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Wall Street firms see record-low commodity revenues

oil barrelGoldman Sachs, JPMorgan Chase and Morgan Stanley posted the lowest commodity revenues on record last year after increased regulation and subdued markets drove oil, grains and copper trading down.

Last year, Goldman Sachs, which has long been considered the top commodity trader on Wall Street, saw its commodity revenues plummet by more than 60 percent year-over-year to $575 million. Goldman Sachs’ current revenues, however, fell by almost 90 percent from $4.5 billion in 2009, Reuters reports.

Morgan Stanley posted a 20 percent decrease in commodity revenues last year, while JPMorgan, which has ramped up its commodities business through a number of acquisitions, saw its revenues fall by 16 percent to $2.4 billion.

Overall, Wall Street commodity revenues have plunged by more than 50 percent since the 2008 financial crisis to only $6 billion. Last year, commodities comprised just 6.5 percent of revenues from fixed-income trading, currencies and commodities, a significant decrease from 30 percent in 2008.

“Ongoing concerns about increased regulation and capital sensitivity [are] pushing banks to re-evaluate their commodities strategies,” London-based research firm Coalition said, according to Reuters.

The Volcker Rule, which bans financial institutions from trading on their own accounts, has caused some market uncertainty, and reduced market instability has led to a decline in trading and hedging activities.

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