Deutsche Bank: Best Asian Prime Broker
Deutsche Bank’s Global Markets division is vast. It employs 6,000 professionals in 40 trading rooms across the globe, 18 of which are located in cities in the Asia-Pacific region. Few prime brokers in the region can claim to have such a solid on-the-ground trading presence, giving hedge fund clients the speed of information and execution that’s critical for operational efficiency.
Deutsche’s Hedge Fund Consulting Group has 13 members globally, four of whom are based in Asia. Over the past 24 months the group has worked with more than 60 managers in Asia involved in starting up, expanding or establishing new offices in the region.
As well as supporting clients in traditional equity capital markets, Deutsche Bank’s prime brokerage business has continued to build out its capabilities across FX and fixed income. Last April saw the bank execute one of the first Chinese RMB FX option trades, a milestone in the continued evolution of China’s FX derivatives market.
Additionally, in September 2010 Deutsche Bank issued its first renminbi debt offering in Hong Kong. The bank’s dbX-Margin cross margining platform provides leverage to hedge fund managers on multiple offshore renminbi (CNH) bonds, also known as ‘dim sum’ bonds.
Its Fixed Income Prime Brokerage business, which supports client clearing for OTC swaps, has established an active intermediation business with eight clients in Asia-Pacific. Within the region FIPB offers derivatives intermediation to large macro-focused hedge funds.
One of the big trends recently has been the move toward a multi-prime model. Harvey Twomey (pictured), head of global prime finance distribution for Asia Pacific in Hong Kong, says the market moved several years ago to a more diversified approach with respect to the number of prime brokers with which hedge funds typically engage.
“Deutsche Bank was undoubtedly a significant beneficiary of that secular change in 2008-09,” Twomey says. “In recent years our market share has grown in this region as a function of our being mandated at inception by an increasing share of new fund launches, and existing clients on the platform growing in terms of assets under management.”
The seamless integration of its synthetic and physical prime brokerage products with the sizeable inventory within its ETF platform, in Twomey’s opinion, gives the bank a natural edge in terms of depth and breadth of securities available to lend in the region. He says: “The bank’s incredibly strong debt footprint allows us a cross-asset class capability that is quite unique.”
A good example of Deutsche Bank’s Asian prime brokerage expertise is India, a market littered with regulatory and legal hurdles. Its local presence there gives managers easy access to its burgeoning economy. By having a banking and trust presence in Mauritius, an offshore tax haven, and a custody business in Mumbai, Deutsche Bank can help clients efficiently move money from offshore prime brokerage accounts to onshore custody and clearing accounts.
In what was a challenging year for fund managers, Twomey says the relative winners came from the macro players and more trading-oriented strategies. “Our capital introduction team hosted 70-plus managers at our Asian Manager Forum last November, and we continue to strive to make the DB Capital Introduction offering differentiated and relevant to the needs of our clients and investor partners,” he says.
Twomey says of winning Hedgeweek’s Best Asian Prime Broker award: “We have an incredibly tightly-knit team in the region, and this sort of industry validation is extremely satisfying. We are very grateful to Hedgeweek and our clients.”
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