JPMorgan Chase & Co. had the biggest U.S. fixed-income market share as trading clients expand the number of dealers they do business with, Greenwich Associates said in an annual survey.
JPMorgan, which held the top spot in a similar survey in 2011 before dropping to third last year, has an 11.4 percent market share, Greenwich Associates said today, citing a study it conducted based on interviews with 1,027 active institutional investors in the U.S. Goldman Sachs Group Inc. dropped to fifth from second last year.
Buy-side clients are spreading their business as Wall Street banks are scaling back in product areas in which they aren’t leaders, Greenwich said. Banks including Morgan Stanley and UBS AG are shedding assets in fixed-income trading and seeking to cut costs amid sluggish revenue growth.
“For many institutional investors, these strategic shifts have resulted in disruptions in sell-side coverage and a reduction in market liquidity as dealers pull back capital, consolidate desks, reduce headcount and replace senior fixed-income professionals with younger, less experienced and cheaper talent,” Stamford, Connecticut-based Greenwich said in the report.
Credit Suisse Group AG, Citigroup Inc. and Deutsche Bank AG had the three largest market shares behind JPMorgan. Greenwich said the four firms were in a statistical tie for first. The study focused on activity with clients, rather than trading revenue.
The nine largest banks generated about $90 billion in fixed-income trading revenue globally in 2012, excluding some accounting charges, according to data compiled by Bloomberg. That was up 14 percent from 2011, and accounted for more than half of all revenue from trading and investment banking at the firms, the data show.
Credit Suisse, based in Zurich, has the largest market share in trading rate products such as government bonds and interest-rate derivatives, according to Greenwich. Deutsche Bank, JPMorgan and Citigroup joined the Swiss bank in a statistical tie.
JPMorgan and Bank of America Corp. had the biggest share in credit products, such as corporate bonds and leveraged loans. Barclays Plc, Credit Suisse and Bank of America had the largest share in securitized products, such as commercial mortgage-backed securities.
Citigroup was the share leader in municipal bonds, with New York-based JPMorgan and Citigroup leading in emerging-market trading, Greenwich said.
The study took place between February and April, Greenwich said.