Deutsche Bank launches next-generation Autobahn
Deutsche Bank has launched the next generation of its Autobahn – the FX platform that revolutionized electronic trading in the past decade – which it says will redefine the way trading is conducted with its clients.
The new version will bring together a range of FX services, from pre- and post-trade workflow, execution, analytics and market data, to market research and trader commentary via the Autobahn app market. This market will initially offer a selection of more than 160 apps to suit the specific needs of individual clients, whether that is for prime broker clients, or real-money investors and corporations with extensive workflow requirements.
“You can now build your own Autobahn for the functionality that you want as a client,” says Zar Amrolia, Deutsche Bank’s global head of foreign exchange. “It’s a very modular approach; a bespoke Autobahn. These days, you just can’t have a one-size-fits-all offering, you have to go bespoke.”
The app-based electronic distribution system is the first of its kind at the institutional end of the financial services industry, and has been designed as such to give flexibility around products offered and functionality to suit a changing regulatory environment, where there is an increasing need for automated reporting into a swap data repository.
Furthermore, as regulations dictate new products or services, new apps can easily be incorporated into the existing infrastructure.
“One of the reasons why we did that is because of the changes in market structure, and our belief that clients are going to need to turn around their post-trade operations a lot quicker given some of the regulations,” says Ian O’Flaherty, global head of FX e-sales. “This will help them do it.”
The key innovation of this new generation single-dealer platform (SDP) is the creation of an integrated trade blotter, which records a client’s trades across all types of execution formats in real time. Such a level of granularity, available in real time, has not been available before, which Deutsche believes will foster a more effective dialogue between the client and the salesperson.
“We now have the medium, whereby the client and the salesperson can see all the trades that they’ve executed electronically, all the trades that they’ve executed by voice and all the trades they’ve executed by third-party platforms with Deutsche Bank,” says Amrolia. “That’s an incredibly powerful value proposition.”
Previously, such analytics would have taken as long as a day to extract from three separate databases, which for active clients would already be out of date. Moreover, says Deutsche Bank, it signals the morphing of two functions into a new hybrid sales force, which brings together the skills of e-trading, voice trading, market intelligence and value-add solutions.
The first generation of SDPs were more siloed and less combatable. On one side, the electronic sales people, who were technology literate, were primarily tasked with rolling out the platform to clients and developing better functionality. The voice salesperson, conversely, offered market intelligence and valued-added hedging ideas to clients. Now these two functions are being combined.
“This is the first step towards where a single salesperson will be entirely comfortable talking to clients about their risk and their execution method, and be able to react when a client says ‘let’s create an algorithm, or an API’,” says O’Flaherty. “The salesperson of the future will have no problem talking electronic, voice, risk and value added.”
The new Autobahn also attempts to bring about a more universal adoption of SDPs by clients too. Use of first-generation SDPs was typically more prevalent among bank and hedge fund clients, and less so for real-money and corporate customers.
This was because the one-size-fits-all model did not always match the fragmented workflow requirements of clients – for instance, fund managers who trade multiple accounts, or multinational corporate with offshore subsidiaries.
“Corporates and real money care more about their backend processes, the post-trade functionality than they do about the liquidity function, or how the user interface looks,” says Amrolia. “We’ve invested heavily in our post-trade functionality, and making that available to clients that want to see it.”
For instance, with the new integrated trade-blotter function, a multinational corporation with subsidiaries in Asia that wants to see what its net exposure is at a global level, or at an Asia level, can create filters to view those positions.
Real-money clients can customize the trade blotter to suit their requirements. It will allow them to book trades into those various accounts, and then create reports by various criteria, such as by currency, by voice or by electronic, roll spot trades to multiple forward dates and aggregate trade tickets with the press of a button.
While the existing blotter functionality applies to cash trades, Deutsche will soon roll out an application for options and structured products.
One of the shortcomings of the first-generation platforms was that order systems were based on a set of basic templates that were difficult to modify when a client requested a more specific order execution. Deutsche Bank has attempted to create an order system that takes account of every possible scenario based upon the two basic precepts of take profit and stop loss.
“We’ve created a very flexible order module,” says O’Flaherty. “We researched as many different trading scenarios that clients may want to leave an order for as possible and it covers all of them.”
It has incorporated “a logic” into the app, which it believes will circumvent human error and prevent a client doing things Autobahn knows the client does not want to do, based on its initial order. It also adds in functionality such as loop orders, whereby if a client buys at one level, it then automatically sells at another level, and then the process repeats itself. This order type is designed with gamma traders in the option market in mind.
The new order system also provides a suite of algorithms, which will initially include 10 different algos, to cover various execution preferences, with email and text alerts confirming execution.
While enhancing the user experience, and adding new functionality for cash products, Deutsche Bank has responded to an increasing client demand for Asian non-deliverable swaps, which it will stream from today, out to a one-year maturity, and then out to 10-years on request.
It is clear that trading in Asian currencies continues to grow, but the demand for funding trades via the non-deliverable swaps market has risen sharply in recent years too. Traditionally, this has been a voice market and was often difficult to price.
More than 300 of Deutsche’s clients have taken part in the beta testing of the platform, and the bank hopes to have migrate its more than 4,000 clients onto the revamped Autobahn by year-end. The App store will be available to all clients from Sunday.
While the app store maybe synonymous with mobile technology, only the FX research, trader commentary and analytics will be available on mobile devices. Orders and execution must be conducted from designated IP addresses.