JPMorgan Leads U.S. Banks Boosting Share of European Bond Market

U.S. banks increased their share of Europe’s fixed-income market at the expense of local competitors as trading volumes slid in 2013, Greenwich Associates said in an annual survey report.

Barclays Plc retained its position as the biggest secondary-market trader of European fixed-income products, with a 12.8 percent market share, down from 13.3 percent in 2012, Stamford, Connecticut-based Greenwich said on its website today. Second-placed Deutsche Bank AG’s portion shrank to 10.5 percent from 11.9 percent, while JPMorgan Chase & Co. increased its share to 9.3 percent from 8.5 percent and Citigroup Inc. had 7.7 percent, up from about 6 percent.

Investors reported reduced liquidity in bond markets in the second half of 2013, according to Greenwich, as speculation that the Federal Reserve would reduce the pace of its $85 billion of monthly asset purchases damped demand. UBS AG exited most fixed-income markets, while other European banks scaled back to comply with Basel III regulatory requirements, it said.

“It has become more difficult for many institutions to execute trades, and our data suggest that they are reaching out to new dealers in an attempt to source needed liquidity,” Peter D’Amario, a Greenwich Associate consultant, said in the report.

European banks are increasing the number of trading counterparties to gain access to liquidity, according to Greenwich. They averaged nine counterparties in this year’s survey versus 8.4 in 2012. This increase benefited U.S banks and European institutions including UniCredit SpA, Commerzbank AG, Banca IMI SpA and Rabobank Groep, the Greenwich report said.

Barclays, Britain’s second-biggest lender by assets, was Greenwich’s 2013 “Quality Leader” in European fixed-income trading, sales and overall service in rates products. JPMorgan was the 2013 “Quality Leader” in European fixed-income research and overall European service in credit products.

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