10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Commission File Number 1-11758

(Exact Name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 1585 Broadway
New York, NY 10036 (Address of principal executive
offices, including zip code) 36-3145972
(I.R.S. Employer Identification No.) (212) 761-4000
(Registrant’s telephone number,
including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer  x	Accelerated Filer  ¨
Non-Accelerated Filer  ¨	Smaller reporting company  ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of April 30, 2013, there were 1,960,115,045 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.

QUARTERLY REPORT ON FORM 10-Q

For the quarter ended March 31, 2013

Table of Contents		Page
Part I—Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Financial Condition—March 31, 2013 and December 31, 2012		1
	Condensed Consolidated Statements of Income—Three Months Ended March 31, 2013 and 2012		2
	Condensed Consolidated Statements of Comprehensive Income—Three Months Ended March 31, 2013 and 2012		3
	Condensed Consolidated Statements of Cash Flows—Three Months Ended March 31, 2013 and 2012		4
	Condensed Consolidated Statements of Changes in Total Equity—Three Months Ended March 31, 2013 and 2012		5
	Notes to Condensed Consolidated Financial Statements (unaudited)		7
	Report of Independent Registered Public Accounting Firm		89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		90
	Introduction		90
	Executive Summary		91
	Business Segments		100
	Accounting Developments		114
	Other Matters		115
	Critical Accounting Policies		117
	Liquidity and Capital Resources		121
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		136
Item 4.	Controls and Procedures		151
Financial Data Supplement (unaudited)			152
Part II—Other Information
Item 1.	Legal Proceedings		155
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		158
Item 6.	Exhibits		158

i

AVAILABLE INFORMATION

Morgan Stanley files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any document we file with the SEC at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for information on the public reference room. The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and information statements and other information that issuers (including Morgan Stanley) file electronically with the SEC. Morgan Stanley’s electronic SEC filings are available to the public at the SEC’s internet site, www.sec.gov.

Morgan Stanley’s internet site is www.morganstanley.com. You can access Morgan Stanley’s Investor Relations webpage at www.morganstanley.com/about/ir. Morgan Stanley makes available free of charge, on or through its Investor Relations webpage, its proxy statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Morgan Stanley also makes available, through its Investor Relations webpage, via a link to the SEC’s internet site, statements of beneficial ownership of Morgan Stanley’s equity securities filed by its directors, officers, 10% or greater shareholders and others under Section 16 of the Exchange Act.

Morgan Stanley has a Corporate Governance webpage. You can access information about Morgan Stanley’s corporate governance at www.morganstanley.com/about/company/governance. Morgan Stanley posts the following on its Corporate Governance webpage:

• Amended and Restated Certificate of Incorporation;

• Amended and Restated Bylaws;

• Charters for its Audit Committee; Operations and Technology Committee; Compensation, Management Development and Succession Committee; Nominating and Governance Committee; and Risk Committee;

• Corporate Governance Policies;

• Policy Regarding Communication with the Board of Directors;

• Policy Regarding Director Candidates Recommended by Shareholders;

• Policy Regarding Corporate Political Contributions;

• Policy Regarding Shareholder Rights Plan;

• Code of Ethics and Business Conduct;

• Code of Conduct; and

• Integrity Hotline information.

Morgan Stanley’s Code of Ethics and Business Conduct applies to all directors, officers and employees, including its Chief Executive Officer, Chief Financial Officer and Deputy Chief Financial Officer. Morgan Stanley will post any amendments to the Code of Ethics and Business Conduct and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange LLC (“NYSE”) on its internet site. You can request a copy of these documents, excluding exhibits, at no cost, by contacting Investor Relations, 1585 Broadway, New York, NY 10036 (212-761-4000). The information on Morgan Stanley’s internet site is not incorporated by reference into this report.

ii

Part I—Financial Information.

Item 1.  Financial Statements.

MORGAN STANLEY

Condensed Consolidated Statements of Financial Condition

(dollars in millions, except share data)

(unaudited)

	March 31, 2013			December 31, 2012
Assets
Cash and due from banks ($584 and $526 at March 31, 2013 and December 31, 2012, respectively, related to consolidated variable interest entities generally not available to the Company)	$	17,773		$	20,878
Interest bearing deposits with banks		25,129			26,026
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements		31,313			30,970
Trading assets, at fair value (approximately $138,143 and $147,348 were pledged to various parties at March 31, 2013 and December 31, 2012, respectively; $3,343 and $3,490 related to consolidated variable interest entities, generally not available to the Company at March 31, 2013 and December 31, 2012, respectively)		267,236			267,603
Securities available for sale, at fair value		41,454			39,869
Securities received as collateral, at fair value		17,971			14,278
Federal funds sold and securities purchased under agreements to resell (includes $873 and $621 at fair value at March 31, 2013 and December 31, 2012, respectively)		140,415			134,412
Securities borrowed		135,727			121,701
Customer and other receivables		62,271			64,288
Loans (net of allowances of $129 and $106 at March 31, 2013 and December 31, 2012, respectively)		30,615			29,046
Other investments		4,940			4,999
Premises, equipment and software costs (net of accumulated depreciation of $5,750 and $5,525 at March 31, 2013 and December 31, 2012, respectively) ($222 and $224 at March 31, 2013 and December 31, 2012, respectively, related to consolidated variable interest entities, generally not available to the Company)		5,928			5,946
Goodwill		6,633			6,650
Intangible assets (net of accumulated amortization of $1,336 and $1,250 at March 31,2013 and December 31, 2012, respectively) (includes $8 and $7 at fair value at March 31, 2013 and December 31, 2012, respectively)		3,694			3,783
Other assets ($577 and $593 at March 31, 2013 and December 31, 2012, respectively, related to consolidated variable interest entities, generally not available to the Company)		10,284			10,511
Total assets	$	801,383		$	780,960
Liabilities
Deposits (includes $1,442 and $1,485 at fair value at March 31, 2013 and December 31, 2012, respectively)	$	80,623		$	83,266
Commercial paper and other short-term borrowings (includes $1,262 and $725 at fair value at March 31, 2013 and December 31, 2012, respectively)		2,475			2,138
Trading liabilities, at fair value		132,472			120,122
Obligation to return securities received as collateral, at fair value		23,510			18,226
Securities sold under agreements to repurchase (includes $565 and $363 at fair value at March 31, 2013 and December 31, 2012, respectively)		119,270			122,674
Securities loaned		40,351			36,849
Other secured financings (includes $9,624 and $9,466 at fair value at March 31, 2013 and December 31, 2012, respectively) ($739 and $976 at March 31, 2013 and December 31, 2012, respectively, related to consolidated variable entities and are non-recourse to the Company)		16,294			15,727
Customer and other payables		137,127			127,722
Other liabilities and accrued expenses ($116 and $117 at March 31, 2013 and December 31, 2012, respectively related to consolidated variable interest entities and are non-recourse to the Company)		13,622			14,928
Long-term borrowings (includes $42,510 and $44,044 at fair value at March 31, 2013 and December 31, 2012, respectively)		165,142			169,571
		730,886			711,223
Commitments and contingent liabilities (see Note 12)
Redeemable noncontrolling interests (see Notes 3 and 14)		4,425			4,309
Equity
Morgan Stanley shareholders’ equity:
Preferred stock		1,508			1,508
Common stock, $0.01 par value:
Shares authorized: 3,500,000,000 at March 31, 2013 and December 31, 2012;
Shares issued: 2,038,893,979 at December 31, 2012 and March 31,2013;
Shares outstanding: 1,960,582,868 at March 31, 2013 and 1,974,042,123 at December 31, 2012		20			20
Additional Paid-in capital		23,661			23,426
Retained earnings		40,750			39,912
Employee stock trust		1,872			2,932
Accumulated other comprehensive loss		(694	)		(516	)
Common stock held in treasury, at cost, $0.01 par value; 78,311,111 shares at March 31, 2013 and 64,851,856 shares at December 31, 2012		(2,541	)		(2,241	)
Common stock issued to employee trust		(1,872	)		(2,932	)
Total Morgan Stanley shareholders’ equity		62,704			62,109
Nonredeemable noncontrolling interests		3,368			3,319
Total equity		66,072			65,428
Total liabilities, redeemable noncontrolling interests and equity	$	801,383		$	780,960

See Notes to Condensed Consolidated Financial Statements.

1

MORGAN STANLEY

Condensed Consolidated Statements of Income

(dollars in millions, except share and per share data)

(unaudited)

	Three Months Ended March 31,
	2013			2012
Revenues:
Investment banking	$	1,224		$	1,063
Trading		2,694			2,402
Investments		338			85
Commissions and fees		1,168			1,177
Asset management, distribution and administration fees		2,346			2,152
Other		203			104
Total non-interest revenues		7,973			6,983
Interest income		1,398			1,542
Interest expense		1,213			1,601
Net interest		185			(59	)
Net revenues		8,158			6,924
Non-interest expenses:
Compensation and benefits		4,216			4,430
Occupancy and equipment		379			388
Brokerage, clearing and exchange fees		428			403
Information processing and communications		448			459
Marketing and business development		134			146
Professional services		440			412
Other		531			484
Total non-interest expenses		6,576			6,722
Income from continuing operations before income taxes		1,582			202
Provision for income taxes		332			54
Income from continuing operations		1,250			148
Discontinued operations:
Gain (loss) from discontinued operations		(30	)		28
Provision for (benefit from) income taxes		(11	)		42
Net gain (loss) from discontinued operations		(19	)		(14	)
Net income	$	1,231		$	134
Net income applicable to redeemable noncontrolling interests		122			—
Net income applicable to nonredeemable noncontrolling interests		147			228
Net income (loss) applicable to Morgan Stanley	$	962		$	(94	)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	936		$	(119	)
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations	$	981		$	(79	)
Net gain (loss) from discontinued operations		(19	)		(15	)
Net income (loss) applicable to Morgan Stanley	$	962		$	(94	)
Earnings (loss) per basic common share:
Income (loss) from continuing operations	$	0.50		$	(0.05	)
Net gain (loss) from discontinued operations		(0.01	)		(0.01	)
Earnings (loss) per basic common share	$	0.49		$	(0.06	)
Earnings (loss) per diluted common share:
Income (loss) from continuing operations	$	0.49		$	(0.05	)
Net gain (loss) from discontinued operations		(0.01	)		(0.01	)
Earnings (loss) per diluted common share	$	0.48		$	(0.06	)
Dividends declared per common share	$	0.05		$	0.05
Average common shares outstanding:
Basic		1,901,204,729			1,876,961,836
Diluted		1,940,264,085			1,876,961,836

See Notes to Condensed Consolidated Financial Statements.

2

MORGAN STANLEY

Condensed Consolidated Statements of Comprehensive Income

(dollars in millions)

(unaudited)

	Three Months Ended March 31,
	2013			2012
Net income	$	1,231		$	134
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments(1)	$	(245	)	$	20
Amortization of cash flow hedges(2)		1			2
Change in net unrealized losses on securities available for sale(3)		(27	)		(19	)
Pension, postretirement and other related adjustments(4)		1			2
Total other comprehensive income (loss)	$	(270	)	$	5
Comprehensive income	$	961		$	139
Net income applicable to redeemable noncontrolling interests		122			—
Net income applicable to nonredeemable noncontrolling interests		147			228
Other comprehensive income applicable to redeemable noncontrolling interests		—			—
Other comprehensive income (loss) applicable to nonredeemable noncontrolling interests		(92	)		(92	)
Comprehensive income applicable to Morgan Stanley	$	784		$	3

(1) Amounts are net of provision for income taxes of $165 million and $4 million for the quarters ended March 31, 2013 and 2012, respectively.

(2) Amounts are net of provision for income taxes of $1 million and $1 million for the quarters ended March 31, 2013 and 2012, respectively.

(3) Amounts are net of provision for (benefit from) income taxes of $(19) million and $(13) million for the quarters ended March 31, 2013 and 2012, respectively.

(4) Amounts are net of provision for income taxes of $5 million and $2 million for the quarters ended March 31, 2013 and 2012, respectively.

See Notes to Condensed Consolidated Financial Statements.

3

MORGAN STANLEY

Condensed Consolidated Statements of Cash Flows

(dollars in millions)

(unaudited)

	Three Months Ended March 31,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,231		$	134
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
(Income) loss on equity method investees		(64	)		32
Compensation payable in common stock and options		265			372
Depreciation and amortization		360			375
Loss on business dispositions		5			—
Gain on sale of securities available for sale		(3	)		(1	)
(Gain) loss on retirement of long-term debt		—			(14	)
Impairment charges and other-than-temporary impairment charges		29			12
Provision for credit losses on lending activities		(39	)		(2	)
Changes in assets and liabilities:
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements		(343	)		(698	)
Trading assets, net of Trading liabilities		13,284			13,690
Securities borrowed		(14,026	)		(14,536	)
Securities loaned		3,502			3,969
Customer and other receivables and other assets		2,830			(5,179	)
Customer and other payables and other liabilities		6,976			10,567
Federal funds sold and securities purchased under agreements to resell		(6,003	)		(6,296	)
Securities sold under agreements to repurchase		(3,404	)		5,575
Net cash provided by operating activities		4,600			8,000
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from (payments for):
Premises, equipment and software costs, net		(263	)		(212	)
Business dispositions, net of cash disposed		481			—
Loans, net		(2,168	)		(569	)
Purchases of securities available for sale		(4,674	)		(3,487	)
Sales, maturities and redemptions of securities available for sale		3,380			1,003
Net cash used for investing activities		(3,244	)		(3,265	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (payments for):
Commercial paper and other short-term borrowings		337			(826	)
Distributions related to noncontrolling interests		(8	)		(7	)
Derivatives financing activities		36			(169	)
Other secured financings		501			(1,674	)
Deposits		(2,643	)		779
Net proceeds from:
Excess tax benefits associated with stock-based awards		12			34
Issuance of long-term borrowings		10,046			5,320
Payments for:
Long-term borrowings		(12,018	)		(16,043	)
Repurchases of common stock for employee tax withholding		(306	)		(183	)
Cash dividends		(119	)		(112	)
Net cash used for financing activities		(4,162	)		(12,881	)
Effect of exchange rate changes on cash and cash equivalents		(612	)		93
Effect of cash and cash equivalents related to variable interest entities		(584	)		(534	)
Net decrease in cash and cash equivalents		(4,002	)		(8,587	)
Cash and cash equivalents, at beginning of period		46,904			47,312
Cash and cash equivalents, at end of period	$	42,902		$	38,725
Cash and cash equivalents include:
Cash and due from banks	$	17,773		$	10,133
Interest bearing deposits with banks		25,129			28,592
Cash and cash equivalents, at end of period	$	42,902		$	38,725

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash payments for interest were $728 million and $1,169 million for the quarters ended March 31, 2013 and 2012, respectively.

Cash payments for income taxes were $139 million and $145 million for the quarters ended March 31, 2013 and 2012, respectively.

See Notes to Condensed Consolidated Financial Statements.

4

MORGAN STANLEY

Condensed Consolidated Statements of Changes in Total Equity

Three Months Ended March 31, 2013

(dollars in millions)

(unaudited)

	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Employee Stock Trust			Accumulated Other Comprehensive Income (Loss)			Common Stock Held in Treasury at Cost			Common Stock Issued to Employee Trust			Non- redeemable Non- controlling Interests			Total Equity
BALANCE AT DECEMBER 31, 2012	$	1,508	$	20	$	23,426	$	39,912		$	2,932		$	(516	)	$	(2,241	)	$	(2,932	)	$	3,319		$	65,428
Net income applicable to Morgan Stanley		—		—		—		962			—			—			—			—			—			962
Net income applicable to nonredeemable noncontrolling interests		—		—		—		—			—			—			—			—			147			147
Dividends		—		—		—		(124	)		—			—			—			—			—			(124	)
Shares issued under employee plans and related tax effects		—		—		235		—			(1,060	)		—			6			1,060			—			241
Repurchases of common stock		—		—		—		—			—			—			(306	)		—			—			(306	)
Foreign currency translation adjustments		—		—		—		—			—			(153	)		—			—			(92	)		(245	)
Net change in cash flow hedges		—		—		—		—			—			1			—			—			—			1
Change in net unrealized losses on securities available for sale		—		—		—		—			—			(27	)		—			—			—			(27	)
Pension, postretirement and other related adjustments		—		—		—		—			—			1			—			—			—			1
Other net decreases		—		—		—		—			—			—			—			—			(6	)		(6	)
BALANCE AT MARCH 31, 2013	$	1,508	$	20	$	23,661	$	40,750		$	1,872		$	(694	)	$	(2,541	)	$	(1,872	)	$	3,368		$	66,072

See Notes to Condensed Consolidated Financial Statements.

5

MORGAN STANLEY

Condensed Consolidated Statements of Changes in Total Equity—(Continued)

Three Months Ended March 31, 2012

(dollars in millions)

(unaudited)

	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Employee Stock Trust		Accumulated Other Comprehensive Income (Loss)			Common Stock Held in Treasury at Cost			Common Stock Issued to Employee Trust			Non- Redeemable Non- controlling Interests			Total Equity
BALANCE AT DECEMBER 31, 2011	$	1,508	$	20	$	22,836	$	40,341		$	3,166	$	(157	)	$	(2,499	)	$	(3,166	)	$	8,029		$	70,078
Net loss applicable to Morgan Stanley		—		—		—		(94	)		—		—			—			—			—			(94	)
Net income applicable to nonredeemable noncontrolling interests		—		—		—		—			—		—			—			—			228			228
Dividends		—		—		—		(129	)		—		—			—			—			—			(129	)
Shares issued under employee plans and related tax effects		—		—		94		—			86		—			490			(86	)		—			584
Repurchases of common stock		—		—		—		—			—		—			(183	)		—			—			(183	)
Foreign currency translation adjustments		—		—		—		—			—		112			—			—			(92	)		20
Net change in cash flow hedges		—		—		—		—			—		2			—			—			—			2
Change in net unrealized losses on securities available for sale		—		—		—		—			—		(19	)		—			—			—			(19	)
Pension, postretirement and other related adjustments		—		—		—		—			—		2			—			—			—			2
Other net increases		—		—		—		—			—		—			—			—			103			103
BALANCE AT MARCH 31, 2012	$	1,508	$	20	$	22,930	$	40,118		$	3,252	$	(60	)	$	(2,192	)	$	(3,252	)	$	8,268		$	70,592

See Notes to Condensed Consolidated Financial Statements.

6

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Introduction and Basis of Presentation.

The Company.    Morgan Stanley, a financial holding company, is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Global Wealth Management Group and Asset Management. The Company, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. Unless the context otherwise requires, the terms “Morgan Stanley” or the “Company” mean Morgan Stanley (the “Parent”) together with its consolidated subsidiaries.

A summary of the activities of each of the Company’s business segments is as follows:

Institutional Securities provides financial advisory and capital raising services, including advice on mergers and acquisitions, restructurings, real estate and project finance; corporate lending; sales, trading, financing and market-making activities in equity and fixed income securities and related products, including foreign exchange and commodities; and investment activities.

Global Wealth Management Group, which includes the Company’s 65% interest in Morgan Stanley Smith Barney Holdings LLC (the “Wealth Management Joint Venture” or “Wealth Management JV”) (see Note 3), provides brokerage and investment advisory services to individual investors and small-to-medium sized businesses and institutions covering various investment alternatives; financial and wealth planning services; annuity and other insurance products; credit and other lending products; cash management services; retirement services; and trust and fiduciary services and engages in fixed income trading, which primarily facilitates clients’ trading or investments in such securities.

Asset Management provides a broad array of investment strategies that span the risk/return spectrum across geographies, asset classes and public and private markets to a diverse group of clients across the institutional and intermediary channels as well as high net worth clients.

Discontinued Operations.

Quilter.    On April 2, 2012, the Company completed the sale of Quilter & Co. Ltd. (“Quilter”), its retail wealth management business in the United Kingdom (“U.K.”). The results of Quilter are reported as discontinued operations within the Global Wealth Management Group business segment for all periods presented.

Saxon.    On October 24, 2011, the Company announced that it had reached an agreement to sell Saxon, a provider of servicing and subservicing of residential mortgage loans, to Ocwen Financial Corporation. The transaction, which was restructured as a sale of Saxon’s assets during the first quarter of 2012, was substantially completed in the second quarter of 2012. The results of Saxon are reported as discontinued operations within the Institutional Securities business segment for all periods presented.

Prior period amounts have been recast for discontinued operations. See Note 21 for additional information on discontinued operations.

Basis of Financial Information.    The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”), which require the Company to make estimates and assumptions regarding the valuations of certain financial instruments, the valuation of goodwill and intangible assets, compensation, deferred tax assets, the outcome of litigation and tax matters, and other matters that affect the condensed consolidated financial statements and related disclosures. The Company believes that the estimates utilized in the preparation of the condensed consolidated financial statements are prudent and reasonable. Actual results could differ materially from these estimates.

7

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Intercompany balances and transactions have been eliminated.

In the quarter ended March 31, 2013, the Company renamed “Principal transactions—Trading” revenues as “Trading” revenues and “Principal transactions—Investments” revenues as “Investments” revenues in the condensed consolidated statements of income, and “Financial instruments owned” as “Trading assets,” “Financial instruments sold, not yet purchased” as “Trading liabilities,” “Receivables” as “Customer and other receivables” and “Payables” as “Customer and other payables” in the condensed consolidated statements of financial condition.

The condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “Form 10-K”). The condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the interim period. The results of operations for interim periods are not necessarily indicative of results for the entire year.

Consolidation.    The condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and other entities in which the Company has a controlling financial interest, including certain variable interest entities (“VIE”) (see Note 7). For consolidated subsidiaries that are less than wholly owned, the third-party holdings of equity interests are referred to as noncontrolling interests. The portion of net income attributable to noncontrolling interests for such subsidiaries is presented as either Net income (loss) applicable to redeemable noncontrolling interests or Net income (loss) applicable to nonredeemable noncontrolling interests in the condensed consolidated statements of income. The portion of the shareholders’ equity of such subsidiaries that is redeemable is presented as Redeemable noncontrolling interests outside of the equity section in the condensed consolidated statements of financial condition. The portion of the shareholders’ equity of such subsidiaries that is nonredeemable is presented as Nonredeemable noncontrolling interests, a component of total equity, in the condensed consolidated statements of financial condition.

For entities where (1) the total equity investment at risk is sufficient to enable the entity to finance its activities without additional support and (2) the equity holders bear the economic residual risks and returns of the entity and have the power to direct the activities of the entity that most significantly affect its economic performance, the Company consolidates those entities it controls either through a majority voting interest or otherwise. For VIEs (i.e., entities that do not meet these criteria), the Company consolidates those entities where the Company has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE, except for certain VIEs that are money market funds, investment companies or are entities qualifying for accounting purposes as investment companies. Generally, the Company consolidates those entities when it absorbs a majority of the expected losses or a majority of the expected residual returns, or both, of the entities.

For investments in entities in which the Company does not have a controlling financial interest but has significant influence over operating and financial decisions, the Company generally applies the equity method of accounting with net gains and losses recorded within Other revenues. Where the Company has elected to measure certain eligible investments at fair value in accordance with the fair value option, net gains and losses are recorded within Investments revenues (see Note 4).

Equity and partnership interests held by entities qualifying for accounting purposes as investment companies are carried at fair value.

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The Company’s significant regulated U.S. and international subsidiaries include Morgan Stanley & Co. LLC (“MS&Co.”), Morgan Stanley Smith Barney LLC (“MSSB LLC”), Morgan Stanley & Co. International plc (“MSIP”), Morgan Stanley MUFG Securities Co., Ltd. (“MSMS”), Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association.

Income Statement Presentation.    The Company, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. In connection with the delivery of the various products and services to clients, the Company manages its revenues and related expenses in the aggregate. As such, when assessing the performance of its businesses, primarily in its Institutional Securities business segment, the Company considers its trading, investment banking, commissions and fees and interest income, along with the associated interest expense, as one integrated activity.

2. Significant Accounting Policies.

For a detailed discussion about the Company’s significant accounting policies, see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

During the quarter ended March 31, 2013, other than the following, no updates were made to the Company’s significant accounting policies.

Condensed Consolidated Statements of Cash Flows.

For purposes of the condensed consolidated statements of cash flows, cash and cash equivalents consist of Cash and due from banks and Interest bearing deposits with banks, which are highly liquid investments with original maturities of three months or less, held for investment purposes, and readily convertible to known amounts of cash.

In the quarter ended March 31, 2012, the Company’s significant non-cash activities included approximately $0.1 billion of net assets received from Citigroup, Inc. (“Citi”) related to Citi’s required equity contribution in connection with the Morgan Stanley Wealth Management platform integration (see Notes 3 and 14).

During the third quarter of 2012, the Company identified that activities related to certain loans had been reported as cash flows from operating activities that should have been presented as investing activities. The Company corrected the previously presented cash flows for these loans and in doing so, the condensed consolidated statements of cash flows for the quarter ended March 31, 2012 has been adjusted to increase net cash flows from operating activities by $0.6 billion, with the corresponding decreases in net cash flows from investing activities. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements.

Accounting Developments.

Disclosures about Offsetting Assets and Liabilities. In January 2013, the Financial Accounting Standards Board (the “FASB”) issued an accounting update that clarified the intended scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are either offset in the financial statements or subject to an enforceable master netting arrangement or similar agreement. These disclosure requirements became effective for the Company beginning on January 1, 2013. Since these amended principles require only additional disclosures concerning offsetting and related arrangements, adoption has not affected the Company’s condensed consolidated statements of income or financial condition (see Notes 6 and 11).

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. In February 2013, the FASB issued an accounting update that created new disclosure requirements requiring entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting principles (“GAAP”) to be reclassified in its entirety to net income. The disclosure requirements became effective for the Company beginning on January 1, 2013. Since these amended principles require only additional disclosures concerning amounts reclassified out of accumulated other comprehensive income, adoption has not affected the Company’s condensed consolidated statements of comprehensive income or notes to the condensed consolidated financial statements (see Note 14).

3. Wealth Management Joint Venture.

On May 31, 2009, the Company and Citi consummated the combination of the Company’s Global Wealth Management Group business segment and the businesses of Citi’s Smith Barney in the U.S., Quilter Holdings Ltd. (see Note 21) in the U.K. and Smith Barney Australia (collectively, “Smith Barney”). The combined businesses operate as Morgan Stanley Wealth Management. Prior to September 2012, the Company owned 51% and Citi owned 49% of the Wealth Management JV.

In September 2012, the Company reached an agreement with Citi to purchase an additional 14% stake in the Wealth Management JV, and a transfer of approximately $5.4 billion of deposits at no premium from Citi. In addition, the agreement specifies that the Company must use reasonable best efforts to obtain the regulatory approvals required to purchase the remaining 35% stake in the Wealth Management JV by June 1, 2015 and, subject to receipt of such approvals, the Company must consummate such acquisition by that date at a purchase price of $4.725 billion (or a pro rata portion of such amount if less than 35% of the total outstanding stake is being purchased) and receive a transfer of deposits currently estimated to be $57 billion at no premium from Citi, no later than June 1, 2015.

The Company completed the purchase of the additional 14% stake in the Wealth Management JV from Citi on September 17, 2012 for $1.89 billion. The related $5.4 billion of deposits were transferred at no premium in October of 2012. At March 31, 2013, the Company held a 65% stake in the Wealth Management JV.

The change in the terms of the Wealth Management JV’s agreement to acquire the remaining noncontrolling interest resulted in a reclassification of approximately $4.3 billion from nonredeemable noncontrolling interests to redeemable noncontrolling interests. At December 31, 2012 and March 31, 2013, the redeemable noncontrolling interest is not reflected as a liability at its redemption amount because it is not deemed probable that the noncontrolling interest will become redeemable due to the required regulatory approvals.

4. Fair Value Disclosures.

Fair Value Measurements.

A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis follows.

Trading Assets and Trading Liabilities.

U.S. Government and Agency Securities.

• U.S. Treasury Securities.    U.S. Treasury securities are valued using quoted market prices. Valuation adjustments are not applied. Accordingly, U.S. Treasury securities are generally categorized in Level 1 of the fair value hierarchy.

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• U.S. Agency Securities.    U.S. agency securities are composed of three main categories consisting of agency-issued debt, agency mortgage pass-through pool securities and collateralized mortgage obligations. Non-callable agency-issued debt securities are generally valued using quoted market prices. Callable agency-issued debt securities are valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. The fair value of agency mortgage pass-through pool securities is model-driven based on spreads of the comparable To-be-announced (“TBA”) security. Collateralized mortgage obligations are valued using quoted market prices and trade data adjusted by subsequent changes in related indices for identical or comparable securities. Actively traded non-callable agency-issued debt securities are generally categorized in Level 1 of the fair value hierarchy. Callable agency-issued debt securities, agency mortgage pass-through pool securities and collateralized mortgage obligations are generally categorized in Level 2 of the fair value hierarchy.

Other Sovereign Government Obligations.

• Foreign sovereign government obligations are valued using quoted prices in active markets when available. These bonds are generally categorized in Level 1 of the fair value hierarchy. If the market is less active or prices are dispersed, these bonds are categorized in Level 2 of the fair value hierarchy.

Corporate and Other Debt.

• State and Municipal Securities.    The fair value of state and municipal securities is determined using recently executed transactions, market price quotations and pricing models that factor in, where applicable, interest rates, bond or credit default swap spreads and volatility. These bonds are generally categorized in Level 2 of the fair value hierarchy.

• Residential Mortgage-Backed Securities (“RMBS”), Commercial Mortgage-Backed Securities (“CMBS”) and other Asset-Backed Securities (“ABS”).    RMBS, CMBS and other ABS may be valued based on price or spread data obtained from observed transactions or independent external parties such as vendors or brokers. When position-specific external price data are not observable, the fair value determination may require benchmarking to similar instruments and/or analyzing expected credit losses, default and recovery rates. In evaluating the fair value of each security, the Company considers security collateral-specific attributes, including payment priority, credit enhancement levels, type of collateral, delinquency rates and loss severity. In addition, for RMBS borrowers, Fair Isaac Corporation (“FICO”) scores and the level of documentation for the loan are also considered. Market standard models, such as Intex, Trepp or others, may be deployed to model the specific collateral composition and cash flow structure of each transaction. Key inputs to these models are market spreads, forecasted credit losses, default and prepayment rates for each asset category. Valuation levels of RMBS and CMBS indices are also used as an additional data point for benchmarking purposes or to price outright index positions.

RMBS, CMBS and other ABS are generally categorized in Level 2 of the fair value hierarchy. If external prices or significant spread inputs are unobservable or if the comparability assessment involves significant subjectivity related to property type differences, cash flows, performance and other inputs, then RMBS, CMBS and other ABS are categorized in Level 3 of the fair value hierarchy.

• Corporate Bonds.    The fair value of corporate bonds is determined using recently executed transactions, market price quotations (where observable), bond spreads or credit default swap spreads obtained from independent external parties such as vendors and brokers adjusted for any basis difference between cash and derivative instruments. The spread data used are for the same maturity as the bond. If the spread data do not reference the issuer, then data that reference a comparable issuer are used. When position-specific external price data are not observable, fair value is determined based on either benchmarking to similar

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instruments or cash flow models with yield curves, bond or single-name credit default swap spreads and recovery rates as significant inputs. Corporate bonds are generally categorized in Level 2 of the fair value hierarchy; in instances where prices, spreads or any of the other aforementioned key inputs are unobservable, they are categorized in Level 3 of the fair value hierarchy.

• Collateralized Debt Obligation (“CDO”).    The Company holds cash CDOs that typically reference a tranche of an underlying synthetic portfolio of single name credit default swaps collateralized by corporate bonds (“credit-linked notes”) or cash portfolio of asset-backed securities (“asset-backed CDOs”). Credit correlation, a primary input used to determine the fair value of credit-linked notes, is usually unobservable and derived using a benchmarking technique. The other credit-linked note model inputs such as credit spreads, including collateral spreads, and interest rates are typically observable. Asset-backed CDOs are valued based on an evaluation of the market and model input parameters sourced from similar positions as indicated by primary and secondary market activity. Each asset-backed CDO position is evaluated independently taking into consideration available comparable market levels, underlying collateral performance and pricing, and deal structures, as well as liquidity. Cash CDOs are categorized in Level 2 of the fair value hierarchy when either the credit correlation input is insignificant or comparable market transactions are observable. In instances where the credit correlation input is deemed to be significant or comparable market transactions are unobservable, cash CDOs are categorized in Level 3 of the fair value hierarchy.

• Corporate Loans and Lending Commitments.    The fair value of corporate loans is determined using recently executed transactions, market price quotations (where observable), implied yields from comparable debt, and market observable credit default swap spread levels obtained from independent external parties such as vendors and brokers adjusted for any basis difference between cash and derivative instruments, along with proprietary valuation models and default recovery analysis where such transactions and quotations are unobservable. The fair value of contingent corporate lending commitments is determined by using executed transactions on comparable loans and the anticipated market price based on pricing indications from syndicate banks and customers. The valuation of loans and lending commitments also takes into account fee income that is considered an attribute of the contract. Corporate loans and lending commitments are categorized in Level 2 of the fair value hierarchy except in instances where prices or significant spread inputs are unobservable, in which case they are categorized in Level 3 of the fair value hierarchy.

• Mortgage Loans.    Mortgage loans are valued using observable prices based on transactional data or third-party pricing for identical or comparable instruments, when available. Where position-specific external prices are not observable, the Company estimates fair value based on benchmarking to prices and rates observed in the primary market for similar loan or borrower types or based on the present value of expected future cash flows using its best estimates of the key assumptions, including forecasted credit losses, prepayment rates, forward yield curves and discount rates commensurate with the risks involved or a methodology that utilizes the capital structure and credit spreads of recent comparable securitization transactions. Mortgage loans valued based on observable market data for identical or comparable instruments are categorized in Level 2 of the fair value hierarchy. Where observable prices are not available, due to the subjectivity involved in the comparability assessment related to mortgage loan vintage, geographical concentration, prepayment speed and projected loss assumptions, mortgage loans are categorized in Level 3 of the fair value hierarchy. Mortgage loans are presented within Loans and lending commitments in the fair value hierarchy table.

• Auction Rate Securities (“ARS”).    The Company primarily holds investments in Student Loan Auction Rate Securities (“SLARS”) and Municipal Auction Rate Securities (“MARS”) with interest rates that are reset through periodic auctions. SLARS are ABS backed by pools of student loans. MARS are municipal bonds often wrapped by municipal bond insurance. ARS were historically traded and valued as floating

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rate notes, priced at par due to the auction mechanism. Beginning in fiscal 2008, uncertainties in the credit markets have resulted in auctions failing for certain types of ARS. Once the auctions failed, ARS could no longer be valued using observations of auction market prices. Accordingly, the fair value of ARS is determined using independent external market data where available and an internally developed methodology to discount for the lack of liquidity and non-performance risk.

Inputs that impact the valuation of SLARS are independent external market data, the underlying collateral types, level of seniority in the capital structure, amount of leverage in each structure, credit rating and liquidity considerations. Inputs that impact the valuation of MARS are recently executed transactions, the maximum rate, quality of underlying issuers/insurers and evidence of issuer calls/prepayment. ARS are generally categorized in Level 2 of the fair value hierarchy as the valuation technique relies on observable external data. SLARS and MARS are presented within Asset-backed securities and State and municipal securities, respectively, in the fair value hierarchy table.

Corporate Equities.

• Exchange-Traded Equity Securities.    Exchange-traded equity securities are generally valued based on quoted prices from the exchange. To the extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in Level 1 of the fair value hierarchy; otherwise, they are categorized in Level 2 or Level 3 of the fair value hierarchy.

• Unlisted Equity Securities.    Unlisted equity securities are valued based on an assessment of each underlying security, considering rounds of financing and third-party transactions, discounted cash flow analyses and market-based information, including comparable company transactions, trading multiples and changes in market outlook, among other factors. These securities are generally categorized in Level 3 of the fair value hierarchy.

• Fund Units.    Listed fund units are generally marked to the exchange-traded price or net asset value (“NAV”) and are categorized in Level 1 of the fair value hierarchy if actively traded on an exchange or in Level 2 of the fair value hierarchy if trading is not active. Unlisted fund units are generally marked to NAV and categorized as Level 2; however, positions which are not redeemable at the measurement date or in the near future are categorized in Level 3 of the fair value hierarchy.

Derivative and Other Contracts.

• Listed Derivative Contracts.    Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. Listed derivatives that are not actively traded are valued using the same approaches as those applied to over-the-counter (“OTC”) derivatives; they are generally categorized in Level 2 of the fair value hierarchy.

• OTC Derivative Contracts.    OTC derivative contracts include forward, swap and option contracts related to interest rates, foreign currencies, credit standing of reference entities, equity prices or commodity prices.

Depending on the product and the terms of the transaction, the fair value of OTC derivative products can be either observed or modeled using a series of techniques and model inputs from comparable benchmarks, including closed-form analytic formulas, such as the Black-Scholes option-pricing model, and simulation models or a combination thereof. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets, as is the case for generic interest rate swaps, certain option contracts and certain credit default swaps. In the case of more established derivative products, the pricing

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models used by the Company are widely accepted by the financial services industry. A substantial majority of OTC derivative products valued by the Company using pricing models fall into this category and are categorized in Level 2 of the fair value hierarchy.

Other derivative products, including complex products that have become illiquid, require more judgment in the implementation of the valuation technique applied due to the complexity of the valuation assumptions and the reduced observability of inputs. This includes certain types of interest rate derivatives with both volatility and correlation exposure and credit derivatives including credit default swaps on certain mortgage-backed or asset-backed securities, basket credit default swaps and CDO-squared positions (a CDO-squared position is a special purpose vehicle that issues interests, or tranches, that are backed by tranches issued by other CDOs) where direct trading activity or quotes are unobservable. These instruments involve significant unobservable inputs and are categorized in Level 3 of the fair value hierarchy.

Derivative interests in credit default swaps on certain mortgage-backed or asset-backed securities, for which observability of external price data is limited, are valued based on an evaluation of the market and model input parameters sourced from similar positions as indicated by primary and secondary market activity. Each position is evaluated independently taking into consideration available comparable market levels as well as cash-synthetic basis, or the underlying collateral performance and pricing, behavior of the tranche under various cumulative loss and prepayment scenarios, deal structures (e.g., non-amortizing reference obligations, call features, etc.) and liquidity. While these factors may be supported by historical and actual external observations, the determination of their value as it relates to specific positions nevertheless requires significant judgment.

For basket credit default swaps and CDO-squared positions, the correlation input between reference credits is unobservable for each specific swap or position and is benchmarked to standardized proxy baskets for which correlation data are available. The other model inputs such as credit spread, interest rates and recovery rates are observable. In instances where the correlation input is deemed to be significant, these instruments are categorized in Level 3 of the fair value hierarchy; otherwise, these instruments are categorized in Level 2 of the fair value hierarchy.

The Company trades various derivative structures with commodity underlyings. Depending on the type of structure, the model inputs generally include interest rate yield curves, commodity underlier price curves, implied volatility of the underlying commodities and, in some cases, the implied correlation between these inputs. The fair value of these products is determined using executed trades and broker and consensus data to provide values for the aforementioned inputs. Where these inputs are unobservable, relationships to observable commodities and data points, based on historic and/or implied observations, are employed as a technique to estimate the model input values. Commodity derivatives are generally categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the fair value hierarchy.

For further information on derivative instruments and hedging activities, see Note 11.

Investments.

• The Company’s investments include direct investments in equity securities as well as investments in private equity funds, real estate funds and hedge funds, which include investments made in connection with certain employee deferred compensation plans. Direct investments are presented in the fair value hierarchy table as Principal investments and Other. Initially, the transaction price is generally considered by the Company as the exit price and is the Company’s best estimate of fair value.

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After initial recognition, in determining the fair value of non-exchange-traded internally and externally managed funds, the Company generally considers the NAV of the fund provided by the fund manager to be the best estimate of fair value. For non-exchange-traded investments either held directly or held within internally managed funds, fair value after initial recognition is based on an assessment of each underlying investment, considering rounds of financing and third-party transactions, discounted cash flow analyses and market-based information, including comparable company transactions, trading multiples and changes in market outlook, among other factors. Exchange-traded direct equity investments are generally valued based on quoted prices from the exchange.

Exchange-traded direct equity investments that are actively traded are categorized in Level 1 of the fair value hierarchy. Non-exchange-traded direct equity investments and investments in private equity and real estate funds are generally categorized in Level 3 of the fair value hierarchy. Investments in hedge funds that are redeemable at the measurement date or in the near future are categorized in Level 2 of the fair value hierarchy; otherwise, they are categorized in Level 3 of the fair value hierarchy.

Physical Commodities.

• The Company trades various physical commodities, including crude oil and refined products, natural gas, base and precious metals, and agricultural products. Fair value for physical commodities is determined using observable inputs, including broker quotations and published indices. Physical commodities are categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the fair value hierarchy.

Securities Available for Sale.

• Securities available for sale are composed of U.S. government and agency securities (e.g., U.S. Treasury securities, agency-issued debt, agency mortgage pass-through securities and collateralized mortgage obligations), CMBS, Federal Family Education Loan Program (“FFELP”) student loan asset-backed securities, auto loan asset-backed securities, corporate bonds and equity securities. Actively traded U.S. Treasury securities, non-callable agency-issued debt securities and equity securities are generally categorized in Level 1 of the fair value hierarchy. Callable agency-issued debt securities, agency mortgage pass-through securities, collateralized mortgage obligations, CMBS, FFELP student loan asset-backed securities, auto loan asset-backed securities and corporate bonds are generally categorized in Level 2 of the fair value hierarchy. For further information on securities available for sale, see Note 5.

Deposits.

• Time Deposits.    The fair value of certificates of deposit is determined using third-party quotations. These deposits are generally categorized in Level 2 of the fair value hierarchy.

Commercial Paper and Other Short-Term Borrowings/Long-Term Borrowings.

• Structured Notes.    The Company issues structured notes that have coupon or repayment terms linked to the performance of debt or equity securities, indices, currencies or commodities. Fair value of structured notes is determined using valuation models for the derivative and debt portions of the notes. These models incorporate observable inputs referencing identical or comparable securities, including prices to which the notes are linked, interest rate yield curves, option volatility and currency, commodity or equity prices. Independent, external and traded prices for the notes are considered as well. The impact of the Company’s own credit spreads is also included based on the Company’s observed secondary bond market spreads. Most structured notes are categorized in Level 2 of the fair value hierarchy.

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Securities Purchased under Agreements to Resell and Securities Sold under Agreements to Repurchase.

• The fair value of a reverse repurchase agreement or repurchase agreement is computed using a standard cash flow discounting methodology. The inputs to the valuation include contractual cash flows and collateral funding spreads, which are estimated using various benchmarks, interest rate yield curves and option volatilities. In instances where the unobservable inputs are deemed significant, reverse repurchase agreements and repurchase agreements are categorized in Level 3 of the fair value hierarchy; otherwise, they are categorized in Level 2 of the fair value hierarchy.

The following fair value hierarchy tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis at March 31, 2013.

	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Counterparty and Cash Collateral Netting			Balance at March 31, 2013
	(dollars in millions)
Assets at Fair Value
Trading assets:
U.S. government and agency securities:
U.S. Treasury securities	$	24,411		$	—		$	—		$	—		$	24,411
U.S. agency securities		2,040			22,796			—			—			24,836
Total U.S. government and agency securities		26,451			22,796			—			—			49,247
Other sovereign government obligations		29,893			8,577			3			—			38,473
Corporate and other debt:
State and municipal securities		—			2,228			—			—			2,228
Residential mortgage-backed securities		—			1,684			19			—			1,703
Commercial mortgage-backed securities		—			1,122			174			—			1,296
Asset-backed securities		—			1,040			11			—			1,051
Corporate bonds		—			18,453			888			—			19,341
Collateralized debt obligations		—			442			1,666			—			2,108
Loans and lending commitments		—			11,175			5,284			—			16,459
Other debt		—			9,104			1			—			9,105
Total corporate and other debt		—			45,248			8,043			—			53,291
Corporate equities(1)		74,280			923			270			—			75,473
Derivative and other contracts:
Interest rate contracts		711			708,732			3,640			—			713,083
Credit contracts		—			58,131			4,134			—			62,265
Foreign exchange contracts		24			50,395			5			—			50,424
Equity contracts		965			42,508			1,044			—			44,517
Commodity contracts		3,674			15,559			2,332			—			21,565
Other		—			90			—			—			90
Netting(2)		(4,892	)		(774,480	)		(6,543	)		(70,200	)		(856,115	)
Total derivative and other contracts		482			100,935			4,612			(70,200	)		35,829
Investments:
Private equity funds		—			—			2,291			—			2,291
Real estate funds		—			7			1,370			—			1,377
Hedge funds		—			370			545			—			915
Principal investments		20			2			2,855			—			2,877
Other		190			77			496			—			763
Total investments		210			456			7,557			—			8,223
Physical commodities		—			6,700			—			—			6,700
Total trading assets		131,316			185,635			20,485			(70,200	)		267,236
Securities available for sale		14,049			27,405			—			—			41,454
Securities received as collateral		17,920			51			—			—			17,971
Federal funds sold and securities purchased under agreements to resell		—			873			—			—			873
Intangible assets(3)		—			—			8			—			8
Total assets measured at fair value	$	163,285		$	213,964		$	20,493		$	(70,200	)	$	327,542
Liabilities at Fair Value
Deposits	$	—		$	1,442		$	—		$	—		$	1,442
Commercial paper and other short-term borrowings		—			1,257			5			—			1,262
Trading liabilities:
U.S. government and agency securities:
U.S. Treasury securities		21,303			—			—			—			21,303
U.S. agency securities		1,765			96			—			—			1,861
Total U.S. government and agency securities		23,068			96			—			—			23,164
Other sovereign government obligations		26,928			3,325			—			—			30,253

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	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Counterparty and Cash Collateral Netting			Balance at March 31, 2013
	(dollars in millions)
Corporate and other debt:
State and municipal securities		—			47			—			—			47
Residential mortgage-backed securities		—			—			4			—			4
Asset-backed securities		—			1			—			—			1
Corporate bonds		—			6,979			424			—			7,403
Collateralized debt obligations		—			317			—			—			317
Unfunded lending commitments		—			252			25			—			277
Other debt		—			87			11			—			98
Total corporate and other debt		—			7,683			464			—			8,147
Corporate equities(1)		28,705			1,547			4			—			30,256
Derivative and other contracts:
Interest rate contracts		747			681,975			3,662			—			686,384
Credit contracts		—			56,326			2,731			—			59,057
Foreign exchange contracts		3			51,466			240			—			51,709
Equity contracts		891			47,321			2,384			—			50,596
Commodity contracts		4,164			15,027			1,629			—			20,820
Other		—			30			3			—			33
Netting(2)		(4,892	)		(774,480	)		(6,543	)		(42,032	)		(827,947	)
Total derivative and other contracts		913			77,665			4,106			(42,032	)		40,652
Total trading liabilities		79,614			90,316			4,574			(42,032	)		132,472
Obligation to return securities received as collateral		23,452			58			—			—			23,510
Securities sold under agreements to repurchase		—			410			155			—			565
Other secured financings		—			9,349			275			—			9,624
Long-term borrowings		—			39,726			2,784			—			42,510
Total liabilities measured at fair value	$	103,066		$	142,558		$	7,793		$	(42,032	)	$	211,385

(1) The Company holds or sells short for trading purposes equity securities issued by entities in diverse industries and of varying size.

(2) For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash collateral netting are included in the column titled “Counterparty and Cash Collateral Netting.” For contracts with the same counterparty, counterparty netting among positions classified within the same level is included within that level. For further information on derivative instruments and hedging activities, see Note 11.

(3) Amount represents mortgage servicing rights (“MSR”) accounted for at fair value. See Note 7 for further information on MSRs.

Transfers Between Level 1 and Level 2 During the Quarter Ended March 31, 2013.

For assets and liabilities that were transferred between Level 1 and Level 2 during the period, fair values are ascribed as if the assets or liabilities had been transferred as of the beginning of the period.

In the quarter ended March 31, 2013, there were no material transfers between Level 1 and Level 2.

18

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2012.

	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Counterparty and Cash Collateral Netting			Balance at December 31, 2012
	(dollars in millions)
Assets at Fair Value
Trading assets:
U.S. government and agency securities:
U.S. Treasury securities	$	24,662		$	14		$	—		$	—		$	24,676
U.S. agency securities		1,451			27,888			—			—			29,339
Total U.S. government and agency securities		26,113			27,902			—			—			54,015
Other sovereign government obligations		37,669			5,487			6			—			43,162
Corporate and other debt:
State and municipal securities		—			1,558			—			—			1,558
Residential mortgage-backed securities		—			1,439			45			—			1,484
Commercial mortgage-backed securities		—			1,347			232			—			1,579
Asset-backed securities		—			915			109			—			1,024
Corporate bonds		—			18,403			660			—			19,063
Collateralized debt obligations		—			685			1,951			—			2,636
Loans and lending commitments		—			12,617			4,694			—			17,311
Other debt		—			4,457			45			—			4,502
Total corporate and other debt		—			41,421			7,736			—			49,157
Corporate equities(1)		68,072			1,067			288			—			69,427
Derivative and other contracts:
Interest rate contracts		446			819,581			3,774			—			823,801
Credit contracts		—			63,234			5,033			—			68,267
Foreign exchange contracts		34			52,729			31			—			52,794
Equity contracts		760			37,074			766			—			38,600
Commodity contracts		4,082			14,256			2,308			—			20,646
Other		—			143			—			—			143
Netting(2)		(4,740	)		(883,733	)		(6,947	)		(72,634	)		(968,054	)
Total derivative and other contracts		582			103,284			4,965			(72,634	)		36,197
Investments:
Private equity funds		—			—			2,179			—			2,179
Real estate funds		—			6			1,370			—			1,376
Hedge funds		—			382			552			—			934
Principal investments		185			83			2,833			—			3,101
Other		199			71			486			—			756
Total investments		384			542			7,420			—			8,346
Physical commodities		—			7,299			—			—			7,299
Total trading assets		132,820			187,002			20,415			(72,634	)		267,603
Securities available for sale		14,466			25,403			—			—			39,869
Securities received as collateral		14,232			46			—			—			14,278
Federal funds sold and securities purchased underagreements to resell		—			621			—			—			621
Intangible assets(3)		—			—			7			—			7
Total assets measured at fair value	$	161,518		$	213,072		$	20,422		$	(72,634	)	$	322,378
Liabilities at Fair Value
Deposits	$	—		$	1,485		$	—		$	—		$	1,485
Commercial paper and other short-term borrowings		—			706			19			—			725
Trading liabilities:
U.S. government and agency securities:
U.S. Treasury securities		20,098			21			—			—			20,119
U.S. agency securities		1,394			107			—			—			1,501
Total U.S. government and agency securities		21,492			128			—			—			21,620
Other sovereign government obligations		27,583			2,031			—			—			29,614

19

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Counterparty and Cash Collateral Netting			Balance at December 31, 2012
	(dollars in millions)
Corporate and other debt:
State and municipal securities		—			47			—			—			47
Residential mortgage-backed securities		—			—			4			—			4
Corporate bonds		—			3,942			177			—			4,119
Collateralized debt obligations		—			328			—			—			328
Unfunded lending commitments		—			305			46			—			351
Other debt		—			156			49			—			205
Total corporate and other debt		—			4,778			276			—			5,054
Corporate equities(1)		25,216			1,655			5			—			26,876
Derivative and other contracts:
Interest rate contracts		533			789,715			3,856			—			794,104
Credit contracts		—			61,283			3,211			—			64,494
Foreign exchange contracts		2			56,021			390			—			56,413
Equity contracts		748			39,212			1,910			—			41,870
Commodity contracts		4,530			15,702			1,599			—			21,831
Other		—			54			7			—			61
Netting(2)		(4,740	)		(883,733	)		(6,947	)		(46,395	)		(941,815	)
Total derivative and other contracts		1,073			78,254			4,026			(46,395	)		36,958
Total trading liabilities		75,364			86,846			4,307			(46,395	)		120,122
Obligation to return securities received as collateral		18,179			47			—			—			18,226
Securities sold under agreements to repurchase		—			212			151			—			363
Other secured financings		—			9,060			406			—			9,466
Long-term borrowings		—			41,255			2,789			—			44,044
Total liabilities measured at fair value	$	93,543		$	139,611		$	7,672		$	(46,395	)	$	194,431

(1) The Company holds or sells short for trading purposes equity securities issued by entities in diverse industries and of varying size.

(2) For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash collateral netting are included in the column titled “Counterparty and Cash Collateral Netting.” For contracts with the same counterparty, counterparty netting among positions classified within the same level is included within that level. For further information on derivative instruments and hedging activities, see Note 11.

(3) Amount represents MSRs accounted for at fair value. See Note 7 for further information on MSRs.

Transfers Between Level 1 and Level 2 During the Quarter Ended March 31, 2012.

Trading assets—Derivative and other contracts and Trading liabilities—Derivative and other contracts.    During the quarter ended March 31, 2012, the Company reclassified approximately $1.1 billion of derivative assets and approximately $1.2 billion of derivative liabilities from Level 2 to Level 1 as these listed derivatives became actively traded and were valued based on quoted prices from the exchange. Also during the quarter ended March 31, 2012, the Company reclassified approximately $0.3 billion of derivative assets and approximately $0.4 billion of derivative liabilities from Level 1 to Level 2 as transactions in these contracts did not occur with sufficient frequency and volume to constitute an active market.

Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis.

The following tables present additional information about Level 3 assets and liabilities measured at fair value on a recurring basis for the quarters ended March 31, 2013 and 2012, respectively. Level 3 instruments may be hedged with instruments classified in Level 1 and Level 2. As a result, the realized and unrealized gains (losses) for assets and liabilities within the Level 3 category presented in the tables below do not reflect the related

20

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

realized and unrealized gains (losses) on hedging instruments that have been classified by the Company within the Level 1 and/or Level 2 categories.

Additionally, both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains (losses) during the period for assets and liabilities within the Level 3 category presented in the tables below may include changes in fair value during the period that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

For assets and liabilities that were transferred into Level 3 during the period, gains (losses) are presented as if the assets or liabilities had been transferred into Level 3 at the beginning of the period; similarly, for assets and liabilities that were transferred out of Level 3 during the period, gains (losses) are presented as if the assets or liabilities had been transferred out at the beginning of the period.

21

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Quarter Ended March 31, 2013.

	Beginning Balance at December 31, 2012			Total Realized and Unrealized Gains (Losses) (1)			Purchases			Sales			Issuances			Settlements			Net Transfers			Ending Balance at March 31, 2013			Unrealized Gains (Losses) for Level 3 Assets/ Liabilities Outstanding at March 31, 2013(2)
	(dollars in millions)
Assets at Fair Value
Trading assets:
Other sovereign government obligations	$	6		$	—		$	1		$	(3	)	$	—		$	—		$	(1	)	$	3		$	—
Corporate and other debt:
Residential mortgage-backed securities		45			26			15			(42	)		—			—			(25	)		19			9
Commercial mortgage-backed securities		232			15			6			(80	)		—			—			1			174			7
Asset-backed securities		109			—			1			(99	)		—			—			—			11			—
Corporate bonds		660			62			437			(247	)		—			(12	)		(12	)		888			5
Collateralized debt obligations		1,951			191			314			(695	)		—			(95	)		—			1,666			63
Loans and lending commitments		4,694			20			944			(149	)		—			(738	)		513			5,284			1
Other debt		45			(8	)		14			(49	)		—			—			(1	)		1			(1	)
Total corporate and other debt		7,736			306			1,731			(1,361	)		—			(845	)		476			8,043			84
Corporate equities		288			(22	)		85			(61	)		—			—			(20	)		270			5
Net derivative and other contracts(3):
Interest rate contracts		(82	)		(106	)		1			—			(1	)		192			(26	)		(22	)		18
Credit contracts		1,822			(452	)		42			—			(15	)		(4	)		10			1,403			(418	)
Foreign exchange contracts		(359	)		8			—			—			—			109			7			(235	)		(2	)
Equity contracts		(1,144	)		(140	)		85			(1	)		(93	)		(76	)		29			(1,340	)		(125	)
Commodity contracts		709			(10	)		9			—			(4	)		(8	)		7			703			(30	)
Other		(7	)		(2	)		—			—			—			6			—			(3	)		(2	)
Total net derivative and other contracts		939			(702	)		137			(1	)		(113	)		219			27			506			(559	)
Investments:
Private equity funds		2,179			114			70			(72	)		—			—			—			2,291			104
Real estate funds		1,370			80			3			(83	)		—			—			—			1,370			90
Hedge funds		552			2			31			(34	)		—			—			(6	)		545			(3	)
Principal investments		2,833			63			35			(85	)		—			—			9			2,855			78
Other		486			17			11			(17	)		—			—			(1	)		496			16
Total investments		7,420			276			150			(291	)		—			—			2			7,557			285
Intangible assets		7			4			—			—			—			(3	)		—			8			2
Liabilities at Fair Value
Commercial paper and other short-term borrowings	$	19		$	—		$	—		$	—		$	1		$	(1	)	$	(14	)	$	5		$	—
Trading liabilities:
Corporate and other debt:
Residential mortgage-backed securities		4			—			—			—			—			—			—			4			—
Corporate bonds		177			—			(131	)		371			—			—			7			424			3
Unfunded lending commitments		46			21			—			—			—			—			—			25			20
Other debt		49			11			(37	)		10			—			—			—			11			10
Total corporate and other debt		276			32			(168	)		381			—			—			7			464			33
Corporate equities		5			—			(3	)		1			—			—			1			4			1
Securities sold under agreements to repurchase		151			(4	)		—			—			—			—			—			155			(4	)
Other secured financings		406			12			—			—			13			(132	)		—			275			5
Long-term borrowings		2,789			(17	)		—			—			543			(188	)		(377	)		2,784			(17	)

22

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) Total realized and unrealized gains (losses) are primarily included in Trading in the condensed consolidated statements of income except for $276 million related to Trading assets—Investments, which is included in Investments revenues.

(2) Amounts represent unrealized gains (losses) for the quarter ended March 31, 2013 related to assets and liabilities still outstanding at March 31, 2013.

(3) Net derivative and other contracts represent Trading assets—Derivative and other contracts net of Trading liabilities—Derivative and other contracts. For further information on derivative instruments and hedging activities, see Note 11.

23

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for Quarter Ended March 31, 2012.

	Beginning Balance at December 31, 2011			Total Realized and Unrealized Gains (Losses)(1)			Purchases		Sales			Issuances			Settlements			Net Transfers			Ending Balance at March 31, 2012			Unrealized Gains (Losses) for Level 3 Assets/ Liabilities Outstanding at March 31, 2012(2)
	(dollars in millions)
Assets at Fair Value
Trading assets:
U.S. agency securities	$	8		$	—		$	42	$	(26	)	$	—		$	—		$	(1	)	$	23		$	—
Other sovereign government obligations		119			(1	)		8		(118	)		—			—			—			8			—
Corporate and other debt:
State and municipal securities		—			—			—		—			—			—			3			3			—
Residential mortgage-backed securities		494			(21	)		6		(245	)		—			—			(191	)		43			(18	)
Commercial mortgage-backed securities		134			23			5		(21	)		—			(1	)		(13	)		127			16
Asset-backed securities		31			1			—		(28	)		—			—			(1	)		3			1
Corporate bonds		675			45			426		(225	)		—			—			(22	)		899			39
Collateralized debt obligations		980			123			296		(161	)		—			—			(73	)		1,165			82
Loans and lending commitments		9,590			(20	)		496		(1,018	)		—			(421	)		(30	)		8,597			(35	)
Other debt		128			2			27		(123	)		—			—			23			57			—
Total corporate and other debt		12,032			153			1,256		(1,821	)		—			(422	)		(304	)		10,894			85
Corporate equities		417			(45	)		901		(758	)		—			—			39			554			(9	)
Net derivative and other contracts(3):
Interest rate contracts		420			170			6		—			(5	)		(139	)		(430	)		22			179
Credit contracts		5,814			(1,381	)		63		—			(10	)		(47	)		(58	)		4,381			(1,786	)
Foreign exchange contracts		43			(99	)		—		—			—			162			(40	)		66			(83	)
Equity contracts		(1,234	)		(99	)		199		(58	)		(50	)		(250	)		50			(1,442	)		(161	)
Commodity contracts		570			199			4		—			(4	)		37			(3	)		803			101
Other		(1,090	)		58			—		—			—			269			740			(23	)		56
Total net derivative and other contracts		4,523			(1,152	)		272		(58	)		(69	)		32			259			3,807			(1,694	)
Investments:
Private equity funds		1,936			(7	)		101		(36	)		—			—			—			1,994			1
Real estate funds		1,213			52			87		(14	)		—			—			—			1,338			5
Hedge funds		696			25			22		(33	)		—			—			(87	)		623			23
Principal investments		2,937			38			180		(65	)		—			—			104			3,194			57
Other		501			(33	)		34		(3	)		—			—			28			527			(41	)
Total investments		7,283			75			424		(151	)		—			—			45			7,676			45
Physical commodities		46			—			—		—			—			(46	)		—			—			—
Intangible assets		133			(34	)		—		—			—			—			—			99			(34	)

24

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Beginning Balance at December 31, 2011		Total Realized and Unrealized Gains (Losses) (1)			Purchases			Sales		Issuances		Settlements			Net Transfers			Ending Balance at March 31, 2012		Unrealized Gains (Losses) for Level 3 Assets/ Liabilities Outstanding at March 31, 2012(2)
	(dollars in millions)
Liabilities at Fair Value
Commercial paper and other short-term borrowings	$	2	$	—		$	—		$	—	$	13	$	—		$	—		$	15	$	—
Trading liabilities:
Other sovereign government obligations		8		—			(7	)		—		—		—			—			1		—
Corporate and other debt:
Residential mortgage-backed securities		355		—			(294	)		—		—		—			—			61		(61	)
Corporate bonds		219		(59	)		(186	)		126		—		—			(25	)		193		(74	)
Unfunded lending commitments		85		25			—			—		—		—			—			60		25
Other debt		73		1			—			—		—		(55	)		16			33		3
Total corporate and other debt		732		(33	)		(480	)		126		—		(55	)		(9	)		347		(107	)
Corporate equities		1		(2	)		(2	)		10		—		—			(9	)		2		—
Securities sold under agreements to repurchase		340		1			—			—		—		—			(153	)		186		3
Other secured financings		570		(44	)		—			—		12		(32	)		—			594		(44	)
Long-term borrowings		1,603		(173	)		—			—		262		(78	)		183			2,143		(171	)

(1) Total realized and unrealized gains (losses) are primarily included in Trading in the condensed consolidated statements of income except for $75 million related to Trading assets—Investments, which is included in Investments revenues.

(2) Amounts represent unrealized gains (losses) for the quarter ended March 31, 2012 related to assets and liabilities still outstanding at March 31, 2012.

(3) Net derivative and other contracts represent Trading assets—Derivative and other contracts net of Trading liabilities—Derivative and other contracts. For further information on derivative instruments and hedging activities, see Note 11.

25

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Quantitative Information about and Sensitivity of Significant Unobservable Inputs Used in Recurring Level 3 Fair Value Measurements at March 31, 2013 and December 31, 2012.

The disclosures below provide information on the valuation techniques, significant unobservable inputs and their ranges and averages for each major category of assets and liabilities measured at fair value on a recurring basis with a significant Level 3 balance. The level of aggregation and breadth of products cause the range of inputs to be wide and not evenly distributed across the inventory. Further, the range of unobservable inputs may differ across firms in the financial services industry because of diversity in the types of products included in each firm’s inventory. The disclosures below also include qualitative information on the sensitivity of the fair value measurements to changes in the significant unobservable inputs.

At March 31, 2013.

	Balance at March 31, 2013 (dollars in millions)			Valuation Technique(s)	Significant Unobservable Input(s) / Sensitivity of the Fair Value to Changes in the Unobservable Inputs	Range(1)	Averages(2)
Assets
Trading assets:
Corporate and other debt:
Commercial mortgage-backed securities	$	174		Comparable pricing	Comparable bond price /(A)	57 to 101 points	81 points
Corporate bonds		888		Comparable pricing	Comparable bond price / (A)	4 to 145 points	92 points
Collateralized debt obligations		1,666		Comparable pricing(6)	Comparable bond price / (A)	16 to 95 points	63 points
				Correlation model	Credit correlation / (B)	23 to 54 %	41%
Loans and lending commitments		5,284		Corporate loan model	Credit spread / (C)	44 to 1,045 basis points	245 basis points
				Comparable pricing	Comparable bond price / (A)	80 to 120 points	100 points
				Comparable pricing(6)	Comparable loan price / (A)	30 to 103 points	86 points
Corporate equities(3)		270		Net asset value(6)	Discount to net asset value / (C)	0 to 51 %	20%
				Comparable pricing	Comparable equity price / (A)	0 to 100 %	50%
				Comparable pricing	Comparable price / (A)	43 to 74 points	52 points
				Market approach	EBITDA multiple / (A)	8 to 10 times	9 times
Net derivative and other contracts:
Interest rate contracts		(22	)	Option model	Interest rate volatility concentration liquidity multiple / (C)(D)	0 to 10 times	0 times / 0 times (4)
					Comparable bond price / (A)(D)	5 to 98 points	52 points / 52 points (4)
					Interest rate - Foreign exchange correlation /(A)(D)	2 to 63 %	35% / 43%(4)
					Interest rate volatility skew / (A)(D)	9 to 117 %	53% / 48%(4)
					Interest rate quanto correlation / (A)(D)	-53 to 37 %	8% / -1%(4)
					Interest rate curve correlation / (A)(D)	42 to 98 %	78% / 82%(4)
					Inflation volatility / (A)(D)	60 to 83 %	70% / 66%(4)
Credit contracts		1,403		Comparable pricing	Cash synthetic basis / (C)(D)	1 to 10 points	3 points
					Comparable bond price / (C)(D)	0 to 83 points	27 points
				Correlation model(6)	Credit correlation / (B)	20 to 94 %	47%
Foreign exchange contracts(5)		(235	)	Option model	Comparable bond price / (A)(D)	5 to 98 points	52 points / 52 points (4)
					Interest rate quanto correlation / (A)(D)	-53 to 37 %	8% / -1%(4)
					Interest rate - Credit spread correlation /(A)(D)	-59 to 60 %	-5% / -3%(4)
					Interest rate - Foreign exchange correlation /(A)(D)	2 to 63 %	35% / 43%(4)
					Interest rate volatility skew / (A)(D)	9 to 117 %	53% / 48%(4)
Equity contracts(5)		(1,340	)	Option model	At the money volatility / (C)(D)	14 to 44 %	30%
					Volatility skew / (C)(D)	-2 to 0 %	-1%
					Equity - Equity correlation / (C)(D)	40 to 99 %	71%
					Equity - Foreign exchange correlation / (C)(D)	-60 to 38 %	-15%
					Equity - Interest rate correlation / (C)(D)	1 to 66 %	42% /40%(4)
Commodity contracts		703		Option model	Forward power price / (C)(D)	$18 to $110 per Megawatt hour	$42 per Megawatt hour
					Commodity volatility / (A)(D)	12 to 31 %	13%
					Cross commodity correlation / (C)(D)	43 to 97 %	91%
Investments(3):
Principal investments		2,855		Discounted cash flow	Implied weighted average cost of capital / (C)(D)	10 to 15 %	11%
					Exit multiple / (A)(D)	6 to 10 times	9 times
				Discounted cash flow(6)	Capitalization rate / (C)(D)	6 to 10 %	7%
					Equity discount rate / (C)(D)	15 to 35 %	22%
				Market approach	EBITDA multiple / (A)	6 to 18 times	9 times
Other		496		Discounted cash flow	Implied weighted average cost of capital /(C)(D)	8 to 11 %	8%
					Exit multiple / (A)(D)	6 to 7 times	7 times
				Market approach(6)	EBITDA multiple / (A)	7 to 14 times	11 times

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MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Balance at March 31, 2013 (dollars in millions)		Valuation Technique(s)	Significant Unobservable Input(s) / Sensitivity of the Fair Value to Changes in the Unobservable Inputs	Range(1)	Averages(2)
Liabilities
Trading liabilities:
Corporate and other debt:
Corporate bonds	$	424	Comparable pricing	Comparable bond price / (A)	10 to 147 points	100 points
Securities sold under agreements to repurchase		155	Discounted cash flow	Funding spread / (A)	98 to 144 basis points	115 basis points
Other secured financings		275	Comparable pricing(6)	Comparable bond price / (A)	103 to 117 points	110 points
			Discounted cash flow	Funding spread / (A)	144 to 146 basis points	145 basis points
Long-term borrowings		2,784	Option model	At the money volatility / (A)(D)	24 to 30 %	27%
				Volatility skew / (A)(D)	-1 to 0 %	-1%
				Equity - Equity correlation /(C)(D)	50 to 98 %	74%
				Equity - Foreign exchange correlation /(A)(D)	-60 to 35 %	2%

EBITDA—Earnings before interest, taxes, depreciation and amortization

(1) The ranges of significant unobservable inputs are represented in points, percentages, basis points, times or megawatt hours. Points are a percentage of par; for example, 101 points would be 101% of par. A basis point equals 1/100th of 1%; for example, 1,045 basis points would equal 10.45%.

(2) Amounts represent weighted averages except where simple averages and the median of the inputs are provided (see footnote 4 below). Weighted averages are calculated by weighting each input by the fair value of the respective financial instruments except for long-term borrowings and derivative instruments where inputs are weighted by risk.

(3) Investments in funds measured using an unadjusted net asset value are excluded.

(4) The data structure of the significant unobservable inputs used in valuing Interest rate contracts, Foreign exchange contracts and certain Equity contracts may be in a multi-dimensional form, such as a curve or surface, with risk distributed across the structure. Therefore, a simple average and median, together with the range of data inputs, may be more appropriate measurements than a single point weighted average.

(5) Includes derivative contracts with multiple risks (i.e., hybrid products).

(6) This is the predominant valuation technique for this major asset or liability class.

Sensitivity of the fair value to changes in the unobservable inputs:

(A) Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.

(B) Significant changes in credit correlation may result in a significantly higher or lower fair value measurement. Increasing (decreasing) correlation drives a redistribution of risk within the capital structure such that junior tranches become less (more) risky and senior tranches become more (less) risky.

(C) Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.

(D) There are no predictable relationships between the significant unobservable inputs.

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MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At December 31, 2012.

	Balance at December 31, 2012 (dollars in millions)			Valuation Technique(s)	Significant Unobservable Input(s) / Sensitivity of the Fair Value to Changes in the Unobservable Inputs	Range(1)	Weighted Average
Assets
Trading assets:
Corporate and other debt:
Commercial mortgage-backed securities	$	232		Comparable pricing	Comparable bond price /(A)	46 to 100 points	76 points
Asset-backed securities		109		Discounted cash flow	Internal rate of return /(C)	21%	21%
Corporate bonds		660		Comparable pricing	Comparable bond price /(A)	0 to 143 points	24 points
Collateralized debt obligations		1,951		Comparable pricing	Comparable bond price / (A)	15 to 88 points	59 points
				Correlation model	Credit correlation / (B)	15 to 45 %	40%
Loans and lending commitments		4,694		Corporate loan model	Credit spread / (C)	17 to 1,004 basis points	281 basis points
				Comparable pricing	Comparable bond price / (A)	80 to 120 points	104 points
				Comparable pricing	Comparable loan price / (A)	55 to 100 points	88 points
Corporate equities(2)		288		Net asset value	Discount to net asset value / (C)	0 to 37 %	8%
				Comparable pricing	Discount to comparable equity price / (C)	0 to 27 points	14 points
				Market approach	EBITDA multiple / (A)	6 times	6 times
Net derivative and other contracts:
Interest rate contracts		(82	)	Option model	Interest rate volatility concentration		See (3)
					liquidity multiple / (C)(D)	0 to 8 times
					Comparable bond price / (A)(D)	5 to 98 points
					Interest rate - Foreign exchange correlation / (A)(D)	2 to 63 %
					Interest rate volatility skew / (A)(D)	9 to 95 %
					Interest rate quanto correlation / (A)(D)	-53 to 33 %
					Interest rate curve correlation / (A)(D)	48 to 99 %
					Inflation volatility / (A)(D)	49 to 100 %
				Discounted cash flow	Forward commercial paper rate-LIBOR basis / (A)	-18 to 95 basis points
Credit contracts		1,822		Comparable pricing	Cash synthetic basis / (C)	2 to 14 points	See (4)
					Comparable bond price / (C)	0 to 80 points
				Correlation model	Credit correlation / (B)	14 to 94 %
Foreign exchange contracts(5)		(359	)	Option model	Comparable bond price / (A)(D)	5 to 98 points	See (6)
					Interest rate quanto correlation / (A)(D)	-53 to 33 %
					Interest rate - Credit spread correlation / (A)(D)	-59 to 65 %
					Interest rate - Foreign exchange correlation / (A)(D)	2 to 63 %
					Interest rate volatility skew / (A)(D)	9 to 95 %
Equity contracts(5)		(1,144	)	Option model	At the money volatility / (C)(D)	7 to 24 %	See (7)
					Volatility skew / (C)(D)	-2 to 0 %
					Equity - Equity correlation / (C)(D)	40 to 96 %
					Equity - Foreign exchange correlation / (C)(D)	-70 to 38 %
					Equity - Interest rate correlation / (C)(D)	18 to 65 %
Commodity contracts		709		Option model	Forward power price / (C)(D)	$28 to $84 per Megawatt hour
					Commodity volatility / (A)(D)	17 to 29 %
					Cross commodity correlation / (C)(D)	43 to 97 %
Investments(2):
Principal investments		2,833		Discounted cash flow	Implied weighted average cost of capital / (C)(D)	8 to 15 %	9%
					Exit multiple / (A)(D)	5 to 10 times	9 times
				Discounted cash flow	Capitalization rate / (C)(D)	6 to 10 %	7%
					Equity discount rate / (C)(D)	15 to 35 %	23%
				Market approach	EBITDA multiple / (A)	3 to 17 times	10 times
Other		486		Discounted cash flow	Implied weighted average cost of capital / (C)(D)	11 %	11%
					Exit multiple / (A)(D)	6 times	6 times
				Market approach	EBITDA multiple / (A)	6 to 8 times	7 times

28

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Balance at December 31, 2012 (dollars in millions)		Valuation Technique(s)	Significant Unobservable Input(s) / Sensitivity of the Fair Value to Changes in the Unobservable Inputs	Range(1)	Weighted Average
Liabilities
Trading liabilities:
Corporate and other debt:
Corporate bonds	$	177	Comparable pricing	Comparable bond price / (A)	0 to 150 points	50 points
Securities sold under agreements to repurchase		151	Discounted cash flow	Funding spread / (A)	110 to 184 basis points	166 basis points
Other secured financings		406	Comparable pricing	Comparable bond price / (A)	55 to 139 points	102 points
			Discounted cash flow	Funding spread / (A)	183 to 186 basis points	184 basis points
Long-term borrowings		2,789	Option model	At the money volatility / (A)(D)	20 to 24 %	24%
				Volatility skew / (A)(D)	-1 to 0 %	0%
				Equity - Equity correlation / (C)(D)	50 to 90 %	77%
				Equity - Foreign exchange correlation / (A)(D)	-70 to 36 %	-15%

LIBOR—London Interbank Offered Rate

(1) The ranges of significant unobservable inputs are represented in points, percentages, basis points, times or megawatt hours. Points are a percentage of par; for example, 100 points would be 100% of par. A basis point equals 1/100th of 1%; for example, 1,004 basis points would equal 10.04%.

(2) Investments in funds measured using an unadjusted net asset value are excluded.

(3) See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input ranges for comparable bond prices, interest rate volatility skew, interest rate quanto correlation and forward commercial paper rate–LIBOR basis.

(4) See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input ranges for comparable bond prices and credit correlation.

(5) Includes derivative contracts with multiple risks (i.e., hybrid products).

(6) See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input ranges for comparable bond prices, interest rate quanto correlation, interest rate-credit spread correlation and interest rate volatility skew.

(7) See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input range for equity-foreign exchange correlation.

Sensitivity of the fair value to changes in the unobservable inputs:

(A) Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.

(B) Significant changes in credit correlation may result in a significantly higher or lower fair value measurement. Increasing (decreasing) correlation drives a redistribution of risk within the capital structure such that junior tranches become less (more) risky and senior tranches become more (less) risky.

(C) Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.

(D) There are no predictable relationships between the significant unobservable inputs.

The following provides a description of significant unobservable inputs included in the March 31, 2013 and December 31, 2012 tables above for all major categories of assets and liabilities:

• Comparable bond price—a pricing input used when prices for the identical instrument are not available. Significant subjectivity may be involved when fair value is determined using pricing data available for comparable instruments. Valuation using comparable instruments can be done by calculating an implied yield (or spread over a liquid benchmark) from the price of a comparable bond, then adjusting that yield (or spread) to derive a value for the bond. The adjustment to yield (or spread) should account for relevant differences in the bonds such as maturity or credit quality. Alternatively, a price-to-price basis can be assumed between the comparable instrument and bond being valued in order to establish the value of the bond. Additionally, as the probability of default increases for a given bond (i.e., as the bond becomes more distressed), the valuation of that bond will increasingly reflect its expected recovery level assuming default. The decision to use price-to-price or yield/spread comparisons largely reflects trading market convention for the financial instruments in question. Price-to-price comparisons are primarily employed

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

for CMBS, CDOs, mortgage loans and distressed corporate bonds. Implied yield (or spread over a liquid benchmark) is utilized predominately for non-distressed corporate bonds, loans and credit contracts.

• Internal rate of return—the discount factor required for the net present value of future cash flows to equal zero. The internal rate of return represents the minimum average annual return required for an investment.

• Correlation—a pricing input where the payoff is driven by more than one underlying risk. Correlation is a measure of the relationship between the movements of two variables (i.e., how the change in one variable influences a change in the other variable). Credit correlation, for example, is the factor that describes the relationship between the probability of individual entities to default on obligations and the joint probability of multiple entities to default on obligations.

• Credit spread—the difference in yield between different securities due to differences in credit quality. The credit spread reflects the additional net yield an investor can earn from a security with more credit risk relative to one with less credit risk. The credit spread of a particular security is often quoted in relation to the yield on a credit risk-free benchmark security or reference rate, typically either U.S. Treasury or LIBOR.

• EBITDA multiple / Exit multiple—is the Enterprise Value to EBITDA ratio, where the Enterprise Value is the aggregate value of equity and debt minus cash and cash equivalents. The EBITDA multiple reflects the value of the company in terms of its full-year EBITDA, whereas the exit multiple reflects the value of the company in terms of its full year expected EBITDA at exit. Either multiple allows comparison between companies from an operational perspective as the effect of capital structure, taxation and depreciation/amortization is excluded.

• Volatility—the measure of the variability in possible returns for an instrument given how much that instrument changes in value over time. Volatility is a pricing input for options and, generally, the lower the volatility, the less risky the option. The level of volatility used in the valuation of a particular option depends on a number of factors, including the nature of the risk underlying that option (e.g., the volatility of a particular underlying equity security may be significantly different from that of a particular underlying commodity index), the tenor and the strike price of the option.

• Volatility skew—the measure of the difference in implied volatility for options with identical underliers and expiry dates but with different strikes. The implied volatility for an option with a strike price that is above or below the current price of an underlying asset will typically deviate from the implied volatility for an option with a strike price equal to the current price of that same underlying asset.

• Forward commercial paper rate–LIBOR basis—the basis added to the LIBOR rate when the commercial paper yield is expressed as a spread over the LIBOR rate. The basis to LIBOR is dependent on a number of factors, including, but not limited to, collateralization of the commercial paper, credit rating of the issuer, and the supply of commercial paper. The basis may become negative, i.e., the return for highly-rated commercial paper, such as asset-backed commercial paper, may be less than LIBOR.

• Cash synthetic basis—the measure of the price differential between cash financial instruments (“cash instruments”) and their synthetic derivative-based equivalents (“synthetic instruments”). The range disclosed in the table above signifies the number of points by which the synthetic bond equivalent price is higher than the quoted price of the underlying cash bonds.

• Implied weighted average cost of capital (“WACC”)—the WACC implied by the current value of equity in a discounted cash flow model. The model assumes that the cash flow assumptions, including projections, are fully reflected in the current equity value while the debt to equity ratio is held constant. The WACC theoretically represents the required rate of return to debt and equity investors, respectively.

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MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

• Capitalization rate—the ratio between net operating income produced by an asset and its market value at the projected disposition date.

• Funding spread—the difference between the general collateral rate (which refers to the rate applicable to a broad class of U.S. Treasury issuances) and the specific collateral rate (which refers to the rate applicable to a specific type of security pledged as collateral, such as a municipal bond). Repurchase agreements are discounted based on collateral curves. The curves are constructed as spreads over the corresponding OIS/ LIBOR curves, with the short end of the curve representing spreads over the corresponding OIS curves and the long end of the curve representing spreads over LIBOR.

Fair Value of Investments that Calculate Net Asset Value.

The Company’s Investments measured at fair value were $8,223 million and $8,346 million at March 31, 2013 and December 31, 2012, respectively. The following table presents information solely about the Company’s investments in private equity funds, real estate funds and hedge funds measured at fair value based on net asset value at March 31, 2013 and December 31, 2012, respectively.

	At March 31, 2013				At December 31, 2012
	Fair Value		Unfunded Commitment		Fair Value		Unfunded Commitment
	(dollars in millions)
Private equity funds	$	2,291	$	617	$	2,179	$	644
Real estate funds		1,377		214		1,376		221
Hedge funds(1):
Long-short equity hedge funds		473		—		475		—
Fixed income/credit-related hedge funds		84		—		86		—
Event-driven hedge funds		43		—		52		—
Multi-strategy hedge funds		315		3		321		3
Total	$	4,583	$	834	$	4,489	$	868

(1) Fixed income/credit-related hedge funds, event-driven hedge funds, and multi-strategy hedge funds are redeemable at least on a six-month period basis primarily with a notice period of 90 days or less. At March 31, 2013, approximately 39% of the fair value amount of long-short equity hedge funds is redeemable at least quarterly, 39% is redeemable every six months and 22% of these funds have a redemption frequency of greater than six months. The notice period for long-short equity hedge funds at March 31, 2013 is primarily greater than six months. At December 31, 2012, approximately 36% of the fair value amount of long-short equity hedge funds is redeemable at least quarterly, 38% is redeemable every six months and 26% of these funds have a redemption frequency of greater than six months. The notice period for long-short equity hedge funds at December 31, 2012 is primarily greater than six months.

Private Equity Funds.    Amount includes several private equity funds that pursue multiple strategies including leveraged buyouts, venture capital, infrastructure growth capital, distressed investments, and mezzanine capital. In addition, the funds may be structured with a focus on specific domestic or foreign geographic regions. These investments are generally not redeemable with the funds. Instead, the nature of the investments in this category is that distributions are received through the liquidation of the underlying assets of the fund. At March 31, 2013, it is estimated that 9% of the fair value of the funds will be liquidated in the next five years, another 58% of the fair value of the funds will be liquidated between five to 10 years and the remaining 33% of the fair value of the funds have a remaining life of greater than 10 years.

Real Estate Funds.    Amount includes several real estate funds that invest in real estate assets such as commercial office buildings, retail properties, multi-family residential properties, developments or hotels. In addition, the funds may be structured with a focus on specific geographic domestic or foreign regions. These investments are generally not redeemable with the funds. Distributions from each fund will be received as the underlying investments of the funds are liquidated. At March 31, 2013, it is estimated that 3% of the fair value of

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MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the funds will be liquidated within the next five years, another 49% of the fair value of the funds will be liquidated between five to 10 years and the remaining 48% of the fair value of the funds have a remaining life of greater than 10 years.

Hedge Funds.    Investments in hedge funds may be subject to initial period lock-up restrictions or gates. A hedge fund lock-up provision is a provision that provides that, during a certain initial period, an investor may not make a withdrawal from the fund. The purpose of a gate is to restrict the level of redemptions that an investor in a particular hedge fund can demand on any redemption date.

• Long-short Equity Hedge Funds.    Amount includes investments in hedge funds that invest, long or short, in equities. Equity value and growth hedge funds purchase stocks perceived to be undervalued and sell stocks perceived to be overvalued. Investments representing approximately 8% 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 two years or less at March 31, 2013.

• Fixed Income/Credit-Related Hedge Funds.    Amount includes investments in hedge funds that employ long-short, distressed or relative value strategies in order to benefit from investments in undervalued or overvalued securities that are primarily debt or credit related. At March 31, 2013, investments representing approximately 8% of the fair value of the investments in fixed income/credit-related hedge funds 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 over three years at March 31, 2013.

• Event-Driven Hedge Funds.    Amount includes investments in hedge funds that invest in event-driven situations such as mergers, hostile takeovers, reorganizations, or leveraged buyouts. This may involve the simultaneous purchase of stock in companies being acquired and the sale of stock in its acquirer, with the expectation to profit from the spread between the current market price and the ultimate purchase price of the target company. At March 31, 2013, there were no restrictions on redemptions.

• Multi-strategy Hedge Funds.    Amount includes investments in hedge funds that pursue multiple strategies to realize short- and long-term gains. Management of the hedge funds has the ability to overweight or underweight different strategies to best capitalize on current investment opportunities. At March 31, 2013, investments representing approximately 57% 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 two years or less at March 31, 2013. Investments representing approximately 9% 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 March 31, 2013.

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 tables present net gains (losses) due to changes in fair value for items

32

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

measured at fair value pursuant to the fair value option election for the quarters ended March 31, 2013 and 2012, respectively:

	Trading			Interest Income (Expense)			Gains (Losses) Included in Net Revenues
	(dollars in millions)
Three Months Ended March 31, 2013
Federal funds sold and securities purchased under agreements to resell	$	1		$	1		$	2
Deposits		14			(17	)		(3	)
Commercial paper and other short-term borrowings(1)		63			(1	)		62
Securities sold under agreements to repurchase		(4	)		(1	)		(5	)
Long-term borrowings(1)		91			(297	)		(206	)
Three Months Ended March 31, 2012
Federal funds sold and securities purchased under agreements to resell	$	(4	)	$	1		$	(3	)
Deposits		10			(22	)		(12	)
Commercial paper and other short-term borrowings(1)		(129	)		—			(129	)
Securities sold under agreements to repurchase		(2	)		(1	)		(3	)
Long-term borrowings(1)		(2,951	)		(344	)		(3,295	)

(1) Of the total gains (losses) recorded in Trading for short-term and long-term borrowings for the quarters ended March 31, 2013 and 2012, $(317) million and $(1,978) million, respectively, are attributable to changes in the credit quality of the Company, 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 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K, 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.

The Company hedges the economics of market risk for short-term and long-term borrowings (i.e., risks other than that related to the credit quality of the Company) as part of its overall trading strategy and manages the market risks embedded within the issuance by the related business unit as part of the business unit’s portfolio. The gains and losses on related economic hedges are recorded in Trading and largely offset the gains and losses on short-term and long-term borrowings attributable to market risk.

At March 31, 2013 and December 31, 2012, a breakdown of the short-term and long-term borrowings by business unit responsible for risk-managing each borrowing is shown in the table below:

	Short-term and Long-term Borrowings
Business Unit	At March 31, 2013		At December 31, 2012
	(dollars in millions)
Interest rates	$	21,228	$	23,330
Equity		18,746		17,326
Credit and foreign exchange		3,100		3,337
Commodities		698		776
Total	$	43,772	$	44,769

33

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables present information on the Company’s short-term and long-term borrowings (primarily structured notes), loans and unfunded lending commitments for which the fair value option was elected.

Gains (Losses) due to Changes in Instrument-Specific Credit Risk.

	Three Months Ended March 31,
	2013			2012
	(dollars in millions)
Short-term and long-term borrowings(1)	$	(317	)	$	(1,978	)
Loans(2)		60			293
Unfunded lending commitments(3)		134			407

(1) The change in the fair value of short-term and long-term borrowings (primarily structured notes) includes an adjustment to reflect the change in credit quality of the Company based upon observations of the Company’s secondary bond market spreads.

(2) Instrument-specific credit gains (losses) were determined by excluding the non-credit components of gains and losses, such as those due to changes in interest rates.

(3) Gains (losses) were generally determined based on the differential between estimated expected client yields and contractual yields at each respective period end.

Net Difference between Contractual Principal Amount and Fair Value.

	Contractual Principal Amount Exceeds Fair Value
	At March 31, 2013			At December 31, 2012
	(dollars in millions)
Short-term and long-term borrowings(1)	$	(1,476	)	$	(436	)
Loans(2)		23,992			25,249
Loans 90 or more days past due and/or on non-accrual status(2)(3)		19,334			20,456

(1) These amounts do not include structured notes where the repayment of the initial principal amount fluctuates based on changes in the reference price or index.

(2) The majority of this difference between principal and fair value amounts emanates from the Company’s distressed debt trading business, which purchases distressed debt at amounts well below par.

(3) The aggregate fair value of loans that were in non-accrual status, which includes all loans 90 or more days past due, was $1,528 million and $1,360 million at March 31, 2013 and December 31, 2012, respectively. The aggregate fair value of loans that were 90 or more days past due was $813 million and $840 million at March 31, 2013 and December 31, 2012, respectively.

The tables above exclude non-recourse debt from consolidated VIEs, liabilities related to failed sales of financial assets, pledged commodities and other liabilities that have specified assets attributable to them.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis.

Certain assets were measured at fair value on a non-recurring basis and are not included in the tables above. These assets may include loans, other investments, premises, equipment and software costs, and intangible assets.

The following tables present, by caption on the condensed consolidated statements of financial condition, the fair value hierarchy for those assets measured at fair value on a non-recurring basis for which the Company recognized a non-recurring fair value adjustment for the quarters ended March 31, 2013 and 2012, respectively.

34

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Three Months Ended March 31, 2013.

			Fair Value Measurements Using:
	Carrying Value at March 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) for 2013(1)
	(dollars in millions)
Loans(2)	$	2,532	$	—	$	490	$	2,042	$	(9	)
Other investments(3)		69		—		—		69		(18	)
Premises, equipment and software costs(3)		25		—		—		25		(1	)
Intangible assets(3)		2		—		—		2		(1	)
Total	$	2,628	$	—	$	490	$	2,138	$	(29	)

(1) Losses are recorded within Other expenses in the condensed consolidated statements of income except for fair value adjustments related to Loans and losses related to Other investments, which are included in Other revenues.

(2) Non-recurring changes in fair value for loans held for investment were calculated based upon the fair value of the underlying collateral. The fair value of the collateral was determined using internal expected recovery models. The non-recurring change in fair value for mortgage loans held for sale is based upon a valuation model incorporating market observable inputs.

(3) Losses recorded were determined primarily using discounted cash flow models.

There were no liabilities measured at fair value on a non-recurring basis during the quarter ended March 31, 2013.

Three Months Ended March 31, 2012.

			Fair Value Measurements Using:
	Carrying Value at March 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) for 2012(1)
	(dollars in millions)
Loans(2)	$	298	$	—	$	144	$	154	$	(6	)
Other investments(3)		47		—		—		47		(3	)
Premises, equipment and software costs(3)		3		—		—		3		(1	)
Intangible assets(4)		2		2		—		—		(2	)
Total	$	350	$	2	$	144	$	204	$	(12	)

(1) Losses are recorded within Other expenses in the condensed consolidated statements of income except for fair value adjustments related to Loans and losses related to Other investments, which are included in Other revenues.

(2) Non-recurring changes in fair value for loans held for investment were calculated based upon the fair value of the underlying collateral. The fair value of the collateral was determined using internal expected recovery models. The non-recurring change in fair value for mortgage loans held for sale is based upon a valuation model incorporating market observable inputs.

(3) Losses recorded were determined primarily using discounted cash flow models.

(4) Losses were determined using discounted cash flow models or a valuation technique incorporating an observable market index.

In addition to the losses included in the table above, there was a pre-tax gain of approximately $51 million (related to Other assets) included in discontinued operations in the quarter ended March 31, 2012 in connection with the disposition of Saxon (see Notes 1 and 21). This pre-tax gain was primarily due to the subsequent

35

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

increase in the fair value of Saxon, which had incurred impairment losses of $98 million in the quarter ended December 31, 2011. The fair value of Saxon was determined based on the revised purchase price agreed upon with the buyer.

There were no liabilities measured at fair value on a non-recurring basis during the quarter ended March 31, 2012.

Financial Instruments Not Measured at Fair Value.

The tables below present the carrying value, fair value and fair value hierarchy category of certain financial instruments that are not measured at fair value in the condensed consolidated statements of financial condition. The tables below exclude certain financial instruments such as equity method investments and all non-financial assets and liabilities such as the value of the long-term relationships with our deposit customers.

The carrying value of cash and cash equivalents, including Interest bearing deposits with banks, and other short-term financial instruments such as Federal funds sold and securities purchased under agreements to resell, Securities borrowed, Securities sold under agreements to repurchase, Securities loaned, certain Customer and other receivables and Customer and other payables arising in the ordinary course of business, Deposits, Commercial paper and other short-term borrowings and Other secured financings approximate fair value because of the relatively short period of time between their origination and expected maturity.

For longer-dated Federal funds sold and securities purchased under agreements to resell, Securities borrowed, Securities sold under agreements to repurchase, Securities loaned and Other secured financings, fair value is determined using a standard cash flow discounting methodology. The inputs to the valuation include contractual cash flows and collateral funding spreads, which are estimated using various benchmarks and interest rate yield curves.

For consumer and residential real estate loans where position-specific external price data is not observable, the fair value is based on the credit risks of the borrower using a probability of default and loss given default method, discounted at the estimated external cost of funding level. The fair value of corporate loans is determined using recently executed transactions, market price quotations (where observable), implied yields from comparable debt, and market observable credit default swap spread levels along with proprietary valuation models and default recovery analysis where such transactions and quotations are unobservable.

The fair value of long-term borrowings is generally determined based on transactional data or third party pricing for identical or comparable instruments, when available. Where position-specific external prices are not observable, fair value is determined based on current interest rates and credit spreads for debt instruments with similar terms and maturity.

36

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial Instruments Not Measured at Fair Value at March 31, 2013 and December 31, 2012.

At March 31, 2013.

	At March 31, 2013				Fair Value Measurements Using:
	Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(dollars in millions)
Financial Assets:
Cash and due from banks	$	17,773	$	17,773	$	17,773	$	—	$	—
Interest bearing deposits with banks		25,129		25,129		25,129		—		—
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements		31,313		31,313		31,313		—		—
Federal funds sold and securities purchased under agreements to resell		139,542		139,695		—		138,334		1,361
Securities borrowed		135,727		135,726		—		135,574		152
Customer and other receivables(1)		57,422		57,295		—		51,656		5,639
Loans(2)		30,615		31,053		—		6,478		24,575
Financial Liabilities:
Deposits	$	79,181	$	79,181	$	—	$	79,181	$	—
Commercial paper and other short-term borrowings		1,213		1,213		—		959		254
Securities sold under agreements to repurchase		118,705		118,837		—		107,677		11,160
Securities loaned		40,351		40,400		—		38,073		2,327
Other secured financings		6,670		6,693		—		3,436		3,257
Customer and other payables(1)		133,842		133,842		—		133,842		—
Long-term borrowings		122,632		125,618		—		115,726		9,892

(1) Accrued interest, fees and dividend receivables and payables where carrying value approximates fair value have been excluded.

(2) Includes all loans measured at fair value on a non-recurring basis.

The fair value of the Company's unfunded lending commitments, primarily related to corporate lending in the Institutional Securities business segment, that are not carried at fair value at March 31, 2013 was $756 million, of which $542 million and $214 million would be categorized in Level 2 and Level 3 of the fair value hierarchy, respectively. The carrying value of these commitments, if fully funded, would be $53.6 billion.

37

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At December 31, 2012.

	At December 31, 2012				Fair Value Measurements Using:
	Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(dollars in millions)
Financial Assets:
Cash and due from banks	$	20,878	$	20,878	$	20,878	$	—	$	—
Interest bearing deposits with banks		26,026		26,026		26,026		—		—
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements		30,970		30,970		30,970		—		—
Federal funds sold and securities purchased under agreements to resell		133,791		133,792		—		133,035		757
Securities borrowed		121,701		121,705		—		121,691		14
Customer and other receivables(1)		59,702		59,634		—		53,532		6,102
Loans(2)		29,046		27,263		—		5,307		21,956
Financial Liabilities:
Deposits	$	81,781	$	81,781	$	—	$	81,781	$	—
Commercial paper and other short-term borrowings		1,413		1,413		—		1,107		306
Securities sold under agreements to repurchase		122,311		122,389		—		111,722		10,667
Securities loaned		36,849		37,163		—		35,978		1,185
Other secured financings		6,261		6,276		—		3,649		2,627
Customer and other payables(1)		125,037		125,037		—		125,037		—
Long-term borrowings		125,527		126,683		—		116,511		10,172

(1) Accrued interest, fees and dividend receivables and payables where carrying value approximates fair value have been excluded.

(2) Includes all loans measured at fair value on a non-recurring basis.

The fair value of the Company’s unfunded lending commitments, primarily related to corporate lending in the Institutional Securities business segment, that are not carried at fair value at December 31, 2012 was $755 million, of which $543 million and $212 million would be categorized in Level 2 and Level 3 of the fair value hierarchy, respectively. The carrying value of these commitments, if fully funded, would be $50.0 billion.

38

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

5. Securities Available for Sale.

The following tables present information about the Company’s available for sale securities:

	At March 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Other-than- Temporary Impairment		Fair Value
	(dollars in millions)
Debt securities available for sale:
U.S. government and agency securities:
U.S. Treasury securities	$	13,938	$	105	$	2	$	—	$	14,041
U.S. agency securities		15,199		99		10		—		15,288
Total U.S. government and agency securities		29,137		204		12		—		29,329
Corporate and other debt:
Commercial mortgage-backed securities:
Agency		2,370		2		15		—		2,357
Non-Agency		459		2		1		—		460
Auto loan asset-backed securities		2,171		3		1		—		2,173
Corporate bonds		3,530		15		3		—		3,542
Collateralized debt and loan obligations		677		—		—		—		677
FFELP student loan asset-backed securities(1)		2,884		25		1		—		2,908
Total Corporate and other debt		12,091		47		21		—		12,117
Total debt securities available for sale		41,228		251		33		—		41,446
Equity securities available for sale		15		—		7		—		8
Total	$	41,243	$	251	$	40	$	—	$	41,454

39

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	At December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Other-than- Temporary Impairment		Fair Value
	(dollars in millions)
Debt securities available for sale:
U.S. government and agency securities:
U.S. Treasury securities	$	14,351	$	109	$	2	$	—	$	14,458
U.S. agency securities		15,330		122		3		—		15,449
Total U.S. government and agency securities		29,681		231		5		—		29,907
Corporate and other debt:
Commercial mortgage-backed securities:
Agency		2,197		6		4		—		2,199
Non-Agency		160		—		—		—		160
Auto loan asset-backed securities		1,993		4		1		—		1,996
Corporate bonds		2,891		13		3		—		2,901
FFELP student loan asset-backed securities(1)		2,675		23		—		—		2,698
Total Corporate and other debt		9,916		46		8		—		9,954
Total debt securities available for sale		39,597		277		13		—		39,861
Equity securities available for sale		15		—		7		—		8
Total	$	39,612	$	277	$	20	$	—	$	39,869

(1) Amounts are backed by a guarantee from the U.S. Department of Education of at least 95% of the principal balance and interest on such loans.

40

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The tables below present the fair value of investments in securities available for sale that are in an unrealized loss position:

	Less than 12 Months				12 Months or Longer				Total
At March 31, 2013	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(dollars in millions)
Debt securities available for sale:
U.S. government and agency securities:
U.S. Treasury securities	$	805	$	2	$	—	$	—	$	805	$	2
U.S. agency securities		2,927		10		23		—		2,950		10
Total U.S. government and agency securities		3,732		12		23		—		3,755		12
Corporate and other debt:
Commercial mortgage-backed securities:
Agency		1,703		15		—		—		1,703		15
Non-Agency		169		1		—		—		169		1
Auto loan asset-backed securities		1,072		1		—		—		1,072		1
Corporate bonds		907		3		—		—		907		3
FFELP student loan asset-backed securities		458		1		—		—		458		1
Total Corporate and other debt		4,309		21		—		—		4,309		21
Total debt securities available for sale		8,041		33		23		—		8,064		33
Equity securities available for sale		—		—		8		7		8		7
Total	$	8,041	$	33	$	31	$	7	$	8,072	$	40

	Less than 12 Months				12 Months or Longer				Total
At December 31, 2012	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(dollars in millions)
Debt securities available for sale:
U.S. government and agency securities:
U.S. Treasury securities	$	1,012	$	2	$	—	$	—	$	1,012	$	2
U.S. agency securities		1,534		3		27		—		1,561		3
Total U.S. government and agency securities		2,546		5		27		—		2,573		5
Corporate and other debt:
Commercial mortgage-backed securities:
Agency		1,057		4		—		—		1,057		4
Auto loan asset-backed securities		710		1		—		—		710		1
Corporate bonds		934		3		—		—		934		3
Total Corporate and other debt		2,701		8		—		—		2,701		8
Total debt securities available for sale		5,247		13		27		—		5,274		13
Equity securities available for sale		8		7		—		—		8		7
Total	$	5,255	$	20	$	27	$	—	$	5,282	$	20

41

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Gross unrealized losses are recorded in Accumulated other comprehensive income.

For debt securities available for sale in an unrealized loss position, the Company does not intend to sell these securities or expect to be required to sell these securities prior to recovery of the amortized cost basis. In addition, the Company does not expect the U.S. government and agency securities to experience a credit loss given the explicit and implicit guarantee provided by the U.S. government. The Company believes that the debt securities with an unrealized loss in Accumulated other comprehensive income were not other-than-temporarily impaired at March 31, 2013.

For equity securities available for sale in an unrealized loss position, the Company does not intend to sell these securities or expect to be required to sell these securities prior to the recovery of the amortized cost basis. The Company believes that the equity securities with an unrealized loss in Accumulated other comprehensive income were not other-than-temporarily impaired at March 31, 2013.

The following table presents the amortized cost and fair value of debt securities available for sale by contractual maturity dates at March 31, 2013.

At March 31, 2013	Amortized Cost		Fair Value		Annualized Average Yield
	(dollars in millions)
U.S. government and agency securities:
U.S. Treasury securities:
Due within 1 year	$	1,550	$	1,571		1.7	%
After 1 year through 5 years		12,388		12,470		0.7	%
Total		13,938		14,041
U.S. agency securities:
After 5 years through 10 years		2,017		2,029		1.1	%
After 10 years		13,182		13,259		1.1	%
Total		15,199		15,288
Total U.S. government and agency securities		29,137		29,329		0.9	%
Corporate and other debt:
Commercial mortgage-backed securities:
Agency:
After 1 year through 5 years		487		487		0.9	%
After 5 years through 10 years		547		547		0.9	%
After 10 years		1,336		1,323		1.5	%
Total		2,370		2,357
Non-Agency:
After 1 year through 5 years		105		105		1.1	%
After 5 years through 10 years		38		38		0.8	%
After 10 years		316		317		0.9	%
Total		459		460
Auto loan asset-backed securities:
After 1 year through 5 years		1,982		1,984		0.7	%
After 5 years through 10 years		189		189		0.6	%
Total		2,171		2,173

42

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At March 31, 2013	Amortized Cost		Fair Value		Annualized Average Yield
	(dollars in millions)
Corporate bonds:
Due within 1 year		203		203		0.6	%
After 1 year through 5 years		3,041		3,053		1.1	%
After 5 years through 10 years		286		286		1.8	%
Total		3,530		3,542
Collateralized debt and loan obligations:
After 1 year through 5 years		50		50		1.7	%
After 10 years		627		627		1.4	%
Total		677		677
FFELP student loan asset-backed securities:
After 1 year through 5 years		124		124		0.7	%
After 5 years through 10 years		507		511		1.0	%
After 10 years		2,253		2,273		1.1	%
Total		2,884		2,908
Total Corporate and other debt		12,091		12,117		1.1	%
Total debt securities available for sale	$	41,228	$	41,446		1.0	%

See Note 7 for additional information on securities issued by VIEs, including U.S. agency mortgage-backed securities, auto loan asset-backed securities, FFELP student loan asset-backed securities and collateralized debt and loan obligations.

The following table presents information pertaining to sales of securities available for sale during the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,
	2013		2012
	(dollars in millions)
Gross realized gains	$	5	$	2
Gross realized losses	$	2	$	1
Proceeds of sales of securities available for sale	$	2,029	$	—

Gross realized gains and losses are recognized in Other revenues in the condensed consolidated statements of income.

6. Collateralized Transactions.

The Company enters into reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions to, among other things, acquire securities to cover short positions and settle other securities obligations, to accommodate customers’ needs and to finance the Company’s inventory positions. The Company manages credit exposure arising from such transactions by, in appropriate circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide the Company, in the

43

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

event of a counterparty default (such as bankruptcy or a counterparty’s failure to pay or perform), the right to net a counterparty’s rights and obligations under such agreement and liquidate and setoff collateral against the net amount owed by the counterparty. The Company’s policy is generally to take possession of securities purchased under agreements to resell and securities borrowed, and to receive securities and cash posted as collateral (with rights of rehypothecation), although in certain cases the Company may agree for such collateral to be posted to a third party custodian under a tri-party arrangement that enables the Company to take control of such collateral in the event of a counterparty default. The Company also monitors the fair value of the underlying securities as compared with the related receivable or payable, including accrued interest, and, as necessary, requests additional collateral as provided under the applicable agreement to ensure such transactions are adequately collateralized. The following tables present information about the offsetting of these instruments and related collateral amounts. For information related to offsetting of derivatives, see Note 11.

	At March 31, 2013
	Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)			Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Financial Instruments Not Offset in the Condensed Consolidated Statements of Financial Condition(2)			Net Exposure
	(dollars in millions)
Assets
Federal funds sold and securities purchased under agreements to resell	$	228,101	$	(87,686	)	$	140,415	$	(129,911	)	$	10,504
Securities borrowed		141,667		(5,940	)		135,727		(115,717	)		20,010
Liabilities
Securities sold under agreements to repurchase	$	206,956	$	(87,686	)	$	119,270	$	(89,815	)	$	29,455
Securities loaned		46,291		(5,940	)		40,351		(37,348	)		3,003

(1) Amounts include all instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2) Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3) Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

44

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	At December 31, 2012
	Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)			Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Financial Instruments Not Offset in the Condensed Consolidated Statements of Financial Condition(2)			Net Exposure
	(dollars in millions)
Assets
Federal funds sold and securities purchased under agreements to resell	$	203,448	$	(69,036	)	$	134,412	$	(126,303	)	$	8,109
Securities borrowed		127,002		(5,301	)		121,701		(105,849	)		15,852
Liabilities
Securities sold under agreements to repurchase	$	191,710	$	(69,036	)	$	122,674	$	(103,521	)	$	19,153
Securities loaned		42,150		(5,301	)		36,849		(30,395	)		6,454

(1) Amounts include all instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2) Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3) Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

The Company also engages in securities financing transactions for customers through margin lending. Under these agreements and transactions, the Company either receives or provides collateral, including U.S. government and agency securities, other sovereign government obligations, corporate and other debt, and corporate equities. Customer receivables generated from margin lending activity are collateralized by customer-owned securities held by the Company. The Company monitors required margin levels and established credit limits daily and, pursuant to such guidelines, requires customers to deposit additional collateral, or reduce positions, when necessary. Margin loans are extended on a demand basis and are not committed facilities. Factors considered in the review of margin loans are the amount of the loan, the intended purpose, the degree of leverage being employed in the account, and overall evaluation of the portfolio to ensure proper diversification or, in the case of concentrated positions, appropriate liquidity of the underlying collateral or potential hedging strategies to reduce risk. Additionally, transactions relating to concentrated or restricted positions require a review of any legal impediments to liquidation of the underlying collateral. Underlying collateral for margin loans is reviewed with respect to the liquidity of the proposed collateral positions, valuation of securities, historic trading range, volatility analysis and an evaluation of industry concentrations. For these transactions, adherence to the Company’s collateral policies significantly limits the Company’s credit exposure in the event of customer default. The Company may request additional margin collateral from customers, if appropriate, and, if necessary, may sell securities that have not been paid for or purchase securities sold but not delivered from customers. At March 31, 2013 and December 31, 2012, there were approximately $25.1 billion and $24.0 billion, respectively, of customer margin loans outstanding.

Other secured financings include the liabilities related to transfers of financial assets that are accounted for as financings rather than sales, consolidated VIEs where the Company is deemed to be the primary beneficiary, and certain equity-linked notes and other secured borrowings. These liabilities are generally payable from the cash flows of the related assets accounted for as Trading assets (see Notes 7 and 10).

The Company pledges its trading assets to collateralize repurchase agreements and other securities financings. Pledged financial instruments that can be sold or repledged by the secured party are identified as Trading assets

45

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(pledged to various parties) in the condensed consolidated statements of financial condition. The carrying value and classification of Trading assets by the Company that have been loaned or pledged to counterparties where those counterparties do not have the right to sell or repledge the collateral were as follows:

	At March  31, 2013		At December  31, 2012
	(dollars in millions)
Trading assets:
U.S. government and agency securities	$	14,125	$	15,273
Other sovereign government obligations		4,569		3,278
Corporate and other debt		16,450		11,980
Corporate equities		9,130		26,377
Total	$	44,274	$	56,908

The Company receives collateral in the form of securities in connection with reverse repurchase agreements, securities borrowed and derivative transactions, and customer margin loans. In many cases, the Company is permitted to sell or repledge these securities held as collateral and use the securities to secure repurchase agreements, to enter into securities lending and derivative transactions or for delivery to counterparties to cover short positions. The Company additionally receives securities as collateral in connection with certain securities-for-securities transactions in which the Company is the lender. In instances where the Company is permitted to sell or repledge these securities, the Company reports the fair value of the collateral received and the related obligation to return the collateral in the condensed consolidated statements of financial condition. At March 31, 2013 and December 31, 2012, the fair value of financial instruments received as collateral where the Company is permitted to sell or repledge the securities was $613 billion and $560 billion, respectively, and the fair value of the portion that had been sold or repledged was $469 billion and $397 billion, respectively.

At March 31, 2013 and December 31, 2012, cash and securities deposited with clearing organizations or segregated under federal and other regulations or requirements were as follows:

	At March 31, 2013		At December 31, 2012
	(dollars in millions)
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	$	31,313	$	30,970
Securities(1)		13,999		13,424
Total	$	45,312	$	44,394

(1) Securities deposited with clearing organizations or segregated under federal and other regulations or requirements are sourced from Federal funds sold and securities purchased under agreements to resell and Trading assets in the condensed consolidated statements of financial condition.

7. Variable Interest Entities and Securitization Activities.

The Company is involved with various special purpose entities (“SPE”) in the normal course of business. In most cases, these entities are deemed to be VIEs.

The Company applies accounting guidance for consolidation of VIEs to certain entities in which equity investors do not have the characteristics of a controlling financial interest. Except for certain asset management entities,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the primary beneficiary of a VIE is the party that both (1) has the power to direct the activities of a VIE that most significantly affect the VIE’s economic performance and (2) has an obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. The Company consolidates entities of which it is the primary beneficiary.

The Company’s variable interests in VIEs include debt and equity interests, commitments, guarantees, derivative instruments and certain fees. The Company’s involvement with VIEs arises primarily from:

• Interests purchased in connection with market-making activities, securities held in its available for sale portfolio and retained interests held as a result of securitization activities, including re-securitization transactions.

• Guarantees issued and residual interests retained in connection with municipal bond securitizations.

• Servicing of residential and commercial mortgage loans held by VIEs.

• Loans made to and investments in VIEs that hold debt, equity, real estate or other assets.

• Derivatives entered into with VIEs.

• Structuring of credit-linked notes (“CLN”) or other asset-repackaged notes designed to meet the investment objectives of clients.

• Other structured transactions designed to provide tax-efficient yields to the Company or its clients.

The Company determines whether it is the primary beneficiary of a VIE upon its initial involvement with the VIE and reassesses whether it is the primary beneficiary on an ongoing basis as long as it has any continuing involvement with the VIE. This determination is based upon an analysis of the design of the VIE, including the VIE’s structure and activities, the power to make significant economic decisions held by the Company and by other parties, and the variable interests owned by the Company and other parties.

The power to make the most significant economic decisions may take a number of different forms in different types of VIEs. The Company considers servicing or collateral management decisions as representing the power to make the most significant economic decisions in transactions such as securitizations or CDOs. As a result, the Company does not consolidate securitizations or CDOs for which it does not act as the servicer or collateral manager unless it holds certain other rights to replace the servicer or collateral manager or to require the liquidation of the entity. If the Company serves as servicer or collateral manager, or has certain other rights described in the previous sentence, the Company analyzes the interests in the VIE that it holds and consolidates only those VIEs for which it holds a potentially significant interest of the VIE.

The structure of securitization vehicles and CDOs is driven by several parties, including loan seller(s) in securitization transactions, the collateral manager in a CDO, one or more rating agencies, a financial guarantor in some transactions and the underwriter(s) of the transactions, who serve to reflect specific investor demand. In addition, subordinate investors, such as the “B-piece” buyer (i.e., investors in most subordinated bond classes) in commercial mortgage-backed securitizations or equity investors in CDOs, can influence whether specific loans are excluded from a CMBS transaction or investment criteria in a CDO.

For many transactions, such as re-securitization transactions, CLNs and other asset-repackaged notes, there are no significant economic decisions made on an ongoing basis. In these cases, the Company focuses its analysis on decisions made prior to the initial closing of the transaction and at the termination of the transaction. Based upon factors, which include an analysis of the nature of the assets, including whether the assets were issued in a transaction sponsored by the Company and the extent of the information available to the Company and to

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

investors, the number, nature and involvement of investors, other rights held by the Company and investors, the standardization of the legal documentation and the level of the continuing involvement by the Company, including the amount and type of interests owned by the Company and by other investors, the Company concluded in most of these transactions that decisions made prior to the initial closing were shared between the Company and the initial investors. The Company focused its control decision on any right held by the Company or investors related to the termination of the VIE. Most re-securitization transactions, CLNs and other asset-repackaged notes have no such termination rights.

Except for consolidated VIEs included in other structured financings and managed real estate partnerships in the tables below, the Company accounts for the assets held by the entities primarily in Trading assets and the liabilities of the entities as Other secured financings in the condensed consolidated statements of financial condition. For consolidated VIEs included in other structured financings, the Company accounts for the assets held by the entities primarily in Premises, equipment and software costs, and Other assets in the condensed consolidated statements of financial condition. For consolidated VIEs included in managed real estate partnerships, the Company accounts for the assets held by the entities primarily in Trading assets in the condensed consolidated statements of financial condition. Except for consolidated VIEs included in other structured financings, the assets and liabilities are measured at fair value, with changes in fair value reflected in earnings.

The assets owned by many consolidated VIEs cannot be removed unilaterally by the Company and are not generally available to the Company. The related liabilities issued by many consolidated VIEs are non-recourse to the Company. In certain other consolidated VIEs, the Company has the unilateral right to remove assets or provides additional recourse through derivatives such as total return swaps, guarantees or other forms of involvement.

As part of the Company’s Institutional Securities business segment’s securitization and related activities, the Company has provided, or otherwise agreed to be responsible for, representations and warranties regarding certain assets transferred in securitization transactions sponsored by the Company (see Note 12).

The following tables present information at March 31, 2013 and December 31, 2012 about VIEs that the Company consolidates. Consolidated VIE assets and liabilities are presented after intercompany eliminations and include assets financed on a non-recourse basis:

	At March 31, 2013
	Mortgage and Asset-Backed Securitizations		Collateralized Debt Obligations		Managed Real Estate Partnerships		Other Structured Financings		Other
	(dollars in millions)
VIE assets	$	881	$	—	$	2,486	$	992	$	1,500
VIE liabilities	$	565	$	—	$	134	$	65	$	176

	At December 31, 2012
	Mortgage and Asset-Backed Securitizations		Collateralized Debt Obligations		Managed Real Estate Partnerships		Other Structured Financings		Other
	(dollars in millions)
VIE assets	$	978	$	52	$	2,394	$	983	$	1,676
VIE liabilities	$	646	$	16	$	83	$	65	$	313

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MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In general, the Company’s exposure to loss in consolidated VIEs is limited to losses that would be absorbed on the VIE’s assets recognized in its financial statements, net of losses absorbed by third-party holders of the VIE’s liabilities. At March 31, 2013 and December 31, 2012, managed real estate partnerships reflected nonredeemable noncontrolling interests in the Company’s condensed consolidated financial statements of $1,854 million and $1,804 million, respectively. The Company also had additional maximum exposure to losses of approximately $60 million and $58 million at March 31, 2013 and December 31, 2012, respectively. This additional exposure related primarily to certain derivatives (e.g., instead of purchasing senior securities, the Company has sold credit protection to synthetic CDOs through credit derivatives that are typically related to the most senior tranche of the CDO) and commitments, guarantees and other forms of involvement.

The following tables present information about certain non-consolidated VIEs in which the Company had variable interests at March 31, 2013 and December 31, 2012. The tables include all VIEs in which the Company has determined that its maximum exposure to loss is greater than specific thresholds or meets certain other criteria. Most of the VIEs included in the tables below are sponsored by unrelated parties; the Company’s involvement generally is the result of the Company’s secondary market-making activities and securities held in its available for sale portfolio (see Note 5):

	At March 31, 2013
	Mortgage and Asset-Backed Securitizations		Collateralized Debt Obligations		Municipal Tender Option Bonds		Other Structured Financings		Other
	(dollars in millions)
VIE assets that the Company does not consolidate (unpaid principal balance)(1)	$	260,828	$	18,864	$	3,668	$	1,742	$	13,781
Maximum exposure to loss:
Debt and equity interests(2)	$	22,170	$	1,803	$	190	$	1,057	$	2,984
Derivative and other contracts		35		33		2,174		—		248
Commitments, guarantees and other		51		—		—		669		562
Total maximum exposure to loss	$	22,256	$	1,836	$	2,364	$	1,726	$	3,794
Carrying value of exposure to loss—Assets:
Debt and equity interests(2)	$	22,170	$	1,803	$	190	$	672	$	2,979
Derivative and other contracts		35		8		4		—		79
Total carrying value of exposure to loss—Assets	$	22,205	$	1,811	$	194	$	672	$	3,058
Carrying value of exposure to loss—Liabilities:
Derivative and other contracts	$	—	$	4	$	—	$	—	$	50
Commitments, guarantees and other		—		—		—		11		214
Total carrying value of exposure to loss—Liabilities	$	—	$	4	$	—	$	11	$	264

(1) Mortgage and asset-backed securitizations include VIE assets as follows: $21.8 billion of residential mortgages; $45.5 billion of commercial mortgages; $131.9 billion of U.S. agency collateralized mortgage obligations; and $61.6 billion of other consumer or commercial loans.

(2) Mortgage and asset-backed securitizations include VIE debt and equity interests as follows: $0.9 billion of residential mortgages; $1.1 billion of commercial mortgages; $14.9 billion of U.S. agency collateralized mortgage obligations; and $5.3 billion of other consumer or commercial loans.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	At December 31, 2012
	Mortgage and Asset-Backed Securitizations		Collateralized Debt Obligations		Municipal Tender Option Bonds		Other Structured Financings		Other
	(dollars in millions)
VIE assets that the Company does not consolidate (unpaid principal balance)(1)	$	251,689	$	13,178	$	3,390	$	1,811	$	14,029
Maximum exposure to loss:
Debt and equity interests(2)	$	22,280	$	1,173	$	—	$	1,053	$	3,387
Derivative and other contracts		154		51		2,158		—		562
Commitments, guarantees and other		66		—		—		679		384
Total maximum exposure to loss	$	22,500	$	1,224	$	2,158	$	1,732	$	4,333
Carrying value of exposure to loss—Assets:
Debt and equity interests(2)	$	22,280	$	1,173	$	—	$	663	$	3,387
Derivative and other contracts		156		8		4		—		174
Total carrying value of exposure to loss—Assets	$	22,436	$	1,181	$	4	$	663	$	3,561
Carrying value of exposure to loss—Liabilities:
Derivative and other contracts	$	11	$	2	$	—	$	—	$	172
Commitments, guarantees and other		—		—		—		12		—
Total carrying value of exposure to loss—Liabilities	$	11	$	2	$	—	$	12	$	172

(1) Mortgage and asset-backed securitizations include VIE assets as follows: $18.3 billion of residential mortgages; $53.8 billion of commercial mortgages; $126.3 billion of U.S. agency collateralized mortgage obligations; and $53.3 billion of other consumer or commercial loans.

(2) Mortgage and asset-backed securitizations include VIE debt and equity interests as follows: $1.0 billion of residential mortgages; $1.5 billion of commercial mortgages; $14.8 billion of U.S. agency collateralized mortgage obligations; and $5.0 billion of other consumer or commercial loans.

The Company’s maximum exposure to loss often differs from the carrying value of the variable interests held by the Company. The maximum exposure to loss is dependent on the nature of the Company’s variable interest in the VIEs and is limited to the notional amounts of certain liquidity facilities, other credit support, total return swaps, written put options, and the fair value of certain other derivatives and investments the Company has made in the VIEs. Liabilities issued by VIEs generally are non-recourse to the Company. Where notional amounts are utilized in quantifying maximum exposure related to derivatives, such amounts do not reflect fair value writedowns already recorded by the Company.

The Company’s maximum exposure to loss does not include the offsetting benefit of any financial instruments that the Company may utilize to hedge these risks associated with the Company’s variable interests. In addition, the Company’s maximum exposure to loss is not reduced by the amount of collateral held as part of a transaction with the VIE or any party to the VIE directly against a specific exposure to loss.

Securitization transactions generally involve VIEs. Primarily as a result of its secondary market-making activities, the Company owned additional securities issued by securitization SPEs for which the maximum exposure to loss is less than specific thresholds. These additional securities totaled $4.3 billion at March 31, 2013. These securities were either retained in connection with transfers of assets by the Company, acquired in connection with secondary market-making activities or held in the Company’s available for sale portfolio (see Note 5). Securities issued by securitization SPEs

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MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

consist of $1.6 billion of securities backed primarily by residential mortgage loans, $0.5 billion of securities backed by U.S. agency collateralized mortgage obligations, $0.7 billion of securities backed by commercial mortgage loans, $0.6 billion of securities backed by collateralized debt obligations or collateralized loan obligations and $0.9 billion backed by other consumer loans, such as credit card receivables, automobile loans and student loans. The Company’s primary risk exposure is to the securities issued by the SPE owned by the Company, with the risk highest on the most subordinate class of beneficial interests. These securities generally are included in Trading assets—Corporate and other debt or Securities available for sale and are measured at fair value (see Note 4). The Company does not provide additional support in these transactions through contractual facilities, such as liquidity facilities, guarantees or similar derivatives. The Company’s maximum exposure to loss generally equals the fair value of the securities owned.

The Company’s transactions with VIEs primarily include securitizations, municipal tender option bond trusts, credit protection purchased through CLNs, other structured financings, collateralized loan and debt obligations, equity-linked notes, managed real estate partnerships and asset management investment funds. The Company’s continuing involvement in VIEs that it does not consolidate can include ownership of retained interests in Company-sponsored transactions, interests purchased in the secondary market (both for Company-sponsored transactions and transactions sponsored by third parties), derivatives with securitization SPEs (primarily interest rate derivatives in commercial mortgage and residential mortgage securitizations and credit derivatives in which the Company has purchased protection in synthetic CDOs), and as servicer in residential mortgage securitizations in the U.S. and Europe and commercial mortgage securitizations in Europe. Such activities are further described in Note 7 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

Transfers of Assets with Continuing Involvement.

The following tables present information at March 31, 2013 regarding transactions with SPEs in which the Company, acting as principal, transferred financial assets with continuing involvement and received sales treatment:

	At March 31, 2013
	Residential Mortgage Loans		Commercial Mortgage Loans		U.S. Agency Collateralized Mortgage Obligations		Credit- Linked Notes and Other
	(dollars in millions)
SPE assets (unpaid principal balance)(1)	$	34,516	$	53,905	$	18,614	$	12,956
Retained interests (fair value):
Investment grade	$	1	$	52	$	1,100	$	—
Non-investment grade		83		90		—		1,403
Total retained interests (fair value)	$	84	$	142	$	1,100	$	1,403
Interests purchased in the secondary market (fair value):
Investment grade	$	58	$	90	$	44	$	404
Non-investment grade		92		29		—		24
Total interests purchased in the secondary market (fair value)	$	150	$	119	$	44	$	428
Derivative assets (fair value)	$	—	$	915	$	—	$	171
Derivative liabilities (fair value)	$	2	$	—	$	—	$	239

(1) Amounts include assets transferred by unrelated transferors.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	At March 31, 2013
	Level 1		Level 2		Level 3		Total
	(dollars in millions)
Retained interests (fair value):
Investment grade	$	—	$	1,101	$	52	$	1,153
Non-investment grade		—		91		1,485		1,576
Total retained interests (fair value)	$	—	$	1,192	$	1,537	$	2,729
Interests purchased in the secondary market (fair value):
Investment grade	$	—	$	596	$	—	$	596
Non-investment grade		—		110		35		145
Total interests purchased in the secondary market (fair value)	$	—	$	706	$	35	$	741
Derivative assets (fair value)	$	—	$	775	$	311	$	1,086
Derivative liabilities (fair value)	$	—	$	237	$	4	$	241

The following tables present information at December 31, 2012 regarding transactions with SPEs in which the Company, acting as principal, transferred assets with continuing involvement and received sales treatment:

	At December 31, 2012
	Residential Mortgage Loans		Commercial Mortgage Loans		U.S. Agency Collateralized Mortgage Obligations		Credit- Linked Notes and Other
	(dollars in millions)
SPE assets (unpaid principal balance)(1)	$	36,750	$	70,824	$	17,787	$	14,701
Retained interests (fair value):
Investment grade	$	1	$	77	$	1,468	$	—
Non-investment grade		54		109		—		1,503
Total retained interests (fair value)	$	55	$	186	$	1,468	$	1,503
Interests purchased in the secondary market (fair value):
Investment grade	$	11	$	124	$	99	$	389
Non-investment grade		113		34		—		31
Total interests purchased in the secondary market (fair value)	$	124	$	158	$	99	$	420
Derivative assets (fair value)	$	2	$	948	$	—	$	177
Derivative liabilities (fair value)	$	22	$	—	$	—	$	303

(1) Amounts include assets transferred by unrelated transferors.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	At December 31, 2012
	Level 1		Level 2		Level 3		Total
	(dollars in millions)
Retained interests (fair value):
Investment grade	$	—	$	1,476	$	70	$	1,546
Non-investment grade		—		84		1,582		1,666
Total retained interests (fair value)	$	—	$	1,560	$	1,652	$	3,212
Interests purchased in the secondary market (fair value):
Investment grade	$	—	$	617	$	6	$	623
Non-investment grade		—		139		39		178
Total interests purchased in the secondary market (fair value)	$	—	$	756	$	45	$	801
Derivative assets (fair value)	$	—	$	774	$	353	$	1,127
Derivative liabilities (fair value)	$	—	$	295	$	30	$	325

Transferred assets are carried at fair value prior to securitization, and any changes in fair value are recognized in the condensed consolidated statements of income. The Company may act as underwriter of the beneficial interests issued by securitization vehicles. Investment banking underwriting net revenues are recognized in connection with these transactions. The Company may retain interests in the securitized financial assets as one or more tranches of the securitization. These retained interests are included in the condensed consolidated statements of financial condition at fair value. Any changes in the fair value of such retained interests are recognized in the condensed consolidated statements of income.

Net gains on sales of assets in securitization transactions at the time of the sale were not material in the quarters ended March 31, 2013 and 2012, respectively.

During the quarters ended March 31, 2013 and 2012, the Company received proceeds from new securitization transactions of $7.5 billion and $6.0 billion, respectively. During the quarters ended March 31, 2013 and 2012, the Company received proceeds from cash flows from retained interests in securitization transactions of $1.2 billion and $1.7 billion, respectively.

The Company has provided, or otherwise agreed to be responsible for, representations and warranties regarding certain assets transferred in securitization transactions sponsored by the Company (see Note 12).

Failed Sales.

In order to be treated as a sale of assets for accounting purposes, a transaction must meet all of the criteria stipulated in the accounting guidance for the transfer of financial assets. If the transfer fails to meet these criteria, that transfer of financial assets is treated as a failed sale. In such case for transfers to VIEs and securitizations, the Company continues to recognize the assets in Trading assets, and the Company recognizes the associated liabilities in Other secured financings in the condensed consolidated statements of financial condition.

The assets transferred to many unconsolidated VIEs in transactions accounted for as failed sales cannot be removed unilaterally by the Company and are not generally available to the Company. The related liabilities issued by many unconsolidated VIEs are non-recourse to the Company. In certain other failed sale transactions, the Company has the unilateral right to remove assets or provide additional recourse through derivatives such as total return swaps, guarantees or other forms of involvement.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents information about the carrying value (equal to fair value) of assets and liabilities resulting from transfers of financial assets treated by the Company as secured financings:

	At March 31, 2013				At December 31, 2012
	Carrying Value of				Carrying Value of
	Assets		Liabilities		Assets		Liabilities
	(dollars in millions)
Credit-linked notes	$	221	$	203	$	283	$	222
Equity-linked transactions		347		343		422		405
Other		37		36		29		28

Mortgage Servicing Activities.

Mortgage Servicing Rights.    The Company may retain servicing rights to certain mortgage loans that are sold. These transactions create an asset referred to as MSRs, which totaled approximately $8 million and $7 million at March 31, 2013 and December 31, 2012, respectively, and are included within Intangible assets and carried at fair value in the condensed consolidated statements of financial condition.

SPE Mortgage Servicing Activities.    The Company services residential mortgage loans in the U.S. and in Europe and commercial mortgage loans in Europe owned by SPEs, including SPEs sponsored by the Company and SPEs not sponsored by the Company. The Company generally holds retained interests in Company-sponsored SPEs. In some cases, as part of its market-making activities, the Company may own some beneficial interests issued by both Company-sponsored and non-Company sponsored SPEs.

The Company provides no credit support as part of its servicing activities. The Company is required to make servicing advances to the extent that it believes that such advances will be reimbursed. Reimbursement of servicing advances is a senior obligation of the SPE, senior to the most senior beneficial interests outstanding. Outstanding advances are included in Other assets and are recorded at cost, net of allowances. Advances at March 31, 2013 and December 31, 2012 totaled approximately $64 million and $49 million, respectively. There were no allowances at March 31, 2013 and December 31, 2012.

The following tables present information about the Company’s mortgage servicing activities for SPEs to which the Company transferred loans at March 31, 2013 and December 31, 2012:

	At March 31, 2013
	Residential Mortgage Unconsolidated SPEs			Residential Mortgage Consolidated SPEs			Commercial Mortgage Unconsolidated SPEs		Commercial Mortgage Consolidated SPEs
	(dollars in millions)
Assets serviced (unpaid principal balance)	$	750		$	914		$	4,395	$	—
Amounts past due 90 days or greater (unpaid principal balance)(1)	$	80		$	49		$	—	$	—
Percentage of amounts past due 90 days or greater(1)		10.6	%		5.4	%		—		—
Credit losses	$	1		$	4		$	—	$	—

(1) Amounts include loans that are at least 90 days contractually delinquent, loans for which the borrower has filed for bankruptcy, loans in foreclosure and real estate owned.

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	At December 31, 2012
	Residential Mortgage Unconsolidated SPEs			Residential Mortgage Consolidated SPEs			Commercial Mortgage Unconsolidated SPEs		Commercial Mortgage Consolidated SPEs
	(dollars in millions)
Assets serviced (unpaid principal balance)	$	821		$	1,141		$	4,760	$	—
Amounts past due 90 days or greater (unpaid principal balance)(1)	$	86		$	43		$	—	$	—
Percentage of amounts past due 90 days or greater(1)		10.4	%		3.8	%		—		—
Credit losses	$	3		$	2		$	—	$	—

(1) Amounts include loans that are at least 90 days contractually delinquent, loans for which the borrower has filed for bankruptcy, loans in foreclosure and real estate owned.

8. Financing Receivables and Allowance for Credit Losses.

Loans held for investment.

The Company’s loans held for investment are recorded at amortized cost and classified as Loans in the condensed consolidated statements of financial condition.

The Company’s loans held for investment at March 31, 2013 and December 31, 2012 included the following:

	At March 31, 2013			At December 31, 2012
	(dollars in millions)
Commercial and industrial	$	11,009		$	9,449
Consumer loans		8,200			7,618
Residential real estate loans		6,929			6,630
Wholesale real estate loans		328			326
Total loans held for investment, gross of allowance for loan losses		26,466			24,023
Allowance for loan losses		(129	)		(106	)
Total loans held for investment, net of allowance for loan losses	$	26,337		$	23,917

The above table does not include loans held for sale of $4,278 million and $5,129 million at March 31, 2013 and December 31, 2012, respectively.

The Company’s Credit Risk Management Department evaluates new obligors before credit transactions are initially approved, and at least annually thereafter for consumer and industrial loans. For corporate and commercial loans, credit evaluations typically involve the evaluation of financial statements, assessment of leverage, liquidity, capital strength, asset composition and quality, market capitalization and access to capital markets, cash flow projections and debt service requirements, and the adequacy of collateral, if applicable. The Company’s Credit Risk Management Department will also evaluate strategy, market position, industry dynamics, obligor’s management and other factors that could affect the obligor’s risk profile. For residential real estate and consumer loans, the initial credit evaluation includes, but is not limited to, review of the obligor’s income, net worth, liquidity, collateral, loan-to-value ratio, and credit bureau information. Subsequent credit monitoring for residential real estate loans is performed at the portfolio level. Consumer loan collateral values are monitored on an ongoing basis.

Commercial and industrial loans of approximately $49 million were impaired at March 31, 2013. Approximately 99% of the Company’s loan portfolio was current at March 31, 2013. Commercial and industrial loans of

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approximately $19 million and residential real estate loans of approximately $1 million were impaired at December 31, 2012. Approximately 99% of the Company’s loan portfolio was current at December 31, 2012.

The Company assigned an internal grade of “doubtful” to certain commercial asset-backed and wholesale real estate loans totaling $72 million and $25 million at March 31, 2013 and December 31, 2012, respectively. Doubtful loans can be classified as current if the borrower is making payments in accordance with the loan agreement. The Company assigned an internal grade of “pass” to the majority of its remaining loan portfolio.

For a description of the Company’s loan portfolio and credit quality indicators utilized in its credit monitoring process, see Note 8 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

The table below summarizes information about the allowance for loan losses, loans by impairment methodology, the allowance for lending-related commitments and lending-related commitments by impairment methodology.

	Commercial and Industrial			Consumer			Residential Real Estate			Wholesale Real Estate		Total
	(dollars in millions)
Allowance for loan losses:
Balance at December 31, 2012	$	96		$	3		$	5		$	2	$	106
Gross charge-offs		(3	)		—			(1	)		—		(4	)
Net charge-offs		(3	)		—			(1	)		—		(4	)
Provision for loan losses(1)		30			(2	)		(1	)		—		27
Balance at March 31, 2013	$	123		$	1		$	3		$	2	$	129
Allowance for loan losses by impairment methodology:
Collectively evaluated for impairment	$	112		$	1		$	3		$	2	$	118
Individually evaluated for impairment		11			—			—			—		11
Total allowance for loan losses at March 31, 2013	$	123		$	1		$	3		$	2	$	129
Loans evaluated by impairment methodology(2):
Collectively evaluated for impairment	$	10,933		$	8,200		$	6,925		$	328	$	26,386
Individually evaluated for impairment		76			—			4			—		80
Total loan evaluated at March 31, 2013	$	11,009		$	8,200		$	6,929		$	328	$	26,466
Allowance for lending-related commitments:
Balance at December 31, 2012	$	90		$	—		$	—		$	1	$	91
Provision for lending-related commitments(3)		12			—			—			—		12
Balance at March 31, 2013	$	102		$	—		$	—		$	1	$	103
Allowance for lending-related commitments by impairment methodology:
Collectively evaluated for impairment	$	98		$	—		$	—		$	1	$	99
Individually evaluated for impairment		4			—			—			—		4
Total allowance for lending-related commitments at March 31, 2013	$	102		$	—		$	—		$	1	$	103
Lending-related commitments evaluated by impairment methodology:
Collectively evaluated for impairment	$	46,792		$	1,579		$	1,105		$	262	$	49,738
Individually evaluated for impairment		1			—			—			—		1
Total lending-related commitments evaluated at March 31, 2013	$	46,793		$	1,579		$	1,105		$	262	$	49,739

56

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) The Company records charges to the provisions for loan losses within Other revenues.

(2) Balances are gross of the allowance and represent recorded investment in the loans.

(3) The Company records charges to the provisions for lending-related commitments within Other non-interest expenses.

	Commercial and Industrial			Consumer			Residential Real Estate		Wholesale Real Estate		Total
	(dollars in millions)
Allowance for loan losses:
Balance at December 31, 2011	$	14		$	1		$	1	$	1	$	17
Gross charge-offs		(2	)		—			—		—		(2	)
Gross recoveries		1			—			—		—		1
Net charge-offs		(1	)		—			—		—		(1	)
Provision for loan losses(1)		8			1			1		—		10
Balance at March 31, 2012	$	21		$	2		$	2	$	1	$	26
Allowance for loan losses by impairment methodology:
Collectively evaluated for impairment	$	94		$	3		$	5	$	2	$	104
Individually evaluated for impairment		2			—			—		—		2
Total allowance for loan losses at December 31, 2012	$	96		$	3		$	5	$	2	$	106
Loans evaluated by impairment methodology(2):
Collectively evaluated for impairment	$	9,419		$	7,618		$	6,629	$	326	$	23,992
Individually evaluated for impairment		30			—			1		—		31
Total loan evaluated at December 31, 2012	$	9,449		$	7,618		$	6,630	$	326	$	24,023
Allowance for lending-related commitments:
Balance at December 31, 2011	$	19		$	(3	)	$	—	$	2	$	18
Provision for lending-related commitments(3)		(6	)		(2	)		—		—		(8	)
Balance at March 31, 2012	$	13		$	(5	)	$	—	$	2	$	10
Allowance for lending-related commitments by impairment methodology:
Collectively evaluated for impairment	$	86		$	—		$	—	$	1	$	87
Individually evaluated for impairment		4			—			—		—		4
Total allowance for lending-related commitments at December 31, 2012	$	90		$	—		$	—	$	1	$	91
Lending-related commitments evaluated by impairment methodology:
Collectively evaluated for impairment	$	44,079		$	1,406		$	712	$	101	$	46,298
Individually evaluated for impairment		47			—			—		—		47
Total lending-related commitments evaluated at December 31, 2012	$	44,126		$	1,406		$	712	$	101	$	46,345

(1) The Company records charges to the provisions for loan losses within Other revenues.

(2) Balances are gross of the allowance and represent recorded investment in the loans.

(3) The Company records charges to the provisions for lending-related commitments within Other non-interest expenses.

57

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Employee Loans.

Employee loans are granted primarily in conjunction with a program established in the Global Wealth Management Group business segment to retain and recruit certain employees. These loans are recorded in Customer and other receivables in the condensed consolidated statements of financial condition. These loans are full recourse, generally require periodic payments and have repayment terms ranging from one to 12 years. The Company establishes a reserve for loan amounts it does not consider recoverable, which is recorded in Compensation and benefits expense. At March 31, 2013, the Company had $5,602 million of employee loans, net of an allowance of approximately $135 million. At December 31, 2012, the Company had $5,998 million of employee loans, net of an allowance of approximately $131 million.

The Company has also granted loans to other employees primarily in conjunction with certain after-tax leveraged investment arrangements. At March 31, 2013, the balance of these loans was $164 million, net of an allowance of approximately $104 million. At December 31, 2012, the balance of these loans was $172 million, net of an allowance of approximately $108 million. The Company establishes a reserve for non-recourse loan amounts not recoverable from employees, which is recorded in Other expense.

Collateralized Transactions.

In certain instances, the Company enters into reverse repurchase agreements and securities borrowed transactions to acquire securities to cover short positions, to settle other securities obligations and to accommodate customers’ needs. The Company also engages in securities financing transactions for customers through margin lending (see Note 6).

Servicing Advances.

As part of its servicing activities, the Company may make servicing advances to the extent that it believes that such advances will be reimbursed (see Note 7).

9. Goodwill and Net Intangible Assets.

The Company tests goodwill for impairment on an annual basis and on an interim basis when certain events or circumstances exist. The Company tests for impairment at the reporting unit level, which is generally at the level of or one level below its business segments. For both the annual and interim tests, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing the two-step impairment test is not required. However, if the Company concludes otherwise, then it is required to perform the first step of the two-step impairment test. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. If the estimated fair value is below carrying value, however, further analysis is required to determine the amount of the impairment. Additionally, if the carrying value of a reporting unit is zero or a negative value and it is determined that it is more likely than not the goodwill is impaired, further analysis is required. The estimated fair values of the reporting units are derived based on valuation techniques the Company believes market participants would use for each of the reporting units.

The estimated fair values are generally determined utilizing methodologies that incorporate price-to-book and price-to-earnings multiples of certain comparable companies. The Company also utilizes a discounted cash flow methodology for certain reporting units.

58

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company completed its annual goodwill impairment testing at July 1, 2012. The Company’s testing did not indicate any goodwill impairment as each of the Company’s reporting units with goodwill had a fair value that was substantially in excess of its carrying value. Adverse market or economic events could result in impairment charges in future periods. At December 31, 2012, each of the Company’s reporting units with goodwill had a fair value that was substantially in excess of its carrying value.

