An inside source told Bloomberg that the matter has not been publicly disclosed, although internal briefings have taken place within the financial institution about the matter.
The possibility of redundancies before the end of the year in the unit has been ruled out by Morgan Stanley.
Its hiring freeze comes as the five largest Wall Street banks struggle with weak trading and equity underwriting volumes that could result in the worst investment banking revenue figures since the height of the global financial crisis in the fourth quarter of 2008.
Since June 2009, Morgan Stanley has added around 400 new employees to its sales and trading operation.
Earlier this year, Morgan Stanley chairman John Mack was appointed to the international advisory council of China International Corp, which purchased a minority stake in the US bank back in 2007.
By Asim Shah