Income & Expense
Trading Revenue
Trading Revenue is the bank's income from market-making, proprietary trading, and changes in the fair value of trading-account positions. It is concentrated almost exclusively at the largest dealer banks.
Formula
Trading revenue spans equity, fixed income, currencies, and commodities products. It includes market-making spreads, principal positions, and net derivatives valuation changes. Volcker Rule constraints have limited pure proprietary trading at US bank holding companies since 2014.
Why it matters
Trading revenue is the most volatile income line in banking. JPMorgan, Goldman, Morgan Stanley, Bank of America, and Citi together account for nearly all US bank trading revenue. Strong quarters can add $5-8B at the largest banks; weak quarters can produce losses. Trading revenue is the swing factor in large-bank quarterly earnings surprises.
How to interpret
For non-trading banks (95%+ of US banks) trading revenue is zero or trivial. For dealer banks, trading revenue is best evaluated as a share of total revenue (typically 15-35% for universal banks) and against year-over-year trajectory.
Thresholds
| Range | Label | Interpretation |
|---|---|---|
| 0% | Non-dealer | Typical for community and regional banks. |
| 0–15% of revenue | Limited | Small trading desk; client-facing only. |
| 15–35% | Significant | Major dealer-bank operation. |
| > 35% | Heavy | Trading-dominant revenue mix. |
Worked example
Frequently asked
Did the Volcker Rule eliminate proprietary trading?
It eliminated pure proprietary trading at US bank holding companies. Market-making, hedging, and underwriting are still permitted. The line between proprietary and market-making has been a long-standing implementation question.
Why is trading revenue so volatile?
Because it combines volume (which scales with market activity) and volatility (which scales with rate, equity, and FX moves). Both can swing quarter to quarter, producing 30-50% variations in trading revenue at the same bank.
Which products generate the most trading revenue?
Fixed income (rates, credit, FX, commodities, securitized products) generates substantially more revenue than equities for most US dealer banks. Rates and FX trading are the largest single subcategories at JPMorgan and Citi; commodities is most concentrated at Goldman Sachs.
Sources
- FFIEC Call Report Schedule RI, Line 5.c
- Bank Holding Company FR Y-9C trading-revenue disclosures
See Trading Revenue across 4,335 US banks
BankRegReports ranks every FDIC-insured institution by Trading Revenue, refreshed quarterly within 48 hours of FFIEC release.