Goodwill.

Changes in the carrying amount of the Company’s goodwill, net of accumulated impairment losses for the quarter ended March 31, 2013, were as follows:

	Institutional Securities(1)			Global Wealth Management Group(1)		Asset Management		Total
	(dollars in millions)
Goodwill at December 31, 2012(2)	$	337		$	5,573	$	740	$	6,650
Goodwill disposed of during the period(3)		(17	)		—		—		(17	)
Goodwill at March 31, 2013(2)	$	320		$	5,573	$	740	$	6,633

(1) On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

(2) The amount of the Company’s goodwill before accumulated impairments of $700 million, which included $673 million related to the Institutional Securities business segment and $27 million related to the Asset Management business segment, was $7,333 million and $7,350 million at March 31, 2013 and December 31, 2012, respectively.

(3) In 2011, the Company announced that it had reached an agreement with the employees of its in-house quantitative proprietary trading unit, Process Driven Trading (“PDT”), whereby PDT employees will acquire certain assets from the Company and launch an independent advisory firm. This transaction closed on January 1, 2013.

Net Intangible Assets.

Changes in the carrying amount of the Company’s intangible assets for the quarter ended March 31, 2013 were as follows:

	Institutional Securities			Global Wealth Management Group			Asset Management		Total
	(dollars in millions)
Amortizable net intangible assets at December 31, 2012	$	175		$	3,600		$	1	$	3,776
Mortgage servicing rights (see Note 7)		—			7			—		7
Net intangible assets at December 31, 2012	$	175		$	3,607		$	1	$	3,783
Amortizable net intangible assets at December 31, 2012	$	175		$	3,600		$	1	$	3,776
Foreign currency translation adjustments and other		(3	)		—			—		(3	)
Amortization expense		(3	)		(83	)		—		(86	)
Impairment losses(1)		(1	)		—			—		(1	)
Amortizable net intangible assets at March 31, 2013		168			3,517			1		3,686
Mortgage servicing rights (see Note 7)		—			8			—		8
Net intangible assets at March 31, 2013	$	168		$	3,525		$	1	$	3,694

(1) Impairment losses are recorded within Other expenses.

59

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

10. Long-Term Borrowings and Other Secured Financings.

The Company’s long-term borrowings included the following components:

	At March 31,     2013		At December 31,     2012
	(dollars in millions)
Senior debt	$	154,531	$	158,899
Subordinated debt		5,783		5,845
Junior subordinated debentures		4,828		4,827
Total	$	165,142	$	169,571

During the quarter ended March 31, 2013, the Company issued and reissued notes with a principal amount of approximately $10 billion including the Company’s issuance of $4.5 billion in senior unsecured debt on February 25, 2013. During the quarter ended March 31, 2013, approximately $12 billion in aggregate long-term borrowings matured or were retired.

The weighted average maturity of the Company’s long-term borrowings, based upon stated maturity dates, was approximately 5.3 years at March 31, 2013 and December 31, 2012.

Other Secured Financings.

Other secured financings include the liabilities related to transfers of financial assets that are accounted for as financings rather than sales, consolidated VIEs where the Company is deemed to be the primary beneficiary, pledged commodities, certain equity-linked notes and other secured borrowings. See Note 7 for further information on other secured financings related to VIEs and securitization activities.

The Company’s other secured financings consisted of the following:

	At March 31,     2013		At December 31,     2012
	(dollars in millions)
Secured financings with original maturities greater than one year	$	12,700	$	14,431
Secured financings with original maturities one year or less		3,012		641
Failed sales(1)		582		655
Total(2)	$	16,294	$	15,727

(1) For more information on failed sales, see Note 7.

(2) Amounts include $9,624 million and $9,466 million at fair value at March 31, 2013 and December 31, 2012, respectively.

11. Derivative Instruments and Hedging Activities.

The Company trades, makes markets and takes proprietary positions globally in listed futures, OTC swaps, forwards, options and other derivatives referencing, among other things, interest rates, currencies, investment grade and non-investment grade corporate credits, loans, bonds, U.S. and other sovereign securities, emerging market bonds and loans, credit indices, asset-backed security indices, property indices, mortgage-related and other asset-backed securities, and real estate loan products. The Company uses these instruments for trading, foreign currency exposure management and asset and liability management.

60

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company manages its trading positions by employing a variety of risk mitigation strategies. These strategies include diversification of risk exposures and hedging. Hedging activities consist of the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). The Company manages the market risk associated with its trading activities on a Company-wide basis, on a worldwide trading division level and on an individual product basis.

In connection with its derivative activities, the Company generally enters into master netting arrangements and collateral arrangements with its counterparties. These agreements provide the Company with the right, in the event of a default by the counterparty (such as bankruptcy or a failure to pay or perform), to net a counterparty's rights and obligations under the agreement and to liquidate and setoff collateral against any net amount owed by the counterparty. The Company’s policy is generally to receive securities and cash posted as collateral (with rights of rehypothecation), although in certain cases the Company may agree for such collateral to be posted to a third party custodian under a control agreement that enables the Company to take control of such collateral in the event of a counterparty default. The following tables present information about the offsetting of derivative instruments and related collateral amounts. See information related to offsetting of certain collateralized transactions in Note 6.

	At March 31, 2013
	Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)			Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition(2)						Net Exposure
								Financial Instruments Collateral			Other Cash Collateral
	(dollars in millions)
Derivative assets
Bilateral OTC	$	549,368	$	(519,065	)	$	30,303	$	(6,688	)	$	(135	)	$	23,480
Cleared OTC(4)		315,330		(315,138	)		192		—			—			192
Exchange traded		27,246		(21,912	)		5,334		—			—			5,334
Total derivative assets	$	891,944	$	(856,115	)	$	35,829	$	(6,688	)	$	(135	)	$	29,006
Derivative liabilities
Bilateral OTC	$	524,588	$	(492,049	)	$	32,539	$	(7,973	)	$	(82	)	$	24,484
Cleared OTC(4)		314,030		(313,986	)		44		—			—			44
Exchange traded		29,981		(21,912	)		8,069		(1,853	)		—			6,216
Total derivative liabilities	$	868,599	$	(827,947	)	$	40,652	$	(9,826	)	$	(82	)	$	30,744

(1) Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2) Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3) Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

(4) Includes OTC derivatives that are centrally cleared in accordance with certain regulatory requirements.

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MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	At December 31, 2012
	Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)			Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition(2)						Net Exposure
								Financial Instruments Collateral			Other Cash Collateral
	(dollars in millions)
Derivative assets
Bilateral OTC	$	604,713	$	(573,844	)	$	30,869	$	(7,691	)	$	(232	)	$	22,946
Cleared OTC(4)		375,233		(374,546	)		687		—			—			687
Exchange traded		24,305		(19,664	)		4,641		—			—			4,641
Total derivative assets	$	1,004,251	$	(968,054	)	$	36,197	$	(7,691	)	$	(232	)	$	28,274
Derivative Liabilities
Bilateral OTC	$	578,018	$	(547,285	)	$	30,733	$	(7,871	)	$	(64	)	$	22,798
Cleared OTC(4)		374,960		(374,866	)		94		—			(23	)		71
Exchange traded		25,795		(19,664	)		6,131		(1,028	)		—			5,103
Total derivative liabilities	$	978,773	$	(941,815	)	$	36,958	$	(8,899	)	$	(87	)	$	27,972

(1) Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2) Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3) Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

(4) Includes OTC derivatives that are centrally cleared in accordance with certain regulatory requirements.

The Company incurs credit risk as a dealer in OTC derivatives. Credit risk with respect to derivative instruments arises from the failure of a counterparty to perform according to the terms of the contract. The Company’s exposure to credit risk at any point in time is represented by the fair value of the derivative contracts reported as assets. The fair value of a derivative represents the amount at which the derivative could be exchanged in an orderly transaction between market participants and is further described in Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K and Note 4.

The tables below present a summary by counterparty credit rating and remaining contract maturity of the fair value of OTC derivatives in a gain position at March 31, 2013 and December 31, 2012, respectively. Fair value is presented in the final column, net of collateral received (principally cash and U.S. government and agency securities):

OTC Derivative Products—Trading Assets at March 31, 2013(1)

	Years to Maturity								Cross-Maturity and Cash Collateral Netting(3)			Net Exposure Post-Cash Collateral		Net Exposure Post-Collateral
Credit Rating(2)	Less than 1		1 - 3		3 - 5		Over 5
	(dollars in millions)
AAA	$	396	$	468	$	1,318	$	5,553	$	(4,819	)	$	2,916	$	2,682
AA		2,251		2,094		2,848		10,133		(11,349	)		5,977		4,514
A		8,299		9,894		12,251		26,845		(49,419	)		7,870		6,227
BBB		2,762		4,255		3,063		18,143		(19,725	)		8,498		7,303
Non-investment grade		2,285		2,548		1,672		3,669		(5,075	)		5,099		2,946
Total	$	15,993	$	19,259	$	21,152	$	64,343	$	(90,387	)	$	30,360	$	23,672

62

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) Fair values shown represent the Company’s net exposure to counterparties related to the Company’s OTC derivative products. Amounts include centrally cleared OTC derivatives. The table does not include exchange-traded derivatives and the effect of any related hedges utilized by the Company.

(2) Obligor credit ratings are determined by the Company’s Credit Risk Management Department.

(3) Amounts represent the netting of receivable balances with payable balances for the same counterparty across maturity categories. Receivable and payable balances with the same counterparty in the same maturity category are netted within such maturity category, where appropriate. Cash collateral received is netted on a counterparty basis, provided legal right of offset exists.

OTC Derivative Products—Trading Assets at December 31, 2012(1)

	Years to Maturity								Cross-Maturity and Cash Collateral Netting(3)			Net Exposure Post-Cash Collateral		Net Exposure Post-Collateral
Credit Rating(2)	Less than 1		1 - 3		3 - 5		Over 5
	(dollars in millions)
AAA	$	353	$	551	$	1,299	$	6,121	$	(4,851	)	$	3,473	$	3,088
AA		2,125		3,635		2,958		10,270		(12,761	)		6,227		4,428
A		6,643		9,596		14,228		29,729		(50,722	)		9,474		7,638
BBB		2,673		3,970		3,704		18,586		(21,713	)		7,220		5,754
Non-investment grade		2,091		2,855		2,142		4,538		(6,696	)		4,930		2,725
Total	$	13,885	$	20,607	$	24,331	$	69,244	$	(96,743	)	$	31,324	$	23,633

(1) Fair values shown represent the Company’s net exposure to counterparties related to the Company’s OTC derivative products. Amounts include centrally cleared OTC derivatives. The table does not include exchange-traded derivatives and the effect of any related hedges utilized by the Company.

(2) Obligor credit ratings are determined by the Company’s Credit Risk Management Department.

(3) Amounts represent the netting of receivable balances with payable balances for the same counterparty across maturity categories. Receivable and payable balances with the same counterparty in the same maturity category are netted within such maturity category, where appropriate. Cash collateral received is netted on a counterparty basis, provided legal right of offset exists.

Hedge Accounting.

The Company applies hedge accounting using various derivative financial instruments to hedge interest rate and foreign exchange risk arising from assets and liabilities not held at fair value as part of asset and liability management and foreign currency exposure management.

The Company’s hedges are designated and qualify for accounting purposes as one of the following types of hedges: hedges of exposure to changes in fair value of assets and liabilities being hedged (fair value hedges) and hedges of net investments in foreign operations whose functional currency is different from the reporting currency of the parent company (net investment hedges).

For all hedges where hedge accounting is being applied, effectiveness testing and other procedures to ensure the ongoing validity of the hedges are performed at least monthly.

Fair Value Hedges—Interest Rate Risk.    The Company’s designated fair value hedges consisted primarily of interest rate swaps designated as fair value hedges of changes in the benchmark interest rate of fixed rate senior long-term borrowings. The Company uses regression analysis to perform an ongoing prospective and retrospective assessment of the effectiveness of these hedging relationships (i.e., the Company applies the “long-haul” method of hedge accounting). A hedging relationship is deemed effective if the fair values of the hedging instrument (derivative) and the hedged item (debt liability) change inversely within a range of 80% to 125%. The Company considers the impact of valuation adjustments related to the Company’s own credit spreads and counterparty credit spreads to determine whether they would cause the hedging relationship to be ineffective.

63

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For qualifying fair value hedges of benchmark interest rates, the changes in the fair value of the derivative and the changes in the fair value of the hedged liability provide offset of one another and, together with any resulting ineffectiveness, are recorded in Interest expense. When a derivative is de-designated as a hedge, any basis adjustment remaining on the hedged liability is amortized to Interest expense over the remaining life of the liability using the effective interest method.

Net Investment Hedges.    The Company may utilize forward foreign exchange contracts to manage the currency exposure relating to its net investments in non-U.S. dollar functional currency operations. No hedge ineffectiveness is recognized in earnings since the notional amounts of the hedging instruments equal the portion of the investments being hedged and the currencies being exchanged are the functional currencies of the parent and investee. The gain or loss from revaluing hedges of net investments in foreign operations at the spot rate is deferred and reported within Accumulated other comprehensive income (loss) in Total Equity, net of tax effects. The forward points on the hedging instruments are recorded in Interest income.

The following tables summarize the fair value of derivative instruments designated as accounting hedges and the fair value of derivative instruments not designated as accounting hedges by type of derivative contract on a gross basis. Fair values of derivative contracts in an asset position are included in Trading assets and fair values of derivative contracts in a liability position are reflected in Trading liabilities in the condensed consolidated statements of financial condition (see Note 4):

	Assets at March 31, 2013					Liabilities at March 31, 2013
	Fair Value			Notional		Fair Value			Notional
	(dollars in millions)
Derivatives designated as accounting hedges:
Interest rate contracts	$	7,585		$	76,175	$	276		$	5,030
Foreign exchange contracts		650			10,812		102			4,559
Total derivatives designated as accounting hedges		8,235			86,987		378			9,589
Derivatives not designated as accounting hedges(1):
Interest rate contracts		705,498			18,634,245		686,108			18,577,861
Credit contracts		62,265			1,865,650		59,057			1,791,783
Foreign exchange contracts		49,774			2,025,369		51,607			2,088,219
Equity contracts		44,517			694,383		50,596			714,161
Commodity contracts		21,565			403,627		20,820			360,219
Other		90			4,167		33			3,623
Total derivatives not designated as accounting hedges		883,709			23,627,441		868,221			23,535,866
Total derivatives	$	891,944		$	23,714,428	$	868,599		$	23,545,455
Cash collateral netting		(67,743	)		—		(39,575	)		—
Counterparty netting		(788,372	)		—		(788,372	)		—
Total derivatives	$	35,829		$	23,714,428	$	40,652		$	23,545,455

(1) Notional amounts include gross notionals related to open long and short futures contracts of $73 billion and $71 billion, respectively. The unsettled fair value on these futures contracts (excluded from the table above) of $900 million and $4 million is included in Customer and other receivables and Customer and other payables, respectively, on the condensed consolidated statements of financial condition.

64

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Assets at December 31, 2012					Liabilities at December 31, 2012
	Fair Value			Notional		Fair Value			Notional
	(dollars in millions)
Derivatives designated as accounting hedges:
Interest rate contracts	$	8,347		$	75,115	$	168		$	2,660
Foreign exchange contracts		367			10,291		319			17,156
Total derivatives designated as accounting hedges		8,714			85,406		487			19,816
Derivatives not designated as accounting hedges(1):
Interest rate contracts		815,454			18,130,030		793,936			17,682,566
Credit contracts		68,267			1,932,786		64,494			1,867,807
Foreign exchange contracts		52,427			1,841,186		56,094			1,886,073
Equity contracts		38,600			587,700		41,870			587,199
Commodity contracts		20,646			341,556		21,831			325,101
Other		143			4,908		61			5,161
Total derivatives not designated as accounting hedges		995,537			22,838,166		978,286			22,353,907
Total derivatives	$	1,004,251		$	22,923,572	$	978,773		$	22,373,723
Cash collateral netting		(69,248	)		—		(43,009	)		—
Counterparty netting		(898,806	)		—		(898,806	)		—
Total derivatives	$	36,197		$	22,923,572	$	36,958		$	22,373,723

(1) Notional amounts include gross notionals related to open long and short futures contracts of $73 billion and $68 billion, respectively. The unsettled fair value on these futures contracts (excluded from the table above) of $1,073 million and $24 million is included in Customer and other receivables and Customer and other payables, respectively, on the condensed consolidated statements of financial condition.

The following tables summarize the gains or losses reported on derivative instruments designated and qualifying as accounting hedges for the quarters ended March 31, 2013 and 2012, respectively.

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 condensed consolidated statements of income from interest rate contracts:

	Gains (Losses) Recognized
	Three Months Ended March 31,
Product Type	2013			2012
	(dollars in millions)
Derivatives	$	(872	)	$	(546	)
Borrowings		1,162			698
Total	$	290		$	152

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Derivatives Designated as Net Investment Hedges.

	Gains (Losses) Recognized in OCI (effective portion)
	Three Months Ended March 31,
Product Type	2013		2012
	(dollars in millions)
Foreign exchange contracts(1)	$	308	$	21
Total	$	308	$	21

(1) Losses of $32 million and $66 million were recognized in income related to amounts excluded from hedge effectiveness testing during the quarters ended March 31, 2013 and 2012, respectively.

The table below summarizes gains (losses) on derivative instruments not designated as accounting hedges for the quarters ended March 31, 2013 and 2012, respectively:

	Gains (Losses) Recognized in Income(1)(2)
	Three Months Ended March 31,
Product Type	2013			2012
	(dollars in millions)
Interest rate contracts	$	(144	)	$	1,607
Credit contracts		(80	)		(672	)
Foreign exchange contracts		807			595
Equity contracts		(3,032	)		(828	)
Commodity contracts		423			(576	)
Other contracts		(2	)		55
Total derivative instruments	$	(2,028	)	$	181

(1) Gains (losses) on derivative contracts not designated as hedges are primarily included in Trading in the condensed consolidated statements of income.

(2) Gains (losses) associated with certain derivative contracts that have physically settled are excluded from the table above. Gains (losses) on these contracts are reflected with the associated cash instruments, which are also included in Trading in the condensed consolidated statements of income.

The Company also has certain embedded derivatives that have been bifurcated from the related structured borrowings. Such derivatives are classified in Long-term borrowings and had a net fair value of $57 million and $53 million at March 31, 2013 and December 31, 2012, respectively and a notional value of $2,149 million and $2,178 million at March 31, 2013 and December 31, 2012, respectively. The Company recognized losses of $2 million and gains of $7 million related to changes in the fair value of its bifurcated embedded derivatives for the quarters ended March 31, 2013 and 2012, respectively.

At March 31, 2013 and December 31, 2012, the amount of payables associated with cash collateral received that was netted against derivative assets was $67.7 billion and $69.2 billion, respectively, and the amount of receivables in respect of cash collateral paid that was netted against derivative liabilities was $39.6 billion and $43.0 billion, respectively. Cash collateral receivables and payables of $140 million and $99 million, respectively, at March 31, 2013 and $158 million and $34 million, respectively, at December 31, 2012, were not offset against certain contracts that did not meet the definition of a derivative.

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Credit-Risk-Related Contingencies.

In connection with certain OTC trading agreements, the Company may be required to provide additional collateral or immediately settle any outstanding liability balances with certain counterparties in the event of a credit ratings downgrade. At March 31, 2013, the aggregate fair value of OTC derivative contracts that contain credit-risk-related contingent features that are in a net liability position totaled $30,396 million, for which the Company has posted collateral of $26,568 million, in the normal course of business. The long-term credit ratings on the Company by Moody’s Investor Services, Inc. (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”) are currently at different levels (commonly referred to as “split ratings”). At March 31, 2013, the future potential collateral amounts, termination payments or other contractual amounts that could be called by counterparties in the event of a downgrade of the Company’s long-term credit rating under various scenarios are: $397 million (Baa1 Moody’s/BBB+ S&P) and $2,257 million (Baa2 Moody’s/BBB S&P). Of these amounts, $2,125 million at March 31, 2013 related to bilateral arrangements between the Company and other parties where upon the downgrade of one party, the downgraded party must deliver collateral to the other party. These bilateral downgrade arrangements are a risk management tool used extensively by the Company as credit exposures are reduced if counterparties are downgraded.

Credit Derivatives and Other Credit Contracts.

The Company enters into credit derivatives, principally through credit default swaps, under which it receives or provides protection against the risk of default on a set of debt obligations issued by a specified reference entity or entities. A majority of the Company’s counterparties are banks, broker-dealers, insurance and other financial institutions, and monoline insurers.

The tables below summarize the notional and fair value of protection sold and protection purchased through credit default swaps at March 31, 2013 and December 31, 2012:

	At March 31, 2013
	Maximum Potential Payout/Notional
	Protection Sold				Protection Purchased
	Notional		Fair Value (Asset)/Liability		Notional		Fair Value (Asset)/Liability
	(dollars in millions)
Single name credit default swaps	$	1,004,144	$	1,412	$	960,778	$	(1,299	)
Index and basket credit default swaps		550,972		4,930		458,150		(4,550	)
Tranched index and basket credit default swaps		271,525		905		411,864		(4,606	)
Total	$	1,826,641	$	7,247	$	1,830,792	$	(10,455	)

	At December 31, 2012
	Maximum Potential Payout/Notional
	Protection Sold				Protection Purchased
	Notional		Fair Value (Asset)/Liability		Notional		Fair Value (Asset)/Liability
	(dollars in millions)
Single name credit default swaps	$	1,069,474	$	2,889	$	1,029,543	$	(2,456	)
Index and basket credit default swaps		551,630		5,664		454,800		(5,124	)
Tranched index and basket credit default swaps		272,088		2,330		423,058		(7,076	)
Total	$	1,893,192	$	10,883	$	1,907,401	$	(14,656	)

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The table below summarizes the credit ratings and maturities of protection sold through credit default swaps and other credit contracts at March 31, 2013:

	Protection Sold
	Maximum Potential Payout/Notional										Fair Value (Asset)/ Liability(1)(2)
	Years to Maturity
Credit Ratings of the Reference Obligation	Less than 1		1-3		3-5		Over 5		Total
	(dollars in millions)
Single name credit default swaps:
AAA	$	1,809	$	5,780	$	16,531	$	3,673	$	27,793	$	(61	)
AA		10,141		17,863		36,987		6,476		71,467		(557	)
A		64,263		68,132		67,702		9,668		209,765		(2,343	)
BBB		119,304		130,055		138,543		30,832		418,734		312
Non-investment grade		84,290		88,959		86,589		16,547		276,385		4,061
Total		279,807		310,789		346,352		67,196		1,004,144		1,412
Index and basket credit default swaps(3):
AAA		42,730		53,491		50,189		14,238		160,648		(1,574	)
AA		1,159		10,123		12,124		8,375		31,781		(161	)
A		4,349		5,562		11,546		2,517		23,974		216
BBB		31,459		103,097		125,754		32,271		292,581		(397	)
Non-investment grade		66,319		68,392		139,218		39,584		313,513		7,751
Total		146,016		240,665		338,831		96,985		822,497		5,835
Total credit default swaps sold	$	425,823	$	551,454	$	685,183	$	164,181	$	1,826,641	$	7,247
Other credit contracts(4)(5)	$	466	$	82	$	138	$	1,139	$	1,825	$	(195	)
Total credit derivatives and other credit contracts	$	426,289	$	551,536	$	685,321	$	165,320	$	1,828,466	$	7,052

(1) Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting.

(2) Fair value amounts of certain credit default swaps where the Company sold protection have an asset carrying value because credit spreads of the underlying reference entity or entities tightened during the terms of the contracts.

(3) Credit ratings are calculated internally.

(4) Other credit contracts include CLNs, CDOs and credit default swaps that are considered hybrid instruments.

(5) Fair value amount shown represents the fair value of the hybrid instruments.

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The table below summarizes the credit ratings and maturities of protection sold through credit default swaps and other credit contracts at December 31, 2012:

	Protection Sold
	Maximum Potential Payout/Notional										Fair Value (Asset)/ Liability(1)(2)
	Years to Maturity
Credit Ratings of the Reference Obligation	Less than 1		1-3		3-5		Over 5		Total
	(dollars in millions)
Single name credit default swaps:
AAA	$	2,368	$	6,592	$	19,848	$	5,767	$	34,575	$	(204	)
AA		10,984		16,804		34,280		7,193		69,261		(325	)
A		66,635		72,796		67,285		10,760		217,476		(2,740	)
BBB		124,662		145,462		142,714		34,396		447,234		(492	)
Non-investment grade		91,743		98,515		92,143		18,527		300,928		6,650
Total		296,392		340,169		356,270		76,643		1,069,474		2,889
Index and basket credit default swaps(3):
AAA		18,652		36,005		45,789		3,240		103,686		(1,377	)
AA		1,255		9,479		12,026		8,343		31,103		(55	)
A		2,684		5,423		5,440		125		13,672		(155	)
BBB		27,720		105,870		143,562		29,101		306,253		(862	)
Non-investment grade		97,389		86,703		153,858		31,054		369,004		10,443
Total		147,700		243,480		360,675		71,863		823,718		7,994
Total credit default swaps sold	$	444,092	$	583,649	$	716,945	$	148,506	$	1,893,192	$	10,883
Other credit contracts(4)(5)	$	796	$	125	$	155	$	1,323	$	2,399	$	(745	)
Total credit derivatives and other credit contracts	$	444,888	$	583,774	$	717,100	$	149,829	$	1,895,591	$	10,138

(1) Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting.

(2) Fair value amounts of certain credit default swaps where the Company sold protection have an asset carrying value because credit spreads of the underlying reference entity or entities tightened during the terms of the contracts.

(3) Credit ratings are calculated internally.

(4) Other credit contracts include CLNs, CDOs and credit default swaps that are considered hybrid instruments.

(5) Fair value amount shown represents the fair value of the hybrid instruments.

Single Name Credit Default Swaps.    A credit default swap protects the buyer against the loss of principal on a bond or loan in case of a default by the issuer. The protection buyer pays a periodic premium (generally quarterly) over the life of the contract and is protected for the period. The Company in turn will have to perform under a credit default swap if a credit event as defined under the contract occurs. Typical credit events include bankruptcy, dissolution or insolvency of the referenced entity, failure to pay and restructuring of the obligations of the referenced entity. In order to provide an indication of the current payment status or performance risk of the credit default swaps, the external credit ratings of the underlying reference entity of the credit default swaps are disclosed.

Index and Basket Credit Default Swaps.    Index and basket credit default swaps are credit default swaps that reference multiple names through underlying baskets or portfolios of single name credit default swaps. Generally, in the event of a default on one of the underlying names, the Company will have to pay a pro rata portion of the total notional amount of the credit default index or basket contract. In order to provide an indication of the current payment status or performance risk of these credit default swaps, the weighted average external credit ratings of the underlying reference entities comprising the basket or index were calculated and disclosed.

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The Company also enters into index and basket credit default swaps where the credit protection provided is based upon the application of tranching techniques. In tranched transactions, the credit risk of an index or basket is separated into various portions of the capital structure, with different levels of subordination. The most junior tranches cover initial defaults, and once losses exceed the notional of the tranche, they are passed on to the next most senior tranche in the capital structure.

When external credit ratings are not available, credit ratings were determined based upon an internal methodology.

Credit Protection Sold through CLNs and CDOs.    The Company has invested in CLNs and CDOs, which are hybrid instruments containing embedded derivatives, in which credit protection has been sold to the issuer of the note. If there is a credit event of a reference entity underlying the instrument, the principal balance of the note may not be repaid in full to the Company.

Purchased Credit Protection with Identical Underlying Reference Obligations.    For single name credit default swaps and non-tranched index and basket credit default swaps, the Company has purchased protection with a notional amount of approximately $1.4 trillion and $1.5 trillion at March 31, 2013 and December 31, 2012, respectively, compared with a notional amount of approximately $1.6 trillion at both March 31, 2013 and December 31, 2012, of credit protection sold with identical underlying reference obligations. In order to identify purchased protection with the same underlying reference obligations, the notional amount for individual reference obligations within non-tranched indices and baskets was determined on a pro rata basis and matched off against single name and non-tranched index and basket credit default swaps where credit protection was sold with identical underlying reference obligations.

The purchase of credit protection does not represent the sole manner in which the Company risk manages its exposure to credit derivatives. The Company manages its exposure to these derivative contracts through a variety of risk mitigation strategies, which include managing the credit and correlation risk across single name, non-tranched indices and baskets, tranched indices and baskets, and cash positions. Aggregate market risk limits have been established for credit derivatives, and market risk measures are routinely monitored against these limits. The Company may also recover amounts on the underlying reference obligation delivered to the Company under credit default swaps where credit protection was sold.

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12. Commitments, Guarantees and Contingencies.

Commitments.

The Company’s commitments associated with outstanding letters of credit and other financial guarantees obtained to satisfy collateral requirements, investment activities, corporate lending and financing arrangements, mortgage lending and margin lending at March 31, 2013 are summarized below by period of expiration. Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements:

	Years to Maturity								Total at March 31, 2013
	Less than 1		1-3		3-5		Over 5
	(dollars in millions)
Letters of credit and other financial guarantees obtained to satisfy collateral requirements	$	1,460	$	9	$	—	$	1	$	1,470
Investment activities		778		100		36		273		1,187
Primary lending commitments—investment grade(1)		7,353		10,801		34,106		926		53,186
Primary lending commitments—non-investment grade(1)		818		4,711		10,337		1,919		17,785
Secondary lending commitments(2)		78		41		27		40		186
Commitments for secured lending transactions		340		—		—		—		340
Forward starting reverse repurchase agreements and securities borrowing agreements(3)(4)		63,397		—		—		—		63,397
Commercial and residential mortgage-related commitments		1,125		18		179		193		1,515
Underwriting commitments		40		—		—		—		40
Other commitments		1,763		340		115		100		2,318
Total	$	77,152	$	16,020	$	44,800	$	3,452	$	141,424

(1) This amount includes $36.9 billion of investment grade and $9.5 billion of non-investment grade unfunded commitments accounted for as held for investment and $1.1 billion of investment grade and $2.8 billion of non-investment grade unfunded commitments accounted for as held for sale at March 31, 2013. The remainder of these lending commitments is carried at fair value.

(2) These commitments are recorded at fair value within Trading assets and Trading liabilities in the condensed consolidated statements of financial condition (see Note 4).

(3) The Company enters into forward starting reverse repurchase and securities borrowing agreements (agreements that have a trade date at or prior to March 31, 2013 and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations. These agreements primarily settle within three business days and of the total amount at March 31, 2013, $55.3 billion settled within three business days.

(4) The Company also has a contingent obligation to provide financing to a clearinghouse through which it clears certain transactions. The financing is required only upon the default of a clearinghouse member. The financing takes the form of a reverse repurchase facility, with a maximum amount of approximately $2.3 billion.

The above table does not include the Company’s commitment to purchase an additional 35% of the Wealth Management JV for $4.725 billion upon obtaining all regulatory approvals (see Note 3).

For further description of these commitments, refer to Note 13 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

The Company sponsors several non-consolidated investment funds for third-party investors where the Company typically acts as general partner of, and investment advisor to, these funds and typically commits to invest a

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minority of the capital of such funds, with subscribing third-party investors contributing the majority. The Company’s employees, including its senior officers, as well as the Company’s directors, may participate on the same terms and conditions as other investors in certain of these funds that the Company forms primarily for client investment, except that the Company may waive or lower applicable fees and charges for its employees. The Company has contractual capital commitments, guarantees, lending facilities and counterparty arrangements with respect to these investment funds.

Guarantees.

The table below summarizes certain information regarding the Company’s obligations under guarantee arrangements at March 31, 2013:

	Maximum Potential Payout/Notional										Carrying Amount (Asset)/ Liability			Collateral/ Recourse
	Years to Maturity
Type of Guarantee	Less than 1		1-3		3-5		Over 5		Total
	(dollars in millions)
Credit derivative contracts(1)	$	425,823	$	551,454	$	685,183	$	164,181	$	1,826,641	$	7,247		$	—
Other credit contracts		466		82		138		1,139		1,825		(195	)		—
Non-credit derivative contracts(1)		1,147,217		766,393		321,798		397,311		2,632,719		71,979			—
Standby letters of credit and other financial guarantees issued(2)(3)		735		1,246		1,484		5,504		8,969		(205	)		7,090
Market value guarantees		—		83		101		541		725		10			106
Liquidity facilities		2,342		148		—		—		2,490		(4	)		3,723
Whole loan sales representations and warranties		—		—		—		23,967		23,967		82			—
Securitization representations and warranties		—		—		—		70,927		70,927		35			—
General partner guarantees		71		45		32		165		313		74			—

(1) Carrying amounts of derivative contracts are shown on a gross basis prior to cash collateral or counterparty netting. For further information on derivative contracts, see Note 11.

(2) Approximately $2.1 billion of standby letters of credit are also reflected in the “Commitments” table above in primary and secondary lending commitments. Standby letters of credit are recorded at fair value within Trading assets or Trading liabilities in the condensed consolidated statements of financial condition.

(3) Amounts include guarantees issued by consolidated real estate funds sponsored by the Company of approximately $85.4 million. These guarantees relate to obligations of the fund’s investee entities, including guarantees related to capital expenditures and principal and interest debt payments. Accrued losses under these guarantees of approximately $3.9 million are reflected as a reduction of the carrying value of the related fund investments, which are reflected in Trading assets on the condensed consolidated statement of financial condition.

For further description of these guarantees, refer to Note 13 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

The Company has obligations under certain guarantee arrangements, including contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying measure (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or non-occurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. Also included as guarantees are contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity’s failure to perform under an agreement, as well as indirect guarantees of the indebtedness of others. The Company’s use of guarantees is described below by type of guarantee:

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Other Guarantees and Indemnities.

In the normal course of business, the Company provides guarantees and indemnifications in a variety of commercial transactions. These provisions generally are standard contractual terms. Certain of these guarantees and indemnifications are described below.

• Trust Preferred Securities.    The Company has established Morgan Stanley Capital Trusts for the limited purpose of issuing trust preferred securities to third parties and lending the proceeds to the Company in exchange for junior subordinated debentures. The Company has directly guaranteed the repayment of the trust preferred securities to the holders thereof to the extent that the Company has made payments to a Morgan Stanley Capital Trust on the junior subordinated debentures. In the event that the Company does not make payments to a Morgan Stanley Capital Trust, holders of such series of trust preferred securities would not be able to rely upon the guarantee for payment of those amounts. The Company has not recorded any liability in the condensed consolidated financial statements for these guarantees and believes that the occurrence of any events (i.e., non-performance on the part of the paying agent) that would trigger payments under these contracts is remote. See Note 11 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for details on the Company’s junior subordinated debentures.

• Indemnities.    The Company provides standard indemnities to counterparties for certain contingent exposures and taxes, including U.S. and foreign withholding taxes, on interest and other payments made on derivatives, securities and stock lending transactions, certain annuity products and other financial arrangements. These indemnity payments could be required based on a change in the tax laws or change in interpretation of applicable tax rulings or a change in factual circumstances. Certain contracts contain provisions that enable the Company to terminate the agreement upon the occurrence of such events. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated.

• Exchange/Clearinghouse Member Guarantees.    The Company is a member of various U.S. and non-U.S. exchanges and clearinghouses that trade and clear securities and/or derivative contracts. Associated with its membership, the Company may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the exchange or the clearinghouse. While the rules governing different exchange or clearinghouse memberships vary, in general the Company’s guarantee obligations would arise only if the exchange or clearinghouse had previously exhausted its resources. The maximum potential payout under these membership agreements cannot be estimated. The Company has not recorded any contingent liability in the condensed consolidated financial statements for these agreements and believes that any potential requirement to make payments under these agreements is remote.

• Merger and Acquisition Guarantees.    The Company may, from time to time, in its role as investment banking advisor be required to provide guarantees in connection with certain European merger and acquisition transactions. If required by the regulating authorities, the Company provides a guarantee that the acquirer in the merger and acquisition transaction has or will have sufficient funds to complete the transaction and would then be required to make the acquisition payments in the event the acquirer’s funds are insufficient at the completion date of the transaction. These arrangements generally cover the time frame from the transaction offer date to its closing date and, therefore, are generally short term in nature. The maximum potential amount of future payments that the Company could be required to make cannot be estimated. The Company believes the likelihood of any payment by the Company under these arrangements is remote given the level of the Company’s due diligence associated with its role as investment banking advisor.

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In the ordinary course of business, the Company guarantees the debt and/or certain trading obligations (including obligations associated with derivatives, foreign exchange contracts and the settlement of physical commodities) of certain subsidiaries. These guarantees generally are entity or product specific and are required by investors or trading counterparties. The activities of the subsidiaries covered by these guarantees (including any related debt or trading obligations) are included in the Company’s condensed consolidated financial statements.

Contingencies.

Legal.    In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities as a global diversified financial services institution. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In some cases, the entities that would otherwise be the primary defendants in such cases are bankrupt or are in financial distress. These actions have included, but are not limited to, residential mortgage and credit crisis related matters. Over the last several years, the level of litigation and investigatory activity focused on residential mortgage and credit crisis related matters has increased materially in the financial services industry. As a result, the Company expects that it may become the subject of increased claims for damages and other relief regarding residential mortgages and related securities in the future and, while the Company has identified below any individual proceedings where the Company believes a material loss to be reasonably possible and reasonably estimable, there can be no assurance that material losses will not be incurred from claims that have not yet been notified to the Company or are not yet determined to be probable or possible and reasonably estimable losses.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Company’s business and involving, among other matters, accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

The Company contests liability and/or the amount of damages as appropriate in each pending matter. Where available information indicates that it is probable a liability had been incurred at the date of the condensed consolidated financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income. In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss. In addition, even where loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is not always possible to reasonably estimate the size of the possible loss or range of loss.

For certain legal proceedings, the Company cannot reasonably estimate such losses, particularly for proceedings that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, determination of issues related to class certification and the calculation of damages, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before a loss or additional loss or range of loss or additional loss can be reasonably estimated for any proceeding.

For certain other legal proceedings, the Company can estimate reasonably possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued, but does not believe, based on current knowledge and after consultation with counsel, that such losses will have a material adverse effect on the Company’s condensed consolidated financial statements as a whole, other than the matters referred to in the following paragraphs.

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On March 15, 2010, the Federal Home Loan Bank of San Francisco filed two complaints against the Company and other defendants in the Superior Court of the State of California. These actions are styled Federal Home Loan Bank of San Francisco v. Credit Suisse Securities (USA) LLC, et al., and Federal Home Loan Bank of San Francisco v. Deutsche Bank Securities Inc. et al., respectively. Amended complaints filed on June 10, 2010 allege that defendants made untrue statements and material omissions in connection with the sale to plaintiff of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The amount of certificates allegedly sold to plaintiff by the Company in these cases was approximately $704 million and $276 million, respectively. The complaints raise claims under both the federal securities laws and California law and seek, among other things, to rescind the plaintiff’s purchase of such certificates. On July 29, 2011 and September 8, 2011, the court presiding over both actions sustained defendants’ demurrers with respect to claims brought under the Securities Act, and overruled defendants’ demurrers with respect to all other claims. At March 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in these cases was approximately $356 million, and the certificates had incurred actual losses of approximately $1.7 million. Based on currently available information, the Company believes it could incur a loss up to the difference between the $356 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 9, 2010 and February 11, 2011, Cambridge Place Investment Management Inc. filed two separate complaints against the Company and other defendants in the Superior Court of the Commonwealth of Massachusetts, both styled Cambridge Place Investment Management Inc. v. Morgan Stanley & Co., Inc., et al. The complaints assert claims on behalf of certain clients of plaintiff’s affiliates and allege that defendants made untrue statements and material omissions in the sale of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly issued by the Company or sold to plaintiff’s affiliates’ clients by the Company in the two matters was approximately $344 million. The complaints raise claims under the Massachusetts Uniform Securities Act and seek, among other things, to rescind the plaintiff’s purchase of such certificates. On October 14, 2011, plaintiffs filed an amended complaint in each action. On November 22, 2011, defendants filed a motion to dismiss the amended complaints. On March 12, 2012, the court denied defendants’ motion to dismiss with respect to plaintiff’s standing to bring suit. Defendants sought interlocutory appeal from that decision on April 11, 2012. On April 26, 2012, defendants filed a second motion to dismiss for failure to state a claim upon which relief can be granted, which the court denied, in substantial part, on October 2, 2012. Based on currently available information, the Company believes it could incur a loss for these actions of up to the difference between the as yet undetermined unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 15, 2010, China Development Industrial Bank (“CDIB”) filed a complaint against the Company, which is styled China Development Industrial Bank v. Morgan Stanley & Co. Incorporated et al. and is pending in the Supreme Court of the State of New York, New York County (“Supreme Court of NY”). The complaint relates to a $275 million credit default swap referencing the super senior portion of the STACK 2006-1 CDO. The complaint asserts claims for common law fraud, fraudulent inducement and fraudulent concealment and alleges that the Company misrepresented the risks of the STACK 2006-1 CDO to CDIB, and that the Company knew that the assets backing the CDO were of poor quality when it entered into the credit default swap with CDIB. The complaint seeks compensatory damages related to the approximately $228 million that CDIB alleges it has already lost under the credit default swap, rescission of CDIB’s obligation to pay an additional $12 million,

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punitive damages, equitable relief, fees and costs. On February 28, 2011, the court presiding over this action denied the Company’s motion to dismiss the complaint and on March 21, 2011, the Company appealed that order. On July 7, 2011, the appellate court affirmed the lower court’s decision denying the motion to dismiss. Based on currently available information, the Company believes it could incur a loss of up to approximately $240 million plus pre- and post-judgment interest, fees and costs.

On October 15, 2010, the Federal Home Loan Bank of Chicago filed a complaint against the Company and other defendants in the Circuit Court of the State of Illinois styled Federal Home Loan Bank of Chicago v. Bank of America Funding Corporation et al. The complaint alleges that defendants made untrue statements and material omissions in the sale to plaintiff of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sold to plaintiff by the Company in this action was approximately $203 million. The complaint raises claims under Illinois law and seeks, among other things, to rescind the plaintiff’s purchase of such certificates. On March 24, 2011, the court granted plaintiff leave to file an amended complaint. On May 27, 2011, defendants filed a motion to dismiss the amended complaint, which motion was denied on September 19, 2012. The Company filed its answer on December 21, 2012. At March 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in this case was approximately $103 million and certain certificates had incurred actual losses of approximately $700,000. Based on currently available information, the Company believes it could incur a loss up to the difference between the $103 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 18, 2011, the Western and Southern Life Insurance Company and certain affiliated companies filed a complaint against the Company and other defendants in the Court of Common Pleas in Ohio, styled Western and Southern Life Insurance Company, et al. v. Morgan Stanley Mortgage Capital Inc., et al. An amended complaint was filed on April 2, 2012 and alleges that defendants made untrue statements and material omissions in the sale to plaintiffs of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The amount of the certificates allegedly sold to plaintiffs by the Company was approximately $153 million. The amended complaint raises claims under the Ohio Securities Act, federal securities laws, and common law and seeks, among other things, to rescind the plaintiffs’ purchases of such certificates. On May 21, 2012, the Company filed a motion to dismiss the amended complaint, which motion was denied on August 3, 2012. The court has set a trial date of November 2013. At March 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in this case was approximately $122 million, and the certificates had incurred actual losses of approximately $55,000. Based on currently available information, the Company believes it could incur a loss up to the difference between the $122 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus post-judgment interest, fees and costs. The Company may be entitled to an offset for interest received by the plaintiff prior to a judgment.

On September 2, 2011, the Federal Housing Finance Agency (“FHFA”), as conservator for Fannie Mae and Freddie Mac, filed 17 complaints against numerous financial services companies, including the Company. A complaint against the Company and other defendants was filed in the Supreme Court of NY, styled Federal Housing Finance Agency, as Conservator v. Morgan Stanley et al. The complaint alleges that defendants made untrue statements and material omissions in connection with the sale to Fannie Mae and Freddie Mac of residential mortgage pass-through certificates with an original unpaid balance of approximately $11 billion. The complaint raises claims under federal and state securities laws and common law and seeks, among other things, rescission and compensatory and punitive damages. On September 26, 2011, defendants removed the

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action to the United States District Court for the Southern District of New York and on October 26, 2011, the FHFA moved to remand the action back to the Supreme Court of NY. On May 11, 2012, plaintiff withdrew its motion to remand. On July 13, 2012, the Company filed a motion to dismiss the complaint, which motion was denied in large part on November 19, 2012. Trial is currently scheduled to begin in January 2015. At March 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in these cases was approximately $2.87 billion, and the certificates had incurred actual losses of approximately $54 million. Based on currently available information, the Company believes it could incur a loss up to the difference between the $2.87 billion unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On April 25, 2012, The Prudential Insurance Company of America and certain affiliates filed a complaint against the Company and certain affiliates in the Superior Court of the State of New Jersey styled The Prudential Insurance Company of America, et al. v. Morgan Stanley, et al. The complaint alleges that defendants made untrue statements and material omissions in connection with the sale to plaintiffs of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by the Company is approximately $1 billion. The complaint raises claims under the New Jersey Uniform Securities Law, as well as common law claims of negligent misrepresentation, fraud and tortious interference with contract and seeks, among other things, compensatory damages, punitive damages, rescission and rescissionary damages associated with plaintiffs’ purchases of such certificates. On October 16, 2012, plaintiffs filed an amended complaint which, among other things, increases the total amount of the certificates at issue by approximately $80 million, adds causes of action for fraudulent inducement, equitable fraud, aiding and abetting fraud, and violations of the New Jersey RICO statute, and includes a claim for treble damages. On January 23, 2013, defendants filed a motion to dismiss the amended complaint, which was denied on March 15, 2013. At March 25, 2013, the current unpaid balance of the mortgage pass through certificates at issue in these cases was approximately $598 million, and the certificates had not yet incurred actual losses. Based on currently available information, the Company believes it could incur a loss up to the difference between the $598 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

In addition to the matters referenced above, on April 24, 2013, the parties reached an agreement to settle Abu Dhabi Commercial Bank, et al. v. Morgan Stanley & Co. Inc., et al. On April 26, 2013, the court dismissed the action with prejudice. The settlement does not cover certain claims that were previously dismissed.

13. Regulatory Requirements.

Morgan Stanley.    The Company is a financial holding company under the Bank Holding Company Act of 1956, as amended, and is subject to the regulation and oversight of the Federal Reserve. The Federal Reserve 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 establishes similar capital requirements and standards for Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association.

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 Federal Reserve. These standards are based upon a framework described in the “International Convergence of Capital Measurement and Capital Standards,”

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July 1988, as amended, also referred to as Basel I. In December 2007, the U.S. banking regulators published final regulation incorporating the Basel II Accord, which requires internationally active banking organizations, as well as certain of their U.S. bank subsidiaries, to implement Basel II standards over the next several years. In July 2010, the Company began reporting its capital adequacy standards on a parallel basis to its regulators under Basel I and Basel II as part of a phased implementation of Basel II.

In December 2010, the Basel Committee reached an agreement on Basel III. In June 2012, the U.S. banking regulators proposed rules to implement many aspects of Basel III (the “U.S. Basel III proposals”). The U.S. Basel III proposals contemplate that the new capital requirements would be phased in over several years, beginning in 2013. In November 2012, the U.S. banking regulators announced that the U.S. Basel III proposals would not become effective on January 1, 2013. The announcement did not specify new implementation or phase in dates for the U.S. Basel III proposals.

In June 2011, the U.S. banking regulators published final regulations implementing a provision of the Dodd-Frank Act requiring that certain institutions supervised by the Federal Reserve, including the Company, be subject to minimum capital requirements that are not less than the generally applicable risk-based capital requirements. Currently, this minimum “capital floor” is based on Basel I. The U.S. Basel III proposals would replace the current Basel I-based “capital floor” with a standardized approach that, among other things, modifies the existing risk weights for certain types of asset classes. Effective January 1, 2013, in accordance with the U.S. banking regulators’ rules the Company implemented the Basel Committee’s market risk capital framework amendment, commonly referred to as “Basel 2.5”, which increased the capital requirements for securitizations and correlation trading within the Company's trading book as well as incorporated add-ons for stressed VaR and incremental risk requirements (“market risk capital framework amendment”).

At March 31, 2013, the Company was in compliance with Basel I, inclusive of the market risk capital framework amendment, with ratios of Tier 1 capital to RWAs of 13.9% and total capital to RWAs of 14.5% (6% and 10% being well-capitalized for regulatory purposes, respectively). The ratio of Tier 1 common capital to RWAs was 11.5% (5% being the minimum under the Federal Reserve’s Comprehensive Capital Analysis and Review (“CCAR”) framework). Financial holding companies are subject to a Tier 1 leverage ratio as defined by the Federal Reserve. 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, deferred tax assets and financial and non-financial equity investments). The adjusted average total assets are derived using weekly balances for the year. At March 31, 2013, the Company was also in compliance with the Federal Reserve’s Tier 1 leverage requirement, with a Tier 1 leverage ratio of 7.0% (5% being well-capitalized for regulatory purposes).

The following table summarizes the capital measures for the Company:

	March 31, 2013					December 31, 2012
	Balance		Ratio			Balance		Ratio
	(dollars in millions)
Tier 1 common capital	$	46,512		11.5	%	$	44,794		14.6	%
Tier 1 capital		56,129		13.9	%		54,360		17.7	%
Total capital		58,382		14.5	%		56,626		18.5	%
RWAs		403,237		—			306,746		—
Adjusted average assets		800,699		—			769,495		—
Tier 1 leverage		—		7.0	%		—		7.1	%

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The Company’s U.S. Bank Operating Subsidiaries.    The Company’s U.S. 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 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.

At March 31, 2013, the Company’s U.S. bank operating subsidiaries met all capital adequacy requirements to which they are subject and exceeded all regulatory 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 capital information for the Company’s U.S. bank operating subsidiaries, which are U.S. depository institutions, calculated in a manner consistent with the guidelines described under Basel I, inclusive of the market risk capital framework amendment:

	March 31, 2013					December 31, 2012
	Amount		Ratio			Amount		Ratio
	(dollars in millions)
Total capital (to RWAs):
Morgan Stanley Bank, N.A.	$	11,752		15.8	%	$	11,509		17.2	%
Morgan Stanley Private Bank, National Association	$	1,696		27.6	%	$	1,673		28.8	%
Tier I capital (to RWAs):
Morgan Stanley Bank, N.A.	$	10,144		13.6	%	$	9,918		14.9	%
Morgan Stanley Private Bank, National Association	$	1,690		27.5	%	$	1,665		28.7	%
Leverage ratio:
Morgan Stanley Bank, N.A.	$	10,144		12.7	%	$	9,918		13.3	%
Morgan Stanley Private Bank, National Association	$	1,690		10.3	%	$	1,665		10.6	%

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 ratio of total capital to RWAs of 10%, a capital ratio of Tier 1 capital to RWAs of 6%, 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 for financial holding companies. At March 31, 2013 and December 31, 2012, the Company’s 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 U.S. Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority, Inc. and the U.S. Commodity Futures Trading Commission. MS&Co. has consistently operated with capital in excess of its regulatory capital requirements. MS&Co.’s net capital totaled $8,848 million and $7,820 million at March 31, 2013 and December 31, 2012, respectively, which exceeded the amount required by $7,348 million and $6,453 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.

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MS&Co. is also required to notify the SEC in the event that its tentative net capital is less than $5 billion. At March 31, 2013, MS&Co. had tentative net capital in excess of the minimum and the notification requirements.

MSSB LLC 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, Inc. and the U.S. Commodity Futures Trading Commission. MSSB LLC has consistently operated with capital in excess of its regulatory capital requirements. MSSB LLC clears certain customer activity directly and introduces other business to MS&Co. and Citi. Subsequent to July 6, 2012, MSSB LLC clears customer activity that was previously introduced to Citi.

MSIP, a London-based broker-dealer subsidiary, is subject to the capital requirements of the Financial Services 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 in excess of their respective regulatory capital 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 A2 by Moody’s and AAA by S&P, maintains certain operating restrictions that have been reviewed by Moody’s and S&P. 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.

14. Redeemable Noncontrolling Interests and Total Equity.

Redeemable Noncontrolling Interests.

Redeemable noncontrolling interests relates to the Wealth Management JV (see Note 3). Changes in redeemable noncontrolling interests for the quarter ended March 31, 2013 were as follows (dollars in millions):

Balance at December 31, 2012	$	4,309
Net income applicable to redeemable noncontrolling interests		122
Other		(6	)
Balance at March 31, 2013	$	4,425

Total Equity.

Morgan Stanley Shareholders’ Equity.

Common Equity Offerings.    During the quarters ended March 31, 2013 and 2012, the Company did not purchase any of its common stock as part of its share repurchase program. At March 31, 2013, the Company had approximately $1.6 billion remaining under its current share repurchase authorization. Share repurchases by the Company are subject to regulatory approval.

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Accumulated Other Comprehensive Income (Loss).

The following table presents Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax and net of noncontrolling interests, for the quarter ended March 31, 2013 (dollars in millions):

	Foreign Currency Translation Adjustments			Net Change in Cash Flow Hedges			Change in Net Unrealized Gains (Losses) on Securities Available  for Sale			Pension, Postretirement and Other Related Adjustments			Total
Balance at December 31, 2012	$	(123	)	$	(5	)	$	151		$	(539	)	$	(516	)
Other comprehensive income (loss) before reclassifications		(153	)		—			(25	)		(3	)		(181	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			1			(2	)		4			3
Net other comprehensive income (loss) during the period		(153	)		1			(27	)		1			(178	)
Balance at March 31, 2013	$	(276	)	$	(4	)	$	124		$	(538	)	$	(694	)

The Company had no significant reclassifications out of accumulated other comprehensive loss for the quarter ended March 31, 2013.

Nonredeemable Noncontrolling Interests.

Changes in nonredeemable noncontrolling interests were not material in the quarter ended March 31, 2013. Changes in nonredeemable noncontrolling interests in the quarter ended March 31, 2012 primarily resulted from $113 million in net assets received from Citi related to Citi’s required equity contribution in connection with the Morgan Stanley Wealth Management platform integration.

15. Earnings per Common Share.

Basic earnings per common share (“EPS”) is computed by dividing earnings (loss) applicable to Morgan Stanley common shareholders by the weighted average number of common shares outstanding for the period. Common shares outstanding include common stock and vested restricted stock units (“RSUs”) where recipients have satisfied either the explicit vesting terms or retirement eligibility requirements. Diluted EPS reflects the assumed conversion of all dilutive securities. The Company calculates EPS using the two-class method and determines whether instruments granted in share-based payment transactions are participating securities (see Note 2 to the

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consolidated financial statements for the year ended December 31, 2012 in the Form 10-K). The following table presents the calculation of basic and diluted EPS (in millions, except for per share data):

	Three Months Ended March 31,
	2013			2012
Basic EPS:
Income from continuing operations	$	1,250		$	148
Net gain (loss) from discontinued operations		(19	)		(14	)
Net income		1,231			134
Net income applicable to redeemable noncontrolling interests		122			—
Net income applicable to nonredeemable noncontrolling interests		147			228
Net income (loss) applicable to Morgan Stanley		962			(94	)
Less: Preferred dividends (Series A Preferred Stock)		(11	)		(11	)
Less: Preferred dividends (Series C Preferred Stock)		(13	)		(13	)
Less: Allocation of (earnings) loss to participating RSUs(1):
From continuing operations		(2	)		(1	)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	936		$	(119	)
Weighted average common shares outstanding		1,901			1,877
Earnings (loss) per basic common share:
Income (loss) from continuing operations	$	0.50		$	(0.05	)
Net gain (loss) from discontinued operations		(0.01	)		(0.01	)
Earnings (loss) per basic common share	$	0.49		$	(0.06	)
Diluted EPS:
Earnings (loss) applicable to Morgan Stanley common shareholders	$	936		$	(119	)
Weighted average common shares outstanding		1,901			1,877
Effect of dilutive securities:
Stock options and RSUs(1)		39			—
Weighted average common shares outstanding and common stock equivalents		1,940			1,877
Earnings (loss) per diluted common share:
Income (loss) from continuing operations	$	0.49		$	(0.05	)
Net income (loss) from discontinued operations		(0.01	)		(0.01	)
Earnings (loss) per diluted common share	$	0.48		$	(0.06	)

(1) RSUs that are considered participating securities participate in all of the earnings of the Company in the computation of basic EPS, and, therefore, such RSUs are not included as incremental shares in the diluted calculation.

The following securities were considered antidilutive and, therefore, were excluded from the computation of diluted EPS:

	Three Months Ended March 31,
Number of Antidilutive Securities Outstanding at End of Period:	2013		2012
	(shares in millions)
RSUs and performance-based stock units		5		103
Stock options		37		45
Total		42		148

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16. Interest Income and Interest Expense.

Details of Interest income and Interest expense were as follows:

	Three Months Ended March 31,
	2013			2012
	(dollars in millions)
Interest income(1):
Trading assets(2)	$	604		$	791
Securities available for sale		96			86
Loans		244			118
Interest bearing deposits with banks		26			27
Federal funds sold and securities purchased under agreements to resell and Securities borrowed		92			113
Other		336			407
Total interest income	$	1,398		$	1,542
Interest expense(1):
Deposits	$	41		$	45
Commercial paper and other short-term borrowings		9			13
Long-term debt		960			1,254
Securities sold under agreements to repurchase and Securities loaned		450			463
Other		(247	)		(174	)
Total interest expense	$	1,213		$	1,601
Net interest	$	185		$	(59	)

(1) Interest income and expense are recorded within the condensed consolidated statements of income depending on the nature of the instrument and related market conventions. When interest is included as a component of the instrument’s fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.

(2) Interest expense on Trading liabilities is reported as a reduction to Interest income on Trading assets.

17. Employee Benefit Plans.

The Company sponsors various pension plans for the majority of its U.S. and non-U.S. employees. The Company provides certain other postretirement benefits, primarily health care and life insurance, to eligible U.S. employees. The Company also provides certain postemployment benefits to certain former employees or inactive employees prior to retirement.

Effective January 1, 2011, the Morgan Stanley Employees Retirement Plan (the “Pension Plan”) for U.S. participants ceased accruals of benefits under the Pension Plan.

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MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of the Company’s net periodic benefit expense for its pension and postretirement plans were as follows:

	Three Months Ended March 31,
	2013			2012
	(dollars in millions)
Service cost, benefits earned during the period	$	7		$	8
Interest cost on projected benefit obligation		39			41
Expected return on plan assets		(28	)		(28	)
Net amortization of prior service costs		(4	)		(3	)
Net amortization of actuarial loss		10			7
Net periodic benefit expense	$	24		$	25

18. Income Taxes.

The Company is under continuous examination by the Internal Revenue Service (the “IRS”) and other tax authorities in certain countries, such as Japan and the U.K., and in states in which the Company has significant business operations, such as New York. The Company is currently under review by the IRS Appeals Office for the remaining issues covering tax years 1999 – 2005. Also, the Company is currently at various levels of field examination with respect to audits with the IRS, as well as New York State and New York City, for tax years 2006 – 2008 and 2007 – 2009, respectively. During 2013, the Company expects to reach a conclusion with the U.K. tax authorities on substantially all issues through tax year 2010.

The Company believes that the resolution of tax matters will not have a material effect on the condensed consolidated statements of financial condition of the Company, although a resolution could have a material impact on the Company’s condensed consolidated statements of income for a particular future period and on the Company’s effective income tax rate for any period in which such resolution occurs. The Company has established a liability for unrecognized tax benefits that the Company believes is adequate in relation to the potential for additional assessments. Once established, the Company adjusts unrecognized tax benefits only when more information is available or when an event occurs necessitating a change.

It is reasonably possible that significant changes in the gross balance of unrecognized tax benefits may occur within the next 12 months. At this time, however, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits and impact on the effective tax rate over the next 12 months.

The Company’s effective tax rate from continuing operations for the quarter ended March 31, 2013 included a discrete tax benefit of $81 million due to the retroactive effective date of the American Taxpayer Relief Act of 2012 (the “Relief Act”). The Relief Act that was enacted on January 2, 2013, among other things, extended with retroactive effect to January 1, 2012 a provision of U.S. tax law that defers the imposition of tax on certain active financial services income of certain foreign subsidiaries earned outside of the U.S. until such income is repatriated to the U.S. as a dividend. Additionally, the Company’s effective tax rate from continuing operations for the quarter ended March 31, 2013 included a discrete net tax benefit of $61 million associated with remeasurement of reserves and related interest based on new information regarding the status of certain tax authority examinations. Excluding these discrete tax benefits, the annual effective tax rate in the quarter ended March 31, 2013 would have been 30.0%.

84

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

19. Segment and Geographic Information.

Segment Information.

The Company structures its segments primarily based upon the nature of the financial products and services provided to customers and the Company’s management organization. The Company provides a wide range of financial products and services to its customers in each of its business segments: Institutional Securities, Global Wealth Management Group and Asset Management. For further discussion of the Company’s business segments, see Note 1.

Revenues and expenses directly associated with each respective segment are included in determining its operating results. Other revenues and expenses that are not directly attributable to a particular segment are allocated based upon the Company’s allocation methodologies, generally based on each segment’s respective net revenues, non-interest expenses or other relevant measures.

As a result of treating certain intersegment transactions as transactions with external parties, the Company includes an Intersegment Eliminations category to reconcile the business segment results to the Company’s consolidated results. Intersegment Eliminations also reflect the effect of fees paid by the Institutional Securities business segment to the Global Wealth Management Group business segment related to the bank deposit program.

Selected financial information for the Company’s segments is presented below:

Three Months Ended March 31, 2013	Institutional Securities			Global Wealth Management Group			Asset Management			Intersegment Eliminations			Total
	(dollars in millions)
Total non-interest revenues	$	4,313		$	3,057		$	649		$	(46	)	$	7,973
Interest income		1,024			488			2			(116	)		1,398
Interest expense		1,248			75			6			(116	)		1,213
Net interest		(224	)		413			(4	)		—			185
Net revenues(1)	$	4,089		$	3,470		$	645		$	(46	)	$	8,158
Income from continuing operations before income taxes	$	798		$	597		$	187		$	—		$	1,582
Provision for income taxes		60			220			52			—			332
Income from continuing operations		738			377			135			—			1,250
Discontinued operations(2):
Gain (loss) from discontinued operations		(30	)		(1	)		1			—			(30	)
Provision for (benefit from) income taxes		(11	)		—			—			—			(11	)
Net gain (loss) on discontinued operations		(19	)		(1	)		1			—			(19	)
Net income		719			376			136			—			1,231
Net income applicable to redeemable noncontrolling interests		1			121			—			—			122
Net income applicable to nonredeemable noncontrolling interests		96			—			51			—			147
Net income applicable to Morgan Stanley	$	622		$	255		$	85		$	—		$	962

85

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Three Months Ended March 31, 2012	Institutional Securities(3)			Global Wealth Management Group(3)		Asset Management			Intersegment Eliminations			Total
	(dollars in millions)
Total non-interest revenues	$	3,586		$	2,891	$	541		$	(35	)	$	6,983
Interest income		1,177			458		3			(96	)		1,542
Interest expense		1,628			58		11			(96	)		1,601
Net interest		(451	)		400		(8	)		—			(59	)
Net revenues(1)	$	3,135		$	3,291	$	533		$	(35	)	$	6,924
Income (loss) from continuing operations before income taxes	$	(329	)	$	403	$	128		$	—		$	202
Provision for (benefit from) income taxes		(106	)		122		38			—			54
Income (loss) from continuing operations		(223	)		281		90			—			148
Discontinued operations(2):
Gain from discontinued operations		25			2		1			—			28
Provision for income taxes		41			1		—			—			42
Net gain (loss) on discontinued operations		(16	)		1		1			—			(14	)
Net income (loss)		(239	)		282		91			—			134
Net income applicable to nonredeemable noncontrolling interests		79			84		65			—			228
Net income (loss) applicable to Morgan Stanley	$	(318	)	$	198	$	26		$	—		$	(94	)

(1) In certain management fee arrangements, the Company is entitled to receive performance-based fees (also referred to as incentive fees) when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, performance fee revenue is accrued (or reversed) quarterly based on measuring account fund performance to date versus the performance benchmark stated in the investment management agreement. The amount of performance-based fee revenue at risk of reversing if fund performance falls below stated investment management agreement benchmarks was approximately $274 million at March 31, 2013 and approximately $205 million at December 31, 2012 (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K).

(2) See Notes 1 and 21 for discussion of discontinued operations.

(3) On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

Total Assets(1)	Institutional Securities(2)		Global Wealth Management Group(2)		Asset Management		Total
	(dollars in millions)
At March 31, 2013	$	675,327	$	118,557	$	7,499	$	801,383
At December 31, 2012	$	648,049	$	125,565	$	7,346	$	780,960

(1) Corporate assets have been fully allocated to the Company’s business segments.

(2) Prior period amounts have been recast to reflect the transfer of the International Wealth Management business from Global Wealth Management Group business segment to the Institutional Securities business segment.

86

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Geographic Information.

The Company operates in both U.S. and non-U.S. markets. The Company’s non-U.S. business activities are principally conducted and managed through European and Asian locations. The net revenues disclosed in the following table reflect the regional view of the Company’s consolidated net revenues on a managed basis, based on the following methodology:

• Institutional Securities: advisory and equity underwriting—client location, debt underwriting—revenue recording location, sales and trading—trading desk location.

• Global Wealth Management Group: global representative coverage location.

• Asset Management: client location, except for Merchant Banking and Real Estate Investing businesses, which are based on asset location.

	Three Months Ended March 31,
Net Revenues	2013		2012
	(dollars in millions)
Americas	$	5,956	$	4,784
Europe, Middle East and Africa		1,066		1,149
Asia		1,136		991
Net revenues	$	8,158	$	6,924

20. Equity Method Investments.

The Company has investments accounted for under the equity method of accounting (see Note 1) of $4,618 million and $4,682 million at March 31, 2013 and December 31, 2012, respectively, included in Other investments in the condensed consolidated statements of financial condition. Gains (losses) from these investments were $64 million and $(32) million for the quarters ended March 31, 2013 and 2012, respectively, and are included in Other revenues in the condensed consolidated statements of income.

Japanese Securities Joint Venture

On May 1, 2010, the Company and Mitsubishi UFJ Financial Group, Inc. (“MUFG”) formed a joint venture in Japan of their respective investment banking and securities businesses. MUFG and the Company have integrated their respective Japanese securities companies by forming two joint venture companies. MUFG contributed the investment banking, wholesale and retail securities businesses conducted in Japan by Mitsubishi UFJ Securities Co., Ltd. into Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“MUMSS”). The Company contributed the investment banking operations conducted in Japan by its subsidiary MSMS, formerly known as Morgan Stanley Japan Securities Co., Ltd., into MUMSS (MSMS, together with MUMSS, the “Joint Venture”). MSMS will continue its sales and trading and capital markets business conducted in Japan. Following the respective contributions to the Joint Venture and a cash payment of 23 billion yen ($247 million), from MUFG to the Company, the Company owns a 40% economic interest in the Joint Venture and MUFG owns a 60% economic interest in the Joint Venture.

The Company holds a 40% voting interest and MUFG holds a 60% voting interest in MUMSS, while the Company holds a 51% voting interest and MUFG holds a 49% voting interest in MSMS. The Company continues to consolidate MSMS in its condensed consolidated financial statements and, commencing on May 1, 2010, accounted for its interest in MUMSS as an equity method investment within the Institutional Securities

87

MORGAN STANLEY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

business segment. During the quarters ended March 31, 2013 and 2012, the Company recorded income of $125 million and $27 million, respectively, within Other revenues in the condensed consolidated statements of income, arising from the Company’s 40% stake in MUMSS.

21. Discontinued Operations.

See Note 1 for a discussion of the Company’s discontinued operations.

The table below provides information regarding amounts included in discontinued operations:

	Three Months Ended March 31,
	2013			2012
	(dollars in millions)
Net revenues(1):
Saxon	$	—		$	76
Quilter		(1	)		31
Other(2)		(9	)		10
	$	(10	)	$	117
Pre-tax gain (loss) on discontinued operations(1):
Saxon	$	(20	)	$	25
Quilter		(1	)		2
Other(2)		(9	)		1
	$	(30	)	$	28

(1) Amounts included eliminations of intersegment activity.

(2) Amounts included in Other are related to the sale of a principal investment and other.

22. Subsequent Events.

The Company has evaluated subsequent events for adjustment to or disclosure in the condensed consolidated financial statements through the date of this report and the Company has not identified any recordable or disclosable events, not otherwise reported in these condensed consolidated financial statements or the notes thereto, except for the following:

Common Dividend.

On April 18, 2013, the Company announced that its Board of Directors declared a quarterly dividend per common share of $0.05. The dividend is payable on May 15, 2013 to common shareholders of record on April 30, 2013.

Long-Term Borrowings.

On April 25, 2013, the Company issued $3.7 billion in senior unsecured debt.

88

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Morgan Stanley:

We have reviewed the accompanying condensed consolidated statement of financial condition of Morgan Stanley and subsidiaries (the “Company”) as of March 31, 2013, and the related condensed consolidated statements of income, comprehensive income, cash flows and changes in total equity for the three-month periods ended March 31, 2013 and March 31, 2012. These condensed consolidated financial statements are the responsibility of the management of the Company.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of financial condition of the Company as of December 31, 2012, and the consolidated statements of income, comprehensive income, cash flows and changes in total equity for the year then ended (not presented herein) included in the Company’s Annual Report on Form 10-K; and in our report dated February 26, 2013, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial condition as of December 31, 2012 is fairly stated, in all material respects, in relation to the consolidated statement of financial condition from which it has been derived.

/s/ Deloitte & Touche LLP

New York, New York

May 7, 2013

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introduction.

Morgan Stanley, a financial holding company, is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Global Wealth Management Group and Asset Management. The Company, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. Unless the context otherwise requires, the terms “Morgan Stanley” or the “Company” mean Morgan Stanley (the “Parent”) together with its consolidated subsidiaries.

A summary of the activities of each of the Company’s business segments is as follows:

Institutional Securities provides financial advisory and capital-raising services, including advice on mergers and acquisitions, restructurings, real estate and project finance; corporate lending; sales, trading, financing and market-making activities in equity and fixed income securities and related products, including foreign exchange and commodities; and investment activities.

Global Wealth Management Group, which includes the Company’s 65% interest in Morgan Stanley Smith Barney Holdings LLC (the “Wealth Management Joint Venture” or “Wealth Management JV”), provides brokerage and investment advisory services to individual investors and small-to-medium sized businesses and institutions covering various investment alternatives; financial and wealth planning services; annuity and other insurance products; credit and other lending products; cash management services; retirement services; and trust and fiduciary services and engages in fixed income trading, which primarily facilitates clients’ trading or investments in such securities.

Asset Management provides a broad array of investment strategies that span the risk/return spectrum across geographies, asset classes and public and private markets to a diverse group of clients across the institutional and intermediary channels as well as high net worth clients.

See Notes 1 and 21 to the condensed consolidated financial statements for a discussion of the Company’s discontinued operations.

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 economic and political conditions and geopolitical events; the effect of market conditions, particularly in the global equity, fixed income, credit and commodities markets, including corporate and mortgage (commercial and residential) lending and commercial real estate markets; the impact of current, pending and future legislation (including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”)), regulation (including capital, leverage and liquidity requirements), and legal actions in the United States of America (“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 the Company’s unsecured short-term and long-term debt; investor, consumer and business sentiment and confidence in the financial markets; the performance of the Company’s acquisitions, joint ventures, strategic alliances or other strategic arrangements (including the Wealth Management JV and with Mitsubishi UFJ Financial Group, Inc. (“MUFG”)); the Company’s reputation; inflation, natural disasters and acts of war or terrorism; the actions and initiatives of current and potential competitors as well as governments, regulators and self-regulatory organizations; the effectiveness of the Company’s risk management policies; and technological changes; or a combination of these or other factors. In addition, legislative, legal and regulatory developments related to the Company’s businesses are likely to increase costs, thereby affecting results of operations. These factors also may have an adverse impact on the Company’s ability to achieve its strategic objectives. For a further discussion of these and other important factors that could affect the Company’s business, see “Business—Competition” and “Business—Supervision and Regulation” in Part I, Item 1, and “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “Form 10-K”), and “Other Matters” herein.

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The discussion of the Company’s results of operations below may contain forward-looking statements. These statements, which reflect management’s beliefs and expectations, are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of the risks and uncertainties that may affect the Company’s future results, please see “Forward-Looking Statements” immediately preceding “Business—Competition” and “Business—Supervision and Regulation” in Part I, Item 1, “Risk Factors” in Part I, Item 1A, and “Executive Summary—Significant Items” in Part II, Item 7 of the Form 10-K and “Other Matters” herein.

Executive Summary.

Financial Information and Statistical Data (dollars in millions, except where noted and per share amounts).

	Three Months Ended March 31,
	2013			2012
Net revenues:
Institutional Securities(1)	$	4,089		$	3,135
Global Wealth Management Group(1)		3,470			3,291
Asset Management		645			533
Intersegment Eliminations		(46	)		(35	)
Consolidated net revenues	$	8,158		$	6,924
Net income	$	1,231		$	134
Net income applicable to redeemable noncontrolling interests(2)		122			—
Net income applicable to nonredeemable noncontrolling interests(2)		147			228
Net income (loss) applicable to Morgan Stanley	$	962		$	(94	)
Income (loss) from continuing operations applicable to Morgan Stanley:
Institutional Securities(1)	$	641		$	(302	)
Global Wealth Management Group(1)		256			198
Asset Management		84			25
Intersegment Eliminations		—			—
Income (loss) from continuing operations applicable to Morgan Stanley	$	981		$	(79	)
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations applicable to Morgan Stanley	$	981		$	(79	)
Net gain (loss) from discontinued operations applicable to Morgan Stanley(3)		(19	)		(15	)
Net income (loss) applicable to Morgan Stanley	$	962		$	(94	)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	936		$	(119	)
Earnings (loss) per basic common share:
Income (loss) from continuing operations	$	0.50		$	(0.05	)
Net gain (loss) from discontinued operations(3)		(0.01	)		(0.01	)
Earnings (loss) per basic common share(4)	$	0.49		$	(0.06	)
Earnings (loss) per diluted common share:
Income (loss) from continuing operations	$	0.49		$	(0.05	)
Net gain (loss) from discontinued operations(3)		(0.01	)		(0.01	)
Earnings (loss) per diluted common share(4)	$	0.48		$	(0.06	)
Regional net revenues:
Americas	$	5,956		$	4,784
Europe, Middle East and Africa		1,066			1,149
Asia		1,136			991
Net revenues	$	8,158		$	6,924

91

Financial Information and Statistical Data (dollars in millions, except where noted and per share amounts)—(Continued).

	Three Months Ended March 31,
	2013			2012
Average common equity (dollars in billions):
Institutional Securities	$	39.9		$	29.5
Global Wealth Management Group		13.4			13.3
Asset Management		2.8			2.5
Parent capital		4.8			15.2
Consolidated average common equity	$	60.9		$	60.5
Return on average common equity(5):
Institutional Securities		6	%		N/M
Global Wealth Management Group		8	%		6	%
Asset Management		12	%		4	%
Consolidated		6	%		N/M
Book value per common share(6)	$	31.21		$	30.74
Tangible common equity(7)	$	53,687		$	54,156
Return on average tangible common equity(8)		7.2	%		N/M
Tangible book value per common share(9)	$	27.38		$	27.37
Effective income tax rate from continuing operations(10)		21.0	%		26.7	%
Worldwide employees at March 31, 2013 and 2012		55,289			59,200
Global liquidity reserve held by the bank and non-bank legal entities at March 31, 2013 and 2012 (dollars in billions)(11)	$	186		$	179
Average global liquidity reserve (dollars in billions)(11)
Bank legal entities	$	69		$	63
Non-bank legal entities		118			115
Total global liquidity reserve	$	187		$	178
Long-term borrowings at March 31, 2013 and 2012	$	165,142		$	176,723
Maturities of long-term borrowings outstanding at March 31, 2013 and 2012 (next 12 months)	$	22,138		$	29,458
Capital ratios at March 31, 2013 and 2012:
Total capital ratio(12)		14.5	%		18.1	%
Tier 1 common capital ratio(12)		11.5	%		13.3	%
Tier 1 capital ratio(12)		13.9	%		16.9	%
Tier 1 leverage ratio		7.0	%		7.0	%
Consolidated assets under management or supervision at March 31, 2013 and 2012 (dollars in billions)(13):
Asset Management(14)	$	341		$	304
Global Wealth Management Group(1)(15)		618			517
Total	$	959		$	821

92

Financial Information and Statistical Data (dollars in millions, except where noted and per share amounts)—(Continued).

	Three Months Ended March 31,
	2013			2012
Institutional Securities(1):
Pre-tax profit margin(16)		20	%		N/M
Global Wealth Management Group(1)(15):
Global representatives at March 31, 2013 and 2012(17)		16,284			16,726
Annualized revenues per global representative (dollars in thousands)(18)	$	851		$	780
Assets by client segment at March 31, 2013 and 2012 (dollars in billions):
$10 million or more	$	604		$	543
$1 million to $10 million		730			712
Subtotal $1 million or more		1,334			1,255
$100,000 to $1 million		416			373
Less than $100,000		44			39
Total client assets	$	1,794		$	1,667
Fee-based client assets as a percentage of total client assets(19)		35	%		31	%
Client assets per global representative(20)	$	110		$	100
Fee-based client asset flows (dollars in billions)(21)	$	15.3		$	10.2
Bank deposits at March 31, 2013 and 2012 (dollars in billions)(22)	$	126		$	112
Global retail locations at March 31, 2013 and 2012		691			725
Pre-tax profit margin(16)		17	%		12	%
Asset Management:
Pre-tax profit margin(16)		29	%		24	%
Selected management financial measures, excluding DVA(23):
Net revenues, excluding DVA(23)	$	8,475		$	8,902
Income from continuing operations applicable to Morgan Stanley, excluding DVA(23)	$	1,182		$	1,375
Income per diluted common share from continuing operations, excluding DVA(23)	$	0.59		$	0.71
Return on common equity from continuing operations, excluding DVA(5)		7.5	%		9.2	%
Return on tangible common equity from continuing operations, excluding DVA(8)		8.5	%		10.3	%

N/M—Not Meaningful.

DVA—Debt Valuation Adjustment represents the change in the fair value of certain of the Company’s long-term and short-term borrowings resulting from the fluctuation in the Company’s credit spreads and other credit factors.

(1) On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity Division within the Institutional Securities business segment. Accordingly, all results and statistical data have been recast for all periods to reflect the International Wealth Management business as part of the Institutional Securities business segment.

(2) See Notes 2, 3 and 14 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K and Notes 3 and 14 to the condensed consolidated financial statements for information on redeemable and nonredeemable noncontrolling interests.

(3) See Notes 1 and 21 to the condensed consolidated financial statements for information on discontinued operations.

(4) For the calculation of basic and diluted earnings per share (“EPS”), see Note 15 to the condensed consolidated financial statements.

(5) The calculation of each business segment’s return on average common equity uses income from continuing operations applicable to Morgan Stanley less preferred dividends as a percentage of each business segment’s average common equity. The return on average common equity is a non-generally accepted accounting principle (“non-GAAP”) financial measure that the Company considers to be a useful measure to the Company and investors to assess operating performance. The computation of average common equity for each business segment is determined using the Company’s Required Capital framework (“Required Capital Framework”), an internal capital adequacy measure (see “Liquidity and Capital Resources—Regulatory Requirements—Required Capital” herein). The effective tax rates used in the computation of business segment return on average common equity were determined on a separate legal entity basis. To determine the return on average common equity, excluding the impact of DVA, both the numerator and the denominator were adjusted to exclude the impact of DVA. The impact of DVA for the quarters ended March 31, 2013 and 2012 was 1.2% and 9.9%, respectively.

(6) Book value per common share equals common shareholders’ equity of $61,196 million at March 31, 2013 and $60,816 million at March 31, 2012 divided by common shares outstanding of 1,961 million at March 31, 2013 and 1,978 million at March 31, 2012.

93

(7) Tangible common equity is a non-GAAP financial measure that the Company considers to be a useful measure that the Company and investors use to assess capital adequacy. For a discussion of tangible common equity, see “Liquidity and Capital Resources—The Balance Sheet” herein.

(8) Return on average tangible common equity is a non-GAAP financial measure that the Company considers to be a useful measure that the Company and investors use to assess capital adequacy. The calculation of return on average tangible common equity uses income from continuing operations applicable to Morgan Stanley less preferred dividends as a percentage of average tangible common equity. To determine the return on average tangible common equity, excluding the impact of DVA, both the numerator and the denominator were adjusted to exclude the impact of DVA. The impact of DVA for the quarters ended March 31, 2013 and 2012 was 1.3% and 11.1%, respectively.

(9) Tangible book value per common share is a non-GAAP financial measure that the Company considers to be a useful measure that the Company and investors use to assess capital adequacy. Tangible book value per common share equals tangible common equity divided by period-end common shares outstanding.

(10) For a discussion of the effective income tax rate, see “Overview of the Quarter Ended March 31, 2013 Financial Results” and “Significant Items—Income Tax Items” herein.

(11) For a discussion of Global Liquidity Reserve and average liquidity, see “Liquidity and Capital Resources—Liquidity Risk Management Framework—Global Liquidity Reserve” herein.

(12) The Company calculates its Tier 1 capital ratio and risk-weighted assets (“RWAs”) in accordance with the capital adequacy standards for financial holding companies adopted by the Federal Reserve Board. 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. On January 1, 2013, the U.S. banking regulators’ rules to implement the Basel Committee’s market risk capital framework amendment, commonly referred to as “Basel 2.5”, became effective, which increased the capital requirements for securitizations and correlation trading within the Company's trading book, as well as incorporated add-ons for stressed VaR and incremental risk requirements (“market risk capital framework amendment”). The Company’s Tier 1 capital ratio and RWAs for the current quarter were calculated under this revised framework. The Company’s Tier 1 capital ratio and RWAs for prior quarters have not been recalculated under this revised framework. For a discussion of Total capital ratio, Tier 1 capital ratio and Tier 1 common capital ratio, see “Liquidity and Capital Resources—Regulatory Requirements" herein.

(13) Revenues and expenses associated with these assets are included in the Company’s Global Wealth Management Group and Asset Management business segments.

(14) Amounts exclude the Asset Management business segment’s proportionate share of assets managed by entities in which it owns a minority stake.

(15) Prior-period amounts have been recast to exclude Quilter & Co. Ltd. (“Quilter”). See Notes 1 and 21 to the condensed consolidated financial statements for information on discontinued operations.

(16) Pre-tax profit margin is a non-GAAP financial measure that the Company considers to be a useful measure that the Company and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.

(17) For the quarters ended March 31, 2013 and 2012, global representatives for the Company are 16,703 and 17,193, which include approximately 419 and 467 representatives associated with the International Wealth Management business reported in the Institutional Securities business segment, respectively.

(18) Annualized revenues per global representative for the quarters ended March 31, 2013 and 2012 equal Global Wealth Management Group business segment’s annualized revenues divided by the average global representative headcount for the quarters ended March 31, 2013 and 2012, respectively.

(19) Fee-based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets. Effective for the quarter ended March 31, 2013, client assets also include certain additional non-custodied assets as a result of the completion of the Morgan Stanley Wealth Management platform conversion.

(20) Client assets per global representative equal total period-end client assets divided by period-end global representative headcount.

(21) Beginning January 1, 2013, the Company enhanced its definition of fee-based asset flows. Fee-based asset flows have been recast for all periods to include dividends, interest and client fees, and to exclude cash management related activity.

(22) Approximately $69 billion and $57 billion of the bank deposit balances at March 31, 2013 and 2012, respectively, are held at Company-affiliated depositories with the remainder held at Citigroup, Inc. (“Citi”) affiliated depositories. These deposit balances are held at certain of the Company’s Federal Deposit Insurance Corporation (the “FDIC”) insured depository institutions for the benefit of the Company’s clients through their accounts. For additional information regarding the Company’s deposits, see “Liquidity and Capital Resources—Funding Management—Deposits” herein.

(23) From time to time, the Company may disclose certain “non-GAAP financial measures” in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. For these purposes, “GAAP” refers to generally accepted accounting principles in the United States. The Securities and Exchange Commission (“SEC”) defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flows that excludes or includes amounts or is subject to adjustments that effectively exclude, or include, amounts from the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by the Company are provided as additional information to investors in order to provide them with further transparency about, or an alternative method for assessing, our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever the Company refers to a non-GAAP financial measure, the Company will also

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generally present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure and the GAAP financial measure.

	Three Months Ended March 31,
	2013			2012
Reconciliation of Selected Management Financial Measures from a Non-GAAP to a GAAP Basis (dollars in millions, except per share amounts):
Net revenues
Net revenues—Non-GAAP	$	8,475		$	8,902
Impact of DVA		(317	)		(1,978	)
Net revenues—GAAP	$	8,158		$	6,924
Income (loss) from continuing operations applicable to Morgan Stanley
Income applicable to Morgan Stanley—Non-GAAP	$	1,182		$	1,375
Impact of DVA		(201	)		(1,454	)
Income (loss) applicable to Morgan Stanley—GAAP	$	981		$	(79	)
Earnings (loss) per diluted common share
Income per diluted common share from continuing operations—Non-GAAP	$	0.59		$	0.71
Impact of DVA		(0.10	)		(0.76	)
Income (loss) per diluted common share from continuing operations—GAAP	$	0.49		$	(0.05	)
Average diluted shares—Non-GAAP (in millions)		1,940			1,903
Impact of DVA (in millions)		—			(26	)
Average diluted shares—GAAP (in millions)		1,940			1,877

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Global Market and Economic Conditions.

During the first quarter of 2013, global market and economic conditions improved modestly from 2012 year-end. The U.S. economy continued to grow moderately despite payroll and income tax increases that were implemented in January, though there were indications of slowing in March and April. Europe remained in recession, but market strains associated with the European financial crisis continued to ease after temporary concerns raised by election results in Italy and developments in Cyprus. Despite these improvements, global market and economic conditions in the first quarter of 2013 continued to be challenged by concerns about the ongoing European sovereign debt crisis, the need to raise the U.S. federal debt ceiling and reduce government spending, and slowing economic growth in emerging markets.

In the U.S., major equity market indices ended the first quarter of 2013 higher compared with the beginning of the year, primarily due to improved investor confidence after concerns about the “fiscal cliff” (i.e., the combination of expiring tax cuts and spending cuts on or after January 1, 2013) dissipated. Expectations for an extended period of accommodative monetary policy also supported market sentiment. The U.S. economy continued its moderate growth pace in the first quarter of 2013, although after a more robust start to the year, growth in economic activity slowed in March as higher payroll and income taxes began to weigh on consumer spending, the sequestration (i.e., the $85 billion in automatic across-the-board government budget cuts) started on March 1, 2013, and softening global demand impacted exporters. A shrinking labor force helped push the unemployment rate down to 7.6% in March of 2013 from 7.8% at 2012 year-end. Residential real estate markets strengthened, and home prices rose amid falling inventories across much of the country during the first quarter of 2013, but investments in commercial real estate projects remained challenged. Consumer spending improved during the first quarter of 2013 despite lower after-tax household income, but business investment spending growth moderated. Energy price volatility boosted consumer price inflation early in the year, but underlying inflation excluding food and energy slowed to near historical lows. Oil prices declined over the course of the first quarter of 2013 driven by concerns about the global economy. The Federal Open Market Committee (“FOMC”) of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) kept key interest rates at historically low levels. On March 31, 2013, the federal funds target rate remained at 0.0% to 0.25%, and the discount rate at 0.75%. In March of 2013, the FOMC decided to continue purchasing U.S. Treasury securities and agency mortgage-backed securities until the job market improves “substantially” and also continued to anticipate that key interest rates will remain “exceptionally low” until the unemployment rate falls to 6.5% or lower, as long as medium-term inflation expectations remain below 2.5%.

In Europe, major equity market indices ended the first quarter of 2013 higher compared with the beginning of the year, primarily due to investors’ optimism about Europe’s progress in addressing its sovereign debt crisis despite the new concerns ignited by the financial distress in Cyprus at the end of the first quarter of 2013. In the euro-area, the unemployment rate increased to a record 12.1% in March 2013 from 11.7% at 2012 year-end. At March 31, 2013, the European Central Bank’s (“ECB”) benchmark interest rate was 0.75% and the Bank of England’s (“BOE”) benchmark interest rate was 0.5%, both of which were unchanged from December 31, 2012. To stimulate economic activity in Europe, in early May 2013, the ECB lowered the benchmark interest rate from 0.75% to 0.5% and kept open its special liquidity facilities until at least the middle of 2014.

Major equity market indices in Asia, except for the indices in China and India, ended the first quarter of 2013 higher compared with the beginning of the year. Japan’s economy stabilized in the first quarter of 2013. To revive its economy and overcome deflation, the Japanese government approved a $116 billion economic stimulus package in January of 2013 and the Bank of Japan announced a new monetary easing plan in April of 2013 to double the monetary base over two years mainly through the aggressive purchase of long-term government bonds. Japan’s benchmark interest rate remained within a range of zero to 0.1% in the first quarter of 2013. China’s gross domestic product growth slowed during the first quarter of 2013 as export and domestic spending weakened, raising concerns that a recovery in China’s economy is losing momentum.

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Overview of the Quarter Ended March 31, 2013 Financial Results.

Consolidated Results.    The Company recorded net income applicable to Morgan Stanley of $962 million on net revenues of $8,158 million during the quarter ended March 31, 2013 (“current quarter”) compared with a net loss applicable to Morgan Stanley of $94 million on net revenues of $6,924 million during the quarter ended March 31, 2012 (“prior year quarter”).

Net revenues in the current quarter included negative revenues due to the impact of DVA of $317 million compared with negative revenues of $1,978 million in the prior year quarter. Non-interest expenses decreased 2% to $6,576 million in the current quarter compared with $6,722 million in the prior year quarter. Compensation expenses decreased 5% to $4,216 million in the current quarter compared with $4,430 million in the prior year quarter. Non-compensation expenses increased 3% to $2,360 million in the current quarter compared with $2,292 in the prior year quarter.

Earnings per diluted common share (“diluted EPS”) and diluted EPS from continuing operations were $0.48 and $0.49 in the current quarter, respectively, compared with $(0.06) and $(0.05), respectively, in the prior year quarter.

Excluding the impact of DVA, net revenues were $8,475 million and diluted EPS from continuing operations were $0.59 per share in the current quarter, compared with $8,902 million and $0.71 per share, respectively, in the prior year quarter.

The Company’s effective tax rate from continuing operations was 21.0% and 26.7% for the quarters ended March 31, 2013 and 2012, respectively. The results for the quarter ended March 31, 2013 included a discrete net tax benefit of $142 million, or $(0.07) per diluted share, due to the retroactive effective date of the American Taxpayer Relief Act of 2012 (the “Relief Act”) and remeasurement of reserves and related interest based on new information regarding the status of certain tax authority examinations. Excluding these discrete net tax benefits, the annual effective tax rate in the quarter ended March 31, 2013 would have been 30.0%. The increase in the effective tax rate is primarily reflective of the geographic mix of earnings. For further discussion of the discrete net tax benefit, see “Executive Summary—Significant Items—Income tax items” herein.

Discontinued operations were a gain (loss) of $(30) million and $28 million in the quarters ended March 31, 2013 and 2012, respectively.

Institutional Securities.    Income from continuing operations before taxes was $798 million in the current quarter compared with a loss from continuing operations before taxes of $329 million in the prior year quarter. Net revenues for the current quarter were $4,089 million compared with $3,135 million in the prior year quarter. The results in the current quarter included negative revenues due to the impact of DVA of $317 million compared with negative revenues of $1,978 million in the prior year quarter. Investment banking revenues for the current quarter increased 11% to $945 million from the prior year quarter, reflecting higher revenues from equity and fixed income underwriting transactions, partially offset by lower revenues from advisory transactions. The following sales and trading net revenues results exclude the impact of DVA. The presentation of net revenues excluding the impact of DVA is a non-GAAP financial measure that the Company considers useful for the Company and investors to allow further comparability of period-to-period operating performance. See “Business Segments—Institutional Securities—Sales and Trading Net Revenues” for more information. Equity sales and trading net revenues, excluding the impact of DVA, of $1,594 million decreased 19% from the prior year quarter, reflecting lower revenues in the derivatives business, as a result of lower market volumes, partially offset by higher revenues in the prime brokerage business. Excluding the impact of DVA, fixed income and commodities sales and trading net revenues were $1,515 million in the current quarter, a decrease of 42% from the prior year quarter, primarily reflecting lower results in interest rates and commodities. Other sales and trading net revenues were $73 million in the current quarter compared with net losses of $286 million in the prior year quarter, primarily due to net gains associated with loans and lending commitments and losses on economic hedges related

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to the Company’s long-term debt and negative carry. Other revenues of $137 million were recognized in the current quarter compared with other revenues of $51 million in the prior year quarter. The results included income arising from the Company’s 40% stake in Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“MUMSS”) (see “Executive Summary—Significant Items—Japanese Securities Joint Venture” herein), partially offset by an increase in the provision for loan losses. Non-interest expenses decreased 5% to $3,291 million in the current quarter, primarily due to lower compensation expenses, partially offset by higher non-compensation expenses. Compensation and benefits expenses in the current quarter were $1,892 million compared with $2,203 million in the prior year quarter, due to lower headcount. Non-compensation expenses were $1,399 million compared with $1,261 million in the prior year quarter.

Global Wealth Management Group.    Income from continuing operations before taxes was $597 million in the current quarter compared with $403 million in the prior year quarter. Net revenues were $3,470 million in the current quarter compared with $3,291 million in the prior year quarter. Transactional revenues, consisting of Commissions and fees, Trading and Investment banking increased 2% to $1,131 million from the prior year quarter. Trading revenues decreased 11% to $298 million in the current quarter from the prior year quarter, primarily due to lower gains related to positions associated with certain employee deferred compensation plans and lower revenues from municipal securities, corporate equity securities, foreign exchange transactions, government securities and structured notes. Commissions and fees revenues decreased 2% to $559 million in the current quarter from the prior year quarter, primarily due to lower client activity. Investment banking revenues increased 34% to $274 million in the current quarter from the prior year quarter, primarily due to higher revenues from closed-end funds. Asset management, distribution and administration fees increased 8% to $1,858 million in the current quarter from the prior year quarter, primarily due to higher fee-based revenues. Net interest increased 3% to $413 million in the current quarter from the prior year quarter, primarily resulting from higher revenues from the bank deposit program, partially offset by lower interest on the available for sale portfolio. Total client asset balances were $1,794 billion at March 31, 2013 and client assets in fee-based accounts were $621 billion, or 35% of total client assets. Fee-based client asset flows for the current quarter were $15.3 billion compared with $10.2 billion in the prior year quarter. Prior period amounts have been recast to reflect the transfer of the International Wealth Management business from Global Wealth Management Group business segment to the Institutional Securities Group business segment and for the Company’s enhanced definition of fee-based asset flows (see “Business Segments” herein). Non-compensation expenses decreased 8% to $808 million in the quarter ended March 31, 2013 from the comparable period of 2012, partially driven by the absence of platform integration costs.

Asset Management.    Income from continuing operations before taxes was $187 million in the current quarter compared with $128 million in the prior year quarter. Net revenues were $645 million in the current quarter compared with $533 million in the prior year quarter. The increase in net revenues reflected higher results in the Traditional Asset Management business and higher net gains in the Company’s Merchant Banking business. Non-interest expenses were $458 million in the current quarter compared with $405 million in the prior year quarter. Compensation and benefits expenses increased 19% to $259 million in the current quarter, primarily due to higher net revenues. Non-compensation expenses increased 6% to $199 million in the current quarter, primarily due to higher brokerage and clearing expenses.

Significant Items.

Severance costs.    In the quarter ended March 31, 2013 and 2012, the Company incurred severance costs of approximately $132 million and $138 million, respectively, associated with reduction in force events which are included in Compensation and benefits expenses in the condensed consolidated statement of income.

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Corporate Lending.    The Company recorded the following amounts primarily associated with loans and lending commitments within the Institutional Securities business segment (see “Business Segments—Institutional Securities” herein):

	Three Months Ended
	March 31,
	2013			2012
	(dollars in millions)
Other sales and trading:
Gains on loans and lending commitments and Net interest	$	254		$	785
Losses on hedges		(49	)		(637	)
Total Other sales and trading revenues	$	205		$	148
Other revenues:
Provision for loan losses(1)	$	(28	)	$	(8	)
Gains (losses) on loans held for sale		8			(6	)
Total Other revenues	$	(20	)	$	(14	)
Other expenses: Provision for unfunded commitments		(12	)		6
Total	$	173		$	140

(1) The increase for the quarter ended March 31, 2013 was primarily driven by increased growth in the held for investment portfolio at March 31, 2013 as compared to March 31, 2012.

Income Tax Items.    The Company’s effective tax rate from continuing operations for the quarter ended March 31, 2013 included a discrete tax benefit of $81 million due to the retroactive effective date of the Relief Act. The Relief Act that was enacted on January 2, 2013, among other things, extended with retroactive effect to January 1, 2012 a provision of U.S. tax law that defers the imposition of tax on certain active financial services income of certain foreign subsidiaries earned outside of the U.S. until such income is repatriated to the U.S. as a dividend. Additionally, the Company’s effective tax rate from continuing operations for the quarter ended March 31, 2013 included a discrete net tax benefit of $61 million associated with remeasurement of reserves and related interest based on new information regarding the status of certain tax authority examinations.

Japanese Securities Joint Venture.    During the quarters ended March 31, 2013 and 2012, the Company recorded income of $125 million and $27 million, respectively, within Other revenues in the condensed consolidated statements of income, arising from the Company’s 40% stake in MUMSS. Net income applicable to nonredeemable noncontrolling interests associated with MUFG’s interest in Morgan Stanley MUFG Securities Co., Ltd. (“MSMS”) was $90 million and $81 million for the quarters ended March 31, 2013 and 2012, respectively (see Note 20 to the condensed consolidated financial statements).

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Business Segments.

Substantially all of the Company’s operating revenues and operating expenses are allocated to its business segments. Certain revenues and expenses have been allocated to each business segment, generally in proportion to its respective net revenues, non-interest expenses or other relevant measures.

As a result of treating certain intersegment transactions as transactions with external parties, the Company includes an Intersegment Eliminations category to reconcile the business segment results to the Company’s consolidated results. Intersegment Eliminations also reflect the effect of fees paid by the Institutional Securities business segment to the Global Wealth Management Group business segment related to the bank deposit program. The Company did not recognize any Intersegment Elimination gains or losses in the quarters ended March 31, 2013 and March 31, 2012.

On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity Division within the Institutional Securities business segment. Accordingly, all results and statistical data have been recast for all periods to reflect the International Wealth Management business as part of the Institutional Securities business segment.

Net Revenues.

Trading.    Trading revenues include revenues from customers’ purchases and sales of financial instruments in which the Company acts as a market maker and gains and losses on the Company’s related positions. Trading revenues include the realized gains and losses from sales of cash instruments and derivative settlements, unrealized gains and losses from ongoing fair value changes of the Company’s positions related to market-making activities, and gains and losses related to investments associated with certain employee deferred compensation plans. In many markets, the realized and unrealized gains and losses from the purchase and sale transactions will include any spreads between bids and offers. Certain fees received on loans carried at fair value and dividends from equity securities are also recorded in this line item since they relate to market-making positions. Commissions received for purchasing and selling listed equity securities and options are recorded separately in the Commissions and fees line item. Other cash and derivative instruments typically do not have fees associated with them, and fees for related services would be recorded in Commissions and fees.

The Company often invests directly, as a principal, in investments or other financial instruments to economically hedge its obligations under its deferred compensation plans. Changes in value of such investments made by the Company are recorded in Trading revenues and Investments revenues. Expenses associated with the related deferred compensation plans are recorded in Compensation and benefits. Compensation expense is calculated based on the notional value of the award granted, adjusted for upward and downward changes in fair value of the referenced investment and is recognized ratably over the prescribed vesting period for the award. Generally, changes in compensation expense resulting from changes in fair value of the referenced investment will be offset by changes in fair value of investments made by the Company. However, there may be a timing difference between the immediate revenue recognition of gains and losses on the Company’s investments and the deferred recognition of the related compensation expense over the vesting period.

As a market maker, the Company stands ready to buy, sell or otherwise transact with customers under a variety of market conditions and provide firm or indicative prices in response to customer requests. The Company’s liquidity obligations can be explicit and obligatory in some cases, and in others, customers expect the Company to be willing to transact with them. In order to most effectively fulfill its market-making function, the Company engages in activities, across all of its trading businesses, that include, but are not limited to: (i) taking positions in anticipation of, and in response to, customer demand to buy or sell and—depending on the liquidity of the relevant market and the size of the position—holding those positions for a period of time; (ii) managing and assuming basis risk (risk associated with imperfect hedging) between customized customer risks and the standardized products available in the market to hedge those risks; (iii) building, maintaining and rebalancing

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inventory, through trades with other market participants, and engaging in accumulation activities to accommodate anticipated customer demand; (iv) trading in the market to remain current on pricing and trends; and (v) engaging in other activities to provide efficiency and liquidity for markets. Interest income and expense are also impacted by market-making activities as debt securities held by the Company earn interest and securities are loaned, borrowed, sold with agreement to repurchase and purchased with agreement to resell.

Investments.    The Company’s investments generally are held for long-term appreciation and generally are subject to significant sales restrictions. Estimates of the fair value of the investments may involve significant judgment and may fluctuate significantly over time in light of business, market, economic and financial conditions generally or in relation to specific transactions. In some cases, such investments are required or are a necessary part of offering other products. The revenues recorded are the result of realized gains and losses from sales and unrealized gains and losses from ongoing fair value changes of the Company’s holdings as well as from investments associated with certain employee deferred compensation plans (as mentioned in the paragraph above). Typically, there are no fee revenues from these investments. The sales restrictions on the investments relate primarily to redemption and withdrawal restrictions on investments in real estate funds, hedge funds and private equity funds, which include investments made in connection with certain employee deferred compensation plans (see Note 4 to the condensed consolidated financial statements). Restrictions on interests in exchanges and clearinghouses generally include a requirement to hold those interests for the period of time that the Company is clearing trades on that exchange or clearinghouse. Additionally, there are certain investments related to assets held by consolidated real estate funds, which are primarily related to holders of noncontrolling interests.

Commissions and Fees.    Commission and fee revenues primarily arise from agency transactions in listed and over-the-counter (“OTC”) equity securities, services related to sales and trading activities, and sales of mutual funds, futures, insurance products and options.

Asset Management, Distribution and Administration Fees.    Asset management, distribution and administration fees include fees associated with the management and supervision of assets, account services and administration, performance-based fees relating to certain funds, separately managed accounts, shareholder servicing and the distribution of certain open-ended mutual funds.

Asset management, distribution and administration fees in the Global Wealth Management Group business segment also include revenues from individual investors electing a fee-based pricing arrangement and fees for investment management. Mutual fund distribution fees in the Global Wealth Management Group business segment are based on either the average daily fund net asset balances or average daily aggregate net fund sales and are affected by changes in the overall level and mix of assets under management or supervision.

Asset management fees in the Asset Management business segment arise from investment management services the Company provides to investment vehicles pursuant to various contractual arrangements. The Company receives fees primarily based upon mutual fund daily average net assets or based on monthly or quarterly invested equity for other vehicles. Performance-based fees in the Asset Management business segment are earned on certain funds as a percentage of appreciation earned by those funds and, in certain cases, are based upon the achievement of performance criteria. These fees are normally earned annually and are recognized on a monthly or quarterly basis.

Net Interest.    Interest income and Interest expense are a function of the level and mix of total assets and liabilities, including trading assets and trading liabilities, securities available for sale, securities borrowed or purchased under agreements to resell, securities loaned or sold under agreements to repurchase, loans, deposits, commercial paper and other short-term borrowings, long-term borrowings, trading strategies, customer activity in the Company’s prime brokerage business, and the prevailing level, term structure and volatility of interest rates. Certain Securities purchased under agreements to resell (“reverse repurchase agreements”) and Securities sold under agreements to repurchase (“repurchase agreements”) and Securities borrowed and Securities loaned transactions may be entered into with different customers using the same underlying securities, thereby generating a spread between the interest revenue on the reverse repurchase agreements or securities borrowed transactions and the interest expense on the repurchase agreements or securities loaned transactions.

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INSTITUTIONAL SECURITIES

INCOME STATEMENT INFORMATION

	Three Months Ended March 31,
	2013			2012(1)
	(dollars in millions)
Revenues:
Investment banking	$	945		$	851
Trading		2,414			2,075
Investments		142			(49	)
Commissions and fees		609			606
Asset management, distribution and administration fees		66			52
Other		137			51
Total non-interest revenues		4,313			3,586
Interest income		1,024			1,177
Interest expense		1,248			1,628
Net interest		(224	)		(451	)
Net revenues		4,089			3,135
Compensation and benefits		1,892			2,203
Non-compensation expenses		1,399			1,261
Total non-interest expenses		3,291			3,464
Income (loss) from continuing operations before income taxes		798			(329	)
Provision for (benefit from) income taxes		60			(106	)
Income (loss) from continuing operations		738			(223	)
Discontinued operations:
Gain (loss) from discontinued operations		(30	)		25
Provision for (benefit from) income taxes		(11	)		41
Net gains (losses) on discontinued operations		(19	)		(16	)
Net income (loss)		719			(239	)
Net income applicable to redeemable noncontrolling interests		1			—
Net income applicable to nonredeemable noncontrolling interests		96			79
Net income (loss) applicable to Morgan Stanley	$	622		$	(318	)
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations	$	641		$	(302	)
Net gains (losses) from discontinued operations		(19	)		(16	)
Net income (loss) applicable to Morgan Stanley	$	622		$	(318	)

(1) Prior period amounts have been recast to reflect the transfer of the International Wealth Management business from the Global Wealth Management Group business segment to the Institutional Securities business segment.

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Investment Banking.    Investment banking revenues were as follows:

	Three Months Ended March 31,
	2013		2012
	(dollars in millions)
Advisory revenues	$	251	$	313
Underwriting revenues:
Equity underwriting revenues		283		172
Fixed income underwriting revenues		411		366
Total underwriting revenues		694		538
Total investment banking revenues	$	945	$	851

The following table presents the Company’s volumes of announced and completed mergers and acquisitions, equity and equity-related offerings, and fixed income offerings:

	Three Months Ended March 31,
	2013(1)		2012(1)
	(dollars in billions)
Announced mergers and acquisitions(2)	$	99	$	100
Completed mergers and acquisitions(2)		193		76
Equity and equity-related offerings(3)		14		12
Fixed income offerings(4)		70		72

(1) Source: Thomson Reuters, data at April 16, 2013. Announced and completed mergers and acquisitions volumes are based on full credit to each of the advisors in a transaction. Equity and equity-related offerings and fixed income offerings are based on full credit for single book managers and equal credit for joint book managers. Transaction volumes may not be indicative of net revenues in a given period. In addition, transaction volumes for prior periods may vary from amounts previously reported due to the subsequent withdrawal or change in the value of a transaction.

(2) Amounts include transactions of $100 million or more. Announced mergers and acquisitions exclude terminated transactions.

(3) Amounts include Rule 144A and public common stock, convertible and rights offerings.

(4) Amounts include non-convertible preferred stock, mortgage-backed and asset-backed securities and taxable municipal debt. Amounts also include publicly registered and Rule 144A issues. Amounts exclude leveraged loans and self-led issuances.

Investment banking revenues for the quarter ended March 31, 2013 increased 11% from the comparable period in 2012, reflecting higher revenues from equity and fixed income underwriting transactions, partially offset by lower revenues from advisory transactions. Overall, underwriting revenues of $694 million increased 29% from the quarter ended March 31, 2012. Equity underwriting revenues increased 65% to $283 million in the quarter ended March 31, 2013, reflecting higher market volumes. Fixed income underwriting revenues were $411 million in the quarter ended March 31, 2013, an increase of 12% from the comparable period of 2012, reflecting a favorable debt underwriting environment. Advisory revenues from merger, acquisition and restructuring transactions were $251 million in the quarter ended March 31, 2013, a decrease of 20% from the comparable period of 2012, reflecting reduced transaction volume and delayed timing around transaction closings.

Sales and Trading Net Revenues.    Sales and trading net revenues are composed of Trading revenues; Commissions and fees; Asset management, distribution and administration fees; and Net interest revenues (expenses). See “Business Segments—Net Revenues” herein for further information about what is included in the above-referenced components of sales and trading revenues. In assessing the profitability of its sales and trading activities, the Company views these net revenues in the aggregate. In addition, decisions relating to trading are based on an overall review of aggregate revenues and costs associated with each transaction or series of transactions. This review includes, among other things, an assessment of the potential gain or loss associated with a transaction, including any associated commissions and fees, dividends, the interest income or expense

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associated with financing or hedging the Company’s positions, and other related expenses. See Note 11 to the condensed consolidated financial statements for further information related to gains (losses) on derivative instruments.

Sales and trading net revenues were as follows:

	Three Months Ended March 31,
	2013			2012(1)
	(dollars in millions)
Trading	$	2,414		$	2,075
Commissions and fees		609			606
Asset management, distribution and administration fees		66			52
Net interest		(224	)		(451	)
Total sales and trading net revenues	$	2,865		$	2,282

(1) All prior period amounts have been recast to conform to the current year’s presentation. For further information, see “Business Segments” herein and Notes 1 and 21 to the condensed consolidated financial statements.

Total sales and trading net revenues increased to $2,865 million in the quarter ended March 31, 2013 from $2,282 million in the quarter ended March 31, 2012, reflecting higher revenues in fixed income and commodities sales and trading net revenues, partially offset by lower revenues in equity sales and trading net revenues. The results in the quarter ended March 31, 2013 also included gains in other sales and trading net revenues compared with losses in other sales and trading net revenues in the prior year period.

Sales and trading net revenues by business were as follows:

	Three Months Ended March 31,
	2013		2012(1)
	(dollars in millions)
Equity	$	1,515	$	1,575
Fixed income and commodities		1,277		993
Other(2)		73		(286	)
Total sales and trading net revenues	$	2,865	$	2,282

(1) All prior period amounts have been recast to conform to the current year’s presentation. For further information, see “Business Segments” herein and Notes 1 and 21 to the condensed consolidated financial statements.

(2) Other sales and trading net revenues include net gains (losses) from certain loans and lending commitments and related hedges associated with the Company’s lending activities, net gains (losses) on economic hedges related to the Company’s long-term debt and net losses associated with costs related to negative carry.

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The following sales and trading net revenues results exclude the impact of DVA (see footnote 2 in the following table). The reconciliation of sales and trading, including equity sales and trading and fixed income and commodities sales and trading net revenues, from a non-GAAP to a GAAP basis is as follows:

	Three Months Ended March 31,
	2013			2012(1)
	(dollars in millions)
Total sales and trading net revenues—non-GAAP(2)	$	3,182		$	4,260
Impact of DVA		(317	)		(1,978	)
Total sales and trading net revenues	$	2,865		$	2,282
Equity sales and trading net revenues—non-GAAP(2)	$	1,594		$	1,956
Impact of DVA		(79	)		(381	)
Equity sales and trading net revenues	$	1,515		$	1,575
Fixed income and commodities sales and trading net revenues—non-GAAP(2)	$	1,515		$	2,590
Impact of DVA		(238	)		(1,597	)
Fixed income and commodities sales and trading net revenues	$	1,277		$	993

(1) All prior period amounts have been recast to conform to the current year’s presentation. For further information, see “Business Segments” herein and Notes 1 and 21 to the condensed consolidated financial statements.

(2) Sales and trading net revenues, including fixed income and commodities and equity sales and trading net revenues that exclude the impact of DVA, are non-GAAP financial measures that the Company considers useful for the Company and investors to allow further comparability of period-to-period operating performance.

Equity.    Equity sales and trading net revenues decreased 4% to $1,515 million in the quarter ended March 31, 2013 from the comparable period in 2012. The results in equity sales and trading net revenues included negative revenue due to the impact of DVA of $79 million in the quarter ended March 31, 2013 compared with negative revenue of $381 million in the quarter ended March 31, 2012. Equity sales and trading net revenues, excluding the impact of DVA, in the quarter ended March 31, 2013 decreased 19% to $1,594 million over the comparable period in 2012, reflecting lower revenues in the derivatives business, as a result of lower market volumes, partially offset by higher revenues in the prime brokerage business.

In the quarter ended March 31, 2013, equity sales and trading net revenues also reflected gains of $17 million related to changes in the fair value of net derivative contracts attributable to the tightening of counterparties’ credit default swap (“CDS”) spreads and other factors compared with gains of $43 million in the quarter ended March 31, 2012. The Company also recorded losses of $9 million in the quarter ended March 31, 2013 related to changes in the fair value of net derivative contracts attributable to the tightening of the Company’s CDS spreads and other factors compared with losses of $72 million in the quarter ended March 31, 2012 due to the tightening of such spreads and other factors. The gains and losses on CDS spreads and other factors include gains and losses on related hedging instruments.

Fixed Income and Commodities.    Fixed income and commodities sales and trading net revenues increased 29% to $1,277 million in the quarter ended March 31, 2013 from $993 million in the quarter ended March 31, 2012. Results in the quarter ended March 31, 2013 included negative revenue of $238 million due to the impact of DVA, compared with negative revenue of $1,597 million in the quarter ended March 31, 2012 due to the impact of DVA. Fixed income product net revenues, excluding the impact of DVA, in the quarter ended March 31, 2013 decreased 32% over the comparable period in 2012, reflecting lower results in interest rates, partially offset by higher revenue levels in credit products. Commodity net revenues, excluding the impact of DVA, in the quarter ended March 31, 2013 decreased 77% over the comparable period in 2012, primarily due to lower levels of client activity, including in structured transactions.

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In the quarter ended March 31, 2013, fixed income and commodities sales and trading net revenues reflected net gains of $6 million related to changes in the fair value of net derivative contracts attributable to the tightening of counterparties’ CDS spreads and other factors compared with losses of $43 million in the quarter ended March 31, 2012, due to the widening of such spreads and other factors. The Company also recorded losses of $72 million in the quarter ended March 31, 2013 related to changes in the fair value of net derivative contracts attributable to the tightening of the Company’s CDS spreads and other factors compared with gains of $96 million in the quarter ended March 31, 2012 due to the widening of such spreads and other factors. The gains and losses on CDS spreads and other factors include gains and losses on related hedging instruments.

Other.    In addition to the equity and fixed income and commodities sales and trading net revenues discussed above, sales and trading net revenues included other trading revenues, consisting of certain activities associated with the Company’s corporate lending activities, gains (losses) on economic hedges related to the Company’s long-term debt and costs related to negative carry. The fair value measurement of corporate loans and lending commitments takes into account fee income that is considered an attribute of the contract. The valuation of these commitments could change in future periods depending on, among other things, the extent that they are renegotiated or repriced or if the associated acquisition transaction does not occur. Effective April 1, 2012, the Company began accounting for all new corporate loans and lending commitments as either held for investment or held for sale. This corporate lending portfolio has grown, and the Company expects this trend to continue. See “Quantitative and Qualitative Disclosures about Market Risk—Credit Risk” in Part I, Item 3, herein.

Other sales and trading net revenues were $73 million in the quarter ended March 31, 2013 compared with net losses of $286 million in the quarter ended March 31, 2012. Results in the quarter ended March 31, 2013 included net gains of $205 million associated with corporate loans and lending commitments (realized and unrealized net gains and net interest income of $254 million and losses on related hedges of $49 million). Results in the prior year quarter were partially offset by net gains of $148 million associated with corporate loans and lending commitments (realized and unrealized net gains and net interest income of $785 million and losses on related hedges of $637 million). The results in both quarters also included losses on economic hedges related to the Company’s long-term debt and negative carry.

Net Interest.    Net interest expense decreased to $224 million in the quarter ended March 31, 2013 from net interest expense of $451 million in the quarter ended March 31, 2012, primarily due to lower interest costs associated with the Company’s long-term borrowings.

Investments.    Net investment gains of $142 million were recognized in the quarter ended March 31, 2013 compared with net investment losses of $49 million in the quarter ended March 31, 2012. The gains in the quarter ended March 31, 2013 primarily included mark-to-market gains on investments in real estate funds and net gains from investments associated with the Company’s deferred compensation and co-investment plans. Results in the quarter ended March 31, 2012 primarily included mark-to-market losses on certain investments.

Other.    Other revenues of $137 million were recognized in the quarter ended March 31, 2013 compared with other revenues of $51 million in the quarter ended March 31, 2012. The results in the quarters ended March 31, 2013 and 2012, primarily included income of $125 million and $27 million, respectively, arising from the Company’s 40% stake in MUMSS (see “Executive Summary—Significant Items—Japanese Securities Joint Venture” herein). The gains in the quarter ended March 31, 2013 were partially offset by increases in the provision for loan losses.

Non-interest Expenses.    Non-interest expenses decreased 5% in the quarter ended March 31, 2013. The decrease was due to lower compensation expenses, partially offset by higher non-compensation expenses. Compensation and benefits expenses decreased 14% in 2013, due to lower headcount. Results in the quarter ended March 31, 2013 included severance expenses of $113 million related to reductions in force in January 2013 compared with $108 million in the prior year quarter related to reductions in force in January 2012. Non-compensation expenses increased 11% in the quarter ended March 31, 2013 compared with the prior year period.

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Brokerage, clearing and exchange expenses increased 8% in the quarter ended March 31, 2013, primarily due to higher volumes of activity. Professional services expenses increased 14% in the quarter ended March 31, 2013, primarily due to higher consulting expenses. Other expenses increased 69% in the quarter ended March 31, 2013, primarily due to an increase in litigation costs, French transaction taxes and a higher reserve for the allowance for credit losses associated with unfunded commitments.

Discontinued Operations.

On October 24, 2011, the Company announced that it had reached an agreement to sell Saxon, a provider of servicing and subservicing of residential mortgage loans, to Ocwen Financial Corporation. The transaction, which was restructured as a sale of Saxon’s assets during the first quarter of 2012, was substantially completed in the second quarter of 2012. The results of Saxon are reported as discontinued operations within the Institutional Securities business segment for all periods presented.

For further information, see Notes 1 and 21 to the condensed consolidated financial statements.

Nonredeemable Noncontrolling Interests.

Nonredeemable noncontrolling interests primarily relate to MSMS (see “Executive Summary—Significant Items—Japanese Securities Joint Venture” herein).

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GLOBAL WEALTH MANAGEMENT GROUP

INCOME STATEMENT INFORMATION

	Three Months Ended March 31,
	2013			2012(1)
	(dollars in millions)
Revenues:
Investment banking	$	274		$	205
Trading		298			335
Investments		3			2
Commissions and fees		559			572
Asset management, distribution and administration fees		1,858			1,719
Other		65			58
Total non-interest revenues		3,057			2,891
Interest income		488			458
Interest expense		75			58
Net interest		413			400
Net revenues		3,470			3,291
Compensation and benefits		2,065			2,009
Non-compensation expenses		808			879
Total non-interest expenses		2,873			2,888
Income from continuing operations before income taxes		597			403
Provision for income taxes		220			122
Income from continuing operations		377			281
Discontinued operations:
Income (loss) from discontinued operations		(1	)		2
Provision for income taxes		—			1
Net gain (loss) from discontinued operations		(1	)		1
Net income		376			282
Net income applicable to redeemable noncontrolling interests		121			—
Net income applicable to nonredeemable noncontrolling interests		—			84
Net income applicable to Morgan Stanley	$	255		$	198
Amounts applicable to Morgan Stanley:
Income from continuing operations	$	256		$	198
Net gain (loss) from discontinued operations		(1	)		—
Net income applicable to Morgan Stanley	$	255		$	198

(1) Prior period amounts have been recast to reflect the transfer of the International Wealth Management business from Global Wealth Management Group business segment to the Institutional Securities Group business segment.

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Net Revenues.    Global Wealth Management Group business segment’s net revenues are composed of Transactional, Asset management, Net interest and Other revenues. Transactional revenues include Investment banking, Trading, and Commissions and fees. Asset management revenues include Asset management, distribution and administration fees, and fees related to the bank deposit program. Net interest revenues include net interest revenues related to the bank deposit program, interest on securities available for sale and all other net interest revenues. Other revenues include revenues from available for sale securities, customer account services fees, other miscellaneous revenues and revenues from Investments.

	Three Months Ended March 31,
	2013		2012(1)
	(dollars in millions)
Net revenues:
Transactional	$	1,131	$	1,112
Asset management		1,858		1,719
Net interest		413		400
Other		68		60
Net revenues	$	3,470	$	3,291

(1) Prior period amounts have been recast to reflect the transfer of the International Wealth Management business from Global Wealth Management Group business segment to the Institutional Securities Group business segment.

Wealth Management JV.    During third quarter of 2012, the Company completed the purchase of an additional 14% stake in the Wealth Management JV from Citi for $1.89 billion, increasing the Company’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests. Due to the terms of the revised agreement with Citi, subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable to redeemable noncontrolling interests. The Company has a commitment to purchase the additional 35% for $4.725 billion upon obtaining all regulatory approvals.

On September 25, 2012, the Company announced that its U.S. wealth management business was rebranded to Morgan Stanley Wealth Management.

See Note 3 to the condensed consolidated financial statements for further information.

Transactional.

Investment Banking.    Investment banking revenues increased 34% to $274 million in the quarter ended March 31, 2013 from the comparable period of 2012, primarily due to higher revenues from closed-end funds.

Trading.    Trading revenues decreased 11% to $298 million in the quarter ended March 31, 2013 from the comparable period of 2012, primarily due to lower gains related to positions associated with certain employee deferred compensation plans and lower revenues from municipal securities, corporate equity securities, foreign exchange transactions, government securities and structured notes.

Commissions and Fees.    Commissions and fees revenues decreased 2% to $559 million in the quarter ended March 31, 2013 from the comparable period of 2012, primarily due to lower client activity.

Asset Management.

Asset Management, Distribution and Administration Fees.    Asset management, distribution and administration fees increased 8% to $1,858 million in the quarter ended March 31, 2013 from the comparable period of 2012,

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primarily due to higher fee-based revenues. The referral fees for deposits placed with Citi-affiliated depository institutions were $88 million and $82 million in the quarters ended March 31, 2013 and 2012, respectively.

Balances in the bank deposit program increased to $126.1 billion at March 31, 2013 from $112.0 billion at March 31, 2012. Deposits held by Company-affiliated FDIC-insured depository institutions were $69 billion at March 31, 2013 and $57 billion at March 31, 2012.

Client assets in fee-based accounts increased to $621 billion and represented 35% of total client assets at March 31, 2013 compared with $512 billion and 31% at March 31, 2012, respectively. Total client asset balances increased to $1,794 billion at March 31, 2013 from $1,667 billion at March 31, 2012, primarily due to the impact of market conditions and net new asset inflows. Client asset balances in households with assets greater than $1 million increased to $1,334 billion at March 31, 2013 from $1,255 billion at March 31, 2012. Effective for the quarter ended March 31, 2013, client assets also include certain additional non-custodied assets as a result of the completion of the Morgan Stanley Wealth Management platform conversion. Fee-based client asset flows for the quarter ended March 31, 2013 were $15.3 billion compared with $10.2 billion in the quarter ended March 31, 2012.

Beginning January 1, 2013, the Company enhanced its definition of fee-based asset flows. Fee-based asset flows have been recast for all periods to include dividends, interest and client fees, and to exclude cash management related activity.

Net Interest.

Net interest increased 3% to $413 million in the quarter ended March 31, 2013 from the comparable period of 2012, primarily resulting from higher revenues from the bank deposit program, partially offset by lower interest on the available for sale portfolio.

Other.

Other revenues were $65 million in the quarter ended March 31, 2013, an increase of 12% from the comparable period of 2012, primarily due to higher revenues from mortgages and secured financing activities.

Non-interest Expenses.

Non-interest expenses decreased 1% in the quarter ended March 31, 2013 from the comparable period of 2012. Compensation and benefits expenses increased 3% from the comparable period of 2012, primarily due to higher compensable revenues, partially offset by lower amortization of deferred awards and severance expense. Non-compensation expenses decreased 8% in the quarter ended March 31, 2013 from the comparable period of 2012, partially driven by the absence of platform integration costs. Other expenses decreased 16% in the quarter ended March 31, 2013, primarily due to a lower FDIC assessment of deposits and infrastructure expenses. Professional services expenses decreased 6% in the quarter ended March 31, 2013 from the comparable period of 2012, primarily due to lower technology consulting costs.

Discontinued Operations.

On April 2, 2012, the Company completed the sale of Quilter, its retail wealth management business in the U.K. The results of Quilter are reported as discontinued operations for all periods presented. See Notes 1 and 21 to the condensed consolidated financial statements.

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ASSET MANAGEMENT

INCOME STATEMENT INFORMATION

	Three Months Ended March 31,
	2013			2012
	(dollars in millions)
Revenues:
Investment banking	$	5		$	7
Trading		(6	)		(6	)
Investments		193			132
Asset management, distribution and administration fees		455			411
Other		2			(3	)
Total non-interest revenues		649			541
Interest income		2			3
Interest expense		6			11
Net interest		(4	)		(8	)
Net revenues		645			533
Compensation and benefits		259			218
Non-compensation expenses		199			187
Total non-interest expenses		458			405
Income from continuing operations before income taxes		187			128
Provision for income taxes		52			38
Income from continuing operations		135			90
Discontinued operations:
Gain from discontinued operations		1			1
Provision for (benefit from) income taxes		—			—
Net gain from discontinued operations		1			1
Net income		136			91
Net income applicable to nonredeemable noncontrolling interests		51			65
Net income applicable to Morgan Stanley	$	85		$	26
Amounts applicable to Morgan Stanley:
Income from continuing operations	$	84		$	25
Net gain from discontinued operations		1			1
Net income applicable to Morgan Stanley	$	85		$	26

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Statistical Data.

The Asset Management business segment’s period-end and average assets under management or supervision were as follows:

	At March 31,				Average for the Three Months Ended March 31,
	2013		2012		2013		2012
	(dollars in billions)
Assets under management or supervision by asset class:
Traditional Asset Management:
Equity	$	127	$	117	$	125	$	111
Fixed income		62		58		63		58
Liquidity		95		75		99		74
Alternatives(1)		28		26		28		25
Total Traditional Asset Management		312		276		315		268
Real Estate Investing		20		19		20		19
Merchant Banking:
Private Equity		9		9		9		9
Total Merchant Banking		9		9		9		9
Total assets under management or supervision	$	341	$	304	$	344	$	296
Share of minority stake assets(2)	$	6	$	6	$	5	$	5

(1) The alternatives asset class includes a range of investment products such as funds of hedge funds, funds of private equity funds and funds of real estate funds.

(2) Amounts represent the Asset Management business segment’s proportional share of assets managed by entities in which it owns a minority stake.

Activity in the Asset Management business segment’s assets under management or supervision during the quarters ended March 31, 2013 and 2012 was as follows:

	Three Months Ended March 31,
	2013			2012
	(dollars in billions)
Balance at beginning of period	$	338		$	287
Net flows by asset class:
Traditional Asset Management:
Equity		—			(1	)
Fixed income		2			(1	)
Liquidity		(5	)		1
Total Traditional Asset Management		(3	)		(1	)
Real Estate Investing		—			1
Total net flows		(3	)		—
Net market appreciation		6			17
Total net increase		3			17
Balance at end of period	$	341		$	304

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Trading.    The Company recognized losses of $6 million in the quarters ended March 31, 2013 and 2012. Trading results in both periods primarily reflected losses related to certain consolidated real estate funds sponsored by the Company.

Investments.    The Company recorded net investment gains of $193 million in the quarter ended March 31, 2013, compared with gains of $132 million in the quarter ended March 31, 2012. The increase in the quarter ended March 31, 2013 was primarily related to higher net gains in the Company’s Merchant Banking business, including certain investments associated with the Company’s employee deferred compensation and co-investment plans.

Asset Management, Distribution and Administration Fees.    Asset management, distribution and administration fees increased 11% to $455 million in the quarter ended March 31, 2013. The increase primarily reflected higher management and administration revenues, primarily due to higher average assets under management and higher performance fees.

The Company’s assets under management increased $37 billion from $304 billion at March 31, 2012 to $341 billion at March 31, 2013, reflecting positive flows and market appreciation. The Company recorded net outflows of $2.5 billion in the quarter ended March 31, 2013, primarily reflecting net customer outflows in liquidity funds, partially offset by net customer inflows in fixed income funds.

Other.    Other revenues were $2 million in the quarter ended March 31, 2013 as compared with other losses of $3 million in the comparable period of 2012. The results in the quarter ended March 31, 2013 included lower losses associated with the Company’s minority investments in Avenue Capital Group, a New York-based investment manager, and Lansdowne Partners, a London-based investment manager.

Non-interest Expenses.    Non-interest expenses were $458 million in the quarter ended March 31, 2013 as compared with $405 million in the comparable period of 2012. Compensation and benefits expenses increased 19% in the quarter ended March 31, 2013, primarily due to higher net revenues. Non-compensation expenses increased 6% in the quarter ended March 31, 2013 compared with the quarter ended March 31, 2012 primarily due to higher brokerage and clearing expenses.

Nonredeemable Noncontrolling Interests.

Nonredeemable noncontrolling interests are primarily related to the consolidation of certain real estate funds sponsored by the Company. Investment gains associated with these consolidated funds were $67 million and $74 million in the quarters ended March 31, 2013 and 2012, respectively.

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Accounting Developments.

Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.

In March 2013, the Financial Accounting Standards Board (“FASB”) issued an accounting update requiring the parent entity to release any related cumulative translation adjustment into net income when the parent ceases to have a controlling financial interest in a subsidiary that is a foreign entity. When the parent ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, the related cumulative translation adjustment would be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. This guidance is effective for the Company prospectively beginning on January 1, 2014. The adoption of this accounting guidance is not expected to have a material impact on the Company’s condensed consolidated financial statements.

Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.

In February 2013, the FASB issued an accounting update that requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay and any additional amount the reporting entity expects to pay on behalf of its co-obligors. This update also requires additional disclosures about those obligations. This guidance is effective for the Company retrospectively beginning on January 1, 2014. The adoption of this accounting guidance is not expected to have a material impact on the Company’s condensed consolidated financial statements.

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Other Matters.

Legal Matters.

Subsequent to the release of the Company’s first quarter earnings on April 18, 2013, legal accruals were increased as an agreement to settle certain matters was reached, which increased Other expenses within the Institutional Securities business segment for the quarter ended March 31, 2013 by $32 million or a decrease of $0.01 in diluted EPS. Excluding the impact of DVA, diluted EPS from continuing operations decreased by $0.02.

Real Estate.

The Company acts as the general partner for various real estate funds and also invests in certain of these funds as a limited partner. The Company’s real estate investments at March 31, 2013 and December 31, 2012 are described below. Such amounts exclude investments associated with certain employee deferred compensation and co-investment plans.

At March 31, 2013 and December 31, 2012, the condensed consolidated statements of financial condition included amounts representing real estate investment assets of condensed consolidated subsidiaries of approximately $2.3 billion and $2.2 billion, respectively, including noncontrolling interests of approximately $1.9 billion and $1.8 billion, respectively, for a net amount of $0.4 billion in both periods. This net presentation is a non-GAAP financial measure that the Company considers to be a useful measure for the Company and investors to use in assessing the Company’s net exposure. In addition, the Company has contractual capital commitments, guarantees, lending facilities and counterparty arrangements with respect to real estate investments of $0.4 billion at March 31, 2013.

In addition to the Company’s real estate investments, the Company engages in various real estate-related activities, including origination of loans secured by commercial and residential properties. The Company also securitizes and trades in a wide range of commercial and residential real estate and real estate-related whole loans, mortgages and other real estate. In connection with these activities, the Company has provided, or otherwise agreed to be responsible for, representations and warranties. Under certain circumstances, the Company may be required to repurchase such assets or make other payments related to such assets if such representations and warranties were breached. The Company continues to monitor its real estate-related activities in order to manage its exposures and potential liability from these markets and businesses. See “Legal Proceedings—Residential Mortgage and Credit Crisis Related Matters” in Part II, Item 1, herein and Note 12 to the condensed consolidated financial statements for further information.

Long-Term Incentive Compensation Plans.

In January 2013, the Company granted approximately $1.2 billion of deferred stock-based awards and approximately $1.4 billion of deferred cash-based awards related to the 2012 performance year that contain a future service requirement. For deferred stock-based awards, absent estimated or actual forfeitures or cancellations or accelerations, this amount of unrecognized compensation cost will be recognized as approximately $679 million in 2013, approximately $315 million in 2014 and approximately $182 million thereafter. For deferred cash-based awards, absent actual forfeitures or cancellations or accelerations and any future return on referenced investments, this amount of unrecognized compensation cost will be recognized as approximately $969 million in 2013, approximately $268 million in 2014 and approximately $171 million thereafter. For additional information regarding Long-Term Incentive Compensation Plans, please see Note 20 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

Regulatory Outlook.

The Dodd-Frank Act was enacted on July 21, 2010. While certain portions of the Dodd-Frank Act were effective immediately, other portions will be effective following extended transition periods or through numerous

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rulemakings by multiple governmental agencies, and only a portion of those rulemakings have been completed. It remains difficult to assess fully the impact that the Dodd-Frank Act will have on the Company and on the financial services industry generally. In addition, various international developments, such as the adoption of risk-based capital, leverage and liquidity standards by the Basel Committee on Banking Supervision, known as “Basel III,” will continue to impact the Company in the coming years.

It is likely that 2013 and subsequent years will see further material changes in the way major financial institutions are regulated in both the U.S. and other markets in which the Company operates, although it remains difficult to predict the exact impact these changes will have on the Company’s business, financial condition, results of operations and cash flows for a particular future period. For a further discussion regarding the regulatory outlook for the Company, please refer to “Business—Supervision and Regulation” in Part I, Item 1 included in the Form 10-K.

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Critical Accounting Policies.

The Company’s condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require the Company to make estimates and assumptions (see Note 1 to the condensed consolidated financial statements). The Company believes that of its significant accounting policies (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K and Note 2 to the condensed consolidated financial statements), the following policies involve a higher degree of judgment and complexity.

Fair Value.

Financial Instruments Measured at Fair Value.    A significant number of the Company’s financial instruments are carried at fair value. The Company makes estimates regarding valuation of assets and liabilities measured at fair value in preparing the condensed consolidated financial statements. These assets and liabilities include but are not limited to:

• Trading assets and Trading liabilities;

• Securities available for sale;

• Securities received as collateral and Obligation to return securities received as collateral;

• Certain Securities purchased under agreements to resell;

• Certain Deposits;

• Certain Commercial paper and other short-term borrowings, primarily structured notes;

• Certain Securities sold under agreements to repurchase;

• Certain Other secured financings; and

• Certain Long-term borrowings, primarily structured notes.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, the Company uses various valuation approaches. A hierarchy for inputs is used in measuring fair value that maximizes the use of observable prices and inputs and minimizes the use of unobservable prices and inputs by requiring that the relevant observable inputs be used when available. The hierarchy is broken down into three levels, wherein Level 1 uses observable prices in active markets, and Level 3 consists of valuation techniques that incorporate significant unobservable inputs and, therefore, require the greatest use of judgment. In periods of market disruption, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be recategorized from Level 1 to Level 2 or Level 2 to Level 3. In addition, a downturn in market conditions could lead to declines in the valuation of many instruments. For further information on the valuation process, fair value definition, Level 1, Level 2, Level 3 and related valuation techniques, and quantitative information about and sensitivity of significant unobservable inputs used in Level 3 fair value measurements, see Notes 2 and 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K and Note 4 to the condensed consolidated financial statements.

Level 3 Assets and Liabilities.    The Company’s Level 3 assets before the impact of cash collateral and counterparty netting across the levels of the fair value hierarchy were $20.5 billion and $20.4 billion at March 31, 2013 and December 31, 2012, respectively, and represented approximately 6% at March 31, 2013 and December 31, 2012, of the assets measured at fair value (approximately 3% of total assets at March 31, 2013 and December 31, 2012). Level 3 liabilities before the impact of cash collateral and counterparty netting across the levels of the fair value hierarchy were $7.8 billion and $7.7 billion at March 31, 2013 and December 31, 2012,

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respectively, and represented approximately 4% of the Company’s liabilities measured at fair value. During the quarters ended March 31, 2013 and 2012, the net losses of approximately $0.7 billion and $1.2 billion, respectively, in Net derivative and other contracts categorized as Level 3 assets were primarily driven by tightening of credit spreads on underlying reference entities of basket credit default swaps. See Note 4 to the condensed consolidated financial statements for further information about changes in Level 3 assets and liabilities.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis.    At March 31, 2013, certain of the Company’s assets were measured at fair value on a non-recurring basis, primarily relating to loans, other investments, premises, equipment and software costs, and intangible assets. The Company incurs losses or gains for any adjustments of these assets to fair value. A downturn in market conditions could result in impairment charges in future periods.

For assets and liabilities measured at fair value on a non-recurring basis, fair value is determined by using various valuation approaches. The same hierarchy as described above, which maximizes the use of observable inputs and minimizes the use of unobservable inputs by generally requiring that the observable inputs be used when available, is used in measuring fair value for these items.

See Note 4 to the condensed consolidated financial statements for further information on assets and liabilities that are measured at fair value on a non-recurring basis.

Fair Value Control Processes.    The Company employs control processes to validate the fair value of its financial instruments, including those derived from pricing models. These control processes are designed to ensure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and that the assumptions are reasonable.

See Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for additional information regarding the Company’s valuation policies, processes and procedures.

Goodwill and Intangible Assets.

Goodwill.    The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. The Company tests for impairment at the reporting unit level, which is generally at the level of or one level below its business segments. Goodwill no longer retains its association with a particular acquisition once it has been assigned to a reporting unit. As such, all of the activities of a reporting unit, whether acquired or organically developed, are available to support the value of the goodwill. For both the annual and interim tests, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing the two-step impairment test is not required. However, if the Company concludes otherwise, then it is required to perform the first step of the two-step impairment test. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. If the estimated fair value is below carrying value, however, further analysis is required to determine the amount of the impairment. Additionally, if the carrying value of a reporting unit is zero or a negative value and it is determined that it is more likely than not the goodwill is impaired, further analysis is required. The estimated fair values of the reporting units are derived based on valuation techniques the Company believes market participants would use for each of the reporting units. The estimated fair values are generally determined utilizing methodologies that incorporate price-to-book, price-to-earnings and assets under management multiples of certain comparable companies. The Company also utilizes a discounted cash flow methodology for certain reporting units. At December 31, 2012, each of the Company’s reporting units with goodwill had a fair value that was substantially in excess of its carrying value.

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Intangible Assets.    Amortizable intangible assets are amortized over their estimated useful lives and are reviewed for impairment on an interim basis when certain events or circumstances exist. For amortizable intangible assets, an impairment exists when the carrying amount of the intangible asset exceeds its fair value. An impairment loss will be recognized only if the carrying amount of the intangible asset is not recoverable and exceeds its fair value. The carrying amount of the intangible asset is not recoverable if it exceeds the sum of the expected undiscounted cash flows.

Indefinite-lived intangible assets are not amortized but are reviewed annually (or more frequently when certain events or circumstances exist) for impairment. For indefinite-lived intangible assets, an impairment exists when the carrying amount exceeds its fair value.

For both goodwill and intangible assets, to the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. For amortizable intangible assets, the new cost basis is amortized over the remaining useful life of that asset. Adverse market or economic events could result in impairment charges in future periods.

See Notes 4 and 9 to the condensed consolidated financial statements for additional information about goodwill and intangible assets.

Legal and Regulatory Contingencies.

In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities as a global diversified financial services institution.

Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In some cases, the entities that would otherwise be the primary defendants in such cases are bankrupt or in financial distress.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Company’s business, including, among other matters, accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

Accruals for litigation and regulatory proceedings are generally determined on a case-by-case basis. Where available information indicates that it is probable a liability had been incurred at the date of the condensed consolidated financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income. In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss. For certain legal proceedings, the Company can estimate possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued. For certain other legal proceedings, the Company cannot reasonably estimate such losses, particularly for proceedings that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before a loss or additional loss or range of loss or additional loss can be reasonably estimated for any proceeding.

Significant judgment is required in deciding when and if to make these accruals and the actual cost of a legal claim or regulatory fine/penalty may ultimately be materially different from the recorded accruals.

See Note 12 to the condensed consolidated financial statements for additional information on legal proceedings.

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Income Taxes.

The Company is subject to the income and indirect tax laws of the U.S., its states and municipalities and those of the foreign jurisdictions in which the Company has significant business operations. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. The Company must make judgments and interpretations about the application of these inherently complex tax laws when determining the provision for income taxes and the expense for indirect taxes and must also make estimates about when certain items affect taxable income in the various tax jurisdictions. Disputes over interpretations of the tax laws may be settled with the taxing authority upon examination or audit. The Company periodically evaluates the likelihood of assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations, and unrecognized tax benefits related to potential losses that may arise from tax audits are established in accordance with the guidance on accounting for unrecognized tax benefits. Once established, unrecognized tax benefits are adjusted when there is more information available or when an event occurs requiring a change.

