Morgan Stanley reached a deal with its prop-trading head Peter Muller; the desk will spin off into a new firm at the end of 2012, according to the Wall Street Journal.Muller, a quant who has been making a ton of money for Morgan Stanley since ’93, will probably take about 60 others with him when he leaves, and the bank will keep a stake in the new firm.
rumours surfaced in November that negotiations over a split were in the late stages.
Though Morgan Stanley and its prop traders have talked about splitting for a long time, the Volcker Rule in the Dodd-Frank regulation spurred a faster detachment.
Similar breakups are taking place in banks throughout Wall Street because of Fin-Reg – Goldman Sachs’ Principal Strategies desk will begin trading as a new firm in March.
Morgan Stanley will also probably provide trading and prime-brokerage services to the new outfit, which is going to be called PDT Advisors, according to the WSJ; the desk is known as PDT – shorthand for ‘Process Driven Trading’ – now.
As the banks extracts its capital from PDT, the unit will raise funds from outside investors.