Charlie White-Thomson, UK CEO of Saxo Markets on what’s in store for the next 30 years

Where do you want Saxo Markets to sit within the brokerage landscape at the moment and what type of customers do you try and cater most towards?

Well, there’s two parts to that question.  Who are we now, we have 800,000 clients globally. There are three parts to our business; There’s the self-directed investor, there’s the self-directed trader and there’s the white label business.  We have a very broad range of clients and I think we’re most known for our self-directed trader business.

But what we’re doing, and you asked me where I’d like to go, is we’re expanding our investor business.  That’s what I call traditional investing. We’re going to be adding new products over the next six to nine months. Then the third part is the partnership business, which is the white label business and I think that’s a very exciting part of our business as well, because effectively, that’s where we work with large institutions around the world and we help them deliver on their financial aspirations.

When I speak to CEOs of these large institutions, they think about three things. They think about, do I want to buy the technology, do I want to build it or do I want to partner? And increasingly, what I’m seeing is the most progressive want to partner because the other two are either expensive or take a long time.

What’s an ideal retail customer for you? Do you focus on the very small people getting started or are you more towards the sophisticated end of the spectrum?

I think, at the moment, we’re at the sophisticated end.  These are high-net-worth individuals, they probably had experience in the financial markets. But as I look at the development of our client base, I’m seeing more and more what I would call traditional investors.  They’re coming to do their ISAs, they’re coming to do their ETFs, they’re coming to do their stock investing or bond or whatever because we have a very broad multi-asset portfolio. I think another important part is that we believe strongly in risk management and that your portfolio has many gears and that you need to be able to protect the downside in what are very volatile markets.

Do you think it’s now too easy for retail clients to trade highly leveraged derivative products? 

I’d rather not talk about my competitors, but I think that if I look at Saxo, it’s not easy to open an account. We have requirements, there are forms to fill in, there are different questions that we ask. We want to understand our clients well, we want to do KYC to a good effect because it’s really important. Then as we go into 2023, consumer duty, which will be part of the system as from July, that really doubles down on the whole aspect of companies like Saxo looking after their clients and we welcome that.

Brokers essentially all do ultimately the same thing. You’re all selling the same biscuits, which is access to the markets. If an institutional trader or a professional trader is looking to perhaps move to a more mature brokerage, what would you say Saxo markets could offer an institutional, professional trader that they can’t get with the more broader brokerages out there?

That’s an interesting question.  I’ve come from the institutional side of the business.  I was at a large European investment bank and the thing I find about Saxo, it is truly multi-asset, we have 50,000 financial instruments.  I think that our platform is ideally suited for someone who is in the earliest stage of their financial career or their financial investing or very sophisticated people. I’m proud of what we’ve built, I mean, we’re 30 years old today, it’s taken us a long time. We’ve spent significant amounts of money in ensuring that we have a very strong platform with all of the tools, I hope, to tackle what are very volatile markets.

What are the key benefits of your white label offering and who are typical customers?

I think the key benefit of it is that we have a single technology stack and a lot of the counterparties that I speak with, because they’ve had multiple acquisitions, they have loads of different technology stacks.  What we can do is provide a single technology stack and on top is 40,000 financial instruments. One of the messages that I have is that wealth managers in many cases are very, very good with their clients, but what they’re less good at is access to markets and what they’re less good at is their technology stack and both of those two things that we can do very well.

What sort of service levels do you provide as a white label? Is it as simple as just putting somebody’s logo up in the corner or do you do deep integration as well?

There are all sorts of different levels of service.  We can do open heart surgery where we do books and records, we do the full jamboree, for want of a better expression, or we can do some more surface where it’s a screen and the facing platform, but it’s quite difficult to answer that question.  It can be lighter touch or open heart surgery.

What’s your view on free investing? Do you think it’s here to stay and will Saxo ever offer it?

Free trading for me is an oxymoron, it’s a misnomer. I mean, I’m responsible for a financial services business here in the United Kingdom. When I look at the complexity, when I look at the number of people we need to have on the platform, when I look at my integration with the regulator, it’s not possible for it to be free.  One of the things I’m calling for is more transparency around fees and I think that if you, as an investor, believe that you are trading for free, then I think at some point, you’re paying for it. I think it’s important that clients understand that.  I think that we won’t be looking to do free trading, though I do welcome it, as I said earlier, we will be expanding into the investor client base.

Do you think as well, free investing doesn’t quite do what it’s supposed to do? That it encourages people to invest who perhaps shouldn’t be investing?

