Deutsche Bank is launching a New York desk that will trade packages of risks made up of swaps, mortgages, agencies and government bonds. Jon Kinol, managing director of North American over-the-counter derivatives in New York, said creating the cross-rates desk is a response to burgeoning customer demand over the last six months to trade across these asset classes. "As flow fixed income products continue to converge, this desk will give us the ability to trade and risk manage the aggregate risk in one book, which will help liquidity and minimize trading costs to our clients," he said.
Currently, clients have to call separate desks to trade each sector, but the new desk will give them one point of call. The desk is aimed at clients active in the fixed income markets, and will allow them to reallocate their positions more efficiently. "It's just a more streamlined way of trading. Clients have one price for the package of risk rather than separate prices," Kinol said.
Todd Knezovik, senior swaps trader in New York, and one outside hire soon to be announced, will man the desk. The desk, which will have its own risk book, is a joint venture between the OTC derivatives and fixed income departments. Kinol added that while other banks have started looking into setting up cross-rates desks, he believes Deutsche Bank is out in front in terms of establishing the trading aspect.
