Weak trading conditions drive Morgan Stanley cuts
Job losses within the sales and trading division at
Morgan Stanley have been driven by the current market environment rather than any changes to the bank’s trading operations, according to a source close to the matter.
Morgan Stanley is planning a tranche of around 30
job cuts this week as part of a 100-person sales and trading staff cull originally revealed earlier this year. The headcount reduction is not limited to any particular trading
area or asset class and has not been driven by any regulatory change or a shift in
the bank’s organisational structure, according to the source.
Although low levels of liquidity across markets
globally have led some investment banks to reduce their headcount, other firms
have reorganised in light of impending regulation. A number of banks have
already laid out plans for restructuring their trading divisions as part of
compliance with the US Volcker rule, which limits the ability of deposit-taking banks to engage in prop trading and invest in private equity vehicles. Such firms include J.P. Morgan, Goldman Sachs
and Citi. In light of Volcker, Morgan Stanley unveiled plans to spin off its prop trading unit in
January last year.
Other firms, such as Credit Suisse and Citi, have repositioned their respective trading offerings in light of the changing
execution demands of institutional clients. At the end of 2011, Citi combined
its wholesale business with its electronic trading offering, led by Tim
Wildenberg, while Credit Suisse combined its US high-touch and electronic
trading businesses under the leadership of Dan Mathisson in March.