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Digital trading will speed up bond transactions: Saxo

Digital trading will speed up bond transactions: Saxo

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By Killian Plastow ·
September 22 2016

Digital trading will speed up bond transactions: Saxo

Saxo Capital Markets has announced a new digital trading tool for global bonds, which should increase the speed of bond transactions.

The service, which the firm hopes to roll out in October, will give traders access to over 5,000 investment grade and high-yield corporate and government bonds in 20 different currencies, Saxo said.

"Saxo's digital bond trading solution will connect traders with the entire global bond market in a direct, competitive, transparent, and efficient manner," commented Saxo Capital Markets Australia chief executive Ben Smoker.

Speaking to Adviser Innovation, Saxo Bank head of bond trading desk Simon Fasdal explained that digitising bond trading would drastically improve the speed of trades.

"We have a lot of issues; clients face a lot of different pricing, even the pricings [for the same bond] are different, so trying to digitise that is quite a task actually," he said.

Mr Fasdal explained that Saxo Bank's new technology used multiple algorithms to identify relevant bonds, sort them by price, and execute the trade, using pre-determined limit prices set by buyers to ensure the actual cost of the transaction doesn't exceed expectation.

"That's an execution trail that for dealers can take 10 - 15 minutes, even 30 minutes, because they need to call, sometimes need to quote in one system, here, it's really compressed down to a minimum," he said.


The service will be available to retail and institutional clients and will allow trading orders to be executed within seconds, and Saxo said it should result in an average 30 per cent price improvement for corporate bonds, and an average 5 to 10 per cent improvement in government bonds.

The digital bond trading service will be rolled out on the company's multi-asset trading platform, SaxoTraderGO.

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