Morgan Stanley to Exit U.S. Options Market-Making Business

Morgan Stanley MS is planning to shut its automated market-making business that specializes in electronic market-making for U.S. stock options. The news was reported by Bloomberg, citing sources familiar with the matter.Rationale Behind MS's Options Market-Making Unit Exit PlanThe unit had been part of the MS efforts to execute options trades electronically and pay retail brokers for order flow.Morgan Stanley is winding down its options market-making operations, stepping back from a sector increasingly dominated by high-speed trading firms. The decision marks a strategic exit from a business where electronic execution and payment for order flow had been central.Despite significant growth in U.S. derivatives activity, traditional banks like Morgan Stanley face increasing challenges competing with proprietary trading firms such as Citadel Securities and IMC Trading. These firms leverage superior speed, scale, and technology while operating under lighter regulatory burdens.Once among the few major banks still paying for options order flow, Morgan Stanley’s exit plan reflects the structural challenges faced by traditional market participants when competing with companies optimized for speed, scalability, and technological sophistication, often under less stringent regulatory regimes.Zacks Rank & Price Performance of MSShares of MS have rallied 37.7% compared with the industry’s 29.8% growth in the past year.Image Source: Zacks Investment ResearchCurrently, Morgan Stanley carries a Zacks Rank #3 (Hold).Other Banks Worth ConsideringA couple of other noteworthy banks include Affiliated Managers (AMG) and Evercore Inc. (EVR).The Zacks Consensus Estimate for AMG has remained unchanged for 2025 over the past week. Its stock has risen 17.5% in the past six months. AMG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Similarly, earnings estimates for EVR have also remained unchanged for the current year in the last week. Shares of EVR have gained 26.7% over the past year. The stock presently carries a Zacks Rank #2 (Buy).Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Morgan Stanley (MS): Free Stock Analysis Report Evercore Inc (EVR): Free Stock Analysis Report Affiliated Managers Group, Inc. (AMG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks