The flow business – sales and trading in a broad range of asset classes including rates, credit, equities, commodities and foreign exchange – is now firmly established as one of the cornerstones of global markets franchises. It has become their bread and butter.
Defining its characteristics, though, can be a tricky exercise. Flow can mean different things in different market conditions. For instance in 2010, the inaugural year for this award, the financial markets were in the midst of normalizing – which generally meant rallying – thanks to some generous liquidity assistance from the world’s main central banks. However, the past 12 months have been quite different. Banks’ flow models have been tested by a series of mini crises, such as a southern European debt crisis, which has seeped into the banking system; political upheaval in the Middle East; and a natural disaster in Japan. Simply providing tight bid-offer spreads wasn’t the way to garner flow business or make revenues.