JPMorgan trims commodities trading risk in Q3

JPMorgan Chase & Co, the first major U.S. bank to announce results for the period, reported lower third-quarter profits, including a decline in quarterly revenues in its Fixed Income Markets business, which includes commodities.

The banks said it had cut its average value at risk (VaR) in commodities to $15 million in the third quarter from $16 million in the second quarter. It was up from $13 million in the third quarter of 2010.

VaR is an industry measure for how much of a bank's money is at risk on a day for trading a particular asset class.

The bank does not break out commodity results separately, and made no reference to them after reporting a 22 percent quarterly decline in revenues in its Fixed Income Markets business.

Commodity prices whipsawed in the third quarter as fears of a slowing U.S. economy and the European debt crisis roiled markets, many of which had jumped to multi-month or year highs at the start of this year.

The Reuters-Jefferies CRB Index of 19 commodity futures fell by 12 percent over the quarter.

JPMorgan's VaR as a whole fell in the third quarter, averaging $53 million versus $58 million in the second quarter due to reduced risks in equities as well as commodities.

In equities, the bank's VaR averaged $19 million versus $25 million previously. For fixed income instruments such as bonds, its risk levels rose to $48 million from $45 million, and for currencies, they were up to $10 million from $9 million.

The bank's shares fell 1.5 percent in premarket trading to $32.70.

(Reporting by David Sheppard; editing by John Picinich)

Authors: Commodities - Yahoo! News Search Results

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