Goldman Sachs licks wounds in equities trading as peers grab share

Tue Apr 18, 2017 5:33pm EDT
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By Olivia Oran

(Reuters) - Goldman Sachs Group Inc GS.N on Tuesday became the first Wall Street bank this earnings season to report lower equities trading revenue, signaling it was unlikely to reclaim the top market share ranking from Morgan Stanley MS.N any time soon.

People familiar with the business said a combination of outdated trading technology, a late effort to court quantitative funds and overall fee pressure on the bank's key clients has blunted Goldman's edge. It now ranks No. 2 behind its biggest rival.

Last year, the once-dominant bank fell more than $1 billion behind Morgan Stanley MS.N in equities revenue, marking the widest-ever such gap between the firms. That gap, which has been growing for years, has raised pressure from investors looking for answers and prompted Goldman to rethink its strategy.

"If they're not experiencing the same good results as their peers, you may have to question if they're owning up to their issues," said Jerry Braakman, chief investment officer of First American Trust, which holds Goldman shares.

(GRAPHIC: Goldman vs. Morgan Stanley

Goldman executives acknowledge that the business has taken a hit and say they are trying hard to turn things around. They point to some key hires and investments they have made in trading technology to win over new types of customers.

But a full rehabilitation will take some time, they said. The executives requested anonymity because they were not authorized to speak publicly.

A spokeswoman for Goldman declined to comment.   Continued...

A Goldman Sachs sign is displayed inside the company's post on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 18, 2017. REUTERS/Brendan McDermid