Introducing Order Driven Execution in November 2016
In an increasingly complex reporting and compliance environment, institutions must position themselves to address and adhere to regulatory changes, requiring additional compliance and technology spend.
We are constantly enhancing your solution to ensure that you keep ahead of the market and develop your business further. From October Saxo will introduce Order Driven Execution for FX Spot, FX Forwards and CFDs, meaning that the way clients trade requests are executed will change from a Quote Driven Model to an Order Driven Model.
Saxo’s early adoption of best practice and the forthcoming release of the FX Global Code are the key drivers for this improvement to the platform.
Overview & Scope
The way that Saxo executes client trade requests is changing from a Quote Driven Model (green pricing) to an Order Driven Model (Quick Trade). This will apply to FX Spot, FX Forwards and CFD Indices, Commodities, Interest Rates and Bonds. FX Options will continue to trade on a Quote Driven Model.
With the introduction of order driven execution, the trade button colours in the trading platforms will use a new convention where red will be used for sell buttons and blue for buy buttons (as already used in SaxoTraderGO when placing orders). This means that under normal market conditions, the trade buttons in the Trade Ticket and the Trade Board will be red and blue instead of green.
What is an Order Driven Model?
An Order Driven Model provides an executable price provided to Saxo clients that is based on Saxo’s own liquidity, in addition to liquidity available on a DMA basis in the broader market. The client is provided with greater control over the way that their order is traded through user-defined Price Tolerance, with the potential to benefit from price improvements if the market moves in the client’s favour within this tolerance.
An Order Driven Model may result in partial fills, but under normal market conditions a Market IOC order will be filled in full immediately.
Why is Saxo changing to an Order Driven Model?
- To be more transparent in the way that Saxo handles client orders. Early adoption of best practice and the forthcoming release of the FX Global Code are the key drivers in defining ourselves as a transparent and responsible FX and CFD trading provider.
- To extend the breadth of FX liquidity available to our clients. Saxo will be able to connect to a broader set of market venues (i.e. ECNs) that typically only operate under an Order Driven Model.
- Removing the ‘Liquidity Mirage’ by not showing a top of book price to all clients simultaneously but rather representing a price that must be dictated based on order size and liquidity available in the market at that time.
- Better alignment of FX Spot/Forward and CFD Indices, Commodity, Interest Rate and Bond products with the order execution methodologies of other asset classes.
- To enhance FX functionality with the introduction of partial fills, user-defined tolerances and price improvements. Offering our clients greater access, transparency and control helps to continue to democratise investment and trading.
More information is coming soon. Please contact your account manager if you have any questions.