Morgan Stanley Narrows Gap with Goldman Sachs in Equities Trading

Morgan Stanley is making significant strides to reclaim its leading position in the stock market under new CEO Ted Pick. After losing ground to Goldman Sachs following the Archegos Capital Management collapse in 2021, Morgan Stanley has now narrowed the gap with its rival to its smallest since 2022.

In the latest quarter, Morgan Stanley’s stock trading revenue surged nearly 20% to $3 billion, surpassing analysts’ expectations. In comparison, Goldman Sachs saw a 7% increase to $3.2 billion, while JPMorgan Chase experienced a 21% rise, just under $3 billion.

Morgan Stanley’s renewed focus on attracting quantitative hedge funds, such as AQR and Two Sigma, and its increased lending through its prime brokerage division are key factors in this resurgence. However, the bank’s cautious approach, following the $1 billion loss in the Archegos scandal, has kept it from aggressively pursuing high-risk clients.

Despite Morgan Stanley’s progress, Goldman Sachs continues to lead in equity trading revenue, outpacing Morgan Stanley in eight out of the last ten quarters. Nonetheless, the competitive landscape is shifting, with Morgan Stanley showing promising signs of closing the gap as it rebuilds its market share under Pick’s leadership.