Even though U.S. commercial banks' trading divisions lead the industry in three important types of trading, brokerage firms and foreign banks are gaining ground in the trading business, according to a poll of practitioners.
Morgan Guaranty Trust Co. was ranked in the top five more often than any other U.S. commercial bank in the poll by Swaps Monitor, a weekly newsletter.
Investment banking powerhouse Merrill Lynch & Co. ranked among the top three in six categories, while Paribas Capital Markets and Swiss Bank were the most prominent foreign bank players moving up the rankings since last year.
The weekly newsletter polled subscribers who were involved in the derivatives market as dealers, brokers, or end-users, asking them to name the four firms that acted most professionally in a series of categories.
Respondents were asked which company is the best over-the-counter derivatives originator and which is the best trader in short-term, medium- term, long-term, currency, and basis swaps. Other product categories included caps, swaptions, equity derivatives.
Besides being ranked first in medium-term swaps, the main unit of J.P. Morgan & Co. also appeared among the best regarded traders in medium-term, long-term, and currency swaps. It took third-place in swap option contracts, also known as swaptions. The company also ranked in the top three for documentation and general back-office support.
Merrill Lynch placed first in origination of over-the-counter derivatives, trading in basis swaps and documentation. The company ranked third in both general back-office support and municipal derivatives, and second in long-term swaps trading.
Paribas, a unit of Paris-based Banque Paribas ranked first in swaptions and currency swaps, second in caps, and fifth in medium-term swaps. The bank also ranked second among non-U.S. banks in derivatives.
Swiss Bank ranked just behind Paribas among foreign dealers, in third place. The bank also placed among the favorite firms in six categories: second in swaptions and long-term swaps, third in medium-term swaps and equity derivatives, and fourth in caps and currency swaps.
The other U.S. commercial banks receiving top billing were merger partners Chemical Banking Corp. and Chase Manhattan Corp. Chemical received the most votes in short-term swaps, and was second in medium-term swaps. Chase was voted best trader firm in caps, and finished second, third, and fourth in voting for best traders in basis swaps, short-term swaps, and medium-term swaps, respectively.
Despite its problems during the past year, Bankers Trust New York Corp. still finished third in originations, basis swaps, and municipal derivatives. The firm also placed fourth in equity derivatives.