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Well Guys after doing reasearch I have found that the currency options you guys were talking about with Cme and brokers like IB and the otc options I was talking about are completely different. I didnt know about the ones you guys pointed out. Any way for you info and without being unfair to saxo I can tell you the following:
Saxo Bank is in fact a EU regulated bank with the same regulation requirements and reporting requirements as any other bank.
Their FX options are OTC meaning they are the counterparty however this is true for all FX trading around the world, including some of the biggest names in the financial industry. This is not new nor terrifying. It is in fact the most liquid market in the world and they enable you to open/ close your positions 24 hours a day 6 days a week.
Also I cannot agree that their system is bad. they have received countless rewards for being the best platform in the market in several areas. Please look at their website for confirmation of that ( www.saxobank.com )
Yes - Saxo will be your counterparty in the trade but they will also hedge via spot and therefore it is NOT true that any money a trader loses they will win or vice versa. The client flow they receive makes their option book much more complex than just viewing clients trade against their trade.
Well, good morning to you too, sunshine! We've been telling you this since the beginning that the options you're talking about are spot market OTC and the options we're talking about are exchange-listed.
Of course FX is the OTC market for the biggest names in the world, but neither you will be trading with them nor you will have the same weight as they do. So, yes, you're right, spot FX is the largest and most liquid market in the world, but this statement refers to the interbank market, and, guess what, that's not where you will be trading. For you, the market is as liquid as your dealer (in this case Saxo) is or wants it to be.
OK, I agree, saying that their loss is your gain and vice versa is not exactly right. And yes I know they hedge. Nevertheless, you cannot escape the fact that they control you through execution and quotes, which they handle and thus can easily screw you. I'm not saying they do that, but they sure can.
Consider another point, I presume you heard of REFCO and what happened to it. Well, their spot FX clients still haven't got their money back, while futures clients had no problems at all.
