So who will rule the roost when it comes to FICC-type trading?

We're all accustomed to having Goldman Sachs at the top of the industry, where it has lodged itself the last few years. But JPMorgan has vowed to get competitive in this market, and it now looms as powerful competition. Two big deals helped set the company on this course. In October 2010, it purchased for $220 million the North American gas and power deals unit from RBS Sempra, which was part owned by RBS. Recall that the SEC forced RBS to divest its stake per a bailout deal. In July 2010, JPMorgan purchased RBS Sempra's additional energy units for $1.6 billion, which certainly signaled its ambitions.

The results have been impressive--and well timed. Deutsche Bank analysts note that JPMorgan's share of trading revenue among the top five broker-dealers has risen to as much as 26 percent over the past two quarters from as much as 22 percent over the previous nine months.

"We came away more confident than ever that share gains in FICC trading are sustainable as management noted that strong relative trading results recently reflect the benefits of investment spend over the past couple of years," the analysts told clients, notes Bloomberg. FICC-type trading was thought to be a weak point for the industry so far this year, but JPMorgan and others have managed to beat expectations.

The surge in commodities prices and trading has certainly been a boost not only to JPMorgan, but also to all the big dealers. Income from commodities has surged. This was not necessarily expected, and the revenue has helped offset big losses in fixed income. But commodities remain a small part of the overall FICC pie. JPMorgan may be faring well in other areas as well, perhaps in currencies. 

It will be interesting to see how the JPMorgan vs. Goldman Sachs battle tallied up for the second quarter. - Jim