Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2023
Commission File Number 1-11758(Exact name of Registrant as specified in its charter)
Delaware(State or other jurisdiction ofincorporation or organization)

1585 Broadway
New York, NY 10036

36-3145972(212) 761-4000(I.R.S. Employer Identification No.)

(Registrant’s telephone number,including area code)

Trading
Symbol(s)MS

Name of exchange on
which registered
New York Stock Exchange

MS/PA

New York Stock Exchange

MS/PE

New York Stock Exchange

MS/PF

New York Stock Exchange

MS/PI

New York Stock Exchange

MS/PK

New York Stock Exchange

MS/PL

New York Stock Exchange

MS/PONew York Stock Exchange

MS/PPNew York Stock Exchange

MS/26CNew York Stock Exchange

MS/29

New York Stock Exchange(Address of principal executive offices,
including Zip Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Floating Rate
Non-Cumulative Preferred Stock, Series A, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate
Non-Cumulative Preferred Stock, Series E, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate
Non-Cumulative Preferred Stock, Series F, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate
Non-Cumulative Preferred Stock, Series I, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate
Non-Cumulative Preferred Stock, Series K, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of 4.875%
Non-Cumulative Preferred Stock, Series L, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of 4.250%
Non-Cumulative Preferred Stock, Series O, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of 6.500%
Non-Cumulative Preferred Stock, Series P, $0.01 par value
Global Medium-Term Notes, Series A, Fixed Rate Step-Up Senior Notes Due 2026
of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto)
Global Medium-Term Notes, Series A, Floating Rate Notes Due 2029
of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto)

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒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 thepreceding 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 ☒ No ☐Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 ofthe Exchange Act. (Check one):
Large accelerated filer☒

Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company ☐If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the Registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control overfinancial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the Registrant included in the filingreflect the correction of an error to previously issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the Registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
☐Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act ). Yes ☐ No ☒As of June 30, 2023, the aggregate market value of the common stock of the Registrant held by non-affiliates of the Registrant was approximately $136,317,364,533.
This calculation does not reflect a determination that persons are affiliates for any other purposes.
As of January 31, 2024, there were 1,635,268,297 shares of the Registrant’s common stock, $0.01 par value, outstanding.
Documents Incorporated by Reference: Portions of the Registrant’s definitive proxy statement for its 2024 annual meeting of shareholders are incorporated byreference in Part III of this Form 10-K.

Table of Contents
ANNUAL REPORT ON FORM 10-K
For the year ended December 31, 2023
Table of Contents

Part Item

Page

Table of Contents

Part Item

Page

5

6. Derivative Instruments and Hedging
Activities

Overview

5

7. Investment Securities

112

Business Segments

5

8. Collateralized Transactions

113

Competition

5

Supervision and Regulation

6

9. Loans, Lending Commitments and Related
Allowance for Credit Losses

116

Human Capital10

10. Goodwill and Intangible Assets

119
120

Business

I

1

108

12

11. Other Assets—Equity Method
Investments and Leases

Risk Factors

1A

13

12. Deposits

121

Cybersecurity

1C

26

13. Borrowings and Other Secured
Financings

121

14. Commitments, Guarantees andContingencies

123
129

Information about our Executive Officers

Management’s Discussion and Analysis ofFinancial Condition and Results ofOperations

II

7

28

Introduction

28

15. Variable Interest Entities andSecuritization Activities

Executive Summary

29

16. Regulatory Requirements

133

Business Segments

33

17. Total Equity

136

37

18. Interest Income and Interest Expense

139

Wealth Management

39

Investment Management42

19. Deferred Compensation Plans andCarried Interest Compensation

139

Supplemental Financial Information

44

20. Employee Benefit Plans

141

Other Matters44

21. Income Taxes

144

Accounting Development Updates

45

22. Segment, Geographic and Revenue
Information

145

Critical Accounting Estimates

46

23. Parent Company

147

Liquidity and Capital Resources

48

Financial Data Supplement (Unaudited)

150

Balance Sheet

49

153

Regulatory Requirements

53

Glossary of Common Terms and Acronyms
Changes in and Disagreements withAccountants on Accounting and Financial
Disclosure

9

154

61

Controls and Procedures

9A

154

Risk Management

61

Other Information

9B

156

Market Risk

64

Credit Risk

68

Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections

9C

156

1B

156

Properties

2

156

Legal Proceedings

3156

Mine Safety Disclosures
Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities

4

156

II

5

156

Directors, Executive Officers and Corporate
Governance

III

10

157

Executive Compensation

11

157

Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder Matters

12

157

13

157

14

157

15

157

16

160
161

Institutional Securities

Quantitative and Qualitative Disclosuresabout Risk

7A

Country and Other Risks
Financial Statements and Supplementary Data

Unresolved Staff Comments

75
8

80

Report of Independent Registered Public
Accounting Firm (PCAOB ID No. 34)

80

Consolidated Income Statement

82

Consolidated Comprehensive Income
Statement

82

Consolidated Balance Sheet

83

Consolidated Statement of Changes in Total
Equity84

Consolidated Cash Flow Statement

85

Notes to Consolidated Financial Statements

86

1. Introduction and Basis of Presentation

86

Certain Relationships and Related
Transactions and Director Independence

2. Significant Accounting Policies

87

Principal Accountant Fees and Services

3. Cash and Cash Equivalents

97

Exhibits and Financial Statement Schedules

4. Fair Values
5. Fair Value Option

97
107

Form 10-K Summary
Signatures

2

I

IV

Table of Contents
Forward-Looking Statements
We have included in or incorporated by reference into this report, and from time to time may make in our public filings, press releases orother public statements, certain statements, including, without limitation, those under “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures about Risk” and “Legal Proceedings” that
may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation ReformAct of 1995. In addition, our management may make forward-looking statements to analysts, investors, representatives of the media andothers. These forward-looking statements are not historical facts and represent only our beliefs regarding future events, many of which,by their nature, are inherently uncertain and beyond our control.
The nature of our business makes predicting the future trends of our revenues, expenses and net income difficult. The risks anduncertainties involved in our businesses could affect the matters referred to in such statements, and it is possible that our actual results
may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Important factors that could
cause actual results to differ from those in the forward-looking statements include, without limitation:• the effect of market conditions, particularly in the global equity, fixed income, currency, credit and commodities markets, including
corporate, commercial and residential mortgage lending, real estate and energy markets;• the level of individual investor participation in the global markets, as well as the level and mix of client assets;• the flow of investment capital into or from AUM;
• the level and volatility of equity, fixed income and commodity prices, interest rates, inflation and currency values, other market indicesor other market factors, such as market liquidity;• the availability and cost of both credit and capital, as well as the credit ratings assigned to our unsecured short-term and long-term
debt;• technological changes instituted by us, our competitors or counterparties, and technological risks, including risks associated withemerging technologies, business continuity and related operational risks, including breaches or other disruptions of our or a third
party’s (or third-parties thereof) operations or systems;• risk associated with cybersecurity threats, including data protection and cybersecurity risk management;• our ability to effectively manage our capital and liquidity, including under stress tests designed by our banking regulators;• the impact of current, pending and future legislation or changes thereto, regulation (including capital, leverage, funding, liquidity,
consumer protection, and recovery and resolution requirements) and our ability to address such requirements;• uncertainty concerning fiscal or monetary policies established by central banks and financial regulators, government shutdowns, debt
ceilings or funding;• changes to global trade policies, tariffs and replacement or reform of certain interest rate benchmarks;• legal and regulatory actions, including litigation and enforcement, and other non-financial risks in the U.S. and worldwide;• changes in tax laws and regulations globally;• the effectiveness of our risk management processes and related controls, including climate risk;• our ability to effectively respond to an economic downturn, or other market disruptions;• the effect of social, economic, and political conditions and geopolitical events, including as a result of government shutdowns, changes
in U.S. presidential administrations or Congress, sovereign risk, acts of war or aggression, and terrorist activities or military actions;• the actions and initiatives of current and potential competitors, as well as governments, central banks, regulators and self-regulatoryorganizations;• our ability to provide innovative products and services and execute our strategic initiatives, and costs related thereto, including withrespect to the operational or technological integration related to such innovative and strategic initiatives;• the performance and results of our acquisitions, divestitures, joint ventures, partnerships, minority stakes or strategic alliances, or otherstrategic arrangements and related integrations;• investor, consumer and business sentiment and confidence in the financial markets;• our reputation and the general perception of the financial services industry;• our ability to retain, integrate and attract qualified employees or successfully transition key roles;• climate-related incidents, other environmental and sustainability matters, and global pandemics; and• other risks and uncertainties detailed under “Business—Competition,” “Business—Supervision and Regulation,” “Risk Factors” andelsewhere throughout this report.
Accordingly, you are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which
they are made. We undertake no obligation to update publicly or revise any forward-looking statements to reflect the impact of
circumstances or events that arise after the dates they are made, whether as a result of new information, future events or otherwise,
except as required by applicable law. You should, however, consult further disclosures we may make in future filings of our annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and any amendments thereto or in future press
releases or other public statements.

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Available Information
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange
Commission (“SEC”). The SEC maintains a website, www.sec.gov, that contains annual, quarterly and current reports, proxy andinformation statements, and other information that issuers file electronically with the SEC. Our electronic SEC filings areavailable to the public at the SEC’s website.
Our website is www.morganstanley.com. You can access our Investor Relations webpage at www.morganstanley.com/about-us-ir.
We make available free of charge, on or through our Investor Relations webpage, our 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 furnishedpursuant to the Securities Exchange Act of 1934, as amended (“Exchange Act”), as soon as reasonably practicable after suchmaterial is electronically filed with, or furnished to, the SEC. We also make available, through our Investor Relations webpage,
via a link to the SEC’s website, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or
greater shareholders and others under Section 16 of the Exchange Act.
You can access information about our corporate governance at www.morganstanley.com/about-us-governance, our sustainability
initiatives at www.morganstanley.com/about-us/sustainability-at-morgan-stanley, and our commitment to diversity and inclusionat www.morganstanley.com/about-us/diversity. Our webpages include:• Amended and Restated Certificate of Incorporation;• Amended and Restated Bylaws;• Charters for our Audit Committee, Compensation, Management Development and Succession Committee, Governance andSustainability Committee, Operations and Technology Committee, and Risk Committee;• Corporate Governance Policies;• Policy Regarding Corporate Political Activities;• Policy Regarding Shareholder Rights Plan;• Equity Ownership Commitment;• Code of Ethics and Business Conduct;• Code of Conduct;• Integrity Hotline Information;• Environmental and Social Policies; and• 2022 ESG Report: Diversity & Inclusion, Climate, and Sustainability.
Our Code of Ethics and Business Conduct applies to all directors, officers and employees, including our Chief Executive Officer,
Chief Financial Officer and Deputy Chief Financial Officer. We will post any amendments to the Code of Ethics and BusinessConduct 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 our website. 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 our website is not incorporated byreference into this report.

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Business

position also depends substantially on our ability to continue
to attract and retain highly qualified employees while
managing compensation and other costs. We compete withcommercial banks, investment banking firms, brokeragefirms, insurance companies, exchanges, electronic trading andclearing platforms, financial data repositories, investment
advisers and sponsors of mutual funds, hedge funds, real
assets funds and private credit and equity funds, energy
companies, financial technology firms and other companies
offering financial and ancillary services in the U.S. andglobally, including, in certain instances, through the internet.
In addition, restrictive laws and regulations applicable tocertain global financial services institutions, which have been
increasing in complexity and volume, may prohibit us fromengaging in certain transactions, impose more stringent
capital and liquidity requirements, and increase costs, and can
put us at a competitive disadvantage to competitors in certain
businesses not subject to these same requirements. See also
“Supervision and Regulation” herein and “Risk Factors.”

Overview
We are a global financial services firm that, through our
subsidiaries and affiliates, advises, and originates, trades,
manages and distributes capital for governments, institutions
and individuals. We were originally incorporated under thelaws of the State of Delaware in 1981, and our predecessor
companies date back to 1924. We are a financial holding
company (“FHC”) regulated by the Board of Governors of theFederal Reserve System (“Federal Reserve”) under the Bank
Holding Company Act of 1956, as amended (“BHC Act”).
We conduct our business from our headquarters in and around
New York City, our regional offices and branches throughout
the U.S. and our principal offices in London, Frankfurt,
Tokyo, Hong Kong and other world financial centers. Unlessthe context otherwise requires, the terms “Morgan Stanley,”the “Firm,” “us,” “we” and “our” mean Morgan Stanley (the“Parent Company”) together with its consolidated
subsidiaries. See the “Glossary of Common Terms andAcronyms” for the definition of certain terms and acronyms
used throughout the 2023 Form 10-K.

We compete directly in the U.S. and globally with othersecurities and financial services firms and broker-dealers andwith others on a regional or product basis. Additionally, there
is increased competition driven by established firms and asset
managers, as well as the emergence of new firms, nonfinancial companies and business models, including
innovative uses of technology, competing for the same clientsand assets, or offering similar products and services to retailand institutional customers. We also compete with companies
that provide online trading and banking services, investment
advisory services, robo-advice capabilities, access to digitalasset capabilities and services, and other financial products
and services.

Financial information concerning us, our business segments
and geographic regions for each of the years ended December
31, 2023, December 31, 2022, and December 31, 2021 isincluded in “Financial Statements and Supplementary Data.”
Business Segments
We are a global financial services firm that maintains
significant market positions in each of our business segments:
Institutional Securities, Wealth Management and Investment
Management. Through our subsidiaries and affiliates, we
provide a wide variety of products and services to a large anddiversified group of clients and customers, including
corporations, governments, financial institutions andindividuals. Additional information related to our businesssegments, respective clients, and products and services
provided is included under “Management’s Discussion andAnalysis of Financial Condition and Results of Operations.”

Our ability to access capital at competitive rates (which is
generally impacted by, among other things, our credit spreads
and ratings) and to commit and deploy capital efficiently,
particularly in our more capital-intensive businesses,
including underwriting and sales, trading, financing andmarket-making activities, also affects our competitive
position. We expect clients to continue to request that we
provide loans or lending commitments in connection withcertain investment banking activities.

Competition

It is possible that competition may become even more intense
as we continue to compete with financial or other institutions
that may be larger, or better capitalized, or may have astronger local presence and longer operating history in certain
geographies or products. Many of these firms have the ability
to offer a wide range of products and services throughdifferent platforms that may enhance their competitive
position and could result in additional pricing pressure on ourbusinesses.

All aspects of our businesses are highly competitive, and we
expect them to remain so. We compete in the U.S. andglobally for clients, market share and human talent. Operating
within the financial services industry on a global basis
presents, among other things, technological, risk management,
regulatory, infrastructure and other challenges that require
effective resource allocation in order for us to remaincompetitive. Our competitive position depends on a numberof factors, including our reputation, client experience, thequality and consistency of our long-term investment
performance, innovation, execution, relative pricing and otherfactors, including entering into new or expanding current
businesses as a result of acquisitions and other strategic
initiatives. Our ability to sustain or improve our competitive

We continue to experience price competition in some of ourbusinesses. In particular, the ability to execute securities,
derivatives and other financial instrument trades electronicallyon exchanges, swap execution facilities and other automatedtrading platforms, and the introduction and application of new
5

December 2023 Form 10-K

Table of Contents

technologies will likely continue the pressure on ourrevenues. The trend toward direct access to automated,
electronic markets will likely continue as additional markets
move to more automated trading platforms. We haveexperienced and will likely continue to experience
competitive pressures in these and other areas in the future.

Scope of Permitted Activities. The BHC Act limits theactivities of BHCs and FHCs and grants the Federal Reserveauthority to limit our ability to conduct activities. We mustobtain the Federal Reserve’s approval before engaging incertain banking and other financial activities both in the U.S.
and internationally.

Our ability to compete successfully in the investment
management industry is affected by several factors, including
our reputation, quality of investment professionals,
performance of investment strategies or product offerings
relative to peers and appropriate benchmark indices,
advertising and sales promotion efforts, fee levels, theeffectiveness of and access to distribution channels andinvestment pipelines, the types of products offered, andregulatory restrictions specific to FHCs. Our investment
products, including alternative investment products, maycompete with investments offered by other investment
managers, including by investment managers who may besubject to less stringent legal and regulatory regimes than us.

The BHC Act grandfathers “activities related to the trading,sale or investment in commodities and underlying physicalproperties,” provided that we were engaged in “any of suchactivities as of September 30, 1997 in the U.S.” and provided
that certain other conditions that are within our reasonable
control are satisfied. We currently engage in our commodities
activities pursuant to the BHC Act grandfather exemption, as
well as other authorities under the BHC Act.
Activities Restrictions under the Volcker Rule. The Volcker
Rule prohibits banking entities, including us and our affiliates,from engaging in certain proprietary trading activities, as
defined in the Volcker Rule, subject to exemptions forunderwriting, market-making, risk-mitigating hedging andcertain other activities. The Volcker Rule also prohibits
certain investments and relationships by banking entities withcovered funds, as defined in the Volcker Rule, subject to anumber of exemptions and exclusions.

Supervision and Regulation
As a major financial services firm, we are subject to extensive
regulation by U.S. federal and state regulatory agencies andsecurities exchanges and by regulators and exchanges in eachof the major markets where we conduct our business.

Capital Requirements. The Federal Reserve establishes
capital requirements largely based on the Basel III capital
standards established by the Basel Committee on Banking
Supervision (“Basel Committee”), including well-capitalized
standards, for large BHCs and evaluates our compliance withsuch requirements. The Office of the Comptroller of theCurrency (“OCC”) establishes similar capital requirements
and standards for Morgan Stanley Bank, N.A. (“MSBNA”)
and Morgan Stanley Private Bank, National Association(“MSPBNA”) (together, our “U.S. Bank Subsidiaries”).

We continue to monitor the changing political, tax andregulatory environment. While it is likely that there will bechanges in the way major financial institutions are regulated
in both the U.S. and other markets in which we operate, itremains difficult to predict the exact impact these changes
will have on our business, financial condition, results ofoperations and cash flows for a particular future period. We
expect to remain subject to extensive supervision andregulation.

The Federal Reserve, Federal Deposit Insurance Corporation(“FDIC”) and the OCC (collectively, “U.S. banking
agencies”) have proposed a comprehensive set of revisions totheir capital requirements based on changes to the Basel III
capital standards finalized by the Basel Committee. The
impact on us of any revisions to the capital requirements is
uncertain and depends on the adoption of final rulemakings
by the U.S. banking agencies. For additional information, see“Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources—Regulatory
Requirements—Regulatory
Developments and Other Matters—Basel III Endgame
Proposal.”Financial Holding Company
Consolidated Supervision. We operate as a bank holding
company (“BHC”) and FHC under the BHC Act and are
subject to comprehensive consolidated supervision, regulationand examination by the Federal Reserve. In particular, we aresubject to (among other things): significant regulation andsupervision; intensive scrutiny of our businesses and plans for
expansion of those businesses; limitations on activities; asystemic risk regime that imposes heightened capital andliquidity requirements; restrictions on activities andinvestments imposed by a section of the BHC Act added by
the Dodd-Frank Wall Street Reform and Consumer Protection
Act (“Dodd-Frank Act”) referred to as the “Volcker Rule,”
and comprehensive derivatives regulation. In addition, theConsumer Financial Protection Bureau (“CFPB”) has primaryrulemaking, enforcement and examination authority over us
and our subsidiaries with respect to federal consumer
protection laws.

December 2023 Form 10-K

In addition, many of our regulated subsidiaries are subject toregulatory capital requirements, including regulated
subsidiaries registered as swap dealers with the U.S.
Commodity Futures Trading Commission (“CFTC”) or
conditionally registered as security-based swap dealers with
the SEC or registered as broker-dealers or futures commission
merchants.
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For more information about the specific capital requirements
applicable to us and our U.S. Bank Subsidiaries, as well as
our subsidiaries that are broker-dealers, swap dealers andsecurity-based swap dealers, see “Management’s Discussion
and Analysis of Financial Condition and Results ofOperations—Liquidity and Capital Resources—Regulatory
Requirements” and Note 16 to the financial statements.

systemically important financial institutions supervised by theFederal Reserve). In addition, we are subject to a limit of 25%
of Tier 1 capital for aggregate net credit exposures to any
other unaffiliated counterparty.
The Federal Reserve may establish additional prudential
standards for large BHCs, including with respect to an early
remediation framework, contingent capital, enhanced public
disclosures and limits on short-term debt, including offbalance sheet exposures. See “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—
Liquidity and Capital Resources—Regulatory Requirements—Total Loss-Absorbing Capacity, Long-Term Debt andClean Holding Company Requirements.”

Capital Planning, Stress Tests and Capital Distributions. The
Federal Reserve has adopted capital planning and stress test
requirements for large BHCs, including Morgan Stanley. For
more information about our capital planning and stress test
requirements, see “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations—Liquidity
and Capital Resources—Regulatory Requirements.”

If the Federal Reserve or the Financial Stability OversightCouncil determines that a BHC with $250 billion or more inconsolidated assets poses a “grave threat” to U.S. financial
stability, the institution may be, among other things, restricted
in its ability to merge or offer financial products and/or
required to terminate activities and dispose of assets. See also
“Capital Requirements” and “Liquidity Requirements” and“Resolution and Recovery Planning” herein.

In addition, the Federal Reserve, the OCC and the FDIC havethe authority to prohibit or limit the payment of dividends by
the banking organizations they supervise, including us andour U.S. Bank Subsidiaries, if, in the banking regulator’sopinion, payment of a dividend would constitute an unsafe orunsound practice in light of the financial condition of thebanking organization. For information about the Federal
Reserve’s restrictions on capital distributions for large BHCs,
see “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources—Regulatory Requirements—Capital Plans, Stress
Tests and the Stress Capital Buffer.” All of these policies andother requirements could affect our ability to pay dividends
and/or repurchase stock or require us to provide capitalassistance to our U.S. Bank Subsidiaries under circumstancesthat we would not otherwise decide to do.

Resolution and Recovery Planning. We are required to submit
once every two years to the Federal Reserve and the FDIC a
resolution plan that describes our strategy for a rapid andorderly resolution under the U.S. Bankruptcy Code in theevent of our material financial distress or failure. Interim
updates are required in certain limited circumstances,including material mergers or acquisitions or fundamental
changes to our resolution strategy.
Our preferred resolution strategy, which is set out in our mostrecent resolution plan, is an SPOE strategy, which generally
contemplates the provision of adequate capital and liquidity
by the Parent Company to certain of its subsidiaries so thatsuch subsidiaries have the resources necessary to implement
the resolution strategy after the Parent Company has filed forbankruptcy.

Liquidity Requirements. In addition to capital regulations, theU.S. banking agencies have adopted liquidity and funding
standards, including the LCR, the NSFR, liquidity stresstesting and associated liquidity reserve requirements.
For more information, see “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—
Liquidity and Capital Resources—Balance Sheet—
Regulatory Liquidity Framework.”

Our next resolution plan is due July 1, 2025. Further, we
submit an annual recovery plan to the Federal Reserve thatoutlines the steps that management could take over time togenerate or conserve financial resources in times of prolonged
financial stress.

Systemic Risk Regime. Under rules issued by the Federal
Reserve, large BHCs, including Morgan Stanley, must
conduct internal liquidity stress tests, maintain unencumberedhighly liquid assets to meet projected net cash outflows for 30days over the range of liquidity stress scenarios used ininternal stress tests, and comply with various liquidity risk
management requirements. These large BHCs also mustcomply with a range of risk management and corporate
governance requirements.

Certain of our domestic and foreign subsidiaries are also
subject to resolution and recovery planning requirements inthe jurisdictions in which they operate. For example, theFDIC currently requires certain insured depository institutions(“IDI”), including our U.S. Bank Subsidiaries, to submit a
resolution plan every three years that describes the IDI’s
strategy for a rapid and orderly resolution in the event ofmaterial financial distress or failure of the IDI.

The Federal Reserve also imposes single-counterparty credit
limits (“SCCL”) for large banking organizations. U.S. Global
systemically important banks (“G-SIBs”), including us, aresubject to a limit of 15% of Tier 1 capital for aggregate net
credit exposures to any “major counterparty” (defined toinclude other U.S. G-SIBs, foreign G-SIBs and non-bank

In addition, certain financial companies, including BHCs suchas the Firm and certain of its subsidiaries, can be subject to a
resolution proceeding under the orderly liquidation authority,
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December 2023 Form 10-K

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with the FDIC being appointed as receiver, provided that
determination of extraordinary financial distress and systemicrisk is made by the U.S. Treasury Secretary in consultation
with the U.S. President. Regulators have adopted certain
orderly liquidation authority implementing regulations andmay expand or clarify these regulations in the future. If wewere subject to the orderly liquidation authority, the FDIC
would have considerable powers, including: the power toremove directors and officers responsible for our failure andto appoint new directors and officers; the power to assign ourassets and liabilities to a third party or bridge financial
company without the need for creditor consent or prior court
review; the ability to differentiate among our creditors,
including treating certain creditors within the same classbetter than others, subject to a minimum recovery right on thepart of disfavored creditors to receive at least what they would
have received in bankruptcy liquidation; and broad powers toadminister the claims process to determine distributions fromthe assets of the receivership. The FDIC has been developing
an SPOE strategy that could be used to implement the orderly
liquidation authority.

localization requirements and restrictions on cross-bordertransfer of personal and other data that may restrict our ability
to conduct business in those jurisdictions or create additional
financial and regulatory burdens to do so.
Numerous jurisdictions have passed laws, rules andregulations in these areas and many are considering new or
updated ones that could impact our businesses, particularly as
the application, interpretation and enforcement of these laws,
rules and regulations are often uncertain and evolving. Many
aspects of our businesses are subject to legal requirements
concerning the use and protection of certain customer andother information, as well as the privacy and cybersecurity
laws referenced above. We have adopted measures designed
to comply with these and related applicable requirements inall relevant jurisdictions.
For additional information on our cybersecurity strategy andprocesses, see “Cybersecurity.”
Institutional Securities and Wealth Management
U.S. Bank Subsidiaries. Our U.S. Bank Subsidiaries are
FDIC-insured depository institutions subject to supervision,
regulation and examination by the OCC and are subject to the
OCC’s risk governance guidelines, which establish
heightened standards for a large IDI’s risk governanceframework and the oversight of that framework by the IDI’s
board of directors. Our U.S. Bank Subsidiaries are also
subject to prompt corrective action standards, which require
the relevant federal banking regulator to take prompt
corrective action with respect to a depository institution if that
institution does not meet certain capital adequacy standards.
In addition, BHCs, such as Morgan Stanley, are required toserve as a source of strength to their U.S. bank subsidiaries
and commit resources to support these subsidiaries in theevent such subsidiaries are in financial distress. Our U.S.
Bank Subsidiaries’ business activities are generally limited tosupporting our Institutional Securities and WealthManagement business segments. Our U.S. Bank Subsidiaries’
business activities are generally limited to supporting our
Institutional Securities and Wealth Management businesssegments.

Regulators have also taken and proposed various actions tofacilitate an SPOE strategy under the U.S. Bankruptcy Code,the orderly liquidation authority or other resolution regimes.
For more information about our resolution plan-related
submissions and associated regulatory actions, see “Risk
Factors—Legal, Regulatory and Compliance Risk,”“Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources—Regulatory
Requirements—Total
LossAbsorbing Capacity, Long-Term Debt and Clean Holding
Company Requirements” and “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—
Liquidity and Capital Resources—Regulatory Requirements—Resolution and Recovery Planning.”
Cyber and Information Security Risk Management andProtection of Client Information
The financial services industry faces increased global
regulatory focus regarding cyber and information security risk
management practices. Many aspects of our businesses are
subject to cybersecurity legal, regulatory and disclosure
requirements enacted by U.S. federal and state governments
and other non-U.S. jurisdictions. These requirements are
generally aimed at codifying basic cybersecurity protections
and mandating data breach notification requirements.

Our U.S. Bank Subsidiaries are also subject to Sections 23A
and 23B of the Federal Reserve Act, which impose
restrictions on certain transactions with affiliates, including
any extension of credit to, or purchase of assets from, anaffiliate. These restrictions limit the total amount of credit
exposure that our U.S. Bank Subsidiaries may have to any
one affiliate and to all affiliates and require collateral for
those exposures. Section 23B requires affiliate transactions to
be on market terms.

Our businesses are also subject to increasing privacy and dataprotection legal requirements concerning the use andprotection of certain personal information with regard toclients, employees and others. These requirements impose
mandatory privacy and data protection obligations, including
providing for individual rights, enhanced governance andaccountability requirements, and significant fines andlitigation risk for noncompliance. In addition, several
jurisdictions have enacted or proposed personal and other data
December 2023 Form 10-K

As commonly controlled FDIC-insured depository
institutions, each of our U.S. Bank Subsidiaries could be
responsible for any loss to the FDIC from the failure of theother U.S. Bank Subsidiary.

8

Table of Contents

are subject to net capital requirements of, and certain of theiractivities are regulated by, the CFTC and the National Futures
Association (“NFA”). MS&Co. is also subject torequirements of, and regulation by, the CME Group, in its
capacityas
MS&Co.’sdesignatedself-regulatoryorganization, and various commodity futures exchanges ofwhich MS&Co. is a member. Rules and regulations of the
CFTC, NFA, the Joint Audit Committee and commodity
futures exchanges address obligations related to, among otherthings, customer asset protections, including rules andregulations governing the segregation of customer funds, theuse by futures commission merchants of customer funds, themargining of customer accounts and documentation enteredinto by futures commission merchants with their customers,
record-keeping and reporting obligations of futurescommission merchants and introducing brokers, risk
disclosure and risk management. Our commodities activities
are subject to extensive laws and regulations in the U.S. andabroad.

Broker-Dealer and Investment Adviser Regulation. Our
primary U.S. broker-dealer subsidiaries, Morgan Stanley &Co. LLC (“MS&Co.”) and Morgan Stanley Smith Barney
LLC (“MSSB”) are registered broker-dealers with the SEC
and in all 50 states, the District of Columbia, Puerto Rico andthe U.S. Virgin Islands and are members of various selfregulatory organizations, including the Financial Industry
Regulatory Authority (“FINRA”), and various securities
exchanges and clearing organizations. Broker-dealers are
subject to laws and regulations covering all aspects of the
securities business, including sales and trading practices,
securities offerings, publication of research reports, use ofcustomers’ funds and securities, capital structure, risk
management controls in connection with market access,recordkeeping and retention, and the conduct of theirdirectors, officers, representatives and other associatedpersons. Broker-dealers are also regulated by securities
administrators in those states where they do business. Our
significant broker-dealer subsidiaries are members of the
Securities Investor Protection Corporation.

Derivatives Regulation. We are subject to comprehensive
regulation of our derivatives businesses, including regulations
that impose margin requirements, public and regulatory
reporting, central clearing and mandatory trading on regulated
exchanges or execution facilities for certain types of swaps
and security-based swaps (collectively, “Swaps”).

MSSB is also a registered investment adviser with the SEC.
MSSB’s relationship with its investment advisory clients is
subject to the fiduciary and other obligations imposed oninvestment advisers. The SEC and other supervisory bodies
generally have broad administrative powers to address noncompliance, including the power to restrict or limit MSSB
from carrying on its investment advisory and other asset
management activities.

CFTC and SEC rules require registration of swap dealers andsecurity-based swap dealers, respectively, and impose
numerous obligations on such registrants, including adherence
to business conduct standards for all in-scope Swaps. We
have registered a number of U.S. and non-U.S. swap dealers
and conditionally registered a number of U.S. and non-U.S
security-based swap dealers. Swap dealers and security-based
swap dealers regulated by a prudential regulator are subject touncleared Swap margin requirements and minimum capitalrequirements established by the prudential regulators. Swap
dealers and security-based swap dealers not subject toregulation by a prudential regulator are subject to uncleared
Swap margin requirements and minimum capital requirements
established by the CFTC and SEC, respectively. In somecases, the CFTC and SEC permit non-U.S. swap dealers andsecurity-based swap dealers that do not have a prudential
regulator to comply with applicable non-U.S. uncleared Swap
margin and minimum capital requirements instead of directcompliance with CFTC or SEC requirements.

The Firm is subject to various regulations that affect brokerdealer sales practices and customer relationships, including
the SEC’s “Regulation Best Interest,” which requires brokerdealers to act in the “best interest” of retail customers at thetime a recommendation is made without placing the financial
or other interests of the broker-dealer ahead of the interest of
the retail customer.
Margin lending by our broker-dealers is regulated by theFederal Reserve’s restrictions on lending in connection withpurchases and short sales of securities. Our broker-dealers arealso subject to maintenance and other margin requirements
imposed under FINRA and other self-regulatory organization
rules.
Our U.S. broker-dealer subsidiaries are subject to the SEC’s
net capital rule and the net capital requirements of various
exchanges, other regulatory authorities and self-regulatoryorganizations. For more information about theserequirements, see Note 16 to the financial statements.

Investment Management
Many of the subsidiaries engaged in our investment
management activities are registered as investment adviserswith the SEC. Many aspects of our investment management
activities are also subject to federal and state laws andregulations in place primarily for the protection of theinvestor or client. These laws and regulations generally grantsupervisory agencies and bodies broad administrative powers,
including the power to limit or restrict us from carrying on
our investment management activities in the event that we fail
to comply with such laws and regulations.

Research Regulation.
In addition to research-related
regulations currently in place in the U.S. and otherjurisdictions, regulators continue to focus on research
conflicts of interest and may impose additional regulations.
Futures Activities and Certain Commodities Activities
Regulation. MS&Co. and E*TRADE Futures LLC, as futurescommission merchants, and MSSB, as an introducing broker,
9

December 2023 Form 10-K

Table of Contents

In addition, certain of our subsidiaries are U.S. registeredbroker-dealers and act as distributors to our proprietarymutual funds and as placement agents to certain private
investment funds managed by our Investment Managementbusiness segment. Certain of our affiliates are registered ascommodity trading advisors and/or commodity pool
operators, or are operating under certain exemptions fromsuch registration pursuant to CFTC rules and other guidance,and have certain responsibilities with respect to each pool
they advise. Our investment management activities are subject
to additional laws and regulations, including restrictions on
sponsoring or investing in, or maintaining certain otherrelationships with, covered funds, as defined by the Volcker
Rule, subject to certain limited exemptions. See also
“Financial Holding Company—Activities Restrictions under
the Volcker Rule,” “Institutional Securities and WealthManagement—Broker-Dealer and Investment Adviser
Regulation,”“Institutional
Securities
andWealthManagement—Regulation of Futures Activities and Certain
Commodities Activities,” and “Institutional Securities andWealth Management—Derivatives Regulation” herein and“Non-U.S. Regulation” herein for a discussion of otherregulations that impact our Investment Management businessactivities.

prudential requirements that are applicable under non-U.S.
law.
Firmwide Financial Crimes Program
Our Financial Crimes program is coordinated andimplemented on an enterprise-wide basis and supports ourfinancial crime prevention efforts across all regions andbusiness units. The program includes anti-money laundering(“AML”), economic sanctions (“Sanctions”), anti-boycott,anti-corruption, anti-tax evasion, and government andpolitical activities compliance programs and aligned businessline risk functions.
In the U.S., the Bank Secrecy Act, as amended by the USA
PATRIOT Act of 2001 and the Anti-Money Laundering Act
of 2020, imposes significant obligations on financial
institutions to detect and deter money laundering and terrorist
financing activity, including requiring banks, broker-dealers,
futures commission merchants, introducing brokers andmutual funds to develop and implement AML programs,
verify the identity of customers that maintain accounts, andmonitor and report suspicious activity to appropriate law
enforcement or regulatory authorities. Outside of the U.S.,
applicable laws, rules and regulations similarly require
designated types of financial institutions to implement AML
programs.

U.S. Consumer Protection
We are subject to supervision and regulation by the CFPB
with respect to U.S. federal consumer protection laws. Federal
consumer protection laws to which we are subject include theGramm-Leach-Bliley Act’s privacy provisions, Equal Credit
Opportunity Act, Home Mortgage Disclosure Act, Electronic
Fund Transfer Act, Fair Credit Reporting Act, Real Estate
Settlement Procedures Act, Truth in Lending Act and Truth in
Savings Act, all of which are enforced by the CFPB. We arealso subject to certain federal consumer protection laws
enforced by the OCC, including the Servicemembers Civil
Relief Act. Furthermore, we are subject to certain state
consumer protection laws, and under the Dodd-Frank Act,
state attorneys general and other state officials are empowered
to enforce certain federal consumer protection laws andregulations. These federal and state consumer protection laws
apply to a range of our activities.

We are also subject to Sanctions, such as regulations andeconomic sanctions programs administered by the U.S.
government, including the U.S. Treasury Department’s Officeof Foreign Assets Control (“OFAC”) and the U.S.
Department of State, and similar sanctions programs imposedby foreign governments or global or regional multilateralorganizations. In addition, we are subject to anti-corruption
laws, such as the U.S. Foreign Corrupt Practices Act and the
U.K. Bribery Act, in the jurisdictions in which we operate.
Anti-corruption laws generally prohibit offering, promising,giving or authorizing others to give anything of value, either
directly or indirectly, to a government official or private party
in order to influence official action or otherwise gain an unfair
business advantage, such as to obtain or retain business.
Human Capital

Non-U.S. Regulation

Employees and Culture

Our businesses are regulated extensively by non-U.S.
regulators, including governments, central banks andregulatory bodies, securities exchanges, commodity
exchanges, and self-regulatory organizations, especially inthose jurisdictions in which we maintain an office. Certain
regulators have prudential, business conduct and otherauthority over us or our subsidiaries, as well as powers tolimit or restrict us from engaging in certain businesses or to
conduct administrative proceedings that can result in
censures, fines, asset seizures and forfeitures, the issuance of
cease-and-desist orders, or the suspension or expulsion of aregulated entity, its affiliates or its employees. Certain of our
subsidiaries are subject to capital, liquidity, leverage and otherDecember 2023 Form 10-K

Our employees are our most important asset. With offices in
42 countries, we have approximately 80 thousand employees
across the globe as of December 31, 2023, whom we dependon to build value for our clients and shareholders. To facilitate
talent attraction and retention, we strive to make Morgan
Stanley a diverse and inclusive workplace, with a strong
culture and opportunities for our employees to grow anddevelop in their career. We support our employees withcompetitive compensation, benefits, and health and wellbeing
programs.
Our core values guide decision-making aligned with the
expectations of our employees, clients, shareholders,10Table of Contents

regulators, directors and the communities in which we
operate. These guiding values—Put Clients First, Do the
Right Thing, Lead with Exceptional Ideas, Commit toDiversity and Inclusion, and Give Back—are at the heart ofour workplace culture and underpin our success. Our Code of
Conduct is central to our expectation that employees embody
our values. Every new hire and every employee annually isrequired to certify to their understanding of and adherence to
the Code of Conduct. We also invite employee feedback on
our culture and workplace through our ongoing employee
engagement surveys. For a further discussion of the culture,values and conduct of employees, see “Quantitative andQualitative Disclosures about Risk—Risk Management.”

by location and include: health care and insurance benefits,mental health resources, flexible spending and health savings
accounts, paid time-off, flexible work schedules, family leave,
child and elder care resources, financial help with fertility,
adoption and surrogacy, and tuition assistance, among manyothers. Onsite services in our principal locations include
health centers, mental health counseling, fitness centers andphysical therapy.
In 2023, we further enhanced our family support, women’s
health, mental health and wellbeing offerings. Our Global
Wellbeing Board, comprised of senior management across the
Firm’s businesses and geographies, continues to shape andadvance our wellbeing strategy. For more detailed
information on our human capital programs and initiatives,see “People and Culture” in our 2022 ESG Report: Diversity& Inclusion, Climate, and Sustainability (found on our
website). The reports and information elsewhere on our
website are not incorporated by reference into, and do notform any part of, this Annual Report.

Diversity and Inclusion
We believe a diverse and inclusive workforce is important toMorgan Stanley’s continued success and our ability to serve
our clients. Our programming, including the Morgan Stanley
Institute for Inclusion, supports our workforce and helps tobuild a sense of community and belonging for all colleagues.
We have deepened our investments to recruit, advance andretain diverse talent through a holistic approach, focused on
professional development, health and wellbeing, benefits, andculture.

Human Capital Metrics
Category
Employees

Talent Development and Retention

CultureWe are committed to the development of our workforce andsupporting mobility and career growth. Our talentdevelopment programs are designed to provide employeeswith the resources to help them achieve their career goals,
build management skills and lead their organizations. We
believe supporting employee development and growth
contributes to long-term retention.

Diversity andInclusionAt
December 31,
2023

MetricEmployees bygeography(thousands)

Americas

53

Asia

17

EMEA

10

Employeeengagement1% Proud to work at
Morgan Stanley

92 %Global gender
representation% Women40 %% Women officer2

29 %U.S. ethnic
diversity
representation% Ethnically diverse3

35 %% Ethnically diverse
officer2,328 %Voluntary attritionin 2023% Global

We continue to offer leadership programs to support
employees as they progress in their career at the firm.

Retention
TenureCompensation, Financial and Employee Wellbeing
Compensation

We provide responsible and effective compensation programs
that reinforce our values and culture through four key
objectives: deliver pay for sustainable performance, attract
and retain top talent, align with shareholder interests andmitigate excessive risk taking. In addition to salaries, these
programs (which vary by location) include annual bonuses,
retirement savings plans with matching contributions, anemployee stock purchase plan, student loan refinancing and afinancial wellbeing program. To promote equitable rewards
for all employees, we have enhanced our practices to support
fair and consistent compensation and reward decisions basedon merit, perform ongoing reviews of compensation decisions
and conduct regular assessments of our rewards structure.

Compensation
and benefits

8%Management Committee
average length ofservice (years)

21

All employees average
length of service (years)

7

Total compensation andbenefits expense in
2023 (millions)$24,558

1. The percentage disclosed is based on the 2023 biennial employee engagement
survey results, which reflect responses from 89% of employees.
2. Officer includes Managing Directors, Executive Directors and Vice Presidents.
3. U.S. ethnically diverse designations align with the Equal Employment Opportunity
Commission’s ethnicity and race categories and include American Indian or Native
Alaskan, Asian, Black or African American, Hispanic or Latino, Native Hawaiian orPacific Islander, and two or more races.

Our employees’ health is also central to our ongoing success.
We support the physical, mental and financial wellbeing ofour global workforce and their families by offering programs
focusing on awareness, prevention and access. Offerings vary11

December 2023 Form 10-K

Table of Contents
Information about Our Executive Officers

Daniel A. Simkowitz (58). Co-President (since January2024). Head of Investment Management (October 2015 to
December 2023) and Co-Head of Corporate Strategy (June2021 to December 2023). Co-Head of Global Capital Markets(March 2013 to September 2015). Chairman of Global CapitalMarkets (November 2009 to March 2013). Managing Director
in Global Capital Markets (December 2000 to November2009).

The executive officers of Morgan Stanley and their age andtitles as of February 22, 2024 are set forth below. Businessexperience is provided in accordance with SEC rules.
Mandell L. Crawley (48). Executive Vice President andChief Human Resources Officer (since February 2021). Headof Private Wealth Management (June 2017 to January 2021).
Chief Marketing Officer (September 2014 to June 2017).
Head of National Business Development and TalentManagement for Wealth Management (June 2011 to
September 2014). Divisional Business Development Officer(May 2010 to June 2011). Regional Business Development
Officer (May 2009 to May 2010). Head of Field Sales andMarketing (February 2008 to May 2009). Head of Fixed
Income Capital Markets Sales and Distribution for WealthManagement (April 2004 to February 2008).

Charles A. Smith (57). Executive Vice President and Chief
Risk Officer of Morgan Stanley (since May 2023). Head of
Institutional Securities Business Development (March 2017 to
May 2023). Chief Financial Officer of Institutional Securities(August 2012 to May 2017). President of Morgan Stanley
Bank, N.A. and Morgan Stanley Private Bank, N.A.
(September 2011 to August 2012). Head of Firm Strategy andExecution (May 2008 to September 2011). Managing
Director in the Investment Banking Division (December 2005
to May 2008).

James P. Gorman (65). Executive Chairman of the Board of
Directors (since January 2012). Chief Executive Officer ofMorgan Stanley (January 2012 to December 2023). President(January 2010 to December 2011) and member of the Boardof Directors (since January 2010). Co-President (December
2007 to December 2009) and Co-Head of Strategic Planning(October 2007 to December 2009). President and Chief
Operating Officer of Wealth Management (February 2006 to
April 2008).

Sharon Yeshaya (44). Executive Vice President and Chief
Financial Officer (since June 2021). Head of Investor
Relations (June 2016 to May 2021). Chief of Staff in the
Office of the Chairman and CEO (January 2015 to May
2016). Co-Head of New Product Origination for Derivative
Structured Products (December 2012 to December 2014).

Eric F. Grossman (57). Executive Vice President and Chief
Legal Officer of Morgan Stanley (since January 2012) and
Chief Administrative Officer (since July 2022). Global Headof Legal (September 2010 to January 2012). Global Head of
Litigation (January 2006 to September 2010) and GeneralCounsel of the Americas (May 2009 to September 2010).
General Counsel of Wealth Management (November 2008 to
September 2010). Partner at the law firm of Davis Polk &Wardwell LLP (June 2001 to December 2005).
Edward Pick (55). Chief Executive Officer of Morgan
Stanley (since January 2024). Co-President and Co-Head ofCorporate Strategy (June 2021 to December 2023). Head of
Institutional Securities (July 2018 to December 2023). Global
Head of Sales and Trading (October 2015 to July 2018). Headof Global Equities (March 2011 to October 2015). Co-Headof Global Equities (April 2009 to March 2011). Co-Head of
Global Capital Markets (July 2008 to April 2009). Co-Headof Global Equity Capital Markets (December 2005 to July2008).
Andrew M. Saperstein (57). Co-President (since June2021). Head of Wealth Management (April 2019 to December2023). Co-Head of Wealth Management (January 2016 toApril 2019). Co-Chief Operating Officer of Institutional
Securities (March 2015 to January 2016). Head of Investment
Products and Services (June 2012 to March 2015).

December 2023 Form 10-K

12

Table of Contents

Risk Factors

market conditions that in turn affect the size, number andtiming of investment banking client assignments andtransactions and the realization of returns from our principal
investments.

For a discussion of the risks and uncertainties that may affectour future results and strategic objectives, see “ForwardLooking Statements” preceding “Business” and “Return on
Tangible Common Equity Goal” in “Management’s
Discussion and Analysis of Financial Condition and Resultsof Operations.”

Periods of unfavorable market or economic conditions,
including equity market levels and the level and pace ofchanges in interest rates and asset valuation, may haveadverse impacts on the level of individual investor confidence
and participation in the global markets and/or the level of andmix of client assets, including deposits, which would
negatively impact the results of our Wealth Managementbusiness segment.

Market Risk
Market risk refers to the risk that a change in the level of one
or more market prices, rates, spreads, indices, volatilities,
correlations or other market factors, such as market liquidity,
will result in losses for a position or portfolio. We have direct
exposure to market risk. In addition, market risk may also
impact our clients and markets in a manner that may
indirectly impact us. For more information on how wemonitor and manage market risk, see “Quantitative andQualitative Disclosures about Risk—Market Risk.”

Substantial market fluctuations could also cause variations in
the value of our investments in our funds, the flow ofinvestment capital into or from AUM, and the way customers
allocate capital among money market, equity, fixed income orother investment alternatives, which could negatively impact
the results of our Investment Management business segment.
The value of our financial instruments may be materiallyaffected by market fluctuations. Market volatility, illiquidmarket conditions and disruptions in the markets may make it
difficult to value and monetize certain of our financial
instruments, particularly during periods of market uncertainty
or displacement. Subsequent valuations in future periods, inlight of factors then prevailing, may result in significant
changes in the value of these instruments and may adversely
impact historical or prospective fees and performance-based
income (also known as incentive fees, which include carriedinterest) in respect of certain businesses. In addition, at thetime of any sales and settlements of these financial
instruments, the price we ultimately realize will depend on the
demand and liquidity in the market at that time and may bematerially lower than their current fair value. Any of thesefactors could cause a decline in the value of our financial
instruments, which may adversely affect our results ofoperations in future periods.

Our results of operations may be materially affected bymarket fluctuations and by global financial market andeconomic conditions and other factors.
Our results of operations have been in the past and may, in the
future, be materially affected by global financial market andeconomic conditions, including in particular by periods of low
or slowing economic growth in the United States and othermajor markets, both directly and indirectly through theirimpact on client activity levels. These include the level andvolatility of equity, fixed income and commodity prices; thelevel, term structure and volatility of interest rates; inflationand currency values; the level of other market indices, fiscal
or monetary policies established by central banks andfinancial regulators; and uncertainty concerning the future
path of interest rates, government shutdowns, debt ceilings or
funding, which may be driven by economic conditions,recessionary fears, market uncertainty or lack of confidence
among investors and clients due to the effects of widespread
events such as global pandemics, natural disasters, climaterelated incidents, acts of war or aggression, geopoliticalinstability, changes in U.S. presidential administrations orCongress, changes to global trade policies, supply chain
complications and the implementation of tariffs orprotectionist trade policies and other factors, or a combinationof these or other factors.

In addition, financial markets are susceptible to severe events
evidenced by rapid depreciation in asset values accompanied
by a reduction in asset liquidity. Under these extreme
conditions, hedging and other risk management strategies may
not be as effective at mitigating trading losses as they would
be under more normal market conditions. Moreover, underthese conditions, market participants are particularly exposedto trading strategies employed by many market participants
simultaneously and on a large scale, which could lead toincreased individual counterparty risk for our businesses.
Although our risk management and monitoring processes seek
to quantify and mitigate risk to more extreme market moves,
severe market events have historically been difficult topredict, and we could realize significant losses if extreme
market events were to occur.

The results of our Institutional Securities business segment,
particularly results relating to our involvement in primary andsecondary markets for all types of financial products, aresubject to substantial market fluctuations due to a variety offactors that we cannot control or predict with great certainty.
These fluctuations impact results by causing variations inbusiness flows and activity and in the fair value of securities
and other financial products. Fluctuations also occur due tothe level of global market activity, which, among other things,
can be impacted by market uncertainty or lack of investor andclient confidence due to unforeseen economic, geopolitical or
13

December 2023 Form 10-K

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Holding large and concentrated positions may expose us tolosses.

Our valuations related to, and reserves for losses on, credit
exposures rely on complex models, estimates and subjective
judgments about the future. While we believe current
valuations and reserves adequately address our perceived
levels of risk, future economic conditions, including inflationand changes in real estate and other asset values, that differ
from or are more severe than forecast, inaccurate models orassumptions, or external factors such as global pandemics,
natural disasters, or geopolitical events, could lead toinaccurate measurement of or deterioration of credit quality ofour borrowers and counterparties or the value of collateral andresult in unexpected losses. We may also incur higher-thananticipated credit losses as a result of (i) disputes withcounterparties over the valuation of collateral or (ii) actions
taken by other lenders that may negatively impact thevaluation of collateral. In cases where we foreclose on
collateral, sudden declines in the value or liquidity ofcollateral may result in significant losses to us despite our (i)credit monitoring, (ii) over-collateralization, (iii) ability tocall for additional collateral or (iv) ability to force repaymentof the underlying obligation, especially where there is a single
type of collateral supporting the obligation. In addition, in thelonger term, climate change may have a negative impact on
the financial condition of our clients, which may decrease
revenues from those clients and increase the credit risk
associated with loans and other credit exposures to thoseclients. Certain of our credit exposures may be concentrated
by counterparty, product, sector, portfolio, industry or
geographic region. Although our models and estimatesaccount for correlations among related types of exposures, achange in the market or economic environment for aconcentrated product or an external factor impacting a
concentrated counterparty, sector, portfolio, industry or
geographic region may result in credit losses in excess ofamounts forecast. For further information regarding ourcountry risk exposure, see also “Quantitative and Qualitative
Disclosures about Risk—Country Risks.”

Concentration of risk may reduce revenues or result in losses
in our market-making, investing, underwriting (including
block trading) and lending businesses (including margin
lending) in the event of unfavorable market movements. We
commit substantial amounts of capital to these businesses,
which often results in our taking large positions in the
securities of, or making large loans to, a particular issuer orissuers in a particular industry, country or region. In the event
we hold a concentrated position larger than those held bycompetitors, we may incur larger losses. For further
information regarding our country risk exposure, see also
“Quantitative and Qualitative Disclosures about Risk—
Country Risks.”
Credit Risk
Credit risk refers to the risk of loss arising when a borrower,
counterparty or issuer does not meet its financial obligations
to us. For more information on how we monitor and manage
credit risk, see “Quantitative and Qualitative Disclosuresabout Risk—Credit Risk.”
We are exposed to the risk that third parties that areindebted to us will not perform their obligations.
We incur significant credit risk exposure through our
Institutional Securities business segment. This risk may arise
from a variety of business activities, including, but not limited
to: extending credit to clients through various lending
commitments; entering into swap or other derivative contracts
under which counterparties have obligations to makepayments to us; acting as clearing broker for listed and overthe-counter derivatives whereby we guarantee client
performance to clearinghouses; providing short- or long-term
funding that is secured by physical or financial collateral,
including, but not limited to, real estate and marketablesecurities, whose value may at times be insufficient to fully
cover the loan repayment amount; posting margin and/or
collateral and other commitments to clearinghouses, clearing
agencies, exchanges, banks, securities firms and otherfinancial counterparties; and investing and trading insecurities and loan pools, whereby the value of these assets
may fluctuate based on realized or expected defaults on theunderlying obligations or loans.

In addition, as a clearing member of several central
counterparties, we are responsible for the defaults or
misconduct of our customers and could incur financial losses
in the event of default by other clearing members. Although
we regularly review our credit exposures, default risk may
arise from events or circumstances that are difficult to detect
or foresee.
A default by a large financial institution could adversely
affect financial markets.

We also incur credit risk in our Wealth Management businesssegment lending to mainly individual investors, including, but
not limited to, margin- and securities-based loans
collateralized by securities, residential mortgage loans,including home equity lines of credit (“HELOCs”), andstructured loans to ultra-high net worth clients, that are in
most cases secured by various types of collateral whose value
may at times be insufficient to fully cover the loan repayment
amount, including marketable securities, private investments,
commercial real estate and other financial assets.

December 2023 Form 10-K

The commercial soundness of many financial institutions andcertain other large financial services firms may be closelyinterrelated as a result of credit, trading, clearing or otherrelationships among such entities. Increased centralization of
trading activities through particular clearinghouses, central
agents or exchanges may increase our concentration of risk
with respect to these entities. As a result, concerns about, or adefault or threatened default by, one or more such entities
could lead to significant market-wide liquidity and credit
problems, losses or defaults by other institutions, or require14

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financial commitments to multi-lateral actions intended tosupport market stability. This is sometimes referred to assystemic risk and may adversely affect financial
intermediaries, such as clearinghouses, clearing agencies,
exchanges, banks and securities firms, with which we interact
on a daily basis and, therefore, could adversely affect us. See
also “Systemic Risk Regime” under “Business—Supervision
and Regulation—Financial Holding Company.”

As a major participant in the global capital markets, we face
the risk of incorrect valuation or risk management of our
trading positions due to flaws in data, models, electronic
trading systems or processes, or due to fraud or cyberattack.
We also face the risk of operational failure or disruption of
any of the clearing agents, exchanges, clearinghouses or otherfinancial intermediaries we use to facilitate our lending,securities and derivatives transactions. In addition, in theevent of a breakdown or improper operation or disposal of ouror a direct or indirect third party’s systems (or third parties
thereof), processes or information assets, or improper orunauthorized action by third parties, including consultants andsubcontractors or our employees, we have received in the pastand may receive in the future regulatory sanctions, and could
suffer financial loss, an impairment to our liquidity position, adisruption of our businesses or damage to our reputation.

Operational Risk
Operational risk refers to the risk of loss, or of damage to our
reputation, resulting from inadequate or failed processes orsystems, from human factors (e.g., inappropriate or unlawful
conduct) or from external events (e.g., cyberattacks or thirdparty vulnerabilities) that may manifest as, for example, lossof information, business disruption, theft and fraud, legal,
regulatory and compliance risks, or damage to physical assets.
We may incur operational risk across the full scope of ourbusiness activities, including revenue-generating activities
and support and control groups (e.g., information technology("IT") and trade processing). Legal, regulatory andcompliance risk is included in the scope of operational risk
and is discussed below under “Legal, Regulatory andCompliance Risk.” For more information on how we monitor
and manage operational risk, see “Quantitative andQualitative Disclosures about Risk—Operational Risk.”

In addition, the interconnectivity of multiple financial
institutions
withcentralagents,exchanges
andclearinghouses, and the increased importance of these entities,
increases the risk that an operational failure at one institution
or entity may cause an industrywide operational failure that
could materially impact our ability to conduct business.
Furthermore, the concentration of Firm and personal
information held by a small number of third parties increases
the risk that a breach or disruption at a key third party may
cause an industrywide event that could significantly increase
the cost and risk of conducting business. These risks may beheightened to the extent that we rely on third parties that areconcentrated in a geographic area.

We are subject to operational risks, including a failure,breach or other disruption of our operations or security
systems or those of our third parties (or third parties
thereof), as well as human error or malfeasance, which
could adversely affect our businesses or reputation.

There can be no assurance that our business contingency andsecurity response plans fully mitigate all potential risks to us.
Our ability to conduct business may be adversely affected bya disruption in the infrastructure that supports our businesses
and the communities where we are located. This may include
a disruption involving physical site access; software flaws andvulnerabilities; cybersecurity incidents; terrorist activities;
political unrest; disease pandemics; catastrophic events;
climate-related incidents and natural disasters (such as
earthquakes, tornadoes, floods, hurricanes and wildfires);electrical outages; environmental hazards; computer servers;
communication platforms or other services we use; newtechnologies (such as generative artificial intelligence); andour employees or third parties with whom we conductbusiness. Although we employ backup systems for our data,
those backup systems may be unavailable following a
disruption, the affected data may not have been backed up or
may not be recoverable from the backup, or the backup data
may be costly to recover, which could adversely affect ourbusiness.

Our businesses are highly dependent on our ability to process
and report, on a daily basis, a large number of transactions
across numerous and diverse markets in many currencies. We
may introduce new products or services or change processesor reporting, including in connection with new regulatory
requirements, or integration of processes or systems ofacquired companies, resulting in new operational risk that we
may not fully appreciate or identify.
The trend toward direct access to automated, electronic
markets and the move to more automated trading platforms
has resulted in the use of increasingly complex technologythat relies on the continued effectiveness of the programmingcode and integrity of the data to process the trades. We relyon the ability of our employees, our consultants, our internal
systems and systems at technology centers maintained by
unaffiliated third parties to operate our different businesses
and process a high volume of transactions. Unusually hightrading volumes or site usage could cause our systems tooperate at an unacceptably slow speed or even fail.
Disruptions to, destruction of, instability of or other failure toeffectively maintain our IT systems or external technologythat allows our clients and customers to use our products andservices (including our self-directed brokerage platform)
could harm our business and our reputation.

Notwithstanding evolving technology and technology-basedrisk and control systems, our businesses ultimately rely on
people, including our employees and those of third parties
with whom we conduct business. As a result of human error
or engagement in violations of applicable policies, laws, rules
or procedures, certain errors or violations are not always
discovered immediately by our technological processes or by
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December 2023 Form 10-K

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our controls and other procedures that are intended to preventand detect such errors or violations. These can include
calculation or input errors, inadvertent or duplicate payments,
mistakes in addressing emails or other communications, errors
in software or model development or implementation, or
errors in judgment, as well as intentional efforts to disregard
or circumvent applicable policies, laws, rules or procedures.
Our use of new technologies may be undermined by suchhuman errors or misconduct due to undetected flaws or biases
in the algorithms or data utilized by such technologies.
Human errors and malfeasance, even if promptly discovered
and remediated, can result in material losses and liabilities forus, and negatively impact our reputation in the future.

increased nation-state targeting of financial institutions in the
U.S. and abroad.
Information security risks may also derive from human error,
fraud or malice on the part of our employees or third parties,
software bugs, server malfunctions, software or hardware
failure or other technological failure. For example, humanerror has led to the loss of the Firm's physical data-bearing
devices in the past. These risks may be heightened by several
factors, including remote work, reliance on new technologies(such as generative artificial intelligence) or as a result of theintegration of acquisitions and other strategic initiatives that
may subject us to new technology, customers or third-party
providers. In addition, third parties with whom we dobusiness or share information, and each of their service
providers, our regulators and the third parties with whom ourcustomers and clients share information used forauthentication, may also be sources of cybersecurity andinformation security risks, particularly where activities ofcustomers are beyond our security and control systems. Thereis no guarantee that the measures we take will provide
absolute security or recoverability given that the techniques
used in cyberattacks are complex, frequently change and are
difficult to anticipate.

We conduct business in various jurisdictions outside the U.S.,
including jurisdictions that may not have comparable levels ofprotection for their corporate assets, such as intellectual
property, trademarks, trade secrets, know-how, and customer
information and records. The protection afforded in thosejurisdictions may be less established and/or predictable thanin the U.S. or other jurisdictions in which we operate. As aresult, there may also be heightened risks associated with thepotential theft of their data, technology and intellectual
property in those jurisdictions by domestic or foreign actors,
including private parties and those affiliated with orcontrolled by state actors. Additionally, we are subject tocomplex and evolving U.S. and international laws andregulations governing cybersecurity, privacy and data
governance, transfer and protection, which may differ andpotentially conflict, in various jurisdictions. Any theft of data,technology or intellectual property may negatively impact ouroperations and reputation, including disrupting the businessactivities of our subsidiaries, affiliates, joint ventures orclients conducting business in those jurisdictions.

Like other financial services firms, the Firm, its third-party
providers and its clients continue to be the subject ofunauthorized access attacks; mishandling, loss, theft or
misuse of information; computer viruses or malware;cyberattacks designed to obtain confidential information,
destroy data, disrupt or degrade service, sabotage systems or
networks or cause other damage; ransomware; denial ofservice attacks; data breaches; social engineering attacks;
phishing attacks; and other events. There can be no assurance
that such unauthorized access, mishandling or misuse of
information, or cybersecurity incidents will not occur in the
future and they could occur more frequently and on a moresignificant scale.

A cyberattack, information or security breach or atechnology failure of ours or a third party could adversely
affect our ability to conduct our business or manage our
exposure to risk, or result in disclosure or misuse of
personal, confidential or proprietary information andotherwise adversely impact our results of operations,liquidity and financial condition, as well as cause
reputational harm.

We maintain a significant amount of personal and confidential
information on our customers, clients and certain
counterparties that we are required to protect under various
state, federal and international data protection and privacy
laws. These laws may be in conflict with one another orcourts and regulators may interpret them in ways that we had
not anticipated or that adversely affect our business. A
cyberattack, information or security breach, or a technology
failure of ours or of a third party could jeopardize our or ourclients’, employees’, partners’, vendors’ or counterparties’
personal, confidential, proprietary or other information
processed and stored in, and transmitted through, our and ourthird parties’ computer systems and networks. Furthermore,such events could cause interruptions or malfunctions in our,
our clients’, employees’, partners’, vendors’, counterparties’or third parties’ operations, as well as the unauthorized
release, gathering, monitoring, misuse, loss or destruction of
personal, confidential, proprietary and other information ofours, our employees, our customers or of other third parties.
Any of these events could result in reputational damage with

Cybersecurity risks for financial institutions have significantly
increased in recent years in part because of the proliferation of
new technologies; the use of the internet, mobile
telecommunications and cloud technologies to conduct
financial transactions; and the increased sophistication andactivities of organized crime, hackers, terrorists, nation-states,
state-sponsored actors and other parties. Any of these parties
may also attempt to fraudulently induce employees,
customers, clients, vendors or other third parties or users of
our systems to disclose sensitive information in order to gain
access to our networks, systems or data or those of ouremployees or clients, and such parties may see theireffectiveness enhanced by the use of artificial intelligence.
Global events and geopolitical instability have also led to
December 2023 Form 10-K

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our clients and the market, client dissatisfaction, additionalcosts to us to maintain and update our operational and security
systems and infrastructure, violation of the applicable dataprotection and privacy laws, regulatory investigations andenforcement actions, litigation exposure, or fines or penalties,
any of which could adversely affect our business, financial
condition or results of operations.

on how we monitor and manage liquidity risk, see“Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources” and “Quantitative and Qualitative Disclosuresabout Risk—Liquidity Risk.”
Liquidity is essential to our businesses and we rely on
external sources to finance a significant portion of ouroperations.

