Saxo Bank, the largest European-based Forex trading firm (and a member of LeapRate’s Approved List of Forex firms) has announced the introduction of “Contract Options” trading on its SaxoTrader, SaxoWebTrader and MobileTrader platforms.
Retail traders will now be able to trade, via Saxo Bank, a variety of “standard” derivatives which are normally listed on a variety of exchanges worldwide – options on stock indices, commodities, interest rates, currencies and bonds. For a list of the Contract Options being offered by Saxo Bank click here.
Why now? In one word, liquidity. We have recently seen advances in software and technology, allowing Forex firms such as Saxo Bank to connect their platforms directly to exchanges and electronic networks. These “bridges” have been much easier to create for basic Forex pairs trading, which are fairly simple financial instruments. However more sophisticated instruments such as options (e.g. expiry dates) and equity CFDs (e.g. dividends) have presented more difficult problems to bridge providers. If a Forex firm wanted to offer these products, they had to “b-book” the trades, that is take them on their own books, and then look to hedge accumulated positions manually. Now, Forex firms can “STP” the trades, by real-time connections to the right liquidity sources for these products.
Saxo Bank has been among the most innovative / aggressive Forex firms worldwide in introducing new products for its clients to trade, beyond FX. Last summer Saxo Bank introduced Binary Options trading, and in September introduced the USDCNH pair, allowing retail traders access to (offshore) Renminbi trading.