Saxo Danish FSA

Here is the BBG story: Saxo Bank Broke Investor Protection Rules, Danish FSA Says (1)
2015-07-10 12:56:00.919 GMT


(Updates to add FSA assessment of Saxo’s repricing method
in 10th paragraph.)

By Frances Schwartzkopff
(Bloomberg) -- Saxo Bank A/S failed to notify clients of
limits in its trading capacity, putting it in breach of investor
protection rules, Denmark’s financial regulator said.
The Copenhagen-based bank didn’t tell clients it faced
constraints on the liquidity provided by wholesalers, the
Financial Supervisory Authority said. Its use of the phrase
“dedicated liquidity” may have led experienced investors to
assume it would “always settle transactions, even in an
otherwise illiquid market,” the FSA said.
Saxo faces legal challenges to its handling of clients’
trades after a January decision by the Swiss central bank to end
the franc’s cap to the euro sent currency markets into a
tailspin. More than three dozen clients had filed complaints
with the FSA, the agency said.
The FSA also reprimanded Saxo for failing to notify clients
immediately of the difficulties it faced filling orders after
Switzerland’s move. It didn’t rule on whether Saxo will be
allowed to reprice trades in the wake of turmoil.
Saxo has defended its actions, citing the extraordinary
circumstances and the language in its contracts with clients. In
May, it sued clients in Singapore to recover losses.
Friday’s FSA report doesn’t change its position, according
to the bank.
The FSA’s conclusions “give no reason” to make changes
“in the legal position of the bank in relation to the affected
clients who suffered losses” after the Swiss decision, Bjoern
Krog Andersen, head of legal and compliance at Saxo, said in a
statement on the bank’s website.

Not Biased

The FSA said contracts that allow repricing don’t conflict
with rules requiring banks to act “honestly and
professionally.”
Still, it said that “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 method by which Saxo repriced trades treated clients
equally and was “not biased towards the interests of the
bank,” the agency said.