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.
Beginning in the quarter ended March 31, 2012, the Company and segment Required Capital is met by Tier 1 common capital.
Prior to the quarter ended March 31, 2012, the Company’s Required Capital was met by regulatory Tier 1 capital or Tier 1 common equity.
Segment capital for prior periods has been recast under this framework.
For a further discussion of the Company’s Tier 1 common capital, see “Capital” herein.
The following table presents the business segments’ and Parent’s average Tier 1 common capital and average common equity for 2012 and 2011:
## Table 0 ##
The Company updated its Required Capital Framework methodology, with the regulatory changes becoming effective in 2013.
As a result of this update to the Required Capital Framework methodology, and taking the estimated impact of Basel 2.5 into consideration, Parent capital is estimated to decrease by approximately $13 billion with a corresponding increase allocated to the business segments.
Liquidity.
The Basel Committee has developed two standards for supervisors to use in liquidity risk supervision.
The first standard’s objective is to promote the short-term resilience of the liquidity risk profile of banks and bank holding companies.
The Basel Committee developed the Liquidity Coverage Ratio (“LCR”) to ensure banks have sufficient high-quality liquid assets to cover net cash outflows arising from significant stress over 30 calendar days.
The standard requires that the value of the ratio be no lower than 100%; the Company is compliant with this liquidity standard.
The second standard’s objective is to promote resilience over a longer time horizon.
The Net Stable Funding Ratio (“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 ratio must be greater than 100%.
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.
MORGAN STANLEY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
## Table 1 ##
Transferred assets are carried at fair value prior to securitization, and any changes in fair value are recognized in the 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 consolidated statements of financial condition at fair value.
Any changes in the fair value of such retained interests are recognized in the consolidated statements of income.
Net gains on sales of assets in securitization transactions at the time of the sale were not material in 2012, 2011 and 2010.
During 2012, 2011 and 2010, the Company received proceeds from new securitization transactions of $17.0 billion, $22.6 billion and $25.6 billion, respectively.
During 2012, 2011 and 2010, the Company received proceeds from cash flows from retained interests in securitization transactions of $4.3 billion, $6.5 billion and $7.1 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 13).
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 Financial instruments owned, and the Company recognizes the associated liabilities in Other secured financings in the 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.
MORGAN STANLEY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) consumer price index).
Senior debt also may be structured to be callable by the Company or extendible at the option of holders of the senior debt securities.
Debt containing provisions that effectively allow the holders to put or extend the notes aggregated $1,175 million at December 31, 2013 and $1,131 million at December 31, 2012.
In addition, separate agreements are entered into by the Company’s subsidiaries that effectively allow the holders to put the notes aggregated $353 million at December 31, 2013 and $1,895 million at December 31, 2012.
Subordinated debt and junior subordinated debentures generally are issued to meet the capital requirements of the Company or its regulated subsidiaries and primarily are U. S.  dollar denominated.
Senior Debt—Structured Borrowings.
The Company’s index-linked, equity-linked or credit-linked borrowings include various structured instruments whose payments and redemption values are linked to the performance of a specific index (e. g. , Standard & Poor’s 500), a basket of stocks, a specific equity security, a credit exposure or basket of credit exposures.
To minimize the exposure resulting from movements in the underlying index, equity, credit or other position, the Company has entered into various swap contracts and purchased options that effectively convert the borrowing costs into floating rates based upon LIBOR.
These instruments are included in the preceding table at their redemption values based on the performance of the underlying indices, baskets of stocks, or specific equity securities, credit or other position or index.
The Company carries either the entire structured borrowing at fair value or bifurcates the embedded derivative and carries it at fair value.
The swaps and purchased options used to economically hedge the embedded features are derivatives and also are carried at fair value.
Changes in fair value related to the notes and economic hedges are reported in Trading revenues.
See Note 4 for further information on structured borrowings.
Subordinated Debt and Junior Subordinated Debentures.
Included in the Company’s long-term borrowings are subordinated notes of $9,275 million having a contractual weighted average coupon of 4.69% at December 31, 2013 and $5,845 million having a weighted average coupon of 4.81% at December 31, 2012.
Junior subordinated debentures outstanding by the Company were $4,849 million at December 31, 2013 and $4,827 million at December 31, 2012 having a contractual weighted average coupon of 6.37% at both December 31, 2013 and December 31, 2012.
Maturities of the subordinated and junior subordinated notes range from 2014 to 2067.
Maturities of certain junior subordinated debentures can be extended to 2052 at the Company’s option.
Asset and Liability Management.
In general, securities inventories that are not financed by secured funding sources and the majority of the Company’s assets are financed with a combination of deposits, short-term funding, floating rate long-term debt or fixed rate long-term debt swapped to a floating rate.
Fixed assets are generally financed with fixed rate long-term debt.
The Company uses interest rate swaps to more closely match these borrowings to the duration, holding period and interest rate characteristics of the assets being funded and to manage interest rate risk.
These swaps effectively convert certain of the Company’s fixed rate borrowings into floating rate obligations.
In addition, for non-U.
S.  dollar currency borrowings that are not used to fund assets in the same currency, the Company has entered into currency swaps that effectively convert the borrowings into U. S.  dollar obligations.
The Company’s use of swaps for asset and liability management affected its effective average borrowing rate as follows:
## Table 2 ##
(1) Included in the weighted average and effective average calculations are non-U.
S.  dollar interest rates.
Other.
The Company, through several of its subsidiaries, maintains funded and unfunded committed credit facilities to support various businesses, including the collateralized commercial and residential mortgage whole loan, derivative contracts, warehouse lending, emerging market loan, structured product, corporate loan, investment banking and prime brokerage businesses.
