21 November 2023: IEM Finance Survey: Primary dealers as perceived by investors

IEM Finance conducted the 21st online annual survey of French primary dealers’ (SVTs) clients from 4 September to 22 September 2023. Its aim is to assess the quality of commercial relationship and services provided by primary dealers to their clients, as well as clients’ views on the functioning of the French government debt market.

In 2023, 188 investors, representing a total of 118 institutions (Asset Management companies, Banks, Insurance companies...), responded to the questionnaire. This corresponds to a response rate of 25.1% in terms of respondents and 43.2% in terms of institutions surveyed.

Main results of the survey :

1-    The French government debt market:

-    Investor satisfaction is very high on the functioning of French government debt market, both in France and abroad. Among all investors, 99.4% declared to be “very satisfied” or “satisfied”, reaching its highest level since 2014.

-    Liquidity and transparency are highly valued by investors, who consider these criteria to be important for a sovereign issuer, such as France. They were 92.6% to assess liquidity as “very important” and 71% of them had the same assessment regarding transparency. As far as liquidity is concerned, it is the highest level ever recorded. The assessment of predictability has been improving continually since 2018: 59.1% of investors rated it as “very important”, increasing by 11 percentage points since 2019.

-    Liquidity is considered to be satisfactory (“very satisfactory” or “satisfactory”) by a very large number of investors for BTF, nominal and inflation-linked OAT. Among investors who were able to provide their opinion, almost all investors (99.4% in 2023 against 96.2% in 2022) were satisfied. This proportion also increased for BTFs and reached 93.4%, against 90.3% in 2022.

-    Beyond information provided by AFT, a vast majority of investors (94.1%) were “satisfied” by the information received from French public institutions on economic policy and public finances, a number slightly higher than in 2022 (+1.4 percentage points).

-    A large majority of investors declared that they were “very satisfied “or “satisfied” by the tapping of existing securities. Among investors who expressed their opinion, 97.8% declared to be satisfied.

-    Investors, who expressed an opinion, declared to be satisfied with the information published on Green OATs at 98.1%. It is the highest level since the launch of Green OATs.

2-    The Primary dealers - SVTs:

-    On fixed-income markets overall, the top-five most frequently quoted primary dealers by investors as being their main partner are:

2023

2022

1 - J.P. Morgan

2 - BNP Paribas

3 - Citi

4 - Barclays

5 - Deutsche Bank

1 - J.P. Morgan

2 - BNP Paribas

3 - Citi

4 - Société Générale

5 - Crédit Agricole - CIB

5 - Deutsche Bank

-    On the French government debt market, the top-five most frequently quoted primary dealers by investors as being their main partner are:

2023

2022

1 - BNP Paribas

2 - J.P. Morgan

3 - Crédit Agricole - CIB

4 - HSBC

4 - Nomura

4 - Société Générale

1 - BNP Paribas

2 - Crédit Agricole - CIB

3 - Société Générale

4 - Citi

5 - J.P. Morgan

-    For investors, being a primary dealer is still the most important criterion for the selection of an intermediary (the share of investors surveyed who consider this criterion as “very important or important” stands at 73.7%), followed by the League Table published by AFT at the beginning of the year, which assesses the performance of primary dealers on the primary and secondary markets and in terms of the quality of the service offered (35.1%).

-    Investors also gave their opinion on attention paid to the quality of various services offered by primary dealers:

o    The quality of pricing remained largely ahead of investor expectations. Indeed, more than 94% of them were still assessing it as “very important”. The level reached in 2023 (94.6%) is the highest level observed since the launch of the survey in 2003.

o    Information, advice and sales coverage come in second place. Despite a decrease by 12.4 percentage points, half of investors considered those services to be “very important”.

o    Lastly, quality of research and back/middle office were tied for third place, with 28.8% of investors rating them as “very important”. It’s the first time since 2004 that the quality of research did not come ahead of the quality of back/middle office.

 

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