Morgan Stanley 2010 Annual Report Download - page 206

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
13. Commitments, Guarantees and Contingencies.
Commitments.
The Company’s commitments associated with outstanding letters of credit and other financial guarantees
obtained to satisfy collateral requirements, investment activities, corporate lending and financing arrangements,
mortgage lending and margin lending at December 31, 2010 are summarized below by period of expiration.
Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily
reflect the actual future cash funding requirements:
Years to Maturity Total at
December 31,
2010
Less
than 1 1-3 3-5 Over 5
(dollars in millions)
Letters of credit and other financial guarantees obtained to
satisfy collateral requirements ....................... $ 1,701 $ 8 $ 11 $ 1 $ 1,721
Investment activities ................................. 1,146 587 103 78 1,914
Primary lending commitments—investment grade(1)(2) ..... 8,104 28,291 7,885 219 44,499
Primary lending commitments—non-investment grade(1) . . . 990 5,448 5,361 2,134 13,933
Secondary lending commitments(1) ..................... 39 116 173 39 367
Commitments for secured lending transactions ............ 346 621 2 — 969
Forward starting reverse repurchase agreements(3) ......... 53,037 — — — 53,037
Commercial and residential mortgage-related
commitments .................................... 1,131 10 68 634 1,843
Underwriting commitments ........................... 128 — — — 128
Other commitments ................................. 198 62 3 — 263
Total ......................................... $66,820 $35,143 $13,606 $3,105 $118,674
(1) These commitments are recorded at fair value within Financial instruments owned and Financial instruments sold, not yet purchased in
the consolidated statements of financial condition (see Note 4).
(2) This amount includes commitments to asset-backed commercial paper conduits of $275 million at December 31, 2010, of which
$138 million have maturities of less than one year and $137 million of which have maturities of one to three years.
(3) The Company enters into forward starting securities purchased under agreements to resell (agreements that have a trade date at or prior to
December 31, 2010 and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities
and other sovereign government obligations. These agreements primarily settle within three business days and at December 31, 2010,
$45.2 billion of the $53.0 billion settled within three business days.
Letters of Credit and Other Financial Guarantees Obtained to Satisfy Collateral Requirements. The Company
has outstanding letters of credit and other financial guarantees issued by third-party banks to certain of the
Company’s counterparties. The Company is contingently liable for these letters of credit and other financial
guarantees, which are primarily used to provide collateral for securities and commodities borrowed and to satisfy
various margin requirements in lieu of depositing cash or securities with these counterparties.
Investment Activities. The Company enters into commitments associated with its real estate, private equity and
principal investment activities, which include alternative products.
Lending Commitments. Primary lending commitments are those which are originated by the Company whereas
secondary lending commitments are purchased from third parties in the market. The commitments include
lending commitments that are made to investment grade and non-investment grade companies in connection with
corporate lending and other business activities.
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