Morgan Stanley’s trading desk might be turned into a hedge fund

According to Wall Street Journal, Morgan Stanley, whose first-quarter losses are more than expected, is eyeing changes to its biggest proprietary-trading desk. As people familiar with this subject told the paper, aforesaid change include either a spin-off of the unit into a hedge fund, or it may be opened up to outside investors, or Morgan Stanley may decide even to stop trading operation, which is called Process Driven Trading. Since its creation in 1993 this trading unit has earned $6.5 billion in pretax income, as the paper said.

According to Morgan Stanley spokesman "no decisions have been made on PDT."

On Wednesday Morgan Stanley posted loss, which is third in six quarters. As a consequence of its real estate investment losses and debt-related charges Morgan Stanley slashed its dividends.