It is getting interesting. Means Saxo has losses more than initially claimed US$50mln. The problem is that Saxo allowed its unqualified customers to sell uncovered OTC FX options on CHF pairs which lead to a catastrophe. One guy even has US$ -560,000 on balance after franc windfall.
"In light of the recent volatile Swiss Franc currency movements, we would like to inform you that Saxo Capital Markets (Australia) Pty Ltd and its parent company Saxo Bank A/S are well positioned financially for our on-going businesses globally.
Our parent company, Saxo Bank A/S is a Danish regulated bank and we meet the regulatory capital requirements which we are required to under Danish Financial Services Authority capital requirements. As you may be aware, the capital requirements for regulated banks are higher than for most brokerages who are not regulated as banks. You would be pleased to know that Saxo Bank A/S continues to meet these requirements regardless of the extent of collection of any losses that our clients have incurred. As such, Saxo Bank and its entities are in healthy financial state to continue our business and have already begun accepting many clients who have transferred their accounts to Saxo from other brokers, which Saxo Bank Group takes as a vote of confidence in our business and operations.
One of the factors that has contributed towards successfully protecting our financial strength is the proactive Risk Management policies that Saxo Bank Group employs across its global entities. As an organization we raised margin requirements for CHF in September 2014 to 8%, translating to a leverage change to 12.5x. This naturally deleveraged our client positions and lowered the financial impact of the CHF move to our client portfolios collectively.
Saxo Bank Group also did not have any significant proprietary exposures to the CHF, which limited the Group's risk to the move"
Aussie broker BBY uses white label SAXO CFD and futures platform. They have just cranked their margins up - here's a few examples:
New FX Margin Requirements: Currency Code Name Current Margin* New Margin EUR Euro 0.5%/1% 2% USD US Dollar 0.5%/1% 2% GBP British Pound 0.5%/1% 2% JPY Japanese Yen 0.5%/1% 3% CHF Swiss Franc 4%/8% 15% XAU Gold 2%/4% 6% XAG Silver 3%/6% 8%
Hi John, I'd happily believe you except my Danish is a bit rusty. Anyway, I've just received a diabtribe against not just the SNB but all central banks in general, penned by none other than Steen Jakobsen, chief investment officer of Saxo Bank, the parent company of Saxo Capital Markets (Australia). On the strength of that, it sounds like Saxo Bank expects to stay in business. No mention of destruction of customers' wealth to benefit his bank by Steen, though. So, Andy V, that link to the Forex day traders' chatroom is insightful on that front. Thanks for that. One point raised there made me stop and think about this: in my home jurisdiction, Australia, if a listed company said "all's well, it's business as usual for us" on Friday, then on Monday put out a trading update that disclosed a complete change of direction, the directors would be prosecuted, and most likely investors and bondholders would launch a class action against them. US and UK are similar, and the bourses in EU countries would have much the same rules, as would Zurich, I presume. Yet it sounds like the SNB and its governor are unrepentant and untouchable for doing exactly the same thing that would see private sector corporate finance execs jailed. Is that right? It's more than would our RBA governor calls "jaw-boning" - ie, talking the currency up or down via public thought bubbles. And finally, good luck to Saxo Bank in Denmark in clawing back the margin calls from any non-EU jurisdictions.
The article linked is actually just a summary of this one: http://finans.dk/finans/finans/ECE7370486/K%C3%A6mpetab-p%C3%A5-schweizerfranc-rammer-Saxo-Bank/
That quotes Saxo Bank as saying their max loss is about $80 million, but that even in a worst-case scenario they'll meet all capital requirements. Danish media is speculating their loss may ultimately be as high as $100 million.
Taken at face value that would seem to indicate Saxo Bank isn't in danger of going under, unless of course there's something they're not telling us (which wouldn't be the first time a dodgy financial firm has done that, of course).
As a Dane, I would certainly be happy to see the Ayn Rand cultists that own Saxo Bank go away (along with the dreadful libertarian party they're funding).
Saxo Bank is known for its annual '10 outrageous predictions'. Just looked through the 2015 batch but did not find this one. Maybe the possibility of the SNB abandoning the peg was not outrageous enough?
MORE changes from SAXO! Obviously they think the HK$/US$ peg is going to go!!! Do they know something we dont????
Dear Client, Following on from our margin changes on 21th January 2015, BBY Online’ s hedge counterparty SAXO Capital Markets Ltd will adjust margin requirements on the below currencies effective Wednesday, 4th February 2015 at 15:15 GMT.
The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.
11 comments:
It is getting interesting. Means Saxo has losses more than initially claimed US$50mln. The problem is that Saxo allowed its unqualified customers to sell uncovered OTC FX options on CHF pairs which lead to a catastrophe. One guy even has US$ -560,000 on balance after franc windfall.
Proof
whereas you're not gambling... right John?
Got this about 12 hours ago...
"In light of the recent volatile Swiss Franc currency movements, we would like to inform you that Saxo Capital Markets (Australia) Pty Ltd and its parent company Saxo Bank A/S are well positioned financially for our on-going businesses globally.
