Deutsche Bank has become the fourth product manufacturer to offer its range of leveraged products via the Swissquote Bank’s Swiss Dots platform, an over-the-counter (OTC) trading platform which was launched in May 2012 in cooperation with UBS and Goldman Sachs. The online investment service allows OTC trading in more than 40,000 leveraged products, including warrants, factor certificates and mini-futures which are available exclusively via the Swissquote platform and can be traded directly with their issuers.

“Swiss Dots does not cover the whole of the Swiss market, but it provides an efficient alternative and we expect this platform to grow and become a reference for investors seeking to trade leverage products on an OTC platform,” said Stefan Armbruster (pictured), head of warrants and certificates, AWM Passive at Deutsche.

The German bank will also be able to provide a wider range of leveraged products with narrow spreads. “In Germany, we provide very narrow spreads in the retail market, even more than in institutional,” said Armbruster. “This is because that offering is retail-driven and, as an issuer, you can justify that when you have a retail flow.”

In Switzerland, leveraged products on the stock exchange are driven by a mixture of retail and institutional clients, “so an issuer using a platform such as Swiss Dots, which is driven by retail flows coming from brokers, can offer a better service as well as a more competitive pricing compared to what can be offered in the institutional market”, said Armbruster.

This is also to do with the size of trades, as retail investors are not requesting quotes on €5m tickets, according to Armbruster. “Risk management is managed differently in the retail and institutional markets, and the benefits around pricing can be passed onto the end client,” said Armbruster. “There are some concerns around Switzerland not being part of Europe and not being subjected to new regulatory guidelines such as Mifid 2, but, nevertheless, the Swiss regulator is looking very closely at developments in Europe, and we believe this is a platform with very robust transparency controls. The appeal of this platform for issuers is that it’s more cost-efficient and flexible.”

In Germany, 70% of Deutsche’s leveraged products’ are transacted on OTC platforms, such as Limit Order Xervices (Lox), which, unlike Swiss Dots, is not broker-independent, said Armbruster. The German bank does not use Borse Stuttgart’s Cats OTC platform, a decision that was based “on commercial reasons”, said Armbruster.

Deutsche’s product range will sit alongside offering from founding partners Goldman and UBS, as well as Commerzbank, which joined Swiss Dots a year ago. On average, 15,000 transactions are completed monthly on the platform. Its market share, measured in terms of all leveraged securities transactions at the Six Structured Products Exchange, was around 30% as of the end of June 2015.

Deutsche has over 257,000 live leverage products in Germany compared to 65 live long/short mini-futures in Switzerland.

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