Given our global footprint and the high volume oftransactions we process; the large number of clients, partners,
vendors and counterparties with which we do business; andthe increasing sophistication of cyberattacks, a cyberattack or
information or security breach could occur and persist for an
extended period of time without detection. It could takeconsiderable time for us to determine the scope, extent,
amount and type of information compromised, and the impact
of such an attack may not be fully understood. During suchtime we would not necessarily know the extent of the harm or
how best to remediate it, and certain errors or actions could be
repeated or compounded before they are discovered andremediated, if at all, all or any of which would further
increase the costs and consequences of a cyberattack or
information security incident.

Liquidity is essential to our businesses. Our liquidity could be
negatively affected by our inability to raise funding in thelong-term or short-term debt capital markets, our inability toaccess the secured lending markets, our inability to attract andretain deposits, or unanticipated outflows of cash or collateral
by customers or clients. Factors that we cannot control, suchas disruption of the financial markets or negative views about
the financial services industry generally, including concerns
regarding fiscal matters in the U.S. and other geographic
areas, could impair our ability to raise funding.
In addition, our ability to raise funding could be impaired if
investors, depositors or lenders develop a negative perceptionof our long-term or short-term financial prospects due tofactors such as an incurrence of large trading, credit oroperational losses, a downgrade by the rating agencies, adecline in the level of our business activity, if regulatory
authorities take significant action against us or our industry,or if we discover significant employee misconduct or illegal
activity.

While many of our agreements with partners and third-party
vendors include indemnification provisions, we may not beable to recover sufficiently, or at all, under such provisions toadequately offset any losses we may incur. In addition,although we maintain insurance coverage that may, subject topolicy terms and conditions, cover certain aspects of cyberand information security risks, such insurance coverage may
be insufficient to cover any or all losses we may incur, and wecannot be sure that such insurance will continue to beavailable to us on commercially reasonable terms, or at all, orthat our insurers will not deny coverage as to any future
claim.

If we are unable to raise funding using the methods describedabove, we would likely need to finance or liquidate
unencumbered assets, such as our investment portfolios or
trading assets, to meet maturing liabilities or otherobligations. We may be unable to sell some of our assets or
we may have to sell assets at a discount to market value,either of which could adversely affect our results ofoperations, cash flows and financial condition.

We continue to make investments with a view toward
maintaining and enhancing our cybersecurity, resilience andinformation security posture, including investments intechnology and associated technology risk management
activities. The cost of managing cybersecurity andinformation security risks and attacks along with complying
with new, increasingly expansive and evolving regulatory
requirements could adversely affect our results of operations
and business.

Our borrowing costs and access to the debt capital markets
depend on our credit ratings.
The cost and availability of unsecured financing generally are
impacted by (among other things) our long-term and shortterm credit ratings. The rating agencies continue to monitor
certain Firm-specific and industrywide factors that areimportant to the determination of our credit ratings. These
include governance, capital adequacy, the level and quality ofearnings, liquidity and funding, risk appetite andmanagement, asset quality, strategic direction, business mix,
regulatoryorlegislativechanges,macroeconomic
environment and perceived levels of support, and it is possiblethat the rating agencies could downgrade our ratings andthose of similar institutions.

Liquidity Risk
Liquidity risk refers to the risk that we will be unable tofinance our operations due to a loss of access to the capital
markets or difficulty in liquidating our assets. Liquidity risk
also encompasses our ability (or perceived ability) to meet our
financial obligations without experiencing significant
business disruption or reputational damage that may threaten
our viability as a going concern, as well as the associatedfunding risks triggered by the market or idiosyncratic stressevents that may negatively affect our liquidity and may
impact our ability to raise new funding. For more information

Our credit ratings also can have an adverse impact on certain
trading revenues, particularly in those businesses where
longer-term counterparty performance is a key consideration,
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Our liquidity and financial condition have in the past been,
and in the future could be, adversely affected by U.S. andinternational markets and economic conditions.

such as OTC and other derivative transactions, including
credit derivatives and interest rate swaps. In connection withcertain OTC trading agreements and certain other agreements
associated with our Institutional Securities business segment,
we may be required to provide additional collateral to, or
immediately settle any outstanding liability balance with,certain counterparties in the event of a credit rating
downgrade.

Our ability to raise funding in the long-term or short-term
debt capital markets or the equity markets, or to accesssecured lending markets, has in the past been, and could in the
future be, adversely affected by conditions in the U.S. andinternational markets and economies.

Termination of our trading agreements could cause us tosustain losses and impair our liquidity by requiring us to findother sources of financing or to make significant payments inthe form of cash or securities. The additional collateral or
termination payments that may occur in the event of a futurecredit rating downgrade vary by contract and can be based on
ratings by Moody’s Investors Service, Inc., S&P Global
Ratings and/or other rating agencies. See also “Management’s
Discussion and Analysis of Financial Condition and Resultsof Operations—Liquidity and Capital Resources—Credit
Ratings—Incremental Collateral or Terminating Payments.”

In particular, our cost and availability of funding in the past
have been, and may in the future be, adversely affected byilliquid credit markets, interest rates and wider credit spreads.
Significant turbulence in the U.S., the E.U. and otherinternational markets and economies could adversely affectour liquidity and financial condition and the willingness ofcertain counterparties and customers to do business with us.
Legal, Regulatory and Compliance Risk
Legal, regulatory and compliance risk includes the risk oflegal or regulatory sanctions; material financial loss, including
fines, penalties, judgments, damages and/or settlements;
limitations on our business; or loss to reputation we may
suffer as a result of our failure to comply with laws,
regulations, rules, related self-regulatory organization
standards and codes of conduct applicable to our businessactivities. This risk also includes contractual and commercial
risk, such as the risk that a counterparty’s performanceobligations will be unenforceable. It also includes compliancewith AML, terrorist financing and anti-corruption rules andregulations. For more information on how we monitor andmanage legal, regulatory and compliance risk, see“Quantitative and Qualitative Disclosures about Risk—Legal,
Regulatory and Compliance Risk.”

We are a holding company and depend on payments fromour subsidiaries.
The Parent Company has no business operations and depends
on dividends, distributions, loans and other payments from its
subsidiaries to fund dividend payments and to fund all
payments on its obligations, including debt obligations.
Regulatory restrictions, tax restrictions or elections and otherlegal restrictions may limit our ability to transfer funds freely,
either to or from our subsidiaries. In particular, many of our
subsidiaries, including our bank and broker-dealer
subsidiaries, are subject to laws, regulations and selfregulatory organization rules that, in certain circumstances,
limit, as well as permit regulatory bodies to block or reduce,
the flow of funds to the Parent Company, or that prohibit suchtransfers or dividends altogether, including steps to “ringfence” entities by regulators outside the U.S. to protect clientsand creditors of such entities in the event of financial
difficulties involving such entities.

The financial services industry is subject to extensive
regulation, and changes in regulation will impact ourbusiness.
Like other major financial services firms, we are subject toextensive regulation by U.S. federal and state regulatory
agencies and securities exchanges and by regulators andexchanges in each of the major markets where we conduct ourbusiness, including an increasing number of complex
sanctions and disclosure regimes. These laws and regulations,which continue to increase in volume and complexity,
significantly affect the way and costs of doing business andcan restrict the scope of our existing businesses and limit ourability to expand our product offerings and pursue certain
investments.

These laws, regulations and rules may hinder our ability toaccess funds that we may need to make payments on our
obligations. Furthermore, as a BHC, we may become subject
to a prohibition or to limitations on our ability to pay
dividends. The Federal Reserve, the OCC and the FDIC havethe authority, and under certain circumstances the duty, toprohibit or to limit the payment of dividends or other capitalactions by the banking organizations they supervise, including
us and our U.S. Bank Subsidiaries. See “We may be
prevented from paying dividends or taking other capitalactions because of regulatory constraints or revised regulatory
capital requirements” under “Legal, Regulatory andCompliance Risk” herein.

December 2023 Form 10-K

The Firm and its employees are subject to wide-ranging
regulation and supervision, which, among other things,
subject us to intensive scrutiny of our businesses and anyplans for expansion of those businesses through acquisitions
or otherwise, limitations on activities, a systemic risk regime
that imposes heightened capital and liquidity and funding
requirements and other enhanced prudential standards,
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resolution regimes and resolution planning requirements,
requirements for maintaining minimum amounts of TLAC
and external long-term debt, restrictions on activities andinvestments imposed by the Volcker Rule, comprehensive
derivatives regulation, interest rate benchmark requirements,
commodities regulation, market structure regulation,
consumer protection regulation, tax regulations andinterpretations, antitrust laws, trade and transaction reporting
obligations, broadened fiduciary obligations and disclosure
requirements.

debt. See “Business—Supervision and Regulation” and“Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources—Regulatory Requirements.”
Further, because both our resolution plan contemplates an
SPOE strategy under the U.S. Bankruptcy Code and the FDIC
has proposed an SPOE strategy through which it may apply
its orderly liquidation authority powers, we believe that theapplication of an SPOE strategy is the reasonably likely
outcome if either our resolution plan were implemented or a
resolution proceeding were commenced under the orderly
liquidation authority. An SPOE strategy generally
contemplates the provision of adequate capital and liquidity
by the Parent Company to certain of its subsidiaries so thatsuch subsidiaries have the resources necessary to implement
the resolution strategy, and the Parent Company has enteredinto a secured amended and restated support agreement withsuch entities, pursuant to which it would provide such capitaland liquidity to such entities.

New laws, rules, regulations and guidelines, as well as
ongoing implementation of, our efforts to comply with, and/orchanges to laws, rules, regulations and guidelines, includingchanges in the breadth, application, interpretation or
enforcement of laws, rules, regulations and guidelines, could
materially impact the profitability of our businesses and thevalue of assets we hold, impact our income tax provision andeffective tax rate, expose us to additional theories of liability
and additional costs, require changes to business practices orforce us to discontinue businesses, adversely affect our ability
to pay dividends and repurchase our stock or require us toraise capital, including in ways that may adversely impact ourshareholders or creditors.

In addition, a wholly owned, direct subsidiary of the Parent
Company, Morgan Stanley Holdings LLC (“Funding IHC”),
serves as a resolution funding vehicle. The Parent Company
has transferred, and has agreed to transfer on an ongoingbasis, certain assets to the Funding IHC. In the event of aresolution scenario, the Parent Company would be obligatedto contribute all of its material assets that can be contributed
under the terms of the amended and restated support
agreement (other than shares in subsidiaries of the Parent
Company and certain other assets) to the Funding IHC. The
Funding IHC would be obligated to provide capital andliquidity, as applicable, to certain supported subsidiaries,
pursuant to the terms of the secured amended and restatedsupport agreement.

In addition, regulatory requirements that are imposed byforeign policymakers and regulators may be inconsistent or
conflict with regulations that we are subject to in the U.S. andmay adversely affect us.
The application of regulatory requirements and strategies in
the U.S. or other jurisdictions to facilitate the orderly
resolution of large financial institutions may pose a greaterrisk of loss for our security holders and subject us to otherrestrictions.
We are required to submit once every two years to the Federal
Reserve and the FDIC a resolution plan that describes our
strategy for a rapid and orderly resolution under the U.S.
Bankruptcy Code in the event of material financial distress or
failure. If the Federal Reserve and the FDIC were to jointly
determine that our resolution plan submission was notcredible or would not facilitate an orderly resolution, and if
we were unsuccessful in addressing any deficiencies
identified by the regulators, we or any of our subsidiaries may
be subject to more stringent capital, leverage, or liquidity
requirements or restrictions on our growth, activities oroperations, or after a two-year period, we may be required todivest assets or operations.

The obligations of the Parent Company and of the Funding
IHC, respectively, under the amended and restated support
agreement are in most cases secured on a senior basis by theassets of the Parent Company (other than shares insubsidiaries of the Parent Company and certain other assets),and the assets of the Funding IHC, as applicable. As a result,claims of certain supported subsidiaries, including theFunding IHC, against the assets of the Parent Company withrespect to such secured assets are effectively senior to
unsecured obligations of the Parent Company.
Although an SPOE strategy, whether applied pursuant to ourresolution plan or in a resolution proceeding under the orderly
liquidation authority, is intended to result in better outcomesfor creditors overall, there is no guarantee that the applicationof an SPOE strategy, including the provision of support to the
Parent Company’s supported subsidiaries pursuant to thesecured amended and restated support agreement, will not
result in greater losses for holders of our securities comparedwith a different resolution strategy for us.

In addition, provided that certain procedures are met, we canbe subject to a resolution proceeding under the orderly
liquidation authority under Title II of the Dodd-Frank Act
with the FDIC being appointed as receiver instead of being
resolved under the U.S. Bankruptcy Code. The FDIC’s power
under the orderly liquidation authority to disregard thepriority of creditor claims and treat similarly situated creditors
differently in certain circumstances, subject to certain
limitations, could adversely impact holders of our unsecured

Regulators have taken and proposed various actions tofacilitate an SPOE strategy under the U.S. Bankruptcy Code,19

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The financial services industry faces substantial litigationand is subject to extensive regulatory and law enforcement
investigations, and we may face damage to our reputationand legal liability.

the orderly liquidation authority and other resolution regimes.
For example, the Federal Reserve requires top-tier BHCs of
U.S. G-SIBs, including the Firm, to maintain adequate TLAC,
including equity and eligible long-term debt, in order toensure that such institutions have enough loss-absorbing
resources at the point of failure to be recapitalized through theconversion of debt to equity or otherwise by imposing losses
on eligible TLAC where the SPOE strategy is used. The
combined implication of the SPOE resolution strategy and the
TLAC requirement is that our losses will be imposed on theholders of eligible long-term debt and other forms of eligible
TLAC issued by the Parent Company before any losses are
imposed on the creditors of our supported subsidiaries
without requiring taxpayer or government financial support.

As a global financial services firm, we face the risk ofinvestigations and proceedings by governmental and selfregulatory organizations in all countries in which we conduct
our business. These investigations and proceedings, as well as
the amount of penalties and fines sought, continue to impact
the financial services industry. Certain U.S. and international
governmental entities have brought criminal actions against,
or have sought criminal convictions, pleas, deferred
prosecution agreements or non-prosecution agreements fromfinancial institutions. Significant regulatory or law
enforcement action against us could materially adversely
affect our business, reputation, financial condition or resultsof operations, and increase our exposure to civil litigation.

In addition, certain jurisdictions, including the U.K. and E.U.
jurisdictions, have implemented, or are in the process of
implementing, changes to resolution regimes to provide
resolution authorities with the ability to recapitalize a failingentity organized in such jurisdiction by writing down certain
unsecured liabilities or converting certain unsecured liabilities
into equity. Such “bail-in” powers are intended to enable therecapitalization of a failing institution by allocating losses to
its shareholders and unsecured creditors. This may increase
the overall level of capital and liquidity required by us on aconsolidated basis and may result in limitations on our ability
to efficiently distribute capital and liquidity among ouraffiliated entities, including in times of stress. Non-U.S.
regulators are also considering requirements that certain
subsidiaries of large financial institutions maintain minimum
amounts of TLAC that would pass losses up from thesubsidiaries to the Parent Company and, ultimately, tosecurity holders of the Parent Company in the event of failure.

Investigations and proceedings initiated by these authorities
may result in adverse judgments, settlements, fines, penalties,
disgorgement, restitution, forfeiture, injunctions or otherrelief, and have included and may in the future include
requirements that the Firm admit certain conduct, which may
result in increased exposure to civil litigation. In addition,these measures have caused and may in the future cause
collateral consequences. For example, such matters could
impact our ability to engage in, or impose limitations on,
certain of our businesses.
As part of the resolution of certain investigations andproceedings, the Firm has been and may in the future be
required to undertake certain measures and failure to do so
may result in adverse consequences, such as further
investigations or proceedings—both civil and criminal—andadditional penalties, fines, judgments or other relief.

We may be prevented from paying dividends or taking othercapital actions because of regulatory constraints or revised
regulatory capital requirements.

The Dodd-Frank Act also provides compensation towhistleblowers who present the SEC or CFTC withinformation related to securities or commodities law
violations that leads to a successful enforcement action. As aresult of this compensation, it is possible we could face anincreased number of investigations by the SEC or CFTC.

We are subject to comprehensive consolidated supervision,
regulation and examination by the Federal Reserve, including
with respect to regulatory capital requirements, stress testing
and capital planning. We submit, on at least an annual basis, acapital plan to the Federal Reserve describing proposed
dividend payments to shareholders, proposed repurchases ofour outstanding securities and other proposed capital actions
that we intend to take. Our ability to take capital actions
described in the capital plan is dependent on, among otherfactors, the results of supervisory stress tests conducted by theFederal Reserve and our compliance with regulatory capitalrequirements imposed by the Federal Reserve.

We have been named, from time to time, as a defendant invarious legal actions, including arbitrations, class actions andother litigation, as well as investigations or proceedings
brought by regulatory agencies, arising in connection with ouractivities as a global diversified financial services institution.
Certain of the actual or threatened legal or regulatory actions
include claims for substantial compensatory and/or punitive
damages or claims for indeterminate amounts of damages, or
may result in material penalties, fines or other results adverse
to us.

In addition, the Federal Reserve may change regulatory
capital requirements to impose higher requirements that
restrict our ability to take capital actions or may modify or
impose other regulatory standards or restrictions that increase
our operating expenses or constrain our ability to take capitalactions. For additional information, see “Management’s
Discussion and Analysis of Financial Condition and Resultsof Operations—Liquidity and Capital Resources.”
December 2023 Form 10-K

In some cases, the third-party entities that would otherwise be
the primary defendants in such cases are bankrupt, in financial
distress or may not honor applicable indemnification
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obligations. In other cases, including antitrust litigation, we
may be subject to claims for joint and several liability withother defendants for treble damages or other relief related toalleged conspiracies involving other institutions. Like anylarge corporation, we are also subject to risk from potential
employee misconduct, including noncompliance with
policies, laws, rules and regulations, and improper use or
disclosure of confidential information, or improper sales
practices or other conduct.

occur and could adversely affect our businesses andreputation.
Our regulators also have the ability to scrutinize our activities
for potential conflicts of interest, including through detailed
examinations of specific transactions. For example, our status
as a BHC supervised by the Federal Reserve subjects us todirect Federal Reserve scrutiny with respect to transactions
between our U.S. Bank Subsidiaries and their affiliates.
Further, the Volcker Rule subjects us to regulatory scrutiny
regarding certain transactions between us and our clients.

We may be responsible for representations and warranties
associated with commercial and residential real estate loans
and may incur losses in excess of our reserves.

Risk Management

We originate loans secured by commercial and residential
properties. Further, we securitize and trade in a wide range ofcommercial and residential real estate and real estate-related
assets and products. In connection with these activities, wehave provided, or otherwise agreed to be responsible for,certain representations and warranties. Under certain
circumstances, we may be required to repurchase such assets
or make other payments related to such assets if such
representations and warranties were breached, and may incur
losses as a result. We have also made representations andwarranties in connection with our role as an originator ofcertain loans that we securitized in CMBS and RMBS. For
additional information, see Note 14 to the financial
statements.

Our risk management strategies, models and processes may
not be fully effective in mitigating our risk exposures in all
market environments or against all types of risk, which
could result in unexpected losses.

A failure to address conflicts of interest appropriately could
adversely affect our businesses and reputation.

As our businesses change and grow, including throughacquisitions and the introduction and application of newtechnologies, such as artificial intelligence, and the markets inwhich we operate evolve, our risk management strategies,
models and processes may not always adapt with thosechanges. Some of our methods of managing risk are based
upon our use of observed historical market behavior andmanagement’s judgment. As a result, these methods may notpredict future risk exposures, which could be significantly
greater than the historical measures indicate.

We have devoted significant resources to develop our risk
management capabilities and expect to continue to do so in
the future. Nonetheless, our risk management strategies,
models and processes, including our use of various risk
models for assessing market, credit, liquidity and operational
exposures and hedging strategies, stress testing and otheranalysis, may not be fully effective in mitigating our risk
exposure in all market environments or against all types ofrisk, including risks that are unidentified or unanticipated.

As a global financial services firm that provides products andservices to a large and diversified group of clients, including
corporations, governments, financial institutions andindividuals, we face potential conflicts of interest in thenormal course of business. For example, potential conflicts
can occur when there is a divergence of interests between us
and a client, among clients, between an employee on the one
hand and us or a client on the other, or situations in which we
may be a creditor of a client. Moreover, we utilize multiple
brands and business channels, including those resulting from
our acquisitions, and continue to enhance the collaboration
across business segments, which may heighten the potential
conflicts of interest or the risk of improper sharing of
information.

In addition, many models we use are based on assumptions or
inputs regarding correlations among prices of various asset
classes or other market indicators and, therefore, cannot
anticipate sudden, unanticipated, or unidentified market or
economic movements, such as the impact of a pandemic or asudden geopolitical conflict, which could cause us to incur
losses.

We have policies, procedures and controls that are designed to
identify and address potential conflicts of interest, and we
utilize various measures, such as the use of disclosure, tomanage these potential conflicts. However, identifying andmitigating potential conflicts of interest can be complex andchallenging and can become the focus of media andregulatory scrutiny. Indeed, actions that merely appear to
create a conflict can put our reputation at risk even if thelikelihood of an actual conflict has been mitigated. It is
possible that potential conflicts could give rise to litigation or
enforcement actions, which may lead to our clients being lesswilling to enter into transactions in which a conflict may

Management of market, credit, liquidity, operational, model,
legal, regulatory and compliance risks requires, among otherthings, policies and procedures to record properly and verify alarge number of transactions and events, and these policies
and procedures may not be fully effective. Our trading risk
management strategies and techniques also seek to balance
our ability to profit from trading positions with our exposure
to potential losses.
While we employ a broad and diversified set of risk
monitoring and risk mitigation techniques, those techniques
and the judgments that accompany their application cannot
21

December 2023 Form 10-K

Table of Contents

anticipate every economic and financial outcome or thetiming of such outcomes. For example, to the extent that our
trading or investing activities involve less liquid trading
markets or are otherwise subject to restrictions on sales or
hedging, we may not be able to reduce our positions and,
therefore, reduce our risk associated with such positions. We
may, therefore, incur losses in the course of our trading orinvesting activities. For more information on how we monitor
and manage market and certain other risks and related
strategies, models and processes, see “Quantitative andQualitative Disclosures about Risk—Market Risk.”in reputational harm as a result of public sentiment, legislativeand regulatory scrutiny (including from U.S. federal and state
governments and foreign policymakers and regulators),
litigation and reduced investor and stakeholder confidence. If
we are unable to achieve our objectives relating to climatechange or our current response to climate change is perceived
to be ineffective or insufficient, or the way we respond isperceived negatively, our business and reputation may suffer.
The risks associated with, and the perspective of regulators,
governments, shareholders, employees and other stakeholders
regarding, climate change, as well as geopolitical events,
continue to evolve rapidly, making it difficult to assess theultimate impact on us of climate-related risks anduncertainties. As climate risk is interconnected with otherrisks, we have developed and continue to enhance processes
to embed climate risk considerations into our risk
management practices and governance structures. Despite ourrisk management practices, the unpredictability surrounding
the timing and severity of climate-related events and societal
or political changes in reaction to them make it difficult topredict, identify, monitor and mitigate climate risks.

Climate change manifesting as physical or transition risks
could result in increased costs and risks and adversely affectour operations, businesses and clients.
There continues to be increasing concern over the risks ofclimate change and related environmental sustainability
matters. The physical risks of climate change include harm topeople and property arising from acute, climate-related
events, such as floods, hurricanes, heatwaves, droughts, andwildfires and chronic, longer-term shifts in climate patterns,
such as higher global average temperatures, rising sea levels
and long-term droughts. Such events could disrupt ouroperations or those of our clients or third parties on which werely, including through direct damage to physical assets andindirect impacts from supply chain disruption and market
volatility. These events could impact the ability of certain of
our clients or customers to repay their obligations, reduce thevalue of collateral, increase costs, including the cost oravailability of insurance coverage, and result in other adverse
effects.

In addition, the methodologies and data used to manage andmonitor climate risk continue to evolve. Current approaches
utilize information and estimates that have been derived frominformation or factors released by third-party sources, which
may not reflect the latest or most accurate data. Climaterelated data, particularly greenhouse gas emissions for clientsand counterparties, remains limited in availability and varies
in quality. Certain third-party information may also changeover time as methodologies evolve and are refined. While webelieve this information is the best available at the time, we
may only be able to complete limited validation. Furthermore,modeling capabilities and methodologies to analyze climaterelated risks, although improving, remain nascent andemerging. These and other factors could cause results to differ
materially, which could impact our ability to manage climaterelated risks.

The transition risks of climate change include policy, legal,
technology and market changes. Examples of these transition
risks include changes in consumer and business sentiment,
related technologies, shareholder preferences and any
additional regulatory and legislative requirements, including
increased disclosure or carbon taxes. These risks could
increase our expenses and adversely impact our strategies,
including by limiting our ability to pursue certain businessactivities or offer certain products and services. Negative
impacts to certain of our clients, such as decreased
profitability and asset write-downs, could also lead toincreased credit, counterparty and liquidity risk to us.

Replacement or reform of certain interest rate benchmarks
could adversely affect our business, securities, financial
condition and results of operations.
Central banks around the world, including the Federal
Reserve, have sponsored initiatives in recent years to replace
LIBOR and replace or reform certain other interest ratebenchmarks (collectively, the “IBORs”). A transition awayfrom use of the IBORs to alternative rates and other potential
interest rate benchmark reforms has been underway for anumber of years.

In addition, our reputation and client relationships may be
adversely impacted as a result of our, or our clients’,
involvement in certain practices that may have, or areassociated with having, an adverse impact on climate change.
Legislative or regulatory change regarding climate-relatedrisks, including inconsistent requirements and uncertainties,
could result in loss of revenue, or increased credit, market,
liquidity, regulatory, compliance, reputational and other risks
and costs.

These reforms have caused and may in the future cause suchrates to perform differently than in the past, or to cease
entirely, or have other consequences that are contrary tomarket expectations.

Our ability to achieve our climate-related targets andcommitments and the way we go about this could also result
December 2023 Form 10-K

The ongoing market transition away from these interest ratebenchmarks to alternative reference rates is complex and22

Table of Contents

could have a range of adverse impacts on our business,securities, financial condition and results of operations,
including:and other companies offering financial and ancillary services
in the U.S. and globally, including, in certain instances,through the internet. We also compete with companies thatprovide online trading and banking services, investment
advisory services, robo-advice capabilities, access to digitalasset capabilities and services, and other financial products
and services. We compete on the basis of several factors,
including transaction execution, capital or access to capital,
products and services, innovation, technology, reputation, risk
appetite and price.

• Adversely impacting the pricing, liquidity, value of, returnon and trading for a broad array of financial products,
including any securities, loans and derivatives that areincluded in our financial assets and liabilities that are linked
to these interest rate benchmarks;• Inquiries, reviews or other actions from regulators in
respect of our (or the market’s) preparation, readiness,transition plans and actions regarding the replacement of alegacy interest rate benchmark with one or more alternativereference rates;• Disputes, litigation or other actions with clients,
counterparties and investors in various scenarios, such as
regarding the interpretation and enforceability of provisions
in IBOR-based products such as fallback language or otherrelated provisions, including in the case of fallbacks to thealternative reference rates, any economic, legal, operationalor other impact resulting from the fundamental differences
between the IBORs and the various alternative reference
rates or regarding the interpretation of applicablelegislation, regulations or rules; and• Causing us to incur additional costs in relation to any of theabove factors.

Over time, certain sectors of the financial services industry
have become more concentrated, as institutions involved in a
broad range of financial services have left businesses, beenacquired by or merged into other firms, or have declaredbankruptcy. Such changes could result in our remaining
competitors gaining greater capital and other resources, suchas the ability to offer a broader range of products and services
and geographic diversity, or new competitors may emerge.
We have experienced and may continue to experience pricing
pressures as a result of these factors and as some of ourcompetitors seek to obtain market share by reducing prices,eliminating commissions or other fees, or providing morefavorable terms of business. In addition, certain of ourcompetitors may be subject to different and, in some cases,
less stringent, legal and regulatory regimes than we are,thereby putting us at a competitive disadvantage. Some newcompetitors in the financial technology sector have sought totarget existing segments of our businesses that could besusceptible to disruption by innovative or less regulated
business models. For more information regarding thecompetitive environment in which we operate, see “Business—Competition”
and“Business—Supervision
andRegulation.”

Other factors include the pace of the transition to thealternative reference rates, timing mismatches between cash
and derivative markets, the specific terms and parameters forand market acceptance of any alternative reference rate,
market conventions for the use of any alternative reference
rate in connection with a particular product (including thetiming and market adoption of any conventions proposed orrecommended by any industry or other group), prices of andthe liquidity of trading markets for products based onalternative reference rates, and our ability to further transitionand develop appropriate systems and analytics for one ormore alternative reference rates.

Automated trading markets and the introduction andapplication of new technologies may adversely affect ourbusiness and may increase competition.
We continue to experience price competition in some of ourbusinesses. In particular, the ability to execute securities,
derivatives and other financial instrument trades electronicallyon exchanges, swap execution facilities and other automatedtrading platforms, and the introduction and application of newtechnologies, including generative artificial intelligence, will
likely continue the pressure on revenues. The trend toward
direct access to automated, electronic markets will likely
continue as additional markets move to more automatedtrading platforms. We have experienced and will likely
continue to experience competitive pressures in these andother areas in the future.

See also “Management's Discussion and Analysis of Financial
Condition and Results of Operations—Regulatory
Requirements—Regulatory Developments and Other
Matters.”
Competitive Environment
We face strong competition from financial services firms
and others, which could lead to pricing pressures that could
materially adversely affect our revenues and profitability.
The financial services industry and all aspects of ourbusinesses are intensely competitive, and we expect them toremain so. We compete with commercial banks, investmentbanking firms, brokerage firms, insurance companies,
exchanges, electronic trading and clearing platforms, financial
data repositories, investment advisers and sponsors of mutual
funds, hedge funds, real assets funds and private credit andequity funds, energy companies, financial technology firms

Our ability to retain and attract qualified employees iscritical to the success of our business and the failure to doso may materially adversely affect our performance.
Our people are our most important asset. We compete withvarious other companies in attracting and retaining qualified
23

December 2023 Form 10-K

Table of Contents

and skilled personnel. If we are unable to continue to attract,
integrate and retain highly qualified employees or
successfully transition key roles, or do so at levels or in forms
necessary to maintain our competitive position, ourperformance, including our competitive position and results ofoperations, could be materially adversely affected. Our ability
to attract and retain qualified and skilled personnel depends
on numerous factors, some of which are outside of ourcontrol.

Various emerging market countries have experienced severe
political, economic or financial disruptions, including
significant devaluations of their currencies, defaults or
potential defaults on sovereign debt, capital and currency
exchange controls, high rates of inflation and low or negative
growth rates in their economies. Crime and corruption, as
well as issues of security and personal safety, also exist incertain of these countries. These conditions could adversely
impact our businesses and increase volatility in financial
markets generally.

Compensation costs required to attract and retain employees
may increase or the competitive market for talent may further
intensify due to factors such as low unemployment, a strong
job market and changes in employees’ expectations, concernsand preferences. The financial industry has experienced andmay continue to experience more stringent regulation of
employee compensation than other industries, which may or
may not impact competitors. These more stringent regulations
have shaped our compensation practices, which could have an
adverse effect on our ability to hire or retain the mostqualified employees.

A disease pandemic, such as COVID-19 and its variants, orother widespread health emergencies, natural disasters,
climate-related incidents, terrorist activities or military
actions, or social or political tensions, could create economic
and financial disruptions in emerging markets or in otherareas of the global economy that could adversely affect ourbusinesses, or could lead to operational difficulties, including
travel limitations and supply chain complications, that could
impair our ability to manage or conduct our businesses aroundthe world.

International Risk

As a U.S. company, we are required to comply with theeconomic sanctions and embargo programs administered by
OFAC and similar multinational bodies and governmental
agencies worldwide, which may be inconsistent with local
law. We and certain of our subsidiaries are also subject toapplicable AML and/or anti-corruption laws in the U.S., aswell as in the jurisdictions in which we operate, including the
Bank Secrecy Act, the U.S. Foreign Corrupt Practices Act andthe U.K. Bribery Act. A violation of a sanction, embargo
program, AML or anti-corruption law could subject us, andindividual employees, to a regulatory enforcement action, as
well as significant civil and criminal penalties.

We are subject to numerous political, economic, legal, tax,
operational, franchise and other risks as a result of ourinternational operations that could adversely impact ourbusinesses in many ways.
We are subject to numerous political, economic, legal, tax,
operational, franchise and other risks that are inherent in
operating in many countries, including risks of possible
nationalization, expropriation, price controls, capital controls,
exchange controls, increased taxes and levies, minimum
global tax regimes, cybersecurity, data transfer andoutsourcing restrictions, regulatory scrutiny regarding the useof new technologies, prohibitions on certain types of foreign
and capital market activities, limitations on cross-border
listings and other restrictive governmental actions, as well as
the outbreak of hostilities or political and governmental
instability, including tensions between China and the U.S., theexpansion or escalation of hostilities between Russia andUkraine or in the Middle East or the initiation or escalation of
hostilities or terrorist activity around the world and thepotential associated impacts on global and local economies
and our operations. In many countries, the laws andregulations applicable to the securities and financial services
industries and multinational corporations are uncertain,
evolving and subject to sudden change or may be inconsistent
with U.S. law. It may also be difficult for us to determine theexact requirements of local laws in every market or adapt tochanges in law, which could adversely impact our businesses.
Our inability to remain in compliance with local laws in aparticular market could have a significant and negative effectnot only on our business in that market but also on our
reputation generally. We are also subject to the risk thattransactions we structure might not be legally enforceable inall cases.
December 2023 Form 10-K

Acquisition, Divestiture and Joint Venture Risk
We may be unable to fully capture the expected value fromacquisitions, divestitures, joint ventures, partnerships,
minority stakes or strategic alliances, and certain
acquisitions may subject our business to new or increasedrisk.
In connection with past or future acquisitions, divestitures,
joint ventures, partnerships, minority stakes or strategic
alliances (including with Mitsubishi UFJ Financial Group,
Inc. (“MUFG”)), we face numerous risks and uncertainties incombining, transferring, separating or integrating the relevantbusinesses and systems that may present operational and otherrisks, including the need to combine or separate accounting,data processing and other systems, management controls andlegal entities, and to integrate relationships with clients,
trading counterparties and business partners. Certain of thesestrategic initiatives, and integration thereof, may cause us toincur incremental expenses and may also require incremental
financial, management and other resources.
In the case of joint ventures, partnerships and minority stakes,
we are subject to additional risks and uncertainties because
24Table of Contents

we may be dependent upon, and subject to liability, losses orreputational damage relating to systems, controls andpersonnel that are not under our control, and conflicts or
disagreements between us and any of our joint venture
partners or partners may negatively impact the benefits to beachieved by the relevant joint venture or partnership,
respectively.
There is no assurance that any of our acquisitions, divestitures
or investments will be successfully integrated or
disaggregated or yield all of the positive benefits andsynergies anticipated. If we are not able to integrate ordisaggregate successfully our past and future acquisitions or
dispositions, including aligning the processes, policies andprocedures of the acquired entities with our standards, there isa risk that our results of operations, financial condition andcash flows may be materially and adversely affected.
Certain of our business initiatives, including expansions ofexisting businesses, may change our client or account profileor bring us into contact, directly or indirectly, with individuals
and entities that are not within our traditional client andcounterparty base and may expose us to new asset classes,
services, competitors and new markets. These businessactivities expose us to new and enhanced risks, greater
regulatory scrutiny of these activities, increased credit-related,sovereign, compliance and operational risks, as well as
franchise and reputational concerns regarding the manner inwhich these assets are being operated or held, or services arebeing delivered.
For more information regarding the regulatory environment inwhich we operate, see also “Business—Supervision andRegulation.”25

December 2023 Form 10-K

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Cybersecurity

strategy. This information is also provided to an internal
forensics team, which develops and implements technologies
designed to help detect these cybersecurity threats across ourenvironment. Where a potential threat is identified in ourenvironment, our incident response team evaluates thepotential impact to the Firm and coordinates remediation
where required. These groups, as well as the Operational Risk
Department, review external cybersecurity incidents that may
be relevant to the Firm, and the outcomes of these incidents
further inform the design of our Cybersecurity Program. In
addition, we maintain a robust global training program on
cybersecurity risks and requirements and conduct regularphishing email simulations for our employees andconsultants.

Risk management and strategy
We, our businesses, and the broader financial services
industry face an increasingly complex and evolving threat
environment. We have made and continue to make substantial
investments in cybersecurity and fraud prevention technology,
and employ experienced talent to lead our Cybersecurity andInformation Security organizations and program under theoversight of our Board of Directors (“Board”) and the
Operations and Technology Committee of the Board(“BOTC”). See “Risk Factors—Operational Risk” for
information on risks to the Firm from cybersecurity threats.
As part of our enterprise risk management (“ERM”)
framework, we have implemented and maintain a program toassess, identify and manage risks arising from thecybersecurity threats confronting the Firm (“Cybersecurity
Program”). Our Cybersecurity Program helps protect ourclients, customers, employees, property, products, services
and reputation by seeking to preserve the confidentiality,
integrity and availability of information, enable the securedelivery of financial services, and protect the business and thesafe operation of our technology systems. We continually
adjust our Cybersecurity Program to address the evolving
cybersecurity threat landscape and comply with extensive
legal and regulatory expectations.

Our processes are designed to help oversee, identify andmitigate cybersecurity risks associated with our use of thirdparty vendors. We maintain a third-party risk management
program that includes evaluation of, and response to,cybersecurity risks at our third-party vendors. Prior to
engaging third-party vendors to provide services to the Firm,
we conduct assessments of the third-party vendors’
cybersecurity programs to identify the impact of their serviceson the cybersecurity risks to the Firm. Once on-boarded,
third-party vendors’ cybersecurity programs are subject torisk-based oversight, which may include security
questionnaires, submission of independent security audit
reports or a Firm audit of the third-party vendor’s security
program, and, with limited exceptions, third-party vendors are
required to meet our cybersecurity standards. Where a thirdparty vendor cannot meet those standards, its services, and theresidual risk to the Firm, are subject to review, challenge andescalation through our risk management processes and ERM
committees, which may ultimately result in requesting
increased security measures or ceasing engagement with suchthird-party vendor.

Processes for assessing, identifying and managing material
risks from cybersecurity threats
Our Cybersecurity Program takes into account industry bestpractices and addresses risks from cybersecurity threats to our
network, infrastructure, computing environment and the third
parties that we rely on. We periodically assess the design ofour cybersecurity controls against the Cyber Risk Institute
Cyber Profile, which is based on the National Institute ofStandards and Technology (“NIST”) Cybersecurity
Frameworkfor
Improving
CriticalInfrastructure
Cybersecurity, as well as global cybersecurity regulations,and develop improvements to those controls in response tothat assessment. Our Cybersecurity Program also includes
cybersecurity and information security policies, procedures
and technologies that are designed to address regulatory
requirements and protect our clients’, employees’ and own
data against unauthorized disclosure, modification andmisuse. These policies, procedures and technologies cover abroad range of areas, including: identification of internal andexternal threats, access control, data security, protective
controls, detection of malicious or unauthorized activity,
incident response, and recovery planning.

Our Cybersecurity Program is regularly assessed by theInternal Audit Department (“IAD”) through various assurance
activities, with the results reported to the Audit Committee of
the Board (“BAC”) and the BOTC. Annually, certain
elements of the Cybersecurity Program are subject to an audit
by an independent consultant, as well as an assessment by aseparate, independent third party, the results of which,including opportunities identified for improvement andrelated remediation plans, are reviewed with the BOTC. Our
Cybersecurity Program is also examined regularly by the
Firm’s prudential and conduct regulators within the scope of
their jurisdiction.
GovernanceManagement’s role in assessing and managing material
risks from cybersecurity threats

Our threat intelligence function within the Cybersecurity
Program actively engages in private and public information
sharing communities and leverages both commercial andproprietary products to collect a wide variety of industry andgovernmental information regarding the latest cybersecurity
threats, which informs our cybersecurity risk assessments andDecember 2023 Form 10-K

Our Cybersecurity Program is operated and maintained bymanagement, including the Chief Information Officer ofCyber, Data, Risk and Resilience (“CIO”) and the Chief
Information Security Officer (“CISO”). These senior officers
26

Table of Contents

are responsible for assessing and managing the Firm’s
cybersecurity risks. Our Cybersecurity Program strategy,
which is set by the CISO and overseen by the Head ofOperational Risk, is informed by various risk and control
assessments, control testing, external assessments, threat
intelligence, and public and private information sharing. Our
Cybersecurity Program also includes processes for escalating
and considering the materiality of incidents that impact theFirm, including escalation to senior management and theBoard, which are periodically tested through tabletop
exercises.

Department (“Operations”); and (iii) the Non-Financial Risk
Management Department (“NFR”). Such reporting includes
updates on our Cybersecurity Program, risks fromcybersecurity threats, our programs to address and mitigate
the risks associated with the evolving cybersecurity threat
environment, and the Operational Risk Department’s
assessment of cybersecurity risks. Senior officers inTechnology and NFR also provide an annual report to the
BOTC on the status of our Cybersecurity Program, including
a discussion of risks arising from cybersecurity threats, incompliance with the Gramm-Leach-Bliley Act. At least
annually, these senior management representatives discuss thestatus of the Cybersecurity Program and key cybersecurity
risks with the Board. The BOTC also receives an annual
independent assessment of key aspects of our Cybersecurity
Program from an external party and holds joint meetings with
the BAC and Risk Committee of the Board (“BRC”), as
necessary and appropriate. In addition, members of the BOTC
periodically participate in incident response tabletop exercises
and the BOTC periodically receives reports from incident
response tabletop exercises performed by and for
management.

The members of management that lead our Cybersecurity
Program and strategy have extensive experience intechnology, cybersecurity and information security. The CIO
has over 30 years of experience in various engineering, IT,
operations and information security roles. The CISO has over
25 years of experience leading cybersecurity teams atfinancial institutions, including in the areas of IT strategy, risk
management and information security. The Head ofOperational Risk has over 20 years of experience intechnology, security and compliance roles, including
experience in government security agencies.

At least annually, the BOTC or the Board reviews andapproves the Global Cybersecurity Program Policy, theGlobal Information Security Program Policy, the Global
Third-Party Risk Management Policy, and the Global
Technology Policy. The chair of the BOTC regularly reports
to the Board on risks from cybersecurity threats and othermatters reviewed by the BOTC. In accordance with theBoard’s Corporate Governance Policies, all Board members
are invited to attend BOTC meetings and have access tomeeting materials.

Risk levels and mitigating measures are presented to andmonitored by dedicated management-level cybersecurity risk
committees. These committees include representatives from
Firm management as well as business and control
stakeholders who review, challenge and, where appropriate,
consider exceptions to our policies and procedures.
Significant cybersecurity risks are escalated from thesecommittees to our Non-Financial Risk Committee. The CIO
and the Head of Operational Risk report on the status of our
Cybersecurity Program, including significant cybersecurity
risks; review metrics related to the program; and discuss thestatus of regulatory and remedial actions and incidents to theFirm Risk Committee, the BOTC and the Board, as
appropriate. For more information regarding the Firm’s ERM
framework, see “Quantitative and Qualitative Disclosuresabout Risk—Risk Management.”

Senior management, including the senior officers mentioned
above, discuss cybersecurity developments with the chair of
the BOTC between Board and committee meetings, asnecessary. The BOTC meets regularly in executive session
with management, including the Head of NFR, and senior
officers from Technology and Operations.

Board of Directors’ oversight of risks from cybersecurity
threats
As discussed above, material cybersecurity risks are
addressed by management-level ERM committees withescalation to the BOTC and Board, as appropriate. The BOTC
has primary responsibility for assisting the Board in its
oversight of significant operational risk exposures of the Firm
and its business units, including IT, information security,
fraud, third-party oversight, business disruption andresilience, and cybersecurity risks (including review ofcybersecurity risks against established risk management
methodologies) and the steps management has taken tomonitor and control such exposures.
In accordance with its charter, the BOTC receives quarterly
reports from (i) the Technology Department (“Technology”),
including the CIO or the CISO; (ii) the Operations
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December 2023 Form 10-K

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
Morgan Stanley is a global financial services firm thatmaintains significant market positions in each of its businesssegments—Institutional Securities, Wealth Management andInvestment Management. Morgan Stanley, through its
subsidiaries and affiliates, provides a wide variety of products
and services to a large and diversified group of clients andcustomers, including corporations, governments, financial
institutions and individuals. Unless the context otherwise
requires, the terms “Morgan Stanley,” “Firm,” “us,” “we” or“our” mean Morgan Stanley (the “Parent Company”) together
with its consolidated subsidiaries. See the “Glossary ofCommon Terms and Acronyms” for the definition of certain
terms and acronyms used throughout this Form 10-K. For ananalysis of 2022 results compared with 2021 results, see Part
II, Item 7, “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” in the annual
report on Form 10-K for the year-ended December 31, 2022
filed with the SEC.

Investment Management provides a broad range ofinvestment strategies and products that span geographies,
asset classes, and public and private markets to a diverse
group of clients across institutional and intermediarychannels. Strategies and products, which are offeredthrough a variety of investment vehicles, include equity,
fixed income, alternatives and solutions, and liquidity andoverlay services. Institutional clients include defined
benefit/defined
contributionplans,
foundations,endowments, government entities, sovereign wealth funds,
insurance companies, third-party fund sponsors andcorporations. Individual clients are generally served
through intermediaries, including affiliated and nonaffiliated distributors.
Management’s Discussion and Analysis includes certain
metrics that we believe to be useful to us, investors, analysts
and other stakeholders by providing further transparency
about, or an additional means of assessing, our financial
condition and operating results. Such metrics, when used, aredefined and may be different from or inconsistent withmetrics used by other companies.

A description of the clients and principal products andservices of each of our business segments is as follows:
Institutional Securities provides a variety of products andservices to corporations, governments, financial institutions
and ultra-high net worth clients. Investment Banking
services consist of capital raising and financial advisory
services, including the underwriting of debt, equity
securities and other products, as well as advice on mergers
and acquisitions, restructurings and project finance. Our
Equity and Fixed Income businesses include sales,financing, prime brokerage, market-making, Asia wealthmanagement services and certain business-related
investments. Lending activities include originating
corporate loans and commercial real estate loans, providing
secured lending facilities, and extending securities-based
and other financing to customers. Other activities include
research.

The results of operations in the past have been, and in the
future may continue to be, materially affected by:competition; risk factors; legislative, legal and regulatory
developments; and other factors. These factors also may havean adverse impact on our ability to achieve our strategic
objectives. Additionally, the discussion of our results ofoperations herein may contain forward-looking statements.
These statements, which reflect management’s beliefs andexpectations, 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 our future results,see“Forward-Looking
Statements,”“Business—Competition,” “Business—Supervision and Regulation,”“Risk Factors” and “Liquidity and Capital Resources—
Regulatory Requirements” herein.

Wealth Management provides a comprehensive array offinancial services and solutions to individual investors andsmall to medium-sized businesses and institutions covering:financial advisor-led brokerage, custody, administrative andinvestment advisory services; self-directed brokerage
services; financial and wealth planning services; workplace
services, including stock plan administration; securitiesbased lending, residential real estate loans and other lending
products; banking; and retirement plan services.

December 2023 Form 10-K

28

Table of Contents

Management’s Discussion and Analysis
Executive Summary

Net Revenues($ in millions)

Overview of Financial Results
Consolidated Results—Full Year Ended December 31, 2023
• The Firm reported net revenues of $54.1 billion and net
income of $9.1 billion against a mixed market backdrop
and a number of headwinds.

$59,755$53,668$54,143

2022

2023

• The Firm delivered ROE of 9.4% and ROTCE of 12.8%(see “Selected Non-GAAP Financial Information” herein).
• The Firm expense efficiency ratio was 77%. The ratio was
negatively impacted by severance costs of $353 million, an
FDIC special assessment of $286 million, higher legal
expenses relating to a specific matter of $249 million andintegration-related expenses of $293 million.

2021

Net Income Applicable to Morgan Stanley($ in millions)• At December 31, 2023, the Firm’s Standardized Common
Equity Tier 1 capital ratio was 15.2%.
• Institutional Securities reported net revenues of $23.1
billion reflecting lower completed activity in Investment
Banking and lower results in Equity and Fixed Income on
reduced client activity and a less favorable market
environment compared to a year ago.

$15,034$11,029• Wealth Management delivered net revenues of $26.3
billion, reflecting mark-to-market gains on investments
associated with certain employee deferred cash-based
compensation plans (“DCP investments”) compared withlosses in the prior year and higher Net interest revenues.
The pre-tax margin was 24.9%. The business added net new
assets of $282.3 billion, representing a 6.7% annualized
growth rate from beginning period assets.

2021

2022

$9,0872023

Earnings per Diluted Common Share• Investment Management reported net revenues of $5.4
billion and AUM increased to $1.5 trillion.

$8.03
$6.15

2021

2022

$5.18

2023

2023 Compared with 2022
• We reported net revenues of $54.1 billion in 2023
compared with $53.7 billion in 2022. For 2023, net income
applicable to Morgan Stanley was $9.1 billion, or $5.18 perdiluted common share, compared with $11.0 billion, or$6.15 per diluted common share in 2022.

29

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
Business Segment Results

Non-Interest Expenses($ in millions)$40,083$39,299

Net Revenues by Segment1$41,798($ in millions)$59,755$15,455$16,246$17,240$6,220$53,668$54,143$5,375$5,370$24,417$26,268$24,393$23,060$24,243$24,628$23,053$24,558$29,833

2021

2022

Compensation and benefits expenses

2023
Non-compensation expenses

2021
Institutional Securities• Compensation and benefits expenses of $24,558 million in
2023 increased 7% from the prior year, primarily due tohigher expenses related to certain employee deferred cashbased compensation plans linked to investment
performance (“DCP”) and higher salary expenses, partially
offset by lower expenses related to outstanding deferred
equity compensation.

2023
Investment Management

Net Income Applicable to Morgan Stanley by Segment1($ in millions)$15,034$1,347$4,7342023 Compensation and benefits expenses included $353
million of severance costs, primarily associated with theemployee action recorded in the second quarter of 2023.

$11,029$660$5,139$9,087$639$5,022• Non-compensation expenses of $17,240 million in 2023
increased 6% from the prior year, primarily driven by an
FDIC special assessment of $286 million, increased spend
on technology, higher costs related to exits of real estateand higher legal expenses, including $249 million related toa specific matter.

$8,957$5,242

2021
Institutional Securities

Provision for Credit Losses

2022
Wealth Management$3,4532023
Investment Management

1. The amounts in the charts represent the contribution of each business segment to
the total of the applicable financial category and may not sum to the total presented
on top of the bars due to intersegment eliminations. See Note 22 to the financial
statements for details of intersegment eliminations.

The Provision for credit losses on loans and lending
commitments of $532 million in 2023 was primarily related todeteriorating conditions in the commercial real estate sector,
including provisions for certain specific loans, mainly in theoffice portfolio, and modest growth in certain other loan
portfolios. The Provision for credit losses on loans andlending commitments of $280 million in 2022 was due toportfolio growth and deterioration in the macroeconomic
outlook.

• Institutional Securities net revenues of $23,060 million in
2023 decreased 5% from the prior year, primarily reflecting
lower results across businesses.
• Wealth Management net revenues of $26,268 million in
2023 increased 8% from the prior year, primarily reflecting
gains on DCP investments compared with losses in theprior year and higher Net interest revenues.

For further information on the Provision for credit losses, see“Credit Risk” herein.

December 2023 Form 10-K

2022
Wealth Management• Investment Management net revenues of $5,370 million in
2023 were relatively unchanged from the prior year,
reflecting a decrease in Asset management and related fees
revenues offset by an increase in Performance based
income and other revenues.

30

Table of Contents

Management’s Discussion and Analysis
Net Revenues by Region1($ in millions)$ in millions, except per share data, worldwide
employees and client assets$59,755$7,451$53,668$54,143$6,740$6,434$6,811$6,058$7,699$44,605

Average liquidity resources for three months$
ended5Loans6$

Americas

2023

EMEA

312,250

226,828 $222,182

1,193,693 $

1,180,231

Deposits$

351,804 $356,646

Borrowings$

263,732 $

238,058

Common shareholders’ equity$

90,288 $91,391

Tangible common shareholders’ equity3$

66,527 $67,123

1,627

1,675

Book value per common share7$

55.50 $

54.55

Tangible book value per common share3,7$40.89 $

40.06

Client assets8 (in billions)

2022

314,504 $$Worldwide employees (in thousands)

2021

At
December 31,
2022

Total assets

Common shares outstanding$41,651$40,117At
December 31,
2023

$

80

82

6,588 $

5,492

Capital ratios9

Asia

Common Equity Tier 1 capital—Standardized

15.2 %

15.3 %

1. For a discussion of how the geographic breakdown of net revenues is determined,
see Note 22 to the financial statements.

Tier 1 capital—Standardized

17.1 %

17.2 %

Common Equity Tier 1 capital—Advanced

15.5 %

15.6 %• Americas net revenues in 2023 increased 4%, primarily
driven by results within the Wealth Management businesssegment and Other net revenues within the Institutional
Securities business segment, partially offset by lower
results across businesses within the Institutional Securities
business segment.

Tier 1 capital—Advanced

17.4 %

17.6 %

Tier 1 leverage

6.7 %

6.7 %

SLR

5.5 %

5.5 %

1. The expense efficiency ratio represents total non-interest expenses as apercentage of net revenues.
2. ROE and ROTCE represent earnings applicable to Morgan Stanley commonshareholders as a percentage of average common equity and average tangible
common equity, respectively.
3. Represents a non-GAAP financial measure. See “Selected Non-GAAP Financial
Information” herein.
4. Pre-tax margin represents income before provision for income taxes as apercentage of net revenues.
5. For a discussion of Liquidity resources, see “Liquidity and Capital Resources—
Balance Sheet—Liquidity Risk Management Framework—Liquidity Resources”
herein.
6. Includes loans held for investment, net of ACL, loans held for sale and also includes
loans at fair value, which are included in Trading assets in the balance sheet.
7. Book value per common share and tangible book value per common share equalcommon shareholders’ equity and tangible common shareholders’ equity,
respectively, divided by common shares outstanding.
8. Client assets represents Wealth Management client assets and Investment
Management AUM. Certain Wealth Management client assets are invested in
Investment Management products and are also included in Investment
Management’s AUM.
9. For a discussion of our capital ratios, see “Liquidity and Capital Resources—
Regulatory Requirements” herein.

• EMEA net revenues in 2023 decreased 11%, primarily
driven by lower results across businesses within theInstitutional Securities business segment.
• Asia net revenues in 2023 decreased 5%, primarily driven
by lower results across businesses within the Institutional
Securities business segment.
Selected Financial Information and Other Statistical Data2023

$ in millions, except per share data

2022

2021

Consolidated results
Net revenues$ 54,143 $ 53,668 $ 59,755

Earnings applicable to Morgan Stanley
common shareholders$

8,530 $ 10,540 $ 14,566

Earnings per diluted common share$

5.18 $

6.15 $

Economic and Market Conditions

8.03

The market environment in 2023 remained mixed,characterized by inflationary pressures and uncertainty
regarding the future path of interest rates, which remained
persistently high. Towards the end of the year, the market
environment improved from prior quarters with the
expectation of lower interest rates going into 2024. However,there is continued uncertainty regarding the timing and paceof these rate reductions along with concerns regarding
heightened geopolitical risks that could impact the capital
markets in 2024. The market environment impacted ourbusinesses in 2023, as discussed further in “Business
Segments” herein, and, to the extent that it continues toremain uncertain, could adversely impact client confidence
and related activity.

Consolidated financial measures
Expense efficiency ratio1

77 %

73 %

67 %

ROE2

9.4 %

11.2 %

15.0 %ROTCE2,3

19.8 %

12.8 %

15.3 %

Pre-tax margin4

22 %

26 %

33 %

Effective tax rate

21.9 %

20.7 %

23.1 %

Institutional Securities

19 %

28 %

40 %

Wealth Management

25 %

27 %

25 %

Investment Management

16 %

15 %

27 %

Pre-tax margin by segment4

For more information on economic and market conditions,and the potential effects of geopolitical events and acts of war
or aggression on our future results, refer to “Risk Factors” and“Forward-Looking Statements.”
31

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
Selected Non-GAAP Financial Information

may not be material to our Income before provision forincome taxes in any individual period, it may impact theWealth Management business segment reported ratios andoperating metrics in certain periods due to potentiallysignificant impacts to net revenues and compensation
expenses. For additional information on DCP, refer to “Other
Matters” herein.

We prepare our financial statements using U.S. GAAP. From
time to time, we may disclose certain “non-GAAP financial
measures” in this document or in the course of our earnings
releases, earnings and other conference calls, financial
presentations, definitive proxy statements and other public
disclosures. A “non-GAAP financial measure” excludes, or
includes, amounts from the most directly comparable measurecalculated and presented in accordance with U.S. GAAP. We
consider the non-GAAP financial measures we disclose to be
useful to us, investors, analysts and other stakeholders byproviding further transparency about, or an alternate means ofassessing or comparing our financial condition, operating
results and capital adequacy.

The principal non-GAAP financial measures presented in thisdocument are set forth in the following tables.
Reconciliations from U.S. GAAP to Non-GAAP Consolidated
Financial Measures$ in millions

Net revenues
Adjustment for mark-to-market losses(gains) on DCP1

These measures are not in accordance with, or a substitute for,
U.S. GAAP and may be different from or inconsistent with
non-GAAP financial measures used by other companies.
Whenever we refer to a non-GAAP financial measure, we will
also generally define it or present the most directlycomparable financial measure calculated and presented inaccordance with U.S. GAAP, along with a reconciliation of
the differences between the U.S. GAAP financial measure andthe non-GAAP financial measure.

2021

(434)

1,198

(389)

$ 53,709 $ 54,866 $ 59,366

Compensation expense$ 24,558 $ 23,053 $ 24,628
(668)

716

(526)

Adjusted Compensation expense—nonGAAP$ 23,890 $ 23,769 $ 24,102

Wealth Management Net revenues$ 26,268 $ 24,417 $ 24,243

Adjustment for mark-to-market losses(gains) on DCP1

(282)

858

(210)

Adjusted Wealth Management Net revenues—non-GAAP$ 25,986 $ 25,275 $ 24,033

Wealth Management Compensation
expense$ 13,972 $ 12,534 $ 13,090

Adjustment for mark-to-market losses(gains) on DCP1
Adjusted Wealth Management
Compensation expense—non-GAAP

(412)

530

(293)

$ 13,560 $ 13,064 $ 12,797
At December 31,$ in millions

2023

2022

2021

Tangible equity
Common shareholders’ equity
Less: Goodwill and net intangible assets
Tangible common shareholders’ equity—
non-GAAP$ 90,288 $ 91,391 $ 97,691(23,761)(24,268)(25,192)$ 66,527 $ 67,123 $ 72,499
Average Monthly Balance$ in millions

Compensation expense for DCP awards is calculated based on
the notional value of the award granted, adjusted for changes
in the fair value of the referenced investments that employees
select. Compensation expense is recognized over the vesting
period relevant to each separately vesting portion of deferredawards.

2023

2022

2021

Tangible equity
Common shareholders’ equity
Less: Goodwill and net intangible assets
Tangible common shareholders’ equity—
non-GAAP

We invest directly, as principal, in financial instruments andother investments to economically hedge certain of ourobligations under these DCP awards. Changes in the fairvalue of such investments, net of financing costs, are recordedin net revenues, and included in Transactional revenues in the
Wealth Management business segment. Although changes incompensation expense resulting from changes in the fair valueof the referenced investments will generally be offset bychanges in the fair value of investments recognized in net
revenues, there is typically a timing difference between theimmediate recognition of gains and losses on our investments
and the deferred recognition of the related compensation
expense over the vesting period. While this timing difference
December 2023 Form 10-K

2022

Adjusted Net revenues—non-GAAP
Adjustment for mark-to-market losses(gains) on DCP1

We present certain non-GAAP financial measures that
exclude the impact of mark-to-market gains and losses on
DCP investments from net revenues and compensation
expenses. The impact of DCP is primarily reflected in our
Wealth Management business segment results. These
measures allow for better comparability of period-to-period
underlying operating performance and revenue trends,
especially in our Wealth Management business segment. By
excluding the impact of these items, we are better able todescribe the business drivers and resulting impact to net
revenues and corresponding change to the associatedcompensation expenses.

2023$ 54,143 $ 53,668 $ 59,755

32$ 90,819 $ 93,873 $ 97,094(24,013)(24,789)(23,392)$ 66,806 $ 69,084 $ 73,702

Table of Contents

Management’s Discussion and Analysis
Within the Institutional Securities business segment, theserevenues are primarily composed of fees earned fromunderwriting equity and fixed income securities, syndicatingloans and advisory services in relation to mergers andacquisitions, divestitures and corporate restructurings.

Non-GAAP Financial Measures by Business Segment$ in billions

Average common equity2
Institutional Securities

2023

2022

2021

$ 45.6$ 48.8$ 43.5

Wealth Management

28.8

31.0

28.6

Investment Management

10.4

10.6

8.8

ROE3
Institutional Securities

7%

10 %

20 %

Wealth Management

17 %

16 %

16 %

Investment Management

6%

6%

15 %

Average tangible common equity2
Institutional Securities$ 45.2$ 48.3$ 42.9Wealth Management

14.8

16.3

13.4

Investment Management

0.7

0.8

0.9
20 %

ROTCE3
Institutional Securities

7%

10 %

Wealth Management

33 %

31 %

34 %

Investment Management

88 %

86 %

144 %

Within the Wealth Management business segment, theserevenues are derived from the distribution of newly issued
securities.
Trading
Trading revenues include the realized gains and losses fromtransactions in financial instruments, unrealized gains andlosses from ongoing changes in the fair value of our positions,and gains and losses from financial instruments used toeconomically hedge compensation expense related to DCP.

1. Net revenues and compensation expense are adjusted for DCP for both Firm and
Wealth Management business segment. See “Other Matters” herein for more
information.

Within the Institutional Securities business segment, Trading
revenues arise from transactions in cash instruments andderivatives in which we act as a market maker for our clients.
In this role, we stand ready to buy, sell or otherwise transact
with customers under a variety of market conditions and toprovide firm or indicative prices in response to customer
requests. Our liquidity obligations can be explicit in somecases, and in others, customers expect us to be willing totransact with them. In order to most effectively fulfill ourmarket-making function, we engage in activities across all of
our trading businesses that include, but are not limited to:

2. Average common equity and average tangible common equity for each businesssegment is determined using our Required Capital framework (see “Liquidity andCapital Resources—Regulatory Requirements—Attribution of Average Common
Equity According to the Required Capital Framework” herein). The sums of thesegments’ Average common equity and Average tangible common equity do notequal the Consolidated measures due to Parent Company equity.
3. The calculation of ROE and ROTCE by segment uses net income applicable toMorgan Stanley by segment less preferred dividends allocated to each segment asa percentage of average common equity and average tangible common equity,
respectively, allocated to each segment.

Return on Tangible Common Equity Goal
We have an ROTCE goal of 20%. Our ROTCE goal is aforward-looking statement that is based on a normal market
environment and may be materially affected by many factors.

• taking positions in anticipation of, and in response to,customer demand to buy or sell and—depending on theliquidity of the relevant market and the size of the position—to hold those positions for a period of time;• building, maintaining and rebalancing inventory held tofacilitate client activity through trades with other market
participants;• managing and assuming basis risk (risk associated withimperfect hedging) between risks incurred from thefacilitation of client transactions and the standardized
products available in the market to hedge those risks;• trading in the market to remain current on pricing andtrends; and• engaging in other activities to provide efficiency andliquidity for markets.

See “Risk Factors” and “Forward-Looking Statements” herein
for further information on market and economic conditions
and their potential effects on our future operating results.
ROTCE represents a non-GAAP financial measure. For
further information on non-GAAP measures, see “Selected
Non-GAAP Financial Information” herein.

Business Segments
Substantially all of our operating revenues and operating
expenses are directly attributable to our business segments.
Certain revenues and expenses have been allocated to eachbusiness segment, generally in proportion to its respective net
revenues, non-interest expenses or other relevant measures.
See Note 22 to the financial statements for segment net
revenues by income statement line item and information onintersegment transactions.

In many markets, the realized and unrealized gains and losses
from 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 arealso recorded in Trading revenues since they relate topositions carried at fair value.

