Goldman Sees MiFID Equities Headwinds, Some Offsets: Nomura
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Key focus in equities business during Nomura Instinet meeting with Goldman CFO Marty Chavez earlier this week was on potential impact from new European trading rules called MiFID II (Markets in Financial Instruments Directive), analyst Steven Chubak writes in note recapping meeting.
- Chavez noted expectations for severe downward rev. pressure with any regulatory/market structure change over the years (like Regulation NMS, decimalization); said MiFID II is no different
- At the same time, rev. headwinds have generally been at least partly offset by opportunities; for example, shift from active to passive hurt equity commissions but also prompted new products
- Chavez said GS scale, differentiated content position firm well
- Messaging at meeting suggests GS is starting to focus on growth after prioritizing control levers (capital, expense mgmt), which may have dragged on rev./pricing; progress may be obscured by challenging 2Q; GS acknowledged recent FICC weakness raises questions about appropriate balance between control and growth
- Chavez highlighted growth prospects in number of areas, including Marcus (room for further loan growth), consumer adjacencies, other tech-focused opportunities, like providing data analytics to clients, recent investment in quant fund offerings
- GS up as much as 2.1% to highest intraday since May 26 while S&P 500 financials (S5FINL) gains as much as 1.5% to highest since March 21, KBW banks index (BKX) rises 2% to highest since May 9