With the bulk of the foreign exchange fixing charges being settled, Deutsche Bank is facing a different allegation in relation to its forex business conduct. The German lender is set to be accused by a number of lawyers of manipulating its Autobahn electronic trading platform.
The bank is denying the allegations and is going to meet the challengers in court. In a statement the bank responded to the accusations: “We disagree with the allegations and will be defending ourselves in court.”
The news doesn’t come as a surprise: Deutsche Bank has already been charged last month for the same matter in the U.S. According to the allegations, the German lender used some sort of specially designed algorithms, which were delaying the execution of the given orders of its clients on the firm’s electronic trading platform Autobahn.
FXTM Appoints Marcelo Spina as Global Head of PartnershipsGo to article >>
US law firm Hausfeld, along with others, has already filed a case in a New York court on behalf of its client, Axiom Investment Advisors.
According to the complaint the Autobahn platform was deliberately programmed to execute client orders with delays, therefore resulting in slippage. Further on, the claims state that orders were rejected when the market was moving in an unfavorable direction for the bank.
Any justification of the claims will need substantial investigations from the authorities competent in the matter. That said, it will be very difficult to determine whether the algorithms put in place by Deutsche Bank were not put there merely to facilitate the market making capability of the German lender.
While high-frequency trading companies are known to use algorithms to front-run orders of their clients, Deutsche could have used complex mathematical equations in order to manage its risk of being at a disadvantage from the deal that it helped facilitate.