Morgan Stanley 2009 Annual Report Download - page 158

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
and Securities purchased under agreements to resell, Securities borrowed, Securities sold under agreements to
repurchase, Securities loaned, Receivables—customers, Receivables—brokers, dealers and clearing
organizations, Payables—customers, Payables—brokers, dealers and clearing organizations, certain Commercial
paper and other short-term borrowings, and certain Deposits.
The Company’s long-term borrowings are recorded at amortized amounts unless elected under the fair value
option or designated as a hedged item in a fair value hedge. For long-term borrowings not measured at fair value,
the fair value of the Company’s long-term borrowings was estimated using either quoted market prices or
discounted cash flow analyses based on the Company’s current borrowing rates for similar types of borrowing
arrangements. As of December 31, 2009, the carrying value of the Company’s long-term borrowings was
approximately $1.4 billion higher than fair value. As of December 31, 2008, the carrying value of the Company’s
long-term borrowings was approximately $25.6 billion higher than fair value.
5. Collateralized Transactions.
Securities purchased under agreements to resell (“reverse repurchase agreements”) and Securities sold under
agreements to repurchase (“repurchase agreements”), principally government and agency securities, are carried at
the amounts at which the securities subsequently will be resold or reacquired as specified in the respective
agreements; such amounts include accrued interest. Reverse repurchase agreements and repurchase agreements
are presented on a net-by-counterparty basis, when appropriate. The Company’s policy is generally to take
possession of securities purchased under agreements to resell. Securities borrowed and Securities loaned are
carried at the amounts of cash collateral advanced and received in connection with the transactions. Other
secured financings include the liabilities related to transfers of financial assets that are accounted for as
financings rather than sales, consolidated VIEs where the Company is deemed to be the primary beneficiary, and
certain equity-referenced securities and loans where in all instances these liabilities are payable solely from the
cash flows of the related assets accounted for as Financial instruments owned (see Note 6).
The Company pledges its financial instruments owned to collateralize repurchase agreements and other securities
financings. Pledged financial instruments that can be sold or repledged by the secured party are identified as
Financial instruments owned (pledged to various parties) in the consolidated statements of financial condition.
The carrying value and classification of financial instruments owned by the Company that have been loaned or
pledged to counterparties where those counterparties do not have the right to sell or repledge the collateral were
as follows:
At
December 31,
2009
At
December 31,
2008
(dollars in millions)
Financial instruments owned:
U.S. government and agency securities ................................ $18,376 $ 9,134
Other sovereign government obligations ............................... 4,584 2,570
Corporate and other debt ........................................... 13,111 21,850
Corporate equities ................................................ 10,284 4,388
Total ....................................................... $46,355 $37,942
The Company enters into reverse repurchase agreements, repurchase agreements, securities borrowed and
securities loaned transactions to, among other things, acquire securities to cover short positions and settle other
securities obligations, to accommodate customers’ needs and to finance the Company’s inventory positions. The
Company also engages in securities financing transactions for customers through margin lending. Under these
153