Morgan Stanley is hiring several people in its interest rates trading unit in Europe, a rare sign of an investment bank adding headcount in the increasingly under-pressure fixed income business.
Dan Aksan is joining from Citigroup as a managing director to run hedge fund and global real money sales in Europe, according to people familiar with the matter.
Romain Laprade is set to join as a euro swaps trader from Goldman Sachs, according to those people.
Morgan Stanley is also hiring two people in European rates, including an options trader, the people said. None of the hires have started at the bank yet or been previously reported.
A spokesman for Morgan Stanley declined to comment. Spokespeople at Citigroup and Goldman Sachs didn’t immediately respond to requests for comment.
The move comes amid a tough time for the industry. Fixed income revenues across the top 12 investment banks fell to their lowest level last year since 2006, according to analytics firm Coalition.
The appointments don’t mark a strategic shift or expansion in fixed income for Morgan Stanley, according to people familiar with the matter. Instead, they are a reaction to client demand in areas where the US bank thinks it can take market share away from struggling rivals, the people said.
Morgan Stanley made swingeing cuts to its fixed income business in 2015, reducing headcount by around a quarter. Executives at the bank said that was the tough medicine needed to adapt to structural changes in the market and it is now in a good position compared to some of its peers, which have yet to make sweeping changes to bond trading operations.
JP Morgan, the largest bank by revenues in fixed income trading, reported an 18% decline in first-quarter revenues from a year earlier. Deutsche Bank saw a 19% decline, while Goldman Sachs reported an 11% drop.
Morgan Stanley reported a 9% decrease in fixed income trading revenues, putting it roughly in the middle of the pack among the major US banks. Some banks, such as Barclays, Citigroup, Credit Suisse and UBS, reported an increase in income from a year earlier.
Rates trading is traditionally the largest revenue generator of the businesses lumped together in fixed income, currencies and commodities, but it has come under considerable strain in recent years. The margin banks earn trading government debt and simple derivatives linked to interest rates remain slim, bankers say, while hefty capital requirements have hit longer-dated trades signed before the financial crisis.
At the same time, lengthy periods of calm in financial markets and ultra-low interest rates have depressed trading volumes. Revenues at the rates trading units of the 12 largest investment banks fell 17% last year to US$18.9bn, according to Coalition, down from a recent peak of US$25.9bn in 2016.
“Revenues declined across products with flow declining most in EMEA,” Coalition analysts wrote in a report, referring to higher-volume activities related to trading government bonds and swaps.