Net Revenues
Investment Banking

Within the Wealth Management business segment, Trading
revenues primarily include revenues from customers’purchases and sales of fixed income instruments in which we
act as principal, as well as gains and losses related to DCP
investments.

Investment banking revenues are derived from client
engagements in which we act as an advisor, underwriter or
distributor of capital.

33

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
Investments

Within the Investment Management business segment, Assetmanagement revenues are primarily composed of fees
received from investment vehicles on the basis of assets undermanagement. Performance-based fees, not in the form ofcarried interest, are earned on certain products and separately
managed accounts as a percentage of appreciation in value
and, in certain cases, are based upon the achievement of
performance criteria. These performance fees are generally
recognized on a quarterly or annual basis.

Investments revenues are composed of realized andunrealized gains and losses derived from investments,
including those associated with employee deferredcompensation and co-investment plans. Estimates of the fairvalue of the investments that produce these revenues 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.

Net Interest

Within the Institutional Securities segment, gains and losses
are primarily from business-related investments. Certain
investments are subject to sale restrictions.

Interest income and Interest expense are functions of the leveland mix of total assets and liabilities, including Trading assets
and Trading liabilities, Investment securities, Securities
borrowed or purchased under agreements to resell, Securities
loaned or sold under agreements to repurchase, Loans,
Deposits and Borrowings.

Within the Investment Management business segment,
Investments revenues are primarily from performance-based
fees in the form of carried interest, a portion of which is
subject to reversal, and gains and losses from investments.
The business is entitled to receive carried interest when the
return in certain funds exceeds specified performance targets.
Additionally, we consolidate certain sponsored Investment
Management funds where revenues are primarily attributable
to holders of noncontrolling interests.

Within the Institutional Securities business segment, Netinterest is a function of market-making strategies, client
activity, and the prevailing level, term structure and volatilityof interest rates. Net interest is impacted by market-making,lending and financing activities as we generally earn intereston securities held by the Firm, Securities borrowed, Securities
purchased under agreements to resell, Loans and marginloans, while Borrowings, Securities loaned and Securities soldunder agreements to repurchase generally incur interest
expense.

Commissions and Fees
Commissions and fees result from arrangements in which theclient is charged a fee for executing transactions related tosecurities, services related to sales and trading activities, andsales of other products.

Within the Wealth Management business segment, Interest
income is driven by assets held including Investment
securities, Loans and margin loans. Interest expense is driven
by Deposits and other funding.

Within the Institutional Securities business segment,
commissions and fees include fees earned from marketmaking activities, such as executing and clearing clienttransactions on major stock and derivative exchanges, as well
as from OTC derivatives.

Other
Other revenues for Institutional Securities include revenues
and losses from equity method investments, fees earned inassociation with lending activities, mark-to-market gains andlosses on loans and lending commitments held for sale, as
well as gains and losses on economic derivative hedges
associated with certain held-for-sale and held-for-investment
loans and lending commitments.

Within the Wealth Management business segment,
commissions and fees arise from client transactions primarily
in equity securities, insurance products, mutual funds,
alternative investments, futures and options. WealthManagement also earns revenues from order flow payments
for directing customer orders to broker-dealers, exchanges
and market centers for execution.

Other revenues for Wealth Management include realized
gains and losses on AFS securities, account handling fees,
referral fees and other miscellaneous revenues.

Asset Management
Asset management revenues include fees associated with the
management and supervision of assets and the distribution offunds and similar products.

Provision for Credit Losses
The Provision for credit losses includes the provision for
credit losses for loans and lending commitments held forinvestment.

Within the Wealth Management business segment, Assetmanagement revenues are related to advisory services
associated with fee-based assets, account service andadministration, as well as distribution of products. Theserevenues are generally based on the net asset value of theaccount in which a client is invested.

December 2023 Form 10-K

Institutional Securities—Fixed Income and Equities
Fixed income and Equities net revenues are composed of
Trading revenues, Commissions and fees, Asset management
revenues, Net interest, and certain Investments and Other
34

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Management’s Discussion and Analysis
revenues directly attributable to those businesses. Theserevenues, which can be affected by a variety of interrelated
factors, including market volumes, bid-offer spreads and theimpact of market conditions on inventory held to facilitateclient activity, as well as the effect of hedging activity, areviewed in the aggregate when assessing the performance andprofitability of our businesses.

• Commodities products and Other. We make markets invarious commodity products related primarily to electricity,
natural gas, oil and metals. Other activities primarily
include results from the centralized management of our
fixed income derivative counterparty exposures and the
management of derivative counterparty risk. These
activities are primarily recorded in Trading revenues.

Following is a description of the revenue-generating activities
within our equity and fixed income businesses, as well as how
their results impact the income statement line items.

Fixed income also includes certain Investments and Other
revenues.
Institutional Securities—Other Net Revenues

Equity—Financing. We provide financing, prime brokerageand fund administration services to our clients active in theequity markets through a variety of products, including
margin lending, securities lending and swaps. Results fromthis business are largely driven by the difference between
financing income earned and financing and liquidity costs
incurred, which are reflected in Net interest for securities
lending products, and in Trading revenues for derivative
products. Fees for providing fund administration services arereflected in Asset management revenues.

Other net revenues include impacts from certain treasury
functions, such as liquidity and funding costs and gains andlosses on economic hedges related to certain borrowings.
Other net revenues also include mark-to-market gains andlosses on held-for-sale corporate loans and lending
commitments, as well as net interest and gain and losses on
economic hedges associated with held-for-sale and held-forinvestment corporate loans and lending commitments. Also
included are gains and losses from financial instruments used
to economically hedge compensation expense related tocertain DCP, income and losses from the equity method
investment related to our Japanese securities joint venturewith MUFG, as well as Investments and Other revenues thatare not directly attributable to Fixed income and Equities
businesses.

Equity—Execution services. A significant portion of theresults for this business is generated by commissions and feesfrom executing and clearing client transactions on major stockand derivative exchanges, as well as from OTC transactions.
We make markets for our clients principally in equity-related
securities and derivative products, including those thatprovide liquidity and are utilized for hedging. Market-making
also generates gains and losses on inventory held to facilitateclient activity, which are reflected in Trading revenues.
Execution services also includes certain Investments andOther revenues.

Compensation Expense
Compensation and benefits expenses include base salaries andfixed allowances, formulaic programs, discretionary incentive
compensation, amortization of deferred cash and equity
awards, changes in the fair value of DCP investments,
including the Firm’s share price for certain awards, carriedinterest allocated to employees, severance costs, and otheritems such as health and welfare benefits.

Fixed income—Within fixed income, we make markets invarious flow and structured products in order to facilitateclient activity as part of the following products and services:

The factors that drive compensation for our employees varyfrom period to period, from segment to segment and within asegment. For certain revenue-producing employees in the
Wealth Management and Investment Management businesssegments, compensation is largely paid on the basis offormulaic payouts that link employee compensation torevenues. Compensation for other employees, including
revenue-producing employees in the Institutional Securities
business segment, include base salary and benefits and may
also include incentive compensation that is determinedfollowing the assessment of the performance of the Firm,business unit and individual.

• Global macro products. We make markets for our clients ininterest rate, foreign exchange and emerging market
products, including exchange-traded and OTC securities
and derivative instruments. The results of this marketmaking activity are primarily driven by gains and losses
from buying and selling positions to stand ready for andsatisfy client demand and are recorded in Trading revenues.
• Credit products. We make markets in credit-sensitive
products, such as corporate bonds and mortgage securities
and other securitized products, and related derivative
instruments. The values of positions in this business are
sensitive to changes in credit spreads and interest rates,
which result in gains and losses reflected in Trading
revenues. We undertake lending activities, which includecommercial mortgage lending, secured lending facilities
and financing extended to sales and trading customers. Dueto the amount and type of the interest-bearing securities andloans making up this business, a significant portion of theresults is also reflected in Net interest revenues.

Compensation expense for DCP is recognized over the
relevant vesting period and is adjusted based on the fair valueof the referenced investments until distribution. Althoughchanges in compensation expense resulting from changes in
the fair value of the referenced investments will generally beoffset by changes in the fair value of investments made by theFirm, there is typically a timing difference between the35

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
immediate recognition of gains and losses on the Firm's
investments and the compensation expense recognized overthe vesting period.
Income Taxes
The Income tax provision for our business segments isgenerally determined based on the revenues, expenses andactivities directly attributable to each business segment.
Certain items have been allocated to each business segment,
generally in proportion to its respective net revenues or otherrelevant measures.

December 2023 Form 10-K

36

Table of Contents

Management’s Discussion and Analysis
Institutional Securities

Investment Banking continues to operate in a market
environment characterized by lower completed M&A andunderwriting activity amid market uncertainty, including thefuture path of interest rates.

Income Statement Information% Change2023$ in millions

2022

2021

2023

2022

(24)%

(16)%

See “Investment Banking Volumes” herein.

Revenues
Advisory$ 2,244 $ 2,946 $ 3,487

EquityEquity, Fixed Income and Other Net Revenues

889

851

4,437

4%

(81)%

Fixed income

1,445

1,438

2,348

—%

(39)%

Total Underwriting

2,334

2,289

6,785

2%

(66)%

Total Investment banking

4,578

5,235

10,272

(13)%

(49)%

Equity9,986

10,76911,435(7)%(6)%

Fixed income

7,673

9,022

7,516

(15)%

20 %

$ in millions

Trading

823

(633)

610

N/M

N/M

Financing$ 7,206 $Other
Net revenues

23,06024,39329,833

(5)%

(18)%

Provision for credit losses

401

211

(7)

90 %

N/M

Compensation and benefits

8,369

8,246

9,165

1%

(10)%

Non-compensation expenses

9,814

9,221

8,861

6%

4%

Total non-interest expenses

18,183

17,46718,026

4%(3)%

Income before provision forincome taxes

4,476

6,715

11,814

(33)%

(43)%

Provision for income taxes

884

Net income

2,746

(32)%

2023

Execution services

5,407

9,068

(34)%

(40)%

139

165

111

(16)%

49 %

$ 3,453 $ 5,242 $ 8,957

(34)%

(41)%

2,919

$ in millions

Trading

Financing$ 5,223 $Execution services

2,947

Equity and equity-related offerings2, 3
2, 4

Fixed income offerings

31

23

117

235

229

371

375 $

(975) $

Fees1

Net
Interest2

535 $
2,462

All
Other3Total(257) $

36 $

5,537

(81)

(96)

5,232

$ 8,170 $ 2,997 $(338) $

(60) $ 10,769

Total Fixed income$ 7,711 $

922 $

48 $

341 $

9,022

2021

2021
1,107

5,076

Total Equity

Execution services

881 $

112

425 $ 7,673

Investment Banking Volumes

655 $

(190)

$ 7,848 $$ 4,110 $

$

2,235

Total

66 $ 4,910

Total Fixed income

FinancingCompleted mergers and acquisitions1

524 $ (2,886) $178 $ 9,986

Trading2022

All
Other3$ 10,125 $ 2,759 $ (3,076) $$ in millions

2023

Net
Interest2

Total Equity

Investment Banking$ in billions

Fees1

2022

(52)%

3,592

Net income applicable tononcontrolling interests
Net income applicable toMorgan Stanley

1,308

Equity and Fixed Income Net Revenues

3,327

Fees1

Net
Interest2

508 $
2,648

Total Equity$ 7,437 $ 3,156 $Total Fixed income$ 5,098 $All
Other3

520 $

8 $

Total
5,146

(226)

540

294 $

548 $ 11,435

307 $ 1,835 $

276 $

6,289
7,516

1. Includes Commissions and fees and Asset management revenues.
2. Includes funding costs, which are allocated to the businesses based on funding
usage.
3. Includes Investments and Other revenues.

Source: Refinitiv data as of January 2, 2024. Transaction volumes may not be
indicative of net revenues in a given period. In addition, transaction volumes for priorperiods may vary from amounts previously reported due to the subsequent withdrawal,
change in value or change in timing of certain transactions.
1. Includes transactions of $100 million or more. Based on full credit to each of theadvisors in a transaction.
2. Based on full credit for single book managers and equal credit for joint book
managers.
3. Includes Rule 144A issuances and registered public offerings of common stock,convertible securities and rights offerings.
4. Includes Rule 144A and publicly registered issuances, non-convertible preferredstock, mortgage-backed and asset-backed securities, and taxable municipal debt.
Excludes leveraged loans and self-led issuances.

EquityNet revenues of $9,986 million in 2023 decreased 7%
compared with the prior year, reflecting decreases in
Financing and Execution services.
• Financing revenues decreased primarily due to higher
funding and liquidity costs compared with the prior year.
• Execution services revenues decreased primarily due tolower gains on inventory held to facilitate client activity inderivatives and cash equities and lower client activity incash equities, partially offset by mark-to-market gains on
business-related investments compared with losses in theprior year.

Investment Banking Revenues
Net revenues of $4,578 million in 2023 decreased 13%
compared with the prior year, primarily reflecting lower
Advisory revenues.
• Advisory revenues decreased primarily due to fewer
completed M&A transactions on lower market volumes.
• Equity underwriting revenues increased on higher volumes,
primarily in secondary offerings and convertible issuances,
partially offset by lower revenues from initial public
offerings.
• Fixed income underwriting revenues were relatively
unchanged from the prior year, primarily reflecting higher
investment-grade loan and bond issuances, offset by lower
non-investment grade loan issuances.

Fixed Income
Net revenues of $7,673 million in 2023 decreased 15%
compared with the prior year, primarily reflecting a decreasein foreign exchange and commodities products.
• Global macro products revenues decreased primarily due toa decline in foreign exchange products.
• Credit products revenues decreased primarily due to lower
client activity across products.
37

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis• Commodities products and other fixed income revenues
decreased compared to elevated results in the prior year,
primarily due to lower gains on inventory held to facilitateclient activity and lower client activity.
Other Net Revenues
Other net revenues were $823 million in 2023 compared withlosses of $633 million in the prior year, primarily due tolower mark-to-market losses on corporate loans held for sale,inclusive of hedges, and higher net interest income and feeson corporate loans, mark-to-market gains compared withlosses in the prior year on DCP investments and impacts fromliquidity and funding costs.
Provision for Credit Losses
In 2023, the Provision for credit losses on loans and lending
commitments of $401 million was primarily related todeteriorating conditions in the commercial real estate sector,
including provisions for certain specific loans, mainly in theoffice portfolio, and modest growth in certain other loan
portfolios. The Provision for credit losses on loans andlending commitments of $211 million in 2022 was primarily
driven by portfolio growth and deterioration in themacroeconomic outlook.
For further information on the Provision for credit losses, see“Credit Risk” herein.
Non-Interest Expenses
Non-interest expenses of $18,183 million in 2023 increased
4% compared with the prior year due to higher Noncompensation expenses and Compensation and benefits
expenses.
• Compensation and benefits expenses increased primarily
due to higher expenses related to DCP and higher stockbased compensation expenses driven by the Firm’s shareprice movement in the prior year, partially offset by lower
expenses related to outstanding deferred equity
compensation.
• Non-compensation expenses increased primarily due toincreased spend on technology, an FDIC special assessmentof $121 million, higher legal expenses, including $249
million related to a specific matter, higher execution-related
and marketing and business development expenses.

December 2023 Form 10-K

38

Table of Contents

Management’s Discussion and Analysis
Wealth Management

recent periods. Should these factors continue, the growth rateof our NNA may be impacted.

Income Statement Information

Advisor-Led Channel% Change2023$ in millions

2022

2021

2023

2022

Revenues
Asset management$14,019 $13,872 $13,966

1$ in billions

At December 31,
2023

At December 31,
2022

1%

(1)%

Advisor-led client assets1

$

3,979

$

3,392

$

1,983

$

1,678

Transactional

3,556

2,473

4,259

44 %

(42)%

Fee-based client assets2

Net interest

8,118

7,429

5,393

9%

38 %

Fee-based client assets as apercentage of advisor-led client
assetsOther1
Net revenues

575

643

625

(11)%

3%

26,26824,417

24,243

8%

1%

131

69

11

90 %

N/M

13,972

12,534

13,090

11 %(4)%

Provision for credit losses
Compensation and benefits
Non-compensation expenses

5,635

5,231

4,961

8%

5%

Total non-interest expenses

19,607

17,76518,05110 %(2)%

Income before provision forincome taxes

6,530

6,583

6,181

(1)%

7%

Provision for income taxes

1,508

1,444

1,447

4%

—%

$ 5,022 $ 5,139 $ 4,734

(2)%

9%

Net income applicable toMorgan Stanley$ in billions

Total client assets1

$

5,129

$

4,187

U.S. Bank Subsidiary loans

$

147

$

146

Margin and other lending2

$

21

$

22

3

Deposits

$

346

$

Self-directed assets (in billions)1

2.92%

1.59%

2.43%

0.53%

2022

2023
Net new assets

$

282.3

$

311.3

2021
$

179.3

At December 31,
2022

$

$

1,150
8.1

Daily average revenue trades (“DARTs”)(in thousands)3

795
8.0

2023

2022

2021

759

864

1,161

1. Self-directed client assets represent active accounts which are not advisor led.
Active accounts are defined as having at least $25 in assets.
2. Self-directed households represent the total number of households that include atleast one active account with self-directed assets. Individual households orparticipants that are engaged in one or more of our Wealth Management channels
are included in each of the respective channel counts.
3. DARTs represent the total self-directed trades in a period divided by the number of
trading days during that period.

2021
$

162.8

At December 31,
2023
Self-directed households (in millions)2351

Period average$

Self-Directed Channel

Annualized weighted average cost of
deposits4
Period end

109.2

1. Advisor-led client assets represent client assets in accounts that have a WealthManagement representative assigned.
2. 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.
3. Fee-based asset flows include net new fee-based assets (including asset
acquisitions), net account transfers, dividends, interest and client fees, and exclude
institutional cash management related activity. For a description of the Inflows andOutflows included in Fee-based asset flows, see Fee-based client assets herein.

Wealth Management Metrics
At December 31,
2022

$

49%
2022

2023
Fee-based asset flows3

1. Transactional includes Investment banking, Trading, and Commissions and fees
revenues. Other includes Investments and Other revenues.

At December 31,
2023

50%

437.7

Workplace Channel1

1. Client assets represent those for which Wealth Management is providing services
including financial advisor-led brokerage, custody, administrative and investment
advisory services; self-directed brokerage and investment advisory services;financial and wealth planning services; workplace services, including stock plan
administration, and retirement plan services. See “Advisor-Led Channel” and “SelfDirected Channel” herein for additional information.
2. Margin and other lending represents margin lending arrangements, which allow
customers to borrow against the value of qualifying securities and other lending
which includes non-purpose securities-based lending on non-bank entities.
3. Deposits reflect liabilities sourced from Wealth Management clients and othersources of funding on our U.S. Bank Subsidiaries. Deposits include sweep deposit
programs, savings and other, and time deposits. As of December 31, 2023, there
were no off-balance sheet amounts excluded from deposits. As of December 31,
2022, approximately $6 billion off-balance sheet amounts were excluded from
deposits.
4. Annualized weighted average represents the total annualized weighted average
cost of the various deposit products, excluding the effect of related hedging
derivatives. The period end cost of deposits is based upon balances and rates as ofDecember 31, 2023 and December 31, 2022. The period average is based on dailybalances and rates for the year.

Workplace unvested assets (inbillions)2
Number of participants (in millions)3

At December 31,
2023

At December 31,
2022

$

$

416
6.6

302
6.3

1. The workplace channel includes equity compensation solutions for companies, their
executives and employees.
2. Stock plan unvested assets represent the market value of public company
securities at the end of the period. The stock plan vested asset retention rate within
the workplace channel, which represents the percentage of stock plan assets
retained in either the self-directed or advisor-led channels following vesting, is 29%,
34% and 24% for 2023, 2022 and 2021, respectively. The rate is derived using thestock plan inflows for the previous year, less related outflows for the previous year
and reported year, and dividing the result by the previous year inflows.
3. Stock plan participants represent total accounts with vested and/or unvested stockplan assets in the workplace channel. Individuals with accounts in multiple plans
are counted as participants in each plan.

Net Revenues

Net New Assets (NNA)

Asset Management

NNA represent client asset inflows, inclusive of interest,
dividends and asset acquisitions, less client asset outflows,
and exclude the impact of business combinations/divestitures
and the impact of fees and commissions. The level of NNA ina given period is influenced by a variety of factors, including
macroeconomic factors that impact client investment andspending behaviors, our ability to attract and retain financial
advisors and clients, and timing of large idiosyncratic flows.
Macroeconomic factors have had an impact on our NNA in

Asset management revenues of $14,019 million in 2023
increased 1% compared with the prior year, reflecting the
cumulative impact of positive fee-based flows, partially offset
by a reduction driven by changes in client and product mix
and lower average fee-based client asset levels due to declines
in the markets.
See “Fee-Based Client Assets Rollforwards” herein.
39

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
Transactional Revenues

Fee-Based Client Assets Rollforwards

Transactional revenues of $3,556 million in 2023 increased
44% compared with the prior year, primarily due to $282
million of gains on DCP investments compared with $858
million of losses in the prior year, partially offset by lower
client activity.
For further information on the impact of DCP, see “Selected
Non-GAAP Financial Information” herein.

At
December 31,
2022

Separately
managed4$

The level and pace of interest rate changes and othermacroeconomic factors continued to impact client preferences
for cash allocation to higher-yielding products and the pace ofreallocation of client balances, resulting in changes in thedeposit mix and associated interest expense, as well as clientdemand for loans. If these trends persist, net interest income
could be impacted in future periods.

501 $

70 $

(23) $

41 $

589

96

(56)

53

501

Advisor

167

29

(32)

24

188

Portfolio manager

552

98

(73)

68

645

1,628 $

293 $(184) $

186 $

1,923

50

60

(50)

—

60

1,678 $

353 $(234) $

186 $

1,983

$

Total fee-basedclient assets$$ in billions

At
At
December 31,
Market December 31,
2021
Inflows1,5 Outflows2 Impact3
2022

Separately
managed4

$

479 $

141 $

(25) $(94) $

501

Unified managed

467

76

(50)

(85)

408

Advisor

211

29

(35)

(38)

167

Portfolio manager

636

94

(67)

(111)

1,793 $

340 $(177) $ (328) $

46

38

(34)

1,839 $

378 $

(211) $ (328) $Subtotal$

Cash management

Provision for Credit Losses
The Provision for credit losses on loans and lending
commitments of $131 million in 2023 was primarily related todeteriorating conditions in the commercial real estate sector,
including provisions for certain specific loans, mainly in theoffice portfolio. The Provision for credit losses on loans andlending commitments was $69 million in 2022, primarily
driven by portfolio growth in Residential real estate loans anddeteriorating conditions in the commercial real estate sector.

At
Market December 31,
2023
Outflows2 Impact3

408

Cash management

Net interest revenues of $8,118 million in 2023 increased 9%compared with the prior year, primarily due to the net effectof higher interest rates, partially offset by changes in deposit
mix.

Inflows1

Unified managed

Subtotal

Net Interest

552
1,628

—

50

Total fee-basedclient assets$$ in billions

At
At
December 31,
Market December 31,
2020
Inflows1,6 Outflows2 Impact3
2021

Separately
managed4

$

1,678

359 $

86 $

(20) $

54 $479

Unified managed

379

100

(54)

42

467

Advisor

177

42

(30)

22

211

Portfolio manager

509

113

(58)

72

636

1,424 $

341 $

(162) $

190 $

1,793

48

30

(32)

—

46

1,472 $

371 $

(194) $

190 $

1,839

Subtotal$

Cash management
Total fee-basedclient assets$

1. Inflows include new accounts, account transfers, deposits, dividends and interest.
2. Outflows include closed or terminated accounts, account transfers, withdrawals andclient fees.
3. Market impact includes realized and unrealized gains and losses on portfolio
investments.
4. Includes non-custody account values based on asset values reported on a quarterlag by third-party custodians.
5. Includes $75 billion of fee-based assets acquired in an asset acquisition in the firstquarter of 2022, reflected in Separately managed.
6. Includes $43 billion of fee-based assets acquired in an asset acquisition in the third
quarter of 2021, reflected in Separately managed.

For further information on the Provision for credit losses, see“Credit Risk” herein.
Non-Interest Expenses

Average Fee Rates1

Non-interest expenses of $19,607 million in 2023 increased
10% compared with the prior year, as a result of higher
Compensation and benefits expense and higher Noncompensation expense.

2023

2022

2021

Separately managed

12

12

14

Unified managed

92

94

95

Advisor

80

81

82

Portfolio manager

91

92

93

Subtotal

65

66

72

Cash management

6

6

5

Total fee-based client assets

64

65

70

Fee rate in bps• Compensation and benefits expenses increased, primarily
due to higher expenses related to DCP and higher salaries
driven by hiring mix.
For further information on the impact of expenses related to
DCP, see “Selected Non-GAAP Financial Information”
herein.

1. Based on Asset management revenues related to advisory services associated withfee-based assets.

Asset management revenues within the Wealth Management
segment are primarily generated from the following types ofaccounts:• Non-compensation expenses increased, primarily driven by
an FDIC special assessment of $165 million, increased
spend on technology and costs related to exits of real estate.

December 2023 Form 10-K

$ in billions• Separately managed—accounts by which third party andaffiliated asset managers are engaged to manage clients’assets with investment decisions made by the asset
40

Table of Contents

Management’s Discussion and Analysis
manager. Only one third-party asset manager strategy canbe held per account.
• Unified managed—accounts that provide the client with theability to combine separately managed accounts, mutual
funds and exchange-traded funds, all in one aggregate
account. Investment decisions and discretionary authority
may be exercised by the client, financial advisor or
portfolio manager. Also includes accounts that give theclient the ability to systematically allocate assets across awide range of mutual funds, for which the investment
decisions are made by the client.
• Advisor—accounts where the investment decisions must be
approved by the client, and the financial advisor mustobtain approval each time a change is made to the accountor its investments.
• Portfolio manager—accounts where a financial advisor has
discretion (contractually approved by the client) to makeongoing investment decisions without the client’s approval
for each individual change.
• Cash management—accounts where the financial advisor
provides discretionary cash management services toinstitutional clients, whereby securities or proceeds areinvested and reinvested in accordance with the client’s
investment criteria. Generally, the portfolio will be invested
in short-term fixed income and cash equivalent
investments.

41

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
Investment Management

Net Revenues

Income Statement Information

Asset Management and Related Fees
% Change2023$ in millions

2022

2021

2023

Asset management and related fees of $5,231 million in 2023
decreased 2% compared with the prior year, primarily due toa shift in the mix of average AUM, driven by the cumulative
effect of net flows.

2022

Revenues
Asset management and relatedfees$ 5,231 $ 5,332 $ 5,576

Performance-based income andother1

(2)%

(4)%

139

43

644

N/M

(93)%

Net revenues

5,370

5,375

6,220

—%

(14)%

Compensation and benefits

2,217

2,273

2,373

(2)%

(4)%

Non-compensation expenses

2,311

2,295

2,169

1%

6%

Total non-interest expenses

4,528

4,568

4,542

(1)%

1%

Income before provision forincome taxes

842

807

1,678

4%

(52)%

Provision for income taxes

199

162

356

23 %

(54)%

Net income

643

645

1,322

—%

(51)%

4

(15)

(25) 127 %40 %Net income applicable tononcontrolling interests
Net income applicable toMorgan Stanley

$

639 $

660 $ 1,347(3)%

Asset management revenues are influenced by the level,
relative mix of AUM and related fee rates. The market
environment and client preferences in recent quarters have
impacted the mix of our average Long-Term AUM levelacross certain asset classes. To the extent these conditions
continue, we would expect our Asset management revenue tocontinue to be negatively impacted.
See “Assets Under Management or Supervision” herein.
Performance-based Income and Other(51)%

Performance-based income and other revenues increased to$139 million in 2023, from $43 million in the prior year,
primarily due to mark-to-market gains in 2023 compared withlosses in the prior year on DCP investments and investmentsin public funds, partially offset by lower accrued carriedinterest in certain private funds.

1. Includes Investments, Trading, Commissions and fees, Net interest and Other
revenues.

Non-Interest Expenses
Non-interest expenses of $4,528 million in 2023 decreased
1% from the prior year, primarily due to lower Compensation
and benefits expenses.
• Compensation and benefits expenses decreased primarily
due to lower expenses related to compensation associatedwith carried interest, partially offset by higher expenses
related to DCP.
• Non-compensation expenses were relatively unchanged forthe current year.

December 2023 Form 10-K

42

Table of Contents

Management’s Discussion and Analysis
Assets Under Management or Supervision

Average AUM

Rollforwards$ in billions$ in billionsAt
Dec 31,
2022

Equity$Inflows1

Outflows2

MarketImpact3

Other4,5

EquityAt
Dec 31,
2023

2023
$

2022

2021

279 $

298 $

362

Fixed income

170

186

181

Alternatives and Solutions

466

435

380

259 $

40 $

(57) $

57 $

(4) $

295

Long-Term AUM Subtotal

915

919

923

Fixed Income

173

56

(62)

11

(7)

171

Liquidity and Overlay Services

Alternatives
and Solutions

464

462

430

431

108

(91)

57

3

508

Total AUM

$

863 $

204 $

(210) $

125 $

(8) $

974

Average Fee Rates1

20

(15)

485

Fee rate in bps$

1,305 $

145 $(23) $

1,459

Long-Term
AUM
Liquidity andOverlayServices
Total

442

$ in billionsAt
Dec 31,2021

Equity$2,282(2,244)2,486 $ (2,454) $Inflows1

Outflows2

MarketImpact3

Other4At
Dec 31,2022$ 1,379 $ 1,381 $ 1,353

2023

2022

2021

Equity71

70

74

Fixed income

35

35

38

Alternatives and Solutions

32

34

36

Long-Term AUM

44

46

51

395 $

56 $

(74) $(106) $

(12) $

259

Liquidity and Overlay Services

Fixed Income

207

66

(78)

(16)

(6)

173

13

11

5

Alternatives
and Solutions

Total AUM

34

34

37

466

102

(83)

(47)

(7)

431

224 $

(235) $

(169) $

(25) $

863

1. Based on Asset management revenues, net of waivers, excluding performancebased fees and other non-management fees. For certain non-U.S. funds, it includes
the portion of advisory fees that the advisor collects on behalf of third-party
distributors. The payment of those fees to the distributor is included in Noncompensation expenses in the income statement.

Long-Term
AUM$

1,068 $

Total$

1,565 $$ in billionsAt
Dec 31,
2020

Equity$Liquidity andOverlayServices

497

2,224

(2,268)2,448 $ (2,503) $Inflows1

Outflows2

(6)

(5)

442

(175) $

(30) $

1,305

MarketImpact3

Other4,6

242 $

100 $

(85) $

34 $

104 $

395

Fixed Income

98

67

(55)

—

97

207

Alternatives
and Solutions

153

95

(78)

51

245

466

493 $

262 $

(218) $

85 $

446 $

6

115

91 $

561 $

Long-Term
AUM$

Liquidity andOverlayServices
Total

$

288

1,940

781 $

2,202 $ (2,070) $(1,852)

Asset management and other related fees within theInvestment Management segment are primarily generated
from Equity, Fixed Income and the following products:At
Dec 31,
2021

Alternatives and Solutions. Includes products in fund offunds, real estate, infrastructure, private equity and credit
strategies and multi-asset portfolios, as well as systematic
strategies that create custom investment solutions.

1,068

Liquidity and Overlay Services. Includes liquidity fundproducts, as well as overlay services, which represent
investment strategies that use passive exposure instruments toobtain, offset or substitute specific portfolio exposures,
beyond those provided by the underlying holdings of the
fund.

497
1,565

1. Inflows represent investments or commitments from new and existing clients in new
or existing investment products, including reinvestments of client dividends andincreases in invested capital. Inflows exclude the impact of exchanges, whereby aclient changes positions within the same asset class.
2. Outflows represent redemptions from clients’ funds, transition of funds from thecommitted capital period to the invested capital period and decreases in invested
capital. Outflows exclude the impact of exchanges, whereby a client changes
positions within the same asset class.
3. Market impact includes realized and unrealized gains and losses on portfolio
investments. This excludes any funds where market impact does not impact
management fees.
4. Other contains both distributions and foreign currency impact for all periods.
Distributions represent decreases in invested capital due to returns of capital after
the investment period of a fund. It also includes fund dividends that the client has
not reinvested. Foreign currency impact reflects foreign currency changes for nonU.S. dollar dominated funds.
5. In 2023, our Retail Municipal and Corporate Fixed Income business (“FIMS”) was
combined with our Parametric retail customized solutions business. The impact of
the change was a $6 billion movement in AUM from Fixed Income to theAlternatives and Solutions asset class included in Other.
6. The 2021 Other amounts primarily include AUM additions related to the Eaton
Vance Corp. (“Eaton Vance”) acquisition.

43

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
Supplemental Financial Information

Other Matters

U.S. Bank Subsidiaries

Deferred Cash-Based Compensation

Our U.S. Bank Subsidiaries accept deposits, provide loans toa variety of customers, including large corporate andinstitutional clients, as well as high to ultra-high net worth
individuals, and invest in securities. Lending activity in our
U.S. Bank Subsidiaries from the Institutional Securities
business segment primarily includes Secured lending
facilities, Commercial and Residential real estate andCorporate loans. Lending activity in our U.S. Bank
Subsidiaries from the Wealth Management business segment
primarily includes Securities-based lending, which allows
clients to borrow money against the value of qualifying
securities, and Residential real estate loans.

The Firm sponsors a number of deferred cash-based
compensation programs for current and former employees,
which generally contain vesting, clawback and cancellation
provisions.
Employees are permitted to allocate the value of theirdeferred awards among a menu of notional investments,
whereby the value of their awards will track the performanceof the referenced notional investments. The menu ofinvestments, which is selected by the Firm, includes fixedincome, equity, commodity and money market funds.
Compensation expense for DCP awards is calculated based on
the notional value of the award granted, adjusted for changes
in the fair value of the referenced investments that employees
select. Compensation expense is recognized over the vesting
period relevant to each separately vesting portion of deferredawards.

For a further discussion of our credit risks, see “Quantitativeand Qualitative Disclosures about Risk—Credit Risk” herein.
For a further discussion about loans and lending
commitments, see Notes 9 and 14 to the financial statements.
U.S. Bank Subsidiaries’ Supplemental Financial Information1
At
December 31,
2023$ in billions

We invest directly, as principal, in financial instruments andother investments to economically hedge certain of ourobligations under these DCP awards. Changes in the fairvalue of such investments, net of financing costs, are recordedin net revenues, and included in Transactional revenues in the
Wealth Management business segment. Although changes incompensation expense resulting from changes in the fair valueof the referenced investments will generally be offset bychanges in the fair value of investments recognized in net
revenues, there is typically a timing difference between theimmediate recognition of gains and losses on our investments
and the deferred recognition of the related compensation
expense over the vesting period. While this timing difference
may not be material to our Income before provision forincome taxes in any individual period, it may impact theWealth Management business segment reported ratios andoperating metrics in certain periods due to potentiallysignificant impacts to net revenues and compensation
expenses. At December 31, 2023 and December 31, 2022,
substantially all employee referenced investments that
subjected the Firm to price risk were economically hedged.

At
December 31,
2022

Investment securities:
Available-for-sale at fair value$

Held-to-maturity
Total Investment securities

66.6 $

66.9

51.4

56.4

$

118.0 $

123.3$

60.3 $

54.4

Wealth Management Loans2
Residential real estate
Securities-based lending and Other3
Total, net of ACL

86.2

91.7

$

146.5 $

146.1$

Institutional Securities Loans2
Corporate

10.1 $

6.9

Secured lending facilities

40.8

37.1

Commercial and Residential real estate

10.7

10.2

Securities-based lending and Other

4.1

6.0

Total, net of ACL$

65.7 $

60.2

Total Assets$

396.1 $

391.0

Deposits4$

346.1 $

350.6

1. Amounts exclude transactions between the bank subsidiaries, as well as deposits
from the Parent Company and affiliates.
2. For a further discussion of loans in the Wealth Management and Institutional
Securities business segments, see “Quantitative and Qualitative Disclosures about
Risk—Credit Risk” herein.
3. Other loans primarily include tailored lending. For a further discussion of Otherloans, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk”
herein.
4. For further information on deposits, see “Liquidity and Capital Resources—Funding
Management—Balance Sheet—Unsecured Financing” herein.

Amounts Recognized in Compensation Expense2023$ in millions

Deferred cash-based awards$

Return on referenced investments
Total recognized in compensation
expense

$

2022

2021

693 $

761 $

810

668

(716)

526

1,361 $

45 $

1,336

Amounts Recognized in Compensation Expense by Segment2023$ in millions

Institutional Securities

December 2023 Form 10-K

44

2022

2021

162 $

(97) $

372

Wealth Management

984

11

798

Investment Management

215

131

166

Total recognized in compensation
expense$$1,361 $

45 $

1,336

Table of Contents

Management’s Discussion and Analysis
Projected Future Compensation Obligation1

Accounting Development Updates$ in millions

Award liabilities at December 31, 20232, 3$

Fully vested amounts to be distributed by the end of
February 20244
Unrecognized portion of prior awards at December 31,
20233
2023 performance year awards granted in 20243
Total5The Financial Accounting Standards Board has issued certain
accounting updates that apply to us. Accounting updates notlisted below were assessed and determined to be either not
applicable or to not have a material impact on our financial
condition or results of operations upon adoption.

5,331
(905)
1,373
357

$

6,156

We adopted the following accounting update on January 1,
2024, with no material impact on our financial condition or
results of operations upon adoption:

1. Amounts relate to performance years 2023 and prior.
2. Balance is reflected in Other liabilities and accrued expenses in the balance sheet
as of December 31, 2023.
3. Amounts do not include assumptions regarding forfeitures or assumptions about
future market conditions with respect to referenced investments.
4. Distributions after February of each year are generally immaterial.
5. Of the total projected future compensation obligation, approximately 20% relates toInstitutional Securities, approximately 70% relates to Wealth Management andapproximately 10% relates to Investment Management.

• Investments—Tax Credit Structures. This accounting
update permits an election to account for tax equity
investments using the proportional amortization method if
certain conditions are met. Under the proportionalamortization method, the initial cost of the investment isamortized in proportion to the income tax credits and otherincome tax benefits received and recognized net in theincome statement as a component of provision for income
taxes. The update requires a separate accounting policy
election to be made for each tax credit program. Additional
disclosures are required regarding (i) the nature of our tax
equity investments and (ii) the effect of our tax equity
investments and related income tax credits on the financial
condition and results of operations.

The previous table presents a rollforward of the Firm’s
estimated projected future compensation obligation forexisting deferred cash-based compensation awards, exclusiveof any assumptions about future market conditions withrespect to referenced investments.
Projected Future Compensation Expense1$ in millions

Estimated to be recognized in:
2024

$

2025

337

Thereafter
Total

534

We are currently evaluating the following accounting updates;
however, we do not expect a material impact on our financial
condition or results of operations upon adoption:

859
$

1,730

1. Amounts relate to performance years 2023 and prior, and do not include
assumptions regarding forfeitures or assumptions about future market conditions
with respect to referenced investments.

• Income Tax Disclosures. This accounting update requires
disclosure of additional information in relation to income
taxes, including additional disaggregation of the income tax
rate reconciliation and income taxes paid. For the income
tax rate reconciliation, this update requires (1) disclosure of
specific categories of reconciling items; and (2) providing
additional information for reconciling items that meet aquantitative threshold (if the effect of those reconciling
items is equal to or greater than 5 percent of the amountcomputed by multiplying pretax income (or loss) by theapplicable statutory income tax rate). For income taxes
paid, this update requires disclosure of information,
including (1) the amount of income taxes paid (net ofrefunds received) disaggregated by federal, state, andforeign taxes; and (2) the amount of income taxes paid (netof refunds received), disaggregated by individual
jurisdictions in which income taxes paid (net of refunds
received) is equal to or greater than 5 percent of total
income taxes paid (net of refunds received). Additionally,
the update requires disclosure of (1) income (or loss) before
income taxes, disaggregated between domestic and foreign;and (2) income taxes disaggregated by federal, state andforeign. The accounting update is effective for annual
periods beginning January 1, 2025, with early adoption
permitted.

The previous table sets forth an estimate of compensation
expense associated with the projected future compensation
obligation. Our projected future compensation obligation and
expense for DCP for performance years 2023 and prior are
forward-looking statements subject to uncertainty. Actual
results may be materially affected by various factors,
including, among other things: the performance of eachparticipant’s referenced investments; changes in market
conditions; participants’ allocation of their deferred awards;
and participant cancellations or accelerations. See “ForwardLooking Statements” and “Risk Factors” for additional
information.
For further information on the Firm’s deferred stock-basedplans and carried interest compensation, which are excluded
from the previous tables, see Notes 2 and 19 to the financial
statements.

• Segment Reporting. This accounting update requires
additional reportable segment disclosures on an annual andinterim basis, primarily about significant segment expenses
and other segment items that are regularly provided to the45

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
hierarchy. Level 3 financial assets represented 1.2% and 1.4%of our total assets, as of December 31, 2023 and December
31, 2022, respectively.

chief operating decision maker and included within thereported measure of segment profit or loss. This update
does not change how operating segments are identified or
aggregated, or how quantitative thresholds are applied todetermine the reportable segments. The accounting update
is effective for fiscal years beginning January 1, 2024, andinterim periods within fiscal years beginning January 1,
2025, with early adoption permitted.

In periods of market disruption, the observability of prices
and inputs, as well as market liquidity, may be reduced formany instruments, which could cause an instrument to berecategorized from Level 1 to Level 2 or from Level 2 toLevel 3. In addition, a downturn in market conditions could
lead to declines in the valuation of many instruments carriedat fair value. Imprecision in estimating unobservable market
inputs or other factors can affect the amount of gain or loss
recorded for a particular position. The Firm uses various
methodologies and assumptions in the determination of fairvalue. The use of methodologies or assumptions different thanthose used by the Firm could result in a different estimate offair value at the reporting date. For further information on thedefinition of fair value, Level 1, Level 2, Level 3 and related
valuation techniques, and quantitative information about andsensitivity of significant unobservable inputs used in Level 3
fair value measurements, see Notes 2 and 4 to the financial
statements.

Critical Accounting Estimates
Our financial statements are prepared in accordance with U.S.
GAAP, which requires us to make estimates and assumptions(see Note 1 to the financial statements). We believe that ofour significant accounting policies (see Note 2 to the 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 our financial instruments are carriedat fair value. The use of fair value to measure financial
instruments is fundamental to our risk management practices
and is our most critical accounting estimate. We makeestimates regarding the valuation of assets and liabilities
measured at fair value in preparing the financial statements.
These assets and liabilities include, but are not limited to:

Where appropriate, valuation adjustments are made to accountfor various factors, such as liquidity risk (bid-ask
adjustments), credit quality, model uncertainty, concentration
risk and funding, in order to arrive at fair value. For a further
discussion of valuation adjustments that we apply, see Note 2
to the financial statements.

• Trading assets and Trading liabilities;• Investment Securities—AFS;• Certain Securities purchased under agreements to resell;• Loans held-for-sale (measured at the lower of amortizedcost or fair value);• Certain Deposits, primarily certificates of deposit;• Certain Securities sold under agreements to repurchase;• Certain Other secured financings; and• Certain Borrowings.

Goodwill and Intangible Assets
Goodwill
We test goodwill for impairment on an annual basis as ofJuly 1 and on an interim basis when certain events orcircumstances exist. Evaluating goodwill for impairment
requires management to make significant judgments,
including, in part, the use of unobservable inputs that are
subject to uncertainty. Goodwill impairment tests are
performed at the reporting unit level, which is generally at thelevel of or one level below our business segments. Goodwill
no longer retains its association with a particular acquisition
once it has been assigned to a reporting unit. As such, all theactivities of a reporting unit, whether acquired or organicallydeveloped, are available to support the value of the goodwill.

Fair value is defined as the price that would be received to sellan asset or paid to transfer a liability (i.e., the exit price) in anorderly transaction between market participants at themeasurement date.
In determining fair value, we use various valuation
approaches. A hierarchy for inputs is used in measuring fairvalue that maximizes the use of observable prices and inputs,
and minimizes the use of unobservable prices and inputs byrequiring that the relevant observable inputs be used whenavailable. The hierarchy is broken down into three levels:
wherein Level 1 represents quoted prices in active markets,
Level 2 represents valuations based on quoted prices inmarkets that are not active or for which all significant inputs
are observable, and Level 3 consists of valuation techniquesthat incorporate significant unobservable inputs and,
therefore, require the greatest use of judgment. The fair values
for the substantial majority of our financial assets andliabilities carried at fair value are based on observable prices
and inputs and are classified in level 1 or 2, of the fair value
December 2023 Form 10-K

For both the annual and interim tests, we have the option toeither (i) perform a quantitative impairment test or (ii) first
perform a qualitative assessment to determine whether it ismore likely than not that the fair value of a reporting unit isless than its carrying amount, in which case, the quantitative
test would be performed.
When performing a quantitative impairment test, we compare
the fair value of a reporting unit with its carrying amount,
including goodwill. If the fair value of the reporting unit isless than its carrying amount, the goodwill impairment loss isequal to the excess of the carrying value over the fair value,
46

Table of Contents

Management’s Discussion and Analysis
limited by the carrying amount of goodwill allocated to thatreporting unit.

The initial valuation of an intangible asset as part of theacquisition method of accounting and the subsequentvaluation of intangible assets as part of an impairment
assessment are subjective and based, in part, on inputs that areunobservable and can be subject to uncertainty. These inputs
include, but are not limited to, forecasted cash flows, revenue
growth rates, customer attrition rates and discount rates.

The carrying value of each reporting unit is determined basedon the capital allocated to the reporting unit. The estimatedfair value of the reporting units is derived based on valuation
techniques we believe market participants would use for eachof the reporting units. The estimated fair value is generally
determined by utilizing a discounted cash flow methodology.
In certain instances, we may also utilize methodologies thatincorporate price-to-book and price-to-earnings multiples ofcomparable companies.

For both goodwill and intangible assets, to the extent an
impairment loss is recognized, the loss establishes the newcost 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 ofthat asset. Unanticipated declines in our revenue generating
capability, adverse market or economic events, and regulatory
actions, could result in material impairment charges in future
periods.

The discounted cash flow methodology uses projected future
cash flows based on the reporting units’ earnings forecast.
The discount rate used represents an estimate of the cost ofequity for that reporting unit based on the Capital Asset
Pricing Model.

See Notes 2 and 10 to the financial statements for additional
information about goodwill and intangible assets.

At each annual goodwill impairment testing date, each of ourreporting units with goodwill had a fair value that was
substantially in excess of its carrying value.

Legal and Regulatory Contingencies

Intangible Assets

In the normal course of business, we have been named, fromtime to time, as a defendant in various legal actions, including
arbitrations, class actions and other litigation, arising inconnection with our activities as a global diversified financial
services institution.

Intangible assets are initially recorded at cost, or in thesituation where acquired as part of a business combination, at
the fair value determined as part of the acquisition method of
accounting. Subsequently, amortizable intangible assets arecarried in the balance sheet at amortized cost, where
amortization is recognized over their estimated useful lives.
Indefinite lived intangible assets are not amortized but are
tested for impairment on an annual basis as of July 1 and on
an interim basis when certain events or circumstances exist.

Certain of the actual or threatened legal actions include claims
for substantial compensatory and/or punitive damages orclaims for indeterminate amounts of damages. In some cases,
the third-party entities that are, or would otherwise be, theprimary defendants in such cases are bankrupt, in financial
distress, or may not honor applicable indemnification
obligations. These actions have included, but are not limited
to, antitrust claims, claims under various false claims act
statutes, and matters arising from our sales and tradingbusinesses and our activities in the capital markets.

On a quarterly basis:• All intangible assets are assessed for the presence ofimpairment indicators. Where such indicators are present,
an evaluation for impairment is conducted.
• For amortizable intangible assets, an impairment loss exists
if the carrying amount of the intangible asset is notrecoverable and exceeds its fair value. The carrying amountof the intangible asset is not recoverable if it exceeds thesum of the expected undiscounted cash flows.
• For indefinite-lived intangible assets, an impairment exists
if the carrying amount of the intangible asset exceeds its
fair value.
• Amortizable intangible assets are assessed for any
indication that the remaining useful life or the finite life
classification should be revised. In such cases, theremaining carrying amount is amortized prospectively over
the revised useful life, unless it is determined that the life of
the intangible asset is indefinite, in which case theintangible asset is not amortized.
• Indefinite-lived intangible assets are assessed for any
indication that the life of the intangible asset is no longer
indefinite; in such cases, the carrying amount of theintangible asset is amortized prospectively over its
remaining useful life.

We are also involved, from time to time, in other reviews,
investigations and proceedings (both formal and informal) bygovernmental and self-regulatory agencies regarding ourbusiness, and involving, among other matters, sales, trading,financing, prime brokerage, market-making activities,
investment banking advisory services, capital markets
activities, financial products or offerings sponsored,
underwritten or sold by us, wealth and investment
management services, and accounting and operational
matters, certain of which may result in adverse judgments,
settlements, fines, penalties, disgorgement, restitution,
forfeiture, injunctions, limitations on our ability to conductcertain business, or other relief.
We contest liability and/or the amount of damages asappropriate in each pending matter. Where available
information indicates that it is probable a liability had been
incurred at the date of the financial statements and we can47

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
reasonably estimate the amount of that loss or the range ofloss, we accrue an estimated loss by a charge to income.

Our provision for income taxes is composed of current anddeferred taxes. Current income taxes approximate taxes to be
paid or refunded for the current period. 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 andlaws that will be in effect when such differences are expected
to reverse.

In many legal proceedings and investigations, it is inherently
difficult to determine whether any loss is probable orreasonably possible, or to estimate the amount of any loss. In
addition, even where we have determined that a loss isprobable or reasonably possible or an exposure to loss orrange of loss exists in excess of the liability already accrued
with respect to a previously recognized loss contingency, we
are often unable to reasonably estimate the amount of the loss
or range of loss. It is particularly difficult to determine if aloss is probable or reasonably possible, or to estimate theamount of loss, where the factual record is being developed orcontested or where plaintiffs or government entities seek
substantial or indeterminate damages, restitution, forfeiture,disgorgement or penalties. Numerous issues may need to beresolved in an investigation or proceeding before adetermination can be made that a loss or additional loss (orrange of loss or range of additional loss) is probable orreasonably possible, or to estimate the amount of loss,
including through potentially lengthy discovery or
determination of important factual matters, determination ofissues related to class certification, the calculation of damages
or other relief, and consideration of novel or unsettled legal
questions relevant to the proceedings or investigations inquestion.

Our deferred tax balances may also include deferred assets
related to tax attribute carryforwards, such as net operating
losses and tax credits that will be realized through reductionof future tax liabilities and, in some cases, are subject toexpiration if not utilized within certain periods. We perform
regular reviews to ascertain whether deferred tax assets are
realizable. These reviews include management’s estimatesand assumptions regarding future taxable income andincorporate various tax planning strategies, including
strategies that may be available to tax attribute carryforwards
before they expire.
Once the deferred tax asset balances have been determined,
we may record a valuation allowance against the deferred tax
asset balances to reflect the amount we estimate is more likely
than not to be realized at a future date. Both current anddeferred income taxes may reflect adjustments related to ourunrecognized tax benefits.
Significant judgment is required in estimating theconsolidated 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 estimates and/or the actual costs ofa tax assessment may ultimately be materially different fromthe recorded accruals and unrecognized tax benefits, if any.

Significant judgment is required in deciding when and if tomake 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 14 to the financial statements for additional
information on legal contingencies.
Income Taxes

See Note 2 to the financial statements for additional
information on our significant assumptions, judgments andinterpretations associated with the accounting for income
taxes and Note 21 to the financial statements for additional
information on our tax examinations.

We are subject to the income tax laws of the U.S., its statesand municipalities and those of the foreign jurisdictions inwhich we have business operations. These tax laws arecomplex and subject to interpretation by the taxpayer and therelevant governmental taxing authorities. We must makejudgments and interpretations about the application of these
inherently complex tax laws and make estimates about certain
items affecting taxable income when determining theprovision for income taxes in the various tax jurisdictions.

Liquidity and Capital Resources
Our liquidity and capital policies are established andmaintained by senior management, with oversight by the
Asset/Liability Management Committee and the Board.
Through various risk and control committees, senior
management reviews business performance relative to thesepolicies, monitors the availability of alternative sources offinancing, and oversees the liquidity, interest rate andcurrency sensitivity of our asset and liability position. Our
Corporate Treasury department (“Treasury”), Firm Risk
Committee, Asset/Liability Management Committee, andother committees and control groups assist in evaluating,monitoring and managing the impact that our businessactivities have on our balance sheet, liquidity and capital
structure. Liquidity and capital matters are reported regularly
to the Board and the BRC.

Disputes over interpretations of the tax laws may be settledwith the taxing authority upon examination or audit. We
periodically evaluate the likelihood of assessments in eachtaxing jurisdiction resulting from current and subsequent
years’ examinations, and unrecognized tax benefits related topotential losses that may arise from tax audits are establishedin accordance with the relevant accounting guidance. Onceestablished, unrecognized tax benefits are adjusted when there
is more information available or when an event occurs
requiring a change.

December 2023 Form 10-K

48

Table of Contents

Management’s Discussion and Analysis
Balance Sheet$1,194 billion at December 31, 2023 were relatively
unchanged from $1,180 billion at December 31, 2022.

We monitor and evaluate the composition and size of ourbalance sheet on a regular basis. Our balance sheet
management process includes quarterly planning, businessspecific thresholds, monitoring of business-specific usage
versus key performance metrics and new business impact
assessments.

Liquidity Risk Management Framework
The primary goal of our Liquidity Risk Management
Framework is to ensure that we have access to adequate
funding across a wide range of market conditions and time
horizons. The framework is designed to enable us to fulfill
our financial obligations and support the execution of ourbusiness strategies.

We establish balance sheet thresholds at the consolidated andbusiness segment levels. We monitor balance sheet utilization
and review variances resulting from business activity andmarket fluctuations. On a regular basis, we review current
performance versus established thresholds and assess the needto re-allocate our balance sheet based on business segmentneeds. We also monitor key metrics, including asset andliability size and capital usage.

The following principles
Management Framework:

At December 31, 2023
WM
IM

IS

Total

AssetsCash and cash equivalents$ 72,928 $ 16,172 $132 $89,232

Trading assets at fair value

353,841

7,962

5,271

367,074

Investment securities

39,212

115,595—

154,807

Securities purchased underagreements to resell

90,701

20,039—110,740

Securities borrowed

119,823

1,268—

121,091

Customer and other receivables

47,333

31,237

1,535

80,105Loans1

72,110146,526

4

218,640

Goodwill

424

10,1996,084

16,707

Intangible assets

26

3,427

3,602

7,055

14,10812,743

1,391

28,242Other assets2
Total assets$ in millionsIS

Our Required Liquidity Framework establishes the amount ofliquidity we must hold in both normal and stressed
environments to ensure that our financial condition andoverall soundness are not adversely affected by an inability(or perceived inability) to meet our financial obligations in atimely manner. The Required Liquidity Framework considers
the most constraining liquidity requirement to satisfy all
regulatory and internal limits at a consolidated and legal
entity level.

Total$ 88,362 $ 39,539 $226 $128,127

Trading assets at fair value

294,884

1,971

4,460

301,315

Investment securities

40,481

119,450—

159,931

Securities purchased underagreements to resell

102,511

11,396—113,907

Securities borrowed

132,619755—

133,374

Customer and other receivables

47,51529,6201,405

78,540Loans1

67,676

146,105

4

213,785

Goodwill

429

10,202

6,021

16,652

36

3,911

3,671

7,618

15,324

10,356

1,302

26,982Intangible assets
Other assets2
Total assets

Risk

Required Liquidity Framework

AssetsCash and cash equivalents

Liquidity

The core components of our Liquidity Risk Management
Framework are the Required Liquidity Framework, Liquidity
Stress Tests and Liquidity Resources, which support ourtarget liquidity profile.

$ 810,506 $ 365,168 $18,019 $ 1,193,693
At December 31, 2022
WM
IM

our

• Sufficient liquidity resources, which consist of HQLA andcash deposits with banks (“Liquidity Resources”) should bemaintained to cover maturing liabilities and other plannedand 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• Liquidity Stress Tests should anticipate, and account for,
periods of limited access to funding.

Total Assets by Business Segment$ in millions

guide

Liquidity Stress Tests
We use Liquidity Stress Tests to model external andintercompany liquidity flows across multiple scenarios and arange of time horizons. These scenarios contain various
combinations of idiosyncratic and systemic stress events ofdifferent severity and duration. The methodology,
implementation, production and analysis of our Liquidity
Stress Tests are important components of the Required
Liquidity Framework.

$ 789,837 $ 373,305 $17,089 $ 1,180,231

1. Amounts include loans held for investment, net of ACL, and loans held for sale but
exclude loans at fair value, which are included in Trading assets in the balance
sheet (see Note 9 to the financial statements).
2. Other assets primarily includes premises, equipment and software, ROU assets
related to leases, other investments and deferred tax assets.

A substantial portion of total assets consists of cash and cash
equivalents, liquid marketable securities and short-term
receivables. In the Institutional Securities business segment,these arise from market-making, financing and prime
brokerage activities, and in the Wealth Management businesssegment, these arise from banking activities, including
management of the investment portfolio. Total assets of

The assumptions used in our various Liquidity Stress Test
scenarios include, but are not limited to, the following:• No government support;• No access to equity and limited access to unsecured debt
markets;49

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis• Repayment of all unsecured debt maturing within the stresshorizon;• Higher haircuts for and significantly lower availability of
secured funding;• Additional collateral that would be required by trading
counterparties,
certainexchanges
andclearing
organizations related to credit rating downgrades;• Additional collateral that would be required due tocollateral substitutions, collateral disputes and uncalled
collateral;• Discretionary unsecured debt buybacks;• Drawdowns on lending commitments provided to third
parties; and• Client cash withdrawals and reduction in customer shortpositions that fund long positions.

Liquidity Resources by Type of Investment
Average Daily Balance
Three Months Ended$ in millions

December 31, September 30,
2023
2023

Cash deposits with central banks$

64,205 $66,330U.S. government obligations

137,635

122,110

U.S. agency and agency mortgage-backed
securities

83,73386,628

Non-U.S. sovereign obligations2

20,117

23,416

Other investment grade securities

678

Unencumbered HQLA securities1:

Total HQLA1

306,368 $
8,136

8,190

$

314,504 $307,367

Cash deposits with banks (non-HQLA)
Total Liquidity Resources693$

299,177

1. HQLA is presented prior to applying weightings and includes all HQLA held in
subsidiaries.
2. Primarily composed of unencumbered French, Japanese, U.K., German andSpanish government obligations.

Liquidity Stress Tests are produced and results are reported at
different levels, including major operating subsidiaries andmajor currencies, to capture specific cash requirements andcash availability across the Firm, including a limited numberof asset sales in a stressed environment. The Liquidity Stress
Tests assume that subsidiaries will use their own liquidity firstto fund their obligations before drawing liquidity from the
Parent Company and that the Parent Company will support its
subsidiaries and will not have access to subsidiaries’ liquidity
reserves. In addition to the assumptions underpinning the
Liquidity Stress Tests, we take into consideration settlement
risk related to intraday settlement and clearing of securities
and financing activities.

Liquidity Resources by Bank and Non-Bank Legal Entities
Average Daily Balance
Three Months Ended$ in millions

December 31, September 30,
2023
2023

Bank legal entities
U.S.

$

Non-U.S.

132,870 $

132,663

5,359

6,101

138,229

138,764

Parent Company

58,49453,681

Non-Parent Company

56,45958,839At December 31, 2023 and December 31, 2022,
we maintained sufficient Liquidity Resources to meet current
and contingent funding obligations as modeled in our
Liquidity Stress Tests.

Total U.S.

114,953

112,520

Liquidity Resources

Liquidity Resources may fluctuate from period to period
based on the overall size and composition of our balance
sheet, the maturity profile of our unsecured debt, andestimates of funding needs in a stressed environment, among
other factors.

Total Bank legal entities
Non-Bank legal entities
U.S.:

61,32256,083

Total Non-Bank legal entities

176,275

168,603

314,504 $307,367

Total Liquidity Resources

We maintain sufficient Liquidity Resources to cover daily
funding needs and to meet strategic liquidity targets sized by
the Required Liquidity Framework and Liquidity Stress Tests.
We actively manage the amount of our Liquidity Resources
considering the following components: unsecured debt
maturity profile; balance sheet size and composition; fundingneeds in a stressed environment, inclusive of contingent cash
outflows; legal entity, regional and segment liquidity
requirements; regulatory requirements; and collateralrequirements.

$

Regulatory Liquidity Framework
Liquidity Coverage Ratio and Net Stable Funding Ratio
We and our U.S. Bank Subsidiaries are required to maintain aminimum LCR and NSFR of 100%.
The LCR rule requires large banking organizations to havesufficient Eligible HQLA to cover net cash outflows arisingfrom significant stress over 30 calendar days, thus promoting
the short-term resilience of the liquidity risk profile ofbanking organizations. In determining Eligible HQLA for
LCR purposes, weightings (or asset haircuts) are applied to
HQLA, and certain HQLA held in subsidiaries is excluded.

The amount of Liquidity Resources we hold is based on ourrisk appetite and is calibrated to meet various internal andregulatory requirements and to fund prospective businessactivities. The Liquidity Resources are primarily held within
the Parent Company and its major operating subsidiaries. The
Total HQLA values in the tables immediately following aredifferent from Eligible HQLA, which, in accordance with the
LCR rule, also takes into account certain regulatory
weightings and other operational considerations.

December 2023 Form 10-K

Non-U.S.

The NSFR rule requires large banking organizations tomaintain an amount of available stable funding, which is theirregulatory capital and liabilities subject to standardized
weightings, equal to or greater than their required stable50

Table of Contents

Management’s Discussion and Analysis
funding, which is their projected minimum funding needs,
over a one-year time horizon.

provides us with flexibility in managing the composition of
our balance sheet. Secured financing investors principally
focus on the quality of the eligible collateral posted.
Accordingly, we actively manage our secured financings
based on the quality of the assets being funded.

As of December 31, 2023, we and our U.S. Bank Subsidiaries
are compliant with the minimum LCR and NSFR
requirements of 100%.

We have established longer-tenor secured funding
requirements for less liquid asset classes, for which funding
may be at risk in the event of a market disruption. We define
highly liquid assets as government-issued or governmentguaranteed securities with a high degree of fundability andless liquid assets as those that do not meet these criteria.

Liquidity Coverage Ratio
Average Daily Balance
Three Months Ended
December 31,
September 30,
2023
2023

$ in millions

Eligible HQLA1Cash deposits with central banks$

Securities2

58,047$

194,970

60,163

Total Eligible HQLA1$

253,017$

241,173

Net cash outflows$

196,488$

190,336

LCR

To further minimize the refinancing risk of secured financing
for less liquid assets, we have established concentration limits
to diversify our investor base and reduce the amount ofmonthly maturities for secured financing of less liquid assets.
As a component of the Liquidity Risk Management
Framework, we hold a portion of our Liquidity Resources
against the potential disruption to our secured financing
capabilities.

181,010

129 %

127 %

1. Under the LCR rule, Eligible HQLA is calculated using weightings and excluding
certain HQLA held in subsidiaries.
2. Primarily includes U.S. Treasuries, U.S. agency mortgage-backed securities,
sovereign bonds and investment grade corporate bonds.

Net Stable Funding Ratio$ in millions

Available stable funding
Required stable funding
NSFR

In general, we maintain a pool of liquid and easily fundable
securities, which takes into account HQLA classifications
consistent with LCR definitions, and other regulatory
requirements, and provides a valuable future source ofliquidity.

Average Daily Balance
Three Months Ended
December 31,
September 30,
2023
2023
$

555,884
465,226120 %$

553,413468,290
118 %Collateralized Financing Transactions$ in millions

At
December 31,
2023

Securities purchased under agreements toresell and Securities borrowed$

231,831 $247,281

Securities sold under agreements torepurchase and Securities loaned$

77,708 $78,213

Securities received as collateral1$

6,219 $

9,954

Funding Management
We manage our funding in a manner that reduces the risk of
disruption to our operations. We pursue a strategy ofdiversification of secured and unsecured funding sources (byproduct, investor and region) and attempt to ensure that thetenor of our liabilities equals or exceeds the expected holding
period of the assets being financed. Our goal is to achieve an
optimal mix of durable secured and unsecured financing.

