Dealers suffer in euro rates desert

Analysis shows collapse in swap and bond bid/offer spreads, as traders say business is “unsustainable”

Eoin Coveney, nbillustration.co.uk

Welcome to the great European rates desert: bid/offer spreads have more than halved in many flow products over the past two years, with total revenues – the available ‘wallet’ – shrinking 37%. 

Around 40 dealers are trapped in this unforgiving terrain, and it’s taking a toll, with some now privately describing their business as doomed unless something changes.

“The whole thing is in question – the business is not sustainable,” says the head of flow rates at one large European bank.

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