Best New Electronic Trading Platform
The story of Deutsche Bank Autobahn’s ascendancy as a top-tier electronic trading platform began about three years ago, but 2012 was arguably the year it fully emerged.
“We completed the rollout of all our ‘Smarter Liquidity’ products, and we have seen the SuperX dark pool really come into its own,” said Jose Marques, global head of equity electronic trading at Deutsche Bank. “Even though market volumes continue to fall, Deutsche Bank continues to gain market share.”
The value proposition of Autobahn, which is named after the German highway with no general speed limit, is how it allows institutional investors to punch above their weight class when they trade. As asset managers are more investing- rather than trading-oriented, they can’t deploy as many internal resources to keep up with the shortest-term market participants. Autobahn provides that lift, Marques said.
“We built ultra-low-latency systems, connectivity and market data, but the much bigger investment has been in the quantitative processes that underline trading tactics and modalities,” Marques told Markets Media. “This has allowed institutional clients to trade on a level playing field with the very best high-frequency traders. When a client comes in to Autobahn and uses Stealth, they can compete head to head with electronic market-making firms by looking at market microstructure on a microsecond level.”
Stealth is Autobahn’s liquidity-seeking algorithm that “uses advanced high-frequency alpha models to opportunistically source liquidity in both bright and dark venues,” Deutsche Bank said in a 2011 release. “It rapidly captures trading opportunities when it discovers quality liquidity.”
Marques and his team at Autobahn have since raised the bar on their algorithm suite through visualization tools, which are designed to effectively remove algos from the realm of the black box.
“Deutsche Bank’s algos are now making real trading decisions, adding value by speeding up or slowing down, so sometimes the buy-side trader can’t tell whether the algos are making an intelligent decision, or if the machine is not working,” Marques said. “In response we created a real-time set of analytics, or visualization tools, called Trade Insight, that allows the buy-side trader to monitor and look inside the brain of the machine to understand why it’s making the decision.”
“It’s a big leap forward in terms of integrating man and machine as far as working better as a team,” Marques continued. “The algo by itself is just a tool, but combined with Trade Insight, man and machine become a highly effective execution system.”
When a client comes in to Autobahn and uses Stealth, they can compete head to head with electronic market-making firms by looking at market microstructure on a microsecond level.” Jose Marques, global head of equity electronic trading at Deutsche Bank
Deutsche Bank Super X dark pool has moved up to fourth among U.S. bulge-bracket dark pools, behind Credit Suisse Crossfinder, Goldman Sachs Sigma X, and Barclays LX. About 60 million shares traded via Super X in December 2012, up from 42.5 million in December 2011, according to Rosenblatt Securities.
Autobahn is not a new product per se, but it is new to the top echelon of broker trading platforms. As Marques recounted, a rapidly changing market structure meant that standing pat wasn’t an option when Deutsche Bank hired him three years ago to run electronic trading.
“The whole paradigm shifted from the old way, with liquidity specialists and market markers upstairs, to HFT-based liquidity providers,” he said. “This was