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BofA, JPMorgan Reprise Perfect Trading Run in Quarter

JPMorgan Chase & Co. headquarters stand in New York
JPMorgan Chase & Co. racked up a perfect trading record for the second time this year, making money every day last quarter after accomplishing the same feat in the first three months of 2010. Photographer: JB Reed/Bloomberg

Bank of America Corp. and JPMorgan Chase & Co., the two biggest U.S. banks by assets, racked up perfect trading records for the second time this year, making money every day last quarter after accomplishing the same feat in the first three months of 2010.

Traders at Charlotte, North Carolina-based Bank of America made more than $25 million on more than 55 days during the third quarter, the bank said in a Nov. 5 regulatory filing. New York- based JPMorgan, which doesn’t break out its results by quarter, made more than $200 million on 12 days in the first nine months and lost money on only eight, the company said today in a filing.

Goldman Sachs Group Inc., which makes the most revenue on Wall Street trading stocks and bonds, had losses in that business on two days in the third quarter while Morgan Stanley reported 10 losing days. Citigroup Inc. also had two unprofitable trading days in the period, a person briefed on the matter said. Goldman Sachs and Citigroup had perfect trading results during the first quarter.

Lower volatility and improving credit markets helped Wall Street’s trading last quarter, said Jim Mitchell, a senior vice president at Buckingham Research Group in New York. “If you don’t have a lot of volatility and markets are generally positive, you don’t tend to have a lot of trading losses,” Mitchell said.

Carry Trade

JPMorgan said its value at risk, a measure of the average amount the bank could lose on any given day, fell to $109 million in the third quarter from $178 million during the same period last year, driven primarily by a decline in market volatility.

Chris Whalen, a former Federal Reserve Bank of New York analyst and co-founder of Institutional Risk Analytics in Torrance, California, said trading volume was also strong during the third quarter and banks benefited from the “carry trade,” the difference between their low cost of funds and the yield they earned on investments.

Trading revenue at eight of the biggest Wall Street firms declined an average of 12 percent through September from the same period a year earlier. Goldman Sachs generated 69 percent of revenue this year from trading, and said third-quarter trading results declined 36 percent. The seven days that New York-based Goldman Sachs made more than $100 million last quarter were the fewest since the fourth quarter of 2006.

Morgan Stanley said yesterday it made more than $100 million on one day last quarter, versus 18 days in the third quarter of 2009.

Morgan Stanley, also based in New York, had $1.43 billion in total sales and trading revenue for the third quarter, the lowest since the first quarter of 2009. Excluding losses and gains tied to its own credit spreads, Morgan Stanley generated $1.31 billion from trading fixed-income products, down 24 percent from the second quarter.

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