Market Share Math

Michael Giberson

So just as Lynne urges you to follow the prodigious output of theWSJ’s Energy Roundup blog, they reveal that they, too, are human by rushing out some less-than-carefully worked out language about market shares among traders in the over-the-counter energy derivatives markets:

According to a recent survey by research firm Greenwich Associates, Goldman is the largest energy-trading firm in the world when it comes to companies trading over-the-counter energy derivatives. Goldman controls 40% of the market, followed by Morgan Stanley, which has a 35% market share, and Barclays Capital, which was used by 27% of the companies surveyed by Greenwich.

So, by a little mental math, it looks like the top three firms have locked up 102% of the market. No wonder the smaller firms have to work so hard.

3 thoughts on “Market Share Math

  1. Of course, if “market share” is defined as “what percentage of market participants use your services”–as the language applied to Barclay’s implies–then the arithmetic problem goes away. All that’s necessary is for market participants to use multiple traders for their business. But, then, the writer is conceptually confused.

  2. Exactly what I was thinking. I think it was the use of the phrase “controls 40% of the market,” that attracted my attention. If the customers are using more than one firm to handle derivatives trading, then it isn’t the energy-trading firms that are in control.

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