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IEM Finance undertook its fourteenth online survey of French primary dealers’ (SVTs) clients from 15 September to 19 October 2016. 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 2016, 260 primary dealer clients filled out the questionnaire, giving a response rate of 25%.
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: 92.9% of them were “very satisfied” or “satisfied” in 2016.
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 remains steady in 2016, with 86.7% of investors considering it to be “very important”. 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” reached 65%.
The liquidity of securities issued by the French State continues to be particularly appreciated by investors: for BTAN and OAT, almost all investors appreciate it (93% are “very satisfied” or “satisfied”). Investor satisfaction for inflation-indexed securities increases: 64% of investors are “very satisfied” or “satisfied” in 2016 against 58% in 2015. For BTF, 58.3% of investors are “very satisfied” or “satisfied”. A third of surveyed investors did not express their opinion regarding the liquidity of BTF and inflation-indexed securities.
Regarding transparency and beyond the information disseminated by AFT, a majority of investors are “satisfied” with the information they receive from French public institutions regarding economic policy and public finances. The proportion of satisfied investors continues to increase to reach 91.3% in 2016 compared to 85.4% in 2015 and 82.7% in 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” (91.4%).
The proportion of investors who have been in contact with the AFT within the last 12 months increased again in 2016. More than a third of investors were in contact with the AFT (38.6% in 2016 compared to 30.3% in 2015 and 23.6% in 2014).
2- Primary dealers - SVTs:
- On the French government bond market, the five top-ranked primary dealers most frequently mentioned by investors as being their main partner are:
2016 2015 1 – BNP Paribas
2 – Société Générale
3 – Crédit Agricole CIB
4 ex-aequo – Barclays et JP Morgan
1 – BNP Paribas
2 – Société Générale
3 – Barclays
4 – Natixis
5 – HSBC
- On fixed-income markets in general, the five top-ranked primary dealers most frequently mentioned by investors as being their main partner are:
2016 2015 1 – Barclays
2 – JP Morgan
3 – BNP Paribas
4 – Citigroup
5 – HSBC
1 – BNP Paribas
2 – Barclays
3 – Citigroup
4 – JP Morgan
5 – Société Générale
- Being a primary dealer is still the most important criterion when selecting an intermediary, with 70.9% 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 beginning of February, 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: the proportion of investors considering it to be “very important” reached 87.4%.
o The quality of information, advice and sales coverage remains the second most important service. It is considered to be “very important” by 47.6% of investors.
o The perceived importance of research increases slightly in 2016, with 37.6% of investors deeming it to be “very important”, compared to 36.1% in 2015.
o 23.9% of investors consider the back / middle office as "very important”.
o Overall ratings of primary dealers increase slightly for the three services. The quality of pricing received a better rating than in 2015, with an average mark increasing to 7.4/10 compared to 7.2/10 in 2015. The assessment of the research remains steady and the one of the quality of information, advice and sales coverage increase: both services obtained an average mark of 7.5/10.