Morgan Stanley 2015 Annual Report Download - page 223

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(1) Capital ratios that are required in order to be considered well-capitalized for U.S. regulatory purposes.
Under regulatory capital requirements adopted by the U.S. federal banking agencies, U.S. depository institutions, in order to be
considered well-capitalized, must maintain certain minimum capital ratios. Each U.S. depository institution subsidiary of the
Company must be well-capitalized in order for the Company to continue to qualify as a financial holding company and to
continue to engage in the broadest range of financial activities permitted for financial holding companies. At December 31, 2015
and December 31, 2014, the Company’s U.S. Bank Subsidiaries maintained capital at levels sufficiently in excess of the
universally mandated well-capitalized requirements to address any additional capital needs and requirements identified by the
U.S. federal banking regulators.
MS&Co. and Other Broker-Dealers.
MS&Co. is a registered broker-dealer and registered futures commission merchant and, accordingly, is subject to the
minimum net capital requirements of the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Commodity
Futures Trading Commission (“CFTC”). MS&Co. has consistently operated with capital in excess of its regulatory capital
requirements. MS&Co.’s net capital totaled $10,254 million and $6,593 million at December 31, 2015 and December 31,
2014, respectively, which exceeded the amount required by $8,458 million and $4,928 million, respectively. MS&Co. is
required to hold tentative net capital in excess of $1 billion and net capital in excess of $500 million in accordance with the
market and credit risk standards of Appendix E of SEC Rule 15c3-1. In addition, MS&Co. is required to notify the SEC in
the event that its tentative net capital is less than $5 billion. At December 31, 2015 and December 31, 2014, MS&Co. had
tentative net capital in excess of the minimum and the notification requirements.
MSSB LLC is a registered broker-dealer and introducing broker for the futures business and, accordingly, is subject to the
minimum net capital requirements of the SEC and the CFTC. MSSB LLC has consistently operated with capital in excess of
its regulatory capital requirements. MSSB LLC’s net capital totaled $3,613 million and $4,620 million at December 31, 2015
and December 31, 2014, respectively, which exceeded the amount required by $3,459 million and $4,460 million,
respectively.
MSIP, a London-based broker-dealer subsidiary, is subject to the capital requirements of the Prudential Regulation
Authority, and MSMS, a Tokyo-based broker-dealer subsidiary, is subject to the capital requirements of the Financial
Services Agency. MSIP and MSMS have consistently operated with capital in excess of their respective regulatory capital
requirements.
Other Regulated Subsidiaries.
Certain other U.S. and non-U.S. subsidiaries of the Company are subject to various securities, commodities and banking
regulations, and capital adequacy requirements promulgated by the regulatory and exchange authorities of the countries in
which they operate. These subsidiaries have consistently operated with capital in excess of their local capital adequacy
requirements.
The regulatory capital requirements referred to above, and certain covenants contained in various agreements governing
indebtedness of the Company, may restrict the Company’s ability to withdraw capital from its subsidiaries. At December 31,
2015 and December 31, 2014, approximately $28.6 billion and $31.8 billion, respectively, of net assets of consolidated
subsidiaries may be restricted as to the payment of cash dividends and advances to the parent company.
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