Oct 9 (Reuters) - Peter Muller, the founder of MorganStanley's proprietary trading unit that is being spun offthis year as a stand-alone hedge fund, has raised more than $500million from Blackstone Group LP , Bloomberg reported.
Muller started his first fund in July at New York-based PDTPartners LLC, the agency said, citing people familiar with thematter. He is planning a second fund that will begin trading inJanuary with about $1.5 billion, it said.
Morgan Stanley said last year it would spin off Muller'sgroup, founded as Process Driven Trading in 1993, to comply withthe Dodd-Frank legislation that bars banks from trading theirown capital.
Bloomberg said Muller expects to have $2 billion undermanagement in all, and some of this amount would be locked upfor seven years. He does not plan any fee discounts, accordingto the agency.
Blackstone's hedge fund unit, which routinely invests withnew managers, is not getting a stake in PDT, the agency said.
Muller declined to comment to Bloomberg through a spokesman,A Blackstone spokesman also declined to comment to the agency.
Morgan Stanley and Blackstone could not immediately bereached for comment by Reuters outside regular U.S. businesshours.
(Reporting by Neha Alawadhi in Bangalore; Editing by RichardPullin)
Keywords: MORGANSTANLEY FUND/