US banks’ trading divisions becalmed as market volatility hits record low
New York — Trading revenue is expected to be a black spot in US banks’ third-quarter earnings, as market volatility remained low, and investors have little hope the fourth quarter will be much better. US banks’ equity trading volume has been hit by record lows in volatility as investors have less reason to trade if stocks are not moving much. At the end of the third quarter, the quarterly average for the CBOE market volatility index was at its lowest on record. On top of this, traders said that equity trading had also been damped by an ongoing rise in popularity of passive investment instruments such as exchange-traded funds (ETFs) over active investing. Trading volume for fixed income, currencies and commodities (FICC) was also hurt by weak volatility in the quarter. Making matters worse, banks face a difficult comparison with the year-ago quarter when investors were busy reacting to the Brexit vote and preparing for the US election. "August was very slow. We saw some fits and star...
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