Although J.P. Morgan and Citi have distanced themselves from the pack of other major dealers in global FX, banks like UBS and Barclays also won client relationships and trading share last year, making an already competitive market even more so. J.P. Morgan and Citi are both at the top in the critical area of e-trading—which now accounts for 80% of global FX trading volume by customers—while also excelling in traditional sales and trading.
Citi defends its title this year as the world’s top FX dealer to global corporates, with J.P. Morgan and HSBC tied in second place. Barclays and Bank of America Merrill Lynch round out the field, tying in the No. 4 spot. Among financials, J.P. Morgan ranks first, while Citi is not far behind in second place. UBS ranks a more distant third and is followed by a tight-packed group of Barclays, Deutsche Bank, Goldman Sachs, with global market shares so close they are statistically tied. These dealers are the 2019 Greenwich Leaders in Global FX Market Share.
“These dealers’ varying strengths and focuses are reflected when looking at the top banks by the major client segments,” says Greenwich Associates consultant Satnam Sohal.
For Dealers, Thinner Margins, Tougher Competition
Thanks to the dual trends of e-trading and more intense competition, dealers are finding it challenging to make money on some transactions, including many G10 spot trades. While these trades are increasingly viewed as loss leaders required to win other, more profitable business, dealers are starting to be more selective in how they allocate their resources across clients.
“Although many of these trends seem to favor the biggest dealers with the biggest IT budgets, smaller and regional banks can compete successfully by carving out a niche, be it in specific currency pairs where they have a natural advantage, in complex structured trades or in specific client segments such as corporates—especially those companies to which the bank provides credit,” says Greenwich Associates Managing Director Frank Feenstra.
In European FX, Global Dealers Dominate but Regional Players Remain Relevant
In the highly competitive and increasingly electronic European FX business, regional banks are finding ways to carve out a niche by focusing on their core domestic banking clients, taking advantage of their close physical proximity to local companies, and leveraging their strength in their home currency if it is not part of the Eurozone.
Local banks in Germany, Italy, the Netherlands, and the United Kingdom feature prominently in their home markets. While global FX dealers rank as the 2019 Greenwich Share Leaders due the large FX volumes they trade with a comparatively small number of MNCs, local dealers tend to have a larger footprint and to trade FX with a larger number of corporates. And although Citi and HSBC rank among the 2019 Greenwich Quality Leaders in these countries, domestic dealers are delivering high levels of service to their customers.
In Canadian FX, E-Trading Grows as Non-Canadian Bank Ups its Take of the Business
The three banks sharing the title of 2019 Greenwich Share Leaders in Canadian Foreign Exchange Services are building out their cutting-edge technology platforms and riding the wave of electronic trading to a dominant position in FX.
At the top of that list is RBC Capital Markets, which boasts the market’s most sophisticated and highly regarded e-trading platform. Likewise, the No. 2 ranked BMO Capital Markets and the third-ranked TD Securities are moving fast up the technology curve and are also gaining ground.
Overall, National Bank Financial, an FX dealer that thrives among corporates and is expanding into investors, leads in the ability to understand client needs and deliver intensive sales coverage and earned the title of Greenwich Quality Leader for Canadian FX Service in 2019.
Click here for the full list of 2019 Greenwich Leaders in Foreign Exchange Services - Global
