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Is it legal for Saxo to requote price many times higher and

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x9200
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Re: Is it legal for Saxo to requote price many times higher

Postby x9200 » Wed, 11 Feb 2015 5:25 am

kohll wrote:An example, one of the people in my group upon the close out of all the positions, i.e. stopped out with losses of 300k, but he still have a positive cash equity of 200k.
However, 12 hours later, the restatement of the CHF rates wiped out all the positive cash equity and resulted in negative equity of 1.8 million!
Saxo subsequent issued demand of payment of 1.8 million!

kohll wrote: On a separate note, who the hell reads the T&Cs when they activate their iPhones .....i think if you print out the T&C in 12pt, it should be a few thousand pages. And almost 99.999% of iphone users just "I accept" in 2 seconds.

Maybe hidden in that millions of words under clause 3012.1.3 section 521 para 488 it says, "Apple has the right to charge you $10 everyday, and collect from you in 2016" ? (Legally binding?)

Making half a million dollars involving deals without reading T&C. You set for me some new dimensions.

And frankly, if your deal was a local one, I would not really rely on the EU law that is overly very overprotective for the consumers. Singapore is not there yet.

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Re: Is it legal for Saxo to requote price many times higher and

Postby snommoc » Tue, 01 Sep 2015 10:03 am

User JR8 had several replies to the topic but unfortunately there are very little ground on the legal aspect as well as on (interbank) industry practice.

I would like to highlight a few points in additional to what kohll provides.

JR8, if you merely thinks this affects those investors who originally lose money on the trade, please take a look at this video:

https://www.youtube.com/watch?v=CFgxe9HIBfA

The video is about an investor who bet the right direction on the SNB event and then got re-booked the transaction price. And then his profit becomes a loss and liability. Please review your previous comments after this.

From the news regarding litigation in various countries, the investors are mostly looking for restoring the transaction prices to where they were on January 15, 2015. They are not denying their losses. So it comes back to the topic, as a market maker, or principal (not as an agent), can Saxo quote you a price, and a trade done, with confirmation, then Saxo change the agreed price in an agreed transaction unilaterally? If Saxo can, then what's the point of the confirmation?

If you had experience in the industry for so many years, have you ever agreed a deal with a counterparty, and then your counterparty change the contents of the agreement 12 hours later unilaterlly, without justifying why the price was wrong and why this price is right?

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Re: Is it legal for Saxo to requote price many times higher and

Postby snommoc » Tue, 01 Sep 2015 11:47 am

Just have some time so I extract from Saxo Bank's General Business Terms.

"Market Maker" shall mean a professional participant in the financial markets who con-tinuously offers purchase and sale prices for a financial instrument in order to buy and sell respectively in the event of interested Clients. Being a Market Maker Saxo Bank is in relation to a transaction the Client's im-mediate counterpart.

"OTC" shall mean any Contract concerning a commodity, security, currency or other fi-nancial instrument or property, including any option, future, or CFD which is not traded on a regulated stock or commodity exchange but "over the counter" by Saxo Bank whether as a Market Maker as described in Clause 16 or otherwise;

16.2 The Client is specifically made aware that in certain markets, including the foreign exchange markets, OTC foreign exchange options and CFD Contracts, Saxo Bank may act as a Market Maker.

16.3 Saxo Bank will, upon the Client's written request, in general disclose to the Client whether Saxo Bank may act as a Market Maker in a certain in-strument.

16.4 When acting as a Market Maker, Saxo Bank will under normal market circumstances quote the Cli-ent bid and ask prices.

16.6 The Client understands and accepts that Saxo Bank acts as a Market Maker and, therefore it may be necessary for Saxo Bank to manage its available li-quidity by separating its clients into different liquid-ity pools where the pricing and available liquidity in each group may be independent of the other pools/groups. Liquidity separations can become rel-evant for clients whom, for example: have price agreements deviating from standard, use alternative trading tools (e.g. API), trade outside normal trad-ing hours, trade in odd sizes, make frequent use of resting orders that can require manual attention, frequently transact in multiple products and/or as-set classes, or have other similar features to their trading.

[Note: 16.6 actually relates to Saxo Bank offering different tiers of clients different bid / ask spreads: if you are a white-label partner of Saxo Bank, you will well know it.]

16.8 The Client accepts that Saxo Bank in such markets where Saxo Bank acts as Market Maker, may hold positions that are contrary to positions of the Cli-ent, resulting in potential conflicts of interest be-tween Saxo Bank and the Client, cf. Clause 18.

16.9 In markets, where Saxo Bank acts as a Market Maker, the Client accepts that Saxo Bank has no obligation to quote prices to clients at all times in any given market, nor to quote such prices to cli-ents with a specific maximum spread.

[Note: 16.9 says Saxo Bank has the choice not to quote anything, so if it quotes, the prices are what they are willing to trade]

16.10 In markets, where Saxo Bank acts as a Market Maker, Saxo Bank may or may not charge commis-sions. However, irrespective of whether or not Saxo Bank charges any commissions, the Client ac-cepts that Saxo Bank will seek to make additional profits out of its performance as a Market Maker and the size of any such profits may be considera-ble if and when compared with the Client's margin deposit.

