Over half of buy-siders to re-evaluate fixed income brokers

Survey finds top priority for European fixed income managers is to re-evaluate their current broker relationships for value.

A survey of European buy-siders has found 54% are re-evaluating the value of their current broker relationships in fixed income as a top priority.

Cost effectiveness was named by 18% of respondents as the most important criteria when choosing a broker, according to the survey by the Fixed Income Leaders Summit, and this remains unchanged from the previous year’s survey.

Head of fixed income in Paris at BNP Paribas Dealing Services, Christophe Bourgeois, said: “Not surprisingly the focus is cost effectiveness, highlighting the on-going constraints buy-side actors are facing.”

In the US, 64% of buy-siders named re-evaluating current broker relationships as the second top priority, with 68% saying implementing US regulatory guidelines is the most important priority.

This mirrors finding among European managers as 48% named understanding the requirements of MiFID II, making it the second biggest priority for buy-siders.

In terms of negative effects of MiFID II, 30% said reduced market liquidity and wider spreads will be the most detrimental impact to buy-siders.

Respondents were also asked what the top function would be if they were to design a trading system, and integrated transaction cost analysis (TCA) capabilities came out on top, followed by a central limit order book.

BNP Dealing Services’ Bourgeois added: “TCA analysis is now clearly the focus on fixed income dealing, after equity and FX.

“Data constraints is a big concern in fixed income; the challenge is to gather data as much as possible, as well as gathering data of great quality.”