Forex Magnates spoke with Steen Blaafalk, Chief Financial & Risk Officer at Saxo Bank A/S for his take on the recent fallout surrounding the SNB’s abandonment of its peg along with its impact on Saxo Bank. His interview can be read below.
1. Saxo Bank was one of the first brokers to increase margin requirements on Swiss franc pairs in September, what made you anticipate the risks of the SNB dropping the floor?
I would like to stress that we were as surprised as anybody by the Swiss National Bank’s decision despite our anticipation last September and we did not foresee an actual removal this swiftly. However, the potential for this happening increased significantly the past months because of the ECB’s monetary policy, geopolitical risk and lack of policy choices for the SNB.
2. How effective have the risk controls used by Saxo Bank been during the extraordinary events which unfolded yesterday?
Effective, I would say, but this was the largest move ever in a major currency and there was virtually no Liquidity in the markets during the crucial hours yesterday so we have been working hard on giving our affected clients an overview, and are working closely with them to resolve their situations.
3. Do you think yesterday's events will have long-term effects on the industry and could result in some regulatory changes to the structure of the FX market?
Yes, already this morning Saxo saw clients of other brokers transferring their accounts to Saxo. We take this as a sign of confidence in our business and operations but also, as you said, it could be an indication of long-term effects including consolidation of our industry.
