Deutsche Bank offers FX swap order service on Autobahn
Deutsche Bank, the No.1 FX bank, has started offering clients FX forwards order functionality on its electronic platform Autobahn. Adam Vos, its global head of forwards, believes it is the first bank to offer such a service on a single-dealer platform.
The service, called swap orders, will allow Deutsche customers to leave orders expressed in FX swap points, in the same way that spot orders are left at a specific spot rate. The orders can be adjusted for movements in the spot rate, and they can drop out at certain times as determined by the customer. The bank has 25 forwards traders globally who will monitor the orders on the Autobahn platform during their respective timezones.
The only other platform to offer a similar service is the interdealer platform Reuters Matching, which relies on there being an opposing trade to match the client interest. The main difference with the offering by Deutsche is that it offers 24-hour streaming liquidity.
“We have a commitment to provide liquidity around the clock, and clients will be able to leave orders to access that liquidity,” Vos tells EuromoneyFXNews.
Deutsche will also offer its ‘inside fill’ functionality – which exists in the spot market – to its swap orders service, allowing customers to trade inside the bid-offer spread of the market with any of Deutsche’s forward traders on the platform, if they have opposing interest.
The addition of functionality for clients to leave FX forward orders is part of a process to drive more volume on to the single-dealer platform away from voice trading broker platforms and other independent multi-dealer venues.
The FX forwards market has lagged the migration from these venues in the spot markets – traditionally dominated by Deutsche and Barclays Capital – and the options market, which has also seen Credit Suisse gain market share with its Merlin platform.
“If you look at how the spot and derivatives markets have evolved, the use of single-dealer platforms to access bank liquidity has seen a shift out of brokers and other execution platforms to the liquidity providers,” says Vos. “Swap markets have been slow in moving that way. This added functionality will speed up that process.”
The likely target market will be at the sophisticated end of the spectrum – those that trade FX forwards in high volumes, such as banks, hedge funds and real-money clients.
Vos says that as more features are added to the service, it will be of increasing relevance to corporate clients, particularly if they have target hedging levels on future cash flows.