Deutsche Bank has been at the top of the FX industry for more than eight years following its win in this year’s Euromoney FX survey. But its position has come under threat in recent years as the other big guns in FX have sought to close the gap with what has essentially been a combination of technological aptitude and aggressive market making.
But Deutsche has just moved up a gear, with the relaunch of its ground-breaking electronic trading platform, Autobahn. Autobahn was introduced to the FX markets just over a decade ago, took the market by storm and became a market leader.
The new version, in an age when almost all work processes in the FX markets are automated, is designed around providing a range of components to fit the particular needs of individual clients. It includes services for pre-trade and post-trade workflow, execution, analytics and market data, to market research and trader commentary via the Autobahn app market.
This market will initially offer a selection of more than 160 apps to suit the specific needs of individual clients, whether that is for prime-broker clients, or real-money investors and corporations with extensive workflow requirements.
Go bespoke
"You can now build your own Autobahn for the functionality that you want as a client," says Zar Amrolia, Deutsche’s global head of foreign exchange. "It’s a very modular approach; a bespoke Autobahn. These days, you just can’t have a one-size-fits-all offering, you have to go bespoke."
The app-based electronic distribution system is the first of its kind at the institutional end of the financial services industry, and has been designed as such to give flexibility around products offered and functionality to suit a changing regulatory environment, where there is an increasing need for automated reporting.
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| Zar Amrolia, Deutsche’s global head of foreign exchange |
Furthermore, as regulations dictate new products or services, new apps can easily be incorporated into the existing infrastructure.
"One of the reasons why we did that is because of the changes in market structure, and our belief that clients are going to need to turn around their post-trade operations a lot quicker given some of the regulations," says Ian O’Flaherty, global head of FX e-sales. "This will help them do it."
The key innovation of this new-generation single-dealer platform (SDP) is the creation of an integrated trade blotter, which records a client’s trades across all types of execution formats in real time. Such a level of granularity, available in real time, has not been available before. Deutsche believes it will foster a more informed dialogue between the client and the salesperson.
"We now have the medium whereby the client and the salesperson can see all the trades that they’ve executed electronically, all the trades that they’ve executed by voice and all the trades they’ve executed by third-party platforms with Deutsche," says Amrolia. "That’s an incredibly powerful value proposition."
Previously, such analytics would have taken as long as a day to extract from three separate databases, which for active clients would already be out of date. Moreover, says Deutsche, it signals the morphing of two functions into a new hybrid sales force, which brings together the skills of e-trading, voice trading, market intelligence and value-add solutions.
The first generation of SDPs were more siloed and less compatible. On one side, the electronic sales people, who were technology literate, were primarily tasked with rolling out the platform to clients and developing better functionality. The voice salesperson, conversely, offered market intelligence and valued-added hedging ideas to clients. Now these two functions are being combined.
"This is the first step towards where a single salesperson will be entirely comfortable talking to clients about their risk and their execution method, and be able to react when a client says ‘let’s create an algorithm, or an API’," says O’Flaherty. "The salesperson of the future will have no problem talking electronic, voice, risk and value added."
The new Autobahn also attempts to bring about a more universal adoption of SDPs by clients. Use of first-generation SDPs was typically more prevalent among bank and hedge fund clients, and less so for real-money and corporate customers.
This was because the one-size-fits-all model did not always match the fragmented workflow requirements of clients – for instance, fund managers who trade multiple accounts, or multinational corporates with offshore subsidiaries.
Back office
"Corporates and real money care more about their back-end processes, the post-trade functionality, than they do about the liquidity function, or how the user interface looks," says Amrolia. "We’ve invested heavily in our post-trade functionality, and making that available to clients that want to see it."
Real-money clients can customize the trade blotter to suit their requirements. It will enable them to book trades into those various accounts, and then create reports by various criteria, such as by currency, by voice or by electronic, roll spot trades to multiple forward dates and aggregate trade tickets with the press of a button.
The existing blotter functionality applies to cash trades but Deutsche will soon roll out an application for options and structured products.
This story first appeared on EuromoneyFXNews.