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Barclays Capital links up with S&P to offer trading ideas


Date: Wednesday, September 13, 2006
Author: Chris Hughes, FT.com

From the FT: Barclays Capital, the investment banking unit of Barclays, is to strengthen its equity derivatives franchise by offering trading ideas inspired by equity research produced by Standard & Poor's. Barcap has been mostly a debt capital markets firm since it was created when Barclays sold its cash equities business to Credit Suisse in 1997. But it kept an equity derivatives unit, which accounted for 17 per cent of Barcap's 3.4bn of income in the first half of 2006.

The expansion of the hedge fund community has created increasing demand for equity derivatives, which can be used to hedge underlying equity positions traded through Barcap's rivals. The partnership with S&P - which is better known for its credit rating agency - will fuse two contrasting investment approaches. Barcap's derivatives research is based on quantitative techniques and analysis of stock volatility. S&P's equity research uses more traditional methods, examining company fundamentals to establish whether stocks are headed up or down in value.