Saxo Bank Shows Trading Volume is Dropping

Alan Penny

13 December 2019

3 min read

saxo bank

  • Saxo, a major brokerage for both retail and institutions
  • Volume dropping across multiple assets

Saxo Bank, the massive Danish international, has shown a disturbing trend in the Forex markets: dropping volumes. They had just reported its monthly FX volume, the worst in four years. While winter is typically hard for brokers to stir up more volume, Saxo has shown just how bad things have gotten and what is starting to become a trend.

The announcement

Saxo reported that during November, they posted a month on month drop in volume across all of their assets including Forex, commodities, fixed income, and even equities.

perhaps the retail trader is starting to go by the wayside

This suggests that perhaps the retail trader is starting to go by the wayside, and that could even back up the idea of stock buybacks being the main driver of equities, as corporations back more of their shares using almost free money from central banks.

FX trading volume drops nearly 25 per cent

FX trading recorded a volume of $107.4 billion for the month of November. During the month of October, $141 billion was traded through Saxo in the foreign exchange, with a decrease of almost 25%. The volume for the month of November was the lowest for the year, which was worse than the previously worst month of the year in April, when $124.3 billion had been traded. The number in November was so poor that it has the lowest figure that Saxo had posted since early 2016.

Commodities experienced a significant drop at Saxo as well. Month on month, commodities went from $33.7 billion in October to a reading of $32.1 billion in November, losing almost 5%. The daily volume was roughly $1.5 billion, but what’s more concerning for Saxo and the brokerage business is that volume was 34% lower this November than last.

Fixed income assets lose 27% of volume

Equities and fixed income trading also fell significantly during November, with fixed income assets losing roughly 27% of volume with $8.4 billion traded. During the month of October, fixed income had traded $500 million on a daily basis, but the month of November had been cut all the way down to $400 million per day. Equities dropped from $63 billion in the month of October to $44 billion in November, losing roughly 29% of volume.

The main take away

There are so many moving pieces out there with the US/China trade war, global economic slowdown, Brexit, and so on driving markets back and forth, making it almost impossible for the average retail trader to get excited.

The phrase “money on the sidelines” is probably very poignant at this point in time as it seems that the average trader is simply stepping away. What’s even more interesting is that Saxo serves a lot of institutional clients as well, and they seem to be stepping to the sidelines also.

Volumes on stock exchanges around the world have been lower, similar to what have been seen in commodity markets and cryptocurrencies. Because of this, lack of liquidity could become an issue at times in the markets which could cause even further erratic movement. This tends to be a vicious cycle, feeding itself on lack of stability when it comes to news flow.

Written By
Alan Penny

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