Deutsche Bank Starts Hong Kong Dark Pool as Demand Increases
Deutsche Bank Starts Hong Kong Dark Pool as Demand Increases
Hannelore Foerster/Bloomberg
Deutsche Bank joins U.S. rival Citigroup Inc. in offering services in Asia for clients seeking trading venues that don’t display quotes publicly.
Deutsche Bank joins U.S. rival Citigroup Inc. in offering services in Asia for clients seeking trading venues that don’t display quotes publicly. Photographer: Hannelore Foerster/Bloomberg
Deutsche Bank AG started dark pool trading in Hong Kong today, the German lender’s first such platform in Asia, to meet growing demand in the region.
After Hong Kong, the bank plans to offer off-exchange trading in Australia, Japan and Singapore, said Mark Davis, head of equity and equity-linked execution for the Asia-Pacific region at Deutsche Bank. The timing of the introduction in those markets is still being confirmed, he said.
Demand for dark pools, which don’t display quotes publicly, has grown more slowly in Asia than in the U.S. and Europe and Ronald Arculli, chairman of Hong Kong’s stock exchange, has criticized the platforms for lack of transparency. New York- based Citigroup Inc. said last week it plans to start dark pool services in Singapore next year after its off-exchange trading in Australia increased to a record in June.
Dark pools provide “an additional source of liquidity for us,” said Lee King Fuei, Singapore-based fund manager at Schroders Plc, adding that his firm trades through a number of the platforms in Asia. “The cost of transaction using dark pools is much lower.”
Deutsche Bank’s Hong Kong dark pool follows the introduction of the service to clients in the U.S. in March and in Europe in April, according to Mark Bennewith, a Singapore- based spokesman. The lender’s shares gained 1.2 percent to 51.63 euros as of 11:53 a.m. in Frankfurt.
Off-Exchange Trading
“Execution in Asia continues to develop, and as part of this evolution, electronic trading volumes have been increasing,” Deutsche Bank’s Davis said in an interview. “Our clients have been asking for tools that will give them access to greater liquidity, reduce market impact and improve trading execution efficiency.”
The portion of trades handled off public exchanges in the Asia-Pacific region is forecast to rise to 3 percent of transactions within three years from 1 percent last year, John Feng, New York-based managing director of research company Greenwich Associates, said on March 9. By contrast, trades through dark pools last year in the U.S. accounted for 10 percent of the total, and 4 percent in Europe, he estimates.
The growth of such networks in Asia has lagged behind the U.S. and Europe because regulators in Asia have been slow to accept the systems, according to Feng.
Financial markets face a “systemic risk” from alternative trading platforms, Arculli, chairman of Hong Kong Exchanges & Clearing Ltd., said on Dec. 9. Deutsche Bank’s Bennewith declined to comment on Arculli’s concerns.
To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.
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