DIVORCE OR SEPARATION FOR MORGAN STANLEY AND PETER MULLER?
Financial reform has destroyed yet another successful Wall Street marriage: that of Morgan Stanley and Peter Muller, head of the bank’s “Process Driven Trading Unit”. According to CNBC, it doesn’t look like a full blown divorce. Just a separation. Of sorts.
There is a separation agreement, for sure, and it looks like a permanent situation. But you know how these things go. One act of Congress could resuscitate that marriage in a New York minute. For now, Morgan Stanley keeps a “minority interest” in Peter’s unit but Peter and his gang goes off to make their billions elsewhere, but they still have access to Morgan Stanley’s “infrastructure.” MSNBC on the matter:
Mr.Muller and his team would get access to Morgan Stanley’s infrastructure, including its legal and other resources.
Mr.Muller, 47, is part of a new breed of investors called quants — short for quantitative — who use high-speed computers to turbocharge their mathematically powered investing skills.
They program their computers to track different data and variables like the historic relationship between certain pairs of stocks.
If the relationship goes out of kilter, a quant might make a bet, amplified with borrowed money, that the historical relationship between the stocks will return.
The strategy has been immensely profitable for Morgan Stanley.
The Process Driven Trading unit generated an estimated $4 billion in profits in the 10 years through 2006, according to Scott Patterson’s book, “The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It” (Crown Business, 2010).
Something tells me we haven’t heard the last of this couple. Read more on MSNBC: http://www.cnbc.com/id/40147765