At
December 31,
2022

Average Daily Balance
Three Months EndedWe fund our balance sheet on a global basis through diverse
sources. These sources include our equity capital, borrowings,bank notes, securities sold under agreements to repurchase,
securities lending, deposits, letters of credit and lines ofcredit. We have active financing programs for both standard
and structured products targeting global investors andcurrencies.

$ in millions

December 31,
2023

December 31,
2022

Securities purchased under agreements toresell and Securities borrowed$

235,928 $261,627

Securities sold under agreements torepurchase and Securities loaned$

87,285 $77,268

1. Included within Trading assets in the balance sheet.

See “Total Assets by Business Segment” herein for additional
information on the assets shown in the previous table andNotes 2 and 8 to the financial statements for additional
information on collateralized financing transactions.

Treasury allocates interest expense to our businesses based on
the tenor and interest rate profile of the assets being funded.
Treasury similarly allocates interest income to businesses
carrying deposit products and other liabilities across thebusinesses based on the characteristics of those deposits andother liabilities.

In addition to the collateralized financing transactions shownin the previous table, we engage in financing transactions
collateralized by customer-owned securities, which aresegregated in accordance with regulatory requirements.
Receivables under these financing transactions, primarily
margin loans, are included in Customer and other receivablesin the balance sheet, and payables under these financing
transactions, primarily to prime brokerage customers, areincluded in Customer and other payables in the balance sheet.
Our risk exposure on these transactions is mitigated by

Secured Financing
The liquid nature of the marketable securities and short-term
receivables arising principally from sales and trading
activities in the Institutional Securities business segment
51

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
Borrowings by Remaining Maturity at December 31, 20231

collateral maintenance policies and the elements of ourLiquidity Risk Management Framework.
Unsecured Financing$ in millions

ParentCompany

Original maturities of one year or less$Subsidiaries— $3,188 $

Total
3,188

Original maturities greater than one year

We view deposits and borrowings as stable sources of fundingfor unencumbered securities and non-security assets. Our
unsecured financings include borrowings and certificates ofdeposit carried at fair value, which are primarily composed of:
instruments whose payments and redemption values arelinked to the performance of a specific index, a basket ofstocks, a specific equity security, a commodity, a credit
exposure or basket of credit exposures; and instruments withvarious interest rate-related features, including step-ups, stepdowns and zero coupons. Also included are unsecured
contracts that are not classified as OTC derivatives because
they fail initial net investment criteria. As part of our asset/
liability management strategy, when appropriate, we use
derivatives to make adjustments to the interest rate risk profile
of our borrowings (see Notes 6 and 13 to the financial
statements).

2024$ in millions

148,274 $

202,592

139,978

117,356

Total Savings and demand deposits

288,252

319,948

Time deposits

63,552

36,698351,804 $356,646

Total2$$

1. Amounts represent balances swept from client brokerage accounts.
2. As of December 31, 2023, there were no off-balance sheet amounts excluded from
deposits. As of December 31, 2022, approximately $6 billion of off-balance sheet
amounts were excluded from deposits at unaffiliated financial institutions.

35,5232026

24,516

10,90735,4232027

19,282

6,056

25,3382028

11,432

9,807

21,239Thereafter

90,63532,235

122,870

Total greater than one year

$ 176,810 $

83,734 $ 260,544

Total$ 176,810 $

86,922 $ 263,732

The availability and cost of financing to us can varydepending on market conditions, the volume of certain trading
and lending activities, our credit ratings and the overall
availability of credit. We also engage in, and may continue toengage in, repurchases of our borrowings as part of ourmarket-making activities.

Deposits are primarily sourced from our Wealth Management
clients and are considered to have stable, low-cost funding
characteristics relative to other sources of funding. Eachcategory of deposits presented above has a different costprofile and clients may respond differently to changes ininterest rates and other macroeconomic conditions. The
decrease in total deposits in 2023 was primarily driven by acontinued reduction in Brokerage sweep deposits, largely due
to net outflows to alternative cash equivalent and otherproducts, partially offset by an increase in Time deposits andSavings.

December 2023 Form 10-K

20,151

13,493We believe that accessing debt investors through multiple
distribution channels helps provide consistent access to theunsecured markets. In addition, the issuance of borrowings
with original maturities greater than one year allows us toreduce reliance on short-term credit-sensitive instruments.
Borrowings with original maturities greater than one year are
generally managed to achieve staggered maturities, thereby
mitigating refinancing risk, and to maximize investor
diversification through sales to global institutional and retailclients across regions, currencies and product types.

At
December 31,
2022

Savings and other

11,236 $22,030Borrowings of $264 billion at December 31, 2023 increased
from $238 billion at December 31, 2022, primarily due toissuances net of maturities and redemptions and mark-tomarket adjustments on equity-linked borrowings driven bymarket factors.

Savings and demand deposits:
Brokerage sweep deposits1$

1. Original maturity in the table is generally based on contractual final maturity. For
borrowings with put options, remaining maturity represents the earliest put date.

Deposits
At
December 31,
2023

8,915 $

2025

For further information on Borrowings, see Note 13 to thefinancial statements.
Credit Ratings
We rely on external sources to finance a significant portion of
our daily operations. Our credit ratings are one of the factors
in the cost and availability of financing and can have an
impact on certain trading revenues, particularly in thosebusinesses where longer-term counterparty performance is a
key consideration, such as certain OTC derivativetransactions. When determining credit ratings, rating agencies
consider both company-specific and industry-wide factors.
See also “Risk Factors—Liquidity Risk.”52

Table of Contents

Management’s Discussion and Analysis
Parent Company and U.S. Bank Subsidiaries Issuer Ratings
at February 16, 2024

Common Stock Repurchases

DBRS, Inc.

Short-Term
Debt

Long-Term
Debt

RatingOutlookR-1 (middle)

A (high)

StableFitch Ratings, Inc.

F1

A+

StableMoody’s Investors Service, Inc.

P-1

A1

StableRating and Investment
Information, Inc.

a-1

A+

StableS&P Global Ratings

A-2

A-

StableShort-Term
Debt

Long-Term
Debt

RatingOutlook

Number of shares

F1+

AA-

StableMoody’s Investors Service, Inc.

P-1

Aa3

StableS&P Global Ratings

A-1

A+

Stable

2022

2021

62

113

126
91.13

Average price per share$

85.35 $

87.25 $

Total$

5,300 $

9,865 $ 11,464

For additional information on our common stock repurchases,
see “Liquidity and Capital Resources—Regulatory
Requirements—Capital Plans, Stress Tests and the Stress
Capital Buffer” herein and Note 17 to the financial
statements.

MSBNA

Fitch Ratings, Inc.

2023

in millions, except for per share data

Parent Company

For a description of our capital plan, see “Liquidity andCapitalResources—Regulatory
Requirements—Capital
Plans, Stress Tests and the Stress Capital Buffer” herein.

MSPBNA

Common Stock Dividend Announcement

Short-Term
Debt

Long-Term
Debt

RatingOutlook

Announcement date

Moody’s Investors Service, Inc.

P-1

Aa3

StableAmount per share

S&P Global Ratings

A-1

A+

StableDate paid

February 15, 2024

Shareholders of record as ofJanuary 31, 2024

Incremental Collateral or Terminating Payments

January 16, 2024
$0.85

For additional information on our common stock dividends,
see “Liquidity and Capital Resources—Regulatory
Requirements—Capital Plans, Stress Tests and the Stress
Capital Buffer” herein.

In connection with certain OTC derivatives and certain otheragreements where we are a liquidity provider to certain
financing vehicles associated with the Institutional Securities
business segment, we may be required to provide additional
collateral, immediately settle any outstanding liability
balances with certain counterparties or pledge additional
collateral to certain clearing organizations in the event of afuture credit rating downgrade irrespective of whether we arein a net asset or net liability position. See Note 6 to thefinancial statements for additional information on OTC
derivatives that contain such contingent features.

For additional information on our common stock andinformation on our preferred stock, see Note 17 to thefinancial statements.
Off-Balance Sheet Arrangements
We enter into various off-balance sheet arrangements,
including through unconsolidated SPEs and lending-related
financial instruments (e.g., guarantees and commitments),
primarily in connection with the Institutional Securities andInvestment Management business segments.

While certain aspects of a credit rating downgrade arequantifiable pursuant to contractual provisions, the impact itwould have on our business and results of operations in future
periods is inherently uncertain and would depend on a numberof interrelated factors, including, among other things, themagnitude of the downgrade, the rating relative to peers, therating assigned by the relevant agency before the downgrade,individual client behavior and future mitigating actions wemight take. The liquidity impact of additional collateralrequirements is included in our Liquidity Stress Tests.

We utilize SPEs primarily in connection with securitization
activities. For information on our securitization activities, seeNote 15 to the financial statements.
For information on our commitments, obligations undercertain guarantee arrangements and indemnities, see Note 14
to the financial statements. For a further discussion of ourlending commitments, see “Quantitative and Qualitative
Disclosures about Risk—Credit Risk—Loans and Lending
Commitments” herein.

Capital Management
We view capital as an important source of financial strengthand actively manage our 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 agency
guidelines. In the future, we may expand or contract ourcapital base to address the changing needs of our businesses.

Regulatory Requirements
Regulatory Capital Framework
We are an FHC under the BHC Act and are subject to theregulation and oversight of the Federal Reserve. The Federal
Reserve establishes capital requirements for us, including“well-capitalized” standards, and evaluates our compliancewith such capital requirements. The OCC establishes similar
capital requirements and standards for our U.S. Bank
53

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
Subsidiaries. The regulatory capital requirements are largely
based on the Basel III capital standards established by theBasel Committee and also implement certain provisions of the
Dodd-Frank Act. For us to remain an FHC, we must remain
well-capitalized in accordance with standards established by
the Federal Reserve, and our U.S. Bank Subsidiaries mustremain well-capitalized in accordance with standards
established by the OCC. In addition, many of our regulated
subsidiaries are subject to regulatory capital requirements,
including regulated subsidiaries registered as swap dealerswith the CFTC or conditionally registered as security-based
swap dealers with the SEC or registered as broker-dealers or
futures commission merchants. For additional information on
regulatory capital requirements for our U.S. Bank
Subsidiaries, as well as our subsidiaries that are swap entities,
see Note 16 to the financial statements.

buffer requirement computed under the applicable advanced
approaches for calculating credit risk, market risk andoperational risk RWAs (“Advanced Approach”) is equal toour 2.5% capital conservation buffer, G-SIB capital surcharge
and CCyB.

Regulatory Capital Requirements

1. Required ratios represent the regulatory minimum plus the capital buffer
requirement.

We are required to maintain minimum risk-based andleverage-based capital and TLAC ratios. For additional
information on TLAC, see “Total Loss-Absorbing Capacity,
Long-Term Debt and Clean Holding Company Requirements”
herein.

Risk-Weighted Assets. RWA reflects both our on- and offbalance sheet risk, as well as capital charges attributable to
the risk of loss arising from the following:Risk-Based Regulatory Capital Ratio Requirements

Regulatory
Minimum

Advanced
2.5%

Capital buffers
Capital conservation buffer

—

—

SCB1

5.4%

5.8%

N/A

G-SIB capital surcharge2

3.0%

3.0%

3.0%

CCyB3

0%

0%

0%

Capital buffer requirement

8.4%

8.8%

5.5%

1. For additional information on the SCB, see “Capital Plans, Stress Tests and theStress Capital Buffer” herein.
2. For a further discussion of the G-SIB capital surcharge, see “G-SIB Capital
Surcharge” herein.
3. The CCyB can be set up to 2.5% but is currently set by the Federal Reserve atzero.

Advanced

Common Equity
Tier 1 capital
ratio

4.5%

12.9%

13.3%

10.0%

Tier 1 capital
ratio

6.0%

14.4%

14.8%

11.5%

Total capital
ratio

8.0%

16.4%

16.8%

13.5%

Leverage-Based Regulatory Capital. Leverage-based capitalrequirements include a minimum Tier 1 leverage ratio of 4%,
a minimum SLR of 3% and an enhanced SLR capital bufferof at least 2%.

The capital buffer requirement represents the amount ofCommon Equity Tier 1 capital we must maintain above theminimum risk-based capital requirements in order to avoid
restrictions on our ability to make capital distributions,
including the payment of dividends and the repurchase ofstock, and to pay discretionary bonuses to executive officers.
Our capital buffer requirement computed under the
standardized approaches for calculating credit risk and market
RWAs (“Standardized Approach”) is equal to the sum of our
SCB, G-SIB capital surcharge and CCyB, and our capital
December 2023 Form 10-K

Standardized

Our risk-based capital ratios are computed under each of(i) the Standardized Approach and (ii) the Advanced
Approach. The credit risk RWA calculations between the two
approaches differ in that the Standardized Approach requires
calculation of RWA using prescribed risk weights andexposure methodologies, whereas the Advanced Approach
utilizes models to calculate exposure amounts and risk
weights. At December 31, 2023 and December 31, 2022, thedifferences between the actual and required ratios were lower
under the Standardized Approach.

At December
31, 2023 andDecember 31,
2022

StandardizedStandardized• Credit risk: The failure of a borrower, counterparty or
issuer to meet its financial obligations to us;• Market risk: Adverse changes in the level of one or moremarket prices, rates, spreads, indices, volatilities,
correlations or other market factors, such as market
liquidity; and• Operational risk: Inadequate or failed processes or systems,
from human factors or from external events (e.g., fraud,
theft, legal and compliance risks, cyber attacks or damage
to physical assets).

Capital Buffer Requirements

Standardized

At December
31, 2023 andDecember 31,
2022

Required ratios1

Risk-Based Regulatory Capital. Risk-based capital ratio
requirements apply to Common Equity Tier 1 capital, Tier 1
capital and Total capital (which includes Tier 2 capital), eachas a percentage of RWA, and consist of regulatory minimum
required ratios plus our capital buffer requirement. Capitalrequirements require certain adjustments to, and deductions
from, capital for purposes of determining these ratios.

At
At
December 31, December 31,
2023
2022

At
At
December 31, December 31,
2023
2022

CECL Deferral. Beginning on January 1, 2020, we elected todefer the effect of the adoption of CECL on our risk-based
and leverage-based capital amounts and ratios, as well as our
RWA, adjusted average assets and supplementary leverage
exposure calculations, over a five-year transition period. The
deferral impacts began to phase in at 25% per year fromJanuary 1, 2022 and are phased-in at 50% from January 1,
2023. The deferral impacts will become fully phased-in
beginning on January 1, 2025.
54

Table of Contents

Management’s Discussion and Analysis
Regulatory Capital Ratios$ in millions

RequiredRatio1

Regulatory Capital

At December 31,
2023

Required At December 31,
Ratio1
2022$ in millions

Risk-based capital—
Standardized
Common Equity Tier 1
capitalAt
At
December 31, December 31,
2023
2022
ChangeCommon Equity Tier 1 capital$

69,448$

Common shareholders’ equity

68,670$90,288 $91,391 $ (1,103)

Tier 1 capital

78,183

77,191

Regulatory adjustments anddeductions:

Total capital

88,87486,575

Net goodwill(16,394)(16,393)(1)

Total RWA

456,053447,849

Net intangible assets(5,509)(6,048)539

Common Equity
Tier 1 capital
ratio

12.9%

15.2%

13.3%

Impact of CECL transition

124

185

(61)

15.3%

Other adjustments anddeductions1

939

(465)

1,404

Total Common Equity Tier 1
capital$69,448 $68,670 $778$

8,750 $

8,750 $

—

758

552

206

$

9,508 $

9,302 $

206

(773)

(781)

8

$

78,183 $77,191 $992$

Tier 1 capital
ratio

14.4%

17.1%

14.8%

17.2%

Total capital ratio

16.4%

19.5%

16.8%

19.3%

At December 31,
2023

At December 31,
2022$ in millions

RequiredRatio1

Additional Tier 1 capitalPreferred stock
Noncontrolling interests
Additional Tier 1 capital

Risk-based capital—
Advanced

Deduction for investments incovered funds

Common Equity Tier 1
capital$69,448$68,670Total Tier 1 capital

Tier 1 capital

78,183

77,191

Total capitalStandardized Tier 2 capital

88,19086,159Total RWA

Subordinated debt

448,154438,806

8,760 $

7,846 $

914

Eligible ACL

2,051

1,613

438

Other adjustments and deductions

(120)

(75)

(45)

Common Equity Tier 1
capital ratio

10.0%

15.5%

15.6%

Tier 1 capital ratio

11.5%

17.4%

17.6%

Total capital ratio

Total Standardized Tier 2
capital

13.5%

19.7%

19.6%

$

10,691 $9,384 $ 1,307

Total Standardized capital$

88,874 $86,575 $ 2,299

RequiredRatio1At December 31,
2023

At December 31,
2022$

8,760 $

7,846 $

914

1,367

1,197

170

(75)

(45)

$ in millions

Advanced Tier 2 capital
Subordinated debt

Leverage-based capital

Eligible credit reserves

Adjusted average assets2
Tier 1 leverage ratio$
4.0%

Supplementary
leverage exposure3
SLR

$

6.7%
$

5.0%

1,159,626

1,429,552
5.5%

1,150,772

Other adjustments anddeductions

6.7%$

1,399,403
5.5%

(120)

Total Advanced Tier 2 capital$

10,007 $

8,968 $ 1,039

Total Advanced capital$

88,190 $86,159 $ 2,031

1. Other adjustments and deductions used in the calculation of Common Equity Tier 1
capital primarily includes net after-tax DVA, the credit spread premium over risk-freerate for derivative liabilities, defined benefit pension plan assets, after-tax gain onsale from assets sold into securitizations, investments in our own capital
instruments and certain deferred tax assets.

1. Required ratios are inclusive of any buffers applicable as of the date presented.
2. Adjusted average assets represents the denominator of the Tier 1 leverage ratio
and is composed of the average daily balance of consolidated on-balance sheet
assets for the quarters ending on the respective balance sheet dates, reduced bydisallowed goodwill, intangible assets, investments in covered funds, defined
benefit pension plan assets, after-tax gain on sale from assets sold into
securitizations, investments in our own capital instruments, certain deferred tax
assets and other capital deductions.
3. Supplementary leverage exposure is the sum of Adjusted average assets used in
the Tier 1 leverage ratio and other adjustments, primarily: (i) for
derivatives, potential future exposure and the effective notional principal amount ofsold credit protection offset by qualifying purchased credit protection; (ii) the
counterparty credit risk for repo-style transactions; and (iii) the credit equivalentamount for off-balance sheet exposures.

55

December 2023 Form 10-K

Table of Contents

Management’s Discussion and Analysis
interconnectedness,cross-jurisdictional
activity,
andcomplexity and substitutability (“Method 1”) or use of shortterm wholesale funding (“Method 2”), whichever is higher.

RWA Rollforward
Standardized$ in millions

Advanced

Credit risk RWA
Balance at December 31, 2022$

397,275 $

285,638

Total Loss-Absorbing Capacity, Long-Term Debt andClean Holding Company Requirements

Change related to the following items:
Derivatives

6,065

660

Securities financing transactions

2,924

(354)

Investment securities(1,316)385

Commitments, guarantees and loans(2,606)

6,903

Equity investments

1,621

1,964

Other credit risk

3,768

2,662

Total change in credit risk RWA$

10,456 $12,220

Balance at December 31, 2023$

407,731 $297,858$

50,574 $50,563

Regulatory VaR(3,946)(3,946)

Regulatory stressed VaR(5,017)(5,017)

Incremental risk charge

9494Comprehensive risk measure

341

231

The Federal Reserve has established external TLAC, longterm debt (“LTD”) and clean holding company requirements
for top-tier BHCs of U.S. G-SIBs (“covered BHCs”),
including the Parent Company. These requirements aredesigned to ensure that covered BHCs will have enough lossabsorbing resources at the point of failure to be recapitalized
through the conversion of eligible LTD to equity or otherwise
by imposing losses on eligible LTD or other forms of TLAC
where an SPOE resolution strategy is used (see “Business—
Supervision and Regulation—Financial Holding Company—
Resolution and Recovery Planning” and “Risk Factors—
Legal, Regulatory and Compliance Risk”).

Market risk RWA
Balance at December 31, 2022
Change related to the following items:

Specific risk

6,276

6,276

Total change in market risk RWA$(2,252) $(2,362)

Balance at December 31, 2023$

48,322 $48,201

Balance at December 31, 2022

N/A $102,605

Change in operational risk RWA

N/ABalance at December 31, 2023

N/A $102,095

456,053 $448,154

These TLAC and eligible LTD requirements include various
restrictions, such as requiring eligible LTD to: be issued by
the covered BHC; be unsecured; have a maturity of one year
or more from the date of issuance; and not contain certain
embedded features, such as a principal or redemption amountsubject to reduction based on the performance of an asset,
entity or index, or a similar feature. In addition, therequirements provide permanent grandfathering for debt
instruments issued prior to December 31, 2016 that would be
eligible LTD but for having impermissible acceleration
clauses or being governed by foreign law.

Operational risk RWA

Total RWA

$

(510)

Regulatory VaR—VaR for regulatory capital requirements

In 2023, Credit risk RWA increased under the Standardized
and Advanced Approaches. Under the Standardized
Approach, the increase was primarily driven by higher
derivatives, higher securities financing transactions, higher
equity investments, as well as an increase in Other credit risk
driven by higher deferred tax assets and securitizations. These
increases were partially offset by decreases in lending
activity. Under the Advanced Approach, the increase wasprimarily driven by growth in Corporate lending, higher
equity investments, higher derivatives, as well as increase in
Other credit risk driven by higher deferred tax assets andsecuritizations.

A covered BHC is also required to maintain minimum
external TLAC equal to the greater of (i) 18% of total RWAor (ii) 7.5% of its total leverage exposure (the denominator of
its SLR). Covered BHCs must also meet a minimum external
LTD requirement equal to the greater of (i) total RWA
multiplied by the sum of 6% plus the higher of the Method 1
or Method 2 G-SIB capital surcharge applicable to the Parent
Company or (ii) 4.5% of its total leverage exposure.
TLAC buffer requirements are imposed on top of both therisk-based and leverage exposure-based external TLAC
minimum requirements. The risk-based TLAC buffer is equal
to the sum of 2.5%, our Method 1 G-SIB surcharge and the
CCyB, if any, as a percentage of total RWA. The leverage
exposure-based TLAC buffer is equal to 2% of our total
leverage exposure. Failure to maintain the buffers would
result in restrictions on our ability to make capital
distributions, including the payment of dividends and therepurchase of stock, and to pay discretionary bonuses to
executive officers.

Market risk RWA decreased in 2023 under both theStandardized and Advanced Approaches, primarily due tolower Regulatory VaR and stressed VaR driven by reductions
in macro and commodities businesses, partially offset byhigher Specific risk charges on securitization and nonsecuritization standardized charges.
Operational
unchanged.

risk

RWA

in

2023

remained

relatively

G-SIB Capital Surcharge
We and other U.S. G-SIBs are subject to an additional riskbased capital surcharge, the G-SIB capital surcharge, whichmust be satisfied using Common Equity Tier 1 capital andwhich functions as an extension of the capital conservationbuffer. The surcharge is calculated based on the G-SIB’s size,
December 2023 Form 10-K

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Management’s Discussion and Analysis
capital. The capital plan must include a discussion of how wewill maintain capital above the minimum regulatory capitalratios and how we will serve as a source of strength to our
U.S. Bank Subsidiaries under supervisory stress scenarios. In
addition, the Federal Reserve has issued guidance setting out
its heightened expectations for capital planning practices atcertain large financial institutions, including us.

Required and Actual TLAC and Eligible LTD Ratios
ActualAmount/Ratio$ in millionsAt
At
Regulatory Required December 31, December 31,
1
Minimum
Ratio
2023
2022

External TLAC2$

External TLAC as a %of RWA

18.0%

21.5%

External TLAC as a %of leverage exposure

7.5%

9.5%

Eligible LTD3

250,914

$

55.0%

54.9%

17.6%
$

162,547

245,951

As part of its annual capital supervisory stress testing process,the Federal Reserve determines an SCB for each large BHC,
including us. The SCB applies only with respect toStandardized Approach risk-based capital requirements andreplaced the Common Equity Tier 1 capital conservationbuffer of 2.5%. The SCB is the greater of (i) the maximum
decline in our Common Equity Tier 1 capital ratio under theseverely adverse scenario over the supervisory stress test
measurement period plus the sum of the four quarters ofplanned common stock dividends divided by the projected
RWAs from the quarter in which the Firm’s projected
Common Equity Tier 1 capital ratio reaches its minimum inthe supervisory stress test and (ii) 2.5%.

17.6%
$

159,444

Eligible LTD as a % of
RWA

9.0%

9.0%

35.6%

35.6%

Eligible LTD as a % ofleverage exposure

4.5%

4.5%

11.4%

11.4%

1. Required ratios are inclusive of applicable buffers.
2. External TLAC consists of Common Equity Tier 1 capital and Additional Tier 1
capital (each excluding any noncontrolling minority interests), as well as eligibleLTD.
3. Consists of TLAC-eligible LTD reduced by 50% for amounts of unpaid principal due
to be paid in more than one year but less than two years from each respectivebalance sheet date.

Furthermore, under the clean holding company requirements,a covered BHC is prohibited from incurring any external debt
with an original maturity of less than one year or certain otherliabilities, regardless of whether the liabilities are fully
secured or otherwise senior to eligible LTD, or entering into
certain other prohibited transactions. Certain other externalliabilities, including those with certain embedded features
noted above, are subject to a cap equal to 5% of the covered
BHC’s outstanding external TLAC amount. Additionally, as
of April 1, 2021, we and our U.S. Bank Subsidiaries are
required to make certain deductions from regulatory capitalfor investments in certain unsecured debt instruments(including eligible LTD in the TLAC framework) issued by
the Parent Company or other G-SIBs.

The supervisory stress test assumes that BHCs generally
maintain a constant level of assets and RWAs throughout the
projection period.
A firm’s SCB is subject to revision each year, taking effectfrom October 1 to reflect the results of the Federal Reserve’s
annual supervisory stress test. The Federal Reserve has
discretion to recalculate a firm’s SCB outside of the October 1
annual cycle and to require approval for certain actions, insome circumstances. The Federal Reserve also has theauthority to impose restrictions on capital actions as asupervisory matter.

We are in compliance with all TLAC requirements as ofDecember 31, 2023 and December 31, 2022.

For the 2023 capital planning and stress test cycle, we
submitted our capital plan and company-run stress test results
to the Federal Reserve on April 5, 2023. On June 28, 2023,
the Federal Reserve published summary results of its
supervisory stress tests of each large BHC, in which the
projected decline in our Common Equity Tier 1 ratio in theseverely adverse scenario improved from the prior annual
supervisory stress test by 50 basis points, from 4.6% to 4.1%.
Following the publication of the supervisory stress test
results, and as a result of the increase in our common stock
dividend and the resulting dividend add-on, we announced
that our SCB will be 5.4% from October 1, 2023 throughSeptember 30, 2024. Together with other features of theregulatory capital framework, this SCB results in an aggregateStandardized Approach Common Equity Tier 1 ratio of
12.9%.

Capital Plans, Stress Tests and the Stress Capital Buffer
The Federal Reserve has capital planning and stress test
requirements for large BHCs, which form part of the Federal
Reserve’s annual CCAR framework.
We must submit, on at least an annual basis, a capital plan to
the Federal Reserve, taking into account the results ofseparate annual stress tests designed by us and the Federal
Reserve, so that the Federal Reserve may assess our systems
and processes that incorporate forward-looking projections ofrevenues and losses to monitor and maintain our internal
capital adequacy. As banks with less than $250 billion of total
assets, our U.S. Bank Subsidiaries are not subject tocompany-run stress test regulatory requirements.

We also disclosed a summary of the results of our companyrun stress tests on our Investor Relations website andincreased our quarterly common stock dividend to $0.85 pershare from $0.775, beginning with the common stock
dividend announced on July 18, 2023. Additionally, ourBoard of Directors reauthorized a multi-year common stock
repurchase program of up to $20 billion, without a set

The capital plan must include a description of all planned
capital actions over a nine-quarter planning horizon, including
any issuance or redemption of a debt or equity capital
instrument, any capital distribution (i.e., payments ofdividends or stock repurchases) and any similar action that theFederal Reserve determines could impact our consolidated
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Management’s Discussion and Analysis
expiration date, beginning in the third quarter of 2023, which
will be exercised from time to time as conditions warrant.

on June 30, 2023. For more information about resolution
planning requirements, see “Business—Supervision andRegulation—Financial Holding Company—Resolution andRecovery Planning.”

Attribution of Average Common Equity According to theRequired Capital Framework

As described in our most recent resolution plan, our preferred
resolution strategy is an SPOE strategy. In line with our
SPOE strategy, the Parent Company has transferred, and has
agreed to transfer on an ongoing basis, certain assets to its
wholly owned, direct subsidiary Morgan Stanley Holdings
LLC (the “Funding IHC”). In addition, the Parent Company
has entered into an amended and restated support agreementwith its material entities (including the Funding IHC) andcertain other subsidiaries. In the event of a resolution
scenario, the Parent Company would be obligated tocontribute all of its contributable assets to our supported
entities and/or the Funding IHC. The Funding IHC would be
obligated to provide capital and liquidity, as applicable, to our
supported entities. The combined implication of the SPOE
resolution strategy and the requirement to maintain certain
levels of TLAC is that losses in resolution would be imposedon the holders of eligible LTD and other forms of eligible
TLAC issued by the Parent Company before any losses are
imposed on creditors of our supported entities and without
requiring taxpayer or government financial support.

Our required capital (“Required Capital”) estimation is basedon the Required Capital framework, an internal capital
adequacy measure. Common equity attribution to the businesssegments is based on capital usage calculated under theRequired Capital framework, as well as each businesssegment’s relative contribution to our total Required Capital.
The Required Capital framework is a risk-based and leveragebased capital measure, which is compared with our regulatory
capital to ensure that we maintain an amount of going concern
capital after absorbing potential losses from stress events,
where applicable, at a point in time. The amount of capital
allocated to the business segments is generally set at the
beginning of each year and remains fixed throughout the year
until the next annual reset unless a significant business change
occurs (e.g., acquisition or disposition). We define thedifference between our total average common equity and thesum of the average common equity amounts allocated to ourbusiness segments as Parent Company common equity. We
generally hold Parent Company common equity forprospective regulatory requirements, organic growth,potential future acquisitions and other capital needs.

The obligations of the Parent Company and the Funding IHC
under the amended and restated support agreement are in
most cases secured on a senior basis by the assets of the
Parent Company (other than shares in subsidiaries of the
Parent Company and certain other assets) and the assets of theFunding IHC. As a result, claims of our supported entities,
including the Funding IHC, with respect to the secured assets,are effectively senior to unsecured obligations of the Parent
Company.

Average Common Equity Attribution under the Required
Capital Framework1
2023$ in billions

Institutional Securities

2022

2021

45.6 $

48.8 $

43.5

Wealth Management

28.8

31.0

28.6

Investment Management2

10.4

10.6

8.8

Parent

6.0

3.5

16.2

90.8 $

93.9 $

97.1

Total

$

$

For more information about resolution and recovery planningrequirements and our activities in these areas, including theimplications of such activities in a resolution scenario, see“Business—Supervision and Regulation—Financial Holding
Company—Resolution and Recovery Planning” and “Risk
Factors—Legal, Regulatory and Compliance Risk.”

1. The attribution of average common equity to the business segments is a non-GAAP
financial measure. See “Selected Non-GAAP Financial Information” herein.
2. The total average common equity and the allocation to the Investment Managementbusiness segment in 2021 reflect the Eaton Vance acquisition on March 1, 2021.

We continue to evaluate our Required Capital framework withrespect to the impact of evolving regulatory requirements, as
appropriate.

Regulatory Developments and Other Matters

Resolution and Recovery Planning

Replacement of London Interbank Offered Rate andReplacement or Reform of Other Interest Rate Benchmarks

We are required to submit once every two years to the Federal
Reserve and the FDIC (“Agencies”) a resolution plan that
describes our strategy for a rapid and orderly resolution under
the U.S. Bankruptcy Code in the event of our material
financial distress or failure. We submitted our 2021 targeted
resolution plan on June 30, 2021. In November 2022, wereceived joint feedback on our 2021 resolution plan from the
Agencies. The feedback indicated that there are no
shortcomings or deficiencies in our 2021 resolution plan andthat we had successfully addressed a prior shortcoming
identified by the Agencies in the review of our 2019 full
resolution plan. We submitted our 2023 full resolution plan
December 2023 Form 10-K

Central banks around the world, including the Federal
Reserve, have sponsored initiatives in recent years to replace
LIBOR and replace or reform certain other interest ratebenchmarks (collectively, the “IBORs”).
With the cessation of publication of U.S. dollar LIBOR rates
on a representative basis as of June 30, 2023, all LIBOR
publications have ceased on a representative basis. However,
the one-, three- and six-month U.S. dollar LIBOR and threemonth sterling LIBOR rates are being published for a limited
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synthetic methodology (known as “synthetic LIBOR”).
Publication of the three-month synthetic sterling LIBOR willcease at the end of March 2024 and publication of the one-,
three- and six-month synthetic U.S. dollar LIBOR will ceaseat the end of September 2024.

includes operational risk and credit valuation adjustment
RWA components.
The Basel III Endgame Proposal, if adopted as a final rule,would maintain the current capital rule’s dual-requirement
structure, whereby we and our U.S. Bank Subsidiaries would
be required to calculate our risk-based capital ratios underboth the Expanded Approach and the Standardized Approach.
In addition, the proposal would modify the Standardized
Approach by requiring that the new market risk standards
from the proposal also be applied in the Standardized
Approach.

As of December 31, 2023, a significant majority of our U.S.
dollar LIBOR-referenced contracts contained fallback
provisions or otherwise had a path that allowed for thetransition to an alternative reference rate following the
cessation of the applicable U.S. dollar LIBOR rate. We
continue to execute against our Firmwide IBOR transition
plan to complete the transition in all relevant markets toalternative reference rates.

The Basel III Endgame Proposal would apply the SCB and GSIB surcharge to risk-based capital requirements calculated
under both the Expanded Approach and the Standardized
Approach. The proposal includes a proposed effective date ofJuly 1, 2025, with three-year transition arrangements until
revised standards are fully phased in on July 1, 2028.

See also “Risk Factors—Risk Management” for a further
discussion of risks related to the planned replacement of the
IBORs and/or reform of other interest rate benchmarks andrelated risks.
FDIC Final Rulemaking on Special Assessment

Based on our current understanding of the Basel III Endgame
Proposal, we estimate that, if the Expanded Approach had
applied on a fully phased-in basis as of December 31, 2023,
and in the absence of taking any actions to mitigate its impact,
our Expanded Approach RWAs as of that date would havebeen approximately 40% higher than our actual Standardized
Approach RWAs as of that date.

Following the failures of certain banks and resulting losses to
the FDIC’s Deposit Insurance Fund in the first half of 2023,
the FDIC adopted a final rule on November 16, 2023 to
implement a special assessment to recover the cost associatedwith protecting uninsured depositors. Under the final rule, theassessment base for the special assessment is equal to an IDI’s
estimated uninsured deposits reported as of December 31,
2022, adjusted to exclude the first $5 billion of uninsured
deposits. The $5 billion exclusion is applied once to theaggregate uninsured deposits of our U.S. Bank Subsidiaries.
The final rule provides that, starting in 2024, the FDIC willcollect the special assessment at a quarterly rate of 3.36 basis
points over eight quarterly assessment periods, subject tochange depending on any adjustments to the loss estimate,mergers, failures, or amendments to reported estimates ofuninsured deposits. We recorded the cost of the entire special
assessment of $286 million in Non-interest expenses when the
final rule was published in the Federal Register, in the fourth
quarter of 2023.

The increase in RWAs resulting from the Expanded Approach
would result, assuming all other surcharge elements remained
unchanged, in a lower SCB and lower G-SIB Method 2
surcharge as compared with current surcharges, as RWAs areincluded in the denominators of the relevant calculations foreach buffer. Lower surcharges would, therefore, partiallydecrease the otherwise higher regulatory capital requirements
under the Expanded Approach. The proposal would phase in
the higher Expanded Approach RWAs on July 1 of each year
during the transition, thereby increasing our regulatory capitalrequirements, with delayed incorporation of the potentiallylower SCB and G-SIB Method 2 capital surcharge
calculations.

Basel III Endgame Proposal

Any estimate of how the Expanded Approach may impact us
is a forward-looking statement and subject to uncertainty, as
actual results may differ from the anticipated results and may
be materially affected by and dependent on a range of factors,
including business performance, future capital actions, theresults of future supervisory stress tests, and potential
modifications to the proposal by the U.S. banking agencies ina final rulemaking. The Firm does not undertake to update
any forward-looking statement.

On July 27, 2023, U.S. banking agencies proposed revisions
to risk-based capital and related standards applicable to us andour U.S. Bank Subsidiaries (“Basel III Endgame Proposal”).
The proposal would introduce a new measure of RWAs
known as “Expanded Total RWAs” (the “Expanded
Approach”), reflecting new RWA methodologies thatgenerally align with changes to the global Basel Accord
adopted by the Basel Committee. The proposal would
eliminate the current capital rule’s Advanced Approach andeffectively replace it with the Expanded Approach, whichmore heavily relies on standardized methodologies. As
compared with the Standardized Approach, the Expanded
Approach includes more granular risk weights for credit risk
and introduces a new market risk framework. In addition,
unlike the Standardized Approach, the Expanded Approach

G-SIB Surcharge Proposal
On July 27, 2023, the Federal Reserve proposed revisions to
the G-SIB capital surcharge framework applicable to us (“GSIB Surcharge Proposal”). The G-SIB Surcharge Proposal
includes various technical revisions to the G-SIB capitalsurcharge methodology and would revise the resulting
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Management’s Discussion and Analysis
Method 2 G-SIB capital surcharge from 0.5-percentage point
increments to 0.1-percentage point increments. The G-SIB
Surcharge Proposal includes a proposed effective date twocalendar quarters after the date of adoption of a final rule by
the Federal Reserve. We continue to evaluate the G-SIB
Surcharge Proposal and the potential impacts, if adopted, on
our capital requirements and our Required Capital framework.

December 2023 Form 10-K

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Table of Contents

Quantitative and Qualitative Disclosures about Risk
Risk Management

management requires thorough and frequent reporting and theappropriate escalation of risk matters. The fast-paced,complex and constantly evolving nature of global financial
markets requires us to maintain a risk management culturethat is incisive, knowledgeable about specialized products andmarkets, and subject to ongoing review and enhancement.

Overview
Risk is an inherent part of our businesses and activities. We
believe effective risk management is vital to the success ofour business activities. Accordingly, we have an ERM
framework to integrate the diverse roles of risk management
into a holistic enterprise structure and to facilitate theincorporation of risk assessment into decision-making
processes across the Firm.

Our risk appetite defines the aggregate level and types of riskthat the Firm is willing to accept to achieve its businessobjectives, taking into account the interests of clients andfiduciary duties to shareholders, as well as capital and otherregulatory requirements. This risk appetite is embedded in ourrisk culture and linked to our short-term and long-term
strategic, capital and financial plans, as well as compensation
programs. This risk appetite and the related Board-level risk
limits and risk tolerance statements are reviewed andapproved by the BRC and the Board on at least an annual
basis.

We have policies and procedures in place to identify,
measure, monitor, escalate, mitigate and control the principal
risks involved in the activities of the Institutional Securities,
Wealth Management and Investment Management businesssegments, as well as at the Parent Company level. The
principal risks involved in our business activities are bothfinancial and non-financial and include market (including
non-trading risks), credit, liquidity, model, operational(including cybersecurity), compliance (including conduct),financial crime, strategic and reputational risks. Strategic risk
is integrated into our business planning, embedded in theevaluation of all principal risks and overseen by the Board.

Risk Governance Structure
Risk management at the Firm requires independent Firm-level
oversight, accountability of our business divisions, andeffective communication of risk matters across the Firm, tosenior management and ultimately to the Board. Our risk
governance structure is set forth in the following chart andalso includes risk managers, committees, and groups within
and across business segments and operating legal entities. The
ERM framework, composed of independent but
complementary
entities,
facilitatesefficientandcomprehensive supervision of our risk exposures andprocesses.

The cornerstone of our risk management philosophy is the
pursuit of risk-adjusted returns through prudent risk taking
that protects our capital base and franchise. This philosophy isimplemented through the ERM framework. Five key
principles
underliethisphilosophy:
integrity,
comprehensiveness, independence, accountability andtransparency. To help ensure the efficacy of risk management,
which is an essential component of our reputation, senior

RRP—Resolution and Recovery Planning
1. Committees include the Capital Commitment Committee, Global Large Loan Committee, Equity Underwriting Committee, Leveraged Finance Underwriting Committee andMunicipal Capital Commitment Committee.
2. Committees include the Securities Risk Committee, Wealth Management Risk Committee and Investment Management Risk Committee.

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Risk Disclosures
Morgan Stanley Board of Directors

Operations and Technology Committee of the Board

The Board has oversight of the ERM framework and is
responsible for helping to ensure that our risks are managed ina sound manner. The Board has authorized the committees
within the ERM framework to help facilitate our risk
oversight responsibilities. As set forth in the Board’s
Corporate Governance Policies, the Board also oversees, andreceives reports on, our financial performance, strategy andbusiness plans, as well as our practices and procedures
relating to reputational and franchise risk, and culture, values
and conduct.

The BOTC oversees our operations and technology strategy
and significant investments in support of such strategy;
oversees operational risk, including information technology,
information security, fraud, third-party oversight, businessdisruption and resilience and cybersecurity risks and the steps
management has taken to monitor and control such exposures.
The BOTC reviews and approves significant operations andtechnology policies. The BOTC also reviews risk
management and risk assessment guidelines in coordination
with the Board and other Board committees, and policies
regarding operational risk. The BOTC reports to the Board ona regular basis.

Risk Committee of the Board
The BRC assists the Board in its oversight of the ERM
framework; oversees significant financial risk exposures of
the Firm, including market, credit, model and liquidity risk,
against established risk measurement methodologies and thesteps management has taken to monitor and control such
exposures; oversees our risk appetite statement, including risk
tolerance levels and limits; reviews capital, liquidity andfunding strategy and planning and related guidelines andpolicies; reviews the contingency funding plan and capitalplanning process; oversees our significant risk governance,risk management and risk assessment guidelines and policies;
oversees the performance of the Chief Risk Officer; reviews
reports from our Strategic Transactions Committee, CCAR
Committee and RRP Committee; reviews significant new
product risk, emerging risks, regulatory matters and climate
risk; and reviews reports from the Chief Audit Officer
regarding the results of reviews and assessments of the risk
management, liquidity and capital functions. The BRC reports
to the Board on a regular basis and coordinates with the Boardand other Board committees with respect to oversight of risk
management and risk assessment guidelines.

Firm Risk Committee

Audit Committee of the Board

Functional Risk and Control Committees

The BAC oversees the integrity of our financial statements,
compliance with legal and regulatory requirements, andsystem of internal controls; oversees risk management andrisk assessment guidelines in coordination with the Board andother Board committees; reviews the major legal, complianceand financial crime risk exposures of the Firm and the steps
management has taken to monitor and control such exposures;
appoints, compensates, retains, oversees, evaluates and, whenappropriate, replaces the independent auditor; oversees thequalifications, performance and independence of our
independent auditor and pre-approves audit and permitted
non-audit services; oversees the performance of our Chief
Audit Officer; and, after review, recommends to the Board theacceptance and inclusion of the annual audited financial
statements in the Firm’s annual report on Form 10-K. The
BAC reports to the Board on a regular basis.

Functional risk and control committees and other committees
within the ERM framework facilitate efficient andcomprehensive supervision of our risk exposures andprocesses.

December 2023 Form 10-K

The Board has also authorized the Firm Risk Committee(“FRC”), a management committee appointed and co-chairedby the Chief Executive Officer and Chief Risk Officer, which
includes the most senior officers of the Firm from thebusiness, independent risk functions and control groups, tohelp oversee the ERM framework. The FRC’s responsibilities
include: oversight of our risk management principles,
procedures, limits and tolerances; the monitoring of capitallevels and material market, credit, model, operational,
liquidity, legal, compliance and reputational risk matters, andother risks, as appropriate; and the steps management has
taken to monitor and manage such risks. The FRC alsoestablishes and communicates risk appetite, including
aggregate Firm limits and tolerances, as appropriate. The
Governance Process Review Subcommittee of the FRC
oversees governance and process issues on behalf of the FRC.
The FRC reports to the Board, the BAC, the BOTC and the
BRC through the Chief Risk Officer, Chief Financial Officer,
Chief Legal Officer and Head of Non-Financial Risk.

Each business segment has a risk committee that is
responsible for helping to ensure that the business segment, asapplicable, adheres to established limits for market, credit,
operational and other risks; implements risk measurement,
monitoring, and management policies, procedures, controls
and systems that are consistent with the risk framework
established by the FRC; and reviews, on a periodic basis, ouraggregate risk exposures, risk exception experience, and theefficacy of our risk identification, measurement, monitoringand management policies and procedures, and related
controls.

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Risk Disclosures
Chief Risk Officer

management policies and procedures relating to, among otherthings, controls over financial reporting and disclosure; eachbusiness segment’s market, credit and operational risk profile;liquidity risks; model risks; sales practices; reputational, legal
enforceability, compliance and regulatory risks; andtechnological risks. Participation by the senior officers of theFirm and business segment control groups helps ensure thatrisk policies and procedures, exceptions to risk limits, newproducts and business ventures, and transactions with risk
elements undergo thorough review.

The Chief Risk Officer, who is independent of business units,
reports to the BRC and the Chief Executive Officer. The
Chief Risk Officer oversees compliance with our risk limits;
approves exceptions to our risk limits; independently reviews
material market, credit, model and liquidity risks; and reviews
results of risk management processes with the Board, theBRC, the BOTC and the BAC, as appropriate. The Chief Risk
Officer also coordinates with the Head of NFR regarding nonfinancial risk, the Chief Financial Officer and the Chief
Executive Officer regarding capital and liquidity management
and works with the Compensation, Management
Development and Succession Committee of the Board to help
ensure that the structure and design of incentive compensation
arrangements do not encourage unnecessary and excessive
risk taking.

Internal Audit Department
The Internal Audit Department (“IAD”) independently
identifies and assesses risks facing the Firm and provides
independent, objective and timely assurance to stakeholders
about the effectiveness of risk management, governance andcontrols over key risks within the Firm’s businesses andfunctions. IAD develops and executes a comprehensive riskbased assurance plan to fulfill its role and purpose, which
includes assessing compliance with policies, procedures andlaws and regulations. IAD may also conduct other activities,
such as retrospective reviews, pre-implementation reviews
and investigations as requested by the BAC, senior
management or the Firm’s regulators.

Head of Non-Financial Risk
The Head of Non-Financial Risk, who is independent ofbusiness units, reports to the Chief Legal Officer and Chief
Administrative Officer. The Head of Non-Financial Risk
oversees the compliance, financial crimes and operational risk
management functions; independently reviews non-financial
risks, including compliance (including conduct), financial
crimes, and operational (including cybersecurity) risks, aswell as material regulatory risks; and reviews results of risk
management processes with the Board, the BAC, the BOTC
and the BRC as appropriate. The Head of Non-Financial Risk
also coordinates with the Chief Risk Officer regarding
financial risks.

IAD executes its activities in accordance with the mandatory
elements of The Institute of Internal Auditors’ International
Professional Practices Framework as well as the Firm’s Codeof Ethics and Business Conduct, regulatory requirements, andIAD’s policies, procedures, standards and guidance. The
Chief Audit Officer, who reports functionally to the BAC andadministratively to the Firm’s Chief Executive Officer,
communicates the results of IAD activities to the BAC on aquarterly basis and periodically to the BRC and BOTC.

Independent Risk Management Functions
The Financial Risk Management functions (Market Risk,
Credit Risk, Model Risk and Liquidity Risk Management
Departments) and Non-Financial Risk Management functions(Compliance, Global Financial Crimes, and Operational Risk
Departments) are independent of our business units and reportto the Chief Risk Officer and Head of Non-Financial Risk,
respectively. These functions assist senior management andthe FRC in monitoring and controlling our risk through anumber of control processes. Each function maintains its own
risk governance structure with specified individuals andcommittees responsible for aspects of managing risk. Further
discussion about the responsibilities of the risk management
functions may be found under “Market Risk,” “Credit Risk,”“Operational Risk,” “Model Risk” and “Liquidity Risk” and“Legal, Regulatory and Compliance Risk” herein.

Culture, Values and Conduct of Employees
Employees of the Firm are accountable for conducting
themselves in accordance with our core values: Put ClientsFirst, Do the Right Thing, Lead with Exceptional Ideas,
Commit to Diversity and Inclusion, and Give Back. We arecommitted to reinforcing and confirming adherence to ourcore values through our governance framework, tone from thetop, management oversight, risk management and controls,
and three lines of defense structure (business, Independent
Risk Management functions such as Financial Risk
Management and Non-Financial Risk Management, andInternal Audit).
The Board is responsible for overseeing the Firm’s practices
and procedures relating to culture, values and conduct, as set
forth in the Board’s Corporate Governance Policies. Senior
management committees oversee the Firmwide culture, values
and conduct program and report regularly to the Board. A
fundamental building block of these programs is the Firm’s
Code of Conduct, which establishes standards for employee
conduct that further reinforce the Firm’s commitment tointegrity and ethical conduct. Every new hire and every

Support and Control Groups
Our support and control groups include, but are not limited to,Legal, the Finance Division, Technology, the Operations
Division, the Human Capital Management & Global Services
Division (“HCMGS”), Firm Strategy and Execution. Our
support and control groups coordinate with the businesssegment control groups to review the risk monitoring and risk
63

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Risk Disclosures
employee annually is required to certify to their understandingof and adherence to the Code of Conduct. The Firm’s Global
Conduct Risk Management Policy also sets out a consistentglobal framework for managing conduct risk (i.e., the risk
arising from misconduct by employees or contingent workers)
and conduct risk incidents at the Firm.

activities of our Institutional Securities, Wealth Management
and Investment Management business segments. Thesesections and the estimated amounts of our risk exposure
generated by our statistical analyses are forward-looking
statements. However, the analyses used to assess such risks
are not predictions of future events, and actual results mayvary significantly from such analyses due to events in themarkets in which we operate and certain other factors
described in the following paragraphs.

The employee annual performance review process includes
evaluation of employee conduct related to risk management
practices and the Firm’s expectations. We also have several
mutually reinforcing processes to identify employee conductthat may have an impact on employment status, current-yearcompensation and/or prior-year compensation. For example,
the Global Incentive Compensation Discretion Policy sets
forth standards for managers when making annualcompensation decisions and specifically provides thatmanagers must consider whether their employees effectively
managed and/or supervised risk control practices during theperformance year. Control function management meets todiscuss employees whose conduct is not in line with our
expectations. These results are incorporated into identified
employees’ performance reviews and compensation andpromotion decisions.

Market Risk
Market risk refers to the risk that a change in the level of one
or more market prices, rates, spreads, indices, volatilities,
correlations or other market factors, such as market liquidity,
will result in losses for a position or portfolio. Generally, we
incur market risk as a result of trading, investing and client
facilitation activities, principally within the Institutional
Securities business segment where the substantial majority of
our VaR for market risk exposures is generated. In addition,
we incur non-trading market risk, principally within the
Wealth Management and Investment Management businesssegments. The Wealth Management business segment
primarily incurs non-trading market risk (including interest
rate risk) from lending and deposit-taking activities. The
Investment Management business segment primarily incurs
non-trading market risk from capital investments in its funds.

The Firm’s clawback and cancellation provisions apply todeferred incentive compensation and cover a broad scope of
employee conduct, including any act or omission (including
with respect to direct supervisory responsibilities) that
constitutes a breach of obligation to the Firm or causes a
restatement of the Firm’s financial results, constitutes aviolation of the Firm’s global risk management principles,policies and standards, or causes a loss of revenue associatedwith a position on which the employee was paid and theemployee operated outside of risk management policies.

Market risk also includes non-trading interest rate risk. Nontrading interest rate risk in the banking book (amounts
classified for regulatory capital purposes under the banking
book regime) refers to the exposure that a change in interest
rates will result in prospective earnings changes for assets andliabilities in the banking book.

Risk Limits Framework

Sound market risk management is an integral part of ourculture. The various business units and trading desks are
responsible for ensuring that market risk exposures are wellmanaged and prudent. The control groups help ensure thatthese risks are measured and closely monitored and are madetransparent to senior management. The Market Risk
Department is responsible for ensuring the transparency ofmaterial market risks, monitoring compliance with establishedlimits and escalating risk concentrations to appropriate senior
management.

Risk limits and quantitative metrics provide the basis formonitoring risk-taking activity and avoiding outsized risktaking. Our risk-taking capacity is sized through the Firm’s
capital planning process where losses are estimated under the
Firm’s BHC Severely Adverse stress testing scenario. We
also maintain a comprehensive suite of risk limits andquantitative metrics to support and implement our riskappetite statement. Our risk limits support linkages between
the overall risk appetite, which is reviewed by the Board, andmore granular risk-taking decisions and activities.

To execute these responsibilities, the Market Risk Department
monitors our risk against limits on aggregate risk exposures,
performs a variety of risk analyses, routinely reports risksummaries, and maintains our VaR and scenario analysis
systems. Market risk is also monitored through various
measures: by use of statistics (including VaR and related
analytical measures), by measures of position size andsensitivity, and through routine stress testing, which measures
the impact on the value of existing portfolios of specified
changes in market factors and scenarios designed by theMarket Risk Department in collaboration with the business
units. The material risks identified by these processes are
summarized in reports produced by the Market Risk

Risk limits, once established, are reviewed and updated on atleast an annual basis, with more frequent updates asnecessary. Board-level risk limits address the most important
Firmwide aggregations of risk. Additional risk limits
approved by the FRC address more specific types of risk andare bound by the higher-level Board risk limits.
Risk Management Process
In subsequent sections, we discuss our risk management
policies and procedures for our primary risks involved in the
December 2023 Form 10-K

64

Table of Contents

Risk Disclosures
Department that are circulated to and discussed with senior
management, the FRC, the BRC and the Board.

terms, specific characteristics or other basis risks that may
exist between the hedge instrument and the risk exposure thatis being hedged.

Trading Risks
Primary Market
Management

Risk

ExposuresandMarketWe manage the market risk associated with our trading
activities on a Firmwide basis, on a worldwide trading
division level and on an individual product basis. We manage
and monitor our market risk exposures in such a way as tomaintain a portfolio that we believe is well diversified in theaggregate with respect to market risk factors and that reflects
our aggregate risk tolerance as established by our senior
management.

Risk

We have exposures to a wide range of risks related to interest
rates and credit spreads, equity prices, foreign exchange rates
and commodity prices as well as the associated implied
volatilities, correlations and spreads of the global markets inwhich we conduct our trading activities.

Aggregate market risk limits have been approved for the Firm
across all divisions worldwide. Additional market risk limits
are assigned to trading desks and, as appropriate, products andregions. Trading division risk managers, desk risk managers,
traders and the Market Risk Department monitor market risk
measures against limits in accordance with policies set by our
senior management.

We are exposed to interest rate and credit spread risk as aresult of our market-making activities and other trading ininterest rate-sensitive financial instruments (i.e., risk arisingfrom changes in the level or implied volatility of interest
rates, the timing of mortgage prepayments, the shape of theyield curve and/or credit spreads). The activities from whichthose exposures arise and the markets in which we are active
include, but are not limited to, the following: derivatives,
corporate and government debt across both developed andemerging markets and asset-backed debt, including mortgagerelated securities.

Value-at-Risk
The statistical technique known as VaR is one of the tools we
use to measure, monitor and review the market risk exposuresof our trading portfolios. The Market Risk Department
calculates and distributes daily VaR-based risk measures tovarious levels of management.

We are exposed to equity price, correlation and implied
volatility risk as a result of making markets in equity
securities and derivatives and maintaining other positions,
including positions in non-public entities. Positions in nonpublic entities may include, but are not limited to, exposures
to private equity, venture capital, private partnerships, realestate funds and other funds. Such positions are less liquid,
have longer investment horizons and are more difficult tohedge than listed equities.

We estimate VaR using a model based on a one-year equalweighted historical simulation for general market risk factors
and name-specific risk in corporate equities and related
derivatives, and Monte Carlo simulation for name-specificrisk in bonds, loans and related derivatives. The model
constructs a distribution of hypothetical daily changes in thevalue of trading portfolios based on historical observation ofdaily 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.

We are exposed to foreign exchange rate, correlation andimplied volatility risk as a result of making markets in foreign
currencies and foreign currency derivatives, from maintaining
foreign exchange positions and from holding non-U.S. dollardenominated financial instruments.

VaR for risk management purposes (“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 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 fivetimes in every 100 trading days, if the portfolio were held
constant for one day.

We are exposed to commodity price and implied volatility
risk as a result of market-making activities in commodity
products related primarily to electricity, natural gas, oil andprecious metals. Commodity exposures are subject to periodsof high price volatility as a result of changes in supply anddemand. These changes can be caused by weather conditions,
physical production and transportation, or geopolitical andother events that affect the available supply and level ofdemand for these commodities.

Our VaR model generally takes into account linear and nonlinear 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 foreignexchange 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).

We manage our trading positions by employing a variety ofrisk-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 ofderivative products (e.g., futures, forwards, swaps andoptions). Hedging activities may not always provide effective
mitigation against trading losses due to differences in the65

December 2023 Form 10-K

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Risk Disclosures
We use VaR as one of a range of risk management tools.
Among their benefits, VaR models permit estimation of aportfolio’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 limitations, which include, but are notlimited 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 historicalmarket 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 notincluded in VaR.

history is updated and the confidence level. As a result, VaR
statistics are more useful when interpreted as indicators oftrends in a firm’s risk profile rather than as an absolutemeasure of risk to be compared across firms.
Our regulators have approved the same VaR model we use forrisk management purposes for use in regulatory calculations.
The portfolio of positions used for Management VaR differsfrom that used for Regulatory VaR. Management VaR
contains certain positions that are excluded from Regulatory
VaR.
95%/One-Day Management VaR
2023

Interest rate and credit spread$

Equity price

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. VaR is mostappropriate as a risk measure for trading positions in liquid
financial markets and will understate the risk associated withsevere events, such as periods of extreme illiquidity. We areaware of these and other limitations and, therefore, use VaR
as only one component in our risk management oversightprocess. This process also incorporates stress testing andscenario analyses and extensive risk monitoring, analysis andcontrol at the trading desk, division and Firm levels.

Average

High1

Low1

29 $

34 $

43 $

27

19

24

38

15

Foreign exchange rate

6

9

18

5

Commodity price

11

17

35

10

(27)

(40)

N/A

N/A

38 $

44 $

60 $

33

25

21

25

18

(22)

(15)

N/A

N/A

41 $

50 $

72 $

41

Less: Diversification benefit2
Primary Risk Categories$

Credit Portfolio
Less: Diversification benefit2
Total Management VaR$$ in millions

PeriodEnd

Interest rate and credit spread

$

2022

We update our VaR model in response to changes in thecomposition of trading portfolios and to improvements inmodeling techniques and systems capabilities. We arecommitted to continuous review and enhancement of VaR
methodologies and assumptions in order to capture evolving
risks associated with changes in market structure anddynamics. As part of our regular process improvements,
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.

Average

High1

Low1

37 $

31 $

43 $

21

Equity price

16

23

41

16

Foreign exchange rate

10

8

19

3

Commodity price

26

27

41

15

(36)

(40)

N/A

N/A

53 $

49 $

65 $

31

19

15

19

12

(9)

(11)

N/A

N/A

63 $

53 $

74 $

32

Less: Diversification benefit2
Primary Risk Categories$

Credit Portfolio
Less: Diversification benefit2
Total Management VaR$

1. The high and low VaR values for the Total Management VaR and each of thecomponent VaRs might have occurred on different days during the quarter, and,
therefore, the diversification benefit is not an applicable measure.
2. 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 foreach of the components occur on different days; similar diversification benefits also
are taken into account within each component.

Since the reported VaR statistics are estimates based on
historical data, VaR should not be viewed as predictive of our
future revenues or financial performance or of our ability tomonitor and manage risk. There can be no assurance that ouractual losses on a particular day will not exceed the VaRamounts indicated in the following tables 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 oflosses that, should they occur, may be significantly greaterthan the VaR amount.

Average Total Management VaR and Average Management
VaR for the Primary Risk Categories decreased in 2023 from2022 primarily due to reduced exposure in the Commodity
price risk category and lower market volatility.
Distribution of VaR Statistics and Net Revenues
We evaluate the reasonableness of our VaR model bycomparing the potential declines in portfolio values generated
by the model with corresponding actual trading results for the
Firm, as well as individual business units. For days where
losses exceed the VaR statistic, we examine the drivers of
trading losses to evaluate the VaR model’s accuracy. There
were 16 trading loss days in 2023, one of which exceeded
95% Total Management VaR, compared to 15 trading loss
days in 2022, none of which exceeded 95% Total
Management VaR.

VaR statistics are not readily comparable across firms becauseof differences in the firms’ portfolios, modeling assumptions
and methodologies. These differences can result in materiallydifferent VaR estimates across firms for similar portfolios.
The impact of such differences varies depending on the factor
history assumptions, the frequency with which the factor
December 2023 Form 10-K

$ in millions

PeriodEnd66

Table of Contents

Risk Disclosures
Credit Spread Risk Sensitivity1

Daily 95%/One-Day Total Management VaR for 2023($ in millions)$ in millions

At
December 31,
2023

Derivatives

$

94
86

Number of Days

Borrowings carried at fair valueAt
December 31,
2022

6 $

7

48

39

1. Amounts represent the potential gain for each 1 bps widening of our credit spread.

Credit spread risk sensitivity for borrowings carried at fairvalue at December 31, 2023 increased from December 31,
2022, primarily driven by debt issuances and credit spreadtightening.

46

21
3

1

$65 to $70$70 to $75$60 to $65$55 to $60$50 to $55$45 to $50$40 to $45

8

The Wealth Management business segment reflects a
substantial portion of our non-trading interest rate risk. Net
interest income in the Wealth Management business segment
primarily consists of interest income earned on non-trading
assets held, including loans and investment securities, as wellas margin and other lending on non-bank entities and interest
expense incurred on non-trading liabilities, primarily deposits.

Daily Net Trading Revenues for 2023

Wealth Management Net Interest Income Sensitivity Analysis($ in millions)96$ in millions

At
December 31,
2023

At
December 31,
2022

Number of Days

Basis point change
+100

59

58

-100

23
5

2

$100 to $125

$125 to $150

$75 to $100$(50) to $(25)$50 to $75$(75) to $(50)$25 to $50$(100) to $(75)$0 to $25

2$(25) to $0

0

585 $

643

(609)

(745)

The previous table presents an analysis of selected
instantaneous upward and downward parallel interest rate
shocks (subject to a floor of zero percent in the downward
scenario) on net interest income over the next 12 months for
our Wealth Management business segment. These shocks areapplied to our 12-month forecast for our Wealth Managementbusiness segment, which incorporates market expectations ofinterest rates and our forecasted business activity, including
deposit forecasts as a key assumption.

13
1

$

We do not manage to any single rate scenario but rather
manage net interest income in our Wealth Managementbusiness segment across a range of possible outcomes,
including non-parallel rate change scenarios. The sensitivity
analysis assumes that we take no action in response to thesescenarios, assumes there are no changes in othermacroeconomic variables normally correlated with changes ininterest rates and includes subjective assumptions regarding
customer and market re-pricing behavior and other factors.

Daily net trading revenues include profits and losses fromInterest rate and credit spread, Equity price, Foreign exchange
rate, Commodity price, and Credit Portfolio positions andintraday trading activities for our trading businesses. Certain
items such as fees, commissions, net interest income andcounterparty default risk are excluded from daily net trading
revenues and the VaR model. Revenues required forRegulatory VaR backtesting further exclude intraday trading.

Our Wealth Management business segment balance sheet isasset sensitive, given assets reprice faster than liabilities,
resulting in higher net interest income in increasing interest
rate scenarios. The level of interest rates may impact theamount of deposits held at the Firm, given competition fordeposits from other institutions and alternative cashequivalent products available to depositors. Further, risinginterest rates could also impact client demand for loans. Net
interest income sensitivity to interest rates at December 31,
2023 decreased from December 31, 2022, primarily driven by
the effects of changes in the mix of our assets and liabilities.