The Company’s provision for income taxes is composed of current and deferred taxes. Current income taxes approximate taxes to be paid or refunded for the current period. The Company’s deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the applicable enacted tax rates and laws that will be in effect when such differences are expected to reverse. The Company’s deferred tax balances also include deferred assets related to tax attributes carryforwards, such as net operating losses and tax credits that will be realized through reduction of future tax liabilities and, in some cases, are subject to expiration if not utilized within certain periods. The Company performs regular reviews to ascertain whether deferred tax assets are realizable. These reviews include management’s estimates and assumptions regarding future taxable income and incorporate various tax planning strategies, including strategies that may be available to utilize net operating losses before they expire. Once the deferred tax asset balances have been determined, the Company may record a valuation allowance against the deferred tax asset balances to reflect the amount of these balances (net of valuation allowance) that the Company estimates it is more likely than not to realize at a future date. Both current and deferred income taxes could reflect adjustments related to the Company’s unrecognized tax benefits.

Significant judgment is required in estimating the consolidated provision for (benefit from) income taxes, current and deferred tax balances (including valuation allowance, if any), accrued interest or penalties and uncertain tax positions. Revisions in our estimates and/or the actual costs of a tax assessment may ultimately be materially different from the recorded accruals and unrecognized tax benefits, if any.

See Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for additional information on the Company’s significant assumptions, judgments and interpretations associated with the accounting for income taxes and Note 18 to the condensed consolidated financial statements for additional information on the Company’s tax examinations.

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Liquidity and Capital Resources.

The Company’s senior management establishes the liquidity and capital policies. Through various risk and control committees, the Company’s senior management reviews business performance relative to these policies, monitors the availability of alternative sources of financing, and oversees the liquidity and interest rate and currency sensitivity of the Company’s asset and liability position. The Company’s Treasury Department, Firm Risk Committee, Asset and Liability Management Committee and other control groups assist in evaluating, monitoring and controlling the impact that the Company’s business activities have on its condensed consolidated statements of financial condition, liquidity and capital structure. Liquidity and capital matters are reported regularly to the Board’s Risk Committee.

The Balance Sheet.

The Company monitors and evaluates the composition and size of its balance sheet on a regular basis. The Company’s balance sheet management process includes quarterly planning, business specific limits, monitoring of business specific usage versus limits, key metrics and new business impact assessments.

The Company establishes balance sheet limits at the consolidated, business segment and business unit levels. The Company monitors balance sheet usage versus limits and variances resulting from business activity or market fluctuations are reviewed. On a regular basis, the Company reviews current performance versus limits and assesses the need to re-allocate limits based on business unit needs. The Company also monitors key metrics, including asset and liability size, composition of the balance sheet, limit utilization and capital usage.

The tables below summarize total assets for the Company’s business segments at March 31, 2013 and December 31, 2012:

	At March 31, 2013
	Institutional Securities		Global Wealth Management Group		Asset Management		Total
	(dollars in millions)
Assets
Cash and cash equivalents(1)	$	34,059	$	7,953	$	890	$	42,902
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements(2)		28,846		2,467		—		31,313
Trading assets		260,174		2,511		4,551		267,236
Securities available for sale		—		41,454		—		41,454
Securities received as collateral(2)		17,971		—		—		17,971
Federal funds sold and securities purchased under agreements to resell(2)		127,107		13,308		—		140,415
Securities borrowed(2)		135,313		414		—		135,727
Customer and other receivables(2)		39,603		21,906		762		62,271
Loans, net of allowance		12,788		17,827		—		30,615
Other assets(3)		19,466		10,717		1,296		31,479
Total assets(4)	$	675,327	$	118,557	$	7,499	$	801,383

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	At December 31, 2012
	Institutional Securities(5)		Global Wealth Management Group(5)		Asset Management		Total
	(dollars in millions)
Assets
Cash and cash equivalents(1)	$	33,370	$	12,714	$	820	$	46,904
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements(2)		26,116		4,854		—		30,970
Trading assets		260,885		2,285		4,433		267,603
Securities available for sale		—		39,869		—		39,869
Securities received as collateral(2)		14,278		—		—		14,278
Federal funds sold and securities purchased under agreements to resell(2)		120,957		13,455		—		134,412
Securities borrowed(2)		121,302		399		—		121,701
Customer and other receivables(2)		39,362		24,161		765		64,288
Loans, net of allowance		12,078		16,968		—		29,046
Other assets(3)		19,701		10,860		1,328		31,889
Total assets(4)	$	648,049	$	125,565	$	7,346	$	780,960

(1) Cash and cash equivalents include Cash and due from banks and Interest bearing deposits with banks.

(2) Certain of these assets are included in secured financing assets (see “Secured Financing” herein).

(3) Other assets include Other investments; Premises, equipment and software costs; Goodwill; Intangible assets; and Other assets.

(4) Total assets include Global Liquidity Reserves of $186 billion and $182 billion at March 31, 2013 and December 31, 2012, respectively.

(5) On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

A substantial portion of the Company’s total assets consists of liquid marketable securities and short-term receivables arising principally from sales and trading activities in the Institutional Securities business segment. The liquid nature of these assets provides the Company with flexibility in managing the size of its balance sheet. The Company’s total assets increased to $801,383 million at March 31, 2013 from $780,960 million at December 31, 2012. The increase in total assets was primarily due to an increase in Securities borrowed and Federal funds sold and securities purchased under agreements to resell.

The Company’s assets and liabilities are primarily related to transactions attributable to sales and trading and securities financing activities. At March 31, 2013, securities financing assets and liabilities were $373 billion and $314 billion, respectively. At December 31, 2012, securities financing assets and liabilities were $348 billion and $300 billion, respectively. Securities financing transactions include cash deposited with clearing organizations or segregated under federal and other regulations or requirements, repurchase and resale agreements, securities borrowed and loaned transactions, securities received as collateral and obligation to return securities received and customer and other receivables and payables. Securities borrowed or purchased under agreements to resell and securities loaned or sold under agreements to repurchase are treated as collateralized financings (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K and Note 6 to the condensed consolidated financial statements). Securities sold under agreements to repurchase and Securities loaned were $160 billion at March 31, 2013 and averaged $173 billion during the quarter ended March 31, 2013. Securities purchased under agreements to resell and Securities borrowed were $276 billion at March 31, 2013 and averaged $293 billion during the quarter ended March 31, 2013.

Securities financing assets and liabilities also include matched book transactions with minimal market, credit and/or liquidity risk. Matched book transactions accommodate customers, as well as obtain securities for the settlement and financing of inventory positions. The customer receivable portion of the securities financing transactions includes customer margin loans, collateralized by customer-owned securities, and customer cash,

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which is segregated in accordance with regulatory requirements. The customer payable portion of the securities financing transactions primarily includes customer payables to the Company’s prime brokerage customers. The Company’s risk exposure on these transactions is mitigated by collateral maintenance policies that limit the Company’s credit exposure to customers. Included within securities financing assets were $18 billion and $14 billion at March 31, 2013 and December 31, 2012, respectively, recorded in accordance with accounting guidance for the transfer of financial assets that represented offsetting assets and liabilities for fully collateralized non-cash loan transactions.

Liquidity Risk Management Framework.

The primary goal of the Company’s liquidity risk management framework is to ensure that the Company has access to adequate funding across a wide range of market conditions. The framework is designed to enable the Company to fulfill its financial obligations and support the execution of the Company’s business strategies.

The following principles guide the Company’s liquidity risk management framework:

• Sufficient liquid assets should be maintained to cover maturing liabilities and other planned and contingent outflows;

• Maturity profile of assets and liabilities should be aligned, with limited reliance on short-term funding;

• Source, counterparty, currency, region, and term of funding should be diversified; and

• Limited access to funding should be anticipated through the Contingency Funding Plan (“CFP”).

The core components of the Company’s liquidity risk management framework are the CFP, Liquidity Stress Tests and the Global Liquidity Reserve (as defined below), which support the Company’s target liquidity profile.

Contingency Funding Plan.

The Company’s CFP describes the data and information flows, limits, targets, operating environment indicators, escalation procedures, roles and responsibilities, and available mitigating actions in the event of a liquidity stress. The CFP also sets forth the principal elements of the Company’s liquidity stress testing which identifies stress events of different severity and duration, assesses current funding sources and uses and establishes a plan for monitoring and managing a potential liquidity stress event.

Liquidity Stress Tests.

The Company uses liquidity stress tests to model liquidity outflows across multiple scenarios over a range of time horizons. These scenarios contain various combinations of idiosyncratic and systemic stress events.

The assumptions underpinning the Liquidity Stress Tests include, but are not limited to, the following:

• No government support;

• No access to equity and unsecured debt markets;

• Repayment of all unsecured debt maturing within the stress horizon;

• Higher haircuts and significantly lower availability of secured funding;

• Additional collateral that would be required by trading counterparties, certain exchanges and clearing organizations related to credit rating downgrades;

• Additional collateral that would be required due to collateral substitutions, collateral disputes and uncalled collateral;

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• Discretionary unsecured debt buybacks;

• Drawdowns on unfunded commitments provided to third parties;

• Client cash withdrawals and reduction in customer short positions that fund long positions;

• Limited access to the foreign exchange swap markets;

• Return of securities borrowed on an uncollateralized basis; and

• Maturity roll-off of outstanding letters of credit with no further issuance.

The Liquidity Stress Tests are produced for the Parent and major operating subsidiaries, as well as at major currency levels, to capture specific cash requirements and cash availability across the Company. The Liquidity Stress Tests assume that subsidiaries will use their own liquidity first to fund their obligations before drawing liquidity from the Parent. The Parent will support its subsidiaries and will not have access to subsidiaries’ liquidity reserves that are subject to any regulatory, legal or tax constraints.

At March 31, 2013, the Company maintained sufficient liquidity to meet current and contingent funding obligations as modeled in its Liquidity Stress Tests.

Global Liquidity Reserve.

The Company maintains sufficient liquidity reserves (“Global Liquidity Reserve”) to cover daily funding needs and meet strategic liquidity targets sized by the CFP and Liquidity Stress Tests. The size of the Global Liquidity Reserve is actively managed by the Company. The following components are considered in sizing the Global Liquidity Reserve: unsecured debt maturity profile, balance sheet size and composition, funding needs in a stressed environment inclusive of contingent cash outflows and collateral requirements. Additionally, the Global Liquidity Reserve includes an additional reserve, which is primarily a discretionary surplus based on the Company’s risk tolerance and is subject to change dependent on market and firm-specific events.

The Global Liquidity Reserve is held within the Parent and major operating subsidiaries. The Global Liquidity Reserve is composed of diversified cash and cash equivalents and highly liquid unencumbered securities. Eligible unencumbered securities include U.S. government securities, U.S. agency securities, U.S. agency mortgage-backed securities, non-U.S. government securities and other highly liquid investment grade securities.

Global Liquidity Reserve by Type of Investment.

The table below summarizes the Company’s Global Liquidity Reserve by type of investment:

	At March 31, 2013
	(dollars in billions)
Cash deposits with banks	$	15
Cash deposits with central banks		23
Unencumbered highly liquid securities:
U.S. government obligations		72
U.S. agency and agency mortgage-backed securities		41
Non-U.S. sovereign obligations(1)		17
Investments in money market funds		1
Other investment grade securities		17
Global Liquidity Reserve	$	186

(1) Non-U.S. sovereign obligations are composed of unencumbered German, French, Dutch, U.K., Brazilian and Japanese government obligations.

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The ability to monetize assets during a liquidity crisis is critical. The Company believes that the assets held in the Global Liquidity Reserve can be monetized within five business days in a stressed environment given the highly liquid and diversified nature of the reserves. The currency profile of the Global Liquidity Reserve is consistent with the CFP and Liquidity Stress Tests. In addition to the Global Liquidity Reserve, the Company has other cash and cash equivalents and other unencumbered assets that are available for monetization that are not included in the balances in the table above.

Global Liquidity Reserve Held by Bank and Non-Bank Legal Entities.

The table below summarizes the Global Liquidity Reserve held by bank and non-bank legal entities:

					Average Balance(1)
	At March 31, 2013		At December 31, 2012		For the Three Months Ended March 31, 2013		For the Three Months Ended December 31, 2012
	(dollars in billions)
Bank legal entities:
Domestic	$	63	$	66	$	64	$	60
Foreign		5		5		5		5
Total Bank legal entities		68		71		69		65
Non-Bank legal entities:
Domestic(2)		85		81		86		81
Foreign		33		30		32		31
Total Non-Bank legal entities		118		111		118		112
Total	$	186	$	182	$	187	$	177

(1) The Company calculates the average Global Liquidity Reserve based upon daily amounts.

(2) The Parent held $66 billion at March 31, 2013, which averaged $67 billion for the quarter ended March 31, 2013.

The Company is exposed to intra-day settlement risk in connection with liquidity provided to its major broker-dealer subsidiaries for intra-day clearing and settlement of its securities and financing activity.

Funding Management.

The Company manages its funding in a manner that reduces the risk of disruption to the Company’s operations. The Company pursues a strategy of diversification of secured and unsecured funding sources (by product, by investor and by region) and attempts to ensure that the tenor of the Company’s liabilities equals or exceeds the expected holding period of the assets being financed.

The Company funds its balance sheet on a global basis through diverse sources. These sources may include the Company’s equity capital, long-term debt, repurchase agreements, securities lending, deposits, commercial paper, letters of credit and lines of credit. The Company has active financing programs for both standard and structured products targeting global investors and currencies.

Secured Financing.    A substantial portion of the Company’s total assets consists of liquid marketable securities and arises principally from its Institutional Securities business segment’s sales and trading activities. The liquid nature of these assets provides the Company with flexibility in funding these assets with secured financing. The Company’s goal is to achieve an optimal mix of durable secured and unsecured financing. Secured financing investors principally focus on the quality of the eligible collateral posted. Accordingly, the Company actively manages its secured financing book based on the quality of the assets being funded.

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The Company utilizes shorter-term secured financing only for highly liquid assets and has established longer tenor limits for less liquid asset classes, for which funding may be at risk in the event of a market disruption. The Company defines highly liquid assets as those which are consistent with the standards of the Global Liquidity Reserve, and less liquid assets as those which do not meet these standards. At March 31, 2013, the weighted average maturity of the Company’s secured financing against less liquid assets was greater than 120 days. To further minimize the refinancing risk of secured financing for less liquid assets, the Company has established concentration limits to diversify its investor base and reduce the amount of monthly maturities for secured financing of less liquid assets. Furthermore, the Company obtains spare capacity, or term secured funding liabilities in excess of less liquid inventory, as an additional risk mitigant to replace maturing trades in the event that secured financing markets or our ability to access them become limited. Finally, in addition to the above risk management framework, the Company holds a portion of its Global Liquidity Reserve against the potential disruption to its secured financing capabilities.

Unsecured Financing.    The Company views long-term debt and deposits as stable sources of funding. Unencumbered securities and non-security assets are financed with a combination of long- and short-term debt and deposits. The Company’s unsecured financings include structured borrowings, whose payments and redemption values are based on the performance of certain underlying assets, including equity, credit, foreign exchange, interest rates and commodities. When appropriate, the Company may use derivative products to conduct asset and liability management and to make adjustments to the Company’s interest rate risk profile (see Note 12 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K).

Short-Term Borrowings.    The Company’s unsecured short-term borrowings consist of commercial paper, bank loans, bank notes and structured notes with maturities of 12 months or less at issuance.

The table below summarizes the Company’s short-term unsecured borrowings:

	At March 31, 2013		At December 31, 2012
	(dollars in millions)
Commercial paper	$	254	$	306
Other short-term borrowings		2,221		1,832
Total	$	2,475	$	2,138

Deposits.    The Company’s bank subsidiaries’ funding sources include time deposits, money market deposit accounts, demand deposit accounts, repurchase agreements, federal funds purchased, commercial paper and Federal Home Loan Bank advances. The vast majority of deposits in Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association (the “Subsidiary Banks”) are sourced from the Company’s retail brokerage accounts and are considered to have stable, low-cost funding characteristics.

Deposits were as follows:

	At March 31, 2013(1)		At December 31, 2012(1)
	(dollars in millions)
Savings and demand deposits(2)	$	76,895	$	80,058
Time deposits(3)		3,728		3,208
Total	$	80,623	$	83,266

(1) Total deposits subject to FDIC insurance at March 31, 2013 and December 31, 2012 were $60 billion and $62 billion, respectively.

(2) Amounts include non-interest bearing deposits of $1,037 million at December 31, 2012.

(3) Certain time deposit accounts are carried at fair value under the fair value option (see Note 4 to the condensed consolidated financial statements).

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Senior Indebtedness.    At March 31, 2013, the aggregate outstanding carrying amount of the Company’s senior indebtedness was approximately $155 billion (including guaranteed obligations of the indebtedness of subsidiaries) compared with $158 billion at December 31, 2012. The decrease in the amount of senior indebtedness was primarily due to repayments of notes, net of new issuances of long-term borrowings.

Long-Term Borrowings.    The Company believes that accessing debt investors through multiple distribution channels helps provide consistent access to the unsecured markets. In addition, the issuance of long-term debt allows the Company to reduce reliance on short-term credit sensitive instruments (e.g., commercial paper and other unsecured short-term borrowings). Long-term borrowings are generally managed to achieve staggered maturities, thereby mitigating refinancing risk, and to maximize investor diversification through sales to global institutional and retail clients across regions, currencies and product types. Availability and cost of financing to the Company can vary depending on market conditions, the volume of certain trading and lending activities, the Company’s credit ratings and the overall availability of credit.

The Company may from time to time engage in various transactions in the credit markets (including, for example, debt retirements) that it believes are in the best interests of the Company and its investors.

Long-term borrowings at March 31, 2013 consisted of the following:

	Parent		Subsidiaries		Total
	(dollars in millions)
Due in 2013	$	14,812	$	1,292	$	16,104
Due in 2014		20,941		803		21,744
Due in 2015		19,978		4,341		24,319
Due in 2016		20,387		1,990		22,377
Due in 2017		25,623		2,074		27,697
Thereafter		50,511		2,390		52,901
Total	$	152,252	$	12,890	$	165,142

Long-Term Borrowing Activity for the Three Months Ended March 31, 2013.    During the quarter ended March 31, 2013, the Company issued and reissued notes with a principal amount of approximately $10 billion, including the Company’s issuance of $4.5 billion in senior unsecured debt on February 25, 2013. In connection with the note issuances, the Company generally enters into certain transactions to obtain floating interest rates. The weighted average maturity of the Company’s long-term borrowings, based upon stated maturity dates, was approximately 5.3 years at March 31, 2013. During the quarter ended March 31, 2013, approximately $12 billion in aggregate long-term borrowings matured or were retired. On April 25, 2013, the Company issued $3.7 billion in senior unsecured debt.

Credit Ratings.

The Company relies on external sources to finance a significant portion of its day-to-day operations. The cost and availability of financing generally is impacted by the Company’s credit ratings. In addition, the Company’s credit ratings can have an impact on certain trading revenues, particularly in those businesses where longer term counterparty performance is a key consideration, such as OTC derivative transactions, including credit derivatives and interest rate swaps. Rating agencies will look at company specific factors, other industry factors such as regulatory or legislative changes, the macro-economic environment and perceived levels of government support among other things.

The rating agencies have stated that they currently incorporate various degrees of credit rating uplift from external sources of potential support, as well as perceived government support of systemically important banks, including the credit ratings of the Company. Rating agencies continue to monitor the progress of U.S. financial

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reform legislation to assess whether the possibility of extraordinary government support for the financial system in any future financial crises is negatively impacted. Legislative and rulemaking outcomes may lead to reduced uplift assumptions for U.S. banks and thereby place downward pressure on credit ratings. At the same time, proposed U.S. financial reform legislation and attendant rulemaking also have positive implications for credit ratings such as higher standards for capital and liquidity levels. The net result on credit ratings and the timing of any change in rating agency assumptions on support is currently uncertain.

At April 30, 2013, the Parent’s and Morgan Stanley Bank, N.A.’s senior unsecured ratings were as set forth below:

	Parent			Morgan Stanley Bank, N.A.
	Short-Term Debt	Long-Term Debt	Rating Outlook	Short-Term Debt	Long-Term Debt	Rating Outlook
DBRS, Inc.	R-1 (middle)	A (high)	Negative	—	—	—
Fitch Ratings, Inc.	F1	A	Stable	F1	A	Stable
Moody’s Investor Services, Inc.	P-2	Baa1	Negative	P-2	A3	Stable
Rating and Investment Information, Inc.	a-1	A	Negative	—	—	—
Standard & Poor’s Financial Services LLC	A-2	A-	Negative	A-1	A	Negative

In connection with certain OTC trading agreements and certain other agreements where the Company is a liquidity provider to certain financing vehicles associated with the Institutional Securities business segment, the Company may be required to provide additional collateral or immediately settle any outstanding liability balances with certain counterparties or pledge additional collateral to certain exchanges and clearing organizations in the event of a future credit rating downgrade irrespective of whether the company is in a net asset or liability position.

As noted in the table above, the long-term credit ratings on the Company by Moody’s Investor Services, Inc. (“Moody’s”) and Standard & Poor’s Financial Services LLC (“S&P”) are currently at different levels (commonly referred to as “split ratings”). The table below shows the future potential collateral amounts that could be called by counterparties or exchanges and clearing organizations in the event of the following credit rating scenarios for Moody’s and S&P at March 31, 2013:

Company Rating Scenario (Moody's/S&P)	OTC Agreements		Other Agreements		Exchanges and Clearing Organizations
	(dollars in millions)
Baa1/BBB+	$	586	$	—	$	—
Baa2/BBB	$	2,823	$	—	$	—
Baa3/BBB-	$	3,505	$	320	$	130

While certain aspects of a credit ratings downgrade are quantifiable pursuant to contractual provisions, the impact it will have on the Company’s business and results of operation in future periods is inherently uncertain and will depend on a number of interrelated factors, including, among others, the magnitude of the downgrade, individual client behavior and future mitigating actions the Company may take. The liquidity impact of additional collateral requirements is included in the Company’s Liquidity Stress Tests.

Capital Management.

The Company’s senior management views capital as an important source of financial strength. The Company actively manages its consolidated capital position based upon, among other things, business opportunities, risks, capital availability and rates of return together with internal capital policies, regulatory requirements and rating

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agency guidelines and, therefore, in the future may expand or contract its capital base to address the changing needs of its businesses. The Company attempts to maintain total capital, on a consolidated basis, at least equal to the sum of its operating subsidiaries’ equity.

At March 31, 2013, the Company had approximately $1.6 billion remaining under its current share repurchase program out of the $6 billion authorized by the Board of Directors in December 2006. The share repurchase program is for capital management purposes and considers, among other things, business segment capital needs as well as equity-based compensation and benefit plan requirements. Share repurchases by the Company are subject to regulatory approval. During the quarter ended March 31, 2013, the Company did not repurchase common stock as part of its capital management share repurchase program (see also “Unregistered Sales of Equity Securities and Use of Proceeds” in Part II, Item 2).

The Board of Directors determines the declaration and payment of dividends on a quarterly basis. In April 2013, the Company announced that its Board of Directors declared a quarterly dividend per common share of $0.05. In March 2013, the Company also announced that the Board of Directors declared a quarterly dividend of $250.00 per share of Series A Floating Rate Non-Cumulative Preferred Stock (represented by depositary shares, each representing 1/1,000th interest in a share of preferred stock and each having a dividend of $ 0.25000) and a quarterly dividend of $25.00 per share of Series C Non-Cumulative Non-Voting Perpetual Preferred Stock.

The following table sets forth the Company’s tangible common equity at March 31, 2013 and December 31, 2012 and average balances during the quarter ended March 31, 2013:

	Balance at						Average Balance(1)
	March 31, 2013			December 31, 2012			For the Three Months Ended March 31, 2013
	(dollars in millions)
Common equity	$	61,196		$	60,601		$	60,924
Preferred equity		1,508			1,508			1,508
Morgan Stanley shareholders’ equity		62,704			62,109			62,432
Junior subordinated debentures issued to capital trusts		4,828			4,827			4,827
Less: Goodwill and net intangible assets(2)		(7,509	)		(7,587	)		(7,548	)
Tangible Morgan Stanley shareholders’ equity	$	60,023		$	59,349		$	59,711
Common equity	$	61,196		$	60,601		$	60,924
Less: Goodwill and net intangible assets(2)		(7,509	)		(7,587	)		(7,548	)
Tangible common equity(3)	$	53,687		$	53,014		$	53,376

(1) The Company calculates its average balances based upon month-end balances.

(2) The goodwill and net intangible assets deduction exclude mortgage servicing rights (net of disallowable mortgage servicing rights) of $7 million and $6 million at March 31, 2013 and December 31, 2012, respectively, and include only the Company’s share of the Wealth Management JV’s goodwill and intangible assets.

(3) Tangible common equity, a non-GAAP financial measure, equals common equity less goodwill and net intangible assets as defined above. The Company views tangible common equity as a useful measure to investors because it is a commonly utilized metric and reflects the common equity deployed in the Company’s businesses.

Capital Covenants.

In October 2006 and April 2007, the Company executed replacement capital covenants in connection with offerings by Morgan Stanley Capital Trust VII and Morgan Stanley Capital Trust VIII (the “Capital Securities”), which become effective after the scheduled redemption date in 2046. Under the terms of the replacement capital covenants, the Company has agreed, for the benefit of certain specified holders of debt, to limitations on its ability to redeem or repurchase any of the Capital Securities for specified periods of time. For a complete description of the Capital Securities and the terms of the replacement capital covenants, see the Company’s Current Reports on Form 8-K dated October 12, 2006 and April 26, 2007.

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Regulatory Requirements.

Capital.

The Company is a financial holding company under the Bank Holding Company Act of 1956, as amended, and is subject to the regulation and oversight of the Federal Reserve. The Federal Reserve 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 (“OCC”) establishes similar capital requirements and standards for the Subsidiary Banks.

The Company calculates its capital ratios and RWAs in accordance with the capital adequacy standards for financial holding companies adopted by the Federal Reserve. 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. On January 1, 2013, the U.S. banking regulators’ rules to implement the Basel Committee’s market risk capital framework amendment, commonly referred to as “Basel 2.5”, became effective, which increased the capital requirements for securitizations and correlation trading within the Company's trading book, as well as incorporated add-ons for stressed VaR and incremental risk requirements (“market risk capital framework amendment”). The Company’s capital ratios and RWAs for the current quarter were calculated under this revised framework. The Company's capital ratios and RWAs for prior quarters have not been recalculated under this revised framework. RWAs reflect both on and off-balance sheet risk of the Company. The risk capital calculations will evolve over time as the Company enhances its risk management methodology and incorporates improvements in modeling techniques while maintaining compliance with the regulatory requirements and interpretations.

Market RWAs reflect capital charges attributable to the risk of loss resulting from adverse changes in market prices and other factors. For a further discussion of the Company’s market risks and models such as Value-at-Risk (“VaR”) model, see “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A, of the Form 10-K and in Part I, Item 3 herein.

Credit RWAs reflect capital charges attributable to the risk of loss arising from a borrower or counterparty failing to meet its financial obligations. For a further discussion of the Company’s credit risks, see “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A, of the Form 10-K and in Part I, Item 3 herein.

Total allowable capital is composed of Tier 1 capital, which includes Tier 1 common capital, and Tier 2 capital. In accordance with the Federal Reserve’s definition, Tier 1 common capital is defined as Tier 1 capital less non-common elements in Tier 1 capital. Non-common elements include perpetual preferred stock and related surplus, minority interests in subsidiaries, trust preferred securities and mandatory convertible preferred securities. Tier 1 capital consists predominantly of common shareholders’ equity as well as qualifying preferred stock and qualifying restricted core capital elements (qualifying trust preferred securities and noncontrolling interests) less goodwill, non-servicing intangible assets (excluding allowable mortgage servicing rights), net deferred tax assets (recoverable in excess of one year), an after-tax debt valuation adjustment and certain other deductions, including equity investments. The debt valuation adjustment in the below table represents the cumulative change in fair value of certain long-term and short-term borrowings that was attributable to the Company’s own instrument-specific credit spreads and is included in retained earnings. For a further discussion of fair value, see Note 4 to the condensed consolidated financial statements.

At March 31, 2013, the Company was in compliance with Basel I, inclusive of the market risk capital framework amendment, with ratios of Tier 1 capital to RWAs of 13.9% and total capital to RWAs of 14.5% (6% and 10% being well-capitalized for regulatory purposes, respectively). The ratio of Tier 1 common capital to RWAs was 11.5% (5% being the minimum under the Federal Reserve’s Comprehensive Capital Analysis and Review (“CCAR”) framework). Financial holding companies are subject to a Tier 1 leverage ratio as defined by the Federal Reserve. 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, deferred tax assets and financial and non-financial equity investments). The adjusted average total assets are derived using weekly

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balances for the year. At March 31, 2013, the Company was also in compliance with the Federal Reserve’s Tier 1 leverage requirement with a Tier 1 leverage ratio of 7.0% (5% being well-capitalized for regulatory purposes).

The following table reconciles the Company’s total shareholders’ equity to Tier 1 common, Tier 1, Tier 2 and Total allowable capital as defined by the regulations issued by the Federal Reserve and presents the Company’s consolidated capital ratios at March 31, 2013 and December 31, 2012:

	At March 31, 2013			At December 31, 2012
	(dollars in millions)
Allowable capital
Common shareholders’ equity	$	61,196		$	60,601
Less: Goodwill		(6,633	)		(6,650	)
Less: Non-servicing intangible assets		(3,687	)		(3,777	)
Less: Net deferred tax assets		(3,838	)		(4,785	)
After-tax debt valuation adjustment		1,024			823
Other deductions		(1,550	)		(1,418	)
Tier 1 common capital		46,512			44,794
Qualifying preferred stock		1,508			1,508
Qualifying restricted core capital elements		8,109			8,058
Tier 1 capital		56,129			54,360
Qualifying subordinated debt and restricted core capital elements		2,742			2,783
Other qualifying amounts		232			197
Other deductions		(721	)		(714	)
Tier 2 capital		2,253			2,266
Total allowable capital	$	58,382		$	56,626
Risk-weighted assets(1)
Market risk	$	151,231		$	54,042
Credit risk		252,006			252,704
Total	$	403,237		$	306,746
Capital ratios
Total capital ratio(1)		14.5	%		18.5	%
Tier 1 common capital ratio(1)		11.5	%		14.6	%
Tier 1 capital ratio(1)		13.9	%		17.7	%
Tier 1 leverage ratio		7.0	%		7.1	%

(1) Effective January 1, 2013, in accordance with the U.S. banking regulators’ rules the Company implemented the Basel Committee’s market risk capital framework amendment, commonly referred to as “Basel 2.5”, which increased the capital requirement for securitizations and correlation trading within the Company's trading book as well as incorporated add-ons for stressed VaR and incremental risk requirements. Under the market risk capital framework amendment, total risk-weighted assets would have been approximately $424 billion at December 31, 2012. At December 31, 2012, the capital ratios would have been approximately as follows: Total capital ratio 13.4%, Tier 1 common capital ratio 10.6% and Tier 1 capital ratio 12.8%.

In November 2011 the Federal Reserve issued the final rule regarding capital plans, which requires large bank holding companies such as the Company to submit capital plans on an annual basis in order for the Federal Reserve to assess the companies’ systems and processes that incorporate forward-looking projections of revenues and losses to monitor and maintain their internal capital adequacy. The rule also requires that such companies receive no objection from the Federal Reserve before making a capital action.

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In addition, the Dodd-Frank Act imposes stress test requirements on large bank holding companies, including the Company. In October 2012, the Federal Reserve issued its stress test final rule as required by the Dodd-Frank Act that requires the Company to conduct semi-annual company-run stress tests. The rule also subjects the Company to an annual supervisory stress test conducted by the Federal Reserve.

The Company submitted its 2013 capital plan to the Federal Reserve in January 2013. In March 2013, the Federal Reserve published a summary of the supervisory stress test results of each company subject to the final rule, including the Company. The Company received no objection to its 2013 capital plan, including the acquisition of the remaining 35% interest in the Wealth Management JV, the completion of which is subject to applicable regulatory approvals, and ongoing payment of current common and preferred dividends.

The Dodd-Frank Act also requires national banks and federal savings associations with total consolidated assets of more than $10 billion to conduct an annual stress test. Beginning in 2013, the regulation requires national banks with more than $50 billion in average total consolidated assets, including Morgan Stanley Bank, N.A. (“MSBNA”), to conduct its first stress test. MSBNA submitted its stress test results to the OCC and the Federal Reserve in January 2013.

In December 2007, the U.S. banking regulators published final regulations incorporating the Basel II Accord, which requires internationally active U.S. banking organizations, as well as certain of their U.S. bank subsidiaries, to implement Basel II standards over the next several years. In July 2010, the Company began reporting its capital adequacy standards on a parallel basis to its regulators under Basel I and Basel II as part of a phased implementation of Basel II.

In December 2010, the Basel Committee reached an agreement on Basel III. In June 2012, the U.S. banking regulators proposed rules to implement many aspects of Basel III (the “U.S. Basel III proposals”). The U.S. Basel III proposals contain new capital standards that raise the quality of capital, strengthen counterparty credit risk capital requirements, introduce a leverage ratio as a supplemental measure to the risk-based ratio and replace the use of externally developed credit ratings with alternatives such as internally developed credit ratings. The proposals include a new capital conservation buffer, which imposes a common equity Tier 1 capital requirement above the new minimum that can be depleted under stress, and could result in restrictions on capital distributions and discretionary bonuses under certain circumstances. The proposals also provide for a potential countercyclical buffer which regulators can activate during periods of excessive credit growth in their jurisdiction.

Although the U.S. Basel III proposals do not address the Basel Committee’s new additional loss absorbency capital requirement for Global Systemically Important Banks (“G-SIBs”), such as the Company, the U.S. banking regulators indicated that guidance on the implementation of the Basel Committee’s G-SIB capital surcharge in the United States would be forthcoming. In November 2012, the Financial Stability Board provisionally assigned the Company a capital surcharge of 1.5 percent of Tier 1 common capital to RWA on a scale of 1.0 percent to 2.5 percent. The Financial Stability Board stated that it intends to update the G-SIB list annually based on new data. The U.S. Basel III proposals also propose amendments to the advanced approaches risk-based capital rule that change certain aspects of the treatment of counterparty credit risk under the Basel II framework and replace the use of externally developed credit ratings with proposed alternatives such as internally developed credit ratings. The U.S. Basel III proposals contemplate that the new capital requirements would be phased in over several years. In November 2012, the U.S. banking regulators announced that the U.S. Basel III proposals would not become effective on January 1, 2013. The announcement did not specify new implementation or phase-in dates for the U.S. Basel III proposals.

In June 2011, the U.S. banking regulators published final regulations implementing a provision of the Dodd-Frank Act requiring that certain institutions supervised by the Federal Reserve, including the Company, be subject to minimum capital requirements that are not less than the generally applicable risk-based capital requirements. Currently, this minimum “capital floor” is based on Basel I. The U.S. Basel III proposals would replace the current Basel I-based “capital floor” with a standardized approach that, among other things, modifies the existing risk weights for certain types of asset classes.

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Pursuant to provisions of the Dodd-Frank Act, over time, trust preferred securities will no longer qualify as Tier 1 capital but will qualify only as Tier 2 capital subject to meeting Tier 2 capital eligibility criteria. This change in regulatory capital treatment may be phased in incrementally during a transition period once Basel III proposals become effective. This provision of the Dodd-Frank Act accelerates the phasing out of trust preferred securities provided in Basel III.

The Company estimates its pro forma Tier 1 common capital ratio under Basel III to be approximately 9.7% as of March 31, 2013. This estimate is based on a preliminary assessment of the Basel III proposals published to date and other factors, including the Company’s expectations and interpretations of the proposed requirements and approvals of relevant advanced approach regulatory models. The estimate may significantly change based on these factors and the final rules to be issued by the Federal Reserve. If the Company does not receive the model approvals, this could have a significant impact on its Basel III capital ratio estimates. In addition, the estimate may not be comparable with that of other financial services firms given the final rules have not been issued and the estimate may be calculated differently. The Company’s estimates for the Tier 1 common capital ratio under Basel III will be refined over time as a result of further rulemaking or other clarifications by the Federal Reserve, and as the Company’s understanding and assumptions and interpretations of the rules evolve. The pro forma Tier 1 common capital ratio under Basel III is a non-GAAP financial measure that the Company considers to be a useful measure for evaluating compliance with expected regulatory capital requirements. The pro forma Tier 1 common capital ratio estimate is based on shareholders’ equity, Tier 1 common capital and RWAs at March 31, 2013. This preliminary estimate is subject to risks and uncertainties that may cause actual results to differ materially and should not be taken as a projection of what the Company’s capital ratios, RWAs, earnings or other results will actually be at future dates. For a discussion of risks and uncertainties that may affect the future results of the Company, please see “Risk Factors” in Part I, Item 1A of the Form 10-K.

Required Capital.

The Company’s required capital (“Required Capital”) estimation is based on the Required Capital Framework, an internal capital adequacy measure. This framework is a risk-based use-of-capital measure, which is compared with the Company’s regulatory capital to help ensure the Company maintains an amount of risk-based going concern capital after absorbing potential losses from extreme stress events where applicable, at a point in time. The Company defines the difference between its regulatory capital and aggregate Required Capital as Parent capital. Average Tier 1 common capital, aggregate Required Capital and Parent capital for the quarter ended March 31, 2013 were approximately $45.7 billion, $39.9 billion and $5.8 billion, respectively. The Company generally holds Parent capital for prospective regulatory requirements, organic growth, acquisitions and other capital needs.

Tier 1 common capital and common equity attribution to the business segments is based on capital usage calculated by the Required Capital Framework. In principle, each business segment is capitalized as if it were an independent operating entity with limited diversification benefit between the business segments. Required Capital is assessed at each business segment and further attributed to product lines. This process is intended to align capital with the risks in each business segment in order to allow senior management to evaluate returns on a risk-adjusted basis. The Required Capital Framework will evolve over time in response to changes in the business and regulatory environment and to incorporate enhancements in modeling techniques. The Company will continue to evaluate the framework with respect to the impact of future regulatory requirements, as appropriate.

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The following table presents the business segments’ and Parent’s average Tier 1 common capital and average common equity for the quarter ended March 31, 2013 and the quarter ended December 31, 2012:

	March 31, 2013(1)				December 31, 2012
	Average Tier 1 Common Capital		Average Common Equity		Average Tier 1 Common Capital		Average Common Equity
	(dollars in billions)
Institutional Securities(1)	$	34.2	$	39.9	$	22.4	$	28.5
Global Wealth Management Group		4.1		13.4		3.8		13.2
Asset Management		1.6		2.8		1.3		2.4
Parent capital(1)		5.8		4.8		16.9		16.3
Total	$	45.7	$	60.9	$	44.4	$	60.4

(1) Effective January 2013, the Company updated its Required Capital Framework methodology to coincide with the regulatory changes becoming effective in 2013. As a result of this update to the methodology, the majority of which was driven by the implementation of the market risk capital framework amendment, average Parent capital decreased by approximately $11 billion with a corresponding increase allocated to the business segments (principally Institutional Securities) at March 31, 2013.

Liquidity.

The Basel Committee has developed two standards intended for use in liquidity risk supervision, the Liquidity Coverage Ratio (“LCR”) and the Net Stable Funding Ratio (“NSFR”).

The LCR was developed to ensure banks have sufficient high-quality liquid assets to cover net cash outflows arising from significant stress over 30 calendar days. This standard’s objective is to promote the short-term resilience of the liquidity risk profile of banks and bank holding companies. The Company is compliant with this liquidity standard.

The NSFR has a time horizon of one year and builds on traditional “net liquid asset” and “cash capital” methodologies used widely by internationally active banking organizations to provide a sustainable maturity structure of assets and liabilities. The NSFR is defined as the amount of available stable funding to the amount of required stable funding. This standard’s objective is to promote resilience over a longer time horizon. After an observation period that began in 2011, the LCR, including any revisions, will be introduced on January 1, 2015. The NSFR, including any revisions, will move to a minimum standard by January 1, 2018.

The Company will continue to monitor the development of these standards, including any further calibration by the Basel Committee and their potential impact on the Company’s current liquidity and funding requirements.

Off-Balance Sheet Arrangements with Unconsolidated Entities.

The Company enters into various arrangements with unconsolidated entities, including variable interest entities (“VIE”), primarily in connection with its Institutional Securities and Asset Management business segments. See “Off-Balance Sheet Arrangements with Unconsolidated Entities” included in Part II, Item 7, of the Form 10-K and Note 7 to the condensed consolidated financial statements for further information.

See Note 12 to the condensed consolidated financial statements for further information on guarantees.

Commitments.

The Company’s commitments associated with outstanding letters of credit and other financial guarantees obtained to satisfy collateral requirements, investment activities, corporate lending and financing arrangements, mortgage lending and margin lending at March 31, 2013 are summarized below by period of expiration. Since

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commitments associated with these instruments may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements:

	Years to Maturity								Total at March 31, 2013
	Less than 1		1-3		3-5		Over 5
	(dollars in millions)
Letters of credit and other financial guarantees obtained to satisfy collateral requirements	$	1,460	$	9	$	—	$	1	$	1,470
Investment activities		778		100		36		273		1,187
Primary lending commitments—investment grade(1)		7,353		10,801		34,106		926		53,186
Primary lending commitments—non-investment grade(1)		818		4,711		10,337		1,919		17,785
Secondary lending commitments(2)		78		41		27		40		186
Commitments for secured lending transactions		340		—		—		—		340
Forward starting reverse repurchase agreements and securities borrowing agreements(3)(4)		63,397		—		—		—		63,397
Commercial and residential mortgage-related commitments		1,125		18		179		193		1,515
Underwriting commitments		40		—		—		—		40
Other commitments		1,763		340		115		100		2,318
Total	$	77,152	$	16,020	$	44,800	$	3,452	$	141,424

(1) This amount includes $36.9 billion of investment grade and $9.5 billion of non-investment grade unfunded commitments accounted for as held for investment and $1.1 billion of investment grade and $2.8 billion of non-investment grade unfunded commitments accounted for as held for sale at March 31, 2013. The remainder of these lending commitments is carried at fair value.

(2) These commitments are recorded at fair value within Trading assets and Trading liabilities in the condensed consolidated statements of financial condition (see Note 4 to the condensed consolidated financial statements).

(3) The Company enters into forward starting reverse repurchase and securities borrowing agreements (agreements that have a trade date at or prior to March 31, 2013 and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations. These agreements primarily settle within three business days and of the total amount at March 31, 2013, $55.3 billion settled within three business days.

(4) The Company also has a contingent obligation to provide financing to a clearinghouse through which it clears certain transactions. The financing is required only upon the default of a clearinghouse member. The financing takes the form of a reverse repurchase facility, with a maximum amount of approximately $2.3 billion.

The above table does not include the Company’s commitment to purchase an additional 35% of the Wealth Management JV for $4.725 billion upon obtaining all regulatory approvals (see Note 3 to the condensed consolidated financial statements).

Effects of Inflation and Changes in Foreign Exchange Rates.

To the extent that a worsening inflation outlook results in rising interest rates or has negative impacts on the valuation of financial instruments that exceed the impact on the value of the Company's liabilities, it may adversely affect the Company’s financial position and profitability. Rising inflation may also result in increases in the Company’s non-interest expenses that may not be readily recoverable in higher prices of services offered.

A significant portion of the Company’s business is conducted in currencies other than the U.S. dollar, and changes in foreign exchange rates relative to the U.S. dollar can, therefore, affect the value of non-U.S. dollar net assets, revenues and expenses. Potential exposures as a result of these fluctuations in currencies are closely monitored, and, where cost-justified, strategies are adopted that are designed to reduce the impact of these fluctuations on the Company’s financial performance. These strategies may include the financing of non-U.S. dollar assets with direct or swap-based borrowings in the same currency and the use of currency forward contracts or the spot market in various hedging transactions related to net assets, revenues, expenses or cash flows.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Market Risk.

Market risk refers to the risk that a change in the level of one or more market prices, rates, indices, implied volatilities (the price volatility of the underlying instrument imputed from option prices), correlations or other market factors, such as market liquidity, will result in losses for a position or portfolio. Generally, the Company incurs market risk as a result of trading, investing and client facilitation activities, principally within the Institutional Securities business segment where the substantial majority of the Company’s Value-at-Risk (“VaR”) for market risk exposures is generated. In addition, the Company incurs trading-related market risk within the Global Wealth Management Group business segment. The Asset Management business segment incurs principally Non-trading market risk primarily from capital investments in real estate funds and investments in private equity vehicles. For a further discussion of the Company’s Market Risk, see “Quantitative and Qualitative Disclosures about Market Risk—Risk Management” in Part II, Item 7A of the Form 10-K.

VaR.

The Company uses the statistical technique known as VaR as one of the tools used to measure, monitor and review the market risk exposures of its trading portfolios. The Market Risk Department calculates and distributes daily VaR-based risk measures to various levels of management.

VaR Methodology, Assumptions and Limitations.

The Company estimates VaR using a model based on volatility adjusted historical simulation for general market risk factors and Monte Carlo simulation for name-specific risk in corporate shares, bonds, loans and related derivatives. The model constructs a distribution of hypothetical daily changes in the value of trading portfolios based on the following: historical observation of daily changes in key market indices or other market risk factors; and information on the sensitivity of the portfolio values to these market risk factor changes. The Company’s VaR model uses four years of historical data with a volatility adjustment to reflect current market conditions. For risk management purposes, the Company’s Management VaR is computed at a 95% level of confidence over a one-day time horizon, which is a useful indicator of possible trading losses resulting from adverse daily market moves. The Company’s 95%/one-day VaR corresponds to the unrealized loss in portfolio value that, based on historically observed market risk factor movements, would have been exceeded with a frequency of 5%, or five times in every 100 trading days, if the portfolio were held constant for one day.

The Company’s VaR model generally takes into account linear and non-linear exposures to equity and commodity price risk, interest rate risk, credit spread risk and foreign exchange rates. The model also takes into account linear exposures to implied volatility risks for all asset classes and non-linear exposures to implied volatility risks for equity, commodity and foreign exchange referenced products. The VaR model also captures certain implied correlation risks associated with portfolio credit derivatives as well as certain basis risks (e.g., corporate debt and related credit derivatives).

The Company uses VaR as one of a range of risk management tools. Among their benefits, VaR models permit estimation of a portfolio’s aggregate market risk exposure, incorporating a range of varied market risks and portfolio assets. One key element of the VaR model is that it reflects risk reduction due to portfolio diversification or hedging activities. However, VaR has various strengths and limitations, which include, but are not limited to: use of historical changes in market risk factors, which may not be accurate predictors of future market conditions, and may not fully incorporate the risk of extreme market events that are outsized relative to observed historical market behavior or reflect the historical distribution of results beyond the 95% confidence interval; and reporting of losses in a single day, which does not reflect the risk of positions that cannot be liquidated or hedged in one day. A small proportion of market risk generated by trading positions is not included in VaR. The modeling of the risk characteristics of some positions relies on approximations that, under certain circumstances, could produce significantly different results from those produced using more precise measures.

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VaR is most appropriate as a risk measure for trading positions in liquid financial markets and will understate the risk associated with severe events, such as periods of extreme illiquidity. The Company is aware of these and other limitations and, therefore, uses VaR as only one component in its risk management oversight process. This process also incorporates stress testing and scenario analyses and extensive risk monitoring, analysis, and control at the trading desk, division and Company levels.

The Company’s VaR model evolves over time in response to changes in the composition of trading portfolios and to improvements in modeling techniques and systems capabilities. The Company is committed to continuous review and enhancement of VaR methodologies and assumptions in order to capture evolving risks associated with changes in market structure and dynamics. As part of regular process improvement, additional systematic and name-specific risk factors may be added to improve the VaR model’s ability to more accurately estimate risks to specific asset classes or industry sectors.

Since the reported VaR statistics are estimates based on historical data, VaR should not be viewed as predictive of the Company’s future revenues or financial performance or of its ability to monitor and manage risk. There can be no assurance that the Company’s actual losses on a particular day will not exceed the VaR amounts indicated below or that such losses will not occur more than five times in 100 trading days for a 95%/one-day VaR. VaR does not predict the magnitude of losses which, should they occur, may be significantly greater than the VaR amount.

VaR statistics are not readily comparable across firms because of differences in the firms’ portfolios, modeling assumptions and methodologies. These differences can result in materially different VaR estimates across firms for similar portfolios. The impact varies depending on the factor history assumptions, the frequency with which the factor history is updated, and the confidence level. As a result, VaR statistics are more useful when interpreted as indicators of trends in a firm’s risk profile rather than as an absolute measure of risk to be compared across firms.

The Company utilizes the same VaR model for both risk management purposes as well as regulatory capital calculations. The Company’s VaR model has been approved by the Company’s regulators for use in regulatory capital calculations.

The portfolio of positions used for the Company’s Management VaR differs from that used for its Regulatory VaR, as it contains certain positions which are excluded from Regulatory VaR, as determined by regulatory capital requirements. Examples include counterparty credit valuation adjustments, and loans that are carried at fair value and associated hedges. Additionally, the Company’s Management VaR excludes certain risks contained in its Regulatory VaR, such as hedges to counterparty exposures related to the Company’s own credit spread.

The table below presents VaR as used for risk management purposes for the Company’s Trading portfolio, on a quarter-end, quarterly average and quarterly high and low basis (see Table 1 below). The Credit Portfolio is disclosed as a separate category from the Primary Risk Categories, and includes loans that are carried at fair value and associated hedges, as well as counterparty credit valuation adjustments and related hedges.

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Trading Risks.

The table below presents the Company’s 95%/one-day Management VaR:

Table 1: 95% Management VaR	95%/One-Day VaR for the Quarter Ended March 31, 2013										95%/One-Day VaR for the Quarter Ended December 31, 2012
Market Risk Category	Period End			Average			High		Low		Period End			Average			High		Low
	(dollars in millions)
Interest rate and credit spread	$	48		$	61		$	76	$	47	$	56		$	60		$	72	$	52
Equity price		17			18			27		15		21			21			35		18
Foreign exchange rate		15			11			16		7		10			11			16		8
Commodity price		23			20			26		16		20			22			26		18
Less: Diversification benefit(1)(2)		(47	)		(44	)		N/A		N/A		(40	)		(45	)		N/A		N/A
Primary Risk Categories	$	56		$	66		$	78	$	52	$	67		$	69		$	80	$	63
Credit Portfolio		14			16			18		14		19			20			25		18
Less: Diversification benefit(1)(2)		(8	)		(10	)		N/A		N/A		(11	)		(11	)		N/A		N/A
Total Management VaR	$	62		$	72		$	85	$	59	$	75		$	78		$	90	$	71

(1) Diversification benefit equals the difference between the total VaR and the sum of the component VaRs. This benefit arises because the simulated one-day losses for each of the components occur on different days; similar diversification benefits also are taken into account within each component.

(2) N/A–Not Applicable. The minimum and maximum VaR values for the total VaR and each of the component VaRs might have occurred on different days during the year, and therefore the diversification benefit is not an applicable measure.

The Company’s average Management VaR for the Primary Risk Categories for the quarter ended March 31, 2013 was $66 million compared with $69 million for the quarter ended December 31, 2012. This decrease was primarily driven by reduced risk in equities and commodities products.

The average Credit Portfolio VaR for the quarter ended March 31, 2013 was $16 million compared with $20 million for the quarter ended December 31, 2012. This reduction was driven by the transition of loans held at fair value to loans held for investment (net of allowance) as well as reduced counterparty credit risk as credit spreads tightened across the market.

The average Total Management VaR for the quarter ended March 31, 2013 was $72 million compared with $78 million for the quarter ended December 31, 2012. This decrease was driven by the aforementioned movements.

Distribution of VaR Statistics and Net Revenues for the quarter ended March 31, 2013.

One method of evaluating the reasonableness of the Company’s VaR model as a measure of the Company’s potential volatility of net revenues is to compare the VaR with actual trading revenues. Assuming no intra-day trading, for a 95%/one-day VaR, the expected number of times that trading losses should exceed VaR during the year is 13, and, in general, if trading losses were to exceed VaR more than 21 times in a year, the adequacy of the VaR model could be questioned. The Company evaluates the reasonableness of its VaR model by comparing the potential declines in portfolio values generated by the model with actual trading results for the Company, as well as individual business units. For days where losses exceed the VaR statistic, the Company examines the drivers of trading losses to evaluate the VaR model’s accuracy relative to realized trading results.

The distribution of VaR Statistics and Net Revenues will be presented in the histograms below for both the Primary Risk Categories and the Total Trading populations.

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Primary Risk Categories.

As shown in Table 1, the Company’s average 95%/one-day Primary Risk Categories VaR for the quarter ended March 31, 2013 was $66 million. The histogram below presents the distribution of the Company’s daily 95%/one-day Primary Risk Categories VaR for the quarter ended March 31, 2013, which was in a range between $55 million and $75 million for approximately 86% of the trading days during the quarter.

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The histogram below shows the distribution of daily net trading revenues for the Company’s businesses that comprise the Primary Risk Categories for the quarter ended March 31, 2013. This excludes non-trading revenues of these businesses and revenues associated with the Company’s own credit risk. During the quarter ended March 31, 2013, the Company’s businesses that comprise the Primary Risk Categories experienced net trading losses on 8 days, of which no day was in excess of the 95%/one-day Primary Risk Categories VaR.

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Total Trading—including the Primary Risk Categories and the Credit Portfolio.

As shown in Table 1, the Company’s average 95%/one-day Total Management VaR, which includes the Primary Risk Categories and the Credit Portfolio, for the quarter ended March 31, 2013 was $72 million. The histogram below presents the distribution of the Company’s daily 95%/one-day Total Management VaR for the quarter ended March 31, 2013, which was in a range between $60 million and $80 million for approximately 81% of trading days during the quarter.

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The histogram below shows the distribution of daily net trading revenues for the Company’s Trading businesses for the quarter ended March 31, 2013. This excludes non-trading revenues of these businesses and revenues associated with the Company’s own credit risk. During the quarter ended March 31, 2013, the Company experienced net trading losses on 8 days, of which no day was in excess of the 95%/one-day Management VaR.

Non-Trading Risks.

The Company believes that sensitivity analysis is an appropriate representation of the Company’s non-trading risks. Reflected below is this analysis, which covers substantially all of the non-trading risk in the Company’s portfolio.

Counterparty Exposure Related to the Company’s Own Spread.

The credit spread risk relating to the Company’s own mark-to-market derivative counterparty exposure is managed separately from VaR. The credit spread risk sensitivity of this exposure corresponds to an increase in value of approximately $5 million and $6 million for each 1 basis point widening in the Company’s credit spread level for March 31, 2013 and December 31, 2012, respectively.

Funding Liabilities.

The credit spread risk sensitivity of the Company’s mark-to-market funding liabilities corresponded to an increase in value of approximately $12 million and $13 million for each 1 basis point widening in the Company’s credit spread level for March 31, 2013 and December 31, 2012, respectively.

Interest Rate Risk Sensitivity on Income from Continuing Operations.

The Company measures the interest rate risk of certain assets and liabilities by calculating the hypothetical sensitivity of net interest income to potential changes in the level of interest rates over the next twelve months. This sensitivity analysis includes positions that are mark-to-market, as well as positions that are accounted for on an accrual basis. For interest rate derivatives that are perfect economic hedges to non-mark-to-market assets or

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liabilities, the disclosed sensitivities include only the impact of the coupon accrual mismatch. This treatment mitigates the effects caused by the measurement basis differences between the economic hedge and the corresponding hedged instrument.

Given the currently low interest rate environment, the Company uses the following two interest rate scenarios to quantify the Company’s sensitivity: instantaneous parallel shocks of 100 and 200 basis point increases to all points on all yield curves simultaneously.

The hypothetical model does not assume any growth, change in business focus, asset pricing philosophy or asset/liability funding mix and does not capture how the Company would respond to significant changes in market conditions. Furthermore, the model does not reflect the Company’s expectations regarding the movement of interest rates in the near term, nor the actual effect on income from continuing operations before income taxes if such changes were to occur.

	March 31, 2013				December 31, 2012
	+100 Basis Points		+200 Basis Points		+100 Basis Points		+200 Basis Points
	(dollars in millions)
Impact on income from continuing operations before income taxes	$	581	$	874	$	749	$	1,140
Impact on income from continuing operations before income taxes excluding Citi’s share of the Wealth Management JV(1)(2)		406		601		477		718

(1) Amounts for March 31, 2013 exclude Citi’s portion of income from continuing operations before taxes associated with its redeemable noncontrolling interest in the Wealth Management Joint Venture.

(2) Amounts for December 31, 2012 exclude Citi’s portion of income from continuing operations before taxes associated with its nonredeemable noncontrolling interest in the Wealth Management Joint Venture.

Investments.

The Company makes investments in both public and private companies. These investments are predominantly equity positions with long investment horizons, the majority of which are for business facilitation purposes. The market risk related to these investments is measured by estimating the potential reduction in net income associated with a 10% decline in investment values.

	10% Sensitivity
Investments	March 31, 2013		December 31, 2012
	(dollars in millions)
Investments related to Asset Management activities:
Hedge fund investments	$	115	$	120
Private equity and infrastructure funds		130		125
Real estate funds		138		138
Other investments:
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.		144		143
Other Company investments		261		292

Credit Risk.

Credit risk refers to the risk of loss arising when a borrower, counterparty or issuer does not meet its financial obligations. For a further discussion of the Company’s credit risks, see “Quantitative and Qualitative Disclosures about Market Risk—Risk Management—Credit Risk” in Part II, Item 7A of the Form 10-K. See Notes 8 and 12 to the condensed consolidated financial statements for additional information about the Company’s financing receivables and lending commitments, respectively.

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Lending Activities.

The Company provides loans to a variety of customers, from large corporate and institutional clients to high net worth individuals. In addition, the Company purchases loans in the secondary market. The table below summarizes the Company’s loans classified as Loans and Trading assets in the condensed consolidated statements of financial condition at March 31, 2013. See Notes 4 and 8 to the condensed consolidated financial statements for further information.

	Institutional Securities Corporate Lending(1)		Institutional Securities Other(2)		Global Wealth Management Group(3)		Total
	(dollars in millions)
Commercial and industrial	$	7,058	$	1,066	$	2,763	$	10,887
Consumer loans		—		231		7,968		8,199
Residential real estate loans		—		—		6,925		6,925
Wholesale real estate loans		—		319		7		326
Loans held for investment, net of allowance		7,058		1,616		17,663		26,337
Loans held for sale		4,114		—		164		4,278
Loans held at fair value		7,056		9,403		—		16,459
Total loans	$	18,228	$	11,019	$	17,827	$	47,074

(1) In addition to loans, at March 31, 2013, $46.4 billion of unfunded lending commitments were accounted for as held for investment, $3.9 billion of unfunded lending commitments were accounted for as held for sale and $20.7 billion of unfunded lending commitments were accounted for at fair value.

(2) In addition to loans, at March 31, 2013, $0.3 billion of unfunded lending commitments were accounted for as held for investment and $0.8 billion of unfunded lending commitments were accounted for at fair value.

(3) In addition to loans, at March 31, 2013, $3.0 billion of unfunded lending commitments were accounted for as held for investment and $0.2 billion of unfunded lending commitments were accounted for as held for sale.

Institutional Securities Corporate Lending Activities.    In connection with certain of its Institutional Securities business segment activities, the Company provides loans or lending commitments to select corporate clients. These loans and lending commitments have varying terms; may be senior or subordinated; may be secured or unsecured; are generally contingent upon representations, warranties and contractual conditions applicable to the borrower; and may be syndicated, traded or hedged by the Company.

The Company’s corporate lending credit exposure is primarily from loan and lending commitments used for general corporate purposes, working capital and liquidity purposes and typically consist of revolving lines of credit, letter of credit facilities and certain term loans. In addition, the Company provides “event-driven” loans and lending commitments associated with a particular event or transaction, such as to support client merger, acquisition or recapitalization activities. The Company’s “event-driven” loans and lending commitments typically consist of revolving lines of credit, term loans and bridge loans.

Corporate lending commitments may not be indicative of the Company’s actual funding requirements, as the commitment may expire unused or the borrower may not fully utilize the commitment or the Company’s portion of the commitment may be reduced through the syndication or sales process. Such syndications or sales may involve third-party institutional investors where the Company may have a custodial relationship, such as prime brokerage clients.

The Company may hedge and/or sell its exposures in connection with loans and lending commitments. Additionally, the Company may mitigate credit risk by requiring borrowers to pledge collateral and include financial covenants in lending commitments. In the condensed consolidated statements of financial condition, these loans are carried at either fair value with changes in fair value recorded in earnings or held for investment, which is recorded at amortized cost, or held for sale, which is recorded at lower of cost or fair value.

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Effective April 1, 2012, the Company began accounting for all new originated corporate loans and lending commitments as either held for investment or held for sale.

The table below presents the Company’s credit exposure from its corporate lending positions and lending commitments, which is measured in accordance with the Company’s internal risk management standards at March 31, 2013. The “total corporate lending exposure” column includes funded and unfunded loans and lending commitments. Lending commitments represent legally binding obligations to provide funding to clients at March 31, 2013 for all lending transactions. Since commitments associated with these business activities may expire unused or may not be utilized to full capacity, they do not necessarily reflect the actual future cash funding requirements.

Corporate Lending Commitments and Funded Loans at March 31, 2013

	Years to Maturity								Total Corporate Lending Exposure(2)
Credit Rating(1)	Less than 1		1-3		3-5		Over 5
	(dollars in millions)
AAA	$	598	$	107	$	111	$	—	$	816
AA		2,950		799		5,812		68		9,629
A		2,643		4,701		11,268		596		19,208
BBB		2,650		9,420		19,080		1,577		32,727
Investment grade		8,841		15,027		36,271		2,241		62,380
Non-investment grade		1,704		7,215		14,311		2,546		25,776
Total	$	10,545	$	22,242	$	50,582	$	4,787	$	88,156

(1) Obligor credit ratings are determined by the Credit Risk Management Department.

(2) Total corporate lending exposure represents the Company’s potential loss assuming the market price of funded loans and lending commitments was zero.

At March 31, 2013, the aggregate amount of investment grade funded loans was $9.2 billion and the aggregate amount of non-investment grade funded loans was $8.0 billion. In connection with these corporate lending activities (which include corporate funded and unfunded loans and lending commitments), the Company had hedges (which include “single name,” “sector” and “index” hedges) with a notional amount of $13.7 billion related to the total corporate lending exposure of $88.2 billion at March 31, 2013.

“Event-Driven” Loans and Lending Commitments at March 31, 2013.

Included in the total corporate lending exposure amounts in the table above at March 31, 2013 were “event-driven” exposures of $7.3 billion composed of funded loans of $2.4 billion and lending commitments of $4.9 billion. Included in the “event-driven” exposure at March 31, 2013 were $6.0 billion of loans and lending commitments to non-investment grade borrowers. The maturity profile of the “event-driven” loans and lending commitments at March 31, 2013 was as follows: 26% will mature in less than 1 year, 11% will mature within 1 to 3 years, 42% will mature within 3 to 5 years and 22% will mature in over 5 years.

At March 31, 2013, $586 million of the Company’s “event-driven” loans were on a non-accrual basis; all other “event-driven” loans were current. These loans primarily are those the Company originated prior to the financial crisis in 2008 and was unable to sell or syndicate. For loans carried at fair value that are on non-accrual status, interest income is recognized on a cash basis.

Institutional Securities Other Lending Activities.    In addition to the primary corporate lending activity described above, the Institutional Securities business segment engages in other lending activity. These loans

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include corporate loans purchased in the secondary market, commercial and residential mortgage loans, asset-backed loans and financing extended to equities and commodities customers. At March 31, 2013, approximately 99% of Institutional Securities Other lending activities held for investment were current; less than 2% were on non-accrual status because the loans were past due for a period of 90 days or more or payment of principal or interest was in doubt.

Global Wealth Management Group Lending Activities.    The principal Global Wealth Management Group activities that result in credit risk to the Company include purpose and non-purpose securities-based lending, structured credit facilities and residential mortgage lending. At March 31, 2013, approximately 99% of the Global Wealth Management Group business segment’s loans held for investment portfolio were current. For a further discussion of the Company’s credit risks associated with Global Wealth Management Group business segment, see “Quantitative and Qualitative Disclosures about Market Risk—Risk Management—Credit Risk— Global Wealth Management Group” in Part II, Item 7A of the Form 10-K.

Credit Exposure—Derivatives.

For credit exposure information on the Company’s OTC derivative products, see Note 11 to the condensed consolidated financial statements.

Credit Derivatives.    A credit derivative is a contract between a seller (guarantor) and buyer (beneficiary) of protection against the risk of a credit event occurring on a set of debt obligations issued by a specified reference entity. The beneficiary pays a periodic premium over the life of the contract and is protected for the period. If a credit event occurs, the guarantor is required to make payment to the beneficiary based on the terms of the credit derivative contract. Credit events, as defined in the contract, may be one or more of the following defined events: bankruptcy, dissolution or insolvency of the referenced entity, failure to pay, obligation acceleration, repudiation, payment moratorium and restructurings.

The Company trades in a variety of credit derivatives and may either purchase or write protection on a single name or portfolio of referenced entities. In transactions referencing a portfolio of referenced names or securities, protection may be limited to a tranche of exposure or a single name within the portfolio. The Company is an active market maker in the credit derivatives markets. As a market maker, the Company works to earn a bid-offer spread on client flow business and manages any residual credit or correlation risk on a portfolio basis. Further, the Company uses credit derivatives to manage its exposure to residential and commercial mortgage loans and corporate lending exposures during the periods presented. The effectiveness of the Company’s CDS protection as a hedge of the Company’s exposures may vary depending upon a number of factors, including the contractual terms of the CDS.

The Company actively monitors its counterparty credit risk related to credit derivatives. A majority of the Company’s counterparties are banks, broker-dealers, insurance and other financial institutions. Contracts with these counterparties do not include ratings-based termination events but do include provisions related to counterparty rating downgrades, which may result in additional collateral being required by the Company. As with all derivative contracts, the Company considers counterparty credit risk in the valuation of its positions and recognizes credit valuation adjustments as appropriate within Trading in the condensed consolidated statements of income.

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The following table summarizes the key characteristics of the Company’s credit derivative portfolio by counterparty at March 31, 2013. The fair values shown are before the application of any counterparty or cash collateral netting. For additional credit exposure information on the Company’s credit derivative portfolio, see Note 11 to the condensed consolidated financial statements.

	At March 31, 2013
	Fair Values(1)						Notionals
	Receivable		Payable		Net		Beneficiary		Guarantor
	(dollars in millions)
Banks and securities firms	$	54,749	$	52,048	$	2,701	$	1,558,601	$	1,517,185
Insurance and other financial institutions		7,380		6,885		495		265,437		304,405
Non-financial entities		136		124		12		6,754		5,051
Total	$	62,265	$	59,057	$	3,208	$	1,830,792	$	1,826,641

(1) The Company’s CDS are classified in both Level 2 and Level 3 of the fair value hierarchy. Approximately 7% of receivable fair values and 5% of payable fair values represent Level 3 amounts (see Note 4 to the condensed consolidated financial statements).

Country Risk Exposure.

Country risk exposure is the risk that events within a country, such as currency crisis, regulatory changes and other political events, will adversely affect the ability of the sovereign government and/or obligors within the country to honor their obligations to the Company. Country risk exposure is measured in accordance with the Company’s internal risk management standards and includes obligations from sovereign governments, corporations, clearinghouses and financial institutions. The Company actively manages country risk exposure through a comprehensive risk management framework that combines credit and market fundamentals and allows the Company to effectively identify, monitor and limit country risk. Country risk exposure before and after hedges is monitored and managed.

The Company’s obligor credit evaluation process may also identify indirect exposures whereby an obligor has vulnerability or exposure to another country or jurisdiction. Examples of indirect exposures include mutual funds that invest in a single country, offshore companies whose assets reside in another country to that of the offshore jurisdiction and finance company subsidiaries of corporations. Indirect exposures identified through the credit evaluation process may result in a reclassification of country risk.

The Company conducts periodic stress testing that seeks to measure the impact on the Company’s credit and market exposures of shocks stemming from negative economic or political scenarios. When deemed appropriate by the Company’s risk managers, the stress test scenarios include country exit from the Eurozone and possible contagion effects. Second order risks such as the impact for core European banks of their peripheral exposures may also be considered. The Company also conducts legal and documentation analysis of its exposures to obligors in peripheral jurisdictions, which are defined as exposures in Greece, Ireland, Italy, Portugal and Spain (the “European Peripherals”), to identify the risk that such exposures could be redenominated into new currencies or subject to capital controls in the case of country exit from the Eurozone. This analysis, and results of the stress tests, may result in the amendment of limits or exposure mitigation. For a further discussion of the Company’s country risk exposure, see “Quantitative and Qualitative Disclosures about Market Risk—Risk Management—Credit Risk—Country Risk Exposure” in Part II, Item 7A of the Form 10-K.

The Company’s sovereign exposures consist of financial instruments entered into with sovereign and local governments. Its non-sovereign exposures comprise exposures to primarily corporations and financial institutions. The following table shows the Company’s significant non-U.S. country risk exposure except for select European countries (see the table in “Country Risk Exposure—Select European Countries” herein) at March 31, 2013. Index credit derivatives are included in the Company’s country risk exposure tables. Each reference entity within an index is allocated to that reference entity’s country of risk. Index exposures are allocated to the underlying reference entities in proportion to the notional weighting of each reference entity in the index, adjusted for any fair value receivable/payable for that reference entity. Where credit risk crosses

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multiple jurisdictions, for example, a CDS purchased from an issuer in a specific country which references bonds issued by an entity in a different country, the fair value of the CDS is reflected in the Net Counterparty Exposure column based on the country of the CDS issuer. Further, the notional amount of the CDS adjusted for the fair value of the receivable/payable is reflected in the Net Inventory column based on the country of the underlying reference entity.

Country	Net Inventory(1)		Net Counterparty Exposure(2)(3)		Funded Lending		Unfunded Commitments		Exposure Before Hedges		Hedges(4)			Net Exposure(5)
	(dollars in millions)
United Kingdom:
Sovereigns	$	777	$	30	$	—	$	—	$	807	$	(209	)	$	598
Non-sovereigns		1,464		12,814		2,507		4,948		21,733		(3,067	)		18,666
Subtotal	$	2,241	$	12,844	$	2,507	$	4,948	$	22,540	$	(3,276	)	$	19,264
Germany:
Sovereigns	$	2,258	$	530	$	—	$	—	$	2,788	$	(1,194	)	$	1,594
Non-sovereigns		658		3,376		588		3,721		8,343		(2,264	)		6,079
Subtotal	$	2,916	$	3,906	$	588	$	3,721	$	11,131	$	(3,458	)	$	7,673
Brazil:
Sovereigns	$	4,079	$	—	$	—	$	—	$	4,079	$	—		$	4,079
Non-sovereigns		79		231		1,407		212		1,929		(179	)		1,750
Subtotal	$	4,158	$	231	$	1,407	$	212	$	6,008	$	(179	)	$	5,829
Canada:
Sovereigns	$	900	$	26	$	—	$	—	$	926	$	—		$	926
Non-sovereigns		696		1,058		186		1,504		3,444		(250	)		3,194
Subtotal	$	1,596	$	1,084	$	186	$	1,504	$	4,370	$	(250	)	$	4,120
Australia:
Sovereigns	$	1,590	$	24	$	—	$	—	$	1,614	$	(21	)	$	1,593
Non-sovereigns		849		475		493		1,007		2,824		(373	)		2,451
Subtotal	$	2,439	$	499	$	493	$	1,007	$	4,438	$	(394	)	$	4,044

(1) Net inventory represents exposure to both long and short single-name and index positions (i.e., bonds and equities at fair value and CDS based on notional amount assuming zero recovery adjusted for any fair value receivable or payable). As a market maker, the Company transacts in these CDS positions to facilitate client trading. At March 31, 2013, net exposures related to purchased and sold single-name and index credit derivatives for these countries were $(123) million. For a further description of the triggers for purchased credit protection and whether those triggers may limit the effectiveness of the Company’s hedges, see “Credit Exposure—Derivatives” herein.

(2) Net counterparty exposure (i.e., repurchase transactions, securities lending and OTC derivatives) taking into consideration legally enforceable master netting agreements and collateral.

(3) At March 31, 2013, the benefit of collateral received against counterparty credit exposure was $15.5 billion in the U.K., with 99% of collateral consisting of cash, U.S. and U.K. government obligations, and $16.7 billion in Germany with 98% of collateral consisting of cash and government obligations of Belgium, France and the Netherlands. The benefit of collateral received against counterparty credit exposure in the three other countries totaled approximately $2.9 billion, with collateral primarily consisting of cash and U.S. government obligations. These amounts do not include collateral received on secured financing transactions.

(4) Represents CDS hedges (purchased and sold) on net counterparty exposure and funded lending executed by trading desks responsible for hedging counterparty and lending credit risk exposures for the Company. Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.

(5) In addition, at March 31, 2013, the Company had exposure to these countries for overnight deposits with banks of approximately $6.3 billion.

Country Risk Exposure—Select European Countries.    In connection with certain of its Institutional Securities business segment activities, the Company has exposure to many foreign countries. During the quarter ended March 31, 2013, certain European countries, which include the European Peripherals and France, continued to

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experience challenges to their creditworthiness due to weakness in their economic and fiscal situations. The following table shows the Company’s exposure to the European Peripherals and France at March 31, 2013. Country exposure is measured in accordance with the Company’s internal risk management standards and includes obligations from sovereign and non-sovereigns, which includes governments, corporations, clearinghouses and financial institutions.

Country	Net Inventory(1)			Net Counterparty Exposure(2)(3)			Funded Lending		Unfunded Commitments		CDS Adjustment(4)		Exposure Before Hedges			Hedges(5)			Net Exposure
	(dollars in millions)
Greece:
Sovereigns	$	46		$	42		$	—	$	—	$	—	$	88		$	—		$	88
Non-sovereigns		40			6			—		—		—		46			(25	)		21
Subtotal	$	86		$	48		$	—	$	—	$	—	$	134		$	(25	)	$	109
Ireland:
Sovereigns	$	100		$	—		$	—	$	—	$	5	$	105		$	5		$	110
Non-sovereigns		248			52			—		—		18		318			(8	)		310
Subtotal	$	348		$	52		$	—	$	—	$	23	$	423		$	(3	)	$	420
Italy:
Sovereigns	$	(151	)	$	322		$	—	$	—	$	445	$	616		$	(208	)	$	408
Non-sovereigns		667			652			370		802		107		2,598			(350	)		2,248
Subtotal	$	516		$	974		$	370	$	802	$	552	$	3,214		$	(558	)	$	2,656
Spain:
Sovereigns	$	(424	)	$	1		$	—	$	—	$	467	$	44		$	11		$	55
Non-sovereigns		330			512			102		916		192		2,052			(454	)		1,598
Subtotal	$	(94	)	$	513		$	102	$	916	$	659	$	2,096		$	(443	)	$	1,653
Portugal:
Sovereigns	$	(109	)	$	(2	)	$	—	$	—	$	31	$	(80	)	$	(63	)	$	(143	)
Non-sovereigns		89			7			95		96		50		337			(22	)		315
Subtotal	$	(20	)	$	5		$	95	$	96	$	81	$	257		$	(85	)	$	172
Sovereigns	$	(538	)	$	363		$	—	$	—	$	948	$	773		$	(255	)	$	518
Non-sovereigns		1,374			1,229			567		1,814		367		5,351			(859	)		4,492
Total
European
Peripherals(6)	$	836		$	1,592		$	567	$	1,814	$	1,315	$	6,124		$	(1,114	)	$	5,010
France(6):
Sovereigns	$	(1,292	)	$	15		$	—	$	—	$	32	$	(1,245	)	$	(246	)	$	(1,491	)
Non-sovereigns		(55	)		2,296			255		1,877		228		4,601			(814	)		3,787
Total France(6)	$	(1,347	)	$	2,311		$	255	$	1,877	$	260	$	3,356		$	(1,060	)	$	2,296

(1) Net inventory represents exposure to both long and short single-name and index positions (i.e., bonds and equities at fair value and CDS based on notional amount assuming zero recovery adjusted for any fair value receivable or payable). As a market maker, the Company transacts in these CDS positions to facilitate client trading. At March 31, 2013, net exposures related to purchased and sold single-name and index credit derivatives for the European Peripherals and France were $(232) million and $(802) million, respectively. For a further description of the triggers for purchased credit protection and whether those triggers may limit the effectiveness of the Company’s hedges, see “Credit Exposure—Derivatives” herein.

(2) Net counterparty exposure (i.e., repurchase transactions, securities lending and OTC derivatives) takes into consideration legally enforceable master netting agreements and collateral.

(3) At March 31, 2013, the benefit of collateral received against counterparty credit exposure was $4.3 billion in the European Peripherals, with 98% of such collateral consisting of cash and German government obligations and $7.8 billion in France with nearly all collateral consisting of cash and U.S. government obligations. These amounts do not include collateral received on secured financing transactions.

149

(4) CDS adjustment represents credit protection purchased from European Peripherals’ banks on European Peripherals’ sovereign and financial institution risk or French banks on French sovereign and financial institution risk. Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.

(5) Represents CDS hedges (purchased and sold) on net counterparty exposure and funded lending executed by trading desks responsible for hedging counterparty and lending credit risk exposures for the Company. Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.

(6) In addition, at March 31, 2013, the Company had European Peripherals and French exposure for overnight deposits with banks of approximately $115 million and $21 million, respectively.

Industry Exposure—Corporate Lending and OTC Derivative Products.    The Company also monitors its credit exposure to individual industries for credit exposure arising from corporate loans and lending commitments as discussed above and current exposure arising from the Company’s OTC derivative contracts.

The following tables show the Company’s credit exposure from its primary corporate loans and lending commitments and OTC derivative products by industry at March 31, 2013:

Industry	Corporate Lending Exposure
	(dollars in millions)
Energy	$	11,798
Utilities		9,705
Funds, exchanges and other financial services(1)		7,643
Telecommunications services		4,948
Chemicals, metals, mining and other materials		4,751
Pharmaceuticals		4,619
Media-related entities		4,261
Capital goods		4,115
Technology software and services		3,869
Food, beverage and tobacco		3,728
Other		28,719
Total	$	88,156

Industry	OTC Derivative Products(2)
	(dollars in millions)
Utilities	$	3,943
Banks		3,740
Special purpose vehicles		3,165
Funds, exchanges and other financial services(1)		2,008
Regional governments		1,481
Healthcare		1,333
Transportation		944
Academic institutions		896
Energy		758
Sovereign governments		706
Other		4,698
Total	$	23,672

(1) Includes mutual funds, pension funds, private equity and real estate funds, exchanges and clearinghouses and diversified financial services.

(2) For further information on derivative instruments and hedging activities, see Note 11 to the condensed consolidated financial statements.

150

Item 4. Controls and Procedures.

Under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

151

FINANCIAL DATA SUPPLEMENT (Unaudited)

Average Balances and Interest Rates and Net Interest Income

	Three Months Ended March 31, 2013
	Average Weekly     Balance		Interest			Annualized Average     Rate
	(dollars in millions)
Assets
Interest earning assets:
Trading assets(1):
U.S.	$	127,859	$	527			1.7	%
Non-U.S.		96,551		77			0.3
Securities available for sale:
U.S.		41,411		96			0.9
Loans:
U.S.		28,628		234			3.3
Non-U.S.		572		10			7.1
Interest bearing deposits with banks:
U.S.		22,647		15			0.3
Non-U.S.		7,529		11			0.6
Federal funds sold and securities purchased under agreements to resell and Securities borrowed:
U.S.		199,363		(52	)		(0.1	)
Non-U.S.		93,713		144			0.6
Other:
U.S.		64,075		99			0.6
Non-U.S.		16,441		237			5.8
Total	$	698,789	$	1,398			0.8	%
Non-interest earning assets		125,572
Total assets	$	824,361
Liabilities and Equity
Interest bearing liabilities:
Deposits:
U.S.	$	79,698	$	41			0.2	%
Non-U.S.		2,151		—			—
Commercial paper and other short-term borrowings:
U.S.		725		1			0.6
Non-U.S.		767		8			4.2
Long-term debt:
U.S.		160,530		942			2.4
Non-U.S.		9,842		18			0.7
Trading liabilities(1):
U.S.		35,280		—			—
Non-U.S.		66,627		—			—
Securities sold under agreements to repurchase and Securities loaned:
U.S.		108,438		158			0.6
Non-U.S.		64,396		292			1.8
Other:
U.S.		91,845		(402	)		(1.8	)
Non-U.S.		31,612		155			2.0
Total	$	651,911	$	1,213			0.8
Non-interest bearing liabilities and equity		172,450
Total liabilities and equity	$	824,361
Net interest income and net interest rate spread			$	185			—	%

(1) Interest expense on Trading liabilities is reported as a reduction of Interest income on Trading assets.

152

FINANCIAL DATA SUPPLEMENT (Unaudited)—(Continued)

Average Balances and Interest Rates and Net Interest Income

	Three Months Ended March 31, 2012
	Average Weekly     Balance		Interest			Annualized Average     Rate
	(dollars in millions)
Assets
Interest earning assets:
Trading assets(1):
U.S.	$	130,147	$	631			2.0	%
Non-U.S.		88,710		160			0.7
Securities available for sale:
U.S.		31,508		86			1.1
Loans:
U.S.		15,931		112			2.9
Non-U.S.		189		6			12.9
Interest bearing deposits with banks:
U.S.		28,789		5			0.1
Non-U.S.		12,474		22			0.7
Federal funds sold and securities purchased under agreements to resell and Securities borrowed:
U.S.		180,579		(37	)		(0.1	)
Non-U.S.		102,382		150			0.6
Other:
U.S.		50,398		232			1.9
Non-U.S.		14,127		175			5.0
Total	$	655,234	$	1,542			1.0	%
Non-interest earning assets		130,446
Total assets	$	785,680
Liabilities and Equity
Interest bearing liabilities:
Deposits:
U.S.	$	65,638	$	45			0.3	%
Non-U.S.		84		—			—
Commercial paper and other short-term borrowings:
U.S.		629		2			1.3
Non-U.S.		2,377		11			1.9
Long-term debt:
U.S.		173,389		1,240			2.9
Non-U.S.		6,809		14			0.8
Trading liabilities(1):
U.S.		28,779		—			—
Non-U.S.		54,457		—			—
Securities sold under agreements to repurchase and Securities loaned:
U.S.		94,878		171			0.7
Non-U.S.		63,601		292			1.9
Other:
U.S.		80,264		(384	)		(1.9	)
Non-U.S.		34,655		210			2.5
Total	$	605,560	$	1,601			1.1
Non-interest bearing liabilities and equity		180,120
Total liabilities and equity	$	785,680
Net interest income and net interest rate spread			$	(59	)		(0.1	)%

(1) Interest expense on Trading liabilities is reported as a reduction of Interest income on Trading assets.

153

FINANCIAL DATA SUPPLEMENT (Unaudited)—(Continued)

Rate/Volume Analysis

The following tables set forth an analysis of the effect on net interest income of volume and rate changes:

	Three Months Ended March 31, 2013 versus Three Months Ended March 31, 2012
	Increase (decrease) due to change in:
	Volume			Rate			Net Change
	(dollars in millions)
Interest earning assets
Trading assets:
U.S.	$	(11	)	$	(93	)	$	(104	)
Non-U.S.		14			(97	)		(83	)
Securities available for sale:
U.S.		27			(17	)		10
Loans:
U.S.		89			33			122
Non-U.S.		12			(8	)		4
Interest bearing deposits with banks:
U.S.		(1	)		11			10
Non-U.S.		(9	)		(2	)		(11	)
Federal funds sold and securities purchased under agreements to resell and Securities borrowed:
U.S.		(4	)		(11	)		(15	)
Non-U.S.		(13	)		7			(6	)
Other:
U.S.		64			(197	)		(133	)
Non-U.S.		29			33			62
Change in interest income	$	197		$	(341	)	$	(144	)
Interest bearing liabilities
Deposits:
U.S.	$	10		$	(14	)	$	(4	)
Commercial paper and other short-term borrowings:
U.S.		—			(1	)		(1	)
Non-U.S.		(7	)		4			(3	)
Long-term debt:
U.S.		(92	)		(206	)		(298	)
Non-U.S.		6			(2	)		4
Securities sold under agreements to repurchase and Securities loaned:
U.S.		24			(37	)		(13	)
Non-U.S.		4			(4	)		—
Other:
U.S.		(56	)		38			(18	)
Non-U.S.		(18	)		(37	)		(55	)
Change in interest expense	$	(129	)	$	(259	)	$	(388	)
Change in net interest income	$	326		$	(82	)	$	244

154

Part II—Other Information.

Item 1. Legal Proceedings.

In addition to the matters described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “Form 10-K”), and those described below, in the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities as a global diversified financial services institution. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In some cases, the entities that would otherwise be the primary defendants in such cases are bankrupt or in financial distress.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Company’s business, including, among other matters, accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

The Company contests liability and/or the amount of damages as appropriate in each pending matter. Where available information indicates that it is probable a liability had been incurred at the date of the condensed consolidated financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income.

In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss. The Company cannot predict with certainty if, how or when such proceedings will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for proceedings that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, determination of issues related to class certification and the calculation of damages, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before a loss or additional loss or range of loss or additional loss can be reasonably estimated for any proceeding. Subject to the foregoing, the Company believes, based on current knowledge and after consultation with counsel, that the outcome of such proceedings will not have a material adverse effect on the consolidated financial condition of the Company, although the outcome of such proceedings could be material to the Company’s operating results and cash flows for a particular period depending on, among other things, the level of the Company’s revenues or income for such period.

Over the last several years, the level of litigation and investigatory activity focused on residential mortgage and credit crisis related matters has increased materially in the financial services industry. As a result, the Company expects that it may become the subject of increased claims for damages and other relief regarding residential mortgages and related securities in the future and, while the Company has identified below certain proceedings that the Company believes to be material, individually or collectively, there can be no assurance that additional material losses will not be incurred from residential mortgage claims that have not yet been notified to the Company or are not yet determined to be material.

The following developments have occurred with respect to certain matters previously reported in the Form 10-K or concern new actions that have been filed since December 31, 2012:

Residential Mortgage and Credit Crisis Related Matters.

Class Actions.

On March 28, 2013, the court presiding in both In re Morgan Stanley ERISA Litigation and Coulter v. Morgan Stanley & Co. Incorporated et al. granted defendants’ motions to dismiss. In each case the court allowed plaintiffs the opportunity to file an amended complaint with respect to certain claims.

155

On March 8, 2013, the Company filed an answer to the fourth amended complaint in In re Morgan Stanley Mortgage Pass-Through Certificates Litigation.

On November 16, 2012, the court presiding in In re IndyMac Mortgage-Backed Securities Litigation denied without prejudice plaintiffs’ motion for reconsideration seeking to expand the offerings at issue in the litigation. On March 26, 2013, the court entered an order staying the litigation for 60 days in order for the parties to engage in settlement discussions.

On April 17, 2013, Bank of America announced an agreement to settle several matters, including the Luther, et al. v. Countrywide Financial Corporation, et al. litigation. The settlement agreement is subject to court approval.

Other Litigation.

On April 24, 2013, the parties reached an agreement to settle the Abu Dhabi Commercial Bank, et al. v. Morgan Stanley & Co. Inc., et al. litigation. On April 26, 2013, the court dismissed the action with prejudice. The settlement does not cover certain claims that were previously dismissed.

On April 24, 2013, the parties reached an agreement to settle the King County, Washington, et al. v. IKB Deutsche Industriebank AG, et al. litigation. On April 26, 2013, the court dismissed the action with prejudice.

On March 15, 2013, the court in Allstate Insurance Company, et al. v. Morgan Stanley, et al. denied in substantial part the defendants’ motion to dismiss the amended complaint.

On January 10, 2013, the Company filed an answer to the amended complaint in Federal Housing Finance Agency, as Conservator for the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation v. Morgan Stanley, et al.

On February 25, 2013, the Company filed a motion for summary judgment and special exceptions with respect to the claims raised in the amended complaint in Federal Deposit Insurance Corporation, as Receiver for Franklin Bank S.S.B v. Morgan Stanley & Company LLC F/K/A Morgan Stanley & Co. Inc., which motion was denied in substantial part on April 26, 2013.

On March 20, 2013, plaintiff in Sealink Funding Limited v. Morgan Stanley, et al. filed a second amended complaint.

On March 15, 2013, the court in The Prudential Insurance Company of America, et al. v. Morgan Stanley, et al. denied the defendants’ motion to dismiss the amended complaint.

On February 12, 2013, the plaintiff in Federal Deposit Insurance Corporation as Receiver for Colonial Bank v. Citigroup Mortgage Loan Trust Inc. et al. filed an amended complaint. On March 29, 2013, defendants filed a motion to dismiss the amended complaint in Federal Deposit Insurance Corporation as Receiver for Colonial Bank v. Countrywide Securities Corporation et al.

On March 18, 2013, the Company filed a motion to dismiss the complaint in Morgan Stanley Mortgage Loan Trust 2006-13ARX v. Morgan Stanley Mortgage Capital Holdings LLC, as successor in interest to Morgan Stanley Mortgage Capital Inc.

On April 24, 2013, the court in Phoenix Light SF Limited et al. v. J.P. Morgan Securities LLC et al. granted defendants’ motion to dismiss the complaint with leave to replead.

On February 8, 2013, the Company filed a motion to dismiss the complaint in Stichting Pensioenfonds ABP v. Morgan Stanley, et al.

On March 15, 2013, defendants filed a motion to dismiss the complaint in Royal Park Investments SA/NV v. Merrill Lynch et al.

156

On March 11, 2013, the Company filed a motion to dismiss the complaint in Morgan Stanley Mortgage Loan Trust 2006-10SL, et al. v. Morgan Stanley Mortgage Capital Holdings LLC, as successor in interest to Morgan Stanley Mortgage Capital Inc.

On January 31, 2013, plaintiffs in HSH Nordbank AG et al. v. Morgan Stanley et al. filed a complaint against the Company, certain affiliates, and other defendants in the Supreme Court of the State of New York, New York County (the “Supreme Court of NY”). The complaint alleges that defendants made material misrepresentations and omissions in the sale to plaintiffs of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by the Company to plaintiff was approximately $524 million. The complaint alleges causes of action against the Company for common law fraud, fraudulent concealment, aiding and abetting fraud, negligent misrepresentation, and rescission and seeks, among other things, compensatory and punitive damages. On April 12, 2013, defendants filed a motion to dismiss the complaint.

On February 14, 2013, plaintiff in Bank Hapoalim B.M. v. Morgan Stanley et al. filed a complaint in the Supreme Court of NY. The complaint alleges that defendants made material misrepresentations and omissions in the sale to plaintiff of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by the Company to plaintiff was approximately $141 million. The complaint alleges causes of action against the Company for common law fraud, fraudulent concealment, aiding and abetting fraud, and negligent misrepresentation, and seeks, among other things, compensatory and punitive damages. On April 26, 2013, defendants filed a motion to dismiss the complaint.

On December 20, 2012, Landesbank Baden-Württemberg and two affiliates filed a summons with notice against the Company and certain affiliates in the Supreme Court of NY, styled Landesbank Baden-Württemberg et al. v. Morgan Stanley et al. The notice alleges that defendants made material misrepresentations and omissions in the sale to plaintiff of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by the Company to plaintiff was approximately $50 million. The notice identifies causes of action against the Company for, among other things, common law fraud, fraudulent inducement, fraudulent concealment, aiding and abetting fraud, and negligent misrepresentation as well as contract claims. The notice identifies the relief sought to include, among other things, monetary damages, punitive damages, and rescission.

On March 7, 2013, the Federal Housing Finance Agency filed a summons with notice on behalf of the trustee of the Saxon Asset Securities Trust, Series 2007-1, against the Company and an affiliate. The matter is styled Federal Housing Finance Agency, as Conservator for the Federal Home Loan Mortgage Corporation, on behalf of the Trustee of the Saxon Asset Securities Trust, Series 2007-1 v. Saxon Funding Management LLC and Morgan Stanley and is pending in the Supreme Court of NY. The notice asserts claims for breach of contract and alleges, among other things, that the loans in the trust, which had an original principal balance of approximately $593 million, breached various representations and warranties. The notice seeks, among other relief, specific performance of the loan breach remedy procedures in the transaction documents, unspecified damages, indemnity, and interest.

On April 26, 2013, Seagull Point, LLC filed a summons with notice against the Company and other defendants. The matter is styled Seagull Point, LLC, individually and on behalf of Morgan Stanley ABS Capital I Inc. Trust 2007 HE-5 v. WMC Mortgage Corp., et al. and is pending in the Supreme Court of NY. The notice asserts claims for breach of contract and alleges, among other things, that the loans in the trust, which had an original principal balance of approximately $1.19 billion, breached various representations and warranties. The notice seeks, among other relief, specific performance of the loan breach remedy procedures in the transaction documents, declaratory judgment relief, and compensatory damages, including damages of not less than $476 million plus expenses, interest and fees.

157

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The table below sets forth the information with respect to purchases made by or on behalf of the Company of its common stock during the quarterly period ended March 31, 2013.

Issuer Purchases of Equity Securities

(dollars in millions, except per share amounts)

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs(C)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1
(January 1, 2013—January 31, 2013)
Share Repurchase Program(A)		—		—		—	$	1,560
Employee Transactions(B)		1,783,230	$	19.85		—		—
Month #2
(February 1, 2013—February 28, 2013)
Share Repurchase Program(A)		—		—		—	$	1,560
Employee Transactions(B)		11,458,512	$	23.35		—		—
Month #3
(March 1, 2013—March 31, 2013)
Share Repurchase Program(A)		—		—		—	$	1,560
Employee Transactions(B)		149,103	$	22.87		—		—
Total
Share Repurchase Program(A)		—		—		—	$	1,560
Employee Transactions(B)		13,390,845	$	22.88		—		—

(A) On December 19, 2006, the Company announced that its Board of Directors authorized the repurchase of up to $6 billion of the Company’s outstanding stock under a share repurchase program (the “Share Repurchase Program”). The Share Repurchase Program is a program for capital management purposes that considers, among other things, business segment capital needs, as well as equity-based compensation and benefit plan requirements. The Share Repurchase Program has no set expiration or termination date. Share repurchases by the Company are subject to regulatory approval.

(B) Includes: (1) shares delivered or attested in satisfaction of the exercise price and/or tax withholding obligations by holders of employee and director stock options (granted under employee and director stock compensation plans) who exercised options; (2) shares withheld, delivered or attested (under the terms of grants under employee and director stock compensation plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares; (3) shares withheld, delivered and attested (under the terms of grants under employee and director stock compensation plans) to offset tax withholding obligations that occur upon the delivery of outstanding shares underlying restricted stock units, and (4) shares withheld, delivered and attested (under the terms of grants under employee and director stock compensation plans) to offset the cash payment for fractional shares. The Company’s employee and director stock compensation plans provide that the value of the shares withheld, delivered or attested shall be valued using the fair market value of the Company’s common stock on the date the relevant transaction occurs, using a valuation methodology established by the Company.

(C) Share purchases under publicly announced programs are made pursuant to open-market purchases, Rule 10b5-1 plans or privately negotiated transactions (including with employee benefit plans) as market conditions warrant and at prices the Company deems appropriate.

Item 6. Exhibits.

An exhibit index has been filed as part of this Report on Page E-1.

158

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MORGAN STANLEY (Registrant)
By:	/s/ RUTH PORAT
	Ruth Porat Executive Vice President and Chief Financial Officer
By:	/s/ PAUL C. WIRTH
	Paul C. Wirth Deputy Chief Financial Officer

Date: May 7, 2013

159

EXHIBIT INDEX

MORGAN STANLEY

Quarter Ended March 31, 2013

Exhibit No.		Description
	10.1	Change of Employment Status and Release Agreement between Morgan Stanley and Paul J. Taubman, dated January 3, 2013.
	10.2	Morgan Stanley UK Limited Alternative Retirement Plan, dated as of October 8, 2009.
	10.3	Form of Award Certificate for Discretionary Retention Awards under the Morgan Stanley Compensation Incentive Plan.
	10.4	Form of Award Certificate for Discretionary Retention Awards of Stock Units.
	10.5	Form of Award Certificate for Discretionary Retention Awards of Stock Options.
	10.6	Form of Award Certificate for Long-Term Incentive Program Awards.
	12	Statement Re: Computation of Ratio of Earnings to Fixed Charges and Computation of Earnings to Fixed Charges and Preferred Stock Dividends.
	15	Letter of awareness from Deloitte & Touche LLP, dated May 7, 2013, concerning unaudited interim financial information.
	31.1	Rule 13a-14(a) Certification of Chief Executive Officer.
	31.2	Rule 13a-14(a) Certification of Chief Financial Officer.
	32.1	Section 1350 Certification of Chief Executive Officer.
	32.2	Section 1350 Certification of Chief Financial Officer.
	101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Financial Condition—March 31, 2013 and December 31, 2012, (ii) the Condensed Consolidated Statements of Income—Three Months Ended March 31, 2013 and 2012, (iii) the Condensed Consolidated Statements of Comprehensive Income—Three Months Ended March 31, 2013 and 2012, (iv) the Condensed Consolidated Statements of Cash Flows—Three Months Ended March 31, 2013 and 2012, (v) the Condensed Consolidated Statements of Changes in Total Equity—Three Months Ended March 31, 2013 and 2012, and (vi) Notes to Condensed Consolidated Financial Statements (unaudited).

E-1

EX-10.1

EXHIBIT 10.1

January 3, 2013

Paul J. Taubman

New York, New York

RE: Change of Employment Status and Release Agreement

Dear Paul:

This letter sets forth our agreement (the “Agreement”) concerning the change of your employment status with Morgan Stanley. For purposes of the Agreement, Morgan Stanley shall include Morgan Stanley and any and all former and existing parents, subsidiaries, predecessors, and successors (“Morgan Stanley” or the “Firm”).

We have mutually agreed that your active employment with Morgan Stanley ended on December 31, 2012, and that you, except as provided below, will remain on the payroll at your current base salary through May 5, 2013 (the “Termination Date”) (the period from November 5, 2012 through the Termination Date, the “Transition Period”). Through December 31, 2012, you remained a member of the Firm’s Operating Committee and an Executive Officer with all of the obligations and responsibilities associated with those positions. Further, you will also be eligible for continued participation in all welfare and other benefit and retirement plans and programs through the Termination Date or the Accelerated Termination Date, as applicable, with further participation in the medical plan through the last day of the month in which you terminate. Your employment will terminate for all purposes effective on the Termination Date or the Accelerated Termination Date, as applicable.

The Agreement becomes effective and enforceable seven (7) days after you execute and do not revoke it. The signed Agreement must be returned to the undersigned on the next business day immediately following the end of the twenty-one (21) day period provided for in the Agreement.

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Payments and Benefits

We have also mutually agreed that in exchange for executing and not revoking this Agreement, Morgan Stanley will:

(1) Provide you with 2012 Above Base Compensation (the “Bonus”) in a form and on terms and conditions consistent with the bonuses paid or granted to active Operating Committee members to the extent reasonably practicable and in accordance with applicable law and regulations and shall be awarded at such time as bonuses are awarded to active employees in 2013; provided, however, that, notwithstanding the distribution schedule that may apply to active Operating Committee members, your award of deferred compensation, if any, shall be vested on the Termination Date or the Accelerated Termination Date, as applicable, and subject to the cancellation terms until the applicable distribution or conversion date only in accordance with the terms set forth in Attachment A, and be converted, and distributed or delivered, in four equal installments on each of June 1, 2013; December 15, 2013; June 1, 2014 and December 15, 2014; provided, further, that the rule of construction for timing of distribution and conversion and the special distribution and conversion provisions for death, Governmental Service Termination, and employment at a Governmental Employer following termination of employment, each as set forth in the award certificate for your 2011 Awards, shall apply.

(2) It also is agreed that you will receive your accrued benefit through the Termination Date or the Accelerated Termination Date, as applicable, under the Firm’s Supplemental Executive Retirement and Excess Plan (“SEREP”), in accordance with the terms of the SEREP, determined as if you were eligible for early retirement and payable upon attainment of age 55.

(3) We have further agreed that all outstanding equity and deferred cash incentive compensation awards (the “Awards”) granted to you by Morgan Stanley (other than Awards with respect to which “Scheduled Conversion Date”, “Scheduled Distribution Date”, “Earliest Distribution Date” or other similar term or concept (such concept, a “Conversion Date”) has occurred), shall be subject to cancellation until the applicable Conversion Date only in accordance with the terms set forth in Attachment A. Other than as expressly modified herein, all other terms of your Awards will not be deemed modified by this Agreement and you understand and agree that you remain subject to

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all conditions and risks inherent in the Awards. We also acknowledge that: (i) the Awards will vest on the Termination Date or the Accelerated Termination Date, as applicable, and, except as otherwise set forth herein with respect to the Bonus, if any, be converted, distributed and/or paid out in accordance with the schedule previously associated with any such Award; and (ii) no cancellation provisions shall apply to those awards with respect to which a Conversion Date has occurred. We have further agreed that your outstanding options shall remain outstanding and exercisable until the expiration of the original option term.

As of the date of this Agreement, Morgan Stanley’s Chairman & Chief Executive Officer, Chief Legal Officer and Chief Human Resources Officer are not aware of any acts or omissions by you that would constitute or trigger a cancellation event.

We agree that, if during the Transition Period, your employment terminates in a Governmental Service Termination (and not involving a cancellation event), as that term is defined with respect to your 2011 Awards, then subject to the conditions set forth in your 2011 Award certificates, all of your unvested Awards will vest and distribute on the date of your Governmental Service Termination.

You acknowledge that any payments or awards under the Agreement are subject to any applicable tax withholding requirements. You agree to fully abide by employee trading policies with respect to the sale of Morgan Stanley stock and any window period or other restrictions which may apply, or become applicable to you, through the Termination Date.

Morgan Stanley considers you to be one of its “specified employees” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). Therefore, pursuant to Section 409A and the terms and conditions of your Morgan Stanley long-term incentive compensation awards, payment of any cash-based long-term incentive awards and conversion of any stock units that would otherwise occur on account of your “Separation from Service” (as defined in Section 409A, and generally the date on which you cease performing services for Morgan Stanley) during the period commencing on your Separation from Service and ending on the date that is six months thereafter, including, without limitation, payments or stock unit conversions that were delayed due to Section 162(m) of the Internal Revenue Code, will instead be paid or convert, as applicable, on the first business day following the date that is six months after your Separation from Service.

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You acknowledge and agree that your receipt of any and all additional payments and benefits provided in this Agreement is contingent upon: (a) your adherence to the terms of this Agreement and your not being terminated for cause (as defined in Attachment A) before the Termination Date or the Accelerated Termination Date, as applicable; and (b) your execution and non-revocation thereafter and receipt by Morgan Stanley of an effective and enforceable Agreement. Except as otherwise authorized by Morgan Stanley in connection with the performance of your duties for the benefit of Morgan Stanley, you further agree that, after December 31, 2012, you will not hold yourself out to be an active officer, director, manager or agent of Morgan Stanley or otherwise attempt to bind or contract on behalf of Morgan Stanley. You do, however, remain an employee of Morgan Stanley through the Termination Date or the Accelerated Termination Date whichever the case may be.

For the sake of clarity, you agree that you will not provide services of any kind on an employee or consultant basis whether or not for remuneration on behalf of any competitor entity previously identified and specifically agreed to by and between you and Morgan Stanley (a “Competitor”) through May 5, 2013 unless expressly authorized to do so by Morgan Stanley. In addition, you agree that neither you nor any entity with which you may become employed with, provide services to or associate with after the date hereof will make any announcement or permit any announcement of your new employment, provision of services or other association until after February 5, 2013. The parties agree that you shall not be subject to a non-competition agreement or customer or client non-solicitation agreement after May 5, 2013.

In the event you obtain or secure new employment, provide service to or otherwise seek to become associated with in any capacity any entity other than a Competitor during the Transition Period, Morgan Stanley will and hereby does agree to waive the balance of the Transition Period and accelerate your termination date (“Accelerated Termination Date”) to permit your immediate engagement with such entity. You understand and agree that all salary for which you are otherwise eligible for under the Agreement and by virtue of your employment with Morgan Stanley will end on the Accelerated Termination Date, provided, however, if you elect an Accelerated Termination Date to engage in discrete advisory work, you will receive a lump sum payment within 45 days of May 5, 2013 in an amount equal to the base salary you would have been paid through the earlier of (1) the Termination Date or (2) your commencement of employment with a new employer or engagement for services for remuneration of any kind.

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Morgan Stanley agrees that if you obtain or secure new employment, provide service to or otherwise seek to become associated with in any capacity any entity other than a Competitor during the Transition Period, Morgan Stanley will not deem this activity to be a violation of this Agreement or any notice period requirement and the Accelerated Termination Date shall be treated as your Termination Date for purposes hereof. For the sake of clarity, in the event you elect an Accelerated Termination Date, Morgan Stanley will not treat your election as a basis for cancellation or clawback of any outstanding deferred compensation awards.

In addition, in exchange for the payments and other benefits provided to you hereunder by the Firm, we agree that, through and including November 5, 2013, you will not directly or indirectly in any capacity (including through any person, corporation, partnership or business entity of any kind), hire or solicit, recruit, induce, entice, influence, or encourage any Morgan Stanley employee to leave Morgan Stanley for or to otherwise become hired or engaged by any entity (“Wrongful Solicitation”). The restrictions in this paragraph shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, at any point from May 5, 2012 through the Termination Date or the Accelerated Termination Date, as applicable.

You also understand and agree that all outstanding claims for expenses incurred properly in the performance of your duties must be submitted as soon as possible but in no event later than six (6) weeks after the Termination Date or the Accelerated Termination Date, as applicable. All expenses eligible for reimbursement under this Agreement and all in-kind benefits shall be paid or provided to you promptly in accordance with Morgan Stanley’s customary practices applicable to the reimbursement of expenses of such type and the provision of such benefits, but in no event later than December 31 of the calendar year following the calendar year in which such expenses were incurred or such in-kind benefits were to be provided; provided, however, any payment to be made to you under the “Future Dealings” paragraph below to reimburse you for any lost wages shall be made no later than December 31 of the calendar year in which you otherwise would have received such wages. The expenses incurred by you in any calendar year that are eligible for reimbursement under this Agreement and the in-kind benefits provided to you in any other calendar year shall not affect the expenses incurred by you in any other calendar year that are eligible for reimbursement hereunder or the in-kind benefits to be provided to you in any other calendar year. Your right to receive any reimbursement or in-kind benefits hereunder shall not be subject to liquidation or exchange for any other benefit.

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You understand and agree that the foregoing consideration provided to you under the terms of this Agreement is in addition to anything of value to which you are otherwise entitled. You represent, warrant and acknowledge that Morgan Stanley owes you no wages, commissions, bonuses, sick or other medical or disability-related pay, personal or other leave-of-absence pay, severance pay, notice pay, vacation pay, or other compensation or payments or form of remuneration of any kind or nature, other than that specifically provided for in this Agreement or your vested or accrued benefits under any compensation or benefit plan (including but not limited to the retiree medical plan, in which Morgan Stanley acknowledges that you are entitled to participate) or program of Morgan Stanley in which you participate.

In addition, you understand and agree that if any provision of this Agreement fails to comply with Section 409A, or would result in your recognizing income for United States federal income tax purposes with respect to any amount payable under this Agreement before the date of payment, or to incur interest or additional tax pursuant to Section 409A, you understand and agree that Morgan Stanley will confer with you regarding a reasonable recommendation to reform such provision in a manner which shall maintain, to the maximum extent practicable, the original intent of the applicable provision; provided, however, if you do not agree to such modification of the provision to bring it into compliance with Section 409A, that you are solely and exclusively responsible for any resulting income tax liability and agree to hold Morgan Stanley harmless for any Section 409A compliance failure, other than if such noncompliance or income tax liability resulted from Morgan Stanley’s breach of the terms of this Agreement.

General information about continuing benefit coverage will be sent to your home address by the Benefit Center two to three weeks following the Termination Date or the Accelerated Termination Date, as applicable. Specific information regarding continuation of your medical benefits will be sent to your home address by Hewitt Associates two to three weeks following termination of coverage. You have sixty (60) days from the date of receipt to elect COBRA coverage. Inquiries about your benefits should be directed to the Benefit Center at 1-877-674-7411.

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Release of Claims

In exchange for providing you with these enhanced payments and benefits, you agree to waive all claims against Morgan Stanley and its affiliate corporations and its and their respective and current and former directors, officers, employees, agents, managers, shareholders, successors, assigns and other representatives in connection with their relationship to Morgan Stanley (such entities and individuals together with Morgan Stanley, the “Morgan Stanley Releasees”), and to release and forever discharge the Morgan Stanley Releasees, from any and all liability for any claims, rights or damages of any kind, whether known or unknown to you, that you may have against the Morgan Stanley Releasees as of the date of your execution of this Agreement including, but not limited to, any claim arising under any federal, state or local law or ordinance, any tort, any employment contract, express or implied, any public policy waivable by law, or arising under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1866, as amended, the Equal Pay Act, as amended, the Uniform Services Employment and Re-employment Rights Act (“USERRA”), as amended, the Age Discrimination in Employment Act of 1967 (“ADEA”), as amended, the Americans with Disabilities Act (“ADA”), as amended, the Family And Medical Leave Act (“FMLA”), as amended, the Employee Retirement Income Security Act (“ERISA”), as amended, the Civil Rights Act of 1991, as amended, the Rehabilitation Act of 1973, as amended, the Older Workers Benefit Protection Act (“OWBPA”), as amended, the Worker Adjustment and Retraining Notification Act (“WARN”), as amended, the Occupational Safety and Health Act of 1970 (“OSHA”), as amended, the New York State Human Rights Law, as amended, New York City Human Rights Law, as amended, New York Labor Act, as amended, New York Equal Pay Law, as amended, New York Civil Rights Law, as amended, New York Rights of Persons With Disabilities Law, as amended, New York Equal Rights Law, as amended, New York Worker Adjustment and Retraining Notification Act, as amended, or any other claim which you have or may have against the Morgan Stanley Releasees (each of whom may enforce the waiver given to them by you in this clause personally) and, whether arising under the laws of the United States, or any other jurisdiction or country in the world, all claims for invasion of privacy, defamation, intentional infliction of emotional distress, injury to reputation, pain and suffering, constructive and wrongful discharge, retaliation, wages, monetary or equitable relief, vacation pay, award(s), grant(s), or separation and/or severance pay under any separation or severance pay plan maintained by Morgan Stanley, any other employee fringe benefits plans, medical plans, or attorneys’ fees or any demand to seek discovery of any of the claims, rights or damages previously enumerated herein.

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You acknowledge, affirm and agree that during your employment you were not and currently are not, aware of any violations of Morgan Stanley’s Code of Conduct or any legal obligations of Morgan Stanley or its employees, including any obligations under federal securities laws or any Securities and Exchange Commission or the Financial Industry Regulatory Authority rule or regulation or any applicable regulation of the Board of Governors of the Federal Reserve System or the Sarbanes-Oxley Act or the False Claims Act that have not been disclosed in accordance with Morgan Stanley policy.

This Agreement is not intended to, and does not, release rights or claims that may arise after the date of your execution hereof and any rights or claims that you may have to secure enforcement of the terms and conditions of this Agreement. To the extent any claim, charge, complaint or action covered by the Release of Claims is brought by you, for your benefit or on your behalf, you expressly waive any claim to any form of monetary or other damages, including attorneys’ fees and costs, or any other form of personal recovery or relief in connection with any such claim, charge, complaint or action. You further agree to dismiss with prejudice any pending civil lawsuit covered by the Release of Claims. For purposes of this Agreement, “you” shall include your heirs, executors, administrators, attorneys, representatives, successors and assigns.

This Agreement, however, does not waive any rights you may have been granted under the Certificate of Incorporation or Bylaws of Morgan Stanley relating to your actions on behalf of Morgan Stanley in the scope of and during the course of your employment by Morgan Stanley and any rights you may have to coverage under D&O insurance policies, indemnification and/or advancement of expenses under any applicable insurance policy or indemnification policy or agreement (including any D&O insurance policy). Nor does anything in this Agreement impair your rights: (i) in any of your Morgan Stanley Wealth Management brokerage or customer accounts; (ii) to vested benefits and entitlements such as retirement, pension or 401(k) benefits); (iii) in any investment partnership managed by Morgan Stanley or any of its affiliates that is in effect as of the date of this Agreement in which you have an investment interest; (iv) as a shareholder of Morgan Stanley; or (v) to obtain contribution as permitted by law in the event of any judgment against you as a result of any act or failure to act for which you and Morgan

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Stanley or any of its affiliated entities are jointly liable. Nor shall any elections, notices or benefits for which you are eligible as a separated employee of Morgan Stanley be impaired by this Agreement.

Confidentiality, Firm Property, Non-Disclosure and Non-Disparagement

You also agree that in the course of your employment with Morgan Stanley you have or may have acquired non-public privileged or confidential information and trade secrets concerning Morgan Stanley’s business, operations, legal matters and resolution or settlement thereof, internal investigations, customer and employee information and lists, hiring, staffing and compensation practices, studies and analyses, plans, funding, financing and methods of doing business whether in hard copy, electronic or other format (“Confidential and Proprietary Information”), and you further agree that it would be damaging to Morgan Stanley if such Confidential and Proprietary Information were disclosed to any competitor of Morgan Stanley or any third party or person. For purposes of this Agreement, “Confidential and Proprietary Information” shall not include information which is or becomes generally known to the public or within the relevant trade or industry other than due to any violation of your obligation to Morgan Stanley, including under this Agreement, and shall not include your own compensation and personnel records. You understand and agree that all Confidential and Proprietary Information has been divulged to you in confidence and you agree to not disclose or cause to be disclosed directly or indirectly any Confidential and Proprietary Information to any third party or person and further agree to keep all Confidential and Proprietary Information secret and confidential without limitation in time. Your use of Confidential and Proprietary Information will stop immediately upon the cessation of your work responsibilities for Morgan Stanley but no later than the Termination Date or the Accelerated Termination Date, as applicable. You will not remove Confidential and Proprietary Information from any Morgan Stanley facility in either original, electronic or copied form and prior to the Termination Date or the Accelerated Termination Date, as applicable, you agree to deliver to Morgan Stanley any Confidential and Proprietary Information in your possession or control. You will not at any time assert any claim of ownership or other property interest in any such Confidential and Proprietary Information. You will permit Morgan Stanley to inspect any material to be removed from Morgan Stanley offices when you cease to work at any Morgan Stanley facility. For the sake of clarity, to the

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extent that you continue to perform authorized services during the Transition Period or to the extent that you are called upon to cooperate with Morgan Stanley in connection with any legal matter, you may disclose or permit to be disclosed, use or remove Confidential and Proprietary Information as authorized by Morgan Stanley and in connection with the performance of your duties for or obligations to Morgan Stanley.

Prior to the Termination Date or the Accelerated Termination Date, as applicable, you further agree to return any Morgan Stanley equipment and property including, but not limited to, identification materials, computers, laptops, tablets, printers, facsimile machines, corporate credit cards, and wireless devices (e.g., mobile phones, SecurIDs, BlackBerry and similar devices), that you possess or control but that are not in Morgan Stanley’s offices. Anything in this Agreement to the contrary notwithstanding, you shall be entitled to retain (i) papers and other materials of a personal nature, including but not limited to, photographs, personal correspondence, personal diaries, personal calendars, and rolodexes) and personal files, (ii) information showing your awards, compensation, or relating to expense reimbursements, (iii) information that you reasonably believe may be needed for tax purposes, (iv) copies of plans, programs and agreements relating to your employment, or termination thereof, with Morgan Stanley. Morgan Stanley retains the right under this paragraph to retain copies of any items included in the exceptions above which it deems related to the performance of your duties on behalf of Morgan Stanley.

Unless permitted under the “Exceptions” provision in this Agreement, both Morgan Stanley and you also agree not to disclose, or cause, or permit to be disclosed (if circumstances place either party in a position to reasonably prevent the disclosure) in any way the terms of this Agreement without limitation in time, except that you may disclose such information: (i) to your legal representatives, (ii) to your immediate family, (iii) for the purpose of enforcing this Agreement, should that ever be necessary or (iv) as may be required by law or any proceeding, and further you may disclose: (x) the financial aspects of this Agreement to your financial representatives or accountants or for the purpose of qualifying for a loan; or (y) the restrictive covenants of this Agreement to future employers (including prospective employers) or partners or members of an LLC (including prospective partners or members) to verify the terms of such restrictive covenants and to the extent necessary to avoid violating this Agreement, and Morgan Stanley may disclose such information: (i) to its legal representatives; (ii) for the purpose of

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enforcing this Agreement, should that ever be necessary, or (iii) as may be required by law, including but not limited to filings or disclosures required by the Securities and Exchange Commission, or any proceeding provided that any private parties to whom disclosure is permitted under this paragraph are informed of the confidentiality provisions of this Agreement and agree to be bound thereby. This provision shall cease to apply to the extent this Agreement becomes publicly known other than as a result of a violation of this Agreement by you. Further, this provision is expressly not intended in any way to limit you from disclosing the financial structure and tax aspects of this Agreement (or, if reasonably necessary, other provisions of this Agreement) to the Internal Revenue Service.

You agree to give prompt notice to Morgan Stanley in writing, addressed to Alexa Pappas, Managing Director, Morgan Stanley, Legal and Compliance Division, [contact information redacted], of any subpoena or judicial, administrative or regulatory inquiry or proceeding, or lawsuit in which you are required or requested to disclose information relating to Morgan Stanley prior to such disclosure unless any such prior notice is prohibited by law or fiduciary or contractual obligations. To the extent reasonably practicable, such written notice must be given to Ms. Pappas within five (5) business days of your knowledge of receipt of any such request or order so that Morgan Stanley may take whatever action it may deem necessary or appropriate to prevent such assistance or testimony. You also agree that to the extent reasonably practicable you will, within five (5) business days of your knowledge of receipt, provide to Ms. Pappas by facsimile or overnight delivery to the above address, a copy of all legal papers and documents served upon you, unless such provision is prohibited by law or contractual or fiduciary obligation or by order of a court or another body with jurisdiction to issue an order. Additionally, you agree that in the event you are served with such subpoena, court order, directive or other process, you will make all reasonable efforts (subject to your personal and professional obligations) to meet with Ms. Pappas or her designee in advance of giving such testimony or information unless any such prior meeting requirement is prohibited by law or contractual or fiduciary obligation or by order of a court or another body with jurisdiction to issue such order.

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You also agree that, without limitation in time, you will not make any Unauthorized Comments which are defined as:

(1) public statements, written or oral, which are intended to defame or disparage Morgan Stanley’s current members of the Board of Directors, Executive Officers, Management Committee members (all in their capacity as such), or its business or its strategic plans, products, practices, policies, or any other internal Morgan Stanley matter or otherwise publicly speak of any of the foregoing in a disparaging manner in any medium or to any person or entity (all up through and including the Termination Date). For the sake of clarity, comments made directly or indirectly to any person or entity which are reasonably intended to or understood may be used “on background” as that term is used commonly in the public media shall be a violation of this provision. Notwithstanding the foregoing, nothing in this Agreement shall prevent you from: (i) responding publicly to incorrect or disparaging press releases or other official statements issued by the Firm about you to the extent reasonably necessary to correct or refute such statements; or (ii) making any truthful statement to the extent (A) required by law or by any court, arbitrator, mediator, administrative or legislative body with actual or apparent jurisdiction to order disclosure or (B) necessary in any litigation or other proceeding between the parties, including in connection with this Agreement or its enforcement; and

(2) written or oral statements which are intended to defame or disparage: (i) Morgan Stanley’s current (up through and including the Termination Date): (a) members of the Board of Directors, Executive Officers, Management Committee members (all in their capacity as such), or (b) legal matters involving Morgan Stanley and resolution or settlement thereof, or (ii) the termination of your employment with Morgan Stanley, to any reporter, author, producer or similar person or entity, or take any other action likely to result in such negative information being made available by such person acting in such capacity to the general public in any form, including, without limitation, books, articles or writings of any other kind, as well as film, videotape, television or other broadcasts, audio tape, electronic/Internet or blog format or any other medium.

Nothing in sub-paragraphs (1) and (2) above is intended to limit in any way your ability to confer in confidence with your legal representatives or advisors. Moreover, nothing in this Agreement is intended to restrict your ability to speak of your career or employment with Morgan Stanley so long as you do so in a manner that is consistent with your obligations set forth in this Agreement. Likewise, nothing in this Agreement is intended to restrict your ability

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to compete fairly with Morgan Stanley in the future or to provide accurate commentary about market or other events occurring after the Termination Date without breaching this Agreement so long as you do not in any way suggest or imply that you have any information about Morgan Stanley other than what is publicly available or that you have any current affiliation with or association with Morgan Stanley (formal or otherwise) and so long as you do so in a manner that is consistent with your obligations set forth in this Agreement.

Morgan Stanley agrees to instruct the members of the Firm’s Operating Committee as of the date of this Agreement that they may not, for so long as they remain employed by Morgan Stanley, defame or disparage you to any person or entity. Notwithstanding the foregoing, nothing in this Agreement shall prevent Morgan Stanley from: (i) responding publicly to incorrect or disparaging public statements made by you to the extent reasonably necessary to correct or refute such statements; or (ii) making any truthful statement to the extent (A) required by law or by any court, arbitrator, mediator, administrative or legislative body with actual or apparent jurisdiction to order disclosure or (B) necessary in any litigation or other proceeding between the parties, including in connection with this Agreement or its enforcement.

You further agree that you will not use or take any action likely to result in the use of any of Morgan Stanley’s names or any abbreviation thereof in connection with any publication to the general public in any medium in a manner that suggests, directly or indirectly, endorsement by or a then-current business connection to Morgan Stanley.

Morgan Stanley agrees that it will provide you with reasonable prior notice of any filings with the Securities and Exchange Commission made by Morgan Stanley in which you are identified by name and/or title and your compensation is disclosed. You understand and agree that to the extent you are provided with advance notice, such notice will be limited to those portions of the filing which make specific and express reference to your compensation. In addition, you understand and agree that Morgan Stanley is not obligated to obtain your consent or authorization prior to making any such filing.

Nothing in this Agreement shall preclude you from disclosing or permitting to be disclosed the fact of your employment with Morgan Stanley, positions held and job duties or other information that would typically appear on a resume or curriculum vitae or otherwise be required in the course of a job search or a job interview or is otherwise customary in that context so long as you do so in a manner that is consistent with your obligations set forth in this Agreement.

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Exceptions

This Agreement does not prohibit or restrict you from lawfully (A) communicating or cooperating with, providing relevant information to or otherwise assisting in an investigation by: (i) any governmental or regulatory body or official(s) or self regulatory organization regarding a possible violation of any federal law relating to fraud or any rule or regulation of the Securities and Exchange Commission or any other law or regulation; or (ii) the EEOC or any other governmental authority with responsibility for the administration of fair employment practices laws regarding a possible violation of such laws; (B) responding to any inquiry from such authority, including an inquiry about the existence of this Agreement or its underlying facts; (C) testifying, participating or otherwise assisting in an action or proceeding relating to a possible violation of any such law, rule or regulation or (D) making any disclosure otherwise required by law or in order to enforce this Agreement. Nor does this Agreement require you to notify Morgan Stanley of such communications or inquiry described in the preceding sentence. In addition, nothing in this Agreement precludes you from benefiting from classwide injunctive relief awarded in any fair employment practices case brought by any governmental agency, provided such relief does not result in your receipt of any monetary benefit or equivalent thereof. You acknowledge and agree, however, that you are waiving any right to recover any monetary damages or any other form of personal relief in connection with any such action, investigation or proceeding.

Any non-disclosure provision in this Agreement does not prohibit or restrict you or your attorneys from responding to any inquiry about this Agreement or its underlying facts and circumstances by the Securities and Exchange Commission, the Financial Industry Regulatory Authority or any other self-regulatory organization.

Future Dealings

In addition, you agree to reasonably cooperate with and assist Morgan Stanley in connection with any investigation, regulatory matter, lawsuit or arbitration in which Morgan Stanley is a subject, target or party and as to which you may have pertinent information as a direct result of your employment with Morgan Stanley. Your cooperation hereunder shall include making yourself reasonably available (subject to your personal and professional

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obligations) for preparation for hearings, proceedings or litigation and for attendance at any pre-trial discovery and trial sessions. Morgan Stanley agrees to make every reasonable effort to provide you with reasonable notice in the event your participation is required. Morgan Stanley agrees to reimburse reasonable out-of-pocket costs incurred by you as the direct result of your participation, provided that such out-of-pocket costs are supported by appropriate documentation and have prior authorization of Morgan Stanley. Such expenses and costs may include, without limitation, demonstrably lost wages, travel costs and legal fees to the extent that separate legal representation is reasonably warranted.

Further Promises

In the event you breach or threaten to breach any of the provisions in this Agreement regarding Confidential and Proprietary Information, Unauthorized Comments or Wrongful Solicitation, you acknowledge that such breach or threatened breach shall cause irreparable harm to Morgan Stanley, entitling Morgan Stanley, at its option, to seek immediate injunctive relief from a court of competent jurisdiction, without waiver of any other rights or remedies from a court of law or equity.

You also acknowledge that this Agreement has been executed voluntarily by you. You are urged to and acknowledge that you have had the opportunity to obtain the advice of any attorney or other representative of your choice, unrelated to Morgan Stanley, prior to executing this Agreement. Further, you acknowledge that you have a full understanding of the terms of this Agreement which may not be changed or altered except by a writing signed by Morgan Stanley and you.

You acknowledge that you have been given at least twenty-one (21) days within which to consider executing this Agreement (the “twenty-one (21) day Period”) and seven (7) days from the date of your execution of this Agreement within which to revoke it (the seven (7) day period defined as the “Agreement Revocation Period”). Your executed Agreement must be returned to the undersigned at the above address. If you execute the Agreement prior to the end of the twenty-one (21) day period that Morgan Stanley has provided for you, you agree and acknowledge that: (i) your execution was a knowing and voluntary waiver of your right to consider this Agreement for the full twenty-one (21) days; and (ii) you had sufficient time in which to consider and understand the Agreement, and to review it with your attorney or other representative of your choice. Any revocation of this Agreement must be in writing and returned

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to the undersigned at the above address via certified U.S. Mail, return receipt requested. In the event that you revoke this Agreement, you acknowledge that you will not be entitled to receive, and agree not to accept, any payments or benefits under this Agreement. You agree that your acceptance of any such payments or benefits will constitute an acknowledgment that you did not revoke the Agreement. This Agreement will not become effective or enforceable until the Agreement Revocation Period has expired. Your release of claims and obligations hereunder shall not become enforceable until the Committee has approved this Agreement.

BY SIGNING THIS AGREEMENT AND RELEASE YOU ACKNOWLEDGE THAT YOU ARE KNOWINGLY AND VOLUNTARILY WAIVING AND RELEASING ANY AND ALL RIGHTS YOU MAY HAVE AGAINST MORGAN STANLEY UP TO THE DATE OF YOUR EXECUTION OF THIS AGREEMENT UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE OLDER WORKERS BENEFIT PROTECTION ACT AND ALL OTHER APPLICABLE DISCRIMINATION LAWS, STATUTES, ORDINANCES OR REGULATIONS.

The Agreement and the documents governing the Awards (as modified herein) are the entire agreement between you and Morgan Stanley with respect to the subject matter hereof and the Agreement supersede any and all oral and written agreements between Morgan Stanley and you regarding the topics covered herein. No one shall be bound by anything not expressed herein. This Agreement is intended solely for the purpose stated herein and does not constitute and should not be construed to be an admission of liability by Morgan Stanley or you. This Agreement shall be binding on both Morgan Stanley and you.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof. If any clause or portion of any clause of this Agreement should ever be determined to be unenforceable, it is agreed that this will not affect the enforceability of the remainder of such clause or of any other clause or the remainder of this Agreement.

This Agreement may be amended, modified or changed only by a written instrument executed by you and Morgan Stanley. Any waiver to be effective must be in writing and signed by the party against whom it is being enforced.

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All notices and other communications hereunder shall be in writing and shall be delivered by hand, by PDF or facsimile to the other party or mailed by overnight mail or registered or certified mail to the other party, return receipt requested, postage prepaid; shall be deemed delivered upon actual receipt or in the case of registered or certified mail, upon the earlier of the actual receipt or two business days following the date postmarked; and shall be addressed as follows:

If to you:	Paul J. Taubman
	New York, New York
If to Morgan Stanley:	Alexa B. Pappas
	Legal & Compliance Division
	[address redacted]

or to such other address as either party shall have furnished to the other in writing in accordance herewith.

Very truly yours,

/s/ Jeffrey Brodsky

Jeffrey Brodsky, Managing Director

Chief Human Resources Officer

AGREED AND ACCEPTED:

/s/ Paul J. Taubman

Paul J. Taubman

Date: January 3, 2013

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Attachment A

CANCELLATION PROVISIONS APPLICABLE TO OUTSTANDING DEFERRED

CASH AND EQUITY AWARDS

If any of the following events occur at any time before the applicable Scheduled Conversion or Distribution Date, your Stock Units and entire Applicable Account Value (whether or not vested) will be canceled immediately, subject to applicable law:

Your Employment is terminated for Cause or you engage in conduct constituting Cause (either during or following Employment and whether or not your Employment has been terminated as of the applicable Scheduled Distribution Date);

Following the termination of your Employment, the Firm determines that your Employment could have been terminated for Cause (for these purposes, “Cause” will be determined without giving consideration to any “cure” period included in the definition of “Cause”);

“Cause” means:

any act or omission which constitutes a breach of your obligations to the Firm, including, without limitation, (A) your failure to comply with any notice or non-solicitation restrictions that may be applicable to you or (B) your failure to comply with the Firm’s compliance, ethics or risk management standards, or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to physical or mental illness) within ten (10) business days after written notification thereof to you by the Firm;

your commission of any dishonest or fraudulent act, or any other act or omission, which has caused or may reasonably be expected to cause injury to the interest or business reputation of the Firm; or

your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Firm is a member or of any policy of the Firm relating to compliance with any of the foregoing.

You disclose Confidential and Proprietary Information to any unauthorized person outside the Firm, or use or attempt to use Confidential and Proprietary Information other than in connection with the business of the Firm; or you fail to comply with your obligations (either during or after your Employment) under the Firm’s Code of Conduct (and any applicable supplements), or otherwise existing between you and the Firm, relating to Confidential and Proprietary Information or an assignment, procurement or enforcement of rights in Confidential and Proprietary Information;

You engage in a Wrongful Solicitation;

You make any Unauthorized Comments;

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You fail or refuse, following your termination of Employment, to cooperate with or assist the Firm in a timely manner in connection with any investigation, regulatory matter, lawsuit or arbitration in which the Firm is a subject, target or party and as to which you may have pertinent information; or

You resign from your employment with the Firm without having provided the Firm 180 days prior notice of your resignation except as permitted by the Agreement attached herewith.

The terms “Confidential and Proprietary Information”, “Wrongful Solicitation” and “Unauthorized Comments” shall be defined consistent with the definitions of those terms in the Agreement.

CLAWBACK CANCELLATION EVENT APPLICABLE TO DEFERRED CASH

AWARDS

Clawback Cancellation Event. Your entire Applicable Account Value (whether or not vested) will be cancelled immediately, subject to applicable law, if before the applicable Scheduled Distribution Date you take any action, or omit to take any action (including with respect to direct supervisory responsibilities), where such action or omission: (i) causes a restatement of the Firm’s consolidated financial results; (ii) constitutes a violation by you of the Firm’s risk policies and standards (where prior authorization and approval of appropriate senior management was not obtained) whether such action results in a favorable or unfavorable impact to the Firm’s consolidated financial results; or (iii) causes, or is reasonably expected to cause, a substantial financial loss on a trading strategy, investment, commitment or other holding originating either in the current year or in any prior year (without the prior understanding of the possibility and magnitude of such loss by appropriate senior management) and such trading strategy, investment, commitment or other holding was a factor in your award determination.

CLAWBACK CANCELLATION EVENT APPLICABLE TO EQUITY AWARDS

Clawback Cancellation Event. All of your stock units (whether or not vested) will be cancelled immediately, subject to applicable law, if before the applicable Scheduled Conversion Date you take any action, or omit to take any action (including with respect to direct supervisory responsibilities), where such action or omission: (i) causes a restatement of the Firm’s consolidated financial results or (ii) constitutes a violation by you of the Firm’s risk policies and standards (where prior authorization and approval of appropriate senior management was not obtained) whether such action results in a favorable or unfavorable impact to the Firm’s consolidated financial results.

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For Performance Stock Units Only:

In the event and to the extent the Committee reasonably determines that the performance certified by the Committee, and on the basis of which PSUs were converted to shares of Morgan Stanley common stock, was based on materially inaccurate financial statements or other performance metric criteria, you will be obligated to repay to the Firm: the number of shares that were delivered upon conversion of your PSUs, less the number of shares that would have been delivered had your PSUs converted to shares based on accurate financial statements or other performance metric criteria (such number of shares determined in each case by the Committee and before satisfaction of tax or other withholding obligations pursuant to Section 12) (the “Repayment Shares”); provided, however, that to the extent that any of the Repayment Shares have been transferred, you shall repay to the Firm an amount equal to the number of Repayment Shares so transferred multiplied by the fair market value, determined using a valuation methodology established by Morgan Stanley, of Morgan Stanley common stock on the date your PSUs converted to shares of Morgan Stanley common stock; plus any dividend equivalents that were paid on the Repayment Shares when your PSUs converted to shares; plus interest on the amounts described in the preceding clauses at the average rate of interest Morgan Stanley paid to borrow money from financial institutions during the period from the date of such conversion through the date preceding the repayment date.

For the avoidance of doubt, your PSUs will not be deemed “earned” if payment of such award is based on materially inaccurate financial statements or other performance metric criteria.

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EX-10.2

EXHIBIT 10.2

OCTOBER 8, 2009

MORGAN STANLEY UK LIMITED

MORGAN STANLEY ALTERNATIVE

RETIREMENT PLAN RULES

CONTENTS

CLAUSE		PAGE
1.	INTERPRETATION		1
2.	ESTABLISHMENT OF THE PLAN		3
3.	ADMINISTRATION		4
4.	DELEGATION		4
5.	AMENDMENTS		5
6.	ELIGIBILITY AND JOINING		5
	No Right to Continued Employment or Participation		5
7.	CREDITS		6
8.	PARTICIPANTS’ NOTIONAL ACCOUNTS		6
9.	NOTIONAL INVESTMENT		6
	Notional Investments available		6
	Participant elects allocation to Notional Investments		7
	Information		7
	Performance		8
	Amounts at Risk		8
10.	RETIREMENT BENEFITS		8
	Normal retirement		8
	Late retirement		8
	Early retirement		9
11.	COMMUTATION		9
12.	BENEFITS ON DEATH BEFORE NORMAL RETIREMENT DATE		9
13.	BENEFITS ON DEATH AFTER PENSION HAS BECOME PAYABLE		10
14.	BENEFICIARIES OF DEATH BENEFITS		11
15.	BENEFITS ON WITHDRAWAL		12
16.	PENSION INCREASES		12
17.	PAYMENT OF BENEFITS		12
18.	INSURANCE AND OTHER ANNUITIES AND INVESTMENTS		12
19.	PROVIDING BENEFITS UNDER OTHER SCHEMES		13
20.	FORFEITURE		13
21.	DEDUCTION OF TAX		13
22.	MONETARY OBLIGATIONS OF PARTICIPANTS		13
23.	SUSPENSION		14
	Non-transferability		14

24.	CHANGE OF PRINCIPAL COMPANY	15
25.	TERMINATION	15
26.	CONFLICTS WITH DESCRIPTIVE MATERIALS	15
27.	GOVERNING LAW	15

2

THIS DEED is made on the 8^th day of October 2009

BY

MORGAN STANLEY UK LIMITED (company number 04071123) whose registered office is at 25 Cabot Square, Canary Wharf, London, E14 4QF (the Principal Company)

WHEREAS:

(A) The Principal Company wishes to provide the Participants with the pension and lump sum benefits described in this deed with effect on and from 6 April 2006.

(B) The Principal Company intends for participation in a Plan to be voluntary. Each Plan is intended to enable the Principal Company to provide benefits for Participants at its discretion.

NOW THIS DEED WITNESSES:

1. INTERPRETATION

1.1 In this Deed, the following words and expressions shall have the meanings set out below:

Beneficiary means either a Designated Beneficiary or Default Beneficiary, as appropriate.

Benefit Salary means, for a Participant,

(a) up to and including 30 April 2009, the amount notified by the Principal Company to the Participant as being the annual rate of his base salary from the Principal Company or the employer with whom he is in Employment for that Pay Period; and

(b) on and from 1 May 2009, the amount notified by the Principal Company to the Participant as being the annual rate of his base salary from the Principal Company or the employer with whom he is in Employment for that Pay Period which is pensionable. Benefit Salary shall be subject to caps for Managing Director level, Executive Director level, Vice President level and levels below Vice President, which will be determined by the Principal Company from time to time.

However, for the purposes of determining the benefits payable under clause 12, but not the benefits payable in respect of any Class B Member or Class C Member, the Participant’s Benefit Salary shall not exceed the Earnings Cap.

Class B Member and Class C Member means a Participant who would have been regarded as a Class B Member or Class C Member under Inland Revenue limits (as determined under previous legislation governing the taxation treatment of occupational pension schemes and set out in IR12 (2001) “Practice Notes on the Approval of Occupational Pension Schemes”), as in force immediately before 6 April 2006.

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Deed means this deed, as amended from time to time.

Default Beneficiary means a “Beneficiary” within the meaning given in Rule 37(A) of the trust deed and rules governing the Main Plan.

Descriptive Materials means any applicable brochures, letters, memoranda or other documents regarding the Plan, including all electronic-based materials.

Designated Beneficiary means the person designated by a Participant pursuant to clause 14.1 to receive benefits in the event of the Participant’s death.

Earliest Retirement Date means the date at which the Participant reaches age 50 or, from 6 April 2010, age 55.

Earnings Cap means the permitted maximum defined in section 590C of the Income and Corporation Taxes Act 1988. In respect of any tax year from 6 April 2006, it shall be a figure determined by the Principal Company as the figure that would have been applicable in that year had section 590C continued in force.

Employment means employment with the Principal Company or one of its affiliates or subsidiaries, and/or Related Employment.

ITEPA means the Income Tax (Earnings and Pensions) Act 2003.

Normal Retirement Date means the date at which the Participant reaches age 60.

Main Plan means the Morgan Stanley UK Group Pension Plan.

Notional Account means, in respect of a Participant, the notional account maintained in accordance with clause 8 (Participants’ Notional Accounts).

Notional Investments means the investment vehicles selected in accordance with clause 9 (Notional Investments) used to measure the returns (positive or negative) to be attributed to Participants’ Notional Accounts.

Participant means an employee who participates in a Plan in accordance with clause 6.2.

Pay Period means, for a Participant, any period for which he receives a single payment of Benefit Salary from the Principal Company or the employer with whom he is in Employment.

Plan means, in respect of each Participant, the Plan governed by the Morgan Stanley Alternative Retirement Plan Rules established by this Deed, as amended, varied or supplemented from time to time.

Pre-April 2006 Main Plan Member means a Participant who was an active member of the Main Plan immediately before 6 April 2006.

Principal Company means Morgan Stanley UK Limited (including any successor thereto) or any person who becomes the Principal Company pursuant to clause 24.1.

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Related Employment means a Participant’s employment with an employer other than the Principal Company or one of its affiliates or subsidiaries, where such employment is recognised by the Principal Company in its discretion as Related Employment.

Retirement Benefits Scheme means an employer-financed retirement benefits scheme within the meaning of Chapter 2 of Part 6 of ITEPA, and which provides benefits to which paragraph 10 of Part 6 of Schedule 3 to the Social Security (Contributions) Regulations 2001 applies.

Special Discretionary Contributions means the amounts notionally credited to a Participant’s Notional Account that are referred to in clause 7.2(b).

1.2 Any reference to any legislation shall be deemed to include any modification, re-enactment or replacement of it for the time being in force.

1.3 The headings in this Deed have been inserted for convenience of reference only and are to be ignored in any construction of the Plan.

1.4 Use of one gender includes the other, and the singular and plural include each other.

2. ESTABLISHMENT OF THE PLAN

2.1 The Principal Company, with effect on and from 6 April 2006, hereby confirms that the Plan shall be established in favour of each Participant.

2.2 The Principal Company intends that each Plan will be a Retirement Benefits Scheme. However, the Principal Company may decide from time to time, either because it is not practicable to pay benefits in respect of a Participant primarily in pension form or for any other reason, that:

(a) in accordance with clause 11, a Participant’s benefit will be commuted and paid in the form of a cash lump sum; and

(b) the cash lump sum so paid will either represent the Participant’s benefit in its entirety, or represent such proportion of the Participant’s benefit that the Plan does not qualify as a Retirement Benefits Scheme in respect of that Participant.

In that event, the Plan in respect of that Participant will be treated as an employer-financed retirement benefits scheme within the meaning of Chapter 2 of Part 6 of ITEPA.

2.3 While and to the extent that the Plan is a Retirement Benefits Scheme in respect of any Participant, it will not be a registered pension scheme following the implementation of Part 4 (Pension Schemes etc) of the Finance Act 2004.

2.4 The Plan is unfunded. A Participant’s Notional Account represents at all times an unfunded and unsecured contractual obligation of the Principal Company. Each Participant and Beneficiary is an unsecured general creditor of the Principal Company with respect to all obligations owed under the Plan.

