Dealer Rankings 2018: Reform Movement

**The results of the dealer rankings poll and the associated feature are protected under copyright laws. Reproduction of the feature and/or the poll results, for either internal or external distribution, is strictly prohibited without the prior written permission of Total Derivatives.**

For information on reprints of the rankings, and permission to reproduce the results in any form, please contact sunil.sharma@totalderivatives.com or call +44 (0)20 7779 8556.


Dealer Ranking 2018: Reform Movement
The slow march of benchmark reform, the still-present threat of a no deal Brexit and the vitality of the US economy provided a stimulating backdrop to the latest annual Total Derivatives Dealer Rankings.

That US strength kept the Fed firmly in tightening mood and led to a grizzly-sized flattening along the Treasury curve over the last year, offering opportunities to dealers and clients. On the other hand rising volatility in stocks, credit, emerging markets and non-core European bonds, all made for treacherous conditions at times.

As for regulators’ efforts to wean the market off tainted LIBORs and onto hygienic risk-free benchmarks, comments from dealers over the last month give some indication of the difficulty of killing LIBOR.

Indeed, the possible LIBOR fallbacks proposed by ISDA earlier this year were described as anything from “impossible” to make work, to only workable for the inter-dealer market and not for the bilateral trades, where term rates were still required.

Similarly, when questioned about the death of dollar LIBOR and its possible replacement with SOFR, responses ranged from “inevitable,” to “yes, but not by 2022,” or “yes but not in the long end,” to not until the market is “forced” – presumably by the combined armies of the regulators and the central banks.

Total Derivatives is reserving judgement for now but, if the 2019 Dealer Rankings contains questions about SOFR, SONIA and ESTER market-making, then regulators will have made progress.


The results
Global first place - across all currencies and products - once again went to JP Morgan. However, there was plenty of movement among the rest of the top five. Citigroup moved up to global second place, Barclays slipped to third and Goldman Sachs pushed up to fourth. Deutsche Bank fell two places to global fifth, while BAML dropped out of the top five.

By currency, JP Morgan stayed top for USD interest rate derivatives. It was followed by Citigroup in second and Goldman Sachs in third. JP Morgan also retained first place for EUR derivatives, while Deutsche Bank held on to second. However Barclays displaced BNP Paribas to take third place in EUR this year. Barclays also consolidated its first place in GBP derivatives ahead of NatWest Markets in second and Goldman Sachs in third. Mitsubishi UFJ took first in JPY derivatives from Nomura.

Across products, Barclays took back first place in global inflation ahead of JP Morgan and Citigroup. JP Morgan held its lead in global options, but Citigroup moved up to second in options and Goldman Sachs rose to third. Morgan Stanley remained in first place for interest rate structured MTNs, with Goldman Sachs in second and JPMorgan third.

Looking by market and product, JP Morgan held the top slot for USD IRS trading for both the 2-10 year and 10-50 year buckets, ahead of Citigroup. BAML was third in 2-10 year USD IRS and Goldman Sachs was third in 10-50 year.

JP Morgan was also first in USD options, in front of Citigroup in second and Morgan Stanley in third. JP Morgan also took the top slot for USD inflation just ahead of Citigroup in second and BAML in third. Dollar structured MTNs were led by Morgan Stanley followed by Goldman Sachs, with JP Morgan third.

In EUR IRS, JP Morgan rose to first place for 2-10 year swaps and retained that position for the 10-50 year bucket. Deutsche Bank was second for 2-10 year and Barclays was third. In 10-50y swaps BNP Paribas was second followed by Deutsche Bank in third.

In EUR options trading, JP Morgan remained first ahead of Deutsche Bank and Barclays. BNP Paribas and Citigroup were joint fourth.

Barclays stayed first place for EUR inflation, ahead of JP Morgan and Deutsche Bank. Goldman Sachs grabbed first place for EUR structured MTNs from Morgan Stanley in second, while Deutsche Bank was third.

JP Morgan remained in first place for EUR/USD cross-currency basis for the third year in a row, followed by Deutsche Bank and Citigroup in second and third place, respectively.

In GBP interest rate derivatives, NatWest Markets was top again for 10-50 year swaps but Barclays came first in the 2-10 year bucket. Barclays was also first for both GBP options and inflation, while NatWest Markets was second for options and Goldman Sachs was second for inflation. JP Morgan was third in sterling 2-10 year swaps.

Finally, JPY swaps and options saw Mitsubishi UFJ, Mizuho, Sumitomo Mitsui and Nomura fight for the top three places, with Mitsubishi UFJ placed first in 2-10y and 10-50y swaps, while Nomura was first in yen options.

The methodology
Total Derivatives’ rankings are the most comprehensive peer review of dealers’ performance in interest rate derivatives trading. There were 1,100 individual responses to the latest rankings, registering a total of over 3,200 votes. Experienced professionals involved in trading, sales and marketing, structuring and strategy at investment banks formed the largest group of respondents, with portfolio managers at asset managers and hedge funds also taking part. Voting took place in October and November 2018.

To recap, respondents are asked to rank the top three dealers (other than their own institution) based on reliability of market-making, keenness of pricing, depth of liquidity provision, speed of execution, access to e-trading platforms, efficiency of post-trade processing and product innovation.

Market-makers are ranked in dollars, euro, yen and sterling. Product categories include two year to 10 year interest rate swaps, 10 year to 50 year interest rate swaps, inflation (cash and derivatives), interest rate options, cross-currency basis swaps and interest rate structured MTNs.

• For information on reprints of the rankings, and permission to reproduce the results in any form, please contact sunil.sharma@totalderivatives.com or call +44 (0)20 7779 8556.