Morgan Stanley 2014 Annual Report Download - page 247

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(1) Amounts include OTC derivatives that are centrally cleared in accordance with certain regulatory requirements.
(2) Notional amounts include gross notionals related to open long and short futures contracts of $426 billion and $729 billion, respectively.
The unsettled fair value on these futures contracts (excluded from the table above) of $879 million and $27 million is included in
Customer and other receivables and Customer and other payables, respectively, in the Company’s consolidated statements of financial
condition.
The following tables summarize the gains or losses reported on derivative instruments designated and qualifying
as accounting hedges for 2014, 2013 and 2012.
Derivatives Designated as Fair Value Hedges.
The following table presents gains (losses) reported on derivative instruments and the related hedge item as well
as the hedge ineffectiveness included in Interest expense in the Company’s consolidated statements of income
from interest rate contracts:
Gains (Losses) Recognized
Product Type 2014 2013 2012
(dollars in millions)
Derivatives ............................................................ $1,462 $(4,332) $ 29
Borrowings ............................................................ (173) 5,604 703
Total ............................................................. $1,289 $ 1,272 $732
Derivatives Designated as Net Investment Hedges.
Gains (Losses)
Recognized in
OCI (effective portion)
Product Type 2014 2013 2012(1)
(dollars in millions)
Foreign exchange contracts(2) ............................................ $606 $448 $102
Total ............................................................ $606 $448 $102
(1) A gain of $77 million, net of tax, related to net investment hedges was reclassified from other comprehensive income (“OCI”) into
income during 2012. The amount primarily related to the reversal of amounts recorded in cumulative other comprehensive income due to
the incorrect application of hedge accounting on certain derivative contracts (see above for further information).
(2) Losses of $186 million, $154 million and $235 million related to the forward points on the hedging instruments were excluded from
hedge effectiveness testing and recognized in interest income during 2014, 2013 and 2012, respectively.
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