Not-so-Good Times for Saxo Bank?
While not a dedicated binary options broker, Saxo Bank has been known to dabble in such matters on the side, and it kind of hurts to see their trading volumes taking a plunge. While far from going under, this brokerage has certainly seen better days.
A Danish wonder?
Once hailed as the epitome of Danish financial prowess, Saxo Bank has just published its August numbers and things do not look good. According to the most recent data, they have only made the total amount of transactions of $221 billion, which is a pretty grim forecast as this is by far the worst performance since last November.
The importance of these reports cannot be overstated, as they signify which brokerages are more successful and which seem to be falling behind. And even though this does not mean anything by itself, a brokerage as diverse as Saxo Bank, spreading across the entire board of financial products should be making a lot more in trading volume than this.
If the industry at large is an indicator, it would seem that most of it suffers from the same problems as Saxo Bank, which is a small comfort but a comfort to be sure. In fact, few brokerages have managed to keep up their numbers, which would be a stunning success in its own right. True, compared to July, the volume is down by more than 15%, but this happens every August as the bulk of traders go on a vacation or something like that. So, in a way, if we consider that the numbers were roughly the same this time last year, we could safely dismiss this claim as a touch-and-go, provided the next month’s figures go up again.
However, the average daily figures paint a different picture: for example, the daily numbers have dropped by almost one quarter and the overall number last year was actually 8.5% higher, so there is definitely something amiss here. Sure, all retail brokerages suffered the same fate, even in the binary options sector, and it is said that market anxiety about the Fed meeting this month has certainly played a significant part in all of this. Hopefully, after this whole Fed thing blows over and people return from their vacations, things will slowly return to what they once were – at least for some brokers.
The Forecast for September
The entire industry is expected to liven up this month, especially if Barclays and the others manage to whine Fed executives into raising the interest rate already, since the employment report is favorable and they did announce four small increases this year, and materialized absolutely none of them as of now.
What Will Saxo Bank Do?
For one, they have already announced a collaboration with Morningstar Investment Management Europe, which will provide some of their renown investment research services to their clients in a bid to attract new clients and keep the old ones trading for as long as possible. These added investment strategies will surely prove beneficial for their efforts.
Take the new, reduced margin requirements into account, and you can certainly tell that Saxo Bank is planning big. Their SaxoSelect portfolios are going to benefit from both its CFD index trackers and advanced investment strategies.
Saxo Morningstar MOAT
This portfolio is going to allow Saxo Bank clients to invest in 30 of the best stocks, as determined by signature Morningstar’s methodology. The whole point of this Moat Rating is to identify and evaluate stocks that are being undervalued so the proper action can be taken. This means the only portfolio in Europe that covers both Wide and Narrow Moat companies is under Saxo Bank’s thumb. Their clients will be able to follow their positions seamlessly and enable the level of transparency that is unheard of, throwing the gauntlet at the rest of the industry.
These are handpicked from as many as 33 different exchanges and Morningstar automatically filters out the companies that lack competitive advantage, before submitting them to a fundamental analysis to compare their real value to the stated one. And even if this is not enough, only those companies that meet all these requirements and are traded at a serious discount would even be taken into account.
The Bottom Line
Saxo Bank’s trading volume may be low, but they have already taken steps to improve it. Through their partnership with Morningstar as well as a revised margin system, traders are expected to flock to their platforms. We’ll have to wait and see how it goes.