Fixed income market in Europe is set for growth and major changes in this sector are on the horizon, according to a new independent study published by Pershing, a BNY Mellon company and Investance.

The study, entitled ‘European Fixed Income: Ready for Lift Off’, is a component of Pershing’s thought-leadership programme, commissioned by Pershing and independently executed by Investance.

It offers an analysis of important trends shaping the investment landscape and provides insight into a range of developments that include changes to the structure of the markets, the emergence of new business models and the impact of competition and regulation on institutional clients.

The topics covered in the study include: post trade lifecycle and the significant changes as a result of rapid market growth, years of underinvestment, increasing regulation and price compression; a discussion on what new solutions will be required and what new competitors will emerge in the traditional banking and global custody areas in an environment less trusting of banks; the capital gap between balance sheet and trading activity; and an overview of the new merchant bank entrants taking market share formerly controlled by the European bulge bracket firms.

The analysis is based on industry research and interviews with leading industry figures and delivers a view of the evolving European markets. Expert interviews, survey data, trade publications and a various other sources are part of this report.

Peter Christmas, chief relationship officer at Pershing, said: “Capital constraints, economic uncertainty and increased levels of caution characterise the current attitudes of institutional investors. The emergence of new participants and new strategies is significant in the long-term development of the fixed income marketplace.”

Roger Braybrooks, head of UK consulting at Investance, said: “This was a very exciting piece of research for us to carry out with Pershing. The new merchant banks, as we term them, are using today’s unprecedented conditions to offer clients an agency and advisory service that harks back to the days of ‘brokers’ rather than ‘broker-dealers’. This is changing the structure of the market from execution right through to settlement and clearing.”

Investance is a global business & technology consulting firm focused on capital markets, asset management, investor services, insurance, private and retail banking.