Goldman’s Currency-Trading Revenue Fell on Options Bet, WSJ Says

Goldman Sachs Group Inc. (GS)’s revenue from its currency-trading unit slumped during the third quarter after a wrong-way bet in the foreign-exchange market, the Wall Street Journal reported.

A structured options trade tied to the U.S. dollar and Japanese yen exacerbated the drop in the three-month period from the second quarter, the Journal said today, citing people it didn’t identify. The bank’s foreign exchange options desk posted a net loss, the newspaper said. It isn’t clear how large the trade was or how long it was in place, according to the report.

Michael DuVally, a spokesman for the New York-based bank, declined to comment. The company, which had the steepest drop in trading revenue among Wall Street’s largest banks, posted trading losses on 15 days during the third quarter, the most since 2011.

The bank posted more than $1 billion in market-making losses on currency products in the third quarter, Reuters reported, citing U.S. Securities and Exchange Commission and Federal Reserve filings.

Goldman Sachs said in its quarterly filing to the SEC that the disclosure isn’t representative of how it manages its trading business, and that some losses or gains on one product may be booked in other units.

Photographer: Victor J. Blue/Bloomberg

Men cross the street in front of Goldman Sachs Group Inc.'s headquarters in New York. Close

Men cross the street in front of Goldman Sachs Group Inc.'s headquarters in New York.

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Photographer: Victor J. Blue/Bloomberg

Men cross the street in front of Goldman Sachs Group Inc.'s headquarters in New York.

“A significant portion of the firm’s cash instruments and derivatives has exposure to foreign currencies and may be economically hedged with foreign currency contracts,” the company said in the filing.

Positions in emerging markets caused the losses following the Fed’s decision to continue its bond-buying program, Reuters said, citing two people familiar with the matter.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net

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