Derivatives Weeks 2003 Awards
Deutsche Bank Wraps Up Equity...
Deutsche Bank's structured products team and its outstanding research landed it top honors in equity derivatives. Yassine Bouhara, global head of equity derivatives at Deutsche Bank in London, said investment products have been the major development this year. "We have become a synthetic asset manager," said Bouhara, referring to the SICAV the firm has set up in Luxembourg, which can issue structured equity derivatives as mutual funds.
The German bank set up a joint venture with DWS, the retail fund of arm of the Deutsche Bank Group, earlier this year and has issued EUR5 billion (USD5.9 billion) in structured products. DWS provides the asset management expertise and distribution, while Deutsche Bank brings the quantitative and structuring knowledge.
The firm's structured products unit has been at the forefront of innovation across the globe over the last 12 months. Earlier this year it became one of the first firm's to apply for a license to offer synthetic exposure to the Chinese 'A' share market. While on the other side of the Pacific, it has been expanding its U.S. structured products group.
...Wins Credit Derivatives Title
Deutsche Bank has won the credit derivatives crown for its global expertise in the instruments and its innovation in the secondary market. After several years of dominating the global market with JPMorgan, the two were clearly the only players in the top tier. Several smaller firms, such as BNP Paribas, however, proved to be exceptionally innovative in Europe and Asia.
The success of Deutsche Bank's principal finance arm, Winchester Capital Principal Finance, tipped the balance in the German bank's favor. Although Deutsche Bank was not the first to set up a separate unit to trade structured credit in the secondary market it has quickly become the benchmark. The quality of the idea is shown by the large number of firms, such as Bank of America and Merrill Lynch, that are following its lead. Rajeev Misra, global head of credit trading at Deutsche Bank in London, said Winchester now has around USD15 billion in assets.
Misra said that one of the largest growth areas for the firm has been the emerging markets. Although the bank has structured derivatives referenced to emerging market sovereigns and corporates before this market has exploded in the last year.
UBS Takes Top FX Honors
Swiss mega-house UBS has taken top honors as foreign exchange counterparty of the year. End-users and rival traders alike pointed to the firm's research, technology and Web-based pricing tools as continuing to set standards across the industry, in a year when notional volumes in the asset class exploded. John Meyer, global head of fx options at UBS in Stamford, Conn., noted that the fx derivatives market has picked up between 25%-30% year on year for 2003, with larger firms including UBS seeing the notional volumes in OTC contracts explode by as much as 50%. The notional value of all FX options stood at USD141.7 trillion at the end of 2002, according to data compiled by the Bank For International Settlements.
End users also praised the firm for its online pricing and analytical service, FX Option Trader. This offers clients transparent two-way pricing, 24 hours a day, with straight through processing of trades also offered online to certain UBS clients, said Meyer
UBS's main strength is not always seeking to offer the best margins, but rather in providing consistent pricing at the same time as maintaining high overall service and strong technological backup, explained one end-user. To ensure consistency, UBS keeps its prices within a certain range, said Meyer.
Morgan Stanley Gets Top Marks In Fixed Income
Morgan Stanley was singled out as having an exceptional product development team, especially in its dealings with pension funds. Several end users said Morgan Stanley's modelers and structurers come up with the most interesting payouts.
The firm won the most praise from pension funds and life insurance companies, which said it was able to offer the simplest and most cost-effective structures.
Sean Notley, co-head of global interest rate derivatives and government bond trading in London, said it has focused on these types of end users since the 1990's when the U.K. pension funds started to have problems paying their guaranteed annuities. It has used this experience to offer derivatives to help institutions deal with similar rule changes, such as FRS 17 in the U.K., and also for similar problems across Europe.