Morgan Stanley 2010 Annual Report Download - page 159

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Transfers Between Level 1 and Level 2 during 2010.
Financial instruments owned—Derivative and other contracts and Financial instruments sold, not yet
purchased—Derivative and other contracts. During 2010, the Company reclassified approximately $2.9 billion
of derivative assets and approximately $2.7 billion of derivative liabilities from Level 2 to Level 1 as these listed
derivatives became actively traded and were valued based on quoted prices from the exchange.
Financial instruments owned—Corporate equities. During 2010, the Company reclassified approximately $1.2
billion of certain Corporate equities from Level 2 to Level 1 as transactions in these securities occurred with
sufficient frequency and volume to constitute an active market.
Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2009
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,
2009
(dollars in millions)
Assets
Financial instruments owned:
U.S. government and agency securities:
U.S. Treasury securities ........... $ 15,394 $ — $ — $ — $ 15,394
U.S. agency securities ............. 19,670 27,115 36 — 46,821
Total U.S. government and
agency securities ........... 35,064 27,115 36 — 62,215
Other sovereign government obligations . . 21,080 4,362 3 — 25,445
Corporate and other debt:
State and municipal securities ....... — 3,234 713 — 3,947
Residential mortgage-backed
securities ..................... — 4,285 818 — 5,103
Commercial mortgage-backed
securities ..................... — 2,930 1,573 — 4,503
Asset-backed securities ............ — 4,797 591 — 5,388
Corporate bonds ................. — 37,363 1,038 — 38,401
Collateralized debt obligations ...... — 1,539 1,553 — 3,092
Loans and lending commitments ..... — 13,759 12,506 — 26,265
Other debt ...................... — 2,093 1,662 — 3,755
Total corporate and other debt . . — 70,000 20,454 — 90,454
Corporate equities(1) .................. 49,732 7,700 536 — 57,968
Derivative and other contracts:
Interest rate contracts ............. 3,403 622,544 1,182 — 627,129
Credit contracts .................. — 124,143 21,921 — 146,064
Foreign exchange contracts ......... 7 52,066 455 — 52,528
Equity contracts .................. 2,126 38,608 631 — 41,365
Commodity contracts ............. 6,291 56,984 1,341 — 64,616
Other .......................... — 114 275 — 389
Netting(2) ...................... (9,517) (791,993) (11,256) (70,244) (883,010)
Total derivative and other
contracts ................. 2,310 102,466 14,549 (70,244) 49,081
Investments:
Private equity funds ............... — — 1,296 — 1,296
Real estate funds ................. — 12 833 — 845
Hedge funds ..................... — 713 1,708 — 2,421
Principal investments ............. 438 5 3,195 — 3,638
Other .......................... 305 200 581 — 1,086
Total investments ............ 743 930 7,613 — 9,286
Physical commodities ................. — 5,329 — — 5,329
Total financial instruments owned . . . 108,929 217,902 43,191 (70,244) 299,778
153