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The cash equities model is broken. An industry plagued by overcapacity and weak profitability can’t cope with higher costs and lower volumes. Some investment banks are trimming equities headcount, when they really need to decide whether they should be in the business at all.

This is a market that has long been crying out for consolidation. The largest 10 investment banks control only half of the global revenue from cash equities trading. That’s lower than in any other sales and trading business line, according to Deutsche Bank research. And the high costs associated with equity research erode revenue while contributing little in fees.

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