Saxo Bank bills its product as the first major brokerage-run social trading platform in the business.
Dow Jones/Copenhagen
Nikolay Budarin is looking to make more than money with his trading activities. He’s eager to make a name for himself.
The 41-year-old designer from London recently signed up to a test version of Saxo Bank’s tradingfloor.com. The product from the Danish brokerage aims to be one answer for investing in the social-media age, enabling clients such as Budarin to amass a stable of followers who can “like” his strategy and even mimic his trades in real time.
“If you raise your profile on the trading floor I think it is quite possible to get some career advancement,” Budarin said in a recent interview. “A bank may call a trader and ask him to manage a portfolio for them.”
Budarin will be able to put his theory to the ultimate test in April, when Saxo’s site is officially launched. While many smaller outfits have been pioneering social trading methods, Saxo bills its product as the first major brokerage-run social trading platform in the business.
“The vision is to make this the Facebook of traders,” Rune Bech, Saxo’s chief digital officer, said in a recent interview. The front page of the site lists investors with information such as recent trades and return on investment, while “home pages” provide performance charts, data–such as most traded instruments–and a photograph for those who wish to add one.
“My dream is a million users within four years,” Bech said. Aimed largely at new clients, the product is made for younger fortune seekers who grew up with Twitter and are more apt to take financial advice from people they see as peers than from paid professionals.
Bech said the bank will soon launch “lots of sexy new features” such as an option to set automatic orders that track the trades of another client.
Of course, Saxo isn’t just trying to be trendy. It earns money on the “spread” between traders’ bid and ask prices, so the more traders it can attract, the more money it makes.
Saxo’s tradingfloor.com was developed under Bech in an 18-month development period during which many of its bigger peers in the financial world ran away from what social media has to offer. In the wake of the UK’s Libor scandal, for instance, JP Morgan Chase, Deutsche Bank and UBS have banned traders from using multi-dealer chat functions that could open the door to market manipulation.
There are reasons to be cautious. Visitors to the site should be aware that publicizing trades, or advocating certain trades, could be used by some traders to pump up prices. The UK Financial Conduct Authority will look into “copy trading”–where online trading services allow people to “copy” the strategies of other traders–and may request that trading platform providers class themselves as investment managers, the Financial Times reported earlier. Saxo Bank expects more regulation when it comes to social trading.
“Saxo Bank is regulated in Denmark (rather than the UK),” Bech said. “But if regulators ask for more, we will implement [the new rules] as we want tradingfloor.com to be the best and most serious social trading platform in the world.” Saxo adds that all actions on tradingfloor.com are transparent and that secret chat rooms are nonexistent.
Potential users, such as 33-year-old Lars Bjerre Jorgensen, see the lack of privacy as an advantage. “I look at what others are doing and it has opened my mind to new areas such as stocks in other countries that I didn’t know about,” the airline risk manager said. “Maybe there is some potential to get famous.”
To date, 800 of Saxo’s existing clients have signed on to participate in tradingfloor.com, representing a fraction of the “tens of thousands” of customers who use the firm’s more traditional trading products. But Bech sees potential. “Top traders share in order to get feedback,” he said. Becoming a favorite in social trading, he reckons, could eventually equate to “being on the top charts for a pop star”.
For many, however, much of the communication taking place promises to be nothing more than banal trader talk. One user, named Michael O’Neill, wrote in recent post: “USDCAD upside gains could be hard to achieve above 1.225, ahead of the payroll reports and numerous central bank interest rate decisions.”
A customer using the name “fxtime” replied, saying “well my short order triggered on the break of that weekly low and have halved the trade at 1.10000...”
The stream belonging to Budarin, who goes by the name of “emptypockets” on the site, is populated by details of 59 different trades he has made, buying and selling what are known as indexed CDFs, or contracts for difference. But he doesn’t feel a lot of explanation is needed when traders are putting their money where their mouths are.