I’m not sure, but when I think about it, I don’t understand how financial services company can do this for free, in my opinion.  If I look at Saxo, we have four people in our client money team, they are not for free. We have five compliance people, they’re not for free. The client servicing team, the sales traders.  I don’t understand, I think that maybe it’s for free for a bit, maybe you can just about do that, but I don’t see how the business model works. Going back to what I said earlier, it’s very important for clients to understand the fee structure and I think it’s very important for financial services companies to be transparent about it.

Sometimes with investing you get what you pay for?

Most definitely, it’s like everything in life.

A huge percentage of volume goes through online, and that’s fine for the majority of traders, but you still offer voice brokerage. Do you think that’s here to stay as well? Do you think there’ll always be a market for voice brokerage and how important is that to Saxo?

We have 800,000 clients globally, so we need to be careful about who we extend voice brokerage to because otherwise, we’re going to need to have very, very large sales teams, very large client services teams.  I think that it’s an important part of what we do.  If you have a certain balance, you will get a sales trader. Though we are a financial technology firm, people are also very important to what we do. We have, I think a nice mix. If I look at our chat bot, where people can put in their questions, we also have a button on there whereby if you want to speak to a human or a person, we have that too. But for me, it’s about getting the right balance.

Do a lot of institutions and hedge funds still trade over the phone?

These professionals rarely speak to people, but where we would see them speak to people would be around maybe some small cap trades, for example, or exotic bonds where you need to speak to someone, it’s very difficult, as you don’t see the full transparency on the price on the screen.  I think that same as my last question, it’s about getting the balance on that.

In all the years that you’ve been in brokerage from institutional down to retail, what do you think is the biggest mistake people make with their trading and what do you think they can do to be better traders or investors?

When I look at mistakes by traders, there are several areas that always apply. Number one that they put on outsize bets. Number two, they’re overly concentrated, so they’ll have 50% of their portfolio in Apple or 50% of their portfolio in crypto, for example. And then number three, they have poor risk management. i.e. they could have a stop loss, but they then ignore it.  Those are the three things it’s about and I think also it’s about avoiding over-leverage and that’s one of the things at Saxo we don’t support, we don’t support over-leverage because it just makes trading much more difficult because you’re just accelerating your risk dramatically.

What’s been the best bit? What have you been most proud of so far?

The thing I’m proud of is the entrepreneurial spirit. This is a FinTech company with 800,000 clients around the world. It’s a FinTech company that still has its CEO and founder. I’m very proud of our multi-asset business, I’m very proud of our risk management business. For me, this is now religion. I think that over the last 10 years, we saw a period where free money and low-interest rates have skewed retail investors appetite for risk. Going forward, we’re in a new paradigm and therefore, I think people like Saxo can provide a really good service, which is risk management, multi-asset portfolios. These are the two things you need to understand. I think if you’re going to deliver to sustained returns in what is a difficult and challenging market.  That’s what I’m most proud of.

What’s been the most difficult?

The thing I found most difficult was when I took over as CEO, we were in lockdown. That was total lockdown and I had a very strong view for the business but I’m sitting at home at my desk and I’m trying to emote ambition, I’m trying to contact people by Teams and I found that most difficult and therefore, our return to the office has been really important to me because I can get to know people and we can deliver on our plans.

Is everybody back in the office?

We’re all back in the office. We have a four:one strategy and I think that works very well for us. I think what it does is that we then allow people to collect their thoughts, work from home for the day and then the younger people within the office also get to see how the more senior people operate and how they deal with difficult clients or difficult subjects.  I’m really glad to say we’re we are back in the office.

One final question, book recommendations, everybody’s got an investment bible that they turn to, is there a book that stood out to you that you think people should read that you think if you read this, you’ll get it?

That’s a very good question, my favorite book is The Reminiscences of a Stock Operator by Edwin Lefèvre and it’s the talks about a stock operator in the early 1920s called Jesse Livermore. I’ve read this book several times, I think it gives you loads of anecdotes and the thing that’s important to me is that we also need to understand history because if you understand history, particularly financial history, then you’re more likely to be able to tackle what is ahead of you and I think that’s particularly evident now with 1970s inflation. Unless you were a working adult in the United Kingdom, you do not know what inflation is, you may be starting to see what inflation is. That’s why I think history is really important and I like to speak to people who were working in the 1970s and that’s why I find this book Reminiscence of Stock Operators so good, it’s full of anecdotes and I would really recommend people reading it.

Charlie White Thomson is CEO of Saxo Markets UK.

• Further reading: Our review, rating and live trading demo of Saxo Markest UK.