• wblogo
  • wblogo
  • wblogo

Deutsche to register early as systematic internaliser

Chris Hamblin, London, Editor, 12 October 2017

articleimage

With an eye on making regulatory reporting on behalf of clients a distinct service, Deutsche Bank has announced its intention to register as a systematic internaliser in accordance with the European Union's second Markets in Financial Instruments Directive as soon as possible on 3rd January.

Under MiFID II, banks will be obliged to tell their regulators about their bonds and fixed income trades after they perform them; this is a new requirement. 'Market makers' are banks that execute a certain number of trades over a threshold that is set out in MiFID II and banks that perform trades in bonds on this scale are making markets. Both market makers and brokers buy and sell bonds on behalf of clients; the difference between them is that a market maker buys bonds and holds them in reserve so that it always has some to give clients whenever they ring up and ask for them.

Mario Muth, the head of fixed-income electronic sales at Deutsche Bank, said in a press release that the bank referred to Compliance Matters: “By registering early as a systematic internaliser, we will be in a position to help clients by taking on post-trade reporting duties as soon as the obligations come into force. For clients, this removes one of the challenges to comply with the new regulation and creates certainty when trading with Deutsche Bank.”

The clients are not HNW retail clients but asset management firms such as Blackrock, Fidelity and Pimco that act on their behalf. If a bank is a systematic internaliser it can take responsibility for reporting trades to the regulators as a service to those clients, who will benefit from being relieved of the worrisome task. Deustche Bank has not registered yet as it cannot do so until January.

DB seems to have touched off a trend. Shortly after it made its announcement, UBS said that it was also doing it. In the equity markets, Deutsche's new fixed-income trading platform will have to compete with venues run by JPMorgan, Virtu Financial Inc and Sun Trading International.

Latest Comment and Analysis

Latest News

Award Winners

Most Read

More Stories

Latest Poll