Morgan Stanley 2014 Annual Report Download - page 201

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2014, investments representing approximately 28% of the fair value of the investments in
this category cannot be redeemed currently because the investments include certain initial period lock-up
restrictions. The remaining restriction period for these investments subject to lock-up restrictions was
primarily over three years at December 31, 2014. Investments representing approximately 27% of the fair
value of the investments in multi-strategy hedge funds cannot be redeemed currently because an exit
restriction has been imposed by the hedge fund manager. The restriction period for these investments
subject to an exit restriction was indefinite at December 31, 2014.
Fair Value Option.
The Company elected the fair value option for certain eligible instruments that are risk managed on a fair value
basis to mitigate income statement volatility caused by measurement basis differences between the elected
instruments and their associated risk management transactions or to eliminate complexities of applying certain
accounting models. The following table presents net gains (losses) due to changes in fair value for items
measured at fair value pursuant to the fair value option election for 2014, 2013 and 2012, respectively:
Trading
Revenues
Interest
Income
(Expense)
Gains (Losses)
Included in
Net Revenues
(dollars in millions)
Year Ended December 31, 2014
Securities purchased under agreements to resell ....................... $ (4) $ 9 $ 5
Commercial paper and other short-term borrowings(1) .................. (136) 1 (135)
Securities sold under agreements to repurchase ........................ (5) (6) (11)
Long-term borrowings(1) ......................................... 1,867 (638) 1,229
Year Ended December 31, 2013
Securities purchased under agreements to resell ....................... $ (1) $ 6 $ 5
Deposits ....................................................... 52 (60) (8)
Commercial paper and other short-term borrowings(1) .................. 181 (8) 173
Securities sold under agreements to repurchase ........................ (3) (6) (9)
Long-term borrowings(1) ......................................... 664 (971) (307)
Year Ended December 31, 2012
Securities purchased under agreements to resell ....................... $ 8 $ 5 $ 13
Deposits ....................................................... 57 (86) (29)
Commercial paper and other short-term borrowings(1) .................. (31) — (31)
Securities sold under agreements to repurchase ........................ (15) (4) (19)
Long-term borrowings(1) ......................................... (5,687) (1,321) (7,008)
(1) Of the total gains (losses) recorded in Trading revenues for short-term and long-term borrowings for 2014, 2013 and 2012, $651 million,
$(681) million and $(4,402) million, respectively, are attributable to changes in the credit quality of the Company and other credit
factors, and the respective remainder is attributable to changes in foreign currency rates or interest rates or movements in the reference
price or index for structured notes before the impact of related hedges.
In addition to the amounts in the above table, as discussed in Note 2, all of the instruments within Trading assets
or Trading liabilities are measured at fair value, either through the election of the fair value option or as required
by other accounting guidance. The amounts in the above table are included within Net revenues and do not
reflect gains or losses on related hedging instruments, if any.
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