Top Global FX banks losing market share to regional players

EuroMoney has just released the results of the 2010 FX Survey (sorry it’s subscription based).

2010 FX Share Top 10 ranking (2009)

1. Deutsche Bank (1)
2. UBS (2)
3. Barclays Capital (3)
4. Citi (5)
5. RBS (4)
6. JPMorgan (6)
7. HSBC (7)
8. Credit Suisse (9)
9. Goldman Sachs (8)
10. Morgan Stanley (11)

The top 10 has almost remained the same, with one new entry (and some slight shuffling of the deckchairs) and for the 6th year running, the mighty Deutsche Bank tops the poll – which is an amazing record! I touched on the factors that separate the top players in an earlier post here

However, to me, what is most interesting and hugely encouraging from this survey, is that for the first time, the share of the top banks is actually falling, and it’s a similar story as you go further down the league table.

Going down
Top 3 banks: 40.44% down from 45.99% (-5.5%)
Top 5 banks: 54.63% down from 61.5% (-6.87%)
Top 10 banks: 77.16% down from 79.68% (-2.5%)
Top 3 banks eTrading share: down from 72.56% to 57.65% (-14.91%)

Going up
6th -10th place: increased from 18.18% to 22.53% (+4.35%)
4th – 10th share of eTrading: increased from 19.43% to 27.62% (+8.19%)

It’s not that the top banks are dropping their game – far from it, they are investing hugely, but the fact is, ‘other banks are raising their game’!

In my opinion, these changes reflect the fact that over the past few years, many more banks – those whose credit ratings and balance sheets remained intact, have been making strategic hires of previously unavailable talent across sales, trading, and risk management, and most importantly hiring ‘top people’ with strong e-trading pricing and technology skills, who have set to work rapidly upgrading etrading capabilities and infrastructure, in order to service existing client franchises, and offer an etrading “flow business” to their clients.

This is clearly demonstrated by the meteoric rise in the rankings of Nomura, who, having integrated the top ‘e-trading’ talent from Lehman’s, has jumped from 57th to 18th place.

So, whilst we will continue to see the FX giants slug it out, the battle may be changing, and the next tranche down, the large regional players, are raising their game, defending their franchise, and dare I say it, eating into the share of the FX giants.

Exciting times