I refer quite a lot to specific ECNs on this blog; TradeWeb, LiquidityHub, Bloomberg etc, etc. Rarely do I mention the specific banks that are good or poor on these ECNs. So who are the best and worst of these 30+ liquidity providers?

Perhaps the best way to express this is to have a tiering system, much like that which these banks employ to categorise their clients. I have considered this for Europe only and thus the ranking doesn’t take into account their prowess in the US, for example. Likewise it will not contain all the banks, more an educated selection.

Tier 1: Global Bank with a total demonstrable commitment to FI eCommerce.

Tier 2: Global Bank with a less demonstable commitment to FI eCommerce

Tier 3: Regional Bank with a less demonstable commitment to FI eCommerce

Now Tier 3 may be harsh on some regional players who do their best, but ultimately for them their technology and, especially, product coverage will not allow them to be considered Tier 1 or 2. Of course a Tier 1 in a certain geographic location in a certain product set (e.g. Capitalia with Italian Govies in Italy) will probably mean a Tier 3 ranking overall. Likewise a strength in a product set across all Europe but not the main product (Euro Govies) will probably mean a Tier 2 rating (e.g. RBC with retail credit). Euro Govies will have a stronger weighting over other govies and credit, given it is what drives the e-Trading market in Europe at present.

So here goes:

Tier 1: Barclays Capital, Deutsche Bank, JP Morgan

Tier 2: ABN Amro, BNP Paribas, Credit Suisse, Dresdner, Goldman Sachs, HSBC, Merrill Lynch, Morgan Stanley RBC, RBS, Soc Gen, TD, UBS

Tier 3: Calyon, Capitalia, Danske, KBL, Nordea, UBM/HvB, Winterfloods etc

The Tier 1 guys stand out for me, as they have really created e-Brands in Europe with Autobahn, BARX and JPEX. No surprises that these will be amongst the leading Swaps dealers when LiquidityHub gets going.

Within Tier 2 there are, as they say in Bordeaux, “super seconds” (Citi and Morgan Stanley) and those who maybe deserve Tier 3 status except they’re just too big overall (I’ll resist saying whom, but you probably know). Tier 3 simply will struggle to make Tier 1 but could be Tier 2 with better organisation and consolidation (UBM and Calyon???).

Please note this expresses my opinion, gathered over the past four years, so please let me know what you think. I’m very happy to be told I’m wrong, but at least let me know why! 🙂