Morgan Stanley to beef up trading?

February 1, 2010 | By Jim Kim

It's no secret that Morgan Stanley (MS) has lagged Goldman Sachs (GS) and JPMorgan Chase (JPM) in sales and trading. The Financial Times notes that in 2009, Morgan Stanley had revenues of $5 billion in fixed income trading ($8.8 billion excluding an accounting loss) compared with $17.6 billion in earnings by JPMorgan and $23.3 billion recorded by Goldman Sachs.

CEO James Gorman seems bent on fixing that. He has announced he will hire "hundreds" more traders, on top of the 350 it hired last year, when the trading for currencies, equities, fixed income products and derivatives exploded. While Goldman Sachs and JPMorgan took advantage of the agency void created by the crisis, it remains unclear if there are huge margins to be had from here. Competition will drive down spreads and commissions, so the upside may be less than we assume.

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