SMBC Nikko Securities is quickly emerging as a powerhouse in Japanese fixed-income trading, according to the results of Greenwich Associates 2011 Japanese Fixed-Income Investors Study.
From 2010 to 2011 SMBC Nikko Securities increased its market share in Japanese government bond trading to 7.8% from just 3.0% and its share in secondary yen investment-grade credit bond trading to 16.6% from 10.1%. With these increases, SMBC Nikko Securities lifted its overall market position in Japanese government bond trading to one just behind that of market leaders Nomura Securities, Mizuho Securities, Daiwa Securities Capital Markets, and Mitsubishi UFJ Securities in Japanese government bond trading. These firms are the 2011 Greenwich Share Leaders in Japanese Government Bonds.
SMBC Nikko Securities’ advance has been even more impressive in the secondary trading of yen investment-grade credit bonds. In this product, Daiwa Securities Capital Markets leads with a 19.2% market share, followed by SMBC Nikko Securities, Nomura Securities, Mizuho Securities, and Mitsubishi UFJ Securities. These firms are the 2011 Greenwich Share Leaders in Secondary Yen Investment-Grade Credit Bonds.
“In terms of quality ratings awarded by institutional trading clients, Nomura Securities and Mizuho Securities continue to dominate Japan’s domestic fixed-income market,” says Greenwich Associates consultant Tim Sangston. “Nomura is the 2011 Greenwich Quality Leader in two categories: Yen Bond Research and Overall Service in Interest Rate Derivatives. Mizuho is the 2011 Greenwich Quality Leader in Yen Bond Trading. The two firms together share the title of 2011 Greenwich Quality Leaders in Yen Bond Sales.”
Greenwich Quality Leaders are firms that receive quality ratings from institutional clients that top those awarded to competitors by a statistically significant margin.
The other big story of the year in domestic fixed income has been the continued advancement of foreign firms such as Goldman Sachs and Credit Suisse. “Although these firms have not gained much ground in credit products, where domestic banks that control new issues have maintained and even grown their dominant positions, these and other foreign dealers are winning share in rates products, and now represent a solid second tier of competitors providing high levels of coverage and liquidity to Japanese investors,” says Greenwich Associates consultant Tomio Sumiyoshi.
Foreign firms also continue to dominate the international fixed-income trading business, with Deutsche Bank and Citi leading the field each with market shares in excess of 11.5%. Only one Japanese firm, Nomura Securities, ranks in the top five. “Nomura Securities, which is just behind Barclays Capital and J.P. Morgan, owes much of its strength in this business to its post-crisis acquisition of Lehman Brothers’ European and Asian assets. The firm also benefited from strengthening its capabilities in the US Treasury market, from which it once retreated,” says Greenwich Associates consultant Taeko Sumiyoshi. Those new and renewed global capabilities helped Nomura Securities rise to the top of the non-yen market in terms of quality of service delivered to investors. Nomura Securities joins Citi and J.P. Morgan as the 2011 Greenwich Quality Leaders in Non-Yen Bond Sales and the firm joins Barclays Capital as the 2011 Quality Leaders in Non-Yen Bond Research. The 2011 Greenwich Quality Leaders in Non-Yen Bond Trading are Citi, Deutsche Bank and Mizuho Securities.