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2.5 Subject to clause 18 below, amounts payable under the Plan shall be satisfied solely out of the general assets of the Principal Company, subject to the claims of its creditors. A Participant and a Participant’s Beneficiaries will not have any interest in any fund or in any specific asset of the Principal Company of any kind by reason of any amount credited to the Participant under the Plan, nor shall a Participant or any Beneficiary or any other person have any right to receive any distribution under the Plan except as, and to the extent, expressly provided in this Deed. The Principal Company is not required to segregate any funds or assets to provide for the distribution of a Participant’s Notional Account or issue any notes or securities for the payment thereof.

2.6 The Principal Company has no obligation to invest amounts corresponding to a contribution in respect of a Participant and/or any appreciation thereon (including, without limitation, in the Notional Investments a Participant selects). If the Principal Company invests amounts corresponding to contributions in any reference fund or applies any amounts in a swap or other asset or transaction, such investment or application shall not confer on a Participant any right or interest in any such reference fund or Notional Investment.

2.7 The Participant will have no ownership or other interest in any financial or other instrument or arrangement that the Principal Company may acquire or enter into to hedge its obligations under the Plan.

3. ADMINISTRATION

3.1 The Principal Company is responsible for administering the Plan, including, without limitation, determining Notional Investments offered, determining the value from time to time of Participants’ Notional Accounts and interpreting the Plan provisions and any Descriptive Materials.

3.2 The Principal Company will be the responsible person in relation to the Plan for the purposes of ITEPA, unless the delegation of this role is permitted by that Act and the Principal Company so delegates it.

4. DELEGATION

4.1 The Principal Company may, in its sole discretion, delegate some or all of its authority and responsibilities pursuant to the Plan.

4.2 Each interpretation, determination or other action made or taken pursuant to the Plan by the Principal Company from time to time shall, subject to any dispute resolution procedure that may be in place from time to time in relation to the Plan, be made or taken in its sole discretion and shall be final, binding and conclusive on all persons.

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5. AMENDMENTS

5.1 The Principal Company may alter, amend or modify the Plan at any time in its sole discretion. These amendments may apply retrospectively, and may include (but are not limited to) changes that the Principal Company considers necessary or advisable as a result of changes in, or the adoption or interpretation of, any law, regulation, ruling, judicial decision or accounting standards, or in order to ensure that benefits payable to a Participant are not subject to income tax or national insurance premiums prior to payment or to reduce any tax or national insurance premiums that may be payable, as appropriate.

5.2 If the amount of any Participant’s benefit is affected by an amendment under clause 5.1, the Principal Company shall use reasonable endeavours to inform that Participant within a reasonable period of the date of the change, although any failure to do so shall not invalidate the change.

5.3 Any amendment shall be evidenced by deed executed by the Principal Company.

6. ELIGIBILITY AND JOINING

6.1 Any employee in Employment invited to join by the Principal Company shall be eligible to participate in the Plan. The Principal Company may determine from time to time in its sole discretion general criteria for eligibility to participate in the Plan, but shall not be bound by such criteria to invite any particular employee to participate in the Plan.

6.2 An employee who is eligible under clause 6.1 shall become a Participant with effect from the first day of the month following the date (no later than the 15^th day of any month) on which he submits a completed application form to the Principal Company in such form as it shall prescribe from time to time, or such other date (earlier or later) as the Principal Company determines.

No Right to Continued Employment or Participation

6.3 Neither the Plan nor any interpretation, determination or other action taken or omitted to be taken pursuant to the Plan shall be construed as guaranteeing a Participant’s Employment, a discretionary bonus or any particular level of bonus, compensation or benefits, as giving a Participant any right to continued Employment, during any period, nor shall they be construed as giving a Participant any right to be reemployed by the Principal Company following any termination of Employment.

6.4 In addition, neither the Plan nor any interpretation, determination or other action taken or omitted to be taken pursuant to the Plan shall be deemed to create or confer on a Participant any right to participate in the Plan, or in any similar program that may be established by the Principal Company.

5

7. CREDITS

7.1 The amounts to be notionally credited to a Participant’s Notional Account and the date on which credits will be made will be agreed by the Principal Company with each Participant from time to time.

7.2 The credits agreed under clause 7.1 may include:

(a) regular periodic credits; and

(b) other credits that are made at the discretion of the Principal Company and are designated by the Principal Company as constituting Special Discretionary Contributions for the purposes of the Plan.

8. PARTICIPANTS’ NOTIONAL ACCOUNTS

8.1 A Participant’s Notional Account from time to time shall be determined in accordance with this clause 8. The credits referred to in clause 7 shall be credited to the Participant’s Notional Account in accordance with the terms agreed between the Principal Company and the Participant.

8.2 A Participant’s Notional Account shall, if the Principal Company so determines in its absolute discretion and at times determined by the Principal Company, be adjusted (positively or negatively) to reflect the returns on the Notional Investments to which the Participant’s Notional Account is linked in accordance with clause 9 (Notional investments).

8.3 A Participant’s Notional Account shall be reduced by an amount determined by the Principal Company to reflect the costs associated with operating the Participant’s Notional Account.

8.4 Any allocation of assets to a Participant’s Notional Account is for benefit calculation purposes only. No Beneficiary is entitled to any Notional Investments or assets.

9. NOTIONAL INVESTMENT

Notional Investments available

9.1 The Principal Company shall choose one or more Notional Investments available under the Plan. In choosing the Notional Investments, the Principal Company shall take into account a variety of factors including, without limitation, the Principal Company’s own business interests and its relations with the Notional Investments or parties affiliated with the Notional Investments.

9.2 The Principal Company has no obligation to select Notional Investments based on its expectation as to their potential rate of return or any other criteria. In electing to participate in the Plan, each Participant shall be deemed to acknowledge the existence of actual and potential conflicts of interest with the Principal Company and waive any claim with respect to the existence of any conflict of interest and the Principal Company may require each Participant to affirmatively make such acknowledgment and waiver.

6

9.3 The Principal Company may, from time to time, change the Notional Investments available to Participants or allocate a Participant’s Notional Account to different Notional Investments than those selected by the Participant. Nothing in the Descriptive Materials shall be construed to confer on a Participant the right to continue to have any particular Notional Investment option available for purposes of measuring the value of the Participant’s Notional Account.

Participant elects allocation to Notional Investments

9.4 A Participant’s Notional Account shall be deemed to be allocated among one or more Notional Investments in such proportions as indicated by the Participant in a form acceptable to the Principal Company. This deemed allocation is made exclusively for the purpose of determining the value of the Participant’s Notional Account from time to time. The proportions in which the Notional Account is allocated will apply at the time the election form is submitted, and the actual proportions in which the value of the Notional Account is allocated may change over time as a result of the performance of the Notional Investments.

9.5 A Participant may change the deemed allocation of the Participant’s Notional Account among the Notional Investments then available under the Plan in accordance with procedures and at such times as established by the Principal Company from time to time, provided however that:

(a) the Principal Company may determine the frequency of reallocations;

(b) the Principal Company may determine the minimum percentage of the Participant’s Notional Account that is required to be allocated to any single Notional Investment; and

(c) the Principal Company may determine the minimum percentage of the Participant’s Notional Account that is required to be allocated to one or more Notional Investments; and

(d) no reallocation that a Participant requests shall be honoured to the extent that it would conflict with the minimum allocation requirements that the Principal Company may establish from time to time.

9.6 The Principal Company shall not be liable for any loss arising from a Participant’s choice of Notional Investment(s). The Participant will be solely responsible for any such choice.

Information

9.7 The Notional Investments available from time to time will be indicated on the Principal Company’s website or through other means that the Principal Company shall determine and communicate to Participants from time to time.

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9.8 The Principal Company may provide a Participant with a description of the Notional Investments and their historical returns. However, the Principal Company is not responsible for actions, statements or performance of the Notional Investments, and shall not be required to advise on or monitor the performance of any Notional Investment.

Performance

9.9 The performance of each Notional Investment shall reflect all of the fees and costs of providing the underlying notional investments, including, without limitation, placement agent and brokerage fees, or such notional fees as the Principal Company deems appropriate. If the Principal Company provides such services, the appropriate fee shall be reflected.

9.10 The Principal Company may act as the investment advisor or provide other services in relation to the Notional Investments and receive fees for providing these services. Fees paid will reduce the performance of the Notional Investment.

Amounts at Risk

9.11 The value of a Participant’s Notional Account is subject to risk at all times based upon the performance of the Notional Investments to which the Participant’s Notional Account is allocated. If the value of a Participant’s Notional Investments decreases in the future, the value of the Participant’s Notional Account may be lower than the aggregate of the notional contributions in respect of the Participant.

9.12 Although a Participant will not be an investor in the underlying investments of the elected Notional Investments, a Participant’s Notional Account will be subject to gains and losses attributable to the performance of the selected Notional Investments.

9.13 Payment of the benefits under the Plan is also subject to the risks associated with the Participant’s status as an unsecured general creditor of the Principal Company as described in clause 2.4.

10. RETIREMENT BENEFITS

Normal retirement

10.1 On a Participant’s Normal Retirement Date, the Principal Company will apply the Participant’s Notional Account to provide the Participant with a pension payable for the remainder of the Participant’s life. The Principal Company may at its discretion defer the payment of the pension to a date later than the Participant’s Normal Retirement Date.

Late retirement

10.2 If the Participant remains in Employment after his Normal Retirement Date, the Participant may elect to defer receipt of his benefits to a later date but not later than the date he leaves Employment. The Principal Company may at its discretion defer the payment of the pension to a date later than the date he leaves Employment.

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10.3 For the purposes of clause 10.2, the Principal Company will treat a Participant who has not left Employment before reaching the age of 75 as having left Employment on reaching that age for the purposes of the Plan.

10.4 If the Participant leaves Employment before his Normal Retirement Date, the Participant may only elect to defer receipt of his benefits to a date later than Normal Retirement Date with the approval of the Principal Company.

Early retirement

10.5 The Principal Company can apply the Participant’s Notional Account under clause 17 to provide retirement benefits before the Normal Retirement Date if the Principal Company has agreed with the Participant that he can have immediate benefits from the Plan. This clause 10.5 will only apply:

(a) if the Participant has attained his Earliest Retirement Date; or

(b) if the Participant is suffering from physical or mental impairment such that the Principal Company considers, having regard to the advice of a suitably qualified medical practitioner, is serious enough to prevent a Participant from following his normal occupation or to seriously impair his earning ability on a permanent basis.

10.6 The benefits on early retirement under clause 10.5 are an alternative to the benefits on leaving the Plan at the Normal Retirement Date under clause 10.1.

11. COMMUTATION

11.1 If the Principal Company in its sole discretion decides and on such terms and conditions as it may specify, a Participant’s pension may be commuted, in whole or in part, in exchange for a lump sum provided that, subject to clause 2.2, the status of the Plan as a Retirement Benefits Scheme in respect of that Participant is not prejudiced by such payment. The Principal Company may in accordance with clause 21 make any statutory deductions for any tax and / or national insurance contribution liability from the lump sum.

12. BENEFITS ON DEATH BEFORE NORMAL RETIREMENT DATE

Member in Employment

12.1 If a Participant dies before his Normal Retirement Date and before leaving Employment, a lump sum shall, with the consent of the Principal Company, be paid to the Participant’s Beneficiaries in such proportions as the Principal Company may decide. Unless the Principal Company decides otherwise, the lump sum shall be equal to:

(a) the value of the credits made to the Participant’s Notional Account under clause 8.1 that are Special Discretionary Contributions, adjusted in accordance with clause 9; and

9

(b) subject to clause 12.2 below, an amount equal to four times the Participant’s Benefit Salary, unless the Participant is a Pre-April 2006 Main Plan Member, in which case this amount will not be payable.

12.2 Where the amount paid to a Participant who is a Pre-April 2006 Main Plan Member under the Main Plan is less than four times the Participant’s Benefit Salary as a result of the operation of Rule 34(A) of the Main Plan, an amount will be paid under the Plan so that the total amount paid to the Participant under the Main Plan and the Plan is equivalent to four times the Participant’s Benefit Salary.

12.3 Where clause 12.1 applies, the Principal Company may in its absolute discretion, though is not required to, provide other benefits in respect of the Participant, or procure that such benefits are provided, of an amount and in such form as it determines to be appropriate.

Member not in Employment

12.4 If a Participant dies before his Normal Retirement Date but after leaving Employment, a lump sum calculated in accordance with clause 12.1(a) shall, with the consent of the Principal Company, be paid to the Participant’s Beneficiaries in such proportions as the Principal Company may decide.

13. BENEFITS ON DEATH AFTER PENSION HAS BECOME PAYABLE

13.1 If the conditions referred to in clause 13.2 apply, and unless the Principal Company and the Participant agree otherwise (in a form prescribed by the Principal Company from time to time), if a Participant dies following the first instalment payment of the benefit made pursuant to clause 17, a lump sum equal to the amount set out in clause 13.3 shall be paid to the Participant’s Beneficiaries.

13.2 The conditions are:

(a) the Participant’s benefit is provided as a pension;

(b) the Participant has elected, in a form acceptable to the Principal Company and subject to such conditions as the Principal Company shall determine (including any reduction to the amount of pension payable to the Participant that the Principal Company determines to be appropriate), that the pension will be guaranteed for a minimum period not exceeding 10 years; and

(c) unless the Principal Company determines otherwise, the Principal Company has secured its liability to provide the pension to the Participant through the purchase or maintenance of an insurance policy or annuity policy (whether or not that policy is in the name of the Participant).

13.3 The amount of the lump sum payable under clause 13.1 shall be equal to the remaining instalments of the Participant’s pension payable to the end of the minimum guaranteed period chosen by the member in accordance with clause 13.2(b), but in any event shall not exceed the amount payable under any insurance policy or annuity policy (see clause 18.2 below).

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14. BENEFICIARIES OF DEATH BENEFITS

14.1 A Participant may make a written designation of one or more Designated Beneficiaries to receive all or part of the benefits to be paid under the Plan in the event of the Participant’s death.

14.2 To make a Designated Beneficiary designation, a Participant must complete and submit a designation of beneficiary in a form acceptable to the Principal Company.

14.3 A Participant may revoke or change the Designated Beneficiary designation at any time.

14.4 If a Participant does not designate a Designated Beneficiary to which benefits are to be paid upon the Participant’s death, or if no Designated Beneficiary survives a Participant, any amount payable under clause 12 or 13 subsequent to the Participant’s death shall be held by the Principal Company in trust to pay or apply it to one or more of the Participant’s Default Beneficiaries or for their benefit in such shares and in such manner as the Principal Company decides, or to pay it to the Participant’s personal representative. For these purposes:

(a) if the Principal Company has not been able to trace any Default Beneficiaries within two years of the Participant’s death and no personal representative has been appointed to the Participant’s estate, and/or if any sum payable under this clause would be payable to the Crown, the Duchy of Lancaster or the Duke of Cornwall, the Principal Company will retain the amount;

(b) in the exercise of its discretion under this clause, the Principal Company can pay a lump sum (or part of it) to a person who is under age 18 or to the trustees of a trust for the benefit only of one or more of the Participant’s Default Beneficiaries. The trust can be of a discretionary nature or include a provision allowing its trustees to charge remuneration. A receipt given by any person to whom a payment is made will be a complete discharge to the Principal Company for that payment; and

(c) the Principal Company can decide that any expenses incurred in connection with the provisions of this clause or any payment or application under this clause may be deducted from the relevant payment on a basis to be decided by the Principal Company.

14.5 If a Beneficiary survives a Participant but dies prior to the completion of the payments contemplated to be made to that Beneficiary under clauses 12 and 13, the unpaid portion of such payments at the death of the Beneficiary shall be paid to the Beneficiary’s estate.

14.6 If there is any question as to the identity of any Designated Beneficiary to receive payment, the Principal Company may determine to pay the Participant’s personal representative. The Principal Company’s determination shall be binding and conclusive on all persons, and the Principal Company shall have no further liability to anyone with respect to such payment.

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15. BENEFITS ON WITHDRAWAL

15.1 If the Participant’s Employment terminates before the Normal Retirement Date otherwise than by death and in circumstances where the Participant does not receive benefits payable on early retirement under clause 10.5 (Early retirement), the Participant shall be entitled to receive benefits in accordance with clauses 10 and 11, as appropriate.

16. PENSION INCREASES

16.1 A pension in payment to any Participant may be increased by such amount as the Principal Company may determine from time to time at its sole discretion (including such rate of increase as is provided under any annuity held for the purposes of the Plan or purchased in respect of the Participant) provided that the status of the Plan as a Retirement Benefits Scheme in respect of that Participant is not prejudiced by such payment.

17. PAYMENT OF BENEFITS

17.1 All payments under the Plan shall be in Pounds Sterling. Participants shall have no right to any other form of payment. The Principal Company may, but shall not be obliged to, provide benefits in any currency other than Pounds Sterling on terms to be agreed between the Principal Company and the Participant.

17.2 All pensions provided under this Plan, shall be paid by equal monthly instalments on such date as the Principal Company may decide or at such other intervals as may be agreed.

17.3 All payments of benefit shall, unless otherwise determined by the Principal Company, be made by bank credit transfer.

17.4 A Participant shall have no rights to make withdrawals or loans from the Participant’s Notional Account for any reason.

18. INSURANCE AND OTHER ANNUITIES AND INVESTMENTS

18.1 The Principal Company may from time to time at its discretion (but shall not be obliged to) provide benefits payable under the Plan, or secure its liabilities under the Plan, through the purchase or maintenance of such insurance policies or assets as the Principal Company considers appropriate. Such insurance policies or assets may be in the name of the Principal Company, the Participant or any other party that the Principal Company selects.

18.2 If the Principal Company secures its liability to provide any benefit or part of a benefit under clauses 12 or 13 above through the purchase or maintenance of insurance policies on the lives of any Participant or any other assets, the Principal Company’s liability to provide that benefit or part of a benefit shall be subject to its receiving sufficient funds from those insurance policies or assets.

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18.3 Where the Principal Company provides an insurance policy or annuity policy that secures a benefit or part of a benefit in the name of the Participant, the Principal Company shall be discharged from all liability to provide that benefit or part of a benefit to or in respect of that Participant once they have purchased that policy.

19. PROVIDING BENEFITS UNDER OTHER SCHEMES

19.1 The Principal Company may discharge its liability to provide a benefit or part of a benefit to a Participant under the Plan by making arrangements to provide that benefit or part of a benefit under any other scheme or arrangement (including without limitation the Main Plan).

20. FORFEITURE

20.1 Any lump sum benefit or instalment of pension payable to or in respect of a person entitled to benefits under the Plan shall be forfeited if not claimed within six years after the date on which the benefit first becomes due and payable, save that the Principal Company may at its discretion pay all or any part of such benefits notwithstanding that they may have been so forfeited.

21. DEDUCTION OF TAX

21.1 The Principal Company can deduct from any payment from the Plan any tax or national insurance contributions for which it may be accountable in consequence of the payment.

22. MONETARY OBLIGATIONS OF PARTICIPANTS

22.1 The Principal Company may deduct an amount from the Participant’s Notional Account equal to the amount that the Principal Company certifies is due to it.

22.2 However, if and to the extent that the Plan is a Retirement Benefits Scheme, this clause 22 is subject to section 91 of the Pensions Act 1995. In that event:

(a) the Principal Company can apply this clause 22 if the Participant has a monetary obligation to the Principal Company in respect of his criminal, negligent or fraudulent act or omission, or arising out of a payment made in error in respect of the Participant’s benefit under the Plan; and

(b) the amount of the deduction will not exceed the lesser of the amount of the obligation and the Participant’s Notional Account unless they would be allowed to include it under section 91 of the Pensions Act 1995.

22.3 The Principal Company will not apply this clause 22 to any part of the Participant’s Notional Account that represents a benefit that has operated to exclude the right to or reduce the amount of a redundancy payment to which the Participant would otherwise be entitled under Part XI of the Employment Rights Act 1996.

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22.4 The Principal Company will if possible give a Participant to whom clause 22 applies a certificate showing the amount by which the Participant’s Notional Account is reduced.

23. SUSPENSION

23.1 This clause 23 applies if a benefit is payable direct from the Plan to a Beneficiary who is under 18 years of age or is unable to act because of physical or mental incapacity, as certified by a qualified medical practitioner. In that event, the Principal Company can pay or apply any part of it for the benefit of the Beneficiary or any of his dependants in any manner they think appropriate, including directing that all or part of the benefit be held by itself or other trustees on such trusts (including discretionary trusts) and with such powers and provisions (including powers of selection and variation) as the Principal Company sees fit, or paying all or part of the benefit to the trustees of any other existing trust.

23.2 The Principal Company can also hold any part of the benefit until the Beneficiary reaches 18 years of age or is able to act, or, if he dies before that age, for the benefit of his estate.

23.3 In addition the Principal Company can pay all or any part of a benefit to the parent or guardian of a beneficiary who is under 18 years of age or unable to act or to any other person who the Principal Company considers is responsible for his maintenance. They will pay the benefit (or part of it) on the basis that the person receiving it will use it towards meeting the expenses of the household in which the Beneficiary resides or in some other manner for his maintenance.

23.4 The receipt of the person to whom any payment is made will be a complete discharge to the Principal Company for that payment.

Non-transferability

23.5 A Participant may not assign, sell, garnish, transfer, pledge or encumber the Participant’s interests in the Plan, other than by will or the laws of descent and distribution.

23.6 The prohibition in clause 23.5 above includes any assignment or other transfer that purports to occur by operation of law or otherwise.

23.7 During a Participant’s lifetime, payments shall be made only to the Participant.

23.8 The term and conditions of the Plan are binding on, and shall benefit, the Principal Company and its successors and assignees, and the Participants, their Beneficiaries, heirs, legatees and personal representatives.

23.9 The Participant’s benefits shall be reduced where necessary to comply with any order or provision for pension sharing on divorce, as is mentioned in section 28(1) of the Welfare Reform and Pensions Act 1999 or Article 25(1) of the Welfare Reform and Pensions (Northern Ireland) Order 1999.

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23.10 If and to the extent that the Plan is a Retirement Benefits Scheme, this clause 23 is subject to sections 91 to 93 of the Pensions Act 1995 (Assignment, forfeiture, bankruptcy etc).

24. CHANGE OF PRINCIPAL COMPANY

24.1 Any employer of any of the Participants (or its holding company) may with the consent of the Principal Company by deed become the Principal Company for the purposes of the Plan.

25. TERMINATION

25.1 The Principal Company may, at any time, terminate the Plan in whole or in part as to some or all Participants.

25.2 Following the termination of the Plan, the Principal Company may permit existing Participants’ Notional Accounts to remain in the Plan, subject to their applicable terms and conditions, or secure the benefits through the purchase of annuities or insurance policies.

26. CONFLICTS WITH DESCRIPTIVE MATERIALS

26.1 In the event of any conflict or inconsistency between this Deed and any Descriptive Materials, this Deed shall govern and any Descriptive Materials shall be interpreted to minimize or eliminate any such conflict or inconsistency, provided however that to the extent the Principal Company amends or modifies any term or definition set forth herein, it shall use reasonable endeavours to notify the Participants affected.

27. GOVERNING LAW

27.1 This Deed is governed by and shall be construed in accordance with English law.

IN WITNESS whereof this DEED was executed and delivered on the date written above.

EXECUTED as a DEED under

the COMMON SEAL of

MORGAN STANLEY UK LIMITED

in the presence of:

Director:	/s/ [Name]
Director/Secretary:	/s/ [Name]

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EX-10.3

EXHIBIT 10.3

MORGAN STANLEY

MORGAN STANLEY COMPENSATION INCENTIVE PLAN

DEFERRED BONUS PROGRAM

[YEAR] DISCRETIONARY RETENTION AWARDS

AWARD CERTIFICATE

TABLE OF CONTENTS FOR AWARD CERTIFICATE

1.	Your award generally.	3
2.	Vesting schedule and payment.	3
3.	Special provision for certain employees.	5
4.	Death, Disability and Full Career Retirement.	5
5.	Involuntary termination by the Firm.	6
6.	Governmental Service.	6
7.	Qualifying Termination.	7
8.	Specified employees.	7
9.	Cancellation of Applicable Account Value under certain circumstances.	7
10.	Tax and other withholding obligations.	10
11.	Obligations you owe to the Firm.	11
12.	Nontransferability.	11
13.	Designation of a beneficiary.	11
14.	No entitlements.	12
15.	Consents under local law.	12
16.	Award modification.	12
17.	Governing law.	13
18.	Defined terms.	13

MORGAN STANLEY

MORGAN STANLEY COMPENSATION INCENTIVE PLAN

DEFERRED BONUS PROGRAM

[YEAR] DISCRETIONARY RETENTION AWARDS

AWARD CERTIFICATE

Morgan Stanley has granted you an award under the [year] Deferred Bonus Program (“DBP Award”) of the Morgan Stanley Compensation Incentive Plan (the “Plan”) as part of your discretionary incentive compensation for services provided during [year] and as an incentive for you to remain in Employment and provide services to the Firm through the Scheduled Vesting Dates. This Award Certificate sets forth the general terms and conditions of your [year] DBP Award under the Plan. The initial value of your [year] DBP Award has been communicated to you independently.

If you are employed outside the United States, you will also receive an “International Supplement” that contains supplemental terms and conditions for your [year] DBP Award. You should read this Award Certificate in conjunction with the International Supplement, if applicable, and the Plan in order to understand the terms and conditions of your [year] DBP Award.

Your [year] DBP Award is made pursuant to the Plan. References to Applicable Account Value in this Award Certificate mean only the Applicable Account Value related to your [year] DBP Award, and the terms and conditions herein apply only to such award. If you receive any other award under the Plan or another incentive compensation plan, it will be governed by the terms and conditions of the applicable award documentation, which may be different from those herein.

The purposes of the [year] DBP Award are, among other things, to facilitate the allocation of a portion of your discretionary above-base compensation for [year] to the notional investment opportunities afforded by the Plan, to reward you for your continued Employment and service to the Firm in the future and your compliance with the Firm’s policies (including the Code of Conduct), to protect the Firm’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, and other legitimate business interests, and to ensure an orderly transition of responsibilities. In view of these purposes, you will earn each portion of your [year] DBP Award only if you (1) remain in continuous Employment through the applicable Scheduled Vesting Date (subject to limited exceptions set forth below), (2) do not engage in any activity that is a cancellation event set forth in Section 9(c) below and (3) satisfy obligations you owe to the Firm as set forth in Section 11 below. Even if your award has vested, you will have no right to your award if a cancellation event occurs under the circumstances set forth in Section 9(c) below. As Morgan Stanley deems appropriate, Morgan Stanley will require you to provide a written certification or other evidence,

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from time to time in its sole discretion, to confirm that no cancellation event has occurred, including upon a termination of Employment and/or during a specified period of time prior to each Scheduled Distribution Date thereafter. If you fail to provide any required certification or other evidence, Morgan Stanley will cancel your award. It is your responsibility to provide the Executive Compensation Department with your up-to-date contact information.

Capitalized terms used in this Award Certificate that are not defined in the text have the meanings set forth in Section 18 below. Capitalized terms used in this Award Certificate that are not defined in the text or in Section 18 below have the meanings set forth in the Plan.

1. Your award generally.

(a) Applicable Account Value. This Award Certificate uses the term “Applicable Account Value” to refer to your [year] DBP Award under the Plan and the notional return (positive or negative) thereon based on the performance of the Notional Investments to which your Account is notionally allocated. If you receive another award under the Plan (for example, an award for a future year), your total Account Value under the Plan will include the Applicable Account Value of your [year] DBP Award and the applicable Account Value of such other award(s).

(b) Notional allocation of Account. The notional allocation of your Applicable Account Value is subject to the ultimate discretion of the Firm and is made exclusively for the purpose of determining your Applicable Account Value from time to time in accordance with the Plan. You may notionally allocate your Applicable Account Value to any one fund, or any combination of funds, offered as Notional Investments under the Plan with respect to your [year] DBP Award.

2. Vesting schedule and payment.

(a) Vesting schedule. Except as otherwise provided in this Award Certificate, your Applicable Account Value will vest according to the following schedule: (i) 25% of your Applicable Account Value will vest on the First Scheduled Vesting Date; (ii) one-third of the remaining portion of your Applicable Account Value will vest on the Second Scheduled Vesting Date; (iii) 50% of the remaining portion of your Applicable Account Value will vest on the Third Scheduled Vesting Date and (iv) the remaining portion of your Applicable Account Value will vest on the Fourth Scheduled Vesting Date.¹ Except as otherwise provided in this Award Certificate, each portion of your Applicable Account Value will vest only if you continue to provide future services to the Firm by remaining in continuous Employment through the applicable Scheduled Vesting Date and providing value added services to the Firm during this timeframe. The special vesting terms set forth in Sections 4, 5, 6 and 7 of this Award Certificate apply (i) if your Employment terminates by reason of your death or Disability, (ii) upon your Full Career Retirement, (iii) if the Firm terminates your employment in an involuntary

¹  The vesting schedule and related vesting dates presented in this form of Award Certificate are indicative. The vesting schedule and related vesting dates applicable to awards may vary.

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termination under the circumstances described in Section 5, (iv) upon a Governmental Service Termination or (v) upon a Qualifying Termination. The vested portion of your Applicable Account Value remains subject to the cancellation and withholding provisions set forth in this Award Certificate.

(b) Payment. Except as otherwise provided in this Award Certificate, (i) 25% of your Applicable Account Value will, to the extent vested, be paid in cash on the First Scheduled Distribution Date; (ii) one-third of the remaining portion of your Applicable Account Value will, to the extent vested, be paid in cash on the Second Scheduled Distribution Date; (iii) 50% of the remaining portion of your Applicable Account Value will, to the extent vested, be paid in cash on the Third Scheduled Distribution Date and (iv) the remaining portion of your Applicable Account Value will, to the extent vested, be paid in cash on the Fourth Scheduled Distribution Date; provided that, subject to Section 2(d), your Applicable Account Value may be paid to you following the applicable Scheduled Distribution Date on the next administratively practicable payroll date.² The special payment provisions set forth in Sections 4(a), 4(b), 6 and 7 of this Award Certificate apply (i) if your Employment terminates by reason of your death or you die after termination of your Employment, (ii) upon your Governmental Service Termination or your employment at a Governmental Employer following your termination of employment with the Firm under circumstances set forth in Section 6(b) or (iii) upon a Qualifying Termination. All payments are subject to applicable withholdings and deductions.

Each portion of your Applicable Account Value scheduled to be paid on the First, Second, Third and Fourth Scheduled Distribution Dates, as applicable, is deemed to be a separate payment for all purposes, including for purposes of Section 409A, and the portion of your Applicable Account Value scheduled to be paid on the First Scheduled Distribution Date and the Second Scheduled Distribution Date is not “nonqualified deferred compensation” for purposes of Section 409A.³

(c) Accelerated payment. Morgan Stanley shall have no right to accelerate the payment of any portion of your Applicable Account Value, except to the extent that such acceleration is not prohibited by Section 409A and would not result in your being required to recognize income for United States federal income tax purposes prior to the distribution of your Applicable Account Value or your incurring additional tax or interest under Section 409A. If any portion of your Applicable Account Value is paid prior to the applicable Scheduled Distribution Date pursuant to this Section 2(c), Morgan Stanley may condition such payment on your agreement that if you engage in any activity constituting a cancellation event set forth in Section 9(c) within the applicable period of time that would have resulted in cancellation of all or a portion of your Applicable Account Value (had it not been paid pursuant to this Section 2(c)), you will be required to repay to Morgan Stanley an amount equal to the payment you received (before taking account of any withholding) in respect of the portion of your Applicable Account Value that would have been canceled upon the occurrence of such cancellation event, plus

²  The payment schedule and related payment dates presented in this form of Award Certificate are indicative. The payment schedule and related payment dates applicable to awards may vary.

³  Provision may not be applicable to awards granted to UK Code Staff.

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interest on such amount at the average rate of interest Morgan Stanley paid to borrow money from financial institutions during the period from the date such portion of your Applicable Account Value was paid through the date preceding the repayment date.

(d) Rule of construction for timing of payment. Whenever this Award Certificate provides for all or a portion of your Applicable Account Value to be paid on a Scheduled Distribution Date or upon a different specified event or date, such payment will be considered to have been timely made, and neither you nor any of your beneficiaries or your estate shall have any claim against the Firm for damages based on a delay in the payment of your Applicable Account Value, and the Firm shall have no liability to you (or to any of your beneficiaries or your estate) in respect of any such delay, as long as payment is made by December 31 of the year in which occurs the applicable Scheduled Distribution Date or such other specified event or date or, if later, by the 15th day of the third calendar month following such specified event or date. Similarly, neither you nor any of your beneficiaries or your estate shall have any claim against the Firm for damages, and the Firm shall have no liability to you (or to any of your beneficiaries or your estate), based on any acceleration of the payment of your Applicable Account Value pursuant to Section 2(c).

3. Special provision for certain employees.

Notwithstanding the other provisions of this Award Certificate, if Morgan Stanley considers you to be one of its executive officers at the time provided for the payment of the vested portion of your Applicable Account Value and determines that your compensation may not be fully deductible by virtue of Section 162(m) of the Internal Revenue Code, Morgan Stanley shall delay payment of the nondeductible portion of your compensation, including delaying payment of your Applicable Account Value to the extent nondeductible, unless the Administrator, in its sole discretion, determines not to delay such payment. This delay will continue until your Separation from Service or, to the extent permitted under Section 409A, the end of the first earlier taxable year of the Firm as of the last day of which you are no longer an executive officer (subject to earlier payment in the event of your death as described below).

4. Death, Disability and Full Career Retirement.

The following special vesting and payment terms apply to your award:

(a) Death during Employment. If your Employment terminates due to death, any unvested portion of your Applicable Account Value will vest on the date of your death. Your Applicable Account Value will be paid to the beneficiary you have designated pursuant to Section 12 or the legal representative of your estate, as applicable, upon your death, provided that your estate or beneficiary notifies the Firm of your death within 60 days following your death. After your death, the cancellation provisions set forth in Section 9(c) will no longer apply.

(b) Death after termination of Employment. If you die after the termination of your Employment but prior to the applicable Scheduled Distribution Date, the vested portion of your Applicable Account Value that you held at the time of your death will be paid to the beneficiary you have designated pursuant to Section 12 or the legal representative of your estate,

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as applicable, upon your death, provided that your estate or beneficiary notifies the Firm of your death within 60 days following your death. After your death, the cancellation provisions set forth in Section 9(c) will no longer apply.

(c) Disability or Full Career Retirement. If your Employment terminates due to Disability or in a Full Career Retirement, any unvested portion of your Applicable Account Value will vest on the date your Employment terminates. Your Applicable Account Value will be paid on the applicable Scheduled Distribution Date. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the applicable Scheduled Distribution Date.

5. Involuntary termination by the Firm.

If the Firm terminates your employment under circumstances not involving any cancellation event set forth in Section 9(c), the unvested portion of your Applicable Account Value will vest on the date your employment with the Firm terminates and your Applicable Account Value will be paid on the applicable Scheduled Distribution Date, provided that you sign an agreement and release satisfactory to the Firm. If you do not sign such an agreement and release satisfactory to the Firm within the timeframe set by the Firm in connection with your involuntary termination as described in this Section 5, any portion of your Applicable Account Value that was unvested immediately prior to your termination shall be canceled. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the applicable Scheduled Distribution Date.

6. Governmental Service.

(a) General treatment of awards upon Governmental Service Termination. If your Employment terminates in a Governmental Service Termination and not involving a cancellation event set forth in Section 9(c), then, provided that you sign an agreement satisfactory to the Firm relating to your obligations pursuant to Section 6(c), any unvested portion of your Applicable Account Value will vest on the date of your Governmental Service Termination. Your vested Applicable Account Value will be paid on the date of your Governmental Service Termination.

(b) General treatment of vested awards upon acceptance of employment at a Governmental Employer following termination of Employment. If your Employment terminates other than in a Governmental Service Termination and not involving a cancellation event set forth in Section 9(c) and, following your termination of Employment, you accept employment with a Governmental Employer, then, provided that you sign an agreement satisfactory to the Firm relating to your obligations pursuant to Section 6(c), the vested portion of your Applicable Account Value will be paid upon your commencement of such employment, provided you present the Firm with satisfactory evidence demonstrating that as a result of such employment the divestiture of your continued interest in your Applicable Account Value is reasonably necessary to avoid the violation of U.S. federal, state or local or foreign ethics law or conflicts of interest law applicable to you at such Governmental Employer.

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(c) Repayment obligation. If any activity or event constituting a cancellation event set forth in Section 9(c) occurs within the applicable period of time that would have resulted in cancellation of all or a portion of your Applicable Account Value had it not been paid pursuant to Sections 6(a) or 6(b) above (disregarding, for purposes of determining whether a cancellation event has occurred, any Full Career Retirement condition set forth in Section 9(c)(1)), you will be required to repay to Morgan Stanley the amount distributed to you pursuant to Sections 6(a) or 6(b) above that would have been canceled upon the occurrence of such cancellation event (before taking account of any withholding), plus interest on such amount at the average rate of interest Morgan Stanley paid to borrow money from financial institutions during the period from the date of such payment through the date preceding the repayment date.

7. Qualifying Termination.

If your employment terminates in a Qualifying Termination, any unvested portion of your Applicable Account Value will vest, cancellation provisions will lapse, and, subject to Section 8, your Applicable Account Value will be paid upon your Qualifying Termination.

8. Specified employees.

Notwithstanding any other terms of this Award Certificate, if Morgan Stanley considers you to be one of its “specified employees” as defined in Section 409A at the time of your Separation from Service, payment of the portion of your Applicable Account Value that is “nonqualified deferred compensation” for purposes of Section 409A that would otherwise be made upon your Separation from Service (including, without limitation, any payments that were delayed due to Section 162(m) of the Internal Revenue Code, as provided in Section 3, and any portion of your Applicable Account Value payable upon your Qualifying Termination, as provided in Section 7) will be delayed until the first business day following the date that is six months after your Separation from Service; provided, however, that in the event that your death, your Governmental Service Termination or your employment at a Governmental Employer following your termination of employment with the Firm under circumstances set forth in Section 6(b) occurs at any time after the Date of the Award, payment will be made in accordance with Section 4(a), 4(b) or 6, as applicable.

9. Cancellation of Applicable Account Value under certain circumstances.

(a) Cancellation of unvested Applicable Account Value. Any unvested portion of your Applicable Account Value will be canceled if your Employment terminates for any reason other than death, Disability, a Full Career Retirement, an involuntary termination by the Firm described in Section 5, a Governmental Service Termination or a Qualifying Termination.

(b) General treatment of vested Applicable Account Value. Except as otherwise provided in this Award Certificate, the vested portion of your Applicable Account Value will be paid on the applicable Scheduled Distribution Date. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the applicable Scheduled Distribution Date.

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(c) Cancellation of Applicable Account Value under certain circumstances.⁴ The cancellation events set forth in this Section 9(c) are designed, among other things, to incentivize compliance with the Firm’s policies (including the Code of Conduct), to protect the Firm’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, and other legitimate business interests, and to ensure an orderly transition of responsibilities. This Section 9(c) shall apply notwithstanding any other terms of this Award Certificate (except where sections in this Award Certificate specifically provide that the cancellation events set forth in this Section 9(c) no longer apply).

Your Applicable Account Value, even if vested, is not earned until the applicable Scheduled Distribution Date (and until you satisfy all obligations you owe to the Firm as set forth in Section 11 below) and, unless prohibited by applicable law, will be canceled prior to the applicable Scheduled Distribution Date in any of the circumstances set forth below in this Section 9(c). The Firm may retain custody of your Applicable Account Value following a Scheduled Distribution Date pending any investigation or other review that impacts the determination as to whether your Applicable Account Value is cancellable under the circumstances set forth below and, in such an instance, your Applicable Account Value shall be forfeited in the event the Firm determines that the Applicable Account Value was cancellable.

(1) Competitive Activity. If you resign and the resulting termination satisfies the definition of a Full Career Retirement and you engage in Competitive Activity, the following shall apply, subject to applicable law:

(i) If your Competitive Activity occurs before the First Scheduled Distribution Date, then your entire Applicable Account Value will be canceled immediately; and

(ii) If your Competitive Activity occurs on or after the First Scheduled Distribution Date but before another Scheduled Distribution Date, then the remaining portion of your Applicable Account Value that is scheduled to be paid on or following such Scheduled Distribution Date will be canceled immediately.

(2) Other Events. If any of the following events occur at any time before the applicable Scheduled Distribution Date, your entire Applicable Account Value (whether or not vested) will be canceled immediately, subject to applicable law:

(i) Your Employment is terminated for Cause or you engage in conduct constituting Cause (either during or following Employment and whether or not your Employment has been terminated as of the applicable Scheduled Distribution Date);

⁴  The cancellation provisions presented in Section 10(c)(1), (2) and (3) of this form of Award Certificate and any corresponding definitions are indicative. The cancellation provisions and corresponding definitions applicable to awards may vary.

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(ii) Following the termination of your Employment, the Firm determines that your Employment could have been terminated for Cause (for these purposes, “Cause” will be determined without giving consideration to any “cure” period included in the definition of “Cause”);

(iii) You disclose Confidential and Proprietary Information to any unauthorized person outside the Firm, or use or attempt to use Confidential and Proprietary Information other than in connection with the business of the Firm; or you fail to comply with your obligations (either during or after your Employment) under the Firm’s Code of Conduct (and any applicable supplements), or otherwise existing between you and the Firm, relating to Confidential and Proprietary Information or an assignment, procurement or enforcement of rights in Confidential and Proprietary Information;

(iv) You engage in a Wrongful Solicitation;

(v) You make any Unauthorized Comments;

(vi) You fail or refuse, following your termination of Employment, to cooperate with or assist the Firm in a timely manner in connection with any investigation, regulatory matter, lawsuit or arbitration in which the Firm is a subject, target or party and as to which you may have pertinent information; or

(vii) You resign from your employment with the Firm without having provided the Firm prior written notice of your resignation consistent with the notice period requirements undertaken by you in connection with your employment offer letter, Sign-On or Notice & Non-Solicitation Agreement or any other contractual obligation in connection with the terms and conditions of your employment, or, in the event no such prior contractual notice period requirements exist, you resign from your employment with the Firm without having provided the Firm prior written notice of your resignation of at least thirty (30) days.

(3) Clawback Cancellation Event.⁵ Your entire Applicable Account Value (whether or not vested) will be canceled in full, or in the case of clause (iii) below, in full or in part, subject to applicable law, if at any time before the applicable Scheduled Distribution Date you take any action, or you fail to take any action (including with respect to direct supervisory responsibilities), where such action or omission:

(i) causes a restatement of the Firm’s consolidated financial results;

⁵  For certain awards granted to UK Code Staff, this provision may also apply in the event the Firm and/or relevant business unit subsequently suffers a material downturn in its financial performance or the Firm and/or business unit suffers a material failure of risk management.

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(ii) constitutes a violation by you of the Firm’s Global Risk Management Principles, Policies and Standards (where prior authorization and approval of appropriate senior management was not obtained) whether such action results in a favorable or unfavorable impact to the Firm’s consolidated financial results; or

(iii) causes a loss in the current year on a trade or transaction originating in the current year or in any prior year for which revenue was recognized and which was a factor in your award determination, and violated internal control policies that resulted from your:

(A) violation of business unit, product or desk specific risk parameters;

(B) use of an incorrect valuation model, method, or inputs for transactions subject to the “STAR” approval process;

(C) failure to perform appropriate due diligence prior to a trade or transaction or failure to provide critical information known at the time of the transaction that might negatively affect the valuation of the transaction; or

(D) failure to timely monitor or escalate to management a loss position pursuant to applicable policies and procedures.

In the event that the Firm determines, in its sole discretion, that your action or omission is as described in clause (iii) and you do not engage in any other cancellation or clawback event described in this Section 9(c), your [year] DBP Award will be reduced by a fraction, the numerator of which is the amount of the pre-tax loss, and the denominator of which is the total revenue originally recognized by the Firm which was a factor in your award determination.

10. Tax and other withholding obligations.

Any vesting, whether on a Scheduled Vesting Date or some other date, of all or a portion of your Applicable Account Value, and any payment of all or a portion of your Applicable Account Value shall be subject to the Firm’s withholding of all required United States federal, state, local and foreign income and employment/payroll taxes (including Federal Insurance Contributions Act taxes). You authorize the Firm to withhold such taxes from any payroll or other payment or compensation to you, including by canceling or accelerating payment of a portion of your Applicable Account Value in an amount not to exceed such taxes imposed upon such vesting or distribution and any additional taxes imposed as a result of such cancellation or acceleration, and to take such other action as the Firm may deem advisable to enable it and you to satisfy obligations for the payment of withholding taxes and other tax

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obligations, assessments, or other governmental charges, whether of the United States or any other jurisdiction, relating to the vesting or payment of your Applicable Account Value. However, the Firm may not deduct or withhold such sum from any payroll or any other payment or compensation (including from your Applicable Account Value), except to the extent it is not prohibited by Section 409A and would not cause you to recognize income for United States federal income tax purposes prior to the distribution of your Applicable Account Value or to incur interest or additional tax under Section 409A.

11. Obligations you owe to the Firm.

As a condition to the earning, payment or distribution of your award, the Firm may require you to pay such sum to the Firm as may be necessary to satisfy any obligation that you owe to the Firm. Notwithstanding any other provision of this Award Certificate, your award, even if vested, is not earned until after such obligations and any tax withholdings or other deductions required by law are satisfied. Notwithstanding the foregoing, Morgan Stanley may not reduce the amount of your Applicable Account Value to be distributed to satisfy obligations that you owe to the Firm except (i) to the extent authorized under Section 10, relating to tax and other withholding obligations or, otherwise, (ii) to the extent such reduction is not prohibited by Section 409A and would not cause you to recognize income for United States federal income tax purposes prior to the distribution of your Applicable Account Value or to incur additional tax or interest under Section 409A. Morgan Stanley’s determination of any amount that you owe the Firm shall be conclusive.

12. Nontransferability.

You may not sell, pledge, hypothecate, assign or otherwise transfer your Applicable Account Value, other than as provided in Section 13 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution. This prohibition includes any assignment or other transfer that purports to occur by operation of law or otherwise. During your lifetime, payments relating to your Applicable Account Value will be made only to you.

Your personal representatives, heirs, legatees, beneficiaries, successors and assigns, and those of Morgan Stanley, shall all be bound by, and shall benefit from, the terms and conditions of your award.

13. Designation of a beneficiary.

You may make a written designation of beneficiary or beneficiaries to receive all or part of the amounts to be distributed in respect of your Applicable Account Value in the event of your death. To make a beneficiary designation, you must complete and submit the Beneficiary Designation form on the Executive Compensation website.

Any portion of your Applicable Account Value that becomes payable upon your death, and as to which a designation of beneficiary is not in effect, will be distributed to your estate.

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If you previously filed a designation of beneficiary form for your award(s) under the Plan with the Executive Compensation Department, such form will also apply to all of your awards under the Plan, including this [year] DBP Award. You may replace or revoke your beneficiary designation at any time. If there is any question as to the legal right of any beneficiary to receive your Applicable Account Value, Morgan Stanley may determine in its sole discretion to distribute the amounts in question to your estate. Morgan Stanley’s determination shall be binding and conclusive on all persons and it will have no further liability to anyone with respect to such amounts.

14. No entitlements.

(a) No right to continued Employment. This [year] DBP Award is not an employment agreement, and nothing in this Award Certificate, the International Supplement, if applicable, or the Plan shall alter your status as an “at-will” employee of the Firm or your employment status at a Related Employer. None of this Award Certificate, the International Supplement, if applicable, or the Plan shall be construed as guaranteeing your employment by the Firm or a Related Employer, or as giving you any right to continue in the employ of the Firm or a Related Employer, during any period (including without limitation the period between the Date of the Award and any Scheduled Vesting Date or Scheduled Distribution Date, or any portion of any of these periods), nor shall they be construed as giving you any right to be reemployed by the Firm or a Related Employer following any termination of Employment.

(b) No right to future awards. This award, and all other awards under the Plan, are discretionary. This award does not confer on you any right or entitlement to receive another award under the Plan or any other award under any other incentive compensation plan of Morgan Stanley at any time in the future or in respect of any future period.

(c) No effect on future employment compensation. Morgan Stanley has made this award to you in its sole discretion. This award does not confer on you any right or entitlement to receive compensation in any specific amount for any future year, and does not diminish in any way the Firm’s discretion to determine the amount, if any, of your compensation. This award is not part of your base salary or wages and will not be taken into account in determining any other employment-related rights you may have, such as rights to pension or severance pay.

15. Consents under local law.

Your award is conditioned upon the making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

16. Award modification.

Morgan Stanley reserves the right to modify or amend unilaterally the terms and conditions of your award, without first asking your consent, or to waive any terms and conditions that operate in favor of Morgan Stanley. These amendments may include (but are not limited to) changes that Morgan Stanley considers necessary or advisable as a result of changes in any, or

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the adoption of any new, Legal Requirement. Morgan Stanley may not modify your award in a manner that would materially impair your rights in your award without your consent; provided, however, that Morgan Stanley may, but is not required to, without your consent, amend or modify your award in any manner that Morgan Stanley considers necessary or advisable to (i) comply with any Legal Requirement, (ii) ensure that your award does not result in an excise or other supplemental tax on the Firm under any Legal Requirement, or (iii) ensure that your award is not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to payment or distribution. Morgan Stanley will notify you of any amendment of your award that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources Officer or the Chief Operating Officer (or if such positions no longer exist, by the holder of an equivalent position) to be effective.

17. Governing law.

This Award Certificate and the related legal relations between you and Morgan Stanley will be governed by and construed in accordance with the laws of the State of New York, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the award to the substantive law of another jurisdiction.

18. Defined terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a) “Board” means the Board of Directors of Morgan Stanley.

(b) “Cause” means:

(1) any act or omission which constitutes a breach of your obligations to the Firm, including, without limitation, (A) your failure to comply with any notice or non-solicitation restrictions that may be applicable to you or (B) your failure to comply with the Firm’s compliance, ethics or risk management standards, or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to physical or mental illness) within ten (10) business days after written notification thereof to you by the Firm;

(2) your commission of any dishonest or fraudulent act, or any other act or omission, which has caused or may reasonably be expected to cause injury to the interest or business reputation of the Firm; or

(3) your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Firm is a member or of any policy of the Firm relating to compliance with any of the foregoing;

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provided, that an act or omission shall constitute “Cause” for purposes of this definition if the Firm determines, in its sole discretion, that such action or omission is described in Section 9(c)(3)(iii) and is deliberate, intentional or willful.

(c) A “Change in Control” shall be deemed to have occurred if any of the following conditions shall have been satisfied:

(1) any one person or more than one person acting as a group (as determined under Section 409A), other than (A) any employee plan established by Morgan Stanley or any of its Subsidiaries, (B) Morgan Stanley or any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act), (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by stockholders of Morgan Stanley in substantially the same proportions as their ownership of Morgan Stanley, is or becomes, during any 12-month period, the beneficial owner, directly or indirectly, of securities of Morgan Stanley (not including in the securities beneficially owned by such person(s) any securities acquired directly from Morgan Stanley or its affiliates other than in connection with the acquisition by Morgan Stanley or its affiliates of a business) representing 50% or more of the total voting power of the stock of Morgan Stanley; provided, however, that the provisions of this subsection (1) are not intended to apply to or include as a Change in Control any transaction that is specifically excepted from the definition of Change in Control under subsection (3) below;

(2) a change in the composition of the Board such that, during any 12-month period, the individuals who, as of the beginning of such period, constitute the Board (the “Existing Board”) cease for any reason to constitute at least 50% of the Board; provided, however, that any individual becoming a member of the Board subsequent to the beginning of such period whose election, or nomination for election by Morgan Stanley’s stockholders, was approved by a vote of at least a majority of the directors immediately prior to the date of such appointment or election shall be considered as though such individual were a member of the Existing Board;

(3) the consummation of a merger or consolidation of Morgan Stanley with any other corporation or other entity, or the issuance of voting securities in connection with a merger or consolidation of Morgan Stanley (or any direct or indirect subsidiary of Morgan Stanley) pursuant to applicable stock exchange requirements; provided that immediately following such merger or consolidation the voting securities of Morgan Stanley outstanding immediately prior thereto do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity of such merger or consolidation or parent entity thereof) 50% or more of the total voting power of Morgan Stanley stock (or if Morgan Stanley is not the surviving entity of such merger or consolidation, 50% or more of the total voting power of the stock of such surviving entity or parent entity thereof); and provided further that a merger or consolidation effected to implement a recapitalization of Morgan Stanley (or similar

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transaction) in which no person (as determined under Section 409A) is or becomes the beneficial owner, directly or indirectly, of securities of Morgan Stanley (not including in the securities beneficially owned by such person any securities acquired directly from Morgan Stanley or its affiliates other than in connection with the acquisition by Morgan Stanley or its affiliates of a business) representing 50% or more of either the then outstanding shares of Morgan Stanley common stock or the combined voting power of Morgan Stanley’s then outstanding voting securities shall not be considered a Change in Control; or

(4) the complete liquidation of Morgan Stanley or the sale or disposition by Morgan Stanley of all or substantially all of Morgan Stanley’s assets in which any one person or more than one person acting as a group (as determined under Section 409A) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from Morgan Stanley that have a total gross fair market value equal to more than 50% of the total gross fair market value of all of the assets of Morgan Stanley immediately prior to such acquisition or acquisitions.

Notwithstanding the foregoing, (x) no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of Morgan Stanley common stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of Morgan Stanley immediately prior to such transaction or series of transactions and (y) no event or circumstances described in any of clauses (1) through (4) above shall constitute a Change in Control unless such event or circumstances also constitute a change in the ownership or effective control of Morgan Stanley, or in the ownership of a substantial portion of Morgan Stanley’s assets, as defined in Section 409A. In addition, no Change in Control shall be deemed to have occurred upon the acquisition of additional control of Morgan Stanley by any one person or more than one person acting as a group that is considered to effectively control Morgan Stanley.

For purposes of the provisions of this Award Certificate, terms used in the definition of a Change in Control shall be as defined or interpreted pursuant to Section 409A.

(d) “Competitive Activity” means:

(1) becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (x) that are similar or substantially related to the services that you provided to the Firm, or (y) that you had direct or indirect managerial or supervisory responsibility for at the Firm, or (z) that call for the application of the same or similar specialized knowledge or skills as those utilized by you in your services for the Firm, in each such case, at any time during the year preceding the termination of your employment with the Firm; or

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(2) either alone or in concert with others, forming, or acquiring a 5% or greater equity ownership, voting interest or profit participation in, a Competitor.

(e) “Competitor” means any corporation, partnership or other entity that competes, or that owns a significant interest in any corporation, partnership or other entity that competes, with any business activity the Firm engages in, or that you reasonably knew or should have known that the Firm was planning to engage in, at the time of the termination of your Employment.

(f) “Confidential and Proprietary Information” means any information that is classified as confidential in the Firm’s Global Policy on Confidential Information or that may have intrinsic value to the Firm, the Firm’s clients or other parties with which the Firm has a relationship, or that may provide the Firm with a competitive advantage, including, without limitation, any trade secrets; inventions (whether or not patentable); formulas; flow charts; computer programs; access codes or other systems information; algorithms; technology and business processes; business, product or marketing plans; sales and other forecasts; financial information; client lists or other intellectual property; information relating to compensation and benefits; and public information that becomes proprietary as a result of the Firm’s compilation of that information for use in its business, provided that such Confidential and Proprietary Information does not include any information which is available for use by the general public or is generally available for use within the relevant business or industry other than as a result of your action. Confidential and Proprietary Information may be in any medium or form, including, without limitation, physical documents, computer files or discs, electronic communications, videotapes, audiotapes, and oral communications.

(g) “Date of the Award” means [insert grant date, which typically will coincide approximately with the end of the year in respect of which the award is made].

(h) “Disability” means any condition that would qualify for a benefit under any group long-term disability plan maintained by the Firm and applicable to you.

(i) “Employed” and “Employment” refer to employment with the Firm and/or Related Employment.

(j) The “Firm” means Morgan Stanley (including any successor thereto) together with its subsidiaries and affiliates. For purposes of the definitions of “Cause,” “Confidential and Proprietary Information,” “Unauthorized Comments” and “Wrongful Solicitation” set forth in this Award Certificate and Section 9(c)(2)(vi) of this Award Certificate, references to the “Firm” shall refer severally to the Firm as defined in the preceding sentence and your Related Employer, if any. For purposes of the cancellation provisions set forth in this Award Certificate relating to disclosure or use of Confidential and Proprietary Information, references to the “Firm” shall refer to the Firm as defined in the second preceding sentence or your Related Employer, as applicable.

(k) “First Scheduled Distribution Date” means [May 31 following the Date of the Award].

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(l) “First Scheduled Vesting Date” means [May 31 following the Date of the Award].

(m) “Fourth Scheduled Distribution Date” means [second anniversary of November 30 following the Date of the Award].

(n) “Fourth Scheduled Vesting Date” means [second anniversary of November 30 following the Date of the Award].

(o) “Full Career Retirement” means the termination of your Employment by you or by the Firm for any reason other than under circumstances involving any cancellation event described in Section 9(c), and other than due to your death or Disability, a Governmental Service Termination or pursuant to a Qualifying Termination, if you meet any of the following criteria as of your termination date and you have provided the Firm at least 12 months’ advance notice of such termination:

(i) you have attained age 50 and completed at least 12 years of service as a [ ]⁶ of the Firm or equivalent officer title; or

(ii) you have attained age 50 and completed at least 15 years of service as an officer of the Firm at the level of [ ]⁷ or above; or

(iii) you have completed at least 20 years of service with the Firm; or

(iv) you have attained age 55 and have completed at least 5 years of service with the Firm and the sum of your age and years of service equals or exceeds 65.⁸

For the purposes of the foregoing definition, service with the Firm will include any period of service with the following entities and any of their predecessors:

1. AB Asesores (“ABS”) prior to its acquisition by the Firm (provided that only years of service as a partner of ABS shall count towards years of service as an officer);

2. Morgan Stanley Group Inc. and its subsidiaries (“MS Group”) prior to the merger with and into Dean Witter, Discover & Co.;

3. Miller Anderson & Sherrerd, L.L.P. prior to its acquisition by MS Group;

⁶  Specified officer title(s) in one or more specified business units.

⁷  Specified officer title(s) in one or more specified business units.

⁸  Age and service conditions specified in clauses (i) through (iv) are indicative and may vary from year to year and for awards granted to certain employees.

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4. Van Kampen Investments Inc. and its subsidiaries prior to its acquisition by MS Group;

5. FrontPoint Partners LLC and its subsidiaries prior to its acquisition by the Firm; and

6. Dean Witter, Discover & Co. and its subsidiaries (“DWD”) prior to the merger of Morgan Stanley Group Inc. with and into Dean Witter, Discover & Co.;

provided that, in the case of an employee who has transferred employment from DWD to MS Group or vice versa, a former employee of DWD will receive credit for employment with DWD only if he or she transferred directly from DWD to Morgan Stanley & Co. Incorporated or its affiliates subsequent to February 5, 1997, and a former employee of MS Group will receive credit for employment with MS Group only if he or she transferred directly from MS Group to Morgan Stanley DW Inc. or its affiliates subsequent to February 5, 1997.

(p) “Governmental Employer” means a governmental department or agency, self-regulatory agency or other public service employer.

(q) “Governmental Service Termination” means the termination of your Employment due to your commencement of employment at a Governmental Employer; provided that you have presented the Firm with satisfactory evidence demonstrating that as a result of such new employment, the divestiture of your continued interest in your Applicable Account Value is reasonably necessary to avoid the violation of U.S. federal, state or local or foreign ethics law or conflicts of interest law applicable to you at such Governmental Employer.

(r) “Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(s) “Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement.

(t) “Management Committee” means the Morgan Stanley Management Committee and any successor or equivalent committee.

(u) “Qualifying Termination” means your Separation from Service within eighteen (18) months following a Change in Control under either of the following circumstances: (a) the Firm terminates your employment under circumstances not involving any cancellation event; or (b) you resign from the Firm due to (i) a materially adverse alteration in your position or in the nature or status of your responsibilities from those in effect immediately prior to the Change in Control, as determined by the Administrator, or (ii) the Firm requiring your principal place of employment to be located more than 75 miles from the location where you were principally employed at the time of the Change in Control (except for required travel on the Firm’s business to an extent substantially consistent with your business travel obligations in the ordinary course of business prior to the Change in Control).

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(v) “Related Employment” means your employment with an employer other than the Firm (such employer, herein referred to as a “Related Employer”), provided that: (i) you undertake such employment at the written request or with the written consent of Morgan Stanley’s Chief Human Resources Officer (or if such position no longer exists, the holder of an equivalent position); (ii) immediately prior to undertaking such employment you were an employee of the Firm or were engaged in Related Employment (as defined herein); and (iii) such employment is recognized by the Firm in its discretion as Related Employment; and, provided further, that the Firm may (1) determine at any time in its sole discretion that employment that was recognized by the Firm as Related Employment no longer qualifies as Related Employment, and (2) condition the designation and benefits of Related Employment on such terms and conditions as the Firm may determine in its sole discretion; and provided further, the Firm will not provide for Related Employment except to the extent such treatment is not prohibited by Section 409A and would not cause you to recognize income for United States federal income tax purposes prior to the distribution of your Applicable Account Value or to incur interest or additional tax under Section 409A. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Firm, or otherwise modify your and the Firm’s respective rights and obligations.

(w) “Scheduled Distribution Date” means the First Scheduled Distribution Date, the Second Scheduled Distribution Date, the Third Scheduled Distribution Date and/or the Fourth Scheduled Distribution Date, as the context requires.

(x) “Scheduled Vesting Date” means the First Scheduled Vesting Date, the Second Scheduled Vesting Date, the Third Scheduled Vesting Date and/or the Fourth Scheduled Vesting Date, as the context requires.

(y) “Second Scheduled Distribution Date” means [November 30 following the Date of the Award].

(z) “Second Scheduled Vesting Date” means [November 30 following the Date of the Award].

(aa) “Section 409A” means Section 409A of the Internal Revenue Code and any regulations thereunder.

(bb) “Separation from Service” means a separation from service with the Firm for purposes of Section 409A determined using the default provisions set forth in Treasury Regulation §1.409A-1(h) or any successor regulation thereto. For purposes of this definition, Morgan Stanley’s subsidiaries and affiliates include (and are limited to) any corporation that is in the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as Morgan Stanley and any trade or business that is under common control with Morgan Stanley (within the meaning of Section 414(c) of the Internal Revenue Code), determined in each case in accordance with the default provisions set forth in Treasury Regulation §1.409A-1(h)(3).

(cc) “Third Scheduled Distribution Date” means [first anniversary of November 30 following the Date of the Award].

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(dd) “Third Scheduled Vesting Date” means [first anniversary of November 30 following the Date of the Award].

(ee) You will be deemed to have made “Unauthorized Comments” about the Firm if, while Employed or following the termination of your Employment, you make, directly or indirectly, any negative, derogatory, disparaging or defamatory comment, whether written, oral or in electronic format, to any reporter, author, producer or similar person or entity or to any general public media in any form (including, without limitation, books, articles or writings of any other kind, as well as film, videotape, audio tape, computer/Internet format or any other medium) that concerns directly or indirectly the Firm, its business or operations, or any of its current or former agents, employees, officers, directors, customers or clients.

(ff) A “Wrongful Solicitation” occurs upon either of the following events:

(1) while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within 180 days after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Firm employee to leave the Firm or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, during any notice period applicable to you in connection with the termination of your Employment or during the 180 days preceding notice of the termination of your Employment; or

(2) while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within 90 days (180 days if you are a member of the Management Committee at the time of notice of termination) after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Firm (i) to discontinue or diminish his, her or its relationship or prospective relationship with the Firm or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which engages in any line of business in which the Firm is engaged (other than the Firm); provided, however, that this clause shall apply only to clients or customers, or prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the termination of your Employment or during the 180 days preceding notice of the termination of your Employment.

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IN WITNESS WHEREOF, Morgan Stanley has duly executed and delivered this Award Certificate as of the Date of the Award.

MORGAN STANLEY

/s/

[Name]

[Title]

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EX-10.4

EXHIBIT 10.4

MORGAN STANLEY

2007 EQUITY INCENTIVE COMPENSATION PLAN

[YEAR] DISCRETIONARY RETENTION AWARDS

AWARD CERTIFICATE FOR STOCK UNITS

TABLE OF CONTENTS FOR AWARD CERTIFICATE

1.	Stock units generally.	3
2.	Vesting schedule and conversion.	3
3.	Special provision for certain employees.	4
4.	Dividend equivalent reinvestment.	5
5.	Death, Disability and Full Career Retirement.	5
6.	Involuntary termination by the Firm.	6
7.	Governmental Service.	6
8.	Qualifying Termination.	7
9.	Specified employees.	7
10.	Cancellation of awards under certain circumstances.	8
11.	Tax and other withholding obligations.	10
12.	Obligations you owe to the Firm.	11
13.	Nontransferability.	12
14.	Designation of a beneficiary.	12
15.	Ownership and possession.	12
16.	Securities law compliance matters.	13
17.	Compliance with laws and regulation.	13
18.	No entitlements.	13
19.	Consents under local law.	14
20.	Award modification.	14
21.	Governing law.	15
22.	Defined terms.	15

MORGAN STANLEY

[YEAR]

DISCRETIONARY RETENTION AWARDS

AWARD CERTIFICATE FOR STOCK UNITS

Morgan Stanley has awarded you retention stock units as part of your discretionary incentive compensation for services provided during [year] and as an incentive for you to remain in Employment and provide services to the Firm through the Scheduled Vesting Dates. This Award Certificate sets forth the general terms and conditions of your [year] stock unit award. The number of stock units in your award has been communicated to you independently.

If you are employed outside the United States, you will also receive an “International Supplement” that contains supplemental terms and conditions for your [year] stock unit award. You should read this Award Certificate in conjunction with the International Supplement, if applicable, in order to understand the terms and conditions of your stock unit award.

Your stock unit award is made pursuant to the Plan. References to “stock units” in this Award Certificate mean only those stock units included in your [year] stock unit award, and the terms and conditions herein apply only to such award. If you receive any other award under the Plan or another equity compensation plan, it will be governed by the terms and conditions of the applicable award documentation, which may be different from those herein.

The purpose of the stock unit award is, among other things, to align your interests with the interests of the Firm and Morgan Stanley’s stockholders, to reward you for your continued Employment and service to the Firm in the future and your compliance with the Firm’s policies (including the Code of Conduct), to protect the Firm’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, and other legitimate business interests, and to ensure an orderly transition of responsibilities. In view of these purposes, you will earn each portion of your [year] stock unit award only if you (1) remain in continuous Employment through the applicable Scheduled Vesting Date (subject to limited exceptions set forth below), (2) do not engage in any activity that is a cancellation event set forth in Section 10(c) below and (3) satisfy obligations you owe to the Firm as set forth in Section 12 below. Even if your award has vested, you will have no right to your award if a cancellation event occurs under the circumstances set forth in Section 10(c) below. As Morgan Stanley deems appropriate, it will require you to provide a written certification or other evidence, from time to time in its sole discretion, to confirm that no cancellation event has occurred, including upon a termination of Employment and/or during a specified period of time prior to each Scheduled Conversion Date. If you fail to timely provide any required certification or other evidence, Morgan Stanley will cancel your award. It is your responsibility to provide the Executive Compensation Department with your up-to-date contact information.

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Capitalized terms used in this Award Certificate that are not defined in the text have the meanings set forth in Section 22 below. Capitalized terms used in this Award Certificate that are not defined in the text or in Section 22 below have the meanings set forth in the Plan.

1. Stock units generally.

Each of your stock units corresponds to one share of Morgan Stanley common stock. A stock unit constitutes a contingent and unsecured promise of Morgan Stanley to pay you one share of Morgan Stanley common stock on the conversion date for the stock unit. As the holder of stock units, you have only the rights of a general unsecured creditor of Morgan Stanley. You will not be a stockholder with respect to the shares of Morgan Stanley common stock corresponding to your stock units unless and until your stock units convert to shares.

2. Vesting schedule and conversion.

(a) Vesting schedule. Except as otherwise provided in this Award Certificate, your stock units will vest according to the following schedule: (i) 25% of your stock units will vest on the First Scheduled Vesting Date; (ii) 25% of your stock units will vest on the Second Scheduled Vesting Date and (iii) the remaining 50% of your stock units will vest on the Third Scheduled Vesting Date.¹ Any fractional stock units resulting from the application of the vesting schedule will be aggregated and will vest on the Third Scheduled Vesting Date. Except as otherwise provided in this Award Certificate, each portion of your stock units will vest only if you continue to provide future services to the Firm by remaining in continuous Employment through the applicable Scheduled Vesting Date and providing value added services to the Firm during this timeframe. The special vesting terms set forth in Sections 5, 6, 7 and 8 of this Award Certificate apply (i) if your Employment terminates by reason of your death or Disability, (ii) upon your Full Career Retirement, (iii) if the Firm terminates your employment in an involuntary termination under the circumstances described in Section 6, (iv) upon a Governmental Service Termination or (v) upon a Qualifying Termination. Vested stock units remain subject to the cancellation and withholding provisions set forth in this Award Certificate.

(b) Conversion. Except as otherwise provided in this Award Certificate, (i) 25% of your stock units will, to the extent vested, convert to shares of Morgan Stanley common stock on the First Scheduled Conversion Date, (ii) 25% of your stock units will, to the extent vested, convert to shares of Morgan Stanley common stock on the Second Scheduled Conversion Date and (iii) the remaining 50% of your stock units will, to the extent vested, convert to shares of Morgan Stanley common stock on the Third Scheduled Conversion Date.² The special

¹  The vesting schedule and related vesting dates presented in this form of Award Certificate are indicative. The vesting schedule and related vesting dates applicable to awards may vary.

²  The conversion schedule and related conversion dates presented in this form of Award Certificate are indicative. The conversion schedule and related conversion dates applicable to awards may vary.

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conversion provisions set forth in Sections 5(a), 5(b), 7 and 8 of this Award Certificate apply (i) if your Employment terminates by reason of your death or you die after termination of your Employment, (ii) upon your Governmental Service Termination or your employment at a Governmental Employer following your termination of employment with the Firm under circumstances set forth in Section 7(b) or (iii) upon a Qualifying Termination. The shares delivered upon conversion of stock units pursuant to this Section 2(b) will not be subject to any transfer restrictions, other than those that may arise under the securities laws, the Firm’s policies or Section 12 below, or to cancellation under the circumstances set forth in Section 10(c).

(c) Accelerated conversion. Morgan Stanley shall have no right to accelerate the conversion of any of your stock units, except to the extent that such acceleration is not prohibited by Section 409A and would not result in your being required to recognize income for United States federal income tax purposes before your stock units convert to shares of Morgan Stanley common stock or your incurring additional tax or interest under Section 409A. If any stock units are converted to shares of Morgan Stanley common stock prior to the applicable Scheduled Conversion Date pursuant to this Section 2(c), these shares may not be transferable and may remain subject to applicable vesting, cancellation and withholding provisions, as determined by Morgan Stanley.

(d) Rule of construction for timing of conversion. Whenever this Award Certificate provides for your stock units to convert to shares on a Scheduled Conversion Date or upon a different specified event or date, such conversion will be considered to have been timely made, and neither you nor any of your beneficiaries or your estate shall have any claim against the Firm for damages based on a delay in conversion of your stock units (or delivery of Morgan Stanley shares following conversion) and the Firm shall have no liability to you (or to any of your beneficiaries or your estate) in respect of any such delay, as long as conversion is made by December 31 of the year in which occurs the applicable Scheduled Conversion Date or such other specified event or date or, if later, by the 15th day of the third calendar month following such specified event or date. Similarly, neither you nor any of your beneficiaries or your estate shall have any claim against the Firm for damages, and the Firm shall have no liability to you (or to any of your beneficiaries or your estate), based on any acceleration of the conversion of your stock units pursuant to Section 2(c), as applicable.

3. Special provision for certain employees.

Notwithstanding the other provisions of this Award Certificate, if Morgan Stanley considers you to be one of its executive officers at the time provided for the conversion of your vested stock units and determines that your compensation may not be fully deductible by virtue of Section 162(m) of the Internal Revenue Code, Morgan Stanley shall delay payment of the nondeductible portion of your compensation, including delaying, to the extent nondeductible, conversion of the stock units, unless the Committee, in its sole discretion, determines not to delay such conversion. This delay will continue until your Separation from Service or, to the extent permitted under Section 409A, the end of the first earlier taxable year of the Firm as of the last day of which you are no longer an executive officer (subject to earlier conversion in the event of your death as described below).

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4. Dividend equivalent reinvestment.

Until your stock units convert to shares, if Morgan Stanley pays a regular or ordinary dividend on its common stock, a dividend equivalent will be credited with respect to your vested and unvested stock units and reinvested in the form of additional stock units. The additional number of stock units credited to you as a result of this dividend reinvestment shall equal:

(i) the cash dividend paid on one share of Morgan Stanley common stock, multiplied by

(ii) the number of stock units subject to your [year] stock unit award on the applicable dividend record date; with the product of (i) and (ii), divided by

(iii) the fair market value of a share of Morgan Stanley common stock on the dividend payment date, as determined by Morgan Stanley in its sole discretion.

Morgan Stanley will credit the dividend equivalents when it pays the corresponding dividend on its common stock. The additional stock units credited to you as a result of the reinvestment of dividend equivalents will vest and convert at the same time as, and be subject to the same vesting and cancellation provisions set forth in this Award Certificate with respect to, the corresponding stock units, and references to “stock units” in this Award Certificate shall include such additional stock units credited to you as a result of the reinvestment of dividend equivalents described in this Section 4. Any fractional stock units resulting from the application of this Section 4 will, to the extent vested, be paid in cash on the applicable Scheduled Conversion Date (or, subject to Section 2(d), on the next administratively practicable payroll date). The decision to pay a dividend and, if so, the amount of any such dividend, is determined by Morgan Stanley in its sole discretion. No dividend equivalents will be paid to you on any canceled stock units.

5. Death, Disability and Full Career Retirement.

The following special vesting and payment terms apply to your stock units:

(a) Death during Employment. If your Employment terminates due to death, all of your unvested stock units will vest on the date of your death. Your stock units will convert to shares of Morgan Stanley common stock and be delivered to the beneficiary you have designated pursuant to Section 14 or the legal representative of your estate, as applicable, upon your death, provided that your estate or beneficiary notifies the Firm of your death within 60 days following your death.

After your death, the cancellation provisions set forth in Section 10(c) will no longer apply, and the shares delivered upon conversion of stock units pursuant to this Section 5(a) will not be subject to any transfer restrictions (other than those that may arise under the securities laws or the Firm’s policies).

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(b) Death after termination of Employment. If you die after the termination of your Employment but prior to the applicable Scheduled Conversion Date, any vested stock units that you held at the time of your death will convert to shares of Morgan Stanley common stock and be delivered to the beneficiary you have designated pursuant to Section 14 or the legal representative of your estate, as applicable, upon your death, provided that your estate or beneficiary notifies the Firm of your death within 60 days following your death.

After your death, the cancellation provisions set forth in Section 10(c) will no longer apply, and the shares delivered upon conversion of stock units pursuant to this Section 5(b) will not be subject to any transfer restrictions (other than those that may arise under the securities laws or the Firm’s policies).

(c) Disability or Full Career Retirement. If your Employment terminates due to Disability or in a Full Career Retirement, all of your unvested stock units will vest on the date your Employment terminates. Your stock units will convert to shares of Morgan Stanley common stock on the applicable Scheduled Conversion Date. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the applicable Scheduled Conversion Date.

6. Involuntary termination by the Firm.

If the Firm terminates your employment under circumstances not involving any cancellation event set forth in Section 10(c), your unvested stock units will vest on the date your employment with the Firm terminates and your stock units will convert to shares of Morgan Stanley common stock on the applicable Scheduled Conversion Date, provided that you sign an agreement and release satisfactory to the Firm. If you do not sign such an agreement and release satisfactory to the Firm within the timeframe set by the Firm in connection with your involuntary termination as described in this Section 6, any stock units that were unvested immediately prior to your termination shall be canceled. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the applicable Scheduled Conversion Date.

7. Governmental Service.

(a) General treatment of awards upon Governmental Service Termination. If your Employment terminates in a Governmental Service Termination and not involving a cancellation event set forth in Section 10(c), then, provided that you sign an agreement satisfactory to the Firm relating to your obligations pursuant to Section 7(c), all of your unvested stock units will vest on the date of your Governmental Service Termination. Your vested stock units will convert to shares of Morgan Stanley common stock on the date of your Governmental Service Termination.

(b) General treatment of vested awards upon acceptance of employment at a Governmental Employer following termination of Employment. If your Employment terminates other than in a Governmental Service Termination and not involving a cancellation event set forth in Section 10(c) and, following your termination of Employment, you accept employment with a Governmental Employer, then, provided that you sign an agreement satisfactory to the Firm relating to your obligations pursuant to Section 7(c), all of your

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outstanding vested stock units will convert to shares of Morgan Stanley common stock upon your commencement of such employment, provided you present the Firm with satisfactory evidence demonstrating that as a result of such employment the divestiture of your continued interest in Morgan Stanley equity awards or continued ownership of Morgan Stanley common stock is reasonably necessary to avoid the violation of U.S. federal, state or local or foreign ethics law or conflicts of interest law applicable to you at such Governmental Employer.

(c) Repayment obligation. If any activity or event constituting a cancellation event set forth in Section 10(c) occurs within the applicable period of time that would have resulted in cancellation of all or a portion of your stock units had they not converted to shares pursuant to Sections 7(a) or 7(b) above (disregarding, for purposes of determining whether a cancellation event has occurred, any Full Career Retirement condition set forth in Section 10(c)(1)), you will be required to pay to Morgan Stanley an amount equal to:

(1) the number of stock units that would have been canceled upon the occurrence of such cancellation event multiplied by the fair market value, determined using a valuation methodology established by Morgan Stanley, of Morgan Stanley common stock on the date your stock units converted to shares of Morgan Stanley common stock; plus

(2) interest on the amount described in clause (1) above at the average rate of interest Morgan Stanley paid to borrow money from financial institutions during the period from the date of such conversion through the date preceding the payment date.

8. Qualifying Termination.

If your employment terminates in a Qualifying Termination, all of your unvested stock units will vest, cancellation provisions will lapse, and, subject to Section 9, your stock units will convert to shares of Morgan Stanley common stock upon your Qualifying Termination.

9. Specified employees.

Notwithstanding any other terms of this Award Certificate, if Morgan Stanley considers you to be one of its “specified employees” as defined in Section 409A at the time of your Separation from Service, any conversion of your stock units that otherwise would occur upon your Separation from Service (including, without limitation, stock units whose conversion was delayed due to Section 162(m) of the Internal Revenue Code, as provided in Section 3, and stock units payable upon your Qualifying Termination, as provided in Section 8) will be delayed until the first business day following the date that is six months after your Separation from Service; provided, however, that in the event that your death, your Governmental Service Termination or your employment at a Governmental Employer following your termination of employment with the Firm under circumstances set forth in Section 7(b) occurs at any time after the Date of the Award, conversion and payment will be made in accordance with Section 5(a), 5(b) or 7, as applicable.

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10. Cancellation of awards under certain circumstances.

(a) Cancellation of unvested awards. Your unvested stock units will be canceled if your Employment terminates for any reason other than death, Disability, a Full Career Retirement, an involuntary termination by the Firm described in Section 6, a Governmental Service Termination or a Qualifying Termination.

(b) General treatment of vested awards. Except as otherwise provided in this Award Certificate, your vested stock units will convert to shares of Morgan Stanley common stock on the applicable Scheduled Conversion Date. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the applicable Scheduled Conversion Date.

(c) Cancellation of awards under certain circumstances. The cancellation events set forth in this Section 10(c) are designed, among other things, to incentivize compliance with the Firm’s policies (including the Code of Conduct), to protect the Firm’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, and other legitimate business interests, and to ensure an orderly transition of responsibilities. This Section 10(c) shall apply notwithstanding any other terms of this Award Certificate (except where sections in this Award Certificate specifically provide that the cancellation events set forth in this Section 10(c) no longer apply).

Your stock units, even if vested, are not earned until the applicable Scheduled Conversion Date (and until you satisfy all obligations you owe to the Firm as set forth in Section 12 below) and, unless prohibited by applicable law, will be canceled prior to the applicable Scheduled Conversion Date in any of the circumstances set forth below in this Section 10(c). Although you will become the beneficial owner of shares underlying your stock units following conversion of your stock units, the Firm may retain custody of your shares following conversion of your stock units pending any investigation or other review that impacts the determination as to whether the stock units are cancellable under the circumstances set forth below and, in such an instance, the shares underlying such stock units shall be forfeited in the event the Firm determines that the stock units were cancellable under the circumstances set forth below.

(1) Competitive Activity. If you resign and the resulting termination satisfies the definition of a Full Career Retirement, or if you resign (whether in a Full Career Retirement or otherwise) following the applicable Scheduled Vesting Date, but prior to the applicable Scheduled Conversion Date, and in either case you engage in Competitive Activity, the following shall apply, subject to applicable law:

(i) If your Competitive Activity occurs before the First Scheduled Conversion Date, then all of your stock units will be canceled immediately;

(ii) If your Competitive Activity occurs on or after the First Scheduled Conversion Date but before the Second Scheduled Conversion Date, then your stock units that are scheduled to convert on the Second Scheduled Conversion Date and the Third Scheduled Conversion Date will be canceled immediately; and

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(iii) If your Competitive Activity occurs on or after the Second Scheduled Conversion Date but before the Third Scheduled Conversion Date, then your stock units that are scheduled to convert on the Third Scheduled Conversion Date will be canceled immediately.³

(2) Other Events. If any of the following events occur at any time before the applicable Scheduled Conversion Date, all of your stock units (whether or not vested) will be canceled immediately, subject to applicable law:

(i) Your Employment is terminated for Cause or you engage in conduct constituting Cause (either during or following Employment and whether or not your Employment has been terminated as of the applicable Scheduled Conversion Date);

(ii) Following the termination of your Employment, the Firm determines that your Employment could have been terminated for Cause (for these purposes, “Cause” will be determined without giving consideration to any “cure” period included in the definition of “Cause”);

(iii) You disclose Confidential and Proprietary Information to any unauthorized person outside the Firm, or use or attempt to use Confidential and Proprietary Information other than in connection with the business of the Firm; or you fail to comply with your obligations (either during or after your Employment) under the Firm’s Code of Conduct (and any applicable supplements) or otherwise existing between you and the Firm, relating to Confidential and Proprietary Information or an assignment, procurement or enforcement of rights in Confidential and Proprietary Information;

(iv) You engage in a Wrongful Solicitation;

(v) You make any Unauthorized Comments;

(vi) You fail or refuse, following your termination of Employment, to cooperate with or assist the Firm in a timely manner in connection with any investigation, regulatory matter, lawsuit or arbitration in which the Firm is a subject, target or party and as to which you may have pertinent information; or

(vii) You resign from your employment with the Firm without having provided the Firm prior written notice of your resignation consistent with the notice period requirements undertaken by you in connection with your employment offer letter, Sign-On or Notice & Non-Solicitation Agreement or any other contractual obligation in connection with the terms and conditions of your employment, or, in the event no such prior contractual notice period requirements exist, you resign from your employment with the Firm without having provided the Firm prior written notice of your resignation of at least thirty (30) days.

³  In the event the terms of the award provide for other than three scheduled conversion dates, this provision will be adjusted accordingly.

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(3) Clawback Cancellation Event. All of your stock units (whether or not vested) will be canceled in full, or in the case of clause (iii) below, in full or in part, subject to applicable law, if at any time before the applicable Scheduled Conversion Date you take any action, or you fail to take any action (including with respect to direct supervisory responsibilities), where such action or omission:

(i) causes a restatement of the Firm’s consolidated financial results;

(ii) constitutes a violation by you of the Firm’s Global Risk Management Principles, Policies and Standards (where prior authorization and approval of appropriate senior management was not obtained) whether such action results in a favorable or unfavorable impact to the Firm’s consolidated financial results; or

(iii) causes a loss in the current year on a trade or transaction originating in the current year or in any prior year for which revenue was recognized and which was a factor in your award determination, and violated internal control policies that resulted from your:

(a) violation of business unit, product or desk specific risk parameters;

(b) use of an incorrect valuation model, method, or inputs for transactions subject to the “STAR” approval process;

(c) failure to perform appropriate due diligence prior to a trade or transaction or failure to provide critical information known at the time of the transaction that might negatively affect the valuation of the transaction; or

(d) failure to timely monitor or escalate to management a loss position pursuant to applicable policies and procedures.

In the event that the Firm determines, in its sole discretion, that your action or omission is as described in clause (iii) and you do not engage in any other cancellation or clawback event described in this Section 10(c), the number of stock units comprising your [year] stock unit award will be reduced by a fraction, the numerator of which is the amount of the pre-tax loss, and the denominator of which is the total revenue originally recognized by the Firm which was a factor in your award determination.

11. Tax and other withholding obligations.

Any vesting, whether on a Scheduled Vesting Date or some other date, of a stock unit award and any conversion of a stock unit award or crediting of dividend equivalents, shall

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be subject to the Firm’s withholding of all required United States federal, state, local and foreign income and employment/payroll taxes (including Federal Insurance Contributions Act taxes). You authorize the Firm to withhold such taxes from any payroll or other payment or compensation to you, including by canceling or accelerating payment of a portion of this award in an amount not to exceed such taxes imposed upon such vesting, conversion or crediting and any additional taxes imposed as a result of such cancellation or acceleration, and to take such other action as the Firm may deem advisable to enable it and you to satisfy obligations for the payment of withholding taxes and other tax obligations, assessments, or other governmental charges, whether of the United States or any other jurisdiction, relating to the vesting or conversion of your stock units or the crediting of dividend equivalents. However, the Firm may not deduct or withhold such sum from any payroll or any other payment or compensation (including from your award), except to the extent it is not prohibited by Section 409A and would not cause you to recognize income for United States federal income tax purposes before your stock units convert to shares of Morgan Stanley common stock or to incur interest or additional tax under Section 409A.

Pursuant to rules and procedures that Morgan Stanley establishes, you may elect to satisfy the tax or other withholding obligations arising upon conversion of your stock units by having Morgan Stanley withhold shares of Morgan Stanley common stock in an amount sufficient to satisfy the tax or other withholding obligations. Shares withheld will be valued using the fair market value of Morgan Stanley common stock on the date your stock units convert (or such other appropriate date determined by Morgan Stanley based on local legal, tax or accounting rules and practices) using a valuation methodology established by Morgan Stanley. In order to comply with applicable accounting standards or the Firm’s policies in effect from time to time, Morgan Stanley may limit the amount of shares that you may have withheld.

12. Obligations you owe to the Firm.

As a condition to the earning, conversion or distribution of your award, the Firm may require you to pay such sum to the Firm as may be necessary to satisfy any obligation that you owe to the Firm. Notwithstanding any other provision of this Award Certificate, your award, even if vested or converted, is not earned until after such obligations and any tax withholdings or other deductions required by law are satisfied. Notwithstanding the foregoing, Morgan Stanley may not reduce the number of shares to be delivered upon conversion of your stock units or delay the payment of your award to satisfy obligations that you owe to the Firm except (i) to the extent authorized under Section 11, relating to tax and other withholding obligations or (ii) to the extent such reduction or delay is not prohibited by Section 409A and would not cause you to recognize income for United States federal income tax purposes before your stock units convert to shares of Morgan Stanley common stock or to incur additional tax or interest under Section 409A.

Morgan Stanley’s determination of any amount that you owe the Firm shall be conclusive. The fair market value of Morgan Stanley common stock for purposes of the foregoing provisions shall be determined using a valuation methodology established by Morgan Stanley.

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13. Nontransferability.

You may not sell, pledge, hypothecate, assign or otherwise transfer your award, other than as provided in Section 14 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution. This prohibition includes any assignment or other transfer that purports to occur by operation of law or otherwise. During your lifetime, payments relating to your award will be made only to you.

Your personal representatives, heirs, legatees, beneficiaries, successors and assigns, and those of Morgan Stanley, shall all be bound by, and shall benefit from, the terms and conditions of your award.

14. Designation of a beneficiary.

You may make a written designation of beneficiary or beneficiaries to receive all or part of your award to be delivered or paid under this Award Certificate in the event of your death. To make a beneficiary designation, you must complete and submit the Beneficiary Designation form on the Executive Compensation website.

Any shares that become deliverable upon your death, and as to which a designation of beneficiary is not in effect, will be distributed to your estate.

If you previously filed a designation of beneficiary form for your equity awards with the Executive Compensation Department, such form will also apply to all of your equity awards, including this award. You may replace or revoke your beneficiary designation at any time. If there is any question as to the legal right of any beneficiary to receive shares or payments under this award, Morgan Stanley may determine in its sole discretion to deliver the shares or make the payments in question to your estate. Morgan Stanley’s determination shall be binding and conclusive on all persons and it will have no further liability to anyone with respect to this award.

15. Ownership and possession.

(a) Before conversion. Generally, you will not have any rights as a stockholder in the shares of Morgan Stanley common stock corresponding to your stock units unless and until your stock units convert to shares.

If Morgan Stanley contributes shares of Morgan Stanley common stock corresponding to your stock units to a grantor trust it has established, you may be permitted to direct the trustee how to vote the shares in the trust corresponding to your stock units. Voting rights, if any, are governed by the terms of the grantor trust and Morgan Stanley may amend any such voting rights, in its sole discretion, at any time. Morgan Stanley is under no obligation to contribute shares corresponding to stock units to a trust. If Morgan Stanley elects not to contribute shares corresponding to your stock units to a trust, you will not have voting rights with respect to shares corresponding to your stock units until your stock units convert to shares.

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(b) Following conversion. Subject to Section 10(c), following conversion of your stock units you will be the beneficial owner of the shares of Morgan Stanley common stock issued to you, and you will be entitled to all rights of ownership, including voting rights and the right to receive cash or stock dividends or other distributions paid on the shares.

(c) Custody of shares. Morgan Stanley may maintain possession of the shares subject to your award until such time as your shares are no longer subject to restrictions on transfer.

16. Securities law compliance matters.

Morgan Stanley may affix a legend to any stock certificates representing shares of Morgan Stanley common stock issued upon conversion of your stock units (and any stock certificates that may subsequently be issued in substitution for the original certificates). The legend will read substantially as follows:

THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE WERE ISSUED PURSUANT TO THE MORGAN STANLEY 2007 EQUITY INCENTIVE COMPENSATION PLAN AND ARE SUBJECT TO THE TERMS AND CONDITIONS THEREOF AND OF AN AWARD CERTIFICATE FOR STOCK UNITS AND ANY SUPPLEMENT THERETO.

THE SECURITIES REPRESENTED BY THIS STOCK CERTIFICATE MAY BE SUBJECT TO RESTRICTIONS ON TRANSFER BY VIRTUE OF THE SECURITIES ACT OF 1933.

COPIES OF THE PLAN, THE AWARD CERTIFICATE FOR STOCK UNITS AND ANY SUPPLEMENT THERETO ARE AVAILABLE THROUGH THE EXECUTIVE COMPENSATION DEPARTMENT.

Morgan Stanley may advise the transfer agent to place a stop order against such shares if it determines that such an order is necessary or advisable.

17. Compliance with laws and regulation.

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other disposition of shares issued upon conversion of your stock units (whether directly or indirectly, whether or not for value, and whether or not voluntary) must be made in compliance with any applicable constitution, rule, regulation or policy of any of the exchanges or associations or other institutions with which the Firm or a Related Employer has membership or other privileges, and any applicable law or applicable rule or regulation of any governmental agency, self-regulatory organization or state or federal regulatory body.

18. No entitlements.

(a) No right to continued Employment. This award is not an employment agreement, and nothing in this Award Certificate, the International Supplement, if applicable, or

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the Plan shall alter your status as an “at-will” employee of the Firm or your employment status at a Related Employer. None of this Award Certificate, the International Supplement, if applicable, or the Plan shall be construed as guaranteeing your employment by the Firm or a Related Employer, or as giving you any right to continue in the employ of the Firm or a Related Employer, during any period (including without limitation the period between the Date of the Award and any Scheduled Vesting Date or Scheduled Conversion Date, or any portion of any of these periods), nor shall they be construed as giving you any right to be reemployed by the Firm or a Related Employer following any termination of Employment.

(b) No right to future awards. This award, and all other awards of stock units and other equity-based awards, are discretionary. This award does not confer on you any right or entitlement to receive another award of stock units or any other equity-based award at any time in the future or in respect of any future period.

(c) No effect on future employment compensation. Morgan Stanley has made this award to you in its sole discretion. This award does not confer on you any right or entitlement to receive compensation in any specific amount for any future year, and does not diminish in any way the Firm’s discretion to determine the amount, if any, of your compensation. This award is not part of your base salary or wages and will not be taken into account in determining any other employment-related rights you may have, such as rights to pension or severance pay.

19. Consents under local law.

Your award is conditioned upon the making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

20. Award modification.

Morgan Stanley reserves the right to modify or amend unilaterally the terms and conditions of your award, without first asking your consent, or to waive any terms and conditions that operate in favor of Morgan Stanley. These amendments may include (but are not limited to) changes that Morgan Stanley considers necessary or advisable as a result of changes in any, or the adoption of any new, Legal Requirement. Morgan Stanley may not modify your award in a manner that would materially impair your rights in your award without your consent; provided, however, that Morgan Stanley may, but is not required to, without your consent, amend or modify your award in any manner that Morgan Stanley considers necessary or advisable to (i) comply with any Legal Requirement, (ii) ensure that your award does not result in an excise or other supplemental tax on the Firm under any Legal Requirement, or (iii) ensure that your award is not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to conversion of your stock units to shares or delivery of such shares following conversion. Morgan Stanley will notify you of any amendment of your award that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources Officer or the Chief Operating Officer (or if such positions no longer exist, by the holder of an equivalent position) to be effective.

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21. Governing law.

This Award Certificate and the related legal relations between you and Morgan Stanley will be governed by and construed in accordance with the laws of the State of New York, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the award to the substantive law of another jurisdiction.

22. Defined terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a) “Access Person” means an individual designated by the Firm’s Compliance Department as an “access employee” or “access person”, which, for example, currently includes all Managing Directors of the Firm.

(b) “Board” means the Board of Directors of Morgan Stanley.

(c) “Cause” means:

(1) any act or omission which constitutes a breach of your obligations to the Firm, including, without limitation, (A) your failure to comply with any notice or non-solicitation restrictions that may be applicable to you or (B) your failure to comply with the Firm’s compliance, ethics or risk management standards, or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to physical or mental illness) within ten (10) business days after written notification thereof to you by the Firm;

(2) your commission of any dishonest or fraudulent act, or any other act or omission, which has caused or may reasonably be expected to cause injury to the interest or business reputation of the Firm; or

(3) your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Firm is a member or of any policy of the Firm relating to compliance with any of the foregoing;

provided, that an act or omission shall constitute “Cause” for purposes of this definition if the Firm determines, in its sole discretion, that such action or omission is described in Section 10(c)(3)(iii) and is deliberate, intentional or willful.

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(d) A “Change in Control” shall be deemed to have occurred if any of the following conditions shall have been satisfied:

(1) any one person or more than one person acting as a group (as determined under Section 409A), other than (A) any employee plan established by Morgan Stanley or any of its Subsidiaries, (B) Morgan Stanley or any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act), (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by stockholders of Morgan Stanley in substantially the same proportions as their ownership of Morgan Stanley, is or becomes, during any 12-month period, the beneficial owner, directly or indirectly, of securities of Morgan Stanley (not including in the securities beneficially owned by such person(s) any securities acquired directly from Morgan Stanley or its affiliates other than in connection with the acquisition by Morgan Stanley or its affiliates of a business) representing 50% or more of the total voting power of the stock of Morgan Stanley; provided, however, that the provisions of this subsection (1) are not intended to apply to or include as a Change in Control any transaction that is specifically excepted from the definition of Change in Control under subsection (3) below;

(2) a change in the composition of the Board such that, during any 12-month period, the individuals who, as of the beginning of such period, constitute the Board (the “Existing Board”) cease for any reason to constitute at least 50% of the Board; provided, however, that any individual becoming a member of the Board subsequent to the beginning of such period whose election, or nomination for election by Morgan Stanley’s stockholders, was approved by a vote of at least a majority of the directors immediately prior to the date of such appointment or election shall be considered as though such individual were a member of the Existing Board;

(3) the consummation of a merger or consolidation of Morgan Stanley with any other corporation or other entity, or the issuance of voting securities in connection with a merger or consolidation of Morgan Stanley (or any direct or indirect subsidiary of Morgan Stanley) pursuant to applicable stock exchange requirements; provided that immediately following such merger or consolidation the voting securities of Morgan Stanley outstanding immediately prior thereto do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity of such merger or consolidation or parent entity thereof) 50% or more of the total voting power of Morgan Stanley stock (or if Morgan Stanley is not the surviving entity of such merger or consolidation, 50% or more of the total voting power of the stock of such surviving entity or parent entity thereof); and provided further that a merger or consolidation effected to implement a recapitalization of Morgan Stanley (or similar transaction) in which no person (as determined under Section 409A) is or becomes the beneficial owner, directly or indirectly, of securities of Morgan Stanley (not including in the securities beneficially owned by such person any securities acquired directly from Morgan Stanley or its affiliates other than in connection with the acquisition by Morgan Stanley or its affiliates of a business) representing 50% or more of either the then outstanding shares of Morgan Stanley common stock or the combined voting power of Morgan Stanley’s then outstanding voting securities shall not be considered a Change in Control; or

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(4) the complete liquidation of Morgan Stanley or the sale or disposition by Morgan Stanley of all or substantially all of Morgan Stanley’s assets in which any one person or more than one person acting as a group (as determined under Section 409A) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from Morgan Stanley that have a total gross fair market value equal to more than 50% of the total gross fair market value of all of the assets of Morgan Stanley immediately prior to such acquisition or acquisitions.

Notwithstanding the foregoing, (x) no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of Morgan Stanley common stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of Morgan Stanley immediately prior to such transaction or series of transactions and (y) no event or circumstances described in any of clauses (1) through (4) above shall constitute a Change in Control unless such event or circumstances also constitute a change in the ownership or effective control of Morgan Stanley, or in the ownership of a substantial portion of Morgan Stanley’s assets, as defined in Section 409A. In addition, no Change in Control shall be deemed to have occurred upon the acquisition of additional control of Morgan Stanley by any one person or more than one person acting as a group that is considered to effectively control Morgan Stanley.

For purposes of the provisions of this Award Certificate, terms used in the definition of a Change in Control shall be as defined or interpreted pursuant to Section 409A.

(e) “Committee” means the Compensation, Management Development and Succession Committee of the Board, any successor committee thereto or any other committee of the Board appointed by the Board with the powers of the Committee under the Plan, or any subcommittee appointed by such Committee.

(f) “Competitive Activity” means:

(1) becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (x) that are similar or substantially related to the services that you provided to the Firm, or (y) that you had direct or indirect managerial or supervisory responsibility for at the Firm, or (z) that call for the application of the same or similar specialized knowledge or skills as those utilized by you in your services for the Firm, in each such case, at any time during the year preceding the termination of your employment with the Firm; or

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(2) either alone or in concert with others, forming, or acquiring a 5% or greater equity ownership, voting interest or profit participation in, a Competitor.

(g) “Competitor” means any corporation, partnership or other entity that competes, or that owns a significant interest in any corporation, partnership or other entity that competes, with any business activity the Firm engages in, or that you reasonably knew or should have known that the Firm was planning to engage in, at the time of the termination of your Employment.

(h) “Confidential and Proprietary Information” means any information that is classified as confidential in the Firm’s Global Policy on Confidential Information or that may have intrinsic value to the Firm, the Firm’s clients or other parties with which the Firm has a relationship, or that may provide the Firm with a competitive advantage, including, without limitation, any trade secrets; inventions (whether or not patentable); formulas; flow charts; computer programs; access codes or other systems information; algorithms; technology and business processes; business, product or marketing plans; sales and other forecasts; financial information; client lists or other intellectual property; information relating to compensation and benefits; and public information that becomes proprietary as a result of the Firm’s compilation of that information for use in its business, provided that such Confidential and Proprietary Information does not include any information which is available for use by the general public or is generally available for use within the relevant business or industry other than as a result of your action. Confidential and Proprietary Information may be in any medium or form, including, without limitation, physical documents, computer files or discs, electronic communications, videotapes, audiotapes, and oral communications.

(i) “Date of the Award” means [insert grant date, which typically will coincide approximately with the end of the year in respect of which the award is made].

(j) “Disability” means any condition that would qualify for a benefit under any group long-term disability plan maintained by the Firm and applicable to you.

(k) “Employed” and “Employment” refer to employment with the Firm and/or Related Employment.

(l) The “Firm” means Morgan Stanley (including any successor thereto) together with its subsidiaries and affiliates. For purposes of the definitions of “Cause,” “Confidential and Proprietary Information,” “Unauthorized Comments” and “Wrongful Solicitation” set forth in this Award Certificate and Section 10(c)(2)(vi) of this Award Certificate, references to the “Firm” shall refer severally to the Firm as defined in the preceding sentence and your Related Employer, if any. For purposes of the cancellation provisions set forth in this Award Certificate relating to disclosure or use of Confidential and Proprietary Information, references to the “Firm” shall refer to the Firm as defined in the second preceding sentence or your Related Employer, as applicable.

(m) “First Scheduled Conversion Date” means [first anniversary of January 27 following the Date of the Award], provided, however, that if you remain employed by the Firm on such date and the date does not occur during an Access Person trading window period,

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then pursuant to Section 2(d), the First Scheduled Conversion Date will be delayed until the first day of the next Access Person trading window period following [first anniversary of January 27 following the Date of the Award] (but in no event beyond [first anniversary of December 31 following the Date of the Award]).

(n) “First Scheduled Vesting Date” means [first anniversary of January 27 following the Date of the Award].

(o) “Full Career Retirement” means the termination of your Employment by you or by the Firm for any reason other than under circumstances involving any cancellation event described in Section 10(c), and other than due to your death or Disability, a Governmental Service Termination or pursuant to a Qualifying Termination, if you meet any of the following criteria as of your termination date and you have provided the Firm at least 12 months’ advance notice of such termination:

(i) you have attained age 50 and completed at least 12 years of service as a [ ]⁴ of the Firm or equivalent officer title; or

(ii) you have attained age 50 and completed at least 15 years of service as an officer of the Firm at the level of [ ]⁵ or above; or

(iii) you have completed at least 20 years of service with the Firm; or

(iv) you have attained age 55 and have completed at least 5 years of service with the Firm and the sum of your age and years of service equals or exceeds 65. ⁶

For the purposes of the foregoing definition, service with the Firm will include any period of service with the following entities and any of their predecessors:

(A) AB Asesores (“ABS”) prior to its acquisition by the Firm (provided that only years of service as a partner of ABS shall count towards years of service as an officer);

(B) Morgan Stanley Group Inc. and its subsidiaries (“MS Group”) prior to the merger with and into Dean Witter, Discover & Co.;

(C) Miller Anderson & Sherrerd, L.L.P. prior to its acquisition by MS Group;

⁴  Specified officer title(s) in one or more specified business units.

⁵  Specified officer title(s) in one or more specified business units.

⁶  Age and service conditions specified in clauses (i) through (iv) are indicative and may vary from year to year and for awards granted to certain employees.

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(D) Van Kampen Investments Inc. and its subsidiaries prior to its acquisition by MS Group;

(E) FrontPoint Partners LLC and its subsidiaries prior to its acquisition by the Firm; and

(F) Dean Witter, Discover & Co. and its subsidiaries (“DWD”) prior to the merger of Morgan Stanley Group Inc. with and into Dean Witter, Discover & Co.;

provided that, in the case of an employee who has transferred employment from DWD to MS Group or vice versa, a former employee of DWD will receive credit for employment with DWD only if he or she transferred directly from DWD to Morgan Stanley & Co. Incorporated or its affiliates subsequent to February 5, 1997, and a former employee of MS Group will receive credit for employment with MS Group only if he or she transferred directly from MS Group to Morgan Stanley DW Inc. or its affiliates subsequent to February 5, 1997.

(p) “Governmental Employer” means a governmental department or agency, self-regulatory agency or other public service employer.

(q) “Governmental Service Termination” means the termination of your Employment due to your commencement of employment at a Governmental Employer; provided that you have presented the Firm with satisfactory evidence demonstrating that as a result of such new employment, the divestiture of your continued interest in Morgan Stanley equity awards or continued ownership of Morgan Stanley common stock is reasonably necessary to avoid the violation of U.S. federal, state or local or foreign ethics law or conflicts of interest law applicable to you at such Governmental Employer.

(r) “Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(s) “Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement.

(t) “Management Committee” means the Morgan Stanley Management Committee and any successor or equivalent committee.

(u) “Plan” means the 2007 Equity Incentive Compensation Plan, as amended.

(v) “Qualifying Termination” means your Separation from Service within eighteen (18) months following a Change in Control under either of the following circumstances: (a) the Firm terminates your employment under circumstances not involving any cancellation event; or (b) you resign from the Firm due to (i) a materially adverse alteration in your position or in the nature or status of your responsibilities from those in effect immediately prior to the Change in Control, as determined by the Committee or its delegees, or (ii) the Firm requiring your principal place of employment to be located more than 75 miles from the location where

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you were principally employed at the time of the Change in Control (except for required travel on the Firm’s business to an extent substantially consistent with your business travel obligations in the ordinary course of business prior to the Change in Control).

(w) “Related Employment” means your employment with an employer other than the Firm (such employer, herein referred to as a “Related Employer”), provided that: (i) you undertake such employment at the written request or with the written consent of Morgan Stanley’s Chief Human Resources Officer (or if such position no longer exists, the holder of an equivalent position); (ii) immediately prior to undertaking such employment you were an employee of the Firm or were engaged in Related Employment (as defined herein); and (iii) such employment is recognized by the Firm in its discretion as Related Employment; and, provided further, that the Firm may (1) determine at any time in its sole discretion that employment that was recognized by the Firm as Related Employment no longer qualifies as Related Employment, and (2) condition the designation and benefits of Related Employment on such terms and conditions as the Firm may determine in its sole discretion; and provided further, the Firm will not provide for Related Employment except to the extent such treatment is not prohibited by Section 409A and would not cause you to recognize income for United States federal income tax purposes before your stock units convert to shares or to incur additional tax or interest under Section 409A. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Firm, or otherwise modify your and the Firm’s respective rights and obligations.

(x) “Scheduled Conversion Date” means the First Scheduled Conversion Date, the Second Scheduled Conversion Date and/or the Third Scheduled Conversion Date, as the context requires.

(y) “Scheduled Vesting Date” means the First Scheduled Vesting Date, the Second Scheduled Vesting Date and/or the Third Scheduled Vesting Date, as the context requires.

(z) “Second Scheduled Conversion Date” means [second anniversary of January 26 following the Date of the Award], provided, however, that if you remain employed by the Firm on such date and the date does not occur during an Access Person trading window period, then pursuant to Section 2(d), the Second Scheduled Conversion Date will be delayed until the first day of the next Access Person trading window period following [second anniversary of January 26 following the Date of the Award] (but in no event beyond [second anniversary of December 31 following the Date of the Award]).

(aa) “Second Scheduled Vesting Date” means [second anniversary of January 26 following the Date of the Award].

(bb) “Section 409A” means Section 409A of the Internal Revenue Code and any regulations thereunder.

(cc) “Separation from Service” means a separation from service with the Firm for purposes of Section 409A determined using the default provisions set forth in Treasury Regulation §1.409A-1(h) or any successor regulation thereto. For purposes of this definition,

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Morgan Stanley’s subsidiaries and affiliates include (and are limited to) any corporation that is in the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as Morgan Stanley and any trade or business that is under common control with Morgan Stanley (within the meaning of Section 414(c) of the Internal Revenue Code), determined in each case in accordance with the default provisions set forth in Treasury Regulation §1.409A-1(h)(3).

(dd) “Third Scheduled Conversion Date” means [third anniversary of January 25 following the Date of the Award], provided, however, that if you remain employed by the Firm on such date and the date does not occur during an Access Person trading window period, then pursuant to Section 2(d), the Third Scheduled Conversion Date will be delayed until the first day of the next Access Person trading window period following [third anniversary of January 25 following the Date of the Award] (but in no event beyond [third anniversary of December 31 following the Date of the Award]).

(ee) “Third Scheduled Vesting Date” means [third anniversary of January 25 following the Date of the Award].

(ff) You will be deemed to have made “Unauthorized Comments” about the Firm if, while Employed or following the termination of your Employment, you make, directly or indirectly, any negative, derogatory, disparaging or defamatory comment, whether written, oral or in electronic format, to any reporter, author, producer or similar person or entity or to any general public media in any form (including, without limitation, books, articles or writings of any other kind, as well as film, videotape, audio tape, computer/Internet format or any other medium) that concerns directly or indirectly the Firm, its business or operations, or any of its current or former agents, employees, officers, directors, customers or clients.

(gg) A “Wrongful Solicitation” occurs upon either of the following events:

(1) while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within 180 days after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Firm employee to leave the Firm or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, during any notice period applicable to you in connection with the termination of your Employment or during the 180 days preceding notice of the termination of your Employment; or

(2) while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within 90 days (180 days if you are a member of the Management Committee at the time of notice of termination) after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Firm (i) to discontinue or diminish his,

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her or its relationship or prospective relationship with the Firm or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which engages in any line of business in which the Firm is engaged (other than the Firm); provided, however, that this clause shall apply only to clients or customers, or prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the termination of your Employment or during the 180 days preceding notice of the termination of your Employment.

IN WITNESS WHEREOF, Morgan Stanley has duly executed and delivered this Award Certificate as of the Date of the Award.

MORGAN STANLEY

/s/

[Name]

[Title]

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EX-10.5

EXHIBIT 10.5

MORGAN STANLEY

EMPLOYEES’ EQUITY ACCUMULATION PLAN

[YEAR] DISCRETIONARY RETENTION AWARDS

AWARD CERTIFICATE FOR STOCK OPTIONS

TABLE OF CONTENTS FOR AWARD CERTIFICATE

1.	Stock options generally.	3
2.	Vesting schedule.	3
3.	Expiration date.	3
4.	Exercise.	4
5.	Restrictions on transfer of Option Shares.	4
6.	Death, Disability and Full Career Retirement.	5
7.	Involuntary termination by the Firm.	5
8.	Governmental Service.	6
9.	Qualifying Termination.	6
10.	Cancellation of awards under certain circumstances.	7
11.	Tax and other withholding obligations.	10
12.	Obligations you owe to the Firm.	11
13.	Nontransferability.	12
14.	Designation of a beneficiary.	12
15.	Ownership and possession.	12
16.	Securities law compliance matters.	13
17.	Compliance with laws and regulation.	13
18.	No entitlements.	13
19.	Consents under local law.	14
20.	Award modification.	14
21.	Governing law.	15
22.	Defined terms.	15

MORGAN STANLEY

[YEAR] DISCRETIONARY RETENTION AWARDS

AWARD CERTIFICATE FOR STOCK OPTIONS

Morgan Stanley has awarded you discretionary retention stock options as part of your discretionary incentive compensation for services provided during [year] and as an incentive for you to remain in Employment and provide services to the Firm through the Scheduled Vesting Dates. This Award Certificate sets forth the general terms and conditions of your [year] discretionary stock option award. The number of stock options in your award has been communicated to you independently.

If you are employed outside the United States, you will also receive an “International Supplement” that contains supplemental terms and conditions for your [year] discretionary stock option award. You should read this Award Certificate in conjunction with the International Supplement, if applicable, in order to understand the terms and conditions of your stock option award.

Your stock option award is made pursuant to the Plan. References to “stock options” in this Award Certificate mean only those stock options included in your [year] discretionary stock option award, and the terms and conditions herein apply only to such award. If you receive any other award under the Plan or another equity compensation plan, it will be governed by the terms and conditions of the applicable award documentation, which may be different from those herein.

The purpose of the stock option award is, among other things, to align your interests with the interests of the Firm and Morgan Stanley’s stockholders, to reward you for your continued Employment and service to the Firm in the future and your compliance with the Firm’s policies (including the Code of Conduct), to protect the Firm’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, and other legitimate business interests, and to ensure an orderly transition of responsibilities. In view of these purposes, you will earn each portion of your [year] discretionary stock option award only if you (1) remain in continuous Employment through the applicable Scheduled Vesting Date (subject to limited exceptions set forth below), (2) do not engage in any activity that is a cancellation event set forth in Section 10(c) below and (3) satisfy obligations you owe to the Firm as set forth in Section 12 below. Even if your award has vested, you will have no right to your award if a cancellation event occurs under the circumstances set forth in Section 10(c) below. As Morgan Stanley deems appropriate, it will require you to provide a written certification or other evidence, from time to time in its sole discretion, to confirm that no cancellation event has occurred, including upon a termination of Employment and/or prior to the exercise of your stock option. If you fail to timely provide any required certification or other evidence, Morgan Stanley will cancel your award. It is your responsibility to provide the Executive Compensation Department with your up-to-date contact information.

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Capitalized terms used in this Award Certificate that are not defined in the text have the meanings set forth in Section 22 below. Capitalized terms used in this Award Certificate that are not defined in the text or in Section 22 below have the meanings set forth in the Plan.

1. Stock options generally.

Each stock option gives you the right to purchase one share of Morgan Stanley common stock at the Exercise Price.

2. Vesting schedule.

Except as otherwise provided in this Award Certificate, one-third of your stock options will vest on each of the First Scheduled Vesting Date, Second Scheduled Vesting Date and Third Scheduled Vesting Date. Your stock options will become exercisable upon vesting. Any fractional stock options resulting from the application of the vesting schedule will be aggregated and will vest on the Third Scheduled Vesting Date.¹ Except as otherwise provided in this Award Certificate, each portion of your stock options will vest only if you continue to provide future services to the Firm by remaining in continuous Employment through the applicable Scheduled Vesting Date and providing value added services to the Firm during this timeframe. The special vesting terms set forth in Sections 6, 7, 8 and 9 of this Award Certificate apply (i) if your Employment terminates by reason of your death or Disability, (ii) upon your Full Career Retirement, (iii) if the Firm terminates your employment in an involuntary termination under the circumstances described in Section 7, (iv) upon a Governmental Service Termination or (v) upon a Qualifying Termination. Vested stock options and any Option Shares are subject to the transfer restrictions and cancellation and withholding provisions set forth in this Award Certificate.

3. Expiration date.

Your stock options will expire on the Expiration Date, assuming your Employment continues until that date. If your Employment terminates before the Expiration Date, any of your stock options that were vested at the time of the termination of your Employment will expire on the earlier of (i) 90 days following your termination and (ii) the Expiration Date. The special expiration and cancellation provisions set forth in Sections 6, 7, 8 and 9 of this Award Certificate apply (i) if your Employment terminates by reason of your death or Disability, (ii) upon your Full Career Retirement, (iii) if the Firm terminates your employment in an involuntary termination under the circumstances described in Section 7, (iv) upon a Governmental Service Termination or (v) upon a Qualifying Termination.

¹  The vesting schedule and related vesting dates presented in this form of Award Certificate are indicative. The vesting schedule and related vesting dates applicable to awards may vary. Notwithstanding the accelerated vesting events set forth in Sections 6(c), 6(d), 7 and 9, awards granted to UK Code Staff may not be exercisable (and cancellation provisions set forth in Section 10(c) will continue to apply) until the applicable Scheduled Vesting Date.

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4. Exercise.

The Exercise Price of your stock options may be paid to the Firm in the following ways: (1) in cash, (2) in shares of Morgan Stanley common stock or (3) in a combination of cash and shares. Any shares that you tender to pay the exercise price will be valued at their fair market value on the exercise date, using a valuation methodology established by Morgan Stanley. Morgan Stanley may also allow you to make a “cashless” exercise of stock options (in which the payment of the exercise price is funded by a sale of shares by a broker) or to exercise your stock options through a net-share settlement.

Morgan Stanley may implement policies and procedures regarding the availability of any of the foregoing exercise methods or to facilitate cashless exercises. Your exercise and payment must conform to the policies and procedures that Morgan Stanley implements from time to time.

Your stock options are considered to be exercised in the order in which they vested.

5. Restrictions on transfer of Option Shares.²

Your Option Shares may not be transferred prior to the applicable Scheduled Vesting Date, except as otherwise provided in this Award Certificate. However, you may sell shares to the extent required to cover the exercise price and tax or other withholding obligations arising upon exercise.

If you pay the exercise price of your stock options by tendering shares of Morgan Stanley common stock that you already own and that are not subject to transfer restrictions, the transfer restrictions set forth in this Section 5 apply only to the Option Shares.

After the applicable Scheduled Vesting Date (and regardless of whether the exercise occurs before or after the applicable Scheduled Vesting Date), the Option Shares will not be subject to any transfer restrictions, other than those that may arise under the securities laws, Section 12 below, and the Firm’s policies as in effect from time to time.

For purposes of this Award Certificate, a “transfer” of shares includes, without limitation, any sale, assignment, pledge, mortgage, encumbrance or other disposition, direct or indirect, whether or not for value, and whether or not voluntary, but does not include a transfer after your death by will or the laws of descent and distribution.

²  Awards granted to UK Code Staff may provide that, except as set forth in Sections 6(a), 6(b) and 8, Option Shares may not be transferred prior to the date that is six months following the applicable Scheduled Vesting Date for the stock options to which the Option Shares relate.

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6. Death, Disability and Full Career Retirement.

The following special vesting terms apply to your stock options:

(a) Death during Employment. If your Employment terminates due to death, all of your unvested stock options will vest on the date of your death. Following your termination due to death, your stock options will remain outstanding until the Expiration Date, and the beneficiary you have designated pursuant to Section 14 or the legal representative of your estate, as applicable, may exercise your stock options until the Expiration Date.

After your death, the cancellation provisions set forth in Section 10(c) will no longer apply, and any Option Shares will no longer be subject to transfer restrictions (other than those that may arise under the securities laws, Section 12 below or the Firm’s policies).

(b) Death after termination of Employment. If you die after the termination of your Employment, the beneficiary you have designated pursuant to Section 14 or the legal representative of your estate, as applicable, may exercise any vested stock options that you held at the time of your death to the extent and for the period of time that you would have been permitted to exercise your stock options at the time of your death.

After your death, the cancellation provisions set forth in Section 10(c) will no longer apply to your stock options and Option Shares, and any Option Shares will no longer be subject to transfer restrictions (other than those that may arise under the securities laws, Section 12 below or the Firm’s policies).

(c) Disability. If your Employment terminates due to Disability, all of your unvested stock options will vest on the date your Employment terminates and vested stock options will remain exercisable until the Expiration Date. Any cancellation provisions set forth in Section 10(c) will no longer apply to your stock options or Option Shares and your Option Shares will no longer be subject to transfer restrictions (other than those that may arise under the securities laws, Section 12 below or the Firm’s policies).

(d) Full Career Retirement. If your Employment terminates in a Full Career Retirement, all of your unvested stock options will vest on the date your Employment terminates and your vested stock options will remain exercisable until the Expiration Date. The transfer restrictions that apply to your Option Shares and the cancellation provisions set forth in Section 10(c) that apply to your stock options and Option Shares will continue to apply until the applicable Scheduled Vesting Date.

7. Involuntary termination by the Firm.

If the Firm terminates your employment under circumstances not involving any cancellation event set forth in Section 10(c), your unvested stock options will vest on the date your employment with the Firm terminates, provided that you sign an agreement and release satisfactory to the Firm. If you do not sign such an agreement and release satisfactory to the Firm within the timeframe set by the Firm in connection with your involuntary termination as described in this Section 7, any stock options that were unvested immediately prior to your termination shall be canceled. Your vested stock options will remain exercisable until the Expiration Date. The transfer restrictions that apply to your Option Shares and the cancellation provisions set forth in Section 10(c) that apply to your stock options and Option Shares will continue to apply until the applicable Scheduled Vesting Date.

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8. Governmental Service.

(a) General treatment of awards upon Governmental Service Termination. If your Employment terminates in a Governmental Service Termination and not involving a cancellation event set forth in Section 10(c), then, provided that you sign an agreement satisfactory to the Firm relating to your obligations pursuant to Section 8(c), your unvested stock options will vest on the date of your Governmental Service Termination and your vested stock options will remain exercisable until (i) the date that is 90 days following your Governmental Service Termination (but in no event later than the Expiration Date) or (ii) if you satisfy the conditions for a Full Career Retirement at the time of your termination, the Expiration Date. Your Option Shares will no longer be subject to transfer restrictions (other than those that may arise under the securities laws, Section 12 below or the Firm’s policies).

(b) General treatment of vested awards upon acceptance of employment at a Governmental Employer following termination of Employment. If your Employment terminates other than in a Governmental Service Termination and not involving a cancellation event set forth in Section 10(c) and, following your termination of Employment, you accept employment with a Governmental Employer, then, provided that you sign an agreement satisfactory to the Firm relating to your obligations pursuant to Section 8(c), any transfer restrictions will no longer apply to your Option Shares upon your commencement of such employment, provided you present the Firm with satisfactory evidence demonstrating that as a result of such employment the divestiture of your continued interest in Morgan Stanley equity awards or continued ownership of Morgan Stanley common stock is reasonably necessary to avoid the violation of U.S. federal, state or local or foreign ethics law or conflicts of interest law applicable to you at such Governmental Employer.

(c) Repayment obligation. If you engage in any activity constituting a cancellation event set forth in Section 10(c) within the applicable period of time that would have resulted in cancellation of all or a portion of your stock options or Option Shares (disregarding, for purposes of determining whether a cancellation event has occurred, any Full Career Retirement condition set forth in Section 10(c)(1), you will be required to pay to Morgan Stanley an amount equal to the sum of:

(1) the amount you were required to recognize as income for federal (or other applicable) income tax purposes in connection with your exercise of any stock options that would have been canceled or any stock options resulting in Option Shares that would have been canceled; and

(2) interest on the amount described in the preceding clause (1) at the average rate of interest Morgan Stanley paid to borrow money from financial institutions during the period from the date of such exercise through the date preceding the payment date.

9. Qualifying Termination.

If your employment terminates in a Qualifying Termination, your unvested stock options will vest and your vested stock options will remain exercisable until the Expiration Date.

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Any cancellation provisions set forth in Section 10(c) will no longer apply to your stock options or Option Shares and your Option Shares will no longer be subject to transfer restrictions (other than those that may arise under the securities laws, Section 12 below or the Firm’s policies).

10. Cancellation of awards under certain circumstances.

(a) Cancellation of unvested awards. Your unvested stock options will be canceled if your Employment terminates for any reason other than death, Disability, a Full Career Retirement, an involuntary termination by the Firm described in Section 7, a Governmental Service Termination or a Qualifying Termination.

(b) General treatment of vested awards. Except as otherwise expressly provided in this Award Certificate, any vested stock options that you hold at the time of the termination of your Employment will remain exercisable for 90 days following the termination of your Employment (but in no event later than the Expiration Date).

(c) Cancellation of awards under certain circumstances.³ The cancellation events set forth in this Section 10(c) are designed, among other things, to incentivize compliance with the Firm’s policies (including the Code of Conduct), to protect the Firm’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, and other legitimate business interests, and to ensure an orderly transition of responsibilities. This Section 10(c) shall apply notwithstanding any other terms of this Award Certificate (except where sections in this Award Certificate specifically provide that the cancellation events set forth in this Section 10(c) no longer apply).

Your stock options, even if vested, and Option Shares are not earned until the applicable Scheduled Vesting Date (and until you satisfy all obligations you owe to the Firm as set forth in Section 12 below) and, unless prohibited by applicable law, will be canceled prior to the applicable Scheduled Vesting Date in any of the circumstances set forth below in Section 10(c)(1), (2) or (3). Although you will become the beneficial owner of Option Shares upon exercise of your stock options, the Firm may retain custody of your Option Shares following exercise of your stock options pending any investigation or other review that impacts the determination as to whether the stock options or Option Shares are cancellable under the circumstances set forth below and, in such an instance, the Option Shares shall be forfeited in the event the Firm determines that the stock options or Option Shares were cancellable.

³  The cancellation provisions presented in Section 10(c)(1), (2) and (3) of this form Award Certificate and any corresponding definitions are indicative. The cancellation provisions and corresponding definitions applicable to awards may vary.

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(1) Competitive Activity.⁴ If you resign and all or a portion of your stock options vest upon such resignation and you engage in Competitive Activity, the following shall apply, subject to applicable law:

(i) If your Competitive Activity occurs before the First Scheduled Vesting Date, then all of your stock options and Option Shares will be canceled immediately.

(ii) If your Competitive Activity occurs on or after the First Scheduled Vesting Date but before the Second Scheduled Vesting Date, then:

(A) two-thirds of your stock options (including Option Shares acquired upon exercise of such stock options) will be canceled immediately; and

(B) the remaining one-third of your stock options will expire on the date that is 90 days after your Employment termination date and any Option Shares that you acquired upon an exercise occurring after such 90-day period will be canceled.

(iii) If your Competitive Activity occurs on or after the Second Scheduled Vesting Date but before the Third Scheduled Vesting Date, then:

(A) one-third of your stock options (including Option Shares acquired upon exercise of such stock options) will be canceled immediately; and

(B) the remaining two-thirds of your stock options will expire on the date that is 90 days after your Employment termination date and any Option Shares that you acquired upon an exercise occurring after such 90-day period will be canceled.

(iv) If your Competitive Activity occurs on or after the Third Scheduled Vesting Date, then all of your stock options and Option Shares will remain outstanding and will continue to be subject to all the other terms and conditions set forth in this Award Certificate.

(v) Your stock options are considered to be exercised in the order in which they vested.

⁴  In the event the terms of the award provide for other than three scheduled vesting dates, this provision will be adjusted accordingly.

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(2) Other Events. If any of the following events occur at any time before the applicable Scheduled Vesting Date, all of your stock options (whether or not vested) and any Option Shares will be canceled immediately, subject to applicable law:

(i) Your Employment is terminated for Cause or you engage in conduct constituting Cause (either during or following Employment and whether or not your Employment has been terminated as of the applicable Scheduled Vesting Date);

(ii) Following the termination of your Employment, the Firm determines that your Employment could have been terminated for Cause (for these purposes, “Cause” will be determined without giving consideration to any “cure” period included in the definition of “Cause”);

(iii) You disclose Confidential and Proprietary Information to any unauthorized person outside the Firm, or use or attempt to use Confidential and Proprietary Information other than in connection with the business of the Firm; or you fail to comply with your obligations (either during or after your Employment) under the Firm’s Code of Conduct (and any applicable supplements) or otherwise existing between you and the Firm, relating to Confidential and Proprietary Information or an assignment, procurement or enforcement of rights in Confidential and Proprietary Information;

(iv) You engage in a Wrongful Solicitation;

(v) You make any Unauthorized Comments;

(vi) You fail or refuse, following your termination of Employment, to cooperate with or assist the Firm in a timely manner in connection with any investigation, regulatory matter, lawsuit or arbitration in which the Firm is a subject, target or party and as to which you may have pertinent information; or

(vii) You resign from your employment with the Firm without having provided the Firm prior written notice of your resignation consistent with the notice period requirements undertaken by you in connection with your employment offer letter, Sign-On or Notice & Non-Solicitation Agreement or any other contractual obligation in connection with the terms and conditions of your employment, or, in the event no such prior contractual notice period requirements exist, you resign from your employment with the Firm without having provided the Firm prior written notice of your resignation of at least thirty (30) days.

(3) Cancellation Clawback Event.⁵ All of your stock options (whether or not vested) and any Option Shares will be canceled in full, or in the case of clause

⁵  For awards granted to UK Code Staff, this provision may also apply in the event the Firm and/or relevant business unit subsequently suffers a material downturn in its financial performance or the Firm and/or relevant business unit suffers a material failure of risk management.

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(iii) below, in full or in part, subject to applicable law, if at any time before the applicable Scheduled Vesting Date you take any action, or you fail to take any action (including with respect to direct supervisory responsibilities), where such action or omission:

(i) causes a restatement of the Firm’s consolidated financial results;

(ii) constitutes a violation by you of the Firm’s Global Risk Management Principles, Policies and Standards (where prior authorization and approval of appropriate senior management was not obtained) whether such action results in a favorable or unfavorable impact to the Firm’s consolidated financial results; or

(iii) causes a loss in the current year on a trade or transaction originating in the current year or in any prior year for which revenue was recognized and which was a factor in your award determination, and violated internal control policies that resulted from your:

(a) violation of business unit, product or desk specific risk parameters;

(b) use of an incorrect valuation model, method, or inputs for transactions subject to the “STAR” approval process;

(c) failure to perform appropriate due diligence prior to a trade or transaction or failure to provide critical information known at the time of the transaction that might negatively affect the valuation of the transaction; or

(d) failure to timely monitor or escalate to management a loss position pursuant to applicable policies and procedures.

In the event that the Firm determines, in its sole discretion, that your action or omission is as described in clause (iii) and you do not engage in any other cancellation or clawback event described in this Section 10(c), the number of stock options and Option Shares comprising your [year] stock option award will be reduced by a fraction, the numerator of which is the amount of the pre-tax loss, and the denominator of which is the total revenue originally recognized by the Firm which was a factor in your award determination.

11. Tax and other withholding obligations.

Any exercise of your stock options shall be subject to the Firm’s withholding of all required United States federal, state, local and foreign income and employment/payroll taxes (including Federal Insurance Contributions Act taxes). You authorize the Firm to withhold such taxes from any payroll or other payment or compensation to you and to take such other action as the Firm may deem advisable to enable it and you to satisfy obligations for the payment of withholding taxes and other tax obligations, assessments, or other governmental charges, whether of the United States or any other jurisdiction relating to the exercise of your stock options.

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Pursuant to rules and procedures that Morgan Stanley establishes, you may elect to satisfy the tax or other withholding obligations arising upon exercise of your stock options by having Morgan Stanley withhold shares of Morgan Stanley common stock or by tendering shares of Morgan Stanley common stock, in each case in an amount sufficient to satisfy the tax or other withholding obligations. Shares withheld or tendered will be valued using the fair market value of Morgan Stanley common stock on the date your stock options are exercised, using a valuation methodology established by Morgan Stanley. In order to comply with applicable accounting standards or the Firm’s policies in effect from time to time, Morgan Stanley may limit the amount of shares that you may have withheld or that you may tender.

12. Obligations you owe to the Firm.

As a condition to the earning of your award, the Firm may require you to pay such sum to the Firm as may be necessary to satisfy any obligation that you owe to the Firm. Notwithstanding any other provision of this Award Certificate, Morgan Stanley may, in its sole discretion, take various actions affecting your stock options in order to collect amounts sufficient to satisfy any obligation that you owe to the Firm and any tax or other withholding obligations as described in Section 11 relating to the exercise of your stock options. These actions include the following:

(a) Upon exercise of stock options, Morgan Stanley may withhold a number of shares sufficient to satisfy any obligation that you owe to the Firm and any tax or other withholding obligations. The Firm shall determine the number of shares to be withheld by dividing the dollar value of your obligation to the Firm and any tax or other withholding obligations by the fair market value of Morgan Stanley common stock on the date of exercise.

(b) Morgan Stanley may, at any time, cancel any of your unexercised stock options or any Option Shares that remain subject to transfer restrictions in a quantity sufficient to satisfy any obligation that you owe to the Firm and any tax or other withholding obligations. Any canceled stock options will be considered to have a value equal to the difference between the fair market value of the underlying shares of Morgan Stanley common stock, determined on the date of cancellation, and the Exercise Price. Any canceled Option Shares will be considered to have a value equal to the fair market value of Morgan Stanley common stock determined on the date of cancellation. Such amount, less any applicable withholding taxes, will be credited against your obligation.

Morgan Stanley’s determination of any amount that you owe the Firm shall be conclusive. The fair market value of Morgan Stanley common stock for purposes of the foregoing provisions shall be determined using a valuation methodology established by Morgan Stanley.

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13. Nontransferability.

You may not sell, pledge, hypothecate, assign or otherwise transfer your stock options, other than as provided in Section 14 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution. This prohibition includes any assignment or other transfer that purports to occur by operation of law or otherwise. During your lifetime, stock options may be exercised only by you.

Your personal representatives, heirs, legatees, beneficiaries, successors and assigns, and those of Morgan Stanley, shall all be bound by, and shall benefit from, the terms and conditions of your award.

14. Designation of a beneficiary.

You may make a written designation of beneficiary or beneficiaries to receive all or part of the shares to be delivered under this Award Certificate in the event of your death or, following your death, to exercise any stock options that have become exercisable and have not expired or been canceled. To make a beneficiary designation, you must complete and submit the Beneficiary Designation form on the Executive Compensation website.

Any shares that become deliverable upon your death, and as to which a designation of beneficiary is not in effect, will be distributed to your estate. Any stock options that remain exercisable following your death, and as to which a designation of beneficiary is not in effect, will be exercisable by the legal representative of your estate.

If you previously filed a designation of beneficiary form for your equity awards with the Executive Compensation Department, such form will also apply to all of your equity awards, including this award. You may replace or revoke your beneficiary designation at any time. If there is any question as to the legal right of any beneficiary to receive shares or exercise stock options under this award, Morgan Stanley may determine in its sole discretion to deliver the shares in question to your estate or to allow the representative of your estate to exercise the stock options in question. Morgan Stanley’s determination shall be binding and conclusive on all persons and it will have no further liability to anyone with respect to this award.

15. Ownership and possession.

(a) Before exercise. Generally, you will not have any rights as a stockholder in the shares of Morgan Stanley common stock subject to your stock options until such shares are delivered to you following the exercise of your stock options. Delivery of shares to you will be effected by entry of your name in the share register of Morgan Stanley or by such other procedure as may be authorized by Morgan Stanley.

(b) Following exercise. Subject to Sections 5 and 10(c), following exercise of your stock options you will be the beneficial owner of the Option Shares delivered to you and, upon such delivery, you will be entitled to all rights of ownership, including voting rights and the right to receive cash or stock dividends or other distributions paid on the shares.

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(c) Custody of shares. Morgan Stanley may maintain possession of the Option Shares until such time as your Option Shares are no longer subject to restrictions on transfer.

16. Securities law compliance matters.

Morgan Stanley may affix a legend to any stock certificates representing shares of Morgan Stanley common stock issued upon exercise of your stock options (and any stock certificates that may subsequently be issued in substitution for the original certificates). The legend will read substantially as follows:

THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE WERE ISSUED PURSUANT TO THE MORGAN STANLEY EMPLOYEES’ EQUITY ACCUMULATION PLAN AND ARE SUBJECT TO THE TERMS AND CONDITIONS THEREOF AND OF AN AWARD CERTIFICATE FOR STOCK OPTIONS AND ANY SUPPLEMENT THERETO.

THE SECURITIES REPRESENTED BY THIS STOCK CERTIFICATE MAY BE SUBJECT TO RESTRICTIONS ON TRANSFER BY VIRTUE OF THE SECURITIES ACT OF 1933.

COPIES OF THE PLAN, THE AWARD CERTIFICATE FOR STOCK OPTIONS AND ANY SUPPLEMENT THERETO ARE AVAILABLE THROUGH THE EXECUTIVE COMPENSATION DEPARTMENT.

Morgan Stanley may advise the transfer agent to place a stop order against such shares if it determines that such an order is necessary or advisable.

17. Compliance with laws and regulation.

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other disposition of shares issued upon exercise of your stock options (whether directly or indirectly, whether or not for value, and whether or not voluntary) must be made in compliance with any applicable constitution, rule, regulation, or policy of any of the exchanges or associations or other institutions with which the Firm or a Related Employer has membership or other privileges, and any applicable law, or applicable rule or regulation of any governmental agency, self-regulatory organization or state or federal regulatory body.

18. No entitlements.

(a) No right to continued Employment. This stock option award is not an employment agreement, and nothing in this Award Certificate, the International Supplement, if applicable, or the Plan shall alter your status as an “at-will” employee of the Firm or your employment status at a Related Employer. None of this Award Certificate, the International Supplement, if applicable, or the Plan shall be construed as guaranteeing your employment by the Firm or a Related Employer, or as giving you any right to continue in the employ of the

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Firm or a Related Employer, during any period (including without limitation the period between the Date of the Award and any of the Scheduled Vesting Dates or the Expiration Date, or any portion of any of these periods), nor shall they be construed as giving you any right to be reemployed by the Firm or a Related Employer following any termination of Employment.

(b) No right to future awards. This award, and all other awards of stock options and other equity-based awards, are discretionary. This award does not confer on you any right or entitlement to receive another award of stock options or any other equity-based award at any time in the future or in respect of any future period.

(c) No effect on future employment compensation. Morgan Stanley has made this award to you in its sole discretion. This award does not confer on you any right or entitlement to receive compensation in any specific amount for any future year, and does not diminish in any way the Firm’s discretion to determine the amount, if any, of your compensation. This award is not part of your base salary or wages and will not be taken into account in determining any other employment-related rights you may have, such as rights to pension or severance pay.

19. Consents under local law.

Your award is conditioned upon the making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

20. Award modification.

Morgan Stanley reserves the right to modify or amend unilaterally the terms and conditions of your award, without first asking your consent, or to waive any terms and conditions that operate in favor of Morgan Stanley. These amendments may include (but are not limited to) changes that Morgan Stanley considers necessary or advisable as a result of changes in any, or the adoption of any new, Legal Requirement. Morgan Stanley may not modify your award in a manner that would materially impair your rights in your award without your consent; provided, however, that Morgan Stanley may, but is not required to, without your consent, amend or modify your award in any manner that Morgan Stanley considers necessary or advisable to (i) comply with any Legal Requirement, (ii) ensure that your award does not result in an excise or other supplemental tax on the Firm under any Legal Requirement, or (iii) ensure that your award is not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to exercise. Morgan Stanley will notify you of any amendment of your award that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources Officer or the Chief Operating Officer (or if such positions no longer exist, by the holder of an equivalent position) to be effective.

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21. Governing law.

This Award Certificate and the related legal relations between you and Morgan Stanley will be governed by and construed in accordance with the laws of the State of New York, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the award to the substantive law of another jurisdiction.

22. Defined terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a) “Board” means the Board of Directors of Morgan Stanley.

(b) “Cause” means:

(1) any act or omission which constitutes a breach of your obligations to the Firm, including, without limitation, (A) your failure to comply with any notice or non-solicitation restrictions that may be applicable to you or (B) your failure to comply with the Firm’s compliance, ethics or risk management standards, or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to physical or mental illness) within ten (10) business days after written notification thereof to you by the Firm;

(2) your commission of any dishonest or fraudulent act, or any other act or omission, which has caused or may reasonably be expected to cause injury to the interest or business reputation of the Firm; or

(3) your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Firm is a member or of any policy of the Firm relating to compliance with any of the foregoing;

provided, that an act or omission shall constitute “Cause” for purposes of this definition if the Firm determines, in its sole discretion, that such action or omission is described in Section 10(c)(3)(iii) and is deliberate, intentional or willful.

(c) A “Change in Control” shall be deemed to have occurred if any of the following conditions shall have been satisfied:

(1) any one person or more than one person acting as a group (as determined under Section 409A), other than (A) any employee plan established by Morgan Stanley or any of its Subsidiaries, (B) Morgan Stanley or any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act), (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by stockholders of Morgan Stanley in substantially the same proportions as their ownership of Morgan Stanley, is or becomes,

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during any 12-month period, the beneficial owner, directly or indirectly, of securities of Morgan Stanley (not including in the securities beneficially owned by such person(s) any securities acquired directly from Morgan Stanley or its affiliates other than in connection with the acquisition by Morgan Stanley or its affiliates of a business) representing 50% or more of the total voting power of the stock of Morgan Stanley; provided, however, that the provisions of this subsection (1) are not intended to apply to or include as a Change in Control any transaction that is specifically excepted from the definition of Change in Control under subsection (3) below;

(2) a change in the composition of the Board such that, during any 12-month period, the individuals who, as of the beginning of such period, constitute the Board (the “Existing Board”) cease for any reason to constitute at least 50% of the Board; provided, however, that any individual becoming a member of the Board subsequent to the beginning of such period whose election, or nomination for election by Morgan Stanley’s stockholders, was approved by a vote of at least a majority of the directors immediately prior to the date of such appointment or election shall be considered as though such individual were a member of the Existing Board;

(3) the consummation of a merger or consolidation of Morgan Stanley with any other corporation or other entity, or the issuance of voting securities in connection with a merger or consolidation of Morgan Stanley (or any direct or indirect subsidiary of Morgan Stanley) pursuant to applicable stock exchange requirements; provided that immediately following such merger or consolidation the voting securities of Morgan Stanley outstanding immediately prior thereto do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity of such merger or consolidation or parent entity thereof) 50% or more of the total voting power of Morgan Stanley stock (or if Morgan Stanley is not the surviving entity of such merger or consolidation, 50% or more of the total voting power of the stock of such surviving entity or parent entity thereof); and provided further that a merger or consolidation effected to implement a recapitalization of Morgan Stanley (or similar transaction) in which no person (as determined under Section 409A) is or becomes the beneficial owner, directly or indirectly, of securities of Morgan Stanley (not including in the securities beneficially owned by such person any securities acquired directly from Morgan Stanley or its affiliates other than in connection with the acquisition by Morgan Stanley or its affiliates of a business) representing 50% or more of either the then outstanding shares of Morgan Stanley common stock or the combined voting power of Morgan Stanley’s then outstanding voting securities shall not be considered a Change in Control; or

(4) the complete liquidation of Morgan Stanley or the sale or disposition by Morgan Stanley of all or substantially all of Morgan Stanley’s assets in which any one person or more than one person acting as a group (as determined under Section 409A) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from Morgan Stanley that have a total gross fair market value equal to more than 50% of the total gross fair market value of all of the assets of Morgan Stanley immediately prior to such acquisition or acquisitions.

