The Danish Financial Supervisory Authority (Danish FSA), has issued two reprimands to Saxo Bank. These reprimands are in relation to Saxo Bank's forex trading services during the January 15, 2015 Swiss franc price shock. Specifically, the FSA found that Saxo Bank violated the Executive Order on Investor Protection as follows:
1) Misleading information: Reprimand for violating section 8(1) of the Executive Order on Investor Protection (the Order). This section requires that dealers provide clear information to retail customers. Dealers are not to mislead customers. In this case, Saxo Bank provided the following information of their website:
"Saxo Bank offers all clients dedicated liquidity for trades up to EUR 25M. What is dedicated liquidity? Liquidity means a demand in the market to buy or sell at a given price level. Without liquidity you will not be able to get in to a position when you see a favorable trading opportunity, or even worse, to get out of a position when you need it the most. In case you want to sell a EUR against USD during high volatile market conditions, finding a buyer can be very difficult or even sometimes impossible for many brokers. With Saxo Bank dedicated liquidity to each and every client answers this problem."
However, during the volatile markets of January 15, 2015, Saxo Bank clients who were short the Swiss franc had difficulty liquidating their positions. The Danish FSA received 38 customer complaints about Saxo Bank relating to this period. Saxo Bank issued a detailed defense stating that they did not believe they violated section 8(1) of the Order. The Danish FSA rejected Saxo Bank's defense, and as such has issued a reprimand against Saxo Bank. THe Danish FSA noted that Saxo Bank removed the offending statements from their website.
2) Customer Order Handling: Reprimand for contradicting section 27(1) of the Order. This section requires that securities dealers immediately notify retail customers of any problems in executing their orders. Saxo Bank stated to the FSA that they did not believe they had violated section 27(1) of the Order. The Danish FSA found that on January 15, 2015 Saxo Bank took too long to inform clients of the difficulties in executing stop loss orders at the prices specified. As such, the Danish FSA issued a reprimand.
So is Saxo Bank A Scam Broker?
The Danish FSA's findings against Saxo Bank are very serious. They found that Saxo Bank misled their clients regarding in their marking materials. If Saxo Bank is willing to mislead their clients once, why not again? Is Saxo Bank misleading their clients in any other way? It reflects very poorly that Saxo Bank has denied the findings of the Danish FSA. If Saxo Bank cannot even recognize that they violated the regulation, how are clients to trust them to obey regulations in the future?
It is the opinion of Forex Scam Alerts that there are many other forex brokers to choose from who have a much better record with the regulators.
Author: Forex Scam Alerts Google+