BREAKINGVIEWS Banks May Need to Cull Their Trading Desks Further Image London's financial district, which could be hit by a cull of traders as banks come under more pressure to cut costs.CreditCreditHenry Nicholls/Reuters By Christopher Thompson Sept. 26, 2018 Get the DealBook newsletter to make sense of major business and policy headlines — and the power-brokers who shape them. __________ Bankers should watch their backs. There are fewer of them trading fixed-income, currencies and commodities than there were four years ago. But cost-cutting is failing to keep pace with the declines in the revenue that banks make from this business, and that spells a new wave of job cuts on dealing floors. For the 13 biggest global investment banks, the combined cost of such trading is equivalent to 75 percent of the revenue they make from it, according to the analytics company Tricumen. That is broadly unchanged from a decade ago, despite cost cutting. The number of fixed income traders working at the top 12 investment banks has fallen by 12.6 percent in the past four years according to the data provider Coalition. But the revenue that these financial institutions make from fixed income trading has declined 15 percent over the same period. Credit looks particularly shaky: trading revenue from this division has fallen by 45 percent since 2014. Another danger is Britain’s planned departure from the European Union, which is forcing banks to set up multiple centers in the region. Rather than duplicating cost bases, banks are likely to use technology to replace humans.
Wondering if trading revenues have fallen because of lower volumes, or tighter spreads / lower commissions etc?