Morgan Stanley’s traders got a boost from President Donald Trump’s deregulation agenda.
In the first three months of the year, Morgan Stanley plowed capital that was freed up after US regulators relaxed a key rule into its prime brokerage division and its macro trading desks, according to Chief Financial Officer Sharon Yeshaya. Wall Street banks long said that the requirement, called the enhanced supplementary leverage ratio, held them back from serving as intermediaries in the Treasuries market during times of stress.
“The idea was that banks would provide more liquidity in the Treasury and agency markets,” Yeshaya said in an interview, adding that there’s “absolutely” a connection between the rule change and her firm’s investment in its trading business. “That’s what we did.”
Since Trump returned office in early 2025, financial regulators have issued a flurry of proposals to relax the bank capital regime implemented after the 2008 financial crisis. The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. finalized revisions to the SLR in November, and unveiled an additional package of proposals tied to other rules last month.
Morgan Stanley was the only one of the biggest Wall Street banks for which the SLR was the so-called “binding constraint,” meaning among all the capital requirements its subject to, that’s the rule it had the least headroom against. The firm’s SLR was 5% at the end of the first quarter, down from 5.4% at year-end.
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