* Follows departures of some gasoline, LNG traders
* Banks exiting trading in some commodities markets
* Has no plans to downside oil trading
By Jonathan Leff and Dmitry Zhdannikov
LONDON, July 23 Two high-profile oil traders
have left Morgan Stanley's European desk, trading sources
said on Tuesday, as Wall Street banks struggle to retain talent
amid increased regulator scrutiny and a decline in revenues.
A source close to the bank said Morgan Stanley, which plans
to exit trading in some commodities market, remained committed
to oil trading and had no plans to downsize its oil trading
operations, one of the largest among banks.
Three trading sources said North Sea oil derivatives
traders, Pasi Siitonen and Simon Hutchinson, who have worked for
Morgan Stanley for several years, have left the bank in the last
Reuters could not reach the two traders for comment. Morgan
Stanley declined to comment. It was not immediately possible to
establish whether the traders had joined a new firm.
"They were some of the most professional guys in Brent
paper," said one trader who regularly hedged his risks by buying
Brent derivatives from Morgan Stanley.
In June, Morgan Stanley said it will exit trading of
agricultural products, freight and some European power and gas
due to a poor outlook for the sectors while oil trading and
North American power and gas businesses remained a
However, the bank has lost some major talent in its priority
areas over the past year including several gasoline traders and
a highly-regarded liquefied natural gas (LNG) team, which left
for trading house Glencore.
The bank, together with other leading Wall Street players in
commodities, Goldman Sachs and JP Morgan, has
seen a steep fall in revenues due to low market volatility,
increased regulatory compliance and capital costs.
An internal memorandum from Morgan Stanley said last month
it estimated that the commodities revenue pool available to
banks has fallen by 50 percent from the peak years of 2007-2009.
The bank added it expected the cycle to turn in its favour again
in the future.
The regulation scrutiny is expected to only tighten in the
future with the U.S. Federal Reserve reviewing a landmark 2003
decision that first allowed regulated banks to trade in physical
Last week, Morgan Stanley said its commodities business
recovered in the three months to June from two previous dismal
quarters, helped by higher client activity in power and gas and
swings in precious metals prices.
But it said that the oil liquids market, which has
traditionally been the most important driver of its commodities
business, continued to operate at historically low levels.