Deutsche Bank's over-the-counter structuring department has developed a product which could offer the team a significant advantage in the hotly contested interest rate swaps market.

The so-called 'DB Swapspread' product is a futures-like cash-settled forward contract which tracks the spread between interest rate swaps and bond futures, mimicking the standard 'spreadlock' play. Swapspread is particularly innovative because, being a cash-settled instrument, it can be used by investors that are normally unable to trade swaps owing to credit or systems limitations. The OTC players at Deutsche Bank maintain the product enables end users to benefit, whether the spreads (or differentials between interest rate swaps and bonds) are volatile or range-bound.