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Notwithstanding the foregoing, (x) no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of Morgan Stanley common stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of Morgan Stanley immediately prior to such transaction or series of transactions and (y) no event or circumstances described in any of clauses (1) through (4) above shall constitute a Change in Control unless such event or circumstances also constitute a change in the ownership or effective control of Morgan Stanley, or in the ownership of a substantial portion of Morgan Stanley’s assets, as defined in Section 409A. In addition, no Change in Control shall be deemed to have occurred upon the acquisition of additional control of Morgan Stanley by any one person or more than one person acting as a group that is considered to effectively control Morgan Stanley.

For purposes of the provisions of this Award Certificate, terms used in the definition of a Change in Control shall be as defined or interpreted pursuant to Section 409A.

(d) “Committee” means the Compensation, Management Development and Succession Committee of the Board, any successor committee thereto or any other committee of the Board appointed by the Board with the powers of the Committee under the Plan, or any subcommittee appointed by such Committee.

(e) “Competitive Activity” means:

(1) becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (x) that are similar or substantially related to the services that you provided to the Firm, or (y) that you had direct or indirect managerial or supervisory responsibility for at the Firm, or (z) that call for the application of the same or similar specialized knowledge or skills as those utilized by you in your services for the Firm, in each such case, at any time during the year preceding the termination of your employment with the Firm; or

(2) either alone or in concert with others, forming, or acquiring a 5% or greater equity ownership, voting interest or profit participation in, a Competitor.

(f) “Competitor” means any corporation, partnership or other entity that competes, or that owns a significant interest in any corporation, partnership or other entity that competes, with any business activity the Firm engages in, or that you reasonably knew or should have known that the Firm was planning to engage in, at the time of the termination of your Employment.

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(g) “Confidential and Proprietary Information” means any information that is classified as confidential in the Firm’s Global Policy on Confidential Information or that may have intrinsic value to the Firm, the Firm’s clients or other parties with which the Firm has a relationship, or that may provide the Firm with a competitive advantage, including, without limitation, any trade secrets; inventions (whether or not patentable); formulas; flow charts; computer programs; access codes or other systems information; algorithms; technology and business processes; business, product or marketing plans; sales and other forecasts; financial information; client lists or other intellectual property; information relating to compensation and benefits; and public information that becomes proprietary as a result of the Firm’s compilation of that information for use in its business, provided that such Confidential and Proprietary Information does not include any information which is available for use by the general public or is generally available for use within the relevant business or industry other than as a result of your action. Confidential and Proprietary Information may be in any medium or form, including, without limitation, physical documents, computer files or discs, electronic communications, videotapes, audiotapes, and oral communications.

(h) “Date of the Award” means [insert grant date, which typically will coincide approximately with the end of the year in respect of which the award is made].

(i) “Disability” means any condition that would qualify for a benefit under any group long-term disability plan maintained by the Firm and applicable to you.

(j) “Employed” and “Employment” refer to employment with the Firm and/or Related Employment.

(k) “Exercise Price” means $[    ] per share.

(l) “Expiration Date” means [fifth anniversary of Date of the Award].

(m) The “Firm” means Morgan Stanley (including any successor thereto) together with its subsidiaries and affiliates. For purposes of the definitions of “Cause,” “Confidential and Proprietary Information,” “Unauthorized Comments” and “Wrongful Solicitation” set forth in this Award Certificate and Section 10(c)(2)(vi) of this Award Certificate, references to the “Firm” shall refer severally to the Firm as defined in the preceding sentence and your Related Employer, if any. For purposes of the cancellation provisions set forth in this Award Certificate relating to disclosure or use of Confidential and Proprietary Information, references to the “Firm” shall refer to the Firm as defined in the second preceding sentence or your Related Employer, as applicable.

(n) “First Scheduled Vesting Date” means [first anniversary of January 27 following the Date of the Award].

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(o) “Full Career Retirement” means the termination of your Employment by you or by the Firm for any reason other than under circumstances involving any cancellation event described in Section 10(c), and other than due to your death or Disability, a Governmental Service Termination or pursuant to a Qualifying Termination, if you meet any of the following criteria as of your termination date and you have provided the Firm at least 12 months’ advance notice of such termination:

(1) you have attained age 50 and completed at least 12 years of service as a [    ]⁶ of the Firm or equivalent officer title; or

(2) you have attained age 50 and completed at least 15 years of service as an officer of the Firm at the level of [    ]⁷ or above; or

(3) you have completed at least 20 years of service with the Firm; or

(4) you have attained age 55 and have completed at least 5 years of service with the Firm and the sum of your age and years of service equals or exceeds 65.⁸

For the purposes of the foregoing definition, service with the Firm will include any period of service with the following entities and any of their predecessors:

(i) AB Asesores (“ABS”) prior to its acquisition by the Firm (provided that only years of service as a partner of ABS shall count towards years of service as an officer);

(ii) Morgan Stanley Group Inc. and its subsidiaries (“MS Group”) prior to the merger with and into Dean Witter, Discover & Co.;

(iii) Miller Anderson & Sherrerd, L.L.P. prior to its acquisition by MS Group;

(iv) Van Kampen Investments Inc. and its subsidiaries prior to its acquisition by MS Group;

(v) FrontPoint Partners LLC and its subsidiaries prior to its acquisition by the Firm; and

(vi) Dean Witter, Discover & Co. and its subsidiaries (“DWD”) prior to the merger of Morgan Stanley Group Inc. with and into Dean Witter, Discover & Co.;

provided that, in the case of an employee who has transferred employment from DWD to MS Group or vice versa, a former employee of DWD will receive credit for employment with DWD only if he or she transferred directly from DWD to Morgan Stanley & Co. Incorporated or its affiliates subsequent to February 5, 1997, and a former employee of MS Group will receive credit for employment with MS Group only if he or she transferred directly from MS Group to Morgan Stanley DW Inc. or its affiliates subsequent to February 5, 1997.

⁶  Specified officer title(s) in one or more specified business units.

⁷  Specified officer title(s) in one or more specified business units.

⁸  Age and Service conditions specified in clauses (1) through (4) may vary from year to year and for awards granted to certain employees.

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(p) “Governmental Employer” means a governmental department or agency, self-regulatory agency or other public service employer.

(q) “Governmental Service Termination” means the termination of your Employment due to your commencement of employment at a Governmental Employer; provided that you have presented the Firm with satisfactory evidence demonstrating that as a result of such new employment, the divestiture of your continued interest in Morgan Stanley equity awards or continued ownership of Morgan Stanley common stock is reasonably necessary to avoid the violation of U.S. federal, state or local or foreign ethics law or conflicts of interest law applicable to you at such Governmental Employer.

(r) “Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(s) “Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement.

(t) “Management Committee” means the Morgan Stanley Management Committee and any successor or equivalent committee.

(u) “Option Shares” means the number of shares of Morgan Stanley common stock underlying the portion of your stock options being exercised less the aggregate number of shares of common stock, if any, tendered, withheld or disposed of (including any shares disposed of in a cashless or net-share settlement exercise) to pay the exercise price and tax or other withholding obligation arising upon such exercise; provided, however, that solely for purposes of Section 10(c), “Option Shares” means, in the case of a stock option for which you pay the exercise price and/or tax or other withholding obligation in cash, the number of shares of Morgan Stanley common stock underlying the portion of your stock options being exercised less the number of shares calculated by dividing (i) the aggregate amount of exercise price and tax or other withholding obligation paid in connection with such exercise by (ii) the closing price of Morgan Stanley common stock as reported on The Bloomberg Professional Service on the date of exercise, and rounding such result down to the nearest whole share.

(v) “Plan” means the Employees’ Equity Accumulation Plan, as amended.

(w) “Qualifying Termination” means your Separation from Service within eighteen (18) months following a Change in Control under either of the following circumstances: (a) the Firm terminates your employment under circumstances not involving any cancellation event; or (b) you resign from the Firm due to (i) a materially adverse alteration in your position or in the nature or status of your responsibilities from those in effect immediately prior to the Change in Control, as determined by the Committee or its delegees, or (ii) the Firm requiring your principal place of employment to be located more than 75 miles from the location where you were principally employed at the time of the Change in Control (except for required travel on the Firm’s business to an extent substantially consistent with your business travel obligations in the ordinary course of business prior to the Change in Control).

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(x) “Related Employment” means your employment with an employer other than the Firm (such employer, herein referred to as a “Related Employer”), provided that: (i) you undertake such employment at the written request or with the written consent of Morgan Stanley’s Chief Human Resources Officer (or if such position no longer exists, the holder of an equivalent position); (ii) immediately prior to undertaking such employment you were an employee of the Firm or were engaged in Related Employment (as defined herein); and (iii) such employment is recognized by the Firm in its discretion as Related Employment; and, provided further that the Firm may (1) determine at any time in its sole discretion that employment that was recognized by the Firm as Related Employment no longer qualifies as Related Employment, and (2) condition the designation and benefits of Related Employment on such terms and conditions as the Firm may determine in its sole discretion. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Firm, or otherwise modify your and the Firm’s respective rights and obligations.

(y) “Scheduled Vesting Date” means the First Scheduled Vesting Date, the Second Scheduled Vesting Date and/or the Third Scheduled Vesting Date, as the context requires.

(z) “Second Scheduled Vesting Date” means [second anniversary of January 26 following the Date of the Award].

(aa) “Section 409A” means Section 409A of the Internal Revenue Code and any regulations thereunder.

(bb) “Separation from Service” means a separation from service with the Firm for purposes of Section 409A determined using the default provisions set forth in Treasury Regulation §1.409A-1(h) or any successor regulation thereto. For purposes of this definition, Morgan Stanley’s subsidiaries and affiliates include (and are limited to) any corporation that is in the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as Morgan Stanley and any trade or business that is under common control with Morgan Stanley (within the meaning of Section 414(c) of the Internal Revenue Code), determined in each case in accordance with the default provisions set forth in Treasury Regulation §1.409A-1(h)(3).

(cc) “Third Scheduled Vesting Date” means [third anniversary of January 25 following the Date of the Award].

(dd) You will be deemed to have made “Unauthorized Comments” about the Firm if, while Employed or following the termination of your Employment, you make, directly or indirectly, any negative, derogatory, disparaging or defamatory comment, whether written, oral or in electronic format, to any reporter, author, producer or similar person or entity or to any general public media in any form (including, without limitation, books, articles or writings of any other kind, as well as film, videotape, audio tape, computer/Internet format or any other medium) that concerns directly or indirectly the Firm, its business or operations, or any of its current or former agents, employees, officers, directors, customers or clients.

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(ee) A “Wrongful Solicitation” occurs upon either of the following events:

(1) while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within 180 days after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Firm employee to leave the Firm or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, during any notice period applicable to you in connection with the termination of your Employment or during the 180 days preceding notice of the termination of your Employment; or

(2) while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within 90 days (180 days if you are a member of the Management Committee at the time of notice of termination) after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Firm (i) to discontinue or diminish his, her or its relationship or prospective relationship with the Firm or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which engages in any line of business in which the Firm is engaged (other than the Firm); provided, however, that this clause shall apply only to clients or customers, or prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the termination of your Employment or during the 180 days preceding notice of the termination of your Employment.

IN WITNESS WHEREOF, Morgan Stanley has duly executed and delivered this Award Certificate as of the Date of the Award.

MORGAN STANLEY

/s/

[Name]

[Title]

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EX-10.6

EXHIBIT 10.6

MORGAN STANLEY

2007 EQUITY INCENTIVE COMPENSATION PLAN

[YEAR] LONG-TERM INCENTIVE PROGRAM AWARD

AWARD CERTIFICATE

TABLE OF CONTENTS FOR AWARD CERTIFICATE

1.	Performance stock units generally.	3
2.	Performance measures.	3
3.	Vesting and conversion.	4
4.	Special provision for certain employees.	6
5.	Dividend equivalent payments.	7
6.	Death, Disability and Full Career Retirement.	7
7.	Involuntary termination by the Firm.	9
8.	Governmental Service.	9
9.	Change in Control.	10
10.	Specified employees.	11
11.	Cancellation of awards under certain circumstances.	11
12.	Tax and other withholding obligations.	14
13.	Obligations you owe to the Firm.	15
14.	Nontransferability.	15
15.	Designation of a beneficiary.	16
16.	Ownership and possession.	16
17.	Securities law compliance matters.	16
18.	Compliance with laws and regulation.	17
19.	No entitlements.	17
20.	Consents under local law.	18
21.	Award modification.	18
22.	Governing law.	18
23.	Defined terms.	19

MORGAN STANLEY

[YEAR]

LONG-TERM INCENTIVE PROGRAM AWARD

AWARD CERTIFICATE

Morgan Stanley has awarded you a [year] long-term incentive program award (“LTIP Award”) as an incentive for you to remain in Employment and provide services to the Firm. This Award Certificate sets forth the general terms and conditions of your [year] LTIP Award. Your [year] LTIP Award consists of a Target Award of performance stock units. The number of performance stock units comprising your Target Award has been communicated to you independently.

If you are employed outside the United States, you will also receive an “International Supplement” that contains supplemental terms and conditions for your [year] LTIP Award. You should read this Award Certificate in conjunction with the International Supplement, if applicable, in order to understand the terms and conditions of your [year] LTIP Award.

Your LTIP Award is made pursuant to the Plan. References to “performance stock units” and “units” (which terms are used interchangeably) in this Award Certificate mean only those performance stock units included in your [year] LTIP Award, and the terms and conditions herein apply only to such award. If you receive any other award under the Plan or another equity compensation plan, it will be governed by the terms and conditions of the applicable award documentation, which may be different from those herein.

The purpose of your LTIP Award is, among other things, to align your interests with the interests of the Firm and Morgan Stanley’s stockholders, to reward you for your continued Employment and service to the Firm in the future and your compliance with the Firm’s policies (including the Code of Conduct), to protect the Firm’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, and other legitimate business interests, and to ensure an orderly transition of responsibilities. In view of these purposes, the number of performance stock units that you earn will depend on the Company’s performance during the Performance Period. Moreover, you will earn your LTIP Award only if you (1) remain in continuous Employment through the Scheduled Vesting Date (subject to limited exceptions set forth below), (2) do not engage in any activity that is a cancellation event set forth in Section 11(c) below and (3) satisfy obligations you owe to the Firm as set forth in Section 13 below. Even if your LTIP Award has vested, you will have no right to your award if a cancellation event occurs under the circumstances set forth in Section 11(c) below. As Morgan Stanley deems appropriate, Morgan Stanley will require you to provide a written certification or other evidence, from time to time in its sole discretion, to confirm that no cancellation event has occurred, including upon a termination of Employment and/or during a

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specified period of time prior to the Scheduled Conversion Date. If you fail to timely provide any required certification or other evidence, Morgan Stanley will cancel your award. It is your responsibility to provide the Executive Compensation Department with your up-to-date contact information.

Capitalized terms used in this Award Certificate that are not defined in the text have the meanings set forth in Section 23 below. Capitalized terms used in this Award Certificate that are not defined in the text or in Section 23 below have the meanings set forth in the Plan.

1. Performance stock units generally.

Each performance stock unit included in your LTIP Award corresponds to one share of Morgan Stanley common stock. A performance stock unit constitutes a contingent and unsecured promise of Morgan Stanley to pay you one share of Morgan Stanley common stock on the conversion date for the unit. As the holder of the LTIP Award, you have only the rights of a general unsecured creditor of Morgan Stanley. You will not be a stockholder with respect to the shares of Morgan Stanley common stock corresponding to your performance stock units unless and until such units convert to shares.

2. Performance measures.

The portion, if any, of your LTIP Award that you earn will be based on Morgan Stanley performance against the performance measures set forth in this Section 2 and the other terms and conditions of this Award Certificate, and may vary from zero to two times the number of performance stock units included in your Target Award.

(a) Morgan Stanley’s Return on Equity. One-half of your Target Award will be earned based on MS ROE. The number of performance stock units that you earn based on MS ROE (subject to vesting and the other terms and conditions of your award) will be determined by multiplying the number of units representing one-half of the Target Award by a multiplier determined as follows:

MS ROE	Multiplier
13% or more	2.00
10%	1.00
5%	0.50
Less than 5%	0.00

If MS ROE is between two thresholds, then the multiplier will be obtained by straight-line interpolation between the two thresholds. For example, if MS ROE is 11.5%, the multiplier would be 1.50. If MS ROE is less than 5%, you will not earn any portion of your LTIP Award as a result of the MS ROE measure, and one-half of your Target Award will be canceled.

(b) Relative Total Shareholder Return. One-half of your Target Award will be earned based on Morgan Stanley’s Total Shareholder Return as compared to the Total Shareholder Return of each member of the Index Group. The number of performance stock units that you earn based on Morgan Stanley’s TSR as compared to the TSR of the Index

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Group (subject to vesting and the other terms and conditions of your award) will be determined by (i) subtracting the Index Group TSR from Morgan Stanley’s TSR (“Relative TSR”) and (ii) multiplying the number of units representing one-half of your Target Award by a multiplier determined as follows:

Relative TSR	Multiplier
50% or more	2.00
0%	1.00
- 50%	0.50
Less than -50%	0.00

provided that, in no event shall the Relative TSR multiplier exceed 1.50 if Morgan Stanley’s TSR for the Performance Period is negative.

If the Relative TSR is between the thresholds, then the multiplier will be obtained by straight-line interpolation between the two points. For example, if Morgan Stanley’s TSR is 20% and the Index Group’s TSR is 10%, the Relative TSR would be 10% and the multiplier would 1.20.

(c) Adjustments. If an event occurs with respect to Morgan Stanley that renders, in the sole determination of the Committee, any of the performance measures set forth in Section 2(a) or Section 2(b) to no longer be appropriate, then the Committee may adjust such measures, as it deems appropriate in its sole discretion, to carry out the intent of the original terms of this award.

3. Vesting and conversion.

(a) Vesting schedule. Except as otherwise provided in this Award Certificate, you will vest in the portion of your LTIP Award that is earned in accordance with Section 2 on the Scheduled Vesting Date.¹ Except as otherwise provided in this Award Certificate, such portion of your LTIP Award will vest only if you continue to provide future services to the Firm by remaining in continuous Employment through the Scheduled Vesting Date and providing value added services to the Firm during this timeframe. The special vesting terms set forth in Sections 6, 7 and 8 of this Award Certificate apply (i) if your Employment terminates by reason of your death or Disability, (ii) upon your Full Career Retirement, (iii) if the Firm terminates your employment in an involuntary termination under the circumstances described in Section 7 or (iv) upon a Governmental Service Termination. Any vested portion of you LTIP Award remains subject to the cancellation and withholding provisions set forth in this Award Certificate.

(b) Conversion. Except as otherwise provided in this Award Certificate, your LTIP Award, to the extent earned and vested, will convert to shares of Morgan Stanley

¹  The vesting schedule and vesting date presented in this form of Award Certificate are indicative. The vesting schedule and vesting date applicable to awards may vary.

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common stock on the Scheduled Conversion Date, with any fractional shares to be distributed in cash.² The special conversion provisions set forth in Sections 6(a), 6(b) and 8 of this Award Certificate apply (i) if your Employment terminates by reason of your death or you die after termination of your Employment or (ii) upon your Governmental Service Termination or your employment at a Governmental Employer following your termination of employment with the Firm under circumstances set forth in Section 8(b).

No portion of your LTIP Award will convert to shares of Morgan Stanley common stock following the end of the Performance Period until the Committee certifies the extent to which the performance criteria set forth in Section 2 have been satisfied.

The shares delivered upon conversion of your LTIP Award pursuant to this Section 3(b) will not be subject to any transfer restrictions, other than those that may arise under the securities laws, the Firm’s policies or Section 13 below, or to cancellation under the circumstances set forth in Section 11(c), but will be subject to repayment as set forth in Section 3(c).³

(c) Repayment/Recapture. In the event and to the extent the Committee reasonably determines that the performance certified by the Committee, and on the basis of which your LTIP Award was converted to shares of Morgan Stanley common stock, was based on materially inaccurate financial statements or other performance metric criteria, you will be obligated to repay to the Firm:

(1) the number of shares that were delivered upon conversion of your LTIP Award, less the number of shares that would have been delivered had your LTIP Award converted to shares based on accurate financial statements or other performance metric criteria (such number of shares determined in each case by the Committee and before satisfaction of tax or other withholding obligations pursuant to Section 12) (the “Repayment Shares”); provided, however, that to the extent that any of the Repayment Shares have been transferred, you shall repay to the Firm an amount equal to the number of Repayment Shares so transferred multiplied by the fair market value, determined using a valuation methodology established by Morgan Stanley, of Morgan Stanley common stock on the date your LTIP Award converted to shares of Morgan Stanley common stock; plus

(2) any dividend equivalents that were paid on the Repayment Shares when your LTIP Award converted to shares; plus

(3) interest on the amounts described in the preceding clauses (1) and (2) at the average rate of interest Morgan Stanley paid to borrow money from financial institutions during the period from the date of such conversion through the date preceding the repayment date.

²  The conversion schedule and conversion date presented in this form of Award Certificate are indicative. The conversion schedule and conversion date applicable to awards may vary.

³  Certain LTIP Awards granted to UK Code Staff may include transfer restrictions for a six-month period following the Scheduled Conversion Date.

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For the avoidance of doubt, your LTIP Award will not be deemed “earned” if payment of such award is based on materially inaccurate financial statements or other performance metric criteria.

(d) Accelerated conversion. Morgan Stanley shall have no right to accelerate the conversion of any portion of your LTIP Award or the payment of any of your dividend equivalents, except to the extent that such acceleration is not prohibited by Section 409A and would not result in your being required to recognize income for United States federal income tax purposes before your LTIP Award converts to shares of Morgan Stanley common stock or your dividend equivalents are paid or your incurring additional tax or interest under Section 409A. If your LTIP Award converts to shares of Morgan Stanley common stock or any dividend equivalents are paid prior to the Scheduled Conversion Date pursuant to this Section 3(d), these shares or dividend equivalents may not be transferable and may remain subject to applicable vesting, cancellation and withholding provisions, as determined by Morgan Stanley.

(e) Rule of construction for timing of conversion. Whenever this Award Certificate provides for your LTIP Award to convert to shares, or your dividend equivalents to be paid, on the Scheduled Conversion Date or upon a different specified event or date, such conversion or payment will be considered to have been timely made, and neither you nor any of your beneficiaries or your estate shall have any claim against the Firm for damages based on a delay in conversion of your LTIP Award (or delivery of Morgan Stanley shares following conversion) or payment of your dividend equivalents, as applicable, and the Firm shall have no liability to you (or to any of your beneficiaries or your estate) in respect of any such delay, as long as conversion or payment, as applicable, is made by December 31 of the year in which occurs the Scheduled Conversion Date or such other specified event or date or, if later, by the 15th day of the third calendar month following such specified event or date. Similarly, neither you nor any of your beneficiaries or your estate shall have any claim against the Firm for damages, and the Firm shall have no liability to you (or to any of your beneficiaries or your estate), based on any acceleration of the conversion of your LTIP Award or payment of your dividend equivalents pursuant to Section 3(d), as applicable.

4. Special provision for certain employees.

Notwithstanding the other provisions of this Award Certificate, if Morgan Stanley considers you to be one of its executive officers at the time provided for the conversion of any vested portion of your LTIP Award and determines that your compensation may not be fully deductible by virtue of Section 162(m), Morgan Stanley shall delay payment of the nondeductible portion of your compensation, including delaying, to the extent nondeductible, conversion of any vested portion of your LTIP Award and payment of the dividend equivalents, unless the Committee, in its sole discretion, determines not to delay such conversion and payment. This delay will continue until your Separation from Service or, to the extent permitted under Section 409A, the end of the first earlier taxable year of the Firm as of the last day of which you are no longer an executive officer (subject to earlier conversion in the event of your death as described below).

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Notwithstanding the other provisions of this Award Certificate, if Morgan Stanley considers you to be a Section 162(m) Performance Employee, the multipliers applicable to your LTIP Award (determined in accordance with Section 2) shall be adjusted downward to the extent the Committee determines, in its sole discretion, that such adjustment is reasonably necessary or advisable to comply with Section 162(m).

5. Dividend equivalent payments.

Until your performance stock units convert to shares, if Morgan Stanley pays a regular or ordinary dividend on its common stock, you will be credited with a dividend equivalent with respect to your LTIP Award in an amount equal to the amount of the dividend that would have been paid on a number of shares of Morgan Stanley common stock corresponding to your Target Award. Morgan Stanley will credit the dividend equivalents when it pays the corresponding dividend on its common stock. Your dividend equivalents will vest and be paid in cash at the same time as, and subject to the same vesting and cancellation provisions set forth in this Award Certificate with respect to, your LTIP Award (provided that, subject to Section 3(e), the dividend equivalents may be paid following the date on which the LTIP Award converts to shares of Morgan Stanley common stock on the next administratively practicable payroll date). The amount of dividend equivalents paid to you will be based on the number of performance stock units that actually convert to shares and will be paid only if your LTIP Award converts to shares.

Notwithstanding the foregoing, in the event your LTIP Award is canceled in full on or before the Scheduled Conversion Date, all dividend equivalents credited to you in respect of regular or ordinary dividends will be canceled. No dividend equivalents will be paid to you on any portion of your LTIP Award that is canceled.

The decision to pay a dividend and, if so, the amount of any such dividend, is determined by Morgan Stanley in its sole discretion.

6. Death, Disability and Full Career Retirement.

The following special earning, vesting and payment terms apply to your LTIP Award:

(a) Death during Employment. If you die while Employed, then the number of performance stock units that will vest, and the number of shares of Morgan Stanley common stock the beneficiary you have designated pursuant to Section 15 or the legal representative of your estate, as applicable, will receive as of the date of your death, will be determined by multiplying (i) the number of shares earned based on the performance measures set forth in Section 2 but applied as though the Performance Period ended with the last Morgan Stanley quarter ending simultaneously with or before the date of your death, for which earnings information for Morgan Stanley has been released as of the date of your death by (ii) the Pro Ration Fraction, provided that your beneficiary or estate notifies the Firm of

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your death within 60 days following your death; provided further, that if your death occurs on or following the Scheduled Vesting Date, then your beneficiary or estate, as applicable, will receive shares (if any) in an amount and at such time that you would have received such shares had your death not occurred. For example, if your death occurs following the end of Morgan Stanley’s third quarter (but prior to the end of the fourth quarter) and earnings information has not been released by Morgan Stanley for such quarter, the performance measures will be applied as though the Performance Period ended with Morgan Stanley’s second quarter (provided Morgan Stanley has released earning information for such quarter).

After your death, the cancellation provisions set forth in Section 11(c) will no longer apply. The shares delivered upon conversion of your LTIP Award pursuant to this Section 6(a) will not be subject to any transfer restrictions (other than those that may arise under the securities laws or the Firm’s policies) but will be subject to repayment as set forth in Section 3(c).

(b) Death after termination of Employment. If you die following your termination of Employment as a result of your Disability, Full Career Retirement or an involuntary termination not involving any cancellation event and your LTIP Award was not canceled in connection with your termination or thereafter, then the number of performance stock units that will vest, and the number of shares of Morgan Stanley common stock the beneficiary you have designated pursuant to Section 15 or the legal representative of your estate, as applicable, will receive as of the date of your death, will be determined by multiplying (i) the number of shares that would have been delivered to you based on applying the performance measures set forth in Section 2 as though the Performance Period ended with the last Morgan Stanley quarter ending simultaneously with or before the date of your death for which earnings information for Morgan Stanley has been released as of the date of your death by (ii) the Pro Ration Fraction determined upon your termination of Employment, provided that your beneficiary or estate notifies the Firm of your death within 60 days following your death; provided further, that if your death occurs on or following the Scheduled Vesting Date, then your beneficiary or estate, as applicable, will receive shares (if any) in an amount and at such time that you would have received such shares had your death not occurred.

After your death, the cancellation provisions set forth in Section 11(c) will no longer apply. The shares delivered upon conversion of your LTIP Award pursuant to this Section 6(b) will not be subject to any transfer restrictions (other than those that may arise under the securities laws or the Firm’s policies) but will be subject to repayment as set forth in Section 3(c).

(c) Disability. If your Employment terminates due to Disability, then, subject to any transfer restrictions and the cancellation provisions described herein, you will vest in a number of performance stock units, and receive a number of shares of Morgan Stanley common stock on the Scheduled Conversion Date, determined by multiplying (i) the number of shares that would have been delivered to you, based on the performance measures described in Section 2, had you remained in Employment through the Scheduled Conversion Date, by (ii) the Pro Ration Fraction. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the Scheduled Conversion Date.

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(d) Full Career Retirement. If your employment terminates in a termination that satisfies the definition of Full Career Retirement, then subject to any transfer restrictions and the cancellation provisions described herein, you will vest in a number of performance stock units, and receive a number of shares of Morgan Stanley common stock on the Scheduled Conversion Date, equal to the number of shares that would have been delivered to you, based on the performance measures set forth in Section 2, had you remained in Employment through the Scheduled Conversion Date. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the Scheduled Conversion Date.

7. Involuntary termination by the Firm.

If the Firm terminates your employment under circumstances not involving any cancellation event set forth in Section 11(c) and you sign an agreement and release satisfactory to the Firm, then, subject to any transfer restrictions and the cancellation provisions described herein, you will vest in a number of performance stock units, and receive a number of shares of Morgan Stanley common stock on the Scheduled Conversion Date, determined by multiplying (i) the number of shares that would have been delivered to you, based on the performance measures set forth in Section 2, had you remained in Employment through the Scheduled Conversion Date, by (ii) the Pro Ration Fraction. If you do not sign such an agreement and release satisfactory to the Firm within the timeframe set by the Firm in connection with your involuntary termination as described in this Section 7, any portion of your LTIP Award that was unvested immediately prior to your termination shall be canceled. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the Scheduled Conversion Date.

8. Governmental Service.

(a) General treatment of awards upon Governmental Service Termination. If your Employment terminates in a Governmental Service Termination and not involving a cancellation event set forth in Section 11(c), then provided that you sign an agreement satisfactory to the Firm relating to your obligations pursuant to Section 8(c), you will vest in a number of performance stock units, and receive as of the date of your Governmental Service Termination a number of shares of Morgan Stanley common stock, determined by multiplying (i) the number of shares earned based on the performance measures set forth in Section 2 but applied as though the Performance Period ended with the last Morgan Stanley quarter ending simultaneously with or before the effective date of your Governmental Service Termination, for which earnings information for Morgan Stanley has been released as of the date of your Governmental Service Termination by (ii) the Pro Ration Fraction.

(b) General treatment of vested awards upon acceptance of employment at a Governmental Employer following termination of Employment. If (i) your Employment terminates other than in a Governmental Service Termination and not involving a cancellation event set forth in Section 11(c), (ii) your LTIP Award was not canceled in connection with your termination or thereafter, (iii) following your termination of Employment, you accept employment with a Governmental Employer, and (iv) you present the Firm with satisfactory evidence demonstrating that as a result of such employment the divestiture of your continued

9

interest in Morgan Stanley equity awards or continued ownership of Morgan Stanley common stock is reasonably necessary to avoid the violation of U.S. federal, state or local or foreign ethics law or conflicts of interest law applicable to you at such Governmental Employer, then, provided that you sign an agreement satisfactory to the Firm relating to your obligations pursuant to Section 8(c), you will receive, upon your commencement of employment with such Governmental Employer, the number of shares determined by multiplying (x) the number of shares of Morgan Stanley common stock earned based on the performance measures set forth in Section 2 but applied as though the Performance Period ended with the last Morgan Stanley quarter ending simultaneously with or before your acceptance of employment at a Governmental Employer, for which earnings information for Morgan Stanley has been released as of such date by (y) the Pro Ration Fraction.

(c) Repayment obligation. Shares delivered upon conversion of your LTIP Award pursuant to Section 8(a) or 8(b) will not be subject to any transfer restrictions (other than those that may arise under the securities laws or the Firm’s policies) but will be subject to repayment as set forth in Section 3(c). Moreover, if you engage in any activity constituting a cancellation event set forth in Section 11(c) within the applicable period of time that would have resulted in cancellation of all or a portion of your LTIP Award had it not converted to shares pursuant to Section 8(a) or 8(b), you will be required to pay to Morgan Stanley an amount equal to:

(1) the number of performance stock units that would have been canceled upon the occurrence of such cancellation event multiplied by the fair market value, determined using a valuation methodology established by Morgan Stanley, of Morgan Stanley common stock on the date your LTIP Award converted to shares of Morgan Stanley common stock; plus

(2) any dividend equivalents that were paid to you on the number of performance stock units described in the foregoing clause (1) when your LTIP Award converted to shares pursuant to Section 8(a) or 8(b); plus

(3) interest on the amounts described in the preceding clauses (1) and (2) at the average rate of interest Morgan Stanley paid to borrow money from financial institutions during the period from the date of such conversion through the date preceding the payment date.

(d) Special Provision for 162(m) Performance Employees. Notwithstanding any other provision of this Section 8, if Morgan Stanley considers you to be a Section 162(m) Performance Employee, conversion of your LTIP Award, and the delivery of shares upon such conversion, pursuant to Sections 8(a) or 8(b), shall be made subject to limitations or requirements determined by the Firm in its sole discretion to be reasonably necessary or advisable to comply with Section 162(m).

9. Change in Control.

In the event of a Change in Control, you will receive on the Scheduled Conversion Date (subject to earlier payment as described in Section 6 upon death and in

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Section 8 in connection with “Governmental Service” and subject to any transfer restrictions and the cancellation provisions set forth herein) the number of shares earned based on the performance measures in Section 2 but applied as though the Performance Period ended with the last quarter of Morgan Stanley ending simultaneously with or before the effective date of the Change in Control; provided, however, that no such payment shall be made if your Employment terminates following the Change in Control, but prior to the Scheduled Vesting Date, for any reason other than for death, Disability, Full Career Retirement, Governmental Service Termination or an involuntary termination not involving any cancellation event. For the avoidance of doubt, following a Change in Control, the provisions of this Award Certificate setting forth the consequences of a termination of employment shall continue to apply (including all provisions governing the timing of payment), except that whenever this Award Certificate provides for you to receive upon or following a termination of employment a number of shares determined by applying the Pro Ration Fraction, the Pro Ration Fraction shall be applied to the number of shares calculated pursuant to the immediately preceding sentence (e.g., applying the performance measures described herein as though the Performance Period ended with the last quarter of Morgan Stanley ending simultaneously with or before the effective date of the Change in Control).

10. Specified employees.

Notwithstanding any other terms of this Award Certificate, if Morgan Stanley considers you to be one of its “specified employees” as defined in Section 409A at the time of your Separation from Service, any conversion of your LTIP Award and payment of your accrued dividend equivalents that otherwise would occur upon your Separation from Service (including, without limitation, any performance stock units whose conversion was delayed due to Section 162(m) of the Internal Revenue Code, as provided in Section 4) will be delayed until the first business day following the date that is six months after your Separation from Service; provided, however, that in the event that your death, your Governmental Service Termination or your employment at a Governmental Employer following your termination of employment with the Firm under circumstances set forth in Section 8(b) occurs at any time after the Date of the Award, conversion and payment will be made in accordance with Section 6 or 8, as applicable.

11. Cancellation of awards under certain circumstances.

(a) Cancellation of unvested awards. Your unvested LTIP Award, including any dividend equivalents credited on your award, will be canceled if your Employment terminates for any reason other than death, Disability, a Full Career Retirement, an involuntary termination by the Firm described in Section 7 or a Governmental Service Termination.

(b) General treatment of vested awards. Except as otherwise provided in this Award Certificate, your LTIP Award, to the extent earned and vested, including any dividend equivalents credited on your award, will convert to shares of Morgan Stanley common stock or be paid, as applicable, on the Scheduled Conversion Date. The cancellation and withholding provisions set forth in this Award Certificate will continue to apply until the Scheduled Conversion Date.

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(c) Cancellation of awards under certain circumstances.⁴ The cancellation events set forth in this Section 11(c) are designed, among other things, to incentivize compliance with the Firm’s policies (including the Code of Conduct), to protect the Firm’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, and other legitimate business interests, and to ensure an orderly transition of responsibilities. This Section 11(c) shall apply notwithstanding any other terms of this Award Certificate (except where sections in this Award Certificate specifically provide that the cancellation events set forth in this Section 11(c) no longer apply).

Notwithstanding Morgan Stanley’s performance based on the measures set forth in Section 2 or your satisfaction of the vesting conditions of this Award Certificate, no portion of your LTIP Award (and any dividend equivalents credited thereon) is earned until the Scheduled Conversion Date (and until you satisfy all obligations you owe to the Firm as set forth in Section 13 below) and, unless prohibited by applicable law, your LTIP Award will be canceled prior to the Scheduled Conversion Date in any of the circumstances set forth below in this Section 11(c). Although you will become the beneficial owner of shares of Morgan Stanley common stock following conversion of your LTIP Award, the Firm may retain custody of your shares following conversion of your LTIP Award (and any dividend equivalents credited thereon) pending any investigation or other review that impacts the determination as to whether the LTIP Award (and any dividend equivalents credited thereon) are cancellable under the circumstances set forth below and, in such an instance, the shares underlying your LTIP Award (and any dividend equivalents credited thereon) shall be forfeited in the event the Firm determines that the LTIP Award (and any dividend equivalents credited thereon) were cancellable.

(1) Competitive Activity. If you resign from Employment and engage in Competitive Activity before the Scheduled Conversion Date, your LTIP Award, including any dividend equivalents credited on your award, whether or not vested and irrespective of Morgan Stanley’s performance based on the measures set forth in Section 2, will be canceled immediately, subject to applicable law.

(2) Other Events. If any of the following events occur at any time before the Scheduled Conversion Date, your LTIP Award, including any dividend equivalents credited on your award, whether or not vested and irrespective of Morgan Stanley’s performance based on the measures set forth in Section 2, will be canceled immediately, subject to applicable law:

(i) Your Employment is terminated for Cause or you engage in conduct constituting Cause (either during or following Employment and whether or not your Employment has been terminated as of the Scheduled Conversion Date);

⁴  The cancellation provisions presented in Sections 11(c)(1), (2) and (3) of this form of Award Certificate and any corresponding definitions are indicative. The cancellation provisions and corresponding definitions applicable to awards may vary.

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(ii) Following the termination of your Employment, the Firm determines that your Employment could have been terminated for Cause (for these purposes, “Cause” will be determined without giving consideration to any “cure” period included in the definition of “Cause”);

(iii) You disclose Confidential and Proprietary Information to any unauthorized person outside the Firm, or use or attempt to use Confidential and Proprietary Information other than in connection with the business of the Firm; or you fail to comply with your obligations (either during or after your Employment) under the Firm’s Code of Conduct (and any applicable supplements) or otherwise existing between you and the Firm, relating to Confidential and Proprietary Information or an assignment, procurement or enforcement of rights in Confidential and Proprietary Information;

(iv) You engage in a Wrongful Solicitation;

(v) You make any Unauthorized Comments;

(vi) You fail or refuse, following your termination of Employment, to cooperate with or assist the Firm in a timely manner in connection with any investigation, regulatory matter, lawsuit or arbitration in which the Firm is a subject, target or party and as to which you may have pertinent information; or

(vii) You resign from your employment with the Firm without having provided the Firm prior written notice of your resignation consistent with the notice period requirements undertaken by you in connection with your employment offer letter, Sign-On or Notice & Non-Solicitation Agreement or any other contractual obligation in connection with the terms and conditions of your employment, or, in the event no such prior contractual notice period requirements exist, you resign from your employment with the Firm without having provided the Firm prior written notice of your resignation of at least thirty (30) days.

(3) Clawback Cancellation Event. Your LTIP Award, including any dividend equivalents credited on your award, whether or not vested and irrespective of Morgan Stanley’s performance based on the measures set forth in Section 2, will be canceled in full, or in the case of clause (iii) below, in full or in part, subject to applicable law, if before the Scheduled Conversion Date you take any action, or you fail to take any action (including with respect to direct supervisory responsibilities), where such action or omission:

(i) causes a restatement of the Firm’s consolidated financial results;

(ii) constitutes a violation by you of the Firm’s Global Risk Management Principles, Policies and Standards (where prior authorization and approval of appropriate senior management was not obtained) whether such action results in a favorable or unfavorable impact to the Firm’s consolidated financial results; or

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(iii) causes a loss in the current year on a trade or transaction originating in the current year or in any prior year for which revenue was recognized and which was a factor in your award determination, and violated internal control policies that resulted from your:

(A) violation of business unit, product or desk specific risk parameters;

(B) use of an incorrect valuation model, method, or inputs for transactions subject to the “STAR” approval process;

(C) failure to perform appropriate due diligence prior to a trade or transaction or failure to provide critical information known at the time of the transaction that might negatively affect the valuation of the transaction; or

(D) failure to timely monitor or escalate to management a loss position pursuant to applicable policies and procedures.

In the event that the Firm determines, in its sole discretion, that your action or omission is as described in clause (iii) and you do not engage in any other cancellation or clawback event described in this Section 11(c), your Target Award will be reduced by a fraction, the numerator of which is the amount of the pre-tax loss, and the denominator of which is the total revenue originally recognized by the Firm which was a factor in your award determination.

12. Tax and other withholding obligations.

Any vesting, whether on a Scheduled Vesting Date or some other date, of your LTIP Award (including dividend equivalents that have been credited in respect of your award), and any conversion of your LTIP Award or crediting or payment of dividend equivalents, shall be subject to the Firm’s withholding of all required United States federal, state, local and foreign income and employment/payroll taxes (including Federal Insurance Contributions Act taxes). You authorize the Firm to withhold such taxes from any payroll or other payment or compensation to you, including by canceling or accelerating payment of a portion of this award (including any dividend equivalents that have been credited on your LTIP Award) in an amount not to exceed such taxes imposed upon such vesting, conversion, crediting or payment and any additional taxes imposed as a result of such cancellation or acceleration, and to take such other action as the Firm may deem advisable to enable it and you to satisfy obligations for the payment of withholding taxes and other tax obligations, assessments, or other governmental charges, whether of the United States or any other jurisdiction, relating to the vesting or conversion of your LTIP Award or the crediting, vesting or payment of dividend equivalents. However, the Firm may not deduct or withhold such sum from any payroll or any other payment or compensation (including from your LTIP Award), except to the extent it is not prohibited by

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Section 409A and would not cause you to recognize income for United States federal income tax purposes before conversion of your LTIP Award or your dividend equivalents are paid or to incur interest or additional tax under Section 409A.

Pursuant to rules and procedures that Morgan Stanley establishes, you may elect to satisfy the tax or other withholding obligations arising upon conversion of your LTIP Award by having Morgan Stanley withhold shares of Morgan Stanley common stock in an amount sufficient to satisfy the tax or other withholding obligations. Shares withheld will be valued using the fair market value of Morgan Stanley common stock on the date your LTIP Award converts (or such other appropriate date determined by Morgan Stanley based on local legal, tax or accounting rules and practices) using a valuation methodology established by Morgan Stanley. In order to comply with applicable accounting standards or the Firm’s policies in effect from time to time, Morgan Stanley may limit the amount of shares that you may have withheld.

13. Obligations you owe to the Firm.

As a condition to the earning, payment, conversion or distribution of your award, the Firm may require you to pay such sum to the Firm as may be necessary to satisfy any obligation that you owe to the Firm. Notwithstanding any other provision of this Award Certificate, your award, even if vested, converted or paid, is not earned until after such obligations and any tax withholdings or other deductions required by law are satisfied. Notwithstanding the foregoing, Morgan Stanley may not reduce the number of shares to be delivered upon conversion of your LTIP Award or the amount of dividend equivalents to be paid in respect of your award or delay the payment of your award to satisfy obligations that you owe to the Firm except (i) to the extent authorized under Section 12, relating to tax and other withholding obligations or (ii) to the extent such reduction or delay is not prohibited by Section 409A and would not cause you to recognize income for United States federal income tax purposes before your LTIP Award converts to shares of Morgan Stanley common stock (or your dividend equivalents are paid) or to incur additional tax or interest under Section 409A.

Morgan Stanley’s determination of any amount that you owe the Firm shall be conclusive. The fair market value of Morgan Stanley common stock for purposes of the foregoing provisions shall be determined using a valuation methodology established by Morgan Stanley.

14. Nontransferability.

You may not sell, pledge, hypothecate, assign or otherwise transfer your award, other than as provided in Section 15 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution. This prohibition includes any assignment or other transfer that purports to occur by operation of law or otherwise. During your lifetime, payments relating to your award will be made only to you.

Your personal representatives, heirs, legatees, beneficiaries, successors and assigns, and those of Morgan Stanley, shall all be bound by, and shall benefit from, the terms and conditions of your award.

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15. Designation of a beneficiary.

You may make a written designation of beneficiary or beneficiaries to receive all or part of your award to be delivered or paid under this Award Certificate in the event of your death. To make a beneficiary designation, you must complete and submit the Beneficiary Designation form on the Executive Compensation website.

Any shares or dividend equivalents that become deliverable upon your death, and as to which a designation of beneficiary is not in effect, will be distributed to your estate.

If you previously filed a designation of beneficiary form for your equity awards with the Executive Compensation Department, such form will also apply to all of your equity awards, including this award. You may replace or revoke your beneficiary designation at any time. If there is any question as to the legal right of any beneficiary to receive shares or payments under this award, Morgan Stanley may determine in its sole discretion to deliver the shares or make the payments in question to your estate. Morgan Stanley’s determination shall be binding and conclusive on all persons and it will have no further liability to anyone with respect to this award.

16. Ownership and possession.

(a) Before conversion. Generally, you will not have any rights as a stockholder in the shares of Morgan Stanley common stock corresponding to your LTIP Award unless and until your LTIP Award converts to shares. Without limiting the generality of the preceding sentence, you will not have any voting rights with respect to shares corresponding to your LTIP Award until your LTIP Award converts to shares.

(b) Following conversion. Subject to Sections 3(c) and 11(c), following conversion of your LTIP Award you will be the beneficial owner of the shares of Morgan Stanley common stock issued to you, and you will be entitled to all rights of ownership, including voting rights and the right to receive cash or stock dividends or other distributions paid on the shares.

(c) Custody of shares. Morgan Stanley may maintain possession of the shares subject to your award until such time as your shares are no longer subject to restrictions on transfer.

17. Securities law compliance matters.

Morgan Stanley may affix a legend to any stock certificates representing shares of Morgan Stanley common stock issued upon conversion of your LTIP Award (and any stock certificates that may subsequently be issued in substitution for the original certificates). The legend will read substantially as follows:

THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE WERE ISSUED PURSUANT TO THE MORGAN STANLEY 2007 EQUITY INCENTIVE COMPENSATION PLAN AND ARE SUBJECT TO THE

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TERMS AND CONDITIONS THEREOF AND OF AN AWARD CERTIFICATE FOR LONG-TERM INCENTIVE PROGRAM AWARDS AND ANY SUPPLEMENT THERETO.

THE SECURITIES REPRESENTED BY THIS STOCK CERTIFICATE MAY BE SUBJECT TO RESTRICTIONS ON TRANSFER BY VIRTUE OF THE SECURITIES ACT OF 1933.

COPIES OF THE PLAN, THE AWARD CERTIFICATE FOR LONG-TERM INCENTIVE PROGRAM AWARDS AND ANY SUPPLEMENT THERETO ARE AVAILABLE THROUGH THE EXECUTIVE COMPENSATION DEPARTMENT.

Morgan Stanley may advise the transfer agent to place a stop order against such shares if it determines that such an order is necessary or advisable.

18. Compliance with laws and regulation.

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other disposition of shares issued upon conversion of your LTIP Award (whether directly or indirectly, whether or not for value, and whether or not voluntary) must be made in compliance with any applicable constitution, rule, regulation or policy of any of the exchanges or associations or other institutions with which the Firm or a Related Employer has membership or other privileges, and any applicable law or applicable rule or regulation of any governmental agency, self-regulatory organization or state or federal regulatory body.

19. No entitlements.

(a) No right to continued Employment. This award is not an employment agreement, and nothing in this Award Certificate, the International Supplement, if applicable, or the Plan shall alter your status as an “at-will” employee of the Firm or your employment status at a Related Employer. None of this Award Certificate, the International Supplement, if applicable, or the Plan shall be construed as guaranteeing your employment by the Firm or a Related Employer, or as giving you any right to continue in the employ of the Firm or a Related Employer, during any period (including without limitation the period between the Date of the Award and any of the Scheduled Vesting Date, the Scheduled Conversion Date, or any portion of any of these periods), nor shall they be construed as giving you any right to be reemployed by the Firm or a Related Employer following any termination of Employment.

(b) No right to future awards. This award, and all other LTIP Awards and other equity-based awards, are discretionary. This award does not confer on you any right or entitlement to receive another LTIP Award or any other equity-based award at any time in the future or in respect of any future period.

(c) No effect on future employment compensation. Morgan Stanley has made this award to you in its sole discretion. This award does not confer on you any right or entitlement to receive compensation in any specific amount for any future year, and does not

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diminish in any way the Firm’s discretion to determine the amount, if any, of your compensation. This award is not part of your base salary or wages and will not be taken into account in determining any other employment-related rights you may have, such as rights to pension or severance pay.

(d) Award terms control. In the event of any conflict between any terms applicable to equity awards in any employment agreement, offer letter or other arrangement that you have entered into with the Firm and the terms set forth in this Award Certificate, the latter shall control.

20. Consents under local law.

Your award is conditioned upon the making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

21. Award modification.

Morgan Stanley reserves the right to modify or amend unilaterally the terms and conditions of your award, without first asking your consent, or to waive any terms and conditions that operate in favor of Morgan Stanley. These amendments may include (but are not limited to) changes that Morgan Stanley considers necessary or advisable as a result of changes in any, or the adoption of any new, Legal Requirement. Morgan Stanley may not modify your award in a manner that would materially impair your rights in your award without your consent; provided, however, that Morgan Stanley may, but is not required to, without your consent, amend or modify your award in any manner that Morgan Stanley considers necessary or advisable to (i) comply with any Legal Requirement, (ii) ensure that your award does not result in an excise or other supplemental tax on the Firm under any Legal Requirement, or (iii) ensure that your award is not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to conversion of your LTIP Award to shares or delivery of such shares following conversion or the crediting or payment of dividend equivalents. Morgan Stanley will notify you of any amendment of your award that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources Officer or the Chief Operating Officer (or if such positions no longer exist, by the holder of an equivalent position) to be effective.

22. Governing law.

This Award Certificate and the related legal relations between you and Morgan Stanley will be governed by and construed in accordance with the laws of the State of New York, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the award to the substantive law of another jurisdiction.

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23. Defined terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a) “Board” means the Board of Directors of Morgan Stanley.

(b) “Cause” means:

(1) any act or omission which constitutes a breach of your obligations to the Firm, including, without limitation, (A) your failure to comply with any notice or non-solicitation restrictions that may be applicable to you or (B) your failure to comply with the Firm’s compliance, ethics or risk management standards, or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to physical or mental illness) within ten (10) business days after written notification thereof to you by the Firm;

(2) your commission of any dishonest or fraudulent act, or any other act or omission, which has caused or may reasonably be expected to cause injury to the interest or business reputation of the Firm; or

(3) your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Firm is a member or of any policy of the Firm relating to compliance with any of the foregoing;

provided, that an act or omission shall constitute “Cause” for purposes of this definition if the Firm determines, in its sole discretion, that such action or omission is described in Section 11(c)(3)(iii) and is deliberate, intentional or willful.

(c) A “Change in Control” shall be deemed to have occurred if any of the following conditions shall have been satisfied:

(1) any one person or more than one person acting as a group (as determined under Section 409A), other than (A) any employee plan established by Morgan Stanley or any of its Subsidiaries, (B) Morgan Stanley or any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act), (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by stockholders of Morgan Stanley in substantially the same proportions as their ownership of Morgan Stanley, is or becomes, during any 12-month period, the beneficial owner, directly or indirectly, of securities of Morgan Stanley (not including in the securities beneficially owned by such person(s) any securities acquired directly from Morgan Stanley or its affiliates other than in connection with the acquisition by Morgan Stanley or its affiliates of a business) representing 50% or more of the total voting power of the stock of Morgan Stanley; provided, however, that the provisions of this subsection (1) are not intended to apply to or include as a Change in Control any transaction that is specifically excepted from the definition of Change in Control under subsection (3) below;

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(2) a change in the composition of the Board such that, during any 12-month period, the individuals who, as of the beginning of such period, constitute the Board (the “Existing Board”) cease for any reason to constitute at least 50% of the Board; provided, however, that any individual becoming a member of the Board subsequent to the beginning of such period whose election, or nomination for election by Morgan Stanley’s stockholders, was approved by a vote of at least a majority of the directors immediately prior to the date of such appointment or election shall be considered as though such individual were a member of the Existing Board;

(3) the consummation of a merger or consolidation of Morgan Stanley with any other corporation or other entity, or the issuance of voting securities in connection with a merger or consolidation of Morgan Stanley (or any direct or indirect subsidiary of Morgan Stanley) pursuant to applicable stock exchange requirements; provided that immediately following such merger or consolidation the voting securities of Morgan Stanley outstanding immediately prior thereto do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity of such merger or consolidation or parent entity thereof) 50% or more of the total voting power of Morgan Stanley stock (or if Morgan Stanley is not the surviving entity of such merger or consolidation, 50% or more of the total voting power of the stock of such surviving entity or parent entity thereof); and provided further that a merger or consolidation effected to implement a recapitalization of Morgan Stanley (or similar transaction) in which no person (as determined under Section 409A) is or becomes the beneficial owner, directly or indirectly, of securities of Morgan Stanley (not including in the securities beneficially owned by such person any securities acquired directly from Morgan Stanley or its affiliates other than in connection with the acquisition by Morgan Stanley or its affiliates of a business) representing 50% or more of either the then outstanding shares of Morgan Stanley common stock or the combined voting power of Morgan Stanley’s then outstanding voting securities shall not be considered a Change in Control; or

(4) the complete liquidation of Morgan Stanley or the sale or disposition by Morgan Stanley of all or substantially all of Morgan Stanley’s assets in which any one person or more than one person acting as a group (as determined under Section 409A) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from Morgan Stanley that have a total gross fair market value equal to more than 50% of the total gross fair market value of all of the assets of Morgan Stanley immediately prior to such acquisition or acquisitions.

Notwithstanding the foregoing, (x) no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of Morgan Stanley common stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of Morgan Stanley immediately

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prior to such transaction or series of transactions and (y) no event or circumstances described in any of clauses (1) through (4) above shall constitute a Change in Control unless such event or circumstances also constitute a change in the ownership or effective control of Morgan Stanley, or in the ownership of a substantial portion of Morgan Stanley’s assets, as defined in Section 409A. In addition, no Change in Control shall be deemed to have occurred upon the acquisition of additional control of Morgan Stanley by any one person or more than one person acting as a group that is considered to effectively control Morgan Stanley.

For purposes of the provisions of this Award Certificate, terms used in the definition of a Change in Control shall be as defined or interpreted pursuant to Section 409A.

(d) “Committee” means the Compensation, Management Development and Succession Committee of the Board, any successor committee thereto or any other committee of the Board appointed by the Board with the powers of the Committee under the Plan, or any subcommittee appointed by such Committee.

(e) “Competitive Activity” means:

(1) becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (x) that are similar or substantially related to the services that you provided to the Firm, or (y) that you had direct or indirect managerial or supervisory responsibility for at the Firm, or (z) that call for the application of the same or similar specialized knowledge or skills as those utilized by you in your services for the Firm, in each such case, at any time during the year preceding the termination of your employment with the Firm; or

(2) either alone or in concert with others, forming, or acquiring a 5% or greater equity ownership, voting interest or profit participation in, a Competitor.

(f) “Competitor” means any corporation, partnership or other entity that competes, or that owns a significant interest in any corporation, partnership or other entity that competes, with any business activity the Firm engages in, or that you reasonably knew or should have known that the Firm was planning to engage in, at the time of the termination of your Employment.

(g) “Confidential and Proprietary Information” means any information that is classified as confidential in the Firm’s Global Policy on Confidential Information or that may have intrinsic value to the Firm, the Firm’s clients or other parties with which the Firm has a relationship, or that may provide the Firm with a competitive advantage, including, without limitation, any trade secrets; inventions (whether or not patentable); formulas; flow charts; computer programs; access codes or other systems information; algorithms; technology and business processes; business, product or marketing plans; sales and other forecasts; financial information; client lists or other intellectual property; information relating to compensation and benefits; and public information that becomes proprietary as a result of the Firm’s

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compilation of that information for use in its business, provided that such Confidential and Proprietary Information does not include any information which is available for use by the general public or is generally available for use within the relevant business or industry other than as a result of your action. Confidential and Proprietary Information may be in any medium or form, including, without limitation, physical documents, computer files or discs, electronic communications, videotapes, audiotapes, and oral communications.

(h) “Date of the Award” means [insert grant date, which will typically coincide with the beginning of the performance period].

(i) “Disability” means any condition that would qualify for a benefit under any group long-term disability plan maintained by the Firm and applicable to you.

(j) “Employed” and “Employment” refer to employment with the Firm and/or Related Employment.

(k) The “Firm” means Morgan Stanley (including any successor thereto) together with its subsidiaries and affiliates. For purposes of the definitions of “Cause,” “Confidential and Proprietary Information,” “Unauthorized Comments” and “Wrongful Solicitation” set forth in this Award Certificate and Section 11(c)(2)(vi) of this Award Certificate, references to the “Firm” shall refer severally to the Firm as defined in the preceding sentence and your Related Employer, if any. For purposes of the cancellation provisions set forth in this Award Certificate relating to disclosure or use of Confidential and Proprietary Information, references to the “Firm” shall refer to the Firm as defined in the second preceding sentence or your Related Employer, as applicable.

(l) “Full Career Retirement” means the termination of your Employment by you or by the Firm for any reason other than under circumstances involving any cancellation event described in Section 11(c), and other than due to your death or Governmental Service Termination if you have either satisfied the age and service requirements set forth in your employment agreement or offer letter with the Firm or, if you are not party to an employment agreement or offer letter with the Firm (or if such agreement or letter does not include a definition of “Full Career Retirement”), you meet any of the following criteria as of your termination date and, in either case, you have provided the Firm at least 12 months’ advance notice of such termination:

(1) you have attained age 50 and completed at least 12 years of service as a [    ]⁵ of the Firm or equivalent officer title; or

(2) you have attained age 50 and completed at least 15 years of service as an officer of the Firm at the level of [    ]⁶ or above; or

⁵  Specified officer title(s) in one or more specified business units.

⁶  Specified officer title(s) in one or more specified business units.

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(3) you have completed at least 20 years of service with the Firm; or

(4) you have attained age 55 and have completed at least 5 years of service with the Firm and the sum of your age and years of service equals or exceeds 65.⁷

For the purposes of the foregoing definition, service with the Firm will include any period of service with the following entities and any of their predecessors:

(i) AB Asesores (“ABS”) prior to its acquisition by the Firm (provided that only years of service as a partner of ABS shall count towards years of service as an officer);

(ii) Morgan Stanley Group Inc. and its subsidiaries (“MS Group”) prior to the merger with and into Dean Witter, Discover & Co.;

(iii) Miller Anderson & Sherrerd, L.L.P. prior to its acquisition by MS Group;

(iv) Van Kampen Investments Inc. and its subsidiaries prior to its acquisition by MS Group;

(v) FrontPoint Partners LLC and its subsidiaries prior to its acquisition by the Firm; and

(vi) Dean Witter, Discover & Co. and its subsidiaries (“DWD”) prior to the merger of Morgan Stanley Group Inc. with and into Dean Witter, Discover & Co.;

provided that, in the case of an employee who has transferred employment from DWD to MS Group or vice versa, a former employee of DWD will receive credit for employment with DWD only if he or she transferred directly from DWD to Morgan Stanley & Co. Incorporated or its affiliates subsequent to February 5, 1997, and a former employee of MS Group will receive credit for employment with MS Group only if he or she transferred directly from MS Group to Morgan Stanley DW Inc. or its affiliates subsequent to February 5, 1997.

(m) “Governmental Employer” means a governmental department or agency, self-regulatory agency or other public service employer.

(n) “Governmental Service Termination” means the termination of your Employment due to your commencement of employment at a Governmental Employer; provided that you have presented the Firm with satisfactory evidence demonstrating that as a result of such new employment, the divestiture of your continued interest in Morgan Stanley equity awards or continued ownership of Morgan Stanley common stock is reasonably necessary to avoid the violation of U.S. federal, state or local or foreign ethics law or conflicts of interest law applicable to you at such Governmental Employer.

⁷  Age and service conditions specified in clauses (1) through (4) may vary from year to year.

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(o) “Index Group” means the S&P 500 Financial Sectors Index.

(p) “Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(q) “Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement.

(r) “Management Committee” means the Morgan Stanley Management Committee and any successor or equivalent committee.

(s) “MS ROE” means Morgan Stanley’s return on average common shareholders’ equity, including discontinued operations and extraordinary items, for each fiscal year during the Performance Period, adjusted to eliminate the impact of the following items with respect to each such fiscal year: (a) debt valuation adjustments, (b) any gain or loss associated with the sale of any Disposal Group at the time of, or subsequent to, it being classified as Held for Sale, (c) any goodwill impairment recognized in a fiscal year within a Reporting Unit if an acquisition by Morgan Stanley (or a subsidiary) of a Non-Controlling Interest in an entity in which Morgan Stanley (or a subsidiary) already has a Controlling Interest is made within the same period and same Reporting Unit, (d) any gain or loss associated with legal settlements and/or accruals related to legal settlements recognized in the fiscal year and relating to business activities conducted prior to January 1, 2011 and (e) any impacts for changes in accounting principles that are not applied on a full retrospective basis in the year of adoption and result in a cumulative catch-up adjustment (recorded either as a gain or a loss, or as an adjustment to equity) in the applicable fiscal year.

• For purposes of clauses (b) through (e) above, adjustments shall only be made to MS ROE if the pre-tax amounts equal or exceed $100 million during the applicable fiscal year;

• For purposes of clauses (b) and (c) above, “Disposal Group,” “Held for Sale,” “Controlling Interest,” “Non-Controlling Interest,” and “Reporting Unit” shall be defined in accordance with US generally accepted accounting principles;

• For purposes of clause (b) above, any gain or loss associated with the sale of a Disposal Group shall include any transaction costs, severance costs, and/or acceleration of unvested deferred compensation awards; and

• For purposes of clause (d) above, such gain or loss shall include any expense (or reversal of expense) recognized during the fiscal year associated with legal proceedings and/or legal settlements.

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(t) “Performance Period” means the three-year period consisting of the reporting years of Morgan Stanley of [year of the Date of the Award, first year following the Date of the Award and second year following the Date of the Award].

(u) “Plan” means the 2007 Equity Incentive Compensation Plan, as amended.

(v) “Pro Ration Fraction” means a fraction, the numerator of which is the number of days starting with and inclusive of [January 1 immediately preceding the Date of the Award] and ending on the effective date of your termination of Employment and the denominator of which is the number of days in the period beginning on [January 1 immediately preceding the Date of the Award] and ending on the Scheduled Vesting Date.

(w) “Related Employment” means your employment with an employer other than the Firm (such employer, herein referred to as a “Related Employer”), provided that: (i) you undertake such employment at the written request or with the written consent of Morgan Stanley’s Chief Human Resources Officer (or if such position no longer exists, the holder of an equivalent position); (ii) immediately prior to undertaking such employment you were an employee of the Firm or were engaged in Related Employment (as defined herein); and (iii) such employment is recognized by the Firm in its discretion as Related Employment; and, provided further, that the Firm may (1) determine at any time in its sole discretion that employment that was recognized by the Firm as Related Employment no longer qualifies as Related Employment, and (2) condition the designation and benefits of Related Employment on such terms and conditions as the Firm may determine in its sole discretion; provided further, the Firm will not provide for Related Employment except to the extent such treatment is not prohibited by Section 409A and would not cause you to recognize income for United States federal income tax purposes before your performance stock units convert to shares (or your dividend equivalents are paid) or to incur additional tax or interest under Section 409A. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Firm, or otherwise modify your and the Firm’s respective rights and obligations.

(x) “Scheduled Conversion Date” means a date during [third year following the Date of the Award] determined by the Committee.

(y) “Scheduled Vesting Date” means [January 1 of the third year following the Date of the Award].

(z) “Section 162(m)” means Section 162(m) of the Internal Revenue Code and any regulations thereunder.

(aa) “Section 162(m) Performance Employee” means an individual determined by the Committee as covered by Morgan Stanley’s Section 162(m) performance formula governing annual incentive compensation for certain officers for 2013.

(bb) “Section 409A” means Section 409A of the Internal Revenue Code and any regulations thereunder.

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(cc) “Separation from Service” means a separation from service with the Firm for purposes of Section 409A determined using the default provisions set forth in Treasury Regulation §1.409A-1(h) or any successor regulation thereto. For purposes of this definition, Morgan Stanley’s subsidiaries and affiliates include (and are limited to) any corporation that is in the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as Morgan Stanley and any trade or business that is under common control with Morgan Stanley (within the meaning of Section 414(c) of the Internal Revenue Code), determined in each case in accordance with the default provisions set forth in Treasury Regulation §1.409A-1(h)(3).

(dd) “Target Award” means the number of performance stock units that has been communicated to you separately and that will be earned, subject to the other terms and conditions of this Award Certificate, if each of the multipliers set forth in Sections 2(a) and 2(b) equals 1.

(ee) “Total Shareholder Return” or “TSR”, as it applies to

(1) Morgan Stanley’s common stock, means the percentage change in value (positive or negative) over the Performance Period as measured by dividing (i) the sum of (A) the cumulative value of dividends and other distributions in respect of the common stock for the Performance Period, assuming dividend reinvestment, and (B) the difference (positive or negative) between the common stock price on the first and last days of the Performance Period (calculated on the basis of the average of the adjusted closing prices over the 30-day trading period immediately prior to the first day of the Performance Period and the average of the adjusted closing prices over the 30-day trading period ending on the last day of the Performance Period), by (ii) the common stock price on the first day of the Performance Period, calculated on the basis of the average of the adjusted closing prices over the 30-day trading period immediately prior to the first day of the Performance Period; and

(2) the Index Group, means the percentage change in value (positive or negative) over the Performance Period as measured by dividing (i) the difference (positive or negative) between the closing price of the Index Group on the first and last days of the Performance Period (calculated on the basis of the average of the adjusted closing prices over the 30-day trading period immediately prior to the first day of the Performance Period and the average of the adjusted closing prices over the 30-day trading period ending on the last day of the Performance Period), by (ii) the closing price of the Index Group on the first day of the Performance Period, calculated on the basis of the average of the adjusted closing prices over the 30-day trading period immediately prior to the first day of the Performance Period. The adjusted closing price of the Index Group on any given date shall be the closing price of the S&P 500 Financial Sectors Index as reported by the Bloomberg Professional Service.

(ff) You will be deemed to have made “Unauthorized Comments” about the Firm if, while Employed or following the termination of your Employment, you make, directly or indirectly, any negative, derogatory, disparaging or defamatory comment, whether written, oral or in electronic format, to any reporter, author, producer or similar person or entity or to any general public media in any form (including, without limitation, books, articles or writings of any other kind, as well as film, videotape, audio tape, computer/Internet format or any other medium) that concerns directly or indirectly the Firm, its business or operations, or any of its current or former agents, employees, officers, directors, customers or clients.

26

(gg) A “Wrongful Solicitation” occurs upon either of the following events:

(1) while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within 180 days after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Firm employee to leave the Firm or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, during any notice period applicable to you in connection with the termination of your Employment or during the 180 days preceding notice of the termination of your Employment; or

(2) while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within 90 days (180 days if you are a member of the Management Committee at the time of notice of termination) after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Firm (i) to discontinue or diminish his, her or its relationship or prospective relationship with the Firm or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which engages in any line of business in which the Firm is engaged (other than the Firm); provided, however, that this clause shall apply only to clients or customers, or prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the termination of your Employment or during the 180 days preceding notice of the termination of your Employment.

27

IN WITNESS WHEREOF, Morgan Stanley has duly executed and delivered this Award Certificate as of the Date of the Award.

MORGAN STANLEY
	/s/
	[Name]
	[Title]

28

EX-12

EXHIBIT 12

Morgan Stanley

Ratio of Earnings to Fixed Charges

and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends

(dollars in millions)

(unaudited)

	Three Months Ended March  31, 2013		2012			2011		2010		2009		Fiscal 2008		One Month Ended December 31, 2008
Ratio of Earnings to Fixed Charges
Earnings:
Income (loss) before income taxes(1)	$	1,249	$	(110	)	$	6,559	$	4,568	$	1,117	$	1,081	$	(1,993	)
Add: Fixed charges, net		1,287		6,206			7,166		6,684		7,112		36,636		1,180
Income (loss) before income taxes and fixed charges, net	$	2,536	$	6,096		$	13,725	$	11,252	$	8,229	$	37,717	$	(813	)
Fixed Charges:
Total interest expense	$	1,213	$	5,912		$	6,880	$	6,405	$	6,861	$	36,412	$	1,160
Interest factor in rents		74		294			286		279		251		224		20
Total fixed charges	$	1,287	$	6,206		$	7,166	$	6,684	$	7,112	$	36,636	$	1,180
Ratio of earnings to fixed charges		2.0		1.0			1.9		1.7		1.2		1.0		*
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
Earnings:
Income (loss) before income taxes(1)	$	1,249	$	(110	)	$	6,559	$	4,568	$	1,117	$	1,081	$	(1,993	)
Add: Fixed charges, net		1,287		6,206			7,166		6,684		7,112		36,636		1,180
Income (loss) before income taxes and fixed charges, net	$	2,536	$	6,096		$	13,725	$	11,252	$	8,229	$	37,717	$	(813	)
Fixed Charges:
Total interest expense	$	1,213	$	5,912		$	6,880	$	6,405	$	6,861	$	36,412	$	1,160
Interest factor in rents		74		294			286		279		251		224		20
Preferred stock dividends		30		96			380		1,001		2,041		122		496
Total fixed charges and preferred stock dividends	$	1,317	$	6,302		$	7,546	$	7,685	$	9,153	$	36,758	$	1,676
Ratio of earnings to fixed charges and preferred stock dividends		1.9		1.0			1.8		1.5		0.9		1.0		*

(1) Income (loss) from continuing operations before income taxes does not include dividends on preferred securities subject to mandatory redemption, gain (loss) on discontinued operations, noncontrolling interests and income or loss from equity investees.

Fixed charges consist of interest cost, including interest on deposits, interest on discontinued operations, dividends on preferred securities subject to mandatory redemption, and that portion of rent expense to be representative of the interest factor.

Fixed charges do not include interest expense on uncertain tax liabilities as the Company records these amounts within the Provision for income taxes.

The preferred stock dividend amounts represent pre-tax earnings required to cover dividends on preferred stock.

* The earnings for the one month ended December 31, 2008 were inadequate to cover total fixed charges and total fixed charges and preferred stock dividends.

The coverage deficiency for total fixed charges for the one month ended December 31, 2008 was $1,993 million.

The coverage deficiency for total fixed charges and preferred stock dividends for the one month ended December 31, 2008 was $2,489 million.

EX-15

EXHIBIT 15

To the Board of Directors and Shareholders of Morgan Stanley:

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited condensed consolidated financial information of Morgan Stanley and subsidiaries for the three-month periods ended March 31, 2013 and 2012, and have issued our report dated May 7, 2013. As indicated in such report, because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, is being incorporated by reference in the following Registration Statements of Morgan Stanley:

Filed on Form S-3:	Filed on Form S-8:
Registration Statement No. 33-57202	Registration Statement No. 33-63024
Registration Statement No. 33-60734	Registration Statement No. 33-63026
Registration Statement No. 33-89748	Registration Statement No. 33-78038
Registration Statement No. 33-92172	Registration Statement No. 33-79516
Registration Statement No. 333-07947	Registration Statement No. 33-82240
Registration Statement No. 333-27881	Registration Statement No. 33-82242
Registration Statement No. 333-27893	Registration Statement No. 33-82244
Registration Statement No. 333-27919	Registration Statement No. 333-04212
Registration Statement No. 333-46403	Registration Statement No. 333-28141
Registration Statement No. 333-46935	Registration Statement No. 333-28263
Registration Statement No. 333-76111	Registration Statement No. 333-62869
Registration Statement No. 333-75289	Registration Statement No. 333-78081
Registration Statement No. 333-34392	Registration Statement No. 333-95303
Registration Statement No. 333-47576	Registration Statement No. 333-85148
Registration Statement No. 333-83616	Registration Statement No. 333-85150
Registration Statement No. 333-106789	Registration Statement No. 333-108223
Registration Statement No. 333-117752	Registration Statement No. 333-142874
Registration Statement No. 333-129243	Registration Statement No. 333-146954
Registration Statement No. 333-131266	Registration Statement No. 333-159503
Registration Statement No. 333-155622	Registration Statement No. 333-159504
Registration Statement No. 333-156423	Registration Statement No. 333-159505
Registration Statement No. 333-178081	Registration Statement No. 333-168278
	Registration Statement No. 333-172634
Filed on Form S-4:	Registration Statement No. 333-177454
Registration Statement No. 333-25003	Registration Statement No. 333-183595

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statements prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ Deloitte & Touche LLP 

New York, New York

May 7, 2013

EX-31.1

EXHIBIT 31.1

Certification

I, James P. Gorman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Morgan Stanley;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2013

/s/ JAMES P. GORMAN

James P. Gorman

Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification

I, Ruth Porat, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Morgan Stanley;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2013

/s/ RUTH PORAT

Ruth Porat

Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Morgan Stanley (the “Company”) on Form 10-Q for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James P. Gorman, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JAMES P. GORMAN

James P. Gorman

Chairman and Chief Executive Officer

Dated: May 7, 2013

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Morgan Stanley (the “Company”) on Form 10-Q for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ruth Porat, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ RUTH PORAT

Ruth Porat

Executive Vice President and

Chief Financial Officer

Dated: May 7, 2013

XML

Commitments, Guarantees and Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Commitments, Guarantees and Contingencies [Abstract]

Commitments by Period of Expiration

			Years to Maturity
			Less								Total at
			than 1		1-3		3-5		Over 5		March 31, 2013
			(dollars in millions)
Letters of credit and other financial guarantees
	obtained to satisfy collateral requirements	$	1,460	$	9	$	—	$	1	$	1,470
Investment activities			778		100		36		273		1,187
Primary lending commitments—investment grade(1)			7,353		10,801		34,106		926		53,186
Primary lending commitments—non-investment grade(1)			818		4,711		10,337		1,919		17,785
Secondary lending commitments(2)			78		41		27		40		186
Commitments for secured lending transactions			340		—		—		—		340
Forward starting reverse repurchase agreements and
	securities borrowing agreements(3)(4)		63,397		—		—		—		63,397
Commercial and residential mortgage-related commitments			1,125		18		179		193		1,515
Underwriting commitments			40		—		—		—		40
Other commitments			1,763		340		115		100		2,318
	Total	$	77,152	$	16,020	$	44,800	$	3,452	$	141,424

.

(1)This amount includes $36.9 billion of investment grade and $9.5 billion of non-investment grade unfunded commitments accounted for as held for investment and $1.1billion of investment grade and $2.8billion of non-investment grade unfunded commitments accounted for as held for sale at March 31, 2013. The remainder of these lending commitments is carried at fairvalue.

(2)These commitments are recorded at fair value within Trading assets and Trading liabilities in the condensed consolidated statements of financial condition (see Note 4).

(3)The Company enters into forward starting reverse repurchase and securities borrowing agreements (agreements that have a trade date at or prior to March 31, 2013 and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations. These agreements primarily settle within three business days and of the total amount atMarch 31, 2013,$55.3billion settled within three business days.

(4)The Company also has a contingent obligation to provide financing to a clearinghouse through which it clears certain transactions. The financing is required only upon the default of a clearinghouse member. The financing takes the form of a reverse repurchase facility, with a maximum amount of approximately $2.3 billion.

Obligations under Guarantee Arrangements

			Maximum Potential Payout/Notional										Carrying Amount (Asset)/ Liability		Collateral/ Recourse
			Years to Maturity
Type of Guarantee			Less than 1		1-3		3-5		Over 5		Total
			(dollars in millions)
Credit derivative contracts(1)		$	425,823	$	551,454	$	685,183	$	164,181	$	1,826,641	$	7,247	$	—
Other credit contracts			466		82		138		1,139		1,825		(195)		—
Non-credit derivative contracts(1)			1,147,217		766,393		321,798		397,311		2,632,719		71,979		—
Standby letters of credit and other
	financial guarantees issued(2)(3)		735		1,246		1,484		5,504		8,969		(205)		7,090
Market value guarantees			—		83		101		541		725		10		106
Liquidity facilities			2,342		148		—		—		2,490		(4)		3,723
Whole loan sales representations
	and warranties		—		—		—		23,967		23,967		82		—
Securitization representations and
	warranties		—		—		—		70,927		70,927		35		—
General partner guarantees			71		45		32		165		313		74		—

_____________

(1)Carrying amounts of derivative contracts are shown on a gross basis prior to cash collateral or counterparty netting. For further information on derivative contracts, see Note 11.

(2)Approximately $2.1 billion of standby letters of credit are also reflected in the “Commitments” tableabove in primary and secondary lending commitments. Standby letters of credit are recorded at fair value within Trading assets or Trading liabilities in the condensed consolidated statements of financial condition.

(3)Amounts include guarantees issued by consolidated real estate funds sponsored by the Company of approximately $85.4million. These guarantees relate to obligations of the fund's investee entities, including guarantees related to capital expenditures and principal and interest debt payments. Accrued losses under these guarantees of approximately $3.9 million are reflected as a reduction of the carrying value of the related fund investments, which are reflected in Trading assetson thecondensed consolidated statement of financial condition.

XML

Fair Value Disclosures (Fair Value of Investments that Calculate Net Asset Value) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Investments	$ 8,223		$ 8,346
Fair Value	4,583		4,489
Unfunded Commitment	834		868
Private Equity Funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	2,291		2,179
Unfunded Commitment	617		644
Percent of investments that will be liquidated in the next five years	9.00%
Percent of investments that will be liquidated within five to 10 years	58.00%
Percent of investments that will be liquidated after 10 years	33.00%
Real Estate Funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	1,377		1,376
Unfunded Commitment	214		221
Percent of investments that will be liquidated in the next five years	3.00%
Percent of investments that will be liquidated within five to 10 years	49.00%
Percent of investments that will be liquidated after 10 years	48.00%
Hedge Funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption frequency	at least on a six-month period basis
Redemption notice period	90 days or less
Long-short Equity Hedge Funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	473	[1]	475	[1]
Unfunded Commitment	0	[1]	0	[1]
Redemption notice period	primarily greater than six months		primarily greater than six months
Percent of investments redeemable at least quarterly	39.00%		36.00%
Percent of investments redeemable every six months	39.00%		38.00%
Percent of investments redeemable greater than six months	22.00%		26.00%
Long-short Equity Hedge Funds | Maximum
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption restriction period	2 years
Long-short Equity Hedge Funds | Initial Period Lock-up Restrictions
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Percent of investments that cannot be redeemed currently	8.00%
Fixed Income/Credit-Related Hedge Funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	84	[1]	86	[1]
Unfunded Commitment	0	[1]	0	[1]
Fixed Income/Credit-Related Hedge Funds | Minimum
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption restriction period	3 years
Fixed Income/Credit-Related Hedge Funds | Initial Period Lock-up Restrictions
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Percent of investments that cannot be redeemed currently	8.00%
Event Driven Hedge Funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	43	[1]	52	[1]
Unfunded Commitment	0	[1]	0	[1]
Multi-strategy Hedge Funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	315	[1]	321	[1]
Unfunded Commitment	$ 3	[1]	$ 3	[1]
Multi-strategy Hedge Funds | Maximum
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption restriction period	2 years
Multi-strategy Hedge Funds | Initial Period Lock-up Restrictions
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Percent of investments that cannot be redeemed currently	57.00%
Multi-strategy Hedge Funds | Exit Restrictions
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Percent of investments that cannot be redeemed currently	9.00%

[1] Fixed income/credit-related hedge funds, event-driven hedge funds, and multi-strategy hedge funds are redeemable at least on a six-month period basis primarily with a notice period of 90 days or less. At March 31, 2013, approximately 39% of the fair value amount of long-short equity hedge funds is redeemable at least quarterly, 39% is redeemable every six months and 22% of these funds have a redemption frequency of greater than six months. The notice period for long-short equity hedge funds at March 31, 2013 is primarily greater than six months. At December 31, 2012, approximately 36% of the fair value amount of long-short equity hedge funds is redeemable at least quarterly, 38% is redeemable every six months and 26% of these funds have a redemption frequency of greater than six months. The notice period for long-short equity hedge funds at December 31, 2012 is primarily greater than six months.

XML

Significant Accounting Policies (Details) (USD $) In Billions, unless otherwise specified	3 Months Ended
	Mar. 31, 2012
Consolidated Statements of Cash Flows
Increase in cash from operating activities due to reclassfication from other activities	$ 0.6
Wealth Management JV
Consolidated Statements of Cash Flows
Nets assets related to delayed contribution in connection with the consummation of business combination	$ 0.1

XML

Variable Interest Entities and Securitization Activities (Consolidated VIEs) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Mortgage and Asset-Backed Securitizations
Variable Interest Entity
VIE assets	$ 881	$ 978
VIE liabilities	565	646
Collateralized Debt Obligations
Variable Interest Entity
VIE assets	0	52
VIE liabilities	0	16
Managed Real Estate Partnerships
Variable Interest Entity
VIE assets	2,486	2,394
VIE liabilities	134	83
Other Structured Financings
Variable Interest Entity
VIE assets	992	983
VIE liabilities	65	65
Other
Variable Interest Entity
VIE assets	1,500	1,676
VIE liabilities	$ 176	$ 313

XML

Fair Value Disclosures (Net Gains (Losses) Due to Changes in Fair Value for Items Measured at Fair Value Pursuant to the Fair Value Option Election) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Federal Funds Sold and Securities Purchased under Agreements to Resell
Gains (losses) due to changes in fair value	$ 2		$ (3)
Deposits
Gains (losses) due to changes in fair value	(3)		(12)
Commercial Paper and Other Short-term Borrowings
Gains (losses) due to changes in fair value	62		(129)
Securities Sold under Agreements to Repurchase
Gains (losses) due to changes in fair value	(5)		(3)
Long-term Borrowings
Gains (losses) due to changes in fair value	(206)		(3,295)
Trading
Gains (losses) due to changes in fair value attributable to changes in the credit quality of the Company	(317)		(1,978)
Trading | Federal Funds Sold and Securities Purchased under Agreements to Resell
Gains (losses) due to changes in fair value	1		(4)
Trading | Deposits
Gains (losses) due to changes in fair value	14		10
Trading | Commercial Paper and Other Short-term Borrowings
Gains (losses) due to changes in fair value	63	[1]	(129)	[1]
Trading | Securities Sold under Agreements to Repurchase
Gains (losses) due to changes in fair value	(4)		(2)
Trading | Long-term Borrowings
Gains (losses) due to changes in fair value	91	[1]	(2,951)	[1]
Interest Income (Expense) | Federal Funds Sold and Securities Purchased under Agreements to Resell
Gains (losses) due to changes in fair value	1		1
Interest Income (Expense) | Deposits
Gains (losses) due to changes in fair value	(17)		(22)
Interest Income (Expense) | Commercial Paper and Other Short-term Borrowings
Gains (losses) due to changes in fair value	(1)		0
Interest Income (Expense) | Securities Sold under Agreements to Repurchase
Gains (losses) due to changes in fair value	(1)		(1)
Interest Income (Expense) | Long-term Borrowings
Gains (losses) due to changes in fair value	$ (297)		$ (344)

[1] Of the total gains (losses) recorded in Trading for short-term and long-term borrowings for the quarters ended March 31, 2013 and 2012, $(317) million and $(1,978) million, respectively, are attributable to changes in the credit quality of the Company, 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.

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Financing Receivables (Employee Loans) (Details) (USD $) In Millions, unless otherwise specified			3 Months Ended
	Mar. 31, 2013 Employee Retainment and Recruitment Program	Dec. 31, 2012 Employee Retainment and Recruitment Program	Mar. 31, 2013 Employee Retainment and Recruitment Program Minimum	Mar. 31, 2013 Employee Retainment and Recruitment Program Maximum	Mar. 31, 2013 After-tax Leveraged Investment Arrangements	Dec. 31, 2012 After-tax Leveraged Investment Arrangements
Employee Loans
Employee loan repayment terms			1 year	12 years
Employee loans outstanding	$ 5,602	$ 5,998			$ 164	$ 172
Allowance for employee loans	$ 135	$ 131			$ 104	$ 108

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Segment and Geographic Information (Selected Financial Information by Segments) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012		Dec. 31, 2012
Total non-interest revenues	$ 7,973		$ 6,983
Interest income	1,398	[1]	1,542	[1]
Interest expense	1,213	[1]	1,601	[1]
Net interest	185		(59)
Net Revenues	8,158	[2]	6,924	[2]
Income (loss) from continuing operations before income taxes	1,582		202
Provision for (benefit from) income taxes	332		54
Income (loss) from continuing operations	1,250		148
Discontinued operations:
Gain (loss) from discontinued operations	(30)	[3],[4]	28	[3],[4]
Provision for (benefit from) income taxes	(11)	[3]	42	[3]
Net gain (loss) on discontinued operations	(19)	[3]	(14)	[3]
Net income (loss)	1,231		134
Net income applicable to redeemable noncontrolling interests	122		0
Net income applicable to nonredeemable noncontrolling interests	147		228
Net income (loss) applicable to Morgan Stanley	962		(94)
Segment Reporting Information, Additional Information
Performance-based fee revenue at risk	274				205
Institutional Securities
Total non-interest revenues	4,313		3,586	[5]
Interest income	1,024		1,177	[5]
Interest expense	1,248		1,628	[5]
Net interest	(224)		(451)	[5]
Net Revenues	4,089	[2]	3,135	[2],[5]
Income (loss) from continuing operations before income taxes	798		(329)	[5]
Provision for (benefit from) income taxes	60		(106)	[5]
Income (loss) from continuing operations	738		(223)	[5]
Discontinued operations:
Gain (loss) from discontinued operations	(30)	[3]	25	[3],[5]
Provision for (benefit from) income taxes	(11)	[3]	41	[3],[5]
Net gain (loss) on discontinued operations	(19)	[3]	(16)	[3],[5]
Net income (loss)	719		(239)	[5]
Net income applicable to redeemable noncontrolling interests	1
Net income applicable to nonredeemable noncontrolling interests	96		79	[5]
Net income (loss) applicable to Morgan Stanley	622		(318)	[5]
Global Wealth Management Group
Total non-interest revenues	3,057		2,891	[5]
Interest income	488		458	[5]
Interest expense	75		58	[5]
Net interest	413		400	[5]
Net Revenues	3,470	[2]	3,291	[2],[5]
Income (loss) from continuing operations before income taxes	597		403	[5]
Provision for (benefit from) income taxes	220		122	[5]
Income (loss) from continuing operations	377		281	[5]
Discontinued operations:
Gain (loss) from discontinued operations	(1)	[3]	2	[3],[5]
Provision for (benefit from) income taxes	0	[3]	1	[3],[5]
Net gain (loss) on discontinued operations	(1)	[3]	1	[3],[5]
Net income (loss)	376		282	[5]
Net income applicable to redeemable noncontrolling interests	121
Net income applicable to nonredeemable noncontrolling interests	0		84	[5]
Net income (loss) applicable to Morgan Stanley	255		198	[5]
Asset Management
Total non-interest revenues	649		541
Interest income	2		3
Interest expense	6		11
Net interest	(4)		(8)
Net Revenues	645	[2]	533	[2]
Income (loss) from continuing operations before income taxes	187		128
Provision for (benefit from) income taxes	52		38
Income (loss) from continuing operations	135		90
Discontinued operations:
Gain (loss) from discontinued operations	1	[3]	1	[3]
Provision for (benefit from) income taxes	0	[3]	0	[3]
Net gain (loss) on discontinued operations	1	[3]	1	[3]
Net income (loss)	136		91
Net income applicable to redeemable noncontrolling interests	0
Net income applicable to nonredeemable noncontrolling interests	51		65
Net income (loss) applicable to Morgan Stanley	85		26
Intersegment Eliminations
Total non-interest revenues	(46)		(35)
Interest income	(116)		(96)
Interest expense	(116)		(96)
Net interest	0		0
Net Revenues	(46)	[2]	(35)	[2]
Income (loss) from continuing operations before income taxes	0		0
Provision for (benefit from) income taxes	0		0
Income (loss) from continuing operations	0		0
Discontinued operations:
Gain (loss) from discontinued operations	0	[3]	0	[3]
Provision for (benefit from) income taxes	0	[3]	0	[3]
Net gain (loss) on discontinued operations	0	[3]	0	[3]
Net income (loss)	0		0
Net income applicable to redeemable noncontrolling interests	0
Net income applicable to nonredeemable noncontrolling interests	0		0
Net income (loss) applicable to Morgan Stanley	$ 0		$ 0

[1] Interest income and expense are recorded within the condensed consolidated statements of income depending on the nature of the instrument and related market conventions. When interest is included as a component of the instrument’s fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.

[2] In certain management fee arrangements, the Company is entitled to receive performance-based fees (also referred to as incentive fees) when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, performance fee revenue is accrued (or reversed) quarterly based on measuring account fund performance to date versus the performance benchmark stated in the investment management agreement. The amount of performance-based fee revenue at risk of reversing if fund performance falls below stated investment management agreement benchmarks was approximately $274 million at March 31, 2013 and approximately $205 million at December 31, 2012 (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K).

[3] See Notes 1 and 21 for discussion of discontinued operations.

[4] Amounts included eliminations of intersegment activity.

[5] On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

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Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2013

Discontinued Operations

Information Regarding Amounts Included In Discontinued Operations

			Three Months Ended
			March 31,
			2013		2012
			(dollars in millions)
Net revenues(1):
	Saxon	$	—	$	76
	Quilter		(1)		31
	Other(2)		(9)		10
		$	(10)	$	117
Pre-tax gain (loss) on discontinued operations(1):
	Saxon	$	(20)	$	25
	Quilter		(1)		2
	Other(2)		(9)		1
		$	(30)	$	28

_____________

(1)Amounts included eliminations of intersegment activity.

(2)       Amounts included in Other are related to the sale of a principal investment and other.

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Collateralized Transactions (Tables)

3 Months Ended

Mar. 31, 2013

Collateralized Transactions

Information of Offsetting of Assets and Liabilities

			At March 31, 2013
			Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)		Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Financial Instruments Not Offset in the Condensed Consolidated Statements of Financial Condition(2)		Net Exposure
			(dollars in millions)
Assets
Federal funds sold and securities purchased under
	agreements to resell	$	228,101	$	(87,686)	$	140,415	$	(129,911)	$	10,504
Securities borrowed			141,667		(5,940)		135,727		(115,717)		20,010
Liabilities
Securities sold under agreements to repurchase		$	206,956	$	(87,686)	$	119,270	$	(89,815)	$	29,455
Securities loaned			46,291		(5,940)		40,351		(37,348)		3,003

_____________

(1)       Amounts include all instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2)       Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3)       Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

			At December 31, 2012
			Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)		Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Financial Instruments Not Offset in the Condensed Consolidated Statements of Financial Condition(2)		Net Exposure
			(dollars in millions)
Assets
Federal funds sold and securities purchased under
	agreements to resell	$	203,448	$	(69,036)	$	134,412	$	(126,303)	$	8,109
Securities borrowed			127,002		(5,301)		121,701		(105,849)		15,852
Liabilities
Securities sold under agreements to repurchase		$	191,710	$	(69,036)	$	122,674	$	(103,521)	$	19,153
Securities loaned			42,150		(5,301)		36,849		(30,395)		6,454

_____________

(1)       Amounts include all instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2)       Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3)       Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

Schedule of Trading Assets That Have Been Loaned or Pledged to Counterparties

				At March 31, 2013		At December 31, 2012
			(dollars in millions)
Trading assets:
	U.S. government and agency securities		$	14,125	$	15,273
	Other sovereign government obligations			4,569		3,278
	Corporate and other debt			16,450		11,980
	Corporate equities			9,130		26,377
		Total	$	44,274	$	56,908

Schedule of Cash and Securities Segregated under Federal and Other Regulations

				At		At
				March 31,		December 31,
				2013		2012
			(dollars in millions)
Cash deposited with clearing organizations or segregated under federal and other
	regulations or requirements		$	31,313	$	30,970
Securities(1)				13,999		13,424
		Total	$	45,312	$	44,394

_____________

(1)       Securities deposited with clearing organizations or segregated under federal and other regulations or requirements are sourced from Federal funds sold and securities purchased under agreements to resell and Trading assets in the condensed consolidated statements of financial condition.

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Goodwill and Net Intangible Assets (Changes in Carrying Amount of Goodwill) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Beginning Balance	$ 6,650	[1]
Goodwill disposed of during the period	(17)	[2]
Ending Balance	6,633	[1]
Goodwill, accumulated impairments	700
Goodwill before accumulated impairments	7,333		7,350
Institutional Securities
Beginning Balance	337	[1],[3]
Goodwill disposed of during the period	(17)	[2],[3]
Ending Balance	320	[1],[3]
Goodwill, accumulated impairments	673
Global Wealth Management Group
Beginning Balance	5,573	[1],[3]
Goodwill disposed of during the period	0	[2],[3]
Ending Balance	5,573	[1],[3]
Asset Management
Beginning Balance	740	[1]
Goodwill disposed of during the period	0	[2]
Ending Balance	740	[1]
Goodwill, accumulated impairments	$ 27

[1] The amount of the Company’s goodwill before accumulated impairments of $700 million, which included $673 million related to the Institutional Securities business segment and $27 million related to the Asset Management business segment, was $7,333 million and $7,350 million at March 31, 2013 and December 31, 2012, respectively.

[2] In 2011, the Company announced that it had reached an agreement with the employees of its in-house quantitative proprietary trading unit, Process Driven Trading (“PDT”), whereby PDT employees will acquire certain assets from the Company and launch an independent advisory firm. This transaction closed on January 1, 2013.

[3] On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

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Variable Interest Entities and Securitization Activities (Fair Value of Assets and Liabilities) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Derivative assets (fair value)	$ 35,829	$ 36,197
Special Purpose Entities
Retained interests (fair value)	2,729	3,212
Interests purchased in the secondary market (fair value)	741	801
Derivative assets (fair value)	1,086	1,127
Derivative liabilities (fair value)	241	325
Special Purpose Entities | Level 1
Retained interests (fair value)	0	0
Interests purchased in the secondary market (fair value)	0	0
Derivative assets (fair value)	0	0
Derivative liabilities (fair value)	0	0
Special Purpose Entities | Level 2
Retained interests (fair value)	1,192	1,560
Interests purchased in the secondary market (fair value)	706	756
Derivative assets (fair value)	775	774
Derivative liabilities (fair value)	237	295
Special Purpose Entities | Level 3
Retained interests (fair value)	1,537	1,652
Interests purchased in the secondary market (fair value)	35	45
Derivative assets (fair value)	311	353
Derivative liabilities (fair value)	4	30
Special Purpose Entities | Investment Grade
Retained interests (fair value)	1,153	1,546
Interests purchased in the secondary market (fair value)	596	623
Special Purpose Entities | Investment Grade | Level 1
Retained interests (fair value)	0	0
Interests purchased in the secondary market (fair value)	0	0
Special Purpose Entities | Investment Grade | Level 2
Retained interests (fair value)	1,101	1,476
Interests purchased in the secondary market (fair value)	596	617
Special Purpose Entities | Investment Grade | Level 3
Retained interests (fair value)	52	70
Interests purchased in the secondary market (fair value)	0	6
Special Purpose Entities | Noninvestment Grade
Retained interests (fair value)	1,576	1,666
Interests purchased in the secondary market (fair value)	145	178
Special Purpose Entities | Noninvestment Grade | Level 1
Retained interests (fair value)	0	0
Interests purchased in the secondary market (fair value)	0	0
Special Purpose Entities | Noninvestment Grade | Level 2
Retained interests (fair value)	91	84
Interests purchased in the secondary market (fair value)	110	139
Special Purpose Entities | Noninvestment Grade | Level 3
Retained interests (fair value)	1,485	1,582
Interests purchased in the secondary market (fair value)	$ 35	$ 39

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Derivative Instruments and Hedging Activities (Notional and Fair Value of Protection Sold and Purchased through Credit Default Swaps) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Protection Sold
Credit Derivatives
Credit risk derivatives, notional amount	$ 1,828,466		$ 1,895,591
Credit risk derivative liabilities, fair value	7,052	[1],[2]	10,138	[1],[2]
Protection Sold | Less than 1 Year
Credit Derivatives
Credit risk derivatives, notional amount	426,289		444,888
Protection Sold | 1 - 3 Years
Credit Derivatives
Credit risk derivatives, notional amount	551,536		583,774
Protection Sold | 3 - 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	685,321		717,100
Protection Sold | Over 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	165,320		149,829
Credit Default Swaps [Member] | Protection Sold
Credit Derivatives
Credit risk derivatives, notional amount	1,826,641		1,893,192
Credit risk derivative liabilities, fair value	7,247	[1],[2]	10,883	[1],[2]
Credit Default Swaps [Member] | Protection Sold | Less than 1 Year
Credit Derivatives
Credit risk derivatives, notional amount	425,823		444,092
Credit Default Swaps [Member] | Protection Sold | 1 - 3 Years
Credit Derivatives
Credit risk derivatives, notional amount	551,454		583,649
Credit Default Swaps [Member] | Protection Sold | 3 - 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	685,183		716,945
Credit Default Swaps [Member] | Protection Sold | Over 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	164,181		148,506
Credit Default Swaps [Member] | Protection Purchased
Credit Derivatives
Credit risk derivatives, notional amount	1,830,792		1,907,401
Credit risk derivative assets, fair value	(10,455)		(14,656)
Single Name Credit Default Swaps | Protection Sold
Credit Derivatives
Credit risk derivatives, notional amount	1,004,144		1,069,474
Credit risk derivative liabilities, fair value	1,412	[1],[2]	2,889	[1],[2]
Single Name Credit Default Swaps | Protection Sold | AAA
Credit Derivatives
Credit risk derivatives, notional amount	27,793		34,575
Credit risk derivative assets, fair value	(61)	[1],[2]	(204)	[1],[2]
Single Name Credit Default Swaps | Protection Sold | AA
Credit Derivatives
Credit risk derivatives, notional amount	71,467		69,261
Credit risk derivative assets, fair value	(557)	[1],[2]	(325)	[1],[2]
Single Name Credit Default Swaps | Protection Sold | A
Credit Derivatives
Credit risk derivatives, notional amount	209,765		217,476
Credit risk derivative assets, fair value	(2,343)	[1],[2]	(2,740)	[1],[2]
Single Name Credit Default Swaps | Protection Sold | BBB
Credit Derivatives
Credit risk derivatives, notional amount	418,734		447,234
Credit risk derivative assets, fair value			(492)	[1],[2]
Credit risk derivative liabilities, fair value	312	[1],[2]
Single Name Credit Default Swaps | Protection Sold | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	276,385		300,928
Credit risk derivative liabilities, fair value	4,061	[1],[2]	6,650	[1],[2]
Single Name Credit Default Swaps | Protection Sold | Less than 1 Year
Credit Derivatives
Credit risk derivatives, notional amount	279,807		296,392
Single Name Credit Default Swaps | Protection Sold | Less than 1 Year | AAA
Credit Derivatives
Credit risk derivatives, notional amount	1,809		2,368
Single Name Credit Default Swaps | Protection Sold | Less than 1 Year | AA
Credit Derivatives
Credit risk derivatives, notional amount	10,141		10,984
Single Name Credit Default Swaps | Protection Sold | Less than 1 Year | A
Credit Derivatives
Credit risk derivatives, notional amount	64,263		66,635
Single Name Credit Default Swaps | Protection Sold | Less than 1 Year | BBB
Credit Derivatives
Credit risk derivatives, notional amount	119,304		124,662
Single Name Credit Default Swaps | Protection Sold | Less than 1 Year | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	84,290		91,743
Single Name Credit Default Swaps | Protection Sold | 1 - 3 Years
Credit Derivatives
Credit risk derivatives, notional amount	310,789		340,169
Single Name Credit Default Swaps | Protection Sold | 1 - 3 Years | AAA
Credit Derivatives
Credit risk derivatives, notional amount	5,780		6,592
Single Name Credit Default Swaps | Protection Sold | 1 - 3 Years | AA
Credit Derivatives
Credit risk derivatives, notional amount	17,863		16,804
Single Name Credit Default Swaps | Protection Sold | 1 - 3 Years | A
Credit Derivatives
Credit risk derivatives, notional amount	68,132		72,796
Single Name Credit Default Swaps | Protection Sold | 1 - 3 Years | BBB
Credit Derivatives
Credit risk derivatives, notional amount	130,055		145,462
Single Name Credit Default Swaps | Protection Sold | 1 - 3 Years | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	88,959		98,515
Single Name Credit Default Swaps | Protection Sold | 3 - 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	346,352		356,270
Single Name Credit Default Swaps | Protection Sold | 3 - 5 Years | AAA
Credit Derivatives
Credit risk derivatives, notional amount	16,531		19,848
Single Name Credit Default Swaps | Protection Sold | 3 - 5 Years | AA
Credit Derivatives
Credit risk derivatives, notional amount	36,987		34,280
Single Name Credit Default Swaps | Protection Sold | 3 - 5 Years | A
Credit Derivatives
Credit risk derivatives, notional amount	67,702		67,285
Single Name Credit Default Swaps | Protection Sold | 3 - 5 Years | BBB
Credit Derivatives
Credit risk derivatives, notional amount	138,543		142,714
Single Name Credit Default Swaps | Protection Sold | 3 - 5 Years | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	86,589		92,143
Single Name Credit Default Swaps | Protection Sold | Over 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	67,196		76,643
Single Name Credit Default Swaps | Protection Sold | Over 5 Years | AAA
Credit Derivatives
Credit risk derivatives, notional amount	3,673		5,767
Single Name Credit Default Swaps | Protection Sold | Over 5 Years | AA
Credit Derivatives
Credit risk derivatives, notional amount	6,476		7,193
Single Name Credit Default Swaps | Protection Sold | Over 5 Years | A
Credit Derivatives
Credit risk derivatives, notional amount	9,668		10,760
Single Name Credit Default Swaps | Protection Sold | Over 5 Years | BBB
Credit Derivatives
Credit risk derivatives, notional amount	30,832		34,396
Single Name Credit Default Swaps | Protection Sold | Over 5 Years | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	16,547		18,527
Single Name Credit Default Swaps | Protection Purchased
Credit Derivatives
Credit risk derivatives, notional amount	960,778		1,029,543
Credit risk derivative assets, fair value	(1,299)		(2,456)
Total Index and Basket Credit Default Swaps | Protection Sold
Credit Derivatives
Credit risk derivatives, notional amount	822,497	[3]	823,718	[3]
Credit risk derivative liabilities, fair value	5,835	[1],[2],[3]	7,994	[1],[2],[3]
Total Index and Basket Credit Default Swaps | Protection Sold | Less than 1 Year
Credit Derivatives
Credit risk derivatives, notional amount	146,016	[3]	147,700	[3]
Total Index and Basket Credit Default Swaps | Protection Sold | 1 - 3 Years
Credit Derivatives
Credit risk derivatives, notional amount	240,665	[3]	243,480	[3]
Total Index and Basket Credit Default Swaps | Protection Sold | 3 - 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	338,831	[3]	360,675	[3]
Total Index and Basket Credit Default Swaps | Protection Sold | Over 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	96,985	[3]	71,863	[3]
Index and Basket Credit Default Swaps | Protection Sold
Credit Derivatives
Credit risk derivatives, notional amount	550,972		551,630
Credit risk derivative liabilities, fair value	4,930		5,664
Index and Basket Credit Default Swaps | Protection Sold | AAA
Credit Derivatives
Credit risk derivatives, notional amount	160,648	[3]	103,686	[3]
Credit risk derivative assets, fair value	(1,574)	[1],[2],[3]	(1,377)	[1],[2],[3]
Index and Basket Credit Default Swaps | Protection Sold | AA
Credit Derivatives
Credit risk derivatives, notional amount	31,781	[3]	31,103	[3]
Credit risk derivative assets, fair value	(161)	[1],[2],[3]	(55)	[1],[2],[3]
Index and Basket Credit Default Swaps | Protection Sold | A
Credit Derivatives
Credit risk derivatives, notional amount	23,974	[3]	13,672	[3]
Credit risk derivative assets, fair value			(155)	[1],[2],[3]
Credit risk derivative liabilities, fair value	216	[1],[2],[3]
Index and Basket Credit Default Swaps | Protection Sold | BBB
Credit Derivatives
Credit risk derivatives, notional amount	292,581	[3]	306,253	[3]
Credit risk derivative assets, fair value	(397)	[1],[2],[3]	(862)	[1],[2],[3]
Index and Basket Credit Default Swaps | Protection Sold | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	313,513	[3]	369,004	[3]
Credit risk derivative liabilities, fair value	7,751	[1],[2],[3]	10,443	[1],[2],[3]
Index and Basket Credit Default Swaps | Protection Sold | Less than 1 Year | AAA
Credit Derivatives
Credit risk derivatives, notional amount	42,730	[3]	18,652	[3]
Index and Basket Credit Default Swaps | Protection Sold | Less than 1 Year | AA
Credit Derivatives
Credit risk derivatives, notional amount	1,159	[3]	1,255	[3]
Index and Basket Credit Default Swaps | Protection Sold | Less than 1 Year | A
Credit Derivatives
Credit risk derivatives, notional amount	4,349	[3]	2,684	[3]
Index and Basket Credit Default Swaps | Protection Sold | Less than 1 Year | BBB
Credit Derivatives
Credit risk derivatives, notional amount	31,459	[3]	27,720	[3]
Index and Basket Credit Default Swaps | Protection Sold | Less than 1 Year | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	66,319	[3]	97,389	[3]
Index and Basket Credit Default Swaps | Protection Sold | 1 - 3 Years | AAA
Credit Derivatives
Credit risk derivatives, notional amount	53,491	[3]	36,005	[3]
Index and Basket Credit Default Swaps | Protection Sold | 1 - 3 Years | AA
Credit Derivatives
Credit risk derivatives, notional amount	10,123	[3]	9,479	[3]
Index and Basket Credit Default Swaps | Protection Sold | 1 - 3 Years | A
Credit Derivatives
Credit risk derivatives, notional amount	5,562	[3]	5,423	[3]
Index and Basket Credit Default Swaps | Protection Sold | 1 - 3 Years | BBB
Credit Derivatives
Credit risk derivatives, notional amount	103,097	[3]	105,870	[3]
Index and Basket Credit Default Swaps | Protection Sold | 1 - 3 Years | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	68,392	[3]	86,703	[3]
Index and Basket Credit Default Swaps | Protection Sold | 3 - 5 Years | AAA
Credit Derivatives
Credit risk derivatives, notional amount	50,189	[3]	45,789	[3]
Index and Basket Credit Default Swaps | Protection Sold | 3 - 5 Years | AA
Credit Derivatives
Credit risk derivatives, notional amount	12,124	[3]	12,026	[3]
Index and Basket Credit Default Swaps | Protection Sold | 3 - 5 Years | A
Credit Derivatives
Credit risk derivatives, notional amount	11,546	[3]	5,440	[3]
Index and Basket Credit Default Swaps | Protection Sold | 3 - 5 Years | BBB
Credit Derivatives
Credit risk derivatives, notional amount	125,754	[3]	143,562	[3]
Index and Basket Credit Default Swaps | Protection Sold | 3 - 5 Years | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	139,218	[3]	153,858	[3]
Index and Basket Credit Default Swaps | Protection Sold | Over 5 Years | AAA
Credit Derivatives
Credit risk derivatives, notional amount	14,238	[3]	3,240	[3]
Index and Basket Credit Default Swaps | Protection Sold | Over 5 Years | AA
Credit Derivatives
Credit risk derivatives, notional amount	8,375	[3]	8,343	[3]
Index and Basket Credit Default Swaps | Protection Sold | Over 5 Years | A
Credit Derivatives
Credit risk derivatives, notional amount	2,517	[3]	125	[3]
Index and Basket Credit Default Swaps | Protection Sold | Over 5 Years | BBB
Credit Derivatives
Credit risk derivatives, notional amount	32,271	[3]	29,101	[3]
Index and Basket Credit Default Swaps | Protection Sold | Over 5 Years | Non-investment Grade
Credit Derivatives
Credit risk derivatives, notional amount	39,584	[3]	31,054	[3]
Index and Basket Credit Default Swaps | Protection Purchased
Credit Derivatives
Credit risk derivatives, notional amount	458,150		454,800
Credit risk derivative assets, fair value	(4,550)		(5,124)
Tranched Index and Basket Credit Default Swaps | Protection Sold
Credit Derivatives
Credit risk derivatives, notional amount	271,525		272,088
Credit risk derivative liabilities, fair value	905		2,330
Tranched Index and Basket Credit Default Swaps | Protection Purchased
Credit Derivatives
Credit risk derivatives, notional amount	411,864		423,058
Credit risk derivative assets, fair value	(4,606)		(7,076)
Single Name, and Non-tranched Index and Basket Credit Default Swaps | Protection Sold
Credit Derivatives
Credit risk derivatives, notional amount	1,600,000		1,600,000
Single Name, and Non-tranched Index and Basket Credit Default Swaps | Protection Purchased
Credit Derivatives
Credit risk derivatives, notional amount	1,400,000		1,500,000
Other Contracts | Protection Sold
Credit Derivatives
Credit risk derivatives, notional amount	1,825	[4],[5]	2,399	[4],[5]
Credit risk derivative assets, fair value	(195)	[1],[2],[4],[5]	(745)	[1],[2],[4],[5]
Other Contracts | Protection Sold | Less than 1 Year
Credit Derivatives
Credit risk derivatives, notional amount	466	[4],[5]	796	[4],[5]
Other Contracts | Protection Sold | 1 - 3 Years
Credit Derivatives
Credit risk derivatives, notional amount	82	[4],[5]	125	[4],[5]
Other Contracts | Protection Sold | 3 - 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	138	[4],[5]	155	[4],[5]
Other Contracts | Protection Sold | Over 5 Years
Credit Derivatives
Credit risk derivatives, notional amount	$ 1,139	[4],[5]	$ 1,323	[4],[5]

[1] Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting.

[2] Fair value amounts of certain credit default swaps where the Company sold protection have an asset carrying value because credit spreads of the underlying reference entity or entities tightened during the terms of the contracts.

[3] Credit ratings are calculated internally.

[4] Other credit contracts include CLNs, CDOs and credit default swaps that are considered hybrid instruments.

[5] Fair value amount shown represents the fair value of the hybrid instruments.

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Fair Value Disclosures (Gains (Losses) Due to Changes in Instrument Specific Credit Risk) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Short-term and Long-term Borrowings
Gains (losses) due to changes in instrument specific credit risk	$ (317)	[1]	$ (1,978)	[1]
Loans
Gains (losses) due to changes in instrument specific credit risk	60	[2]	293	[2]
Unfunded Lending Commitments
Gains (losses) due to changes in instrument specific credit risk	$ 134	[3]	$ 407	[3]

[1] The change in the fair value of short-term and long-term borrowings (primarily structured notes) includes an adjustment to reflect the change in credit quality of the Company based upon observations of the Company’s secondary bond market spreads.

[2] Instrument-specific credit gains (losses) were determined by excluding the non-credit components of gains and losses, such as those due to changes in interest rates.

[3] Gains (losses) were generally determined based on the differential between estimated expected client yields and contractual yields at each respective period end.

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Subsequent Events (Details) (USD $) In Billions, except Per Share data, unless otherwise specified	0 Months Ended
	Apr. 18, 2013	Apr. 25, 2013 Senior Unsecured Debt [Member]
Subsequent Event
Quarterly dividend declared	$ 0.05
Debt issuances		$ 3.7

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Financing Receivables (Loans Held for Investment) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011
Loans Held-for-investment
Loans held for investments, gross of allowances for loan losses	$ 26,466	$ 24,023
Allowance	129	106	26	17
Loans held for investment, net of allowances for loan losses	26,337	23,917
Loans Impaired
Percent of loan portfolio that is current	99.00%	99.00%
Loans held for sale	4,278	5,129
Commercial and Industrial
Loans Held-for-investment
Loans held for investments, gross of allowances for loan losses	11,009	9,449
Allowance	123	96	21	14
Loans Impaired
Impaired loans	49	19
Consumer Loans
Loans Held-for-investment
Loans held for investments, gross of allowances for loan losses	8,200	7,618
Allowance	1	3	2	1
Residential Real Estate Loans
Loans Held-for-investment
Loans held for investments, gross of allowances for loan losses	6,929	6,630
Allowance	3	5	2	1
Loans Impaired
Impaired loans		1
Wholesale Real Estate Loans
Loans Held-for-investment
Loans held for investments, gross of allowances for loan losses	328	326
Allowance	2	2	1	1
Wholesale Real Estate Loans | Doubtful
Loans Held-for-investment
Loans held for investment, net of allowances for loan losses	$ 72	$ 25

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Derivative Instruments and Hedging Activities (Fair Value of OTC Derivatives in a Gain Position) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Fair value of OTC derivatives in a gain position	$ 23,672	[1]	$ 23,633	[1]
AAA
Fair value of OTC derivatives in a gain position	2,682	[1],[2]	3,088	[1],[2]
AA
Fair value of OTC derivatives in a gain position	4,514	[1],[2]	4,428	[1],[2]
A
Fair value of OTC derivatives in a gain position	6,227	[1],[2]	7,638	[1],[2]
BBB
Fair value of OTC derivatives in a gain position	7,303	[1],[2]	5,754	[1],[2]
Non-investment Grade
Fair value of OTC derivatives in a gain position	2,946	[1],[2]	2,725	[1],[2]
Less than 1 Year
Fair value of OTC derivatives in a gain position	15,993	[1],[2]	13,885	[1],[2]
Less than 1 Year | AAA
Fair value of OTC derivatives in a gain position	396	[1],[2]	353	[1],[2]
Less than 1 Year | AA
Fair value of OTC derivatives in a gain position	2,251	[1],[2]	2,125	[1],[2]
Less than 1 Year | A
Fair value of OTC derivatives in a gain position	8,299	[1],[2]	6,643	[1],[2]
Less than 1 Year | BBB
Fair value of OTC derivatives in a gain position	2,762	[1],[2]	2,673	[1],[2]
Less than 1 Year | Non-investment Grade
Fair value of OTC derivatives in a gain position	2,285	[1],[2]	2,091	[1],[2]
1 - 3 Years
Fair value of OTC derivatives in a gain position	19,259	[1]	20,607	[1]
1 - 3 Years | AAA
Fair value of OTC derivatives in a gain position	468	[1],[2]	551	[1],[2]
1 - 3 Years | AA
Fair value of OTC derivatives in a gain position	2,094	[1],[2]	3,635	[1],[2]
1 - 3 Years | A
Fair value of OTC derivatives in a gain position	9,894	[1],[2]	9,596	[1],[2]
1 - 3 Years | BBB
Fair value of OTC derivatives in a gain position	4,255	[1],[2]	3,970	[1],[2]
1 - 3 Years | Non-investment Grade
Fair value of OTC derivatives in a gain position	2,548	[1],[2]	2,855	[1],[2]
3 - 5 Years
Fair value of OTC derivatives in a gain position	21,152	[1]	24,331	[1]
3 - 5 Years | AAA
Fair value of OTC derivatives in a gain position	1,318	[1],[2]	1,299	[1],[2]
3 - 5 Years | AA
Fair value of OTC derivatives in a gain position	2,848	[1],[2]	2,958	[1],[2]
3 - 5 Years | A
Fair value of OTC derivatives in a gain position	12,251	[1],[2]	14,228	[1],[2]
3 - 5 Years | BBB
Fair value of OTC derivatives in a gain position	3,063	[1],[2]	3,704	[1],[2]
3 - 5 Years | Non-investment Grade
Fair value of OTC derivatives in a gain position	1,672	[1],[2]	2,142	[1],[2]
Over 5 Years
Fair value of OTC derivatives in a gain position	64,343	[1],[2]	69,244	[1]
Over 5 Years | AAA
Fair value of OTC derivatives in a gain position	5,553	[1],[2]	6,121	[1]
Over 5 Years | AA
Fair value of OTC derivatives in a gain position	10,133	[1],[2]	10,270	[1]
Over 5 Years | A
Fair value of OTC derivatives in a gain position	26,845	[1],[2]	29,729	[1],[2]
Over 5 Years | BBB
Fair value of OTC derivatives in a gain position	18,143	[1],[2]	18,586	[1]
Over 5 Years | Non-investment Grade
Fair value of OTC derivatives in a gain position	3,669	[1],[2]	4,538	[1]
Cross-Maturity and Cash Collateral Netting
Fair value of OTC derivatives in a gain position	(90,387)	[1],[3]	(96,743)	[1],[3]
Cross-Maturity and Cash Collateral Netting | AAA
Fair value of OTC derivatives in a gain position	(4,819)	[1],[2],[3]	(4,851)	[1],[2],[3]
Cross-Maturity and Cash Collateral Netting | AA
Fair value of OTC derivatives in a gain position	(11,349)	[1],[2],[3]	(12,761)	[1],[2],[3]
Cross-Maturity and Cash Collateral Netting | A
Fair value of OTC derivatives in a gain position	(49,419)	[1],[2],[3]	(50,722)	[1],[2],[3]
Cross-Maturity and Cash Collateral Netting | BBB
Fair value of OTC derivatives in a gain position	(19,725)	[1],[2],[3]	(21,713)	[1],[2],[3]
Cross-Maturity and Cash Collateral Netting | Non-investment Grade
Fair value of OTC derivatives in a gain position	(5,075)	[1],[2],[3]	(6,696)	[1],[2],[3]
Net Exposure Post-Cash Collateral
Fair value of OTC derivatives in a gain position	30,360	[1]	31,324	[1]
Net Exposure Post-Cash Collateral | AAA
Fair value of OTC derivatives in a gain position	2,916	[1],[2]	3,473	[1],[2]
Net Exposure Post-Cash Collateral | AA
Fair value of OTC derivatives in a gain position	5,977	[1],[2]	6,227	[1],[2]
Net Exposure Post-Cash Collateral | A
Fair value of OTC derivatives in a gain position	7,870	[1],[2]	9,474	[1],[2]
Net Exposure Post-Cash Collateral | BBB
Fair value of OTC derivatives in a gain position	8,498	[1],[2]	7,220	[1],[2]
Net Exposure Post-Cash Collateral | Non-investment Grade
Fair value of OTC derivatives in a gain position	$ 5,099	[1],[2]	$ 4,930	[1],[2]

[1] Fair values shown represent the Company’s net exposure to counterparties related to the Company’s OTC derivative products. Amounts include centrally cleared OTC derivatives. The table does not include exchange-traded derivatives and the effect of any related hedges utilized by the Company.

[2] Obligor credit ratings are determined by the Company’s Credit Risk Management Department.

[3] Amounts represent the netting of receivable balances with payable balances for the same counterparty across maturity categories. Receivable and payable balances with the same counterparty in the same maturity category are netted within such maturity category, where appropriate. Cash collateral received is netted on a counterparty basis, provided legal right of offset exists.

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Borrowings and Other Secured Financings (Narratives) (Details) (USD $) In Billions, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Feb. 25, 2013 Senior Unsecured Notes
Notes issued, principal amount	$ 10.0		$ 4.5
Notes matured or retired	$ 12
Weighted average maturity of long-term borrowings	5 years 4 months	5 years 4 months

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Derivative Instruments and Hedging Activities (Fair Value of Derivative Instruments Designated and Not Designated as Accounting Hedges by Type of Derivative Contract on a Gross Basis) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Derivative Assets
Gross amounts	$ 891,944	[1]	$ 1,004,251	[1]
Cash collateral netting	(67,743)		(69,248)
Counterparty netting	(788,372)		(898,806)
Net amounts	35,829		36,197
Derivative Liabilities
Gross amounts	868,599	[1]	978,773	[1]
Cash collateral netting	(39,575)		(43,009)
Counterparty netting	(788,372)		(898,806)
Net amounts	40,652		36,958
Derivatives, Notional Amount
Derivative assets	23,714,428		22,923,572
Derivative liabilities	23,545,455		22,373,723
Designated as Accounting Hedges
Derivative Assets
Gross amounts	8,235		8,714
Derivative Liabilities
Gross amounts	378		487
Derivatives, Notional Amount
Derivative assets	86,987		85,406
Derivative liabilities	9,589		19,816
Designated as Accounting Hedges | Interest Rate Contracts
Derivative Assets
Gross amounts	7,585		8,347
Derivative Liabilities
Gross amounts	276		168
Derivatives, Notional Amount
Derivative assets	76,175		75,115
Derivative liabilities	5,030		2,660
Designated as Accounting Hedges | Foreign Exchange Contracts
Derivative Assets
Gross amounts	650		367
Derivative Liabilities
Gross amounts	102		319
Derivatives, Notional Amount
Derivative assets	10,812		10,291
Derivative liabilities	4,559		17,156
Not Designated as Accounting Hedges
Derivative Assets
Gross amounts	883,709	[2]	995,537	[3]
Derivative Liabilities
Gross amounts	868,221	[2]	978,286	[3]
Derivatives, Notional Amount
Derivative assets	23,627,441	[2]	22,838,166	[3]
Derivative liabilities	23,535,866	[2]	22,353,907	[3]
Not Designated as Accounting Hedges | Interest Rate Contracts
Derivative Assets
Gross amounts	705,498	[2]	815,454	[3]
Derivative Liabilities
Gross amounts	686,108	[2]	793,936	[3]
Derivatives, Notional Amount
Derivative assets	18,634,245	[2]	18,130,030	[3]
Derivative liabilities	18,577,861	[2]	17,682,566	[3]
Not Designated as Accounting Hedges | Foreign Exchange Contracts
Derivative Assets
Gross amounts	49,774	[2]	52,427	[3]
Derivative Liabilities
Gross amounts	51,607	[2]	56,094	[3]
Derivatives, Notional Amount
Derivative assets	2,025,369	[2]	1,841,186	[3]
Derivative liabilities	2,088,219	[2]	1,886,073	[3]
Not Designated as Accounting Hedges | Credit Contracts
Derivative Assets
Gross amounts	62,265	[2]	68,267	[3]
Derivative Liabilities
Gross amounts	59,057	[2]	64,494	[3]
Derivatives, Notional Amount
Derivative assets	1,865,650	[2]	1,932,786	[3]
Derivative liabilities	1,791,783	[2]	1,867,807	[3]
Not Designated as Accounting Hedges | Equity Contracts
Derivative Assets
Gross amounts	44,517	[2]	38,600	[3]
Derivative Liabilities
Gross amounts	50,596	[2]	41,870	[3]
Derivatives, Notional Amount
Derivative assets	694,383	[2]	587,700	[3]
Derivative liabilities	714,161	[2]	587,199	[3]
Not Designated as Accounting Hedges | Commodity Contracts
Derivative Assets
Gross amounts	21,565	[2]	20,646	[3]
Derivative Liabilities
Gross amounts	20,820	[2]	21,831	[3]
Derivatives, Notional Amount
Derivative assets	403,627	[2]	341,556	[3]
Derivative liabilities	360,219	[2]	325,101	[3]
Not Designated as Accounting Hedges | Other Contracts
Derivative Assets
Gross amounts	90	[2]	143	[3]
Derivative Liabilities
Gross amounts	33	[2]	61	[3]
Derivatives, Notional Amount
Derivative assets	4,167	[2]	4,908	[3]
Derivative liabilities	3,623	[2]	5,161	[3]
Not Designated as Accounting Hedges | Future Contracts | Long
Derivatives, Notional Amount
Derivative assets	73,000		73,000
Not Designated as Accounting Hedges | Future Contracts | Short
Derivatives, Notional Amount
Derivative liabilities	71,000
Not Designated as Accounting Hedges | Future Contracts | Receivables
Derivatives, Notional Amount
Derivative assets, unsettled fair value	900		1,073
Not Designated as Accounting Hedges | Future Contracts | Payables
Derivatives, Notional Amount
Derivative liabilities			68,000
Derivative liabilities, unsettled fair value	$ 4		$ 24

[1] Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

[2] Notional amounts include gross notionals related to open long and short futures contracts of $73 billion and $71 billion, respectively. The unsettled fair value on these futures contracts (excluded from the table above) of $900 million and $4 million is included in Customer and other receivables and Customer and other payables, respectively, on the condensed consolidated statements of financial condition.

[3] Notional amounts include gross notionals related to open long and short futures contracts of $73 billion and $68 billion, respectively. The unsettled fair value on these futures contracts (excluded from the table above) of $1,073 million and $24 million is included in Customer and other receivables and Customer and other payables, respectively, on the condensed consolidated statements of financial condition.

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Financing Receivables (Loans and Lending-related Commitments) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012		Dec. 31, 2012
Allowance for loan losses rollforward
Beginning balance	$ 106		$ 17
Gross charge-offs	(4)		(2)
Gross recoveries			1
Net charge-offs	(4)		(1)
Provision for loan losses	27	[1]	10	[1]
Ending balance	129		26
Loans, additional information
Allowance, collectively evaluated for impairment	118				104
Allowance, individually evaluated for impairment	11				2
Loans, collectively evaluated for impairment	26,386	[2]			23,992	[2]
Loans, individually evaluated for impairment	80	[2]			31	[2]
Total loans evaluated for impairment	26,466	[2]			24,023	[2]
Allowance for lending-related commitments rollforward
Beginning balance	91		18
Provision for lending-related commitments	12	[3]	(8)	[3]
Ending balance	103		10
Lending-related commitments, additional information
Allowance, collectively evaluated for impairment	99				87
Allowance, individually evaluated for impairment	4				4
Lending-related commitments, collectively evaluated for impairment	49,738				46,298
Lending-related commitments, individually evaluated for impairment	1				47
Total lending-related commitments evaluated for impairment	49,739				46,345
Commercial and Industrial
Allowance for loan losses rollforward
Beginning balance	96		14
Gross charge-offs	(3)		(2)
Gross recoveries			1
Net charge-offs	(3)		(1)
Provision for loan losses	30	[1]	8	[1]
Ending balance	123		21
Loans, additional information
Allowance, collectively evaluated for impairment	112				94
Allowance, individually evaluated for impairment	11				2
Loans, collectively evaluated for impairment	10,933	[2]			9,419	[2]
Loans, individually evaluated for impairment	76	[2]			30	[2]
Total loans evaluated for impairment	11,009	[2]			9,449	[2]
Allowance for lending-related commitments rollforward
Beginning balance	90		19
Provision for lending-related commitments	12	[3]	(6)	[3]
Ending balance	102		13
Lending-related commitments, additional information
Allowance, collectively evaluated for impairment	98				86
Allowance, individually evaluated for impairment	4				4
Lending-related commitments, collectively evaluated for impairment	46,792				44,079
Lending-related commitments, individually evaluated for impairment	1				47
Total lending-related commitments evaluated for impairment	46,793				44,126
Consumer Loans
Allowance for loan losses rollforward
Beginning balance	3		1
Gross charge-offs	0		0
Gross recoveries			0
Net charge-offs	0		0
Provision for loan losses	(2)	[1]	1	[1]
Ending balance	1		2
Loans, additional information
Allowance, collectively evaluated for impairment	1				3
Allowance, individually evaluated for impairment	0				0
Loans, collectively evaluated for impairment	8,200	[2]			7,618	[2]
Loans, individually evaluated for impairment	0	[2]			0	[2]
Total loans evaluated for impairment	8,200	[2]			7,618	[2]
Allowance for lending-related commitments rollforward
Beginning balance	0		(3)
Provision for lending-related commitments	0	[3]	(2)	[3]
Ending balance	0		(5)
Lending-related commitments, additional information
Allowance, collectively evaluated for impairment	0				0
Allowance, individually evaluated for impairment	0				0
Lending-related commitments, collectively evaluated for impairment	1,579				1,406
Lending-related commitments, individually evaluated for impairment	0				0
Total lending-related commitments evaluated for impairment	1,579				1,406
Residential Real Estate Loans
Allowance for loan losses rollforward
Beginning balance	5		1
Gross charge-offs	(1)		0
Gross recoveries			0
Net charge-offs	(1)		0
Provision for loan losses	(1)	[1]	1	[1]
Ending balance	3		2
Loans, additional information
Allowance, collectively evaluated for impairment	3				5
Allowance, individually evaluated for impairment	0				0
Loans, collectively evaluated for impairment	6,925	[2]			6,629	[2]
Loans, individually evaluated for impairment	4	[2]			1	[2]
Total loans evaluated for impairment	6,929	[2]			6,630	[2]
Allowance for lending-related commitments rollforward
Beginning balance	0		0
Provision for lending-related commitments	0	[3]	0	[3]
Ending balance	0		0
Lending-related commitments, additional information
Allowance, collectively evaluated for impairment	0				0
Allowance, individually evaluated for impairment	0				0
Lending-related commitments, collectively evaluated for impairment	1,105				712
Lending-related commitments, individually evaluated for impairment	0				0
Total lending-related commitments evaluated for impairment	1,105				712
Wholesale Real Estate Loans
Allowance for loan losses rollforward
Beginning balance	2		1
Gross charge-offs	0		0
Gross recoveries			0
Net charge-offs	0		0
Provision for loan losses	0	[1]	0	[1]
Ending balance	2		1
Loans, additional information
Allowance, collectively evaluated for impairment	2				2
Allowance, individually evaluated for impairment	0				0
Loans, collectively evaluated for impairment	328	[2]			326	[2]
Loans, individually evaluated for impairment	0	[2]			0	[2]
Total loans evaluated for impairment	328	[2]			326	[2]
Allowance for lending-related commitments rollforward
Beginning balance	1		2
Provision for lending-related commitments	0	[3]	0	[3]
Ending balance	1		2
Lending-related commitments, additional information
Allowance, collectively evaluated for impairment	1				1
Allowance, individually evaluated for impairment	0				0
Lending-related commitments, collectively evaluated for impairment	262				101
Lending-related commitments, individually evaluated for impairment	0				0
Total lending-related commitments evaluated for impairment	$ 262				$ 101

[1] The Company records charges to the provisions for loan losses within Other revenues.

[2] Balances are gross of the allowance and represent recorded investment in the loans.

[3] The Company records charges to the provisions for lending-related commitments within Other non-interest expenses.

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Variable Interest Entities and Securitization Activities (Non-Consolidated VIEs) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Mortgage and Asset-Backed Securitizations
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	$ 260,828	[1]	$ 251,689	[2]
Maximum exposure to loss	22,256		22,500
Mortgage and Asset-Backed Securitizations | Assets
Variable Interest Entity
Carrying value of exposure to loss	22,205		22,436
Mortgage and Asset-Backed Securitizations | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	0		11
Mortgage and Asset-Backed Securitizations | Debt and Equity Interests
Variable Interest Entity
Maximum exposure to loss	22,170	[3]	22,280	[4]
Mortgage and Asset-Backed Securitizations | Debt and Equity Interests | Assets
Variable Interest Entity
Carrying value of exposure to loss	22,170	[3]	22,280	[4]
Mortgage and Asset-Backed Securitizations | Derivative and Other Contracts
Variable Interest Entity
Maximum exposure to loss	35		154
Mortgage and Asset-Backed Securitizations | Derivative and Other Contracts | Assets
Variable Interest Entity
Carrying value of exposure to loss	35		156
Mortgage and Asset-Backed Securitizations | Derivative and Other Contracts | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	0		11
Mortgage and Asset-Backed Securitizations | Commitments, Guarantees and Other
Variable Interest Entity
Maximum exposure to loss	51		66
Mortgage and Asset-Backed Securitizations | Commitments, Guarantees and Other | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	0		0
Residential Mortgage
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	21,800		18,300
Residential Mortgage | Debt and Equity Interests
Variable Interest Entity
Carrying value of exposure to loss	900		1,000
Commercial Mortgage
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	45,500		53,800
Commercial Mortgage | Debt and Equity Interests
Variable Interest Entity
Carrying value of exposure to loss	1,100		1,500
U.S. Agency Collateralized Mortgage Obligations
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	131,900		126,300
U.S. Agency Collateralized Mortgage Obligations | Debt and Equity Interests
Variable Interest Entity
Carrying value of exposure to loss	14,900		14,800
Other Consumer and Commercial Loans
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	61,600		53,300
Other Consumer and Commercial Loans | Debt and Equity Interests
Variable Interest Entity
Carrying value of exposure to loss	5,300		5,000
Collateralized Debt Obligations
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	18,864	[1]	13,178	[2]
Maximum exposure to loss	1,836		1,224
Collateralized Debt Obligations | Assets
Variable Interest Entity
Carrying value of exposure to loss	1,811		1,181
Collateralized Debt Obligations | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	4		2
Collateralized Debt Obligations | Debt and Equity Interests
Variable Interest Entity
Maximum exposure to loss	1,803	[3]	1,173	[4]
Collateralized Debt Obligations | Debt and Equity Interests | Assets
Variable Interest Entity
Carrying value of exposure to loss	1,803	[3]	1,173	[4]
Collateralized Debt Obligations | Derivative and Other Contracts
Variable Interest Entity
Maximum exposure to loss	33		51
Collateralized Debt Obligations | Derivative and Other Contracts | Assets
Variable Interest Entity
Carrying value of exposure to loss	8		8
Collateralized Debt Obligations | Derivative and Other Contracts | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	4		2
Collateralized Debt Obligations | Commitments, Guarantees and Other
Variable Interest Entity
Maximum exposure to loss	0		0
Collateralized Debt Obligations | Commitments, Guarantees and Other | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	0		0
Municipal Tender Option Bonds
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	3,668	[1]	3,390	[2]
Maximum exposure to loss	2,364		2,158
Municipal Tender Option Bonds | Assets
Variable Interest Entity
Carrying value of exposure to loss	194		4
Municipal Tender Option Bonds | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	0		0
Municipal Tender Option Bonds | Debt and Equity Interests
Variable Interest Entity
Maximum exposure to loss	190	[3]	0	[4]
Municipal Tender Option Bonds | Debt and Equity Interests | Assets
Variable Interest Entity
Carrying value of exposure to loss	190	[3]	0	[4]
Municipal Tender Option Bonds | Derivative and Other Contracts
Variable Interest Entity
Maximum exposure to loss	2,174		2,158
Municipal Tender Option Bonds | Derivative and Other Contracts | Assets
Variable Interest Entity
Carrying value of exposure to loss	4		4
Municipal Tender Option Bonds | Derivative and Other Contracts | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	0		0
Municipal Tender Option Bonds | Commitments, Guarantees and Other
Variable Interest Entity
Maximum exposure to loss	0		0
Municipal Tender Option Bonds | Commitments, Guarantees and Other | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	0		0
Other Structured Financings
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	1,742	[1]	1,811	[2]
Maximum exposure to loss	1,726		1,732
Other Structured Financings | Assets
Variable Interest Entity
Carrying value of exposure to loss	672		663
Other Structured Financings | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	11		12
Other Structured Financings | Debt and Equity Interests
Variable Interest Entity
Maximum exposure to loss	1,057	[3]	1,053	[4]
Other Structured Financings | Debt and Equity Interests | Assets
Variable Interest Entity
Carrying value of exposure to loss	672	[3]	663	[4]
Other Structured Financings | Derivative and Other Contracts
Variable Interest Entity
Maximum exposure to loss	0		0
Other Structured Financings | Derivative and Other Contracts | Assets
Variable Interest Entity
Carrying value of exposure to loss	0		0
Other Structured Financings | Derivative and Other Contracts | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	0		0
Other Structured Financings | Commitments, Guarantees and Other
Variable Interest Entity
Maximum exposure to loss	669		679
Other Structured Financings | Commitments, Guarantees and Other | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	11		12
Other
Variable Interest Entity
VIE assets that the Company does not consolidate (unpaid principal balance)	13,781	[1]	14,029	[2]
Maximum exposure to loss	3,794		4,333
Other | Assets
Variable Interest Entity
Carrying value of exposure to loss	3,058		3,561
Other | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	264		172
Other | Debt and Equity Interests
Variable Interest Entity
Maximum exposure to loss	2,984	[3]	3,387	[4]
Other | Debt and Equity Interests | Assets
Variable Interest Entity
Carrying value of exposure to loss	2,979	[3]	3,387	[4]
Other | Derivative and Other Contracts
Variable Interest Entity
Maximum exposure to loss	248		562
Other | Derivative and Other Contracts | Assets
Variable Interest Entity
Carrying value of exposure to loss	79		174
Other | Derivative and Other Contracts | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	50		172
Other | Commitments, Guarantees and Other
Variable Interest Entity
Maximum exposure to loss	562		384
Other | Commitments, Guarantees and Other | Liabilities
Variable Interest Entity
Carrying value of exposure to loss	$ 214		$ 0

[1] Mortgage and asset-backed securitizations include VIE assets as follows: $21.8 billion of residential mortgages; $45.5 billion of commercial mortgages; $131.9 billion of U.S. agency collateralized mortgage obligations; and $61.6 billion of other consumer or commercial loans.

[2] Mortgage and asset-backed securitizations include VIE assets as follows: $18.3 billion of residential mortgages; $53.8 billion of commercial mortgages; $126.3 billion of U.S. agency collateralized mortgage obligations; and $53.3 billion of other consumer or commercial loans.

[3] Mortgage and asset-backed securitizations include VIE debt and equity interests as follows: $0.9 billion of residential mortgages; $1.1 billion of commercial mortgages; $14.9 billion of U.S. agency collateralized mortgage obligations; and $5.3 billion of other consumer or commercial loans.

[4] Mortgage and asset-backed securitizations include VIE debt and equity interests as follows: $1.0 billion of residential mortgages; $1.5 billion of commercial mortgages; $14.8 billion of U.S. agency collateralized mortgage obligations; and $5.0 billion of other consumer or commercial loans.

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes

Income Taxes

18.Income Taxes.

The Company is under continuous examination by the Internal Revenue Service (the “IRS”) and other tax authorities in certain countries, such as Japan and the U.K., and in states in which the Company has significant business operations, such as New York. The Company is currently under review by the IRS Appeals Office for the remaining issues covering tax years 1999 – 2005. Also, the Company is currently at various levels of field examination with respect to audits with the IRS, as well as New YorkState and New York City, for tax years 2006 – 2008 and 2007 – 2009, respectively. During 2013, the Company expects to reach a conclusion with the U.K. tax authorities on substantially all issues through tax year 2010.

The Company believes that the resolution of tax matters will not have a material effect on the condensed consolidated statements of financial condition of the Company, although a resolution could have a material impact on the Company's condensed consolidated statements of income for a particular future period and on the Company's effective income tax rate for any period in which such resolution occurs. The Company has established a liability for unrecognized tax benefits that the Company believes is adequate in relation to the potential for additional assessments. Once established, the Company adjusts unrecognized tax benefits only when more information is available or when an event occurs necessitating a change.

It is reasonably possible that significant changes in the gross balance of unrecognized tax benefits may occur within the next 12 months. At this time, however, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits and impact on the effective tax rate over the next 12 months.

The Company's effective tax rate from continuing operations for the quarter ended March 31, 2013 included a discrete tax benefit of $81 million due to the retroactive effective date of the American Taxpayer Relief Act of 2012 (the “Relief Act”). The Relief Act that was enacted on January 2, 2013, among other things, extended with retroactive effect to January 1, 2012 a provision of U.S. tax law that defers the imposition of tax on certain active financial services income of certain foreign subsidiaries earned outside of the U.S. until such income is repatriated to the U.S. as a dividend. Additionally, the Company's effective tax rate from continuing operations for the quarter ended March 31, 2013 included a discrete net tax benefit of $61 million associated with remeasurement of reserves and related interest based on new information regarding the status of certain tax authority examinations. Excluding these discrete tax benefits, the annual effective tax rate in the quarter ended March 31, 2013 would have been 30.0%.

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Fair Value Disclosures (Narrative) (Details) (Recurring, Derivative and Other Contracts, USD $) In Billions, unless otherwise specified	Mar. 31, 2012
Trading Assets
Transfers Between Level 1 and Level 2
Derivative assets reclassified from Level 2 to Level 1	$ 1.1
Derivative assets reclassified from Level 1 to Level 2	0.3
Financial Instruments Sold, Not yet Purchased
Transfers Between Level 1 and Level 2
Derivative liabilities reclassified from Level 2 to Level 1	1.2
Derivative liabilities reclassified from Level 1 to Level 2	$ 0.4

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Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Calculation Of Basic And Diluted EPS

				Three Months Ended
				March 31,
				2013		2012
Basic EPS:
	Income from continuing operations		$	1,250	$	148
	Net gain (loss) from discontinued operations			(19)		(14)
	Net income			1,231		134
	Net income applicable to redeemable noncontrolling interests			122		—
	Net income applicable to nonredeemable noncontrolling interests			147		228
	Net income (loss) applicable to Morgan Stanley			962		(94)
	Less: Preferred dividends (Series A Preferred Stock)			(11)		(11)
	Less: Preferred dividends (Series C Preferred Stock)			(13)		(13)
	Less: Allocation of (earnings) loss to participating RSUs(1):
		From continuing operations		(2)		(1)
	Earnings (loss) applicable to Morgan Stanley common shareholders		$	936	$	(119)
	Weighted average common shares outstanding			1,901		1,877
Earnings (loss) per basic common share:
	Income (loss) from continuing operations		$	0.50	$	(0.05)
	Net gain (loss) from discontinued operations			(0.01)		(0.01)
		Earnings (loss) per basic common share	$	0.49	$	(0.06)
Diluted EPS:
	Earnings (loss) applicable to Morgan Stanley common shareholders		$	936	$	(119)
	Weighted average common shares outstanding			1,901		1,877
	Effect of dilutive securities:
		Stock options and RSUs(1)		39		—
	Weighted average common shares outstanding and common stock equivalents			1,940		1,877
Earnings (loss) per diluted common share:
	Income (loss) from continuing operations		$	0.49	$	(0.05)
	Net income (loss) from discontinued operations			(0.01)		(0.01)
		Earnings (loss) per diluted common share	$	0.48	$	(0.06)

_____________

(1)RSUs that are considered participating securities participate in all of the earnings of the Company in the computation of basic EPS, and, therefore, such RSUs are not included as incremental shares in the diluted calculation.

