How Much Did The 5 Largest U.S. Investment Banks Make Through Equity Trading In Q3 2016?
The 5 largest U.S investment banks generated $6.7 billion in total equity trading revenues over Q3 2016 – 5% less than what they made a year ago and a 9% reduction sequentially. Notably, these five banks usually account for about 40-45% of the total global equity trading revenues for any given quarter. ((Global Capital Markets 2016: The Value Migration, BCS Perspectives))
The equity trading business witnessed a lukewarm start to the year, with depressed oil prices and soft global economic outlook weighing on equity market activity. The trend continued over most of Q2, before an unexpected Brexit vote resulted in a surge in equity trading volumes for the quarter. Although the jump in trading activity immediately before and after the Brexit vote helped equity trading revenues at U.S. investment banks, the gains were partially erased by mark-to-market losses from the sharp decline in market valuation. While the third quarter of a year is already a seasonally slow period, overall economic uncertainty in U.K. and China hurt trading volumes for the period – dragging down equity trading revenues this time around.
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The chart above captures changes in equity trading revenues for each of the five largest U.S. investment banks. The red-to-green shading across a particular row should help visualize how these revenues have changed from one quarter to another for individual banks.
Goldman Sachs and Morgan Stanley dominate the equity trading business with these banks monopolizing the top two ranks on the list for every quarter since Q1 2011. Morgan Stanley has had the upper hand in recent years, as the sweeping changes it introduced to its business model over 2011-2012 shifted the focus of its business model away from fixed income trading and towards equities. You can see how changes in Morgan Stanley’s equity trading yield impacts our price estimate for the bank by modifying the chart below.
See the links below for more information and analysis about the 5 largest U.S. investment banks:
- How Much In M&A Advisory Fees Did The 5 Largest U.S. Investment Banks Generate In Q3 2016?
- How Much In Debt Origination Fees Did The 5 Largest U.S. Investment Banks Generate In Q3 2016?
- How Much In Equity Underwriting Fees Did The 5 Largest U.S. Investment Banks Generate In Q3 2016?
- How Have M&A Advisory Fees For The 5 Largest U.S. Investment Banks Changed Since 2010?
- How Have Equity Underwriting Fees For The 5 Largest U.S. Investment Banks Changed Since 2010?
- How Have Debt Origination Fees For The 5 Largest U.S. Investment Banks Changed Since 2010?
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