In this ‘Q&A with’ we chat with Benedict Carter, Head of FX Spot Quant Trading, about his team’s challenges and how they have supported clients over the last year. The team was recently awarded ‘Best Bank for FX Spot’ in the Euromoney FX Awards.
Q1: What challenges has the Deutsche Bank FX Spot business faced over the past 12 months? How has Deutsche Bank been able help clients overcome these challenges?
A: Our Spot clients have faced significant macroeconomic challenges as a result of the conflict in Ukraine. In response, we have provided liquidity in large notional sizes on a consistent basis. This was welcomed by clients needing to make large portfolio changes in the highly volatile conditions. On a separate front, clients continued to face challenges in constructing outbound electronic pricing for onward consumption by their client franchises and risk managing the resultant flow. To meet these emerging needs of the clients, we have developed testing techniques that enable them to partner with us to identify information leakage, which can materially affect any passive strategy by increasing slippage from arrival price.
Q2: How has the integration of new technologies given your clients a competitive advantage?
A: FX Spot is a predominantly electronic product, and as such, technology underpins everything we do. A very important client facing development has been the inclusion of the bank’s Principal Resting Order technology (PRO) into our offering to complement traditional risk transfer pricing. PRO enables clients to interact with Deutsche Bank’s liquidity in a passive way, allowing them to earn a spread instead of paying a spread. This additionally helps us to increase the bank’s internalisation rate and reduces market impact for the entire client franchise. Towards the end of 2022, we also upgraded our client algo STARK, releasing the ability for clients to change liquidity sources and execution style on the fly, allowing them to adapt the algos behaviour in real-time based on their changing requirements.
Q3: How else has the team been able to support its Spot clients in a difficult market landscape?
A: Aside from technology, we have supported clients with thought leadership. Over the past year, we frequently published research showing theoretical foundations of how clients can optimise their execution. We also routinely support these clients in running experiments themselves directly assisting with data analysis. This kind of client interaction is of paramount importance for the bank; without it, we would not be in the position that we are today, and it will be an area of focussed growth for us and our clients in 2024.
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In this ‘Q&A with’ we chat with Benedict Carter, Head of FX Spot Quant Trading, about his team’s challenges and how they have supported clients over the last year. The team was recently awarded ‘Best Bank for FX Spot’ in the Euromoney FX Awards.
Q1: What challenges has the Deutsche Bank FX Spot business faced over the past 12 months? How has Deutsche Bank been able help clients overcome these challenges?
A: Our Spot clients have faced significant macroeconomic challenges as a result of the conflict in Ukraine. In response, we have provided liquidity in large notional sizes on a consistent basis. This was welcomed by clients needing to make large portfolio changes in the highly volatile conditions. On a separate front, clients continued to face challenges in constructing outbound electronic pricing for onward consumption by their client franchises and risk managing the resultant flow. To meet these emerging needs of the clients, we have developed testing techniques that enable them to partner with us to identify information leakage, which can materially affect any passive strategy by increasing slippage from arrival price.
Q2: How has the integration of new technologies given your clients a competitive advantage?
A: FX Spot is a predominantly electronic product, and as such, technology underpins everything we do. A very important client facing development has been the inclusion of the bank’s Principal Resting Order technology (PRO) into our offering to complement traditional risk transfer pricing. PRO enables clients to interact with Deutsche Bank’s liquidity in a passive way, allowing them to earn a spread instead of paying a spread. This additionally helps us to increase the bank’s internalisation rate and reduces market impact for the entire client franchise. Towards the end of 2022, we also upgraded our client algo STARK, releasing the ability for clients to change liquidity sources and execution style on the fly, allowing them to adapt the algos behaviour in real-time based on their changing requirements.
Q3: How else has the team been able to support its Spot clients in a difficult market landscape?
A: Aside from technology, we have supported clients with thought leadership. Over the past year, we frequently published research showing theoretical foundations of how clients can optimise their execution. We also routinely support these clients in running experiments themselves directly assisting with data analysis. This kind of client interaction is of paramount importance for the bank; without it, we would not be in the position that we are today, and it will be an area of focussed growth for us and our clients in 2024.
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