Morgan Stanley 2009 Annual Report Download - page 53

Other Financial Information.
Investment Banking.
Investment banking revenues were as follows:
2009
Fiscal
2008
Fiscal
2007
One Month
Ended
December 31,
2008
(dollars in millions)
Advisory fees from merger, acquisition and restructuring
transactions ............................................. $1,488 $1,740 $2,541 $ 68
Equity underwriting revenues ................................. 1,694 1,045 1,570 47
Fixed income underwriting revenues ........................... 1,272 845 1,427 62
Total investment banking revenues ......................... $4,454 $3,630 $5,538 $177
Investment banking revenues are composed of fees from advisory services and revenues from the underwriting of
securities offerings and syndication of loans.
Sales and Trading.
Sales and trading revenues were as follows:
2009
Fiscal
2008
Fiscal
2007
One Month
Ended
December 31,
2008
(dollars in millions)
Principal transactions—trading ........................... $6,315 $ 5,199 $2,741 $(1,714)
Commissions ......................................... 2,153 3,100 3,261 128
Net interest ........................................... 85 2,422 2,060 115
Total sales and trading revenues ...................... $8,553 $10,721 $8,062 $(1,471)
Sales and trading revenues are composed of principal transactions trading revenues, commissions and net interest
revenues (expenses). In assessing the profitability of its sales and trading activities, the Company views principal
trading, commissions and net interest revenues (expenses) in the aggregate. In addition, decisions relating to
principal transactions are based on an overall review of aggregate revenues and costs associated with each
transaction or series of transactions. This review includes, among other things, an assessment of the potential
gain or loss associated with a transaction, including any associated commissions, dividends, the interest income
or expense associated with financing or hedging the Company’s positions, and other related expenses.
The components of the Company’s sales and trading revenues are as follows:
Principal Transactions—Trading. Principal transactions—trading revenues include revenues from customers’
purchases and sales of financial instruments in which the Company acts as principal and gains and losses on the
Company’s positions, as well as proprietary trading activities for its own account.
Commissions. Commission revenues primarily arise from agency transactions in listed and over-the-counter
(“OTC”) equity securities and options.
Net Interest. Interest and dividend revenues and interest expense are a function of the level and mix of total
assets and liabilities, including financial instruments owned and financial instruments sold, not yet purchased,
reverse repurchase and repurchase agreements, trading strategies, customer activity in the Company’s prime
brokerage business, and the prevailing level, term structure and volatility of interest rates. Certain reverse
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