(Bloomberg) -- Morgan Stanley has a plan to boost return on equity in fixed-income trading above its cost of equity after four of the five units failed to meet that metric last year, Chief Executive Officer James Gorman said.

The credit-trading unit can earn a 15 percent return and interest rates and foreign-exchange trading can each top 10 percent, Gorman, 54, said today at a conference sponsored by the New York-based bank. All had returns on equity of more than 5 percent last year, said Gorman, who cited 10 percent as the firm’s cost of equity.

“We’re not where we want to be with fixed-income and commodities,” Gorman said. “On the other hand, we think we’ve made more progress than perhaps has been understood, but this is a multiyear transformation of a very complex business.”

Commodities, which had a return on equity of less than 5 percent last year, was the one unit for which he didn’t state a target. Morgan Stanley held talks with Qatar’s sovereign-wealth fund last year about selling a stake in the business, and Gorman said the firm is “carefully re-evaluating” the proper structure for the business.

The U.S. Dodd-Frank Act limits the firm’s ability to acquire physical commodities, Gorman said. The past two quarters have been among the worst for commodities since 1995, he said.

“The overall performance of the business can and will be improved,” Gorman said. “But that said, we continue to explore strategic structures that may make sense for us.”

The securitized-products unit had a return on equity of more than 15 percent last year, and that remains the firm’s target, Gorman said.

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