Morgan Stanley back on top for US insurer FX forwards

Morgan Stanley has overtaken Citi as the top bank for FX forwards trades with US insurers in the final quarter of 2024, thanks to an uptick in trading with Massachusetts Mutual.

The US dealer leapt from second place in Q3 to retake top spot in Q4 on the back of a $1.7 billion uptick in positions with Mass Mutual, despite the latter’s overall volume decline in the quarter. Morgan Stanley was last top of the table in Q4 2022.

The move increased Morgan Stanley’s market share of volumes among US insurers by 2.87 percentage points to 13.6%, above Citi’s 11.2% share, according to industry filings collected and analysed by FX Markets’ Counterparty Radar service.

Mass Mutual retained second place among insurers, despite cutting a net $1.3 billion from its G10 FX forwards positions in Q4 compared to the previous quarter. The changes saw it cut $1.7 billion in trades with State Street – pushing the bank from eighth spot in the dealer rankings in Q3 down to seventeenth in Q4 – and completely halt transactions with Crédit Agricole.

TIAA added $733 million of positions with JP Morgan, bringing the bank back into the dealer top 10 in Q4. Mizuho also added $462 million with Global Atlantic.

Overall, there was a 4.89% increase in US insurers’ FX forwards positions in Q4, buoyed mainly by a $2.5 billion surge in the trading of G10 currencies.

The largest contributor to this growth was Prudential, which saw the most significant quarter-over-quarter increase among insurers. Prudential’s G10 FX forwards positions increased by $2.2 billion to nearly $7 billion in Q4, elevating it to fourth place in the rankings. Global Atlantic added $1.5 billion of positions in the quarter, while TIAA’s G10 FX forwards holdings grew by $559 million.

Otherwise, the insurer rankings remained largely static, with Athene US continuing to lead with a 25% share of all volumes.

Across all insurers, the euro/US dollar currency pair saw its largest quarterly volume in over two years, with insurers adding a net $2 billion of positions in Q4. TIAA engaged in some of the quarter’s heftiest trades in the pair, entering $688 million and $558 million positions with TD Securities and JP Morgan in Q4, respectively. The JP Morgan trade is particularly lengthy, expiring in December 2025.

The largest net reduction of positions was in sterling/US dollar, which fell by a net $263 million in Q4 compared with Q3. Despite this, Security Benefit had two jumbo long-dated cable trades in CIBC on its books at the end of Q4, for $517 million and $416 million, both with CIBC and expiring in February 2025.