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.
There is a clear financial benefit in doing this. Deutsche has
to pay these hedge fund managers a management fee and a share of
its profits,...
