FX trading is viewed as an attractive business, not only by retail traders and brokers but also by these major banks who start to offer their own trading service for retail clients.
In the foreign exchange (forex) market, investors or traders aim to get a profit from exchange rates between different currencies. Meanwhile, retail forex is a segment of the forex market. Since the introduction of online trading, speculating on the foreign exchange market is attractive to retails or individuals as it operates 24 hours a day.
With an online broker, anyone can access the same trades in the global marketplace as banks and large financial institutions. Investors or traders can use a broker's website or platform to make a trade, in which currencies can be bought and sold in seconds. They can even train in a forex demo account that accommodates their learning process without real risks.
Nowadays, the retail forex trading market has experienced significant changes in the form of regulation enhancement. It has come in the wake of increased market competition.
Stringent regulations forced many small brokerages into closure as their business models were no longer profitable. On the other hand, the unexpected beneficiaries of these developments are established high street banks that have seized a ripe opportunity to extend their array of financial offerings.
In the place of small brokers pushed from the competition, a far more limited number of high street banks were in a position to pick up their market shares.
According to Greenwich Associates, an independent research company, FX trading is viewed as an attractive business because of the trade-off between increasingly onerous capital reserve requirements that lowers profit margins in investment banking and capital markets business. And so, the opportunity attracts investment banks to build their own platforms for retail offerings.
In the 21st century, the banking industry has many challenges. It forced banks to start looking beyond their established horizons. A combination of online services, non-banking financial apps, and low-interest rates have forced banks to cut their fees while profit margin dropped.
The solution found by many established banks has been a move into their industry adjacents, and in many cases that has entailed a move into retail forex trading. Already in possession of financial accounts that use almost identical infrastructure, the jump across represents a logical move.
They can generate revenue from commissions on deposits while offering higher returns than the traditional saving account's to their existing clients. Here are the 5 major banks in the world known to have opened retail FX trading service for their clients:
1. ADS Securities
The major Middle East capital markets and investment bank offers FX, bullion, and CFDs trading under the subsidiary of ADS Prime. The brand offers retail trading services with multiple liquidity providers.
Using the widely popular MT4 platform that is also accessible by mobile phone, ADS Prime intends to reach a wide audience. The leverage rate provided is up to 400:1, and the trading condition makes it possible for clients to develop their own trading robot (EA) should they are interested in automated trading.
Santander offers distribution and market-making activities for medium to large corporations and institutional private clients. Santander has over 125,000 foreign-exchange customers, including 30,000 SMEs. Approximately a million transactions, mainly in GBP and USD, are made by its retail customers each year.
Santander can assist customers at branches and the bank's FX brokers offer the service of expert management with straightforward, comprehensive digital solutions to satisfy customers' needs. About 64% of customers are digital-based, and the number of clients accessing the bank's app has reached 5 million. Also, Santander provides its services in its core geographical areas of Europe and Latin America. This company offers up to 200 currency pairs with specialized G10 and LatAm currencies. This company has a broad product variety in spot, FX swaps, forwards, and options.
3. Societe Generale
Societe Generale offers FX trading with comprehensive global coverage and trading capabilities in a broad range of currencies in FX spot, futures, forwards, options, and swaps with competitive spreads. This company has a strong European franchise with a focus on emerging markets. In Western Europe, this company has a large footprint and is a top 10 player in G10 currencies. In addition, this company offers a number of global emerging currencies like CEE 5 currencies.
Barclays has an international banking infrastructure and can provide a forex service that allows clients to trade up to 60 currency pairs. This company is looking into further pursuing retail forex trading.
According to Greenwich Associates, an independent research company, Barclays is a leading bank in the forex market in terms of market share. This company has a global FX market share of 10.5%, followed by Deutsche and Citi with shares of 9.8 and 9.3% respectively.
5. Saxo Bank
Saxo Bank has a license in six tier-1 jurisdictions, indicating its merits as a safe broker to trade CFDs and forex. Its clients can trade in spot, forwards, and options over 100 currency pairs. In order to protect clients from volatility, this company has a platform that can trigger on the opposite side of the spread.
