Banks Pile Into Fixed Income Trading


Banks piled into fixed income trading last year while hedge fund participation in the market was largely flat, according to a new survey.
The study by Greenwich Associates found that hedge funds' share of U.S. fixed-income trading volume fell to 20% from 29% last year, while overall trading volume int the market rose 12%. Hedge funds have been losing market share as banks and other investors have moved into the sector.
In some sectors, however, hedge fund trading remains very high. Trading volumes in high-yield credit products, leveraged loans and structured products increased, although much of this may be due to delvering. Distressed debt remains dominated by hedge funds, which account for 95% of the trading volume.
Lehman Brothers remains the top fixed-income dealer to hedge funds, according to the survey. JPMorgan Chase, Goldman Sachs, Deutsche Bank and Morgan Stanley fill out the top five.