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Saxo bond trading achieves reductions in spreads and lower execution time

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Six months since the launch of its electronic bond trading for mid-sized institutions and retail investors, Saxo has conducted a performance analysis that shows a reduction in spreads and a lower execution time.

Nearly 50 per cent of all trades have a spread improvement of more than 25bps, compared to an average indicative price.
 
For corporate and emerging market bonds, one in five trades have a saving of more 50 bps, some even above 100 bps, while in liquid government bonds, most trades are done on mid-prices or close to mid-prices, which effectively cancels the real bid/offer spread in these bonds classes.
 
In a manual environment, trade execution (the full process of requesting dealers for quotes, waiting for the quotes, electing the price that is best to the client, and executing and booking in the trade) can take up to 10 minutes and beyond.
 
With Saxo’s electronic bond trading offering, this execution time is less than one second for 30 per cent of government bond trades; less than 20 seconds for 30 per cent of corporate bonds and emerging market bonds; with the rest below the time limit of 45 seconds.
 
Simon Fasdal (pictured), head of fixed-income trading at Saxo Bank, says: "Our decision to build a full digital value chain in the bond markets has been validated by the sterling results we have achieved for our clients, exceeding expectations with up to 100bps reduction in spreads and a significant reduction in execution time. Both of these factors are instrumental to the performance of our clients’ portfolios and can make a huge difference to potential returns, both in fixed income only portfolios but also when they trade multi-asset." 

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