Apparently it’s not really the Volcker Rule that’s the reason Morgan Stanley is exiting prop trading, it’s because they aren’t very good at it.
Asked whether Morgan Stanley would exit prop trading in light of the Volcker Rule, CEO James Gorman told Charlie Rose, yes.
“We should not be a firm that is betting our shareholders’ capital for our own benefit, we should be working with our shareholders’ capital for our clients benefit,” Gorman replied, according to Forbes.
But also, the prop trading units at Morgan are kind of take it or leave it, according to Gorman.
The firm has not been “outstanding in our proprietary trading over time,” he explained at today’s SIFMA meeting, so the loss won’t be felt too much by the firm’s bottom line.
Aggregate losses during the financial crisis are the reason that Morgan Stanley has exited “all but one of our proprietary trading businesses.”
The Volcker Rule? Not so much.
“Leverage is a killer,” said Gorman.