Danish FSA review of Saxo Bank’s handling of CHF incident: Only two specific criticisms


Saxo Bank has today announced that the Finanstilsynet (the Danish FSA) has concluded its investigation into the company’s handling of the volatility created by the removal of the 1.20 peg on the Euro by the Swiss National Bank on January 15 this year.

​​​​Saxo Bank has issued a notice on its website today, stating that on 15 January 2015, the Swiss National Bank discontinued its peg of the Swiss franc to the Euro without any prior notice, and this led to sudden and sharp price movements, which resulted in some clients of Saxo Bank had their positions closed out, because they no longer met the margin requirements. Following the incident, the Danish FSA has received a number of complaints and within the framework of investor protection regulation, the FSA has conducted a thorough investigation of Saxo Bank’s handling of the CHF incident.

In its conclusions, the Danish FSA reprimands two specific issues but finds apart from that no reason to criticise the Bank’s procedures. The central part of the investigation is the method used by Saxo Bank to determine the adjusted settlement prices for the clients. Here the Danish FSA finds that the method contributed to an equal treatment of clients and that this was done in compliance with regulations on best execution and the regulations on investor protection.

The Danish FSA also notes that the contractual condition which entitles a financial undertaking to change settlement prices under some detailed conditions is not in itself in conflict with the regulations that a financial undertaking must act honestly and professionally towards its clients.

Whether the contract-law conditions allowing the Bank to change the price have been complied with in this specific matter is, however, a question for clarification by the Danish Complaint Board of Banking Services, or by the courts. The Bank believes that two earlier decisions by the Danish Complaint Board of Banking Services support Saxo Bank’s procedures.

The Danish FSA though reprimands, Saxo Bank on two issues related to its handling of the CHF incident:

​The Danish FSA reprimands Saxo Bank for having provided an insufficient description of the limitations to the “dedicated liquidity” description on its website and consequently the Bank already removed this text from its website before the conclusions of the investigation.

The Danish FSA reprimands Saxo Bank for not having immediately informed its clients who had placed stop/limit orders in CHF that there were significant challenges on the liquidity in executing these stop/limit orders.

​Bjørn Krog Andersen, Global Head of Legal & Compliance, Saxo Bank A/S, states: “We take notice that the FSA after a thorough investigation has stated that Saxo Bank’s handling of the events and the application of price adjustments has been consistent with the regulations on investor protection and that the Bank’s terms are not in conflict with the regulations that a financial intermediary must act honestly and professionally towards its clients.”

“We acknowledge that the Danish FSA found reason to issue two reprimands. It is important for the Bank that its client communication is clear and effective and with regards to “dedicated liquidity” that potentially could lead to misunderstandings this has now been removed. With respect to the second reprimand on our communication with our clients, we will in a similar situation inform the relevant clients faster.”

“Moreover, in general we find that the FSA’s investigation and subsequent conclusions give no reason to changes in the legal position of the Bank in relation to the affected clients who suffered losses as a result of the Swiss National Bank’s decision” concluded Mr. Andersen.”

In order to view the official document from Saxo Bank, click here.

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Danish FSA review of Saxo Bank's handling of CHF incident: Only two specific criticisms

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