Morgan Stanley’s (NYSE:MS) net income tumbled 67% during the third quarter as the Wall Street firm was hurt by a slowdown in trading.

The investment-banking giant said Wednesday it earned $313 million last quarter, compared with $936 million. On a per-share basis, it lost 7 cents, reversing a profit of 38 cents a share, from the year before. Continuing operations profits dropped from 50 cents a share to 5 cents a share.

Revenue slid 20% to $6.78 billion, outstripping estimates from analysts for $6.44 billion.

Morgan’s stock took a hit in the wake of the results, sliding 2.28% to $24.81 ahead of Wednesday’s open. The stock was already down more than 14% in 2010 as of Tuesday’s close.

"Although we continued to make progress across some key businesses this quarter, our results in aggregate clearly do not reflect the true potential of Morgan Stanley's global client franchise and I am not satisfied with our overall performance,” CEO James Gorman said in a statement, calling the sales and trading performance “clearly muted.”

Like rival Goldman Sachs (NYSE:GS), Morgan’s results were hurt by its institutional securities business. The unit posted a profit from continuing operations of $240 million, down from $1.3 billion a year earlier. Revenue slid from $5 billion to $2.9 billion.

Goldman reported strong-than-expected third-quarter results on Tuesday, but the Wall Street titan’s net income tumbled 40% amid slumping trading revenues.

Morgan Stanley also announced plans to restructure its ownership of FrontPoint Partners, giving the hedge fund’s management and portfolio managers a majority equity stake. Morgan said it will keep a minority stake in FrontPoint, which manages $7 billion and was acquired by Morgan in 2006.