While there has been widespread chaos among Wall Street, with the coronavirus proving to some alpha male traders that they're not as tough as they think there are, there has been one sliver of the street that has been making a score during the recent panic.
Cash is coming in non-stop at J.P. Morgan's equity derivatives unit, which has generated $1.5 billion in revenue so far this year, according to Bloomberg. That number equals almost all of what JPM reported from all equity market businesses in last year's first quarter. It's also about twice what the desk usually earns.
The monster score for the desk highlights why investment banks have been rumored to keep employees coming in during the city's lockdown. "Some members of the derivatives desk could still be seen sitting closely together inside the bank’s Manhattan offices late last week," Bloomberg noted.
It also shows how large sums of revenue can shift wildly as a result of the overall economic turmoil. The top line boost from this division will likely help offset losses elsewhere. Bank stocks have taken a hit as lending margins are expected to fall due to lower rates. This will negatively impact other parts of J.P. Morgan's business, like wealth management.
J.P. Morgan has the largest share of the market for equity derivatives and as HFTs and hedge funds are strained to help make a market for these transactions due to the record-setting price swings, investment banks have been able to capture more market share. JPMorgan and Citigroup Inc. had together generated about $500 million in additional revenue by March.
And despite scattered (pun intended) reports of J.P. Morgan employees defying social distancing guidelines, the company had previously said in a statement: “We have taken many precautions over the past several weeks to spread traders out within floors and across buildings, and from what we’ve seen they are adhering to social distancing guidance.”
Well, that certainly makes us feel better. And hey, if you're one of the traders at J.P. Morgan literally putting your life on the line to help the investment bank boost its Q1 numbers, don't let anyone tell you that you didn't earn that bonus this year.