New Capital Rules Force Banks to Cut Back Liquidity Provision to “Non-Preferred” Clients
Announcing the 2014 Greenwich Leaders for European Fixed Income
The European fixed-income market continues its transformation as banks implement new and more focused strategies aimed at maximizing profitability.
According to a new report, European Fixed-Income Dealers Narrow Coverage Scope, by Greenwich Associates, European dealers are shedding less profitable client relationships and are competing for the business of a relatively small group of preferred customers.
“European fixed-income dealers have said many times in the past that they do not want to be all things to all people,” says Greenwich Associates consultant Andrew Awad. “This time it’s true.”
This shift in dealer strategy is having a dramatic effect on the market with marked changes in coverage, a shift in dealer quality ratings from clients and an increase in fixed-income electronic trading. “Since the cutback in dealer inventories and liquidity provision, there are many competing initiatives aimed at creating alternative trading venues,” says Greenwich Associates consultant Peter D’Amario. “However, for the foreseeable future, investors will be reliant on dealers that as a group have become much less generous with their capital and much more selective about when and to whom they will provide liquidity.”
2014 Greenwich Share Leaders: European Fixed Income
The competitive landscape among Europe’s top-tier fixed-income dealers has begun to flatten as some historically dominant dealers focused coverage, leaving market share to be picked up by other top-tier dealers that are making a concerted effort to grow their franchises within the new profitability constraints.
In this fast-changing environment, Barclays leads the European fixed-income market with a market share of 11.9% of institutional trading volume, followed by Deutsche Bank at 9.7%. J.P. Morgan and Citi are tied for third with market shares of 8.9% and 8.6% respectfully. HSBC follows with a market share of 7.1%. These dealers are the 2014
Greenwich Share Leaders in European Fixed Income.
Barclays has a commanding lead in rates products with a market share of 12.3%, followed by Deutsche Bank at 9.5%, and the trio of Citi, HSBC and J.P. Morgan are tied with market shares of 7.2-7.6%. These dealers are the 2014
Greenwich Share Leaders in European Fixed-Income Rates Products.
In credit products, J.P. Morgan leads with a 12.9% market share, followed by Barclays at 11.8%, Deutsche Bank at 10.2% and Citi at 9.8%. These dealers are the 2014 Greenwich Share Leaders in European Fixed-Income Credit Products.
2014 Greenwich Quality Leaders: European Fixed Income
Greenwich Associates asked 1,265 fixed-income investors to rate the dealers they use for fixed-income trading in a series of service categories. Dealers that receive ratings topping those of competitors by a statistically significant margin are named Greenwich Quality Leaders.
The 2014 Greenwich Leaders in European Fixed-Income Sales Quality are Barclays and J.P. Morgan. The 2014 Greenwich Quality Leader in European Fixed-Income Research is J.P. Morgan and for Fixed-Income Trading it’s Citi.
The 2014 Greenwich Leader in Overall European Fixed-Income Service Quality – Credit is J.P. Morgan and it’s Barclays for Overall European Fixed-Income Service Quality – Rates.