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IEM Finance undertook its thirteenth online survey of French primary dealers’ (SVTs) clients from 15 September to 9 October 2015. This survey aims to assess both the quality of commercial relations and services provided by primary dealers to their clients, as well as client opinion on the functioning of the French government debt market.
In 2015, 285 primary dealer clients filled out the questionnaire, giving a response rate of 29%.
Main results of the Survey:
1- The French government debt market:
Investor satisfaction on the functioning of the French government debt market remains very high: 93.6% of them were “very satisfied” or “satisfied” in 2015.
Market liquidity and transparency are appreciated by investors who consider them as important criteria with respect to a sovereign issuer such AFT. The perceived importance of this factor increased in 2015, with 86.4% of investors considering it to be “very important” against 84.7% of investors in 2014. Transparency remained the second most important criterion after market liquidity and was followed by predictability. The proportion of investors who consider transparency to be “very important” increased sharply in 2015 and reached 70.6% (the highest level since 2005).
The liquidity of securities issued by the French State continues to be particularly appreciated by investors: for OAT, almost all investors expressed their satisfaction (93.7% are “very satisfied” or “satisfied”). For BTF, a third does not express an opinion while 65.2% were “very satisfied” or “satisfied”.
Regarding transparency and beyond the information disseminated by AFT, 85.4% of investors were satisfied with the information they receive from French public institutions regarding economic policy and public finances. This proportion remained very high and increased in comparison to 2014.
Regarding the strategy of AFT to introduce more flexibility in the choice of securities to be issued, with the reopening of old lines at auctions (“off-the-run”), a large majority of investors are “very satisfied” or “satisfied” (94.7% compared to 95.5% in 2014).
The proportion of investors who have been in contact with the AFT within the last 12 months increased significantly in 2015 (30.3% compared to 23.6% in 2014).
2- Primary dealers - SVTs:
- On fixed-income markets in general, the five top-ranked primary dealers most frequently mentioned by investors as being their main partner are:
2015 2014 1 – BNP Paribas
2 – Barclays
3 – Citigroup
4 – JP Morgan
5 – Société Générale1 – BNP Paribas
2 – Barclays
3 – Citigroup
4 – Société Générale
5 – JP Morgan- On the French government bond market, the five top-ranked primary dealers most frequently mentioned by investors as being their main partner are:
2015 2014 1 – BNP Paribas
2 – Société Générale
3 – Barclays
4 – Natixis
5 – HSBC1 – BNP Paribas
2 – Société Générale
3 – Crédit Agricole
4 – Barclays
5 ex-aequo – HSBC and Natixis- Being a primary dealer is becoming an increasingly important criterion when selecting an intermediary, with 74.6% of investors considering it to be “very important” or “important”. The League Table of the most active primary dealers published by the AFT at the end of January, which assesses the most active SVTs in the primary and secondary markets and in terms of the service offered, remains the second most important factor when selecting financial intermediaries by investors.
- Investors gave their opinion on the importance they attached to the quality of different services offered by primary dealers:
o Pricing is once again considered to be the most important service, with the proportion of investors considering it to be “very important” increasing following a slight decrease in 2014. It reached 88.4% in 2015, compared to 84.6% in 2014.
o The quality of information, advice and sales coverage remains the second most important service. It is considered to be “very important” by more than half of investors (53.9% compared to 54.7% in 2014).
o The perceived importance of research decreased significantly in 2015, with 36.1% of investors deeming it to be “very important”, down from 42.7% in 2014.
o 24.3% of investors consider the back / middle office as "very important”.
o Overall ratings of primary dealers decreased slightly for the three services. The quality of pricing received lower ratings by investors than in 2014, with the average mark decreasing to 7.2/10 compared to 7.5/10 in 2014. Research remains the best-ranked service with an average mark of 7.5/10. The average mark for the quality of information, advice and sales coverage remains stable at 7.4/10.