Shares in leading Wall Street banks were flattened today as privately held rival Jane Street Capital powered past them with record-beating revenues.
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Jane Street, according to a report in the Financial Times, posted trading revenues of $10.1 billion in the second quarter. That’s higher than the $8.9 billion posted by JPMorgan Chase (JPM) and the $7.8 billion reported by Goldman Sachs (GS) over the same period.
Rocketing Revenues
JPM shares were down 0.1% in pre-market trading with GS and Morgan Stanley (MS) both flat. This continues an uneven performance by these major banks over the last 12 months. Although as seen below, since April the banks have all performed strongly.
Jane Street saw its trading revenues rocket 150% higher compared to the same period last year, with profits jumping to $6.9 billion from $2.4 billion in 2024.
Its first-half trading revenue also touched an all-time high for the group of $17.3 billion.
Jane Street has been boosted by the huge stock market volatility created by President Trump’s tariff trade policies. It is not just the tariff rates themselves which have caused uncertainty, but the announcements around potential delays or freezes or surprise hikes and drops in the levies being paid.
That unease prompts investors and traders to reposition their portfolios to find safety or provides opportunities to make short-term trades to take advantage of the disruption.
Private Benefits
Analysts also believe that being a privately held company also has its benefits for Jane Street. They argue that it faces less regulatory scrutiny compared to their listed banking competitors, allowing them to utilize their own capital for larger investments.
It also comes as some of the major Wall Street banks cut their trading operations because of regulations. That includes Morgan Stanley selling off its department focused on electronic market making for U.S. equity options earlier this year.
Larry Tabb, head of Bloomberg’s market structure research, stated on the Futubull website: “There are not many companies in capital markets that can earn this much money. When banks are no longer competitive in trading, clients will ultimately turn to those institutions that can provide them with the best prices directly,” he said.
However, U.S. banks are poised to end the year strongly buoyed by potential interest-rate cuts, moves from the Trump administration to relax regulations and a surge in M&A and IPO activity.
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