MUFG and Morgan Stanley to further collaborate on FX offerings

The so-called ‘Alliance 2.0’ builds on the banks’ initial partnership announced back in 2010; Memorandum of Understanding expects implementation in H1 2024.

Japan’s MUFG and Morgan Stanley have signed a Memorandum of Understanding (MoU) to collaborate on their foreign exchange offerings in a bid to further enhance their respective trading businesses. 

Specifically, MUFG’s main banking offshoot (MUBK) will link with fixed income at Morgan Stanley MUFG Securities (MSMS), utilising Morgan Stanley’s global FX business platform.

The move comes in the face of regulatory developments, the constant electronification of markets and the increased adoption of new technologies, said the banks. “Global players have responded by scaling up FX trading volume by expanding and diversifying their customer base and by increasing technology investments,” they said.

Plans are to implement in the first half of 2024, subject to regulatory approvals.

With this new agreement – known as Alliance 2.0 – both sides are set to benefit from an enhanced scale and reach.

According to the banks “the integration of MUMSS’ broad Japan equity coverage and domestic client relationships with MSMS’ global operating platform and international client relationships will better serve clients’ sophisticated demand for Japan equity products and services through thought leadership in research, execution, and corporate access.” 

As well as collaborating on FX trading, the MoU also relates to the Japanese research and equity businesses for institutional clients. 

Morgan Stanley’s plan for the institutional Japan equity business is to consolidate Japan equity research, institutional sales, corporate access, and a part of the execution services functions of both entities into MSMS. Additionally, the Japan equity underwriting business is also set to be optimised.

Additionally, as part of the move, the banks plan to set up councils with representatives from each side, and some employees from the different subsidiaries are set to be posted to MSMS and other of the banks’ entities for the consolidated functions.

The initial alliance between the bank and the Mitsubishi UFJ Financial Group saw the formation of the joint venture between Morgan Stanley and MUFG back in 2010.

Hironori Kamezawa, president and chief executive of MUFG, said: “As part of our enhanced strategic alliance for the coming decades, we will collaborate in global FX business and Japanese research and equity businesses for institutional investors. 

“We aim to continue to provide exceptional services to each of our firm’s clients by adapting in the evolving landscape and incorporating cutting edge ideas.”

The banks have confirmed that client contacts will not change as the respective FX sales businesses continue to be operated independently by both sides. Additionally, MUFG plans to disclose business metrics across both entities.

James Gorman, chair and chief executive of Morgan Stanley, said: “These initiatives are significant not only in terms of providing better services to our clients, but also as examples of ways our two firms can continue to work together and deepen our strategic alliance over the years to come.”

«