JPMorgan and Lehman Brothers have the biggest market shares in U.S. fixed-income trading and are also rated by institutional investors as delivering the best service quality across fixed-income sales, research and trading.
“In 2007, JPMorgan and Lehman Brothers tied for first place in terms of total market share in U.S. fixed-income trading,” says, Greenwich Associates consultant, Woody Canaday. “The two firms are also equal first in the service quality ratings awarded to them by their fixed-income clients.”
In terms of market share in U.S. fixed-income trading, the two leaders are followed in rank order by Deutsche Bank, Goldman Sachs and Banc of America. “Of the firms with top-five rankings in market share, Banc of America, Deutsche Bank and JPMorgan all grew their fixed-income trading businesses over the past 12 months, suggesting that these franchises are generating significant momentum,” says, Greenwich Associates consultant, Tim Sangston. “Also demonstrating momentum in terms of overall market share growth were Merrill Lynch and RBS Greenwich Capital. Lehman Brothers, by comparison, has had consistently high market share for several years.”
Certain firms made notable market share gains in individual fixed-income product categories. Merrill Lynch and Credit Suisse increased their market shares in rates products, Morgan Stanley grew its market share in credit products, and Banc of America’s market share expanded in securitized products.
“It is interesting to note that three foreign firms – Deutsche Bank, RBS Greenwich Capital and Barclays Capital -increased their market shares in at least two product categories from 2006 to 2007,” says, Greenwich Associates consultant, Frank Feenstra. “These results certainly suggest that the significant investments that some foreign firms are making in U.S. fixed income are paying off – at least in terms of market share.”
Perhaps the most important area of focus for fixed-income dealers in the current marketplace is hedge funds. “Hedge funds give the highest scores for service quality to Lehman Brothers and JPMorgan, followed at some distance by Credit Suisse, Bear Stearns, Deutsche Bank, and Goldman Sachs in a four-way tie,” says Dev Clifford.