What’s $27 Billion to Wall Street? An Alarming Drop in Revenue
Five years ago, fixed-income trading — so called because its keystone product, bonds, typically provides a fixed payout —
generated nearly $103 billion in income for the top 12 investment banks, according to Coalition, a London research firm.
Now, a combination of tough regulations, new technologies, calm markets and changing customer behavior has left
that type of trading a shadow of its former self — and much of Wall Street trying to redefine itself.
He said he had stopped relying exclusively on banks for his trading when he learned
that Jane Street responded more quickly to his trading orders and charged lower fees.
It was a rude awakening for Goldman, which previously had done tens of millions of dollars’ worth of work for the Mexican government, helping it protect itself against swings in the oil market, current
and former employees with knowledge of the trades said.
Trading jobs are much different now — less risky, less glamorous and, most of all, less lucrative.
Not only was Pemex not using Goldman to execute the trades, but Goldman hadn’t even been aware that the trades were happening.
New government rules require banks to hold thicker capital cushions to guard against
losses, which makes trading less profitable by tying up more of a firm’s capital.
Michael Bumkeun Cho, a portfolio manager at Samsung Asset Management in Seoul, South Korea, which manages $200 billion,
specializes in the trading of exchange-traded funds, baskets of stocks or bonds that are easily traded.
