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1.0.0.3 false Regulatory Requirements. false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 Regulatory Requirements. 3 us-gaap_RegulatoryCapitalRequirementsUnderBankingRegulationsTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> 12.    Regulatory Requirements.   Morgan Stanley.    In September 2008, the Company became a financial holding company under the Bank Holding Company Act subject to the regulation and oversight of the Board of Governors of the Federal Reserve System (the “Fed”). The Fed establishes capital requirements for the Company, including well-capitalized standards, and evaluates the Company’s compliance with such capital requirements. The Office of the Comptroller of the Currency and the Office of Thrift Supervision establish similar capital requirements and standards for the Company’s national banks and federal savings bank, respectively.   The Company calculates its capital ratios and risk-weighted assets (“RWAs”) in accordance with the capital adequacy standards for financial holding companies adopted by the Fed. These standards are based upon a framework described in the “International Convergence of Capital Measurement and Capital Standards,” July 1988, as amended, also referred to as Basel I. In December 2007, the U.S. banking regulators published a final Basel II Accord that requires internationally active banking organizations, as well as certain of its U.S. bank subsidiaries, to implement Basel II standards over the next several years. The Company will be required to implement these Basel II standards as a result of becoming a financial holding company.   As of December 31, 2009, the Company was in compliance with Basel I capital requirements with ratios of Tier 1 capital to RWAs of 15.3% and total capital to RWAs of 16.4% (6% and 10% being well-capitalized for regulatory purposes, respectively). In addition, financial holding companies are also subject to a Tier 1 leverage ratio as defined by the Fed. The Company calculated its Tier 1 leverage ratio as Tier 1 capital divided by adjusted average total assets (which reflects adjustments for disallowed goodwill, certain intangible assets and deferred tax assets). The adjusted average total assets are derived using weekly balances for the calendar quarter. This ratio as of December 31, 2009 was 5.8%.   The following table summarizes the capital measures for the Company at December 31, 2009:   <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="4" align="center">December 31, 2009</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Balance</td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">Ratio</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="4" align="center">(dollars in millions)</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Tier 1 capital </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">46,670</td> <td valign="bottom">  </td> <td valign="bottom" align="right">15.3</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td valign="top"> Total capital </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">49,955</td> <td valign="bottom">  </td> <td valign="bottom" align="right">16.4</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> RWAs </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">305,000</td> <td valign="bottom">  </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Adjusted average assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">804,456</td> <td valign="bottom">  </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Tier 1 leverage </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom">  </td> <td valign="bottom" align="right">5.8</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> </table>   The Company’s Significant U.S. Bank Operating Subsidiaries.    The Company’s domestic bank operating subsidiaries are subject to various regulatory capital requirements as administered by U.S. federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional, discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s U.S. bank operating subsidiaries’ financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company’s U.S. bank operating subsidiaries must meet specific capital guidelines that involve quantitative measures of the Company’s U.S. bank operating subsidiaries’ assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.   As of December 31, 2009, the Company’s U.S. bank operating subsidiaries met all capital adequacy requirements to which they are subject.   As of December 31, 2009, the Company’s U.S. bank operating subsidiaries exceeded all regulatorily mandated and targeted minimum regulatory capital requirements to be well-capitalized. There are no conditions or events that management believes have changed the Company’s U.S. bank operating subsidiaries’ category.   The table below sets forth the Company’s significant U.S. bank operating subsidiaries’ capital as of December 31, 2009.   <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> At December 31, 2009 </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Amount</td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">Ratio</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="4" align="center">(dollars in millions)</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Total Capital (to RWAs): </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Morgan Stanley Bank, N.A. </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">8,880</td> <td valign="bottom">  </td> <td valign="bottom" align="right">18.4</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Morgan Stanley Trust </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">591</td> <td valign="bottom">  </td> <td valign="bottom" align="right">69.8</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td height="5"></td> <td height="5" colspan="3"></td> <td height="5" colspan="3"></td> </tr> <tr> <td valign="top"> Tier I Capital (to RWAs): </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Morgan Stanley Bank, N.A. </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7,360</td> <td valign="bottom">  </td> <td valign="bottom" align="right">15.3</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td valign="top"> Morgan Stanley Trust </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">591</td> <td valign="bottom">  </td> <td valign="bottom" align="right">69.8</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td height="5"></td> <td height="5" colspan="3"></td> <td height="5" colspan="3"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Leverage Ratio: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Morgan Stanley Bank, N.A. </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7,360</td> <td valign="bottom">  </td> <td valign="bottom" align="right">10.7</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Morgan Stanley Trust </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">591</td> <td valign="bottom">  </td> <td valign="bottom" align="right">8.8</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> </table>   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 a capital ratio of Tier 1 capital to RWAs of 6%, a ratio of total capital to RWAs of 10%, and a ratio of Tier 1 capital to average book assets (leverage ratio) of 5%. 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 to financial holding companies. As of December 31, 2009, the Company’s three U.S. depository institutions maintained capital at levels in excess of the universally mandated well-capitalized levels. These subsidiary depository institutions maintain capital at levels sufficiently in excess of the “well-capitalized” requirements to address any additional capital needs and requirements identified by the 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 SEC, the Financial Industry Regulatory Authority and the Commodity Futures Trading Commission. MS&Co. has consistently operated with capital in excess of its regulatory capital requirements. MS&Co.’s net capital totaled $7,854 million and $9,216 million as of December 31, 2009 and December 31, 2008, respectively, which exceeded the amount required by $6,758 million and $8,366 million, respectively. Morgan Stanley Smith Barney LLC is a registered broker-dealer and registered futures commission merchant, introducing business to MS&Co. and Citi, and has operated with capital in excess of its regulatory capital requirements. MSIP, a London-based broker-dealer subsidiary, is subject to the capital requirements of the Financial Services Authority, and MSJS, a Tokyo-based broker-dealer subsidiary, is subject to the capital requirements of the Financial Services Agency. MSIP and MSJS have consistently operated in excess of their respective regulatory capital requirements.   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 Rule 15c3-1. MS&Co. is also required to notify the SEC in the event that its tentative net capital is less than $5 billion. As of December 31, 2009, MS&Co. had tentative net capital in excess of the minimum and the notification requirements.   Other Regulated Subsidiaries.    Certain other U.S. and non-U.S. subsidiaries 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 in excess of their local capital adequacy requirements.   Morgan Stanley Derivative Products Inc. (“MSDP”), a derivative products subsidiary rated Aa2 by Moody’s Investors Service, Inc. (“Moody’s”) and AAA by Standard & Poor’s Ratings Services, a Division of the McGraw-Hill Companies Inc. (“S&P”), maintains certain operating restrictions that have been reviewed by Moody’s and S&P. On December 21, 2009, MSDP was downgraded from a triple-A rating to Aa2 rating by Moody’s but maintained its AAA rating by S&P. The downgrade did not significantly impact the Company’s results of operations or financial condition. MSDP is operated such that creditors of the Company should not expect to have any claims on the assets of MSDP, unless and until the obligations to its own creditors are satisfied in full. Creditors of MSDP should not expect to have any claims on the assets of the Company or any of its affiliates, other than the respective assets of MSDP.   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. As of December 31, 2009 and December 31, 2008, approximately $14.7 billion and $13.6 billion, respectively, of net assets of consolidated subsidiaries may be restricted as to the payment of cash dividends and advances to the parent company. </div> 12.    Regulatory Requirements.   Morgan Stanley.    In September 2008, the Company became a financial holding false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true