Non-Trading Risks
We believe that sensitivity analysis is an appropriate
representation of our non-trading risks. The following
sensitivity analyses cover substantially all of the non-tradingrisk in our portfolio.

67

December 2023 Form 10-K

Table of Contents

Risk Disclosures• providing short- or long-term funding that is secured byphysical or financial collateral, including, but not limited to,real estate and marketable securities, whose value may attimes be insufficient to fully cover the repayment amount;• posting margin and/or collateral to clearinghouses, clearing
agencies, exchanges, banks, securities firms and otherfinancial counterparties;• placing funds on deposit at other financial institutions to
support our clearing and settlement obligations; and• investing or trading in securities and loan pools, whereby
the value of these assets may fluctuate based on realized or
expected defaults on the underlying obligations or loans.

Investments Sensitivity, Including Related Carried Interest
Loss from 10% Decline$ in millions

At
December 31,
2023

Investments related to Investment
Management activities$

At
December 31,
2022

481 $

431

MUMSS

134

143

Other Firm investments

399

378

Other investments:

We have exposure to public and private companies throughdirect investments, as well as through funds that invest inthese assets. These investments are predominantly equity
positions with long investment horizons, a portion of which isfor business facilitation purposes. The market risk related tothese investments is measured by estimating the potential
reduction in net revenues associated with a reasonably
possible 10% decline in investment values and related impact
on performance-based income, as applicable.

We incur credit risk in our Wealth Management businesssegment, primarily through lending to individuals and entities,
including, but not limited to, the following:• margin loans collateralized by securities;• securities-based lending and other forms of secured loans,including tailored lending to ultra-high net worth clients,that are in most cases secured by various types of collateral,
including marketable securities, private investments,
commercial real estate and other financial assets;• single-family residential mortgage loans in conforming,
non-conforming or HELOC form, primarily to existing
Wealth Management clients; and• employee loans granted primarily to recruit certain WealthManagement representatives.

Asset Management Revenue Sensitivity
Certain asset management revenues in the WealthManagement and Investment Management business segments
are derived from management fees, which are based on feebased client assets in Wealth Management or AUM in
Investment Management (together, “client holdings”). The
assets underlying client holdings are primarily composed ofequity, fixed income and alternative investments and are
sensitive to changes in related markets. These revenues
depend on multiple factors including, but not limited to, thelevel and duration of a market increase or decline, pricevolatility, the geographic and industry mix of client assets,
and client behavior such as the rate and magnitude of client
investments and redemptions. Therefore, overall revenues
may not correlate completely with changes in the related
markets.

Monitoring and Control
The Credit Risk Management Department (“CRM”)
establishes Firmwide practices to evaluate, monitor andcontrol credit risk at the transaction, obligor and portfolio
levels. The CRM approves extensions of credit, evaluates thecreditworthiness of the counterparties and borrowers on aregular basis, and helps ensure that credit exposure is actively
monitored and managed. The evaluation of counterparties andborrowers includes an assessment of the probability that an
obligor will default on its financial obligations and any losses
that may occur when an obligor defaults. In addition, credit
risk exposure is actively managed by credit professionals andcommittees within the CRM and through various risk
committees, whose membership includes individuals from theCRM. A comprehensive and global Credit Limits Framework
is utilized to manage credit risk levels across the Firm. The
Credit Limits Framework is calibrated within our risk
tolerance and includes single-name limits and portfolio
concentration limits by country, industry and product type.

Credit Risk
Credit risk refers to the risk of loss arising when a borrower,
counterparty or issuer does not meet its financial obligations
to us. We are primarily exposed to credit risk from institutions
and individuals through our Institutional Securities andWealth Management business segments.
We incur credit risk in our Institutional Securities businesssegment through a variety of activities, including, but notlimited to, the following:• extending credit to clients through loans and lending
commitments;• entering into swap or other derivative contracts underwhich counterparties may have obligations to makepayments to us;• acting as clearing broker for listed and over-the-counter
derivatives whereby we guarantee client performance toclearinghouses;

December 2023 Form 10-K

The CRM helps ensure timely and transparent communicationof material credit risks, compliance with established limits
and escalation of risk concentrations to appropriate senior
management. The CRM also works closely with the Market
Risk Department and applicable business units to monitor risk
exposures and to perform stress tests to identify, analyze andcontrol credit risk concentrations arising from lending andtrading activities. The stress tests shock market factors (e.g.,interest rates, commodity prices, credit spreads), risk
68

Table of Contents

Risk Disclosures
forwards, swaps and options). Additionally, we may sell,
assign or syndicate loans and lending commitments to otherfinancial institutions in the primary and secondary loan
markets.
In connection with our derivatives trading activities, we
generally enter into master netting agreements and collateralarrangements with counterparties. These agreements provide
us with the ability to demand collateral, as well as to liquidate
collateral and offset receivables and payables covered under
the same master agreement in the event of a counterparty
default. A collateral management group monitors collaterallevels against requirements and oversees the administration of
the collateral function. See Note 8 to the financial statements
for additional information about our collateralized
transactions.

parameters (e.g., probability of default and loss given default),
recovery rates and expected losses in order to assess theimpact of stresses on exposures, profit and loss, and ourcapital position. Stress tests are conducted in accordance with
our established policies and procedures.
Credit Evaluation
The evaluation of corporate and institutional counterparties
and borrowers includes assigning credit ratings, which reflect
an assessment of an obligor’s probability of default and loss
given default. Credit evaluations typically involve theassessment of financial statements; leverage; liquidity; capitalstrength; asset composition and quality; market capitalization;access to capital markets; adequacy of collateral, if
applicable; and, in the case of certain loans, cash flow
projections and debt service requirements. The CRM also
evaluates strategy, market position, industry dynamics,
management and other factors such as country risks and legal
and contingent risks that could affect the obligor’s risk
profile. Additionally, the CRM evaluates the relative positionof our exposure in the borrower’s capital structure andrelative recovery prospects, as well as other structuralelements of the particular transaction. The underwriting ofcommercial real estate loans includes, but is not limited to,review of the property type, LTV ratio, occupancy levels, debt
service ratio, prevailing capitalization rates and market
dynamics.

Loans and Lending Commitments
At December 31, 2023
HFI

$ in millions

FVO1

HFS

Total

Institutional Securities:
Corporate

6,758 $ 11,862 $— $ 18,620

Secured lending facilities$

39,4983,161—

42,659Commercial and Residential
real estate
Securities-based lending and
Other
Total Institutional Securities

8,678

209

3,331

12,218

2,818

—

4,402

7,220

57,752

15,232

7,733

80,71760,37522—

60,39786,423

1—

86,424

146,79823—

146,821

4

—

455

459

204,554

15,2558,188

227,997

Wealth Management:
Residential real estate
Securities-based lending and
Other
Total Wealth Management

The evaluation of consumer borrowers is tailored to thespecific type of lending. Securities-based loans are evaluatedbased on factors that include, but are not limited to, theamount of the loan and the amount, quality, diversification,
price volatility and liquidity of the collateral. The
underwriting of residential real estate loans includes, but is
not limited to, review of the obligor’s debt-to-income ratio,
net worth, liquidity, collateral, LTV ratio and industry
standard credit-scoring models (e.g., FICO scores).
Subsequent credit monitoring for individual loans is
performed at the portfolio level, and collateral values aremonitored on an ongoing basis.

Total Investment Management2
Total loans
ACL(1,169)(1,169)Total loans, net of ACL$ 203,385 $ 15,255 $ 8,188 $ 226,828

Lending commitments3$ 149,973

Total exposure$ 376,801
At December 31, 2022
HFI

$ in millions

FVO1

HFS

Total

Institutional Securities:
Corporate
Secured lending facilities

Credit risk metrics assigned to our borrowers during theevaluation process are incorporated into the CRM
maintenance of the allowance for credit losses. Suchallowance serves as a reserve for expected inherent losses, aswell as expected losses related to loans identified as impaired.
For more information on the allowance for credit losses, seeNotes 2 and 9 to the financial statements.

Commercial and Residential realestateSecurities-based lending and
Other
Total Institutional Securities$

6,589 $ 10,634 $— $ 17,223

35,6063,176

638,788

8,515

926

2,548

11,989

2,865

39

5,625

8,529

53,575

14,775

8,179

76,52954,4604—

54,464

91,797

9—91,806146,257

13—

146,270

4

—

218

222

199,836

14,788

8,397

223,021

Wealth Management:
Residential real estate
Securities-based lending and
Other
Total Wealth Management

Risk Mitigation

Total Investment Management2
Total loans

We may seek to mitigate credit risk from our lending andtrading activities in multiple ways, including collateralprovisions, guarantees and hedges. At the transaction level,
we seek to mitigate risk through management of key risk
elements such as size, tenor, financial covenants, seniority
and collateral. We actively hedge our lending and derivatives
exposures. Hedging activities consist of the purchase or saleof positions in related securities and financial instruments,
including a variety of derivative products (e.g., futures,

ACL

(839)

(839)

Total loans, net of ACL$ 198,997 $ 14,788 $ 8,397 $ 222,182

Lending commitments3$ 136,960

Total exposure$ 359,142

Total exposure—consists of Total loans, net of ACL, and Lending commitments
1. FVO includes the fair value of certain unfunded lending commitments.
2. Investment Management business segment loans are related to certain of ouractivities as an investment adviser and manager. Loans held at fair value are theresult of the consolidation of investment vehicles (including CLOs) managed by69

December 2023 Form 10-K

Table of Contents

Risk Disclosuresdeteriorating conditions in the commercial real estate sector,
including provisions for certain specific loans, mainly in theoffice portfolio, and modest growth in certain other loan
portfolios. Charge-offs in 2023 were primarily related toCommercial real estate and Corporate loans.

Investment Management, composed primarily of senior secured loans tocorporations.
3. Lending commitments represent the notional amount of legally binding obligations
to provide funding to clients for 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.

We provide loans and lending commitments to a variety ofcustomers, including large corporate and institutional clients,
as well as high to ultra-high net worth individuals. In
addition, we purchase loans in the secondary market. Loans
and lending commitments are either held for investment, held
for sale or carried at fair value. For more information on theseloan classifications, see Note 2 to the financial statements.

The base scenario used in our ACL models as of December
31, 2023 was generated using a combination of consensus
economic forecasts, forward rates, and internally developed
and validated models, and assumes slow economic growth in2024, followed by a gradual improvement in 2025. Given thenature of our lending portfolio, the most sensitive model input
is U.S. gross domestic product (“GDP”).

In 2023, total loans and lending commitments increased byapproximately $18 billion, primarily due to an increase in
Corporate lending and Secured lending facilities within theInstitutional Securities business segment.

Forecasted U.S. Real GDP Growth Rates in Base Scenario
4Q 2024
Year-over-year growth rate

4Q 2025
0.9 %

2.0 %

See Notes 4, 5, 9 and 14 to the financial statements for further
information.

See Note 2 to the financial statements for a discussion of the
Firm’s ACL methodology under CECL.

Allowance forCommitments

Status of Loans Held for Investment

CreditLosses—LoansandLending

At December 31, 2023
2023

$ in millions

ACL—Loans
Beginning balance$

839

Gross charge-offs(167)

Recoveries(165)

Provision for credit losses

488

Other

WM

98.9 %

99.8 %

99.3 %

99.9 %

Nonaccrual1

1.1 %

0.2 %

0.7 %

0.1 %

Net Charge-off Ratios for Loans Held for Investment

$

1,169

$ in millions

ACL—Lending commitments$

504

Provision for credit losses
Other

44

Net charge-off
ratio1

3

Average loans

Ending balance$551

Total ending balance

$

1,720

Net charge-off
ratio1
Average loans

$
$

WM

Net charge-off
ratio1

Total

356 $

132 $

488

45

(1)

44

401 $

131 $

532

Average loans

SBL
and
Other

Total

0.47 %$ 7,062—%

1.50 %$37,702$8,590—%$ 57,177—%

0.08 %$91,126 $201,657(0.09)%$ 6,5440.01 %

0.09 %$33,172$8,234—%$ 49,937

0.02 %

0.01 %$93,427 $191,314

0.44 %$ 5,184

0.24 %

0.38 %$27,833$7,089—%$ 39,111

0.01 %

0.08 %$75,230 $154,447

CRE—Commercial real estate
SBL—Securities-based lending
1. Net charge-off ratio represents gross charge-offs net of recoveries divided by total
average loans held for investment before ACL.

Credit exposure arising from our loans and lending
commitments is measured in accordance with our internal risk
management standards. Risk factors considered indetermining the allowance for credit losses for loans andlending commitments include the borrower’s financial
strength, industry, facility structure, LTV ratio, debt service
ratio, collateral and covenants. Qualitative and environmental
factors such as economic and business conditions, nature andvolume of the portfolio and lending terms, and volume andseverity of past due loans may also be considered.
The allowance for credit losses for loans and lending
commitments increased in 2023, primarily related to
December 2023 Form 10-K

Residential
Real
Estate2021

Year Ended December 31, 2023
IS

Lending commitments

CRE

2022

Provision for Credit Losses by Business Segment$ in millions

SecuredLending
Corporate Facilities

2023

Beginning balance

Total

IS

Accrual7

Ending balance

Loans

WM

1. Nonaccrual loans are loans where principal or interest is not expected whencontractually due or are past due 90 days or more.

2

Net (charge-offs) recoveries

At December 31, 2022

IS

70

Table of Contents

Risk Disclosures
Institutional Securities Loans and Lending Commitments1

Institutional Securities Loans and Lending Commitments by
Industry

At December 31, 2023

$ in millions

At
December 31,
2023

Financials$

Contractual Years to Maturity<1$ in millions

1-5

5-15

>15

Total

Loans
AA

$

3 $

11 $

216 $

— $

230

A

1,054

950

182

—

2,186

BBB

7,117

10,076346—

17,539BB

11,723

16,3671,775

277

30,142Other NIG

9,586

12,961

2,924

156

25,627

Unrated2

111

1,036

62

2,910

4,119

29,594

41,401

5,505

3,343

79,843

Total loans, net of ACL
Lending commitments
AAA

—

50

—

—

50

AA

2,610

3,064

154

—

5,828

A

7,704

21,256593—

29,553BBB

9,161

46,304106—

55,571

BB

4,069

16,431

1,594

414

22,508Other NIG

1,916

13,842

1,077

3

16,838

Unrated2

6

7

—

—

13

25,466

100,954

3,524

417

130,361

Total lending
commitments
Total exposure

5-15

>15

Total

Loans
AA

— $

139 $

— $

205

1,331

787

185

—

2,303

BBB

5,632

10,712465—

16,809BB

11,045

19,219796

162

31,222Other NIG

7,274

10,2493,945

139

21,607

A

Unrated2
Total loans, net of ACL

$

66 $

95

924

624

2,066

3,709

25,44341,891

6,154

2,367

75,855

—

50

—

—

50

AA

2,515

2,935

11

—

5,461

A

5,030

19,717202

330

25,279BBB

10,26339,615566—

50,444

BB

3,691

17,656

1,416

96

22,859Other NIG

1,173

13,872530—

15,575

Unrated2

—

20

—

3

23

22,672

93,865

2,725

429

119,691

Total lending
commitments
Total exposure

Industrials

18,056

14,557

Communications services

15,301

15,336

Healthcare

14,274

12,353

Information technology

12,43013,790Consumer discretionary

12,19011,592

Utilities

11,522

10,542

Consumer staples

9,305

7,823

Energy

9,156

9,115

Materials

6,503

6,102

Insurance

6,486

5,925

Other

1,835

1,831

210,204 $195,546$

Corporate comprises relationship and event-driven loans andlending commitments supporting general and event-driven
financing needs for our institutional clients, which typicallyconsist of revolving lines of credit, term loans and bridgeloans; may 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. Relationship loans and lending
commitments are extended to select institutional clients,
primarily for general corporate purposes and generally with
the intent to hold for the foreseeable future. Event-driven
loans and lending commitments are extended in connection
with specific client transactions and are explained in further
detail in “Institutional Securities Event-Driven Loans andLending Commitments” herein.

Lending commitments
AAA32,358The Institutional Securities business segment lending
activities include Corporate, Secured lending facilities,
Commercial and Residential real estate, and Securities-based
lending and Other. As of December 31, 2023 and December
31, 2022, over 90% of our total lending exposure, which
consists of loans and lending commitments, is investment
grade and/or secured by collateral.

At December 31, 2022
1-5

54,22235,342

Institutional Securities Lending Activities

Contractual Years to Maturity<1

57,804 $Real estate

Total exposure$ 55,060 $142,355 $ 9,029 $ 3,760 $210,204$ in millions

At
December 31,
2022$ 48,115 $135,756 $ 8,879 $ 2,796 $195,546

NIG–Non-investment grade
1. Counterparty credit ratings are internally determined by the CRM.
2. Unrated loans and lending commitments are primarily trading positions that aremeasured at fair value and risk-managed as a component of market risk. For afurther discussion of our market risk, see “Quantitative and Qualitative Disclosuresabout Risk—Market Risk” herein.

Secured lending facilities include loans provided to clients,
which are collateralized by various assets, including
residential and commercial real estate mortgage loans,investor commitments for capital calls, corporate loans andother assets. These facilities generally provide forovercollateralization. Credit risk with respect to these loans
and lending commitments arises from the failure of aborrower to perform according to the terms of the loan
agreement and/or a decline in the underlying collateral value.
The Firm monitors collateral levels against the requirementsof lending agreements. See Note 15 to the financial statements
for information about our securitization activities.

71

December 2023 Form 10-K

Table of Contents

Risk Disclosures
Commercial real estate loans are primarily senior, secured byunderlying real estate and are typically in term loan form. In
addition, as part of certain of its trading and securitization
activities, Institutional Securities may also hold residential
real estate loans.

Institutional Securities Commercial Real Estate Loans andLending Commitments
By Region
At December 31, 2023
Americas

Securities-based lending and Other includes financing
extended to sales and trading customers and corporate loans
purchased in the secondary market.

Loans, net of ACL$

Lending commitments
Total exposure

$

5-15

Total

Total exposure

6,698

3,183

3,040

79

485

3,119

—

485

445

5

9,022 $

450

345 $

9,367

9,805 $

462 $

10,267$Loans1$LC1At December 31, 2022
Loans1

Total

3,310 $

186 $

3,496

Industrial

2,435

5

$

LC1

Total

3,861 $

301 $

4,162

2,440

2,561

25

2,586

2,580 $

7,118

Multifamily

1,715

74

1,789

1,889

85

1,974

685

549

4,798

Retail

842

7

849

659

6

665

5,538 $

3,249 $

3,129 $

11,916

Hotel

718

73

791

780

45

825

Other

2

—

2

55

—

55

9,022 $

345 $

Total

1-5

5-15

1,441 $

2,771 $

Total

3,079

861

603

4,543

$

5,464 $

2,302 $

3,374 $

11,140At December 31, 2023
Lending
Commitments

Loans
$

6,758 $

91,752 $98,51039,49815,58955,087

Commercial real estate

8,678

266

8,944

Other

2,818

915

3,733

Total, before ACL$

57,752 $108,522 $

166,274ACL$(874) $

(533) $

(1,407)At December 31, 2022
Loans

$ in millions$

Lending
Commitments

Total

6,589 $

79,882 $86,471

Secured lending facilities

35,606

12,803

48,409Commercial real estate

8,515

374

8,889

Other

2,865

985

3,850

Total, before ACL$

53,575 $94,044 $147,619

ACL$(674) $

(484) $

(1,158)$9,805 $

462 $ 10,267

As of December 31, 2023 and December 31, 2022, ourlending against commercial real estate (“CRE”) properties
totaled $9.4 billion and $10.3 billion within the Institutional
Securities business segment, which represents 4.5% and 5.3%of total exposure reflected in the Institutional Securities Loans
and Lending Commitments table above. Those CRE loans are
originated for experienced sponsors and are generally secured
by specific institutional CRE properties. In many cases, loans
are subsequently syndicated or securitized on a full or partial
basis, reducing our ongoing exposure.

Total

Secured lending facilities

9,367

The current economic environment and changes in businessand consumer behavior have adversely impacted commercial
real estate borrowers due to pressure from higher interest
rates, tenant lease renewals, and elevated refinancing risks forloans with near-term maturities, among other issues. While
we continue to actively monitor all our loan portfolios, thecommercial real estate sector remains under heightened focus
given the sector’s sensitivity to economic and secular factors,
credit conditions, and difficulties specific to certain property
types, most notably office.

Institutional Securities Loans and Lending Commitments
Held for Investment$ in millions$

LC–Lending Commitments
1. Amounts include HFI, HFS and FVO loans and lending commitments. HFI loans arepresented net of ACL.

6,597

Event-driven loans and lending commitments are associatedwith certain underwritings and/or syndications to finance a
specific transaction, such as merger, acquisition,
recapitalization or project finance activities. Balances may
fluctuate as such lending is related to transactions that vary intiming and size from period to period.

December 2023 Form 10-K

Asia
$

378 $

2,564 $

2,385 $

Corporate

56

Total

6,320 $

3,564

<1

Corporate

3,127

$

LC1

1,974 $$

Lending commitments

EMEA

OfficeContractual Years to Maturity
Loans, net of ACL

5,699

At December 31, 2023

At December 31, 2022
$ in millions

289 $$ in millions

Contractual Years to Maturity
1-5

At December 31, 2022
Loans1

Total

By Property TypeAt December 31, 2023
<1

$

LC1

5,410 $

Total

Institutional Securities Event-Driven Loans and Lending
Commitments$ in millions

Loans1$ in millions

In addition to the amounts included in the table above, we
provide certain secured lending facilities which are typicallycollateralized by pooled CRE mortgage loans and areincluded in Secured lending facilities in the Institutional
Securities Loans and Lending Commitments Held forInvestment table above. These secured lending facilities
benefit from structural protections including crosscollateralization and diversification across property types.

72

Table of Contents

Risk Disclosuresagainst qualifying securities and monitor limits daily and,pursuant to such guidelines, require customers to deposit
additional collateral, or reduce debt positions, whennecessary. These credit lines are primarily uncommitted loan
facilities, as we reserve the right not to make any advances or
may terminate these credit lines at any time. Factors
considered in the review of these loans include, but are notlimited to, the loan amount, the client’s credit profile, thedegree of leverage, collateral diversification, price volatility
and liquidity of the collateral. Other loans primarily include
tailored lending, which typically consist of bespoke lending
arrangements provided to ultra-high net worth clients.
Securities-based lending and Other loans are generally
secured by various types of eligible collateral, including
marketable securities, private investments, commercial realestate and other financial assets.

Institutional Securities Allowance for Credit Losses—Loans
and Lending Commitments
Year Ended December 31, 2023

$ in millions

SecuredLending
Facilities

Corporate

CRE

Other

Total

ACL—Loans
Beginning balance$

Gross chargeoffs
Recoveries

235 $

153 $

275 $

11 $

674

(34)

—

(129)

(1)

(164)

1

—

—

—

1

Net (charge-offs)
recoveries

(33)

—

(129)

(1)

(163)

Provision (release)

37

—

314

5

356

Other

2

—

3

2

7

241 $

153 $

463 $

17 $

874

Ending balance$

ACL—Lending commitments
Beginning balance

411 $

51 $

15 $

7 $

484

Provision (release)

$

16

18

11

—

45

Other

4

1

—

(1)

4

Ending balance

$

431 $

70 $

26 $

6 $

533

Total endingbalance

$

672 $

223 $

489 $

23 $

1,407

Residential real estate loans consist of first- and second-lienmortgages, including HELOCs. Our underwriting policy isdesigned to ensure that all borrowers pass an assessment ofcapacity and willingness to pay, which includes an analysis
utilizing industry standard credit scoring models (e.g., FICO
scores), debt-to-income ratios and assets of the borrower.
LTV ratios are determined based on independent third-party
property appraisals and valuations, and security lien positions
are established through title and ownership reports. The vast
majority of mortgage loans, including HELOCs, are held forinvestment in the Wealth Management business segment’s
loan portfolio.

CRE—Commercial real estate

Institutional Securities HFI Loans—Ratios of Allowance for
Credit Losses to Balance before AllowanceAt
December 31,
2023

At
December 31,
2022

Corporate

3.6%

3.6%

Secured lending facilities

0.4%

0.4%

Commercial real estate

5.3%

3.2%

Securities-based lending and Other

0.6%

0.4%

Total Institutional Securities loans

1.5%

1.3%

Wealth Management Commercial Real Estate Loans andLending Commitments by Property Type

Wealth Management Loans and Lending Commitments

At December 31, 2023

At December 31, 2023
Contractual Years to Maturity$ in millions

Securities-based lending
and Other loans<1

Lending commitments
Total exposure

5-15

>15

$ 76,923 $ 7,679 $ 1,494 $

133 $

Total
86,229Residential real estateloans
Total loans, net of ACL
Lending commitments
Total exposure$

2,180 $At December 31, 2022
Loans1

Total
3 $

2,183

$

2,135 $

Multifamily

1,891

159

2,050

1,661

Office

LC1

Total
6 $

2,141

142

1,803

16

1,752

1,675

1

1,676

454

—

454

330

—

330

Hotel

400

—

400

419

—

419

19,612

Other

253

—

253

183

10

193

$ 93,236 $ 10,707 $ 2,768 $ 59,427 $ 166,138

Total

6,914 $

178 $

7,092

6,403 $

159 $

6,562

91

1,255

58,95060,297$ 76,924 $ 7,770 $ 2,749 $ 59,083 $ 146,526
16,312

2,937

19

344

<1

1-5

5-15

$ 80,526 $ 9,371 $ 1,692 $
1

32

1,375

>15
140 $
52,968

Total

4,501

37

323

$

As of December 31, 2023 and December 31, 2022, our direct
lending against CRE totaled $7.1 billion and $6.6 billion
within the Wealth Management business segment, which
represents 4.3% and 4.0% of total exposure reflected in the
Wealth Management Loans and Lending Commitments table
above, primarily included within Securities-based lending andOther loans. Such loans are originated through our privatebanking platform, are both secured and generally benefitingfrom full or partial guarantees from high or ultra-high net
worth clients, which partially reduce associated credit risk. At
both December 31, 2023 and December 31, 2022, greater than
95% of the CRE loans balance in the Wealth Managementbusiness segment received guarantees. All of our lending
against CRE properties within Wealth Management are in theAmericas region.

91,72954,376$ 80,527 $ 9,403 $ 3,067 $ 53,108 $ 146,105
12,408$

LC–Lending Commitments
1. Amounts include HFI loans and lending commitments. HFI loans are presented netof ACL.

At December 31, 2022

Securities-based lending
and Other loans

Retail

LC1

1,736

1

Contractual Years to Maturity$ in millions

Loans1

Industrial

Residential real estateloans
Total loans, net of ACL

1-5$ in millions

17,269$ 92,935 $ 13,904 $ 3,104 $ 53,431 $ 163,374

The principal Wealth Management business segment lending
activities include Securities-based lending and Residential
real estate loans.
Securities-based lending allows clients to borrow money
against the value of qualifying securities, generally for any
purpose other than purchasing, trading or carrying securities
or refinancing margin debt. We establish approved credit lines
73

December 2023 Form 10-K

Table of Contents

Risk Disclosures
Employee Loans

Wealth Management Allowance for Credit Losses—Loans andLending Commitments

For information on employee loans and related ACL, see Note
9 to the financial statements.

Year Ended December 31, 2023
Residential
Real Estate$ in millions

SBL and
Other

Total

Derivatives

ACL—Loans
Beginning balance

$

87 $

78 $

165

Gross charge-offs

—

(3)

(3)

Recoveries

1

—

1

Net (charge-offs) recoveries

1

(3)

(2)

Provision (release)

13

119

132

Other
Ending balance

$

(1)

1

—

100 $

195 $

295

Fair Value of OTC Derivative Assets
Counterparty Credit Rating1

Less than 1 year

18,451

12,757

7,360

8,814

5,989

3,825

28,0293,955

29,51150,51228,003

6,597

118,578

—

(1)

(1)

Total, gross

—

(1)

(1)

Counterparty netting
Cash and securities
collateral

Total ending balance

$

104 $

209 $

313

Total, net

As of December 31, 2023 and December 31, 2022, more than
75% of Wealth Management residential real estate loans wereto borrowers with “Exceptional” or “Very Good” FICO
scores (i.e., exceeding 740). Additionally, WealthManagement’s securities-based lending portfolio remains
well-collateralized and subject to daily client margining,which includes requiring customers to deposit additional
collateral or reduce debt positions, when necessary.

2,013 $ 16,885 $ 37,517 $ 25,529 $ 10,084 $ 92,028

8,897

Other

18

$

7,274

Provision (release)

14 $

$

(3,691)(48,821)(86,826)(53,178)(15,888) (208,404)(2,709)(10,704)(25,921)(13,025)(5,554)$

1,085 $

Less than 1 year$

Wealth Management
Total

$

16,591

21,436

21,93345,644 $38,524

AA

A

BBB

NIG

Total

1,818

8,648

17,11319,3656,974

3-5 years

655

6,834

8,632

9,105

4,049

29,275

4,206

42,61345,48846,6608,244

147,211

Total, gross$Counterparty netting

53,9189,582 $ 76,261 $ 112,058 $ 107,503 $ 29,997 $ 335,401(4,037)(60,451)(79,334)(85,786)(17,415) (247,023)(3,632)(13,402)(28,776)(14,457)(5,198)$

1,913 $$ in millions

2,408 $

3,948 $

(65,465)

7,260 $

7,384 $ 22,913

At
December 31,
2023

At
December 31,
2022

Industry
Financials

The Institutional Securities and Wealth Management businesssegments provide margin lending arrangements that allow
customers to borrow against the value of qualifying securities,
primarily for the purpose of purchasing additional securities,
as well as to collateralize short positions. Institutional
Securities primarily includes margin loans in the Equity
Financing business. Wealth Management includes marginloans as well as non-purpose securities-based lending on nonbank entities. Amounts may fluctuate from period to period as
overall client balances change as a result of market levels,client positioning and leverage.

7,215 $

6,294

Utilities

4,267

5,656

Regional governments

$

1,319

2,052

Industrials

937

1,433

Communications services

841

1,051

Consumer discretionary

684

290

Information technology

677

480

Energy533

2,851

Consumer staples

515

687

Healthcare

468

565

Materials

383

317

Sovereign governments

262

410

Real estate

167

95

Not-for-profit organizations

166

204

Insurance

156

185

Other

583

343

19,173 $22,913

Total

Credit exposures arising from margin lending activities are
generally mitigated by their short-term nature, the value ofcollateral held and our right to call for additional margin whencollateral values decline. However, we could incur losses inthe event that the customer fails to meet margin calls andcollateral values decline below the loan amount. This risk iselevated in loans backed by collateral pools with significant
concentrations in individual issuers or securities with similarrisk characteristics. For a further discussion, see “Risk Factors—Credit Risk” herein.
December 2023 Form 10-K

(57,913)

6,424 $ 19,173

2,903 $ 18,166 $ 40,825 $ 32,373 $ 10,730 $ 104,997

Over 5 years

At
December 31,
2022

24,208 $6,075 $

1-3 years

Margin and Other Lending$

2,547 $At December 31, 2022

Total, net

Institutional Securities

3,042 $Counterparty Credit Rating1
AAA$ in millions

Customer and Other Receivables$ in millions

46,855

7,485 $ 62,567 $ 115,294 $ 72,278 $ 27,866 $ 285,490

Cash and securities
collateralAt
December 31,
2023

Total

504

Over 5 years

4 $

NIG

1,013

20

$

BBB

3-5 years

16 $Ending balanceA

1-3 years

4 $

$

AA

At December 31, 2023

ACL—Lending commitments
Beginning balanceAAA$ in millions$

1. Counterparty credit ratings are determined internally by the CRM.

We are exposed to credit risk as a dealer in OTC derivatives.
Credit risk with respect to derivative instruments arises fromthe possibility that a counterparty may fail to perform
according to the terms of the contract. For a description of ourrisk mitigation strategies, see “Credit Risk—Risk Mitigation”
herein.

74

Table of Contents

Risk Disclosures
Credit Derivatives

Country Risk

A credit derivative is a contract between a seller and buyer ofprotection against the risk of a credit event occurring on one
or more debt obligations issued by a specified reference
entity. The buyer typically pays a periodic premium over thelife of the contract and is protected for the period. If a credit
event occurs, the seller is required to make payment to thebeneficiary 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 topay, obligation acceleration, repudiation, payment
moratorium and restructuring.

Country risk exposure is the risk that events in, or that affect,a foreign country (any country other than the U.S.) might
adversely affect us. We actively manage country risk
exposure through a comprehensive risk management
framework that combines credit and other market
fundamentals and allows us to effectively identify, monitor
and limit country risk.
Our obligor credit evaluation process defines country of risk
as the country that has the largest economic impact on the
obligor and may be different from the obligor's country ofjurisdiction. Examples where this applies may include
corporations that are incorporated in one country but thatderive the bulk of their revenue from another and mutual
funds incorporated in one jurisdiction but with a concentrationof investments in a different country.

We trade in a variety of credit derivatives and may eitherpurchase or write protection on a single name or portfolio ofreferenced entities. In transactions referencing a portfolio ofentities or securities, protection may be limited to a tranche of
exposure or a single name within the portfolio. We are an
active market maker in the credit derivatives markets. As amarket maker, we work to earn a bid-offer spread on client
flow business and manage any residual credit or correlation
risk on a portfolio basis. Further, we use credit derivatives tomanage our exposure to residential and commercial mortgage
loans and corporate lending exposures. The effectiveness of
our CDS protection as a hedge of our exposures may varydepending upon a number of factors, including the contractual
terms of the CDS.

In addition to the direct country risk reflected in the “Top 10
Non-U.S. Country Exposures” table below, we also haveindirect country exposure, for example, from collateral
received in secured financing transactions or from providing
client clearing services. These indirect exposures are managed
through the credit and market risk frameworks.
We conduct periodic stress testing that seeks to measure theimpact on our credit and market exposures of shocks
stemmingfromnegative
economicorpolitical
scenarios. When deemed appropriate by our risk managers,
the stress test scenarios include possible contagion effects andsecond order risks. This analysis, and results of the stresstests, may result in the amendment of limits or exposure
mitigation.

We actively monitor our counterparty credit risk related tocredit derivatives. A majority of our counterparties arecomposed of banks, broker-dealers, insurance and otherfinancial institutions. Contracts with these counterparties may
include provisions related to counterparty rating downgrades,
which may result in the counterparty posting additional
collateral to us. As with all derivative contracts, we consider
counterparty credit risk in the valuation of our positions andrecognize CVAs as appropriate within Trading revenues in
the income statement.

Our sovereign exposures consist of financial contracts andobligations entered into with sovereign and local
governments. Our non-sovereign exposures consist offinancial contracts and obligations entered into primarily withcorporations and financial institutions.
Index credit derivatives are included in the following “Top 10
Non-U.S. Country Exposures” table. Each reference entity
within an index is allocated to that reference entity’s countryof risk. Index exposures are allocated to the underlying
reference entities in proportion to the notional weighting ofeach reference entity in the index, adjusted for any fair value
receivable or payable for that reference entity. Where credit
risk crosses multiple jurisdictions, for example, a CDS
purchased from an issuer in a specific country that references
bonds issued by an entity in a different country, the fair valueof the CDS is reflected in the Net counterparty exposure row
based on the country of the CDS issuer. Further, the notionalamount of the CDS adjusted for the fair value of thereceivable or payable is reflected in the Net inventory row
based on the country of the underlying reference entity.

For additional credit exposure information on our credit
derivative portfolio, see Note 6 to the financial statements.

75

December 2023 Form 10-K

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Risk Disclosures
Additional Information—Top 10 Non-U.S. Country
Exposures

Top 10 Non-U.S. Country Exposures
At December 31, 2023
UnitedKingdom$ in millions

Korea

FranceBrazilCollateral Held Against Net Counterparty Exposure1

China

Sovereign
Net inventory1$(407) $ 6,475 $419 $ 3,630 $754

Net counterparty exposure2

9

338

—

2

141

Exposure before hedges

(398)

6,813

419

3,632

895

Hedges3

(55)

—

(6)

(164)

—

Net exposure$(453) $ 6,813 $413 $ 3,468 $$ in millions

895

Non-sovereign
Net inventory1

65 $ 1,524 $127 $ 2,022

Net counterparty exposure2$ 1,335 $
6,566

643

2,670

428

136

Loans

8,035

14

858

424

455

Lending commitments

7,966

49

3,166

310

637

Exposure before hedges

23,902

771

8,218

1,289

3,250

—

(1,984)(18)(1)

Hedges3(1,952)Net exposure$ 21,950 $Total net exposure$ 21,497 $ 7,584 $ 6,647 $ 4,739 $ 4,144$ in millions

Australia Canada

India

$

286 $

264 $

79

62

—

—

77

Exposure before hedges

365

326

197

1,563

(3,668)

(8)

—

(262)

Hedges3
Net exposure

—

—

$

365 $

326 $

$

201 $

197 $ 1,563 $ (3,745)

189 $ 1,563 $ (3,930)

Net inventory

Net counterparty exposure2

575

407 $

330 $ 925 $

1,058

332

950

872
2,696

Loans

1,696

402

1,952

118

896

Lending commitments

1,093

1,592

1,135

—

4,618

Exposure before hedges

3,565

3,459

3,749

1,993

9,082

(14)

(91)

(340)

—

(1,937)

Hedges3
Net exposure$ 3,551 $ 3,368 $ 3,409 $ 1,993 $7,145

Total net exposure$ 3,916 $ 3,694 $ 3,598 $ 3,556 $3,215France, Romania, and Switzerland

4,616

Other

U.S., Spain, and Italy

14,592$

7,828

We have established an operational risk framework to
identify, measure, monitor and control risk across the Firm.
Effective operational risk management is essential to reducing
the impact of operational risk incidents and mitigating legal,
regulatory and reputational risks. The framework is
continually evolving to account for changes in the Firm and torespond to the changing regulatory and business environment.

Non-sovereign
1

U.K., U.S., and France

Germany

Operational risk refers to the risk of loss, or of damage to our
reputation, resulting from inadequate or failed processes orsystems, from human factors or from external events (e.g.,cyberattacks or third-party vulnerabilities) that may manifest
as, for example, loss of information, business disruption, theft
and fraud, legal and compliance risks, or damage to physicalassets. We may incur operational risk across the full scope ofour business activities, including revenue-generating activities
and support and control groups (e.g., IT and trade processing).

Germany

Net counterparty exposure2

Collateral2

United Kingdom

Operational Risk

Sovereign
Net inventory1

Country of Risk

1. The benefit of collateral received is reflected in the Top 10 Non-U.S. Country
Exposures at December 31, 2023.
2. Primarily consists of cash and government obligations of the countries listed.

771 $ 6,234 $ 1,271 $ 3,249

Spain

At
December 31,
2023

We have implemented operational risk data and assessment
systems to monitor and analyze internal and external
operational risk events, to assess business environment andinternal control factors, and to perform scenario analysis. The
collected data elements are incorporated in the operationalrisk capital model. The model encompasses both quantitativeand qualitative elements. Internal loss data and scenario
analysis results are direct inputs to the capital model, while
external operational incidents, business environment andinternal control factors are evaluated as part of the scenario
analysis process.

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 a notionalamount assuming zero recovery adjusted for the fair value of any receivable orpayable).
2. Net counterparty exposure (e.g, repurchase transactions, securities lending and
OTC derivatives) is net of the benefit of collateral received and also is net bycounterparty when legally enforceable master netting agreements are in place. For
more information, see “Additional Information—Top 10 Non-U.S. Country
Exposures” herein.
3. Amounts represent net CDS hedges (purchased and sold) on net counterparty
exposure and lending executed by trading desks responsible for hedging
counterparty and lending credit risk exposures. Amounts are based on the CDS
notional amount assuming zero recovery adjusted for the fair value of any
receivable or payable. For further description of the contractual terms for purchased
credit protection and whether they may limit the effectiveness of our hedges, see“Quantitative and Qualitative Disclosures about Risk—Credit Risk—Derivatives"
herein.

In addition, we employ a variety of risk processes andmitigants to manage our operational risk exposures. These
include a governance framework, a comprehensive risk
management program and insurance. Operational risks andassociated risk exposures are assessed relative to the risk
appetite reviewed and confirmed by the Board and areprioritized accordingly.
The breadth and range of operational risk are such that thetypes of mitigating activities are wide-ranging. Examples ofactivities include: continuous enhancement of defenses
against cyberattacks, use of legal agreements and contracts totransfer and/or limit operational risk exposures, due diligence,

December 2023 Form 10-K

76

Table of Contents

Risk Disclosures
implementation of enhanced policies and procedures,
technology change management controls, exception
management processing controls, and segregation of duties.

applied consistently Firmwide and is aligned with regulatory
requirements.
Third-Party Risk Management

Primary responsibility for the management of operational risk
is with the business segments, the control groups and thebusiness managers therein. The business managers maintainprocesses and controls designed to identify, assess, manage,
mitigate and report operational risk. Each of the businesssegments has a designated operational risk coordinator. The
operational risk coordinator regularly reviews operational risk
issues and reports to our senior management within eachbusiness. Each control group also has a designated operationalrisk coordinator and a forum for discussing operational risk
matters with our senior management. Oversight of operationalrisk is provided by the Non-Financial Risk Committee, legal
entity risk committees, regional risk committees and senior
management. In the event of a merger, joint venture,divestiture, reorganization, or creation of a new legal entity, a
new product, or a business activity, operational risks are
considered, and any necessary changes in processes orcontrols are implemented.

In connection with our ongoing operations, we utilize theservices of third-party suppliers, which we anticipate willcontinue and may increase in the future. These services
include, for example, outsourced processing and support
functions and other professional services. Our risk-based
approach to managing exposure to these services includes theperformance of due diligence, implementation of service-leveland other contractual agreements, consideration of operationalrisks and ongoing monitoring of third-party suppliers’
performance. We maintain and continue to enhance our thirdparty risk management program, which is designed to alignwith our risk tolerance and meet regulatory requirements. The
program includes appropriate governance, policies,
procedures and enabling technology. The third-party risk
management program includes the adoption of appropriate
risk management controls and practices throughout the thirdparty management life cycle to manage risk of service failure,risk of data loss and reputational risk, among others.

The Operational Risk Department provides independent
oversight of operational risk and assesses, measures andmonitors operational risk against appetite. The Operational
Risk Department works with the divisions and control groups
to embed a transparent, consistent and comprehensive
framework for managing operational risk within each area andacross the Firm.

Model Risk
Model risk refers to the potential for adverse consequencesfrom decisions based on incorrect or misused model outputs.
Model risk can lead to financial loss, poor business andstrategic decision-making or damage to our reputation. The
risk inherent in a model is a function of the materiality,
complexity and uncertainty around inputs and assumptions.

The Operational Risk Department scope includes oversight oftechnology risk, cybersecurity risk, information security risk,
the fraud risk management and prevention program, and thirdparty risk management (supplier and affiliate risk oversightand assessment), among others.

Model risk is generated from the use of models impacting
financial statements, regulatory filings, capital adequacy
assessments and the formulation of strategy.
Sound model risk management is an integral part of our Risk
Management Framework. The Model Risk Management
Department (“MRM”) is a distinct department in Risk
Management responsible for the oversight of model risk.

Cybersecurity
For a discussion of our Cybersecurity Program, see“Cybersecurity.”
Firm Resilience

The MRM establishes a model risk tolerance in line with ourrisk appetite. The tolerance is based on an assessment of themateriality of the risk of financial loss or reputational damage
due to errors in design, implementation and/or inappropriate
use of models. The tolerance is monitored through modelspecific and aggregate business-level assessments, which are
based upon qualitative and quantitative factors.

The Firm’s critical processes and businesses could be
disrupted by events including cyberattacks, failure or loss ofaccess to technology and/or associated data, military conflicts,
acts of terror, natural disasters, severe weather events andinfectious disease. The Firm maintains a resilience program
designed to provide for operational resilience and enable it torespond to and recover critical processes and supporting
assets in the event of a disruption impacting our people,
technology, facilities and third parties. The key elements of
the Firm’s resilience program include business continuity
management, technology disaster recovery, third party
resilience and key business service resilience. Resilience
testing is performed both internally and with critical third
parties to validate recovery capability in accordance withbusiness requirements. The Firm’s resilience program is

The effective challenge of models consists of critical analysis
by objective, informed parties who can identify model
limitations and assumptions and drive appropriate changes.
The MRM provides effective challenge of models,
independently validates and approves models for use,
annually recertifies models, periodically revalidates, identifies
and tracks remediation plans for model limitations and reports
on model risk metrics. The department also oversees the77

December 2023 Form 10-K

Table of Contents

Risk Disclosuresdevelopment of controls to support a complete and accurate
Firmwide model inventory.

rules, related self-regulatory organization standards and codesof conduct applicable to our business activities. This risk also
includes contractual and commercial risk, such as the risk thata counterparty’s performance obligations will be
unenforceable. It also includes compliance with AML,
terrorist financing, and anti-corruption rules and regulations.
We are generally subject to extensive regulation in the
different jurisdictions in which we conduct our business (seealso “Business—Supervision and Regulation” and “Risk
Factors”).

Liquidity Risk
Liquidity risk refers to the risk that we will be unable tofinance our operations due to a loss of access to the capital
markets or difficulty in liquidating our assets. Liquidity risk
also encompasses our ability (or perceived ability) to meet our
financial obligations without experiencing significant
business disruption or reputational damage that may threaten
our viability as a going concern. Liquidity risk also
encompasses the associated funding risks triggered by themarket or idiosyncratic stress events that may negatively
affect our liquidity and may impact our ability to raise newfunding. Generally, we incur liquidity and funding risk as aresult of our trading, lending, investing and client facilitation
activities.

We have established procedures based on legal and regulatory
requirements on a worldwide basis that are designed tofacilitate compliance with applicable statutory and regulatory
requirements and to require that our policies relating tobusiness conduct, ethics and practices are followed globally.
In addition, we have established procedures to mitigate therisk that a counterparty’s performance obligations will be
unenforceable, including consideration of counterparty legal
authority and capacity, adequacy of legal documentation, thepermissibility of a transaction under applicable law andwhether applicable bankruptcy or insolvency laws limit oralter contractual remedies. The heightened legal andregulatory focus on the financial services and banking
industries globally presents a continuing business challenge
for us.

Our Liquidity Risk Management Framework is critical tohelping ensure that we maintain sufficient liquidity reserves
and durable funding sources to meet our daily obligations andto withstand unanticipated stress events. The Liquidity Risk
Department is a distinct area in Risk Management responsible
for the oversight and monitoring of liquidity risk. The
Liquidity Risk Department ensures transparency of material
liquidity and funding risks, compliance with established risk
limits and escalation of risk concentrations to appropriatesenior management.

Climate Risk
Climate change manifests as physical and transition risks. The
physical risks of climate change include harm to people andproperty arising from acute climate-related events, such as
floods, hurricanes, heatwaves, droughts and wildfires, andchronic, longer-term shifts in climate patterns, such as higher
global average temperatures, rising sea levels and long-term
droughts. The transition risk of climate change include policy,
legal, technology and market changes. Examples of thesetransition risks include changes in consumer behavior andbusiness sentiment, related technologies, shareholder
preferences and any additional regulatory and legislativerequirements, including increased disclosure or carbon taxes.

To execute these responsibilities, the Liquidity Risk
Department establishes limits in line with our risk appetite,
identifies and analyzes emerging liquidity and funding risks toensure such risks are appropriately mitigated, monitors andreports risk exposures against metrics and limits, and reviews
the methodologies and assumptions underpinning our
Liquidity Stress Tests to ensure sufficient liquidity andfunding under a range of adverse scenarios.
The Treasury Department and applicable business units haveprimary responsibility for evaluating, monitoring andcontrolling the liquidity and funding risks arising from ourbusiness activities and for maintaining processes and controls
to manage the key risks inherent in their respective areas. The
Liquidity Risk Department coordinates with the Treasury
Department and these business units to help ensure a
consistent and comprehensive framework for managing
liquidity and funding risk across the Firm. See also
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources” herein.

Climate risk, which is not expected to have a significant effecton our consolidated results of operations or financial
condition in the near term, is an overarching risk that can
impact other categories of risk. Physical risk may lead toincreased credit risk by diminishing borrowers’ repayment
capacity or impacting the value of collateral. In addition,
physical risk could pose increased operational risk to ourfacilities and people. The impacts of transition risk may leadto and amplify credit, market or liquidity risk by reducing ourcustomers’ operating income or the value of their assets aswell as exposing us to reputational, compliance and/or
litigation risk due to increased legal and regulatory scrutiny or
negative public sentiment.

Legal, Regulatory and Compliance Risk
Legal, regulatory and compliance risk includes the risk oflegal or regulatory sanctions, material financial loss, including
fines, penalties, judgments, damages and/or settlements,
limitations on our business, or loss to reputation that we may
suffer as a result of failure to comply with laws, regulations,
December 2023 Form 10-K

As climate risk is interconnected with other risk types, wehave developed and continue to enhance processes to embedclimate risk considerations into our risk management
78

Table of Contents

Risk Disclosures
practices and governance structures. The BRC oversees
Firmwide risks, which include climate risk, and, as part of its
oversight, receives updates on our risk management approach
to climate risk, including our approaches toward scenario
analysis and integration of climate risk into our existing risk
management processes. Our climate risk management efforts
are overseen by the Climate Risk Committee, which is cochaired by our Chief Risk Officer and Chief Sustainability
Officer and shapes our approach to managing climate-relatedrisks in line with our overall risk framework.

79

December 2023 Form 10-K

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Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Morgan Stanley:

Opinion on the Financial Statements

Critical Audit Matter

We have audited the accompanying consolidated balance sheetsof Morgan Stanley and subsidiaries (the “Firm”) as of December
31, 2023 and 2022, the related consolidated income statements,
comprehensive income statements, cash flow statements andstatements of changes in total equity for each of the three years in
the period ended December 31, 2023, and the related notes(collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material
respects, the financial position of the Firm as of December 31,
2023 and 2022, and the results of its operations and its cash flows
for each of the three years in the period ended December 31,
2023, in conformity with accounting principles generally
accepted in the United States of America.

The critical audit matter communicated below is a matter arisingfrom the current-period audit of the financial statements that wascommunicated or required to be communicated to the audit
committee and that (1) relates to accounts or disclosures that arematerial to the financial statements and (2) involved ourespecially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way
our opinion on the financial statements, taken as a whole, and weare not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on theaccounts or disclosures to which it relates.

Valuation of Level 3 Financial Assets and Liabilities
Carried at Fair Value on a Recurring Basis and Level 3
Loans Held for Sale — Refer to Note 4 to the financial
statements

We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)(PCAOB), the Firm’s internal control over financial reporting asof December 31, 2023, based on criteria established in Internal
Control — Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway
Commission and our report dated February 22, 2024, expressed
an unqualified opinion on the Firm’s internal control overfinancial reporting.

Critical Audit Matter Description
The Firm’s trading and financing activities result in the Firm
carrying material financial instruments having limited pricetransparency. These financial instruments can span a broad arrayof product types and generally include derivatives, securities,
loans, and borrowings. As described in Note 4, these Level 3
financial assets and liabilities carried at fair value on a recurring
basis approximate $9.3 billion and $6.2 billion, respectively, andthe Level 3 loans held for sale approximate $6.7 billion at
December 31, 2023. Unlike financial instruments whose inputs
are readily observable and, therefore, more easily independently
corroborated, the valuation of these financial instruments isinherently subjective and often involves the use of unobservable
inputs and proprietary valuation models whose underlying
algorithms and valuation methodologies are complex.

Basis for Opinion
These financial statements are the responsibility of the Firm’s
management. Our responsibility is to express an opinion on the
Firm’s financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to
be independent with respect to the Firm in accordance with the
U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the
PCAOB.

We identified the valuation of Level 3 financial assets andliabilities carried at fair value on a recurring basis and Level 3loans held for sale as a critical audit matter given the Firm uses
complex valuation models and/or valuation inputs that are notobservable in the marketplace to determine the respective
carrying values. Performing our audit procedures to evaluate theappropriateness of these models and inputs involved a highdegree of auditor judgment, professionals with specialized skills
and knowledge, and an increased extent of testing.

We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess therisks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on atest basis, evidence regarding the amounts and disclosures in thefinancial statements. Our audits also included evaluating theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of thefinancial statements. We believe that our audits provide a
reasonable basis for our opinion.

How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation of Level 3 financial
assets and liabilities carried at fair value on a recurring basis andLevel 3 loans held for sale included the following, among others:• We tested the design and operating effectiveness of the Firm’s
model review and price verification controls. The Firm
maintains these internal controls to assess the appropriateness

December 2023 Form 10-K

80

Table of Contentsof its valuation methodologies and the relevant inputs andassumptions.
• We independently evaluated the appropriateness ofmanagement’s valuation methodologies, for selected financial
instruments, including the input assumptions, considering the
expected assumptions of other market participants and external
data when available.
• We developed independent estimates for selected financial
instruments, using externally sourced inputs and independentvaluation models, and used such estimates to further evaluate
management’s estimates. For certain of our selected financial
instruments, this included a comparison to the Firm’s estimatesfor similar transactions and an evaluation of the Firm’s
assumptions inclusive of the inputs, as applicable.
• We tested the revenues arising from the trade date fair value
estimates for selected structured transactions for which wedeveloped independent fair value estimates to test thevaluation inputs and assumptions used by the Firm andevaluated whether these methods were consistent with the
Firm’s relevant valuation policies.
• We assessed the consistency by which management hasapplied significant and unobservable valuation assumptions
used in developing the Firm's estimates.
• We performed a retrospective assessment of management’s
fair value estimates for certain of our selected financial
instruments, for which there were events or transactions
occurring after the valuation date. We did so by comparing
management’s estimates to the relevant evidence provided bysuch events or transactions, as applicable.

/s/ Deloitte & Touche LLPNew York, New York
February 22, 2024
We have served as the Firm’s auditor since 1997.

81

December 2023 Form 10-K

Table of Contents

Consolidated Income Statement2023

in millions, except per share data

Revenues
Investment banking
Trading
Investments
Commissions and fees
Asset management
Other

$

Total non-interest revenues
Interest income
Interest expense
Net interest
Net revenues
Provision for credit losses
Non-interest expenses
Compensation and benefits
Brokerage, clearing and exchange fees
Information processing and communications
Professional services
Occupancy and equipment
Marketing and business development
Other
Total non-interest expenses
Income before provision for income taxes
Provision for income taxes
Net income
Net income applicable to noncontrolling interests
Net income applicable to Morgan Stanley
Preferred stock dividends
Earnings applicable to Morgan Stanley common shareholders$$$

Earnings per common share
Basic
Diluted$Average common shares outstanding
Basic
Diluted

2022

2021

4,948 $
15,263573
4,537
19,617975
45,91350,28142,051
8,230
54,143532

5,599 $
13,92815
4,938
19,578283
44,341
21,595
12,2689,327
53,668280

10,994
12,8101,376
5,521
19,967
1,042
51,710
9,411
1,366
8,045
59,755
4

24,558
3,476
3,775
3,058

23,053
3,458
3,493
3,070

24,628
3,341
3,119
2,933

1,895
898
4,138
41,798
11,8132,583
9,230 $
143
9,087 $
557
8,530 $

1,729
905
3,591
39,29914,0892,910
11,179 $150
11,029 $489
10,540 $

1,725
643
3,694
40,083
19,668
4,548
15,12086
15,034468
14,566

5.24 $
5.18

6.23 $
6.15

8.16
8.03

1,628
1,646

1,691
1,713

1,785
1,814

2023
9,230 $

2022
11,179 $2021
15,120

(20)
1,098
(87)
(1,290)20(279) $
8,951 $
143
(111)
8,919 $

(337)
(4,437)
43
1,502
(4)
(3,233) $7,946 $
150
(82)
7,878 $

(331)
(1,542)(53)
696—(1,230)13,89086(90)
13,894

Consolidated Comprehensive Income Statement$ in millions

Net income
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
Change in net unrealized gains (losses) on available-for-sale securities
Pension and other
Change in net debt valuation adjustment
Net change in cash flow hedges
Total other comprehensive income (loss)
Comprehensive income
Net income applicable to noncontrolling interests
Other comprehensive income (loss) applicable to noncontrolling interests
Comprehensive income applicable to Morgan Stanley$

December 2023 Form 10-K

See Notes to Consolidated Financial Statements

82

$
$

$

Table of Contents

Consolidated Balance SheetAt
December 31,
2023$ in millions, except share data

AssetsCash and cash equivalents
Trading assets at fair value ($162,698 and $124,411 were pledged to various parties)
Investment securities:
Available-for-sale at fair value (amortized cost of $92,149 and $89,772)
Held-to-maturity (fair value of $57,453 and $65,006)
Securities purchased under agreements to resell (includes $7 and $8 at fair value)
Securities borrowed
Customer and other receivables
Loans:
Held for investment (net of allowance for credit losses of $1,169 and $839)
Held for sale
Goodwill
Intangible assets (net of accumulated amortization of $4,847 and $4,253)
Other assets
Total assets
Liabilities
Deposits (includes $6,472 and $4,796 at fair value)
Trading liabilities at fair value
Securities sold under agreements to repurchase (includes $1,020 and $864 at fair value)
Securities loaned
Other secured financings (includes $9,899 and $4,550 at fair value)
Customer and other payables
Other liabilities and accrued expenses
Borrowings (includes $93,900 and $78,720 at fair value)
Total liabilities

$

$
$

At
December 31,
2022

89,232 $367,074

128,127
301,315

88,113
66,694
110,740
121,091
80,10584,29775,634113,907
133,374
78,540203,385
15,255
16,707
7,055
28,242
1,193,693 $

198,997
14,78816,652
7,618
26,982
1,180,231

351,804 $151,51362,651
15,057
12,655
208,148
28,151
263,732
1,093,711

356,646
154,438
62,534
15,6798,158
216,134
27,353
238,058
1,079,000

Commitments and contingent liabilities (see Note 14)
EquityMorgan Stanley shareholders’ equity:
Preferred stock
Common stock, $0.01 par value:
Shares authorized: 3,500,000,000; Shares issued: 2,038,893,979; Shares outstanding: 1,626,828,437 and1,675,487,409
Additional paid-in capital
Retained earnings
Employee stock trusts
Accumulated other comprehensive income (loss)
Common stock held in treasury at cost, $0.01 par value (412,065,542 and 363,406,570 shares)
Common stock issued to employee stock trusts
Total Morgan Stanley shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity

See Notes to Consolidated Financial Statements

83

$

8,750

8,750

20
29,832
97,9965,314

20
29,33994,862
4,881(6,421)(31,139)(5,314)
99,038944
99,982
1,193,693 $(6,253)(26,577)(4,881)
100,141
1,090
101,231
1,180,231

December 2023 Form 10-K

Table of Contents

Consolidated Statement of Changes in Total Equity2023$ in millions

Preferred Stock
Beginning balance
Issuance of preferred stock
Redemption of preferred stock
Ending balanceCommon Stock
Beginning and ending balance
Additional Paid-in Capital
Beginning balance
Share-based award activity
Issuance of preferred stock
Issuance of common stock for the acquisition of Eaton Vance
Other net increases (decreases)
Ending balance
Retained Earnings
Beginning balance
Net income applicable to Morgan Stanley
Preferred stock dividends1

$

2022

2021

8,750 $——
8,750

7,750 $
1,000
—
8,750

9,250
1,300
(2,800)
7,750

20

20

20

29,339493———
29,832

28,841503(6)—
129,33925,546
1,117
(25)
2,185
18
28,841

94,862
9,087(557)

89,432
11,029(489)

78,69415,034(468)(5,393)(3)
97,996(5,108)(2)
94,862(3,818)(10)
89,432

4,881
433
5,314

3,955
926
4,881

3,043
912
3,955

(6,253)(168)(6,421)(3,102)(3,151)(6,253)(1,962)(1,140)(3,102)(26,577)
1,654(6,216)—(31,139)(17,500)
1,794(10,871)—(26,577)(9,767)1,210(12,075)
3,132(17,500)(4,881)(433)(5,314)(3,955)(926)(4,881)(3,043)(912)(3,955)

Noncontrolling Interests
Beginning balance
Net income applicable to noncontrolling interests

1,090
143

1,157
150

1,368
86

Net change in Accumulated other comprehensive income (loss) applicable to noncontrollinginterests
Other net increases (decreases)
Ending balance
Total Equity

(111)
(178)
944
99,982 $

(82)
(135)
1,090
101,231 $

(90)
(207)
1,157
106,598

Common stock dividends1
Other net increases (decreases)
Ending balance
Employee Stock Trusts
Beginning balance
Share-based award activity
Ending balance
Accumulated Other Comprehensive Income (Loss)
Beginning balance
Net change in Accumulated other comprehensive income (loss)
Ending balanceCommon Stock Held in Treasury at Cost
Beginning balance
Share-based award activity
Repurchases of common stock and employee tax withholdings
Issuance of common stock for the acquisition of Eaton Vance
Ending balanceCommon Stock Issued to Employee Stock Trusts
Beginning balance
Share-based award activity
Ending balance$

1. See Note 17 for information regarding dividends per share for each class of stock.

December 2023 Form 10-K

84

See Notes to Consolidated Financial Statements

Table of Contents

Consolidated Cash Flow Statement2023$ in millions

Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Deferred income taxes
Stock-based compensation expense
Depreciation and amortization
Provision for credit losses
Other operating adjustments
Changes in assets and liabilities:
Trading assets, net of Trading liabilities
Securities borrowed
Securities loaned
Customer and other receivables and other assets
Customer and other payables and other liabilities
Securities purchased under agreements to resell
Securities sold under agreements to repurchase
Net cash provided by (used for) operating activities
Cash flows from investing activities
Proceeds from (payments for):
Other assets—Premises, equipment and software
Changes in loans, net
AFS securities:
Purchases
Proceeds from sales
Proceeds from paydowns and maturities
HTM securities:
Purchases
Proceeds from paydowns and maturities
Cash paid as part of the Eaton Vance acquisition, net of cash acquired
Other investing activities
Net cash provided by (used for) investing activities
Cash flows from financing activities
Net proceeds from (payments for):
Other secured financings
Deposits
Issuance of preferred stock, net of issuance costs
Proceeds from issuance of Borrowings
Payments for:Borrowings
Repurchases of common stock and employee tax withholdings
Cash dividends
Other financing activities
Net cash provided by (used for) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, at beginning of period
Cash and cash equivalents, at end of period
Supplemental Disclosure of Cash Flow Information
Cash payments for:
Interest
Income taxes, net of refunds

See Notes to Consolidated Financial Statements

$

$

$

85

2022

2021

9,230 $

11,179 $15,120

(463)
1,709
4,256
532
308

(849)
1,875
3,998
280
618

4
2,085
4,216
4
(147)

(61,026)
12,283(622)
602(3,629)3,167
117(33,536)(39,422)(3,661)
3,380
14,664(4,897)
6,092
346(6,397)

9,075(17,322)
4,568
774
7,758
(3,765)
11,601
33,971(3,412)(4,059)(3,078)(23,652)(2,308)(36,106)(23,078)
5,929
14,316(24,602)
22,014
13,435(42,469)
20,652
26,375

—
8,143
—
(923)
(3,084)(5,231)
9,829
—
(347)
(11,632)(27,102)
14,541(2,648)(832)(49,897)796(5,075)—78,424

(884)
1,659
994
72,460(625)
36,897
1,275
90,273(64,805)(34,898)(70,124)(6,178)(5,763)(125)(2,726)451(38,895)
128,127
89,232 $(10,871)(5,401)(345)
22,714(4,283)
402
127,725
128,127 $(12,075)(4,171)
97
41,547(3,550)22,071
105,654
127,725

41,940 $2,035

9,819 $
4,147

1,303
4,231

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
1. Introduction and Basis of Presentation

corporations. Individual clients are generally served
through intermediaries, including affiliated and nonaffiliated distributors.

The Firm

Basis of Financial Information

Morgan Stanley is a global financial services firm thatmaintains significant market positions in each of its businesssegments—Institutional Securities, Wealth Management andInvestment Management. Morgan Stanley, through its
subsidiaries and affiliates, provides a wide variety of products
and services to a large and diversified group of clients andcustomers, including corporations, governments, financial
institutions and individuals. Unless the context otherwise
requires, the terms “Morgan Stanley” or the “Firm” mean
Morgan Stanley (the “Parent Company”) together with its
consolidated subsidiaries. See the “Glossary of Common
Terms and Acronyms” for the definition of certain terms andacronyms used throughout this Form 10-K.

