Dimon rolls trading dice with excess capital

13 June 2024Banks, Risk Commentarybank capital, Basel rules, Federal Deposit Insurance Corporation, Federal Reserve, JP Morgan, share buybacks, Stress tests, tradingNick Dunbar

The Fed softened its stress tests, which freed up bank capital, then came the Basel Endgame which would eat it all up again. Now, with the Endgame in doubt, JP Morgan has deployed its excess capital in trading bets

Market RWAs, trading revenues and the Basel Endgame proposal

26 January 2024Banksbank capital, Basel rules, Federal Reserve, tradingNick Dunbar

Banks complain that customers will lose access to capital markets products, but the Fed isn’t buying their argument. Use Risky Finance data to assess the debate between the Fed and the banks.

How Covid forbearance gave banks a three trillion dollar boost

3 November 2020BanksBasel rules, CECL, Covid-19, Dodd-Frank Act, investment banking, tradingNick Dunbar

To keep banks operating smoothly during the pandemic, regulators eased capital requirements and boosted trading profits by underpinning financial markets. Did they go too far?

The Rise of Carry

9 February 2020Book ReviewstradingRobert Carver

Rob Carver reviews ‘The Rise of Carry’ by Coldiron, Lee and Lee

How Goldman punished its FICC failures

1 August 2018Banksbonuses, Goldman Sachs, remuneration, tradingNick Dunbar

As David Solomon replaces Lloyd Blankfein, Goldman Sachs is rejigging its trading business in the wake of lacklustre results. Our new remuneration tool shows how the bank punished underperforming staff last year.

What causes trading volume?

12 April 2018Research & presentationseconomics, tradingNick Dunbar

Trading volume is much higher than economists predict. Quant Tom Hyer addresses the paradox from the perspective of relative value.

Can Goldman recover its trading mojo?

9 March 2018BanksBasel III, electronic trading, Goldman Sachs, MiFID 2, P&L distribution, trading, Value-at-risk, Volcker RuleNick Dunbar

We use risk disclosures to analyse Goldman’s plunge in trading profits, and offer five reasons why revenues are unlikely to recover.

Fear and liquidity in the high-yield market

19 August 2014Credit, MarketsETFs, investing, trading, US high yieldNick Dunbar

Junk bond funds are seeing record outflows. This has been described as a 'six-sigma event', in other words, six standard deviations away from the mean weekly flow, something that if normally distributed should only be expected once in millions of years. By definition that's unusual, but in the context of broader investment in riskier corporate…

Are investment banks like nuclear power plants?

16 September 2011Articles, Banksbanking, operational risk, Societe Generale, trading, UBSNick Dunbar

We don't know the full details of how Kweku Adoboli lost $2 billion at UBS, but as I watch an industry in decline, an analogy springs to mind. Yesterday I had a long conversation with one of the former managers in the chain of command above Jerome Kerviel at Societe Generale. After losing his job…

A free lunch at everyone’s expense

14 August 2011Articlesbehavioural economics, public policy, tradingNick Dunbar

They spoke in a barely comprehensible 'patois' and adopted the trappings of consumerism, powered by new forms of technology. The forces of the law were nowhere to be found. Seeing high street institutions standing unguarded in front of them, they went in and pillaged without hindrance, prompting a mixture of anger and soul-searching among the…