After spending three years refashioning its equity derivatives flow, BBVA's efforts appear to have paid off as it earns top spot for equity derivatives sales and research in the latest Thomson Reuters Extel Survey Three years of investment in technology and a restructuring of equity derivatives flow at BBVA has taken the Spanish bank to the top spot in Europe for sales and research in the latest Thomson Reuters Extel Survey, with 13.22% and 10.65% of votes, respectively. The bank was ranked ninth in distribution and fifteenth in research in the 2012 survey of the services and advice given to fund managers, and second and seventh, respectively, in last year's survey. "In 2012, we had a database fit for the clientele that we had three years ago," says Emilio Sainz de Baranda, global head of equity derivatives sales at BBVA in Madrid. "We have improved our tools to match what we offer with client demand, partly due to the fact that we have added new types of institutional clients. We created a new database and a much more powerful dealing platform." There has been a fundamental change in the client base, says Sainz de Baranda. Three years ago, 80% of its audience consisted of proprietary trading desks, but as most of these disappeared - particularly at US banks - BBVA moved to incorporate asset managers, insurance companies and hedge funds. It also focused on providing support to its private banking clients. Proprietary trading now makes up 30-35% of BBVA's equity derivatives flow trades. When the dealing platform was ready last year, it attracted 32 new clients, says Sainz de Baranda. This year it has already added more than half of its annual target of 30 new clients on the flow side, he says. Using in-house technology, BBVA has created a tool that allows it to quote more quickly so that index quotes now take between one and three minutes and stocks take between five and 20 minutes, depending on the maturity and the stock. "We analysed payoffs, maturities and the underlyings that our clients in Europe were interested in. We had a lack of co-ordination within sales and trading because sales was quoting the best for the client and trading was quoting the best for its books. We had to arrive at a compromise in order to become partners with the client," says Sainz de Baranda. The bank also came to the conclusion that it was providing too many equity derivatives research ideas to clients without monitoring their usefulness. "I prefer one excellent idea every 15 days to five every week. Now we monitor the mark to market of our ideas and advise our clients when to close the position." The results form the basis of an index called Strong Conviction Ideas (SCI) that the bank compiles, and which monitors the outcome of trades based on its best ideas, including relative value, skew, volatility, and going long. The bank is a provider of structured products, which it says will benefit from the improvements to equity derivatives flow. "Equity flow is crucial for structured products as they rely on volatility and dividends, and the better you understand these, the better you can make the products," says Sainz de Baranda. BBVA is also planning to create different platforms for structured products....
Start a FREE trial or subscribe to continue reading:
Start a 4 week free trial
Try Risk.net's premium content for a limited period. Register now for your FREE trial to one of our leading brands.
*not available to previous trialists or subscribers.
Log In or Subscribe Now
Subscribe to Risk.net Business now to access all our premium news & features content for 1 year.
Pay by Credit Card for immediate access.