The decline in banks’ fixed income, currencies and commodities revenues continues to sound alarm bells. Some firms may be reporting better-than-expected second-quarter results but it is hard to classify this as good news, particularly as the bar had been set deliberately low following a very bad first quarter. Revenues are still down, just not by as much.

Many hope this poor performance is purely cyclical. But there is plenty of evidence to suggest the trend is more permanent. A perfect storm of regulation, technology, and increased competition from alternative intermediaries is affecting the ability of banks to increase profits. FICC is critical because when FICC suffers, neither equity trading nor investment banking (origination and M&A) are likely to pick up the slack. FICC represented roughly 70% of after-tax industry operating profit in 2012 and over 50% in 2013.