Deutsche Bank announced the launch of its Automated Tool for Orders Management (Atom) enhancement for Autobahn last week. Coupled with a change in Deutsche’s terms of trading whereby the bank commits to deal on its streamed option prices (except in cases of the most manifest error) without re-quote, it looks like competitiveness in electronic options trading is entering a new phase.
Pricing and trading will still be executed within Autobahn but Atom will offer complete order facilities. Option orders may be left in terms of volatility, premium, pips and percentage of notional and can be made contingent on time of day, spot level and other factors.
Deutsche claims Atom, “gives greater opportunity to trade inside the bid/offer spread and ahead of time” and “access to more trading books’ liquidity: Atom allows clients to connect more to Deutsche Bank axes”. It will also allow an order to be placed to include a mark-up over the order parameters.
The change to the terms of trading – what Deutsche calls its “deal done” pledge – is an interesting development. More often problems manifest themselves on request-for-quote (RFQ) systems where the indicated price can show very little relation to the price quoted at deal time. Deutsche’s system provides streamed prices, however, so it looks like the bank has abandoned the ability of occasional dealer intervention to stand 100% behind Autobahn pricing. Kevin Rodgers, Deutsche’s global head of FX derivatives, says: “We know how frustrating it is for our clients to have a trade cancelled at the last moment due to trade mispricing. We have the ability to ensure we can manage this risk and believe that offering clients this additional reassurance is key to building long-term relationships as we help them to manage their daily FX requirements.”
It will be interesting to see if other systems will attempt to follow the Deal done approach, but it will be difficult if full streaming is not available. Streaming rather than RFQ must be the technological way forward; in the interim, systems pricing by RFQ will probably try to compete via price and spread (and more accuracy in indicative prices), if not speed. In the meantime, Deutsche has put itself in pole position for a new award: Contrived acronym of the year. Atom indeed…