Antidilutive Securities Excluded From The Computation Of Diluted EPS

		Three Months Ended
		March 31,
Number of Antidilutive Securities Outstanding at End of Period:		2013	2012
		(shares in millions)
RSUs and performance-based stock units		5	103
Stock options		37	45
	Total	42	148

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Variable Interest Entities and Securitization Activities (Mortgage Servicing Activities for SPEs) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Amounts past due 90 days or greater (unpaid principal balance)	$ 813		$ 840
Unconsolidated SPEs | Residential Mortgage
Assets serviced (unpaid principal balance)	750		821
Amounts past due 90 days or greater (unpaid principal balance)	80	[1]	86	[1]
Percentage of amounts past due 90 days or greater	10.60%	[1]	10.40%	[1]
Credit losses	1		3
Unconsolidated SPEs | Commercial Mortgage
Assets serviced (unpaid principal balance)	4,395		4,760
Amounts past due 90 days or greater (unpaid principal balance)	0	[1]	0	[1]
Percentage of amounts past due 90 days or greater	0.00%	[1]	0.00%	[1]
Credit losses	0		0
Consolidated SPEs | Residential Mortgage
Assets serviced (unpaid principal balance)	914		1,141
Amounts past due 90 days or greater (unpaid principal balance)	49	[1]	43	[1]
Percentage of amounts past due 90 days or greater	5.40%	[1]	3.80%	[1]
Credit losses	4		2
Consolidated SPEs | Commercial Mortgage
Assets serviced (unpaid principal balance)	0		0
Amounts past due 90 days or greater (unpaid principal balance)	0	[1]	0	[1]
Percentage of amounts past due 90 days or greater	0.00%	[1]	0.00%	[1]
Credit losses	$ 0		$ 0

[1] Amounts include loans that are at least 90 days contractually delinquent, loans for which the borrower has filed for bankruptcy, loans in foreclosure and real estate owned.

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Redeemable Noncontrolling Interests and Total Equity (Redeemable Noncontrolling Interests) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Redeemable Noncontrolling Interest [Line Items]
Beginning balance	$ 4,309
Net income applicable to redeemable noncontrolling interests	(122)	0
Ending balance	4,425
Wealth Management JV
Redeemable Noncontrolling Interest [Line Items]
Beginning balance	4,309
Net income applicable to redeemable noncontrolling interests	122
Other	(6)
Ending balance	$ 4,425

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Borrowings and Other Secured Financings (Tables)

3 Months Ended

Mar. 31, 2013

Borrowings and Other Secured Financings

Components of Long-term Borrowings

		At March 31,		At December 31,
		2013		2012
	(dollars in millions)
Senior debt	$	154,531	$	158,899
Subordinated debt		5,783		5,845
Junior subordinated debentures		4,828		4,827
Total	$	165,142	$	169,571

Other Secured Financings

			At		At
			March 31,		December 31,
			2013		2012
			(dollars in millions)
Secured financings with original maturities greater than one year		$	12,700	$	14,431
Secured financings with original maturities one year or less			3,012		641
Failed sales(1)			582		655
	Total(2)	$	16,294	$	15,727

___________

(1)       For more information on failed sales, see Note 7.

(2)       Amounts include$9,624 million and $9,466 million at fair value atMarch 31,2013 and December 31, 2012, respectively.

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Fair Value Disclosures (Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) (Recurring, USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Intangible Assets
Assets
Beginning balance	$ 7		$ 133
Realized and Unrealized Gains (Losses)	4	[1]	(34)	[2]
Purchases	0		0
Sales	0		0
Issuances	0		0
Settlements	(3)		0
Net Transfers	0		0
Ending balance	8		99
Unrealized Gains (Losses) for Level 3 Assets Outstanding	2	[3]	(34)	[4]
Commercial Paper and Other Short-term Borrowings
Liabilities
Beginning balance	19		2
Realized and Unrealized Gains (Losses)	0	[1]	0	[2]
Purchases	0		0
Sales	0		0
Issuances	1		13
Settlements	(1)		0
Net Transfers	(14)		0
Ending balance	5		15
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	0	[3]	0	[4]
Securities Sold under Agreements to Repurchase
Liabilities
Beginning balance	151		340
Realized and Unrealized Gains (Losses)	(4)	[1]	1	[2]
Purchases	0		0
Sales	0		0
Issuances	0		0
Settlements	0		0
Net Transfers	0		(153)
Ending balance	155		186
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	(4)	[3]	3	[4]
Other Secured Financings
Liabilities
Beginning balance	406		570
Realized and Unrealized Gains (Losses)	12	[1]	(44)	[2]
Purchases	0		0
Sales	0		0
Issuances	13		12
Settlements	(132)		(32)
Net Transfers	0		0
Ending balance	275		594
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	5	[3]	(44)	[4]
Long-term Borrowings
Liabilities
Beginning balance	2,789		1,603
Realized and Unrealized Gains (Losses)	(17)	[1]	(173)	[2]
Purchases	0		0
Sales	0		0
Issuances	543		262
Settlements	(188)		(78)
Net Transfers	(377)		183
Ending balance	2,784		2,143
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	(17)	[3]	(171)	[4]
Trading Assets | U.S. Agency Securities
Assets
Beginning balance			8
Realized and Unrealized Gains (Losses)			0	[2]
Purchases			42
Sales			(26)
Issuances			0
Settlements			0
Net Transfers			(1)
Ending balance			23
Unrealized Gains (Losses) for Level 3 Assets Outstanding			0	[4]
Trading Assets | Other Sovereign Government Obligations
Assets
Beginning balance	6		119
Realized and Unrealized Gains (Losses)	0	[1]	(1)	[2]
Purchases	1		8
Sales	(3)		(118)
Issuances	0		0
Settlements	0		0
Net Transfers	(1)		0
Ending balance	3		8
Unrealized Gains (Losses) for Level 3 Assets Outstanding	0	[3]	0	[4]
Trading Assets | Corporate and Other Debt
Assets
Beginning balance	7,736		12,032
Realized and Unrealized Gains (Losses)	306	[1]	153	[2]
Purchases	1,731		1,256
Sales	(1,361)		(1,821)
Issuances	0		0
Settlements	(845)		(422)
Net Transfers	476		(304)
Ending balance	8,043		10,894
Unrealized Gains (Losses) for Level 3 Assets Outstanding	84	[3]	85	[4]
Trading Assets | Corporate and Other Debt | State and Municipal Securities
Assets
Beginning balance			0
Realized and Unrealized Gains (Losses)			0	[2]
Purchases			0
Sales			0
Issuances			0
Settlements			0
Net Transfers			3
Ending balance			3
Unrealized Gains (Losses) for Level 3 Assets Outstanding			0	[4]
Trading Assets | Corporate and Other Debt | Residential Mortgage-backed Securities
Assets
Beginning balance	45		494
Realized and Unrealized Gains (Losses)	26	[1]	(21)	[2]
Purchases	15		6
Sales	(42)		(245)
Issuances	0		0
Settlements	0		0
Net Transfers	(25)		(191)
Ending balance	19		43
Unrealized Gains (Losses) for Level 3 Assets Outstanding	9	[3]	(18)	[4]
Trading Assets | Corporate and Other Debt | Commercial Mortgage-backed Securities
Assets
Beginning balance	232		134
Realized and Unrealized Gains (Losses)	15	[1]	23	[2]
Purchases	6		5
Sales	(80)		(21)
Issuances	0		0
Settlements	0		(1)
Net Transfers	1		(13)
Ending balance	174		127
Unrealized Gains (Losses) for Level 3 Assets Outstanding	7	[3]	16	[4]
Trading Assets | Corporate and Other Debt | Asset-backed Securities
Assets
Beginning balance	109		31
Realized and Unrealized Gains (Losses)	0	[1]	1	[2]
Purchases	1		0
Sales	(99)		(28)
Issuances	0		0
Settlements	0		0
Net Transfers	0		(1)
Ending balance	11		3
Unrealized Gains (Losses) for Level 3 Assets Outstanding	0	[3]	1	[4]
Trading Assets | Corporate and Other Debt | Corporate Bonds
Assets
Beginning balance	660		675
Realized and Unrealized Gains (Losses)	62	[1]	45	[2]
Purchases	437		426
Sales	(247)		(225)
Issuances	0		0
Settlements	(12)		0
Net Transfers	(12)		(22)
Ending balance	888		899
Unrealized Gains (Losses) for Level 3 Assets Outstanding	5	[3]	39	[4]
Trading Assets | Corporate and Other Debt | Collateralized Debt Obligations
Assets
Beginning balance	1,951		980
Realized and Unrealized Gains (Losses)	191	[1]	123	[2]
Purchases	314		296
Sales	(695)		(161)
Issuances	0		0
Settlements	(95)		0
Net Transfers	0		(73)
Ending balance	1,666		1,165
Unrealized Gains (Losses) for Level 3 Assets Outstanding	63	[3]	82	[4]
Trading Assets | Corporate and Other Debt | Loans and Lending Commitments
Assets
Beginning balance	4,694		9,590
Realized and Unrealized Gains (Losses)	20	[1]	(20)	[2]
Purchases	944		496
Sales	(149)		(1,018)
Issuances	0		0
Settlements	(738)		(421)
Net Transfers	513		(30)
Ending balance	5,284		8,597
Unrealized Gains (Losses) for Level 3 Assets Outstanding	1	[3]	(35)	[4]
Trading Assets | Corporate and Other Debt | Other Debt
Assets
Beginning balance	45		128
Realized and Unrealized Gains (Losses)	(8)	[1]	2	[2]
Purchases	14		27
Sales	(49)		(123)
Issuances	0		0
Settlements	0		0
Net Transfers	(1)		23
Ending balance	1		57
Unrealized Gains (Losses) for Level 3 Assets Outstanding	(1)	[3]	0	[4]
Trading Assets | Corporate Equities
Assets
Beginning balance	288		417
Realized and Unrealized Gains (Losses)	(22)	[1]	(45)	[2]
Purchases	85		901
Sales	(61)		(758)
Issuances	0		0
Settlements	0		0
Net Transfers	(20)		39
Ending balance	270		554
Unrealized Gains (Losses) for Level 3 Assets Outstanding	5	[3]	(9)	[4]
Trading Assets | Net Derivative and Other Contracts
Assets
Beginning balance	939	[5]	4,523	[5]
Realized and Unrealized Gains (Losses)	(702)	[1],[5]	(1,152)	[2],[5]
Purchases	137	[5]	272	[5]
Sales	(1)	[5]	(58)	[5]
Issuances	(113)	[5]	(69)	[5]
Settlements	219	[5]	32	[5]
Net Transfers	27	[5]	259	[5]
Ending balance	506	[5]	3,807	[5]
Unrealized Gains (Losses) for Level 3 Assets Outstanding	(559)	[3],[5]	(1,694)	[4],[5]
Trading Assets | Net Derivative and Other Contracts | Interest Rate Contracts
Assets
Beginning balance	(82)	[5]	420	[5]
Realized and Unrealized Gains (Losses)	(106)	[1],[5]	170	[2],[5]
Purchases	1	[5]	6	[5]
Sales	0	[5]	0	[5]
Issuances	(1)	[5]	(5)	[5]
Settlements	192	[5]	(139)	[5]
Net Transfers	(26)	[5]	(430)	[5]
Ending balance	(22)	[5]	22	[5]
Unrealized Gains (Losses) for Level 3 Assets Outstanding	18	[3],[5]	179	[4],[5]
Trading Assets | Net Derivative and Other Contracts | Credit Contracts
Assets
Beginning balance	1,822	[5]	5,814	[5]
Realized and Unrealized Gains (Losses)	(452)	[1],[5]	(1,381)	[2],[5]
Purchases	42	[5]	63	[5]
Sales	0	[5]	0	[5]
Issuances	(15)	[5]	(10)	[5]
Settlements	(4)	[5]	(47)	[5]
Net Transfers	10	[5]	(58)	[5]
Ending balance	1,403	[5]	4,381	[5]
Unrealized Gains (Losses) for Level 3 Assets Outstanding	(418)	[3],[5]	(1,786)	[4],[5]
Trading Assets | Net Derivative and Other Contracts | Foreign Exchange Contracts
Assets
Beginning balance	(359)	[5]	43	[5]
Realized and Unrealized Gains (Losses)	8	[1],[5]	(99)	[2],[5]
Purchases	0	[5]	0	[5]
Sales	0	[5]	0	[5]
Issuances	0	[5]	0	[5]
Settlements	109	[5]	162	[5]
Net Transfers	7	[5]	(40)	[5]
Ending balance	(235)	[5]	66	[5]
Unrealized Gains (Losses) for Level 3 Assets Outstanding	(2)	[3],[5]	(83)	[4],[5]
Trading Assets | Net Derivative and Other Contracts | Equity Contracts
Assets
Beginning balance	(1,144)	[5]	(1,234)	[5]
Realized and Unrealized Gains (Losses)	(140)	[1],[5]	(99)	[2],[5]
Purchases	85	[5]	199	[5]
Sales	(1)	[5]	(58)	[5]
Issuances	(93)	[5]	(50)	[5]
Settlements	(76)	[5]	(250)	[5]
Net Transfers	29	[5]	50	[5]
Ending balance	(1,340)	[5]	(1,442)	[5]
Unrealized Gains (Losses) for Level 3 Assets Outstanding	(125)	[3],[5]	(161)	[4],[5]
Trading Assets | Net Derivative and Other Contracts | Commodity Contracts
Assets
Beginning balance	709	[5]	570	[5]
Realized and Unrealized Gains (Losses)	(10)	[1],[5]	199	[2],[5]
Purchases	9	[5]	4	[5]
Sales	0	[5]	0	[5]
Issuances	(4)	[5]	(4)	[5]
Settlements	(8)	[5]	37	[5]
Net Transfers	7	[5]	(3)	[5]
Ending balance	703	[5]	803	[5]
Unrealized Gains (Losses) for Level 3 Assets Outstanding	(30)	[3],[5]	101	[4],[5]
Trading Assets | Net Derivative and Other Contracts | Other Contracts
Assets
Beginning balance	(7)	[5]	(1,090)	[5]
Realized and Unrealized Gains (Losses)	(2)	[1],[5]	58	[2],[5]
Purchases	0	[5]	0	[5]
Sales	0	[5]	0	[5]
Issuances	0	[5]	0	[5]
Settlements	6	[5]	269	[5]
Net Transfers	0	[5]	740	[5]
Ending balance	(3)	[5]	(23)	[5]
Unrealized Gains (Losses) for Level 3 Assets Outstanding	(2)	[3],[5]	56	[4],[5]
Trading Assets | Investments
Assets
Beginning balance	7,420		7,283
Realized and Unrealized Gains (Losses)	276	[1]	75	[2]
Purchases	150		424
Sales	(291)		(151)
Issuances	0		0
Settlements	0		0
Net Transfers	2		45
Ending balance	7,557		7,676
Unrealized Gains (Losses) for Level 3 Assets Outstanding	285	[3]	45	[4]
Trading Assets | Investments | Private Equity Funds
Assets
Beginning balance	2,179		1,936
Realized and Unrealized Gains (Losses)	114	[1]	(7)	[2]
Purchases	70		101
Sales	(72)		(36)
Issuances	0		0
Settlements	0		0
Net Transfers	0		0
Ending balance	2,291		1,994
Unrealized Gains (Losses) for Level 3 Assets Outstanding	104	[3]	1	[4]
Trading Assets | Investments | Real Estate Funds
Assets
Beginning balance	1,370		1,213
Realized and Unrealized Gains (Losses)	80	[1]	52	[2]
Purchases	3		87
Sales	(83)		(14)
Issuances	0		0
Settlements	0		0
Net Transfers	0		0
Ending balance	1,370		1,338
Unrealized Gains (Losses) for Level 3 Assets Outstanding	90	[3]	5	[4]
Trading Assets | Investments | Hedge Funds
Assets
Beginning balance	552		696
Realized and Unrealized Gains (Losses)	2	[1]	25	[2]
Purchases	31		22
Sales	(34)		(33)
Issuances	0		0
Settlements	0		0
Net Transfers	(6)		(87)
Ending balance	545		623
Unrealized Gains (Losses) for Level 3 Assets Outstanding	(3)	[3]	23	[4]
Trading Assets | Investments | Principal Investments
Assets
Beginning balance	2,833		2,937
Realized and Unrealized Gains (Losses)	63	[1]	38	[2]
Purchases	35		180
Sales	(85)		(65)
Issuances	0		0
Settlements	0		0
Net Transfers	9		104
Ending balance	2,855		3,194
Unrealized Gains (Losses) for Level 3 Assets Outstanding	78	[3]	57	[4]
Trading Assets | Investments | Other Investments
Assets
Beginning balance	486		501
Realized and Unrealized Gains (Losses)	17	[1]	(33)	[2]
Purchases	11		34
Sales	(17)		(3)
Issuances	0		0
Settlements	0		0
Net Transfers	(1)		28
Ending balance	496		527
Unrealized Gains (Losses) for Level 3 Assets Outstanding	16	[3]	(41)	[4]
Trading Assets | Physical Commodities
Assets
Beginning balance			46
Realized and Unrealized Gains (Losses)			0	[2]
Purchases			0
Sales			0
Issuances			0
Settlements			(46)
Net Transfers			0
Ending balance			0
Unrealized Gains (Losses) for Level 3 Assets Outstanding			0	[4]
Trading Liabilities | Other Sovereign Government Obligations
Liabilities
Beginning balance			8
Realized and Unrealized Gains (Losses)			0	[2]
Purchases			(7)
Sales			0
Issuances			0
Settlements			0
Net Transfers			0
Ending balance			1
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding			0	[4]
Trading Liabilities | Corporate and Other Debt
Liabilities
Beginning balance	276		732
Realized and Unrealized Gains (Losses)	32	[1]	(33)	[2]
Purchases	(168)		(480)
Sales	381		126
Issuances	0		0
Settlements	0		(55)
Net Transfers	7		(9)
Ending balance	464		347
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	33	[3]	(107)	[4]
Trading Liabilities | Corporate and Other Debt | Residential Mortgage-backed Securities
Liabilities
Beginning balance	4		355
Realized and Unrealized Gains (Losses)	0	[1]	0	[2]
Purchases	0		(294)
Sales	0		0
Issuances	0		0
Settlements	0		0
Net Transfers	0		0
Ending balance	4		61
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	0	[3]	(61)	[4]
Trading Liabilities | Corporate and Other Debt | Corporate Bonds
Liabilities
Beginning balance	177		219
Realized and Unrealized Gains (Losses)	0	[1]	(59)	[2]
Purchases	(131)		(186)
Sales	371		126
Issuances	0		0
Settlements	0		0
Net Transfers	7		(25)
Ending balance	424		193
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	3	[3]	(74)	[4]
Trading Liabilities | Corporate and Other Debt | Collateralized Debt Obligations
Liabilities
Beginning balance	0
Realized and Unrealized Gains (Losses)	0	[1]
Purchases	0
Sales	0
Issuances	0
Settlements	0
Net Transfers	0
Ending balance	0
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	0	[3]
Trading Liabilities | Corporate and Other Debt | Unfunded Lending Commitments
Liabilities
Beginning balance	46		85
Realized and Unrealized Gains (Losses)	21	[1]	25	[2]
Purchases	0		0
Sales	0		0
Issuances	0		0
Settlements	0		0
Net Transfers	0		0
Ending balance	25		60
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	20	[3]	25	[4]
Trading Liabilities | Corporate and Other Debt | Other Debt
Liabilities
Beginning balance	49		73
Realized and Unrealized Gains (Losses)	11	[1]	1	[2]
Purchases	(37)		0
Sales	10		0
Issuances	0		0
Settlements	0		(55)
Net Transfers	0		16
Ending balance	11		33
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	10	[3]	3	[4]
Trading Liabilities | Corporate Equities
Liabilities
Beginning balance	5		1
Realized and Unrealized Gains (Losses)	0	[1]	(2)	[2]
Purchases	(3)		(2)
Sales	1		10
Issuances	0		0
Settlements	0		0
Net Transfers	1		(9)
Ending balance	4		2
Unrealized Gains (Losses) for Level 3 Liabilities Outstanding	$ 1	[3]	$ 0	[4]

[1] Total realized and unrealized gains (losses) are primarily included in Trading in the condensed consolidated statements of income except for $276 million related to Trading assets—Investments, which is included in Investments revenues.

[2] Total realized and unrealized gains (losses) are primarily included in Trading in the condensed consolidated statements of income except for $75 million related to Trading assets—Investments, which is included in Investments revenues.

[3] Amounts represent unrealized gains (losses) for the quarter ended March 31, 2013 related to assets and liabilities still outstanding at March 31, 2013.

[4] Amounts represent unrealized gains (losses) for the quarter ended March 31, 2012 related to assets and liabilities still outstanding at March 31, 2012.

[5] Net derivative and other contracts represent Trading assets—Derivative and other contracts net of Trading liabilities—Derivative and other contracts. For further information on derivative instruments and hedging activities, see Note 11.

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Collateralized Transactions (Financial Instruments Owned That Have Been Loaned Or Pledged To Counterparties) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Trading assets	$ 44,274	$ 56,908
U.S. Government and Agency Securities
Trading assets	14,125	15,273
Other Sovereign Government Obligations
Trading assets	4,569	3,278
Corporate and Other Debt
Trading assets	16,450	11,980
Corporate Equities
Trading assets	$ 9,130	$ 26,377

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Securities Available for Sale (Schedule of Available for Sale Securities) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Securities Available for Sale
Amortized Cost	$ 41,243		$ 39,612
Gross Unrealized Gains	251		277
Gross Unrealized Losses	40		20
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	41,454		39,869
Debt Securities
Securities Available for Sale
Amortized Cost	41,228		39,597
Gross Unrealized Gains	251		277
Gross Unrealized Losses	33		13
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	41,446		39,861
U.S. Government and Agency Securities
Securities Available for Sale
Amortized Cost	29,137		29,681
Gross Unrealized Gains	204		231
Gross Unrealized Losses	12		5
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	29,329		29,907
U.S. Treasury Securities
Securities Available for Sale
Amortized Cost	13,938		14,351
Gross Unrealized Gains	105		109
Gross Unrealized Losses	2		2
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	14,041		14,458
U.S. Agency Securities
Securities Available for Sale
Amortized Cost	15,199		15,330
Gross Unrealized Gains	99		122
Gross Unrealized Losses	10		3
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	15,288		15,449
Corporate and Other Debt
Securities Available for Sale
Amortized Cost	12,091		9,916
Gross Unrealized Gains	47		46
Gross Unrealized Losses	21		8
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	12,117		9,954
Agency
Securities Available for Sale
Amortized Cost	2,370		2,197
Gross Unrealized Gains	2		6
Gross Unrealized Losses	15		4
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	2,357		2,199
Non-Agency
Securities Available for Sale
Amortized Cost	459		160
Gross Unrealized Gains	2		0
Gross Unrealized Losses	1		0
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	460		160
Auto Loan Asset-backed Securities
Securities Available for Sale
Amortized Cost	2,171		1,993
Gross Unrealized Gains	3		4
Gross Unrealized Losses	1		1
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	2,173		1,996
Corporate Bonds
Securities Available for Sale
Amortized Cost	3,530		2,891
Gross Unrealized Gains	15		13
Gross Unrealized Losses	3		3
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	3,542		2,901
Collateralized Debt and Loan Obligations
Securities Available for Sale
Amortized Cost	677
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Other-than-Temporary Impairment	0
Securities available for sale, at fair value	677
FFELP Student Loan Asset-backed Securities
Securities Available for Sale
Amortized Cost	2,884	[1]	2,675	[1]
Gross Unrealized Gains	25	[1]	23	[1]
Gross Unrealized Losses	1	[1]	0	[1]
Other-than-Temporary Impairment	0	[1]	0	[1]
Securities available for sale, at fair value	2,908	[1]	2,698	[1]
Percent of principal balance and interest guaranteed by the U.S. Department of Education	95.00%		95.00%
Equity Securities
Securities Available for Sale
Amortized Cost	15		15
Gross Unrealized Gains	0		0
Gross Unrealized Losses	7		7
Other-than-Temporary Impairment	0		0
Securities available for sale, at fair value	$ 8		$ 8

[1] Amounts are backed by a guarantee from the U.S. Department of Education of at least 95% of the principal balance and interest on such loans.

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Introduction and Basis of Presentation (Details) (Wealth Management JV)	Mar. 31, 2013	Aug. 31, 2012
Wealth Management JV
Joint Ventures [Line Items]
Parent ownership interest in joint ventures	65.00%	51.00%

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Significant Accounting Policies

2.       Significant Accounting Policies.

For a detailed discussion about the Company's significant accounting policies, see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

During the quarter ended March 31, 2013, other than the following, no updates were made to the Company's significant accounting policies.

Condensed Consolidated Statements of Cash Flows.

For purposes of the condensed consolidated statements of cash flows, cash and cash equivalents consist of Cash and due from banks and Interest bearing deposits with banks, which are highly liquid investments with original maturities of three months or less, held for investment purposes, and readily convertible to known amounts of cash.

In the quarter ended March 31, 2012, the Company's significant non-cash activities included approximately $0.1 billion of net assets received from Citigroup, Inc. (“Citi”) related to Citi's required equity contribution in connection with the Morgan Stanley Wealth Management platform integration (see Notes3 and 14). 

During the third quarter of 2012, the Company identified that activities related to certain loans had been reported as cash flows from operating activities that should have been presented as investing activities. The Company corrected the previously presented cash flows for these loans and in doing so, the condensed consolidated statements of cash flows for the quarter ended March 31, 2012has been adjusted to increase net cash flows from operating activities by $0.6 billion, with the corresponding decreases in net cash flows from investing activities. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements.

Accounting Developments.

Disclosures about Offsetting Assets and Liabilities. In January 2013, the Financial Accounting Standards Board (the “FASB”) issued an accounting update that clarified the intended scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are either offset in the financial statements or subject to an enforceable master netting arrangement or similar agreement. These disclosure requirements became effective for the Company beginning on January 1, 2013. Since these amended principles require only additional disclosures concerning offsetting and related arrangements, adoption has not affected the Company's condensed consolidated statements of income or financial condition (see Notes 6 and 11).

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. In February 2013, theFASB issued an accounting update that created new disclosure requirements requiring entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S.generally accepted accounting principles (“GAAP”) to be reclassified in its entirety to net income. The disclosure requirements became effective for the Company beginning on January 1, 2013. Since these amended principles require only additional disclosures concerning amounts reclassified out of accumulated other comprehensive income, adoption has not affected the Company's condensed consolidated statements of comprehensive income or notes to the condensed consolidated financial statements (see Note 14).

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Securities Available for Sale (Schedule of Available for Sale Securities in an Unrealized Loss Position) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Securities Available for Sale
Fair Value, Less than 12 Months	$ 8,041	$ 5,255
Fair Value, 12 Months or Longer	31	27
Fair Value, Total	8,072	5,282
Gross Unrealized Losses, Less than 12 Months	33	20
Gross Unrealized Losses, 12 Months or Longer	7	0
Gross Unrealized Losses, Total	40	20
Debt Securities
Securities Available for Sale
Fair Value, Less than 12 Months	8,041	5,247
Fair Value, 12 Months or Longer	23	27
Fair Value, Total	8,064	5,274
Gross Unrealized Losses, Less than 12 Months	33	13
Gross Unrealized Losses, 12 Months or Longer	0	0
Gross Unrealized Losses, Total	33	13
U.S. Government and Agency Securities
Securities Available for Sale
Fair Value, Less than 12 Months	3,732	2,546
Fair Value, 12 Months or Longer	23	27
Fair Value, Total	3,755	2,573
Gross Unrealized Losses, Less than 12 Months	12	5
Gross Unrealized Losses, 12 Months or Longer	0	0
Gross Unrealized Losses, Total	12	5
U.S. Treasury Securities
Securities Available for Sale
Fair Value, Less than 12 Months	805	1,012
Fair Value, 12 Months or Longer	0	0
Fair Value, Total	805	1,012
Gross Unrealized Losses, Less than 12 Months	2	2
Gross Unrealized Losses, 12 Months or Longer	0	0
Gross Unrealized Losses, Total	2	2
U.S. Agency Securities
Securities Available for Sale
Fair Value, Less than 12 Months	2,927	1,534
Fair Value, 12 Months or Longer	23	27
Fair Value, Total	2,950	1,561
Gross Unrealized Losses, Less than 12 Months	10	3
Gross Unrealized Losses, 12 Months or Longer	0	0
Gross Unrealized Losses, Total	10	3
Corporate and Other Debt
Securities Available for Sale
Fair Value, Less than 12 Months	4,309	2,701
Fair Value, 12 Months or Longer	0	0
Fair Value, Total	4,309	2,701
Gross Unrealized Losses, Less than 12 Months	21	8
Gross Unrealized Losses, 12 Months or Longer	0	0
Gross Unrealized Losses, Total	21	8
Agency
Securities Available for Sale
Fair Value, Less than 12 Months	1,703	1,057
Fair Value, 12 Months or Longer	0	0
Fair Value, Total	1,703	1,057
Gross Unrealized Losses, Less than 12 Months	15	4
Gross Unrealized Losses, 12 Months or Longer	0	0
Gross Unrealized Losses, Total	15	4
Non-Agency
Securities Available for Sale
Fair Value, Less than 12 Months	169
Fair Value, 12 Months or Longer	0
Fair Value, Total	169
Gross Unrealized Losses, Less than 12 Months	1
Gross Unrealized Losses, 12 Months or Longer	0
Gross Unrealized Losses, Total	1
Auto Loan Asset-backed Securities
Securities Available for Sale
Fair Value, Less than 12 Months	1,072	710
Fair Value, 12 Months or Longer	0	0
Fair Value, Total	1,072	710
Gross Unrealized Losses, Less than 12 Months	1	1
Gross Unrealized Losses, 12 Months or Longer	0	0
Gross Unrealized Losses, Total	1	1
Corporate Bonds
Securities Available for Sale
Fair Value, Less than 12 Months	907	934
Fair Value, 12 Months or Longer	0	0
Fair Value, Total	907	934
Gross Unrealized Losses, Less than 12 Months	3	3
Gross Unrealized Losses, 12 Months or Longer	0	0
Gross Unrealized Losses, Total	3	3
FFELP Student Loan Asset-backed Securities
Securities Available for Sale
Fair Value, Less than 12 Months	458
Fair Value, 12 Months or Longer	0
Fair Value, Total	458
Gross Unrealized Losses, Less than 12 Months	1
Gross Unrealized Losses, 12 Months or Longer	0
Gross Unrealized Losses, Total	1
Equity Securities
Securities Available for Sale
Fair Value, Less than 12 Months	0	8
Fair Value, 12 Months or Longer	8	0
Fair Value, Total	8	8
Gross Unrealized Losses, Less than 12 Months	0	7
Gross Unrealized Losses, 12 Months or Longer	7	0
Gross Unrealized Losses, Total	$ 7	$ 7

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Interest Income and Interest Expense (Tables)

3 Months Ended

Mar. 31, 2013

Interest Income And Interest Expense

Schedule Of Details Of Interest Income And Interest Expense

				Three Months Ended
				March 31,
				2013		2012
				(dollars in millions)
Interest income(1):
	Trading assets(2)		$	604	$	791
	Securities available for sale			96		86
	Loans			244		118
	Interest bearing deposits with banks			26		27
	Federal funds sold and securities purchased under agreements to
		resell and Securities borrowed		92		113
	Other			336		407
Total interest income			$	1,398	$	1,542
Interest expense(1):
	Deposits		$	41	$	45
	Commercial paper and other short-term borrowings			9		13
	Long-term debt			960		1,254
	Securities sold under agreements to repurchase and Securities
		loaned		450		463
	Other			(247)		(174)
Total interest expense			$	1,213	$	1,601
Net interest			$	185	$	(59)

_____________

(1)       Interest income and expense are recorded within the condensed consolidated statements of income depending on the nature of the instrument and related market conventions. When interest is included as a component of the instrument's fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.

(2)       Interest expense on Trading liabilities is reported as a reduction to Interest income on Trading assets.

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Subsequent Events

3 Months Ended

Mar. 31, 2013

Subsequent Events

Subsequent Events

22.Subsequent Events.

The Company has evaluated subsequent events for adjustment to or disclosure in the condensed consolidated financial statements through the date of this report and the Company has not identified any recordable or disclosable events, not otherwise reported in these condensed consolidated financial statements or the notes thereto, except for the following:

Common Dividend.

On April 18, 2013, the Company announced that its Board of Directors declared a quarterly dividend per common share of $0.05. The dividend is payable on May 15, 2013 to common shareholders of record on April30, 2013.

Long-Term Borrowings.

On April 25, 2013, the Company issued $3.7 billion in senior unsecured debt.

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Discontinued Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations

Discontinued Operations

21.Discontinued Operations.

See Note 1 for a discussion of the Company's discontinued operations.

The table below provides information regarding amounts included in discontinued operations:

			Three Months Ended
			March 31,
			2013		2012
			(dollars in millions)
Net revenues(1):
	Saxon	$	—	$	76
	Quilter		(1)		31
	Other(2)		(9)		10
		$	(10)	$	117
Pre-tax gain (loss) on discontinued operations(1):
	Saxon	$	(20)	$	25
	Quilter		(1)		2
	Other(2)		(9)		1
		$	(30)	$	28

_____________

(1)Amounts included eliminations of intersegment activity.

(2)       Amounts included in Other are related to the sale of a principal investment and other.

XML

Earnings Per Common Share (Antidilutive Securities Excluded from the Computation of Diluted EPS) (Details) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Antidilutive securities outstanding	42	148
RSUs and Performance-based Stock Units
Antidilutive securities outstanding	5	103
Stock Options
Antidilutive securities outstanding	37	45

XML

Fair Value Disclosures (Short-term and Long-term Borrowings) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Balance Sheet Captions
Short-term and long-term borrowing, fair value	$ 43,772	$ 44,769
Equity
Balance Sheet Captions
Short-term and long-term borrowing, fair value	18,746	17,326
Credit and Foreign Exchange Contracts
Balance Sheet Captions
Short-term and long-term borrowing, fair value	3,100	3,337
Interest Rates
Balance Sheet Captions
Short-term and long-term borrowing, fair value	21,228	23,330
Commodities
Balance Sheet Captions
Short-term and long-term borrowing, fair value	$ 698	$ 776

XML

Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2013

Employee Benefit Plans

Components of Net Periodic Benefit Expense

			Three Months Ended
			March 31,
			2013		2012
			(dollars in millions)
Service cost, benefits earned during the period		$	7	$	8
Interest cost on projected benefit obligation			39		41
Expected return on plan assets			(28)		(28)
Net amortization of prior service costs			(4)		(3)
Net amortization of actuarial loss			10		7
	Net periodic benefit expense	$	24	$	25

XML

Significant Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Consolidated Statements Of Cash Flows

Condensed Consolidated Statements of Cash Flows.

For purposes of the condensed consolidated statements of cash flows, cash and cash equivalents consist of Cash and due from banks and Interest bearing deposits with banks, which are highly liquid investments with original maturities of three months or less, held for investment purposes, and readily convertible to known amounts of cash.

In the quarter ended March 31, 2012, the Company's significant non-cash activities included approximately $0.1 billion of net assets received from Citigroup, Inc. (“Citi”) related to Citi's required equity contribution in connection with the Morgan Stanley Wealth Management platform integration (see Notes3 and 14). 

During the third quarter of 2012, the Company identified that activities related to certain loans had been reported as cash flows from operating activities that should have been presented as investing activities. The Company corrected the previously presented cash flows for these loans and in doing so, the condensed consolidated statements of cash flows for the quarter ended March 31, 2012has been adjusted to increase net cash flows from operating activities by $0.6 billion, with the corresponding decreases in net cash flows from investing activities. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements.

Accounting Developments

Accounting Developments.

Disclosures about Offsetting Assets and Liabilities. In January 2013, the Financial Accounting Standards Board (the “FASB”) issued an accounting update that clarified the intended scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are either offset in the financial statements or subject to an enforceable master netting arrangement or similar agreement. These disclosure requirements became effective for the Company beginning on January 1, 2013. Since these amended principles require only additional disclosures concerning offsetting and related arrangements, adoption has not affected the Company's condensed consolidated statements of income or financial condition (see Notes 6 and 11).

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. In February 2013, theFASB issued an accounting update that created new disclosure requirements requiring entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S.generally accepted accounting principles (“GAAP”) to be reclassified in its entirety to net income. The disclosure requirements became effective for the Company beginning on January 1, 2013. Since these amended principles require only additional disclosures concerning amounts reclassified out of accumulated other comprehensive income, adoption has not affected the Company's condensed consolidated statements of comprehensive income or notes to the condensed consolidated financial statements (see Note 14).

XML

Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures

Assets and Liabilities Measured at Fair Value on a Recurring Basis

				Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting		Balance at March 31, 2013
					(dollars in millions)
Assets at Fair Value
Trading assets:
	U.S. government and agency securities:
		U.S. Treasury securities		$	24,411	$	—	$	—	$	—	$	24,411
		U.S. agency securities			2,040		22,796		—		—		24,836
			Total U.S. government and agency securities		26,451		22,796		—		—		49,247
	Other sovereign government obligations				29,893		8,577		3		—		38,473
	Corporate and other debt:
		State and municipal securities			—		2,228		—		—		2,228
		Residential mortgage-backed securities			—		1,684		19		—		1,703
		Commercial mortgage-backed securities			—		1,122		174		—		1,296
		Asset-backed securities			—		1,040		11		—		1,051
		Corporate bonds			—		18,453		888		—		19,341
		Collateralized debt obligations			—		442		1,666		—		2,108
		Loans and lending commitments			—		11,175		5,284		—		16,459
		Other debt			—		9,104		1		—		9,105
			Total corporate and other debt		—		45,248		8,043		—		53,291
	Corporate equities(1)				74,280		923		270		—		75,473
	Derivative and other contracts:
		Interest rate contracts			711		708,732		3,640		—		713,083
		Credit contracts			—		58,131		4,134		—		62,265
		Foreign exchange contracts			24		50,395		5		—		50,424
		Equity contracts			965		42,508		1,044		—		44,517
		Commodity contracts			3,674		15,559		2,332		—		21,565
		Other			—		90		—		—		90
		Netting(2)			(4,892)		(774,480)		(6,543)		(70,200)		(856,115)
			Total derivative and other contracts		482		100,935		4,612		(70,200)		35,829
	Investments:
		Private equity funds			—		—		2,291		—		2,291
		Real estate funds			—		7		1,370		—		1,377
		Hedge funds			—		370		545		—		915
		Principal investments			20		2		2,855		—		2,877
		Other			190		77		496		—		763
			Total investments		210		456		7,557		—		8,223
	Physical commodities				—		6,700		—		—		6,700
		Total trading assets			131,316		185,635		20,485		(70,200)		267,236
Securities available for sale					14,049		27,405		—		—		41,454
Securities received as collateral					17,920		51		—		—		17,971
Federal funds sold and securities purchased
	under agreements to resell				—		873		—		—		873
Intangible assets(3)					—		—		8		—		8
Total assets measured at fair value				$	163,285	$	213,964	$	20,493	$	(70,200)	$	327,542
Liabilities at Fair Value
Deposits				$	—	$	1,442	$	—	$	—	$	1,442
Commercial paper and other short-term borrowings					—		1,257		5		—		1,262
Trading liabilities:
	U.S. government and agency securities:
		U.S. Treasury securities			21,303		—		—		—		21,303
		U.S. agency securities			1,765		96		—		—		1,861
			Total U.S. government and agency securities		23,068		96		—		—		23,164
	Other sovereign government obligations				26,928		3,325		—		—		30,253
	Corporate and other debt:
		State and municipal securities			—		47		—		—		47
		Residential mortgage-backed securities			—		—		4		—		4
		Asset-backed securities			—		1		—		—		1
		Corporate bonds			—		6,979		424		—		7,403
		Collateralized debt obligations			—		317		—		—		317
		Unfunded lending commitments			—		252		25		—		277
		Other debt			—		87		11		—		98
			Total corporate and other debt		—		7,683		464		—		8,147
	Corporate equities(1)				28,705		1,547		4		—		30,256
	Derivative and other contracts:
		Interest rate contracts			747		681,975		3,662		—		686,384
		Credit contracts			—		56,326		2,731		—		59,057
		Foreign exchange contracts			3		51,466		240		—		51,709
		Equity contracts			891		47,321		2,384		—		50,596
		Commodity contracts			4,164		15,027		1,629		—		20,820
		Other			—		30		3		—		33
		Netting(2)			(4,892)		(774,480)		(6,543)		(42,032)		(827,947)
			Total derivative and other contracts		913		77,665		4,106		(42,032)		40,652
		Total trading liabilities			79,614		90,316		4,574		(42,032)		132,472
Obligation to return securities received as collateral					23,452		58		—		—		23,510
Securities sold under agreements to repurchase					—		410		155		—		565
Other secured financings					—		9,349		275		—		9,624
Long-term borrowings					—		39,726		2,784		—		42,510
Total liabilities measured at fair value				$	103,066	$	142,558	$	7,793	$	(42,032)	$	211,385

_____________

(1)       The Company holds or sells short for trading purposes equity securities issued by entities in diverse industries and of varying size.

(2)       For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash collateral netting are included in the column titled “Counterparty and Cash Collateral Netting.” For contracts with the same counterparty, counterparty netting among positions classified within the same level is included within that level. For further information on derivative instruments and hedging activities, see Note 11.

(3)       Amount represents mortgage servicing rights (“MSR”) accounted for at fair value. See Note 7 for further information on MSRs.

				Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting		Balance at December 31, 2012
					(dollars in millions)
Assets at Fair Value
Trading assets:
	U.S. government and agency securities:
		U.S. Treasury securities		$	24,662	$	14	$	—	$	—	$	24,676
		U.S. agency securities			1,451		27,888		—		—		29,339
			Total U.S. government and agency securities		26,113		27,902		—		—		54,015
	Other sovereign government obligations				37,669		5,487		6		—		43,162
	Corporate and other debt:
		State and municipal securities			—		1,558		—		—		1,558
		Residential mortgage-backed securities			—		1,439		45		—		1,484
		Commercial mortgage-backed securities			—		1,347		232		—		1,579
		Asset-backed securities			—		915		109		—		1,024
		Corporate bonds			—		18,403		660		—		19,063
		Collateralized debt obligations			—		685		1,951		—		2,636
		Loans and lending commitments			—		12,617		4,694		—		17,311
		Other debt			—		4,457		45		—		4,502
			Total corporate and other debt		—		41,421		7,736		—		49,157
	Corporate equities(1)				68,072		1,067		288		—		69,427
	Derivative and other contracts:
		Interest rate contracts			446		819,581		3,774		—		823,801
		Credit contracts			—		63,234		5,033		—		68,267
		Foreign exchange contracts			34		52,729		31		—		52,794
		Equity contracts			760		37,074		766		—		38,600
		Commodity contracts			4,082		14,256		2,308		—		20,646
		Other			—		143		—		—		143
		Netting(2)			(4,740)		(883,733)		(6,947)		(72,634)		(968,054)
			Total derivative and other contracts		582		103,284		4,965		(72,634)		36,197
	Investments:
		Private equity funds			—		—		2,179		—		2,179
		Real estate funds			—		6		1,370		—		1,376
		Hedge funds			—		382		552		—		934
		Principal investments			185		83		2,833		—		3,101
		Other			199		71		486		—		756
			Total investments		384		542		7,420		—		8,346
	Physical commodities				—		7,299		—		—		7,299
		Total trading assets			132,820		187,002		20,415		(72,634)		267,603
Securities available for sale					14,466		25,403		—		—		39,869
Securities received as collateral					14,232		46		—		—		14,278
Federal funds sold and securities purchased under
	agreements to resell				—		621		—		—		621
Intangible assets(3)					—		—		7		—		7
Total assets measured at fair value				$	161,518	$	213,072	$	20,422	$	(72,634)	$	322,378
Liabilities at Fair Value
Deposits				$	—	$	1,485	$	—	$	—	$	1,485
Commercial paper and other short-term borrowings					—		706		19		—		725
Trading liabilities:
	U.S. government and agency securities:
		U.S. Treasury securities			20,098		21		—		—		20,119
		U.S. agency securities			1,394		107		—		—		1,501
			Total U.S. government and agency securities		21,492		128		—		—		21,620
	Other sovereign government obligations				27,583		2,031		—		—		29,614
	Corporate and other debt:
		State and municipal securities			—		47		—		—		47
		Residential mortgage-backed securities			—		—		4		—		4
		Corporate bonds			—		3,942		177		—		4,119
		Collateralized debt obligations			—		328		—		—		328
		Unfunded lending commitments			—		305		46		—		351
		Other debt			—		156		49		—		205
			Total corporate and other debt		—		4,778		276		—		5,054
	Corporate equities(1)				25,216		1,655		5		—		26,876
	Derivative and other contracts:
		Interest rate contracts			533		789,715		3,856		—		794,104
		Credit contracts			—		61,283		3,211		—		64,494
		Foreign exchange contracts			2		56,021		390		—		56,413
		Equity contracts			748		39,212		1,910		—		41,870
		Commodity contracts			4,530		15,702		1,599		—		21,831
		Other			—		54		7		—		61
		Netting(2)			(4,740)		(883,733)		(6,947)		(46,395)		(941,815)
			Total derivative and other contracts		1,073		78,254		4,026		(46,395)		36,958
		Total trading liabilities			75,364		86,846		4,307		(46,395)		120,122
Obligation to return securities received as collateral					18,179		47		—		—		18,226
Securities sold under agreements to repurchase					—		212		151		—		363
Other secured financings					—		9,060		406		—		9,466
Long-term borrowings					—		41,255		2,789		—		44,044
Total liabilities measured at fair value				$	93,543	$	139,611	$	7,672	$	(46,395)	$	194,431

_____________

(1)       The Company holds or sells short for trading purposes equity securities issued by entities in diverse industries and of varying size.

(2)       For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash collateral netting are included in the column titled “Counterparty and Cash Collateral Netting.” For contracts with the same counterparty, counterparty netting among positions classified within the same level is included within that level. For further information on derivative instruments and hedging activities, see Note 11.

(3)       Amount represents MSRs accounted for at fair value. See Note 7 for further information on MSRs.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis

					Beginning Balance at December 31, 2012		Total Realized and Unrealized Gains (Losses) (1)		Purchases		Sales		Issuances		Settlements		Net Transfers		Ending Balance at March 31, 2013		Unrealized Gains (Losses) for Level 3 Assets/ Liabilities Outstanding at March 31, 2013(2)
					(dollars in millions)
Assets at Fair Value
Trading assets:
	Other sovereign government obligations			$	6	$	—	$	1	$	(3)	$	—	$	—	$	(1)	$	3	$	—
	Corporate and other debt:
		Residential mortgage-backed securities			45		26		15		(42)		—		—		(25)		19		9
		Commercial mortgage-backed securities			232		15		6		(80)		—		—		1		174		7
		Asset-backed securities			109		—		1		(99)		—		—		—		11		—
		Corporate bonds			660		62		437		(247)		—		(12)		(12)		888		5
		Collateralized debt obligations			1,951		191		314		(695)		—		(95)		—		1,666		63
		Loans and lending commitments			4,694		20		944		(149)		—		(738)		513		5,284		1
		Other debt			45		(8)		14		(49)		—		—		(1)		1		(1)
			Total corporate and other debt		7,736		306		1,731		(1,361)		—		(845)		476		8,043		84
	Corporate equities				288		(22)		85		(61)		—		—		(20)		270		5
	Net derivative and other contracts(3):
		Interest rate contracts			(82)		(106)		1		—		(1)		192		(26)		(22)		18
		Credit contracts			1,822		(452)		42		—		(15)		(4)		10		1,403		(418)
		Foreign exchange contracts			(359)		8		—		—		—		109		7		(235)		(2)
		Equity contracts			(1,144)		(140)		85		(1)		(93)		(76)		29		(1,340)		(125)
		Commodity contracts			709		(10)		9		—		(4)		(8)		7		703		(30)
		Other			(7)		(2)		—		—		—		6		—		(3)		(2)
			Total net derivative and
			other contracts		939		(702)		137		(1)		(113)		219		27		506		(559)
	Investments:
		Private equity funds			2,179		114		70		(72)		—		—		—		2,291		104
		Real estate funds			1,370		80		3		(83)		—		—		—		1,370		90
		Hedge funds			552		2		31		(34)		—		—		(6)		545		(3)
		Principal investments			2,833		63		35		(85)		—		—		9		2,855		78
		Other			486		17		11		(17)		—		—		(1)		496		16
			Total investments		7,420		276		150		(291)		—		—		2		7,557		285
Intangible assets					7		4		—		—		—		(3)		—		8		2
Liabilities at Fair Value
Commercial paper and other
	short-term borrowings			$	19	$	—	$	—	$	—	$	1	$	(1)	$	(14)	$	5	$	—
Trading liabilities:
	Corporate and other debt:
		Residential mortgage-backed securities			4		—		—		—		—		—		—		4		—
		Corporate bonds			177		—		(131)		371		—		—		7		424		3
		Unfunded lending commitments			46		21		—		—		—		—		—		25		20
		Other debt			49		11		(37)		10		—		—		—		11		10
			Total corporate and other debt		276		32		(168)		381		—		—		7		464		33
	Corporate equities				5		—		(3)		1		—		—		1		4		1
Securities sold under agreements to repurchase					151		(4)		—		—		—		—		—		155		(4)
Other secured financings					406		12		—		—		13		(132)		—		275		5
Long-term borrowings					2,789		(17)		—		—		543		(188)		(377)		2,784		(17)

___________

(1)       Total realized and unrealized gains (losses) are primarily included in Trading in the condensed consolidated statements of income except for $276 million related to Trading assets—Investments, which is included in Investments revenues.

(2)       Amounts represent unrealized gains (losses) for the quarter ended March 31, 2013 related to assets and liabilities still outstanding at March 31, 2013.

(3)       Net derivative and other contracts represent Trading assets—Derivative and other contracts net of Trading liabilities—Derivative and other contracts. For further information on derivative instruments and hedging activities, see Note 11.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for Quarter Ended March 31, 2012.

					Beginning Balance at December 31, 2011		Total Realized and Unrealized Gains (Losses) (1)		Purchases		Sales		Issuances		Settlements		Net Transfers		Ending Balance at March 31, 2012		Unrealized Gains (Losses) for Level 3 Assets/ Liabilities Outstanding at March 31, 2012(2)
					(dollars in millions)
Assets at Fair Value
Trading assets:
	U.S. agency securities			$	8	$	—	$	42	$	(26)	$	—	$	—	$	(1)	$	23	$	—
	Other sovereign government obligations				119		(1)		8		(118)		—		—		—		8		—
	Corporate and other debt:
		State and municipal securities			—		—		—		—		—		—		3		3		—
		Residential mortgage-backed securities			494		(21)		6		(245)		—		—		(191)		43		(18)
		Commercial mortgage-backed securities			134		23		5		(21)		—		(1)		(13)		127		16
		Asset-backed securities			31		1		—		(28)		—		—		(1)		3		1
		Corporate bonds			675		45		426		(225)		—		—		(22)		899		39
		Collateralized debt obligations			980		123		296		(161)		—		—		(73)		1,165		82
		Loans and lending commitments			9,590		(20)		496		(1,018)		—		(421)		(30)		8,597		(35)
		Other debt			128		2		27		(123)		—		—		23		57		—
			Total corporate and other debt		12,032		153		1,256		(1,821)		—		(422)		(304)		10,894		85
	Corporate equities				417		(45)		901		(758)		—		—		39		554		(9)
	Net derivative and other contracts(3):
		Interest rate contracts			420		170		6		—		(5)		(139)		(430)		22		179
		Credit contracts			5,814		(1,381)		63		—		(10)		(47)		(58)		4,381		(1,786)
		Foreign exchange contracts			43		(99)		—		—		—		162		(40)		66		(83)
		Equity contracts			(1,234)		(99)		199		(58)		(50)		(250)		50		(1,442)		(161)
		Commodity contracts			570		199		4		—		(4)		37		(3)		803		101
		Other			(1,090)		58		—		—		—		269		740		(23)		56
			Total net derivative and other contracts		4,523		(1,152)		272		(58)		(69)		32		259		3,807		(1,694)
	Investments:
		Private equity funds			1,936		(7)		101		(36)		—		—		—		1,994		1
		Real estate funds			1,213		52		87		(14)		—		—		—		1,338		5
		Hedge funds			696		25		22		(33)		—		—		(87)		623		23
		Principal investments			2,937		38		180		(65)		—		—		104		3,194		57
		Other			501		(33)		34		(3)		—		—		28		527		(41)
			Total investments		7,283		75		424		(151)		—		—		45		7,676		45
	Physical commodities				46		—		—		—		—		(46)		—		—		—
Intangible assets					133		(34)		—		—		—		—		—		99		(34)
Liabilities at Fair Value
Commercial paper and other short-term borrowings				$	2	$	—	$	—	$	—	$	13	$	—	$	—	$	15	$	—
Trading liabilities:
	Other sovereign government obligations				8		—		(7)		—		—		—		—		1		—
	Corporate and other debt:
		Residential mortgage-backed securities			355		—		(294)		—		—		—		—		61		(61)
		Corporate bonds			219		(59)		(186)		126		—		—		(25)		193		(74)
		Unfunded lending commitments			85		25		—		—		—		—		—		60		25
		Other debt			73		1		—		—		—		(55)		16		33		3
	Total corporate and other debt				732		(33)		(480)		126		—		(55)		(9)		347		(107)
	Corporate equities				1		(2)		(2)		10		—		—		(9)		2		—
Securities sold under agreements to repurchase					340		1		—		—		—		—		(153)		186		3
Other secured financings					570		(44)		—		—		12		(32)		—		594		(44)
Long-term borrowings					1,603		(173)		—		—		262		(78)		183		2,143		(171)

____________

(1)       Total realized and unrealized gains (losses) are primarily included in Trading in the condensed consolidated statements of income except for $75 million related to Trading assets—Investments, which is included in Investments revenues.

(2)       Amounts represent unrealized gains (losses) forthe quarter ended March 31, 2012 related to assets and liabilities still outstanding at March 31, 2012.

(3)       Net derivative and other contracts represent Trading assets—Derivative and other contracts net of Trading liabilities—Derivative and other contracts. For further information on derivative instruments and hedging activities, see Note 11.

Quantitative Information about and Sensitivity of Significant Unobservable Inputs used in Recurring Level 3 Fair Value Measurements

					Balance at
					March 31,
					2013
					(dollars		Significant Unobservable Input(s) /
					in	Valuation	Sensitivity of the Fair Value to Changes
					millions)	Technique(s)	in the Unobservable Inputs		Range(1)	Averages(2)
Assets
Trading assets:
	Corporate and other debt:
		Commercial mortgage-backed
			securities	$	174	Comparable pricing	Comparable bond price / (A)		57 to 101 points	81 points
		Corporate bonds			888	Comparable pricing	Comparable bond price / (A)		4 to 145 points	92 points
		Collateralized debt obligations			1,666	Comparable pricing(6)	Comparable bond price / (A)		16 to 95 points	63 points
						Correlation model	Credit correlation / (B)		23 to 54 %	41%
		Loans and lending commitments			5,284	Corporate loan model	Credit spread / (C)		44 to 1,045 basis points	245 basis points
						Comparable pricing	Comparable bond price / (A)		80 to 120 points	100 points
						Comparable pricing(6)	Comparable loan price / (A)		30 to 103 points	86 points
	Corporate equities(3)				270	Net asset value(6)	Discount to net asset value / (C)		0 to 51 %	20%
						Comparable pricing	Comparable equity price / (A)		0 to 100 %	50%
						Comparable pricing	Comparable price / (A)		43 to 74 points	52 points
						Market approach	EBITDA multiple / (A)		8 to 10 times	9 times
	Net derivative and other contracts:
		Interest rate contracts			(22)	Option model	Interest rate volatility concentration
								liquidity multiple / (C)(D)	0 to 10 times	0 times / 0 times (4)
							Comparable bond price / (A)(D)		5 to 98 points	52 points / 52 points (4)
							Interest rate - Foreign exchange
								correlation / (A)(D)	2 to 63 %	35% / 43% (4)
							Interest rate volatility skew / (A)(D)		9 to 117 %	53% / 48% (4)
							Interest rate quanto correlation / (A)(D)		-53 to 37 %	8% / -1% (4)
							Interest rate curve correlation / (A)(D)		42 to 98 %	78% / 82% (4)
							Inflation volatility / (A)(D)		60 to 83 %	70% / 66% (4)
		Credit contracts			1,403	Comparable pricing	Cash synthetic basis / (C)(D)		1 to 10 points	3 points
							Comparable bond price / (C)(D)		0 to 83 points	27 points
						Correlation model(6)	Credit correlation / (B)		20 to 94 %	47%
		Foreign exchange contracts(5)			(235)	Option model	Comparable bond price / (A)(D)		5 to 98 points	52 points / 52 points (4)
							Interest rate quanto correlation / (A)(D)		-53 to 37 %	8% / -1% (4)
							Interest rate - Credit spread correlation / (A)(D)		-59 to 60 %	-5% / -3% (4)
							Interest rate - Foreign exchange correlation
								/ (A)(D)	2 to 63 %	35% / 43% (4)
							Interest rate volatility skew / (A)(D)		9 to 117 %	53% / 48% (4)
		Equity contracts(5)			(1,340)	Option model	At the money volatility / (C)(D)		14 to 44 %	30%
							Volatility skew / (C)(D)		-2 to 0 %	-1%
							Equity - Equity correlation / (C)(D)		40 to 99 %	71%
							Equity - Foreign exchange correlation / (C)(D)		-60 to 38 %	-15%
							Equity - Interest rate correlation / (C)(D)		1 to 66 %	42% / 40% (4)
		Commodity contracts			703	Option model	Forward power price / (C)(D)		$18 to $110 per	$42 per
									Megawatt hour	Megawatt hour
							Commodity volatility / (A)(D)		12 to 31 %	13%
							Cross commodity correlation / (C)(D)		43 to 97 %	91%
	Investments(3):
		Principal investments			2,855	Discounted cash flow	Implied weighted average cost of capital / (C)(D)		10 to 15 %	11%
							Exit multiple / (A)(D)		6 to 10 times	9 times
						Discounted cash flow(6)	Capitalization rate / (C)(D)		6 to 10 %	7%
							Equity discount rate / (C)(D)		15 to 35 %	22%
						Market approach	EBITDA multiple / (A)		6 to 18 times	9 times
		Other			496	Discounted cash flow	Implied weighted average cost of capital / (C)(D)		8 to 11 %	8%
							Exit multiple / (A)(D)		6 to 7 times	7 times
						Market approach(6)	EBITDA multiple / (A)		7 to 14 times	11 times
Liabilities
Trading liabilities:
	Corporate and other debt:
		Corporate bonds		$	424	Comparable pricing	Comparable bond price / (A)		10 to 147 points	100 points
Securities sold under agreements
	to repurchase				155	Discounted cash flow	Funding spread / (A)		98 to 144 basis points	115 basis points
Other secured financings					275	Comparable pricing(6)	Comparable bond price / (A)		103 to 117 points	110 points
						Discounted cash flow	Funding spread / (A)		144 to 146 basis points	145 basis points
Long-term borrowings					2,784	Option model	At the money volatility / (A)(D)		24 to 30 %	27%
							Volatility skew / (A)(D)		-1 to 0 %	-1%
							Equity - Equity correlation / (C)(D)		50 to 98 %	74%
							Equity - Foreign exchange correlation / (A)(D)		-60 to 35 %	2%

___________________

EBITDA - Earnings before interest, taxes, depreciation and amortization

(1)       The ranges of significant unobservable inputs are represented in points, percentages, basis points, times or megawatt hours. Points are a percentage of par; for example, 101points would be 101% of par. A basis point equals 1/100th of 1%; for example, 1,045 basis points would equal 10.45%.

(2)       Amounts represent weighted averages except where simple averages and the median of the inputs are provided (see footnote 4 below). Weighted averages are calculated by weighting each input by the fair value of the respective financial instruments except for long-term borrowings and derivative instruments where inputs are weighted by risk.

(3)       Investments in funds measured using an unadjusted net asset value are excluded.

(4)       The data structure of the significant unobservable inputs used in valuing Interest rate contracts, Foreign exchange contracts and certain Equity contracts may be in a multi-dimensional form, such as a curve or surface, with risk distributed across the structure. Therefore, a simple average and median, together with the range of data inputs, may be more appropriate measurements than a single point weighted average.

(5)       Includes derivative contracts with multiple risks (i.e., hybrid products).

(6)This is the predominant valuation technique for this major asset or liability class.

					Balance at
					December 31,
					2012
					(dollars		Significant Unobservable Input(s) /
					in	Valuation	Sensitivity of the Fair Value to Changes			Weighted
					millions)	Technique(s)	in the Unobservable Inputs		Range(1)	Average
Assets
Trading assets:
	Corporate and other debt:
		Commercial mortgage-backed
			securities	$	232	Comparable pricing	Comparable bond price / (A)		46 to 100 points	76 points
		Asset-backed securities			109	Discounted cash flow	Internal rate of return / (C)		21%	21%
		Corporate bonds			660	Comparable pricing	Comparable bond price / (A)		0 to 143 points	24 points
		Collateralized debt obligations			1,951	Comparable pricing	Comparable bond price / (A)		15 to 88 points	59 points
						Correlation model	Credit correlation / (B)		15 to 45 %	40%
		Loans and lending commitments			4,694	Corporate loan model	Credit spread / (C)		17 to 1,004 basis points	281 basis points
						Comparable pricing	Comparable bond price / (A)		80 to 120 points	104 points
						Comparable pricing	Comparable loan price / (A)		55 to 100 points	88 points
	Corporate equities(2)				288	Net asset value	Discount to net asset value / (C)		0 to 37 %	8%
						Comparable pricing	Discount to comparable equity price / (C)		0 to 27 points	14 points
						Market approach	EBITDA multiple / (A)		6 times	6 times
	Net derivative and other contracts:
		Interest rate contracts			(82)	Option model	Interest rate volatility concentration			See (3)
								liquidity multiple / (C)(D)	0 to 8 times
							Comparable bond price / (A)(D)		5 to 98 points
							Interest rate - Foreign exchange
								correlation / (A)(D)	2 to 63 %
							Interest rate volatility skew / (A)(D)		9 to 95 %
							Interest rate quanto correlation / (A)(D)		-53 to 33 %
							Interest rate curve correlation / (A)(D)		48 to 99 %
							Inflation volatility / (A)(D)		49 to 100 %
						Discounted cash flow	Forward commercial paper rate-LIBOR basis / (A)		-18 to 95 basis points
		Credit contracts			1,822	Comparable pricing	Cash synthetic basis / (C)		2 to 14 points	See (4)
							Comparable bond price / (C)		0 to 80 points
						Correlation model	Credit correlation / (B)		14 to 94 %
		Foreign exchange contracts(5)			(359)	Option model	Comparable bond price / (A)(D)		5 to 98 points	See (6)
							Interest rate quanto correlation / (A)(D)		-53 to 33 %
							Interest rate - Credit spread correlation / (A)(D)		-59 to 65 %
							Interest rate - Foreign exchange correlation
								/ (A)(D)	2 to 63 %
							Interest rate volatility skew / (A)(D)		9 to 95 %
		Equity contracts(5)			(1,144)	Option model	At the money volatility / (C)(D)		7 to 24 %	See (7)
							Volatility skew / (C)(D)		-2 to 0 %
							Equity - Equity correlation / (C)(D)		40 to 96 %
							Equity - Foreign exchange correlation / (C)(D)		-70 to 38 %
							Equity - Interest rate correlation / (C)(D)		18 to 65 %
		Commodity contracts			709	Option model	Forward power price / (C)(D)		$28 to $84 per
									Megawatt hour
							Commodity volatility / (A)(D)		17 to 29 %
							Cross commodity correlation / (C)(D)		43 to 97 %
	Investments(2):
		Principal investments			2,833	Discounted cash flow	Implied weighted average cost of capital / (C)(D)		8 to 15 %	9%
							Exit multiple / (A)(D)		5 to 10 times	9 times
						Discounted cash flow	Capitalization rate / (C)(D)		6 to 10 %	7%
							Equity discount rate / (C)(D)		15 to 35 %	23%
						Market approach	EBITDA multiple / (A)		3 to 17 times	10 times
		Other			486	Discounted cash flow	Implied weighted average cost of capital / (C)(D)		11 %	11%
							Exit multiple / (A)(D)		6 times	6 times
						Market approach	EBITDA multiple / (A)		6 to 8 times	7 times
Liabilities
Trading liabilities:
	Corporate and other debt:
		Corporate bonds		$	177	Comparable pricing	Comparable bond price / (A)		0 to 150 points	50 points
Securities sold under agreements
	to repurchase				151	Discounted cash flow	Funding spread / (A)		110 to 184 basis points	166 basis points
Other secured financings					406	Comparable pricing	Comparable bond price / (A)		55 to 139 points	102 points
						Discounted cash flow	Funding spread / (A)		183 to 186 basis points	184 basis points
Long-term borrowings					2,789	Option model	At the money volatility / (A)(D)		20 to 24 %	24%
							Volatility skew / (A)(D)		-1 to 0 %	0%
							Equity - Equity correlation / (C)(D)		50 to 90 %	77%
							Equity - Foreign exchange correlation / (A)(D)		-70 to 36 %	-15%

________________

LIBOR – London Interbank Offered Rate

(1)       The ranges of significant unobservable inputs are represented in points, percentages, basis points, times or megawatt hours. Points are a percentage of par; for example, 100 points would be 100% of par. A basis point equals 1/100th of 1%; for example, 1,004 basis points would equal 10.04%.

(2)       Investments in funds measured using an unadjusted net asset value are excluded.

(3)       See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input ranges for comparable bond prices, interest rate volatility skew, interest rate quanto correlation and forward commercial paper rate–LIBOR basis.

(4)       See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-Kfor a qualitative discussion of the wide unobservable input ranges for comparable bond prices and credit correlation.

(5)       Includes derivative contracts with multiple risks (i.e., hybrid products).

(6)       See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-Kfor a qualitative discussion of the wide unobservable input ranges for comparable bond prices, interest rate quanto correlation, interest rate-credit spread correlation and interest rate volatility skew.

(7)       See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-Kfor a qualitative discussion of the wide unobservable input range for equity-foreign exchange correlation.

Fair Value of Investments that Calculate Net Asset Value

		At March 31, 2013				At December 31, 2012
					Unfunded				Unfunded
			Fair Value		Commitment		Fair Value		Commitment
		(dollars in millions)
Private equity funds		$	2,291	$	617	$	2,179	$	644
Real estate funds			1,377		214		1,376		221
Hedge funds(1):
	Long-short equity hedge funds		473		─		475		─
	Fixed income/credit-related hedge funds		84		─		86		─
	Event-driven hedge funds		43		─		52		─
	Multi-strategy hedge funds		315		3		321		3
Total		$	4,583	$	834	$	4,489	$	868

(1)       Fixed income/credit-related hedge funds, event-driven hedge funds, and multi-strategy hedge funds are redeemable at least on a six-month period basisprimarily with a notice period of 90 days or less. At March 31, 2013, approximately 39% of the fair value amount of long-short equity hedge funds is redeemable at least quarterly, 39% is redeemable every six months and 22% of these funds have a redemption frequency of greater than six months. The notice period for long-short equity hedge funds at March 31, 2013is primarily greater than six months. At December 31, 2012, approximately 36% of the fair value amount of long-short equity hedge funds is redeemable at least quarterly, 38% is redeemable every six months and 26% of these funds have a redemption frequency of greater than six months. The notice period for long-short equity hedge funds at December 31, 2012is primarily greater than six months.

Net Gains (Losses) Due to Changes in Fair Value for Items Measured at Fair Value Pursuant to the Fair Value Option Election

					Interest		Gains (Losses)
					Income		Included in
			Trading		(Expense)		Net Revenues
			(dollars in millions)
Three Months Ended March 31, 2013
Federal funds sold and securities purchased under
	agreements to resell	$	1	$	1	$	2
Deposits			14		(17)		(3)
Commercial paper and other short-term borrowings(1)			63		(1)		62
Securities sold under agreements to repurchase			(4)		(1)		(5)
Long-term borrowings(1)			91		(297)		(206)
Three Months Ended March 31, 2012
Federal funds sold and securities purchased under
	agreements to resell	$	(4)	$	1	$	(3)
Deposits			10		(22)		(12)
Commercial paper and other short-term borrowings(1)			(129)		─		(129)
Securities sold under agreements to repurchase			(2)		(1)		(3)
Long-term borrowings(1)			(2,951)		(344)		(3,295)

(1)       Of the total gains (losses) recorded in Trading for short-term and long-term borrowings for the quarters ended March 31, 2013 and 2012, $(317) million and $(1,978) million, respectively, are attributable to changes in the credit quality of the Company, 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.

Breakdown of Outstanding Short-term and Long-term Borrowings

			Short-term and Long-term
			Borrowings
			At		At
			March 31,		December 31,
Business Unit			2013		2012
			(dollars in millions)
Interest rates		$	21,228	$	23,330
Equity			18,746		17,326
Credit and foreign exchange			3,100		3,337
Commodities			698		776
	Total	$	43,772	$	44,769

Gains (Losses) Due to Changes in Instrument Specific Credit Risk

		Three Months Ended
		March 31,
		2013		2012
		(dollars in millions)
Short-term and long-term borrowings(1)	$	(317)	$	(1,978)
Loans(2)		60		293
Unfunded lending commitments(3)		134		407

_____________

(1)       The change in the fair value of short-term and long-term borrowings (primarily structured notes) includes an adjustment to reflect the change in credit quality of the Company based upon observations of the Company's secondary bond market spreads.

(2)       Instrument-specific credit gains (losses) were determined by excluding the non-credit components of gains and losses, such as those due to changes in interest rates.

(3)       Gains (losses) were generally determined based on the differential between estimated expected client yields and contractual yields at each respective period end.

Amount by Which Contractual Principal Amount Exceeds Fair Value

		Contractual Principal Amount Exceeds Fair Value
		At		At
		March 31,		December 31,
		2013		2012
	(dollars in millions)
Short-term and long-term borrowings(1)	$	(1,476)	$	(436)
Loans(2)		23,992		25,249
Loans 90 or more days past due and/or on non-accrual status(2)(3)		19,334		20,456

_____________

(1)       These amounts do not include structured notes where the repayment of the initial principal amount fluctuates based on changes in the reference price or index.

(2)       The majority of this difference between principal and fair value amounts emanates from the Company's distressed debt trading business, which purchases distressed debt at amounts well below par.

(3)       The aggregate fair value of loans that were in non-accrual status, which includes all loans 90 or more days past due, was $1,528million and $1,360million at March 31, 2013 and December 31, 2012, respectively. The aggregate fair value of loans that were 90 or more days past due was $813million and $840million at March 31, 2013 and December 31, 2012, respectively.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

				Fair Value Measurements Using:
				Quoted Prices
				in Active
		Carrying		Markets for		Significant		Significant		Total
		Value at		Identical		Observable		Unobservable		Gains (Losses)
		March 31,		Assets		Inputs		Inputs		for
		2013		(Level 1)		(Level 2)		(Level 3)		2013(1)
	(dollars in millions)
Loans(2)	$	2,532	$	─	$	490	$	2,042	$	(9)
Other investments(3)		69		─		─		69		(18)
Premises, equipment and software costs(3)		25		─		─		25		(1)
Intangible assets(3)		2		─		─		2		(1)
Total	$	2,628	$	─	$	490	$	2,138	$	(29)

____________

(1)       Losses are recorded within Other expenses in the condensed consolidated statements of income except for fair value adjustments related to Loans and losses related to Other investments, which are included in Other revenues.

(2)       Non-recurring changes in fair value for loans held for investment were calculated based upon the fair value of the underlying collateral. The fair value of the collateral was determined using internal expected recovery models.The non-recurring change in fair value for mortgage loans held for sale is based upon a valuation model incorporating market observable inputs.

(3)       Losses recorded were determined primarily using discounted cash flow models.

				Fair Value Measurements Using:
				Quoted Prices
				in Active
		Carrying		Markets for		Significant		Significant		Total
		Value at		Identical		Observable		Unobservable		Gains (Losses)
		March 31,		Assets		Inputs		Inputs		for
		2012		(Level 1)		(Level 2)		(Level 3)		2012(1)
	(dollars in millions)
Loans(2)	$	298	$	─	$	144	$	154	$	(6)
Other investments(3)		47		─		─		47		(3)
Premises, equipment and software costs(3)		3		─		─		3		(1)
Intangible assets(4)		2		2		─		─		(2)
Total	$	350	$	2	$	144	$	204	$	(12)

_____________

(1)       Losses are recorded within Other expenses in the condensed consolidated statements of income except for fair value adjustments related to Loans and losses related to Other investments, which are included in Other revenues.

(2)       Non-recurring changes in fair value for loans held for investment were calculated based upon the fair value of the underlying collateral. The fair value of the collateral was determined using internal expected recovery models. The non-recurring change in fair value for mortgage loans held for sale is based upon a valuation model incorporating market observable inputs.

(3)       Losses recorded were determined primarily using discounted cash flow models.

(4)       Losses were determined using discounted cash flow models or a valuation technique incorporating an observable market index.

Financial Instruments Not Carried at Fair Value on a Recurring Basis

			At March 31, 2013				Fair Value Measurements Using:
			Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(dollars in millions)
Financial Assets:
Cash and due from banks		$	17,773	$	17,773	$	17,773	$	—	$	—
Interest bearing deposits with banks			25,129		25,129		25,129		—		—
Cash deposited with clearing organizations or segregated under federal and
	other regulations or requirements		31,313		31,313		31,313		—		—
Federal funds sold and securities purchased under agreements to resell			139,542		139,695		—		138,334		1,361
Securities borrowed			135,727		135,726		—		135,574		152
Customer and other receivables(1)			57,422		57,295		—		51,656		5,639
Loans(2)			30,615		31,053		—		6,478		24,575
Financial Liabilities:
Deposits		$	79,181	$	79,181	$	—	$	79,181	$	—
Commercial paper and other short-term borrowings			1,213		1,213		—		959		254
Securities sold under agreements to repurchase			118,705		118,837		—		107,677		11,160
Securities loaned			40,351		40,400		—		38,073		2,327
Other secured financings			6,670		6,693		—		3,436		3,257
Customer and other payables(1)			133,842		133,842		—		133,842		—
Long-term borrowings			122,632		125,618		—		115,726		9,892

___________________

(1) Accrued interest, fees and dividend receivables and payables where carrying value approximates fair value have been excluded.

(2) Includes all loans measured at fair value on a non-recurring basis.

			At December 31, 2012				Fair Value Measurements Using:
			Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(dollars in millions)
Financial Assets:
Cash and due from banks		$	20,878	$	20,878	$	20,878	$	—	$	—
Interest bearing deposits with banks			26,026		26,026		26,026		—		—
Cash deposited with clearing organizations or segregated under federal and
	other regulations or requirements		30,970		30,970		30,970		—		—
Federal funds sold and securities purchased under agreements to resell			133,791		133,792		—		133,035		757
Securities borrowed			121,701		121,705		—		121,691		14
Customer and other receivables(1)			59,702		59,634		—		53,532		6,102
Loans(2)			29,046		27,263		—		5,307		21,956
Financial Liabilities:
Deposits		$	81,781	$	81,781	$	—	$	81,781	$	—
Commercial paper and other short-term borrowings			1,413		1,413		—		1,107		306
Securities sold under agreements to repurchase			122,311		122,389		—		111,722		10,667
Securities loaned			36,849		37,163		—		35,978		1,185
Other secured financings			6,261		6,276		—		3,649		2,627
Customer and other payables(1)			125,037		125,037		—		125,037		—
Long-term borrowings			125,527		126,683		—		116,511		10,172

_________________

(1)       Accrued interest, fees and dividend receivables and payables where carrying value approximates fair value have been excluded.

(2)       Includes all loans measured at fair value on a non-recurring basis.

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Introduction and Basis of Presentation

3 Months Ended

Mar. 31, 2013

Introduction and Basis of Presentation [Abstract]

Introduction And Basis Of Presentation

1.Introduction and Basis of Presentation.

The Company.    Morgan Stanley, a financial holding company, is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Global Wealth Management Group and Asset Management. The Company, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments,financial institutions and individuals. Unless the context otherwise requires, the terms “Morgan Stanley” or the “Company” mean Morgan Stanley (the “Parent”) together with its consolidated subsidiaries.

A summary of the activities of each of the Company's business segments is as follows:

Institutional Securities provides financial advisory andcapital raising services, including advice on mergers and acquisitions, restructurings, real estate and project finance; corporate lending; sales, trading, financing and market-making activities in equity and fixed income securities and related products, including foreign exchange and commodities; and investment activities.

Global Wealth Management Group, which includes the Company's 65% interest in Morgan Stanley Smith Barney Holdings LLC (the “Wealth Management Joint Venture” or “Wealth Management JV”)(see Note 3),provides brokerage and investment advisory services to individual investors and small-to-medium sized businesses and institutions covering various investment alternatives; financial and wealth planning services; annuity and other insurance products; credit and other lending products; cash management services; retirement services; and trust and fiduciary services and engages in fixed income trading, which primarily facilitates clients' trading or investments in such securities.

Asset Management provides a broad array of investment strategies that span the risk/return spectrum across geographies, asset classes and public and private markets to a diverse group of clients across the institutional and intermediary channels as well as high net worth clients.

Discontinued Operations.

Quilter.On April 2, 2012, the Company completed the sale of Quilter & Co. Ltd. (“Quilter”), its retail wealth management business in the United Kingdom (“U.K.”). The results of Quilter are reported as discontinued operations within the Global Wealth Management Group business segment for all periods presented.

Saxon.On October 24, 2011, the Company announced that it had reached an agreement to sell Saxon, a provider of servicing and subservicing of residential mortgage loans, to Ocwen Financial Corporation. The transaction, which was restructured as a sale of Saxon's assets during the first quarter of 2012, was substantially completed in the second quarter of 2012.The results of Saxon are reported as discontinued operations within the Institutional Securities business segment for all periods presented.

Prior period amounts have been recast for discontinued operations. See Note 21 for additional information on discontinued operations.

Basis of Financial Information.    The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”), which require the Company to make estimates and assumptions regarding the valuations of certain financial instruments, the valuation of goodwill and intangible assets, compensation, deferred tax assets, the outcome of litigation and tax matters, and other matters that affect the condensed consolidated financial statements and related disclosures. The Company believes that the estimates utilized in the preparation of the condensed consolidated financial statements are prudent and reasonable. Actual results could differ materially from these estimates.

Intercompany balances and transactions have been eliminated.

In the quarter ended March 31, 2013, the Company renamed “Principal transactions—Trading” revenues as “Trading” revenues and “Principal transactions—Investments” revenues as “Investments” revenues in the condensed consolidated statements of income, and “Financial instruments owned” as “Trading assets,”“Financial instruments sold, not yet purchased” as “Trading liabilities,” “Receivables” as “Customer and other receivables” and “Payables” as “Customer and other payables” in the condensed consolidated statements of financial condition.

The condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 (the “Form 10-K”). The condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the interim period. The results of operations for interim periods are not necessarily indicative of results for the entire year.

Consolidation.    The condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and other entities in which the Company has a controlling financial interest, including certain variable interest entities (“VIE”)(see Note 7). For consolidated subsidiaries that are less than wholly owned, the third-party holdings of equity interests are referred to as noncontrolling interests. The portion of net income attributable to noncontrolling interests for such subsidiaries is presented as either Net income (loss) applicable to redeemable noncontrolling interests or Net income (loss) applicable to nonredeemable noncontrolling interests in the condensed consolidated statements of income. The portion of the shareholders' equity of such subsidiaries that is redeemable is presented as Redeemable noncontrolling interests outside of the equity section in the condensed consolidated statements of financial condition. The portion of the shareholders' equity of such subsidiaries that is nonredeemable is presented as Nonredeemable noncontrolling interests, a component of total equity, in the condensed consolidated statements of financial condition.

For entities where (1) the total equity investment at risk is sufficient to enable the entity to finance its activities without additional support and (2) the equity holders bear the economic residual risks and returns of the entity and have the power to direct the activities of the entity that most significantly affect its economic performance, the Company consolidates those entities it controls either through a majority voting interest or otherwise. For VIEs (i.e., entities that do not meet these criteria), the Company consolidates those entities where the Company has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE, except for certain VIEs that are money market funds, investment companies or are entities qualifying for accounting purposes as investment companies. Generally, the Company consolidates those entities when it absorbs a majority of the expected losses or a majority of the expected residual returns, or both, of the entities.

For investments in entities in which the Company does not have a controlling financial interest but has significant influence over operating and financial decisions, the Company generally applies the equity method of accounting with net gains and losses recorded within Other revenues. Where the Company has elected to measure certain eligible investments at fair value in accordance with the fair value option, net gains and losses are recorded within Investments revenues (see Note 4).

Equity and partnership interests held by entities qualifying for accounting purposes as investment companies are carried at fair value.

The Company's significant regulated U.S. and international subsidiaries include Morgan Stanley & Co. LLC (“MS&Co.”), Morgan Stanley Smith Barney LLC (“MSSB LLC”), Morgan Stanley & Co. International plc (“MSIP”), Morgan Stanley MUFG Securities Co., Ltd. (“MSMS”), Morgan Stanley Bank, N.A. andMorgan Stanley Private Bank, National Association.

Income Statement Presentation.    The Company, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments,financial institutions and individuals. In connection with the delivery of the various products and services to clients, the Company manages its revenues and related expenses in the aggregate. As such, when assessing the performance of its businesses, primarily in its Institutional Securities business segment, the Company considers its trading, investment banking, commissions and fees and interest income, along with the associated interest expense, as one integrated activity.

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Securities Available for Sale (Tables)

3 Months Ended

Mar. 31, 2013

Available-for-sale Securities [Abstract]

Schedule of Available for Sale Securities

						At March 31, 2013
						Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Other-than-Temporary Impairment		Fair Value
					(dollars in millions)
Debt securities available for sale:
	U.S. government and agency securities:
		U.S. Treasury securities			$	13,938	$	105	$	2	$	—	$	14,041
		U.S. agency securities				15,199		99		10		—		15,288
				Total U.S. government and agency securities		29,137		204		12		—		29,329
	Corporate and other debt:
		Commercial mortgage-backed securities:
			Agency			2,370		2		15		—		2,357
			Non-Agency			459		2		1		—		460
		Auto loan asset-backed securities				2,171		3		1		—		2,173
		Corporate bonds				3,530		15		3		—		3,542
		Collateralized debt and loan obligations				677		—		—		—		677
		FFELP student loan asset-backed securities(1)				2,884		25		1		—		2,908
				Total Corporate and other debt		12,091		47		21		—		12,117
Total debt securities available for sale						41,228		251		33		—		41,446
Equity securities available for sale						15		—		7		—		8
Total					$	41,243	$	251	$	40	$	—	$	41,454
						At December 31, 2012
						Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Other-than-Temporary Impairment		Fair Value
					(dollars in millions)
Debt securities available for sale:
	U.S. government and agency securities:
		U.S. Treasury securities			$	14,351	$	109	$	2	$	—	$	14,458
		U.S. agency securities				15,330		122		3		—		15,449
				Total U.S. government and agency securities		29,681		231		5		—		29,907
	Corporate and other debt:
		Commercial mortgage-backed securities:
			Agency			2,197		6		4		—		2,199
			Non-Agency			160		—		—		—		160
		Auto loan asset-backed securities				1,993		4		1		—		1,996
		Corporate bonds				2,891		13		3		—		2,901
		FFELP student loan asset-backed securities(1)				2,675		23		—		—		2,698
				Total Corporate and other debt		9,916		46		8		—		9,954
Total debt securities available for sale						39,597		277		13		—		39,861
Equity securities available for sale						15		—		7		—		8
Total					$	39,612	$	277	$	20	$	—	$	39,869

______________

• Amounts are backed by a guarantee from the U.S. Department of Education of at least 95% of the principal balance and interest on such loans.

Schedule of Available for Sale Securities in an Unrealized Loss Position

					Less than 12 Months				12 Months or Longer				Total
At March 31, 2013					Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
				(dollars in millions)
Debt securities available for sale:
	U.S. government and agency securities:
		U.S. Treasury securities		$	805	$	2	$	—	$	—	$	805	$	2
		U.S. agency securities			2,927		10		23		—		2,950		10
			Total U.S. government and agency securities		3,732		12		23		—		3,755		12
	Corporate and other debt:
		Commercial mortgage-backed securities:
			Agency		1,703		15		—		—		1,703		15
			Non-Agency		169		1		—		—		169		1
		Auto loan asset-backed securities			1,072		1		—		—		1,072		1
		Corporate bonds			907		3		—		—		907		3
		FFELP student loan asset-backed securities			458		1		—		—		458		1
			Total Corporate and other debt		4,309		21		—		—		4,309		21
Total debt securities available for sale					8,041		33		23		—		8,064		33
Equity securities available for sale					—		—		8		7		8		7
Total				$	8,041	$	33	$	31	$	7	$	8,072	$	40
					Less than 12 Months				12 Months or Longer				Total
At December 31, 2012					Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
				(dollars in millions)
Debt securities available for sale:
	U.S. government and agency securities:
		U.S. Treasury securities		$	1,012	$	2	$	—	$	—	$	1,012	$	2
		U.S. agency securities			1,534		3		27		—		1,561		3
			Total U.S. government and agency securities		2,546		5		27		—		2,573		5
	Corporate and other debt:
		Commercial mortgage-backed securities:
			Agency		1,057		4		—		—		1,057		4
		Auto loan asset-backed securities			710		1		—		—		710		1
		Corporate bonds			934		3		—		—		934		3
			Total Corporate and other debt		2,701		8		—		—		2,701		8
Total debt securities available for sale					5,247		13		27		—		5,274		13
Equity securities available for sale					8		7		—		—		8		7
Total				$	5,255	$	20	$	27	$	—	$	5,282	$	20

Schedule of Amortized Cost and Fair Valueof Available for Sale Debt Securities by Contractual Date

At March 31, 2013					Amortized Cost		Fair Value	Annualized Average Yield
				(dollars in millions)
U.S. government and agency securities:
	U.S. Treasury securities:
			Due within 1 year	$	1,550	$	1,571	1.7%
			After 1 year through 5 years		12,388		12,470	0.7%
			Total		13,938		14,041
	U.S. agency securities:
			After 5 years through 10 years		2,017		2,029	1.1%
			After 10 years		13,182		13,259	1.1%
			Total		15,199		15,288
			Total U.S. government and agency securities		29,137		29,329	0.9%
Corporate and other debt:
	Commercial mortgage-backed securities:
		Agency:
			After 1 year through 5 years		487		487	0.9%
			After 5 years through 10 years		547		547	0.9%
			After 10 years		1,336		1,323	1.5%
			Total		2,370		2,357
		Non-Agency:
			After 1 year through 5 years		105		105	1.1%
			After 5 years through 10 years		38		38	0.8%
			After 10 years		316		317	0.9%
			Total		459		460
	Auto loan asset-backed securities:
			After 1 year through 5 years		1,982		1,984	0.7%
			After 5 years through 10 years		189		189	0.6%
			Total		2,171		2,173
	Corporate bonds:
			Due within 1 year		203		203	0.6%
			After 1 year through 5 years		3,041		3,053	1.1%
			After 5 years through 10 years		286		286	1.8%
			Total		3,530		3,542
	Collateralized debt and loan obligations:
			After 1 year through 5 years		50		50	1.7%
			After 10 years		627		627	1.4%
			Total		677		677
	FFELP student loan asset-backed securities:
			After 1 year through 5 years		124		124	0.7%
			After 5 years through 10 years		507		511	1.0%
			After 10 years		2,253		2,273	1.1%
			Total		2,884		2,908
			Total Corporate and other debt		12,091		12,117	1.1%
			Total debt securities available for sale	$	41,228	$	41,446	1.0%

Schedule of Proceeds of Sale of Securities Available for Sale

		Three Months Ended
		March 31,
		2013		2012
		(dollars in millions)
Gross realized gains	$	5	$	2
Gross realized losses	$	2	$	1
Proceeds of sales of securities available for sale	$	2,029	$	—

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Borrowings and Other Secured Financings (Other Secured Financings) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Other secured financings	$ 16,294	[1]	$ 15,727	[1]
Original Maturities Greater than One Year
Other secured financings	12,700		14,431
Original Maturities One Year or Less
Other secured financings	3,012		641
Failed Sales
Other secured financings	582	[2]	655	[2]
Fair Value
Other secured financings	$ 9,624		$ 9,466

[1] Amounts include $9,624 million and $9,466 million at fair value at March 31, 2013 and December 31, 2012, respectively.

[2] For more information on failed sales, see Note 7.

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Regulatory Requirements (Tables)

3 Months Ended

Mar. 31, 2013

Regulatory Requirements

Capital Measures

	March 31, 2013			December 31, 2012
	Balance		Ratio	Balance		Ratio
	(dollars in millions)
Tier 1 common capital	$	46,512	11.5%	$	44,794	14.6%
Tier 1 capital		56,129	13.9%		54,360	17.7%
Total capital		58,382	14.5%		56,626	18.5%
RWAs		403,237	—		306,746	—
Adjusted average assets		800,699	—		769,495	—
Tier 1 leverage		—	7.0%		—	7.1%

Capital Information for U.S. Bank Operating Subsidiaries, Which Are U.S. Depository Institutions

			March 31, 2013			December 31, 2012
			Amount	Ratio		Amount	Ratio
			(dollars in millions)
Total capital (to RWAs):
	Morgan Stanley Bank, N.A.	$	11,752	15.8%	$	11,509	17.2%
	Morgan Stanley Private Bank, National Association	$	1,696	27.6%	$	1,673	28.8%
Tier I capital (to RWAs):
	Morgan Stanley Bank, N.A.	$	10,144	13.6%	$	9,918	14.9%
	Morgan Stanley Private Bank, National Association	$	1,690	27.5%	$	1,665	28.7%
Leverage ratio:
	Morgan Stanley Bank, N.A.	$	10,144	12.7%	$	9,918	13.3%
	Morgan Stanley Private Bank, National Association	$	1,690	10.3%	$	1,665	10.6%

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Fair Value Disclosures (Quantitative Information about Recurring Level 3 Fair Value Measurements) (Details) (Recurring, USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	327,542		322,378
Liabilities	211,385		194,431
Level 3 | Securities Sold under Agreements to Repurchase | Minimum
Fair Value Inputs
Funding Spread	0.98%	[1]	1.10%	[2]
Level 3 | Securities Sold under Agreements to Repurchase | Maximum
Fair Value Inputs
Funding Spread	1.44%	[1]	1.84%	[2]
Level 3 | Securities Sold under Agreements to Repurchase | Weighted Average
Fair Value Inputs
Funding Spread	1.15%	[3]	1.66%
Level 3 | Securities Sold under Agreements to Repurchase | Discounted Cash Flow
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Liabilities	155		151
Level 3 | Other Secured Financings | Minimum
Fair Value Inputs
Comparable Bond Price	103.00%	[1]	55.00%	[2]
Funding Spread	1.44%	[1]	1.83%	[2]
Level 3 | Other Secured Financings | Maximum
Fair Value Inputs
Comparable Bond Price	117.00%	[1]	139.00%	[2]
Funding Spread	1.46%	[1]	1.86%	[2]
Level 3 | Other Secured Financings | Weighted Average
Fair Value Inputs
Comparable Bond Price	110.00%	[3]	102.00%
Funding Spread	1.45%	[3]	1.84%
Level 3 | Other Secured Financings | Comparable Pricing and Discounted Cash Flow
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Liabilities	275		406
Level 3 | Long-term Borrowings | Minimum
Fair Value Inputs
At the Money Volatility	24.00%	[1]	20.00%	[2]
Volatility Skew	(1.00%)	[1]	(1.00%)	[2]
Equity - Equity Correlation	50.00%	[1]	50.00%	[2]
Equity - Foreign Exchange Correlation	(60.00%)	[1]	(70.00%)	[2]
Level 3 | Long-term Borrowings | Maximum
Fair Value Inputs
At the Money Volatility	30.00%	[1]	24.00%	[2]
Volatility Skew	0.00%	[1]	0.00%	[2]
Equity - Equity Correlation	98.00%	[1]	90.00%	[2]
Equity - Foreign Exchange Correlation	35.00%	[1]	36.00%	[2]
Level 3 | Long-term Borrowings | Weighted Average
Fair Value Inputs
At the Money Volatility	27.00%	[3]	24.00%
Volatility Skew	(1.00%)	[3]	0.00%
Equity - Equity Correlation	74.00%	[3]	77.00%
Equity - Foreign Exchange Correlation	2.00%	[3]	(15.00%)
Level 3 | Long-term Borrowings | Option Model
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Liabilities	2,784		2,789
Level 3 | Trading Assets | Corporate Equities | Minimum
Fair Value Inputs
Discount to Net Asset Value	0.00%	[1]	0.00%	[2]
Discount to Comparable Equity Price			0.00%	[2]
EBITDA Multiple	8	[1]
Level 3 | Trading Assets | Corporate Equities | Maximum
Fair Value Inputs
Discount to Net Asset Value	51.00%	[1]	37.00%	[2]
Discount to Comparable Equity Price			27.00%	[2]
EBITDA Multiple	10	[1]	6	[2]
Level 3 | Trading Assets | Corporate Equities | Weighted Average
Fair Value Inputs
Discount to Net Asset Value	20.00%	[3]	8.00%
Discount to Comparable Equity Price			14.00%
EBITDA Multiple	9	[3]	6
Level 3 | Trading Assets | Corporate Equities | Net Asset Value, Comparable Pricing and Market Approach
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	270	[4]	288	[4]
Level 3 | Trading Assets | Corporate and Other Debt | Commercial Mortgage-backed Securities | Minimum
Fair Value Inputs
Comparable Bond Price	57.00%	[1]	46.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Commercial Mortgage-backed Securities | Maximum
Fair Value Inputs
Comparable Bond Price	101.00%	[1]	100.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Commercial Mortgage-backed Securities | Weighted Average
Fair Value Inputs
Comparable Bond Price	81.00%	[3]	76.00%
Level 3 | Trading Assets | Corporate and Other Debt | Commercial Mortgage-backed Securities | Comparable Pricing
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	174		232
Level 3 | Trading Assets | Corporate and Other Debt | Asset-backed Securities | Maximum
Fair Value Inputs
Internal Rate of Return			21.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Asset-backed Securities | Weighted Average
Fair Value Inputs
Internal Rate of Return			21.00%
Level 3 | Trading Assets | Corporate and Other Debt | Asset-backed Securities | Discounted Cash Flow
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets			109
Level 3 | Trading Assets | Corporate and Other Debt | Corporate Bonds | Minimum
Fair Value Inputs
Comparable Bond Price	4.00%	[1]	0.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Corporate Bonds | Maximum
Fair Value Inputs
Comparable Bond Price	145.00%	[1]	143.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Corporate Bonds | Weighted Average
Fair Value Inputs
Comparable Bond Price	92.00%	[3]	24.00%
Level 3 | Trading Assets | Corporate and Other Debt | Corporate Bonds | Comparable Pricing
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	888		660
Level 3 | Trading Assets | Corporate and Other Debt | Collateralized Debt Obligations | Minimum
Fair Value Inputs
Comparable Bond Price	16.00%	[1]	15.00%	[2]
Credit Correlation	23.00%	[1]	15.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Collateralized Debt Obligations | Maximum
Fair Value Inputs
Comparable Bond Price	95.00%	[1]	88.00%	[2]
Credit Correlation	54.00%	[1]	45.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Collateralized Debt Obligations | Weighted Average
Fair Value Inputs
Comparable Bond Price	63.00%	[3]	59.00%
Credit Correlation	41.00%	[3]	40.00%
Level 3 | Trading Assets | Corporate and Other Debt | Collateralized Debt Obligations | Comparable Pricing and Correlation Model
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	1,666		1,951
Level 3 | Trading Assets | Corporate and Other Debt | Loans and Lending Commitments | Minimum
Fair Value Inputs
Comparable Bond Price	80.00%	[1]	80.00%	[2]
Credit Spread	0.44%	[1]	0.17%	[2]
Comparable Loan Price	30.00%	[1]	55.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Loans and Lending Commitments | Maximum
Fair Value Inputs
Comparable Bond Price	120.00%	[1]	120.00%	[2]
Credit Spread	10.45%	[1]	10.04%	[2]
Comparable Loan Price	103.00%	[1]	100.00%	[2]
Level 3 | Trading Assets | Corporate and Other Debt | Loans and Lending Commitments | Weighted Average
Fair Value Inputs
Comparable Bond Price	100.00%	[3]	104.00%
Credit Spread	2.45%	[3]	2.81%
Comparable Loan Price	86.00%	[3]	88.00%
Level 3 | Trading Assets | Corporate and Other Debt | Loans and Lending Commitments | Corporate Loan Model and Comparable Pricing
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	5,284
Level 3 | Trading Assets | Corporate and Other Debt | Loans and Lending Commitments | Corporate Loan Model, Option Model and Comparable Pricing
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets			4,694
Level 3 | Trading Assets | Corporate and Other Debt | Corporate Equities | Minimum
Fair Value Inputs
Comparable Equity Price	0.00%	[1]
Comparable Price	43.00%	[1]
Level 3 | Trading Assets | Corporate and Other Debt | Corporate Equities | Maximum
Fair Value Inputs
Comparable Equity Price	100.00%	[1]
Comparable Price	74.00%	[1]
Level 3 | Trading Assets | Corporate and Other Debt | Corporate Equities | Weighted Average
Fair Value Inputs
Comparable Equity Price	50.00%	[3]
Comparable Price	52.00%	[3]
Level 3 | Trading Assets | Derivative and Other Contracts | Interest Rate Contracts | Minimum
Fair Value Inputs
Comparable Bond Price	5.00%	[1]	5.00%	[2],[5]
Interest Rate Volatility Concentration Liquidity Multiple	0	[1]	0	[2]
Interest Rate Volatility Skew	9.00%	[1]	9.00%	[2],[5]
Interest Rate Quanto Correlation	(53.00%)	[1]	(53.00%)	[2],[5]
Interest Rate - Foreign Exchange Correlation	2.00%	[1]	2.00%	[2]
Inflation Volatility	60.00%	[1]	49.00%	[2]
Forward Commercial Paper Rate - LIBOR Basis			(0.18%)	[2],[5]
Interest Rate Curve Correlation	42.00%	[1]	48.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Interest Rate Contracts | Maximum
Fair Value Inputs
Comparable Bond Price	98.00%	[1]	98.00%	[2],[5]
Interest Rate Volatility Concentration Liquidity Multiple	10	[1]	8	[2]
Interest Rate Volatility Skew	117.00%	[1]	95.00%	[2],[5]
Interest Rate Quanto Correlation	37.00%	[1]	33.00%	[2],[5]
Interest Rate - Foreign Exchange Correlation	63.00%	[1]	63.00%	[2]
Inflation Volatility	83.00%	[1]	100.00%	[2]
Forward Commercial Paper Rate - LIBOR Basis			0.95%	[2],[5]
Interest Rate Curve Correlation	98.00%	[1]	99.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Interest Rate Contracts | Simple Average
Fair Value Inputs
Comparable Bond Price	52.00%	[6]
Interest Rate Volatility Concentration Liquidity Multiple	0	[6]
Interest Rate Volatility Skew	53.00%	[6]
Interest Rate Quanto Correlation	8.00%	[6]
Interest Rate - Foreign Exchange Correlation	35.00%	[6]
Inflation Volatility	70.00%	[6]
Interest Rate Curve Correlation	78.00%	[6]
Level 3 | Trading Assets | Derivative and Other Contracts | Interest Rate Contracts | Median
Fair Value Inputs
Comparable Bond Price	52.00%	[6]
Interest Rate Volatility Concentration Liquidity Multiple	0	[6]
Interest Rate Volatility Skew	48.00%	[6]
Interest Rate Quanto Correlation	(1.00%)	[6]
Interest Rate - Foreign Exchange Correlation	43.00%	[6]
Inflation Volatility	66.00%	[6]
Interest Rate Curve Correlation	82.00%	[6]
Level 3 | Trading Assets | Derivative and Other Contracts | Interest Rate Contracts | Option Model
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	(22)
Level 3 | Trading Assets | Derivative and Other Contracts | Interest Rate Contracts | Discounted Cash Flow and Option Model
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets			(82)
Level 3 | Trading Assets | Derivative and Other Contracts | Credit Contracts | Minimum
Fair Value Inputs
Comparable Bond Price	0.00%	[1]	0.00%	[2],[7]
Credit Correlation	20.00%	[1]	14.00%	[2],[7]
Cash Synthetic Basis	1.00%	[1]	2.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Credit Contracts | Maximum
Fair Value Inputs
Comparable Bond Price	83.00%	[1]	80.00%	[2],[7]
Credit Correlation	94.00%	[1]	94.00%	[2],[7]
Cash Synthetic Basis	10.00%	[1]	14.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Credit Contracts | Weighted Average
Fair Value Inputs
Comparable Bond Price	27.00%	[3]
Credit Correlation	47.00%	[3]
Cash Synthetic Basis	3.00%	[3]
Level 3 | Trading Assets | Derivative and Other Contracts | Credit Contracts | Comparable Pricing and Correlation Model
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	1,403		1,822
Level 3 | Trading Assets | Derivative and Other Contracts | Foreign Exchange Contracts | Minimum
Fair Value Inputs
Comparable Bond Price	5.00%	[1]	5.00%	[2],[8]
Interest Rate Volatility Skew	9.00%	[1]	9.00%	[2],[8]
Interest Rate Quanto Correlation	(53.00%)	[1]	(53.00%)	[2],[8]
Interest Rate - Credit Spread Correlation	(59.00%)	[1]	(59.00%)	[2],[8]
Interest Rate - Foreign Exchange Correlation	2.00%	[1]	2.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Foreign Exchange Contracts | Maximum
Fair Value Inputs
Comparable Bond Price	98.00%	[1]	98.00%	[2],[8]
Interest Rate Volatility Skew	117.00%	[1]	95.00%	[2],[8]
Interest Rate Quanto Correlation	37.00%	[1]	33.00%	[2],[8]
Interest Rate - Credit Spread Correlation	60.00%	[1]	65.00%	[2],[8]
Interest Rate - Foreign Exchange Correlation	63.00%	[1]	63.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Foreign Exchange Contracts | Simple Average
Fair Value Inputs
Comparable Bond Price	52.00%	[6]
Interest Rate Volatility Skew	53.00%	[6]
Interest Rate Quanto Correlation	8.00%	[6]
Interest Rate - Credit Spread Correlation	(5.00%)	[6]
Interest Rate - Foreign Exchange Correlation	35.00%	[6]
Level 3 | Trading Assets | Derivative and Other Contracts | Foreign Exchange Contracts | Median
Fair Value Inputs
Comparable Bond Price	52.00%	[6]
Interest Rate Volatility Skew	48.00%	[6]
Interest Rate Quanto Correlation	(1.00%)	[6]
Interest Rate - Credit Spread Correlation	(3.00%)	[6]
Interest Rate - Foreign Exchange Correlation	43.00%	[6]
Level 3 | Trading Assets | Derivative and Other Contracts | Foreign Exchange Contracts | Option Model
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	(235)	[9]	(359)	[9]
Level 3 | Trading Assets | Derivative and Other Contracts | Equity Contracts | Minimum
Fair Value Inputs
At the Money Volatility	14.00%	[1]	7.00%	[2]
Volatility Skew	(2.00%)	[1]	(2.00%)	[2]
Equity - Equity Correlation	40.00%	[1]	40.00%	[2]
Equity - Foreign Exchange Correlation	(60.00%)	[1]	(70.00%)	[10],[2]
Equity - Interest Rate Correlation	1.00%	[1]	18.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Equity Contracts | Maximum
Fair Value Inputs
At the Money Volatility	44.00%	[1]	24.00%	[2]
Volatility Skew	0.00%	[1]	0.00%	[2]
Equity - Equity Correlation	99.00%	[1]	96.00%	[2]
Equity - Foreign Exchange Correlation	38.00%	[1]	38.00%	[10],[2]
Equity - Interest Rate Correlation	66.00%	[1]	65.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Equity Contracts | Weighted Average
Fair Value Inputs
At the Money Volatility	30.00%	[3]
Volatility Skew	(1.00%)	[3]
Equity - Equity Correlation	71.00%	[3]
Equity - Foreign Exchange Correlation	(15.00%)	[3]
Equity - Interest Rate Correlation	42.00%	[3]
Level 3 | Trading Assets | Derivative and Other Contracts | Equity Contracts | Option Model
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	(1,340)	[9]	(1,144)	[9]
Level 3 | Trading Assets | Derivative and Other Contracts | Commodity Contracts | Minimum
Fair Value Inputs
Forward Power Price (per megawatt hour)	18	[1]	28	[2]
Commodity Volatility	12.00%	[1]	17.00%	[2]
Cross Commodity Correlation	43.00%	[1]	43.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Commodity Contracts | Maximum
Fair Value Inputs
Forward Power Price (per megawatt hour)	110	[1]	84	[2]
Commodity Volatility	31.00%	[1]	29.00%	[2]
Cross Commodity Correlation	97.00%	[1]	97.00%	[2]
Level 3 | Trading Assets | Derivative and Other Contracts | Commodity Contracts | Weighted Average
Fair Value Inputs
Forward Power Price (per megawatt hour)	42	[3]
Commodity Volatility	13.00%	[3]
Cross Commodity Correlation	91.00%	[3]
Level 3 | Trading Assets | Derivative and Other Contracts | Commodity Contracts | Option Model
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	703		709
Level 3 | Trading Assets | Investments | Principal Investments | Minimum
Fair Value Inputs
Implied Weighted Average Cost of Capital	10.00%	[1]	8.00%	[2]
EBITDA Multiple	6	[1]	3	[2]
Exit Multiple	6	[1]	5	[2]
Capitalization Rate	6.00%	[1]	6.00%	[2]
Equity Discount Rate	15.00%	[1]	15.00%	[2]
Level 3 | Trading Assets | Investments | Principal Investments | Maximum
Fair Value Inputs
Implied Weighted Average Cost of Capital	15.00%	[1]	15.00%	[2]
EBITDA Multiple	18	[1]	17	[2]
Exit Multiple	10	[1]	10	[2]
Capitalization Rate	10.00%	[1]	10.00%	[2]
Equity Discount Rate	35.00%	[1]	35.00%	[2]
Level 3 | Trading Assets | Investments | Principal Investments | Weighted Average
Fair Value Inputs
Implied Weighted Average Cost of Capital	11.00%	[3]	9.00%
EBITDA Multiple	9	[3]	10
Exit Multiple	9	[3]	9
Capitalization Rate	7.00%	[3]	7.00%
Equity Discount Rate	22.00%	[3]	23.00%
Level 3 | Trading Assets | Investments | Principal Investments | Discounted Cash Flow and Market Approach
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	2,855	[4]	2,833	[4]
Level 3 | Trading Assets | Investments | Other Investments | Minimum
Fair Value Inputs
Implied Weighted Average Cost of Capital	8.00%	[1]
EBITDA Multiple	7	[1]	6	[2]
Exit Multiple	6	[1]
Level 3 | Trading Assets | Investments | Other Investments | Maximum
Fair Value Inputs
Implied Weighted Average Cost of Capital	11.00%	[1]	11.00%	[2]
EBITDA Multiple	14	[1]	8	[2]
Exit Multiple	7	[1]	6	[2]
Level 3 | Trading Assets | Investments | Other Investments | Weighted Average
Fair Value Inputs
Implied Weighted Average Cost of Capital	8.00%	[3]	11.00%
EBITDA Multiple	11	[3]	7
Exit Multiple	7	[3]	6
Level 3 | Trading Assets | Investments | Other Investments | Discounted Cash Flow and Market Approach
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Assets	496	[4]	486	[4]
Level 3 | Trading Liabilities | Corporate and Other Debt | Corporate Bonds | Minimum
Fair Value Inputs
Comparable Bond Price	10.00%	[1]	0.00%	[2]
Level 3 | Trading Liabilities | Corporate and Other Debt | Corporate Bonds | Maximum
Fair Value Inputs
Comparable Bond Price	147.00%	[1]	150.00%	[2]
Level 3 | Trading Liabilities | Corporate and Other Debt | Corporate Bonds | Weighted Average
Fair Value Inputs
Comparable Bond Price	100.00%	[3]	50.00%
Level 3 | Trading Liabilities | Corporate and Other Debt | Corporate Bonds | Comparable Pricing
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Liabilities	424		177

[1] The ranges of significant unobservable inputs are represented in points, percentages, basis points, times or megawatt hours. Points are a percentage of par; for example, 101 points would be 101% of par. A basis point equals 1/100th of 1%; for example, 1,045 basis points would equal 10.45%.

[2] The ranges of significant unobservable inputs are represented in points, percentages, basis points, times or megawatt hours. Points are a percentage of par; for example, 100 points would be 100% of par. A basis point equals 1/100th of 1%; for example, 1,004 basis points would equal 10.04%.

[3] Amounts represent weighted averages except where simple averages and the median of the inputs are provided (see footnote 4 below). Weighted averages are calculated by weighting each input by the fair value of the respective financial instruments except for long-term borrowings and derivative instruments where inputs are weighted by risk.

[4] Investments in funds measured using an unadjusted net asset value are excluded.

[5] See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input ranges for comparable bond prices, interest rate volatility skew, interest rate quanto correlation and forward commercial paper rate–LIBOR basis.

[6] The data structure of the significant unobservable inputs used in valuing Interest rate contracts, Foreign exchange contracts and certain Equity contracts may be in a multi-dimensional form, such as a curve or surface, with risk distributed across the structure. Therefore, a simple average and median, together with the range of data inputs, may be more appropriate measurements than a single point weighted average.

[7] See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input ranges for comparable bond prices and credit correlation.

[8] See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input ranges for comparable bond prices, interest rate quanto correlation, interest rate-credit spread correlation and interest rate volatility skew.

[9] Includes derivative contracts with multiple risks (i.e., hybrid products).

[10] See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input range for equity-foreign exchange correlation.

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Variable Interest Entities and Securitization Activities (Information Regarding SPEs) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Derivative assets (fair value)	$ 35,829		$ 36,197
Residential Mortgage
SPE assets (unpaid principal balance)	34,516	[1]	36,750	[1]
Retained interests (fair value)	84		55
Interests purchased in the secondary market (fair value)	150		124
Derivative assets (fair value)	0		2
Derivative liabilities (fair value)	2		22
Residential Mortgage | Investment Grade
Retained interests (fair value)	1		1
Interests purchased in the secondary market (fair value)	58		11
Residential Mortgage | Noninvestment Grade
Retained interests (fair value)	83		54
Interests purchased in the secondary market (fair value)	92		113
Commercial Mortgage Loans
SPE assets (unpaid principal balance)	53,905	[1]	70,824	[1]
Retained interests (fair value)	142		186
Interests purchased in the secondary market (fair value)	119		158
Derivative assets (fair value)	915		948
Derivative liabilities (fair value)	0		0
Commercial Mortgage Loans | Investment Grade
Retained interests (fair value)	52		77
Interests purchased in the secondary market (fair value)	90		124
Commercial Mortgage Loans | Noninvestment Grade
Retained interests (fair value)	90		109
Interests purchased in the secondary market (fair value)	29		34
U.S. Agency Collateralized Mortgage Obligations
SPE assets (unpaid principal balance)	18,614	[1]	17,787	[1]
Retained interests (fair value)	1,100		1,468
Interests purchased in the secondary market (fair value)	44		99
Derivative assets (fair value)	0		0
Derivative liabilities (fair value)	0		0
U.S. Agency Collateralized Mortgage Obligations | Investment Grade
Retained interests (fair value)	1,100		1,468
Interests purchased in the secondary market (fair value)	44		99
U.S. Agency Collateralized Mortgage Obligations | Noninvestment Grade
Retained interests (fair value)	0		0
Interests purchased in the secondary market (fair value)	0		0
Credit-Linked Notes and Other
SPE assets (unpaid principal balance)	12,956	[1]	14,701	[1]
Retained interests (fair value)	1,403		1,503
Interests purchased in the secondary market (fair value)	428		420
Derivative assets (fair value)	171		177
Derivative liabilities (fair value)	239		303
Credit-Linked Notes and Other | Investment Grade
Retained interests (fair value)	0		0
Interests purchased in the secondary market (fair value)	404		389
Credit-Linked Notes and Other | Noninvestment Grade
Retained interests (fair value)	1,403		1,503
Interests purchased in the secondary market (fair value)	24		31
Special Purpose Entities
Retained interests (fair value)	2,729		3,212
Interests purchased in the secondary market (fair value)	741		801
Derivative assets (fair value)	1,086		1,127
Derivative liabilities (fair value)	241		325
Special Purpose Entities | Investment Grade
Retained interests (fair value)	1,153		1,546
Interests purchased in the secondary market (fair value)	596		623
Special Purpose Entities | Noninvestment Grade
Retained interests (fair value)	1,576		1,666
Interests purchased in the secondary market (fair value)	$ 145		$ 178

[1] Amounts include assets transferred by unrelated transferors.

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Condensed Consolidated Statements of Financial Condition (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Assets
Cash and due from banks ($584 and $526 at March 31, 2013 and December 31, 2012, respectively, related to consolidated variable interest entities generally not available to the Company)	$ 17,773		$ 20,878
Interest bearing deposits with banks	25,129		26,026
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	31,313		30,970
Trading assets, at fair value (approximately $138,143 and $147,348 were pledged to various parties at March 31, 2013 and December 31, 2012, respectively; $3,343 and $3,490 related to consolidated variable interest entities, generally not available to the Company at March 31, 2013 and December 31, 2012, respectively)	267,236		267,603
Securities available for sale, at fair value	41,454		39,869
Securities received as collateral, at fair value	17,971		14,278
Federal funds sold and securities purchased under agreements to resell (includes $873 and $621 at fair value at March 31, 2013 and December 31, 2012, respectively)	140,415		134,412
Securities borrowed	135,727		121,701
Customer and other receivables	62,271		64,288
Loans (net of allowances of $129 and $106 at March 31, 2013 and December 31, 2012, respectively)	30,615		29,046
Other investments	4,940		4,999
Premises, equipment and software costs (net of accumulated depreciation of $5,750 and $5,525 at March 31, 2013 and December 31, 2012, respectively) ($222 and $224 at March 31, 2013 and December 31, 2012, respectively, related to consolidated variable interest entities, generally not available to the Company)	5,928		5,946
Goodwill	6,633	[1]	6,650	[1]
Intangible assets (net of accumulated amortization of $1,336 and $1,250 at March 31,2013 and December 31, 2012, respectively) (includes $8 and $7 at fair value at March 31, 2013 and December 31, 2012, respectively)	3,694		3,783
Other assets ($577 and $593 at March 31, 2013 and December 31, 2012, respectively, related to consolidated variable interest entities, generally not available to the Company)	10,284		10,511
Total assets	801,383	[2]	780,960	[2]
Liabilities and Equity
Deposits (includes $1,442 and $1,485 at fair value at March 31, 2013 and December 31, 2012, respectively).	80,623		83,266
Commercial paper and other short-term borrowings (includes $1,262 and $725 at fair value at March 31, 2013 and December 31, 2012, respectively)	2,475		2,138
Trading liabilities, at fair value	132,472		120,122
Obligation to return securities received as collateral, at fair value	23,510		18,226
Securities sold under agreements to repurchase (includes $565 and $363 at fair value at March 31, 2013 and December 31, 2012, respectively)	119,270		122,674
Securities loaned	40,351		36,849
Other secured financings (includes $9,624 and $9,466 at fair value at March 31, 2013 and December 31, 2012, respectively) ($739 and $976 at March 31, 2013 and December 31, 2012 ,respectively, related to consolidated variable entities and are non-recourse to the Company)	16,294	[3]	15,727	[3]
Customer and other payables	137,127		127,722
Other liabilities and accrued expenses ($116 and $117 at March 31, 2013 and December 31, 2012, respectively related to consolidated variable interest entities and are non-recourse to the Company)	13,622		14,928
Long-term borrowings (includes $42,510 and $44,044 at fair value at March 31, 2013 and December 31, 2012, respectively)	165,142		169,571
Total liabilities	730,886		711,223
Commitments and contingent liabilities
Redeemable noncontrolling interest	4,425		4,309
Morgan Stanley shareholders' equity:
Preferred stock	1,508		1,508
Common stock, $0.01 par value: Shares authorized: 3,500,000,000 at March 31, 2013 and December 31, 2012; Shares issued: 2,038,893,979 at December 31, 2012 and March 31,2013; Shares outstanding: 1,960,582,868 at March 31, 2013 and 1,974,042,123 at December 31, 2012	20		20
Additional Paid-in Capital	23,661		23,426
Retained earnings	40,750		39,912
Employee stock trust	1,872		2,932
Accumulated other comprehensive loss	(694)		(516)
Common stock held in treasury, at cost, $0.01 par value; 78,311,111 shares at March 31, 2013 and 64,851,856 shares at December 31, 2012	(2,541)		(2,241)
Common stock issued to employee trust	(1,872)		(2,932)
Total Morgan Stanley shareholders' equity	62,704		62,109
Nonredeemable noncontrolling interests	3,368		3,319
Total equity	66,072		65,428
Total liabilities, redeemable noncontrolling interests and equity	$ 801,383		$ 780,960

[1] The amount of the Company’s goodwill before accumulated impairments of $700 million, which included $673 million related to the Institutional Securities business segment and $27 million related to the Asset Management business segment, was $7,333 million and $7,350 million at March 31, 2013 and December 31, 2012, respectively.

[2] Corporate assets have been fully allocated to the Company’s business segments.

[3] Amounts include $9,624 million and $9,466 million at fair value at March 31, 2013 and December 31, 2012, respectively.

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Segment and Geographic Information (Tables)

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Selected Financial Information by Segments

Three Months Ended March 31, 2013				Institutional Securities		Global Wealth Management Group		Asset Management		Intersegment Eliminations		Total
			(dollars in millions)
Total non-interest revenues			$	4,313	$	3,057	$	649	$	(46)	$	7,973
Interest income				1,024		488		2		(116)		1,398
Interest expense				1,248		75		6		(116)		1,213
	Net interest			(224)		413		(4)		—		185
		Net revenues(1)	$	4,089	$	3,470	$	645	$	(46)	$	8,158
Income from continuing operations before income
	taxes		$	798	$	597	$	187	$	—	$	1,582
Provision for income taxes				60		220		52		—		332
Income from continuing operations				738		377		135		—		1,250
Discontinued operations(2):
	Gain (loss) from discontinued operations			(30)		(1)		1		—		(30)
	Provision for (benefit from) income taxes			(11)		—		—		—		(11)
		Net gain (loss) on discontinued operations		(19)		(1)		1		—		(19)
Net income				719		376		136		—		1,231
Net income applicable to redeemable noncontrolling
	interests			1		121		—		—		122
Net income applicable to nonredeemable noncontrolling
	interests			96		—		51		—		147
Net income applicable to Morgan Stanley			$	622	$	255	$	85	$	—	$	962

Three Months Ended March 31, 2012				Institutional Securities(3)		Global Wealth Management Group(3)		Asset Management		Intersegment Eliminations		Total
			(dollars in millions)
Total non-interest revenues			$	3,586	$	2,891	$	541	$	(35)	$	6,983
Interest income				1,177		458		3		(96)		1,542
Interest expense				1,628		58		11		(96)		1,601
	Net interest			(451)		400		(8)		—		(59)
		Net revenues(1)	$	3,135	$	3,291	$	533	$	(35)	$	6,924
Income (loss) from continuing operations before income
	taxes		$	(329)	$	403	$	128	$	—	$	202
Provision for (benefit from) income taxes				(106)		122		38		—		54
Income (loss) from continuing operations				(223)		281		90		—		148
Discontinued operations(2):
	Gain from discontinued operations			25		2		1		—		28
	Provision for income taxes			41		1		—		—		42
		Net gain (loss) on discontinued operations		(16)		1		1		—		(14)
Net income (loss)				(239)		282		91		—		134
Net income applicable to nonredeemable noncontrolling
	interests			79		84		65		—		228
Net income (loss) applicable to Morgan Stanley			$	(318)	$	198	$	26	$	—	$	(94)

(1)In certain management fee arrangements, the Company is entitled to receive performance-based fees (also referred to as incentive fees) when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, performance fee revenue is accrued (or reversed) quarterly based on measuring account fund performance to date versus the performance benchmark stated in the investment management agreement. The amount of performance-based fee revenue at risk of reversing if fund performance falls below stated investment management agreement benchmarks was approximately $274 million at March 31, 2013 and approximately $205 million at December 31, 2012 (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K).

(2)See Notes 1 and 21for discussion of discontinued operations.

(3)       On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

Assets by Segments

Total Assets(1)		Institutional Securities(2)		Global Wealth Management Group(2)		Asset Management		Total
		(dollars in millions)
At March 31, 2013	$	675,327	$	118,557	$	7,499	$	801,383
At December 31, 2012	$	648,049	$	125,565	$	7,346	$	780,960

(1)       Corporate assets have been fully allocated to the Company's business segments.

(2)       Prior period amounts have been recast to reflect the transfer of the International Wealth Management business from Global Wealth Management Group business segment to the Institutional Securities business segment.

Net Revenues by Geographic Area

			Three Months Ended
			March 31,
Net Revenues			2013		2012
			(dollars in millions)
Americas		$	5,956	$	4,784
Europe, Middle East and Africa			1,066		1,149
Asia			1,136		991
	Net revenues	$	8,158	$	6,924

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Redeemable Noncontrolling Interests and Total Equity (Narrative) (Details) (Wealth Management JV, USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2012
Wealth Management JV
Nonredeemable Noncontrolling Interests
Distributions to noncontrolling interests	$ 113

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Condensed Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 1,231	$ 134
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
(Income) loss on equity method investees	(64)	32
Compensation payable in common stock and options	265	372
Depreciation and amortization	360	375
Loss on business dispositions	5	0
Gain on sale of securities available for sale	(3)	(1)
(Gain) loss on retirement of long-term debt	0	(14)
Impairment charges and other-than-temporary impairment charges	29	12
Provision for credit losses on lending activities	(39)	(2)
Changes in assets and liabilities:
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	(343)	(698)
Trading assets, net of Trading liabilities	13,284	13,690
Securities borrowed	(14,026)	(14,536)
Securities loaned	3,502	3,969
Customer and other receivables and other assets	2,830	(5,179)
Customer and other payables and other liabilities	6,976	10,567
Federal funds sold and securities purchased under agreements to resell	(6,003)	(6,296)
Securities sold under agreements to repurchase	(3,404)	5,575
Net cash provided by operating activities	4,600	8,000
CASH FLOWS FROM INVESTING ACTIVITIES
Premises, equipment and software costs, net	(263)	(212)
Business dispositions, net of cash disposed	481	0
Loans, net	(2,168)	(569)
Purchases of securities available for sale	(4,674)	(3,487)
Sales, maturities and redemptions of securities available for sale	3,380	1,003
Net cash used for investing activities	(3,244)	(3,265)
CASH FLOWS FROM FINANCING ACTIVITIES
Commercial paper and other short-term borrowings	337	(826)
Distributions related to noncontrolling interests	(8)	(7)
Derivatives financing activities	36	(169)
Other secured financings	501	(1,674)
Deposits	(2,643)	779
Net proceeds from:
Excess tax benefits associated with stock-based awards	12	34
Issuance of long-term borrowings	10,046	5,320
Payments for:
Long-term borrowings	(12,018)	(16,043)
Repurchases of common stock for employee tax withholding	(306)	(183)
Cash dividends	(119)	(112)
Net cash used for financing activities	(4,162)	(12,881)
Effect of exchange rate changes on cash and cash equivalents	(612)	93
Effect of cash and cash equivalents related to variable interest entities	(584)	(534)
Net decrease in cash and cash equivalents	(4,002)	(8,587)
Cash and cash equivalents, at beginning of period	46,904	47,312
Cash and cash equivalents, at end of period	42,902	38,725
Cash and cash equivalents include:
Cash and due from banks	17,773	10,133
Interest bearing deposits with banks	25,129	28,592
Cash and cash equivalents, at end of period	42,902	38,725
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest	728	1,169
Cash payments for income taxes	$ 139	$ 145

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Regulatory Requirements (Capital Measures) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Balance
Tier 1 common capital, amount	$ 46,512	$ 44,794
Tier 1 capital, amount	56,129	54,360
Total capital, amount	58,382	56,626
RWAs	403,237	306,746
Adjusted average assets	800,699	769,495
Tier 1 leverage capital, amount	$ 0	$ 0
Change in Deferred Tax Asset Disallowance
Ratio
Tier 1 common capital, ratio	11.50%	14.60%
Tier 1 capital to RWAs, ratio	13.90%	17.70%
Total capital to RWAs, ratio	14.50%	18.50%
Tier 1 leverage, ratio	7.00%	7.10%

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Fair Value Disclosures (Assets Measured at Fair Value on a Nonrecurring Basis) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended					3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012	Dec. 31, 2012		Mar. 31, 2012 Saxon	Dec. 31, 2011 Saxon	Mar. 31, 2013 Nonrecurring		Mar. 31, 2012 Nonrecurring		Mar. 31, 2013 Nonrecurring Loans		Mar. 31, 2012 Nonrecurring Loans		Mar. 31, 2013 Nonrecurring Other Investments		Mar. 31, 2012 Nonrecurring Other Investments		Mar. 31, 2013 Nonrecurring Premises, Equipment and Software Costs		Mar. 31, 2012 Nonrecurring Premises, Equipment and Software Costs		Mar. 31, 2013 Nonrecurring Intangible Assets		Mar. 31, 2012 Nonrecurring Intangible Assets		Mar. 31, 2013 Nonrecurring Level 1		Mar. 31, 2012 Nonrecurring Level 1		Mar. 31, 2013 Nonrecurring Level 2		Mar. 31, 2012 Nonrecurring Level 2		Mar. 31, 2013 Nonrecurring Level 3		Mar. 31, 2012 Nonrecurring Level 3
Carrying Value
Loans	$ 30,615			$ 29,046				$ 2,532	[1]	$ 298	[1]
Other investments	4,940			4,999				69	[2]	47	[2]
Premises, equipment and software costs	5,928			5,946				25	[2]	3	[2]
Intangible assets	3,694			3,783				2	[2]	2	[3]
Goodwill	6,633	[4]		6,650	[4]
Total carrying value								2,628		350
Fair Value
Loans																												0	[1]	0	[1]	490	[1]	144	[1]	2,042	[1]	154	[1]
Other investments																												0	[2]	0	[2]	0	[2]	0	[2]	69	[2]	47	[2]
Premises, equipment and software costs																												0	[2]	0	[2]	0	[2]	0	[2]	25	[2]	3	[2]
Intangible assets	8			7																								0	[2]	2	[3]	0	[2]	0	[3]	2	[2]	0	[3]
Total fair value																												0		2		490		144		2,138		204
Gains (losses) in fair value adjustment								(29)	[5]	(12)	[5]	(9)	[1],[5]	(6)	[1],[5]	(18)	[2],[5]	(3)	[2],[5]	(1)	[2],[5]	(1)	[2],[5]	(1)	[2],[5]	(2)	[3],[5]
Additional Disclosures
Pre-tax gain from subsequent increase in fair value of impaired assets						51
Impairment losses	$ 29		$ 12				$ 98

[1] Non-recurring changes in fair value for loans held for investment were calculated based upon the fair value of the underlying collateral. The fair value of the collateral was determined using internal expected recovery models. The non-recurring change in fair value for mortgage loans held for sale is based upon a valuation model incorporating market observable inputs.

[2] Losses recorded were determined primarily using discounted cash flow models.

[3] Losses were determined using discounted cash flow models or a valuation technique incorporating an observable market index.

[4] The amount of the Company’s goodwill before accumulated impairments of $700 million, which included $673 million related to the Institutional Securities business segment and $27 million related to the Asset Management business segment, was $7,333 million and $7,350 million at March 31, 2013 and December 31, 2012, respectively.

[5] Losses are recorded within Other expenses in the condensed consolidated statements of income except for fair value adjustments related to Loans and losses related to Other investments, which are included in Other revenues.

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Earnings Per Common Share (Calculation of Basic and Diluted EPS) (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Basic EPS:
Income from continuing operations	$ 1,250		$ 148
Net gain (loss) from discontinued operations	(19)	[1]	(14)	[1]
Net income	1,231		134
Net income applicable to redeemable noncontrolling interests	122		0
Net income applicable to nonredeemable noncontrolling interests	147		228
Net income (loss) applicable to Morgan Stanley	962		(94)
Less: Allocation of (earnings) loss to participating RSUs:
From continuing operations	(2)	[2]	(1)	[2]
Earnings (loss) applicable to Morgan Stanley common shareholders	936		(119)
Weighted average common shares outstanding	1,901,204,729		1,876,961,836
Earnings (loss) per basic common share:
Income (loss) from continuing operations	$ 0.50		$ (0.05)
Net gain (loss) from discontinued operations	$ (0.01)		$ (0.01)
Earnings (loss) per basic common share	$ 0.49		$ (0.06)
Diluted EPS:
Earnings (loss) applicable to Morgan Stanley common shareholders	936		(119)
Weighted average common shares outstanding	1,901,204,729		1,876,961,836
Effect of dilutive securities:
Stock options and RSUs	39,000,000	[2]	0	[2]
Weighted average common shares outstanding and common stock equivalents	1,940,264,085		1,876,961,836
Earnings (loss) per diluted common share:
Income (loss) from continuing operations	$ 0.49		$ (0.05)
Net income (loss) from discontinued operations	$ (0.01)		$ (0.01)
Earnings (loss) per diluted common share	$ 0.48		$ (0.06)
Series A Preferred Stock
Basic EPS:
Less: Preferred dividends	(11)		(11)
Series C Preferred Stock
Basic EPS:
Less: Preferred dividends	$ (13)		$ (13)

[1] See Notes 1 and 21 for discussion of discontinued operations.

[2] RSUs that are considered participating securities participate in all of the earnings of the Company in the computation of basic EPS, and, therefore, such RSUs are not included as incremental shares in the diluted calculation.

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Financing Receivables (Tables)

3 Months Ended

Mar. 31, 2013

Financing Receivables [Abstract]

Schedule of Loans Held for Investment

		At		At
		March 31, 2013		December 31, 2012
		(dollars in millions)
Commercial and industrial	$	11,009	$	9,449
Consumer loans		8,200		7,618
Residential real estate loans		6,929		6,630
Wholesale real estate loans		328		326
Total loans held for investment, gross of allowance for loan losses		26,466		24,023
Allowance for loan losses		(129)		(106)
Total loans held for investment, net of allowance for loan losses	$	26,337	$	23,917

Loan and Lending-related Commitments by Impairment Methodology, and Their Respective Allowances

			Commercial and				Residential		Wholesale
			Industrial		Consumer		Real Estate		Real Estate		Total
			(dollars in millions)
Allowance for loan losses:
	Balance at December 31, 2012	$	96	$	3	$	5	$	2	$	106
	Gross charge-offs		(3)		—		(1)		—		(4)
	Net charge-offs		(3)		—		(1)		—		(4)
	Provision for loan losses(1)		30		(2)		(1)		—		27
	Balance at March 31, 2013	$	123	$	1	$	3	$	2	$	129
Allowance for loan losses by impairment methodology:
	Collectively evaluated for impairment	$	112	$	1	$	3	$	2	$	118
	Individually evaluated for impairment		11		—		—		—		11
	Total allowance for loan losses at March 31, 2013	$	123	$	1	$	3	$	2	$	129
Loans evaluated by impairment methodology(2):
	Collectively evaluated for impairment	$	10,933	$	8,200	$	6,925	$	328	$	26,386
	Individually evaluated for impairment		76		—		4		—		80
	Total loan evaluated at March 31, 2013	$	11,009	$	8,200	$	6,929	$	328	$	26,466
Allowance for lending-related commitments:
	Balance at December 31, 2012	$	90	$	—	$	—	$	1	$	91
	Provision for lending-related commitments(3)		12		—		—		—		12
	Balance at March 31, 2013	$	102	$	—	$	—	$	1	$	103
Allowance for lending-related commitments by
	impairment methodology:
	Collectively evaluated for impairment	$	98	$	—	$	—	$	1	$	99
	Individually evaluated for impairment		4		—		—		—		4
	Total allowance for lending-related commitments
	at March 31, 2013	$	102	$	—	$	—	$	1	$	103
Lending-related commitments evaluated by
	impairment methodology:
	Collectively evaluated for impairment	$	46,792	$	1,579	$	1,105	$	262	$	49,738
	Individually evaluated for impairment		1		—		—		—		1
	Total lending-related commitments evaluated
	at March 31, 2013	$	46,793	$	1,579	$	1,105	$	262	$	49,739

_______________

(1)The Company records charges to the provisions for loan losses within Other revenues.

(2) Balances are gross of the allowance and represent recorded investment in the loans.

(3) The Company records charges to the provisions for lending-related commitments within Other non-interest expenses.

			Commercial and				Residential		Wholesale
			Industrial		Consumer		Real Estate		Real Estate		Total
			(dollars in millions)
Allowance for loan losses:
	Balance at December 31, 2011	$	14	$	1	$	1	$	1	$	17
	Gross charge-offs		(2)		—		—		—		(2)
	Gross recoveries		1		—		—		—		1
	Net charge-offs		(1)		—		—		—		(1)
	Provision for loan losses(1)		8		1		1		—		10
	Balance at March 31, 2012	$	21	$	2	$	2	$	1	$	26
Allowance for loan losses by impairment methodology:
	Collectively evaluated for impairment	$	94	$	3	$	5	$	2	$	104
	Individually evaluated for impairment		2		—		—		—		2
	Total allowance for loan losses at December 31, 2012	$	96	$	3	$	5	$	2	$	106
Loans evaluated by impairment methodology(2):
	Collectively evaluated for impairment	$	9,419	$	7,618	$	6,629	$	326	$	23,992
	Individually evaluated for impairment		30		—		1		—		31
	Total loan evaluated at December 31, 2012	$	9,449	$	7,618	$	6,630	$	326	$	24,023
Allowance for lending-related commitments:
	Balance at December 31, 2011	$	19	$	(3)	$	—	$	2	$	18
	Provision for lending-related commitments(3)		(6)		(2)		—		—		(8)
	Balance at March 31, 2012	$	13	$	(5)	$	—	$	2	$	10
Allowance for lending-related commitments by
	impairment methodology:
	Collectively evaluated for impairment	$	86	$	—	$	—	$	1	$	87
	Individually evaluated for impairment		4		—		—		—		4
	Total allowance for lending-related commitments
	at December 31, 2012	$	90	$	—	$	—	$	1	$	91
Lending-related commitments evaluated by
	impairment methodology:
	Collectively evaluated for impairment	$	44,079	$	1,406	$	712	$	101	$	46,298
	Individually evaluated for impairment		47		—		—		—		47
	Total lending-related commitments evaluated
	at December 31, 2012	$	44,126	$	1,406	$	712	$	101	$	46,345

_______________

(1) The Company records charges to the provisions for loan losses within Other revenues.

(2) Balances are gross of the allowance and represent recorded investment in the loans.

(3) The Company records charges to the provisions for lending-related commitments within Other non-interest expenses.

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Collateralized Transactions (Narrative) (Details) (USD $) In Billions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Customer margin loans outstanding	$ 25.1	$ 24.0
Fair value of financial instruments received as collateral where the Company is permitted to sell or repledge the securities	613	560
Fair value of financial instruments received as collateral where the Company has sold or repledged	$ 469	$ 397

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Common Share

15.Earnings per Common Share.

Basic earnings per common share (“EPS”)is computed by dividing earnings (loss)applicable to Morgan Stanley common shareholders by the weighted average number of common shares outstanding for the period. Common shares outstanding include common stock and vestedrestricted stock units (“RSUs”)where recipients have satisfied either the explicit vesting terms or retirement eligibility requirements. Diluted EPS reflects the assumed conversion of all dilutive securities. The Company calculates EPS using the two-class method and determines whether instruments granted in share-based payment transactions are participating securities (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 in the Form 10-K). The following table presents the calculation of basic and diluted EPS (in millions, except for per share data):

				Three Months Ended
				March 31,
				2013		2012
Basic EPS:
	Income from continuing operations		$	1,250	$	148
	Net gain (loss) from discontinued operations			(19)		(14)
	Net income			1,231		134
	Net income applicable to redeemable noncontrolling interests			122		—
	Net income applicable to nonredeemable noncontrolling interests			147		228
	Net income (loss) applicable to Morgan Stanley			962		(94)
	Less: Preferred dividends (Series A Preferred Stock)			(11)		(11)
	Less: Preferred dividends (Series C Preferred Stock)			(13)		(13)
	Less: Allocation of (earnings) loss to participating RSUs(1):
		From continuing operations		(2)		(1)
	Earnings (loss) applicable to Morgan Stanley common shareholders		$	936	$	(119)
	Weighted average common shares outstanding			1,901		1,877
Earnings (loss) per basic common share:
	Income (loss) from continuing operations		$	0.50	$	(0.05)
	Net gain (loss) from discontinued operations			(0.01)		(0.01)
		Earnings (loss) per basic common share	$	0.49	$	(0.06)
Diluted EPS:
	Earnings (loss) applicable to Morgan Stanley common shareholders		$	936	$	(119)
	Weighted average common shares outstanding			1,901		1,877
	Effect of dilutive securities:
		Stock options and RSUs(1)		39		—
	Weighted average common shares outstanding and common stock equivalents			1,940		1,877
Earnings (loss) per diluted common share:
	Income (loss) from continuing operations		$	0.49	$	(0.05)
	Net income (loss) from discontinued operations			(0.01)		(0.01)
		Earnings (loss) per diluted common share	$	0.48	$	(0.06)

_____________

(1)RSUs that are considered participating securities participate in all of the earnings of the Company in the computation of basic EPS, and, therefore, such RSUs are not included as incremental shares in the diluted calculation.

The following securities were considered antidilutive and, therefore, were excluded from the computation of diluted EPS:

		Three Months Ended
		March 31,
Number of Antidilutive Securities Outstanding at End of Period:		2013	2012
		(shares in millions)
RSUs and performance-based stock units		5	103
Stock options		37	45
	Total	42	148

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Goodwill and Net Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill and Net Intangible Assets

Changes in Carrying Amount of Goodwill

		Institutional Securities(1)		Global Wealth Management Group(1)		Asset Management		Total
		(dollars in millions)
Goodwill at December 31, 2012(2)	$	337	$	5,573	$	740	$	6,650
Goodwill disposed of during the period(3)		(17)		─		─		(17)
Goodwill at March 31, 2013(2)	$	320	$	5,573	$	740	$	6,633

_____________

(1)       On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

(2)       The amount of the Company's goodwill before accumulated impairments of $700 million, which included $673 million related to the Institutional Securities business segment and $27million related to the Asset Management business segment,was $7,333million and $7,350million at March 31, 2013and December 31, 2012, respectively.

(3)In 2011, the Company announced that it had reached an agreement with the employees of its in-house quantitative proprietary trading unit, Process Driven Trading (“PDT”), whereby PDT employees will acquire certain assets from the Company and launch an independent advisory firm. This transaction closed on January 1, 2013.

Changes in Carrying Amount of Intangible Assets

		Institutional Securities		Global Wealth Management Group		Asset Management		Total
		(dollars in millions)
Amortizable net intangible assets at December 31, 2012	$	175	$	3,600	$	1	$	3,776
Mortgage servicing rights (see Note 7)		—		7		—		7
Net intangible assets at December 31, 2012	$	175	$	3,607	$	1	$	3,783
Amortizable net intangible assets at December 31, 2012	$	175	$	3,600	$	1	$	3,776
Foreign currency translation adjustments and other		(3)		—		—		(3)
Amortization expense		(3)		(83)		—		(86)
Impairment losses(1)		(1)		—		—		(1)
Amortizable net intangible assets at March 31, 2013		168		3,517		1		3,686
Mortgage servicing rights (see Note 7)		—		8		—		8
Net intangible assets at March 31, 2013	$	168	$	3,525	$	1	$	3,694

____________

(1)       Impairment losses are recorded within Other expenses.

