Morgan Stanley 2009 Annual Report Download - page 145

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
remove the assets from the VIEs as these assets are not generally available to the Company. The related liabilities issued by these VIEs
are non-recourse to the Company. Approximately $1.9 billion of these assets and approximately $1.3 billion of these liabilities are
included in Level 3 of the fair value hierarchy. See Note 6 for additional information on consolidated and non-consolidated VIEs,
including retained interests in these entities that the Company holds.
(2) The Company holds or sells short for trading purposes, equity securities issued by entities in diverse industries and of varying size.
(3) For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash
collateral netting are included in the column titled “Counterparty and Cash Collateral Netting.” For contracts with the same counterparty,
counterparty netting among positions classified within the same level is included within that level. For further information on derivative
instruments and hedging activities, see Note 10.
(4) Amount represents mortgage servicing rights (“MSRs”) accounted for at fair value. See Note 6 for further information on MSRs.
Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2008
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Counterparty
and Cash
Collateral
Netting
Balance at
December 31,
2008
(dollars in millions)
Assets
Financial instruments owned:
U.S. government and agency
securities ....................... $10,150 $ 17,735 $ 127 $ — $ 28,012
Other sovereign government
obligations ...................... 16,118 4,965 1 — 21,084
Corporate and other debt(1) ........... 99 52,277 34,918 — 87,294
Corporate equities .................. 37,807 3,538 976 — 42,321
Derivative and other contracts(2) ...... 1,069 156,224 37,711 (105,586) 89,418
Investments ....................... 417 270 9,698 — 10,385
Physical commodities ............... — 2,126 — — 2,126
Total financial instruments owned .......... 65,660 237,135 83,431 (105,586) 280,640
Securities received as collateral ............ 4,623 578 30 — 5,231
Intangible assets(3) ..................... — — 184 — 184
Liabilities
Commercial paper and other short-term
borrowings .......................... $ — $ 1,246 $ — $ — $ 1,246
Deposits .............................. — 9,993 — — 9,993
Financial instruments sold, not yet purchased:
U.S. government and agency
securities ....................... 11,133 769 — — 11,902
Other sovereign government
obligations ...................... 7,303 2,208 — — 9,511
Corporate and other debt ............. 17 6,102 3,808 — 9,927
Corporate equities .................. 15,064 1,749 27 — 16,840
Derivative and other contracts(2) ...... 3,886 118,432 14,329 (68,093) 68,554
Physical commodities ............... — 33 — — 33
Total financial instruments sold, not yet
purchased ........................... 37,403 129,293 18,164 (68,093) 116,767
Obligation to return securities received as
collateral ........................... 4,623 578 30 — 5,231
Other secured financings(1) ............... — 6,391 6,148 — 12,539
Long-term borrowings ................... — 25,293 5,473 — 30,766
(1) Approximately $8.9 billion of assets is included in Corporate and other debt and approximately $7.9 billion of related liabilities is
included in Other secured financings related to consolidated VIEs or non-consolidated VIEs (in the cases where the assets were
transferred by the Company to the VIE and the transfers were accounted for as secured financings). The Company cannot unilaterally
remove the assets from the VIEs; these assets are not generally available to the Company. The related liabilities issued by these VIEs are
non-recourse to the Company. Approximately $8.1 billion of these assets and approximately $5.9 billion of these liabilities are included
in Level 3 of the fair value hierarchy. See Note 6 for additional information on consolidated and non-consolidated VIEs, including
retained interests in these entities that the Company holds.
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