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Morgan Stanley Posts Loss on Eight Trading Days in Third Quarter

Morgan Stanley Posts Loss on 8 Trading Days in Third Quarter
Morgan Stanley had a 40 percent quarter-over-quarter increase in trading revenue, excluding accounting charges. Photographer: Victor J. Blue/Bloomberg

Nov. 7 (Bloomberg) -- Morgan Stanley, the Wall Street bank with the biggest trading-revenue increase last quarter, lost money in that business on eight days in the period, down from 31 days a year earlier.

Traders generated more than $100 million on nine days in the period, compared with two days in the third quarter of 2011, the New York-based company said yesterday in a regulatory filing. None of the daily losses exceeded the bank’s so-called value-at-risk, an estimate of potential trading losses.

Morgan Stanley had a 40 percent quarter-over-quarter increase in trading revenue, excluding accounting charges, led by an 89 percent jump in fixed-income revenue. Chief Financial Officer Ruth Porat, 54, said last month that clients returned to dealing with the firm after shying away in the second quarter as Moody’s Investors Service reviewed its ratings. Moody’s cut the bank’s credit grade two levels in June.

Colm Kelleher, who runs Morgan Stanley’s trading business, will take over the investment-banking unit as Paul J. Taubman, Kelleher’s co-president of institutional securities, leaves at year-end. The company announced plans to reduce so-called risk-weighted assets in the fixed-income trading unit by at least 35 percent from the third quarter of 2011 through the end of 2014.

Bank of America Corp., the second-largest U.S. lender, said in a filing last week that it had one day of trading losses, which were less than $1 million, and one day of revenue of more than $100 million.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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