Morgan Stanley’s Hadden Departs as Head of Rates TradingMichael J. Moore
Morgan Stanley’s Glenn Hadden has left as head of interest-rates trading, citing differences with his bosses over how the business should be run as the firm seeks to boost the unit’s returns.
Mitch Nadel and Jakob Horder were named to replace Hadden, 43, according to an internal company memo yesterday. Horder, who led global structured-rate products, and Nadel, who was head of liquid flow rates in North America, will be co-heads of the unit, the firm said. Mary Claire Delaney, a spokeswoman for the New York-based company, declined to comment.
Ken deRegt, 58, who helped bring Hadden to Morgan Stanley in 2011, left as head of fixed-income sales and trading last year to join hedge-fund firm Canarsie Capital Group. Michael Heaney and Robert Rooney were named to replace deRegt in May, and Hadden said he had differing views on his business than the new leadership, declining to elaborate.
“I’m extremely proud of the success we had at Morgan Stanley, both me personally and the team we built,” Hadden said in a telephone interview. “I have no intention of retiring from investment finance, and my goal is still to serve clients as best I can in whatever capacity that is.”
Revenue from rates trading at the 10 largest global investment banks dropped 40 percent in the first nine months of 2013, according to analytics firm Coalition Ltd., as investors stepped back amid speculation over whether the Federal Reserve would taper its stimulus efforts. Chief Financial Officer Ruth Porat, 56, said in October that the firm was taking “historically low” levels of risk in its rates unit as the business proved “challenging.”
Morgan Stanley’s rates business had a return on equity -- a measure of profitability -- of 5 percent to 10 percent in 2012 and aimed to boost that to more than 10 percent, Chief Executive Officer James Gorman, 55, said in June. Interest-rates trading involves buying and selling products including U.S. Treasury notes and bonds, other government debt, inflation-linked securities and interest-rate derivatives.
Derivatives Week reported the personnel changes yesterday.
Morgan Stanley hired Hadden from Goldman Sachs Group Inc. as part of an effort to boost trading revenue from interest-rate products and currencies. Gorman said in June that the firm had rebuilt its client coverage in those areas, and Hadden said the bank had made “enormous gains” in its share of client business.
Nadel joined Morgan Stanley in 2010 and was head of the fixed-income division in Japan before his most recent role in New York. Horder previously ran the interest-rates trading unit in Europe, Middle East and Africa.
“Jakob and Mitch will focus on aligning the strategy of global rates with the other business units in fixed income, with an intense focus on return on equity,” Heaney and Rooney said in the memo.
Rates and currency trading, or so-called macro trading, contributed more than half of Morgan Stanley’s fixed-income revenue in 2012, from less than half in 2007, Gorman said in June. Porat said in 2012 that rates trading was the primary driver of the increase.
Still, the unit lost at least tens of millions of dollars in the second quarter of 2011 on a wager on U.S. inflation expectations, Bloomberg News reported at the time. Hadden lost more than $200 million in the first half of 2013, the New York Times reported last year.
Hadden was suspended from accessing all CME Group Inc. trading floors for 10 days and fined $80,000 last year to resolve claims tied to transactions in Treasury futures. The trades came on Dec. 19, 2008, when Hadden, then at Goldman Sachs, made orders in the final minute prior to expiration of a 10-year futures contract.
Hadden’s attorney said at the time of the fine that the trades were routine risk-management procedures and that he had difficulty selling his positions because of illiquid market conditions.