In order to foster more of a sell-side sales trader mentality on its trading desk, Morgan Stanley Investment Management is making sure its buy-side traders are well prepared and have the knowledge they need to be more creative and involved in the investment process. Rob Shapiro, executive director, head of trading execution and analysis, oversees MSIM's Trader Development Program, which aims to transform the existing trading team rather than force the firm to seek out new traders with the appropriate skills.

Shapiro has put together the "Advanced Trading Education Series," a weekly educational series that covers a wide range of topics important to MSIM's traders, from subprime mortgages to changes in global market structure. "We bring in someone who is relevant and owns the space outside of MSIM to educate the group," he explains. But the efforts go beyond just traders; Shapiro says that the technology group, the portfolio managers, even members of the legal team are joining in on the Tuesday series. The program also focuses on building professional skill sets -- from delegating and listening to reports, to presenting effectively and conducting meetings.

In addition to education and personal development, MSIM is changing the way it compensates its buy-side traders. The company has instituted semiannual reviews, for which it reaches out to the portfolio managers for qualitative feedback on the traders with whom they interact. Though it is not complete yet, Shapiro says he is working on a formula for analyzing -- trader by trader, region by region -- the impact that traders have on optimizing their trading workflows.

"This will be incorporated as a weighting of some degree into their compensation in the future," says Shapiro. "We're creating an evaluation construct that will pay those people who deserve to get paid a premium, and hopefully it will continue to upgrade the level of talent." --C.M.

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Cover Story

Inside Morgan Stanley's Buy-Side Trading Desk Overhaul
Morgan Stanley Investment Management takes Advanced Trading inside its ambitious project to revamp the buy-side trading desk.

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