Saxo Capital Markets Review 2019

Denmark’s Saxo Bank has operated in the United Kingdom since 2006 through subsidiary Saxo Capital Markets UK Ltd (SCML), offering a broad variety of brokerage services geared towards active traders, investors, professionals and institutions. Smaller account holders will encounter a number of unusual obstacles that include high account minimums, surcharges for small trades and fewer customer support options. Tiered accounts lower trading costs and add benefits as equity grows, but the majority of retail traders will have a tough time reaching the higher customer tiers, which start at £50,000.

An impressive product catalog includes forex, shares, commodities, indices, options, bonds and futures that can be bought or sold short through CFDs, forward contracts and/or direct ownership. Unfortunately, a confusing array of fee schedules and hidden costs make it difficult to estimate bottom-line costs. There’s no spread betting, unlike their UK rivals, denying account holders the tax advantages of that unique venue. Research is excellent and comprehensive, but trader education falls short. This is consistent with Saxo’s business objectives that focus squarely on larger-scale and professional account holders.

Commission and spread disclosures are often contradictory, with different prices quoted for similar or identical instruments and venues. In addition, hidden costs could add up quickly, with negative interest rates, mark-ups and carrying costs for forex, futures, shares and other products. Different fees and costs between CFDs, contracts and direct sales of identical instruments are poorly explained, adding to a lack of transparency evident throughout the web site and in the trading platforms.

The broker is licensed through Financial Conduct Authority (FCA) #551422 and provides basic default protection up to GBP 50,000 through the Financial Services Compensation Scheme (FSCS). Desktop, web and mobile platforms offer no special security features, raising the potential for unauthorized access. Web disclosures include company procedures to ensure the best executions possible, underpinned by a broad range of direct market access (DMA), aggregated and in-house liquidity providers. However, they offer no guaranteed stop loss protection, exposing accounts to catastrophic losses in extreme market conditions, like the 2015 Swiss Franc currency shock.

Saxo Banks has built their own trading platforms from the ground up, providing major upgrades over the industry standard MetaTrader 4 and 5, which can only be accessed through an API interface. A highly customizable desktop, even in the web version, allows traders to organize charts, news, research, and watch lists according to specific strategies and monitor space requirements. Charting and technical indicators are full-featured, with custom time management and linking between platform windows. An impressive variety of buy, sell and stop orders handily beats the competition, accessible through all platform versions including mobile apps.

SaxoTraderGo apps for iOS, Android and tablets provide easy access to the impressive features on the desktop and web versions, with full synching across platforms. The indicator list is shorter but comprehensive, and traders can read real-time news and research with a few swipes. Fee disclosures were confusing and contradictory, with product details listing different commission schedules than web site marketing materials or fine print. Lack of two-tier security protocols match omissions noted at other UK and European brokers, which is hard to justify given the threat of hacking and identity theft.

Saxo Bank maintains an impressive roster of in-house analysts who provide regular market updates, ratings and timely commentary. Research materials can be accessed through the web site or directly through platforms but a relatively thin archive and weak search functionality made it difficult to find topics of interest. A YouTube portal features a subset of analyst videos, but it lacks many materials found within the broker’s research section. There’s no web-based economic calendar but traders will appreciate direct access through the platforms 

Educational materials focus primarily on platform and product tutorials with few skill-building resources and almost no coverage on fundamental or technical analysis. The site contains no glossary, adding another obstacle to low-skilled traders. This tracks a theme found throughout the brokerage, which clearly is not interested in small-sized and low-skilled trading accounts. ESMA disclosures provide justification for this approach, with 71% of account holders losing money on CFD trades.

Average spreads drop in higher account tiers, offering the potential for substantial active trader discounts, but the £50,000 minimum to upgrade tiers will deter many clients. An API interface for algo and automatic trading can’t be used by small account holders and the broker doesn’t offer local VPS hosting. The SaxoTraderPro platform has no back-testing capacity, forcing an API solution for account holders with access to this higher-tech connectivity. The site contains no social or copy-trading data or third party software, a value-added feature used by many European brokers to attract low-end accounts.

Saxo Bank provides a large product catalog, with more than 180 currency pairs, 300 plus index and commodity markets, 5000 bonds and above-average FX and listed options lists. They offer no cryptocurrency trading. Many instruments can be traded through multiple venues and order routing techniques, providing impressive diversity, but some venues will generate higher-than-average costs. The basic live accounts can be opened for £1500, relatively high compared to other UK brokers. Account holders will appreciate free withdrawals but aggressive inactivity fees could drain capital quickly.

The second-tier platinum account requires £50,000 minimum while the third-tier VIP account requires an astounding £1,000,000. Spreads drop while benefits rise at higher levels, but they all charge commission in addition to spread on many instruments, including forex. All-inclusive spread and other specialized accounts are available, but side-by-side comparisons and disclosures are restricted to the three volume-based accounts. Documentation on the site was often contradictory, outlining conflicting fees and trading conditions for identical products and position sizes. It was also easy to miss fine print that adds a separate surcharge on small trades, raising the potential for misunderstandings between broker and account holder.

The broker provides a robust support page with numerous topics, but the search function often failed to display basic or popular results. They claim industry standard 24/5 customer support, but the contact page includes office reception and sales numbers, but no local or toll-free support number, while the small print indicates that departments are open between 9:00am and 5:30pm local time. There is no trade desk number.

The web site has no live chat functionality. Online chat is embedded within the trading platforms but local language support is limited to higher-account tiers. Chat does not function on the demo platform, forcing prospective clients to contact the sales department by phone or e-mail. Platforms also include low- ticketing systems that could generate unnecessary delays. The broker is active on Twitter and Facebook, but handles no service inquiries through those social interfaces.

Saxo Capital Markets offers a good fit for active traders and professionals with accounts at £50,000 or higher. Extensive research facilities, an API interface and discounted fees could add to profitability, but confusing commission and spread schedules may be uncompetitive, depending on trading instruments. Small and low-skilled traders can find better deals elsewhere due to surcharges for small trades, few educational resources, relatively high account minimums, limited support options and higher than average bottom line trading costs. 

Saxo Capital Markets is a great option for active traders and professionals. See how they compare against other online brokers we reviewed.

• Saxo Capital Markets vs. Interactive Brokers