The financial statements are prepared in accordance with U.S.
GAAP, which requires the Firm to make estimates andassumptions regarding the valuations of certain financial
instruments, the valuations of goodwill and intangible assets,
the outcome of legal and tax matters, deferred tax assets,
ACL, and other matters that affect its financial statements andrelated disclosures. The Firm believes that the estimatesutilized in the preparation of its financial statements are
prudent and reasonable. Actual results could differ materiallyfrom these estimates.
The Notes are an integral part of the Firm’s financial
statements. The Firm has evaluated subsequent events foradjustment to or disclosure in these financial statements
through the date of this report and has not identified any
recordable or disclosable events not otherwise reported inthese financial statements or the notes thereto.

A description of the clients and principal products andservices of each of the Firm’s business segments is asfollows:
Institutional Securities provides a variety of products andservices to corporations, governments, financial institutions
and ultra-high net worth clients. Investment Banking
services consist of capital raising and financial advisory
services, including the underwriting of debt, equity
securities and other products, as well as advice on mergers
and acquisitions, restructurings and project finance. Our
Equity and Fixed Income businesses include sales,financing, prime brokerage, market-making, Asia wealthmanagement services and certain business-related
investments. Lending activities include originating
corporate loans and commercial real estate loans, providing
secured lending facilities, and extending securities-based
and other financing to customers. Other activities include
research.

Consolidation
The financial statements include the accounts of the Firm, its
wholly owned subsidiaries and other entities in which the
Firm has a controlling financial interest, including certain
VIEs (see Note 15). Intercompany balances and transactions
have been eliminated. For consolidated subsidiaries that are
not wholly owned, the third-party holdings of equity interests
are referred to as Noncontrolling interests. The net income
attributable to Noncontrolling interests for such subsidiaries ispresented as Net income applicable to noncontrolling interestsin the income statement. The portion of shareholders’ equity
that is attributable to Noncontrolling interests for such
subsidiaries is presented as Noncontrolling interests, acomponent of Total equity, in the balance sheet.

Wealth Management provides a comprehensive array offinancial services and solutions to individual investors andsmall to medium-sized businesses and institutions covering:financial advisor-led brokerage, custody, administrative andinvestment advisory services; self-directed brokerage
services; financial and wealth planning services; workplace
services, including stock plan administration; securitiesbased lending, residential real estate loans and other lending
products; banking; and retirement plan services.

For entities where the total equity investment at risk is
sufficient to enable the entity to finance its activities without
additional subordinated financial support and the equity
holders bear the residual economic risks and returns of theentity and have the power to direct the activities of the entitythat most significantly affect its economic performance, theFirm consolidates those entities it controls either through amajority voting interest or otherwise. For VIEs (i.e., entities
that do not meet the aforementioned criteria), the Firm
consolidates those entities where it has the power to make thedecisions 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 besignificant to the VIE.

Investment Management provides a broad range ofinvestment strategies and products that span geographies,
asset classes, and public and private markets to a diverse
group of clients across institutional and intermediarychannels. Strategies and products, which are offeredthrough a variety of investment vehicles, include equity,
fixed income, alternatives and solutions, and liquidity andoverlay services. Institutional clients include defined
benefit/defined
contributionplans,
foundations,endowments, government entities, sovereign wealth funds,
insurance companies, third-party fund sponsors andDecember 2023 Form 10-K

For investments in entities in which the Firm does not have acontrolling financial interest but has significant influence over
operating and financial decisions, it applies the equity methodof accounting with net gains and losses recorded within Other86

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Notes to Consolidated Financial Statements
revenues (see Note 11) unless the Firm has elected to measure
the investment at fair value, in which case net gains and losses
are recorded within Investments revenues (see Note 5).

related to sales and trading activities; and sales of mutual
funds, alternative funds, futures, insurance products andoptions, as well as revenues from order flow payments for
directing customer orders to broker-dealers, exchanges andmarket centers for execution. Commission and fee revenues
are recognized on trade date when the performance obligation
is satisfied.

Equity and partnership interests held by entities qualifying foraccounting purposes as investment companies are carried atfair value.
The Firm’s significant regulated U.S. and international
subsidiaries include:

Asset Management Revenues
Asset management, distribution and administration fees are
generally based on related asset levels, such as the AUM of acustomer’s account or the net asset value of a fund. These fees
are generally recognized when services are performed and thevalue of the assets is known. Management fees are reduced byestimated fee waivers and expense caps, if any, provided tothe customer.

• Morgan Stanley & Co. LLC (“MS&Co.”),• Morgan Stanley Smith Barney LLC (“MSSB”),• Morgan Stanley Europe SE (“MSESE”),• Morgan Stanley & Co. International plc (“MSIP”),• Morgan Stanley Capital Services LLC (“MSCS”),• Morgan Stanley Capital Group Inc. (“MSCG”),• Morgan Stanley MUFG Securities Co., Ltd. (“MSMS”),• Morgan Stanley Bank, N.A. (“MSBNA”) and• Morgan Stanley Private Bank, National Association(“MSPBNA”).

Performance-based fees not in the form of carried interest arerecorded when the annual performance target is met and therevenues are not probable of a significant reversal.
Sales commissions paid by the Firm in connection with thesale of certain classes of shares of its open-end mutual fundproducts are accounted for as deferred commission assets andamortized to Other expenses over the expected life of thecontract. The Firm periodically tests deferred commission
assets for recoverability based on cash flows expected to bereceived in future periods. Other asset management anddistribution costs are recognized as incurred in the relevant
non-interest expenses line items.

For further information on the Firm’s significant regulated
U.S. and international subsidiaries, see Note 16.

2. Significant Accounting Policies
Revenue Recognition
Revenues are recognized when the promised goods orservices are delivered to our customers in an amount that isbased on the consideration the Firm expects to receive in
exchange for those goods or services when such amounts are
not probable of significant reversal.

Investments Revenues—Carried Interest
The Firm is entitled to receive performance-based fees in theform of carried interest when the return in certain funds
exceeds specified performance targets. When the Firm earns
carried interest from funds as specified performancethresholds are met, that carried interest and any related
general or limited partner interest are accounted for under theequity method of accounting and measured based on the
Firm’s claim on the NAV of the fund at the reporting date,taking into account the distribution terms applicable to theinterest held. Such items are reflected within Investments
revenues.

Investment Banking
Revenues from investment banking activities consist ofrevenues earned from underwriting, primarily equity and
fixed income securities and loan syndications, and advisory
fees, primarily for mergers, acquisitions and restructurings.
Underwriting revenues are generally recognized on trade date
if there is no uncertainty or contingency related to the amountto be paid. Underwriting costs are deferred and recognized in
the relevant non-interest expenses line items when the related
underwriting revenues are recorded.

See Note 22 for information regarding the net cumulative
unrealized amount of performance-based fee revenues at riskof reversal. See Note 14 for information regarding generalpartner guarantees, which include potential obligations toreturn performance fee distributions previously received.

Advisory fees are recognized as advice is provided to theclient, based on the estimated progress of work and whenrevenues are not probable of a significant reversal. Advisory
costs are recognized as incurred in the relevant non-interest
expenses line items, including those reimbursed.

Other Items
Revenues from certain commodities-related contracts arerecognized in Trading revenues when the Firm has transferred
control over the promised goods or services to the customer.

Commissions and Fees
Commission and fee revenues generally result fromtransaction-based arrangements in which the client is charged
a fee for the execution of transactions. Such revenues
primarily arise from transactions in equity securities; services

Receivables from contracts with customers are recognized in
Customer and other receivables in the balance sheet when the87

December 2023 Form 10-K

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Notes to Consolidated Financial Statements
underlying performance obligations have been satisfied andthe Firm has the right per the contract to bill the customer.
Contract assets are recognized in Other assets when the Firm
has satisfied its performance obligations but customer
payment is conditional on something other than the passage oftime. Contract liabilities are recognized in Other liabilities
and accrued expenses when the Firm has collected payment
from a customer based on the terms of the contract but theunderlying performance obligations are not yet satisfied.

within Trading revenues or Investments revenues. Otherwise,
it is recorded within Interest income or Interest expense.
Dividend income is recorded in Trading revenues or
Investments revenues depending on the business activity.
The fair value of OTC financial instruments, including
derivative contracts related to financial instruments andcommodities, is presented in the accompanying balance sheet
on a net-by-counterparty basis, when appropriate.
Additionally, the Firm nets the fair value of cash collateral
paid or received against the fair value amounts recognized fornet derivative positions executed with the same counterparty
under the same master netting agreement.

For contracts with a term of less than one year, incremental
costs to obtain the contract are expensed as incurred.
Revenues are not discounted when payment is expected
within one year.

Fair Value Option

The Firm generally presents, net within revenues, taxes
assessed by a governmental authority that are both imposedon and concurrent with a specific revenue-producing
transaction and collected by the Firm from a customer.

The Firm has elected to measure certain eligible instruments
at fair value, including Securities purchased under agreements
to resell, Loans and lending commitments, equity method
investments and certain other assets, Deposits, Securities soldunder agreements to repurchase, Other secured financings andBorrowings.

Cash and Cash Equivalents
Cash and cash equivalents consist of Cash and due frombanks and Interest-bearing deposits with banks. Cashequivalents are highly liquid investments with remaining
maturities of three months or less from the acquisition datethat are readily convertible to cash and are not held for trading
purposes.

Fair Value Measurement—Definition and Hierarchy
Fair value is defined as the price that would be received to sellan asset or paid to transfer a liability (i.e., the “exit price”) inan orderly transaction between market participants at themeasurement date.

Cash and cash equivalents also include Restricted cash, suchas cash segregated in compliance with federal or otherregulations, including minimum reserve requirements set by
the Federal Reserve Bank and other central banks, and the
Firm’s initial margin deposited with clearing organizations.

Fair value is a market-based measure considered from theperspective of a market participant rather than an entityspecific measure. Therefore, even when market assumptions
are not readily available, assumptions are set to reflect thosethat the Firm believes market participants would use inpricing the asset or liability at the measurement date. Where
the Firm manages a group of financial assets, financial
liabilities, and nonfinancial items accounted for as derivatives
on the basis of its net exposure to either market risks or credit
risk, the Firm measures the fair value of that group offinancial instruments consistently with how market
participants would price the net risk exposure at themeasurement date.

Fair Value of Financial Instruments
Instruments within Trading assets and Trading liabilities aremeasured at fair value, either as required or allowed byaccounting guidance. These financial instruments primarily
represent the Firm’s trading and investment positions andinclude both cash and derivative products. In addition,
securities classified as Available-for-Sale (“AFS”) aremeasured at fair value.

In determining fair value, the Firm uses various valuation
approaches and establishes a hierarchy for inputs used inmeasuring fair value that requires the most observable inputs
be used when available.

Gains and losses on instruments carried at fair value arereflected in Trading revenues, Investments revenues or
Investment banking revenues in the income statement, except
for gains and losses related to AFS securities (see “AFS
Investment Securities” section herein and Note 7) and
derivatives accounted for as hedges, as well as economic
derivative hedges associated with certain held-for-sale andheld-for-investment corporate loans and lending commitments(see “Hedge Accounting” and “Other Hedges” herein andNote 6).

Observable inputs are inputs that market participants would
use in pricing the asset or liability that were developed basedon market data obtained from sources independent of theFirm. Unobservable inputs are inputs that reflect assumptions
the Firm believes other market participants would use inpricing the asset or liability that are developed based on thebest information available in the circumstances. The fair value
hierarchy is broken down into three levels based on theobservability of inputs as follows, with Level 1 being thehighest and Level 3 being the lowest level:

Interest income and interest expense are recorded within theincome statement depending on the nature of the instrument
and related market conventions. When interest is included as acomponent of the instruments’ fair value, interest is recorded
December 2023 Form 10-K

88

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Notes to Consolidated Financial Statements
including, where applicable, commodity prices, equity prices,interest rate yield curves, credit curves, correlation,
creditworthiness of the counterparty, creditworthiness of theFirm, option volatility and currency rates.

Level 1. Valuations based on quoted prices in active markets
that the Firm has the ability to access for identical assets or
liabilities. Valuation adjustments, block discounts anddiscounts for entity-specific and contractual restrictions thatwould not transfer to market participants are not applied to
Level 1 instruments. Since valuations are based on quoted
prices that are readily and regularly available in an active
market, valuation of these products does not entail asignificant degree of judgment.

Where appropriate, valuation adjustments are made to accountfor various factors such as liquidity risk (bid-ask
adjustments), credit quality, model uncertainty, andconcentration risk and funding in order to arrive at fair value.
Adjustments for liquidity risk adjust model-derived midmarket amounts of Level 2 and Level 3 financial instruments
for the bid-mid or mid-ask spread required to properly reflect
the exit price of a risk position. Bid-mid and mid-ask spreads
are marked to levels observed in trade activity, broker quotes
or other external third-party data. Where these spreads areunobservable for the particular position in question, spreads
are derived from observable levels of similar positions.

Level 2. Valuations based on quoted prices for similar assets
or liabilities in active markets, quoted prices for identical orsimilar assets or liabilities in inactive markets, significant
market inputs other than quoted prices that are observable forthe asset or liability, or market-corroborated inputs.
Level 3. Valuations based on inputs that are unobservable andsignificant to the overall fair value measurement.

The Firm applies credit-related valuation adjustments to its
Borrowings for which the fair value option was elected and to
OTC derivatives. The Firm considers the impact of changes in
its own credit spreads based upon observations of thesecondary bond market spreads when measuring the fair value
for Borrowings.

The availability of observable inputs can vary from product toproduct and is affected by a wide variety of factors, including
the type of product, whether the product is new and not yet
established in the marketplace, the liquidity of markets andother characteristics particular to the product. To the extent
that valuation is based on models or inputs that are lessobservable or unobservable in the market, the determinationof fair value requires more judgment. Accordingly, the degreeof judgment exercised by the Firm in determining fair value isgreatest for instruments categorized in Level 3 of the fairvalue hierarchy.

For OTC derivatives, which are recognized in Trading assets
at fair value in the balance sheet, the impact of changes inboth the Firm’s and the counterparty’s credit rating is
considered when measuring fair value. In determining the
expected exposure, the Firm simulates the distribution of the
future exposure to a counterparty, then applies market-based
default probabilities to the future exposure, leveraging
external third-party CDS spread data. Where CDS spread data
are unavailable for a specific counterparty, bond market
spreads, CDS spread data based on the counterparty’s credit
rating or CDS spread data that reference a comparable
counterparty may be utilized. The Firm also considers
collateral held and legally enforceable master netting
agreements that mitigate its exposure to each counterparty.

The Firm considers prices and inputs that are current as of themeasurement date, including during periods of market
dislocation. In periods of market dislocation, the observabilityof prices and inputs may be reduced for many instruments.
This condition could cause an instrument to be reclassified
from Level 1 to Level 2 or from Level 2 to Level 3 of the fairvalue hierarchy.
In certain cases, the inputs used to measure fair value may fall
into different levels of the fair value hierarchy. In such cases,
the total fair value amount is disclosed in the level appropriate
for the lowest level input that is significant to the total fairvalue of the asset or liability.

Adjustments for model uncertainty are taken for positions
whose underlying models are reliant on significant inputs thatare neither directly nor indirectly observable, hence requiring
reliance on established theoretical concepts in their derivation.
These adjustments are derived by making assessments of thepossible degree of variability using statistical approaches andmarket-based information where possible.

Valuation Techniques
Many cash instruments and OTC derivative contracts have bid
and ask prices that can be observed in the marketplace. Bid
prices reflect the highest price that a party is willing to pay for
an asset. Ask prices represent the lowest price that a party is
willing to accept for an asset. The Firm carries positions at the
point within the bid-ask range that meets its best estimate offair value. For offsetting positions in the same financial
instrument, the same price within the bid-ask spread is used tomeasure both the long and short positions.

The Firm may apply concentration adjustments to certain of
its OTC derivative portfolios to reflect the additional cost of
closing out a particularly large risk exposure. Where possible,theseadjustments
are
based
on
observable
market information, but in many instances, significant
judgment is required to estimate the costs of closing
out concentrated risk exposures due to the lack of liquidity inthe marketplace.

Fair value for many cash instruments and OTC derivative
contracts is derived using pricing models. Pricing models take
into account the contract terms, as well as multiple inputs,

The Firm applies an FVA in the fair value measurements of
OTC uncollateralized or partially collateralized derivatives
89

December 2023 Form 10-K

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Notes to Consolidated Financial Statements
and in collateralized derivatives where the terms of theagreement do not permit the reuse of the collateral received.
In general, FVA reflects a market funding risk premium
inherent in the noted derivative instruments. The methodology
for measuring FVA leverages the Firm’s existing creditrelated valuation adjustment calculation methodologies,
which apply to both assets and liabilities.

default. The enforceability of the master netting agreement istaken into account in the Firm’s risk management practices
and application of counterparty credit limits.
For information related to offsetting of derivatives, see Note
6.
Hedge Accounting

See Note 4 for a description of valuation techniques applied tothe major categories of financial instruments measured at fairvalue.

The Firm applies hedge accounting using various derivative
financial instruments for the following types of hedges:
hedges of changes in the fair value of assets and liabilities dueto the risk being hedged (fair value hedges); hedges ofvariability in forecasted cash flows from floating-rate assets
due to contractually specified interest rates (cash flow hedges)
and hedges of net investments in foreign operations whosefunctional currency is different from the reporting currency of
the Parent Company (net investment hedges). These financial
instruments are included within Trading assets—Derivativeand other contracts or Trading liabilities—Derivative andother contracts in the balance sheet. For hedges where hedge
accounting is being applied, the Firm performs effectivenesstesting and other procedures. The change in the fair value ofthe designated portion of the hedging instrument should behighly correlated, between 80 and 125 percent of the change
in the fair value, cash flows, or carrying value (due totranslation gains or losses) of the hedged item attributable to
the risk being hedged. The Firm considers the impact ofvaluation adjustments related to counterparty credit spreads
and its own credit spreads to determine whether they would
cause the hedging relationship to be ineffective.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain of the Firm’s assets and liabilities are measured at fairvalue on a non-recurring basis. The Firm incurs losses orgains for any adjustments of these assets or liabilities to fairvalue.
For assets and liabilities measured at fair value on a nonrecurring basis, fair value is determined by using various
valuation approaches. The same hierarchy for inputs as
described above, which requires that observable inputs beused when available, is used in measuring fair value for these
items.
For further information on financial assets and liabilities thatare measured at fair value on a recurring and non-recurring
basis, see Note 4.
Offsetting of Derivative Instruments

Fair Value Hedges—Interest Rate Risk

In connection with its derivative activities, the Firm generally
enters into master netting agreements and collateralagreements with its counterparties. These agreements provide
the Firm with the right, in the event of a default by thecounterparty, to net a counterparty’s rights and obligations
under the agreement and to liquidate and set off cash
collateral against any net amount owed by the counterparty.
Derivatives with enforceable master netting agreements arereported net of cash collateral received and posted.

The Firm’s designated fair value hedges consist of interest
rate swaps designated as hedges of changes in the benchmark
interest rate of certain fixed rate AFS securities and seniorborrowings. The Firm also designates interest rate swaps asfair value hedges of changes in the benchmark interest rate ofcertain fixed rate deposits. The Firm is permitted to hedge thefull, or part of the contractual term of the hedged instrument.
The Firm uses regression analysis to perform an ongoingprospective and retrospective assessment of the effectivenessof these hedging relationships. For qualifying fair value
hedges of benchmark interest rates, the change in the fairvalue of the derivative, offset by the change in the fair value
attributable to the change in the benchmark interest rate riskof the hedged asset (liability), is recognized in earnings eachperiod as a component of Interest income (expense). For AFS
securities, the change in fair value of the hedged item due tochanges other than the risk being hedged will continue to bereported in OCI. When a derivative is de-designated as ahedge, any basis adjustment remaining on the hedged asset(liability) is amortized to Interest income (expense) over theremaining life of the asset (liability) using the effective
interest method.

However, in certain circumstances, the Firm may not havesuch an agreement in place; the relevant insolvency regime
may not support the enforceability of the master netting
agreement or collateral agreement; or the Firm may not havesought legal advice to support the enforceability of theagreement. In cases where the Firm has not determined anagreement to be enforceable, the related amounts are notoffset (see Note 6).
The Firm’s policy is generally to receive cash and/or
securities posted as collateral (with rights of rehypothecation)in connection with derivative transactions, irrespective of theenforceability determination regarding the master netting andcollateral agreement. In certain cases, the Firm may agree forsuch collateral to be posted by the counterparty to a thirdparty custodian under a control agreement that enables it totake control of such collateral in the event of a counterparty
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Notes to Consolidated Financial Statements
Net Investment Hedges

unrealized losses are recorded either in OCI or in Other
revenues as described below.

The Firm uses forward foreign exchange contracts to manage
a portion of the currency exposure relating to its net
investments in foreign operations. To the extent that thenotional amounts of the hedging instruments equal the portionof the investments being hedged and the underlying exchange
rate of the derivative hedging instrument is the same as theexchange rate between the functional currency of the investee
and the intermediate parent entity’s functional currency, it isconsidered to be perfectly effective. The gain or loss fromrevaluing hedges of net investments in foreign operations at
the spot rate is reported within AOCI. The forward points on
the hedging instruments are excluded from hedge
effectiveness testing and changes in the fair value of thisexcluded component are recorded currently in Interest
income.

AFS securities in an unrealized loss position are firstevaluated to determine whether there is an intent to sell or it ismore likely than not the Firm will be required to sell before
recovery of the amortized cost basis. If so, the amortized costbasis is written down to the fair value of the security such thatthe entire unrealized loss is recognized in Other revenues, andany previously established ACL is written off.
For all other AFS securities in an unrealized loss position, any
portion of unrealized losses representing a credit loss isrecognized in Other revenues and as an increase to the ACL
for AFS securities, with the remainder of unrealized losses
recognized in OCI. A credit loss exists if the Firm does notexpect to recover the amortized cost basis of the security.
When considering whether a credit loss exists, the Firm
considers relevant information, including:

Cash Flow Hedges—Interest Rate Risk
The Firm’s designated cash flow hedges consist of interest
rate derivatives designated as hedges of variability inforecasted cash flows from floating-rate assets due to changes
in the contractually specified interest rates. The Firm uses
regression analysis to perform an ongoing prospective andretrospective assessment of the effectiveness of these hedging
relationships.

• guarantees (implicit or explicit) by the U.S. government;• the extent to which the fair value has been less than theamortized cost basis;• adverse conditions specifically related to the security, its
industry or geographic area;• changes in the financial condition of the issuer of the
security or, in the case of an asset-backed debt security,changes in the financial condition of the underlying loan
obligors;• the payment structure of the debt security and the likelihoodof the issuer being able to make payments that increase in
the future;• failure of the issuer of the security to make scheduledinterest or principal payments;• the current rating and any changes to the rating of the
security by a rating agency.

The objective of this strategy is to hedge the risk of changes
in the hedged item’s cash flows attributable to changes in thecontractually specified interest rate. For qualifying cash flow
hedges of contractually specified interest rates, changes in thefair value of the derivative are recorded in OCI andsubsequently reclassified to earnings in the same periods
when the hedged item affects earnings. If cash flow hedge
accounting is discontinued, AOCI is released into earnings
immediately if the cash flow of the hedged item is probable of
not occurring. Otherwise the amount in AOCI is released into
earnings as the forecasted transaction affects earnings.

If a credit loss exists, the Firm measures the credit loss as thedifference between the present value of cash flows expected
to be collected (discounted at the implicit interest rate atacquisition of the security or discounted at the effective yieldfor securities that incorporate changes in prepayment
assumptions) and the amortized cost basis of the security.
Changes in prepayment assumptions alone are not considered
to result in a credit loss. When estimating the present value of
expected cash flows, information utilized includes theremaining payment terms of the security, prepayment speeds,
financial condition of the issuer, expected defaults and thevalue of any underlying collateral.

Other Hedges
In addition to hedges that are designated and qualify for hedge
accounting, the Firm uses derivatives to economically hedge
credit risk associated with certain held-for-sale and held-forinvestment corporate loans and lending commitments, and therelated gains and losses are reported within Other revenues in
the income statement.
For further information on derivative instruments and hedging
activities, see Note 6.

Presentation of ACL and Provision for Credit Losses

AFS Investment Securities
AFS securities

AFS securities are reported at fair value in the balance sheet.
Interest income, including amortization of premiums andaccretion of discounts, is included in Interest income in theincome statement. Unrealized gains are recorded in OCI, and

91

ACL

Provision for
Credit Losses

Contra investment securities

Other revenue

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Nonaccrual & ACL Charge-offs on AFS Securities

product level. Any decreases in fair value below the initialcarrying amount and any recoveries in fair value up to theinitial carrying amount are recorded in Other revenues.
Increases in fair value above initial carrying value are notrecognized.

AFS securities follow the same nonaccrual and charge-off
guidance as discussed in “Allowance for Credit Losses”
herein.
HTM Securities

Interest Income. Interest income on loans held for sale isaccrued and recognized based on the contractual rate ofinterest. Loan origination fees or costs and purchase pricediscounts or premiums are deferred as an adjustment to theloan’s cost basis until the related loan is sold and, as such, areincluded in the periodic determination of the lower of cost or
fair value adjustments and the gain or loss recognized at thetime of sale.

HTM securities are reported at amortized cost, net of any
ACL, in the balance sheet. Refer to “Allowance for Credit
Losses” herein for guidance on the ACL determination.
Interest income, including amortization of premiums andaccretion of discounts on HTM securities, is included inInterest income in the income statement.
Loans

Lending Commitments. Commitments to fund mortgage loans
held for sale are derivatives and are reported in Trading assets
or Trading liabilities in the balance sheet and in Trading
revenues in the income statement.

The Firm accounts for loans based on the following
categories: loans held for investment; loans held for sale; andloans at fair value.

For commitments to fund non-mortgage loans, the Firm
records the liability and related expense for the fair value
exposure below cost of such commitments in Other liabilities
and accrued expenses in the balance sheet with an offset to
Other revenues in the income statement.

Nonaccrual and ACL Charge-offs on Loans
All loan categories described below follow the same
nonaccrual and charge-off guidance as discussed in“Allowance for Credit Losses” herein.

Because loans and lending commitments held for sale arerecognized at the lower of cost or fair value, the allowance for
credit losses and charge-off policies do not apply to theseloans.

Loans Held for Investment
Loans held for investment are reported at amortized cost,which consists of the outstanding principle balance adjusted
for any charge-offs, the allowance for credit losses, any
unamortized deferred fees or costs for originated loans, andany unamortized premiums or discounts for purchased loans.

Loans at Fair Value
Loans for which the fair value option is elected are carried atfair value and included in Trading assets in the balance sheet,with changes in fair value recognized in earnings. For further
information on loans carried at fair value and classified as
Trading assets, see Note 4.

Interest Income. Interest income on performing loans held forinvestment is accrued and recognized as interest income at thecontractual rate of interest. Purchase price discounts or
premiums, as well as net deferred loan fees or costs, areamortized into interest income over the life of the loan toproduce a level rate of return.

Lending Commitments. The Firm records the liability andrelated expense for the fair value exposure related tocommitments to fund loans that will be measured at fairvalue. The liability is recorded in Trading liabilities in thebalance sheet, and the expense is recorded in Trading
revenues in the income statement.

Lending Commitments. The Firm records the liability andrelated expense for the credit exposure related tocommitments to fund loans. The liability is recorded in Other
Liabilities in the balance sheet and the expense is recorded in
the Provision for credit losses in the income statement. For
more information regarding loan commitments, standby
letters of credit and financial guarantees, see Note 14.

Because such loans and lending commitments are reported atfair value, the allowance for credit losses and charge-off
policies do not apply to these loans.

For more information regarding allowance for credit losses,
refer to “Allowance for Credit Losses” herein.

For further information on loans, see Note 9. For more
information regarding loan commitments, standby letters ofcredit and financial guarantees, see Note 14.

Loans Held for Sale

Allowance for Credit Losses

Loans held for sale are measured at the lower of amortizedcost or fair value, with valuation changes recorded in Other
revenues. The Firm determines the valuation allowance on an
individual loan basis, except for residential mortgage loans
for which the valuation allowance is determined at the loan
December 2023 Form 10-K

The ACL for financial instruments measured at amortizedcost and certain off-balance sheet exposures (e.g., HFI loans
and lending commitments, HTM securities, customer andother receivables and certain guarantees) represents an
92

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Notes to Consolidated Financial Statements
estimate of expected credit losses over the entire life of thefinancial instrument.

generally correspond to external ratings published by S&P.
The Firm also considers transaction structure, including
type of collateral, collateral terms and position of theobligation within the capital structure. In addition, forcommercial real estate, the Firm considers property typeand location, net operating income and LTV ratios, among
other factors, as well as commercial real estate price andcredit spread indices and capitalization rates.
• Residential real estate loans: Loan origination Fair Isaac
Corporation (“FICO”) credit scores as determined byindependent credit agencies in the U.S. and LTV ratios.
• Employee loans: Employment status, which includes thosecurrently employed by the Firm and for which the Firm candeduct any unpaid amounts due to it through certain
compensation arrangements; and those no longer employedby the Firm where such arrangements are no longer
applicable.

Factors considered by management when determining the
ACL include payment status, fair value of collateral andexpected payments of principal and interest, as well asinternal or external information relating to past events, current
conditions, and reasonable and supportable forecasts. The
Firm uses three forecasts that include assumptions aboutcertain macroeconomic variables, including, but not limited
to, U.S. gross domestic product (“GDP”), equity market
indices and unemployment rates, as well as commercial realestate and home price indices. At the conclusion of the Firm’s
reasonable and supportable forecast period of 13 quarters,
there is a gradual reversion back to historical averages.
The ACL is measured on a collective basis when similar risk
characteristics exist for multiple instruments, considering all
available information relevant to assessing the collectabilityof cash flows. Generally, the Firm applies a probability ofdefault/loss given default model for instruments that arecollectively assessed, under which the ACL is calculated as
the product of probability of default, loss given default andexposure at default. These parameters are forecast for eachcollective group of assets using a scenario-based statisticalmodel.

Qualitative and environmental factors such as economic andbusiness conditions, the nature and volume of the portfolio,
and lending terms and the volume and severity of past dueloans are also considered in the ACL calculations.
Presentation of ACL and Provision for Credit Losses

If the instrument does not share similar risk characteristics
with other instruments, including when it is probable that the
Firm will be unable to collect the full payment of principal
and interest on the instrument when due, the ACL is measured
on an individual basis. The Firm generally applies a
discounted cash flow method for instruments that are
individually assessed.

ACL

Provision for
Credit Losses

Held for investment loans

Contra asset

Provision for credit
lossesOther instruments measured atamortized cost (e.g., HTM securities
and customer and other receivables)

Contra asset

Other revenues

Employee loans

Contra asset

Compensation andbenefits expenses

Held for investment lending
commitments

Other liabilities and Provision for credit
accrued expenses
lossesOther off-balance sheet instruments(e.g., certain guarantees)

Other liabilities andaccrued expenses

Other expenses

The Firm may also elect to use an approach that considers thefair value of the collateral when measuring the ACL if theloan is collateral dependent (i.e., repayment of the loan is
expected to be provided substantially by the sale or operationof the underlying collateral and the borrower is experiencing
financial difficulty).

Nonaccrual

Additionally, the Firm can elect to use an approach tomeasure the ACL that considers the fair value of collateral
where the borrower is required to, and reasonably expected to,continually adjust and replenish the amount of collateral
securing the instrument to reflect changes in the fair value ofsuch collateral. The Firm has elected to use this approach forcertain securities-based loans, margin loans, securities
purchased under agreements to resell and securities borrowed.

For any instrument placed on nonaccrual status, the Firm
reverses any unpaid interest accrued with an offsetting
reduction to Interest income. Principal and interest payments
received on nonaccrual instruments are applied to principal if
there is doubt regarding the ultimate collectability ofprincipal. If collection of the principal is not in doubt, interest
income is realized on a cash basis. If the instrument is brought
current and neither principal nor interest collection is in
doubt, instruments can generally return to accrual status, andinterest income can be recognized.

The Firm places financial instruments on nonaccrual status if
principal or interest is not expected when contractually due oris past due for a period of 90 days or more unless theobligation is well-secured and is in the process of collection.

Credit quality indicators considered in developing the ACL
include:ACL Charge-offs• Corporate loans, secured lending facilities, commercial realestate loans and securities, and other loans: Internal risk
ratings developed by the CRM that are refreshed at least
annually, and more frequently as necessary. These ratings

The principal balance of a financial instrument is charged off
in the period it is deemed uncollectible, resulting in a
reduction in the ACL and in the balance of the financial
instrument in the balance sheet. Accrued interest receivable
93

December 2023 Form 10-K

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Notes to Consolidated Financial Statements
Premises, Equipment and Capitalized Software Costs

balances that are separately recorded from the related
financial instruments are charged off against Interest income
when the related financial instrument is placed on nonaccrual
status. Accordingly, the Firm elected not to measure an ACL
for accrued interest receivables.

Premises, equipment and capitalized software costs consist ofbuildings, leasehold improvements, furniture, fixtures,computer and communications equipment, power generation
assets and capitalized software (externally purchased anddeveloped for internal use). Premises, equipment andcapitalized software costs are stated at cost less accumulated
depreciation and amortization and are included in Other assets
in the balance sheet. Depreciation and amortization areprovided by the straight-line method over the estimated usefullife of the asset.

Transfers of Financial Assets
Transfers of financial assets are accounted for as sales when
the Firm has relinquished control over the transferred assets.
Any related gain or loss on sale is recorded in Net revenues.
Transfers that are not accounted for as sales are treated ascollateralized financings. Securities borrowed or purchased
under agreements to resell and securities loaned or sold underagreements to repurchase are treated as collateralized
financings (see Note 8).

Estimated Useful Life of Assets
in years

Buildings

Securities purchased under agreements to resell (“reverse
repurchase agreements”) and Securities sold underagreements to repurchase (“repurchase agreements”),
including repurchase and reverse repurchase agreements-tomaturity, are carried in the balance sheet at the amount ofcash paid or received plus accrued interest except for certain
reverse repurchase and repurchase agreements for which the
Firm has elected the fair value option (see Note 5). Where
appropriate, repurchase agreements and reverse repurchaseagreements with the same counterparty are reported on a net
basis. Securities borrowed and securities loaned are recordedat the amount of cash collateral advanced or received.

39

Leasehold improvements—Building

term of lease to 25

Leasehold improvements—Other

term of lease to 15

Furniture and fixtures
Computer and communications equipment

7
3 to 9Power generation assets

15 to 29

Capitalized software costs

2 to 10Premises, equipment and capitalized software costs are tested
for impairment whenever events or changes in circumstancessuggest that an asset’s carrying value may not be fully
recoverable.
Goodwill and Intangible Assets

In instances where the Firm is the lender in securities-forsecurities transactions and is permitted to sell or repledge
these securities, the fair value of the collateral received isreported in Trading assets, and the related obligation to returnthe collateral is reported in Trading liabilities in the balance
sheet. Securities-for-securities transactions where the Firm isthe borrower are not included in the balance sheet.

The Firm tests goodwill and indefinite-lived intangible assets
for impairment on an annual basis and on an interim basis
when certain events or circumstances exist. The Firm tests
goodwill for impairment at the reporting unit level, which is
generally at the level of or one level below the asset's businesssegment. The Firm tests indefinite-lived intangible assets for
impairment at the aggregate level of management contracts.
For both the annual and interim tests, the Firm has the option
to either (i) perform a quantitative impairment test or (ii) first
perform a qualitative assessment to determine whether it ismore likely than not that the fair value is less than its carrying
amount, in which case, the quantitative test would be
performed.

In order to manage credit exposure arising from thesetransactions, in appropriate circumstances, the Firm enters
into master netting agreements and collateral agreements with
its counterparties. These agreements provide the Firm withthe right, in the event of a default by the counterparty, to net acounterparty’s rights and obligations under the agreement andto liquidate and set off collateral held by the Firm against the
net amount owed by the counterparty.

When performing a quantitative impairment test, the Firmcompares the fair value with the carrying amount. If the fairvalue is less than the carrying amount, the impairment loss isequal to the excess of the carrying value over the fair value,
limited to the carrying amount.

The Firm’s policy is generally to take possession of securities
purchased or borrowed in connection with reverse repurchaseagreements and securities borrowed transactions, respectively,
and to receive cash and/or securities delivered under
repurchase agreements or securities loaned transactions (withrights of rehypothecation).

The estimated fair values are derived based on valuation
techniques the Firm believes market participants would use.
The estimated fair values are generally determined byutilizing a discounted cash flow methodology or
methodologies that incorporate price-to-book and price-toearnings multiples of certain comparable companies forgoodwill impairment testing.

For information related to offsetting of certain collateralized
transactions, see Note 8.

December 2023 Form 10-K

Estimated Useful Life

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Notes to Consolidated Financial Statements
Intangible assets with a finite life are amortized over theirestimated useful life and are reviewed for impairment on aninterim basis when impairment indicators are present.
Impairment losses are recorded within Other expenses in theincome statement.

Stock-based awards generally contain clawback andcancellation provisions. Certain awards provide the Firm
discretion to claw back or cancel all or a portion of the award
under specified circumstances. Where award terms are
considered to be subjective, a grant date cannot be establishedand the awards are subject to variable accounting which
requires that compensation expense for those awards isadjusted for changes in the fair value of the Firm’s common
stock or the relevant model valuation, as appropriate, untilconversion, exercise or expiration. Following amendments toclarify specific subjective award terms in the second quarterof 2023, a grant date for the awards was established such thatcompensation expense for those awards is no longer adjusted
for changes in the fair value of the Firm’s common stock. The
Firm also operates an Employee Stock Purchase Plan(“ESPP”) which allows eligible employees of the Firm topurchase shares of Morgan Stanley at a discount.

Earnings per Common Share
Basic EPS is computed by dividing earnings available toMorgan Stanley common shareholders by the weighted
average number of common shares outstanding for the period.
Earnings available to Morgan Stanley common shareholders
represents net income applicable to Morgan Stanley reduced
by preferred stock dividends. Common shares outstanding
include common stock and vested RSUs where recipients
have satisfied the relevant vesting terms. Diluted EPS reflects
the assumed conversion of all dilutive securities.
Share-based awards that pay dividend equivalents subject tovesting are included in diluted shares outstanding (if dilutive)
under the treasury stock method.

Employee Stock Trusts
In connection with certain stock-based compensation plans,
the Firm has established employee stock trusts to provide, atits discretion, common stock voting rights to certain RSU
holders. Following the grant of an RSU award, when a stock
trust is utilized, the Firm contributes shares to be held in thestock trust until the RSUs convert to common shares. The
assets of the employee stock trusts are consolidated with thoseof the Firm and are generally accounted for in a manner
similar to treasury stock, where the shares of common stock
outstanding reported in Common stock issued to employee
stock trusts are offset by an equal amount reported in
Employee stock trusts in the balance sheet.

The Firm has granted PSUs that vest and convert to shares ofcommon stock only if predetermined performance and market
goals are satisfied. Since the issuance of the shares is
contingent upon the satisfaction of certain conditions, thePSUs are included in diluted EPS based on the number ofshares (if any) that would be issuable if the reporting date was
the end of the performance period.
For further information on diluted earnings (loss) per
common share, see Note 17 to the financial statements.
Deferred Compensation

The Firm uses the grant-date fair value of stock-based
compensation as the basis for recording the movement of theassets to or from the employee stock trusts. Changes in thefair value are not recognized as the Firm’s stock-based
compensation must be settled by delivery of a fixed numberof shares of the Firm’s common stock.

Stock-Based Compensation
The Firm measures compensation expense for stock-based
awards at fair value. The Firm determines the fair value of
RSUs (including PSUs with non-market performance
conditions) based on the grant-date fair value of its common
stock, measured as the volume-weighted average price on thedate of grant (“VWAP”). The fair value of RSUs not entitledto dividends until conversion is measured at VWAP reducedby the present value of dividends expected to be paid on theunderlying shares prior to scheduled conversion date. PSUs
that contain market-based conditions are valued using aMonte Carlo valuation model.

Deferred Cash-Based Compensation
Compensation expense for DCP awards is calculated based on
the notional value of the award granted, adjusted for changes
in the fair value of the referenced investments that employees
select. Compensation expense is recognized over the vesting
period relevant to each separately vesting portion of deferredawards.

Compensation expense is recognized over the vesting period
relevant to each separately vesting portion of the award.
Compensation expense for awards with performance
conditions is recognized based on the probable outcome of theperformance condition at each reporting date. Compensation
expense for awards with market-based conditions is
recognized irrespective of the probability of the market
condition being achieved and is not reversed if the market
condition is not met. The Firm accounts for forfeitures as theyoccur.

The Firm invests directly, as a principal, in financial
instruments and other investments to economically hedge
certain of its obligations under its DCP. Changes in the valueof such investments are recorded in Trading revenues andInvestments revenues. Although changes in compensation
expense resulting from changes in the fair value of thereferenced investments will generally be offset by changes in
the fair value of investments made by the Firm, there istypically a timing difference between the immediate
recognition of gains and losses on the Firm’s investments and95

December 2023 Form 10-K

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Notes to Consolidated Financial Statements
the deferred recognition of the related compensation expense
over the vesting period.

largest amount of tax benefit that is more likely than not to berealized upon ultimate settlement with the related tax
authority. Interest and penalties related to unrecognized tax
benefits are recognized as a component of the provision forincome taxes.

Retirement-Eligible Employee Compensation
For year-end stock-based awards and DCP awards anticipatedto be granted to retirement-eligible employees under award
terms that do not contain a future service requirement, theFirm accrues the estimated cost of the awards over the courseof the calendar year preceding the grant date, which reflects
the period over which the compensation is earned.

Foreign Currencies
Assets and liabilities of operations with non-U.S. dollar
functional currencies are translated at year-end rates of
exchange. Gains or losses resulting from translating foreign
currency financial statements, net of hedge gains or losses andrelated tax effects, are reflected in AOCI in the balance sheet.
Gains or losses resulting from remeasurement of foreign
currency transactions are included in net income, and amounts
recognized in the income statement are translated at the rateof exchange on the respective date of recognition for eachamount.

Carried Interest Compensation
The Firm generally recognizes compensation expense for any
portion of carried interest (both realized and unrealized) thatis allocated to employees. For information on performancebased fees in the form of carried interest, which are directly
related to carried interest compensation, see “Revenue
Recognition—Carried Interest” herein.

Accounting Updates Adopted in 2023

Income Taxes

Fair Value Measurement - Equity Securities Subject toContractual Sale Restrictions

Deferred tax assets and liabilities are recorded based upon thetemporary differences between the financial statement andincome tax bases of assets and liabilities using currently
enacted tax rates in effect for the year in which the differences
are expected to reverse. The effect of a change in tax rates ondeferred tax assets and liabilities is recognized in income tax
expense (benefit) in the period that includes the enactment
date. Such effects are recorded in Provision for income taxes
regardless of where deferred taxes were originally recorded.

The Firm early adopted the Fair Value Measurement ofEquity Securities Subject to Contractual Sale Restrictions
accounting update on July 1, 2023, with no material impact
on the Firm’s financial condition or results of operations upon
adoption. The update clarifies that a contractual sale
restriction is not considered part of the unit of account of anequity security and, therefore, is not considered in measuring
fair value.

The Firm recognizes net deferred tax assets to the extent thatit believes these assets are more likely than not to be realized.
In making such a determination, the Firm considers all
available positive and negative evidence, including future
reversals of existing taxable temporary differences, projected
future taxable income, tax planning strategies and results ofrecent operations. When performing the assessment, the Firm
considers all types of deferred tax assets in combination witheach other, regardless of the origin of the underlying
temporary difference. If a deferred tax asset is determined to
be unrealizable, a valuation allowance is established. If theFirm subsequently determines that it would be able to realize
deferred tax assets in excess of their net recorded amount, it
would make an adjustment to the deferred tax asset valuation
allowance, which would reduce the provision for income
taxes.

Financial Instruments - Credit Losses
The Firm adopted the Financial Instruments-Credit Losses
accounting update on January 1, 2023, with no impact on the
Firm’s financial condition or results of operations upon
adoption.
This accounting update eliminates the accounting guidance
for troubled debt restructurings (“TDRs”) and requires new
disclosures regarding certain modifications of financing
receivables (i.e., principal forgiveness, interest rate
reductions, other-than-insignificant payment delays and term
extensions) to borrowers experiencing financial difficulty.
The update also requires disclosure of current period grosscharge-offs by year of origination for financing receivables
measured at amortized cost. Refer to Note 9, Loans, Lending
Commitments and Related Allowance for Credit Losses, forthe new disclosures.

The Firm recognizes tax expense associated with Global
Intangible Low-Taxed Income as it is incurred as part of thecurrent income taxes to be paid or refunded for the current
period.

Accounting Update Adopted in 2022
Reference Rate Reform

Uncertain tax positions are recorded on the basis of a two-stepprocess, whereby (i) the Firm determines whether it is more
likely than not that the tax positions will be sustained on thebasis of the technical merits of the position and (ii) for thosetax positions that meet this threshold, the Firm recognizes the
December 2023 Form 10-K

The Firm has adopted the Reference Rate Reform accounting
update, which extends the period of time entities can utilize
the reference rate reform relief guidance from December 31,
2022 to December 31, 2024. The relief provides optional
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Notes to Consolidated Financial Statements
expedients and exceptions for applying generally accepted
accounting principles to contracts, hedging relationships andother transactions that reference LIBOR or other interest ratebenchmarks for which the referenced rate is expected to bediscontinued or replaced. The Firm is applying the accounting
relief as relevant contract and hedge accounting relationshipmodifications are made during the course of the reference rate
reform transition period. There was no impact to the Firm’s
financial statements upon issuance of this accounting standard
update.

At December 31, 2023
$ in millions

Level 1

Level 2

Level 3

Netting1

Total

Liabilities at fair value
Deposits$— $ 6,439 $33 $— $ 6,472

16

—

—

27,724

Trading liabilities:
U.S. Treasury andagency securities

27,708Other sovereign
government obligations

26,829

3,955

6

—

30,790

Corporate and other debt—

10,5609—

10,56946,809300

45—47,154

Corporate equities3

Derivative and other contracts:

3. Cash and Cash Equivalents

Interest rate

$ in millions

At
December 31,
2023

Cash and due from banks$

At
December 31,
2022

7,323 $

Interest bearing deposits with banks

5,409

8,000

129,983857—

138,840

Credit—10,795297—

11,092Foreign exchange

96

89,880385—

90,361Equity2,411

64,794

1,689—

68,894

Commodity and other

1,642

11,904

1,521—

15,067

Netting1(7,643) (237,497)(1,082)(42,757) (288,979)

81,909122,718

Total Cash and cash equivalents$

89,232 $128,127

Total derivative and othercontracts

4,506

69,8593,667(42,757)

Restricted cash$

30,571 $35,380Total trading liabilities

105,852

84,6903,727(42,757) 151,512

Securities sold underagreements torepurchase

—

571

449

—

Other secured financings

—

9,807

92

—

9,899

Borrowings—

92,022

1,878—

93,900For additional information on cash and cash equivalents,
including restricted cash, see Note 2.

4. Fair Values$105,852 $193,529 $ 6,179 $ (42,757) $262,803$ in millions

Level 1At December 31, 2022

Assets and Liabilities Measured at Fair Value on a Recurring
Basis
Level 2

Level 3

Netting1

U.S. Treasury andagency securities

Total

Other sovereign
government obligations

Trading assets:

Other sovereign
government obligations$ 56,459 $ 53,741 $— $— $110,200

Level 3

Netting1

Total

Trading assets:

Assets at fair value
U.S. Treasury andagency securities

Level 2

Assets at fair value

At December 31, 2023
Level 1

1,020

Total liabilities at fairvalue

Recurring Fair Value Measurements$ in millions

35,275$ 38,462 $ 42,263 $17 $— $ 80,742

24,644

4,769

169

—

29,582

State and municipal
securities

—

1,503

145

—

1,648

MABS

—

1,774

416

—

2,190

22,580

9,946

94

—

32,620State and municipal
securities

Loans and lending
commitments2

—

6,380

2,017

—

8,397

—

2,148

34

—

2,182

Corporate and other debt—

23,351

2,096—

25,447

MABS

—

1,540

489

—

2,029

Corporate equities3

97,869

1,019

116

—

99,004
171,390

Derivative and other contracts:

Loans and lending
commitments2—

Corporate and other
debt

6,122

2,066

—

8,188

Interest rate

4,481

166,392

517—

Credit

—

7,876

425

—

8,301

Foreign exchange

49

115,766

183—

115,998

Equity2,778

40,171406—

43,355

Commodity and other

5,609

21,152

3,701—

30,462

Netting1(9,618) (258,821)(1,078)(55,777) (325,294)—

35,833

1,983—

37,816

126,772

929

199

—

127,900

7,284

140,139784—

148,207

Credit—10,244393—

10,637

Foreign exchange

12

93,21820—

93,250EquityTotal derivative and othercontracts

3,299

92,536

4,154(55,777)

44,212

2,169

55,319587—

58,075Investments4

Commodity and other

652

685

923

—

2,260

1,608

11,8622,811—

16,281

Netting1

Physical commodities

—

2,379

—

—

2,379

(7,643) (237,497)(1,082)(42,915) (289,137)

Total trading assets4

164,926

176,659

10,0533,430

73,285

3,513(42,915)37,313

Investment securities —AFS

53,86630,39635—

84,297

781

836

949

—

2,566

—

736

—

8

—

—

8

3,5

Corporate equities

Derivative and other contracts:
Interest rate

Total derivative and othercontracts
4,5

Investments

Physical commodities

—

736

—

Total trading assets4

210,022

185,116

9,327

Investment securities —AFS

57,40530,708——88,113

—

7

—

—

7

Securities purchased
under agreements toresellSecurities purchased
under agreements toresell(42,915) 361,550

Total assets at fair value(55,777) 295,861$218,792 $207,063 $10,088 $ (55,777) $380,166

Total assets at fair value $267,427 $ 215,831 $ 9,327 $ (42,915) $449,670

97

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Valuation Techniques for Assets and Liabilities Measured
at Fair Value on a Recurring BasisAt December 31, 2022
$ in millions

Level 1

Level 2

Level 3

Netting1

Total

Liabilities at fair value
Deposits$— $ 4,776 $20 $— $ 4,796——

21,00425,926

U.S. Treasury and Agency Securities
U.S. Treasury Securities
Valuation Technique:• Fair value is determined using quoted market prices.
Valuation Hierarchy Classification:• Level 1—as inputs are observable and in an active market
U.S. Agency Securities
Valuation Techniques:• Non-callable agency-issued debt securities are generally
valued using quoted market prices, and callable agencyissued debt securities are valued by benchmarking modelderived prices to quoted market prices and trade data forcomparable instruments.
• The fair value of agency mortgage pass-through poolsecurities is model-driven based on spreads of comparable
to-be-announced securities.
• CMOs are generally valued using quoted market prices
and trade data adjusted by subsequent changes in related
indices for comparable instruments.
Valuation Hierarchy Classification:• Level 1—on-the-run agency issued debt securities if
actively traded and inputs are observable• Level 2—all other agency issued debt securities, agency
mortgage pass-through pool securities and CMOs if
actively traded and inputs are observable• Level 3—in instances where the trading activity is limited
or inputs are unobservable

Trading liabilities:
U.S. Treasury andagency securities

20,776228

Other sovereign
government obligations

23,235

2,688

3

—

Corporate and other debt

—

8,786

29

—

8,815

59,998518

42—60,558165,158

Corporate equities3

Derivative and other contracts:
Interest rate

3,446

161,044668—

Credit

—

7,987

315

—

8,302

Foreign exchange

89

113,383

117—

113,589

Equity3,266

46,923

1,142—

51,331

Commodity and other

6,187

17,574

2,618—

26,379

Netting1(9,618) (258,821)(1,078)(57,107) (326,624)

Total derivative and othercontracts

3,370

88,090

3,782(57,107)

Total trading liabilities

107,379

100,3103,856(57,107) 154,438

Securities sold underagreements torepurchase

—

352

512

—

864

Other secured financings

—

4,459

91

—

4,550

Borrowings—

77,133

1,587—

78,720Total liabilities at fairvalue

38,135$107,379 $187,030 $ 6,066 $ (57,107) $243,368

MABS—Mortgage- and asset-backed securities
1. 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 thecolumn titled “Netting.” Positions classified within the same level that are with thesame counterparty are netted within that level. For further information on derivative
instruments and hedging activities, see Note 6.
2. For a further breakdown by type, see the following Detail of Loans and Lending
Commitments at Fair Value table.
3. For trading purposes, the Firm holds or sells short equity securities issued byentities in diverse industries and of varying sizes.
4. Amounts exclude certain investments that are measured based on NAV per share,
which are not classified in the fair value hierarchy. For additional disclosure aboutsuch investments, see “Net Asset Value Measurements” herein.
5. At December 31, 2023, the Firm's Trading assets included an insignificant amountof equity securities subject to contractual sale restrictions that generally prohibit the
Firm from selling the security for a period of time as of the measurement date.

Other Sovereign Government Obligations
Valuation Techniques:• Fair value is determined using quoted prices in active
markets when available. When not available, quoted prices
in less active markets are used. In the absence of positionspecific quoted prices, fair value may be determinedthrough benchmarking from comparable instruments.
Valuation Hierarchy Classification:• Level 1—if actively traded and inputs are observable• Level 2—if the market is less active or prices are
dispersed• Level 3—in instances where the prices are unobservable

Detail of Loans and Lending Commitments at Fair Value$ in millions

At
December 31,
2023

Secured lending facilities

$

— $

At
December 31,
2022
6

Commercial real estate

422

528

Residential real estate

2,909

2,020

Securities-based lending and Other loans

4,857

5,843

8,188 $

8,397

Total

$

State and Municipal Securities
Valuation Techniques:• Fair value is determined using recently executedtransactions, market price quotations or pricing models
that factor in, where applicable, interest rates, bond or
CDS spreads, adjusted for any basis difference between
cash and derivative instruments.
Valuation Hierarchy Classification:• Level 2—if value based on observable market data
supported by market liquidity for comparable instruments• Level 3—in instances where market data are notobservable or supported by market liquidity

Unsettled Fair Value of Futures Contracts1$ in millions

At
December 31,
2023

Customer and other receivables, net$

1,062 $

At
December 31,
2022
1,219

1. These contracts are primarily Level 1, actively traded, valued based on quoted
prices from the exchange and are excluded from the previous recurring fair value
tables.

December 2023 Form 10-K

98

Table of Contents

Notes to Consolidated Financial Statements
Mortgage- and Asset-Backed Securities
Valuation Techniques:• Mortgage- and asset-backed securities 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 notobservable, the fair value determination may require
benchmarking to comparable instruments, and/or
analyzing expected credit losses, default and recovery
rates, and/or applying discounted cash flow techniques.
When evaluating the comparable instruments for use in thevaluation of each security, security collateral-specificattributes, including payment priority, credit enhancementlevels, type of collateral, delinquency rates and loss
severity, are considered. In addition, for RMBS borrowers,
FICO scores and the level of documentation for the loan
are considered.
• Market standard cash flow models may be utilized tomodel the specific collateral composition and cash flow
structure of each transaction. Key inputs to these models
are market spreads, forecasted credit losses, and default
and prepayment rates for each asset category.
• Valuation levels of RMBS and CMBS indices are used as
an additional data point for benchmarking purposes or toprice outright index positions.
Valuation Hierarchy Classification:• Level 2—if value based on observable market data
supported by market liquidity for comparable instruments• Level 3—if external prices or significant spread inputs areunobservable or not supported by market liquidity or if thecomparability assessment involves significant subjectivity
related to property type differences, cash flows,
performance or other inputs

or borrower types or based on the present value of
expected future cash flows using the Firm’s best available
estimates of the key assumptions, including forecasted
credit losses, prepayment rates, forward yield curves anddiscount rates commensurate with the risks involved or amethodology that utilizes the capital structure and credit
spreads of recent comparable securitization transactions.
• Fair value of equity margin loans is determined bydiscounting future interest cash flows, net of potential
losses resulting from large downward price movements of
the underlying margin loan collateral. The potential losses
are modeled using the margin loan rate, which iscalibrated from market observable CDS spreads, implied
debt yields or volatility metrics of the loan collateral.
Valuation Hierarchy Classification:• Level 2—if value based on observable market data
supported by market liquidity for comparable instruments• Level 3—in instances where prices or significant spread
inputs are unobservable or not supported by market
liquidity or if the comparability assessment involves
significant subjectivity
Corporate and Other Debt
Corporate Bonds
Valuation Techniques:• Fair value is determined using recently executedtransactions, market price quotations, bond spreads and
CDS 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 thebond. If the spread data do not reference the issuer, thendata that reference comparable issuers are used. When
position-specific external price data are not observable,
fair value is determined based on either benchmarking tocomparable instruments or cash flow models with yield
curves, bond or single-name CDS spreads and recovery
rates or loss given default as significant inputs.
Valuation Hierarchy Classification:• Level 2—if value based on observable market data forcomparable instruments• Level 3—in instances where prices or significant spread
inputs are unobservable or if the comparability assessment
involves significant subjectivity
CDOs
Valuation Techniques:• The Firm holds cash CDOs that typically reference a
tranche of an underlying synthetic portfolio of single-name
CDS spreads collateralized by corporate bonds (“CLN”) or
cash portfolio of ABS/loans (“asset-backed CDOs”).
• Credit correlation, a primary input used to determine thefair value of CLNs, is usually unobservable and derived
using a benchmarking technique. Other model inputs, suchas 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 fromcomparable instruments as indicated by market activity.

Loans and Lending Commitments
Valuation Techniques:• Fair value of corporate loans is determined using recently
executed transactions, market price quotations (whereobservable), implied yields from comparable debt, market
observable CDS spread levels obtained from independent
external parties adjusted for any basis difference between
cash and derivative instruments, along with proprietaryvaluation models and default recovery analysis where suchtransactions and quotations are unobservable.
• Fair value of contingent corporate lending commitments isdetermined 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.
• Fair value of mortgage loans is determined using
observable prices based on transactional data or third-party
pricing for comparable instruments, when available.
• Where position-specific external prices are not observable,
fair value is estimated based on benchmarking to prices
and rates observed in the primary market for similar loan
99

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Each asset-backed CDO position is evaluatedindependently taking into consideration available
comparable market levels, underlying collateralperformance and pricing, deal structures and liquidity.
Valuation Hierarchy Classification:• Level 2—when either comparable market transactions areobservable or credit correlation input is insignificant• Level 3—when either comparable market transactions areunobservable or the credit correlation input is significant
Equity Contracts with Financing Features
Valuation Techniques:• Fair value of certain equity contracts, which are notclassified as OTC derivatives because they do not meet the
net investment criteria, is determined by discounting
future interest cash flows, inclusive of the estimated valueof the embedded optionality. The valuation uses the same
derivative pricing models and valuation techniques as
described under “OTC Derivative Contracts” herein.
Valuation Hierarchy Classification:• Level 2—when the contract is valued using observable
inputs or where the unobservable input is not deemedsignificant• Level 3—when the contract is valued using anunobservable input that is deemed significant

OTC Derivative Contracts
Valuation Techniques:• OTC derivative contracts include forward, swap andoption 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 modeledusing a series of techniques, including closed-form
analytic formulas, such as the Black-Scholes optionpricing model, simulation models or a combination
thereof. Many pricing models do not entail material
subjectivity as the methodologies employed do notnecessitate significant judgment since model inputs may
be observed from actively quoted markets, as is the casefor generic interest rate swaps, many equity, commodityand foreign currency option contracts, and certain CDS. In
the case of more established derivative products, thepricing models used by the Firm are widely accepted by
the financial services industry.
• More complex OTC derivative products are typically lessliquid and require more judgment in the implementation of
the valuation technique since direct trading activity orquotes are unobservable. This includes certain types ofinterest rate derivatives with both volatility and correlation
exposure, equity, commodity or foreign currency
derivatives that are either longer-dated or include exposure
to multiple underlyings, and credit derivatives, including
CDS on certain mortgage- or asset-backed securities andbasket CDS. Where required inputs are unobservable,
relationships to observable data points, based on historicaland/or implied observations, may be employed as atechnique to estimate the model input values. For further
information on the valuation techniques for OTC
derivative products, see Note 2.
Valuation Hierarchy Classification:• Level 2—when valued using observable inputs supported
by market liquidity or where the unobservable input is notdeemed significant• Level 3—when valued using observable inputs withlimited market liquidity or if an unobservable input isdeemed significant

Corporate Equities
Valuation Techniques:• Exchange-traded equity securities are generally valued
based on quoted prices from the exchange.
• Unlisted equity securities are generally valued based on anassessment of each security, considering rounds offinancing and third-party transactions, discounted cash
flow analyses and market-based information, including
comparable transactions, trading multiples and changes inmarket outlook, among other factors.
• Listed fund units are generally marked to the exchangetraded price if actively traded, or to NAV if not. Unlisted
fund units are generally marked to NAV.
Valuation Hierarchy Classification:• Level 1—actively traded exchange-traded securities andfund units• Level 2—if not actively traded, inputs are observable or if
undergoing a recent M&A event or corporate action• Level 3—if not actively traded, inputs are unobservable orif undergoing an aged M&A event or corporate action

Investments
Valuation Techniques:• Investments include direct investments in equity securities,
as well as various investment management funds, which
include DCP investments.
• Exchange-traded direct equity investments are generally
valued based on quoted prices from the exchange.
• For direct investments, initially, the transaction price isgenerally considered by the Firm as the exit price and is its
best estimate of fair value.
• After initial recognition, in determining the fair value of
non-exchange-traded internally and externally managed
funds, the Firm generally considers the NAV of the fundprovided by the fund manager to be the best estimate offair value. These investments are included in the Fund

Derivative and Other Contracts
Exchange-Traded Derivative Contracts
Valuation Techniques:• Exchange-traded derivatives that are actively traded arevalued based on quoted prices from the exchange.
• Exchange-traded derivatives that are not actively tradedare valued using the same techniques as those applied to
OTC derivatives as noted below.
Valuation Hierarchy Classification:• Level 1—when actively traded• Level 2—when not actively traded

December 2023 Form 10-K

100

Table of Contents

Notes to Consolidated Financial Statements
Interests table in the “Net Asset Value Measurements”
section herein.
• For non-exchange-traded investments either held directlyor held within internally managed funds, fair value after
initial recognition is based on an assessment of eachunderlying investment, considering rounds of financing
and third-party transactions, discounted cash flow analyses
and market-based information, including comparable Firm
transactions, trading multiples and changes in market
outlook, among other factors.
Valuation Hierarchy Classification:• Level 1—if actively traded• Level 2—when not actively traded and valued based onrounds of financing or third-party transactions• Level 3—when not actively traded and rounds offinancing or third-party transactions are not available

Securities Purchased under Agreements to Resell andSecurities Sold under Agreements to Repurchase
Valuation Techniques:• Fair value is computed using a standard cash flow
discounting methodology.
• The inputs to the valuation include contractual cash flows
and collateral funding spreads, which are the incremental
spread over the OIS rate for a specific collateral rate (whichrefers to the rate applicable to a specific type of security
pledged as collateral).
Valuation Hierarchy Classification:• Level 2—when the valuation inputs are observable andsupported by market liquidity• Level 3—in instances where the valuation input isobservable but not supported by market liquidity or if anunobservable input is deemed significant

Physical Commodities
Valuation Techniques:.
• Fair value is determined using observable inputs,
including broker quotations and published indices.
Valuation Hierarchy Classification:• Level 2—valued using observable inputs

Other Secured Financings
Valuation Techniques:• Other secured financings are composed of short-dated notes
secured by Corporate equities, agreements to repurchasePhysical commodities, the liabilities related to sales ofLoans and lending commitments accounted for as
financings, and secured contracts that are not classified as
OTC derivatives because they fail net investment criteria.
For further information on the determination of fair value,refer to the Valuation Techniques described herein for thecorresponding instruments, which are the collateralreferenced by the other secured financing liability.
Valuation Hierarchy Classification:• For further information on the determination of valuation
hierarchy classification, see the Valuation Hierarchy
Classification described herein for the corresponding
instruments, which are the collateral referenced by the othersecured financing liability.

Investment Securities—AFS Securities
Valuation Techniques:• AFS securities are composed of U.S. government andagency securities (e.g., U.S. Treasury securities, agencyissued debt, agency mortgage pass-through securities andCMOs), CMBS, ABS, state and municipal securities. For
further information on the determination of fair value,refer to the corresponding asset/liability Valuation
Technique described herein for the same instruments.
Valuation Hierarchy Classification:• For further information on the determination of valuation
hierarchy classification, see the corresponding Valuation
Hierarchy Classification described herein.

