Morgan Stanley seeks approval to offer first U.S.-listed ETFs

Mon Jun 6, 2016 12:41pm EDT
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By Trevor Hunnicutt and Olivia Oran

NEW YORK (Reuters) - Morgan Stanley (MS.N: Quote) has asked securities regulators for the right to launch its first U.S.-listed exchange-traded funds, marking the latest example of a massive Wall Street investment manager courting investors' growing use of those funds.

The company's asset management unit asked the U.S. Securities and Exchange Commission for permission to launch "passive" ETFs that would mimic market indexes as well as "actively managed" ETFs, which allow portfolio managers to pick a set of stocks and bonds they expect to beat the market.

The move comes as businesses like investment management and wealth that offer more stable forms of revenue are growing in importance to Morgan Stanley and other Wall Street banks amid regulatory pressure that have crimped growth in traditional profit areas like trading.

The Morgan Stanley request came in two applications filed late on Friday.

A spokeswoman for Morgan Stanley declined to comment further on the filings.

In October, Morgan Stanley named former capital markets executive Dan Simkowitz as head of the unit, which includes traditional asset management, alternative investments and the merchant bank. Investment management represents less than 10 percent of the firm's overall revenue, and Morgan Stanley is actively seeking to grow this unit by introducing new products.

In the first quarter, revenue from traditional asset management fell 8 percent to $403 million from the year-ago period.

Morgan Stanley's traditional asset-management business oversaw $371 billion as of March 31.   Continued...

The corporate logo of financial firm Morgan Stanley is pictured on the company's world headquarters in the Manhattan borough of New York City, January 20, 2015.    REUTERS/Mike Segar