Deutsche’s expansion into government bond markets around the globe keeps surprising market observers. This year, Deutsche has added another four countries to its coverage – Malaysia, Singapore, Indonesia and Taiwan – and is now active in 22 markets.
And not only is Deutsche pushing its presence into new markets, it is also deepening its position in existing markets. The decision that a strong presence in the Bund market, or even in the European government market, is not sufficient to be the leading government bond trader has clearly paid off. Deutsche was ranked number one government bond trading house by peer trading desks in Euromoney’s bond trading poll this May, well ahead of competitors ABN Amro, Morgan Stanley Dean Witter and JP Morgan. When results were weighted according to the representation of national markets in the Salomon Smith Barney World Government Bond Index, so as to acknowledge strong performance in the larger markets, Deutsche again led the poll convincingly ahead of its closest competitor, Nomura.
Deutsche can point to continuously improving its ranking within the leading government bond trading houses. On top of a tremendous platform in Europe, Deutsche has developed a strong position in the US and, over the last four years, in Japan. This year Deutsche has made itself noticed in the gilts markets, which Wolfgang Matis, global head of fixed income trading, expects to show up strongly in next year’s trading poll.
“Another major factor that consistently put Deutsche into the top position, is that we understood very early investors’ shift towards a more balanced, relative value approach in risk taking, away from the traditional directional play that dominated the bond market in the past,” says Matis.
In response to this shift, Deutsche set up a quantitative orientated advisory group. The high standard of advice contributes hugely to the bank’s success in the liquid market. And the team will be able to focus even more on their advisory role, as price requests will be delivered electronically, thus freeing up resources.
Deutsche is clearly at the forefront of seizing and creating opportunities in e-commerce. It will further encourage the provision of liquidity on the internet. The success in shifting to e-distribution is reflected by the volumes delivered through Autobahn, the bank’s in-house electronic trading system. Over the last year, volumes increased from a monthly average of e18 billion to e35 billion, and represent 25% of total turnover.
Another step to extend and improve electronic services to its clients has been taken by founding a multi-dealer system for European government bonds, BondClick.com. The site will be run by a consortium of six banks, which intend to establish a European version of Tradeweb – the successful American trading platform for US treasuries.
