Morgan Stanley has reached an agreement with the employees of its in-house quantitative proprietary trading unit Process Driven Trading (PDT), whereby PDT employees will acquire certain assets from Morgan Stanley and launch an independent advisory firm at the end of 2012.
Morgan Stanley will have the option to acquire a preferred stake in the new entity, to be known as PDT Advisors.
It is expected the full PDT team, which comprises approximately 60 employees globally, will join the independent firm.
During the two-year transition period, PDT will remain a part of Morgan Stanley and continue to manage Firm capital as it has historically.
PDT will also build out its infrastructure and its third-party investment business during this period.
Morgan Stanley president and CEO James Gorman said PDT has generated an enviable track record within Morgan Stanley since its inception in 1993.
"We are delighted to continue our partnership with PDT as it looks to expand its business by taking on third-party investors," Gorman said.