Extreme market volatility toward the end of 2018 turned a promising year in fixed income sales and trading into a rather disappointing one, with each of the five big U.S. banks booking double-digit losses in the fourth quarter alone. However, with the first full month of 2019 nearly in the books, banks are seeing renewed optimism in fixed income markets, according to a new report from Greenwich Associates.
For the fourth year running, Citi led all competitors in global fixed income market share. In fact, the rankings below are nearly identical to the 2017 numbers. The only difference is that Goldman Sachs finished in sole third last year rather than tying for second with J.P. Morgan. The main takeaway from the report is that the big players, as a group, are poised to own even more market share moving forward as smaller competitors fall off.
The researchers said that years of technological investments by big banks came home to roost in 2018 as electronic trading accounted for roughly 40% of all activity in Europe. The capital-intensive nature of these investments favors the banks that can afford them, leaving smaller dealers access to only niche markets.
“Fewer players, less liquidity and increasing market concentration,” Greenwich Associates principal Satnam Soha said of the effect of MiFID II and other regulatory and market structure changes. If you want to find some comfort working in fixed income, the six banks below are likely the safest.
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