THEIR PEERS MARK out Barclays, Deutsche Bank and JPMorgan as the big three in the rates world. These are the firms with the best-established trading presences and strongest distribution networks in the developed-world government bond markets and associated interest rate derivatives. Euromoney’s survey, asking 1,200 of the biggest investors in government bonds and users of interest rate derivatives which firms they put their business through during the 12 months from September 2009 to September 2010, largely bears this out. Barclays Capital’s market share, looking in aggregate at government bonds and interest rate swaps across the maturity spectrum from two years to 30 years, is impressive enough in dollar rates and stunning in euros. Harry Harrison, head of rates trading at Barclays Capital, says simply: "We have a wide variety of investing clients with quite divergent needs and views. Today, while bank dealers are offering reasonable balance sheet and liquidity, the supply of government bonds is huge and the intra-day volatility can be high. The fear of a cliff event means dealers don’t want to hold the same amount of risk they used to for an extended period, and so the ability to redistribute bonds through that large investor base is very valuable."
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