Best Banks Awards: Deutsche Bank

The way clients interact with their dealers has seen a fundamental shift over the past five years, and it isn’t just more transparency and control that customers expect from banks today. Credit, a state-of-the art e-commerce offering and cutting-edge liquidity solutions are simply not enough to make relationships sticky in today’s world.

“Clients are asking for more control of their trading. They want us to provide pre-trade colour, analytic tools [and] better algos, as well as workflow solutions,” says Russell LaScala, co-head of global FX at Deutsche Bank.

“It has become the new normal to invest in the futurisation of our products and services – not just for our own use, but to also export these tools to our clients,” he adds.

Deutsche Bank has been voted the winner of the Best Bank for FX in the Eurozone category at the 2018 FX Week Best Banks Awards, which LaScala attributes to the dealer’s efforts to mirror the needs of its core client base in the region.

One area where banks have seen significant pick-up in interest is algorithmic execution, for which dealers report a surge in popularity.

LaScala says its “client algo execution has been an enormous growth area for Deutsche Bank in the past year. As a result of the availability of analytics tools, algos now play an even bigger part in the relationship than just execution. Algos have become so important [that] providers need to demonstrate a superior algo suite before they can engage with clients.”

Clients are asking for more control of their trading. They want us to provide pre-trade colour, analytic tools [and] better algos, as well as workflow solutions

Russell LaScala, Deutsche Bank

This is a big flip from previous years when the algo business was just a small slice of overall flows for banks, but it is in line with the prevailing relationship dynamics, which dictate that dealers make a big push in spot in the hope that clients will take more complex products from them as well.

LaScala attributes the growth of algo execution to the largely placid market environment, with few dislocations in price that require clients to ask for a risk-transfer price. Secondly, with reporting requirements under Mifid II, electronic and automated execution is less burdensome than otherwise. And, thirdly, there is the need for control.

“There has been a noticeable shift in that clients no longer want just a time-weighted average price algo with an execution report; they want to control the execution process from start to finish and in real time,” says LaScala.

Deutsche Bank is launching a new first-of-its-kind algo that lets clients work orders directly in its franchise liquidity pool. The algo is designed to trade at the natural pace of market activity, while limiting spread-crossing costs and market impact, and a variety of proprietary controls are configurable to reduce adverse selection on fills.

To accommodate the breadth of client requirements that include workflow solutions, Deutsche Bank has reorganised its internal structure, so David Leigh is the head of all FX products and the workflow business is led by Maria Prata.

MarketColour and relationships

The bank has also launched its MarketColour tool, a quantitative pre-trade analytics service for customers, as well as continuing to invest in the workflow business. As clients face increasing cost pressures, they are looking to work their way down the cost chain and make efficiencies where they can.

“We have seen over the last few years [that] the relationship between liquidity providers and clients has changed. Today, it is less about actual execution, and more about additional tools and workflows throughout the trade lifecycle,” says LaScala.

Customers are also looking to optimise their counterparty relationships, moving away from the days of adding new liquidity providers on an ongoing basis. Instead, they want fewer, but deeper relationships.

This gives an opportunity to established providers who are offering more than just liquidity to their clients, including pre- and post-trade solutions, ranging from analytical tools to algos and payments, and who also have the ability to leverage the breadth of their client franchises.

For Deutsche Bank, currencies will remain a key area of business, with no signs of the dealer’s ambitions souring in the space.

“FX remains one of Deutsche Bank’s top businesses and offers an alternative to the increasing dominance of US banks. Deutsche Bank will continue to focus on delivering a full FX solution to our customers with cutting-edge functionality and service,” LaScala says.

Interviews with the 2018 FX Week Best Banks Awards winners

JP Morgan

Best Bank Overall for Foreign Exchange Dealing

Best Bank for FX for Banks

Best Bank for FX for Investors

Best Bank for Spot FX

Best Bank for FX Forwards

Best Bank for EUR/USD

Best Bank for USD/JPY

Best Bank for EUR/JPY

Best Bank for E-Trading

Citi

Best Bank for FX for Corporates

Best Bank for Currency Options

Best Bank for Structured Products

Best Bank for FX Prime Brokerage

Best Bank for FX in North America

Best Bank for Emerging European, Middle Eastern and African Currencies

Best Bank for FX Research and Strategy

HSBC

Best Bank for FX in Asia-Pacific

Best Bank for Renminbi

Best Bank for Emerging Asian Currencies

Deutsche Bank

Best Bank for FX in the Eurozone

ANZ

Best Bank for Australian Dollar

Barclays

Best Bank for GBP/USD

Best Bank for EUR/GBP

Best Bank for FX in London

UBS

Best Bank for Swiss Franc

NatWest Markets

Best Bank for FX Post-Trade Services

360T

Best Professional e-Trading Venue

Best Vendor for Dealing Technology

Refinitiv

Best Broker for Forward FX

Best Broker for Emerging Markets FX

LCH

Best FX Clearing House

EBS

Best Broker for Spot FX

Bloomberg

Best Market Data Provider for FX

Danske Bank

Best Bank for Scandinavian Currencies

Standard Bank

Best Bank for South African Rand

Best Bank for African Currencies excluding ZAR

BMO Capital Markets

Best Bank for Canadian Dollar

Banco Santander

Best Bank for Emerging Latin American Currencies

kACE

Best Vendor for Risk Management/Options Pricing Software

Saxo Bank

Best Prime-of-Prime House

BGC (no interview)

Best Broker for Currency Options