OCC: Trading Revenue Falls in Third Quarter

Commercial banks reported total trading revenue of $5.3 billion in the third quarter of 2015, down 4 percent from the second quarter and 5 percent from a year prior, according to the OCC’s Quarterly Report on Bank Trading and Derivatives Activities released today.

“It’s not much of a surprise that trading revenue fell in the third quarter,” said Kurt Wilhelm, the OCC’s Senior Advisor for Market Risk, noting that there is a seasonal trend in trading revenue that tapers in the second half of the year. “What is a bit of a surprise, however, is that it was weakness in revenue from trading equity contracts that caused the decline relative to the last quarter and the third quarter of 2014,” he added. “Revenue from equities normally isn’t a major factor in overall bank trading revenue.”

The net current credit exposure rose sharply in the third quarter to $445 billion – an increase of 10 percent, the report said. The notional amount of derivatives banks held fell by 3 percent to $192 trillion.