[Note: 16.10 means Saxo Bank has the room to trade for larger P&L]

16.13 Any commission costs, interest charges, costs associated to and included in the spreads quoted by Saxo Bank as a Market Maker in certain mar-kets and other fees and charges will consequently influence the Client's trading result and will have a negative effect on the Client's trading perfor-mance compared to a situation if such commission costs, interest charges, costs associated to and in-cluded in the spreads did not apply.

16.14 Whilst dealing spreads and commissions are nor-mally considered moderate seen in relation to the value of the assets traded, such costs may be con-siderable when compared with the Client's margin deposit. As a consequence thereof the Client's margin deposit may be depleted by trading losses that the Client may incur and by the directly visible dealing costs such as commissions, interest charges and brokerage fees as well as the said not visible costs for the Client, caused by Saxo Bank's perfor-mance as a Market Maker.

16.16 The Client is specifically made aware that in the area of market making in foreign exchange, OTC foreign exchange options, CFD Contracts and other OTC products, significant implied costs can arise as a consequence of the profits made by Saxo Bank performing in its capacity as a Market Maker.

16.17 Saxo Bank's performance as a Market Maker may negatively affect the Client's Account with Saxo Bank and the said implied costs are neither directly visible nor directly quantifiable for the Client at any time.
16.18 Saxo Bank is at no time obliged to disclose any details of its performance or income produced as a Market Maker or otherwise related to other com-missions, charges and fees.

16.19 The Client is specifically made aware that CFD Contracts may be OTC products quoted by Saxo Bank whilst operating as a Market Maker and not traded on a recognized stock exchange. As a result, the description above of the implied, not visible costs related to Saxo Bank's performance as a Mar-ket Maker may also apply to any CFD Contract.

In Saxo Bank's Conflicts of Interest Policy,

2.1 Saxo Bank hereby identifies and discloses a range of circumstances which may give rise to a conflict of interest and potentially but not necessarily be detrimental to the interests of one or more clients. Such a conflict of interest may arise if Saxo Bank, or any person directly or indirectly controlled by Saxo Bank or a cli-ent, is likely to make a financial gain, or avoid a financial loss, at the expense of a client. Saxo Bank will manage conflicts of interest fairly.

2.2 Saxo Bank has identified the following circum- stances which may give rise to a conflict of in-terest:

A. Saxo Bank may provide advice to clients whose interests may be in conflict or competition with other clients’ interests;

B. Saxo Bank may have an interest that is contrary to clients’ transactions, e.g. when clients trade in markets where Saxo Bank acts as a market maker or when Saxo Bank wishes to invest in the same instrument as a client;

However, Saxo Bank does not have a policy of how to handle this conflicts of interest.

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Re: Is it legal for Saxo to requote price many times higher and

Postby JR8 » Tue, 01 Sep 2015 5:19 pm

These are the T&Cs you knowingly signed up to, correct?

Nothing in it strikes me as unusual. Take for example that small retail clients pay wider spreads than larger clients. There's nothing mysterious about this; the same applies to the guy who goes down to 'Change Alley' and changes S$1k to US$, versus the guy changing S$50k. The quote indicator board even shows the better rates that larger sizes can expect to achieve.

Keep in mind a quote indication is just that, it is not binding on the money-changer to deal with you at that price. You might be able to negotiate a better one. Or you might get a worse one (in aggregate) if trading in size, and the M-C has to go and buy-in some of the currency he needs, at a similarly worse rate.

If I remember the case correctly (this was a trade vs the Swiss Peg that subsequently broke?), any case would seem to hinge on whether the original fill-prices given by Saxo were and are legally binding. Begin by answering that. Which clause in the T&Cs relates to that, if any? Meanwhile the rest, on a brief read, would seem to be something of a distraction (example: your flawed reverse assumption re: 16.9). If I were impacted by this matter, my first step would be to fully understand the extent to which a reported fill, has to be honoured at that price. My gut feel, and it is only that, is that Saxo, and all other such brokers, retain a right to amend indicated fill prices under certain market conditions.

If this is the Swiss-peg debacle, IIRC it was going to a class-action suit. Do the lawyers have a black and white bullet-proof smoking gun, and if so what is it? Something an average man on the street could look at and immediately conclude 'Yes, this is clearly wrong!'? If not, like I suggested before, I fear this might simply be class-action lawyers whipping up a storm to carry out a fee earning exercise.
'Do it or do not do it: You will regret both' - Kierkegaard

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Re: Is it legal for Saxo to requote price many times higher and

Postby JR8 » Tue, 01 Sep 2015 5:29 pm

snommoc wrote:B. Saxo Bank may have [b]an interest that is contrary to clients’ transactions, e.g. when clients trade in markets where Saxo Bank acts as a market maker or when Saxo Bank wishes to invest in the same instrument as a client;[/b]

However, Saxo Bank does not have a policy of how to handle this conflicts of interest.


The tail-end of your post came up again as I posted mine, and so I read again your last point above.

I cannot see the problem that you apparently can within the above. Perhaps you can elaborate by telling me where the conflict of interest is with the following situation:

You believe the price of gold will rise, and you wish to buy some. You go to a jeweller and buy an ounce. The jeweller himself is of the opinion the price will drop: Should he not be allowed to sell you gold? Should he have a policy re: how to deal with this 'conflict of interest'? I'm struggling to see any difference.
'Do it or do not do it: You will regret both' - Kierkegaard


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