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Redeemable Noncontrolling Interests and Total Equity (Components of Accumulated Other Comprehensive Income (Loss)) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Balance at	$ (516)
Before reclassification adjustments	(181)
Amount reclassified from AOCI	3
Net adjustments	(178)
Balance at	(694)
Foreign Currency Translation Adjustments
Balance at	(123)
Before reclassification adjustments	(153)
Amount reclassified from AOCI	0
Net adjustments	(153)
Balance at	(276)
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Balance at	(5)
Before reclassification adjustments	0
Amount reclassified from AOCI	1
Net adjustments	1
Balance at	(4)
Change in Net Unrealized Gains (Losses) on Securities Available for Sale
Balance at	151
Before reclassification adjustments	(25)
Amount reclassified from AOCI	(2)
Net adjustments	(27)
Balance at	124
Pension, Postretirement and Other Related Adjustments
Balance at	(539)
Before reclassification adjustments	(3)
Amount reclassified from AOCI	4
Net adjustments	1
Balance at	$ (538)

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Employee Benefit Plans

3 Months Ended

Mar. 31, 2013

Employee Benefit Plans

Employee Benefit Plans

17.Employee Benefit Plans.

The Company sponsors various pension plans for the majority of its U.S. and non-U.S. employees. The Company provides certain other postretirement benefits, primarily health care and life insurance, to eligible U.S. employees. The Company also provides certain postemployment benefits to certain former employees or inactive employees prior to retirement.

Effective January 1, 2011, the Morgan Stanley Employees Retirement Plan (the “Pension Plan”) for U.S. participants ceased accruals of benefits under the Pension Plan.

The components of the Company's net periodic benefit expense for its pension and postretirement plans were as follows:

			Three Months Ended
			March 31,
			2013		2012
			(dollars in millions)
Service cost, benefits earned during the period		$	7	$	8
Interest cost on projected benefit obligation			39		41
Expected return on plan assets			(28)		(28)
Net amortization of prior service costs			(4)		(3)
Net amortization of actuarial loss			10		7
	Net periodic benefit expense	$	24	$	25

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Collateralized Transactions (Cash And Securities Deposited With Clearing Organizations Or Segregated Under Federal And Other Regulations Or Requirements) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Collateralized Transactions
Cash Reserve Deposit Required and Made	$ 31,313		$ 30,970
Securities	13,999	[1]	13,424	[1]
Total	$ 45,312		$ 44,394

[1] Securities deposited with clearing organizations or segregated under federal and other regulations or requirements are sourced from Federal funds sold and securities purchased under agreements to resell and Trading assets in the condensed consolidated statements of financial condition.

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Discontinued Operations (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues	$ (10)	[1]	$ 117	[1]
Gain (loss) from discontinued operations	(30)	[1],[2]	28	[1],[2]
Saxon
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues	0	[1]	76	[1]
Gain (loss) from discontinued operations	(20)	[1]	25	[1]
Quilter
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues	(1)	[1]	31	[1]
Gain (loss) from discontinued operations	(1)	[1]	2	[1]
Other
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues	(9)	[1],[3]	10	[1],[3]
Gain (loss) from discontinued operations	$ (9)	[1],[3]	$ 1	[1],[3]

[1] Amounts included eliminations of intersegment activity.

[2] See Notes 1 and 21 for discussion of discontinued operations.

[3] Amounts included in Other are related to the sale of a principal investment and other.

XML

Condensed Consolidated Statements of Changes in Total Equity (USD $) In Millions	Total		Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Employee Stock Trust	Accumulated Other Comprehensive Income (Loss)	Common Stock Held in Treasury at Cost	Common Stock Issued to Employee Trust	Non-Redeemable Non-controlling Interests
BALANCE AT at Dec. 31, 2011	$ 70,078		$ 1,508	$ 20	$ 22,836	$ 40,341	$ 3,166	$ (157)	$ (2,499)	$ (3,166)	$ 8,029
Net income (loss) applicable to Morgan Stanley	(94)					(94)
Net income applicable to nonredeemable noncontrolling interests	228										228
Dividends	(129)					(129)
Shares issued under employee plans and related tax effects	584				94		86		490	(86)
Repurchases of common stock	(183)								(183)
Foreign currency translation adjustments	20							112			(92)
Net change in cash flow hedges	2	[1]						2
Change in net unrealized losses on securities available for sale	(19)	[2]						(19)
Pension, postretirement and other related adjustments	2	[3]						2
Other net increases (decreases)	(103)										(103)
BALANCE AT at Mar. 31, 2012	70,592		1,508	20	22,930	40,118	3,252	(60)	(2,192)	(3,252)	8,268
BALANCE AT at Dec. 31, 2012	65,428		1,508	20	23,426	39,912	2,932	(516)	(2,241)	(2,932)	3,319
Net income (loss) applicable to Morgan Stanley	962					962
Net income applicable to nonredeemable noncontrolling interests	147										147
Dividends	(124)					(124)
Shares issued under employee plans and related tax effects	241				235		(1,060)		6	1,060
Repurchases of common stock	(306)								(306)
Foreign currency translation adjustments	(245)							(153)			(92)
Net change in cash flow hedges	1	[1]						1
Change in net unrealized losses on securities available for sale	(27)	[2]						(27)
Pension, postretirement and other related adjustments	1	[3]						1
Other net increases (decreases)	(6)										(6)
BALANCE AT at Mar. 31, 2013	$ 66,072		$ 1,508	$ 20	$ 23,661	$ 40,750	$ 1,872	$ (694)	$ (2,541)	$ (1,872)	$ 3,368

[1] Amounts are net of provision for income taxes of $1 million and $1 million for the quarters ended March 31, 2013 and 2012, respectively.

[2] Amounts are net of provision for (benefit from) income taxes of $(19) million and $(13) million for the quarters ended March 31, 2013 and 2012, respectively.

[3] Amounts are net of provision for income taxes of $5 million and $2 million for the quarters ended March 31, 2013 and 2012, respectively.

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Consolidated Statements of Financial Condition (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Cash and due from banks	$ 17,773		$ 20,878
Trading assets pledged to various parties	138,143		147,348
Trading assets, at fair value	267,236		267,603
Investments	8,223		8,346
Federal funds sold and securities purchased under agreement to resell, fair value	873		621
Allowances, loans	129		106
Premises, equipment and software costs, accumulated depreciation	5,750		5,525
Premises, equipment and software costs	5,928		5,946
Intangible assets, accumulated amortization	1,336		1,250
Intangible assets, fair value	8		7
Other assets	10,284		10,511
Deposits	1,442		1,485
Commercial paper and other short-term borrowings, fair value	1,262		725
Securities sold under agreement to repurchase, fair value	565		363
Other secured financings, fair value	9,624		9,466
Other secured financings	16,294	[1]	15,727	[1]
Other liabilities and accrued expenses	13,622		14,928
Long-term borrowings, fair value	42,510		44,044
Common stock par value per share	$ 0.01		$ 0.01
Common stock, shares authorized	3,500,000,000		3,500,000,000
Common stock, shares issued	2,038,893,979		2,038,893,979
Common stock, shares outstanding	1,960,582,868		1,974,042,123
Common stock held in treasury, shares	78,311,111		64,851,856
Consolidated VIEs
Cash and due from banks	584		526
Trading assets, at fair value	3,343		3,490
Premises, equipment and software costs	222		224
Other assets	577		593
Other secured financings	739		976
Other liabilities and accrued expenses	$ 116		$ 117

[1] Amounts include $9,624 million and $9,466 million at fair value at March 31, 2013 and December 31, 2012, respectively.

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Borrowings and Other Secured Financings

3 Months Ended

Mar. 31, 2013

Borrowings and Other Secured Financings

Long-Term Borrowings and Other Secured Financings

10.Long-Term Borrowings and Other Secured Financings.

The Company's long-term borrowings included the following components:

		At March 31,		At December 31,
		2013		2012
	(dollars in millions)
Senior debt	$	154,531	$	158,899
Subordinated debt		5,783		5,845
Junior subordinated debentures		4,828		4,827
Total	$	165,142	$	169,571

During the quarterendedMarch31, 2013, the Company issued and reissued notes with a principal amount of approximately $10 billion including the Company's issuance of $4.5 billion in senior unsecured debt on February 25, 2013. During the quarterended March31, 2013, approximately $12 billion in aggregate long-term borrowingsmatured or were retired.

The weighted average maturity of the Company's long-term borrowings, based upon stated maturity dates, was approximately 5.3years at March 31, 2013 and December 31, 2012.

Other Secured Financings.

Other secured financings include the liabilities related to transfers of financial assets that are accounted for as financings rather than sales, consolidated VIEs where the Company is deemed to be the primary beneficiary, pledged commodities, certain equity-linked notes and other secured borrowings. See Note 7 for further information on other secured financings related to VIEs and securitization activities.

The Company's other secured financings consisted of the following:

			At		At
			March 31,		December 31,
			2013		2012
			(dollars in millions)
Secured financings with original maturities greater than one year		$	12,700	$	14,431
Secured financings with original maturities one year or less			3,012		641
Failed sales(1)			582		655
	Total(2)	$	16,294	$	15,727

___________

(1)       For more information on failed sales, see Note 7.

(2)       Amounts include$9,624 million and $9,466 million at fair value atMarch 31,2013 and December 31, 2012, respectively.

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Income Taxes (Reconciliation of the Provision for (Benefit from) Income Taxes and the U.S. Federal Statutory Income Tax Rate) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Income Tax Expense (Benefit)
Discrete income tax expense (benefit)	$ (61)
Effective income tax rate excluding effect of discrete tax expense (benefit)	30.00%
Retroactive Effective Date of American Taxpayer Relief Act of 2012
Income Tax Expense (Benefit)
Discrete income tax expense (benefit)	$ (81)

XML

Regulatory Requirements (Narrative) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Tier 1 capital to RWAs, being well-capitalized for regulatory purposes	6.00%
Total capital to RWAs, being well-capitalized for regulatory purposes	10.00%
Tier 1 leverage ratio, being well-capitalized for regulatory purposes	5.00%
Minimum
Tier 1 common capital, ratio	5.00%
MS&Co.
Net capital	$ 8,848,000,000	$ 7,820,000,000
Amount of capital that exceeds the minimum required	7,348,000,000	6,453,000,000
Net capital, minimum amount required to hold	1,000,000,000
Net capital, minimum amount required to hold in accordance with the market and credit risk standards	500,000,000
Amount by which if net capital falls below, the company is required to notify the SEC	$ 5,000,000,000

XML

Commitments, Guarantees and Contingencies (Commitments) (Details) (USD $)	Mar. 31, 2013
Commitment, Fiscal Year Maturity
Less than 1	$ 77,152,000,000
1-3 years	16,020,000,000
3-5 years	44,800,000,000
Over 5 years	3,452,000,000
Total	141,424,000,000
Maximum commitment under reverse repurchase facility	2,300,000,000
Wealth Management JV
Commitment, Fiscal Year Maturity
Commitment to purchase additional percentage of interest in joint venture	35.00%
Purchase price for remaining interest in joint venture	4,725,000,000
Letters of Credit and Other Financial Guarantees Obtained to Satisfy Collateral Requirements
Commitment, Fiscal Year Maturity
Less than 1	1,460,000,000
1-3 years	9,000,000
3-5 years	0
Over 5 years	1,000,000
Total	1,470,000,000
Investment Activities
Commitment, Fiscal Year Maturity
Less than 1	778,000,000
1-3 years	100,000,000
3-5 years	36,000,000
Over 5 years	273,000,000
Total	1,187,000,000
Primary Lending Commitments - Investment Grade
Commitment, Fiscal Year Maturity
Less than 1	7,353,000,000	[1]
1-3 years	10,801,000,000	[1]
3-5 years	34,106,000,000	[1]
Over 5 years	926,000,000	[1]
Total	53,186,000,000	[1]
Unfunded commitments accounted for as held for investment	36,900,000,000
Unfunded commitments accounted for as held for sale	1,100,000,000
Primary Lending Commitments - Non-investment Grade
Commitment, Fiscal Year Maturity
Less than 1	818,000,000	[1]
1-3 years	4,711,000,000	[1]
3-5 years	10,337,000,000	[1]
Over 5 years	1,919,000,000	[1]
Total	17,785,000,000	[1]
Unfunded commitments accounted for as held for investment	9,500,000,000
Unfunded commitments accounted for as held for sale	2,800,000,000
Secondary Lending Commitments
Commitment, Fiscal Year Maturity
Less than 1	78,000,000	[2]
1-3 years	41,000,000	[2]
3-5 years	27,000,000	[2]
Over 5 years	40,000,000	[2]
Total	186,000,000	[2]
Commitments for Secured Lending Transactions
Commitment, Fiscal Year Maturity
Less than 1	340,000,000
1-3 years	0
3-5 years	0
Over 5 years	0
Total	340,000,000
Forward Starting Reverse Repurchase Agreements and Securities Borrowing Agreements
Commitment, Fiscal Year Maturity
Less than 1	63,397,000,000	[3],[4]
1-3 years	0	[3],[4]
3-5 years	0	[3],[4]
Over 5 years	0	[3],[4]
Total	63,397,000,000	[3],[4]
Commitments due in the next three business days	55,300,000,000
Commercial and Residential Mortgage-related Commitments
Commitment, Fiscal Year Maturity
Less than 1	1,125,000,000
1-3 years	18,000,000
3-5 years	179,000,000
Over 5 years	193,000,000
Total	1,515,000,000
Underwriting Commitments
Commitment, Fiscal Year Maturity
Less than 1	40,000,000
1-3 years	0
3-5 years	0
Over 5 years	0
Total	40,000,000
Other Commitments
Commitment, Fiscal Year Maturity
Less than 1	1,763,000,000
1-3 years	340,000,000
3-5 years	115,000,000
Over 5 years	100,000,000
Total	$ 2,318,000,000

[1] This amount includes $36.9 billion of investment grade and $9.5 billion of non-investment grade unfunded commitments accounted for as held for investment and $1.1 billion of investment grade and $2.8 billion of non-investment grade unfunded commitments accounted for as held for sale at March 31, 2013. The remainder of these lending commitments is carried at fair value.

[2] These commitments are recorded at fair value within Trading assets and Trading liabilities in the condensed consolidated statements of financial condition (see Note 4).

[3] The Company enters into forward starting reverse repurchase and securities borrowing agreements (agreements that have a trade date at or prior to March 31, 2013 and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations. These agreements primarily settle within three business days and of the total amount at March 31, 2013, $55.3 billion settled within three business days.

[4] The Company also has a contingent obligation to provide financing to a clearinghouse through which it clears certain transactions. The financing is required only upon the default of a clearinghouse member. The financing takes the form of a reverse repurchase facility, with a maximum amount of approximately $2.3 billion.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 30, 2013
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Trading Symbol	MS
Entity Registrant Name	MORGAN STANLEY
Entity Central Index Key	0000895421
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,960,115,045

XML

Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2013

Derivative Instrument Detail [Abstract]

Derivative Instruments and Hedging Activities

11.    Derivative Instruments and Hedging Activities.

The Company trades, makes markets and takes proprietary positions globally in listed futures, OTC swaps, forwards, options and other derivatives referencing, among other things, interest rates, currencies, investment grade and non-investment grade corporate credits, loans, bonds, U.S. and other sovereign securities, emerging market bonds and loans, credit indices, asset-backed security indices, property indices, mortgage-related and other asset-backed securities, and real estate loan products. The Company uses these instruments for trading, foreign currency exposure management and asset and liability management.

The Company manages its trading positions by employing a variety of risk mitigation strategies. These strategies include diversification of risk exposures and hedging. Hedging activities consist of the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). The Company manages the market risk associated with its trading activities on a Company-wide basis, on a worldwide trading division level and on an individual product basis.

In connection with its derivative activities, the Company generally enters into master netting arrangements and collateral arrangements with its counterparties. These agreements provide the Company with the right, in the event of a default by the counterparty (such as bankruptcy or a failure to pay or perform),to net a counterparty's rights and obligations under the agreement and to liquidate and setoff collateral against any net amount owed by the counterparty. The Company's policy is generally to receive securities and cash posted as collateral (with rights of rehypothecation),although in certain cases the Company may agree for such collateral to be posted to a third party custodian under a control agreement that enables the Company to take control of such collateral in the event of a counterparty default. The following tables present information about the offsetting of derivative instruments and related collateral amounts. See information related to offsetting of certain collateralized transactions in Note 6.

			At March 31, 2013
			Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)		Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition(2)				Net Exposure
									Financial Instruments Collateral		Other Cash Collateral
			(dollars in millions)
Derivative assets
	Bilateral OTC	$	549,368	$	(519,065)	$	30,303	$	(6,688)	$	(135)	$	23,480
	Cleared OTC(4)		315,330		(315,138)		192		—		—		192
	Exchange traded		27,246		(21,912)		5,334		—		—		5,334
	Total derivative assets	$	891,944	$	(856,115)	$	35,829	$	(6,688)	$	(135)	$	29,006
Derivative liabilities
	Bilateral OTC	$	524,588	$	(492,049)	$	32,539	$	(7,973)	$	(82)	$	24,484
	Cleared OTC(4)		314,030		(313,986)		44		—		—		44
	Exchange traded		29,981		(21,912)		8,069		(1,853)		—		6,216
	Total derivative liabilities	$	868,599	$	(827,947)	$	40,652	$	(9,826)	$	(82)	$	30,744

(1)       Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2)       Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3)       Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

(4)       Includes OTC derivatives that are centrally cleared in accordance with certain regulatory requirements.

			At December 31, 2012
			Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)		Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition(2)				Net Exposure
									Financial Instruments Collateral		Other Cash Collateral
			(dollars in millions)
Derivative assets
	Bilateral OTC	$	604,713	$	(573,844)	$	30,869	$	(7,691)	$	(232)	$	22,946
	Cleared OTC(4)		375,233		(374,546)		687		—		—		687
	Exchange traded		24,305		(19,664)		4,641		—		—		4,641
	Total derivative assets	$	1,004,251	$	(968,054)	$	36,197	$	(7,691)	$	(232)	$	28,274
Derivative Liabilities
	Bilateral OTC	$	578,018	$	(547,285)	$	30,733	$	(7,871)	$	(64)	$	22,798
	Cleared OTC(4)		374,960		(374,866)		94		—		(23)		71
	Exchange traded		25,795		(19,664)		6,131		(1,028)		—		5,103
	Total derivative liabilities	$	978,773	$	(941,815)	$	36,958	$	(8,899)	$	(87)	$	27,972

(1)       Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2)       Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3)       Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

(4)       Includes OTC derivatives that are centrally cleared in accordance with certain regulatory requirements.

The Company incurs credit risk as a dealer in OTC derivatives. Credit risk with respect to derivative instruments arises from the failure of a counterparty to perform according to the terms of the contract. The Company's exposure to credit risk at any point in time is represented by the fair value of the derivative contracts reported as assets. The fair value of a derivative represents the amount at which the derivative could be exchanged in an orderly transaction between market participants and is further described in Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K and Note 4.

The tables below present a summary by counterparty credit rating and remaining contract maturity of the fair value of OTC derivatives in a gain position at March 31, 2013 and December 31, 2012, respectively. Fair value is presented in the final column, net of collateral received (principally cash and U.S. government and agency securities):

OTC Derivative Products—Trading Assets at March31, 2013(1)

											Cross-Maturity and Cash  Collateral Netting(3)		Net  Exposure Post-Cash Collateral		Net  Exposure Post-Collateral
			Years to Maturity
Credit Rating(2)			Less than 1		1 - 3		3 - 5		Over 5
			(dollars in millions)
AAA		$	396	$	468	$	1,318	$	5,553	$	(4,819)	$	2,916	$	2,682
AA			2,251		2,094		2,848		10,133		(11,349)		5,977		4,514
A			8,299		9,894		12,251		26,845		(49,419)		7,870		6,227
BBB			2,762		4,255		3,063		18,143		(19,725)		8,498		7,303
Non-investment grade			2,285		2,548		1,672		3,669		(5,075)		5,099		2,946
	Total	$	15,993	$	19,259	$	21,152	$	64,343	$	(90,387)	$	30,360	$	23,672

(1)       Fair values shown represent the Company's net exposure to counterparties related to the Company's OTC derivative products. Amounts include centrally cleared OTC derivatives. The table does not include exchange-traded derivatives and the effect of any related hedges utilized by the Company.

(2)       Obligor credit ratings are determined by the Company's Credit Risk Management Department.

(3)       Amounts represent the netting of receivable balances with payable balances for the same counterparty across maturity categories. Receivable and payable balances with the same counterparty in the same maturity category are netted within such maturity category, where appropriate. Cash collateral received is netted on a counterparty basis, provided legal right of offset exists.

OTC Derivative Products—Trading Assets at December 31, 2012(1)

		Years to Maturity									Cross-Maturity and Cash Collateral Netting(3)		Net Exposure Post-Cash Collateral		Net Exposure Post-Collateral
Credit Rating(2)			Less  than 1		1 - 3		3 - 5		Over 5
			(dollars in millions)
AAA		$	353	$	551	$	1,299	$	6,121	$	(4,851)	$	3,473	$	3,088
AA			2,125		3,635		2,958		10,270		(12,761)		6,227		4,428
A			6,643		9,596		14,228		29,729		(50,722)		9,474		7,638
BBB			2,673		3,970		3,704		18,586		(21,713)		7,220		5,754
Non-investment grade			2,091		2,855		2,142		4,538		(6,696)		4,930		2,725
	Total	$	13,885	$	20,607	$	24,331	$	69,244	$	(96,743)	$	31,324	$	23,633

_____________

(1)       Fair values shown represent the Company's net exposure to counterparties related to the Company's OTC derivative products. Amounts include centrally cleared OTC derivatives. The table does not include exchange-traded derivatives and the effect of any related hedges utilized by the Company.

(2)       Obligor credit ratings are determined by the Company's Credit Risk Management Department.

(3)       Amounts represent the netting of receivable balances with payable balances for the same counterparty across maturity categories. Receivable and payable balances with the same counterparty in the same maturity category are netted within such maturity category, where appropriate. Cash collateral received is netted on a counterparty basis, provided legal right of offset exists.

Hedge Accounting.

The Company applies hedge accounting using various derivative financial instruments to hedge interest rate and foreign exchange risk arising from assets and liabilities not held at fair value as part of asset and liability management and foreign currency exposure management.

The Company's hedges are designated and qualify for accounting purposes as one of the following types of hedges: hedges of exposure to changes in fair value of assets and liabilities being hedged (fair value hedges) and hedges of net investments in foreign operations whose functional currency is different from the reporting currency of the parent company (net investment hedges).

For all hedges where hedge accounting is being applied, effectiveness testing and other procedures to ensure the ongoing validity of the hedges are performed at least monthly.

Fair Value Hedges—Interest Rate Risk.     The Company's designated fair value hedges consisted primarily of interest rate swaps designated as fair value hedges of changes in the benchmark interest rate of fixed rate senior long-term borrowings. The Company uses regression analysis to perform an ongoing prospective and retrospective assessment of the effectiveness of these hedging relationships (i.e., the Company applies the “long-haul” method of hedge accounting). A hedging relationship is deemed effective if the fair values of the hedging instrument (derivative) and the hedged item (debt liability) change inversely within a range of 80% to 125%. The Company considers the impact of valuation adjustments related to the Company's own credit spreads and counterparty credit spreads to determine whether they would cause the hedging relationship to be ineffective.

For qualifying fair value hedges of benchmark interest rates, the changes in the fair value of the derivative and the changes in the fair value of the hedged liability provide offset of one another and, together with any resulting ineffectiveness, are recorded in Interest expense. When a derivative is de-designated as a hedge, any basis adjustment remaining on the hedged liability is amortized to Interest expense over the remaining life of the liability using the effective interest method.

Net Investment Hedges.     The Company may utilize forward foreign exchange contracts to manage the currency exposure relating to its net investments in non-U.S. dollar functional currency operations. No hedge ineffectiveness is recognized in earnings since the notional amounts of the hedging instruments equal the portion of the investments being hedged and the currencies being exchanged are the functional currencies of the parent and investee. The gain or loss from revaluing hedges of net investments in foreign operations at the spot rate is deferred and reported within Accumulated other comprehensive income (loss) in Total Equity, net of tax effects. The forward points on the hedging instruments are recorded in Interest income.

The following tables summarize the fair value of derivative instruments designated as accounting hedges and the fair value of derivative instruments not designated as accounting hedges by type of derivative contract on a gross basis. Fair values of derivative contracts in an asset position are included in Trading assets and fair values of derivative contracts in a liability position are reflected in Trading liabilities in the condensed consolidated statements of financial condition (see Note 4):

				Assets at				Liabilities at
				March 31, 2013				March 31, 2013
				Fair Value		Notional		Fair Value		Notional
				(dollars in millions)
Derivatives designated as accounting hedges:
	Interest rate contracts		$	7,585	$	76,175	$	276	$	5,030
	Foreign exchange contracts			650		10,812		102		4,559
		Total derivatives designated as accounting hedges		8,235		86,987		378		9,589
Derivatives not designated as accounting hedges(1):
	Interest rate contracts			705,498		18,634,245		686,108		18,577,861
	Credit contracts			62,265		1,865,650		59,057		1,791,783
	Foreign exchange contracts			49,774		2,025,369		51,607		2,088,219
	Equity contracts			44,517		694,383		50,596		714,161
	Commodity contracts			21,565		403,627		20,820		360,219
	Other			90		4,167		33		3,623
		Total derivatives not designated as accounting hedges		883,709		23,627,441		868,221		23,535,866
Total derivatives			$	891,944	$	23,714,428	$	868,599	$	23,545,455
Cash collateral netting				(67,743)		—		(39,575)		—
Counterparty netting				(788,372)		—		(788,372)		—
	Total derivatives		$	35,829	$	23,714,428	$	40,652	$	23,545,455

_____________

(1)       Notional amounts include gross notionals related to open long and short futures contracts of $73 billion and $71 billion, respectively. The unsettled fair value on these futures contracts (excluded from the table above) of $900 million and $4 million is included in Customer and other receivables and Customer and other payables, respectively, on thecondensed consolidated statements of financial condition.

				Assets at				Liabilities at
				December 31, 2012				December 31, 2012
				Fair Value		Notional		Fair Value		Notional
				(dollars in millions)
Derivatives designated as accounting hedges:
	Interest rate contracts		$	8,347	$	75,115	$	168	$	2,660
	Foreign exchange contracts			367		10,291		319		17,156
		Total derivatives designated as accounting hedges		8,714		85,406		487		19,816
Derivatives not designated as accounting hedges(1):
	Interest rate contracts			815,454		18,130,030		793,936		17,682,566
	Credit contracts			68,267		1,932,786		64,494		1,867,807
	Foreign exchange contracts			52,427		1,841,186		56,094		1,886,073
	Equity contracts			38,600		587,700		41,870		587,199
	Commodity contracts			20,646		341,556		21,831		325,101
	Other			143		4,908		61		5,161
		Total derivatives not designated as accounting hedges		995,537		22,838,166		978,286		22,353,907
Total derivatives			$	1,004,251	$	22,923,572	$	978,773	$	22,373,723
Cash collateral netting				(69,248)		—		(43,009)		—
Counterparty netting				(898,806)		—		(898,806)		—
	Total derivatives		$	36,197	$	22,923,572	$	36,958	$	22,373,723

_____________

(1)Notional amounts include gross notionals related to open long and short futures contracts of $73 billion and $68 billion, respectively. The unsettled fair value on these futures contracts (excluded from the table above) of $1,073 million and $24 million is included in Customer and other receivablesand Customer and other payables, respectively, on thecondensed consolidated statements of financial condition.

The following tables summarize the gains or losses reported on derivative instruments designated and qualifying as accounting hedges for the quarters ended March 31,2013and 2012, respectively.

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 thecondensed consolidated statements of income from interest rate contracts:

		Gains (Losses) Recognized
		Three Months Ended
		March 31,
Product Type		2013		2012
		(dollars in millions)
Derivatives	$	(872)	$	(546)
Borrowings		1,162		698
Total	$	290	$	152

Derivatives Designated as Net Investment Hedges.

			Gains (Losses) Recognized in OCI (effective portion)
			Three Months Ended
			March 31,
Product Type			2013		2012
			(dollars in millions)
Foreign exchange contracts(1)		$	308	$	21
	Total	$	308	$	21

____________

(1)       Losses of $32 million and $66 million were recognized in income related to amounts excluded from hedge effectiveness testing during the quarters ended March 31, 2013 and 2012, respectively.

The table below summarizes gains (losses) on derivative instruments not designated as accounting hedges for the quarters ended March 31, 2013 and 2012, respectively:

			Gains (Losses) Recognized in Income(1)(2)
			Three Months Ended
			March 31,
Product Type			2013		2012
			(dollars in millions)
Interest rate contracts		$	(144)	$	1,607
Credit contracts			(80)		(672)
Foreign exchange contracts			807		595
Equity contracts			(3,032)		(828)
Commodity contracts			423		(576)
Other contracts			(2)		55
	Total derivative instruments	$	(2,028)	$	181

____________

(1)       Gains (losses) on derivative contracts not designated as hedges are primarily included in Trading in the condensed consolidated statements of income.

(2)       Gains (losses) associated with certain derivative contracts that have physically settled are excluded from the table above. Gains (losses) on these contracts are reflected with the associated cash instruments, which are also included in Trading inthe condensed consolidated statements of income.

The Company also has certain embedded derivatives that have been bifurcated from the related structured borrowings. Such derivatives are classified in Long-term borrowings and had a net fair value of $57 million and $53 million at March 31, 2013 and December 31, 2012, respectively and a notional value of $2,149million and $2,178million at March 31, 2013 and December 31, 2012, respectively. The Company recognizedlosses of $2 million and gains of $7 million related to changes in the fair value of its bifurcated embedded derivatives forthe quarters ended March 31, 2013 and2012, respectively.

At March 31, 2013 and December 31, 2012, the amount of payables associated with cash collateral received that was netted against derivative assets was $67.7billion and $69.2 billion, respectively, and the amount of receivables in respect of cash collateral paid that was netted against derivative liabilities was $39.6 billion and $43.0 billion, respectively. Cash collateral receivables and payables of $140 million and $99 million, respectively, at March 31, 2013 and $158 million and $34 million, respectively, at December 31, 2012, were not offset against certain contracts that did not meet the definition of a derivative.

Credit-Risk-Related Contingencies.

In connection with certain OTC trading agreements, the Company may be required to provide additional collateral or immediately settle any outstanding liability balances with certain counterparties in the event of a credit ratings downgrade. At March 31, 2013, the aggregate fair value of OTC derivative contracts that contain credit-risk-related contingent features that are in a net liability position totaled $30,396million, for which the Company has posted collateral of $26,568million, in the normal course of business.The long-term credit ratings on the CompanybyMoody's Investor Services, Inc. (“Moody's”)and Standard & Poor's Ratings Services (“S&P”) are currently at different levels (commonly referred to as “split ratings”).At March 31, 2013, the future potentialcollateral amounts, termination payments or other contractual amounts that could be called by counterparties in the event of adowngrade of the Company's long-term credit rating under various scenariosare: $397 million (Baa1 Moody's/BBB+ S&P) and $2,257million (Baa2 Moody's/BBB S&P). Of these amounts, $2,125million at March31, 2013related to bilateral arrangements between the Company and other parties where upon the downgrade of one party, the downgraded party must deliver collateral to the other party. These bilateral downgrade arrangements are a risk management tool used extensively by the Company as credit exposures are reduced if counterparties are downgraded.

Credit Derivatives and Other Credit Contracts.

The Company enters into credit derivatives, principally through credit default swaps, under which it receives or provides protection against the risk of default on a set of debt obligations issued by a specified reference entity or entities. A majority of the Company's counterparties are banks, broker-dealers, insurance and other financial institutions, and monoline insurers.

The tables below summarize the notional and fair value of protection sold and protection purchased through credit default swaps at March 31, 2013 and December 31, 2012:

		At March 31, 2013
		Maximum Potential Payout/Notional
		Protection Sold				Protection Purchased
		Notional		Fair Value (Asset)/Liability		Notional		Fair Value (Asset)/Liability
		(dollars in millions)
Single name credit default swaps	$	1,004,144	$	1,412	$	960,778	$	(1,299)
Index and basket credit default swaps		550,972		4,930		458,150		(4,550)
Tranched index and basket credit default swaps		271,525		905		411,864		(4,606)
Total	$	1,826,641	$	7,247	$	1,830,792	$	(10,455)

		At December 31, 2012
		Maximum Potential Payout/Notional
		Protection Sold				Protection Purchased
		Notional		Fair Value (Asset)/Liability		Notional		Fair Value (Asset)/Liability
		(dollars in millions)
Single name credit default swaps	$	1,069,474	$	2,889	$	1,029,543	$	(2,456)
Index and basket credit default swaps		551,630		5,664		454,800		(5,124)
Tranched index and basket credit default swaps		272,088		2,330		423,058		(7,076)
Total	$	1,893,192	$	10,883	$	1,907,401	$	(14,656)

The table below summarizes the credit ratings and maturities of protection sold through credit default swaps and other credit contracts at March31, 2013:

			Protection Sold
			Maximum Potential Payout/Notional										Fair Value
			Years to Maturity										(Asset)/
Credit Ratings of the Reference Obligation			Less than 1		1-3		3-5		Over 5		Total		Liability(1)(2)
			(dollars in millions)
Single name credit default swaps:
	AAA	$	1,809	$	5,780	$	16,531	$	3,673	$	27,793	$	(61)
	AA		10,141		17,863		36,987		6,476		71,467		(557)
	A		64,263		68,132		67,702		9,668		209,765		(2,343)
	BBB		119,304		130,055		138,543		30,832		418,734		312
	Non-investment grade		84,290		88,959		86,589		16,547		276,385		4,061
Total			279,807		310,789		346,352		67,196		1,004,144		1,412
Index and basket credit default swaps(3):
	AAA		42,730		53,491		50,189		14,238		160,648		(1,574)
	AA		1,159		10,123		12,124		8,375		31,781		(161)
	A		4,349		5,562		11,546		2,517		23,974		216
	BBB		31,459		103,097		125,754		32,271		292,581		(397)
	Non-investment grade		66,319		68,392		139,218		39,584		313,513		7,751
Total			146,016		240,665		338,831		96,985		822,497		5,835
Total credit default swaps sold		$	425,823	$	551,454	$	685,183	$	164,181	$	1,826,641	$	7,247
Other credit contracts(4)(5)		$	466	$	82	$	138	$	1,139	$	1,825	$	(195)
Total credit derivatives and
	other credit contracts	$	426,289	$	551,536	$	685,321	$	165,320	$	1,828,466	$	7,052

_____________

(1)       Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting.

(2)       Fair value amounts of certain credit default swaps where the Company sold protection have an asset carrying value because credit spreads of the underlying reference entity or entities tightened during the terms of the contracts.

(3)       Credit ratings are calculated internally.

(4)       Other credit contracts include CLNs, CDOs and credit default swaps that are considered hybrid instruments.

(5)       Fair value amount shown represents the fair value of the hybrid instruments.

The table below summarizes the credit ratings and maturities of protection sold through credit default swaps and other credit contracts at December 31, 2012:

			Protection Sold
			Maximum Potential Payout/Notional										Fair Value
			Years to Maturity										(Asset)/
Credit Ratings of the Reference Obligation			Less than 1		1-3		3-5		Over 5		Total		Liability(1)(2)
			(dollars in millions)
Single name credit default swaps:
	AAA	$	2,368	$	6,592	$	19,848	$	5,767	$	34,575	$	(204)
	AA		10,984		16,804		34,280		7,193		69,261		(325)
	A		66,635		72,796		67,285		10,760		217,476		(2,740)
	BBB		124,662		145,462		142,714		34,396		447,234		(492)
	Non-investment grade		91,743		98,515		92,143		18,527		300,928		6,650
Total			296,392		340,169		356,270		76,643		1,069,474		2,889
Index and basket credit default swaps(3):
	AAA		18,652		36,005		45,789		3,240		103,686		(1,377)
	AA		1,255		9,479		12,026		8,343		31,103		(55)
	A		2,684		5,423		5,440		125		13,672		(155)
	BBB		27,720		105,870		143,562		29,101		306,253		(862)
	Non-investment grade		97,389		86,703		153,858		31,054		369,004		10,443
Total			147,700		243,480		360,675		71,863		823,718		7,994
Total credit default swaps sold		$	444,092	$	583,649	$	716,945	$	148,506	$	1,893,192	$	10,883
Other credit contracts(4)(5)		$	796	$	125	$	155	$	1,323	$	2,399	$	(745)
Total credit derivatives and other
	credit contracts	$	444,888	$	583,774	$	717,100	$	149,829	$	1,895,591	$	10,138

_____________

(1)       Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting.

(2)       Fair value amounts of certain credit default swaps where the Company sold protection have an asset carrying value because credit spreads of the underlying reference entity or entities tightened during the terms of the contracts.

(3)       Credit ratings are calculated internally.

(4)       Other credit contracts include CLNs, CDOs and credit default swaps that are considered hybrid instruments.

(5)       Fair value amount shown represents the fair value of the hybrid instruments.

Single Name Credit Default Swaps.    A credit default swap protects the buyer against the loss of principal on a bond or loan in case of a default by the issuer. The protection buyer pays a periodic premium (generally quarterly) over the life of the contract and is protected for the period. The Company in turn will have to perform under a credit default swap if a credit event as defined under the contract occurs. Typical credit events include bankruptcy, dissolution or insolvency of the referenced entity, failure to pay and restructuring of the obligations of the referenced entity. In order to provide an indication of the current payment status or performance risk of the credit default swaps, the external credit ratings of the underlying reference entity of the credit default swaps are disclosed.

Index and Basket Credit Default Swaps.    Index and basket credit default swaps are credit default swaps that reference multiple names through underlying baskets or portfolios of single name credit default swaps. Generally, in the event of a default on one of the underlying names, the Company will have to pay a pro rata portion of the total notional amount of the credit default index or basket contract. In order to provide an indication of the current payment status or performance risk of these credit default swaps, the weighted average external credit ratings of the underlying reference entities comprising the basket or index were calculated and disclosed.

The Company also enters into index and basket credit default swaps where the credit protection provided is based upon the application of tranching techniques. In tranched transactions, the credit risk of an index or basket is separated into various portions of the capital structure, with different levels of subordination. The most junior tranches cover initial defaults, and once losses exceed the notional of the tranche, they are passed on to the next most senior tranche in the capital structure.

When external credit ratings are not available, credit ratings were determined based upon an internal methodology.

Credit Protection Sold through CLNs and CDOs.    The Company has invested in CLNs and CDOs, which are hybrid instruments containing embedded derivatives, in which credit protection has been sold to the issuer of the note. If there is a credit event of a reference entity underlying the instrument, the principal balance of the note may not be repaid in full to the Company.

Purchased Credit Protection with Identical Underlying Reference Obligations.    For single name credit default swaps and non-tranched index and basket credit default swaps, the Company has purchased protection with a notional amount of approximately $1.4 trillion and $1.5 trillion at March31, 2013 and December 31, 2012, respectively, compared with a notional amount of approximately $1.6trillion at both March 31, 2013 and December 31, 2012, of credit protection sold with identical underlying reference obligations. In order to identify purchased protection with the same underlying reference obligations, the notional amount for individual reference obligations within non-tranched indices and baskets was determined on a pro rata basis and matched off against single name and non-tranched index and basket credit default swaps where credit protection was sold with identical underlying reference obligations.

The purchase of credit protection does not represent the sole manner in which the Company risk manages its exposure to credit derivatives. The Company manages its exposure to these derivative contracts through a variety of risk mitigation strategies, which include managing the credit and correlation risk across single name, non-tranched indices and baskets, tranched indices and baskets, and cash positions. Aggregate market risk limits have been established for credit derivatives, and market risk measures are routinely monitored against these limits. The Company may also recover amounts on the underlying reference obligation delivered to the Company under credit default swaps where credit protection was sold.

XML

Goodwill and Net Intangible Assets (Changes in Carrying Amount of Intangible Assets) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Intangible Assets [Line Items]
Amortizable net intangible assets, beginning balance	$ 3,776
Foreign currency translation adjustments and other	(3)
Amortization expense	(86)
Impairment losses	(1)	[1]
Amortizable net intangible assets, ending balance	3,686
Mortgage servicing rights	8		7
Net intangible assets	3,694		3,783
Institutional Securities
Intangible Assets [Line Items]
Amortizable net intangible assets, beginning balance	175
Foreign currency translation adjustments and other	(3)
Amortization expense	(3)
Impairment losses	(1)	[1]
Amortizable net intangible assets, ending balance	168
Mortgage servicing rights	0		0
Net intangible assets	168		175
Global Wealth Management Group
Intangible Assets [Line Items]
Amortizable net intangible assets, beginning balance	3,600
Foreign currency translation adjustments and other	0
Amortization expense	(83)
Impairment losses	0	[1]
Amortizable net intangible assets, ending balance	3,517
Mortgage servicing rights	8		7
Net intangible assets	3,525		3,607
Asset Management
Intangible Assets [Line Items]
Amortizable net intangible assets, beginning balance	1
Foreign currency translation adjustments and other	0
Amortization expense	0
Impairment losses	0	[1]
Amortizable net intangible assets, ending balance	1
Mortgage servicing rights	0		0
Net intangible assets	$ 1		$ 1

[1] Impairment losses are recorded within Other expenses.

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Commitments, Guarantees and Contingencies (Narrative) (Details) (USD $)	0 Months Ended		0 Months Ended			0 Months Ended		0 Months Ended			0 Months Ended		0 Months Ended
	Jul. 15, 2010 China Development Industrial Bank v. Morgan Stanley & Co. Incorporated et al.	Mar. 31, 2013 China Development Industrial Bank v. Morgan Stanley & Co. Incorporated et al.	Mar. 25, 2013 Federal Home Loan Bank of San Francisco v. Credit Suisse Securities (USA) LLC, et al. and Federal Home Loan Bank of San Francisco v. Deutsche Bank Securities Inc. et al.	Mar. 15, 2010 Federal Home Loan Bank of San Francisco v. Credit Suisse Securities (USA) LLC, et al.	Mar. 15, 2010 Federal Home Loan Bank of San Francisco v. Deutsche Bank Securities Inc. et al.	Mar. 25, 2013 Federal Home Loan Bank of Chicago v. Bank of America Funding Corporation et al.	Oct. 15, 2010 Federal Home Loan Bank of Chicago v. Bank of America Funding Corporation et al.	Mar. 25, 2013 Western and Southern Life Insurance Company et al. v. Morgan Stanley Mortgage Capital Inc. et al.	Jul. 18, 2011 Western and Southern Life Insurance Company et al. v. Morgan Stanley Mortgage Capital Inc. et al.	Mar. 31, 2013 Cambridge Place Investment Management Inc. v. Morgan Stanley & Co., Inc. et al.	Mar. 25, 2013 Federal Housing Finance Agency, as Conservator v. Morgan Stanley et al.	Sep. 02, 2011 Federal Housing Finance Agency, as Conservator v. Morgan Stanley et al. claims	Oct. 16, 2012 The Prudential Insurance Company of America, et al. v. Morgan Stanley, et al.	Mar. 25, 2013 The Prudential Insurance Company of America, et al. v. Morgan Stanley, et al.	Apr. 25, 2012 The Prudential Insurance Company of America, et al. v. Morgan Stanley, et al.
Contingencies
Damages sought	$ 228,000,000
Estimate of possible loss, maximum		240,000,000
Credit default swap asset	275,000,000
Loss in period	12,000,000
Mortgage pass through certificate backed by securitization trusts original amount				704,000,000	276,000,000	103,000,000	203,000,000		153,000,000	344,000,000		11,000,000,000			1,000,000,000
Mortgage pass through certificate backed by securitization trusts unpaid amount			356,000,000					122,000,000			2,870,000,000			598,000,000
Mortgage pass through certificate incurred losses			1,700,000			700,000		55,000			54,000,000
Mortgage pass through certificate backed by securitization trusts amended amount													$ 80,000,000
Number of complaints												17

XML

Condensed Consolidated Statements of Income (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Revenues:
Investment banking	$ 1,224		$ 1,063
Trading	2,694		2,402
Investments	338		85
Commissions and fees	1,168		1,177
Asset management, distribution and administration fees	2,346		2,152
Other	203		104
Total non-interest revenues	7,973		6,983
Interest income	1,398	[1]	1,542	[1]
Interest expense	1,213	[1]	1,601	[1]
Net interest	185		(59)
Net revenues	8,158	[2]	6,924	[2]
Non-interest expenses:
Compensation and benefits	4,216		4,430
Occupancy and equipment	379		388
Brokerage, clearing and exchange fees	428		403
Information processing and communications	448		459
Marketing and business development	134		146
Professional services	440		412
Other	531		484
Total non-interest expenses	6,576		6,722
Income from continuing operations before income taxes	1,582		202
Provision for income taxes	332		54
Income from continuing operations	1,250		148
Discontinued operations:
Gain (loss) from discontinued operations	(30)	[3],[4]	28	[3],[4]
Provision for (benefit from) income taxes	(11)	[3]	42	[3]
Net gain (loss) from discontinued operations	(19)	[3]	(14)	[3]
Net income	1,231		134
Net income applicable to redeemable noncontrolling interests	122		0
Net income applicable to nonredeemable noncontrolling interests	147		228
Net income (loss) applicable to Morgan Stanley	962		(94)
Earnings (loss) applicable to Morgan Stanley common shareholders	936		(119)
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations	981		(79)
Net gain (loss) from discontinued operations	(19)		(15)
Net income (loss) applicable to Morgan Stanley	$ 962		$ (94)
Earnings (loss) per basic common share:
Income (loss) from continuing operations	$ 0.50		$ (0.05)
Net gain (loss) from discontinued operations	$ (0.01)		$ (0.01)
Earnings (loss) per basic common share	$ 0.49		$ (0.06)
Earnings (loss) per diluted common share:
Income (loss) from continuing operations	$ 0.49		$ (0.05)
Net gain (loss) from discontinued operations	$ (0.01)		$ (0.01)
Earnings (loss) per diluted common share	$ 0.48		$ (0.06)
Dividends declared per common share	$ 0.05		$ 0.05
Average common shares outstanding:
Basic	1,901,204,729		1,876,961,836
Diluted	1,940,264,085		1,876,961,836

[1] Interest income and expense are recorded within the condensed consolidated statements of income depending on the nature of the instrument and related market conventions. When interest is included as a component of the instrument’s fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.

[2] In certain management fee arrangements, the Company is entitled to receive performance-based fees (also referred to as incentive fees) when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, performance fee revenue is accrued (or reversed) quarterly based on measuring account fund performance to date versus the performance benchmark stated in the investment management agreement. The amount of performance-based fee revenue at risk of reversing if fund performance falls below stated investment management agreement benchmarks was approximately $274 million at March 31, 2013 and approximately $205 million at December 31, 2012 (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K).

[3] See Notes 1 and 21 for discussion of discontinued operations.

[4] Amounts included eliminations of intersegment activity.

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Securities Available for Sale

3 Months Ended

Mar. 31, 2013

Available-for-sale Securities [Abstract]

Securities Available For Sale

5. Securities Available for Sale.

The following tables present information about the Company's available for sale securities:

						At March 31, 2013
						Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Other-than-Temporary Impairment		Fair Value
					(dollars in millions)
Debt securities available for sale:
	U.S. government and agency securities:
		U.S. Treasury securities			$	13,938	$	105	$	2	$	—	$	14,041
		U.S. agency securities				15,199		99		10		—		15,288
				Total U.S. government and agency securities		29,137		204		12		—		29,329
	Corporate and other debt:
		Commercial mortgage-backed securities:
			Agency			2,370		2		15		—		2,357
			Non-Agency			459		2		1		—		460
		Auto loan asset-backed securities				2,171		3		1		—		2,173
		Corporate bonds				3,530		15		3		—		3,542
		Collateralized debt and loan obligations				677		—		—		—		677
		FFELP student loan asset-backed securities(1)				2,884		25		1		—		2,908
				Total Corporate and other debt		12,091		47		21		—		12,117
Total debt securities available for sale						41,228		251		33		—		41,446
Equity securities available for sale						15		—		7		—		8
Total					$	41,243	$	251	$	40	$	—	$	41,454
						At December 31, 2012
						Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Other-than-Temporary Impairment		Fair Value
					(dollars in millions)
Debt securities available for sale:
	U.S. government and agency securities:
		U.S. Treasury securities			$	14,351	$	109	$	2	$	—	$	14,458
		U.S. agency securities				15,330		122		3		—		15,449
				Total U.S. government and agency securities		29,681		231		5		—		29,907
	Corporate and other debt:
		Commercial mortgage-backed securities:
			Agency			2,197		6		4		—		2,199
			Non-Agency			160		—		—		—		160
		Auto loan asset-backed securities				1,993		4		1		—		1,996
		Corporate bonds				2,891		13		3		—		2,901
		FFELP student loan asset-backed securities(1)				2,675		23		—		—		2,698
				Total Corporate and other debt		9,916		46		8		—		9,954
Total debt securities available for sale						39,597		277		13		—		39,861
Equity securities available for sale						15		—		7		—		8
Total					$	39,612	$	277	$	20	$	—	$	39,869

______________

• Amounts are backed by a guarantee from the U.S. Department of Education of at least 95% of the principal balance and interest on such loans.

The tables below present the fair value of investments in securities available for sale that are in an unrealized loss position:

					Less than 12 Months				12 Months or Longer				Total
At March 31, 2013					Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
				(dollars in millions)
Debt securities available for sale:
	U.S. government and agency securities:
		U.S. Treasury securities		$	805	$	2	$	—	$	—	$	805	$	2
		U.S. agency securities			2,927		10		23		—		2,950		10
			Total U.S. government and agency securities		3,732		12		23		—		3,755		12
	Corporate and other debt:
		Commercial mortgage-backed securities:
			Agency		1,703		15		—		—		1,703		15
			Non-Agency		169		1		—		—		169		1
		Auto loan asset-backed securities			1,072		1		—		—		1,072		1
		Corporate bonds			907		3		—		—		907		3
		FFELP student loan asset-backed securities			458		1		—		—		458		1
			Total Corporate and other debt		4,309		21		—		—		4,309		21
Total debt securities available for sale					8,041		33		23		—		8,064		33
Equity securities available for sale					—		—		8		7		8		7
Total				$	8,041	$	33	$	31	$	7	$	8,072	$	40
					Less than 12 Months				12 Months or Longer				Total
At December 31, 2012					Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
				(dollars in millions)
Debt securities available for sale:
	U.S. government and agency securities:
		U.S. Treasury securities		$	1,012	$	2	$	—	$	—	$	1,012	$	2
		U.S. agency securities			1,534		3		27		—		1,561		3
			Total U.S. government and agency securities		2,546		5		27		—		2,573		5
	Corporate and other debt:
		Commercial mortgage-backed securities:
			Agency		1,057		4		—		—		1,057		4
		Auto loan asset-backed securities			710		1		—		—		710		1
		Corporate bonds			934		3		—		—		934		3
			Total Corporate and other debt		2,701		8		—		—		2,701		8
Total debt securities available for sale					5,247		13		27		—		5,274		13
Equity securities available for sale					8		7		—		—		8		7
Total				$	5,255	$	20	$	27	$	—	$	5,282	$	20

Gross unrealized losses are recorded in Accumulated other comprehensive income.

Fordebt securities available for sale in an unrealized loss position, the Company does not intend to sell these securities or expect to be required to sell these securities prior to recovery of the amortized cost basis. In addition, the Company does not expect the U.S. government and agency securities to experience a credit loss given the explicit and implicit guarantee provided by the U.S. government. The Company believes that the debt securities with an unrealized loss in Accumulated other comprehensive income were not other-than-temporarily impaired at March 31, 2013.

For equity securities available for salein an unrealized loss position, the Company does not intend to sell these securities or expect to be required to sell these securities prior to the recovery of the amortized cost basis. The Company believes that the equity securities with an unrealized loss in Accumulated other comprehensive income were not other-than-temporarily impaired at March 31, 2013.

The following table presents the amortized cost and fair value of debt securities available for sale by contractual maturity dates at March 31, 2013.

At March 31, 2013					Amortized Cost		Fair Value	Annualized Average Yield
				(dollars in millions)
U.S. government and agency securities:
	U.S. Treasury securities:
			Due within 1 year	$	1,550	$	1,571	1.7%
			After 1 year through 5 years		12,388		12,470	0.7%
			Total		13,938		14,041
	U.S. agency securities:
			After 5 years through 10 years		2,017		2,029	1.1%
			After 10 years		13,182		13,259	1.1%
			Total		15,199		15,288
			Total U.S. government and agency securities		29,137		29,329	0.9%
Corporate and other debt:
	Commercial mortgage-backed securities:
		Agency:
			After 1 year through 5 years		487		487	0.9%
			After 5 years through 10 years		547		547	0.9%
			After 10 years		1,336		1,323	1.5%
			Total		2,370		2,357
		Non-Agency:
			After 1 year through 5 years		105		105	1.1%
			After 5 years through 10 years		38		38	0.8%
			After 10 years		316		317	0.9%
			Total		459		460
	Auto loan asset-backed securities:
			After 1 year through 5 years		1,982		1,984	0.7%
			After 5 years through 10 years		189		189	0.6%
			Total		2,171		2,173
	Corporate bonds:
			Due within 1 year		203		203	0.6%
			After 1 year through 5 years		3,041		3,053	1.1%
			After 5 years through 10 years		286		286	1.8%
			Total		3,530		3,542
	Collateralized debt and loan obligations:
			After 1 year through 5 years		50		50	1.7%
			After 10 years		627		627	1.4%
			Total		677		677
	FFELP student loan asset-backed securities:
			After 1 year through 5 years		124		124	0.7%
			After 5 years through 10 years		507		511	1.0%
			After 10 years		2,253		2,273	1.1%
			Total		2,884		2,908
			Total Corporate and other debt		12,091		12,117	1.1%
			Total debt securities available for sale	$	41,228	$	41,446	1.0%

See Note 7 for additional information on securities issued by VIEs, including U.S. agency mortgage-backed securities, auto loan asset-backed securities, FFELP student loan asset-backed securities and collateralized debt and loan obligations.

The following table presents information pertaining to sales of securities available for sale duringthe three months ended March 31, 2013 and 2012:

		Three Months Ended
		March 31,
		2013		2012
		(dollars in millions)
Gross realized gains	$	5	$	2
Gross realized losses	$	2	$	1
Proceeds of sales of securities available for sale	$	2,029	$	—

Gross realized gains and losses are recognized in Other revenues in the condensed consolidated statements of income.

XML

Fair Value Disclosures

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures

Fair Value Disclosures

4.Fair Value Disclosures.

Fair Value Measurements.

A description of the valuation techniques applied to the Company's major categories of assets and liabilities measured at fair value on a recurring basis follows.

Trading Assets and Trading Liabilities.

U.S. Government and Agency Securities.

•       U.S. Treasury Securities.    U.S. Treasury securities are valued using quoted market prices. Valuation adjustments are not applied. Accordingly, U.S. Treasury securities are generally categorized in Level 1 of the fair value hierarchy.

•        U.S. Agency Securities.    U.S. agency securities are composed of three main categories consisting of agency-issued debt, agency mortgage pass-through pool securities and collateralized mortgage obligations. Non-callable agency-issued debt securities are generally valued using quoted market prices. Callable agency-issued debt securities are valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. The fair value of agency mortgage pass-through pool securities is model-driven based on spreads of the comparable To-be-announced (“TBA”) security. Collateralized mortgage obligations are valued using quoted market prices and trade data adjusted by subsequent changes in related indicesfor identical or comparable securities. Actively traded non-callable agency-issued debt securities are generally categorized in Level 1 of the fair value hierarchy. Callable agency-issued debt securities, agency mortgage pass-through pool securities and collateralized mortgage obligations are generally categorized in Level 2 of the fair value hierarchy.

Other Sovereign Government Obligations.

•       Foreign sovereign government obligations are valued using quoted prices in active markets when available. These bonds are generally categorized in Level 1 of the fair value hierarchy. If the market is less active or prices are dispersed, these bonds are categorized in Level 2 of the fair value hierarchy.

Corporate and Other Debt.

•       State and Municipal Securities.    The fair value of state and municipal securities is determined using recently executed transactions, market price quotations and pricing models that factor in, where applicable, interest rates, bond or credit default swap spreads and volatility. These bonds are generally categorized in Level 2 of the fair value hierarchy.

•       Residential Mortgage-Backed Securities (“RMBS”), Commercial Mortgage-Backed Securities (“CMBS”) and other Asset-Backed Securities (“ABS”).    RMBS, CMBS and other ABS may be valued based on price or spread data obtained from observed transactions or independent external parties such as vendors or brokers. When position-specific external price data are not observable, the fair value determination may require benchmarking to similar instruments and/or analyzing expected credit losses, default and recovery rates. In evaluating the fair value of each security, the Company considers security collateral-specific attributes, including payment priority, credit enhancement levels, type of collateral, delinquency rates and loss severity. In addition, for RMBS borrowers, Fair Isaac Corporation (“FICO”) scores and the level of documentation for the loan are also considered. Market standard models, such as Intex, Trepp or others, may be deployed to model the specific collateral composition and cash flow structure of each transaction. Key inputs to these models are market spreads, forecasted credit losses, default and prepayment rates for each asset category. Valuation levels of RMBS and CMBS indices are also used as an additional data point for benchmarking purposes or to price outright index positions.

RMBS, CMBS and other ABS are generally categorized in Level 2 of the fair value hierarchy. If external prices or significant spread inputs are unobservable or if the comparability assessment involves significant subjectivity related to property type differences, cash flows, performance and other inputs, then RMBS, CMBS and other ABS are categorized in Level 3 of the fair value hierarchy.

•       Corporate Bonds.    The fair value of corporate bonds is determined using recently executed transactions, market price quotations (where observable), bond spreads or credit default swap spreads obtained from independent external parties such as vendors and brokers adjusted for any basis difference between cash and derivative instruments. The spread data used are for the same maturity as the bond. If the spread data do not reference the issuer, then data that reference a comparable issuer are used. When position-specific external price data are not observable, fair value is determined based on either benchmarking to similar instruments or cash flow models with yield curves, bond or single-name credit default swap spreads and recovery rates as significant inputs. Corporate bonds are generally categorized in Level 2 of the fair value hierarchy; in instances where prices, spreads or any of the other aforementioned key inputs are unobservable, they are categorized in Level 3 of the fair value hierarchy.

•       Collateralized Debt Obligation (“CDO”).    The Company holds cash CDOs that typically reference a tranche of an underlying synthetic portfolio of single name credit default swapscollateralized by corporate bonds (“credit-linked notes”) or cash portfolio of asset-backed securities (“asset-backed CDOs”). Credit correlation, a primary input used to determine the fair value of credit-linked notes, is usually unobservable and derived using a benchmarking technique. The other credit-linked note model inputs such as credit spreads, including collateral spreads, and interest rates are typically observable. Asset-backed CDOs are valued based on an evaluation of the market and model input parameters sourced from similar positions as indicated by primary and secondary market activity. Each asset-backed CDO position is evaluated independently taking into consideration available comparable market levels, underlying collateral performance and pricing, and deal structures, as well as liquidity.Cash CDOs are categorized in Level 2 of the fair value hierarchy when either the credit correlation input is insignificant or comparable market transactions are observable. In instances where the credit correlation input is deemed to be significantor comparable market transactions are unobservable, cash CDOs are categorized in Level 3 of the fair value hierarchy.

•       Corporate Loans and Lending Commitments.    The fair value of corporate loans is determined using recently executed transactions, market price quotations (where observable), implied yields from comparable debt, and market observable credit default swap spread levels obtained from independent external parties such as vendors and brokersadjusted for any basis difference between cash and derivative instruments, along with proprietary valuation models and default recovery analysis where such transactions and quotations are unobservable. The fair value of contingent corporate lending commitments is determined by using executed transactions on comparable loans and the anticipated market price based on pricing indications from syndicate banks and customers. The valuation of loans and lending commitments also takes into account fee income that is considered an attribute of the contract. Corporate loans and lending commitments are categorized in Level 2 of the fair value hierarchy except in instances where prices or significant spread inputs are unobservable, in which case they are categorized in Level 3 of the fair value hierarchy.

•       Mortgage Loans.    Mortgage loans are valued using observable prices based on transactional data or third-party pricing for identical or comparable instruments, when available. Where position-specific external prices are not observable, the Company estimates fair value based on benchmarking to prices and rates observed in the primary market for similar loan or borrower types or based on the present value of expected future cash flows using its best estimates of the key assumptions, including forecasted credit losses, prepayment rates, forward yield curves and discount rates commensurate with the risks involved or a methodology that utilizes the capital structure and credit spreads of recent comparable securitization transactions. Mortgage loans valued based on observable market data for identical or comparable instruments are categorized in Level 2 of the fair value hierarchy. Where observable prices are not available, due to the subjectivity involved in the comparability assessment related to mortgage loan vintage, geographical concentration, prepayment speed and projected loss assumptions, mortgage loans are categorized in Level 3 of the fair value hierarchy. Mortgage loans are presented within Loans and lending commitments in the fair value hierarchy table.

•       Auction Rate Securities (“ARS”).    The Company primarily holds investments in Student Loan Auction Rate Securities (“SLARS”) and Municipal Auction Rate Securities (“MARS”) with interest rates that are reset through periodic auctions. SLARS are ABS backed by pools of student loans. MARS are municipal bonds often wrapped by municipal bond insurance. ARS were historically traded and valued as floating rate notes, priced at par due to the auction mechanism. Beginning in fiscal 2008, uncertainties in the credit markets have resulted in auctions failing for certain types of ARS. Once the auctions failed, ARS could no longer be valued using observations of auction market prices. Accordingly, the fair value of ARS is determined using independent external market data where available and an internally developed methodology to discount for the lack of liquidity and non-performance risk.

Inputs that impact the valuation of SLARS are independent external market data, the underlying collateral types, level of seniority in the capital structure, amount of leverage in each structure, credit rating and liquidity considerations. Inputs that impact the valuation of MARS are recently executed transactions, the maximum rate, quality of underlying issuers/insurers and evidence of issuer calls/prepayment. ARS are generally categorized in Level 2 of the fair value hierarchy as the valuation technique relies on observable external data. SLARS and MARS are presented within Asset-backed securities and State and municipal securities, respectively, in the fair value hierarchy table.

Corporate Equities.

•       Exchange-Traded Equity Securities.    Exchange-traded equity securities are generally valued based on quoted prices from the exchange. To the extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in Level 1 of the fair value hierarchy; otherwise, they are categorized in Level 2 or Level 3 of the fair value hierarchy.

•       Unlisted Equity Securities.    Unlisted equity securities are valued based on an assessment of each underlying security, considering rounds of financing and third-party transactions, discounted cash flow analyses and market-based information, including comparable company transactions, trading multiples and changes in market outlook, among other factors. These securities are generally categorized in Level 3 of the fair value hierarchy.

•       Fund Units. Listed fund units are generally marked to the exchange-traded price or net asset value (“NAV”) and are categorized in Level 1 of the fair value hierarchy if actively traded on an exchange or in Level 2 of the fair value hierarchy if trading is not active.Unlisted fund units are generally marked to NAV and categorized as Level 2; however, positions which are not redeemable at the measurement date or in the near future are categorized in Level 3 of the fair value hierarchy.

Derivative and Other Contracts.

•       Listed Derivative Contracts.    Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. Listed derivatives that are not actively traded are valued using the same approaches as those applied to over-the-counter (“OTC”) derivatives; they are generally categorized in Level 2 of the fair value hierarchy.

•       OTC Derivative Contracts.    OTC derivative contracts include forward, swap and option contracts related to interest rates, foreign currencies, credit standing of reference entities, equity prices or commodity prices.

Depending on the product and the terms of the transaction, the fair value of OTC derivative products can be either observed or modeled using a series of techniques and model inputs from comparable benchmarks, including closed-form analytic formulas, such as the Black-Scholes option-pricing model, and simulation models or a combination thereof. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets, as is the case for generic interest rate swaps, certain option contracts and certain credit default swaps. In the case of more established derivative products, the pricing models used by the Company are widely accepted by the financial services industry. A substantial majority of OTC derivative products valued by the Company using pricing models fall into this category and are categorized in Level 2 of the fair value hierarchy.

Other derivative products, including complex products that have become illiquid, require more judgment in the implementation of the valuation technique applied due to the complexity of the valuation assumptions and the reduced observability of inputs. This includes certain types of interest rate derivatives with both volatility and correlation exposure and credit derivatives including credit default swaps on certain mortgage-backed or asset-backed securities, basket credit default swaps and CDO-squared positions (a CDO-squared position is a special purpose vehicle that issues interests, or tranches, that are backed by tranches issued by other CDOs) where direct trading activity or quotes are unobservable. These instruments involve significant unobservable inputs and are categorized in Level 3 of the fair value hierarchy.

Derivative interests in credit default swaps on certain mortgage-backed or asset-backed securities, for which observability of external price data is limited, are valued based on an evaluation of the market and model input parameters sourced from similar positions as indicated by primary and secondary market activity. Each position is evaluated independently taking into consideration available comparable market levels as well as cash-synthetic basis, or the underlying collateral performance and pricing, behavior of the tranche under various cumulative loss and prepayment scenarios, deal structures (e.g., non-amortizing reference obligations, call features, etc.) and liquidity. While these factors may be supported by historical and actual external observations, the determination of their value as it relates to specific positions nevertheless requires significant judgment.

For basket credit default swaps and CDO-squared positions, the correlation input between reference credits is unobservable for each specific swap or position and is benchmarked to standardized proxy baskets for which correlation data are available. The other model inputs such as credit spread, interest rates and recovery rates are observable. In instances where the correlation input is deemed to be significant, these instruments are categorized in Level 3 of the fair value hierarchy; otherwise, these instruments are categorized in Level 2 of the fair value hierarchy.

The Company trades various derivative structures with commodity underlyings. Depending on the type of structure, the model inputs generally include interest rate yield curves, commodity underlier price curves, implied volatility of the underlying commodities and, in some cases, the implied correlation between these inputs. The fair value of these products is determined using executed trades and broker and consensus data to provide values for the aforementioned inputs. Where these inputs are unobservable, relationships to observable commodities and data points, based on historic and/or implied observations, are employed as a technique to estimate the model input values. Commodity derivatives are generally categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the fair value hierarchy.

For further information on derivative instruments and hedging activities, see Note 11.

Investments.

•       The Company's investments include direct investments in equity securities as well as investments in private equity funds, real estate funds and hedge funds, which include investments made in connection with certain employee deferred compensation plans. Direct investments are presented in the fair value hierarchy table as Principal investments and Other. Initially, the transaction price is generally considered by the Company as the exit price and is the Company's best estimate of fair value.

After initial recognition, in determining the fair value of non-exchange-traded internally and externally managed funds, the Company generally considers the NAV of the fund provided by the fund manager to be the best estimate of fair value. For non-exchange-traded investments either held directly or held within internally managed funds, fair value after initial recognition is based on an assessment of each underlying investment, considering rounds of financing and third-party transactions, discounted cash flow analyses and market-based information, including comparable company transactions, trading multiples and changes in market outlook, among other factors. Exchange-traded direct equity investments are generally valued based on quoted prices from the exchange.

Exchange-traded direct equity investments that are actively traded are categorized in Level 1 of the fair value hierarchy. Non-exchange-traded direct equity investments and investments in private equity and real estate funds are generally categorized in Level 3 of the fair value hierarchy. Investments in hedge funds that are redeemable at the measurement date or in the near future are categorized in Level 2 of the fair value hierarchy; otherwise, they are categorized in Level 3 of the fair value hierarchy.

Physical Commodities.

•       The Company trades various physical commodities, including crude oil and refined products, natural gas, base and precious metals, and agricultural products. Fair value for physical commodities is determined using observable inputs, including broker quotations and published indices. Physical commodities are categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the fair value hierarchy.

Securities Available for Sale.

•       Securities available for sale are composed of U.S. government and agency securities (e.g., U.S. Treasury securities, agency-issued debt, agency mortgage pass-through securities and collateralized mortgage obligations),CMBS, Federal Family Education Loan Program (“FFELP”) student loan asset-backed securities, auto loan asset-backed securities, corporate bonds and equity securities. Actively traded U.S. Treasury securities, non-callable agency-issued debt securities and equity securities are generally categorized in Level 1 of the fair value hierarchy. Callable agency-issued debt securities, agency mortgage pass-through securities, collateralized mortgage obligations, CMBS,FFELP student loan asset-backed securities, auto loan asset-backed securities and corporate bondsare generally categorized in Level 2 of the fair value hierarchy. For further information on securities available for sale, see Note 5.

Deposits.

•       Time Deposits.    The fair value of certificates of deposit is determined using third-party quotations. These deposits are generally categorized in Level 2 of the fair value hierarchy.

Commercial Paper and Other Short-Term Borrowings/Long-Term Borrowings.

•       Structured Notes.    The Company issues structured notes that have coupon or repayment terms linked to the performance of debt or equity securities, indices, currencies or commodities. Fair value of structured notes is determined using valuation models for the derivative and debt portions of the notes. These models incorporate observable inputs referencing identical or comparable securities, including prices to which the notes are linked, interest rate yield curves, option volatility and currency, commodity or equity prices. Independent, external and traded prices for the notes are considered as well. The impact of the Company's own credit spreads is also included based on the Company's observed secondary bond market spreads. Most structured notes are categorized in Level 2 of the fair value hierarchy.

Securities Purchased under Agreements to Resell and Securities Sold under Agreements to Repurchase.

•       The fair value of a reverse repurchase agreement or repurchase agreement is computed using a standard cash flow discounting methodology. The inputs to the valuation include contractual cash flows and collateral funding spreads, which are estimated using various benchmarks, interest rate yield curves and option volatilities. In instances where the unobservable inputs are deemed significant, reverse repurchase agreements and repurchase agreements are categorized in Level 3 of the fair value hierarchy; otherwise, they are categorized in Level 2 of the fair value hierarchy.

The following fair value hierarchy tables present information about the Company's assets and liabilities measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at March 31, 2013.

				Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting		Balance at March 31, 2013
					(dollars in millions)
Assets at Fair Value
Trading assets:
	U.S. government and agency securities:
		U.S. Treasury securities		$	24,411	$	—	$	—	$	—	$	24,411
		U.S. agency securities			2,040		22,796		—		—		24,836
			Total U.S. government and agency securities		26,451		22,796		—		—		49,247
	Other sovereign government obligations				29,893		8,577		3		—		38,473
	Corporate and other debt:
		State and municipal securities			—		2,228		—		—		2,228
		Residential mortgage-backed securities			—		1,684		19		—		1,703
		Commercial mortgage-backed securities			—		1,122		174		—		1,296
		Asset-backed securities			—		1,040		11		—		1,051
		Corporate bonds			—		18,453		888		—		19,341
		Collateralized debt obligations			—		442		1,666		—		2,108
		Loans and lending commitments			—		11,175		5,284		—		16,459
		Other debt			—		9,104		1		—		9,105
			Total corporate and other debt		—		45,248		8,043		—		53,291
	Corporate equities(1)				74,280		923		270		—		75,473
	Derivative and other contracts:
		Interest rate contracts			711		708,732		3,640		—		713,083
		Credit contracts			—		58,131		4,134		—		62,265
		Foreign exchange contracts			24		50,395		5		—		50,424
		Equity contracts			965		42,508		1,044		—		44,517
		Commodity contracts			3,674		15,559		2,332		—		21,565
		Other			—		90		—		—		90
		Netting(2)			(4,892)		(774,480)		(6,543)		(70,200)		(856,115)
			Total derivative and other contracts		482		100,935		4,612		(70,200)		35,829
	Investments:
		Private equity funds			—		—		2,291		—		2,291
		Real estate funds			—		7		1,370		—		1,377
		Hedge funds			—		370		545		—		915
		Principal investments			20		2		2,855		—		2,877
		Other			190		77		496		—		763
			Total investments		210		456		7,557		—		8,223
	Physical commodities				—		6,700		—		—		6,700
		Total trading assets			131,316		185,635		20,485		(70,200)		267,236
Securities available for sale					14,049		27,405		—		—		41,454
Securities received as collateral					17,920		51		—		—		17,971
Federal funds sold and securities purchased
	under agreements to resell				—		873		—		—		873
Intangible assets(3)					—		—		8		—		8
Total assets measured at fair value				$	163,285	$	213,964	$	20,493	$	(70,200)	$	327,542
Liabilities at Fair Value
Deposits				$	—	$	1,442	$	—	$	—	$	1,442
Commercial paper and other short-term borrowings					—		1,257		5		—		1,262
Trading liabilities:
	U.S. government and agency securities:
		U.S. Treasury securities			21,303		—		—		—		21,303
		U.S. agency securities			1,765		96		—		—		1,861
			Total U.S. government and agency securities		23,068		96		—		—		23,164
	Other sovereign government obligations				26,928		3,325		—		—		30,253
	Corporate and other debt:
		State and municipal securities			—		47		—		—		47
		Residential mortgage-backed securities			—		—		4		—		4
		Asset-backed securities			—		1		—		—		1
		Corporate bonds			—		6,979		424		—		7,403
		Collateralized debt obligations			—		317		—		—		317
		Unfunded lending commitments			—		252		25		—		277
		Other debt			—		87		11		—		98
			Total corporate and other debt		—		7,683		464		—		8,147
	Corporate equities(1)				28,705		1,547		4		—		30,256
	Derivative and other contracts:
		Interest rate contracts			747		681,975		3,662		—		686,384
		Credit contracts			—		56,326		2,731		—		59,057
		Foreign exchange contracts			3		51,466		240		—		51,709
		Equity contracts			891		47,321		2,384		—		50,596
		Commodity contracts			4,164		15,027		1,629		—		20,820
		Other			—		30		3		—		33
		Netting(2)			(4,892)		(774,480)		(6,543)		(42,032)		(827,947)
			Total derivative and other contracts		913		77,665		4,106		(42,032)		40,652
		Total trading liabilities			79,614		90,316		4,574		(42,032)		132,472
Obligation to return securities received as collateral					23,452		58		—		—		23,510
Securities sold under agreements to repurchase					—		410		155		—		565
Other secured financings					—		9,349		275		—		9,624
Long-term borrowings					—		39,726		2,784		—		42,510
Total liabilities measured at fair value				$	103,066	$	142,558	$	7,793	$	(42,032)	$	211,385

_____________

(1)       The Company holds or sells short for trading purposes equity securities issued by entities in diverse industries and of varying size.

(2)       For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash collateral netting are included in the column titled “Counterparty and Cash Collateral Netting.” For contracts with the same counterparty, counterparty netting among positions classified within the same level is included within that level. For further information on derivative instruments and hedging activities, see Note 11.

(3)       Amount represents mortgage servicing rights (“MSR”) accounted for at fair value. See Note 7 for further information on MSRs.

Transfers Between Level 1 and Level 2Duringthe Quarter Ended March 31, 2013.

For assets and liabilities that were transferred between Level 1 and Level 2 during the period,fair values are ascribed as if the assets or liabilities had been transferred as of the beginning of the period.

In the quarter ended March 31, 2013, there were no material transfers between Level 1 and Level 2.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2012.

				Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting		Balance at December 31, 2012
					(dollars in millions)
Assets at Fair Value
Trading assets:
	U.S. government and agency securities:
		U.S. Treasury securities		$	24,662	$	14	$	—	$	—	$	24,676
		U.S. agency securities			1,451		27,888		—		—		29,339
			Total U.S. government and agency securities		26,113		27,902		—		—		54,015
	Other sovereign government obligations				37,669		5,487		6		—		43,162
	Corporate and other debt:
		State and municipal securities			—		1,558		—		—		1,558
		Residential mortgage-backed securities			—		1,439		45		—		1,484
		Commercial mortgage-backed securities			—		1,347		232		—		1,579
		Asset-backed securities			—		915		109		—		1,024
		Corporate bonds			—		18,403		660		—		19,063
		Collateralized debt obligations			—		685		1,951		—		2,636
		Loans and lending commitments			—		12,617		4,694		—		17,311
		Other debt			—		4,457		45		—		4,502
			Total corporate and other debt		—		41,421		7,736		—		49,157
	Corporate equities(1)				68,072		1,067		288		—		69,427
	Derivative and other contracts:
		Interest rate contracts			446		819,581		3,774		—		823,801
		Credit contracts			—		63,234		5,033		—		68,267
		Foreign exchange contracts			34		52,729		31		—		52,794
		Equity contracts			760		37,074		766		—		38,600
		Commodity contracts			4,082		14,256		2,308		—		20,646
		Other			—		143		—		—		143
		Netting(2)			(4,740)		(883,733)		(6,947)		(72,634)		(968,054)
			Total derivative and other contracts		582		103,284		4,965		(72,634)		36,197
	Investments:
		Private equity funds			—		—		2,179		—		2,179
		Real estate funds			—		6		1,370		—		1,376
		Hedge funds			—		382		552		—		934
		Principal investments			185		83		2,833		—		3,101
		Other			199		71		486		—		756
			Total investments		384		542		7,420		—		8,346
	Physical commodities				—		7,299		—		—		7,299
		Total trading assets			132,820		187,002		20,415		(72,634)		267,603
Securities available for sale					14,466		25,403		—		—		39,869
Securities received as collateral					14,232		46		—		—		14,278
Federal funds sold and securities purchased under
	agreements to resell				—		621		—		—		621
Intangible assets(3)					—		—		7		—		7
Total assets measured at fair value				$	161,518	$	213,072	$	20,422	$	(72,634)	$	322,378
Liabilities at Fair Value
Deposits				$	—	$	1,485	$	—	$	—	$	1,485
Commercial paper and other short-term borrowings					—		706		19		—		725
Trading liabilities:
	U.S. government and agency securities:
		U.S. Treasury securities			20,098		21		—		—		20,119
		U.S. agency securities			1,394		107		—		—		1,501
			Total U.S. government and agency securities		21,492		128		—		—		21,620
	Other sovereign government obligations				27,583		2,031		—		—		29,614
	Corporate and other debt:
		State and municipal securities			—		47		—		—		47
		Residential mortgage-backed securities			—		—		4		—		4
		Corporate bonds			—		3,942		177		—		4,119
		Collateralized debt obligations			—		328		—		—		328
		Unfunded lending commitments			—		305		46		—		351
		Other debt			—		156		49		—		205
			Total corporate and other debt		—		4,778		276		—		5,054
	Corporate equities(1)				25,216		1,655		5		—		26,876
	Derivative and other contracts:
		Interest rate contracts			533		789,715		3,856		—		794,104
		Credit contracts			—		61,283		3,211		—		64,494
		Foreign exchange contracts			2		56,021		390		—		56,413
		Equity contracts			748		39,212		1,910		—		41,870
		Commodity contracts			4,530		15,702		1,599		—		21,831
		Other			—		54		7		—		61
		Netting(2)			(4,740)		(883,733)		(6,947)		(46,395)		(941,815)
			Total derivative and other contracts		1,073		78,254		4,026		(46,395)		36,958
		Total trading liabilities			75,364		86,846		4,307		(46,395)		120,122
Obligation to return securities received as collateral					18,179		47		—		—		18,226
Securities sold under agreements to repurchase					—		212		151		—		363
Other secured financings					—		9,060		406		—		9,466
Long-term borrowings					—		41,255		2,789		—		44,044
Total liabilities measured at fair value				$	93,543	$	139,611	$	7,672	$	(46,395)	$	194,431

_____________

(1)       The Company holds or sells short for trading purposes equity securities issued by entities in diverse industries and of varying size.

(2)       For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash collateral netting are included in the column titled “Counterparty and Cash Collateral Netting.” For contracts with the same counterparty, counterparty netting among positions classified within the same level is included within that level. For further information on derivative instruments and hedging activities, see Note 11.

(3)       Amount represents MSRs accounted for at fair value. See Note 7 for further information on MSRs.

Transfers Between Level 1 and Level 2 During the Quarter Ended March 31, 2012.

Trading assets—Derivative and other contracts and Trading liabilities—Derivative and other contracts.  During the quarter ended March 31, 2012, the Company reclassified approximately $1.1 billion of derivative assets and approximately $1.2 billion of derivative liabilities from Level 2 to Level 1 as these listed derivatives became actively traded and were valued based on quoted prices from the exchange. Also during the quarter ended March 31, 2012, the Company reclassified approximately $0.3 billion of derivative assets and approximately $0.4 billion of derivative liabilities from Level 1 to Level 2 as transactions in these contracts did not occur with sufficient frequency and volume to constitute an active market.

Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis.

The following tables present additional information about Level 3 assets and liabilities measured at fair value on a recurring basis for the quarters ended March 31, 2013 and 2012, respectively. Level 3 instruments may be hedged with instruments classified in Level 1 and Level 2. As a result, the realized and unrealized gains (losses) for assets and liabilities within the Level 3 category presented in the tables below do not reflect the related realized and unrealized gains (losses) on hedging instruments that have been classified by the Company within the Level 1 and/or Level 2 categories.

Additionally, both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains (losses) during the period for assets and liabilities within the Level 3 category presented in the tables below may include changes in fair value during the period that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

For assets and liabilities that were transferred into Level 3 during the period, gains (losses) are presented as if the assets or liabilities had been transferred into Level 3 at the beginning of the period; similarly, for assets and liabilities that were transferred out of Level 3 during the period, gains (losses) are presented as if the assets or liabilities had been transferred out at the beginning of the period.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Quarter Ended March 31, 2013.

					Beginning Balance at December 31, 2012		Total Realized and Unrealized Gains (Losses) (1)		Purchases		Sales		Issuances		Settlements		Net Transfers		Ending Balance at March 31, 2013		Unrealized Gains (Losses) for Level 3 Assets/ Liabilities Outstanding at March 31, 2013(2)
					(dollars in millions)
Assets at Fair Value
Trading assets:
	Other sovereign government obligations			$	6	$	—	$	1	$	(3)	$	—	$	—	$	(1)	$	3	$	—
	Corporate and other debt:
		Residential mortgage-backed securities			45		26		15		(42)		—		—		(25)		19		9
		Commercial mortgage-backed securities			232		15		6		(80)		—		—		1		174		7
		Asset-backed securities			109		—		1		(99)		—		—		—		11		—
		Corporate bonds			660		62		437		(247)		—		(12)		(12)		888		5
		Collateralized debt obligations			1,951		191		314		(695)		—		(95)		—		1,666		63
		Loans and lending commitments			4,694		20		944		(149)		—		(738)		513		5,284		1
		Other debt			45		(8)		14		(49)		—		—		(1)		1		(1)
			Total corporate and other debt		7,736		306		1,731		(1,361)		—		(845)		476		8,043		84
	Corporate equities				288		(22)		85		(61)		—		—		(20)		270		5
	Net derivative and other contracts(3):
		Interest rate contracts			(82)		(106)		1		—		(1)		192		(26)		(22)		18
		Credit contracts			1,822		(452)		42		—		(15)		(4)		10		1,403		(418)
		Foreign exchange contracts			(359)		8		—		—		—		109		7		(235)		(2)
		Equity contracts			(1,144)		(140)		85		(1)		(93)		(76)		29		(1,340)		(125)
		Commodity contracts			709		(10)		9		—		(4)		(8)		7		703		(30)
		Other			(7)		(2)		—		—		—		6		—		(3)		(2)
			Total net derivative and
			other contracts		939		(702)		137		(1)		(113)		219		27		506		(559)
	Investments:
		Private equity funds			2,179		114		70		(72)		—		—		—		2,291		104
		Real estate funds			1,370		80		3		(83)		—		—		—		1,370		90
		Hedge funds			552		2		31		(34)		—		—		(6)		545		(3)
		Principal investments			2,833		63		35		(85)		—		—		9		2,855		78
		Other			486		17		11		(17)		—		—		(1)		496		16
			Total investments		7,420		276		150		(291)		—		—		2		7,557		285
Intangible assets					7		4		—		—		—		(3)		—		8		2
Liabilities at Fair Value
Commercial paper and other
	short-term borrowings			$	19	$	—	$	—	$	—	$	1	$	(1)	$	(14)	$	5	$	—
Trading liabilities:
	Corporate and other debt:
		Residential mortgage-backed securities			4		—		—		—		—		—		—		4		—
		Corporate bonds			177		—		(131)		371		—		—		7		424		3
		Unfunded lending commitments			46		21		—		—		—		—		—		25		20
		Other debt			49		11		(37)		10		—		—		—		11		10
			Total corporate and other debt		276		32		(168)		381		—		—		7		464		33
	Corporate equities				5		—		(3)		1		—		—		1		4		1
Securities sold under agreements to repurchase					151		(4)		—		—		—		—		—		155		(4)
Other secured financings					406		12		—		—		13		(132)		—		275		5
Long-term borrowings					2,789		(17)		—		—		543		(188)		(377)		2,784		(17)

___________

(1)       Total realized and unrealized gains (losses) are primarily included in Trading in the condensed consolidated statements of income except for $276 million related to Trading assets—Investments, which is included in Investments revenues.

(2)       Amounts represent unrealized gains (losses) for the quarter ended March 31, 2013 related to assets and liabilities still outstanding at March 31, 2013.

(3)       Net derivative and other contracts represent Trading assets—Derivative and other contracts net of Trading liabilities—Derivative and other contracts. For further information on derivative instruments and hedging activities, see Note 11.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for Quarter Ended March 31, 2012.

					Beginning Balance at December 31, 2011		Total Realized and Unrealized Gains (Losses) (1)		Purchases		Sales		Issuances		Settlements		Net Transfers		Ending Balance at March 31, 2012		Unrealized Gains (Losses) for Level 3 Assets/ Liabilities Outstanding at March 31, 2012(2)
					(dollars in millions)
Assets at Fair Value
Trading assets:
	U.S. agency securities			$	8	$	—	$	42	$	(26)	$	—	$	—	$	(1)	$	23	$	—
	Other sovereign government obligations				119		(1)		8		(118)		—		—		—		8		—
	Corporate and other debt:
		State and municipal securities			—		—		—		—		—		—		3		3		—
		Residential mortgage-backed securities			494		(21)		6		(245)		—		—		(191)		43		(18)
		Commercial mortgage-backed securities			134		23		5		(21)		—		(1)		(13)		127		16
		Asset-backed securities			31		1		—		(28)		—		—		(1)		3		1
		Corporate bonds			675		45		426		(225)		—		—		(22)		899		39
		Collateralized debt obligations			980		123		296		(161)		—		—		(73)		1,165		82
		Loans and lending commitments			9,590		(20)		496		(1,018)		—		(421)		(30)		8,597		(35)
		Other debt			128		2		27		(123)		—		—		23		57		—
			Total corporate and other debt		12,032		153		1,256		(1,821)		—		(422)		(304)		10,894		85
	Corporate equities				417		(45)		901		(758)		—		—		39		554		(9)
	Net derivative and other contracts(3):
		Interest rate contracts			420		170		6		—		(5)		(139)		(430)		22		179
		Credit contracts			5,814		(1,381)		63		—		(10)		(47)		(58)		4,381		(1,786)
		Foreign exchange contracts			43		(99)		—		—		—		162		(40)		66		(83)
		Equity contracts			(1,234)		(99)		199		(58)		(50)		(250)		50		(1,442)		(161)
		Commodity contracts			570		199		4		—		(4)		37		(3)		803		101
		Other			(1,090)		58		—		—		—		269		740		(23)		56
			Total net derivative and other contracts		4,523		(1,152)		272		(58)		(69)		32		259		3,807		(1,694)
	Investments:
		Private equity funds			1,936		(7)		101		(36)		—		—		—		1,994		1
		Real estate funds			1,213		52		87		(14)		—		—		—		1,338		5
		Hedge funds			696		25		22		(33)		—		—		(87)		623		23
		Principal investments			2,937		38		180		(65)		—		—		104		3,194		57
		Other			501		(33)		34		(3)		—		—		28		527		(41)
			Total investments		7,283		75		424		(151)		—		—		45		7,676		45
	Physical commodities				46		—		—		—		—		(46)		—		—		—
Intangible assets					133		(34)		—		—		—		—		—		99		(34)
Liabilities at Fair Value
Commercial paper and other short-term borrowings				$	2	$	—	$	—	$	—	$	13	$	—	$	—	$	15	$	—
Trading liabilities:
	Other sovereign government obligations				8		—		(7)		—		—		—		—		1		—
	Corporate and other debt:
		Residential mortgage-backed securities			355		—		(294)		—		—		—		—		61		(61)
		Corporate bonds			219		(59)		(186)		126		—		—		(25)		193		(74)
		Unfunded lending commitments			85		25		—		—		—		—		—		60		25
		Other debt			73		1		—		—		—		(55)		16		33		3
	Total corporate and other debt				732		(33)		(480)		126		—		(55)		(9)		347		(107)
	Corporate equities				1		(2)		(2)		10		—		—		(9)		2		—
Securities sold under agreements to repurchase					340		1		—		—		—		—		(153)		186		3
Other secured financings					570		(44)		—		—		12		(32)		—		594		(44)
Long-term borrowings					1,603		(173)		—		—		262		(78)		183		2,143		(171)

____________

(1)       Total realized and unrealized gains (losses) are primarily included in Trading in the condensed consolidated statements of income except for $75 million related to Trading assets—Investments, which is included in Investments revenues.

(2)       Amounts represent unrealized gains (losses) forthe quarter ended March 31, 2012 related to assets and liabilities still outstanding at March 31, 2012.

(3)       Net derivative and other contracts represent Trading assets—Derivative and other contracts net of Trading liabilities—Derivative and other contracts. For further information on derivative instruments and hedging activities, see Note 11.

Quantitative Information about and Sensitivity of Significant Unobservable Inputs Used in Recurring Level 3 Fair Value Measurements at March 31, 2013 and December 31, 2012.

The disclosures below provide information on the valuation techniques, significant unobservable inputs and their ranges and averages for each major category of assets and liabilities measured at fair value on a recurring basis with a significant Level 3 balance. The level of aggregation and breadth of products cause the range of inputs to be wide and not evenly distributed across the inventory. Further, the range of unobservable inputs may differ across firms in the financial services industry because of diversity in the types of products included in each firm's inventory. The disclosures below also include qualitative information on the sensitivity of the fair value measurements to changes in the significant unobservable inputs.

At March 31, 2013.

					Balance at
					March 31,
					2013
					(dollars		Significant Unobservable Input(s) /
					in	Valuation	Sensitivity of the Fair Value to Changes
					millions)	Technique(s)	in the Unobservable Inputs		Range(1)	Averages(2)
Assets
Trading assets:
	Corporate and other debt:
		Commercial mortgage-backed
			securities	$	174	Comparable pricing	Comparable bond price / (A)		57 to 101 points	81 points
		Corporate bonds			888	Comparable pricing	Comparable bond price / (A)		4 to 145 points	92 points
		Collateralized debt obligations			1,666	Comparable pricing(6)	Comparable bond price / (A)		16 to 95 points	63 points
						Correlation model	Credit correlation / (B)		23 to 54 %	41%
		Loans and lending commitments			5,284	Corporate loan model	Credit spread / (C)		44 to 1,045 basis points	245 basis points
						Comparable pricing	Comparable bond price / (A)		80 to 120 points	100 points
						Comparable pricing(6)	Comparable loan price / (A)		30 to 103 points	86 points
	Corporate equities(3)				270	Net asset value(6)	Discount to net asset value / (C)		0 to 51 %	20%
						Comparable pricing	Comparable equity price / (A)		0 to 100 %	50%
						Comparable pricing	Comparable price / (A)		43 to 74 points	52 points
						Market approach	EBITDA multiple / (A)		8 to 10 times	9 times
	Net derivative and other contracts:
		Interest rate contracts			(22)	Option model	Interest rate volatility concentration
								liquidity multiple / (C)(D)	0 to 10 times	0 times / 0 times (4)
							Comparable bond price / (A)(D)		5 to 98 points	52 points / 52 points (4)
							Interest rate - Foreign exchange
								correlation / (A)(D)	2 to 63 %	35% / 43% (4)
							Interest rate volatility skew / (A)(D)		9 to 117 %	53% / 48% (4)
							Interest rate quanto correlation / (A)(D)		-53 to 37 %	8% / -1% (4)
							Interest rate curve correlation / (A)(D)		42 to 98 %	78% / 82% (4)
							Inflation volatility / (A)(D)		60 to 83 %	70% / 66% (4)
		Credit contracts			1,403	Comparable pricing	Cash synthetic basis / (C)(D)		1 to 10 points	3 points
							Comparable bond price / (C)(D)		0 to 83 points	27 points
						Correlation model(6)	Credit correlation / (B)		20 to 94 %	47%
		Foreign exchange contracts(5)			(235)	Option model	Comparable bond price / (A)(D)		5 to 98 points	52 points / 52 points (4)
							Interest rate quanto correlation / (A)(D)		-53 to 37 %	8% / -1% (4)
							Interest rate - Credit spread correlation / (A)(D)		-59 to 60 %	-5% / -3% (4)
							Interest rate - Foreign exchange correlation
								/ (A)(D)	2 to 63 %	35% / 43% (4)
							Interest rate volatility skew / (A)(D)		9 to 117 %	53% / 48% (4)
		Equity contracts(5)			(1,340)	Option model	At the money volatility / (C)(D)		14 to 44 %	30%
							Volatility skew / (C)(D)		-2 to 0 %	-1%
							Equity - Equity correlation / (C)(D)		40 to 99 %	71%
							Equity - Foreign exchange correlation / (C)(D)		-60 to 38 %	-15%
							Equity - Interest rate correlation / (C)(D)		1 to 66 %	42% / 40% (4)
		Commodity contracts			703	Option model	Forward power price / (C)(D)		$18 to $110 per	$42 per
									Megawatt hour	Megawatt hour
							Commodity volatility / (A)(D)		12 to 31 %	13%
							Cross commodity correlation / (C)(D)		43 to 97 %	91%
	Investments(3):
		Principal investments			2,855	Discounted cash flow	Implied weighted average cost of capital / (C)(D)		10 to 15 %	11%
							Exit multiple / (A)(D)		6 to 10 times	9 times
						Discounted cash flow(6)	Capitalization rate / (C)(D)		6 to 10 %	7%
							Equity discount rate / (C)(D)		15 to 35 %	22%
						Market approach	EBITDA multiple / (A)		6 to 18 times	9 times
		Other			496	Discounted cash flow	Implied weighted average cost of capital / (C)(D)		8 to 11 %	8%
							Exit multiple / (A)(D)		6 to 7 times	7 times
						Market approach(6)	EBITDA multiple / (A)		7 to 14 times	11 times
Liabilities
Trading liabilities:
	Corporate and other debt:
		Corporate bonds		$	424	Comparable pricing	Comparable bond price / (A)		10 to 147 points	100 points
Securities sold under agreements
	to repurchase				155	Discounted cash flow	Funding spread / (A)		98 to 144 basis points	115 basis points
Other secured financings					275	Comparable pricing(6)	Comparable bond price / (A)		103 to 117 points	110 points
						Discounted cash flow	Funding spread / (A)		144 to 146 basis points	145 basis points
Long-term borrowings					2,784	Option model	At the money volatility / (A)(D)		24 to 30 %	27%
							Volatility skew / (A)(D)		-1 to 0 %	-1%
							Equity - Equity correlation / (C)(D)		50 to 98 %	74%
							Equity - Foreign exchange correlation / (A)(D)		-60 to 35 %	2%

___________________

EBITDA - Earnings before interest, taxes, depreciation and amortization

(1)       The ranges of significant unobservable inputs are represented in points, percentages, basis points, times or megawatt hours. Points are a percentage of par; for example, 101points would be 101% of par. A basis point equals 1/100th of 1%; for example, 1,045 basis points would equal 10.45%.

(2)       Amounts represent weighted averages except where simple averages and the median of the inputs are provided (see footnote 4 below). Weighted averages are calculated by weighting each input by the fair value of the respective financial instruments except for long-term borrowings and derivative instruments where inputs are weighted by risk.

(3)       Investments in funds measured using an unadjusted net asset value are excluded.

(4)       The data structure of the significant unobservable inputs used in valuing Interest rate contracts, Foreign exchange contracts and certain Equity contracts may be in a multi-dimensional form, such as a curve or surface, with risk distributed across the structure. Therefore, a simple average and median, together with the range of data inputs, may be more appropriate measurements than a single point weighted average.

(5)       Includes derivative contracts with multiple risks (i.e., hybrid products).

(6)This is the predominant valuation technique for this major asset or liability class.

Sensitivity of the fair value to changes in the unobservable inputs:

(A)       Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.

(B)       Significant changes in credit correlation may result in a significantly higher or lower fair value measurement. Increasing (decreasing) correlation drives a redistribution of risk within the capital structure such that junior tranches become less (more) risky and senior tranches become more (less) risky.

(C)Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.

(D)       There are no predictable relationships between the significant unobservable inputs.

At December 31, 2012.

					Balance at
					December 31,
					2012
					(dollars		Significant Unobservable Input(s) /
					in	Valuation	Sensitivity of the Fair Value to Changes			Weighted
					millions)	Technique(s)	in the Unobservable Inputs		Range(1)	Average
Assets
Trading assets:
	Corporate and other debt:
		Commercial mortgage-backed
			securities	$	232	Comparable pricing	Comparable bond price / (A)		46 to 100 points	76 points
		Asset-backed securities			109	Discounted cash flow	Internal rate of return / (C)		21%	21%
		Corporate bonds			660	Comparable pricing	Comparable bond price / (A)		0 to 143 points	24 points
		Collateralized debt obligations			1,951	Comparable pricing	Comparable bond price / (A)		15 to 88 points	59 points
						Correlation model	Credit correlation / (B)		15 to 45 %	40%
		Loans and lending commitments			4,694	Corporate loan model	Credit spread / (C)		17 to 1,004 basis points	281 basis points
						Comparable pricing	Comparable bond price / (A)		80 to 120 points	104 points
						Comparable pricing	Comparable loan price / (A)		55 to 100 points	88 points
	Corporate equities(2)				288	Net asset value	Discount to net asset value / (C)		0 to 37 %	8%
						Comparable pricing	Discount to comparable equity price / (C)		0 to 27 points	14 points
						Market approach	EBITDA multiple / (A)		6 times	6 times
	Net derivative and other contracts:
		Interest rate contracts			(82)	Option model	Interest rate volatility concentration			See (3)
								liquidity multiple / (C)(D)	0 to 8 times
							Comparable bond price / (A)(D)		5 to 98 points
							Interest rate - Foreign exchange
								correlation / (A)(D)	2 to 63 %
							Interest rate volatility skew / (A)(D)		9 to 95 %
							Interest rate quanto correlation / (A)(D)		-53 to 33 %
							Interest rate curve correlation / (A)(D)		48 to 99 %
							Inflation volatility / (A)(D)		49 to 100 %
						Discounted cash flow	Forward commercial paper rate-LIBOR basis / (A)		-18 to 95 basis points
		Credit contracts			1,822	Comparable pricing	Cash synthetic basis / (C)		2 to 14 points	See (4)
							Comparable bond price / (C)		0 to 80 points
						Correlation model	Credit correlation / (B)		14 to 94 %
		Foreign exchange contracts(5)			(359)	Option model	Comparable bond price / (A)(D)		5 to 98 points	See (6)
							Interest rate quanto correlation / (A)(D)		-53 to 33 %
							Interest rate - Credit spread correlation / (A)(D)		-59 to 65 %
							Interest rate - Foreign exchange correlation
								/ (A)(D)	2 to 63 %
							Interest rate volatility skew / (A)(D)		9 to 95 %
		Equity contracts(5)			(1,144)	Option model	At the money volatility / (C)(D)		7 to 24 %	See (7)
							Volatility skew / (C)(D)		-2 to 0 %
							Equity - Equity correlation / (C)(D)		40 to 96 %
							Equity - Foreign exchange correlation / (C)(D)		-70 to 38 %
							Equity - Interest rate correlation / (C)(D)		18 to 65 %
		Commodity contracts			709	Option model	Forward power price / (C)(D)		$28 to $84 per
									Megawatt hour
							Commodity volatility / (A)(D)		17 to 29 %
							Cross commodity correlation / (C)(D)		43 to 97 %
	Investments(2):
		Principal investments			2,833	Discounted cash flow	Implied weighted average cost of capital / (C)(D)		8 to 15 %	9%
							Exit multiple / (A)(D)		5 to 10 times	9 times
						Discounted cash flow	Capitalization rate / (C)(D)		6 to 10 %	7%
							Equity discount rate / (C)(D)		15 to 35 %	23%
						Market approach	EBITDA multiple / (A)		3 to 17 times	10 times
		Other			486	Discounted cash flow	Implied weighted average cost of capital / (C)(D)		11 %	11%
							Exit multiple / (A)(D)		6 times	6 times
						Market approach	EBITDA multiple / (A)		6 to 8 times	7 times
Liabilities
Trading liabilities:
	Corporate and other debt:
		Corporate bonds		$	177	Comparable pricing	Comparable bond price / (A)		0 to 150 points	50 points
Securities sold under agreements
	to repurchase				151	Discounted cash flow	Funding spread / (A)		110 to 184 basis points	166 basis points
Other secured financings					406	Comparable pricing	Comparable bond price / (A)		55 to 139 points	102 points
						Discounted cash flow	Funding spread / (A)		183 to 186 basis points	184 basis points
Long-term borrowings					2,789	Option model	At the money volatility / (A)(D)		20 to 24 %	24%
							Volatility skew / (A)(D)		-1 to 0 %	0%
							Equity - Equity correlation / (C)(D)		50 to 90 %	77%
							Equity - Foreign exchange correlation / (A)(D)		-70 to 36 %	-15%

________________

LIBOR – London Interbank Offered Rate

(1)       The ranges of significant unobservable inputs are represented in points, percentages, basis points, times or megawatt hours. Points are a percentage of par; for example, 100 points would be 100% of par. A basis point equals 1/100th of 1%; for example, 1,004 basis points would equal 10.04%.

(2)       Investments in funds measured using an unadjusted net asset value are excluded.

(3)       See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for a qualitative discussion of the wide unobservable input ranges for comparable bond prices, interest rate volatility skew, interest rate quanto correlation and forward commercial paper rate–LIBOR basis.

(4)       See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-Kfor a qualitative discussion of the wide unobservable input ranges for comparable bond prices and credit correlation.

(5)       Includes derivative contracts with multiple risks (i.e., hybrid products).

(6)       See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-Kfor a qualitative discussion of the wide unobservable input ranges for comparable bond prices, interest rate quanto correlation, interest rate-credit spread correlation and interest rate volatility skew.

(7)       See Note 4 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-Kfor a qualitative discussion of the wide unobservable input range for equity-foreign exchange correlation.

Sensitivity of the fair value to changes in the unobservable inputs:

(A)       Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.

(B)       Significant changes in credit correlation may result in a significantly higher or lower fair value measurement. Increasing (decreasing) correlation drives a redistribution of risk within the capital structure such that junior tranches become less (more) risky and senior tranches become more (less) risky.

(C)       Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.

(D)       There are no predictable relationships between the significant unobservable inputs.

The following provides a description of significant unobservable inputs included in the March 31, 2013 and December 31, 2012 tables above for all major categories of assets and liabilities:

• Comparable bond price – a pricing input used when prices for the identical instrument are not available. Significant subjectivity may be involved when fair value is determined using pricing data available for comparable instruments. Valuation using comparable instruments can be done by calculating an implied yield (or spread over a liquid benchmark) from the price of a comparable bond, then adjusting that yield (or spread) to derive a value for the bond. The adjustment to yield (or spread) should account for relevant differences in the bonds such as maturity or credit quality. Alternatively, a price-to-price basis can be assumed between the comparable instrument and bond being valued in order to establish the value of the bond. Additionally, as the probability of default increases for a given bond (i.e., as the bond becomes more distressed), the valuation of that bond will increasingly reflect its expected recovery level assuming default. The decision to use price-to-price or yield/spread comparisons largely reflects trading market convention for the financial instruments in question. Price-to-price comparisons are primarily employed for CMBS, CDOs, mortgage loans and distressed corporate bonds. Implied yield (or spread over a liquid benchmark) is utilized predominately for non-distressed corporate bonds, loans and credit contracts.

• Internal rate of return – the discount factor required for the net present value of future cash flows to equal zero. The internal rate of return represents the minimum average annual return required for an investment.
• Correlation – a pricing input where the payoff is driven by more than one underlying risk. Correlation is a measure of the relationship between the movements of two variables (i.e., how the change in one variable influences a change in the other variable). Credit correlation, for example, is the factor that describes the relationship between the probability of individual entities to default on obligations and the joint probability of multiple entities to default on obligations.
• Credit spread – the difference in yield between different securities due to differences in credit quality. The credit spread reflects the additional net yield an investor can earn from a security with more credit risk relative to one with less credit risk. The credit spread of a particular security is often quoted in relation to the yield on a credit risk-free benchmark security or reference rate, typically either U.S. Treasury or LIBOR.
• EBITDA multiple / Exit multiple – is the Enterprise Value to EBITDA ratio, where the Enterprise Value is the aggregate value of equity and debt minus cash and cash equivalents. The EBITDA multiple reflects the value of the company in terms of its full-year EBITDA, whereas the exit multiple reflects the value of the company in terms of its full year expected EBITDA at exit. Either multiple allows comparison between companies from an operational perspective as the effect of capital structure, taxation and depreciation/amortization is excluded.
• Volatility – the measure of the variability in possible returns for an instrument given how much that instrument changes in value over time. Volatility is a pricing input for options and, generally, the lower the volatility, the less risky the option. The level of volatility used in the valuation of a particular option depends on a number of factors, including the nature of the risk underlying that option (e.g., the volatility of a particular underlying equity security may be significantly different from that of a particular underlying commodity index), the tenor and the strike price of the option.
• Volatility skew – the measure of the difference in implied volatility for options with identical underliers and expiry dates but with different strikes. The implied volatility for an option with a strike price that is above or below the current price of an underlying asset will typically deviate from the implied volatility for an option with a strike price equal to the current price of that same underlying asset.
• Forward commercial paper rate–LIBOR basis – the basis added to the LIBOR rate when the commercial paper yield is expressed as a spread over the LIBOR rate.The basis to LIBOR is dependent on a numberof factors, including, but not limited to, collateralization of the commercial paper, credit rating of the issuer, and the supply of commercial paper. The basis may become negative, i.e., the return for highly-rated commercial paper, such as asset-backed commercial paper, may be less than LIBOR.
• Cash synthetic basis – the measure of the price differential between cash financial instruments (“cash instruments”) and their synthetic derivative-based equivalents (“synthetic instruments”). The range disclosed in the table above signifies the number of points by which the synthetic bond equivalent price is higher than the quoted price of the underlying cash bonds.
• Implied weighted average cost of capital (“WACC”)– the WACC implied by the current value of equityin a discounted cash flow model. The model assumes that the cash flow assumptions, including projections, are fully reflected in the current equity value while the debt to equity ratio is held constant. The WACC theoretically represents the required rate of return to debt and equity investors, respectively.
• Capitalization rate – the ratio between net operating income produced by an asset and its market value at the projected disposition date.
• Funding spread – the difference between the general collateral rate (which refers to the rate applicable to a broad class of U.S. Treasury issuances) and the specific collateral rate (which refers to the rate applicable to a specific type of security pledged as collateral, such as a municipal bond). Repurchase agreements are discounted based on collateral curves. The curves are constructed as spreads over the corresponding OIS/ LIBOR curves, with the short end of the curve representing spreads over the corresponding OIS curves and the long end of the curve representing spreads over LIBOR.

Fair Value of Investments that Calculate Net Asset Value.

The Company's Investments measured at fair value were $8,223 million and $8,346 million at March 31, 2013 and December 31, 2012, respectively. The following table presents information solely about the Company's investments in private equity funds, real estate funds and hedge funds measured at fair value based on net asset value at March 31, 2013 and December 31, 2012, respectively.

		At March 31, 2013				At December 31, 2012
					Unfunded				Unfunded
			Fair Value		Commitment		Fair Value		Commitment
		(dollars in millions)
Private equity funds		$	2,291	$	617	$	2,179	$	644
Real estate funds			1,377		214		1,376		221
Hedge funds(1):
	Long-short equity hedge funds		473		─		475		─
	Fixed income/credit-related hedge funds		84		─		86		─
	Event-driven hedge funds		43		─		52		─
	Multi-strategy hedge funds		315		3		321		3
Total		$	4,583	$	834	$	4,489	$	868

(1)       Fixed income/credit-related hedge funds, event-driven hedge funds, and multi-strategy hedge funds are redeemable at least on a six-month period basisprimarily with a notice period of 90 days or less. At March 31, 2013, approximately 39% of the fair value amount of long-short equity hedge funds is redeemable at least quarterly, 39% is redeemable every six months and 22% of these funds have a redemption frequency of greater than six months. The notice period for long-short equity hedge funds at March 31, 2013is primarily greater than six months. At December 31, 2012, approximately 36% of the fair value amount of long-short equity hedge funds is redeemable at least quarterly, 38% is redeemable every six months and 26% of these funds have a redemption frequency of greater than six months. The notice period for long-short equity hedge funds at December 31, 2012is primarily greater than six months.

Private Equity Funds.    Amount includes several private equity funds that pursue multiple strategies including leveraged buyouts, venture capital, infrastructure growth capital, distressed investments, and mezzanine capital. In addition, the funds may be structured with a focus on specific domestic or foreign geographic regions. These investments are generally not redeemable with the funds. Instead, the nature of the investments in this category is that distributions are received through the liquidation of the underlying assets of the fund. At March 31, 2013, it is estimated that 9% of the fair value of the funds will be liquidated in the next five years, another 58% of the fair value of the funds will be liquidated between five to 10 years and the remaining 33% of the fair value of the funds have a remaining life of greater than 10 years.

Real Estate Funds.    Amount includes several real estate funds that invest in real estate assets such as commercial office buildings, retail properties, multi-family residential properties, developments or hotels. In addition, the funds may be structured with a focus on specific geographic domestic or foreign regions. These investments are generally not redeemable with the funds. Distributions from each fund will be received as the underlying investments of the funds are liquidated. At March 31, 2013, it is estimated that 3% of the fair value of the funds will be liquidated within the next five years, another 49% of the fair value of the funds will be liquidated between five to 10 years and the remaining48% of the fair value of the funds have a remaining life of greater than 10 years.

Hedge Funds.    Investments in hedge funds may be subject to initial period lock-up restrictions or gates. A hedge fund lock-up provision is a provision that provides that, during a certain initial period, an investor may not make a withdrawal from the fund. The purpose of a gate is to restrict the level of redemptions that an investor in a particular hedge fund can demand on any redemption date.

•       Long-short Equity Hedge Funds.    Amount includes investments in hedge funds that invest, long or short, in equities. Equity value and growth hedge funds purchase stocks perceived to be undervalued and sell stocks perceived to be overvalued. Investments representing approximately 8% 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 primarilytwoyears or less at March 31, 2013.

•        Fixed Income/Credit-Related Hedge Funds.    Amount includes investments in hedge funds that employ long-short, distressed or relative value strategies in order to benefit from investments in undervalued or overvalued securities that are primarily debt or credit related. At March 31, 2013, investments representing approximately 8% of the fair value of the investments in fixed income/credit-related hedge funds 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 wasover three years at March 31, 2013.

•       Event-Driven Hedge Funds.    Amount includes investments in hedge funds that invest in event-driven situations such as mergers, hostile takeovers, reorganizations, or leveraged buyouts. This may involve the simultaneous purchase of stock in companies being acquired and the sale of stock in its acquirer, with the expectation to profit from the spread between the current market price and the ultimate purchase price of the target company. At March 31, 2013, there were no restrictions on redemptions.

•       Multi-strategy Hedge Funds.    Amount includes investments in hedge funds that pursue multiple strategies to realize short- and long-term gains. Management of the hedge funds has the ability to overweight or underweight different strategies to best capitalize on current investment opportunities. At March 31, 2013, investments representing approximately 57% 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 two years or less at March 31, 2013. Investments representing approximately 9% 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 March 31, 2013.

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 tables present net gains (losses) due to changes in fair value for items measured at fair value pursuant to the fair value option election forthe quarters ended March 31, 2013 and 2012, respectively:

					Interest		Gains (Losses)
					Income		Included in
			Trading		(Expense)		Net Revenues
			(dollars in millions)
Three Months Ended March 31, 2013
Federal funds sold and securities purchased under
	agreements to resell	$	1	$	1	$	2
Deposits			14		(17)		(3)
Commercial paper and other short-term borrowings(1)			63		(1)		62
Securities sold under agreements to repurchase			(4)		(1)		(5)
Long-term borrowings(1)			91		(297)		(206)
Three Months Ended March 31, 2012
Federal funds sold and securities purchased under
	agreements to resell	$	(4)	$	1	$	(3)
Deposits			10		(22)		(12)
Commercial paper and other short-term borrowings(1)			(129)		─		(129)
Securities sold under agreements to repurchase			(2)		(1)		(3)
Long-term borrowings(1)			(2,951)		(344)		(3,295)

(1)       Of the total gains (losses) recorded in Trading for short-term and long-term borrowings for the quarters ended March 31, 2013 and 2012, $(317) million and $(1,978) million, respectively, are attributable to changes in the credit quality of the Company, 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 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K, 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.

The Company hedges the economics of market risk for short-term and long-term borrowings (i.e., risks other than that related to the credit quality of the Company) as part of its overall trading strategy and manages the market risks embedded within the issuance by the related business unit as part of the business unit's portfolio.  The gains and losses on related economic hedges are recorded in Trading and largely offset the gains and losses on short-term and long-termborrowings attributable to market risk.

At March 31, 2013 and December 31, 2012, a breakdown of the short-term and long-termborrowings by business unit responsible for risk-managing each borrowing is shown in the table below:

			Short-term and Long-term
			Borrowings
			At		At
			March 31,		December 31,
Business Unit			2013		2012
			(dollars in millions)
Interest rates		$	21,228	$	23,330
Equity			18,746		17,326
Credit and foreign exchange			3,100		3,337
Commodities			698		776
	Total	$	43,772	$	44,769

The following tables present information on the Company's short-term and long-term borrowings (primarily structured notes), loans and unfunded lending commitments for which the fair value option was elected.

Gains (Losses) due to Changes in Instrument-Specific Credit Risk.

		Three Months Ended
		March 31,
		2013		2012
		(dollars in millions)
Short-term and long-term borrowings(1)	$	(317)	$	(1,978)
Loans(2)		60		293
Unfunded lending commitments(3)		134		407

_____________

(1)       The change in the fair value of short-term and long-term borrowings (primarily structured notes) includes an adjustment to reflect the change in credit quality of the Company based upon observations of the Company's secondary bond market spreads.

(2)       Instrument-specific credit gains (losses) were determined by excluding the non-credit components of gains and losses, such as those due to changes in interest rates.

(3)       Gains (losses) were generally determined based on the differential between estimated expected client yields and contractual yields at each respective period end.

Net Difference between Contractual Principal Amount and Fair Value.

		Contractual Principal Amount Exceeds Fair Value
		At		At
		March 31,		December 31,
		2013		2012
	(dollars in millions)
Short-term and long-term borrowings(1)	$	(1,476)	$	(436)
Loans(2)		23,992		25,249
Loans 90 or more days past due and/or on non-accrual status(2)(3)		19,334		20,456

_____________

(1)       These amounts do not include structured notes where the repayment of the initial principal amount fluctuates based on changes in the reference price or index.

(2)       The majority of this difference between principal and fair value amounts emanates from the Company's distressed debt trading business, which purchases distressed debt at amounts well below par.

(3)       The aggregate fair value of loans that were in non-accrual status, which includes all loans 90 or more days past due, was $1,528million and $1,360million at March 31, 2013 and December 31, 2012, respectively. The aggregate fair value of loans that were 90 or more days past due was $813million and $840million at March 31, 2013 and December 31, 2012, respectively.

The tables above exclude non-recourse debt from consolidated VIEs, liabilities related to failed sales of financial assets, pledged commodities and other liabilities that have specified assets attributable to them.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis.

Certain assets were measured at fair value on a non-recurring basis and are not included in the tables above. These assets may include loans, other investments, premises, equipment and software costs, and intangible assets.

The following tables present, by caption on the condensed consolidated statements of financial condition, the fair value hierarchy for those assets measured at fair value on a non-recurring basis for which the Company recognized a non-recurring fair value adjustment forthe quarters ended March 31, 2013 and 2012, respectively.

Three Months Ended March 31, 2013.

				Fair Value Measurements Using:
				Quoted Prices
				in Active
		Carrying		Markets for		Significant		Significant		Total
		Value at		Identical		Observable		Unobservable		Gains (Losses)
		March 31,		Assets		Inputs		Inputs		for
		2013		(Level 1)		(Level 2)		(Level 3)		2013(1)
	(dollars in millions)
Loans(2)	$	2,532	$	─	$	490	$	2,042	$	(9)
Other investments(3)		69		─		─		69		(18)
Premises, equipment and software costs(3)		25		─		─		25		(1)
Intangible assets(3)		2		─		─		2		(1)
Total	$	2,628	$	─	$	490	$	2,138	$	(29)

____________

(1)       Losses are recorded within Other expenses in the condensed consolidated statements of income except for fair value adjustments related to Loans and losses related to Other investments, which are included in Other revenues.

(2)       Non-recurring changes in fair value for loans held for investment were calculated based upon the fair value of the underlying collateral. The fair value of the collateral was determined using internal expected recovery models.The non-recurring change in fair value for mortgage loans held for sale is based upon a valuation model incorporating market observable inputs.

(3)       Losses recorded were determined primarily using discounted cash flow models.

There were no liabilities measured at fair value on a non-recurring basis during the quarter ended March 31, 2013.

Three Months Ended March 31, 2012.

				Fair Value Measurements Using:
				Quoted Prices
				in Active
		Carrying		Markets for		Significant		Significant		Total
		Value at		Identical		Observable		Unobservable		Gains (Losses)
		March 31,		Assets		Inputs		Inputs		for
		2012		(Level 1)		(Level 2)		(Level 3)		2012(1)
	(dollars in millions)
Loans(2)	$	298	$	─	$	144	$	154	$	(6)
Other investments(3)		47		─		─		47		(3)
Premises, equipment and software costs(3)		3		─		─		3		(1)
Intangible assets(4)		2		2		─		─		(2)
Total	$	350	$	2	$	144	$	204	$	(12)

_____________

(1)       Losses are recorded within Other expenses in the condensed consolidated statements of income except for fair value adjustments related to Loans and losses related to Other investments, which are included in Other revenues.

(2)       Non-recurring changes in fair value for loans held for investment were calculated based upon the fair value of the underlying collateral. The fair value of the collateral was determined using internal expected recovery models. The non-recurring change in fair value for mortgage loans held for sale is based upon a valuation model incorporating market observable inputs.

(3)       Losses recorded were determined primarily using discounted cash flow models.

(4)       Losses were determined using discounted cash flow models or a valuation technique incorporating an observable market index.

In addition to the losses included in the table above, there was a pre-tax gain of approximately $51 million (related to Other assets) included in discontinued operations in the quarter ended March 31, 2012 in connection with the disposition of Saxon (see Notes 1 and 21). This pre-tax gain was primarily due to the subsequent increase in the fair value of Saxon, which had incurred impairment losses of $98 million in the quarter ended December 31, 2011. The fair value of Saxon was determined based on the revised purchase price agreed upon with the buyer.

There were no liabilities measured at fair value on a non-recurring basis during the quarter ended March 31, 2012.

Financial Instruments Not Measured at Fair Value.

The tables below present the carrying value, fair value and fair value hierarchy category of certain financial instruments that are not measured at fair value in the condensed consolidated statements of financial condition. The tables below exclude certain financial instruments such as equity method investments and all non-financial assets and liabilities such as the value of the long-term relationships with our deposit customers.

The carrying value of cash and cash equivalents, including Interest bearing deposits with banks, and other short-term financial instruments such as Federal funds sold and securities purchased under agreements to resell, Securities borrowed, Securities sold under agreements to repurchase, Securities loaned, certain Customer and other receivables and Customer and other payables arising in the ordinary course of business, Deposits, Commercial paper and other short-term borrowings and Other secured financings approximate fair value because of the relatively short period of time between their origination and expected maturity.

For longer-dated Federal funds sold and securities purchased under agreements to resell, Securities borrowed, Securities sold under agreements to repurchase, Securities loaned and Other secured financings, fair value is determined using a standard cash flow discounting methodology. The inputs to the valuation include contractual cash flows and collateral funding spreads, which are estimated using various benchmarks and interest rate yield curves.

For consumer and residential real estate loans where position-specific external price data is not observable, the fair value is based on the credit risks of the borrower using a probability of default and loss given default method, discounted at the estimated external cost of funding level. The fair value of corporate loans is determined using recently executed transactions, market price quotations (where observable), implied yields from comparable debt, and market observable credit default swap spread levels along with proprietary valuation models and default recovery analysis where such transactions and quotations are unobservable.

The fair value of long-term borrowings is generally determined based on transactional data or third party pricing for identical or comparable instruments, when available. Where position-specific external prices are not observable, fair value is determined based on current interest rates and credit spreads for debt instruments with similar terms and maturity.

Financial Instruments Not Measured at Fair Value at March 31, 2013 and December 31, 2012.

At March 31, 2013.

			At March 31, 2013				Fair Value Measurements Using:
			Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(dollars in millions)
Financial Assets:
Cash and due from banks		$	17,773	$	17,773	$	17,773	$	—	$	—
Interest bearing deposits with banks			25,129		25,129		25,129		—		—
Cash deposited with clearing organizations or segregated under federal and
	other regulations or requirements		31,313		31,313		31,313		—		—
Federal funds sold and securities purchased under agreements to resell			139,542		139,695		—		138,334		1,361
Securities borrowed			135,727		135,726		—		135,574		152
Customer and other receivables(1)			57,422		57,295		—		51,656		5,639
Loans(2)			30,615		31,053		—		6,478		24,575
Financial Liabilities:
Deposits		$	79,181	$	79,181	$	—	$	79,181	$	—
Commercial paper and other short-term borrowings			1,213		1,213		—		959		254
Securities sold under agreements to repurchase			118,705		118,837		—		107,677		11,160
Securities loaned			40,351		40,400		—		38,073		2,327
Other secured financings			6,670		6,693		—		3,436		3,257
Customer and other payables(1)			133,842		133,842		—		133,842		—
Long-term borrowings			122,632		125,618		—		115,726		9,892

___________________

(1) Accrued interest, fees and dividend receivables and payables where carrying value approximates fair value have been excluded.

(2) Includes all loans measured at fair value on a non-recurring basis.

The fair value of the Company's unfunded lending commitments,primarily related to corporate lending in the Institutional Securities business segment, that are not carried at fair value at March 31, 2013 was $756 million, of which $542 million and $214 million would be categorized in Level 2 and Level 3 of the fair value hierarchy, respectively.  The carrying value of these commitments, if fully funded, would be $53.6billion.

At December 31, 2012.

			At December 31, 2012				Fair Value Measurements Using:
			Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(dollars in millions)
Financial Assets:
Cash and due from banks		$	20,878	$	20,878	$	20,878	$	—	$	—
Interest bearing deposits with banks			26,026		26,026		26,026		—		—
Cash deposited with clearing organizations or segregated under federal and
	other regulations or requirements		30,970		30,970		30,970		—		—
Federal funds sold and securities purchased under agreements to resell			133,791		133,792		—		133,035		757
Securities borrowed			121,701		121,705		—		121,691		14
Customer and other receivables(1)			59,702		59,634		—		53,532		6,102
Loans(2)			29,046		27,263		—		5,307		21,956
Financial Liabilities:
Deposits		$	81,781	$	81,781	$	—	$	81,781	$	—
Commercial paper and other short-term borrowings			1,413		1,413		—		1,107		306
Securities sold under agreements to repurchase			122,311		122,389		—		111,722		10,667
Securities loaned			36,849		37,163		—		35,978		1,185
Other secured financings			6,261		6,276		—		3,649		2,627
Customer and other payables(1)			125,037		125,037		—		125,037		—
Long-term borrowings			125,527		126,683		—		116,511		10,172

_________________

(1)       Accrued interest, fees and dividend receivables and payables where carrying value approximates fair value have been excluded.

(2)       Includes all loans measured at fair value on a non-recurring basis.

The fair value of the Company's unfunded lending commitments, primarily related to corporate lending in the Institutional Securities business segment, that are not carried at fair value at December 31, 2012 was $755 million, of which $543 million and $212 million would be categorized in Level 2 and Level 3 of the fair value hierarchy, respectively. The carrying value of these commitments, if fully funded, would be $50.0 billion.

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Interest Income and Interest Expense

3 Months Ended

Mar. 31, 2013

Interest Income And Interest Expense

Interest Income And Interest Expense

16.Interest Income and Interest Expense.

Details of Interest income and Interest expense were as follows:

				Three Months Ended
				March 31,
				2013		2012
				(dollars in millions)
Interest income(1):
	Trading assets(2)		$	604	$	791
	Securities available for sale			96		86
	Loans			244		118
	Interest bearing deposits with banks			26		27
	Federal funds sold and securities purchased under agreements to
		resell and Securities borrowed		92		113
	Other			336		407
Total interest income			$	1,398	$	1,542
Interest expense(1):
	Deposits		$	41	$	45
	Commercial paper and other short-term borrowings			9		13
	Long-term debt			960		1,254
	Securities sold under agreements to repurchase and Securities
		loaned		450		463
	Other			(247)		(174)
Total interest expense			$	1,213	$	1,601
Net interest			$	185	$	(59)

_____________

(1)       Interest income and expense are recorded within the condensed consolidated statements of income depending on the nature of the instrument and related market conventions. When interest is included as a component of the instrument's fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.

(2)       Interest expense on Trading liabilities is reported as a reduction to Interest income on Trading assets.

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Commitments, Guarantees and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments, Guarantees and Contingencies [Abstract]

Commitments, Guarantees and Contingencies

12.    Commitments, Guarantees and Contingencies.

Commitments.

The Company's commitments associated with outstanding letters of credit and other financial guarantees obtained to satisfy collateral requirements, investment activities, corporate lending and financing arrangements, mortgage lending and margin lending at March 31, 2013 are summarized below by period of expiration. Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements:

			Years to Maturity
			Less								Total at
			than 1		1-3		3-5		Over 5		March 31, 2013
			(dollars in millions)
Letters of credit and other financial guarantees
	obtained to satisfy collateral requirements	$	1,460	$	9	$	—	$	1	$	1,470
Investment activities			778		100		36		273		1,187
Primary lending commitments—investment grade(1)			7,353		10,801		34,106		926		53,186
Primary lending commitments—non-investment grade(1)			818		4,711		10,337		1,919		17,785
Secondary lending commitments(2)			78		41		27		40		186
Commitments for secured lending transactions			340		—		—		—		340
Forward starting reverse repurchase agreements and
	securities borrowing agreements(3)(4)		63,397		—		—		—		63,397
Commercial and residential mortgage-related commitments			1,125		18		179		193		1,515
Underwriting commitments			40		—		—		—		40
Other commitments			1,763		340		115		100		2,318
	Total	$	77,152	$	16,020	$	44,800	$	3,452	$	141,424

.

(1)This amount includes $36.9 billion of investment grade and $9.5 billion of non-investment grade unfunded commitments accounted for as held for investment and $1.1billion of investment grade and $2.8billion of non-investment grade unfunded commitments accounted for as held for sale at March 31, 2013. The remainder of these lending commitments is carried at fairvalue.

(2)These commitments are recorded at fair value within Trading assets and Trading liabilities in the condensed consolidated statements of financial condition (see Note 4).

(3)The Company enters into forward starting reverse repurchase and securities borrowing agreements (agreements that have a trade date at or prior to March 31, 2013 and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations. These agreements primarily settle within three business days and of the total amount atMarch 31, 2013,$55.3billion settled within three business days.

(4)The Company also has a contingent obligation to provide financing to a clearinghouse through which it clears certain transactions. The financing is required only upon the default of a clearinghouse member. The financing takes the form of a reverse repurchase facility, with a maximum amount of approximately $2.3 billion.

The above table does not include the Company's commitment to purchase an additional 35% of the Wealth Management JVfor $4.725 billion upon obtaining all regulatory approvals(see Note 3).

For further description of these commitments, refer to Note 13 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

The Company sponsors several non-consolidated investment funds for third-party investors where the Company typically acts as general partner of, and investment advisor to, these funds and typically commits to invest a minority of the capital of such funds, with subscribing third-party investors contributing the majority. The Company's employees, including its senior officers, as well as the Company's directors, may participate on the same terms and conditions as other investors in certain of these funds that the Company forms primarily for client investment, except that the Company may waive or lower applicable fees and charges for its employees. The Company has contractual capital commitments, guarantees, lending facilities and counterparty arrangements with respect to these investment funds.

Guarantees.

The table below summarizes certain information regarding the Company's obligations under guarantee arrangements at March 31, 2013:

			Maximum Potential Payout/Notional										Carrying Amount (Asset)/ Liability		Collateral/ Recourse
			Years to Maturity
Type of Guarantee			Less than 1		1-3		3-5		Over 5		Total
			(dollars in millions)
Credit derivative contracts(1)		$	425,823	$	551,454	$	685,183	$	164,181	$	1,826,641	$	7,247	$	—
Other credit contracts			466		82		138		1,139		1,825		(195)		—
Non-credit derivative contracts(1)			1,147,217		766,393		321,798		397,311		2,632,719		71,979		—
Standby letters of credit and other
	financial guarantees issued(2)(3)		735		1,246		1,484		5,504		8,969		(205)		7,090
Market value guarantees			—		83		101		541		725		10		106
Liquidity facilities			2,342		148		—		—		2,490		(4)		3,723
Whole loan sales representations
	and warranties		—		—		—		23,967		23,967		82		—
Securitization representations and
	warranties		—		—		—		70,927		70,927		35		—
General partner guarantees			71		45		32		165		313		74		—

_____________

(1)Carrying amounts of derivative contracts are shown on a gross basis prior to cash collateral or counterparty netting. For further information on derivative contracts, see Note 11.

(2)Approximately $2.1 billion of standby letters of credit are also reflected in the “Commitments” tableabove in primary and secondary lending commitments. Standby letters of credit are recorded at fair value within Trading assets or Trading liabilities in the condensed consolidated statements of financial condition.

(3)Amounts include guarantees issued by consolidated real estate funds sponsored by the Company of approximately $85.4million. These guarantees relate to obligations of the fund's investee entities, including guarantees related to capital expenditures and principal and interest debt payments. Accrued losses under these guarantees of approximately $3.9 million are reflected as a reduction of the carrying value of the related fund investments, which are reflected in Trading assetson thecondensed consolidated statement of financial condition.

For further description of these guarantees, refer to Note 13 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

The Company has obligations under certain guarantee arrangements, including contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying measure (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or non-occurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. Also included as guarantees are contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement, as well as indirect guarantees of the indebtedness of others. The Company's use of guarantees is described below by type of guarantee:

Other Guarantees and Indemnities.

In the normal course of business, the Company provides guarantees and indemnifications in a variety of commercial transactions. These provisions generally are standard contractual terms. Certain of these guarantees and indemnifications are described below.

•        Trust Preferred Securities.    The Company has established Morgan Stanley Capital Trusts for the limited purpose of issuing trust preferred securities to third parties and lending the proceeds to the Company in exchange for junior subordinated debentures. The Company has directly guaranteed the repayment of the trust preferred securities to the holders thereof to the extent that the Company has made payments to a Morgan Stanley Capital Trust on the junior subordinated debentures. In the event that the Company does not make payments to a Morgan Stanley Capital Trust, holders of such series of trust preferred securities would not be able to rely upon the guarantee for payment of those amounts. The Company has not recorded any liability in thecondensed consolidated financial statements for these guarantees and believes that the occurrence of any events (i.e., non-performance on the part of the paying agent) that would trigger payments under these contracts is remote. See Note 11 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K for details on the Company's junior subordinated debentures.

• Indemnities.    The Company provides standard indemnities to counterparties for certain contingent exposures and taxes, including U.S. and foreign withholding taxes, on interest and other payments made on derivatives, securities and stock lending transactions, certain annuity products and other financial arrangements. These indemnity payments could be required based on a change in the tax laws or change in interpretation of applicable tax rulings or a change in factual circumstances. Certain contracts contain provisions that enable the Company to terminate the agreement upon the occurrence of such events. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated.

•       Exchange/Clearinghouse Member Guarantees.    The Company is a member of various U.S. and non-U.S. exchanges and clearinghouses that trade and clear securities and/or derivative contracts. Associated with its membership, the Company may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the exchange or the clearinghouse. While the rules governing different exchange or clearinghouse memberships vary, in general the Company's guarantee obligations would arise only if the exchange or clearinghouse had previously exhausted its resources. The maximum potential payout under these membership agreements cannot be estimated. The Company has not recorded any contingent liability in thecondensed consolidated financial statements for these agreements and believes that any potential requirement to make payments under these agreements is remote.

•       Merger and Acquisition Guarantees.    The Company may, from time to time, in its role as investment banking advisor be required to provide guarantees in connection with certain European merger and acquisition transactions. If required by the regulating authorities, the Company provides a guarantee that the acquirer in the merger and acquisition transaction has or will have sufficient funds to complete the transaction and would then be required to make the acquisition payments in the event the acquirer's funds are insufficient at the completion date of the transaction. These arrangements generally cover the time frame from the transaction offer date to its closing date and, therefore, are generally short term in nature. The maximum potential amount of future payments that the Company could be required to make cannot be estimated. The Company believes the likelihood of any payment by the Company under these arrangements is remote given the level of the Company's due diligence associated with its role as investment banking advisor.

In the ordinary course of business, the Company guarantees the debt and/or certain trading obligations (including obligations associated with derivatives, foreign exchange contracts and the settlement of physical commodities) of certain subsidiaries. These guarantees generally are entity or product specific and are required by investors or trading counterparties. The activities of the subsidiaries covered by these guarantees (including any related debt or trading obligations) are included in the Company's condensed consolidated financial statements.

Contingencies.

Legal.  In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities as a global diversified financial services institution. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In some cases, the entities that would otherwise be the primary defendants in such cases are bankrupt or are in financial distress. These actions have included, but are not limited to, residential mortgage and credit crisis related matters. Over the last several years, the level of litigation and investigatory activity focused on residential mortgage and credit crisis related matters has increased materially in the financial services industry. As a result, the Company expects that it may become the subject of increased claims for damages and other relief regarding residential mortgages and related securities in the future and, while the Company has identified below any individual proceedings where the Company believes a material loss to be reasonably possible and reasonably estimable, there can be no assurance that material losses will not be incurred from claims that have not yet been notified to the Company or are not yet determined to be probable or possible and reasonably estimable losses.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Company's business and involving, among other matters, accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

The Company contests liability and/or the amount of damages as appropriate in each pending matter. Where available information indicates that it is probable a liability had been incurred at the date of the condensed consolidated financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income. In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss. In addition, even where loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is not always possible to reasonably estimate the size of the possible loss or range of loss.

For certain legal proceedings, the Company cannot reasonably estimate such losses, particularly for proceedings that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, determination of issues related to class certification and the calculation of damages, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before a loss or additional loss or range of loss or additional loss can be reasonably estimated for any proceeding.

For certain other legal proceedings, the Company can estimate reasonably possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued, but does not believe, based on current knowledge and after consultation with counsel, that such losses will have a material adverse effect on the Company'scondensed consolidated financial statements as a whole, other than the matters referred to in thefollowing paragraphs.

On March 15, 2010, the Federal Home Loan Bank of San Francisco filed two complaints against the Company and other defendants in the Superior Court of the State of California. These actions are styled Federal Home Loan Bank of San Francisco v. Credit Suisse Securities (USA) LLC, et al., and Federal Home Loan Bank of San Francisco v. Deutsche Bank Securities Inc. et al., respectively. Amended complaints filed on June 10, 2010 allege that defendants made untrue statements and material omissions in connection with the sale to plaintiff of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The amount of certificates allegedly sold to plaintiff by the Company in these cases was approximately $704 million and $276 million, respectively. The complaints raise claims under both the federal securities laws and California law and seek, among other things, to rescind the plaintiff's purchase of such certificates.  On July 29, 2011 and September 8, 2011, the court presiding over both actions sustained defendants' demurrers with respect to claims brought under the Securities Act, and overruled defendants' demurrers with respect to all other claims. At March 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in these cases was approximately $356 million, and the certificates had incurred actual losses of approximately $1.7 million. Based on currently available information, the Company believes it could incur a loss up to the difference between the $356 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 9, 2010 and February 11, 2011, Cambridge Place Investment Management Inc. filed two separate complaints against the Company and other defendants in the Superior Court of the Commonwealth of Massachusetts, both styled Cambridge Place Investment Management Inc. v. Morgan Stanley & Co., Inc., et al. The complaints assert claims on behalf of certain clients of plaintiff's affiliates and allege that defendants made untrue statements and material omissions in the sale of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly issued by the Company or sold to plaintiff's affiliates' clients by the Company in the two matters was approximately $344 million. The complaints raise claims under the Massachusetts Uniform Securities Act and seek, among other things, to rescind the plaintiff's purchase of such certificates.  On October 14, 2011, plaintiffs filed an amended complaint in each action. On November 22, 2011, defendants filed a motion to dismiss the amended complaints. On March 12, 2012, the court denied defendants' motion to dismiss with respect to plaintiff's standing to bring suit. Defendants sought interlocutory appeal from that decision on April 11, 2012. On April 26, 2012, defendants filed a second motion to dismiss for failure to state a claim upon which relief can be granted, which the court denied, in substantial part, on October 2, 2012. Based on currently available information, the Company believes it could incur a loss for these actions of up to the difference between the as yet undetermined unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 15, 2010, China Development Industrial Bank (“CDIB”) filed a complaint against the Company, which is styled China Development Industrial Bank v. Morgan Stanley & Co. Incorporated et al. and is pending in the Supreme Court of the State of New York, New York County (“Supreme Court of NY”). The complaint relates to a $275 million credit default swap referencing the super senior portion of the STACK 2006-1 CDO. The complaint asserts claims for common law fraud, fraudulent inducement and fraudulent concealment and alleges that the Company misrepresented the risks of the STACK 2006-1 CDO to CDIB, and that the Company knew that the assets backing the CDO were of poor quality when it entered into the credit default swap with CDIB. The complaint seeks compensatory damages related to the approximately $228 million that CDIB alleges it has already lost under the credit default swap, rescission of CDIB's obligation to pay an additional $12 million, punitive damages, equitable relief, fees and costs. On February 28, 2011, the court presiding over this action denied the Company's motion to dismiss the complaint and on March 21, 2011, the Company appealed that order. On July 7, 2011, the appellate court affirmed the lower court's decision denying the motion to dismiss. Based on currently available information, the Company believes it could incur a loss of up to approximately $240 million plus pre- and post-judgment interest, fees and costs.

On October 15, 2010, the Federal Home Loan Bank of Chicago filed a complaint against the Company and other defendants in the Circuit Court of the State of Illinois styled Federal Home Loan Bank of Chicago v. Bank of America Funding Corporation et al. The complaint alleges that defendants made untrue statements and material omissions in the sale to plaintiff of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans.  The total amount of certificates allegedly sold to plaintiff by the Company in this action was approximately $203 million.  The complaint raises claims under Illinois law and seeks, among other things, to rescind the plaintiff's purchase of such certificates. On March 24, 2011, the court grantedplaintiff leave to file an amended complaint. On May 27, 2011, defendants filed a motion to dismiss the amended complaint, which motion was denied on September 19, 2012. The Company filed its answer on December 21, 2012. At March25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in this case was approximately $103 million and certain certificates had incurredactual lossesof approximately $700,000. Based on currently available information, the Company believes it could incur a loss up to the difference between the $103 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 18, 2011, the Western and Southern Life Insurance Company and certain affiliated companies filed a complaint against the Company and other defendants in the Court of Common Pleas in Ohio, styled Western and Southern Life Insurance Company, et al. v. Morgan Stanley Mortgage Capital Inc., et al. An amended complaint was filed on April 2, 2012 and alleges that defendants made untrue statements and material omissions in the sale to plaintiffs of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The amount of the certificates allegedly sold to plaintiffs by the Company was approximately $153 million. The amended complaint raises claims under the Ohio Securities Act, federal securities laws, and common law and seeks, among other things, to rescind the plaintiffs' purchases of such certificates. On May 21, 2012, the Company filed a motion to dismissthe amended complaint, which motion was denied on August 3, 2012. The court has set a trial date of November 2013. At March 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in this case was approximately $122 million, and the certificates had incurredactual losses of approximately $55,000. Based on currently available information, the Company believes it could incur a loss up to the difference between the $122 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus post-judgment interest, fees and costs. The Company may be entitled to an offset for interest received by the plaintiff prior to a judgment.

On September 2, 2011, the Federal Housing Finance Agency (“FHFA”), as conservator for Fannie Mae and Freddie Mac, filed 17 complaints against numerous financial services companies, including the Company. A complaint against the Company and other defendants was filed in the Supreme Court of NY, styled Federal Housing Finance Agency, as Conservator v. Morgan Stanley et al. The complaint alleges that defendants made untrue statements and material omissions in connection with the sale to Fannie Mae and Freddie Mac of residential mortgage pass-through certificates with an original unpaid balance of approximately $11 billion. The complaint raises claims under federal and state securities laws and common law and seeks, among other things, rescission and compensatory and punitive damages. On September 26, 2011, defendants removed the action to the United States District Court for the Southern District of New York and on October 26, 2011, the FHFA moved to remand the action back to the Supreme Court of NY. On May 11, 2012, plaintiff withdrew its motion to remand. On July 13, 2012, the Company filed a motion to dismiss the complaint, which motion was denied in large part on November 19, 2012. Trial is currently scheduled to begin in January 2015. At March25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in these cases was approximately $2.87 billion, and the certificates had incurred actual losses of approximately $54 million. Based on currently available information, the Company believes it could incur a loss up to the difference between the $2.87 billion unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these lossesand to an offset for interest received by the plaintiff prior to a judgment.

