Denmark's Saxo Bank has launched a prime brokerage solution that offers institutional clients, retail brokers and prop trading firms direct access to FX liquidity providers and venues globally.
The new offering, Saxo Prime, combines Saxo's prime brokerage tools with connectivity and trading tools such as algorithms and co-location from software provider MarketFactory. Clients will also have access to the bank's own liquidity through its Saxo Direct application programming interface.
"With Saxo Prime and DMA, we enable our institutional clients to easily and efficiently tap into the major liquidity venues. Saxo Prime gives our clients direct access to the liquidity pools that power the FX markets, from a range of ECNs or to pools of tier one bank liquidity," said Lucian Lauerman, head of API business at Saxo Bank. "Saxo Prime combines direct connectivity with access agreements and credit intermediation where needed, meaning a wider range of clients can directly and easily access these venues."
Volatility exposure
Meanwhile, Tradition-ICAP, a broker for OTC FX options, has added tradable volatility swaps on its Volbroker FX Options Platform.
Volatility swaps are forward contracts which offer exposure to the volatility of an asset with a payout based on the difference between the traded volatility level and realised volatility and are quoted in terms of percentage volatility.
The first trade in AUD-USD has been successfully executed. Nine other currency pairs spanning US dollars, euros, Australian dollars, sterling, Swiss francs, Canadian dollars and Japanese yen are also available. Volatility swaps are expected to be among the OTC derivatives that will be traded on exchange-like platforms and centrally cleared under new legislation. The US will start clearing interest rate swaps and credit default swaps in the coming months, while in Europe, clearing of swaps is not expected until 2014.
"Electronic trading of volatility swaps has been designed to meet the developing requirements of market participants in a sector where liquidity is key," said Tradition-ICAP COO Terry Benson. "With the success of the vanilla market, we see many customers wanting to trade volatility without the hassle of having to gamma trade and ultimately deal with the strike, as seen in the equity markets. Volatility swaps are perfect instruments for creating baskets, hedging spot sensitive exotics, trading actuals and other similar products."
In a separate initiative, Nasdaq OMX has joined forces with Deutsche Bank and Imarex FS to offer market participants trading and clearing services for FX products.
Clients of Nasdaq's NOS Norwegian clearing house – which primarily comprise small- and mid-tier banks as well as shipping and freight companies that use FX trades as hedging tools – can now access the German bank's trading platform. Clients will benefit from Deutsche Bank's liquidity, as well as the firm's clearing and counterparty risk management practices.
"Our clients are looking for superior trade execution, risk management, capital efficiency and trade processing," said Mikael Estvall, vice president of fixed income products at Nasdaq OMX Stockholm. "Our new FX clearing service is a response to that. It's an innovative solution at a time when OTC traded derivatives are gravitating towards clearing in order to reduce counterparty risk. It provides our customers with competitive FX rates from the largest FX bank in the world, along with reduced counterparty risk via our NOS clearing service."