Saxo Bank leaves UK CFD and FX Association in dispute over FCA leverage proposals

Saxo Bank UK FCA

Copenhagen based multi asset broker Saxo Bank has announced that its FCA regulated arm, Saxo Capital Markets UK Limited, is pulling out of the UK CFD and FX Association, a margin trading industry group.

While not giving a specific reason, LeapRate has learned that Saxo is leaving the association in a dispute with the other members over new rules proposed (but not yet formally adopted) by the FCA limiting leverage to 50x and banning client bonus payments.

Saxo stated that it is fully behind the FCA’s proposals, while implying that the association itself, backed by other members, were still fighting the FCA and trying to roll back at least the leverage cap to a more lenient level such as 100x. Or to impose a soft leverage cap as was introduced by Cyprus regulator CySEC, allowing higher amounts leverage for experienced traders under certain circumstances.

CFD and FX Association members include most of the leading online brokers in the UK including IG Group Holdings plc (LON:IGG), where the association is headquartered, London Capital Group Holdings plc (LON:LCG), CMC Markets Plc (LON:CMCX), Global Brokerage Inc (NASDAQ:GLBR) via its FXCM unit, Gain Capital Holdings Inc (NYSE:GCAP), and ETX Capital.

The full text of the Saxo Bank announcement follows:


Saxo leaves UK CFD and FX Association

Today, Saxo Capital Markets UK Limited, the UK subsidiary of Saxo Bank A/S, announces the decision to withdraw from the UK CFD and FX Association, a margin trading industry group. The decision follows thorough consideration of consumer protection, including the recent proposals in the Financial Conduct Authority’s (FCA) Consultation Paper (16/40).

The Saxo Bank group strongly supports the FCA’s proposals in respect of providing access to margin products for retail clients through placing responsible caps on levels of leverage offered, enhanced transparency and ensuring that the products and leverage offered are appropriate for the individual client.

Kim Fournais, Saxo Bank CEO and founder, said:

“We have decided to no longer be a member of the UK CFD and FX Association because the association was not sufficiently reflecting our views and interests. Trading CFDs and FX instruments brings a number of advantages to retail investors that have previously been the preserve of larger financial institutions. However, trading these instruments also carries risks that should not be neglected and warrant high industry standards and firm and fair regulation. “

“For the Saxo Bank group it is important that our interests are aligned with our clients’ interests. When our clients succeed, we succeed and to support that, we offer responsible levels of leverage, risk education and relevant information to clients. The Saxo Bank group supports efforts from regulators to set higher standards in the industry and the underlying aim of ensuring better protection of clients and better alignment between the interests of clients and their facilitators.“

“The Saxo Bank group takes a prudent approach to leverage and welcomes the proposals from the FCA to set responsible boundaries on leverage that are in fact roughly in line with the maximum leverage used by our active trading clients today. Trading with excessive leverage leads to a significant risk of frequent stop-outs which leads to client losses. We have no interest in offering clients too high leverage just to see clients being stopped out.”

The decision also follows Saxo Bank’s signing of the FX Global Code last week and Saxo Bank’s decision to voluntarily publish Enhanced Disclosure to promote increased transparency in the industry.

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