SAXO Bank and its subsidiaries are well positioned financially to conduct their ongoing businesses globally despite the recent volatile Swiss franc currency movements. Saxo Bank A/S is a European regulated bank and meets the regulatory capital requirements, according to European Banking Authority and Danish Financial Services Authority. The capital requirements for regulated banks are higher than those of most brokerages who are not regulated as banks. A number of Saxo Bank's customers ended up with insufficient margin collateral to cover their losses on positions in Swiss franc. Saxo Bank is liaising with these clients to settle such unsecured amounts. It is expected that some customers will not be able to settle the balance in full and that the bank will incur losses in this respect. However, even in the unlikely event that Saxo Bank would not be able to recover any of the outstanding amounts, Saxo Bank would still fulfill its regulatory capital requirements. Part of the reason that bank has successfully protected itstt financial strength is its robust and pre-emptive risk management approach. Having identified the growing risks inherent in CHF trades, the bank raised margin requirements for CHF in Sep. 2014 from 4 percent to 8 percent, translating to a leverage change from 25x to 12.5x. This naturally deleveraged its client positions and lowered the financial impact of the CHF move to our client portfolios collectively. Saxo Bank generally only holds very small, immaterial proprietary positions – including to CHF, and Saxo did not incur any net losses on proprietary trading during this event. — SG
