Deutsche Bank Adds Mortgage Securities to On-Line Trading System

The days of the frantic mortgage trader with a phone clamped to each ear may be numbered.

An on-line program that permits real-time trading for government markets is proving to be a popular, effective alternative to shouted phone orders for clients of Deutsche Morgan Grenfell, the firm says. Now it is using the system to trade mortgage securities too.

Deutsche Morgan Grenfell, a unit of Deutsche Bank, created the program to improve trading precision and to increase the execution speed of deals.

In a promotional video, the firm trumpets the opening of a new trading highway. According to the video, it takes traders and salespeople 38 seconds to seal a deal with phones, but the on-line program compresses the process to 2.1 seconds.

"It can execute Treasury and mortgage trades in a much shorter time frame than it takes to make a phone call," said Kevin Ingram, managing director for mortgage-backed securities. "The way you access liquidity is by having a larger number of trades executed."

Traders from other major Wall Street firms expressed some skepticism.

"I'd have to see it to believe it. I've had no problems with the brokers as far as speed and execution," one government securities trader said.

Another trader said he was unsure clients using the system were getting the best possible price. "It is a live market, but it doesn't necessarily mean you can't do a little bit better if you make a phone call."

Deutsche Morgan Grenfell said its program connects clients to live markets in seconds through a Bloomberg terminal. The system has been used for Treasury products since the fourth quarter of 1996, and mortgage products were broadcast on it at the end of this year's third quarter, said Christopher J. Carroll, managing director and head of global electronic trading.

The system provides clients worldwide with a two-sided quote on targeted securities. It gives clients a direct link to a trader at a market-making desk, while allowing anonymity, said Mr. Carroll.

The system effectively eliminates the telephone or the need to have a salesperson attract the attention of a trader, he added.

The promotional video hints that the program may present additional opportunities on the Internet.

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