May 1 (Bloomberg) -- Morgan Stanley, the second-biggest U.S. securities firm by market value, will open an information technology center in Montreal that may employ as many as 500 people.

Morgan Stanley will invest more than C$200 million ($196 million) in the center, Quebec Finance Minister Monique Jerome- Forget told reporters in Montreal today. The center will open this year and develop software for fixed income, securities processing and investment management, said Jim Rosenthal, a managing director with Morgan Stanley.

The New York-based firm joins Merrill Lynch & Co., the world's largest brokerage, which announced in October it may hire as many as 250 people for a new technology center in Toronto this year.

Quebec will give Morgan Stanley an annual tax credit of as much as C$20,000 per employee, Jerome-Forget said. Morgan Stanley will get the subsidy as part of a provincial plan to subsidize up to 30 percent of wages for new jobs in the information technology industry.

``One of the world's biggest investors has chosen to invest in Quebec,'' Premier Jean Charest said at the press conference. ``This sends a strong signal about the future of our economy.''

Morgan Stanley selected Montreal after studying bids from western U.S. states, India, Eastern Europe and China, Rosenthal said. The firm has about 7,000 technology developers in cities such as Budapest, Glasgow and Shanghai.

Talent Pool

``We very much wanted to come to Montreal because it is a place that has got a great pool of talent, but at the end of the day, we have to make a financial decision too,'' Rosenthal said. ``For some of the technology work we do, it is valuable to us to be close to New York.''

Morgan Stanley is already scouting for offices in the Montreal area. The firm will look to hire graduates in computer science, engineering, mathematics and other scientific fields, Rosenthal said. Average wages will start at more than C$60,000, he said.

``I would expect this center in Montreal to grow over time,'' Rosenthal said. ``We are constrained more by our ability to hire than we are by business conditions. We are such a big user of information technology.''

To contact the reporter for this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net.

Last Updated: May 1, 2008 13:32 EDT