Citi and JP Morgan absent from Fed programme

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The list of eligible dealers for the Fed’s bond and exchange-traded fund programme for the 12th May has been published and it is missing Citi and JP Morgan, two of the world’s largest bond dealers. Citi declined to comment as to why it was absent from the list. JP Morgan did not respond to requests for comment.

The Federal Reserve Bank of New York began to buy fixed income exchange-traded funds (ETFs) on 12 May 2020 via its Secondary Market Corporate Credit Facility (SMCCF). Trading is currently being managed by BlackRock Financial Markets Advisory, acting at the sole direction of the New York Fed on behalf of the facilities.

That trading role is expected to be opened to a competitive bidding process “once the exigent need to commence operations of the facilities has passed.” The facility’s programme is currently planned to close in September 2020, giving a maximum four-month window for another asset manager to pitch for the role and step in, once the initial commencement period is over.

Dealer selection is based on those primary dealers that meet the ‘Eligible Seller’ criteria and that have completed and processed the ‘Seller Certification’ forms. Additional counterparties will be included later based on due diligence and compliance checks.

Currently the firms that BlackRock can trade with are:
• Barclays Capital
• BMO Capital Markets
• BNP Paribas Securities
• BofA Securities
• Cantor Fitzgerald
• Goldman Sachs
• Jefferies
• Mizuho Securities
• Morgan Stanley
• NatWest Markets Securities
• TD Securities
• UBS Securities
• Wells Fargo Securities

In 2019 Citi and JP Morgan were ranked highest in the Greenwich Associates ‘Share and Quality Leaders in Global Fixed Income’ rankings.

At the top of the 2019 ‘Greenwich Share Leaders’ was Citi, which ranked best of all dealers in Overall Global Fixed-Income Market Share. JP Morgan was next, followed by Goldman Sachs, Morgan Stanley and, finally, BoA Securities and Barclays, which were tied for the No.5 spot.

HSBC topped the list of Share Leaders in Fixed Income – Emerging Markets alongside Citi, followed by JP Morgan.

Citi and JP Morgan were the 2019 Greenwich Quality Leaders in Overall Global Fixed-Income Service. These two banks also share that designation for both Global Fixed-Income Sales and Global Fixed-Income Trading Quality, while JP Morgan alone claims the title of 2019 Quality Leader in Global Fixed-Income Research.

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