On April 25, 2012, The Prudential Insurance Company of America and certain affiliates filed a complaint against the Company and certain affiliates in the Superior Court of the State of New Jersey styled The Prudential Insurance Company of America, et al. v. Morgan Stanley, et al. The complaint alleges that defendants made untrue statements and material omissions in connection with the sale to plaintiffs of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by the Company is approximately $1 billion. The complaint raises claims under the New Jersey Uniform Securities Law, as well as common law claims of negligent misrepresentation, fraud and tortious interference with contract and seeks, among other things, compensatory damages, punitive damages, rescission and rescissionary damages associated with plaintiffs' purchases of such certificates. On October 16, 2012, plaintiffs filed an amended complaint which, among other things, increases the total amount of the certificates at issue by approximately $80 million, adds causes of action for fraudulent inducement, equitable fraud, aiding and abetting fraud, and violations of the New Jersey RICO statute, and includes a claim for treble damages. On January 23, 2013, defendants filed a motion to dismiss the amended complaint, which was denied on March 15, 2013. At March 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in these cases was approximately $598 million, and the certificates had not yet incurred actual losses. Based on currently available information, the Company believes it could incur a loss up to the difference between the $598 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against the Company, plus pre- and post-judgment interest, fees and costs. The Company may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

In addition to the matters referenced above, on April 24, 2013, the parties reached an agreement to settle Abu Dhabi Commercial Bank, et al. v. Morgan Stanley & Co. Inc., et al.On April 26, 2013, the court dismissed the action with prejudice. The settlement does not cover certain claims that were previously dismissed.

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Derivative Instruments and Hedging Activities (Other Disclosures) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Derivative [Line Items]
Discussion of interest rate fair value hedge effectiveness assessment and measurement	A hedging relationship is deemed effective if the fair values of the hedging instrument (derivative) and the hedged item (debt liability) change inversely within a range of 80% to 125%.
Hedging Relationship Deemed Effective Range Lower Limit	80.00%
Hedging Relationship Deemed Effective Range Upper Limit	125.00%
Embedded derivatives, net fair value	$ 57,000,000		$ 53,000,000
Embedded derivatives, notional amount	2,149,000,000		2,178,000,000
Recognized gains (losses) related to changes in the fair value of bifurcated embedded derivatives	2,000,000	7,000,000
Amount of payables associated with cash collateral received that was netted against derivative assets	67,700,000,000		69,200,000,000
Amount of receivables in respect of cash collateral paid that was netted against derivative liabilities	39,600,000,000		43,000,000,000
Cash collateral receivables	140,000,000		158,000,000
Cash collateral payables	99,000,000		34,000,000
Credit Risk Related Contingencies
Aggregate fair value of derivative contracts that contain credit-risk-related contingent features that are in a net liability position	30,396,000,000
Posted collateral	26,568,000,000
Amount of additional collateral or termination payments that could be called by counterparties under the terms of such agreements in the event of a downgrade of the Company's long-term credit rating, related to bilateral arrangements between the Company and other parties	2,125,000,000
Baa1 Moody's/BBB+ S&P
Credit Risk Related Contingencies
Amount of additional collateral or termination payments that could be called by counterparties under the terms of such agreements in the event of a downgrade of the Company's long-term credit rating	397,000,000
Baa2 Moody's/BBB+ S&P
Credit Risk Related Contingencies
Amount of additional collateral or termination payments that could be called by counterparties under the terms of such agreements in the event of a downgrade of the Company's long-term credit rating	$ 2,257,000,000

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Financing Receivables

3 Months Ended

Mar. 31, 2013

Financing Receivables [Abstract]

Financing Receivables

8.Financing Receivables and Allowance for Credit Losses.

Loans held for investment.

The Company's loans held for investment are recorded at amortized cost and classified as Loans in the condensed consolidated statements of financial condition.

The Company's loans held for investment at March 31, 2013and December 31, 2012included the following:

		At		At
		March 31, 2013		December 31, 2012
		(dollars in millions)
Commercial and industrial	$	11,009	$	9,449
Consumer loans		8,200		7,618
Residential real estate loans		6,929		6,630
Wholesale real estate loans		328		326
Total loans held for investment, gross of allowance for loan losses		26,466		24,023
Allowance for loan losses		(129)		(106)
Total loans held for investment, net of allowance for loan losses	$	26,337	$	23,917

The above table does not include loans held for sale of $4,278 million and $5,129 million at March 31, 2013 and December 31, 2012, respectively.

The Company's Credit Risk Management Department evaluates new obligors before credit transactions are initially approved, and at least annually thereafter for consumer and industrial loans. For corporate and commercial loans, credit evaluations typically involve the evaluation of financial statements, assessment of leverage, liquidity, capital strength, asset composition and quality, market capitalization and access to capital markets, cash flow projections and debt service requirements, and the adequacy of collateral, if applicable. The Company's Credit Risk Management Department will also evaluate strategy, market position, industry dynamics, obligor's management and other factors that could affect the obligor's risk profile. For residential real estate and consumer loans, the initial credit evaluation includes, but is not limited to, review of the obligor's income, net worth, liquidity, collateral, loan-to-value ratio, and credit bureau information. Subsequent credit monitoring for residential real estate loans is performed at the portfolio level. Consumer loan collateral values are monitored on an ongoing basis.

Commercial and industrial loans of approximately $49 millionwere impaired at March 31, 2013. Approximately 99% of the Company's loan portfolio was current at March 31, 2013. Commercial and industrial loans of approximately $19 million and residential real estate loans of approximately $1 million were impaired at December 31, 2012. Approximately 99% of the Company's loan portfolio was current at December 31, 2012.

The Company assigned an internal grade of “doubtful” to certain commercial asset-backed and wholesale real estate loans totaling $72 million and $25 million at March 31, 2013 and December 31, 2012, respectively. Doubtful loans can be classified as current if the borrower is making payments in accordance with the loan agreement. The Company assigned an internal grade of “pass” to the majority of its remaining loan portfolio.

For a description of the Company's loan portfolio and credit quality indicators utilized in its credit monitoring process, see Note 8 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

The table below summarizes information about the allowance for loan losses, loans by impairment methodology, the allowance for lending-related commitments and lending-related commitments by impairment methodology.

			Commercial and				Residential		Wholesale
			Industrial		Consumer		Real Estate		Real Estate		Total
			(dollars in millions)
Allowance for loan losses:
	Balance at December 31, 2012	$	96	$	3	$	5	$	2	$	106
	Gross charge-offs		(3)		—		(1)		—		(4)
	Net charge-offs		(3)		—		(1)		—		(4)
	Provision for loan losses(1)		30		(2)		(1)		—		27
	Balance at March 31, 2013	$	123	$	1	$	3	$	2	$	129
Allowance for loan losses by impairment methodology:
	Collectively evaluated for impairment	$	112	$	1	$	3	$	2	$	118
	Individually evaluated for impairment		11		—		—		—		11
	Total allowance for loan losses at March 31, 2013	$	123	$	1	$	3	$	2	$	129
Loans evaluated by impairment methodology(2):
	Collectively evaluated for impairment	$	10,933	$	8,200	$	6,925	$	328	$	26,386
	Individually evaluated for impairment		76		—		4		—		80
	Total loan evaluated at March 31, 2013	$	11,009	$	8,200	$	6,929	$	328	$	26,466
Allowance for lending-related commitments:
	Balance at December 31, 2012	$	90	$	—	$	—	$	1	$	91
	Provision for lending-related commitments(3)		12		—		—		—		12
	Balance at March 31, 2013	$	102	$	—	$	—	$	1	$	103
Allowance for lending-related commitments by
	impairment methodology:
	Collectively evaluated for impairment	$	98	$	—	$	—	$	1	$	99
	Individually evaluated for impairment		4		—		—		—		4
	Total allowance for lending-related commitments
	at March 31, 2013	$	102	$	—	$	—	$	1	$	103
Lending-related commitments evaluated by
	impairment methodology:
	Collectively evaluated for impairment	$	46,792	$	1,579	$	1,105	$	262	$	49,738
	Individually evaluated for impairment		1		—		—		—		1
	Total lending-related commitments evaluated
	at March 31, 2013	$	46,793	$	1,579	$	1,105	$	262	$	49,739

_______________

(1)The Company records charges to the provisions for loan losses within Other revenues.

(2) Balances are gross of the allowance and represent recorded investment in the loans.

(3) The Company records charges to the provisions for lending-related commitments within Other non-interest expenses.

			Commercial and				Residential		Wholesale
			Industrial		Consumer		Real Estate		Real Estate		Total
			(dollars in millions)
Allowance for loan losses:
	Balance at December 31, 2011	$	14	$	1	$	1	$	1	$	17
	Gross charge-offs		(2)		—		—		—		(2)
	Gross recoveries		1		—		—		—		1
	Net charge-offs		(1)		—		—		—		(1)
	Provision for loan losses(1)		8		1		1		—		10
	Balance at March 31, 2012	$	21	$	2	$	2	$	1	$	26
Allowance for loan losses by impairment methodology:
	Collectively evaluated for impairment	$	94	$	3	$	5	$	2	$	104
	Individually evaluated for impairment		2		—		—		—		2
	Total allowance for loan losses at December 31, 2012	$	96	$	3	$	5	$	2	$	106
Loans evaluated by impairment methodology(2):
	Collectively evaluated for impairment	$	9,419	$	7,618	$	6,629	$	326	$	23,992
	Individually evaluated for impairment		30		—		1		—		31
	Total loan evaluated at December 31, 2012	$	9,449	$	7,618	$	6,630	$	326	$	24,023
Allowance for lending-related commitments:
	Balance at December 31, 2011	$	19	$	(3)	$	—	$	2	$	18
	Provision for lending-related commitments(3)		(6)		(2)		—		—		(8)
	Balance at March 31, 2012	$	13	$	(5)	$	—	$	2	$	10
Allowance for lending-related commitments by
	impairment methodology:
	Collectively evaluated for impairment	$	86	$	—	$	—	$	1	$	87
	Individually evaluated for impairment		4		—		—		—		4
	Total allowance for lending-related commitments
	at December 31, 2012	$	90	$	—	$	—	$	1	$	91
Lending-related commitments evaluated by
	impairment methodology:
	Collectively evaluated for impairment	$	44,079	$	1,406	$	712	$	101	$	46,298
	Individually evaluated for impairment		47		—		—		—		47
	Total lending-related commitments evaluated
	at December 31, 2012	$	44,126	$	1,406	$	712	$	101	$	46,345

_______________

(1) The Company records charges to the provisions for loan losses within Other revenues.

(2) Balances are gross of the allowance and represent recorded investment in the loans.

(3) The Company records charges to the provisions for lending-related commitments within Other non-interest expenses.

Employee Loans.

Employee loans are granted primarily in conjunction with a program established in the Global Wealth Management Group business segment to retain and recruit certain employees. These loans are recorded in Customer and other receivables in the condensed consolidated statements of financial condition. These loans are full recourse, generally require periodic payments and have repayment terms ranging from one to 12 years. The Company establishes a reserve for loan amounts it does not consider recoverable, which is recorded in Compensation and benefits expense. At March 31, 2013, the Company had $5,602 million of employee loans, net of an allowance of approximately $135 million. At December 31, 2012, the Company had $5,998million of employee loans, net of an allowance of approximately $131 million.

The Company has also granted loans to other employees primarily in conjunction with certain after-tax leveraged investment arrangements. At March 31, 2013, the balance of these loans was $164 million, net of an allowance of approximately $104 million. At December 31, 2012, the balance of these loans was $172 million, net of an allowance of approximately $108 million.The Company establishes a reserve for non-recourse loan amounts not recoverable from employees, which is recorded in Other expense.

Collateralized Transactions.

In certain instances, the Company enters into reverse repurchase agreements and securities borrowed transactions to acquire securities to cover short positions, to settle other securities obligations and to accommodate customers' needs. The Company also engages in securities financing transactions for customers through margin lending (see Note 6).

Servicing Advances.

As part of its servicing activities, the Company may make servicing advances to the extent that it believes that such advances will be reimbursed (see Note 7).

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Fair Value Disclosures (Financial Instruments Not Carried at FV) (Details) (USD $)	Mar. 31, 2013		Dec. 31, 2012		Mar. 31, 2012
Financial Assets:
Cash and due from banks	$ 17,773,000,000		$ 20,878,000,000		$ 10,133,000,000
Interest bearing deposits with banks	25,129,000,000		26,026,000,000		28,592,000,000
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	31,313,000,000		30,970,000,000
Federal funds sold and securities purchased under agreements to resell	140,415,000,000		134,412,000,000
Securities borrowed	135,727,000,000		121,701,000,000
Customer and other receivables	62,271,000,000		64,288,000,000
Loans	30,615,000,000		29,046,000,000
Financial Liabilities
Deposits	80,623,000,000		83,266,000,000
Commercial paper and other short-term borrowings	2,475,000,000		2,138,000,000
Securities sold under agreement to repurchase	119,270,000,000		122,674,000,000
Securities loaned	40,351,000,000		36,849,000,000
Other secured financings	16,294,000,000	[1]	15,727,000,000	[1]
Customer and other payables	137,127,000,000		127,722,000,000
Long-term borrowings	165,142,000,000		169,571,000,000
Carrying Value
Financial Assets:
Cash and due from banks	17,773,000,000		20,878,000,000
Interest bearing deposits with banks	25,129,000,000		26,026,000,000
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	31,313,000,000		30,970,000,000
Federal funds sold and securities purchased under agreements to resell	139,542,000,000		133,791,000,000
Securities borrowed	135,727,000,000		121,701,000,000
Customer and other receivables	57,422,000,000	[2]	59,702,000,000	[2]
Loans	30,615,000,000	[3]	29,046,000,000	[3]
Financial Liabilities
Deposits	79,181,000,000		81,781,000,000
Commercial paper and other short-term borrowings	1,213,000,000		1,413,000,000
Securities sold under agreement to repurchase	118,705,000,000		122,311,000,000
Securities loaned	40,351,000,000		36,849,000,000
Other secured financings	6,670,000,000		6,261,000,000
Customer and other payables	133,842,000,000	[2]	125,037,000,000	[2]
Long-term borrowings	122,632,000,000		125,527,000,000
Additional Disclosures
Lending commitments if fully funded	53,600,000,000		50,000,000,000
Fair Value
Financial Assets:
Cash and due from banks	17,773,000,000		20,878,000,000
Interest bearing deposits with banks	25,129,000,000		26,026,000,000
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	31,313,000,000		30,970,000,000
Federal funds sold and securities purchased under agreements to resell	139,695,000,000		133,792,000,000
Securities borrowed	135,726,000,000		121,705,000,000
Customer and other receivables	57,295,000,000	[2]	59,634,000,000	[2]
Loans	31,053,000,000	[3]	27,263,000,000	[3]
Financial Liabilities
Deposits	79,181,000,000		81,781,000,000
Commercial paper and other short-term borrowings	1,213,000,000		1,413,000,000
Securities sold under agreement to repurchase	118,837,000,000		122,389,000,000
Securities loaned	40,400,000,000		37,163,000,000
Other secured financings	6,693,000,000		6,276,000,000
Customer and other payables	133,842,000,000	[2]	125,037,000,000	[2]
Long-term borrowings	125,618,000,000		126,683,000,000
Additional Disclosures
Unfunded lending commitments	756,000,000		755,000,000
Fair Value | Level 1
Financial Assets:
Cash and due from banks	17,773,000,000		20,878,000,000
Interest bearing deposits with banks	25,129,000,000		26,026,000,000
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	31,313,000,000		30,970,000,000
Federal funds sold and securities purchased under agreements to resell	0		0
Securities borrowed	0		0
Customer and other receivables	0	[2]	0	[2]
Loans	0	[3]	0	[3]
Financial Liabilities
Deposits	0		0
Commercial paper and other short-term borrowings	0		0
Securities sold under agreement to repurchase	0		0
Securities loaned	0		0
Other secured financings	0		0
Customer and other payables	0	[2]	0	[2]
Long-term borrowings	0		0
Fair Value | Level 2
Financial Assets:
Cash and due from banks	0		0
Interest bearing deposits with banks	0		0
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	0		0
Federal funds sold and securities purchased under agreements to resell	138,334,000,000		133,035,000,000
Securities borrowed	135,574,000,000		121,691,000,000
Customer and other receivables	51,656,000,000	[2]	53,532,000,000	[2]
Loans	6,478,000,000	[3]	5,307,000,000	[3]
Financial Liabilities
Deposits	79,181,000,000		81,781,000,000
Commercial paper and other short-term borrowings	959,000,000		1,107,000,000
Securities sold under agreement to repurchase	107,677,000,000		111,722,000,000
Securities loaned	38,073,000,000		35,978,000,000
Other secured financings	3,436,000,000		3,649,000,000
Customer and other payables	133,842,000,000	[2]	125,037,000,000	[2]
Long-term borrowings	115,726,000,000		116,511,000,000
Additional Disclosures
Unfunded lending commitments	542,000,000		543,000,000
Fair Value | Level 3
Financial Assets:
Cash and due from banks	0		0
Interest bearing deposits with banks	0		0
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	0		0
Federal funds sold and securities purchased under agreements to resell	1,361,000,000		757,000,000
Securities borrowed	152,000,000		14,000,000
Customer and other receivables	5,639,000,000	[2]	6,102,000,000	[2]
Loans	24,575,000,000	[3]	21,956,000,000	[3]
Financial Liabilities
Deposits	0		0
Commercial paper and other short-term borrowings	254,000,000		306,000,000
Securities sold under agreement to repurchase	11,160,000,000		10,667,000,000
Securities loaned	2,327,000,000		1,185,000,000
Other secured financings	3,257,000,000		2,627,000,000
Customer and other payables	0	[2]	0	[2]
Long-term borrowings	9,892,000,000		10,172,000,000
Additional Disclosures
Unfunded lending commitments	$ 214,000,000		$ 212,000,000

[1] Amounts include $9,624 million and $9,466 million at fair value at March 31, 2013 and December 31, 2012, respectively.

[2] Accrued interest, fees and dividend receivables and payables where carrying value approximates fair value have been excluded.

[3] Includes all loans measured at fair value on a non-recurring basis.

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Collateralized Transactions

3 Months Ended

Mar. 31, 2013

Collateralized Transactions

Collateralized Transactions

6. Collateralized Transactions.

The Company enters into reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions to, among other things, acquire securities to cover short positions and settle other securities obligations, to accommodate customers' needs and to finance the Company's inventory positions. The Company manages credit exposure arising from such transactions by, in appropriate circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide the Company, in the event of a counterparty default (such as bankruptcy or a counterparty's failure to pay or perform),the right to net a counterparty's rights and obligations under such agreement and liquidate and setoff collateral against the net amount owed by the counterparty. The Company's policy is generally to take possession of securities purchased under agreements to resell and securities borrowed, and to receive securities and cash posted as collateral (with rights of rehypothecation), although in certain cases the Company may agree for such collateral to be posted to a third party custodian under a tri-party arrangement that enables the Company to take control of such collateral in the event of a counterparty default. The Company also monitors the fair value of the underlying securities as compared with the related receivable or payable, including accrued interest, and, as necessary, requests additional collateralas provided under the applicable agreement to ensure such transactions are adequately collateralized. The following tables present information about the offsetting of these instruments and related collateral amounts. For information related to offsetting of derivatives, see Note 11.

			At March 31, 2013
			Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)		Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Financial Instruments Not Offset in the Condensed Consolidated Statements of Financial Condition(2)		Net Exposure
			(dollars in millions)
Assets
Federal funds sold and securities purchased under
	agreements to resell	$	228,101	$	(87,686)	$	140,415	$	(129,911)	$	10,504
Securities borrowed			141,667		(5,940)		135,727		(115,717)		20,010
Liabilities
Securities sold under agreements to repurchase		$	206,956	$	(87,686)	$	119,270	$	(89,815)	$	29,455
Securities loaned			46,291		(5,940)		40,351		(37,348)		3,003

_____________

(1)       Amounts include all instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2)       Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3)       Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

			At December 31, 2012
			Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)		Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Financial Instruments Not Offset in the Condensed Consolidated Statements of Financial Condition(2)		Net Exposure
			(dollars in millions)
Assets
Federal funds sold and securities purchased under
	agreements to resell	$	203,448	$	(69,036)	$	134,412	$	(126,303)	$	8,109
Securities borrowed			127,002		(5,301)		121,701		(105,849)		15,852
Liabilities
Securities sold under agreements to repurchase		$	191,710	$	(69,036)	$	122,674	$	(103,521)	$	19,153
Securities loaned			42,150		(5,301)		36,849		(30,395)		6,454

_____________

(1)       Amounts include all instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2)       Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3)       Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

The Company also engages in securities financing transactions for customers through margin lending. Under these agreements and transactions, the Company either receives or provides collateral, including U.S. government and agency securities, other sovereign government obligations, corporate and other debt, and corporate equities. Customerreceivables generated from margin lending activity are collateralized by customer-owned securities held by the Company. The Company monitors required margin levels and established credit limits daily and, pursuant to such guidelines, requires customers to deposit additional collateral, or reduce positions, when necessary. Margin loans are extended on a demand basis and are not committed facilities. Factors considered in the review of margin loans are the amount of the loan, the intended purpose, the degree of leverage being employed in the account, and overall evaluation of the portfolio to ensure proper diversification or, in the case of concentrated positions, appropriate liquidity of the underlying collateral or potential hedging strategies to reduce risk. Additionally, transactions relating to concentrated or restricted positions require a review of any legal impediments to liquidation of the underlying collateral. Underlying collateral for margin loans is reviewed with respect to the liquidity of the proposed collateral positions, valuation of securities, historic trading range, volatility analysis and an evaluation of industry concentrations. For these transactions, adherence to the Company's collateral policies significantly limits the Company's credit exposure in the event of customer default. The Company may request additional margin collateral from customers, if appropriate, and, if necessary, may sell securities that have not been paid for or purchase securities sold but not delivered from customers. At March 31,2013 and December 31, 2012, there were approximately $25.1 billion and $24.0 billion, respectively, of customer margin loans outstanding.

Other secured financings include the liabilities related to transfers of financial assets that are accounted for as financings rather than sales, consolidated VIEs where the Company is deemed to be the primary beneficiary, and certain equity-linked notes and other secured borrowings. These liabilities are generally payable from the cash flows of the related assets accounted for as Trading assets (see Notes 7 and 10).

The Company pledges its trading assets to collateralize repurchase agreements and other securities financings. Pledged financial instruments that can be sold or repledged by the secured party are identified as Trading assets (pledged to various parties) in the condensed consolidated statements of financial condition. The carrying value and classification of Trading assets by the Company that have been loaned or pledged to counterparties where those counterparties do not have the right to sell or repledge the collateral were as follows:

				At March 31, 2013		At December 31, 2012
			(dollars in millions)
Trading assets:
	U.S. government and agency securities		$	14,125	$	15,273
	Other sovereign government obligations			4,569		3,278
	Corporate and other debt			16,450		11,980
	Corporate equities			9,130		26,377
		Total	$	44,274	$	56,908

The Company receives collateral in the form of securities in connection with reverse repurchase agreements, securities borrowed and derivative transactions, and customer margin loans. In many cases, the Company is permitted to sell or repledge these securities held as collateral and use the securities to secure repurchase agreements, to enter into securities lending and derivative transactions or for delivery to counterparties to cover short positions. The Company additionally receives securities as collateral in connection with certain securities-for-securities transactions in which the Company is the lender. In instances where the Company is permitted to sell or repledge these securities, the Company reports the fair value of the collateral received and the related obligation to return the collateral in the condensed consolidated statements of financial condition. At March31, 2013 and December 31, 2012, the fair value of financial instruments received as collateral where the Company is permitted to sell or repledge the securities was $613 billion and $560 billion, respectively, and the fair value of the portion that had been sold or repledged was $469 billion and $397 billion, respectively.

At March 31, 2013 and December 31, 2012, cash and securities deposited with clearing organizations or segregated under federal and other regulations or requirements were as follows:

				At		At
				March 31,		December 31,
				2013		2012
			(dollars in millions)
Cash deposited with clearing organizations or segregated under federal and other
	regulations or requirements		$	31,313	$	30,970
Securities(1)				13,999		13,424
		Total	$	45,312	$	44,394

_____________

(1)       Securities deposited with clearing organizations or segregated under federal and other regulations or requirements are sourced from Federal funds sold and securities purchased under agreements to resell and Trading assets in the condensed consolidated statements of financial condition.

XML

Variable Interest Entities and Securitization Activities

3 Months Ended

Mar. 31, 2013

Securitization Activities and Variable Interest Entities [Abstract]

Variable Interest Entity Disclosures

7.Variable Interest Entities and Securitization Activities.

The Company is involved with various special purpose entities (“SPE”) in the normal course of business. In most cases, these entities are deemed to be VIEs.

The Company applies accounting guidance for consolidation of VIEs to certain entities in which equity investors do not have the characteristics of a controlling financial interest. Except for certain asset management entities,the primary beneficiary of a VIE is the party that both (1) has the power to direct the activities of a VIE that most significantly affect the VIE's economic performance and (2) has an obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. The Company consolidates entities of which it is the primary beneficiary.

The Company's variable interests in VIEs include debt and equity interests, commitments, guarantees, derivative instruments and certain fees. The Company's involvement with VIEs arises primarily from:

•       Interests purchased in connection with market-making activities, securities held in its available for sale portfolio and retained interests held as a result of securitization activities, including re-securitization transactions.

•       Guarantees issued and residual interests retained in connection with municipal bond securitizations.

•       Servicing of residential and commercial mortgage loans held by VIEs.

•       Loans made to and investments in VIEs that hold debt, equity, real estate or other assets.

•       Derivatives entered into with VIEs.

•       Structuring of credit-linked notes (“CLN”) or other asset-repackaged notes designed to meet the investment objectives of clients.

•       Other structured transactions designed to provide tax-efficient yields to the Company or its clients.

The Company determines whether it is the primary beneficiary of a VIE upon its initial involvement with the VIE and reassesses whether it is the primary beneficiary on an ongoing basis as long as it has any continuing involvement with the VIE. This determination is based upon an analysis of the design of the VIE, including the VIE's structure and activities, the power to make significant economic decisions held by the Company and by other parties, and the variable interests owned by the Company and other parties.

The power to make the most significant economic decisions may take a number of different forms in different types of VIEs. The Company considers servicing or collateral management decisions as representing the power to make the most significant economic decisions in transactions such as securitizations or CDOs. As a result, the Company does not consolidate securitizations or CDOs for which it does not act as the servicer or collateral manager unless it holds certain other rights to replace the servicer or collateral manager or to require the liquidation of the entity. If the Company serves as servicer or collateral manager, or has certain other rights described in the previous sentence, the Company analyzes the interests in the VIE that it holds and consolidates only those VIEs for which it holds a potentially significant interest of the VIE.

The structure of securitization vehicles and CDOsis driven by several parties, including loan seller(s) in securitization transactions, the collateral manager in a CDO, one or more rating agencies, a financial guarantor in some transactions and the underwriter(s) of the transactions, who serve to reflect specific investor demand. In addition, subordinate investors, such as the “B-piece” buyer (i.e., investors in most subordinated bond classes) in commercial mortgage-backed securitizations or equity investors in CDOs, can influence whether specific loans are excluded from a CMBS transaction or investment criteria in a CDO. 

For many transactions, such as re-securitization transactions, CLNs and other asset-repackaged notes, there are no significant economic decisions made on an ongoing basis. In these cases, the Company focuses its analysis on decisions made prior to the initial closing of the transaction and at the termination of the transaction. Based upon factors, which include an analysis of the nature of the assets, including whether the assets were issued in a transaction sponsored by the Company and the extent of the information available to the Company and to investors, the number, nature and involvement of investors, other rights held by the Company and investors, the standardization of the legal documentation and the level of the continuing involvement by the Company, including the amount and type of interests owned by the Company and by other investors, the Company concluded in most of these transactions that decisions made prior to the initial closing were shared between the Company and the initial investors. The Company focused its control decision on any right held by the Company or investors related to the termination of the VIE. Most re-securitization transactions, CLNs and other asset-repackaged notes have no such termination rights.

Except for consolidated VIEs included in other structured financings and managed real estate partnerships in the tables below, the Company accounts for the assets held by the entities primarily in Trading assets and the liabilities of the entities as Other secured financings in the condensed consolidated statements of financial condition. For consolidated VIEs included in other structured financings, the Company accounts for the assets held by the entities primarily in Premises, equipment and software costs, and Other assets in the condensed consolidated statements of financial condition. For consolidated VIEs included in managed real estate partnerships, the Company accounts for the assets held by the entities primarily in Trading assets in the condensedconsolidated statements of financial condition. Except for consolidated VIEs included in other structured financings, the assets and liabilities are measured at fair value, with changes in fair value reflected in earnings.

The assets owned by many consolidated VIEs cannot be removed unilaterally by the Company and are not generally available to the Company. The related liabilities issued by many consolidated VIEs are non-recourse to the Company. In certain other consolidated VIEs, the Company has the unilateral right to remove assets or provides additional recourse through derivatives such as total return swaps, guarantees or other forms of involvement.

As part of the Company's Institutional Securities business segment's securitization and related activities, the Company has provided, or otherwise agreed to be responsible for, representations and warranties regarding certain assets transferred in securitization transactions sponsored by the Company (see Note 12).

The following tables present information at March 31, 2013 and December 31, 2012 about VIEs that the Company consolidates. Consolidated VIE assets and liabilities are presented after intercompany eliminations and include assets financed on a non-recourse basis:

		At March 31, 2013
		Mortgage and Asset-Backed Securitizations		Collateralized Debt Obligations		Managed Real Estate Partnerships		Other Structured Financings		Other
		(dollars in millions)
VIE assets	$	881	$	—	$	2,486	$	992	$	1,500
VIE liabilities	$	565	$	—	$	134	$	65	$	176

		At December 31, 2012
		Mortgage and Asset-Backed Securitizations		Collateralized Debt Obligations		Managed Real Estate Partnerships		Other Structured Financings		Other
		(dollars in millions)
VIE assets	$	978	$	52	$	2,394	$	983	$	1,676
VIE liabilities	$	646	$	16	$	83	$	65	$	313

In general, the Company's exposure to loss in consolidated VIEs is limited to losses that would be absorbed on the VIE's assets recognized in its financial statements, net of losses absorbed by third-party holders of the VIE's liabilities. At March 31, 2013 and December 31, 2012, managed real estate partnerships reflected nonredeemable noncontrolling interests in the Company'scondensed consolidated financial statements of $1,854 million and $1,804 million, respectively. The Company also had additional maximum exposure to losses of approximately $60 million and $58 million at March31, 2013and December 31, 2012, respectively. This additional exposure related primarily to certain derivatives (e.g., instead of purchasing senior securities, the Company has sold credit protection to synthetic CDOs through credit derivatives that are typically related to the most senior tranche of the CDO) and commitments, guarantees and other forms of involvement.

The following tables present information about certain non-consolidated VIEs in which the Company had variable interests at March 31, 2013and December 31, 2012. The tables include all VIEs in which the Company has determined that its maximum exposure to loss is greater than specific thresholds or meets certain other criteria. Most of the VIEs included in the tables below are sponsored by unrelated parties; the Company's involvement generally is the result of the Company's secondary market-making activities and securities held in its available for sale portfolio (see Note 5):

			At March 31, 2013
			Mortgage and Asset-Backed Securitizations			Collateralized Debt Obligations		Municipal Tender Option Bonds		Other Structured Financings		Other
			(dollars in millions)
VIE assets that the Company does not consolidate
	(unpaid principal balance)(1)		$	260,828	$	18,864	$	3,668	$	1,742	$	13,781
Maximum exposure to loss:
	Debt and equity interests(2)		$	22,170	$	1,803	$	190	$	1,057	$	2,984
	Derivative and other contracts			35		33		2,174		—		248
	Commitments, guarantees and other			51		—		—		669		562
		Total maximum exposure to loss	$	22,256	$	1,836	$	2,364	$	1,726	$	3,794
Carrying value of exposure to loss—Assets:
	Debt and equity interests(2)		$	22,170	$	1,803	$	190	$	672	$	2,979
	Derivative and other contracts			35		8		4		—		79
		Total carrying value of exposure to loss—Assets	$	22,205	$	1,811	$	194	$	672	$	3,058
Carrying value of exposure to loss—Liabilities:
	Derivative and other contracts		$	—	$	4	$	—	$	—	$	50
	Commitments, guarantees and other			—		—		—		11		214
		Total carrying value of exposure to loss—Liabilities	$	—	$	4	$	—	$	11	$	264

(1)       Mortgage and asset-backed securitizations include VIE assets as follows: $21.8billion of residential mortgages; $45.5billion of commercial mortgages; $131.9billion of U.S. agency collateralized mortgage obligations; and $61.6billion of other consumer or commercial loans.

(2)       Mortgage and asset-backed securitizations include VIE debt and equity interests as follows: $0.9billion of residential mortgages; $1.1billion of commercial mortgages; $14.9billion of U.S. agency collateralized mortgage obligations; and $5.3billion of other consumer or commercial loans.

			At December 31, 2012
			Mortgage and Asset-Backed Securitizations			Collateralized Debt Obligations		Municipal Tender Option Bonds		Other Structured Financings		Other
			(dollars in millions)
VIE assets that the Company does not consolidate
	(unpaid principal balance)(1)		$	251,689	$	13,178	$	3,390	$	1,811	$	14,029
Maximum exposure to loss:
	Debt and equity interests(2)		$	22,280	$	1,173	$	—	$	1,053	$	3,387
	Derivative and other contracts			154		51		2,158		—		562
	Commitments, guarantees and other			66		—		—		679		384
		Total maximum exposure to loss	$	22,500	$	1,224	$	2,158	$	1,732	$	4,333
Carrying value of exposure to loss—Assets:
	Debt and equity interests(2)		$	22,280	$	1,173	$	—	$	663	$	3,387
	Derivative and other contracts			156		8		4		—		174
		Total carrying value of exposure to loss—Assets	$	22,436	$	1,181	$	4	$	663	$	3,561
Carrying value of exposure to loss—Liabilities:
	Derivative and other contracts		$	11	$	2	$	—	$	—	$	172
	Commitments, guarantees and other			—		—		—		12		—
		Total carrying value of exposure to loss—Liabilities	$	11	$	2	$	—	$	12	$	172

(1)       Mortgage and asset-backed securitizations include VIE assets as follows: $18.3billion of residential mortgages; $53.8billion of commercial mortgages; $126.3billion of U.S. agency collateralized mortgage obligations; and $53.3billion of other consumer or commercial loans.

(2)       Mortgage and asset-backed securitizations include VIE debt and equity interests as follows: $1.0billion of residential mortgages; $1.5billion of commercial mortgages; $14.8billion of U.S. agency collateralized mortgage obligations; and $5.0billion of other consumer or commercial loans.

The Company's maximum exposure to loss often differs from the carrying value of the variable interests held by the Company. The maximum exposure to loss is dependent on the nature of the Company's variable interest in the VIEs and is limited to the notional amounts of certain liquidity facilities, other credit support, total return swaps, written put options, and the fair value of certain other derivatives and investments the Company has made in the VIEs. Liabilities issued by VIEs generally are non-recourse to the Company. Where notional amounts are utilized in quantifying maximum exposure related to derivatives, such amounts do not reflect fair value writedowns already recorded by the Company.

The Company's maximum exposure to loss does not include the offsetting benefit of any financial instruments that the Company may utilize to hedge these risks associated with the Company's variable interests. In addition, the Company's maximum exposure to loss is not reduced by the amount of collateral held as part of a transaction with the VIE or any party to the VIE directly against a specific exposure to loss.

Securitization transactions generally involve VIEs. Primarily as a result of its secondary market-making activities, the Company owned additional securities issued by securitization SPEs for which the maximum exposure to loss is less than specific thresholds. These additional securities totaled $4.3 billion at March31, 2013. These securities were either retained in connection with transfers of assets by the Company, acquired in connection with secondary market-making activities or held in the Company's available for sale portfolio (see Note 5). Securities issued by securitization SPEs consist of $1.6billion of securities backed primarily by residential mortgage loans, $0.5 billion of securities backed by U.S. agency collateralized mortgage obligations, $0.7 billion of securities backed by commercial mortgage loans, $0.6 billion of securities backed by collateralized debt obligations or collateralized loan obligations and $0.9 billion backed by other consumer loans, such as credit card receivables, automobile loans and student loans. The Company's primary risk exposure is to the securities issued by the SPE owned by the Company, with the risk highest on the most subordinate class of beneficial interests. These securities generally are included in Trading assets—Corporate and other debt or Securities available for sale and are measured at fair value (see Note 4). The Company does not provide additional support in these transactions through contractual facilities, such as liquidity facilities, guarantees or similar derivatives. The Company's maximum exposure to loss generally equals the fair value of the securities owned.

The Company's transactions with VIEs primarily include securitizations, municipal tender option bond trusts, credit protection purchased through CLNs, other structured financings, collateralized loan and debt obligations, equity-linked notes, managed real estate partnerships and asset management investment funds. The Company's continuing involvement in VIEs that it does not consolidate can include ownership of retained interests in Company-sponsored transactions, interests purchased in the secondary market (both for Company-sponsored transactions and transactions sponsored by third parties), derivatives with securitization SPEs (primarily interest rate derivatives in commercial mortgage and residential mortgage securitizations and credit derivatives in which the Company has purchased protection in synthetic CDOs), and as servicer in residential mortgage securitizations in the U.S. and Europe and commercial mortgage securitizations in Europe.Such activities are further described in Note 7 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K.

Transfers of Assets with Continuing Involvement.

The following tables present information at March 31, 2013 regarding transactions with SPEs in which the Company, acting as principal, transferred financial assets with continuing involvement and received sales treatment:

				At March 31, 2013
				Residential Mortgage Loans		Commercial Mortgage Loans		U.S. Agency Collateralized Mortgage Obligations		Credit-Linked Notes and  Other
				(dollars in millions)
SPE assets (unpaid principal balance)(1)			$	34,516	$	53,905	$	18,614	$	12,956
Retained interests (fair value):
	Investment grade		$	1	$	52	$	1,100	$	—
	Non-investment grade			83		90		—		1,403
		Total retained interests (fair value)	$	84	$	142	$	1,100	$	1,403
Interests purchased in the secondary market (fair value):
	Investment grade		$	58	$	90	$	44	$	404
	Non-investment grade			92		29		—		24
		Total interests purchased in the secondary market (fair value)	$	150	$	119	$	44	$	428
Derivative assets (fair value)			$	—	$	915	$	—	$	171
Derivative liabilities (fair value)			$	2	$	—	$	—	$	239

_____________

(1)Amounts include assets transferred by unrelated transferors.

				At March 31, 2013
				Level 1		Level 2		Level 3		Total
				(dollars in millions)
Retained interests (fair value):
	Investment grade		$	—	$	1,101	$	52	$	1,153
	Non-investment grade			—		91		1,485		1,576
		Total retained interests (fair value)	$	—	$	1,192	$	1,537	$	2,729
Interests purchased in the secondary market (fair value):
	Investment grade		$	—	$	596	$	—	$	596
	Non-investment grade			—		110		35		145
		Total interests purchased in the secondary market (fair value)	$	—	$	706	$	35	$	741
Derivative assets (fair value)			$	—	$	775	$	311	$	1,086
Derivative liabilities (fair value)			$	—	$	237	$	4	$	241

The following tables present information at December 31, 2012 regarding transactions with SPEs in which the Company, acting as principal, transferred assets with continuing involvement and received sales treatment:

				At December 31, 2012
				Residential Mortgage Loans		Commercial Mortgage Loans		U.S. Agency Collateralized Mortgage Obligations		Credit-Linked Notes and  Other
				(dollars in millions)
SPE assets (unpaid principal balance)(1)			$	36,750	$	70,824	$	17,787	$	14,701
Retained interests (fair value):
	Investment grade		$	1	$	77	$	1,468	$	—
	Non-investment grade			54		109		—		1,503
		Total retained interests (fair value)	$	55	$	186	$	1,468	$	1,503
Interests purchased in the secondary market (fair value):
	Investment grade		$	11	$	124	$	99	$	389
	Non-investment grade			113		34		—		31
		Total interests purchased in the secondary market (fair value)	$	124	$	158	$	99	$	420
Derivative assets (fair value)			$	2	$	948	$	—	$	177
Derivative liabilities (fair value)			$	22	$	—	$	—	$	303

_____________

(1)Amounts include assets transferred by unrelated transferors.

				At December 31, 2012
				Level 1		Level 2		Level 3		Total
				(dollars in millions)
Retained interests (fair value):
	Investment grade		$	—	$	1,476	$	70	$	1,546
	Non-investment grade			—		84		1,582		1,666
		Total retained interests (fair value)	$	—	$	1,560	$	1,652	$	3,212
Interests purchased in the secondary market (fair value):
	Investment grade		$	—	$	617	$	6	$	623
	Non-investment grade			—		139		39		178
		Total interests purchased in the secondary market (fair value)	$	—	$	756	$	45	$	801
Derivative assets (fair value)			$	—	$	774	$	353	$	1,127
Derivative liabilities (fair value)			$	—	$	295	$	30	$	325

Transferred assets are carried at fair value prior to securitization, and any changes in fair value are recognized in thecondensed consolidated statements of income. The Company may act as underwriter of the beneficial interests issued by securitization vehicles. Investment banking underwriting net revenues are recognized in connection with these transactions. The Company may retain interests in the securitized financial assets as one or more tranches of the securitization. These retained interests are included in thecondensed consolidated statements of financial condition at fair value. Any changes in the fair value of such retained interests are recognized in thecondensed consolidated statements of income.

Net gains on sales of assets in securitization transactions at the time of the sale were not materialin the quarters ended March 31,2013and 2012, respectively.

Duringthe quarters ended March 31, 2013 and 2012, the Company received proceeds from new securitization transactions of $7.5 billion and $6.0 billion, respectively. During the quarters ended March 31,2013 and 2012, the Company received proceeds from cash flows from retained interests in securitization transactions of $1.2 billion and $1.7 billion, respectively.

The Company has provided, or otherwise agreed to be responsible for,representations and warranties regarding certain assets transferred in securitization transactions sponsored by the Company (see Note 12).

Failed Sales.

In order to be treated as a sale of assets for accounting purposes, a transaction must meet all of the criteria stipulated in the accounting guidance for the transfer of financial assets. If the transfer fails to meet these criteria, that transfer of financial assets is treated as a failed sale. In such case for transfers to VIEs and securitizations,the Company continues to recognize the assets in Trading assets, and the Company recognizes the associated liabilities in Other secured financings in the condensedconsolidated statements of financial condition.

The assets transferred to many unconsolidated VIEs in transactions accounted for as failed sales cannot be removed unilaterally by the Company and are not generally available to the Company. The related liabilities issued by many unconsolidated VIEs are non-recourse to the Company. In certain other failed sale transactions, the Company has the unilateral right to remove assets or provide additional recourse through derivatives such as total return swaps, guarantees or other forms of involvement.

The following table presents information about the carrying value (equal to fair value) of assets and liabilities resulting from transfers of financial assets treated by the Company as secured financings:

		At March 31, 2013				At December 31, 2012
		Carrying Value of				Carrying Value of
		Assets		Liabilities		Assets		Liabilities
		(dollars in millions)
Credit-linked notes	$	221	$	203	$	283	$	222
Equity-linked transactions		347		343		422		405
Other		37		36		29		28

Mortgage Servicing Activities.

Mortgage Servicing Rights.     The Company may retain servicing rights to certain mortgage loans that are sold. These transactions create an asset referred to as MSRs, which totaled approximately $8million and $7 million at March 31, 2013 and December 31, 2012, respectively, and are included within Intangible assets and carried at fair value in thecondensed consolidated statements of financial condition.

SPE Mortgage Servicing Activities.    The Company services residential mortgage loans in the U.S.and in Europe and commercial mortgage loans in Europe owned by SPEs, including SPEs sponsored by the Company and SPEs not sponsored by the Company. The Company generally holds retained interests in Company-sponsored SPEs. In some cases, as part of its market-making activities, the Company may own some beneficial interests issued by both Company-sponsored and non-Company sponsored SPEs.

The Company provides no credit support as part of its servicing activities. The Company is required to make servicing advances to the extent that it believes that such advances will be reimbursed. Reimbursement of servicing advances is a senior obligation of the SPE, senior to the most senior beneficial interests outstanding. Outstanding advances are included in Other assets and are recorded at cost, net of allowances. Advances at March 31, 2013 and December 31, 2012totaled approximately $64million and $49million, respectively. There were no allowancesatMarch 31, 2013 and December 31, 2012.

The following tables present information about the Company's mortgage servicing activities for SPEs to which the Company transferred loans atMarch 31, 2013 and December 31, 2012:

		At March 31, 2013
		Residential Mortgage Unconsolidated SPEs			Residential Mortgage Consolidated SPEs		Commercial Mortgage Unconsolidated SPEs		Commercial Mortgage Consolidated SPEs
			(dollars in millions)
Assets serviced (unpaid principal balance)		$	750	$	914	$	4,395	$	—
Amounts past due 90 days or greater
	(unpaid principal balance)(1)	$	80	$	49	$	—	$	—
Percentage of amounts past due 90 days
	or greater(1)		10.6%		5.4%		—		—
Credit losses		$	1	$	4	$	—	$	—

_____________

(1)Amounts include loans that are at least 90 days contractually delinquent, loans for which the borrower has filed for bankruptcy, loans in foreclosure and real estate owned.

		At December 31, 2012
		Residential Mortgage Unconsolidated SPEs			Residential Mortgage Consolidated SPEs		Commercial Mortgage Unconsolidated SPEs		Commercial Mortgage Consolidated SPEs
			(dollars in millions)
Assets serviced (unpaid principal balance)		$	821	$	1,141	$	4,760	$	—
Amounts past due 90 days or greater
	(unpaid principal balance)(1)	$	86	$	43	$	—	$	—
Percentage of amounts past due 90 days
	or greater(1)		10.4%		3.8%		—		—
Credit losses		$	3	$	2	$	—	$	—

_____________

(1)       Amounts include loans that are at least 90 days contractually delinquent, loans for which the borrower has filed for bankruptcy, loans in foreclosure and real estate owned.

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Goodwill and Net Intangible Assets

3 Months Ended

Mar. 31, 2013

Goodwill and Net Intangible Assets

Goodwill And Net Intangible Assets

9.Goodwill and Net Intangible Assets.

The Company tests goodwill for impairment on an annual basis and on an interim basis when certain events or circumstances exist. The Company tests for impairment at the reporting unit level, which is generally at the level of or one level below its business segments.For both the annual and interim tests, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing the two-step impairment test is not required. However, if the Company concludes otherwise, then it is required to perform the first step of the two-step impairment test. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. If the estimated fair value is below carrying value, however, further analysis is required to determine the amount of the impairment. Additionally, if the carrying value of a reporting unit is zero or a negative value and it is determined that it is more likely than not the goodwill is impaired, further analysis is required. The estimated fair values of the reporting units are derived based on valuation techniques the Company believes market participants would use for each of the reporting units.

The estimated fair values are generally determined utilizing methodologies that incorporate price-to-book and price-to-earnings multiples of certain comparable companies. The Company also utilizes a discounted cash flow methodology for certain reportingunits.

The Company completed its annual goodwill impairment testing at July 1, 2012.The Company's testing did not indicate any goodwill impairment as each of the Company's reporting units with goodwill had a fair value that was substantially in excess of its carrying value.Adverse market or economic events could result in impairment charges in future periods.AtDecember 31, 2012, each of the Company's reporting units with goodwill had a fair value that was substantially in excess of its carrying value.

Goodwill.

Changes in the carrying amount of the Company's goodwill, net of accumulated impairment losses forthe quarter ended March 31, 2013, were as follows:

		Institutional Securities(1)		Global Wealth Management Group(1)		Asset Management		Total
		(dollars in millions)
Goodwill at December 31, 2012(2)	$	337	$	5,573	$	740	$	6,650
Goodwill disposed of during the period(3)		(17)		─		─		(17)
Goodwill at March 31, 2013(2)	$	320	$	5,573	$	740	$	6,633

_____________

(1)       On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

(2)       The amount of the Company's goodwill before accumulated impairments of $700 million, which included $673 million related to the Institutional Securities business segment and $27million related to the Asset Management business segment,was $7,333million and $7,350million at March 31, 2013and December 31, 2012, respectively.

(3)In 2011, the Company announced that it had reached an agreement with the employees of its in-house quantitative proprietary trading unit, Process Driven Trading (“PDT”), whereby PDT employees will acquire certain assets from the Company and launch an independent advisory firm. This transaction closed on January 1, 2013.

Net Intangible Assets.

Changes in the carrying amount of the Company's intangible assets forthe quarter ended March 31, 2013were as follows:

		Institutional Securities		Global Wealth Management Group		Asset Management		Total
		(dollars in millions)
Amortizable net intangible assets at December 31, 2012	$	175	$	3,600	$	1	$	3,776
Mortgage servicing rights (see Note 7)		—		7		—		7
Net intangible assets at December 31, 2012	$	175	$	3,607	$	1	$	3,783
Amortizable net intangible assets at December 31, 2012	$	175	$	3,600	$	1	$	3,776
Foreign currency translation adjustments and other		(3)		—		—		(3)
Amortization expense		(3)		(83)		—		(86)
Impairment losses(1)		(1)		—		—		(1)
Amortizable net intangible assets at March 31, 2013		168		3,517		1		3,686
Mortgage servicing rights (see Note 7)		—		8		—		8
Net intangible assets at March 31, 2013	$	168	$	3,525	$	1	$	3,694

____________

(1)       Impairment losses are recorded within Other expenses.

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Securities Available for Sale (Schedule of Proceeds of Sale of Securities Available for Sale) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Available-for-sale Securities [Abstract]
Gross realized gains	$ 5	$ 2
Gross realized losses	2	1
Proceeds of sales of debt securities available for sale	$ 2,029	$ 0

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Derivative Instruments and Hedging Activities (Components of Derivative Products) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Derivative Assets
Gross amounts	$ 891,944	[1]	$ 1,004,251	[1]
Amounts offset in the balance sheet	(856,115)	[2],[3]	(968,054)	[2],[3]
Net amounts	35,829		36,197
Amounts not offset against securities collateral	(6,688)	[2]	(7,691)	[2]
Amounts not offset against cash collateral	(135)	[2]	(232)	[2]
Net exposure	29,006		28,274
Derivative Liabilities
Gross amounts	868,599	[1]	978,773	[1]
Amounts offset in the balance sheet	(827,947)	[2],[3]	(941,815)	[2],[3]
Net amounts	40,652		36,958
Amounts not offset against securities collateral	(9,826)	[2]	(8,899)	[2]
Amounts not offset against cash collateral	(82)	[2]	(87)	[2]
Net exposure	30,744		27,972
Bilateral OTC
Derivative Assets
Gross amounts	549,368	[1]	604,713	[1]
Amounts offset in the balance sheet	(519,065)	[2],[3]	(573,844)	[2],[3]
Net amounts	30,303		30,869
Amounts not offset against securities collateral	(6,688)	[2]	(7,691)	[2]
Amounts not offset against cash collateral	(135)	[2]	(232)	[2]
Net exposure	23,480		22,946
Derivative Liabilities
Gross amounts	524,588	[1]	578,018	[1]
Amounts offset in the balance sheet	(492,049)	[2],[3]	(547,285)	[2],[3]
Net amounts	32,539		30,733
Amounts not offset against securities collateral	(7,973)	[2]	(7,871)	[2]
Amounts not offset against cash collateral	(82)	[2]	(64)	[2]
Net exposure	24,484		22,798
Cleared OTC
Derivative Assets
Gross amounts	315,330	[1],[4]	375,233	[1],[4]
Amounts offset in the balance sheet	(315,138)	[2],[3],[4]	(374,546)	[2],[3],[4]
Net amounts	192	[4]	687	[4]
Amounts not offset against securities collateral	0	[2],[4]	0	[2],[4]
Amounts not offset against cash collateral	0	[2],[4]	0	[2],[4]
Net exposure	192	[4]	687	[4]
Derivative Liabilities
Gross amounts	314,030	[1],[4]	374,960	[1],[4]
Amounts offset in the balance sheet	(313,986)	[2],[3],[4]	(374,866)	[2],[3],[4]
Net amounts	44	[4]	94	[4]
Amounts not offset against securities collateral	0	[2],[4]	0	[2],[4]
Amounts not offset against cash collateral	0	[2],[4]	(23)	[2],[4]
Net exposure	44	[4]	71	[4]
Exchange Traded
Derivative Assets
Gross amounts	27,246	[1]	24,305	[1]
Amounts offset in the balance sheet	(21,912)	[2],[3]	(19,664)	[2],[3]
Net amounts	5,334		4,641
Amounts not offset against securities collateral	0	[2]	0	[2]
Amounts not offset against cash collateral	0	[2]	0	[2]
Net exposure	5,334		4,641
Derivative Liabilities
Gross amounts	29,981	[1]	25,795	[1]
Amounts offset in the balance sheet	(21,912)	[2],[3]	(19,664)	[2],[3]
Net amounts	8,069		6,131
Amounts not offset against securities collateral	(1,853)	[2]	(1,028)	[2]
Amounts not offset against cash collateral	0	[2]	0	[2]
Net exposure	$ 6,216		$ 5,103

[1] Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

[2] Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

[3] Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

[4] Includes OTC derivatives that are centrally cleared in accordance with certain regulatory requirements.

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Collateralized Transactions (Balance Sheet Offsetting) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Federal Funds Sold and Securities Purchased under Agreements to Resell
Gross amount	$ 228,101	[1]	$ 203,448	[1]
Amounts offset in the balance sheet	(87,686)	[2],[3]	(69,036)	[2],[3]
Net amount	140,415		134,412
Financial instruments collateral	(129,911)	[2]	(126,303)	[2]
Net exposure	10,504		8,109
Securities Borrowed
Gross amount	141,667	[1]	127,002	[1]
Amounts offset in the balance sheet	(5,940)	[2],[3]	(5,301)	[2],[3]
Net amount	135,727		121,701
Financial instruments collateral	(115,717)	[2]	(105,849)	[2]
Net exposure	20,010		15,852
Securities Sold under Agreements to Repurchase
Gross amount	206,956	[1]	191,710	[1]
Amounts offset in the balance sheet	(87,686)	[2],[3]	(69,036)	[2],[3]
Net amount	119,270		122,674
Financial instruments collateral	(89,815)	[2]	(103,521)	[2]
Net exposure	29,455		19,153
Securities Loaned
Gross amount	46,291	[1]	42,150	[1]
Amounts offset in the balance sheet	(5,940)	[2],[3]	(5,301)	[2],[3]
Net amount	40,351		36,849
Financial instruments collateral	(37,348)	[2]	(30,395)	[2]
Net exposure	$ 3,003		$ 6,454

[1] Amounts include all instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

[2] Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

[3] Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

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Employee Benefit Plans (Components of Net Periodic Benefit Expense) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Pension and Other Postretirement Plans
Service cost, benefits earned during the period	$ 7	$ 8
Interest cost on projected benefit obligation	39	41
Expected return on plan assets	(28)	(28)
Net amortization of prior service costs	(4)	(3)
Net amortization of actuarial loss	10	7
Net periodic benefit expense	$ 24	$ 25

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Securities Available for Sale (Schedule of Amortized Cost and Fair Value of Available for Sale Debt Securities by Contractual Date) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Amortized Cost
Amortized cost, total	$ 41,228
Fair Value
Fair value, total	41,446
Annualized Average Yield
Annualized average yield, total	1.00%
U.S. Government and Agency Securities
Amortized Cost
Amortized cost, total	29,137
Fair Value
Fair value, total	29,329
Annualized Average Yield
Annualized average yield, total	0.90%
U.S. Treasury Securities
Amortized Cost
Amortized cost, due within 1 year	1,550
Amortized cost, after 1 year through 5 years	12,388
Amortized cost, total	13,938
Fair Value
Fair value, due within 1 year	1,571
Fair value, after 1 year through 5 years	12,470
Fair value, total	14,041
Annualized Average Yield
Annualized average yield, due within 1 year	1.70%
Annualized average yield, after 1 year through 5 years	0.70%
U.S. Agency Securities
Amortized Cost
Amortized cost, after 5 years through 10 years	2,017
Amortized cost, after 10 years	13,182
Amortized cost, total	15,199
Fair Value
Fair value, after 5 years through 10 years	2,029
Fair value, after 10 years	13,259
Fair value, total	15,288
Annualized Average Yield
Annualized average yield, after 5 years through 10 years	1.10%
Annualized average yield, after 10 years	1.10%
Corporate and Other Debt
Amortized Cost
Amortized cost, total	12,091
Fair Value
Fair value, total	12,117
Annualized Average Yield
Annualized average yield, total	1.10%
Agency
Amortized Cost
Amortized cost, after 1 year through 5 years	487
Amortized cost, after 5 years through 10 years	547
Amortized cost, after 10 years	1,336
Amortized cost, total	2,370
Fair Value
Fair value, after 1 year through 5 years	487
Fair value, after 5 years through 10 years	547
Fair value, after 10 years	1,323
Fair value, total	2,357
Annualized Average Yield
Annualized average yield, after 1 year through 5 years	0.90%
Annualized average yield, after 5 years through 10 years	0.90%
Annualized average yield, after 10 years	1.50%
Non-Agency
Amortized Cost
Amortized cost, after 1 year through 5 years	105
Amortized cost, after 5 years through 10 years	38
Amortized cost, after 10 years	316
Amortized cost, total	459
Fair Value
Fair value, after 1 year through 5 years	105
Fair value, after 5 years through 10 years	38
Fair value, after 10 years	317
Fair value, total	460
Annualized Average Yield
Annualized average yield, after 1 year through 5 years	1.10%
Annualized average yield, after 5 years through 10 years	0.80%
Annualized average yield, after 10 years	0.90%
Auto Loan Asset-backed Securities
Amortized Cost
Amortized cost, after 1 year through 5 years	1,982
Amortized cost, after 5 years through 10 years	189
Amortized cost, total	2,171
Fair Value
Fair value, after 1 year through 5 years	1,984
Fair value, after 5 years through 10 years	189
Fair value, total	2,173
Annualized Average Yield
Annualized average yield, after 1 year through 5 years	0.70%
Annualized average yield, after 5 years through 10 years	0.60%
Corporate Bonds
Amortized Cost
Amortized cost, due within 1 year	203
Amortized cost, after 1 year through 5 years	3,041
Amortized cost, after 5 years through 10 years	286
Amortized cost, total	3,530
Fair Value
Fair value, due within 1 year	203
Fair value, after 1 year through 5 years	3,053
Fair value, after 5 years through 10 years	286
Fair value, total	3,542
Annualized Average Yield
Annualized average yield, due within 1 year	0.60%
Annualized average yield, after 1 year through 5 years	1.10%
Annualized average yield, after 5 years through 10 years	1.80%
Collateralized Debt and Loan Obligations
Amortized Cost
Amortized cost, after 1 year through 5 years	50
Amortized cost, after 10 years	627
Amortized cost, total	677
Fair Value
Fair value, after 1 year through 5 years	50
Fair value, after 10 years	627
Fair value, total	677
Annualized Average Yield
Annualized average yield, after 1 year through 5 years	1.70%
Annualized average yield, after 10 years	1.40%
FFELP Student Loan Asset-backed Securities
Amortized Cost
Amortized cost, after 1 year through 5 years	124
Amortized cost, after 5 years through 10 years	507
Amortized cost, after 10 years	2,253
Amortized cost, total	2,884
Fair Value
Fair value, after 1 year through 5 years	124
Fair value, after 5 years through 10 years	511
Fair value, after 10 years	2,273
Fair value, total	$ 2,908
Annualized Average Yield
Annualized average yield, after 1 year through 5 years	0.70%
Annualized average yield, after 5 years through 10 years	1.00%
Annualized average yield, after 10 years	1.10%

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Commitments, Guarantees and Contingencies (Obligations under Guarantee Arrangements) (Details) (USD $)	Mar. 31, 2013
Guarantees issued by consolidated real estate fund sponsored by the Company	$ 85,400,000
Accrued losses under these guarantees	3,900,000
Credit Derivative Contracts
Maximum Potential Payout/Notional	1,826,641,000,000	[1]
Carrying Amount (Asset)/Liability	7,247,000,000	[1]
Collateral/Recourse	0	[1]
Other Credit Contracts
Maximum Potential Payout/Notional	1,825,000,000
Carrying Amount (Asset)/Liability	(195,000,000)
Collateral/Recourse	0
Non-credit Derivative Contracts
Maximum Potential Payout/Notional	2,632,719,000,000	[1]
Carrying Amount (Asset)/Liability	71,979,000,000	[1]
Collateral/Recourse	0	[1]
Standby Letters of Credit and Other Financial Guarantees Issued
Maximum Potential Payout/Notional	8,969,000,000	[2],[3]
Carrying Amount (Asset)/Liability	(205,000,000)	[2],[3]
Collateral/Recourse	7,090,000,000	[2],[3]
Market Value Guarantees
Maximum Potential Payout/Notional	725,000,000
Carrying Amount (Asset)/Liability	10,000,000
Collateral/Recourse	106,000,000
Liquidity Facilities
Maximum Potential Payout/Notional	2,490,000,000
Carrying Amount (Asset)/Liability	(4,000,000)
Collateral/Recourse	3,723,000,000
Whole Loan Sales Representations and Warranties
Maximum Potential Payout/Notional	23,967,000,000
Carrying Amount (Asset)/Liability	82,000,000
Collateral/Recourse	0
Securitizations Representations and Warranties
Maximum Potential Payout/Notional	70,927,000,000
Carrying Amount (Asset)/Liability	35,000,000
Collateral/Recourse	0
General Partner Guarantees
Maximum Potential Payout/Notional	313,000,000
Carrying Amount (Asset)/Liability	74,000,000
Collateral/Recourse	0
Less than 1 Year | Credit Derivative Contracts
Maximum Potential Payout/Notional	425,823,000,000	[1]
Less than 1 Year | Other Credit Contracts
Maximum Potential Payout/Notional	466,000,000
Less than 1 Year | Non-credit Derivative Contracts
Maximum Potential Payout/Notional	1,147,217,000,000	[1]
Less than 1 Year | Standby Letters of Credit and Other Financial Guarantees Issued
Maximum Potential Payout/Notional	735,000,000	[2],[3]
Less than 1 Year | Market Value Guarantees
Maximum Potential Payout/Notional	0
Less than 1 Year | Liquidity Facilities
Maximum Potential Payout/Notional	2,342,000,000
Less than 1 Year | Whole Loan Sales Representations and Warranties
Maximum Potential Payout/Notional	0
Less than 1 Year | Securitizations Representations and Warranties
Maximum Potential Payout/Notional	0
Less than 1 Year | General Partner Guarantees
Maximum Potential Payout/Notional	71,000,000
1 - 3 Years | Credit Derivative Contracts
Maximum Potential Payout/Notional	551,454,000,000	[1]
1 - 3 Years | Other Credit Contracts
Maximum Potential Payout/Notional	82,000,000
1 - 3 Years | Non-credit Derivative Contracts
Maximum Potential Payout/Notional	766,393,000,000	[1]
1 - 3 Years | Standby Letters of Credit and Other Financial Guarantees Issued
Maximum Potential Payout/Notional	1,246,000,000	[2],[3]
1 - 3 Years | Market Value Guarantees
Maximum Potential Payout/Notional	83,000,000
1 - 3 Years | Liquidity Facilities
Maximum Potential Payout/Notional	148,000,000
1 - 3 Years | Whole Loan Sales Representations and Warranties
Maximum Potential Payout/Notional	0
1 - 3 Years | Securitizations Representations and Warranties
Maximum Potential Payout/Notional	0
1 - 3 Years | General Partner Guarantees
Maximum Potential Payout/Notional	45,000,000
3 - 5 Years | Credit Derivative Contracts
Maximum Potential Payout/Notional	685,183,000,000	[1]
3 - 5 Years | Other Credit Contracts
Maximum Potential Payout/Notional	138,000,000
3 - 5 Years | Non-credit Derivative Contracts
Maximum Potential Payout/Notional	321,798,000,000	[1]
3 - 5 Years | Standby Letters of Credit and Other Financial Guarantees Issued
Maximum Potential Payout/Notional	1,484,000,000	[2],[3]
3 - 5 Years | Market Value Guarantees
Maximum Potential Payout/Notional	101,000,000
3 - 5 Years | Liquidity Facilities
Maximum Potential Payout/Notional	0
3 - 5 Years | Whole Loan Sales Representations and Warranties
Maximum Potential Payout/Notional	0
3 - 5 Years | Securitizations Representations and Warranties
Maximum Potential Payout/Notional	0
3 - 5 Years | General Partner Guarantees
Maximum Potential Payout/Notional	32,000,000
Over 5 Years | Credit Derivative Contracts
Maximum Potential Payout/Notional	164,181,000,000	[1]
Over 5 Years | Other Credit Contracts
Maximum Potential Payout/Notional	1,139,000,000
Over 5 Years | Non-credit Derivative Contracts
Maximum Potential Payout/Notional	397,311,000,000	[1]
Over 5 Years | Standby Letters of Credit and Other Financial Guarantees Issued
Maximum Potential Payout/Notional	5,504,000,000	[2],[3]
Over 5 Years | Market Value Guarantees
Maximum Potential Payout/Notional	541,000,000
Over 5 Years | Liquidity Facilities
Maximum Potential Payout/Notional	0
Over 5 Years | Whole Loan Sales Representations and Warranties
Maximum Potential Payout/Notional	23,967,000,000
Over 5 Years | Securitizations Representations and Warranties
Maximum Potential Payout/Notional	70,927,000,000
Over 5 Years | General Partner Guarantees
Maximum Potential Payout/Notional	165,000,000
Primary and Secondary Lending Commitments
Standby letters of credit	$ 2,100,000,000

[1] Carrying amounts of derivative contracts are shown on a gross basis prior to cash collateral or counterparty netting. For further information on derivative contracts, see Note 11.

[2] Approximately $2.1 billion of standby letters of credit are also reflected in the “Commitments” table above in primary and secondary lending commitments. Standby letters of credit are recorded at fair value within Trading assets or Trading liabilities in the condensed consolidated statements of financial condition.

[3] Amounts include guarantees issued by consolidated real estate funds sponsored by the Company of approximately $85.4 million. These guarantees relate to obligations of the fund’s investee entities, including guarantees related to capital expenditures and principal and interest debt payments. Accrued losses under these guarantees of approximately $3.9 million are reflected as a reduction of the carrying value of the related fund investments, which are reflected in Trading assets on the condensed consolidated statement of financial condition.

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Variable Interest Entities and Securitization Activities (Tables)

3 Months Ended

Mar. 31, 2013

Securitization Activities and Variable Interest Entities [Abstract]

Consolidated VIEs

		At March 31, 2013
		Mortgage and Asset-Backed Securitizations		Collateralized Debt Obligations		Managed Real Estate Partnerships		Other Structured Financings		Other
		(dollars in millions)
VIE assets	$	881	$	—	$	2,486	$	992	$	1,500
VIE liabilities	$	565	$	—	$	134	$	65	$	176

		At December 31, 2012
		Mortgage and Asset-Backed Securitizations		Collateralized Debt Obligations		Managed Real Estate Partnerships		Other Structured Financings		Other
		(dollars in millions)
VIE assets	$	978	$	52	$	2,394	$	983	$	1,676
VIE liabilities	$	646	$	16	$	83	$	65	$	313

Non-Consolidated VIEs

			At March 31, 2013
			Mortgage and Asset-Backed Securitizations			Collateralized Debt Obligations		Municipal Tender Option Bonds		Other Structured Financings		Other
			(dollars in millions)
VIE assets that the Company does not consolidate
	(unpaid principal balance)(1)		$	260,828	$	18,864	$	3,668	$	1,742	$	13,781
Maximum exposure to loss:
	Debt and equity interests(2)		$	22,170	$	1,803	$	190	$	1,057	$	2,984
	Derivative and other contracts			35		33		2,174		—		248
	Commitments, guarantees and other			51		—		—		669		562
		Total maximum exposure to loss	$	22,256	$	1,836	$	2,364	$	1,726	$	3,794
Carrying value of exposure to loss—Assets:
	Debt and equity interests(2)		$	22,170	$	1,803	$	190	$	672	$	2,979
	Derivative and other contracts			35		8		4		—		79
		Total carrying value of exposure to loss—Assets	$	22,205	$	1,811	$	194	$	672	$	3,058
Carrying value of exposure to loss—Liabilities:
	Derivative and other contracts		$	—	$	4	$	—	$	—	$	50
	Commitments, guarantees and other			—		—		—		11		214
		Total carrying value of exposure to loss—Liabilities	$	—	$	4	$	—	$	11	$	264

(1)       Mortgage and asset-backed securitizations include VIE assets as follows: $21.8billion of residential mortgages; $45.5billion of commercial mortgages; $131.9billion of U.S. agency collateralized mortgage obligations; and $61.6billion of other consumer or commercial loans.

(2)       Mortgage and asset-backed securitizations include VIE debt and equity interests as follows: $0.9billion of residential mortgages; $1.1billion of commercial mortgages; $14.9billion of U.S. agency collateralized mortgage obligations; and $5.3billion of other consumer or commercial loans.

			At December 31, 2012
			Mortgage and Asset-Backed Securitizations			Collateralized Debt Obligations		Municipal Tender Option Bonds		Other Structured Financings		Other
			(dollars in millions)
VIE assets that the Company does not consolidate
	(unpaid principal balance)(1)		$	251,689	$	13,178	$	3,390	$	1,811	$	14,029
Maximum exposure to loss:
	Debt and equity interests(2)		$	22,280	$	1,173	$	—	$	1,053	$	3,387
	Derivative and other contracts			154		51		2,158		—		562
	Commitments, guarantees and other			66		—		—		679		384
		Total maximum exposure to loss	$	22,500	$	1,224	$	2,158	$	1,732	$	4,333
Carrying value of exposure to loss—Assets:
	Debt and equity interests(2)		$	22,280	$	1,173	$	—	$	663	$	3,387
	Derivative and other contracts			156		8		4		—		174
		Total carrying value of exposure to loss—Assets	$	22,436	$	1,181	$	4	$	663	$	3,561
Carrying value of exposure to loss—Liabilities:
	Derivative and other contracts		$	11	$	2	$	—	$	—	$	172
	Commitments, guarantees and other			—		—		—		12		—
		Total carrying value of exposure to loss—Liabilities	$	11	$	2	$	—	$	12	$	172

(1)       Mortgage and asset-backed securitizations include VIE assets as follows: $18.3billion of residential mortgages; $53.8billion of commercial mortgages; $126.3billion of U.S. agency collateralized mortgage obligations; and $53.3billion of other consumer or commercial loans.

(2)       Mortgage and asset-backed securitizations include VIE debt and equity interests as follows: $1.0billion of residential mortgages; $1.5billion of commercial mortgages; $14.8billion of U.S. agency collateralized mortgage obligations; and $5.0billion of other consumer or commercial loans.

Information Regarding SPEs

				At March 31, 2013
				Residential Mortgage Loans		Commercial Mortgage Loans		U.S. Agency Collateralized Mortgage Obligations		Credit-Linked Notes and  Other
				(dollars in millions)
SPE assets (unpaid principal balance)(1)			$	34,516	$	53,905	$	18,614	$	12,956
Retained interests (fair value):
	Investment grade		$	1	$	52	$	1,100	$	—
	Non-investment grade			83		90		—		1,403
		Total retained interests (fair value)	$	84	$	142	$	1,100	$	1,403
Interests purchased in the secondary market (fair value):
	Investment grade		$	58	$	90	$	44	$	404
	Non-investment grade			92		29		—		24
		Total interests purchased in the secondary market (fair value)	$	150	$	119	$	44	$	428
Derivative assets (fair value)			$	—	$	915	$	—	$	171
Derivative liabilities (fair value)			$	2	$	—	$	—	$	239

_____________

(1)Amounts include assets transferred by unrelated transferors.

				At March 31, 2013
				Level 1		Level 2		Level 3		Total
				(dollars in millions)
Retained interests (fair value):
	Investment grade		$	—	$	1,101	$	52	$	1,153
	Non-investment grade			—		91		1,485		1,576
		Total retained interests (fair value)	$	—	$	1,192	$	1,537	$	2,729
Interests purchased in the secondary market (fair value):
	Investment grade		$	—	$	596	$	—	$	596
	Non-investment grade			—		110		35		145
		Total interests purchased in the secondary market (fair value)	$	—	$	706	$	35	$	741
Derivative assets (fair value)			$	—	$	775	$	311	$	1,086
Derivative liabilities (fair value)			$	—	$	237	$	4	$	241

				At December 31, 2012
				Residential Mortgage Loans		Commercial Mortgage Loans		U.S. Agency Collateralized Mortgage Obligations		Credit-Linked Notes and  Other
				(dollars in millions)
SPE assets (unpaid principal balance)(1)			$	36,750	$	70,824	$	17,787	$	14,701
Retained interests (fair value):
	Investment grade		$	1	$	77	$	1,468	$	—
	Non-investment grade			54		109		—		1,503
		Total retained interests (fair value)	$	55	$	186	$	1,468	$	1,503
Interests purchased in the secondary market (fair value):
	Investment grade		$	11	$	124	$	99	$	389
	Non-investment grade			113		34		—		31
		Total interests purchased in the secondary market (fair value)	$	124	$	158	$	99	$	420
Derivative assets (fair value)			$	2	$	948	$	—	$	177
Derivative liabilities (fair value)			$	22	$	—	$	—	$	303

_____________

(1)Amounts include assets transferred by unrelated transferors.

				At December 31, 2012
				Level 1		Level 2		Level 3		Total
				(dollars in millions)
Retained interests (fair value):
	Investment grade		$	—	$	1,476	$	70	$	1,546
	Non-investment grade			—		84		1,582		1,666
		Total retained interests (fair value)	$	—	$	1,560	$	1,652	$	3,212
Interests purchased in the secondary market (fair value):
	Investment grade		$	—	$	617	$	6	$	623
	Non-investment grade			—		139		39		178
		Total interests purchased in the secondary market (fair value)	$	—	$	756	$	45	$	801
Derivative assets (fair value)			$	—	$	774	$	353	$	1,127
Derivative liabilities (fair value)			$	—	$	295	$	30	$	325

Transfers of Assets Treated as Secured Financings

		At March 31, 2013				At December 31, 2012
		Carrying Value of				Carrying Value of
		Assets		Liabilities		Assets		Liabilities
		(dollars in millions)
Credit-linked notes	$	221	$	203	$	283	$	222
Equity-linked transactions		347		343		422		405
Other		37		36		29		28

Mortgage Servicing Activities for SPEs

		At March 31, 2013
		Residential Mortgage Unconsolidated SPEs			Residential Mortgage Consolidated SPEs		Commercial Mortgage Unconsolidated SPEs		Commercial Mortgage Consolidated SPEs
			(dollars in millions)
Assets serviced (unpaid principal balance)		$	750	$	914	$	4,395	$	—
Amounts past due 90 days or greater
	(unpaid principal balance)(1)	$	80	$	49	$	—	$	—
Percentage of amounts past due 90 days
	or greater(1)		10.6%		5.4%		—		—
Credit losses		$	1	$	4	$	—	$	—

_____________

(1)Amounts include loans that are at least 90 days contractually delinquent, loans for which the borrower has filed for bankruptcy, loans in foreclosure and real estate owned.

		At December 31, 2012
		Residential Mortgage Unconsolidated SPEs			Residential Mortgage Consolidated SPEs		Commercial Mortgage Unconsolidated SPEs		Commercial Mortgage Consolidated SPEs
			(dollars in millions)
Assets serviced (unpaid principal balance)		$	821	$	1,141	$	4,760	$	—
Amounts past due 90 days or greater
	(unpaid principal balance)(1)	$	86	$	43	$	—	$	—
Percentage of amounts past due 90 days
	or greater(1)		10.4%		3.8%		—		—
Credit losses		$	3	$	2	$	—	$	—

_____________

(1)       Amounts include loans that are at least 90 days contractually delinquent, loans for which the borrower has filed for bankruptcy, loans in foreclosure and real estate owned.

XML

Fair Value Disclosures (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Assets at Fair Value
Netting	$ (856,115)	[1],[2]	$ (968,054)	[1],[2]
Investments	8,223		8,346
Trading assets, at fair value	267,236		267,603
Securities available for sale	41,454		39,869
Securities received as collateral	17,971		14,278
Federal funds sold and securities purchased under agreement to resell	873		621
Intangible assets	8		7
Liabilities at Fair Value
Deposits	1,442		1,485
Commercial paper and other short-term borrowings	1,262		725
Netting	(827,947)	[1],[2]	(941,815)	[1],[2]
Total trading liabilities	132,472		120,122
Obligation to return securities received as collateral, at fair value	23,510		18,226
Securities sold under agreement to repurchase	565		363
Other secured financings	9,624		9,466
Long-term borrowings	42,510		44,044
Recurring
Assets at Fair Value
U.S. government and agency securities	49,247		54,015
Other sovereign government obligations	38,473		43,162
Corporate and other debt	53,291		49,157
Corporate equities	75,473	[3]	69,427	[3]
Derivative and other contracts	35,829		36,197
Netting	(856,115)	[4]	(968,054)	[4]
Investments	8,223		8,346
Physical commodities	6,700		7,299
Trading assets, at fair value	267,236		267,603
Securities available for sale	41,454		39,869
Securities received as collateral	17,971		14,278
Federal funds sold and securities purchased under agreement to resell	873		621
Intangible assets	8	[5]	7	[6]
Total assets measured at fair value	327,542		322,378
Liabilities at Fair Value
Deposits	1,442		1,485
Commercial paper and other short-term borrowings	1,262		725
U.S. government and agency securities	23,164		21,620
Other sovereign government obligations	30,253		29,614
Corporate and other debt	8,147		5,054
Corporate equities	30,256	[3]	26,876	[3]
Derivative and other contracts	40,652		36,958
Netting	(827,947)	[4]	(941,815)	[4]
Total trading liabilities	132,472		120,122
Obligation to return securities received as collateral, at fair value	23,510		18,226
Securities sold under agreement to repurchase	565		363
Other secured financings	9,624		9,466
Long-term borrowings	42,510		44,044
Total liabilities measure at fair value	211,385		194,431
Recurring | U.S. Treasury Securities
Assets at Fair Value
U.S. government and agency securities	24,411		24,676
Liabilities at Fair Value
U.S. government and agency securities	21,303		20,119
Recurring | U.S. Agency Securities
Assets at Fair Value
U.S. government and agency securities	24,836		29,339
Liabilities at Fair Value
U.S. government and agency securities	1,861		1,501
Recurring | State and Municipal Securities
Assets at Fair Value
Corporate and other debt	2,228		1,558
Liabilities at Fair Value
Corporate and other debt	47		47
Recurring | Residential Mortgage-backed Securities
Assets at Fair Value
Corporate and other debt	1,703		1,484
Liabilities at Fair Value
Corporate and other debt	4		4
Recurring | Commercial Mortgage-backed Securities
Assets at Fair Value
Corporate and other debt	1,296		1,579
Recurring | Asset-backed Securities
Assets at Fair Value
Corporate and other debt	1,051		1,024
Liabilities at Fair Value
Corporate and other debt	1
Recurring | Corporate Bonds
Assets at Fair Value
Corporate and other debt	19,341		19,063
Liabilities at Fair Value
Corporate and other debt	7,403		4,119
Recurring | Collateralized Debt Obligations
Assets at Fair Value
Corporate and other debt	2,108		2,636
Liabilities at Fair Value
Corporate and other debt	317		328
Recurring | Loans and Lending Commitments
Assets at Fair Value
Corporate and other debt	16,459		17,311
Recurring | Unfunded Lending Commitments
Liabilities at Fair Value
Corporate and other debt	277		351
Recurring | Other Debt
Assets at Fair Value
Corporate and other debt	9,105		4,502
Liabilities at Fair Value
Corporate and other debt	98		205
Recurring | Interest Rate Contracts
Assets at Fair Value
Derivative and other contracts	713,083		823,801
Liabilities at Fair Value
Derivative and other contracts	686,384		794,104
Recurring | Credit Contracts
Assets at Fair Value
Derivative and other contracts	62,265		68,267
Liabilities at Fair Value
Derivative and other contracts	59,057		64,494
Recurring | Foreign Exchange Contracts
Assets at Fair Value
Derivative and other contracts	50,424		52,794
Liabilities at Fair Value
Derivative and other contracts	51,709		56,413
Recurring | Equity Contracts
Assets at Fair Value
Derivative and other contracts	44,517		38,600
Liabilities at Fair Value
Derivative and other contracts	50,596		41,870
Recurring | Commodity Contracts
Assets at Fair Value
Derivative and other contracts	21,565		20,646
Liabilities at Fair Value
Derivative and other contracts	20,820		21,831
Recurring | Other Contracts
Assets at Fair Value
Derivative and other contracts	90		143
Liabilities at Fair Value
Derivative and other contracts	33		61
Recurring | Private Equity Funds
Assets at Fair Value
Investments	2,291		2,179
Recurring | Real Estate Funds
Assets at Fair Value
Investments	1,377		1,376
Recurring | Hedge Funds
Assets at Fair Value
Investments	915		934
Recurring | Principal Investments
Assets at Fair Value
Investments	2,877		3,101
Recurring | Other Investments
Assets at Fair Value
Investments	763		756
Recurring | Level 1
Assets at Fair Value
U.S. government and agency securities	26,451		26,113
Other sovereign government obligations	29,893		37,669
Corporate and other debt	0		0
Corporate equities	74,280	[3]	68,072	[3]
Derivative and other contracts	482		582
Netting	(4,892)	[4]	(4,740)	[4]
Investments	210		384
Physical commodities	0		0
Trading assets, at fair value	131,316		132,820
Securities available for sale	14,049		14,466
Securities received as collateral	17,920		14,232
Federal funds sold and securities purchased under agreement to resell	0		0
Intangible assets	0	[5]	0	[6]
Total assets measured at fair value	163,285		161,518
Liabilities at Fair Value
Deposits	0		0
Commercial paper and other short-term borrowings	0		0
U.S. government and agency securities	23,068		21,492
Other sovereign government obligations	26,928		27,583
Corporate and other debt	0		0
Corporate equities	28,705	[3]	25,216	[3]
Derivative and other contracts	913		1,073
Netting	(4,892)	[4]	(4,740)	[4]
Total trading liabilities	79,614		75,364
Obligation to return securities received as collateral, at fair value	23,452		18,179
Securities sold under agreement to repurchase	0		0
Other secured financings	0		0
Long-term borrowings	0		0
Total liabilities measure at fair value	103,066		93,543
Recurring | Level 1 | U.S. Treasury Securities
Assets at Fair Value
U.S. government and agency securities	24,411		24,662
Liabilities at Fair Value
U.S. government and agency securities	21,303		20,098
Recurring | Level 1 | U.S. Agency Securities
Assets at Fair Value
U.S. government and agency securities	2,040		1,451
Liabilities at Fair Value
U.S. government and agency securities	1,765		1,394
Recurring | Level 1 | State and Municipal Securities
Assets at Fair Value
Corporate and other debt	0		0
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 1 | Residential Mortgage-backed Securities
Assets at Fair Value
Corporate and other debt	0		0
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 1 | Commercial Mortgage-backed Securities
Assets at Fair Value
Corporate and other debt	0		0
Recurring | Level 1 | Asset-backed Securities
Assets at Fair Value
Corporate and other debt	0		0
Liabilities at Fair Value
Corporate and other debt	0
Recurring | Level 1 | Corporate Bonds
Assets at Fair Value
Corporate and other debt	0		0
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 1 | Collateralized Debt Obligations
Assets at Fair Value
Corporate and other debt	0		0
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 1 | Loans and Lending Commitments
Assets at Fair Value
Corporate and other debt	0		0
Recurring | Level 1 | Unfunded Lending Commitments
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 1 | Other Debt
Assets at Fair Value
Corporate and other debt	0		0
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 1 | Interest Rate Contracts
Assets at Fair Value
Derivative and other contracts	711		446
Liabilities at Fair Value
Derivative and other contracts	747		533
Recurring | Level 1 | Credit Contracts
Assets at Fair Value
Derivative and other contracts	0		0
Liabilities at Fair Value
Derivative and other contracts	0		0
Recurring | Level 1 | Foreign Exchange Contracts
Assets at Fair Value
Derivative and other contracts	24		34
Liabilities at Fair Value
Derivative and other contracts	3		2
Recurring | Level 1 | Equity Contracts
Assets at Fair Value
Derivative and other contracts	965		760
Liabilities at Fair Value
Derivative and other contracts	891		748
Recurring | Level 1 | Commodity Contracts
Assets at Fair Value
Derivative and other contracts	3,674		4,082
Liabilities at Fair Value
Derivative and other contracts	4,164		4,530
Recurring | Level 1 | Other Contracts
Assets at Fair Value
Derivative and other contracts	0		0
Liabilities at Fair Value
Derivative and other contracts	0		0
Recurring | Level 1 | Private Equity Funds
Assets at Fair Value
Investments	0		0
Recurring | Level 1 | Real Estate Funds
Assets at Fair Value
Investments	0		0
Recurring | Level 1 | Hedge Funds
Assets at Fair Value
Investments	0		0
Recurring | Level 1 | Principal Investments
Assets at Fair Value
Investments	20		185
Recurring | Level 1 | Other Investments
Assets at Fair Value
Investments	190		199
Recurring | Level 2
Assets at Fair Value
U.S. government and agency securities	22,796		27,902
Other sovereign government obligations	8,577		5,487
Corporate and other debt	45,248		41,421
Corporate equities	923	[3]	1,067	[3]
Derivative and other contracts	100,935		103,284
Netting	(774,480)	[4]	(883,733)	[4]
Investments	456		542
Physical commodities	6,700		7,299
Trading assets, at fair value	185,635		187,002
Securities available for sale	27,405		25,403
Securities received as collateral	51		46
Federal funds sold and securities purchased under agreement to resell	873		621
Intangible assets	0	[5]	0	[6]
Total assets measured at fair value	213,964		213,072
Liabilities at Fair Value
Deposits	1,442		1,485
Commercial paper and other short-term borrowings	1,257		706
U.S. government and agency securities	96		128
Other sovereign government obligations	3,325		2,031
Corporate and other debt	7,683		4,778
Corporate equities	1,547	[3]	1,655	[3]
Derivative and other contracts	77,665		78,254
Netting	(774,480)	[4]	(883,733)	[4]
Total trading liabilities	90,316		86,846
Obligation to return securities received as collateral, at fair value	58		47
Securities sold under agreement to repurchase	410		212
Other secured financings	9,349		9,060
Long-term borrowings	39,726		41,255
Total liabilities measure at fair value	142,558		139,611
Recurring | Level 2 | U.S. Treasury Securities
Assets at Fair Value
U.S. government and agency securities	0		14
Liabilities at Fair Value
U.S. government and agency securities	0		21
Recurring | Level 2 | U.S. Agency Securities
Assets at Fair Value
U.S. government and agency securities	22,796		27,888
Liabilities at Fair Value
U.S. government and agency securities	96		107
Recurring | Level 2 | State and Municipal Securities
Assets at Fair Value
Corporate and other debt	2,228		1,558
Liabilities at Fair Value
Corporate and other debt	47		47
Recurring | Level 2 | Residential Mortgage-backed Securities
Assets at Fair Value
Corporate and other debt	1,684		1,439
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 2 | Commercial Mortgage-backed Securities
Assets at Fair Value
Corporate and other debt	1,122		1,347
Recurring | Level 2 | Asset-backed Securities
Assets at Fair Value
Corporate and other debt	1,040		915
Liabilities at Fair Value
Corporate and other debt	1
Recurring | Level 2 | Corporate Bonds
Assets at Fair Value
Corporate and other debt	18,453		18,403
Liabilities at Fair Value
Corporate and other debt	6,979		3,942
Recurring | Level 2 | Collateralized Debt Obligations
Assets at Fair Value
Corporate and other debt	442		685
Liabilities at Fair Value
Corporate and other debt	317		328
Recurring | Level 2 | Loans and Lending Commitments
Assets at Fair Value
Corporate and other debt	11,175		12,617
Recurring | Level 2 | Unfunded Lending Commitments
Liabilities at Fair Value
Corporate and other debt	252		305
Recurring | Level 2 | Other Debt
Assets at Fair Value
Corporate and other debt	9,104		4,457
Liabilities at Fair Value
Corporate and other debt	87		156
Recurring | Level 2 | Interest Rate Contracts
Assets at Fair Value
Derivative and other contracts	708,732		819,581
Liabilities at Fair Value
Derivative and other contracts	681,975		789,715
Recurring | Level 2 | Credit Contracts
Assets at Fair Value
Derivative and other contracts	58,131		63,234
Liabilities at Fair Value
Derivative and other contracts	56,326		61,283
Recurring | Level 2 | Foreign Exchange Contracts
Assets at Fair Value
Derivative and other contracts	50,395		52,729
Liabilities at Fair Value
Derivative and other contracts	51,466		56,021
Recurring | Level 2 | Equity Contracts
Assets at Fair Value
Derivative and other contracts	42,508		37,074
Liabilities at Fair Value
Derivative and other contracts	47,321		39,212
Recurring | Level 2 | Commodity Contracts
Assets at Fair Value
Derivative and other contracts	15,559		14,256
Liabilities at Fair Value
Derivative and other contracts	15,027		15,702
Recurring | Level 2 | Other Contracts
Assets at Fair Value
Derivative and other contracts	90		143
Liabilities at Fair Value
Derivative and other contracts	30		54
Recurring | Level 2 | Private Equity Funds
Assets at Fair Value
Investments	0		0
Recurring | Level 2 | Real Estate Funds
Assets at Fair Value
Investments	7		6
Recurring | Level 2 | Hedge Funds
Assets at Fair Value
Investments	370		382
Recurring | Level 2 | Principal Investments
Assets at Fair Value
Investments	2		83
Recurring | Level 2 | Other Investments
Assets at Fair Value
Investments	77		71
Recurring | Level 3
Assets at Fair Value
U.S. government and agency securities	0		0
Other sovereign government obligations	3		6
Corporate and other debt	8,043		7,736
Corporate equities	270	[3]	288	[3]
Derivative and other contracts	4,612		4,965
Netting	(6,543)	[4]	(6,947)	[4]
Investments	7,557		7,420
Physical commodities	0		0
Trading assets, at fair value	20,485		20,415
Securities available for sale	0		0
Securities received as collateral	0		0
Federal funds sold and securities purchased under agreement to resell	0		0
Intangible assets	8	[5]	7	[6]
Total assets measured at fair value	20,493		20,422
Liabilities at Fair Value
Deposits	0		0
Commercial paper and other short-term borrowings	5		19
U.S. government and agency securities	0		0
Other sovereign government obligations	0		0
Corporate and other debt	464		276
Corporate equities	4	[3]	5	[3]
Derivative and other contracts	4,106		4,026
Netting	(6,543)	[4]	(6,947)	[4]
Total trading liabilities	4,574		4,307
Obligation to return securities received as collateral, at fair value	0		0
Securities sold under agreement to repurchase	155		151
Other secured financings	275		406
Long-term borrowings	2,784		2,789
Total liabilities measure at fair value	7,793		7,672
Recurring | Level 3 | U.S. Treasury Securities
Assets at Fair Value
U.S. government and agency securities	0		0
Liabilities at Fair Value
U.S. government and agency securities	0		0
Recurring | Level 3 | U.S. Agency Securities
Assets at Fair Value
U.S. government and agency securities	0		0
Liabilities at Fair Value
U.S. government and agency securities	0		0
Recurring | Level 3 | State and Municipal Securities
Assets at Fair Value
Corporate and other debt	0		0
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 3 | Residential Mortgage-backed Securities
Assets at Fair Value
Corporate and other debt	19		45
Liabilities at Fair Value
Corporate and other debt	4		4
Recurring | Level 3 | Commercial Mortgage-backed Securities
Assets at Fair Value
Corporate and other debt	174		232
Recurring | Level 3 | Asset-backed Securities
Assets at Fair Value
Corporate and other debt	11		109
Liabilities at Fair Value
Corporate and other debt	0
Recurring | Level 3 | Corporate Bonds
Assets at Fair Value
Corporate and other debt	888		660
Liabilities at Fair Value
Corporate and other debt	424		177
Recurring | Level 3 | Collateralized Debt Obligations
Assets at Fair Value
Corporate and other debt	1,666		1,951
Liabilities at Fair Value
Corporate and other debt	0		0
Recurring | Level 3 | Loans and Lending Commitments
Assets at Fair Value
Corporate and other debt	5,284		4,694
Recurring | Level 3 | Unfunded Lending Commitments
Liabilities at Fair Value
Corporate and other debt	25		46
Recurring | Level 3 | Other Debt
Assets at Fair Value
Corporate and other debt	1		45
Liabilities at Fair Value
Corporate and other debt	11		49
Recurring | Level 3 | Interest Rate Contracts
Assets at Fair Value
Derivative and other contracts	3,640		3,774
Liabilities at Fair Value
Derivative and other contracts	3,662		3,856
Recurring | Level 3 | Credit Contracts
Assets at Fair Value
Derivative and other contracts	4,134		5,033
Liabilities at Fair Value
Derivative and other contracts	2,731		3,211
Recurring | Level 3 | Foreign Exchange Contracts
Assets at Fair Value
Derivative and other contracts	5		31
Liabilities at Fair Value
Derivative and other contracts	240		390
Recurring | Level 3 | Equity Contracts
Assets at Fair Value
Derivative and other contracts	1,044		766
Liabilities at Fair Value
Derivative and other contracts	2,384		1,910
Recurring | Level 3 | Commodity Contracts
Assets at Fair Value
Derivative and other contracts	2,332		2,308
Liabilities at Fair Value
Derivative and other contracts	1,629		1,599
Recurring | Level 3 | Other Contracts
Assets at Fair Value
Derivative and other contracts	0		0
Liabilities at Fair Value
Derivative and other contracts	3		7
Recurring | Level 3 | Private Equity Funds
Assets at Fair Value
Investments	2,291		2,179
Recurring | Level 3 | Real Estate Funds
Assets at Fair Value
Investments	1,370		1,370
Recurring | Level 3 | Hedge Funds
Assets at Fair Value
Investments	545		552
Recurring | Level 3 | Principal Investments
Assets at Fair Value
Investments	2,855		2,833
Recurring | Level 3 | Other Investments
Assets at Fair Value
Investments	496		486
Recurring | Counterparty and Cash Collateral Netting
Assets at Fair Value
Netting	(70,200)	[4]	(72,634)	[4]
Liabilities at Fair Value
Netting	$ (42,032)	[4]	$ (46,395)	[4]

[1] Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

[2] Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

[3] The Company holds or sells short for trading purposes equity securities issued by entities in diverse industries and of varying size.

[4] For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash collateral netting are included in the column titled “Counterparty and Cash Collateral Netting.” For contracts with the same counterparty, counterparty netting among positions classified within the same level is included within that level. For further information on derivative instruments and hedging activities, see Note 11.

[5] Amount represents mortgage servicing rights (“MSR”) accounted for at fair value. See Note 7 for further information on MSRs.

[6] Amount represents MSRs accounted for at fair value. See Note 7 for further information on MSRs.

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Redeemable Noncontrolling Interests and Total Equity

3 Months Ended

Mar. 31, 2013

Redeemable Noncontrolling Interests and Total Equity

Total Equity

14.Redeemable Noncontrolling Interests and Total Equity.

Redeemable Noncontrolling Interests.

Redeemable noncontrolling interests relates to the Wealth Management JV (see Note 3). Changes in redeemable noncontrolling interests for the quarter ended March 31, 2013 were as follows (dollars in millions):

Balance at December 31, 2012		$	4,309
	Net income applicable to redeemable noncontrolling interests		122
	Other		(6)
Balance at March 31, 2013		$	4,425

Total Equity.

Morgan Stanley Shareholders' Equity.

Common Equity Offerings.During the quarters ended March 31, 2013 and 2012, the Company did not purchase any of its common stock as part of its share repurchase program. At March 31, 2013, the Company had approximately $1.6 billion remaining under its current share repurchase authorization. Share repurchases by the Company are subject to regulatory approval.

Accumulated Other Comprehensive Income (Loss).

The following table presents Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax and net of noncontrolling interests, for the quarter ended March 31, 2013 (dollars in millions):

								Change in
				Foreign		Net Change		Net Unrealized		Pension,
				Currency		in		Gains (Losses) on		Postretirement
				Translation		Cash Flow		Securities		and Other Related
				Adjustments		Hedges		Available for Sale		Adjustments		Total
Balance at December 31, 2012			$	(123)	$	(5)	$	151	$	(539)	$	(516)
	Other comprehensive income (loss) before
		reclassifications		(153)		—		(25)		(3)		(181)
	Amounts reclassified from accumulated
		other comprehensive income (loss)		—		1		(2)		4		3
Net other comprehensive income (loss) during
	the period			(153)		1		(27)		1		(178)
Balance at March 31, 2013			$	(276)	$	(4)	$	124	$	(538)	$	(694)

The Company had no significant reclassifications out of accumulated other comprehensive loss for the quarter ended March 31, 2013.

Nonredeemable Noncontrolling Interests.

Changes in nonredeemable noncontrolling interests were not material in the quarter ended March 31, 2013. Changes in nonredeemable noncontrolling interests in the quarter ended March 31, 2012 primarily resulted from $113 million in net assets received from Citi related to Citi's required equitycontribution in connection with the Morgan Stanley Wealth Management platform integration.

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Segment and Geographic Information

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Segment And Geographic Information

19.Segment and Geographic Information.

Segment Information.

The Company structures its segments primarily based upon the nature of the financial products and services provided to customers and the Company's management organization. The Company provides a wide range of financial products and services to its customers in each of its business segments: Institutional Securities, Global Wealth Management Group and Asset Management. For further discussion of the Company's business segments, see Note 1.

Revenues and expenses directly associated with each respective segment are included in determining its operating results. Other revenues and expenses that are not directly attributable to a particular segment are allocated based upon the Company's allocation methodologies, generally based on each segment's respective net revenues, non-interest expenses or other relevant measures.

As a result of treating certain intersegment transactions as transactions with external parties, the Company includes an Intersegment Eliminations category to reconcile the business segment results to the Company's consolidated results. Intersegment Eliminations also reflect the effect of fees paid by the Institutional Securities business segment to the Global Wealth Management Group business segment related to the bank deposit program.

Selected financial information for the Company's segments is presented below:

Three Months Ended March 31, 2013				Institutional Securities		Global Wealth Management Group		Asset Management		Intersegment Eliminations		Total
			(dollars in millions)
Total non-interest revenues			$	4,313	$	3,057	$	649	$	(46)	$	7,973
Interest income				1,024		488		2		(116)		1,398
Interest expense				1,248		75		6		(116)		1,213
	Net interest			(224)		413		(4)		—		185
		Net revenues(1)	$	4,089	$	3,470	$	645	$	(46)	$	8,158
Income from continuing operations before income
	taxes		$	798	$	597	$	187	$	—	$	1,582
Provision for income taxes				60		220		52		—		332
Income from continuing operations				738		377		135		—		1,250
Discontinued operations(2):
	Gain (loss) from discontinued operations			(30)		(1)		1		—		(30)
	Provision for (benefit from) income taxes			(11)		—		—		—		(11)
		Net gain (loss) on discontinued operations		(19)		(1)		1		—		(19)
Net income				719		376		136		—		1,231
Net income applicable to redeemable noncontrolling
	interests			1		121		—		—		122
Net income applicable to nonredeemable noncontrolling
	interests			96		—		51		—		147
Net income applicable to Morgan Stanley			$	622	$	255	$	85	$	—	$	962

Three Months Ended March 31, 2012				Institutional Securities(3)		Global Wealth Management Group(3)		Asset Management		Intersegment Eliminations		Total
			(dollars in millions)
Total non-interest revenues			$	3,586	$	2,891	$	541	$	(35)	$	6,983
Interest income				1,177		458		3		(96)		1,542
Interest expense				1,628		58		11		(96)		1,601
	Net interest			(451)		400		(8)		—		(59)
		Net revenues(1)	$	3,135	$	3,291	$	533	$	(35)	$	6,924
Income (loss) from continuing operations before income
	taxes		$	(329)	$	403	$	128	$	—	$	202
Provision for (benefit from) income taxes				(106)		122		38		—		54
Income (loss) from continuing operations				(223)		281		90		—		148
Discontinued operations(2):
	Gain from discontinued operations			25		2		1		—		28
	Provision for income taxes			41		1		—		—		42
		Net gain (loss) on discontinued operations		(16)		1		1		—		(14)
Net income (loss)				(239)		282		91		—		134
Net income applicable to nonredeemable noncontrolling
	interests			79		84		65		—		228
Net income (loss) applicable to Morgan Stanley			$	(318)	$	198	$	26	$	—	$	(94)

(1)In certain management fee arrangements, the Company is entitled to receive performance-based fees (also referred to as incentive fees) when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, performance fee revenue is accrued (or reversed) quarterly based on measuring account fund performance to date versus the performance benchmark stated in the investment management agreement. The amount of performance-based fee revenue at risk of reversing if fund performance falls below stated investment management agreement benchmarks was approximately $274 million at March 31, 2013 and approximately $205 million at December 31, 2012 (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K).

(2)See Notes 1 and 21for discussion of discontinued operations.

(3)       On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management Group business segment to the Equity division within the Institutional Securities business segment. Accordingly, prior period amounts have been recast to reflect the International Wealth Management business as part of the Institutional Securities business segment.

Total Assets(1)		Institutional Securities(2)		Global Wealth Management Group(2)		Asset Management		Total
		(dollars in millions)
At March 31, 2013	$	675,327	$	118,557	$	7,499	$	801,383
At December 31, 2012	$	648,049	$	125,565	$	7,346	$	780,960

(1)       Corporate assets have been fully allocated to the Company's business segments.

(2)       Prior period amounts have been recast to reflect the transfer of the International Wealth Management business from Global Wealth Management Group business segment to the Institutional Securities business segment.

Geographic Information.

The Company operates in both U.S. and non-U.S. markets. The Company's non-U.S. business activities are principally conducted and managed through European and Asian locations. The net revenues disclosed in the following table reflect the regional view of the Company's consolidated net revenues on a managed basis, based on the following methodology:

•       Institutional Securities: advisory and equity underwriting—client location, debt underwriting—revenue recording location, sales and trading—trading desk location.

•       Global Wealth Management Group: global representative coverage location.

•       Asset Management: client location, except for Merchant Banking and Real Estate Investing businesses, which are based on asset location.

			Three Months Ended
			March 31,
Net Revenues			2013		2012
			(dollars in millions)
Americas		$	5,956	$	4,784
Europe, Middle East and Africa			1,066		1,149
Asia			1,136		991
	Net revenues	$	8,158	$	6,924

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Regulatory Requirements (Significant U.S. Bank Operating Subsidiaries' Capital) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Total capital, amount	$ 58,382	$ 56,626
Tier 1 capital, amount	56,129	54,360
Tier 1 leverage capital, amount	0	0
Morgan Stanley Bank, N.A.
Total capital, amount	11,752	11,509
Tier 1 capital, amount	10,144	9,918
Tier 1 leverage capital, amount	10,144	9,918
Total capital to RWAs, ratio	15.80%	17.20%
Tier 1 capital to RWAs, ratio	13.60%	14.90%
Tier 1 leverage, ratio	12.70%	13.30%
Morgan Stanley Private Bank, National Association
Total capital, amount	1,696	1,673
Tier 1 capital, amount	1,690	1,665
Tier 1 leverage capital, amount	$ 1,690	$ 1,665
Total capital to RWAs, ratio	27.60%	28.80%
Tier 1 capital to RWAs, ratio	27.50%	28.70%
Tier 1 leverage, ratio	10.30%	10.60%

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Wealth Management Joint Venture (Details) (USD $)	3 Months Ended	0 Months Ended	12 Months Ended			0 Months Ended
	Mar. 31, 2013	Sep. 17, 2012 Wealth Management JV	Dec. 31, 2012 Wealth Management JV	Mar. 31, 2013 Wealth Management JV	Aug. 31, 2012 Wealth Management JV	Oct. 31, 2012 Wealth Management JV Citi	Mar. 31, 2013 Wealth Management JV Citi	Sep. 16, 2012 Wealth Management JV Citi
Joint Ventures [Line Items]
Parent ownership interest in joint ventures				65.00%	51.00%
Noncontrolling interest in joint ventures, percentage								49.00%
Commitment to purchase additional percentage of interest in joint venture				35.00%			35.00%
Percentage of interest purchased in joint venture		14.00%
Amount of interest purchased in joint venture		$ 1,890,000,000
Transfer of deposits from joint venture partners	57,000,000,000					5,400,000,000
Purchase price for remaining interest in joint venture				4,725,000,000
Reclass from nonredeemable noncontrolling interests			$ 4,300,000,000

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Segment and Geographic Information (Assets by Segments) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Segment Reporting Information
Assets	$ 801,383	[1]	$ 780,960	[1]
Institutional Securities
Segment Reporting Information
Assets	675,327	[1]	648,049	[1],[2]
Global Wealth Management Group
Segment Reporting Information
Assets	118,557	[1]	125,565	[1],[2]
Asset Management
Segment Reporting Information
Assets	$ 7,499	[1]	$ 7,346	[1]

[1] Corporate assets have been fully allocated to the Company’s business segments.

[2] Prior period amounts have been recast to reflect the transfer of the International Wealth Management business from Global Wealth Management Group business segment to the Institutional Securities business segment.

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Redeemable Noncontrolling Interests and Total Equity (Tables)

3 Months Ended

Mar. 31, 2013

Redeemable Noncontrolling Interests and Total Equity

Changes in Redeemable Noncontrolling Interest

Balance at December 31, 2012		$	4,309
	Net income applicable to redeemable noncontrolling interests		122
	Other		(6)
Balance at March 31, 2013		$	4,425

Changes in Accumulated Other Comprehensive Income (Loss) by Component

								Change in
				Foreign		Net Change		Net Unrealized		Pension,
				Currency		in		Gains (Losses) on		Postretirement
				Translation		Cash Flow		Securities		and Other Related
				Adjustments		Hedges		Available for Sale		Adjustments		Total
Balance at December 31, 2012			$	(123)	$	(5)	$	151	$	(539)	$	(516)
	Other comprehensive income (loss) before
		reclassifications		(153)		—		(25)		(3)		(181)
	Amounts reclassified from accumulated
		other comprehensive income (loss)		—		1		(2)		4		3
Net other comprehensive income (loss) during
	the period			(153)		1		(27)		1		(178)
Balance at March 31, 2013			$	(276)	$	(4)	$	124	$	(538)	$	(694)

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Equity Method Investments (Narratives) (Details) In Millions, unless otherwise specified	3 Months Ended			0 Months Ended		3 Months Ended
	Mar. 31, 2013 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2012 USD ($)	May 01, 2010 MUMSS USD ($)	May 01, 2010 MUMSS JPY (¥)	Mar. 31, 2013 MUMSS USD ($)	Mar. 31, 2012 MUMSS USD ($)	May 01, 2010 MSMS
Schedule of Equity Method Investments [Line Items]
Equity method investment	$ 4,618		$ 4,682
Income (loss) from equity method investments	64	(32)				125	27
Cash contribution received from partner(s) of the joint venture				$ 247	¥ 23,000
Economic interest held by joint venture partners				60.00%	60.00%
Economic interest in joint venture				40.00%	40.00%
Voting interest in joint venture				40.00%	40.00%			51.00%
Voting interest held by noncontrolling interest				60.00%	60.00%			49.00%

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Condensed Consolidated Statements of Comprehensive Income
Net income	$ 1,231		$ 134
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(245)	[1]	20	[1]
Amortization of cash flow hedges	1	[2]	2	[2]
Change in net unrealized losses on securities available for sale	(27)	[3]	(19)	[3]
Pension, postretirement and other related adjustments	1	[4]	2	[4]
Total other comprehensive income (loss)	(270)		5
Comprehensive income	961		139
Net income applicable to redeemable noncontrolling interests	122		0
Net income applicable to nonredeemable noncontrolling interests	147		228
Other comprehensive income applicable to redeemable noncontrolling interests	0		0
Other comprehensive income (loss) applicable to nonredeemable noncontrolling interests	(92)		(92)
Comprehensive income applicable to Morgan Stanley	784		3
Parenthetical Disclosures
Foreign currency translation adjustments, provision for income taxes	165		4
Amortization of cash flow hedges, provision for income taxes	1		1
Change in net unrealized losses on securities available for sale, provision for (benefit from) income taxes	(19)		(13)
Pension, postretirement and other related adjustments, provision for income taxes	$ 5		$ 2

[1] Amounts are net of provision for income taxes of $165 million and $4 million for the quarters ended March 31, 2013 and 2012, respectively.

[2] Amounts are net of provision for income taxes of $1 million and $1 million for the quarters ended March 31, 2013 and 2012, respectively.

[3] Amounts are net of provision for (benefit from) income taxes of $(19) million and $(13) million for the quarters ended March 31, 2013 and 2012, respectively.

[4] Amounts are net of provision for income taxes of $5 million and $2 million for the quarters ended March 31, 2013 and 2012, respectively.

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Derivative Instruments and Hedging Activities (Gains or Losses on Derivative Instruments, Related Hedge Items and Hedge Ineffectiveness) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Derivatives
Gain (loss) recognized in income related to amounts excluded from hedge effectiveness testing	$ (32)		$ (66)
Interest Expense
Derivatives
Gains (Losses) on Fair Value Hedges Recognized	290		152
Interest Expense | Derivatives
Derivatives
Gains (Losses) on Fair Value Hedges Recognized	(872)		(546)
Interest Expense | Borrowings
Derivatives
Gains (Losses) on Fair Value Hedges Recognized	1,162		698
Net Investment Hedges
Derivatives
Gain (Losses) Recognized in OCI (effective portion)	308		21
Net Investment Hedges | Foreign Exchange Contracts
Derivatives
Gain (Losses) Recognized in OCI (effective portion)	308	[1]	21	[1]
Not Designated as Accounting Hedges
Derivatives
Gains (Losses) Recognized in Income	(2,028)	[2],[3]	181	[2],[3]
Not Designated as Accounting Hedges | Foreign Exchange Contracts
Derivatives
Gains (Losses) Recognized in Income	807	[2],[3]	595	[2],[3]
Not Designated as Accounting Hedges | Interest Rate Contracts
Derivatives
Gains (Losses) Recognized in Income	(144)	[2],[3]	1,607	[2],[3]
Not Designated as Accounting Hedges | Credit Contracts
Derivatives
Gains (Losses) Recognized in Income	(80)	[2],[3]	(672)	[2],[3]
Not Designated as Accounting Hedges | Equity Contracts
Derivatives
Gains (Losses) Recognized in Income	(3,032)	[2],[3]	(828)	[2],[3]
Not Designated as Accounting Hedges | Commodity Contracts
Derivatives
Gains (Losses) Recognized in Income	423	[2],[3]	(576)	[2],[3]
Not Designated as Accounting Hedges | Other Contracts
Derivatives
Gains (Losses) Recognized in Income	$ (2)	[2],[3]	$ 55	[2],[3]

[1] Losses of $32 million and $66 million were recognized in income related to amounts excluded from hedge effectiveness testing during the quarters ended March 31, 2013 and 2012, respectively.

[2] Gains (losses) on derivative contracts not designated as hedges are primarily included in Trading in the condensed consolidated statements of income.

[3] Gains (losses) associated with certain derivative contracts that have physically settled are excluded from the table above. Gains (losses) on these contracts are reflected with the associated cash instruments, which are also included in Trading in the condensed consolidated statements of income.

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Wealth Management Joint Venture

3 Months Ended

Mar. 31, 2013

Equity Method Investments and Joint Ventures [Abstract]

Wealth Management Joint Venture Disclosures

3.       Wealth Management Joint Venture.

On May 31, 2009, the Company and Citi consummated the combination of the Company's Global Wealth Management Group business segment and the businesses of Citi's Smith Barney in the U.S., Quilter Holdings Ltd. (see Note 21) in the U.K. and Smith Barney Australia (collectively, “Smith Barney”). The combined businesses operate as Morgan Stanley Wealth Management. Prior to September 2012, the Company owned51% and Citi owned49% of the Wealth Management JV.

In September 2012, the Company reached an agreement with Citi to purchase an additional 14% stake in the Wealth Management JV,and a transfer of approximately $5.4 billion of deposits at no premium from Citi.In addition, the agreement specifies that the Company must use reasonable best efforts to obtain the regulatory approvals required to purchase the remaining 35% stake in the Wealth Management JV by June 1, 2015 and, subject to receipt of such approvals, the Company must consummate such acquisition by that date at a purchase price of $4.725billion (or a pro rata portion of such amount if less than 35% of the total outstanding stake is being purchased) and receive a transfer of deposits currently estimated to be $57billion at no premium from Citi, no later than June 1, 2015.

The Company completed the purchase of the additional 14% stake in the Wealth Management JV from Citi on September 17, 2012 for $1.89 billion. The related $5.4 billion of deposits were transferred at no premium in October of 2012. At March 31, 2013, the Company held a 65% stake in the Wealth Management JV.

The change in the terms of the Wealth Management JV's agreement to acquire the remaining noncontrolling interest resulted in a reclassification of approximately $4.3 billion from nonredeemable noncontrolling interests to redeemable noncontrolling interests. At December 31, 2012 and March 31, 2013, the redeemable noncontrolling interest is not reflected as a liability at its redemption amount because it is not deemed probable that the noncontrolling interest will become redeemable due to the required regulatory approvals.

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Fair Value Disclosures (Amount by Which Contractual Principal Amount Exceeds Fair Value) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Fair Value Disclosures
Short-term and long-term debt borrowings	$ (1,476)	[1]	$ (436)	[1]
Loans	23,992	[2]	25,249	[2]
Loans 90 or more days past due and/or on non-accrual status	19,334	[2],[3]	20,456	[2],[3]
Aggregate fair value of loans in non-accrual status including all loans 90 or more days past due	1,528		1,360
Amounts past due 90 days or greater (unpaid principal balance)	$ 813		$ 840

[1] These amounts do not include structured notes where the repayment of the initial principal amount fluctuates based on changes in the reference price or index.

[2] The majority of this difference between principal and fair value amounts emanates from the Company’s distressed debt trading business, which purchases distressed debt at amounts well below par.

[3] The aggregate fair value of loans that were in non-accrual status, which includes all loans 90 or more days past due, was $1,528 million and $1,360 million at March 31, 2013 and December 31, 2012, respectively. The aggregate fair value of loans that were 90 or more days past due was $813 million and $840 million at March 31, 2013 and December 31, 2012, respectively.

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Borrowings and Other Secured Financings (Components of Long-term Borrowings) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Borrowings and Other Secured Financings
Senior debt	$ 154,531	$ 158,899
Subordinated debt	5,783	5,845
Junior subordinated debentures	4,828	4,827
Total	$ 165,142	$ 169,571

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Segment and Geographic Information (Net Revenues and Assets by Geographic Area) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Segment Reporting Information
Net Revenues	$ 8,158	[1]	$ 6,924	[1]
Americas
Segment Reporting Information
Net Revenues	5,956		4,784
Europe, Middle East and Africa
Segment Reporting Information
Net Revenues	1,066		1,149
Asia
Segment Reporting Information
Net Revenues	$ 1,136		$ 991

[1] In certain management fee arrangements, the Company is entitled to receive performance-based fees (also referred to as incentive fees) when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, performance fee revenue is accrued (or reversed) quarterly based on measuring account fund performance to date versus the performance benchmark stated in the investment management agreement. The amount of performance-based fee revenue at risk of reversing if fund performance falls below stated investment management agreement benchmarks was approximately $274 million at March 31, 2013 and approximately $205 million at December 31, 2012 (see Note 2 to the consolidated financial statements for the year ended December 31, 2012 included in the Form 10-K).

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Variable Interest Entities and Securitization Activities (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Noncontrolling interest	$ 1,854,000,000		$ 1,804,000,000
Additional maximum exposure to loss	60,000,000		58,000,000
Securities issued by SPEs	4,300,000,000
Proceeds from new securitization transactions	7,500,000,000	6,000,000,000
Proceeds from cash flows from retained interests in securitization transactions	1,200,000,000	1,700,000,000
Servicing advances, net of reserves	64,000,000		49,000,000
Mortgage servicing rights	8,000,000		7,000,000
Residential Mortgage Loans
Securities issued by SPEs	1,600,000,000
U.S. Agency Collateralized Mortgage Obligations
Securities issued by SPEs	500,000,000
Commercial Mortgage Loans
Securities issued by SPEs	700,000,000
Collateralized Debt Obligations
Securities issued by SPEs	600,000,000
Other Consumer Loans
Securities issued by SPEs	$ 900,000,000

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Equity Method Investments

3 Months Ended

Mar. 31, 2013

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

20.Equity Method Investments.

The Company has investments accounted for under the equity method of accounting (see Note 1) of $4,618million and $4,682million at March 31, 2013 and December 31, 2012, respectively, included in Other investments in the condensed consolidated statements of financial condition. Gains (losses) from these investments were $64 million and $(32) millionfor the quarters ended March 31, 2013 and 2012, respectively, and are included in Other revenues in the condensed consolidated statements of income.

Japanese Securities Joint Venture

On May 1, 2010, the Company and Mitsubishi UFJ Financial Group, Inc. (“MUFG”)formed a joint venture in Japan of their respective investment banking and securities businesses. MUFG and the Company have integrated their respective Japanese securities companies by forming two joint venture companies. MUFG contributed the investment banking, wholesale and retail securities businesses conducted in Japan by Mitsubishi UFJ Securities Co., Ltd. into Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“MUMSS”).The Company contributed the investment banking operations conducted in Japan by its subsidiary MSMS, formerly known as Morgan Stanley Japan Securities Co., Ltd., into MUMSS (MSMS, together with MUMSS, the “Joint Venture”). MSMS will continue its sales and trading and capital markets business conducted in Japan. Following the respective contributions to the Joint Venture and a cash payment of 23 billion yen ($247 million), from MUFG to the Company, the Company owns a 40% economic interest in the Joint Venture and MUFG owns a 60% economic interest in the Joint Venture.

The Company holds a 40% voting interest and MUFG holds a 60% voting interest in MUMSS, while the Company holds a 51% voting interest and MUFG holds a 49% voting interest in MSMS. The Company continues to consolidate MSMS in its condensed consolidated financial statements and, commencing on May 1, 2010, accounted for its interest in MUMSS as an equity method investment within the Institutional Securities business segment. During the quarters ended March 31, 2013 and 2012, the Company recordedincomeof $125million and $27 million, respectively,within Other revenues in the condensed consolidated statements of income, arising from the Company's 40% stake in MUMSS.

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Variable Interest Entities and Securitization Activities (Transfers of Assets Treated as Secured Financings) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Credit-Linked Notes
Assets, carrying value	$ 221	$ 283
Liabilities, carrying value	203	222
Equity-Linked Transactions
Assets, carrying value	347	422
Liabilities, carrying value	343	405
Other
Assets, carrying value	37	29
Liabilities, carrying value	$ 36	$ 28

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Derivative Instruments and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Instrument Detail [Abstract]

Components of Derivative Products

			At March 31, 2013
			Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)		Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition(2)				Net Exposure
									Financial Instruments Collateral		Other Cash Collateral
			(dollars in millions)
Derivative assets
	Bilateral OTC	$	549,368	$	(519,065)	$	30,303	$	(6,688)	$	(135)	$	23,480
	Cleared OTC(4)		315,330		(315,138)		192		—		—		192
	Exchange traded		27,246		(21,912)		5,334		—		—		5,334
	Total derivative assets	$	891,944	$	(856,115)	$	35,829	$	(6,688)	$	(135)	$	29,006
Derivative liabilities
	Bilateral OTC	$	524,588	$	(492,049)	$	32,539	$	(7,973)	$	(82)	$	24,484
	Cleared OTC(4)		314,030		(313,986)		44		—		—		44
	Exchange traded		29,981		(21,912)		8,069		(1,853)		—		6,216
	Total derivative liabilities	$	868,599	$	(827,947)	$	40,652	$	(9,826)	$	(82)	$	30,744

(1)       Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2)       Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3)       Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

(4)       Includes OTC derivatives that are centrally cleared in accordance with certain regulatory requirements.

			At December 31, 2012
			Gross Amounts(1)		Amounts Offset in the Condensed Consolidated Statements of Financial Condition(2)(3)		Net Amounts Presented in the Condensed Consolidated Statements of Financial Condition		Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition(2)				Net Exposure
									Financial Instruments Collateral		Other Cash Collateral
			(dollars in millions)
Derivative assets
	Bilateral OTC	$	604,713	$	(573,844)	$	30,869	$	(7,691)	$	(232)	$	22,946
	Cleared OTC(4)		375,233		(374,546)		687		—		—		687
	Exchange traded		24,305		(19,664)		4,641		—		—		4,641
	Total derivative assets	$	1,004,251	$	(968,054)	$	36,197	$	(7,691)	$	(232)	$	28,274
Derivative Liabilities
	Bilateral OTC	$	578,018	$	(547,285)	$	30,733	$	(7,871)	$	(64)	$	22,798
	Cleared OTC(4)		374,960		(374,866)		94		—		(23)		71
	Exchange traded		25,795		(19,664)		6,131		(1,028)		—		5,103
	Total derivative liabilities	$	978,773	$	(941,815)	$	36,958	$	(8,899)	$	(87)	$	27,972

(1)       Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

(2)       Amounts relate to master netting arrangements and collateral arrangements which have been determined by the Company to be legally enforceable in the event of default.

(3)       Amounts are reported on a net basis in the condensed consolidated statements of financial condition when subject to a legally enforceable master netting arrangement and when certain other criteria are met in accordance with applicable offsetting accounting guidance.

(4)       Includes OTC derivatives that are centrally cleared in accordance with certain regulatory requirements.

Summary by Counterparty Credit Rating and Remaining Contract Maturity of the Fair Value of OTC Derivatives in a Gain Position

OTC Derivative Products—Trading Assets at March31, 2013(1)

											Cross-Maturity and Cash  Collateral Netting(3)		Net  Exposure Post-Cash Collateral		Net  Exposure Post-Collateral
			Years to Maturity
Credit Rating(2)			Less than 1		1 - 3		3 - 5		Over 5
			(dollars in millions)
AAA		$	396	$	468	$	1,318	$	5,553	$	(4,819)	$	2,916	$	2,682
AA			2,251		2,094		2,848		10,133		(11,349)		5,977		4,514
A			8,299		9,894		12,251		26,845		(49,419)		7,870		6,227
BBB			2,762		4,255		3,063		18,143		(19,725)		8,498		7,303
Non-investment grade			2,285		2,548		1,672		3,669		(5,075)		5,099		2,946
	Total	$	15,993	$	19,259	$	21,152	$	64,343	$	(90,387)	$	30,360	$	23,672

(1)       Fair values shown represent the Company's net exposure to counterparties related to the Company's OTC derivative products. Amounts include centrally cleared OTC derivatives. The table does not include exchange-traded derivatives and the effect of any related hedges utilized by the Company.

(2)       Obligor credit ratings are determined by the Company's Credit Risk Management Department.

(3)       Amounts represent the netting of receivable balances with payable balances for the same counterparty across maturity categories. Receivable and payable balances with the same counterparty in the same maturity category are netted within such maturity category, where appropriate. Cash collateral received is netted on a counterparty basis, provided legal right of offset exists.

OTC Derivative Products—Trading Assets at December 31, 2012(1)

		Years to Maturity									Cross-Maturity and Cash Collateral Netting(3)		Net Exposure Post-Cash Collateral		Net Exposure Post-Collateral
Credit Rating(2)			Less  than 1		1 - 3		3 - 5		Over 5
			(dollars in millions)
AAA		$	353	$	551	$	1,299	$	6,121	$	(4,851)	$	3,473	$	3,088
AA			2,125		3,635		2,958		10,270		(12,761)		6,227		4,428
A			6,643		9,596		14,228		29,729		(50,722)		9,474		7,638
BBB			2,673		3,970		3,704		18,586		(21,713)		7,220		5,754
Non-investment grade			2,091		2,855		2,142		4,538		(6,696)		4,930		2,725
	Total	$	13,885	$	20,607	$	24,331	$	69,244	$	(96,743)	$	31,324	$	23,633

_____________

(1)       Fair values shown represent the Company's net exposure to counterparties related to the Company's OTC derivative products. Amounts include centrally cleared OTC derivatives. The table does not include exchange-traded derivatives and the effect of any related hedges utilized by the Company.

(2)       Obligor credit ratings are determined by the Company's Credit Risk Management Department.

(3)       Amounts represent the netting of receivable balances with payable balances for the same counterparty across maturity categories. Receivable and payable balances with the same counterparty in the same maturity category are netted within such maturity category, where appropriate. Cash collateral received is netted on a counterparty basis, provided legal right of offset exists.

Fair Value of Derivative Instruments Designated and Not Designated as Accounting Hedges by Type of Derivative Contract on a Gross Basis

				Assets at				Liabilities at
				March 31, 2013				March 31, 2013
				Fair Value		Notional		Fair Value		Notional
				(dollars in millions)
Derivatives designated as accounting hedges:
	Interest rate contracts		$	7,585	$	76,175	$	276	$	5,030
	Foreign exchange contracts			650		10,812		102		4,559
		Total derivatives designated as accounting hedges		8,235		86,987		378		9,589
Derivatives not designated as accounting hedges(1):
	Interest rate contracts			705,498		18,634,245		686,108		18,577,861
	Credit contracts			62,265		1,865,650		59,057		1,791,783
	Foreign exchange contracts			49,774		2,025,369		51,607		2,088,219
	Equity contracts			44,517		694,383		50,596		714,161
	Commodity contracts			21,565		403,627		20,820		360,219
	Other			90		4,167		33		3,623
		Total derivatives not designated as accounting hedges		883,709		23,627,441		868,221		23,535,866
Total derivatives			$	891,944	$	23,714,428	$	868,599	$	23,545,455
Cash collateral netting				(67,743)		—		(39,575)		—
Counterparty netting				(788,372)		—		(788,372)		—
	Total derivatives		$	35,829	$	23,714,428	$	40,652	$	23,545,455

_____________

(1)       Notional amounts include gross notionals related to open long and short futures contracts of $73 billion and $71 billion, respectively. The unsettled fair value on these futures contracts (excluded from the table above) of $900 million and $4 million is included in Customer and other receivables and Customer and other payables, respectively, on thecondensed consolidated statements of financial condition.

				Assets at				Liabilities at
				December 31, 2012				December 31, 2012
				Fair Value		Notional		Fair Value		Notional
				(dollars in millions)
Derivatives designated as accounting hedges:
	Interest rate contracts		$	8,347	$	75,115	$	168	$	2,660
	Foreign exchange contracts			367		10,291		319		17,156
		Total derivatives designated as accounting hedges		8,714		85,406		487		19,816
Derivatives not designated as accounting hedges(1):
	Interest rate contracts			815,454		18,130,030		793,936		17,682,566
	Credit contracts			68,267		1,932,786		64,494		1,867,807
	Foreign exchange contracts			52,427		1,841,186		56,094		1,886,073
	Equity contracts			38,600		587,700		41,870		587,199
	Commodity contracts			20,646		341,556		21,831		325,101
	Other			143		4,908		61		5,161
		Total derivatives not designated as accounting hedges		995,537		22,838,166		978,286		22,353,907
Total derivatives			$	1,004,251	$	22,923,572	$	978,773	$	22,373,723
Cash collateral netting				(69,248)		—		(43,009)		—
Counterparty netting				(898,806)		—		(898,806)		—
	Total derivatives		$	36,197	$	22,923,572	$	36,958	$	22,373,723

_____________

(1)Notional amounts include gross notionals related to open long and short futures contracts of $73 billion and $68 billion, respectively. The unsettled fair value on these futures contracts (excluded from the table above) of $1,073 million and $24 million is included in Customer and other receivablesand Customer and other payables, respectively, on thecondensed consolidated statements of financial condition.

____________

(1)       Losses of $32 million and $66 million were recognized in income related to amounts excluded from hedge effectiveness testing during the quarters ended March 31, 2013 and 2012, respectively.

The table below summarizes gains (losses) on derivative instruments not designated as accounting hedges for the quarters ended March 31, 2013 and 2012, respectively:

Summary of Gains or Losses Reported on Derivative Instruments Designated and Not Designated as Accounting Hedges

		Gains (Losses) Recognized
		Three Months Ended
		March 31,
Product Type		2013		2012
		(dollars in millions)
Derivatives	$	(872)	$	(546)
Borrowings		1,162		698
Total	$	290	$	152

			Gains (Losses) Recognized in OCI (effective portion)
			Three Months Ended
			March 31,
Product Type			2013		2012
			(dollars in millions)
Foreign exchange contracts(1)		$	308	$	21
	Total	$	308	$	21

			Gains (Losses) Recognized in Income(1)(2)
			Three Months Ended
			March 31,
Product Type			2013		2012
			(dollars in millions)
Interest rate contracts		$	(144)	$	1,607
Credit contracts			(80)		(672)
Foreign exchange contracts			807		595
Equity contracts			(3,032)		(828)
Commodity contracts			423		(576)
Other contracts			(2)		55
	Total derivative instruments	$	(2,028)	$	181

____________

(1)       Gains (losses) on derivative contracts not designated as hedges are primarily included in Trading in the condensed consolidated statements of income.

(2)       Gains (losses) associated with certain derivative contracts that have physically settled are excluded from the table above. Gains (losses) on these contracts are reflected with the associated cash instruments, which are also included in Trading inthe condensed consolidated statements of income.

Disclosure of Credit Derivatives

		At March 31, 2013
		Maximum Potential Payout/Notional
		Protection Sold				Protection Purchased
		Notional		Fair Value (Asset)/Liability		Notional		Fair Value (Asset)/Liability
		(dollars in millions)
Single name credit default swaps	$	1,004,144	$	1,412	$	960,778	$	(1,299)
Index and basket credit default swaps		550,972		4,930		458,150		(4,550)
Tranched index and basket credit default swaps		271,525		905		411,864		(4,606)
Total	$	1,826,641	$	7,247	$	1,830,792	$	(10,455)

		At December 31, 2012
		Maximum Potential Payout/Notional
		Protection Sold				Protection Purchased
		Notional		Fair Value (Asset)/Liability		Notional		Fair Value (Asset)/Liability
		(dollars in millions)
Single name credit default swaps	$	1,069,474	$	2,889	$	1,029,543	$	(2,456)
Index and basket credit default swaps		551,630		5,664		454,800		(5,124)
Tranched index and basket credit default swaps		272,088		2,330		423,058		(7,076)
Total	$	1,893,192	$	10,883	$	1,907,401	$	(14,656)

			Protection Sold
			Maximum Potential Payout/Notional										Fair Value
			Years to Maturity										(Asset)/
Credit Ratings of the Reference Obligation			Less than 1		1-3		3-5		Over 5		Total		Liability(1)(2)
			(dollars in millions)
Single name credit default swaps:
	AAA	$	1,809	$	5,780	$	16,531	$	3,673	$	27,793	$	(61)
	AA		10,141		17,863		36,987		6,476		71,467		(557)
	A		64,263		68,132		67,702		9,668		209,765		(2,343)
	BBB		119,304		130,055		138,543		30,832		418,734		312
	Non-investment grade		84,290		88,959		86,589		16,547		276,385		4,061
Total			279,807		310,789		346,352		67,196		1,004,144		1,412
Index and basket credit default swaps(3):
	AAA		42,730		53,491		50,189		14,238		160,648		(1,574)
	AA		1,159		10,123		12,124		8,375		31,781		(161)
	A		4,349		5,562		11,546		2,517		23,974		216
	BBB		31,459		103,097		125,754		32,271		292,581		(397)
	Non-investment grade		66,319		68,392		139,218		39,584		313,513		7,751
Total			146,016		240,665		338,831		96,985		822,497		5,835
Total credit default swaps sold		$	425,823	$	551,454	$	685,183	$	164,181	$	1,826,641	$	7,247
Other credit contracts(4)(5)		$	466	$	82	$	138	$	1,139	$	1,825	$	(195)
Total credit derivatives and
	other credit contracts	$	426,289	$	551,536	$	685,321	$	165,320	$	1,828,466	$	7,052

_____________

(1)       Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting.

(2)       Fair value amounts of certain credit default swaps where the Company sold protection have an asset carrying value because credit spreads of the underlying reference entity or entities tightened during the terms of the contracts.

(3)       Credit ratings are calculated internally.

(4)       Other credit contracts include CLNs, CDOs and credit default swaps that are considered hybrid instruments.

(5)       Fair value amount shown represents the fair value of the hybrid instruments.

			Protection Sold
			Maximum Potential Payout/Notional										Fair Value
			Years to Maturity										(Asset)/
Credit Ratings of the Reference Obligation			Less than 1		1-3		3-5		Over 5		Total		Liability(1)(2)
			(dollars in millions)
Single name credit default swaps:
	AAA	$	2,368	$	6,592	$	19,848	$	5,767	$	34,575	$	(204)
	AA		10,984		16,804		34,280		7,193		69,261		(325)
	A		66,635		72,796		67,285		10,760		217,476		(2,740)
	BBB		124,662		145,462		142,714		34,396		447,234		(492)
	Non-investment grade		91,743		98,515		92,143		18,527		300,928		6,650
Total			296,392		340,169		356,270		76,643		1,069,474		2,889
Index and basket credit default swaps(3):
	AAA		18,652		36,005		45,789		3,240		103,686		(1,377)
	AA		1,255		9,479		12,026		8,343		31,103		(55)
	A		2,684		5,423		5,440		125		13,672		(155)
	BBB		27,720		105,870		143,562		29,101		306,253		(862)
	Non-investment grade		97,389		86,703		153,858		31,054		369,004		10,443
Total			147,700		243,480		360,675		71,863		823,718		7,994
Total credit default swaps sold		$	444,092	$	583,649	$	716,945	$	148,506	$	1,893,192	$	10,883
Other credit contracts(4)(5)		$	796	$	125	$	155	$	1,323	$	2,399	$	(745)
Total credit derivatives and other
	credit contracts	$	444,888	$	583,774	$	717,100	$	149,829	$	1,895,591	$	10,138

_____________

(1)       Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting.

(2)       Fair value amounts of certain credit default swaps where the Company sold protection have an asset carrying value because credit spreads of the underlying reference entity or entities tightened during the terms of the contracts.

(3)       Credit ratings are calculated internally.

(4)       Other credit contracts include CLNs, CDOs and credit default swaps that are considered hybrid instruments.

(5)       Fair value amount shown represents the fair value of the hybrid instruments.

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Regulatory Requirements

3 Months Ended

Mar. 31, 2013

Regulatory Requirements

Regulatory Requirements

13.Regulatory Requirements.

Morgan Stanley.     The Company is a financial holding company under the Bank Holding Company Act of 1956, as amended, and is subject to the regulation and oversight of the Federal Reserve. The Federal Reserve 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 establishes similar capital requirements and standards for Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association.

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 Federal Reserve. 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 final regulation incorporating the Basel II Accord, which requires internationally active banking organizations, as well as certain of their U.S. bank subsidiaries, to implement Basel II standards over the next several years.In July 2010, the Company began reporting its capital adequacy standards on a parallel basis to its regulators under Basel I and Basel II as part of a phased implementation of Basel II.

In December 2010, the Basel Committee reached an agreement on Basel III. In June 2012, the U.S. banking regulators proposed rules to implement many aspects of Basel III (the “U.S. Basel III proposals”).The U.S. Basel III proposals contemplate that the new capital requirements would be phased in over several years, beginning in 2013. In November 2012, the U.S. banking regulators announced that the U.S. Basel III proposals would not become effective on January 1, 2013. The announcement did not specify new implementation or phase in dates for the U.S. Basel III proposals.

In June 2011, the U.S. banking regulators published final regulations implementing a provision of the Dodd-Frank Act requiring that certain institutions supervised by the Federal Reserve, including the Company, be subject to minimum capital requirements that are not less than the generally applicable risk-based capital requirements. Currently, this minimum “capital floor” is based on Basel I. The U.S. Basel III proposals would replace the current Basel I-based “capital floor” with a standardized approach that, among other things, modifies the existing risk weights for certain types of asset classes.Effective January 1, 2013, in accordance with the U.S. banking regulators' rules the Company implemented the Basel Committee's market risk capital framework amendment, commonly referred to as “Basel 2.5”, which increased the capital requirements for securitizations and correlation trading within the Company's trading book as well as incorporated add-ons for stressed VaR and incremental risk requirements (“market risk capital framework amendment”).

At March 31, 2013, the Company was in compliance with Basel I, inclusive ofthemarket risk capital frameworkamendment, with ratios of Tier 1 capital to RWAs of 13.9% and total capital to RWAs of 14.5% (6% and 10% being well-capitalized for regulatory purposes, respectively). The ratio of Tier 1 common capital to RWAs was 11.5% (5% being the minimum under the Federal Reserve's Comprehensive Capital Analysis and Review (“CCAR”) framework).Financial holding companies are subject to a Tier 1 leverage ratio as defined by the Federal Reserve. 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, deferred tax assets and financial and non-financial equity investments). The adjusted average total assets are derived using weekly balances for the year. At March 31, 2013, the Company was also in compliance with the Federal Reserve'sTier 1 leverage requirement, with a Tier 1 leverage ratio of 7.0% (5%being well-capitalized for regulatory purposes).

The following table summarizes the capital measures for the Company:

	March 31, 2013			December 31, 2012
	Balance		Ratio	Balance		Ratio
	(dollars in millions)
Tier 1 common capital	$	46,512	11.5%	$	44,794	14.6%
Tier 1 capital		56,129	13.9%		54,360	17.7%
Total capital		58,382	14.5%		56,626	18.5%
RWAs		403,237	—		306,746	—
Adjusted average assets		800,699	—		769,495	—
Tier 1 leverage		—	7.0%		—	7.1%

The Company's U.S. Bank Operating Subsidiaries.     The Company's U.S. 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 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.

At March 31, 2013, the Company's U.S. bank operating subsidiaries met all capital adequacy requirements to which they are subject and exceeded all regulatory 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 capital information for the Company's U.S. bank operating subsidiaries, which are U.S. depository institutions, calculated in a manner consistent with the guidelines described under Basel I, inclusive of the market risk capital framework amendment:

			March 31, 2013			December 31, 2012
			Amount	Ratio		Amount	Ratio
			(dollars in millions)
Total capital (to RWAs):
	Morgan Stanley Bank, N.A.	$	11,752	15.8%	$	11,509	17.2%
	Morgan Stanley Private Bank, National Association	$	1,696	27.6%	$	1,673	28.8%
Tier I capital (to RWAs):
	Morgan Stanley Bank, N.A.	$	10,144	13.6%	$	9,918	14.9%
	Morgan Stanley Private Bank, National Association	$	1,690	27.5%	$	1,665	28.7%
Leverage ratio:
	Morgan Stanley Bank, N.A.	$	10,144	12.7%	$	9,918	13.3%
	Morgan Stanley Private Bank, National Association	$	1,690	10.3%	$	1,665	10.6%

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 ratio of total capital to RWAs of 10%, a capital ratio of Tier 1 capital to RWAs of 6%, and a ratio of Tier 1 capital to average book assets (leverage ratio) of 5%. EachU.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 March 31, 2013 and December 31, 2012, the Company's 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 U.S. Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority, Inc. and the U.S. Commodity Futures Trading Commission. MS&Co. has consistently operated with capital in excess of its regulatory capital requirements. MS&Co.'s net capital totaled $8,848 million and $7,820million at March 31, 2013 and December 31, 2012, respectively, which exceeded the amount required by $7,348 million and $6,453million, respectively.MS&Co. is required to hold tentative net capital in excess of $1billion 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. MS&Co. is also required to notify the SEC in the event that its tentative net capital is less than $5 billion. At March31, 2013, MS&Co. had tentative net capital in excess of the minimum and the notification requirements.

MSSB LLC 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, Inc. and the U.S. Commodity Futures Trading Commission. MSSB LLC has consistently operated with capital in excess of its regulatory capital requirements. MSSB LLC clears certain customer activity directly and introduces other business to MS&Co. and Citi. Subsequent to July 6, 2012, MSSB LLC clears customer activity that was previously introduced to Citi.

MSIP, a London-based broker-dealer subsidiary, is subject to the capital requirements of the Financial Services 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 in excess of their respective regulatory capital 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 A2 by Moody's and AAA by S&P, maintains certain operating restrictions that have been reviewed by Moody's and S&P. 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.

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Interest Income and Interest Expense (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Interest income:
Trading assets	$ 604	[1],[2]	$ 791	[1],[2]
Securities available for sale	96	[2]	86	[2]
Loans	244	[2]	118	[2]
Interest bearing deposits with banks	26	[2]	27	[2]
Federal funds sold and securities purchased under agreements to resell and Securities borrowed	92	[2]	113	[2]
Other	336	[2]	407	[2]
Total Interest income	1,398	[2]	1,542	[2]
Interest expense:
Deposits	41	[2]	45	[2]
Commercial paper and other short-term borrowings	9	[2]	13	[2]
Long-term debt	960	[2]	1,254	[2]
Securities sold under agreements to repurchase and Securities loaned	450	[2]	463	[2]
Other	(247)	[2]	(174)	[2]
Total Interest expense	1,213	[2]	1,601	[2]
Net interest	$ 185		$ (59)

[1] Interest expense on Trading liabilities is reported as a reduction to Interest income on Trading assets.

[2] Interest income and expense are recorded within the condensed consolidated statements of income depending on the nature of the instrument and related market conventions. When interest is included as a component of the instrument’s fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.