Morgan Stanley 2010 Annual Report Download - page 30

holding company, or that prohibit such transfers altogether in certain circumstances. These laws, regulations and
rules may hinder our ability to access funds that we may need to make payments on our obligations. Furthermore,
as a bank holding company, we may become subject to a prohibition or to limitations on our ability to pay
dividends or repurchase our stock. The OCC, the Federal Reserve and the FDIC have the authority, and under
certain circumstances the duty, to prohibit or to limit the payment of dividends by the banking organizations they
supervise, including us and our bank holding company subsidiaries.
Our liquidity and financial condition have in the past been, and in the future could be, adversely affected by U.S.
and international markets and economic conditions.
Our ability to raise funding in the long-term or short-term debt capital markets or the equity markets, or to access
secured lending markets, has in the past been, and could in the future be, adversely affected by conditions in the
U.S. and international markets and economy. Global market and economic conditions have been particularly
disrupted and volatile during the past three years, with volatility reaching unprecedented levels in the Fall of
2008 and into 2009. In particular, our cost and availability of funding have been, and may in the future be,
adversely affected by illiquid credit markets and wider credit spreads. Renewed turbulence in the U.S. and
international markets and economy could adversely affect our liquidity and financial condition and the
willingness of certain counterparties and customers to do business with us.
Market Risk.
Market risk refers to the risk that a change in the level of one or more market prices of commodities or securities,
rates, indices, implied volatilities (the price volatility of the underlying instrument imputed from option prices),
correlations or other market factors, such as liquidity, will result in losses for a position or portfolio. For more
information on how we monitor and manage market risk, see “Qualitative and Quantitative Disclosure about
Market Risk” in Part II, Item 7A herein.
Our results of operations may be materially affected by market fluctuations and by global and economic
conditions and other factors.
Our results of operations may be materially affected by market fluctuations due to global and economic
conditions and other factors. The results of operations in the past have been, and in the future may continue to be,
materially affected by many factors, including the effect of political and economic conditions and geopolitical
events; the effect of market conditions, particularly in the global equity, fixed income and credit markets,
including corporate and mortgage (commercial and residential) lending and commercial real estate investments;
the impact of current, pending and future legislation (including the Dodd-Frank Act), regulation (including
capital requirements), and legal actions in the U.S. and worldwide; the level and volatility of equity, fixed
income and commodity prices and interest rates, currency values and other market indices; the availability and
cost of both credit and capital as well as the credit ratings assigned to our unsecured short-term and long-term
debt; investor sentiment and confidence in the financial markets; the performance of the Company’s acquisitions,
joint ventures, strategic alliances or other strategic arrangements (including MSSB and with Mitsubishi UFJ
Financial Group, Inc.); our reputation; inflation, natural disasters, and acts of war or terrorism; the actions and
initiatives of current and potential competitors and technological changes; or a combination of these or other
factors. In addition, legislative, legal and regulatory developments related to our businesses are likely to increase
costs, thereby affecting results of operations. These factors also may have an impact on our ability to achieve our
strategic objectives.
The results of our Institutional Securities business segment, particularly results relating to our involvement in
primary and secondary markets for all types of financial products, are subject to substantial fluctuations due to a
variety of factors, such as those enumerated above that we cannot control or predict with great certainty. These
fluctuations impact results by causing variations in new business flows and in the fair value of securities and
other financial products. Fluctuations also occur due to the level of global market activity, which, among other
things, affects the size, number and timing of investment banking client assignments and transactions and the
realization of returns from our principal investments. During periods of unfavorable market or economic
24