View source for Bulge bracket

{{Short description|World's largest investment banks}}
[[File:ChryslerBuildingMidtownManhattanNewYorkCity.jpg|thumb|300x300px|Most "bulge bracket" banks maintain central offices in [[New York City]], one of the three key global financial hubs alongside [[London]] and [[Hong Kong]].<ref name=WorldEconomicAndFinancialSuperCenter>{{cite web |url=http://www.businessinsider.com/top-8-cities-by-gdp-china-vs-the-us-2011-8 |title=Top 8 Cities by GDP: China vs. The U.S. |quote=For instance, Shanghai, the largest Chinese city with the highest economic production, and a fast-growing global financial hub, is far from matching or surpassing New York, the largest city in the U.S. and the economic and financial super center of the world. |publisher=Business Insider, Inc |accessdate=May 21, 2018}}{{better source needed|date=February 2019|reason=This article is about the bulge bracket, so the source needs to support the connection, not merely imply it}}</ref>]]
{{Banking |banks}}

'''Bulge bracket banks''' are the world's largest global [[investment banks]],<ref>{{cite web |url=http://www.yourdictionary.com/finance/bulge-bracket |title=Bulge bracket - Definition of bulge bracket at YourDictionary.com |access-date=March 6, 2009 |url-status=dead |archive-url=https://web.archive.org/web/20090203233720/http://www.yourdictionary.com/finance/bulge-bracket |archive-date=February 3, 2009 }}</ref> serving mostly large [[corporation]]s, [[institutional investors]] and [[government]]s. The descriptor "bulge bracket" comes from the way investment banks are listed on the "[[tombstone (financial industry)|tombstone]]", or public notification of a financial transaction,<ref name="Staff">{{Cite news|url=http://www.investopedia.com/terms/b/bulgebracket.asp|title=Bulge Bracket|author=Investopedia Staff|date=November 25, 2003|newspaper=Investopedia|access-date=February 5, 2017|language=en-US}}</ref> where the largest advisors on investment banking operations (mergers, acquisitions, IPOs, or debt issuance) are listed first.{{r|gilpin19871005}} The designation of a bulge bracket bank is primarily based on the bank's financial advisory business, as opposed to sales and trading.

== Overview ==
Bulge bracket banks usually provide both advisory and financing banking services, as well as the sales, [[market maker|market making]], and research on a broad array of financial products including equities, credit, rates, commodities and their derivatives. They are also heavily involved in the invention of new financial products, such as [[Mortgage-backed security|mortgage-backed securities]] (MBS) in the 1980s, [[credit default swap]]s (CDS) in the 1990s, [[collateralized debt obligation]]s (CDO) in the 2000s, and today, [[carbon emission trading]] and [[insurance]]-linked products.

Bulge bracket firms are usually [[primary dealer]]s in US [[treasury securities]]. Bulge bracket banks are also global in the sense that they have a strong presence in all four of the world's major regions: the [[Americas]], [[Europe, the Middle East and Africa]] (EMEA) and [[Asia-Pacific]] (APAC).

There is often debate over which banks are considered to belong to the bulge bracket. Various rankings are often cited, such as [[Bloomberg, L.P.|Bloomberg 20]], [[Mergermarket]] [[M&A]] league tables, or [[Thomson Reuters league tables]], as well as other rankings.

==History==
According to biographer [[Ron Chernow]]'s 1990 book ''[[The House of Morgan]]'', "in the late 1960s and early 1970s, the top tier—called the bulge bracket—consisted of [[Morgan Stanley]]; [[First Boston]]; [[Kuhn, Loeb & Co.|Kuhn, Loeb]]; and [[Dillon, Read]]." Morgan Stanley appeared above the other members of the bulge bracket by demanding and receiving the role of syndicate manager. While order within brackets was otherwise determined alphabetically, Chernow describes this positioning as being of "life-and-death" importance to the firms. Chernow says that [[Bache & Co.|Bache Halsey Stuart Shields Incorporated]]'s name was chosen based on a desire to be placed as high as possible within its bracket.{{Citation needed|date=June 2024}}

According to Chernow, Morgan Stanley "queasily noted the rise of [[Salomon Brothers]] and [[Goldman Sachs]], which were using their trading skills to chip away at the four dominant firms." In 1975, to more reflect economic reality, Morgan Stanley removed Kuhn, Loeb and Dillon, Read, and replaced them with [[Merrill Lynch]], Salomon Brothers and Goldman Sachs. Chernow describes' Morgan Stanley's place at the top of the bracket as a "gilded anachronism" by the late 1970s.<ref name=chernow/>

