Banks reap record revenues from corporate equity derivatives bonanza | IFR – International Financing Review

Banks reap record revenues from corporate equity derivatives bonanza | IFR – International Financing Review

Heady equity valuations and a torrent of deal-making activity are helping deliver a record-busting year for corporate equity derivatives desks, a risky but lucrative corner of investment banks’ stock-trading units that helps investors and companies finance, hedge and manoeuvre in and out of large equity holdings.

Global investment banks made US$3.5bn in revenues from corporate equity derivatives in the first half of the year, according to data analytics firm Coalition Greenwich, which projects an increase of roughly 25% in the annual revenue pool this year to a record high of about US$7bn.

That boom is providing a further lift to equities trading divisions at banks such as JP Morgan and Goldman Sachs that specialise in this area, while also fuelling competition among lenders including Barclays and BNP Paribas that are looking to grow these activities.