Awards: Saxo Bank

Prime-of-prime providers have settled into the credit-intermediation infrastructure in foreign exchange markets with offerings and products targeted towards different client segments and trading models.

Saxo Bank, the winner of the Best Prime-of-Prime Provider category at the 2018 FX Week e-FX Awards, not only serves as a credit intermediary between its clients and liquidity providers, but also manages the entire relationship.

“We provide clients with credit, technology, pre-trade risk controls, aggregation and connectivity, as well as a suite of post-trade analytics,” says Peter Plester, head of FXPB at Saxo Bank.

“We construct bespoke liquidity pools for our clients, and manage and optimise the liquidity for them to make sure they have the right LPs, the best fill rates and fastest response times,” he adds.

Saxo Bank does not trade against its clients. Some providers in the space are licensed to take risk and they can provide their own price feeds into the client’s liquidity mix if they wish. Plester emphasises that this is not what Saxo does.

We don’t put our own price feeds in; we don’t use technology to first-look or b-book trades. We make it as close to a traditional prime brokerage set-up as possible

Peter Plester, Saxo Bank

“What sets us apart from other prime-of-primes is that we’re completely un-conflicted with our clients,” he says.

Instead, the bank provides true and direct market access to about two dozen bank and non-bank liquidity providers, and nine trading venues, with ParFX the most recent addition.

“We don’t put our own price feeds in; we don’t use technology to first-look or b-book trades. We make it as close to a traditional prime brokerage set-up as possible,” Plester says.

Over the last 12 months, Saxo has also made its credit distribution more efficient by introducing dynamic credit allocations for clients across the bank’s three matching engines in London, New York and Tokyo.

Full-amount feed

The bank has also added a full-amount feed for clients who want to trade orders of above $5 million and up to $50 million. Clients can put in a request-for-quote for a full-amount order on a bilateral basis to avoid market impact.

“With regard to our new full-amount feeds, market impact is limited because clients are not sweeping the book and trade frequency is managed,” says Plester.

One condition when using the full-amount service is that market participants are restricted from conducting another trade in the same currency pair for five seconds after the original trade.

“The LPs we’re using are all able to form their own price and internalise, which greatly reduces market impact,” Plester adds.

VIEW THE LIST OF WINNERS