FINANCIAL DATA SUPPLEMENT (Unaudited)—(Continued)
## Table 3 ##
(1) Other includes Non-banking financial institutions and others in the 2013 presentation.
For cross-border exposure that exceeds 0.75% but does not exceed 1% of the Company’s consolidated assets, Ireland, Switzerland and China had a total cross-border exposure of $20,534 million at December 31, 2013, Saudi Arabia and Singapore had a total cross-border exposure of $12,848 million at December 31, 2012, and Korea, Singapore, Canada and certain other countries had a total cross-border exposure of $26,908 million at December 31, 2011.
Notes to Consolidated Financial Statements 4.
The sum of the quarters’ earnings per common share may not equal the annual amounts due to the averaging effect of the number of shares and share equivalents throughout the year.5.
During the fourth quarter of 2016, net revenues included losses of approximately $60 million on sales and markdowns of legacy limited partnership investments in third-party-sponsored funds within the Investment Management business segment.
The fourth quarter of 2016 also included a $70 million provision within the Wealth Management business segment related to certain brokerage service reporting activities.
Employee Share-Based Awards

<table><tr><td></td><td colspan="2"> 2012</td><td colspan="2"> 2011</td></tr><tr><td></td><td> Average Tier 1 Common Capital</td><td> Average Common Equity</td><td> Average Tier 1 Common Capital</td><td> Average Common Equity</td></tr><tr><td></td><td colspan="4"> (dollars in billions)</td></tr><tr><td>Institutional Securities</td><td>$22.3</td><td>$29.0</td><td>$25.9</td><td>$32.7</td></tr><tr><td>Global Wealth Management Group</td><td>3.7</td><td>13.3</td><td>3.3</td><td>13.2</td></tr><tr><td>Asset Management</td><td>1.3</td><td>2.4</td><td>1.5</td><td>2.6</td></tr><tr><td>Parent capital</td><td>15.5</td><td>16.1</td><td>5.3</td><td>5.9</td></tr><tr><td>Total</td><td>$42.8</td><td>$60.8</td><td>$36.0</td><td>$54.4</td></tr></table>
<table><tr><td></td><td colspan="4"> At December 31, 2011</td></tr><tr><td></td><td> Level 1</td><td> Level 2</td><td> Level 3</td><td> Total</td></tr><tr><td></td><td colspan="4"> (dollars in millions)</td></tr><tr><td>Retained interests (fair value):</td><td></td><td></td><td></td><td></td></tr><tr><td>Investment grade</td><td>$—</td><td>$1,186</td><td>$3</td><td>$1,189</td></tr><tr><td>Non-investment grade</td><td>—</td><td>74</td><td>1,621</td><td>1,695</td></tr><tr><td>Total retained interests (fair value)</td><td>$—</td><td>$1,260</td><td>$1,624</td><td>$2,884</td></tr><tr><td>Interests purchased in the secondary market (fair value):</td><td></td><td></td><td></td><td></td></tr><tr><td>Investment grade</td><td>$—</td><td>$638</td><td>$2</td><td>$640</td></tr><tr><td>Non-investment grade</td><td>—</td><td>126</td><td>116</td><td>242</td></tr><tr><td>Total interests purchased in the secondary market (fair value)</td><td>$—</td><td>$764</td><td>$118</td><td>$882</td></tr><tr><td>Derivative assets (fair value)</td><td>$—</td><td>$869</td><td>$572</td><td>$1,441</td></tr><tr><td>Derivative liabilities (fair value)</td><td>$—</td><td>$541</td><td>$30</td><td>$571</td></tr></table>
<table><tr><td></td><td>2013</td><td>2012</td><td>2011</td></tr><tr><td>Weighted average coupon of long-term borrowings at period-end-1</td><td>4.4%</td><td>4.4%</td><td>4.0%</td></tr><tr><td>Effective average borrowing rate for long-term borrowings after swaps at period-end-1</td><td>2.2%</td><td>2.3%</td><td>1.9%</td></tr></table>
<table><tr><td></td><td>At December 31, 2011</td></tr><tr><td>Country</td><td>Banks</td><td>Governments</td><td>Other</td><td>Total</td></tr><tr><td>United Kingdom</td><td>$13,852</td><td>$2</td><td>$89,585</td><td>$103,439</td></tr><tr><td>Cayman Islands</td><td>766</td><td>—</td><td>31,169</td><td>31,935</td></tr><tr><td>France</td><td>23,561</td><td>1,096</td><td>4,196</td><td>28,853</td></tr><tr><td>Japan</td><td>23,542</td><td>436</td><td>2,821</td><td>26,799</td></tr><tr><td>Germany</td><td>18,674</td><td>3,485</td><td>1,859</td><td>24,018</td></tr><tr><td>Netherlands</td><td>3,508</td><td>23</td><td>8,826</td><td>12,357</td></tr><tr><td>Luxembourg</td><td>1,619</td><td>94</td><td>6,137</td><td>7,850</td></tr><tr><td>Brazil</td><td>149</td><td>3,398</td><td>2,165</td><td>5,712</td></tr><tr><td>Australia</td><td>2,008</td><td>557</td><td>1,414</td><td>3,979</td></tr><tr><td>Italy</td><td>881</td><td>1,463</td><td>539</td><td>2,883</td></tr></table>

Question: Which Level is Interests purchased in the secondary market (fair value) in terms of Investment grade the highest in 2011?
Answer: 2