Borrowings
Valuation Techniques:• The Firm carries certain borrowings at fair value that areprimarily composed of: instruments whose payments andredemption values are linked to the performance of a
specific index, a basket of stocks, a specific equity security,
a commodity, a credit exposure or basket of credit
exposures; and instruments with various interest rate-related
features, including step-ups, step-downs and zero coupons.
Also included are unsecured contracts that are not classified
as OTC derivatives because they fail initial net investment
criteria.
• Fair value is determined using valuation models for thederivative and debt portions of the instruments. Thesemodels incorporate observable inputs referencing identicalor comparable securities, including prices to which the
instruments are linked, interest rate yield curves, option
volatility and currency rates, and commodity or equity
prices.
• Independent, external and traded prices are considered, as
well as the impact of the Firm’s own credit spreads, which
are based on observed secondary bond market spreads.

Deposits
Valuation Techniques:• The Firm issues FDIC-insured certificates of deposit that
pay either fixed coupons or that have repayment terms
linked to the performance of debt or equity securities,
indices or currencies. The fair value of these certificates ofdeposit is determined using valuation models thatincorporate observable inputs referencing identical orcomparable securities, including prices to which thedeposits are linked, interest rate yield curves, option
volatility and currency rates, equity prices, and the impactof the Firm’s own credit spreads, adjusted for the impact of
the FDIC insurance, which is based on vanilla deposit
issuance rates.
Valuation Hierarchy Classification:• Level 2—when valuation inputs are observable• Level 3—in instances where an unobservable input isdeemed significant

101

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Valuation Hierarchy Classification:• Level 2—when valued using observable inputs or where theunobservable input is not deemed significant• Level 3—in instances where an unobservable input isdeemed significant

2023

2022

Beginning balance

2021

U.S. Treasury and agency securities
Beginning balance

$

17 $

2 $

9

—

(3)

—

Purchases

—

14

2

Sales

(10)

(1)

(9)

Realized and unrealized gains (losses)

Net transfers

(7)

5

—

Ending balance

$

— $

17 $

2

Unrealized gains (losses)

$

— $

(1) $

—

$

169 $

211 $

2021

116 $

115 $

Realized and unrealized gains (losses)

$

12

(97)

86
(8)

Purchases

85

73

121

Sales

(41)

(22)

(50)

Net transfers

27

47

(34)

Ending balance

$

199 $

116 $

115

Unrealized gains (losses)

$

19 $

11 $

(3)

$

923 $

1,125 $

828

35

(409)

382

Investments
Beginning balance
Realized and unrealized gains (losses)
Purchases

158

63

226

Sales

(183)

(107)

(115)

Net transfers

Other sovereign government obligations
Beginning balance2022

Corporate equities

Rollforward of Level 3 Assets and Liabilities Measured at Fair
Value on a Recurring Basis$ in millions

2023$ in millions

16

251

(196)

Ending balance

$

949 $

923 $

1,125

Unrealized gains (losses)

$

27 $

(397) $

359

$

2,804

Investment securities—AFS

268

Beginning balance

Realized and unrealized gains (losses)

5

(5)

(1)

35 $

— $

Purchases

38

116

146

Realized and unrealized gains (losses)

—

(3)

(4)

Sales

(86)

(107)

(192)

Sales

(32)

—

(203)

Net transfers

(32)

(46)

(10)

Net transfers3(2,597)(3)

38

Ending balance

$

94 $

169 $

211

Ending balance

$

— $

35 $

—

Unrealized gains (losses)$

2 $(14) $—

Unrealized gains (losses)

$

— $

(3) $

—

— $

— $

3

—

—

(3)

Securities purchased under agreements to resell

State and municipal securities
Beginning balance$

Realized and unrealized gains (losses)

145 $

13 $

—

Beginning balance

—

(4)

—

Net transfers$

Purchases

9

91

4

Ending balance

$

— $

— $

—

Sales

(6)

(82)

(4)

Unrealized gains (losses)

$

— $

— $

—

(114)

127

13

Net derivatives: Interest rate$

Net transfers
Ending balance

$

34 $

145 $

13

Beginning balance(151) $

708 $

682

Unrealized gains (losses)

$

— $

— $

—

Realized and unrealized gains (losses)

(336)

(643)

284

Purchases

140

1

67

$

416 $

344 $

322

Issuances

(43)

—

(52)

MABS
Beginning balance
Realized and unrealized gains (losses)

(2)

(342)

51

Settlements

Purchases

241

(92)

14

232

511

254

Net transfers

Sales

(165)

(130)

(215)

76

(125)

(287)

8

33

(68)

Net transfers
Ending balance

$

489 $

416 $

344

Unrealized gains (losses)$(14) $

2 $

(10)

$

Realized and unrealized gains (losses)

2,017 $

3,806 $

5,759

(189)

(80)

51

$

(73) $(151) $

708

Unrealized gains (losses)$(210) $

(327) $

292$

Net derivatives: Credit
Beginning balance

Loans and lending commitments
Beginning balanceEnding balance

110 $

98 $

49

Realized and unrealized gains (losses)

5

84

95

Purchases

—

5

18

Issuances

—

(10)

(46)

Purchases and originations

1,502

793

2,446

Sales

(477)

(740)

(2,609)Settlements

(21)

(61)

58

2

(6)

(76)

Settlements(843)(1,526)(1,268)Net transfers

Net transfers1

56

(236)

(573)

Ending balance

$

96 $

110 $

98

Ending balance$

2,066 $

2,017 $

3,806

Unrealized gains (losses)

$

2 $

70 $

122

Unrealized gains (losses)$(76) $

29 $

(7)

66 $

52 $

61

$

2,096 $

1,973 $

3,435

Realized and unrealized gains (losses)

(8)

(89)

Net derivatives: Foreign exchange

Corporate and other debt
Beginning balance

Beginning balance

$

(290)

Realized and unrealized gains (losses)

145

456

(140)

Purchases—

1

2

Purchases and originations

623

1,165

1,355

Issuances

Sales

(1)

—

(15)

(664)

(1,889)(785)

Settlements

Settlements

(33)

(27)

—

(15)

(46)

16

Net transfers2

(184)

418

(1,892)

Net transfers

(125)

67

77

Ending balance$

1,983 $

2,096 $

1,973

Unrealized gains (losses)$(10) $

160 $25

December 2023 Form 10-K

102

Ending balance$(365) $

66 $52

Unrealized gains (losses)$(277) $

43 $

(62)

Table of Contents

Notes to Consolidated Financial Statements
2023$ in millions

2022

2021

$ in millions

Net derivatives: Equity
Beginning balance

2023

2022

2021
4,374

Borrowings(736) $(945) $ (2,231)

Beginning balance

1,587 $

2,157 $

Realized and unrealized gains (losses)

(91)

201

344

Realized and unrealized losses (gains)

219

(133)

(99)

Purchases

221

77

70

Issuances

708

513

717

Issuances

(572)

(339)

(443)

Settlements

(391)

(285)

(448)

Settlements

87

348

160

Net transfers2

(245)

(665)

(2,387)$

Net transfers2

$

(78)

1,155

Ending balance$

1,878 $

1,587 $

2,157

Ending balance$ (1,102) $(736) $

(945)

Unrealized losses (gains)

$

182 $

(138) $

(114)

Unrealized gains (losses)

$

328 $

(103)

Portion of unrealized losses (gains) recordedin OCI—Change in net DVA

29

(35)

(17)

1. Net transfers in 2021 reflect the transfer in the third quarter of $895 million of equity
margin loans from Level 3 to Level 2 as a result of the reduced significance of themargin loan rate input.
2. Net transfers in 2021 reflect the transfer in the second quarter of $2.0 billion of
Corporate and other debt, $1.0 billion of net Equity derivatives and $2.2 billion of
Borrowings from Level 3 to Level 2 as the unobservable inputs were not significant
to the overall fair value measurements.
3. Net transfers in 2021 reflect the transfer in the first quarter of $2.5 billion of AFS
securities from Level 3 to Level 2 due to increased trading activity and observabilityof pricing inputs.

(11)(201) $Net derivatives: Commodity and other
Beginning balance

1,083 $

1,529 $

1,709

Realized and unrealized gains (losses)

$

910

315

529

Purchases

78

185

44

Issuances

(136)

(210)

(86)

Settlements

(701)

(510)

(599)

Net transfers

56

(226)

(68)

Ending balance$

1,290 $

1,083 $

1,529

Unrealized gains (losses)

$

243 $

(935) $

141$

Level 3 instruments may be hedged with instruments
classified in Level 1 and Level 2. The realized and unrealized
gains or losses for assets and liabilities within the Level 3
category presented in the previous tables do not reflect therelated realized and unrealized gains or losses on hedging
instruments that have been classified by the Firm within theLevel 1 and/or Level 2 categories.

Deposits
Beginning balance

20 $

67 $

126

Realized and unrealized losses (gains)

1

—

—

Issuances

25

11

—

Settlements

—

(3)

(10)

Net transfers

(13)

(55)

(49)

Ending balance

$

33 $

20 $

67

Unrealized losses (gains)

$

1 $

— $

—

$

74 $

61 $

79

8

(86)

(21)

Purchases

(38)

(35)

(30)

Sales

22

93

43

Net transfers

(6)

41

(10)

The unrealized gains (losses) during the period for assets andliabilities within the Level 3 category may include changes infair value during the period that were attributable to bothobservable and unobservable inputs. Total realized andunrealized gains (losses) are primarily included in Trading
revenues in the income statement.

Nonderivative trading liabilities
Beginning balance
Realized and unrealized losses (gains)

Ending balance

$

60 $

74 $

61

Unrealized losses (gains)

$

8 $

17 $

(21)
444

Additionally, in the previous tables, consolidations of VIEs
are included in Purchases, and deconsolidations of VIEs areincluded in Settlements.

Securities sold under agreements to repurchase
Beginning balance

512 $

651 $

Realized and unrealized losses (gains)

$

2

(8)

1

Issuances

1

17

—

Settlements

(9)

(22)

—

Net transfers

(57)

(126)

206

Ending balance

$

449 $

512 $

651

Unrealized losses (gains)

$

2 $

— $

1

Significant Unobservable Inputs Used in Recurring andNonrecurring Level 3 Fair Value Measurements
Valuation Techniques and Unobservable Inputs
Balance / Range (Average1)

Other secured financings
Beginning balance

91 $

403 $

516

Realized and unrealized losses (gains)

$

5

(6)

(17)

Issuances

83

39

449

Settlements

(99)

(342)

(518)

Net transfers

12

(3)

(27)

Ending balance

$

92 $

91 $

403

Unrealized losses (gains)

$

5 $

(6) $

(16)

At December 31, 2023

$ in millions, except inputs

At December 31, 2022

Assets at Fair Value on a Recurring Basis
Other sovereign
government
obligations

$

94 $

169

Comparable pricing:
61 to 110 points (87points)Bond priceState and municipal
securities

$

34 $

57 to 124 points (89points)145Comparable pricing:
Bond price
MABS

N/M
$

489 $

86 to 100 points (97points)416

Comparable pricing:
Bond price103

0 to 88 points (61 points)

0 to 95 points (68 points)

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Balance / Range (Average1)
At December 31, 2023

$ in millions, except inputs

Loans and lending
commitments$

Balance / Range (Average1)

At December 31, 2022

2,066 $At December 31, 2023

$ in millions, except inputs

Commodity and
other

2,017

$

At December 31, 2022

1,290 $

1,083

Option model:

Margin loan model:
Margin loan rate

2% to 4% (3%)

Forward power
price

2% to 4% (3%)

Comparable pricing:
85 to 102 points (98points)Loan priceCorporate andother debt$

87 to 105 points (99points)1,983 $

54% to 84% (62% / 54%)

54% to 84% (62% / 54%)

Bond price
Loss given default
$

199 $
100%

Investments$

Other secured
financings

923

Exit multiple

16% to 18% (17%)

15% to 17% (16%)

9 to 17 times (15 times)

7 to 17 times (14 times)

Borrowings

22 times

7 to 21 times (11 times)

24% to 100% (86%)$(73) $(151)

Option model:
IR volatility skew

70% to 100% (81% / 93%)105% to 130% (113% /109%)

IR curve correlation

49% to 99% (77% / 79%)

47% to 100% (80% / 84%)

Bond volatility

79% to 85% (82% / 85%)

N/M

Inflation volatility

27% to 70% (43% / 39%)

22% to 65% (43% / 38%)

N/M

4% to 5% (5% / 5%)IR curve
Credit$96 $96 to 165 bps (131 bps)

92 $22 to 101 points (76points)$91
23 to 101 points (75points)1,878 $

1,587

6% to 69% (13%)

7% to 86% (23%)

Equity volatility
skew-2% to 0% (0%)-2% to 0% (0%)

Equity correlation

41% to 97% (79%)

39% to 98% (86%)-65% to 40% (-30%)-50% to 0% (-21%)

Equity - FX
correlation

24% to 100% (89%)

Net derivative and other contracts:
Interest rate$

Equity volatility

Comparable pricing:
Equity price

512

Option model:

Market approach:
EBITDA multiple

449 $28 to 135 bps (79 bps)

Loan price

Discounted cash flow:
WACC$

Comparable pricing:

100%

949 $

70% to 100% (94%)

Funding spread

116

Comparable pricing:
Equity price

54% to 100% (94%)

Discounted cash flow:

Discounted cash flow:
Corporate equities

12% to 169% (34%)

Cross-commodity
correlation
Securities soldunder agreements
to repurchase

Comparable pricing:
51 to 132 points (90points)$1 to $292 ($43) per MWh

8% to 123% (31%)

Liabilities at Fair Value on a Recurring Basis

2,096

28 to 135 points (82points)$0 to $220 ($49) per MWh

Commodity volatility

IR curve correlation

50% to 89% (71% / 70%)

N/M

IR - Volatility skew

N/M

47% to 136% (74% / 59%)

54% to 84% (62% / 54%)

54% to 84% (62% / 54%)

Discounted cash flow:
Loss given default

Nonrecurring Fair Value Measurement
Loans

$

4,532 $

6,610

Corporate loan model:
Credit spread

110

99 to 1467 bps (1015bps)

91 to 1276 bps (776 bps)

25 to 93 points (70points)36 to 80 points (65 points)

115 to 268 bps (185 bps)

110 to 319 bps (245 bps)

Comparable pricing:

Credit default swap model:
Cash-syntheticbasis

7 points

Loan price

7 points

Warehouse model:
Bond price0 to 92 points (46 points)

0 to 83 points (43 points)

Credit spread

10 to 404 bps (94 bps)

10 to 528 bps (115 bps)

18 to 590 bps (67 bps)

18 to 590 bps (93 bps)

Funding spread2

Foreign exchange$(365) $

Credit spread

Points—Percentage of par
IR—Interest rate
FX—Foreign exchange
1. A single amount is disclosed for range and average when there is no significant
difference between the minimum, maximum and average. Amounts represent
weighted averages except where simple averages and the median of the inputs are
more relevant.
2. Includes derivative contracts with multiple risks (i.e., hybrid products).

66

Option model:
IR curve-4% to 26% (7% / 5%)-2% to 38% (8% / 4%)

Foreign exchange
volatility skew

-3% to 12% (2% / 0% )10% to 10% (10% / 10%)

Contingency
probability
Equity2

$

95%

95%

(1,102) $(736)

The previous table provides information on the valuation
techniques, significant unobservable inputs, and the ranges
and averages for each major category of assets and liabilities
measured at fair value on a recurring and nonrecurring basiswith a significant Level 3 balance. The level of aggregation
and breadth of products cause the range of inputs to be wideand not evenly distributed across the inventory of financial
instruments. Further, the range of unobservable inputs may
differ across firms in the financial services industry becauseof diversity in the types of products included in each firm’s
inventory. Generally, there are no predictable relationships
between multiple significant unobservable inputs attributable
to a given valuation technique.

Option model:
Equity volatility

6% to 97% (23%)

5% to 96% (25%)

Equity volatility
skew-1% to 0% (0%)-4% to 0% (-1%)

Equity correlation

25% to 97% (49%)

10% to 93% (71%)

FX correlation-79% to 40% (-28%)-79% to 65% (-26%)

IR correlation

10% to 30% (15%)

10% to 30% (14%)

December 2023 Form 10-K

104

Table of Contents

Notes to Consolidated Financial Statements
During 2023, there were no significant revisions made to thedescriptions of the Firm’s significant unobservable inputs.

• Margin Loan Rate. The annualized rate that reflects thepossibility of losses as a result of movements in the price of
the underlying margin loan collateral. The rate is calibrated
from the discount rate, credit spreads and/or volatility
measures.

An increase (decrease) to the following significant
unobservable inputs would generally result in a higher (lower)
fair value.

• WACC. WACC represents the theoretical rate of return
required to debt and equity investors. The WACC is used ina discounted cash flow model that calculates the value ofthe equity. The model assumes that the cash flow
assumptions, including projections, are fully reflected in thecurrent equity value, while the debt to equity ratio is held
constant.

• Comparable Bond or Loan Price. A pricing input used
when prices for the identical instrument are not available.
Significant subjectivity may be involved when fair value isdetermined using pricing data available for comparable
instruments. Valuation using comparable instruments canbe done by calculating an implied yield (or spread over aliquid benchmark) from the price of a comparable bond orloan, then adjusting that yield (or spread) to derive a value
for the bond or loan. The adjustment to yield (or spread)should account for relevant differences in the bonds orloans, such as maturity or credit quality. Alternatively, aprice-to-price basis can be assumed between thecomparable instrument and the bond or loan being valued inorder to establish the value of the bond or loan.

An increase (decrease) to the following significant
unobservable inputs would generally result in an impact to thefair value, but the magnitude and direction of the impact
would depend on whether the Firm is long or short the
exposure.
• Correlation. A pricing input where the payoff is driven bymore than one underlying risk. Correlation is a measure of
the relationship between the movement of two variables(i.e., how the change in one variable influences a change inthe other variable).

• Comparable Equity Price. A price derived from equity
raises, share buybacks and external bid levels, etc. A
discount or premium may be included in the fair value
estimate.

• Credit Spread. 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 ofa particular security is often quoted in relation to the yield
on a credit risk-free benchmark security or reference rate.

• Contingency Probability. Probability associated with therealization of an underlying event upon which the value ofan asset is contingent.
• EBITDA Multiple/Exit Multiple. The ratio of enterprisevalue to EBITDA, where enterprise value is the aggregate
value of equity and debt minus cash and cash equivalents.
The EBITDA multiple reflects the value of a company interms of its full-year EBITDA, whereas the exit multiple
reflects the value of a 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 anddepreciation/amortization is excluded.

• Interest Rate Curve. The term structure of interest rates(relationship between interest rates and the time tomaturity) and a market’s measure of future interest rates at
the time of observation. An interest rate curve is used to set
interest rate and foreign exchange derivative cash flows andis a pricing input used in the discounting of any OTC
derivative cash flow.
• Volatility. The measure of variability in possible returns for
an instrument given how much that instrument changes invalue 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 aparticular option depends on a number of factors, including
the nature of the risk underlying that option, the tenor andthe strike price of the option.

An increase (decrease) to the following significant
unobservable inputs would generally result in a lower (higher)
fair value.
• Cash-Synthetic Basis. The measure of the price differential
between cash financial instruments and their synthetic
derivative-based equivalents. The range disclosed in theprevious table signifies the number of points by which thesynthetic bond equivalent price is higher than the quoted
price of the underlying cash bonds.

• Volatility Skew. The measure of the difference in implied
volatility for options with identical underliers and expiry
dates but with different strikes.

• Funding Spread. The cost of borrowing defined as theincremental spread over the OIS rate for a specificcollateral rate (which refers to the rate applicable to a
specific type of security pledged as collateral).
• Loss Given Default. Amount expressed as a percentage ofpar that is the expected loss when a credit event occurs.
105

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Net Asset Value Measurements

Nonrecurring Fair Value Measurements

Fund Interests

Assets and Liabilities Measured at Fair Value on a
Nonrecurring Basis$ in millions

Private equity$

Real estate
Hedge
Total

$

At December 31, 2023

At December 31, 2022

Carrying
Value

Carrying
Value

Commitment

At December 31, 2023

Commitment

2,685 $

720 $

2,622 $

638

2,765

240

2,642

239

74

3

190

3

5,524 $

963 $

5,454 $

880

Level 31

Level 2$ in millions

Total

AssetsLoans

4,215 $

4,532 $

Other assets—Other investments

$

—

4

4

Other assets—ROU assets

23

—

23

$

4,238 $

4,536 $

8,774

Other liabilities and accrued
expenses—Lending commitments

$

110 $

60 $

170

Total

$

110 $

60 $

170

Total

Amounts in the previous table represent the Firm’s carrying
value of general and limited partnership interests in fundinvestments, as well as any related performance-based incomein the form of carried interest. The carrying amounts aremeasured based on the NAV of the fund taking into accountthe distribution terms applicable to the interest held. Thissame measurement applies whether the fund investments areaccounted for under the equity method or fair value.

8,747

Liabilities

At December 31, 2022
Level 31

Level 2$ in millions

Total

AssetsLoans

4,193 $

6,610 $

Other assets—Other investments—

7

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 geographic regions.

Other assets—ROU assets

4

—

$

4,197 $

6,617 $

10,814

Other liabilities and accrued
expenses—Lending commitments

$

275 $

153 $

428

Total

$

275 $

153 $

428

Real Estate. Funds that invest in real estate assets such ascommercial office buildings, retail properties, multifamily
residential properties, developments or hotels. In addition, thefunds may be structured with a focus on specific geographic
regions.

1. For significant Level 3 balances, refer to “Significant Unobservable Inputs Used in
Recurring and Nonrecurring Level 3 Fair Value Measurements” section herein for
details of the significant unobservable inputs used for nonrecurring fair value
measurement.

Total

Gains
(Losses)
Remeasurements1

Loans25-10 years
Over 10 years
Total

December 2023 Form 10-K

$

947
1,778

86

40

2,685 $

2,765

2023

Fair

2022

Value

2021

$

(426) $

(563) $

(89)

—

—

(8)

Intangibles

—

—

(3)

Other assets—Other investments3

(15)

(14)

(57)
(14)

Other assets—Premises, equipment
and software4

(8)

(6)

Other assets—ROU assets5

(35)

(11)

(25)

$

(484) $(594) $

(196)

Other liabilities and accrued expenses—Lending commitments2

$

75 $

(137) $

37

Total

$

75 $

(137) $

37

1. Gains and losses for Loans and Other assets—Other investments are classified in
Other revenues. For other items, gains and losses are recorded in Other revenues
if the item is held for sale; otherwise, they are recorded in Other expenses.
2. Nonrecurring changes in the fair value of loans and lending commitments, which
exclude the impact of related economic hedges, are calculated as follows: for theheld-for-investment category, based on the value of the underlying collateral; andfor the held-for-sale category, based on recently executed transactions, market
price quotations, valuation models that incorporate market observable inputs where
possible, such as comparable loan or debt prices and CDS spread levels adjusted
for any basis difference between cash and derivative instruments, or default
recovery analysis where such transactions and quotations are unobservable.
3. Losses related to Other assets—Other investments were determined using
techniques that included discounted cash flow models, methodologies thatincorporate multiples of certain comparable companies and recently executedtransactions.
4. Losses related to Other assets—Premises, equipment and software generally
include impairments as well as write-offs related to the disposal of certain assets.
5. Losses related to Other Assets—ROU assets include impairments related to thediscontinued leased properties.

Real Estate

1,186

Nonrecurring

Liabilities

Carrying Value at December 31, 2023
1,413 $

4

Goodwill

Total

Nonredeemable Funds by Contractual Maturity
Private Equity

7

AssetsSee Note 14 for information regarding general partner
guarantees, which include potential obligations to return
performance fee distributions previously received. See Note
22 for information regarding unrealized carried interest at riskof reversal.

$

from

$ in millions

Hedge. Funds that pursue various investment strategies,
including long-short equity, fixed income/credit, event-driven
and multi-strategy. Investments in hedge funds may besubject to initial period lock-up or gate provisions, which
restrict an investor from withdrawing from the fund during acertain initial period or restrict the redemption amount on any
redemption date, respectively.

Less than 5 years

10,803Liabilities

Investments in private equity and real estate funds generally
are not redeemable due to the closed-end nature of thesefunds. Instead, distributions from each fund will be received
as the underlying investments of the funds are disposed andmonetized.

$ in millions$

106

Table of Contents

Notes to Consolidated Financial Statements
The previous tables exclude all non-financial assets andliabilities, such as Goodwill and Intangible assets, and certain
financial instruments, such as equity method investments andcertain receivables.

Financial Instruments Not Measured at Fair ValueAt December 31, 2023
Carrying
Value$ in millions

Fair Value
Level 1

Level 2

Level 3

Total

Financial assets
Cash and cash equivalents $89,232 $ 89,232 $Investment securities—
HTM

66,694

21,93734,411

1,105

57,453

Securities purchased
under agreements toresell110,733—

108,099

2,674

110,773

Securities borrowed

121,091—

121,091—

121,091

Customer and otherreceivables

74,337—

70,1104,031

74,141

Held for investment

203,385—

20,125

176,291

196,416

Held for sale

15,255

—

8,652

6,672

15,324

704

—

704

—

704

— $

5. Fair Value Option— $ 89,232

The Firm has 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 theirassociated risk management transactions or to eliminate
complexities of applying certain accounting models.

Loans1,2:

Other assets

Borrowings Measured at Fair Value on a Recurring BasisAt
December 31, 2023

$ in millions

Financial liabilities
Deposits$

At
December 31, 2022

Business Unit Responsible for Risk Management345,332 $— $345,391 $— $345,391

Securities sold underagreements torepurchase46,073 $38,94561,631—

61,621—

61,621

Interest rates

31,05526,077

Securities loaned

15,057—

15,055—

15,055

Commodities

12,798

10,7172,756

Credit

2,400

1,564

Foreign exchange

1,574

1,417

93,900 $78,720EquityOther secured financings

2,756

Customer and otherpayablesBorrowings

—

2,756

—

208,015—

208,015—

208,015

169,832—

171,0094

171,013

Total

Commitment
AmountLending commitments3

$

$

$

Net Revenues from Borrowings under the Fair Value Option

149,464 $— $1,338 $

749 $

2,087

2023

$ in millions

Trading revenues
Interest expense

At December 31, 2022
Carrying
Value$ in millions

Level 2503

Net revenues1

Fair Value
Level 1

Level 3

Total

2022

2021

$ (7,991) $ 12,370 $293$ (8,494) $ 12,077 $

899
305
594

1. Amounts do not reflect any gains or losses from related economic hedges.

Financial assets
Cash and cash equivalents $128,127 $128,127 $Investment securities—
HTM

75,63426,754

37,2181,034

65,006

Securities purchased
under agreements toresell

113,899—

111,188

2,681

113,869

Securities borrowed

133,374—

133,370—

133,370

Customer and otherreceivables

73,248—69,2683,664

72,932

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

Held for investment

198,997—

17,278

173,778

191,056$ in millions

Held for sale

14,788

—

6,875

7,783

14,658

2023

704

—

704

—

704

— $

Gains (losses) from changes in fair value are recorded in
Trading revenues and are mainly attributable to movements in
the reference price or index, interest rates or foreign exchange
rates.

— $128,127

Loans1, 2:

Other assets

Loans and other receivables1

Financial liabilities
Deposits$

Trading
Revenues$

OCI(123) $—

Lending commitments

14—

Deposits—

17

Borrowings(19)(1,726)

351,850 $— $351,721 $— $351,721

Securities sold underagreements torepurchase

61,670—61,620—61,6202022

Securities loaned

15,679—15,673—

15,673Loans and other receivables1

Other secured financings

3,608

—

3,608

—

3,608

Lending commitments

(12)

—

Deposits—(24)

Borrowings

—

2,006

Customer and otherpayables

216,018—

216,018—

216,018

Borrowings

159,338—

157,7804

157,784

Lending commitments$

136,241 $Loans and other receivables1— $1,789 $ 1,077 $(108) $—

2021

Commitment
Amount3$

2,866

1. Amounts include loans measured at fair value on a nonrecurring basis.
2. Loans amounts have been disaggregated into HFI and HFS for the first time in the
fourth quarter of 2023. Prior period amounts have been revised to match the current
period presentation.
3. Represents Lending commitments accounted for as Held for Investment and Heldfor Sale. For a further discussion on lending commitments, see Note 14.

107

$

278 $

—

Lending commitments2—

Deposits—

17

Borrowings

(36)

901

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements$ in millions

At
At
December 31, 2023 December 31, 2022

Cumulative pre-tax DVA gain (loss)
recognized in AOCI$

(2,166) $Fair Values of Derivative Contracts
Assets at December 31, 2023

(457)

$ in millions

1. Loans and other receivables-specific credit gains (losses) were determined by
excluding the non-credit components of gains and losses.

Interest rate

Difference between Contractual Principal and Fair Value$ in millions

Loans and other receivables2$

Nonaccrual loans2
Borrowings3

11,086 $11,916

8,566

9,128

3,030

5,203

Cleared ExchangeOTC
TradedTotal

Designated as accounting hedges

1

At
At
December 31, 2023 December 31, 2022

Bilateral
OTC

25 $

— $

— $

25

Foreign exchange

$

5

5

—

10

Total

30

5

—

35

2

27

—

29

Not designated as accounting hedges
Economic hedges of loans
CreditOther derivatives
Interest rate

127,414

19,914854

148,182

1. Amounts indicate contractual principal greater than or (less than) fair value.
2. The majority of the difference between principal and fair value amounts for loans
and other receivables relates to distressed debt positions purchased at amounts
well below par.
3. Excludes borrowings where the repayment of the initial principal amount fluctuates
based on changes in a reference price or index.

Credit

5,712

4,896

—

10,608Foreign exchange

90,6542,570

16

93,240Equity20,338—37,73758,075

Commodity and other

13,928—2,353

16,281

Total

258,048

27,40740,960326,415

The previous tables exclude non-recourse debt fromconsolidated VIEs, liabilities related to transfers of financial
assets treated as collateralized financings, pledgedcommodities and other liabilities that have specified assets
attributable to them.

Total gross derivatives
Counterparty netting(184,553) (23,851)(38,510) (246,914)

Cash collateral netting(39,493)

Total in Trading assets$ 34,032 $Financial instruments collateral
Net amounts$ in millions

At
At
December 31, 2023 December 31, 2022

Nonaccrual loans$$

40,960 $ 326,450

440 $
75 $

(2,730)831 $—(42,223)2,450 $ 37,313

Amounts not offset1

Fair Value Loans on Nonaccrual Status

Nonaccrual loans 90 or moredays past due$ 258,078 $27,412 $Amounts offset(15,690)—$ 18,342 $

831 $

—

Net amounts for which master netting or collateral agreements are
not in place or may not be legally enforceable585(15,690)2,450 $ 21,623
$

2,641

Liabilities at December 31, 2023

116

$ in millions

Bilateral
OTC

Cleared ExchangeOTC
TradedTotal

Designated as accounting hedges

6. Derivative
Activities

Instruments

andHedging

Interest rate

467 $

— $

— $

467

Foreign exchange

$

414

43

—

457

Total

881

43

—

924

43

702

—

745

Not designated as accounting hedges

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

Economic hedges of loans
CreditOther derivatives
Interest rate

120,604

17,179590

138,373

Credit

5,920

4,427

—

10,347

Foreign exchange

87,1042,694

106

89,904Equity31,545—37,34968,894

Commodity and other

12,237—2,830

15,067

Total

257,453

25,00240,875323,330

Total gross derivatives$ 258,334 $25,045 $

40,875 $ 324,254

Counterparty netting(184,553) (23,851)(38,510) (246,914)

Cash collateral netting(41,082)(983)$ 32,699 $211 $Amounts offset

The Firm manages its market-making 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 ofderivative products (e.g., futures, forwards, swaps andoptions). The Firm manages the market risk associated withits market-making activities on a Firmwide basis, on aworldwide trading division level and on an individual productbasis.

December 2023 Form 10-K

Total in Trading liabilities—(42,065)

2,365 $ 35,275

Amounts not offset1
Financial instruments collateral
Net amounts(6,864)(8)$ 25,835 $

203 $

(37)

Net amounts for which master netting or collateral agreements are
not in place or may not be legally enforceable

108(6,909)2,328 $ 28,366
$

5,911

Table of Contents

Notes to Consolidated Financial Statements
Notionals of Derivative Contracts

Assets at December 31, 2022
Bilateral
OTC$ in millions

Cleared ExchangeOTC
TradedAssets at December 31, 2023

Total

Designated as accounting hedges
Interest rate$

$ in billions

63

Bilateral
OTC

Cleared ExchangeOTC
Traded

Total

62 $

1 $

— $

Foreign exchange

15

44

—

59

Total

Interest rate

77

45

—

122

— $

92 $

— $

Foreign exchange

1

1

—

2

Total

1

93

—

94

—

1

—

1

4,153

8,357

560

13,070

214

176

—

390

3,378

165

7

3,550
968

Designated as accounting hedges

Not designated as accounting hedges
Economic hedges of loans$

92

Not designated as accounting hedges

Credit

2

59

—

61

141,291

29,007

1,029

171,327

Economic hedges of loans

Other derivatives

CreditInterest rate
CreditOther derivatives

5,888

2,352

—

8,240

Foreign exchange

113,5402,337

62

115,939

EquityCredit16,505—26,85043,355

Foreign exchangeInterest rate

Commodity and other

24,298—6,164

30,462

Total

Equity301,524

33,755

34,105369,384

528

—

440

Commodity and other

142

—

65

207

8,415

8,699

1,072

18,186

Total gross derivatives$ 301,601 $33,800 $

34,105 $ 369,506(214,773) (32,250)(32,212) (279,235)

Total

Amounts offset
Counterparty netting
Cash collateral netting(44,711)

Total in Trading assets$ 42,117 $(1,348)202 $—(19,406)—$ 22,711 $

202 $

—

(19,406)$

1,072 $ 18,280

Cleared ExchangeOTC
TradedTotal

Designated as accounting hedges
Interest rate

1,893 $ 24,806

Net amounts for which master netting or collateral agreements are
not in place or may not be legally enforceable$ in billions

BilateralOTC

8,416 $ 8,792 $Liabilities at December 31, 2023

Amounts not offset
Net amounts$(46,059)

1,893 $ 44,212

1

Financial instruments collateral

Total gross derivatives

4,318

183 $

— $

Foreign exchange

$

14

3 $

3

—

186
17

Total

17

186

—

203

2

22

—

24

4,631

8,197

455

13,283

229

155

—

384

3,496

167

33

3,696
1,299

Not designated as accounting hedges
Liabilities at December 31, 2022
$ in millions

Bilateral
OTC

Cleared ExchangeOTC
TradedEconomic hedges of loans
Credit

Total

Other derivatives

Designated as accounting hedges
Interest rate

$

457 $

Foreign exchange
Total

550

4 $
101

1,007

105

— $
—
—

461

Interest rate

651

CreditForeign exchange

1,112

Not designated as accounting hedges

Equity

587

—

712

Economic hedges of loans

Commodity and other

101

—

79

180

9,046

8,541

1,279

18,866

Credit

9

368

—

Total

377

Other derivatives
Interest rate

Total gross derivatives$

Bilateral
OTC

135,661

28,581

455

5,535

2,390

—

7,925

Foreign exchange

110,322

2,512

104

112,938$ in billions

Equity23,138—28,193

51,331

Designated as accounting hedges

Credit

9,063 $ 8,727 $

164,697

1,279 $ 19,069

Assets at December 31, 2022
Cleared ExchangeOTC
TradedTotal

Commodity and other

19,631—

6,748

26,379Interest rate

2 $

62 $

— $

Total

294,296

33,85135,500363,647

Foreign exchange

2

2

—

4

Total

4

64

—

68

—

3

—

3

3,404

7,609

614

11,627

190

130

—

320

3,477

126

15

3,618

Equity

488

—

358

846

Commodity and other

141

—

59

200

7,700

7,868

1,046

16,614

Total gross derivatives$ 295,303 $33,956 $

35,500 $ 364,759

Counterparty netting(214,773) (32,250)(32,212) (279,235)

Cash collateral netting(45,884)

Amounts offset

Total in Trading liabilities

Net amounts

64

Not designated as accounting hedges(1,505)—

Economic hedges of loans(47,389)$ 34,646 $201 $3,288 $ 38,135(2,545)—(1,139)$ 32,101 $201 $2,149 $ 34,451

CreditOther derivatives

Amounts not offset1
Financial instruments collateral$Interest rate

Net amounts for which master netting or collateral agreements are
not in place or may not be legally enforceable(3,684)$CreditForeign exchange

6,430

1. Amounts relate to master netting agreements and collateral agreements that havebeen determined by the Firm to be legally enforceable in the event of default but
where certain other criteria are not met in accordance with applicable offsetting
accounting guidance.

Total
Total gross derivatives$

7,704 $ 7,932 $

1,046 $ 16,682

See Note 4 for information related to the unsettled fair valueof futures contracts not designated as accounting hedges,
which are excluded from the previous tables.

109

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Fair Value Hedges—Hedged Items

Liabilities at December 31, 2022
$ in billions

Bilateral
OTC

Cleared ExchangeOTC
TradedTotal

Designated as accounting hedges
Interest rate

$ in millions

$

3 $

187 $

— $

190

Investment securities—AFS
Amortized cost basis currently or previously
hedged$47,179 $34,073Basis adjustments included in amortized cost1$(732) $

(1,628)Foreign exchange

12

2

—

14

Total

15

189

—

204

Not designated as accounting hedges

Deposits

Economic hedges of loans
Credit

—

15

—

15

Carrying amount currently or previously
hedged$10,569 $3,735

11,694

Basis adjustments included in carrying
amount1$(31) $(119)

Carrying amount currently or previously
hedged$158,659 $146,025

Basis adjustments included in carrying
amount—Outstanding hedges$(9,219) $(12,748)

Basis adjustments included in carrying
amount—Terminated hedges$(671) $

(715)

Other derivatives
Interest rate

3,436

CreditForeign exchange
EquityCommodity and other
Total
Total gross derivatives

$

At
At
December 31, December 31,
2023
2022

7,761

497

199

125

—

324

3,516

123

35

3,674

488

—

552

1,040

101

—

79

180

7,740

8,024

1,163

16,927

7,755 $ 8,213 $Borrowings

1,163 $ 17,131

1. Hedge accounting basis adjustments are primarily related to outstanding hedges.

The notional amounts of derivative contracts generally
overstate the Firm’s exposure. In most circumstances,
notional amounts are used only as a reference point fromwhich to calculate amounts owed between the parties to thecontract. Furthermore, notional amounts do not reflect thebenefit of legally enforceable netting arrangements or risk
mitigating transactions.

Gains (Losses) on Economic Hedges of Loans

Credit contracts1

$

$

2022

2021

(576) $

1,928 $

742

$ in millions

At
December 31,
2023

638

(1,838)(629)

Net derivative liabilities with credit riskrelated contingent features$

Collateral posted

3,664 $ (15,159) $ (4,306)

Deposits

(88)

124

88

Borrowings(3,564)

15,042

4,214$

Forward points excluded from hedge
effectiveness testing—Recognized inInterest income(168) $

657 $

664

211

(33)

(53)

$

(4) $

—

9 $

Less: Realized gains (losses) (pre-tax)
reclassified from AOCI to interest income

(16)

—

—

Net change in cash flow hedges included
within AOCI

25

(4)

—

At
December 31,
2022

21,957 $20,287

16,38912,268

Incremental Collateral and Termination Payments upon
Potential Future Ratings Downgrade

Cash flow hedges—Interest rate contracts1
Recognized in OCI(285)

The previous table presents the aggregate fair value of certain
derivative contracts that contain credit risk-related contingent
features that are in a net liability position for which the Firm
has posted collateral in the normal course of business.

Net investment hedges—Foreign exchange contracts
Recognized in OCI(62)

Derivatives with Credit Risk-Related Contingencies

Fair value hedges—Recognized in Interest expense
Interest rate contracts(522)

Net Derivative Liabilities and Collateral Posted

2023

Investment Securities—AFS

2021

1. Amounts related to hedges of certain held-for-investment and held-for-sale loans.

Fair value hedges—Recognized in Interest income
Interest rate contracts

2022

Recognized in Other revenues

Gains (Losses) on Accounting Hedges$ in millions

2023$ in millions$ in millions

At
December 31,
2023

One-notch downgrade$

Two-notch downgrade

1. For the year ended 2023, there were no forecasted transactions that failed to occur.
The net gains (losses) associated with cash flow hedges expected to be reclassified
from AOCI within 12 months as of December 31, 2023 is approximately $(56)million. The maximum length of time over which forecasted cash flows are hedged
is 18 months.

Bilateral downgrade agreements included in the amounts
above1

450
394

$

692

1. Amount represents arrangements between the Firm and other parties where upon
the downgrade of one party, the downgraded party must deliver collateral to theother party. These bilateral downgrade arrangements are used by the Firm tomanage the risk of counterparty downgrades.

The additional collateral or termination payments that may becalled in the event of a future credit rating downgrade vary bycontract and can be based on ratings by Moody’s InvestorsService, Inc., S&P Global Ratings and/or other rating
agencies. The previous table shows the future potential
collateral amounts and termination payments that could becalled or required by counterparties or exchange and clearingorganizations in the event of one-notch or two-notch
December 2023 Form 10-K

110

Table of Contents

Notes to Consolidated Financial Statements
downgrade scenarios based on the relevant contractual
downgrade triggers.

Protection Purchased with CDS
Notional

Maximum Potential Payout/Notional of Credit Protection
Sold1$ in billions<1

Tranched index and basket

1-3

3-5

Over 5

Total

Total
$

10 $

97

17

1

39

$

26 $

43 $

56 $

11 $

136
$ in millions

At
December 31,
2023

$

8 $

19 $

85 $

4 $

116

Single name

$

8

14

95

17

134

Index and basket

Fair Value Asset (Liability)

16 $

33 $

180 $

21 $

250

Tranched index and basket

$

42 $

76 $

236 $

32 $

386

Total

—

—

—

3

3

42 $

76 $

236 $

35 $

389

$

330

Other credit contracts$

CDS protection sold with identical protection purchased

1-3

3-5

Over 5

Total

Single-name CDS
$

12 $

29 $

29 $

9 $

5

13

16

2

36

$

17 $

42 $

45 $

11 $

115

$

3 $

13 $

37 $

3 $

56

8

17

108

19

152

Non-investment grade

79

Total

$

11 $

30 $

145 $

22 $

208

Total CDS sold

$

28 $

72 $

190 $

33 $

323

—

—

—

—

—

28 $

72 $

190 $

33 $

323

$

262

Other credit contracts$

CDS protection sold with identical protection purchased$ in millions

At
December 31,
2022

Single-name CDS
Investment grade$

1,904 $

762

399

(808)

$

2,303 $

(46)$

1,929 $

859

45

(1,812)

Non-investment grade
Total

Non-investment grade
Total

$

1,974 $

(953)

Total CDS sold$4,277 $

(999)

Other credit contracts
Total credit protection sold314$

4,591 $

(1,012)(217)(5,019) $998

Single-Name CDS. A CDS protects the buyer against the lossof principal on a bond or loan in case of a default by theissuer. The protection buyer pays a periodic premium(generally quarterly) over the life of the contract and isprotected for the period. The Firm, in turn, performs under a
CDS 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 andrestructuring of the obligations of the referenced entity.

Index and basket CDS
Investment grade

(33)
1,248

The purchase of credit protection does not represent the solemanner in which the Firm risk manages its exposure to credit
derivatives. The Firm manages its exposure to thesederivative 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 Firm may also recover amounts on theunderlying reference obligation delivered to the Firm under
CDS where credit protection was sold.

Fair Value Asset (Liability) of Credit Protection Sold1
At
December 31,
2023(2,799) $(1,208)The fair value amounts as shown in the previous tables areprior to cash collateral or counterparty netting.

Index and basket CDS
Non-investment grade$At
December 31,
2022

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

Years to Maturity at December 31, 2022
<1

$ in billions

Total credit protection sold

26
339

39 $

$

Investment grade

30
409 $

14

Total CDS sold

Total

173

29 $

Total

Investment grade

140

213

7

Non-investment grade

Total credit protection sold$At
December 31,
2022

166 $

19 $

Index and basket CDS
Investment grade$

Index and basket

Non-investment grade
Total

Single nameYears to Maturity at December 31, 2023
Single-name CDS
Investment grade$ in billions

At
December 31,
2023

(1)
(1,000)1. Investment grade/non-investment grade determination is based on the internal
credit rating of the reference obligation. Internal credit ratings serve as the CRM’s
assessment of credit risk and the basis for a comprehensive credit limits frameworkused to control credit risk. The Firm uses quantitative models and judgment toestimate the various risk parameters related to each obligor.

Index and Basket CDS. Index and basket CDS are products
where credit protection is provided on a portfolio of singlename CDS. Generally, in the event of a default on one of theunderlying names, the Firm pays a pro rata portion of the total
notional amount of the CDS.
The Firm also enters into tranched index and basket CDS
where credit protection is provided on a particular portion of
the portfolio loss distribution. The most junior tranches cover
initial defaults, and once losses exceed the notional of the111

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
tranche, they are passed on to the next most senior tranche in
the capital structure.

Investment Securities in an Unrealized Loss Position
At December 31,
2023

Other Credit Contracts. The Firm has invested in CLNs andCDOs, which are hybrid instruments containing embedded
derivatives, in which credit protection has been sold to theissuer of the note. If there is a credit event of a reference
entity underlying the instrument, the principal balance of thenote may not be repaid in full to the Firm.

$ in millions

Fair
Value

At December 31,
2022

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
LossesU.S. Treasury securities
Less than12 months$ 14,295 $12 months or longer

33,4581,081

11,454543

Total

47,753

1,103

53,5982,254

22 $ 42,144 $1,711

U.S. agency securities

7. Investment Securities

Less than12 months

4,297

43

13,662

1,271

12 months or longer

18,459

2,485

7,060

1,482

22,756

2,528

20,722

2,753
448

Total

AFS and HTM Securities

Agency CMBSAt December 31, 2023

$ in millions

Gross
Amortized Unrealized
Cost1
Gains

Gross
Unrealized
Losses

Fair
Value

—

—

5,343

12 months or longer

5,415

456

185

22

5,415

456

5,528

470
40

Total

AFS securities
U.S. Treasury securities

Less than12 months

State and municipal securities$

58,484 $

24 $

1,103

57,405Less than12 months

524

3

2,106

U.S. agency securities2

25,852

4

2,528

23,32812 months or longer

35

2

65

2

Agency CMBS

5,871

—

456

5,415

Total

559

5

2,171

42

State and municipal
securities

1,132

46

5

1,173

810

—

18

792

92,14974

4,110

88,113FFELP student loan ABS3
Total AFS securities

FFELP student loan ABS

HTM securities
U.S. Treasury securities

23,222—

1,285

21,937

U.S. agency securities2

40,894—

7,699

33,195

Agency CMBS

1,337

—

121

1,216

Non-agency CMBS

1,241

2

138

1,105

Total HTM securities

66,6942

9,243

57,45376 $

13,353 $145,566

Total investment securities $ 158,843 $$ in millions

Gross
Unrealized
Gains

Gross
Unrealized
Losses$56,103 $17 $2,254 $ 53,866

23,926

1

2,753

21,174

Agency CMBS

5,998

—

470

5,528

State and municipal
securities

2,598

71

42

2,627

FFELP student loan ABS3

1,147

—

45

1,102

89,772

89

5,564

84,297

U.S. Treasury securities

28,599—1,845

26,754

U.S. agency securities2

44,038—

8,487

35,551

Agency CMBS

1,819

—

152

1,667

Non-agency CMBS

1,178

—

144

1,034

Total HTM securities

75,634—

10,62865,00689 $

16,192 $149,303

Total AFS securities

22

Total

672

18

1,103

45

Less than12 months

19,172

69

63,882

3,493

12 months or longer

57,983

4,041

19,2402,071$ 77,155 $

4,110 $ 83,122 $5,564

See Note 15 for additional information on securities issued by
VIEs, including U.S. agency mortgage-backed securities, nonagency CMBS, and FFELP student loan ABS.

1. Amounts are net of any ACL.
2. U.S. agency securities consist mainly of agency mortgage pass-through poolsecurities, CMOs and agency-issued debt.
3. Underlying loans are backed by a guarantee, ultimately from the U.S. Departmentof Education, of at least 95% of the principal balance and interest outstanding.

December 2023 Form 10-K

23

476

The HTM securities net carrying amounts at December 31,
2023 and December 31, 2022 reflect an ACL of $44 million
and $34 million, respectively, predominantly related to Nonagency CMBS. See Note 2 for a description of the ACL
methodology used for HTM Securities. As of December 31,
2023 and December 31, 2022, Non-Agency CMBS HTM
securities were predominantly on accrual status andinvestment grade.

HTM securities

Total investment securities $ 165,406 $

627

17

For AFS securities, the Firm believes there are no securities inan unrealized loss position that have credit losses after
performing the analysis described in Note 2. Additionally, theFirm does not intend to sell these securities and is not likely tobe required to sell these securities prior to recovery of theamortized cost basis. As of December 31, 2023 and December
31, 2022, the securities in an unrealized loss position are
predominantly investment grade.

Fair
Value

U.S. agency securities2

1

616

Total

AFS securities
U.S. Treasury securities

56

12 months or longer

Total AFS securities in an unrealized loss position

At December 31, 2022
Amortized
Cost1

Less than12 months

112Table of Contents

Notes to Consolidated Financial Statements
Investment Securities by Contractual Maturity$ in millions

At December 31, 2023

At December 31, 2023
Annualized
Amortized
Fair
Average
1
Cost
Value
Yield2,3$ in millions

U.S. Treasury securities:
Due within 1 year

6,403 $

6,317

2.1 %

16,311 $16,0301.2 %After 1 year through 5 years

12,05911,497

1.8 %

40,412

39,6202.6 %After 5 years through 10 years

3,202

2,965

2.4 %

4.0 %

After 10 years

1,558

1,158

2.3 %

23,222

21,937

U.S. Treasury securities:
After 1 year through 5 years
After 5 years through 10 years
Total

Annualized
Average
Yield2Fair
Value

HTM securities

AFS securities
Due within 1 year

Amortized
Cost1

$

1,761

1,755

$

Total

58,48457,405

Due within 1 year2323(0.6)%

After 1 year through 5 years

6

6

1.8 %

After 1 year through 5 years

397

375

1.6 %

After 5 years through 10 years

294

276

2.1 %

1.8 %

After 10 years

40,59432,913

1.8 %40,89433,195

U.S. agency securities:

U.S. agency securities:

After 5 years through 10 years
After 10 years
Total

547

504

24,88522,42625,852

23,328

Total

3.6 %

Agency CMBS:
Due within 1 year

30

30

2.5 %

(2.2)%

After 1 year through 5 years

1,063

985

1.4 %

1.8 %

After 5 years through 10 years

117

99

1.4 %

After 10 years

127

102

1.6 %

1,337

1,216

Due within 1 year

208

185

4.0 %

5.2 %

After 1 year through 5 years

343

321

4.6 %

4.7 %

After 5 years through 10 years

641

551

3.7 %

After 10 years

49

48

5.7 %

1,241

1,105

Agency CMBS:
Due within 1 year
After 1 year through 5 years

1
2,491

1
2,392

After 5 years through 10 years

2,176

2,043

2.0 %

After 10 years

1,203

979

1.4 %

5,871

5,415

Total

Total
Non-agency CMBS:

State and municipal securities:
Due within 1 year
After 1 year through 5 years
After 5 years through 10 years
After 10 years
Total

27
185

28
184

6

9

4.1 %

914

952

4.2 %

1,132

1,173

Total
Total HTM securities
Total investment securities

FFELP student loan ABS:
After 1 year through 5 years

96

91

6.1 %

After 5 years through 10 years

99

95

6.0 %

After 10 years

615

606

6.2 %

810

792

92,14988,113

Total
Total AFS securities$

66,69457,453

1.9 %

158,843 $

145,566

2.3 %

1. Amounts are net of any ACL.
2. Annualized average yield is computed using the effective yield, weighted based on
the amortized cost of each security. The effective yield is shown pre-tax and
excludes the effect of related hedging derivatives.
3. At December 31, 2023, the annualized average yield, including the interest rate
swap accrual of related hedges, was 1.6% for AFS securities contractually maturing
within 1 year and 3.6% for all AFS securities.

2.6 %Gross Realized Gains (Losses) on Sales of AFS Securities2023$ in millions

Gross realized gains$

Gross realized (losses)
Total1

$

2022

2021

70 $

164 $

(21)

(94)

237
(27)

49 $

70 $

210

1. Realized gains and losses are recognized in Other revenues in the income
statement.

8. Collateralized Transactions
The Firm enters into securities purchased under agreements toresell, securities sold under agreements to repurchase,
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 its inventory positions.
The Firm 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 toensure such transactions are adequately collateralized, or
returns excess collateral.

113

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
The risk related to a decline in the market value of collateralpledged or received is managed by setting appropriate marketbased margin requirements. Increases in collateral margin
calls on secured financing due to market value declines may
be mitigated by increases in collateral margin calls on
securities purchased under agreements to resell and securities
borrowed transactions with similar quality collateral.
Additionally, the Firm may request lower quality collateralpledged be replaced with higher quality collateral throughcollateral substitution rights in the underlying agreements.

For information related to offsetting of derivatives, see Note
6.
Gross Secured Financing
Contractual Maturity$ in millions

Securities sold underagreements torepurchase$ 80,376 $ 114,826 $25,510 $31,441 $252,153

Total included in theoffsetting disclosure
Trading liabilities—
Obligation to returnsecurities received
as collateralAmounts
Not
Offset1

Securities borrowed

5,122

142,453(21,362)

121,091(115,969)

62,651 $ (58,357) $Securities loaned

15,057(15,046)

Securities purchased under agreements to resell

11$

Securities borrowed——

13,528$ 54,551 $ 77,359 $20,586 $36,486 $188,982
15,150

882

30-90
Days

Over 90
Days

1,984

9,629

Total

27,645$ 69,701 $ 78,241 $22,570 $46,115 $216,627

22,880———22,880$ 92,581 $ 78,241 $22,570 $46,115 $239,507

U.S. Treasury and agency securities

1,741

2

Amounts
Not
Offset1

At
December 31,
2022

98,377 $57,761Other sovereign government obligations

122,342

98,839Corporate equities

18,144

19,340Other

13,29013,042

252,153 $

188,982

Total

At December 31, 2022
Balance
Sheet Net
AmountsAt
December 31,
2023

Securities sold under agreements to repurchase

3,014

Securities loaned

Amounts
Offset—Securities sold underagreements torepurchase$ in millions

607

Securities sold under agreements to repurchase

Gross
Amounts

13,5284,294

Net amounts for which master netting agreements are not in place or may
not be legally enforceable$ in millions$ 101,884 $ 116,171 $26,219 $44,298 $288,572

Gross Secured Financing Balances by Class of Collateral
PledgedSecurities sold underagreements torepurchase$ 252,153 $(189,502) $(21,362)

36,419$ in millions

Total

Liabilities

36,41912,857

Overnight Less thanand Open 30 Days

Trading liabilities—
Obligation to returnsecurities received ascollateral

Assets
1,847

709

Total

$ 115,412 $ 116,171 $26,219 $44,298 $302,100

Total included in theoffsetting disclosure

Net
Amounts

Securities purchased
under agreements
to resell$ 300,242 $(189,502) $ 110,740 $(108,893) $1,345

Over 90Days

At December 31, 2022

At December 31, 2023
Balance
Sheet Net
Amounts

21,508

30-90
Days

Total

Securities loaned

Amounts
OffsetRemaining

Overnight Less thanand Open 30 Days

Securities loaned

Offsetting of Certain Collateralized Transactions

Gross
Amountsby

At December 31, 2023

The Firm actively manages its secured financings in a mannerthat reduces the potential refinancing risk of secured
financings of less liquid assets and also considers the qualityof collateral when negotiating collateral eligibility withcounterparties. The Firm utilizes shorter term secured
financing for highly liquid assets and has established longer
tenor limits for less liquid assets, for which funding may be atrisk in the event of a market disruption.

$ in millions

Balances$$

Securities loaned
Other sovereign government obligations

Net
Amounts$

Corporate equities

1,379 $
34,434862
26,289Assets

Other

606

494

Securities purchased
under agreements
to resell$ 240,355 $(126,448) $ 113,907 $(109,902) $

Total

$

36,419 $27,645

4,005

Total included in the offsetting disclosure$

288,572 $

216,627

Securities borrowed

5,301

145,340(11,966)

133,374(128,073)

Trading liabilities—Obligation to return securities received as collateral
Corporate equities

Liabilities
Securities sold underagreements torepurchase$ 188,982 $(126,448) $62,534 $ (57,395) $Securities loaned

15,67927,645(11,966)(15,199)

5,139

Securities borrowed
Securities sold under agreements to repurchase
Securities loaned

26

22,833
47

Total

$

13,528 $22,880

Total$

302,100 $239,507$

Carrying Value of Assets Loaned or Pledged without
Counterparty Right to Sell or Repledge

1,696$ in millions

At
December 31,
2023

Trading assets

$

624
3,861
250

1. Amounts relate to master netting agreements that have been determined by the
Firm to be legally enforceable in the event of default but where certain other criteria
are not met in accordance with applicable offsetting accounting guidance.

December 2023 Form 10-K

13,502 $480

Net amounts for which master netting agreements are not in place or may
not be legally enforceable
Securities purchased under agreements to resell

$

Other

At
December 31,
2022

37,522 $34,524

The Firm pledges certain of its trading assets to collateralize
securities sold under agreements to repurchase, securities
114

Table of Contents

Notes to Consolidated Financial Statements
loaned, other secured financings and derivatives and to covercustomer short sales. Counterparties may or may not have theright to sell or repledge the collateral.

Customer Margin and Other Lending

Pledged financial instruments that can be sold or repledged by
the secured party are identified as Trading assets (pledged tovarious parties) in the balance sheet.

$ in millions

At
December 31,
2022

Collateral received with right to sell or repledge $735,830 $

637,941

Collateral that was sold or repledged1

553,386

486,820

1. Does not include securities used to meet federal regulations for the Firm’s U.S.
broker-dealers.

The Firm receives collateral in the form of securities inconnection with securities purchased under agreements toresell,securities
borrowed,
securities-for-securities
transactions, derivative transactions, customer margin loans
and securities-based lending. In many cases, the Firm ispermitted to sell or repledge this collateral to secure securities
sold under agreements to repurchase, to enter into securities
lending and derivative transactions or to deliver tocounterparties to cover short positions.

$ in millions

Segregated securities1$

At
December 31,
2022

20,670 $32,254

1. Securities segregated under federal regulations for the Firm’s U.S. broker-dealers
are sourced from Securities purchased under agreements to resell and Trading
assets in the balance sheet.

Concentration Based on the Firm’s Total Assets
At
December 31,
2023

At
December 31,
2022

U.S. government and agency securities andother sovereign government obligations
Trading assets1

12 %

9%

Off balance sheet—Collateral received2

11 %

12 %

$

45,644 $38,524

Margin loans are extended on a demand basis and generally
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 theaccount and the amount of collateral, as well as an 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 toreduce risk. Underlying collateral for margin loans isreviewed 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 theFirm’s collateral policies significantly limits its credit
exposure in the event of a customer default. The Firm may
request additional margin collateral from customers, if
appropriate, and, if necessary, may sell securities that havenot been paid for or purchase securities sold but not deliveredfrom customers.

Securities Segregated for Regulatory PurposesAt
December 31,
2023

Margin and other lendingAt
December 31,
2022

The Firm provides margin lending arrangements that allow
customers to borrow against the value of qualifying securities.
Receivables from these arrangements are included within
Customer and other receivables in the balance sheet. Under
these arrangements, the Firm receives collateral, which
includes U.S. government and agency securities, othersovereign government obligations, corporate and other debt,
and corporate equities. Margin loans are collateralized bycustomer-owned securities held by the Firm. The Firm
monitors required margin levels and established credit terms
daily and, pursuant to such guidelines, requires customers todeposit additional collateral, or reduce positions, whennecessary.

Fair Value of Collateral Received with Right to Sell or
RepledgeAt
December 31,
2023$ in millions

At
December 31,
2023

Also included in the amounts in the previous table is nonpurpose securities-based lending on entities in the WealthManagement business segment.

1. Other sovereign government obligations included in Trading assets primarily consistof obligations of the U.K., Japan and Brazil.
2. Collateral received is primarily related to Securities purchased under agreements toresell and Securities borrowed.

Other Secured Financings

The Firm is subject to concentration risk by holding large
positions in certain types of securities, loans or commitments
to purchase securities of a single issuer, including sovereign
governments and other entities, issuers located in a particularcountry or geographic area, public and private issuers
involving developing countries or issuers engaged in aparticular industry.

Other secured financings include the liabilities related tocollateralized notes, transfers of financial assets that are
accounted for as financings rather than sales and consolidated
VIEs where the Firm is deemed to be the primary beneficiary.
These liabilities are generally payable from the cash flows of
the related assets accounted for as Trading assets (see Notes
13 and 15). Additionally, for certain secured financing
transactions that the Firm entered into during 2023 that meet
applicable netting criteria, the Firm offsets Other secured
financing liabilities against financing receivables recorded
within Trading assets in the amount of $3,472 million at
December 31, 2023.

Positions taken and underwriting and financing commitments,
including those made in connection with the Firm’s private
equity, principal investment and lending activities, often
involve substantial amounts and significant exposure toindividual issuers and businesses, including investment grade
and non-investment grade issuers.
115

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
9. Loans, Lending Commitments and Related
Allowance for Credit Losses

Loans by Interest Rate TypeAt December 31, 2023

The Firm’s held-for-investment and held-for-sale loan
portfolios consist of the following types of loans:• Corporate. Corporate includes revolving lines of credit,
term loans and bridge loans made to corporate entities for avariety of purposes.
• Secured Lending Facilities. Secured lending facilities
include loans provided to clients, which are collateralizedby various assets, including residential and commercial realestate mortgage loans, investor commitments for capitalcalls, corporate loans and other assets.
• Commercial Real Estate. Commercial real estate loans
include owner-occupied loans and income-producing loans.
• Residential Real Estate. Residential real estate loans
mainly include non-conforming loans and HELOC.
• Securities-based Lending and Other. Securities-based
lending includes loans that allow clients to borrow money
against the value of qualifying securities, generally for any
suitable purpose other than purchasing, trading, or carrying
securities or refinancing margin debt. The majority of theseloans are structured as revolving lines of credit. Other
primarily includes certain loans originated in the tailoredlending business within the Wealth Management businesssegment.

Corporate$

HFS Loans

11,862 $18,620

Secured lending facilities

39,4983,161

42,659Commercial real estate

8,678

209

8,887

Residential real estate

60,37522

60,397

Securities-based lending andOther loans

89,245

1

89,246

Total loans

204,554

15,255

219,809

ACL(1,169)$203,385 $

15,255 $218,640

Loans to non-U.S. borrowers, net$

21,152 $5,043 $

26,195

Corporate$

HFS Loans

10,634 $17,223

Secured lending facilities

35,606

3,176

38,782

Commercial real estate

8,515

926

9,441

Residential real estate

54,4604

54,464

Securities-based lending andOther loans

94,66648

94,714

Total loans

199,836

14,788214,624

ACL

(839)
$

198,997 $

14,788 $

213,785

Loans to non-U.S. borrowers, net$

17,979 $5,672 $

23,651

December 2023 Form 10-K

18,620 $— $17,223—42,659—38,782

Commercial real estate

141

8,746

204

9,237

Residential real estate

28,934

31,46424,90329,561

23,92265,32324,077

70,637$52,997 $ 166,812 $49,184 $ 165,440

For Residential real estate and Securities-based loans, theinitial credit evaluation typically includes, but is not limited
to, review of the obligor’s income, net worth, liquidity,
collateral, LTV ratio and credit bureau information.
Subsequent credit monitoring for residential real estate loans
is performed at the portfolio level. Securities-based loan
collateral values are monitored on an ongoing basis.
For information related to credit quality indicators considered
in developing the ACL, see Note 2.

(839)

Total loans, net— $Secured lending facilities

For Commercial real estate loans, the credit evaluation is
focused on property and transaction metrics, including
property type, LTV ratio, occupancy levels, debt service ratio,
prevailing capitalization rates and market dynamics.

