Saxo Bank pleased to announce that beginning 16 June 2008 Saxo Bank will introduce new, dynamic pricing for FX spot currency pairs called Forex Price Bands. This new pricing system will enable you to trade off live, executable prices in greater amounts for most currency pairs. In addition, Saxo Bank is reducing its target spread across many currency pairs as part of the rollout of Forex Price Bands.

A Forex Price Band (FX Band) is a volume interval with a specified spread for each designated volume amount. Depending on the amount and frequency traded, you will encounter different, more dynamic spreads. The introduction of FX Bands not only gives you the transparency you demand, but also delivers the most efficient and competitive price for the amount traded.
For example, we currently stream a target spread of 2 pips in EURUSD for amounts up to 35 million EUR. Beyond this amount, trading is conducted on a Request for Quote (RFQ) basis.

FX Bands will allow you to receive live, executable prices beyond the current live prices limit, for example up to a maximum of 70 million for EURUSD. Similar increases have been set for most of the other major currency pairs. The amount entered on the trading ticket will determine the spread. Depending on the liquidity of the currency pair and the number of FX Bands, generally the smaller the trade amount, the tighter the spread.
Each currency pair will have an applicable FX Band setup. The number of bands per currency pair will depend on the liquidity of the underlying Forex Cross. For example please view the EURUSD default bands below

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For amounts in excess of the upper band limit, trading will take place on a RFQ basis.
To view FX Bands for all currency pairs, please refer to the Trading Conditions page under the Account tab within your SaxoTrader platform. Please note that this information is only viewable once your ID/Account has been setup for FX Bands after 16 June 2008.


Band Jumping

The concept of Band Jumping will accompany the new FX Bands pricing system. This allows you to continue receiving live streaming quotes as you continue to trade over a short period of time. This is called the reload period. As stated earlier, the amount specified determines the spread, as you continue to trade you will be subject to the thresholds between the different price bands.
Each time you trade a reload period is imposed. The reload time is 20 seconds. If you proceed to trade again within this 20 second reload time and the new trade amount plus the trade amount for the trade already executed exceeds the band threshold, then you will jump into a higher price band for the time remaining in the reload period. Each time a trade is executed, the reload period is reset and the spread reflects the amounts just traded. Whenever an additional trade is placed within the reload time, the trade amounts are combined and thus determine the band in which the next trade will be executed. When the reload time expires, then the FX Bands are reset to the band reflecting the amount entered on the trade ticket.
The purpose of this process is to allow you to continue trading on live, executable prices for instant trading as long as the accumulated trade amount within the reload time remains under the upper limit for each currency pair. The upper limit for EURUSD is 70 million. A buy of 10 million and a sell of 5 million within the reload period, counts as a total trade volume of 15 million.
You will not be required to download any new software for the changes to come into effect. Most clients will not even notice a change in the pricing. If you currently trade in higher amounts above the maximum auto-execute limits on an RFQ basis you will now notice green streaming prices when the bands are launched 16 June 2008 up to the new increased limits.

Order Handling

Orders will also be subject to the Forex Bands and the jumping process. A single order at a specified limit or stop price will be executed in the relevant band according to the amount specified on the order. Multiple orders for small amounts at the same limit or stop price will also be subject to the bands and will not be executed simultaneously and independent of each other. Therefore you will not be able to work around the bands by placing multiple smaller orders instead of one order for the total amount.
It is therefore important to note that if you have placed multiple orders at same rate you may not receive a fill for all orders, and the rate of those that are filled can vary as some of the orders may be subject to a band jump.

Forex Spread Changes

With the upcoming release of the FX Bands, Saxo Bank will be lowering the spreads across a range of FX spot crosses. The technology delivered by the new dynamic pricing system allows Saxo Bank to offer more competitive target spreads benefitting our clients.
In accordance with the band structure please find below the changes to our FX spot target rates in the new Band 1.