Morgan Stanley plans to break off its largest proprietary trading group, Process Driven Trading, to create an independent advisory firm by the end of 2012.
The bank will have the option to acquire a preferred stake in the new company, to be known as PDT Advisors, Morgan Stanley said Monday. It said it expects the unit's full staff of about 60 employees to join the new firm.
Under the plan, PDT employees will acquire certain assets from Morgan Stanley, a press release said. Before it becomes independent, the unit will continue to trade with Morgan Stanley's capital.
PDT produced a quarter of Morgan Stanley's earnings in some years during the late 1990s and early 2000s before losing as much as $500 million in less than a month in the third quarter of 2007, according to "The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It," by Scott Patterson.