Our parent company, Saxo Bank A/S is a Danish regulated bank and we meet the regulatory capital requirements which we are required to under Danish Financial Services Authority capital requirements. As you may be aware, the capital requirements for regulated banks are higher than for most brokerages who are not regulated as banks. You would be pleased to know that Saxo Bank A/S continues to meet these requirements regardless of the extent of collection of any losses that our clients have incurred. As such, Saxo Bank and its entities are in healthy financial state to continue our business and have already begun accepting many clients who have transferred their accounts to Saxo from other brokers, which Saxo Bank Group takes as a vote of confidence in our business and operations.
One of the factors that has contributed towards successfully protecting our financial strength is the proactive Risk Management policies that Saxo Bank Group employs across its global entities. As an organization we raised margin requirements for CHF in September 2014 to 8%, translating to a leverage change to 12.5x. This naturally deleveraged our client positions and lowered the financial impact of the CHF move to our client portfolios collectively.
Saxo Bank Group also did not have any significant proprietary exposures to the CHF, which limited the Group's risk to the move"
Aussie broker BBY uses white label SAXO CFD and futures platform. They have just cranked their margins up - here's a few examples:
New FX Margin Requirements:
Currency Code Name Current Margin* New Margin
EUR Euro 0.5%/1% 2%
USD US Dollar 0.5%/1% 2%
GBP British Pound 0.5%/1% 2%
JPY Japanese Yen 0.5%/1% 3%
CHF Swiss Franc 4%/8% 15%
XAU Gold 2%/4% 6%
XAG Silver 3%/6% 8%
IBEX35.I Spain 35
0.5%/1% 10%
SMI.I Switzerland 20 0.5%/1% 10%
Not encouraging - "stable bolt horse door after" - supports your thesis
Hi John,
I'd happily believe you except my Danish is a bit rusty. Anyway, I've just received a diabtribe against not just the SNB but all central banks in general, penned by none other than Steen Jakobsen, chief investment officer of Saxo Bank, the parent company of Saxo Capital Markets (Australia). On the strength of that, it sounds like Saxo Bank expects to stay in business. No mention of destruction of customers' wealth to benefit his bank by Steen, though. So, Andy V, that link to the Forex day traders' chatroom is insightful on that front. Thanks for that. One point raised there made me stop and think about this: in my home jurisdiction, Australia, if a listed company said "all's well, it's business as usual for us" on Friday, then on Monday put out a trading update that disclosed a complete change of direction, the directors would be prosecuted, and most likely investors and bondholders would launch a class action against them. US and UK are similar, and the bourses in EU countries would have much the same rules, as would Zurich, I presume. Yet it sounds like the SNB and its governor are unrepentant and untouchable for doing exactly the same thing that would see private sector corporate finance execs jailed. Is that right? It's more than would our RBA governor calls "jaw-boning" - ie, talking the currency up or down via public thought bubbles. And finally, good luck to Saxo Bank in Denmark in clawing back the margin calls from any non-EU jurisdictions.
Bold statement - have you actually taken time to review their capital etc?
Are you saying a DKK900m loss is going to wipe out their capital and put segregated client accounts at risk?
The article linked is actually just a summary of this one: http://finans.dk/finans/finans/ECE7370486/K%C3%A6mpetab-p%C3%A5-schweizerfranc-rammer-Saxo-Bank/
That quotes Saxo Bank as saying their max loss is about $80 million, but that even in a worst-case scenario they'll meet all capital requirements. Danish media is speculating their loss may ultimately be as high as $100 million.
Taken at face value that would seem to indicate Saxo Bank isn't in danger of going under, unless of course there's something they're not telling us (which wouldn't be the first time a dodgy financial firm has done that, of course).
As a Dane, I would certainly be happy to see the Ayn Rand cultists that own Saxo Bank go away (along with the dreadful libertarian party they're funding).
Saxo Bank is known for its annual '10 outrageous predictions'. Just looked through the 2015 batch but did not find this one. Maybe the possibility of the SNB abandoning the peg was not outrageous enough?
Imagine if we don't pay up. Saxo will have to take provisional losses, then they will definitely fall below their regulatory requirements!!!
All affected Saxo Asia Pacific clients (Singapore, Malaysia, ASEAN, Australia, New Zealand), please email me at saxosgchf@gmail.com
We have hit critical mass
Hi John,
MORE changes from SAXO! Obviously they think the HK$/US$ peg is going to go!!! Do they know something we dont????
Dear Client,
Following on from our margin changes on 21th January 2015, BBY Online’ s hedge counterparty SAXO Capital Markets Ltd will adjust margin requirements on the below currencies effective Wednesday, 4th February 2015 at 15:15 GMT.
Currency Code Current Margin New Margin Diff
AUD 2% 3% 1%
CAD 2% 3% 1%
CLP 6% 8% 2%
CNH 5% 20% 15%
CNY 6% 20% 14%
CZK 4% 8% 4%
DKK 2% 5% 3%
HKD 4% 20% 16%
HUF 2% 8% 6%
INR 6% 8% 2%
NOK 2% 5% 3%
NZD 2% 3% 1%
PLN 2% 8% 6%
SEK 2% 5% 3%
SGD 2% 3% 1%
TRY 4% 8% 4%
ZAR 4% 8% 4%
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