Barclays and J.P. Morgan are the world’s leading dealers of OTC derivatives to corporates hedging energy commodities exposures and Goldman Sachs is the top dealer of OTC commodity derivatives to commodities investors.
According to the results of Greenwich Associates most recent studies on commodity derivatives and the new report 2013 Greenwich Leaders: OTC Commodities Derivatives, approximately 40% of companies around the world that use derivatives to hedge energy commodities exposure name Barclays and/or J.P. Morgan as important dealers of OTC products. Goldman Sachs and Morgan Stanley tie for the second spot among companies, with 30–32% of companies saying they work with these firms, followed by Citi and Deutsche Bank, each of which is used as an OTC derivatives dealer by 27% of companies active in this market. These firms are the 2013 Greenwich Share Leaders in Global Energy Commodities — OTC Derivatives among corporate users.
The 2013 Greenwich Quality Leaders in global OTC derivatives service for energy derivatives among corporate users are Barclays, Goldman Sachs and J.P. Morgan. Greenwich Quality Leaders are firms whose corporate clients award them quality ratings that exceed those given to competitors by a statistically significant margin.
J.P. Morgan’s leading position in this global market is attributable mainly to the strength of its customer franchise in the United States and Asia, where the firm ranks as the number-one dealer of OTC energy derivatives to companies. Barclays has a strong presence in all regional markets, tying for the top spot in Europe with Morgan Stanley, and ranking second in both the United States and Asia.
“Banks are rethinking their approach to the commodities business in light of new capital requirements and regulations,” says Greenwich Associates consultant Andrew Awad. “A number remain committed, but the landscape — which was altered dramatically over the past five-to-seven years by the huge investments in the business made by the commercial banks — is becoming far more fragmented, as few banks want to be all things to all people and more find specific segments in which they can profitably compete.”
Goldman Sachs Top OTC Derivatives Dealer Among Commodities Investors
Nearly 60% of institutional commodities investors around the world use Goldman Sachs as a dealer for OTC derivatives. Next is J.P. Morgan, which is used as a dealer by 54%, followed by Barclays and Deutsche Bank at 46–47% and Morgan Stanley at 37%. These firms are the 2013 Greenwich Share Leaders in Global Commodities Investors — OTC Derivatives. The 2013 Greenwich Quality Leader in this category is Goldman Sachs.
While the investor business is the area of the commodities market most subject to regulatory change, any speculation about an investor exit appears to be overblown. “‘Real money’ investment managers will remain in this market doing index, enhanced index and even alpha strategies that are unsuitable for exchange trading,” says Andrew Awad. “Hedge funds — as well as some real money investors — are likely to move to futures over time as regulations are enforced.”
J.P. Morgan Dominates in Metals
J.P. Morgan is far and away the world’s biggest dealer of OTC global metals commodities derivatives. Some 55% of users name J.P. Morgan as an important dealer, a figure that easily tops the 33–34% market penetration scores of closest rivals Barclays, Citi and Deutsche Bank. These firms, along with Société Générale, are the 2013 Greenwich Share Leaders in Global Metals Commodities — OTC Derivatives. J.P. Morgan is also the 2013 Greenwich Quality Leader.
Greenwich Share and Quality Leaders
The attached present the complete list of 2013 Greenwich Share and Quality Leaders in OTC Commodities Derivatives for corporates hedging energy and metals and investors.