{{Blockquote|For Morgan Stanley, the doomsday trumpet sounded in 1979. That year, IBM asked the firm to accept Salomon Brothers as co-manager on a $1 billion debt issue needed for a new generation of computers... After much resounding talk, nearly everybody [at Morgan Stanley] voted to defy IBM and demand sole management. Morgan Stanley was shocked when word came back that IBM hadn't budged in its demand: Salomon Brothers would head the issue, as planned. It was a landmark in Wall Street history: the golden chains [of Morgan dominance] were smashed.<ref name=chernow>{{cite book |last1=Chernow |first1=Ron |author-link1=Ron Chernow |title=The House of Morgan |isbn=9780802198136 |edition=Twentieth anniversary | publisher=Grove/Atlantic, Inc. | year=2010 |chapter-url=https://books.google.com/books?id=sgNUEqkgctEC&pg=PT654 |access-date=3 February 2019 |chapter=Chapter Thirty-One: Tombstones}}</ref>}}

By the 1980s a revised bulge bracket had been defined. ''The New York Times'' in 1987 reported that

{{Blockquote|Of these, six firms—The First Boston Corporation, Goldman, Sachs & Company, Merrill Lynch & Company, Morgan Stanley & Company, Salomon Brothers and Shearson Lehman Brothers—are so powerful that they make up the ''bulge'' bracket, so-called because more often than not they lead the deals, garnering the top tombstone spots.<ref name=gilpin19871005>{{Cite news |url=https://www.nytimes.com/1987/10/05/business/split-in-tombstone-ranks.html|title=Split in 'Tombstone' Ranks|first=Kenneth N.|last=Gilpin |date=October 5, 1987|newspaper=The New York Times }}</ref>}}

In the 1990s, the dominance of the bulge bracket firms was globalizing. In 2001 ''The New York Times'' reported that "The real battle for the bulge bracket is taking place in Europe."<ref>{{Cite web|url=https://www.nytimes.com/2001/02/03/business/international-business-american-bankers-invade-europe.html|title=INTERNATIONAL BUSINESS; American Bankers Invade Europe |first1=Suzanne|last1=Kapner|first2=Andrew Ross|last2=Sorkin |date=February 3, 2001|newspaper=New York Times }}</ref>

== Modern list ==
In 2020, the [[Corporate Finance Institute]], a Canadian financial analyst certification organization, and Wall Street Oasis, an online investment banking and finance forum, listed nine investment banks as part of the bulge bracket category.<ref>{{Cite web|title=Bulge Bracket Investment Banks - List of Top Global Banks|url=https://corporatefinanceinstitute.com/resources/careers/companies/bulge-bracket-investment-banks-list/|access-date=July 19, 2020|website=Corporate Finance Institute|language=en-US}}</ref><ref>{{cite web |title=What Is A Bulge Bracket Investment Bank (BB)? |url=https://www.wallstreetoasis.com/finance-dictionary/what-is-a-bulge-bracket-investment-bank-bb |website=Wall Street Oasis |access-date=September 16, 2021}}</ref> [[Investopedia]] in 2022 listed the same banks.<ref name="hargrave20221223">{{Cite web |last=Hargrave |first=Marshall |date=2022-12-23 |title=What Is Bulge Bracket? |url=https://www.investopedia.com/terms/b/bulgebracket.asp |access-date=2023-03-26 |website=Investopedia |language=en}}</ref> {{as of|2023|03}}, there are eight bulge bracket banks, following the [[acquisition of Credit Suisse by UBS]].<ref>{{Cite web|title=FINMA approves merger of UBS and Credit Suisse|url=https://www.finma.ch/en/news/2023/03/20230319-mm-cs-ubs/|access-date=March 25, 2023|website=FINMA|language=en-US}}</ref> In alphabetical order:
*{{flagicon| USA}} [[Bank of America]]
*{{flagicon| UK}} [[Barclays]]
*{{flagicon| USA}} [[Citigroup]]
*{{flagicon| Germany}} [[Deutsche Bank]]
*{{flagicon| USA}} [[Goldman Sachs]]
*{{flagicon| USA}} [[JPMorgan Chase]]
*{{flagicon| USA}} [[Morgan Stanley]]
*{{flagicon| Switzerland}} [[UBS]]

==Other uses==
By extension, members of the international business community sometimes refer to leading business services providers as "bulge bracket". For example, this term has been used to describe a group of global, highly prestigious law firms with deep expertise across a broad range of topics. However, these firms are more frequently referred to as the [[Magic Circle (law firms)]] and [[Silver Circle (law firms)]].<ref>{{cite journal |last1=Dombalagian |first1=Onnig H. |title=Requiem for the Bulge Bracket?: Revisiting Investment Bank Regulation |journal=SSRN Electronic Journal |date=2009 |doi=10.2139/ssrn.1249441 |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1249441 |access-date=20 March 2025|url-access=subscription }}</ref> Similarly, "bulge bracket" has sometimes been used to describe the [[Big Three (management consultancies)]] (or alternatively "MBB") or the [[Big Four accounting firms]] due to their global reach and strong reputations in consulting and accounting services, respectively.{{Citation needed|date=June 2024}}

== See also ==
* [[Boutique investment bank]]
* [[List of investment banks]]
* [[Primary dealer]]

== References ==
{{reflist}}

{{Major investment banks}}

{{DEFAULTSORT:Bulge Bracket}}
[[Category:Investment banks]]