As the use of derivatives for risk management and cash management continues to grow dramatically, the opportunities and challenges for providers are multiplying.
Global Finance’s second annual awards for the World’s Best Derivatives Providers recognize the banks that have excelled in their service to corporations in each asset class across the three main financial regions of the world. This service is judged in terms of not only competitive pricing and execution capability but also crucial considerations such as customer support, product expertise, research and innovation.
The awards were compiled through the canvassing of opinions from treasurers—involved in all three regions at both the national and international levels—and non-market participants, such as analysts and consultants, combined with market intelligence garnered by the editorial team. Biggest therefore does not necessarily mean best, though the backing of a major force in the interdealer markets does provide obvious advantages that, if augmented with product innovation and strong service levels, can make for a formidable package.
As with last year, efforts to integrate across asset classes emerged as a major theme. With treasurers’ time at a premium, it makes increasing sense for banks to offer a holistic risk management service rather than artificially channeling the business into product silos. As one banker put it, this combined approach enables his team “to be more innovative and focus on whatever key issues keep treasurers and CFOs awake at night, be it share price, leverage or whatever else.”
Another key theme the banks have been seeing over the past 12 months is the growth in corporate cash holdings, which has in many cases afforded opportunities for the creation of innovative derivatives-based cash management strategies. Additionally, regulatory changes in Europe and the United States have added an extra dimension to the consideration of risk and methods of mitigating it.
As ever, long-standing relationships between banks and their corporate customers count for a great deal. However, no franchise is immune to competition. With the growing commoditization of certain types of derivatives on the one hand and the increasing sophistication of corporate treasuries on the other, resting on their laurels is a sure way for derivatives providers to abdicate market leadership.
See owr award winners