Saxobank was founded in 1992 in Denmark, which began as a brokerage business. At present, they have penetrated the online banking and forex trading business internationally. The company is known as one of the best in the industry.
Their innovative platforms have been used by Microsoft's global institutions, Barclays Stockbrokers Ltd, and TD Waterhouse. The platforms include SaxoTraderGO, an award-winning trading platforms and is offered as Saxobank's flagship. Two other platforms are SaxoTraderPRO and SaxoInvestors. Each platform has advantages and functions.
SaxoTraderPRO is suitable for use by advanced traders and institutional clients, which trade faster via quick-close all features and view exchange order books and execution reports in real-time. On the other hand, Saxo TraderGO is a platform for retail traders. This type of platform offers easy portfolio management from a single account. For example, traders can get live and historic reports of net holdings.
As for Saxo Investors which is a user-friendly case-product platform tailored to retail investors, there are several advantages including browsing curated themes and pre-made screenings. Also, clients can choose between diversified investment portfolios. It is a responsive platform accessible from any device.
The Saxobank website accommodates the needs of international clients, with dozens of languages available on the Saxobank website. Besides English, there are also Japanese, Mandarin, French, Italian, Indonesian, and many more.
When clients choose Saxo, clients are choosing to trade with a fully regulated industry leader, who adheres to strict regulatory requirements in 15 financial centers around the world, including the UK, Singapore, Hong Kong, and Denmark.
Another advantage is traders have so many choices of instruments that can be traded on Saxo, covering 40,000 instruments across 184 forex pairs, 9,000 CFDs, 19,000 shares, 200 Stock options, 2,500 ETFs, Futures, Gold, Silver, and many more.
Since the company also serves as a bank, the speed of execution at Saxo can be guaranteed. However, some traders may feel that Saxobank is not suitable for individual trading, as the minimum capital is too large and the spreads and commissions are considered burdensome for so many clients. The spread which is charged by Saxobank for each pair is quite large, so it is not suitable for scalpers. Meanwhile, the commission that must be paid by traders to this broker starts from USD1.
Furthermore, Saxobank often stops trading for a few seconds before the release of important news and only activates it again after the news is released. This makes news traders do not have the best opportunity to act on Saxobank.
Actually, The deposit value can be adjusted according to the level of account chosen by the clients. There are three levels in Saxo Accounts, including Classic (minimum funding is 500 Pounds), Platinum (minimum funding is 50,000 Pounds), and VIP (minimum funding is 1,000,000 Pounds). Clients can use leverage 1:200 and a minimum lot of 0.05.
Traders are spoiled with various kinds of facilities provided by Saxobank. Each aaccount level has its own facilities offering that can be adjusted to the needs of traders. The higher the level, the more complete the facilities provided.
For example, traders who have VIP accounts will get personal relationship managers, and direct access to trading experts 24 hours. These facilities are not found when traders choose Classic and Platinum accounts.
For Corporate Clients, Saxobank provides 40,000 instruments, with 1: 1 support from expert account managers and the security that comes from their 25+ year experience.
If clients meet professional criteria, they can join Professional Accounts at Saxobank. The criteria in question include having a financial portfolio that exceeds around 500,000 Euros, having placed at least 20 relevant trades in significant sizes over the last four quarters, and having worked in the financial sector for at least one year.
Moreover, Saxobank provides more than 100 institutional specialists operating from offices in key financial centers, including Denmark, London, Singapore, Shanghai, Hong Kong, Switzerland, and Dubai. The client can choose the location closest to their area. With this kind of support, Saxobank is optimistic for delivering the right solution for the business of clients.
From the explanation above, it can be concluded that Saxo is more suitable for deep-pocket forex traders who are interested in forex trading as an investment portfolio. The broker's business focus is also more towards institutional clients rather than retail clients.
Similar to retail tradings from major banks, these forex brokers allow advanced trading conditions and specifications for experienced traders. If you are looking for the perfect environment to trade without any conditional boundaries, hit the list of forex brokers for professional traders.