Goldman Sachs, and others, say proprietary trading accounts for circa 10 per cent of net revenues – though that may vary considerable from quarter to quarter. Here, however, is an interesting datapoint.
From the Office of the Comptroller of the Currency’s third quarter 2009 report:
That’s trading revenue as a percentage of gross revenue at America’s top banks, and you can see that it’s highest at Goldman, where the ratio ranged from 59 to 69 per cent in the first nine months of 2009.
Total net revenues for 2009, as released on Thursday in Goldman’s Q4 earnings statement, came to $45.17bn, of which reported revenue from trading and principal investments came to $28.88bn. That’s about 64 per cent of revenue, which is in line with the historical OCC data.
Interesting to note then, that if Goldman makes around 10 per cent of net revenues from prop trading – as they stated on their conference call on Thursday – that would mean about $4.5bn filtered down to the Q4 figure of $45.17bn, from that $28.88bn trading revenue pot for 2009. Which suggests a very large proportion (something like 85 per cent) of Goldman’s Sachs-generated trading revenue is, perhaps counter-intuitively, already considered not to be for their own account.
Either way, it rather highlights the upcoming difficulty of defining proprietary trading.
See the links below.
(H/T Sean Corrigan of Diapason Commodities)
Related links:
Just what is prop trading? – Bronte Capital
The Volcker rule, the US analysts react - FT Alphaville
The Volcker rule, the European analysts react – FT Alphaville
Big banks have already figured out loopholes – Clusterstock