Oct 9 (Reuters) - Peter Muller, the founder of Morgan Stanley's proprietary trading unit that is being spun off this year as a stand-alone hedge fund, has raised more than $500 million from Blackstone Group LP , Bloomberg reported.
Muller started his first fund in July at New York-based PDT Partners LLC, the agency said, citing people familiar with the matter. He is planning a second fund that will begin trading in January with about $1.5 billion, it said.
Morgan Stanley said last year it would spin off Muller's group, founded as Process Driven Trading in 1993, to comply with the Dodd-Frank legislation that bars banks from trading their own capital.
Bloomberg said Muller expects to have $2 billion under management in all, and some of this amount would be locked up for seven years. He does not plan any fee discounts, according to the agency.
Blackstone's hedge fund unit, which routinely invests with new 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 be reached for comment by Reuters outside regular U.S. business hours.
(Reporting by Neha Alawadhi in Bangalore; Editing by Richard Pullin)
Keywords: MORGANSTANLEY FUND/