Morgan Stanley 2009 Annual Report Download - page 8

Morgan Stanley trades, makes markets and takes long and short proprietary positions globally in listed futures
and OTC swaps, forwards, options and other derivatives referencing, among other things, interest rates,
currencies, investment grade and non-investment grade corporate credits, loans, bonds, U.S. and other sovereign
securities, emerging market bonds and loans, credit indexes, asset-backed security indexes, property indexes,
mortgage-related and other asset-backed securities and real estate loan products.
Morgan Stanley trades, makes markets and takes long and short proprietary positions in major foreign currencies,
such as the Japanese yen, euro, British pound, Swiss franc and Canadian dollar, as well as in emerging markets
currencies. Morgan Stanley trades these currencies on a principal basis in the spot, forward, option and futures
markets.
Through the use of repurchase and reverse repurchase agreements, Morgan Stanley acts as an intermediary
between borrowers and lenders of short-term funds and provides funding for various inventory positions. Morgan
Stanley also provides financing to customers for commercial and residential real estate loan products and other
securitizable asset classes. In addition, Morgan Stanley engages in principal securities lending with clients,
institutional lenders and other broker-dealers.
Morgan Stanley advises on investment and liability strategies and assists corporations in their debt repurchases
and tax planning. Morgan Stanley structures debt securities, derivatives and other instruments with risk/return
factors designed to suit client objectives, including using repackaged asset and other structured vehicles through
which clients can restructure asset portfolios to provide liquidity or reconfigure risk profiles.
Commodities. Morgan Stanley trades as principal and maintains long and short proprietary trading positions in
the spot, forward and futures markets in several commodities, including metals (base and precious), agricultural
products, crude oil, oil products, natural gas, electric power, emission credits, coal, freight, liquefied natural gas
and related products and indices. Morgan Stanley is a market-maker in exchange-traded options and futures and
OTC options and swaps on commodities, and offers counterparties hedging programs relating to production,
consumption, reserve/inventory management and structured transactions, including energy-contract
securitizations. Morgan Stanley is an electricity power marketer in the U.S. and owns electricity generating
facilities in the U.S. and Europe.
Morgan Stanley owns TransMontaigne Inc. and its subsidiaries, a group of companies operating in the refined
petroleum products marketing and distribution business, and owns an interest in Heidmar Holdings LLC, which
owns a group of companies that provide international marine transportation and U.S. marine logistics services.
Clients and Services. Morgan Stanley provides financing services, including prime brokerage, which offers,
among other services, consolidated clearance, settlement, custody, financing and portfolio reporting services to
clients trading multiple asset classes. In addition, Morgan Stanley’s institutional distribution and sales activities
are overseen and coordinated through Clients and Services.
Investments. Morgan Stanley from time to time makes investments that represent business facilitation or
principal investing activities. Business facilitation investments are strategic investments undertaken by Morgan
Stanley to facilitate core business activities. Principal investing activities are investments and capital
commitments provided to public and private companies, funds and other entities generally for proprietary
purposes to maximize total returns to Morgan Stanley.
Morgan Stanley sponsors and manages investment vehicles and separate accounts for clients seeking exposure to
private equity, real estate-related and other alternative investments. Morgan Stanley may also invest in and
provide capital to such investment vehicles. See also “Asset Management.”
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