A total return swap typically allows an investor exposure to the returns of an underlying asset without directly needing to own/trade it. For investors without direct access to DSE, this provides an alternative to having to go through a local broker/dealer. Overall – this lowers the barrier to entry.
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2 Responses to Deutsche Bank synthetic equity platform to access DSE
It’s as simple as a Total Return Swap (TRS) derivative contract, the underlying being any one of a list of the larger, liquid stocks on DSE. Without actually transacting the stock, you can be exposed to the economic benefit (and harm) of owning the stock via a swap contract written with DB … as the name says, it is synthetically replicating the returns of an equity.
The goal would be to reach investors who want the diversification benefit of including DSE in their portfolio but want the ease/efficiency of going through DB rather than having to physically open up a brokerage account with a DSE broker and deal with all the FX/regulatory/operational issues.
I’d like to know a lot more about this product/platform Tahsin. Enlighten us:-)
It’s as simple as a Total Return Swap (TRS) derivative contract, the underlying being any one of a list of the larger, liquid stocks on DSE. Without actually transacting the stock, you can be exposed to the economic benefit (and harm) of owning the stock via a swap contract written with DB … as the name says, it is synthetically replicating the returns of an equity.
The goal would be to reach investors who want the diversification benefit of including DSE in their portfolio but want the ease/efficiency of going through DB rather than having to physically open up a brokerage account with a DSE broker and deal with all the FX/regulatory/operational issues.