In a Volatile Trading Environment, BTG Pactual Stays Consistent

The Brazilian bank once again leads II’s Latin America Trading Team.

Paulo Fridman/Bloomberg

Paulo Fridman/Bloomberg

It’s a clean sweep for BTG Pactual.

The firm once again topped Institutional Investor’s Latin America Trading Team, based on the votes of buy-side traders and investment professionals with investments in Latin America equities.

Respondents were asked to rate brokers in four categories: overall trading and execution, electronic trading, portfolio/program trading, and high-touch sales trading. BTG Pactual improved its standings from last year to capture No. 1 in each of these.

And it accomplished this feat during another volatile year, according to Guilherme Martins, global of head sales and trading at BTG Pactual. “We can split last year into two parts,” he said. “First semester started strong, driven by equity capital markets activity and strong volumes. Then, more recently, we’ve seen volumes subsiding with declining risk appetite for equities.”

Last year was a challenging one, especially in the second half when local funds in the region faced redemptions and international accounts dealt with global uncertainties. “Nonetheless, we managed to gain market share given our capillarity and local reach,” he added.

The shockwaves were felt further down the leaderboard of the trading rankings, with many of the global firms from last year ceding their spots to domestic players. Santander placed second overall this year, followed by XP Investimentos in third place. Citi and UBS — the top international firms recognized — took fourth and fifth, respectively.

UBS was also No. 2 in electronic trading. Santander placed third in that category, while Citi took fourth. Goldman Sachs rounded out the top five. Portfolio trading, meanwhile, was dominated by local firms, with XP Investimentos in second, Santader in third, and Itau BBA in fourth. UBS was the only global firm to crack the top five in that category.

The final category, high-touch sales trading, saw Santander in second and BofA Securities in third. XP Investimentos placed fourth and Citi, fifth. In line with other II surveys, these attribute scores were aggregated and weighted by each responding firm’s Latin America commission range to create the overall ranking.

According to Martins, the buy-side is still grappling with concerns in the region’s marketplace, which include liquidity and related slippage. “Improvements in technology and regulatory framework in certain markets like Brazil should help address these issues in the short term,” he said. “In general, our clients have been receptive to having a high-touch and low-touch option for navigating LatAm markets and this relationship should be key going forward.”

Recently BTG Pactual has launched BLOX, its proprietary block trading facility in Brazil, as the latest addition to its electronic low-touch suite of products. “It seeks to bring together market participants, both local and foreign, for systematic and immediate block execution while minimizing information leakage and significantly reducing market impact,” he said.

Besides this technology investment, Martins reported no major changes to his team this year, citing low turnover as trading and execution in this region remains a “relationship business.”

“The better we know our clients’ needs, the better we will service them,” he said. “Quality product and consistent service continue to be the keys to success across trading, research, and sales teams.” This collaboration was noted as BTG Pactual once again topped II’s Latin America Research Team.

While BTG Pactual is focused on remaining consistent, Martins predicts more volatility and volumes in the region due to the upcoming presidential elections in Brazil this October, among other factors.

“Asset rotation will continue to be in focus as rate tightening is expected to peak by year end,” he said. “At the end of the day, we need to see more growth in countries like Mexico, Chile, and Colombia to make LatAm more relevant.”

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