Deutsche launches standardised forex index contracts

Deutsche Bank has launched standardised foreign exchange index contracts that track the performance of one currency against a basket of other currencies.

The products, called Deutsche Bank FX Indices (DBFXIs), are based on central bank trade-weighted currency indexes (TWIs), with each currency within a basket weighted according to its importance in trade with a specific country.

“TWIs for key currencies have only been available on a bespoke, over-the-counter basis, so creating standardised tradable foreign exchange index contracts seemed the logical step forward,” said Rob Mandeno, Deutsche Bank’s global head of foreign exchange forwards trading.

Torquil Wheatley, head of Deutsche Bank’s foreign exchange index group, commented: “In the past any profit or loss on basket trades was returned in currencies other than the base currency. What’s unique about DBFXIs is that any realised gain is simpler to understand and predict – if the index moves from 100 to 101, then you know you’ve made 1% on your chosen currency.”

Deutsche Bank said DBFXIs typically include five or six currencies per basket, and are available on a range of currencies, including the US dollar, the euro, the yen and sterling.