* Banks feel squeeze on market-making activities
* Commodities trading revenue down nearly a third
* Tricumen report cites capital constraints, EM weakness
* Advisory, M&A fees up 16 percent
By Jamie McGeever
LONDON, Nov 16 (Reuters) - Revenue at the world's largest investment banks fell 12 percent in the third quarter from a year ago, driven by an even larger slump in fixed income, currency and commodity, or FICC, trading revenue, according to data analysis firm Tricumen.
This is another indication of the squeeze on investment banks' market-making activities and market liquidity as they adjust to tighter regulations and cut costs.
FICC trading revenue at the world's 13 biggest investment banks fell to $15.6 billion in the three months to September, overshadowing a slight recovery in equity market trading revenue.
That was down 20 percent from the same quarter last year. Within that, commodities trading revenue was down almost a third.
"Rates markets remained depressed by the combination of the weakness in emerging markets and ever-stricter capital constraints imposed by regulators," Tricumen said in a report dated Nov. 15.
Total Q3 revenue across the 13 banks tracked by Tricumen was $37 billion, down 12 percent from just over $42 billion a year earlier.
That brought total revenue in the first nine months of the year to $139 billion, down 3.9 percent from $144.6 billion in the same period last year.
The FICC slump in Q3 meant revenue in the first nine months of the year totalled $59.2 billion, down almost 10 percent from the first nine months of last year, Tricumen said.
The best-performing area in market trading was cash equities, which saw revenues rise 7 percent in the quarter from a year ago to $3 billion, and by almost 11 percent over the first nine months of the year to $37.8 billion.
Banks also registered an increase in advisory and merger and acquisition fees. They rose 16 percent to $3.5 billion from the same period last year, and over the first nine months of the year they were up 20 percent to $10.2 billion.
The figures cover the five largest U.S. and the eight largest European investment banks, and are based on Tricumen's own definition of product areas, which may differ from banks'. (Reporting by Jamie McGeever; Editing by Mark Trevelyan)