A chaotic run in stock markets is unleashing a windfall for banks’ equities traders.
JPMorgan Chase & Co. is on track to boost revenue from equities trading by more than 30% this quarter from a year earlier, according to people with knowledge of the matter. If the trajectory holds, the firm would surpass its $3.3 billion record set four years ago.
Such a trend could spell even bigger bounties at Goldman Sachs Group Inc. and Morgan Stanley, which typically vie for the industry’s stock-trading crown. While JPMorgan’s increase is particularly steep, Goldman’s equities unit is also running ahead of its pace last year, when it reaped $3.3 billion in the first three months, the people said, asking not to be named because they weren’t authorized to speak publicly.
Market swoons set off by President Donald Trump’s abrupt policy announcements are — for banks, at least — creating a rare bright spot amid signs of economic trouble. But the gyrations have tripped up hedge funds, stalled dealmakers’ talks on prospective mergers and shaken consumer confidence.
The resilience of equities desks is a nod to their evolution since the 2008 financial crisis. Their earnings hinge less on taking risks with their balance sheets and more on facilitating surges in client trading in response to price swings. Individual stock moves have unleashed bursts of derivatives trading, driving up banks’ gains.
Representatives for JPMorgan and Goldman Sachs declined to comment.
The boon for banks contrasts with the impact on multistrategy hedge funds — the big, all-weather investing platforms geared toward eking out gains irrespective of market conditions. The two largest, Ken Griffin’s Citadel and Izzy Englander’s Millennium Management, posted rare losses in February and slumped further in early March.
There’s pain in other corners of investment banks. Some dealmakers are ruing predictions that Trump’s return to the White House would unleash a wave of activity. Instead, they’re grousing about the uncertainty created by sudden tariff proclamations. The volume of new transactions announced globally this year is lower than at the start of 2024.
Morgan Stanley Co-President Dan Simkowitz said as much on Tuesday. Merger and acquisition announcements and new equity issuance are “certainly on pause” as clients assess Trump’s policies, he said at a conference hosted by his bank.
Before 2008, big US banks made proprietary bets on stocks to reap billions of dollars a year, rather than confining themselves to just passively fielding client orders. But as new regulations reined in risk-taking, banks leaned on other aspects of their businesses, such as providing financing to clients interested in levering up bets to juice returns.
Three banks have dominated the stock-trading business over the past decade. Morgan Stanley held the top spot for seven years starting in 2014 before ceding it to Goldman.
Along with JPMorgan, the trio raked in almost $36 billion from their equities businesses last year, pulling further ahead of competitors.
This story was originally featured on Fortune.com
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2025-03-18 19:44:39
