Bloomberg News

Morgan Stanley May Gain From Wall Street’s Fixed-Income Shift

November 15, 2011

Nov. 15 (Bloomberg) -- Morgan Stanley, the sixth-biggest U.S. bank, may benefit from a decline in the dominance of fixed- income trading on Wall Street, said Paul J. Taubman, co- president of the firm’s institutional-securities group.

Fixed-income revenue grew in the last decade to almost two- thirds of investment banking and trading revenue for the financial industry, Taubman, 50, said today at an investor conference in New York. Around 2000, the revenue was evenly split between fixed-income, equity trading and investment banking, he said.

“We suffered as much as anything else from a mix shift away from those businesses where we had historic leadership positions,” Taubman said. “There’s no doubt that the institutional-equities business and the investment-banking business are likely to comprise an ever-increasing share of the overall Street wallet for institutional revenues.”

Morgan Stanley generated $4.9 billion from fixed-income trading and $4.9 billion from equity trading in the first nine months of the year, excluding accounting adjustments. JPMorgan Chase & Co. and Citigroup Inc. generated more than twice as much revenue from fixed-income trading as equities. All three firms are based in New York.

Morgan Stanley also had $3.3 billion in revenue from investment banking. That represented an increase of 20 percent from a year earlier, a bigger jump than any of its largest competitors, said Taubman, who oversees investment banking and capital markets.

Chief Executive Officer James Gorman set out a goal earlier this year of gaining 2 percentage points in fixed-income-trading market share.

“Every indication” is that the investments made toward that goal are paying off with increased share, Taubman said today at the conference, hosted by Bank of America Corp.’s Merrill Lynch unit. The number of corporate clients using the firm’s debt-derivatives services climbed 33 percent from a year earlier, Taubman said.

--Editors: Steve Dickson, William Ahearn

To contact the reporter on this story: Michael J. Moore in New York at

To contact the editor responsible for this story: Rick Green at

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