In a sign that banks are relying on technology to gain market share in currency markets, Deutsche Bank launched an upgrade of its Autobahn foreign exchange trading system this week.
“It’s a next evolution of our FX trading platform,” said Maria Prata, head of hybrid FX sales, North America at Deutsche Bank, in an interview with Advanced Trading.
The move to develop a next generation Autobahn FX electronic trading platform was driven by three trends in currency dealing, said Prata, who cited changes in FX market structure, new regulations and the increasing sophistication of clients.
As the largest bank in FX, Deutsche Bank has so many different kinds of users in FX that it built the platform to address various client segments such as hedge funds, asset managers as well as financial institutions and corporate customers. “We’re able to tailor the features as it applies to individual requirements,” said Prata, who noted that some clients would want to deal on streaming prices while others would want to use the order-entry module.
Deustsche Bank’s technology upgrade follows a bunch of refreshes in electronic currency trading, according to the Wall Street Journal on Wednesday. Earlier this year, Citigroup, the second largest bank by market share, upgraded its systems, reports the Wall Street Journal. The Royal Bank of Scotland, UBS, and Morgan Stanley have also announced upgrades, which the Wall Street Journal characterized as an “industry wide arms race for top-fight technology.”
Through the new Autobahn FX system, customers can keep track of their positions whether they trade with Deutsche Bank through voice, electronically or through third-party platforms. “Regardless of how they execute, we want to bring all that information in one (centralized) place in a fully automated way,” said Prata, noting this gives the client greater visibility into all their business with Deutsche Bank. “If they traded with us over a third-party platform, we’ll be able to provide them with all the trading information over the Autobahn. It’s a big time save for clients,” said Prata. The new platform covers a full range of instruments, including FX spot, forwards, swaps and non-deliverable forwards as well as options. The bank also expanded its order modules to include spot orders, algo orders, forward and swap orders and contingency orders.
In terms of redesigning the technology, the platform was built to be more modular, and flexible to react to changes and deliver applications, such as new features, new products to trade, and information to comply with regulations, in a much quicker way, said Prata.
With the changes looming on the regulatory front, the bank felt it needed to give clients more flexibility, new products and new ways to interact with Deutsche Bank. The Web-based platform is also much faster in terms of speed of pricing, login times, trade affirmation, reporting and the ability to customize information for the user, said Prata.
The platform is also equipped to respond to regulatory requirements for reporting FX trades to the DTCC’s swap data repository, according to Jason Shell, head of FX trading, North America. “Reporting is going to be a large technological issue. What’s great about our product is it’s all built into it,” said Shell. In addition, the platform will need to report on the cleared products, NDFs and the FX options. “We’re going to link to the clearinghouses, and we already have built that,” said Shell.
While over 300 clients already use the new Autobahn platform, Deutsche Bank said it would continue to support its existing FX platform until clients are successfully migrated.
Citing record volumes in currency trading over the past four quarters, bank officials suggested that the new platform would contribute to its commitment to trade 1 trillion euros ($1.23 trillion) a week within the next two years.