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European FICC House of the Year
Bank of America Merrill Lynch
BAML’s FICC franchise was ranked joint third by global revenues in 2015 according to advisory firm Coalition, with a market-leading position in credit. In its 2016 second quarter results, the US bank reported that its fixed income trading revenues, excluding the effects of debt valuation adjustments, surged 22% to $2.6 billion – the highest quarterly tally since the first three months of 2015. The results were driven by stronger performance in rates and currencies trading, as well as high secondary trading in loans and securitised products, the firm said.
Citadel Securities, the global market-making firm owned by Citadel LLC, is still an emerging firm in the European FICC sector but it is one to watch. Already one of the biggest market-makers in US Treasuries and interest rate swaps, it is intent on replicating that presence across the Atlantic. It has begun offering US swaps to European customers and hired former JP Morgan clearing sales head Brian Oliver to recruit clients in the region. It has launched a euro-denominated interest rate swaps offering, and plans to expand into European credit default swaps and government bonds. Citadel Securities’s efforts to grow in Europe could depend on the adoption of rules designed to encourage transparency in fixed income and derivatives trading, expected from 2018.
Citigroup retained its top slot in Euromoney’s 2016 survey, the closely watched rankings of the FX industry. It also ranked second in terms of global FICC revenues in 2015, according to the most recent Coalition Index league table and was one of the strongest performers in rates and emerging markets. In its second quarter results for 2016, Citi’s fixed income trading revenues rose by 14% to nearly $3.5 billion, the best quarterly performance from that business since the first three months of 2015.
JP Morgan’s fixed income franchise needs little introduction. It was the top-ranked firm globally by FICC revenues and joint first in Europe, alongside Deutsche Bank, according to Coalition’s 2015 survey. Its biggest strength is its breadth, with particular product strength in G10 rates, foreign exchange and credit. It has also been an early mover in preparing for the electronification of FICC asset classes, setting up in 2014 a cross-asset class agency electronic execution division called JP Morgan Execution Services. Its single dealer FX platform, JP Morgan Markets, has also proved highly resilient, handling record volumes on June 24, without a hitch.
XTX is one of a group of non-bank firms that is taking market share from traditional dealers in the FICC market through the use of sophisticated technology. The firm, founded in 2015, provides liquidity across asset classes, but its presence in FX markets has caught attention. In the Euromoney FX rankings, which banks have long used to benchmark their success, XTX this year became the first non-bank to penetrate the top 10, with an estimated market share of 3.87%. This put it in fourth place for FX spot, and ninth place overall. HFTs have been criticised for trading in milliseconds and causing disorderly markets, but XTX says it holds positions for at least 10 minutes in G10 currencies and 20 minutes in emerging market currencies.