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IEM Finance undertook its fifteenth online survey of French primary dealers’ (SVTs) clients from 12 September to 18 October 2017. 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 2017, 255 primary dealer clients filled out the questionnaire, giving a response rate of 23.5%.
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 and has continued to increase: 100% of French investors and 95.7% of all investors declare to be “very satisfied” or “satisfied” in 2017, against 98% and 92.9% in 2016.
Market liquidity and transparency are appreciated by investors who consider them as important criteria with respect to a sovereign issuer, such as AFT. The perceived importance of these two factors remains steady in 2017, with 86.8% and 65% of investors considering it to be “very important”. Market liquidity remains the most important criterion before transparency, followed by predictability and innovation.
The liquidity of securities issued by the French State continues to be particularly appreciated by investors: for OAT, almost all investors appreciate it (97.5% are “very satisfied” or “satisfied”). Investor satisfaction for inflation-indexed securities once again increases in 2017: 77% of investors are “very satisfied” or “satisfied” against 64% in 2016. For BTF, 64.5% of investors are “very satisfied” or “satisfied” (58.3% in 2016). 35% and 30% of surveyed investors did not express any opinion regarding the liquidity of BTF and inflation-indexed securities respectively.
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 remains stable at 91% in 2017.
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” (94.4%).
The proportion of investors who have been in contact with AFT within the last 12 months remains stable at 38.5% in 2017.
2- Primary dealers - SVTs:
- On the French government bond market, the five top-ranked most frequently mentioned primary dealers by investors as being their main partner are:
2017 2016 1 – BNP Paribas
2 – JP Morgan
3 – Barclays
4 – Société Générale
5 – Crédit Agricole CIB
1 – BNP Paribas
2 – Société Générale
3 – Crédit Agricole CIB
4 ex-aequo – Barclays et JP Morgan
- On fixed-income markets in general, the five top-ranked most frequently mentioned primary dealers by investors as being their main partner are:
2017 2016 1 – JP Morgan
2 – BNP Paribas
3 – Barclays
4 – Goldman Sachs
5 – Citigroup
1 – Barclays
2 – JP Morgan
3 – BNP Paribas
4 – Citigroup
5 – HSBC
- Being a primary dealer is still the most important criterion when selecting an intermediary, with 68.8% of investors considering it to be “very important” or “important”. The League Table of the most active primary dealers published by AFT at the beginning of February, which assesses the most active primary dealers 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 89.1%.
o The quality of information, advice and sales coverage remains the second most important service. It is considered to be “very important” by 48% of investors.
o The perceived importance of research decreases in 2017, with 31% of investors deeming it to be “very important”, compared to 37.6% in 2016.
o 26.2% 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 research remains the best rated by investors with an average mark of 7.6/10. The quality of pricing receives a better rating than in 2016, with an average mark increasing to 7.5/10 compared to 7.4/10 in 2016. The assessment of quality of information, advice and sales coverage increases slightly with an average mark of 7.4/10.