Covering over 5,000 government and corporate bonds across developed and emerging markets, Saxo’s new electronic trading technology is the first of its kind to offer a direct, simple, efficient and transparent way for retail investors and mid-sized institutions to access bonds.

Saxo’s technology redirects client orders into an auction pool of 40 of the largest liquidity providers in the world to compete for those orders in just a few seconds. The result of this process is improved transparency, an improved execution rate and better prices.

Six months after the launch of its technology, Saxo clients have experienced an improvement in spreads of more than 25 basis points (bps). For corporate and emerging market bonds, one in five trades have seen their spreads reduced by 50 bps and some even above 100 bps.

In liquid government bonds, the majority of the trades are now executed on mid-prices or close to mid-prices, effectively cancelling the bid/offer spread in this bond category.

Execution speed has also improved. The time limit for any bond trade in the improved SaxoTraderGO platform is 45 seconds. However, approximately 30 per cent of the trades of government bonds now takes less than one second, while 30 per cent of corporate and emerging market bonds are taking less than 20 seconds.

“Saxo’s digital bond trading technology is making it possible for retail investors and mid-size institutions to directly access fixed income securities without having to go through the hassle of manual execution processes,” said Saxo Capital Markets Australia CEO Ben Smoker.

“The manual bond trading processes can be a challenge in Australia. Up until the recent launch of the Saxo Digital Bond Trading offering, accessibility to bond trading for Australian investors has been limited to only a handful of manual-process brokers offering a somewhat anaemic variety of bonds. The customer experience has been poor due to the time and cost involved,” he said.

Saxo Capital Markets’ decision to build a full digital value chain in the bond markets space has been validated by the reduction of spreads and improvements in the speed of execution.

“Both the spread of a bond trade and the time it takes to execute can be instrumental factors to the performance of our clients’ portfolios and can make a huge difference to potential returns – both in fixed income-only portfolios, but also as part of a multi-asset portfolio,” Mr Smoker said.

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