THE Royal Bank of Scotland is not the only bank to have profited from the volatility in markets by generating substantially higher revenues from trading securities.
The rise in trading revenue yesterday was attributed to higher sales of interest-rate hedging instruments by the corporate and investment division. The financial results showed that the bank had traded contracts on bonds worth £5 billion, compared with £3 billion in the equivalent period last year.
Trading profits at HSBC were also significantly higher than last time, at $1.2 billion (£750 million), after strong gains in foreign exchange trades in addition to sales of other derivative contracts.
On Wall Street the investment banks, who have traditionally been strong in proprietary trading, have also made a killing in recent weeks, particularly in trading of fixedincome products.
Morgan Stanley’s trading revenues in the first six months of the year were $4.8 billion, although the figure includes commission generated from straightforward share sales for clients.
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According to filings with the Securities and Exchange Commission, there were not many days in the second quarter when the Wall Street firms lost money because the environment for trading fixed-income products has been favourable. This year Goldman Sachs said that it was committing more money to trading.
Trading revenues for the first six months at Goldman Sachs were $6 billion.
The second-quarter results will fuel debate on the sustainability of trading revenues.