Morgan Stanley CFO Discusses Stress Test, NY Fed And Q1

While the Street is awaiting the result of second part of Fed's stress test on Wednesday, Morgan Stanley MS CFO, Ruth Porat, was on CNBC Tuesday to talk about the importance of both parts of the Fed's stress test, Morgan Stanley's relationship with the New York Fed and how the trading business is progressing for the firm this quarter.

Qualitative As Important As Quantitative

"There are really two parts of the test: there's the quantitative and qualitative and both of them are critically important," Porat said. "As it relates to which of the five metrics are most important, they all are."

"At the end of the day, each one of them is and so for us really it's about modeling what happens in a severely adverse environment and looking at what are idiosyncratic vulnerabilities for any firm and so it's a robust long process, but it's not just those 5 metrics, the qualitative is just as important."

Juggling Between Two Feds

On the relationship that Morgan Stanley shares with the New York Fed, Porat said, "The New York Fed is our primary on-site regulator and they are everywhere and so we continue to have a highly constructive relationship with them and see them as present as we ever have."

She continued, "The Washington Fed is clearly central on many elements of policy and the CCAR process ends up going into the Washington Fed, but I would say the New York Fed is rigorous and very present."

Trading This Quarter

"Trading equity and fixed-income markets is quite strong. We are seeing both on the institutional and the retail side a high level of engagement. I would say January started more slowly than last year, but it's picked up through the quarter," Porat concluded.