And the winners are…

Goldman Sachs leads the flow equity derivatives market in North America and J.P. Morgan holds the No. 1 spot in Europe, according to the latest data from market consultancy Greenwich Associates.

The U.S. stock market is smashing records on a near daily basis, and equity markets around the world are strong. However, globally volatility remains at historically low levels, Greenwich said. The lack of volatility reflects and has contributed to a sustained downturn in trading volumes. Although strong equity markets and low interest rates are prompting investors to take money off the sidelines, more and more investment assets are flowing into index funds that don’t require the trading and hedging activity inherent in most active management strategies.

Together, these trends have lessened demand for equity options, swaps and futures, taking the steam out of the flow equity derivatives market. “Brokers in this market would love some volatility—whether it came from a spike in investor conviction or fear,” said Greenwich Associates Managing Director Jay Bennett.

Sluggish demand has not diminished the commitment of the world’s leading brokers to this business. Although banks have become more careful in their allocation of resources and capital—not just in derivatives but across the board—the 2017 Greenwich Leaders are defending their positions to be ready for an uptick in volume in this critical, and in spots highly profitable, business.

In North America, Goldman Sachs and Citi lead the market in Equity Options and Volatility Products, with relationship penetration levels of 65%–69%, followed by Bank of America Merrill Lynch and Morgan Stanley, which are also statistically deadlocked at 57%–60%. In Equity Swaps, over three-quarters of market participants trade with the leader Goldman Sachs. With a relationship penetration of 59%, Goldman Sachs also leads in Equity Futures, followed by Morgan Stanley and Bank of America Merrill Lynch in second place.

In Europe, J.P. Morgan’s 69% relationship penetration gives the firm a commanding lead in Equity Options & Volatility Products, ahead of Société Générale and Morgan Stanley, which are tied in second place. In Equity Swaps, J.P. Morgan leads with a 49% market penetration, followed by six brokers statistically tied with penetration scores between 30% and 36%. In Equity Futures, J.P. Morgan, Morgan Stanley and Goldman Sachs are statistically tied atop the market at 38%–42%, followed by a three-way tie among Bank of America Merrill Lynch, UBS and Deutsche Bank.

Greenwich Associates research shows a large historic correlation between relationship penetration and quality of service in flow equity derivatives. Since sales, pricing and execution are also primary components of service quality in this market, brokers who rate high on quality also tend to win the most trades. The 2017 Greenwich Quality Leaders in Equity Options & Volatility Products are Citi and Goldman Sachs in North America, and Bank of America Merrill Lynch, Deutsche Bank, J.P. Morgan and Société Générale in Europe.