JPMorgan sees rise in trading risk as rivals hit brakes

JPMorgan still

Wall Street bank chiefs have vilified the profit-crushing markets that opened 2016 as “challenging” and “exceptionally violent and turbulent.” Trading revenue plunged. Job cuts ensued.

Bloomberg News reports that more granular figures in banks’ quarterly reports over the past two weeks hint at decisions managers made to weather that storm, and how they played out -- in many cases not well -- across traders’ desks.

Value-at-risk, an estimate of the most a firm might lose on all but the most exceptional trading days, should theoretically climb as price swings increase, so long as the banks’ holdings stay the same. In JPMorgan’s main trading arm it jumped 59% in the first quarter from a year earlier. But at two U.S. rivals -- Bank of America and Citigroup -- the figures fell as they reined in certain businesses. And a similar drop can be seen across the Atlantic, as firms including Deutsche Bank shrank operations.

JPMorgan blamed market volatility after its surge in value-at-risk, known as VaR. It also acknowledged “increased exposures in fixed income and equities” within its investment bank. That is, it tolerated more risk. Daily trading VaR in that division averaged $54m in the quarter, up from $34m a year earlier. A company spokesman declined to comment.

To access the complete Bloomberg News article hit the link below:

JPMorgan Trading Risk Rose, Rivals Hit Brakes With Markets Amok

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