On December 21, 2015, the OCC issued its Quarterly Report on Bank Trading and Derivatives Activities. According to the report, insured US commercial banks and savings associations reported trading revenue of $5.3 billion in the third quarter of 2015, 3.54 percent ($200 million) lower than the second quarter of 2015 and 5.1 percent ($300 million) down from the third quarter of 2014. Drivers of bank trading revenue included interest rate and foreign exchange contracts, totaling $4.5 billion in the third quarter, though the strong performance was more than offset by weakness from equities. The report also showed that credit exposures from derivatives rose sharply in the third quarter. While the notional amount of derivatives held by insured US commercial banks declined $6 trillion, or 3 percent, during the third quarter to $192 trillion, the decline is not reflective of current activity. According to the OCC, there continues to be significant new business at the dealer firms, but trade compression is more than offsetting normal growth.
The OCC’s Quarterly Report on Bank Trading and Derivatives Activities is available at: http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq315.pdf.