Report: Banks to lose billions from new swaps rules


Banks could lose up to $4.5B in annual revenue as new regulations alter how swaps are traded, according to a report from McKinsey & Co. That amount is equal to 35% of the $13B in revenue booked by banks from trading in rate derivatives, and it comes at a time when FICC business is already on the decline.

At issue are new rules requiring swaps trade on electronic systems rather than over the phone ("Thanks, big boy"), and the greater transparency should bite into profits. To counter this, says McKinsey's Roger Rudisuli, banks will have to cut costs and realign teams to focus attention on fewer customers.

The usual suspects make up the 5 largest U.S. swaps dealers: JPM, C, BAC, GS, and MS.

ETFs: IAI, KCE, KBWC

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Comments (15)
  • Drew Robertson
    , contributor
    Comments (373) | Send Message
     
    These guys. http://on.mktw.net/1iF...
    25 Jun 2014, 10:14 AM Reply Like
  • funfundvierzig
    , contributor
    Comments (4372) | Send Message
     
    The negative news for the long mismanaged and malmanaged Bank of America is relentlessly unending. …funfun..
    25 Jun 2014, 10:17 AM Reply Like
  • smcke0wn
    , contributor
    Comments (3) | Send Message
     
    Swaps are hugely profitable when you don't have to pay out, and then they tank your profit margins entirely when they start firing off. A lost revenue stream now may be worth it, if you don't blow up your firm in the next crash.
    25 Jun 2014, 10:23 AM Reply Like
  • gwynfryn
    , contributor
    Comments (6445) | Send Message
     
    So that's how it works? An irresponsible way of earning, to my mind! They're basically lighting a fuse to a bomb that they hope won't go off until they are safely out of the way.
    25 Jun 2014, 11:36 AM Reply Like
  • dictionshunary
    , contributor
    Comments (685) | Send Message
     
    BAC mgmt should be praised for having righted the ship and steered it through all the mess that the current administration put on it. BAC will emerge from all these negative happenings and attacks from the DOJ and disgruntled former fired for cause fun type employees. We highly recommend BAC at this level and forecast mid to high twenties by the end of the year. Long BAC. Buy more.
    25 Jun 2014, 01:04 PM Reply Like
  • Wow72
    , contributor
    Comments (584) | Send Message
     
    All's we see under this Admin is Banks Losing... More bad news...I thought we were going to clean them up and get them producing... Guess Not!
    25 Jun 2014, 01:34 PM Reply Like
  • Hello Again 83
    , contributor
    Comments (669) | Send Message
     
    THE SKY IS FALLING!!!
    25 Jun 2014, 02:09 PM Reply Like
  • acesfull
    , contributor
    Comments (433) | Send Message
     
    Hey, a better idea. The government goes in, confiscates all the assets, puts it in a fund to aid the needy and federal employee pension funds. If you still like your bank, you can keep your bank, period. But there won't be anything left in the vault. Society can then benefit.
    25 Jun 2014, 04:46 PM Reply Like
  • vman
    , contributor
    Comments (152) | Send Message
     
    ace... you are on the right track... looks like the new Fannie and Fred will be McTarullomae....

     

    Scott Trade: Federal Reserve governor Daniel Tarullo said the Fed's board intends to play a larger role in evaluating the way banks monitor and plan for risks, the latest push by the regulator to centralize oversight of Wall Street in Washington.
    26 Jun 2014, 07:26 AM Reply Like
  • eXit11
    , contributor
    Comments (819) | Send Message
     
    A better idea is to confiscate and shut down federal employee pension funds and and fire half of of all federal employees as a starter. Second, trim the federal income tax by a third. Then we can see the light at the end of the tunnel.
    26 Jun 2014, 10:37 AM Reply Like
  • outofhere
    , contributor
    Comments (3694) | Send Message
     
    Samurat

     

    I can understand your frustration with the government however if you were to actually cut the federal employees by half. 1] there would be no staff to issue new social security checks for the baby boomers. 2] No staff to maintain national parks. 3] Not enough staff or funds to run our transportation systems ie no planes or trains 4] from a numerical stand point no navy, marines or air force and reduced army
    The only positive I could think of congressional and Presidential staff and Cabinet would have to be curtailed.(never happen)

     

    Note: worked 6 years for US Treasury.

     

    The one thing that is run right is the TSP accounts It's like a 401k for Government employees Their history of great returns I would bet is not matched by any mutual fund.
    27 Jun 2014, 05:13 PM Reply Like
  • outofhere
    , contributor
    Comments (3694) | Send Message
     
    VMAN

     

    The staff of the fed is made up of professional bankers. Many have 10 - 25 years in commercial or international banking experience.
    It's not like the bank examiner I met in Chicago who just happen to be related to the then Governor. The governor was later incarcerated so you understand what we were dealing with.
    27 Jun 2014, 05:20 PM Reply Like
  • edhaven
    , contributor
    Comments (90) | Send Message
     
    What's the fuss? We all know how efficient the government is at running things. You know ..... IRS, EPA. HSA and every other thing they have their hands in.
    If I'm wrong name some good things.
    26 Jun 2014, 09:35 AM Reply Like
  • outofhere
    , contributor
    Comments (3694) | Send Message
     
    edhaven

     

    national parks. federal prisons, ( lots of politicians' are inside),NTSB

     

    unfortunately their are more negatives than positive
    27 Jun 2014, 05:24 PM Reply Like
  • 8043601
    , contributor
    Comments (54) | Send Message
     
    Pretty short list, isn't it.
    16 Jul 2015, 10:21 AM Reply Like
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