A customer of its own customers

Three powerful and transforming currents swirling through wholesale financial services – banks’ increased appetite for proprietary trading, the growth of hedge funds and the trend to outsourcing – flowed together at a compelling presentation by Deutsche Bank at Euromoney’s annual forex forum at the London Hilton last month.

Deutsche Bank director Steffen Orben described how the bank allocates capital to what it calls a non-franchise trading group. Instead of employing large numbers of its own proprietary traders, Deutsche sees a portfolio benefit in allocating credit lines to hedge fund managers and allowing them to trade the markets on its behalf.