Saxo Bank launches digital trading solution for corporate, government bonds

Saxo Bank will offer its clients access to trading opportunities in over 5.000 investment grade and high yield corporate and government bonds from all over the world and in 20 different currencies. The solution will be rolled out in October 2016 on SaxoTraderGO, the bank’s multi-asset trading platform.

Saxo Bank will combine its technological prowess and its relationship with 40 of the largest liquidity providers in the bond markets to offer both retail and institutional clients more transparent, cheaper and more efficient access to fixed income trading opportunities. The move is set to revolutionise the way investors trade bonds – a process which currently involves a manual “request for quote” from a very small number of banks, and in some instances a single bank. The current process is inefficient as it does not explore the depth of the liquidity and range of prices available in the marketplace.

Saxo Bank’s digital bond trading is connecting each client with the entire global bond market. Each bond order is directed to an optimised dealer auction which comprises up to 40 of largest bond liquidity providers. Thanks to technology, most trades are done within seconds, but, most importantly, clients will experience cost savings due to the multi dealer environment. Saxo Bank’s ability to offer its clients a fully digital trading solution which has high scalability will allow it to offer, on average, a price improvement of 30 basis points for corporate bonds and 5-10 basis points for government bonds, according to the bank’s observations.

Large institutional investors have had access to electronic trading in liquid government and corporate bonds for a while, however, electronic bond trading has to date not been available to a large part of the investor base. Saxo Bank’s aim is to change that and democratise access to efficient bond trading.

Simon Fasdal, Head of Fixed Income Trading at Saxo Bank, commented: “Many providers who have attempted to address the issue of electronic bond trading have failed because they took the wrong approach by trying to copy equity style trading into a fragmented market and ignoring issues with liquidity and indicative prices. Others have stuck to a manual work stream, despite a digital frontend, and not really taken the step to a full digital value chain. We have engineered a front end that will present clients with a trading experience which is similar to that which they are accustomed to in equity trading, offering speed of execution and transparency, and the technology to cope with the much more complex nature of fragmented bond markets in a simple manner.”