For the largest buy-side institutions, there is trading in specific asset classes, and there is the broader mission to stitch the desks together into one cohesive operation
Industry sources note that Deutsche Asset Management does unique things in implementing automation across asset classes. They are pushing trading technology to the next generation — building best-in-class infrastructure, optimizing efficiency, and automating wherever possible to allow its traders to focus on more strategic transactions. Deutsche Asset Management is the 2016 Markets Choice Award winner for Best Buy-Side Trading Desk.
Juan Landazabal, global head of fixed income & FX trading for Deutsche Asset Management, cited three characteristics that capture the essence of the trading unit: deep and specialized knowledge, a ‘customer culture’ in terms of working with portfolio managers, and embracing technology as a means to increase transparency, automation and communication.
“Across our traders, everybody takes pride in knowing their market niche very well,” Landazabal told Markets Media. “We have sector specialists with deep knowledge and a lot of experience, whether it be high yield, mid-cap German stocks or FX, across our trading operations. Our market participants put out relevant trade ideas, market information, and market intelligence for the benefit of our portfolios.”
Deutsche Asset Management, a unit of Deutsche Bank AG, manages $846 billion. The firm’s key global traders are based in Frankfurt, New York and Hong Kong.
On the technology side, 2016 was a big year for IT implementation projects, said Mike Bellaro, global head of equity trading for Deutsche Asset Management. “The key to our future will be about continuing to build a scalable trading platform and using technology to our competitive advantage,” he said.
Juan Landazabal, Deutsche AM
“As an organization we have been very aggressive in embracing technology and utilizing smart order routing to optimize efficiency and preserve alpha for our end investors,” Bellaro said. “We have been attempting to build a sell-side infrastructure within the buy side. With the support of management, we have been able to bring on board key sell-side staff to our trading operation, which has allowed us to raise the bar both from a trading and sales trading perspective.”
In equities, Deutsche Asset Management has been active in shaping market structure and advocating for more and better ‘natural’ block trading. “We are building a block trading desk on the buy side to handle complex trading situations,” Bellaro said. “This will be mission-critical, as most buy-side firms have great electronic trading DNA, but do not have block trading skills. It seems to be a lost art of trading.”
In fixed income, Deutsche Asset Management is involved in Project Neptune, a cross-industry effort to boost liquidity in the notoriously illiquid credit markets. Said Bellaro, “we’ve played a pivotal role in getting Neptune put together for the distribution of sell-side axes straight to buy-side order management systems, and the definition of governance around that and what type of information needs to be sent.”