Total Loans

6,589 $

Floating or
Adjustable
Rate

The CRM evaluates new obligors before credit transactions
are initially approved and at least annually thereafter for
corporate and commercial real estate loans. For Corporate,
Secured lending facilities and Other loans, credit evaluations
typically involve the evaluation of financial statements,
assessment of leverage, liquidity, capital strength, asset
composition and quality, market capitalization and access tocapital markets, cash flow projections and debt service
requirements, and the adequacy of collateral, if applicable.
The CRM also evaluates strategy, market position, industry
dynamics, obligor’s management and other factors that could
affect an obligor’s risk profile.

At December 31, 2022
HFI Loans$ in millions

Fixed Rate

Credit Quality(1,169)Total loans, net$

At December 31, 2022

See Note 4 for further information regarding Loans andlending commitments held at fair value. See Note 14 fordetails of current commitments to lend in the future.

Total Loans

6,758 $

Corporate

Total loans, before ACLAt December 31, 2023
HFI Loans

Fixed Rate

Securities-based lending
and Other loans

Loans by Type$ in millions$ in millions

Floating or
Adjustable
Rate

116

Table of Contents

Notes to Consolidated Financial Statements
Loans Held for Investment before Allowance by OriginationYear
At December 31, 2023

At December 31, 2023

At December 31, 2022

CorporateIG$ in millions

Revolving$

NIG

2,350 $

Total

3,863 $

IG

NIG

6,213 $ 2,554 $Total

3,456 $ 6,010$ in millions

Securities-based
Lending1

Revolving$

Other2
IG

NIG

Total

71,474 $

5,230 $

1,362 $

78,066

2023

1,612

627

346

2,585

2022

1,128

816

804

2,748

2021

165

330

377

872

2023

—

88

88

2022

—

166

166

6

107

113

2020

—

435

414

849

2021

15

89

104

—

139

139

2019

13

769

628

1,410

2020

29

25

54

—

58

58

Prior

202

1,327

1,186

2,715

Total

74,594 $9,534 $

5,117 $

89,245

2019

—

133

133

—

154

154

Prior

—

—

—

115

—

115

2,394 $

4,364 $

Total$

6,758 $ 2,675 $At December 31, 2023

At December 31, 2022

3,914 $ 6,589

At December 31, 2022

Revolving
2023

Revolving$

Other2
IG

NIG

Total

5,760 $

1,480 $

84,355

2022

1,425

1,572

269

3,266

9,494 $ 22,240 $ 31,734 $ 9,445 $ 21,243 $ 30,688

2021

725

525

223

1,473

1,535

2,994

2020

—

580

418

998

16

913

644

1,573

IG
$

$ in millions

Securities-based
Lending1
77,115 $Secured Lending Facilities$ in millions

$

NIG

Total

1,459

IG

NIG

Total

2022

392

2,390

2,782

1,135

1,336

2,471

2019

2021

—

365

365

254

208

462

Prior

2020

—

80

80

—

98

98

Total

2019

60

333

393

60

486

546

Prior

296

854

1,150

215

1,126

1,341

IG—Investment Grade
NIG—Non-investment Grade
1. Securities-based loans are subject to collateral maintenance provisions, and at
December 31, 2023 and December 31, 2022, these loans are predominantly overcollateralized. For more information on the ACL methodology related to securitiesbased loans, see Note 2.
2. Other loans primarily include tailored lending. For a further discussion of Otherloans, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk”
herein.

Total$ 11,777 $ 27,721 $ 39,498 $11,109 $ 24,497 $ 35,606
At December 31, 2023

At December 31, 2022

Commercial Real EstateIG$ in millions

Revolving

NIG

$

— $

Total

170 $

IG

170 $

NIG
— $

Total

204 $

1,067

1,328

2022

284

1,900

2,184

379

2,201

2,580

2021

370

1,494

1,864

239

1,609

1,848

2020

—

756

756

—

728

728

2019

195

1,369

1,564

659

1,152

1,811

Prior

—

812

812

211

1,133

1,344

1,110 $

7,568 $

8,678 $ 1,488 $7,027 $ 8,515≥ 740

Revolving$

680-739

108 $by LTV Ratio
≤ 679

33 $

8

≤ 80%
$

> 80%

149 $

—

$

149

7,390

1,517

230

8,168

969

9,137

2022

10,9272,424

389

12,6501,090

13,7402021

11,0752,376

239

12,763927

13,690

2020

6,916

1,430

104

8,017

433

8,450

2019

3,965

890

131

4,686

300

4,986

Prior

7,677

2,241

305

9,420

803

10,223$ 48,058 $ 10,911 $1,406$ 55,853 $ 4,522

Revolving$

680-739

90 $

$

—

85

Commercial real estate

185—

Residential real estate

160

158

by LTV Ratio

29 $

5

$

> 80%

124 $

—

Total
$

124

2,533

411

13,276

1,149

14,4252021

11,604

2,492

257

13,378975

14,353

2020

7,292

1,501

115

8,452

456

8,908

2019

4,208

946

137

4,968

323

5,291

8,488

2,519

352

10,457902$ 43,163 $ 10,020 $1,277$ 50,655 $ 3,805

1
356

At December 31, 2023$

95 $At December 31, 2022
71

Secured lending facilities

87

94

Commercial real estate

426

209

Residential real estate

95

118

174

10

$

877 $

502

Nonaccrual loans without$
an ACL86 $117

1. There were no loans held for investment that were 90 days or more past due andstill accruing as of December 31, 2023 and December 31, 2022. For further
information on the Firm’s nonaccrual policy, see Note 2 to the financial statements.

The Firm may modify the terms of certain loans for economicor legal reasons related to a borrower's financial difficulties,
and these modifications include interest rate reductions,principal forgiveness, term extensions and other-thaninsignificant payment delays or a combination of these

11,359$1393 $Corporate

Total

≤ 80%

$

$ in millions

At December 31, 2022

11,481

Total

112

Secured lending facilities

Residential Real Estate≤ 679

At December 31, 2022

47 $Nonaccrual Loans Held for Investment before Allowance1

60,375

2022

Prior

$

Securities-based lending
and Other loans

by FICO Scores≥ 740$ in millions

At December 31, 2023

Corporate

1. As of December 31, 2023, the majority of the amounts are past due for a period ofless than 90 days. As of December 31, 2022, the majority of the amounts are 90
days or more past due.

Total

2023

Total

3,001
94,666$ in millions

Total

Residential Real Estate$ in millions

950
3,984 $

Securities-based lending
and Other loans

At December 31, 2023
by FICO Scores

1,849
11,199 $Past Due Loans Held for Investment before Allowance1

261

$

202
79,483 $

204

2023

Total

$

54,460117

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
aforementioned modifications. Modified loans are typicallyevaluated individually for allowance for credit losses. As of
December 31, 2023, there were no loans held for investment
modified in the current year with subsequent default.

Gross Charge-offs by Origination Year
Year Ended December 31, 2023

Modified Loans Held for Investment
1

Modified during the year ended December 31, 2023

At December 31, 2023

$

183

2.7 %

Commercial real estate

199

2.3 %

Residential real estate

1

0.1 %

145

0.2 %

Securities-based lending
and Other loans
Total

$

71

Total

71

$

0.1 %

—

—

—

(3)

(3)

2019

—

—

(85)

—

(1)

(86)

—

—

(44)

—

—

(44)

(34) $— $(129) $

— $

(4) $

(167)

$

$

24

$ in millions

SecuredLending
Corporate Facilities

CRE

SBL
Residential andReal Estate Other

Total

ACL—Loans
Beginning balance

$

$

$ 153

$275

87

$ 89

$839

—

(129)

—

(4)

(167)

0.3 %

Recoveries

1

—

—

1

—

2

—%

Net (charge-offs)
recoveries

(33)

—

(129)

1

(4)

(165)

Provision (release)

37

—

314

13

124

488

Other

2

—

3

(1)

3

7

241

$ 153

$463

100

$212

$1,16930 %44 % 100 %

1
$

(34)

(34)

25

Ending balance

At December 31, 2023
Term Extension
Corporate

Added 1 year, 10 months to the life of themodified loan(s)Commercial real estate

Added 4 years, 2 months to the life of themodified loan(s)Residential real estate

Added 4 months to the life of the modified loan(s)Securities-based lending
and Other loans

Added 7 months to the life of the modified loan(s)$Percent of loans tototal loans1

Modified during the year ended December 31, 20231

3%

19 %

$

4%

ACL—Lending commitments
Beginning balance $ 411
$

51

$ 15

4

$ 23

$504

Provision (release)

16

18

11

—

(1)

44

Other

4

1

—

—

(2)

3

$

Ending balance

$

431

$

70

$ 26

$

4

$ 20

$551

Total endingbalance

$

672

$ 223

$489

$

104

$232

$1,720Year Ended December 31, 2022

$ in millions

SecuredLending
Corporate Facilities

ACL—Loans
Beginning balance

$

CRE

SBL
Residential andReal Estate Other

Total

$

165

$ 163

$206

60

$ 60

$654

Gross charge-offs
Added 6 months to the life of the modified loan(s)

—

(3)

(7)

—

(21)

(31)

Recoveries

Combination - Multiple Modification

6

—

—

1

—

7

Net (charge-offs)
recoveries

6

(3)

(7)

1

(21)

(24)

Provision (release)

65

(6)

80

26

51

216

Other-than-insignificant Payment Delay

Commercial real estate

Added 7 months of Term extension and 6 monthsof Other-than-insignificant payment delay to thelife of the modified loan(s)Residential real estate

Added 10 years of Term extension and reduced
the interest rate by 1% on the modified loan(s)OtherEnding balance

Past Due Status for Loans Held for Investment Modified in theLast 12 months
At December 31, 2023
30-89 Days
Past Due$ in millions$

Residential real estate$

December 2023 Form 10-K

90+ Days
Past Due

Total

24 $

21 $

45

—

1

1

24 $

22 $

46

$

Percent of loans tototal loans1

1. In instances where more than one loan was modified, modification impact ispresented on a weighted-average basis.

Total

—

235

Financial Impact on Modified Loans Held for Investment

Commercial real estate

2020

Gross charge-offs

1. Lending commitments to borrowers for which the Firm modified terms of thereceivable were $1,062 million as of December 31, 2023.
2. Percentage of total loans represents the percentage of modified loans to total loans
held for investment by loan type.
3. Combination - Multiple Modifications primarily includes loans with Term extension
and Other-than-insignificant payment delay.

Securities-based lending
and Other loans— $ — $

Year Ended December 31, 2023

Combination - Multiple Modifications

Total— $ — $

Allowance for Credit Losses Rollforward and Allocation—
Loans and Lending Commitments

3

Residential real estate

Total(34) $

528

Securities-based lending
and Other loans$

CRE

Residential SBL
RealandEstateOther

CRE—Commercial real estate
SBL—Securities-based lending

Other-than-insignificant Payment Delay

Commercial real estate

$

Total

Term Extension
Corporate

RevolvingPrior% of Total Loans2

Amortized Cost

$ in millions$ in millions

SecuredLending
Corporate Facilities

118

(1)

(1)

(4)

235

$ 153

$275

3%

18 %

$

4%

—

(1)

(7)

87

$ 89

$839

27 %

48 % 100 %ACL—Lending commitments
Beginning balance $ 356
$

41

$ 20

1

$ 26

$444

Provision (release)

59

10

(5)

3

(3)

64

Other

(4)

—

—

—

—

(4)

$

Ending balance

$

411

$

51

$ 15

$

4

$ 23

$504

Total endingbalance

$

646

$ 204

$290

$

91

$112

$1,343

Table of Contents

Notes to Consolidated Financial Statements
Employee loans are granted in conjunction with a program
established primarily to recruit certain Wealth Management
financial advisors, are full recourse and generally require
periodic repayments, and are due in full upon termination of
employment with the Firm. These loans are recorded in
Customer and other receivables in the balance sheet. See Note
2 for a description of the CECL allowance methodology,
including credit quality indicators, for employee loans.

Year Ended December 31, 2021

$ in millions

SecuredLending
Corporate Facilities

ACL—Loans
Beginning balance

$

CRE

SBL
Residential andReal Estate Other

Total

$

309

$ 198

$211

59

$ 58

$835

Gross charge-offs

(23)

(67)

(27)

(1)

(8)

(126)

Provision (release)

(119)

34

25

1

11

(48)

(2)

(2)

(3)

1

(1)

(7)

165

$ 163

$206

60

$ 60

$654

25 %

50 % 100 %10. Goodwill and Intangible Assets
Goodwill Rollforward

Other
Ending balance$

Percent of loans tototal loans1

3%

18 %

$

4%

ACL—Lending commitments
Beginning balance $ 323
$

38

$ 11

1

$ 23

$396

Provision (release)

37

2

10

—

3

52

Other

(4)

1

(1)

—

—

(4)

$

Ending balance

$

356

$

41

$ 20

$

1

$ 26

$444

Total endingbalance

$

521

$ 204

$226

$

61

$ 86

$1,098IS$ in millions

At December 31, 2021¹$

The allowance for credit losses for loans and lending
commitments increased in 2023, primarily related todeteriorating conditions in the commercial real estate sector,
including provisions for certain specific loans, mainly in theoffice portfolio, and modest growth in certain other loan
portfolios. Charge-offs in 2023 were primarily related toCommercial real estate and Corporate loans. The basescenario used in our ACL models as of December 31, 2023
was generated using a combination of consensus economic
forecasts, forward rates, and internally developed andvalidated models, and assumes slow economic growth in2024, followed by a gradual improvement in 2025. Given thenature of our lending portfolio, the most sensitive model input
is U.S. GDP.

(39)

(7)

(12)

(58)

(7)

(116)

—

(123)

$

(5)

2

7

4

Acquired

—

—

56

56

—

(5)

—

(5)

At December 31, 2023¹$

424 $ 10,199 $ 6,084 $ 16,707

Accumulated impairments2

$

673 $

0.6 %

0.4 %

Nonaccrual HFI loans to total HFI loans

0.4 %

0.3 %

ACL for loans to nonaccrual HFI loans

133.3 %

167.1 %

— $

27 $

700

1. Balances represent the amount of the Firm’s goodwill after accumulated
impairments.
2. There were no impairments recorded in 2023, 2022 or 2021.

Intangible Assets RollforwardIS$ in millions

At December 31, 2021

$

WM

IM

Total

104 $ 4,463 $ 3,793 $ 8,360

Acquired

23

41

—

64

Disposals

(75)

(106)

—

(181)

Amortization expense

(16)

(483)

(111)

(610)

Other

—

(4)

(11)

(15)

At December 31, 2022

Selected Credit Ratios

ACL for loans to total HFI loans

429 $ 10,202 $ 6,021 $ 16,652

Foreign currency$

36 $ 3,911 $ 3,671 $ 7,618

Acquired

—

9

37

46

Disposals

—

(13)

—

(13)

Amortization expense

(10)

(481)

(110)

(601)

Other

—

1

4

5

At December 31, 2023
At
December 31,
2022

Total

Disposals

Disposals

See Note 2 for a description of the ACL calculated under the
CECL methodology, including credit quality indicators, used
for held-for-investment loans.
At
December 31,
2023

IM

Foreign currency
At December 31, 2022¹

1. Percent of loans to total loans represents loans held for investment by loan type tototal loans held for investment.

WM

475 $ 10,325 $ 6,033 $ 16,833$

26 $ 3,427 $ 3,602 $ 7,055

Intangible Assets by Type
Non-amortizable
Gross
Carrying
Amount$ in millions

Amortizable
Gross
Carrying
AmountAccumulated
Amortization

At December 31, 2023
Management contracts

Employee LoansAt
December 31,
2023$ in millions
1

Currently employed by the Firm$

No longer employed by the Firm2
Employee loans$

ACL
Employee loans, net of ACL
Remaining repayment term, weighted
average in years$

At
December 31,
2022

4,257 $

2,113 $

245 $

72

—

8,763

4,582

Trade names

—

767

187

Other

—

14

2,113 $

9,789 $

Total

4,023

$

Customer relationships

$

6
4,847

At December 31, 2022

92

97

4,349 $

4,120

Management contracts

2,110

245

51

(121)

(139)

Customer relationships

—

8,766

4,046

4,228 $

3,981

Trade names

—

736

151

Other

—

14

2,110 $

9,761 $

5.8

5.8

Total

$

5
4,253

1. These loans are predominantly current.
2. These loans are predominantly past due for a period of 90 days or more.

119

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
available totransactions.

Intangible Assets Estimated Future Amortization ExpenseAt
December 31, 2023
$
600
455
348
343
337

$ in millions

2024
2025
2026
2027
2028

$
2023

$ in millions

Income (loss)

$

124 $

2022
39 $

$ in millions

At
December 31,
2022

Other assets—ROU assets

$

$

4,073

5,417

4,901

Remaining lease term, in years

8.7

8.6

Discount rate

4.0 %

3.3 %

At
December 31,
2023

At
December 31,
2022

Lease Liabilities

1,927
2021

$ in millions

2023

104

Equity method investments, other than investments in certain
fund interests, are summarized above and are included in
Other assets in the balance sheet with related income or loss
included in Other revenues in the income statement. See “Net
Asset Value Measurements—Fund Interests” in Note 4 for the
carrying value of certain of the Firm’s fund interests, which
are composed of general and limited partnership interests, aswell as any related carried interest.

$
$

870

913

785

2025

846

673

2026

774

604

2027

716

548

2028

644

462

2,637

1,747

Total undiscounted cash flows

6,530

5,689

Imputed interest(1,113)(788)

Thereafter

Japanese Securities Joint Venture

Amount on balance sheet$

5,417 $

4,901

Committed leases not yet commenced

$

248 $

970

2022

2021

Lease Costs
2023$ in millions

$

129 $

2022
35 $

2021

2023

$ in millions

168

Fixed costs$

Variable costs1

The Firm and Mitsubishi UFJ Financial Group, Inc.
(“MUFG”) formed a joint venture in Japan comprising theirrespective investment banking and securities businesses byforming two joint venture companies, Mitsubishi UFJ Morgan
Stanley Securities Co., Ltd. (“MUMSS”) and Morgan Stanley
MUFG Securities Co., Ltd. (“MSMS”) (collectively, the“Joint Venture”). The Firm owns a 40% economic interest in
the Joint Venture, and MUFG owns the other 60%.

Less: Sublease income
Total lease cost, net

$

938 $

841 $

852

206

170

187

(10)

(7)

1,134 $

1,004 $

(6)
1,033

1. Includes common area maintenance charges and other variable costs not includedin the measurement of ROU assets and lease liabilities.

Cash Flows Statement Supplemental Information2023$ in millions

Cash outflows—Lease liabilities
Non-cash—ROU assets recorded for new
and modified leases

The Firm’s 40% voting interest in MUMSS is accounted forunder the equity method within the Institutional Securities
business segment and is included in the equity method
investment balances above. The Firm consolidates MSMS
into the Institutional Securities business segment, based on its
51% voting interest.

$

892 $
1,055

2022

2021

881 $

879

544

578

Occupancy lease agreements, in addition to base rentals,
generally provide for rent and operating expense escalations
resulting from increased assessments for real estate taxes andother charges.

The Firm engages in transactions in the ordinary course ofbusiness with MUFG and its affiliates; for example,
investment banking, financial advisory, sales and trading,derivatives, investment management, lending, securitizationand other financial services transactions. Such transactions areon substantially the same terms as those that would be
December 2023 Form 10-K

4,368

Weighted average:

2024

Income (loss) from investment in MUMSS

comparable

At
December 31,
2023

Other liabilities and accrued expenses—
Lease liabilities

At
December 31,
2022

1,915 $

for

Balance Sheet Amounts Related to Leases

Equity Method Investments

Investments

parties

The Firm’s leases are principally non-cancelable operating
real estate leases.

11. Other Assets—Equity Method Investments
and Leases$ in millions

third

LeasesThe Firm’s annual goodwill and non-amortizable intangible
asset impairment testing as of July 1, 2023 did not indicate
any impairment. For more information, see Note 2.

At
December 31,
2023

unrelated

120

Table of Contents

Notes to Consolidated Financial Statements
12. Deposits

13. Borrowings and Other Secured Financings

Deposits

Maturities and Terms of Borrowings$ in millions

At
December 31,
2023

Savings and demand deposits$

Time deposits

At
December 31,
2022

288,252 $

319,948

63,552

36,698

Parent Company
Fixed
Rate1

$ in millions

Variable
Rate2

Subsidiaries
Fixed
Rate1

At
At
Variable December 31, December 31,
2023
2022
Rate2

Original maturities of one year or less:
Next 12 months

$

— $

— $

84 $ 3,104 $

3,188 $

4,191

607 $10,629 $

20,151

29,842

Original maturities greater than one year:

Total deposits$

351,804 $356,646

Deposits subject to FDIC insurance$

276,598 $

260,4202024$ 8,526 $Deposits not subject to FDIC insurance$

75,206 $96,2262025

18,994

3,036

2,655

10,83835,52330,2352026

23,038

1,478

3,764

7,143

35,42328,9982027

18,935

347

973

5,083

25,33823,5612028

11,058

374

622

9,185

21,23915,698Thereafter

87,841

2,794

9,392

22,843

122,870

86,6232023

Time Deposit Maturities$ in millions

At
December 31,
2023

2024

$

33,6492025

16,220

2026

5,726

2027

3,757

2028

3,708

Thereafter$

Uninsured Non-U.S. Time Deposit Maturities$ in millions

Less than 3 months

$

1,602

3 - 6 months

540

6 - 12 months

381

Over 12 months

48

Total

$

$168,392 $ 8,418 $18,013 $65,721 $

260,544 $

233,867

Total$168,392 $ 8,418 $18,097 $68,825 $

263,732 $

238,058

3.5 %

6.1 %

5.2 %

2,571

$ in millions

At
December 31,
2023

Senior$SubordinatedTotal

At December 31,
2023

Deposits in U.S. bank subsidiaries
from non-U.S. depositors$

At December 31,
2022

880 $

3.6 %

3.2 %

Borrowings with Original Maturities Greater than One Year

Deposits in U.S. Bank Subsidiaries from Non-U.S. Depositors$ in millions

N/M

1. Fixed rate borrowings include instruments with step-up, step-down and zero coupon
features.
2. Variable rate borrowings include those that bear interest based on a variety ofindices, including SOFR and federal funds rates, in addition to certain notes carriedat fair value with various payment provisions, including notes linked to theperformance of a specific index, a basket of stocks, a specific equity security, acommodity, a credit exposure or basket of credit exposures.
3. Only includes borrowings with original maturities greater than one year. Weighted
average coupon is calculated utilizing U.S. and non-U.S. dollar interest rates andexcludes financial instruments for which the fair value option was elected. Virtually
all of the variable rate notes issued by subsidiaries are carried at fair value so aweighted average coupon is not meaningful.

63,552At
December 31,
2023

18,910Total greater than
one year

Weighted average
coupon at period
end3

492

Total

$
389 $

Weighted average stated maturity, in years$

At
December 31,
2022

248,174 $

221,667

12,37012,200260,544 $

233,867

6.6

6.7

Certain senior debt securities are denominated in various nonU.S. dollar currencies and may be structured to provide areturn that is linked to equity, credit, commodity or otherindices (e.g., the consumer price index). Senior debt also may
be structured to be callable by the Firm or extendible at theoption of holders of the senior debt securities.

1,220

The Firm’s Borrowings include notes carried and managed ona fair value basis. These include instruments whose payments
and redemption values are linked to the performance of a
specific index, a basket of stocks, a specific equity security, acommodity, a credit exposure or basket of credit exposures;and instruments with various interest rate-related features,
including step-ups, step-downs and zero coupons. Also
included are unsecured contracts that are not classified as
OTC derivatives because they fail initial net investment
criteria. To minimize the exposure from such instruments, theFirm has entered into various swap contracts and purchased
options that effectively convert the borrowing costs into
floating rates. The swaps and purchased options used toeconomically 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
121

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Maturities and Terms of Other Secured Financings1

revenues. See Notes 2 and 5 for further information on
borrowings carried at fair value.

At December 31, 2023

Senior Debt Subject to Put Options or Liquidity Obligations$ in millions

At
December 31,
2022$ in millions

Put options embedded in debt agreements$

1,571 $

496

2023

Liquidity obligations1$

3,166 $

2,423

2024

Next 12 months

Subordinated Debt
2022

4.3 %

4.1 %

2022

2021

3.2 %

2.7 %

Weighted average coupon after swaps

6.5 %

5.1 %

1.6 %

8 $

—

$

8

$

501

$

— $ 5,085

$

5,200

$ 5,085

343
131

95

95

2026

5

87

92

2

2027

—

—

—

—

2028

—

434

434

—

Thereafter

7

1,086

1,093

862

12 $ 6,787$ 6,799

$

N/M

5.6 %

$

5.6 %

6,538
4.9 %

1. Excludes transfers of assets accounted for as secured financings. See subsequent
table.
2. Variable rate other secured financings bear interest based on a variety of indices,
including SOFR and federal funds rates. Amounts include notes carried at fair value
with various payment provisions, including notes linked to equity, credit, commodity
or other indices.
3. Includes only other secured financings with original maturities greater than one
year. Weighted average coupon is calculated utilizing U.S. and non-U.S. dollar
interest rates and excludes other secured financings that are linked to non-interest
indices and for which the fair value option was elected.

At December 31,
3.6 %

$

—

Weighted average
coupon at period-end3

Rates for Borrowings with Original Maturities Greater than
One YearContractual weighted average coupon1

Total

2025

Total

Subordinated debt generally is issued to meet the capitalrequirements of the Firm or its regulated subsidiaries andprimarily is U.S. dollar denominated. Maturities ofsubordinated debt range from 2025 to 2038.

2023

At
December 31,
2022

Original maturities greater than one year:

1. Includes obligations to support secondary market trading.

2023

VariableRate2

Original maturities of one year or less:At
December 31,
2023

Contractual weighted average coupon

Fixed
Rate

Other secured financings include the liabilities related tocollateralized notes, transfers of financial assets that are
accounted for as financings rather than sales and consolidated
VIEs where the Firm is deemed to be the primary beneficiary.
These liabilities are generally payable from the cash flows of
the related assets accounted for as Trading assets. See Note 15
for further information on other secured financings related to
VIEs and securitization activities.

1. Weighted average coupon was calculated utilizing U.S. and non-U.S. dollar interest
rates and excludes financial instruments for which the fair value option was elected.

In general, other than securities inventories and customer
balances financed by secured funding sources, the majority of
the Firm’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. The Firm uses
interest rate swaps to more closely match these borrowings to
the duration, holding period and interest rate characteristics ofthe assets being funded and to manage interest rate risk. These
swaps effectively convert certain of the Firm’s fixed rateborrowings into floating rate obligations. In addition, for nonU.S. dollar currency borrowings that are not used to fundassets in the same currency, the Firm has entered intocurrency swaps that effectively convert the borrowings into
U.S. dollar obligations.

Maturities of Transfers of Assets Accounted for as Secured
Financings1$ in millions

At
December 31,
2023

2023
2024

The Firm’s use of swaps for asset and liability management
affects its effective average borrowing rate.

At
December 31,
2022
$

987

5,749

4

2025

9

60

2026

36

35

2027

21

21

2028

11

—

Thereafter

22

12

5,848 $

1,119

Total

$

$

1. Excludes Securities sold under agreements to repurchase and Securities loaned.

Other Secured Financings$ in millions

At
December 31,
2023

For transfers of assets that fail to meet accounting criteria fora sale, the Firm continues to record the assets and recognizes
the associated liabilities in the balance sheet.

At
December 31,
2022

Original maturities:
One year or less$Greater than one year
Total
Transfers of assets accounted for as
secured financings

December 2023 Form 10-K$

5,732 $

944

6,923

7,214

12,655 $

8,158

5,848

1,119

122

Table of Contents

Notes to Consolidated Financial Statements
14. Commitments, Guarantees andContingencies

Underwriting Commitments. The Firm provides underwriting
commitments in connection with its capital raising sources toa diverse group of corporate and other institutional clients.

Commitments

Investment Activities. The Firm sponsors several nonconsolidated investment management funds for third-party
investors where it typically acts as general partner of, andinvestment adviser to, these funds and typically commits toinvest a minority of the capital of such funds, with
subscribing third-party investors contributing the majority.
The Firm has contractual capital commitments, guarantees
and counterparty arrangements with respect to theseinvestment management funds.

Years to Maturity at December 31, 2023
$ in millions

Less
than 1

1-3

3-5

Over 5

Total

Lending:
Corporate$ 17,036 $ 36,214 $ 54,411 $ 1,134 $ 108,795

Secured lending
facilities

8,043

5,936

3,466

2,424

19,869Commercial and
Residential realestate

217

28

28

352

625

Securities-based
lending and Other

16,483

3,488

319

394

20,684

Forward-starting secured
financing receivables1

60,261———60,261

Central counterparty

300

—

—

14,91015,210Investment activities

1,659

119

80

551

2,409

51

17

—

6

74

Letters of credit andother financial
guarantees
Total

Letters of Credit and Other Financial Guarantees. The Firm
has outstanding letters of credit and other financial guarantees
issued by third-party banks to certain of the Firm’s
counterparties. The Firm is contingently liable for these lettersof credit and other financial guarantees, which are primarily
used to provide collateral for securities and commodities
traded and to satisfy various margin requirements in lieu ofdepositing cash or securities with these counterparties.

$ 104,050 $ 45,802 $ 58,304 $ 19,771 $ 227,927

Lending commitments participated to third parties

$

7,213

1. Forward-starting secured financing receivables are generally settled within threebusiness days.

Guarantees

Since commitments associated with these instruments may
expire unused, the amounts shown do not necessarily reflect
the actual future cash funding requirements.

At December 31, 2023
Maximum Potential Payout/Notional of
Obligations by Years to MaturityLessthan 1$ in millions

Types of Commitments1

Non-credit derivatives

Lending Commitments. Lending commitments primarily
represent the notional amount of legally binding obligations toprovide funding to clients for different types of loantransactions. For syndications that are led by the Firm, thelending commitments accepted by the borrower but not yet
closed are net of the amounts agreed to by counterparties thatwill participate in the syndication. For syndications that the
Firm participates in and does not lead, lending commitments
accepted by the borrower but not yet closed include only theamount that the Firm expects it will be allocated from the leadsyndicate bank. Due to the nature of the Firm’s obligations
under the commitments, these amounts include certain
commitments participated to third parties.

1-3

3-5

1,546,134 1,342,622 268,865

Over 5Carrying
AmountAsset(Liability)

777,285(44,539)

Standby letters of credit
and other financial
guarantees issued2

1,495

977

1,322

2,688

(2)

Market value guarantees

1

—

—

—

—

Liquidity facilities

2,092

—

—

—

(1)

Whole loan sales
guarantees

—

77

10

23,075—

Securitization
representations andwarranties3

—

—

—

80,667(3)

General partner guarantees

398

32

139

24

(89)

Client clearing guarantees

228

—

—

—

—

1. The carrying amounts of derivative contracts that meet the accounting definition ofa guarantee are shown on a gross basis. For further information on derivative
contracts, see Note 6.
2. These amounts include certain issued standby letters of credit participated to third
parties, totaling $0.9 billion of notional and collateral/recourse, due to the nature of
the Firm’s obligations under these arrangements. As of December 31, 2023, thecarrying amount of standby letters of credit and other financial guarantees issued
includes an allowance for credit losses of $70 million.
3. Related to commercial and residential mortgage securitizations.

Forward-Starting Secured Financing Receivables. This
amount includes securities purchased under agreements toresell and securities borrowed that the Firm has entered into
prior to the balance sheet date that will settle after the balance
sheet date. These transactions are primarily secured bycollateral from U.S. government agency securities and othersovereign government obligations when they are funded.

Types of Guarantees
Non-Credit Derivatives. Certain derivative contracts meet theaccounting definition of a guarantee, including certain written
options, contingent-forward contracts and CDS (see Note 6
regarding credit derivatives in which the Firm has sold credit
protection to the counterparty which are excluded from theprevious table). For non-credit derivative contracts that meet
the accounting definition of a guarantee the notional amountis used as the maximum potential payout for certain derivative
contracts, such as written interest rate caps and written foreign
currency options. The Firm evaluates collateral requirements
for all derivatives, including derivatives that do not meet theCentral Counterparty. These commitments relate to theFirm’s membership in certain clearinghouses and arecontingent upon the default of a clearinghouse member orother stress events.

123

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
accounting definition of a guarantee. For the effects of cash
collateral and counterparty netting, see Note 6.

the current UPB of those loans, and, accordingly, the amountincluded in the previous table represents the UPB at the timeof the whole loan sale or at the time when the Firm last
serviced any of those loans. The current UPB balances could
be substantially lower than the maximum potential payout
amount included in the previous table. The related liability
primarily relates to sales of loans to the federal mortgage
agencies.

In certain situations, collateral may be held by the Firm forthose contracts that meet the definition of a guarantee.
Generally, the Firm sets collateral requirements bycounterparty so that the collateral covers various transactions
and products and is not allocated specifically to individual
contracts. Also, the Firm may recover amounts related to theunderlying asset delivered to the Firm under the derivative
contract.

Securitization Representations and Warranties. As part of the
Firm’sInstitutional
Securities
businesssegment’s
securitizations and related activities, the Firm has provided, orotherwise agreed to be responsible for, representations andwarranties regarding certain assets transferred insecuritization transactions sponsored by the Firm. The extent
and nature of the representations and warranties, if any, vary
among different securitizations. Under certain circumstances,
the Firm may be required to repurchase certain assets or makeother payments related to such assets if such representations
and warranties are breached. The maximum potential amountof future payments the Firm could be required to make would
be equal to the current outstanding balances of, or losses
associated with, the assets subject to breaches of such
representations and warranties. The amount included in theprevious table for the maximum potential payout includes thecurrent UPB or historical losses where known and the UPB at
the time of sale when the current UPB is not known.

Standby Letters of Credit and Other Financial Guarantees
Issued. Generally, in connection with its lending businesses,
the Firm provides standby letters of credit and other financial
guarantees to counterparties. Such arrangements represent
obligations to make payments to third parties if thecounterparty fails to fulfill its obligation under a borrowing
arrangement or other contractual obligation. A majority of the
Firm’s standby letters of credit are provided on behalf ofcounterparties that are investment grade. If the counterparty
fails to fulfill its contractual obligation, the Firm has access tocollateral or recourse that would approximate its obligation.
Market Value Guarantees. Market value guarantees are issued
to guarantee timely payment of a specified return to investors
in certain affordable housing tax credit funds. These
guarantees are designed to return an investor’s contribution toa fund and the investor’s share of tax losses and tax credits
expected to be generated by a fund.

General Partner Guarantees. As a general partner in certain
investment management funds, the Firm receives certain
distributions from the partnerships when the return exceeds
specified performance targets according to the provisions of
the partnership agreements. The Firm may be required toreturn all or a portion of such distributions to the limited
partners in the event the limited partners do not achieve acertain return as specified in the various partnershipagreements, subject to certain limitations.

Liquidity Facilities. The Firm has entered into liquidity
facilities with SPEs and other counterparties, whereby the
Firm is required to make certain payments if losses or defaults
occur. Primarily, the Firm acts as liquidity provider tomunicipal bond securitization SPEs and for stand-alone
municipal bonds in which the holders of beneficial interests
issued by these SPEs or the holders of the individual bonds,
respectively, have the right to tender their interests forpurchase by the Firm on specified dates at a specified price.
The Firm often may have recourse to the underlying assets
held by the SPEs in the event payments are required undersuch liquidity facilities, as well as make-whole or recourse
provisions with the trust sponsors. The recourse amount often
exceeds the maximum potential payout amount of theguarantee. Substantially all of the underlying assets in theSPEs are investment grade. Liquidity facilities provided tomunicipal tender option bond trusts are classified as
derivatives.

Client Clearing Guarantees. The Firm is a sponsoring
member of the Government Securities Division of the FICC's
Sponsored Clearing Model. Clients of the Firm, as sponsoredmembers, can transact in overnight and term securities
repurchase and resale agreements, which are cleared throughthe FICC. As sponsoring member, the Firm guarantees to the
FICC the prompt and full payment and performance of its
clients’ obligations. In 2020, the FICC’s sponsored clearing
model was updated such that the Firm could be responsible
for liquidation of a sponsored member’s account andguarantees any resulting loss to the FICC in the event thesponsored member fails to fully pay any net liquidation
amount due from the sponsored member to the FICC.
Accordingly, the Firm’s maximum potential payout amountreflects the total of the estimated net liquidation amounts forsponsored member accounts. The Firm minimizes credit
exposure under this guarantee by obtaining a security interest
in its sponsored member clients’ collateral and theircontractual rights under sponsored member transactions.
Therefore, the Firm's exposure is estimated to be an amount
substantially lower than the maximum potential payout

Whole Loan Sales Guarantees. The Firm has provided, orotherwise agreed to be responsible for, representations andwarranties regarding certain whole loan sales. Under certain
circumstances, the Firm may be required to repurchase such
assets or make other payments related to such assets if such
representations and warranties are breached. The Firm’s
maximum potential payout related to such representations andwarranties is equal to the current UPB of such loans. Since theFirm no longer services these loans, it has no information on
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amount. The collateral amount in which the Firm has asecurity interest is approximately equal to the maximum
potential payout amount of the guarantee.

believes that any potential requirement to make payments
under these agreements is remote.
• Merger and Acquisition Guarantees. The Firm may, fromtime to time, in its role as investment banking advisor be
required to provide guarantees in connection with certain
European merger and acquisition transactions. If requiredby the regulating authorities, the Firm provides a guaranteethat the acquirer in the transaction has or will havesufficient funds to complete the transaction and would thenbe required to make the acquisition payments in the eventthe acquirer’s funds are insufficient at the completion dateof the transaction. These arrangements generally cover thetime frame from the transaction offer date to its closing dateand, therefore, are generally short term in nature. The Firm
believes the likelihood of any payment by the Firm underthese arrangements is remote given the level of its due
diligence in its role as investment banking advisor.

Other Guarantees and Indemnities
In the normal course of business, the Firm provides
guarantees and indemnifications in a variety of transactions.
These provisions generally are standard contractual terms.
Certain of these guarantees and indemnifications aredescribed below:• Indemnities. The Firm provides standard indemnities tocounterparties for certain contingent exposures and taxes,
including U.S. and foreign withholding taxes, on interest
and other payments made on derivatives, securities andstock lending transactions, certain annuity products andother financial arrangements. These indemnity payments
could be required based on a change in the tax laws, achange in interpretation of applicable tax rulings or achange in factual circumstances. Certain contracts containprovisions that enable the Firm to terminate the agreement
upon the occurrence of such events. The Firm may also
provide indemnities when it sells a business or assets to athird-party, pursuant to which it indemnifies the third-party
for losses incurred on assets acquired or liabilities assumed
or due to actions taken by the Firm prior to the sale of thebusiness or assets. The Firm expects the risk of loss
associated with indemnities related to the sale of businesses
or assets to be remote. The maximum potential amount of
future payments that the Firm could be required to makeunder these indemnifications cannot be estimated.

In addition, in the ordinary course of business, the Firmguarantees the debt and/or certain trading obligations(including obligations associated with derivatives, foreignexchange contracts and the settlement of physicalcommodities) of certain subsidiaries. These guarantees
generally are entity or product specific and are required byinvestors or trading counterparties. The activities of the
Firm’s subsidiaries covered by these guarantees (including
any related debt or trading obligations) are included in thefinancial statements.
Finance Subsidiary
The Parent Company fully and unconditionally guarantees the
securities issued by Morgan Stanley Finance LLC, a wholly
owned finance subsidiary. No other subsidiary of the Parent
Company guarantees these securities.

• Exchange/Clearinghouse Member Guarantees. The Firm isa member of various exchanges and clearinghouses that
trade and clear securities and/or derivative contracts.
Associated with its membership, the Firm may be required
to pay a certain amount as determined by the exchange or
the clearinghouse in case of a default of any of its members
or pay a proportionate share of the financial obligations ofanother member that may default on its obligations to theexchange or the clearinghouse. While the rules governing
different exchange or clearinghouse memberships and theforms of these guarantees may vary, in general the Firm’s
obligations under these rules would arise only if theexchange or clearinghouse had previously exhausted its
resources.

Contingencies
Legal
In addition to the matters described below, in the normal
course of business, the Firm has been named, from time totime, as a defendant in various legal actions, including
arbitrations, class actions and other litigation, arising inconnection 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 ofdamages. In some cases, the third-party entities that are, or
would otherwise be, the primary defendants in such cases arebankrupt, in financial distress, or may not honor applicable
indemnification obligations. These actions have included, but
are not limited to, antitrust claims, claims under various false
claims act statutes, and matters arising from our sales andtrading businesses and our activities in the capital markets.

In addition, some clearinghouse rules require members toassume a proportionate share of losses resulting from theclearinghouse’s investment of guarantee fund contributions
and initial margin and of other losses unrelated to thedefault of a clearing member, if such losses exceed thespecified resources allocated for such purpose by theclearinghouse.
The maximum potential payout under these rules cannot be
estimated. The Firm has not recorded any contingent
liability in its financial statements for these agreements and

The Firm is also involved, from time to time, in other reviews,
investigations and proceedings (both formal and informal) by
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governmental and self-regulatory agencies regarding the
Firm’s business, and involving, among other matters, sales,
trading, financing, prime brokerage, market-making activities,
investment banking advisory services, capital markets
activities, financial products or offerings sponsored,
underwritten or sold by the Firm, wealth and investment
management services, and accounting and operational
matters, certain of which may result in adverse judgments,
settlements, fines, penalties, disgorgement, restitution,
forfeiture, injunctions, limitations on our ability to conductcertain business, or other relief.

amount already accrued) to be reasonably possible. In many
legal proceedings in which the Firm has determined that amaterial loss (or where an accrual has occurred, a material
loss beyond the amount already accrued) is reasonably
possible, the Firm is unable to reasonably estimate the loss orrange of loss. There are other matters in which the Firm hasdetermined a loss or range of loss to be reasonably possible,
but the Firm does not believe, based on current knowledge
and after consultation with counsel, that such losses could
have a material adverse effect on the Firm’s financial
statements as a whole, although the outcome of suchproceedings or investigations may significantly impact the
Firm’s business or results of operations for any particular
reporting period, or cause significant reputational harm.

The Firm contests liability and/or the amount of damages asappropriate in each pending matter. Where available
information indicates that it is probable a liability had been
incurred at the date of the financial statements and the Firm
can reasonably estimate the amount of that loss or the rangeof loss, the Firm accrues an estimated loss by a charge toincome, including with respect to certain of the individual
proceedings or investigations described below.
2023$ in millions

Legal expenses

$

488 $

2022
443 $

While the Firm has identified below certain proceedings orinvestigations that the Firm believes to be material,
individually or collectively, there can be no assurance thatmaterial losses will not be incurred from claims that have notyet been asserted or those where potential losses have not yet
been determined to be probable or reasonably possible.

2021
157

Block Trading Matter

The Firm’s legal expenses can, and may in the future,fluctuate from period to period, given the current environment
regarding government or self-regulatory agency investigations
and private litigation affecting global financial services firms,
including the Firm.

On January 12, 2024, the U.S. Attorney’s Office for theSouthern District of New York (“USAO”) and the SEC
announced they had reached settlement agreements with the
Firm in connection with their investigations into the Firm’s
blocks business. Specifically, the Firm entered into a threeyear non-prosecution agreement (“NPA”) with the USAO that
included the payment of forfeiture, restitution, and a criminal
fine for making false statements in connection with the sale ofcertain block trades from 2018 through August 2021. The
NPA required the Firm to admit responsibility for certain actsof its employees and to continue to cooperate with andprovide certain information to the USAO for the term of theagreement. Additionally, the SEC charged the Firm withviolations of Section 10(b) of the Exchange Act and Rule10b-5(b) thereunder for the disclosure of confidential
information about block trades and also violations of Section
15(g) of the Exchange Act for the failure to enforce its
policies concerning the misuse of material non-public
information related to block trades. As part of the SEC
agreement, the Firm paid disgorgement and a civil penalty.
After the agreed-upon credits were applied, the Firm paid a
total amount of approximately $249 million under both
settlements. The Firm also faces potential civil liability
arising from claims that have been or may be asserted by,among others, block transaction participants who contend
they were harmed or disadvantaged including, among otherthings, as a result of a share price decline allegedly caused by
the activities of the Firm and/or its employees, or as a resultof the Firm’s and/or its employees’ failure to adhere toapplicable laws and regulations. In addition, the Firm has
responded to demands from shareholders under Section 220of the Delaware General Corporation Law for books andrecords concerning the investigations.

In many legal proceedings and investigations, it is inherently
difficult to determine whether any loss is probable orreasonably possible, or to estimate the amount of any loss. In
addition, even where the Firm has determined that a loss isprobable or reasonably possible or an exposure to loss orrange of loss exists in excess of the liability already accrued
with respect to a previously recognized loss contingency, theFirm is often unable to reasonably estimate the amount of theloss or range of loss. It is particularly difficult to determine if
a loss is probable or reasonably possible, or to estimate theamount of loss, where the factual record is being developed orcontested or where plaintiffs or government entities seek
substantial or indeterminate damages, restitution, forfeiture,disgorgement or penalties. Numerous issues may need to beresolved in an investigation or proceeding before adetermination can be made that a loss or additional loss (orrange of loss or range of additional loss) is probable orreasonably possible, or to estimate the amount of loss,
including through potentially lengthy discovery or
determination of important factual matters, determination ofissues related to class certification, the calculation of damages
or other relief, and consideration of novel or unsettled legal
questions relevant to the proceedings or investigations inquestion.
The Firm has identified below any individual proceedings orinvestigations where the Firm believes a material loss (orwhere an accrual has occurred, a material loss beyond theDecember 2023 Form 10-K

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Antitrust Related Mattersin the United States District Court for the SDNY under thecaption City of Philadelphia, et al. v. Bank of America
Corporation, et al. Plaintiffs allege, inter alia, that the Firm,along with a number of other financial institution defendants,
violated U.S. antitrust laws and relevant state laws inconnection with alleged efforts to artificially inflate interest
rates for Variable Rate Demand Obligations (“VRDO”).
Plaintiffs seek, among other relief, treble damages. The classaction complaint was filed on behalf of a class of municipal
issuers of VRDO for which defendants served as remarketing
agent. On November 2, 2020, the court granted in part anddenied in part the defendants’ motion to dismiss theconsolidated complaint, dismissing state law claims, but
denying dismissal of the U.S. antitrust claims. On September
21, 2023, the court granted plaintiffs’ motion for classcertification. On October 5, 2023, defendants petitioned theUnited States Court of Appeals for the Second Circuit forleave to appeal that decision, which was granted on February
5, 2024.

The Firm and other financial institutions are responding to anumber of governmental investigations and civil litigation
matters related to allegations of anticompetitive conduct invarious aspects of the financial services industry, including
the matters described below.
Beginning in February of 2016, the Firm was named as adefendant in multiple purported antitrust class actions now
consolidated into a single proceeding in the United States
District Court for the Southern District of New York(“SDNY”) styled In Re: Interest Rate Swaps Antitrust
Litigation. Plaintiffs allege, inter alia, that the Firm, together
with a number of other financial institution defendants,
violated U.S. and New York state antitrust laws from 2008
through December of 2016 in connection with their alleged
efforts to prevent the development of electronic exchangebased platforms for interest rate swaps trading. Complaints
were filed both on behalf of a purported class of investors
who purchased interest rate swaps from defendants, as well as
on behalf of three operators of swap execution facilities that
allegedly were thwarted by the defendants in their efforts todevelop such platforms. The consolidated complaints seek,
among other relief, certification of the investor class ofplaintiffs and treble damages. On July 28, 2017, the court
granted in part and denied in part the defendants’ motion todismiss the complaints. On December 15, 2023, the court
denied the class plaintiffs’ motion for class certification. On
December 29, 2023, the class plaintiffs petitioned the UnitedStates Court of Appeals for the Second Circuit for leave toappeal that decision.

Qui Tam Matters
The Firm and other financial institutions are defending against
qui tam litigations brought under various state false claims
statutes, including the matter described below. Such matters
may involve the same types of claims pursued in multiple
jurisdictions and may include claims for treble damages.
On August 18, 2009, Relators Roger Hayes and C. Talbot
Heppenstall, Jr., filed a qui tam action in New Jersey state
court styled State of New Jersey ex. rel. Hayes v. Bank ofAmerica Corp., et al. The complaint, filed under seal pursuant
to the New Jersey False Claims Act, alleged that the Firm andseveral other underwriters of municipal bonds had defrauded
New Jersey issuers by misrepresenting that they would
achieve the best price or lowest cost of capital in connection
with certain municipal bond issuances. On March 17, 2016,
the court entered an order unsealing the complaint. On
November 17, 2017, Relators filed an amended complaint toallege the Firm mispriced certain bonds issued in twenty-threebond offerings between 2008 and 2017, having a total par
amount of $6.9 billion. The complaint seeks, among otherrelief, treble damages. On February 22, 2018, the Firm moved
to dismiss the amended complaint, and on July 17, 2018, thecourt denied the Firm’s motion. On October 13, 2021,
following a series of voluntary and involuntary dismissals,
Relators limited their claims to certain bonds issued in fiveofferings the Firm underwrote between 2008 and 2011,
having a total par amount of $3.9 billion. On August 22,
2023, the Firm reached an agreement in principle to settle thelitigation.

In August of 2017, the Firm was named as a defendant in apurported antitrust class action in the United States District
Court for the SDNY styled Iowa Public Employees’
Retirement System et al. v. Bank of America Corporation etal. Plaintiffs allege, inter alia, that the Firm, together with anumber of other financial institution defendants, violated U.S.
antitrust laws and New York state law in connection with
their alleged efforts to prevent the development of electronic
exchange-based platforms for securities lending. The classaction complaint was filed on behalf of a purported class ofborrowers and lenders who entered into stock loantransactions with the defendants. The class action complaintseeks, among other relief, certification of the class ofplaintiffs and treble damages. On September 27, 2018, thecourt denied the defendants’ motion to dismiss the classaction complaint. Plaintiffs’ motion for class certification wasreferred by the District Court to a magistrate judge who, on
June 30, 2022, issued a report and recommendation that theDistrict Court certify a class. On May 20, 2023, the Firmreached an agreement in principle to settle the litigation. On
September 1, 2023, the court granted preliminary approval of
the settlement.

European MattersTax
In matters styled Case number 15/3637 and Case number
15/4353, the Dutch Tax Authority (“Dutch Authority”) is
challenging in the Dutch courts the prior set-off by the Firm

The Firm is a defendant in three antitrust class action
complaints which have been consolidated into one proceeding
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Notes to Consolidated Financial Statements
of approximately €124 million (approximately $137 million)
plus accrued interest of withholding tax credits against the
Firm’s corporation tax liabilities for the tax years 2007 to
2012. The Dutch Authority alleges that the Firm was notentitled to receive the withholding tax credits on the basis,inter alia, that a Firm subsidiary did not hold legal title tocertain securities subject to withholding tax on the relevant
dates. The Dutch Authority has also alleged that the Firm
failed to provide certain information to the Dutch Authority
and to keep adequate books and records. On April 26, 2018,the District Court in Amsterdam issued a decision dismissing
the Dutch Authority’s claims with respect to certain of the tax
years in dispute. On May 12, 2020, the Court of Appeal in
Amsterdam granted the Dutch Authority's appeal in mattersre-styled Case number 18/00318 and Case number 18/00319.
On January 19, 2024, the Dutch High Court granted the
Firm’s appeal in matters re-styled Case number 20/01884 andreferred the case to the Court of Appeal in The Hague.

February 4, 2019, the Firm filed its defense to the matter now
styled Case number B-803-18.
U.K. Government Bond Matter
The Firm is engaging with the UK Competition and Markets
Authority in connection with its investigation of suspectedanti-competitive arrangements in the financial services sector,
specifically regarding the Firm's activities concerning certain
liquid fixed income products between 2009 and 2012. On
May 24, 2023, the U.K. Competition and Markets Authority
issued a Statement of Objections setting out its provisional
findings that the Firm had breached U.K. competition law by
sharing competitively sensitive information in connection
with gilts and gilt asset swaps between 2009 and 2012. The
Firm is contesting the provisional findings. Separately, on
June 16, 2023, the Firm was named as a defendant in apurported antitrust class action in the United States District
Court for the SDNY styled Oklahoma Firefighters Pension
and Retirement System v. Deutsche Bank Aktiengesellschaft,
et al., alleging, inter alia, that the Firm, together with anumber of other financial institution defendants, violated U.S.
antitrust laws in connection with their alleged effort to fix
prices of gilts traded in the United States between 2009 and2013. On September 28, 2023, the defendants filed a joint
motion to dismiss the complaint, which has been fully briefed.

On June 22, 2021, Dutch criminal authorities sought various
documents in connection with an investigation of the Firm
related to the civil claims asserted by the Dutch Authority
concerning the accuracy of the Firm subsidiary’s tax returns
and the maintenance of its books and records for 2007 to
2012. The Dutch criminal authorities have requested
additional information, and the Firm is continuing to respondto them in connection with their ongoing investigation.

Other

Danish Underwriting Matter

On August 13, 2021, the plaintiff in Camelot Event Driven
Fund, a Series of Frank Funds Trust v. Morgan Stanley & Co.
LLC, et al. filed in the Supreme Court of the State of New
York, New York County ("Supreme Court of NY") a
purported class action complaint alleging violations of thefederal securities laws against ViacomCBS (“Viacom”),
certain of its officers and directors, and the underwriters,
including the Firm, of two March 2021 Viacom offerings: a$1.7 billion Viacom Class B Common Stock offering and a$1 billion offering of 5.75% Series A Mandatory Convertible
Preferred Stock (collectively, the “Offerings”). The complaint
alleges, inter alia, that the Viacom offering documents forboth issuances contained material omissions because they did
not disclose that certain of the underwriters, including theFirm, had prime brokerage relationships and served ascounterparties to certain derivative transactions with
Archegos Capital Management LP, (“Archegos”), a fund withsignificant exposure to Viacom securities across multiple
prime brokers. The complaint, which seeks, among otherthings, unspecified compensatory damages, alleges that theoffering documents did not adequately disclose the risks
associated with Archegos’s concentrated Viacom positions atthe various prime brokers, including that the unwind of thosepositions could have a deleterious impact on the stock price ofViacom. On November 5, 2021, the complaint was amended
to add allegations that defendants failed to disclose thatcertain underwriters, including the Firm, had intended tounwind Archegos’s Viacom positions while simultaneously
distributing the Offerings. On February 6, 2023, the court
issued a decision denying the motions to dismiss as to the

On October 5, 2017, various institutional investors filed aclaim against the Firm and another bank in a matter now
styled Case number B-803-18 (previously BS 99-6998/2017),
in the City Court of Copenhagen, Denmark concerning theirroles as underwriters of the initial public offering (“IPO”) in
March 2014 of the Danish company OW Bunker A/S. The
claim seeks damages of approximately DKK529 million(approximately $79 million) plus interest in respect of alleged
losses arising from investing in shares in OW Bunker, which
entered into bankruptcy in November 2014. Separately, on
November 29, 2017, another group of institutional investors
joined the Firm and another bank as defendants to pending
proceedings in the High Court of Eastern Denmark against
various other parties involved in the IPO in a matter styled
Case number B-2073-16. The claim brought against the Firm
and the other bank has been given its own Case number
B-2564-17. The investors claim damages of approximately
DKK767 million (approximately $114 million) plus interest
from the Firm and the other bank on a joint and several basiswith the Defendants to these proceedings. Both claims are
based on alleged prospectus liability; the second claim also
alleges professional liability of banks acting as financial
intermediaries. On June 8, 2018, the City Court of
Copenhagen, Denmark ordered that the matters now styled
Case number B-803-18, Case number B-2073-16, and Case
number B-2564-17 be heard together before the High Court ofEastern Denmark. On June 29, 2018, the Firm filed its
defense to the matter now styled Case number B-2564-17. On
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Firm and the other underwriters, but granted the motion todismiss as to Viacom and the Viacom individual defendants.
On February 15, 2023, the underwriters, including the Firm,
filed their notices of appeal of the denial of their motions to
dismiss. On March 10, 2023, the plaintiff appealed thedismissal of Viacom and the individual Viacom defendants.
On January 4, 2024, the court granted the plaintiff’s motion
for class certification. On February 14, 2024, the defendants
filed their notice of appeal.

• Guarantees issued and residual interests retained inconnection with municipal bond securitizations.
• Loans made to and investments in VIEs that hold debt,
equity, real estate or other assets.
• Derivatives entered into with VIEs.
• Structuring of CLNs or other asset-repackaging notes
designed to meet the investment objectives of clients.
• Other structured transactions designed to provide taxefficient yields to the Firm or its clients.

On May 17, 2013, the plaintiff in IKB International S.A. in
Liquidation, et al. v. Morgan Stanley, et al. filed a complaint
against the Firm and certain affiliates in the Supreme Court ofNY. The complaint alleges that defendants made material
misrepresentations and omissions in the sale to plaintiff ofcertain 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 Firm to plaintiffs wasapproximately $133 million. The complaint alleges causes ofaction against the Firm for common law fraud, fraudulent
concealment, aiding and abetting fraud, and negligent
misrepresentation, and seeks, among other things,
compensatory and punitive damages. On October 29, 2014,
the court granted in part and denied in part the Firm’s motion
to dismiss. All claims regarding four certificates weredismissed. After these dismissals, the remaining amount ofcertificates allegedly issued by the Firm or sold to plaintiffs
by the Firm was approximately $116 million. On August 11,
2016, the Appellate Division, First Department affirmed thetrial court’s order denying in part the Firm’s motion todismiss the complaint. On July 15, 2022, the Firm filed amotion for summary judgment on all remaining claims. On
March 1, 2023, the court granted in part and denied in part the
Firm’s motion for summary judgment, narrowing the alleged
misrepresentations at issue in the case. On March 14, 2023,
the Firm filed its notice of appeal, and on March 21, 2023,
plaintiffs filed their notice of cross appeal.

The Firm 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 aslong 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 tomake significant economic decisions held by the Firm and byother parties, and the variable interests owned by the Firm andother parties.
The power to make the most significant economic decisions
may take a number of different forms in different types of
VIEs. The Firm considers servicing or collateral management
decisions as representing the power to make the mostsignificant economic decisions in transactions such as
securitizations or CDOs. As a result, the Firm does notconsolidate 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 torequire the liquidation of the entity. If the Firm serves asservicer or collateral manager, or has certain other rights
described in the previous sentence, the Firm analyzes theinterests in the VIE that it holds and consolidates only those
VIEs for which it holds a potentially significant interest in the
VIE.
For many transactions, such as re-securitization transactions,
CLNs and other asset-repackaging notes, there are no
significant economic decisions made on an ongoing basis. In
these cases, the Firm focuses its analysis on decisions madeprior to the initial closing of the transaction and at thetermination of the transaction. The Firm concluded in most ofthese transactions that decisions made prior to the initialclosing were shared between the Firm and the initial investors
based upon the nature of the assets, including whether theassets were issued in a transaction sponsored by the Firm andthe extent of the information available to the Firm and toinvestors, the number, nature and involvement of investors,
other rights held by the Firm and investors, thestandardization of the legal documentation and the level ofcontinuing involvement by the Firm, including the amountand type of interests owned by the Firm and by otherinvestors. The Firm focused its control decision on any rightheld by the Firm or investors related to the termination of the
VIE. Most re-securitization transactions, CLNs and otherasset-repackaging notes have no such termination rights.

15. Variable Interest Entities and Securitization
Activities
Overview
The Firm is involved with various SPEs in the normal courseof business. In most cases, these entities are deemed to be
VIEs.
The Firm’s variable interests in VIEs include debt and equity
interests, commitments, guarantees, derivative instruments
and certain fees. The Firm’s involvement with VIEs arises
primarily from:• Interests purchased in connection with market-making
activities, securities held in its Investment securities
portfolio and retained interests held as a result of
securitization
activities,
includingre-securitizationtransactions.
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Notes to Consolidated Financial Statements
Consolidated VIE Assets and Liabilities by Type of Activity
At December 31, 2023
$ in millions

VIE Assets

MABS1

$

VIE Liabilities

Non-consolidated VIEs

At December 31, 2022
VIE Assets

At December 31, 2023

VIE Liabilities$ in millions

MABS1$144,906 $ 1,526 $ 3,152 $ 3,102 $ 50,052

597 $

256 $

1,153 $

520

VIE assets (UPB)

Investment vehicles2

753

502

638

272

Maximum exposure to loss3

MTOB

582

520

371

322

Debt and equity interests

Other

378

97

519

199

Derivative and other contracts

2,310 $

1,375 $

2,681 $

1,313

Commitments, guarantees and
other

Total

$

Total

MTOB—Municipal tender option bonds
1. Amounts include transactions backed by residential mortgage loans, commercial
mortgage loans and other types of assets, including consumer or commercial
assets and may be in loan or security form. The value of assets is determinedbased on the fair value of the liabilities and the interests owned by the Firm in such
VIEs as the fair values for the liabilities and interests owned are more observable.
2. Amounts include investment funds and CLOs.

CDO$ 21,203 $

MTOB

52 $

—
3,439
$ 24,642 $— $ 2,049 $ 9,076

—

2,092

—

4,452

—

—

—

55

52 $ 2,092 $ 2,049 $ 13,583

Carrying value of variable interests—Assets
Debt and equity interests$ 21,203 $Derivative and other contracts
Total—$ 21,203 $52 $— $ 1,682 $ 9,075

—

2

52 $

2 $ 1,682 $ 10,405—

Additional VIE assets owned4

Consolidated VIE Assets and Liabilities by Balance Sheet
Caption$ in millions

At
December 31,
2023$

Trading assets at fair valueAt
December 31,
2022

164 $

2,066

Investment securities

492

255

Securities purchased under agreements toresell67

200

Customer and other receivables

26

16

Other assets

4

2

Total

$

2,310 $$

Other liabilities and accrued expenses
Borrowings

1,185

121

124

32
$

1,375 $

1,313

Noncontrolling interests

$

54 $

71

$ in millions

MABS1

VIE assets (UPB)$123,601 $ 3,162 $ 4,632 $ 2,403 $ 50,178

— $

— $

CDO

3 $

MTOB

$ 13,104 $ 274 $Derivative and other contracts
Commitments, guarantees and
other
Total

— $

452

Other2OSF— $ 1,694 $ 11,596

—

—

3,200

—

5,211

674

—

—

—

1,410

$ 13,778 $ 274 $ 3,200 $ 1,694 $ 18,217

Carrying value of variable interests—Assets
Debt and equity interests$ 13,104 $ 274 $Derivative and other contracts
Total

—

—

$ 13,104 $ 274 $— $ 1,577 $ 11,596
3

—

1,564

3 $ 1,577 $ 13,160

Additional VIE assets owned4$ 13,708

Carrying value of variable interests—Liabilities

4

Total

$

Debt and equity interests

2,681

1,222 $

Derivative and other contracts

Maximum exposure to loss3

Liabilities
Other secured financings$ 15,002

At December 31, 2022

142

1,557

1,330

Carrying value of variable interests—Liabilities

AssetsCash and cash equivalents

Other2OSF

Derivative and other contracts

$

— $

— $

3 $

— $

281

1. Amounts include transactions backed by residential mortgage loans, commercial
mortgage loans and other types of assets, including consumer or commercial
assets, and may be in loan or security form.
2. Other primarily includes exposures to commercial real estate property andinvestment funds.
3. Where notional amounts are utilized in quantifying the maximum exposure related
to derivatives, such amounts do not reflect changes in fair value recorded by theFirm.
4. Additional VIE assets owned represents the carrying value of total exposure to nonconsolidated VIEs for which the maximum exposure to loss is less than specificthresholds, primarily interests issued by securitization SPEs. The Firm’s maximum
exposure to loss generally equals the fair value of the assets owned. These assets
are primarily included in Trading assets and Investment securities and aremeasured at fair value (see Note 4). The Firm does not provide additional support
in these transactions through contractual facilities, guarantees or similar derivatives.

Consolidated VIE assets and liabilities are presented in theprevious tables after intercompany eliminations. Generally,
most assets owned by consolidated VIEs cannot be removed
unilaterally by the Firm and are not available to the Firm
while the related liabilities issued by consolidated VIEs are
non-recourse to the Firm. However, in certain consolidated
VIEs, the Firm either has the unilateral right to remove assets
or provides additional recourse through derivatives such as
total return swaps, guarantees or other forms of involvement.

The previous tables include VIEs sponsored by unrelatedparties, as well as VIEs sponsored by the Firm; examples of
the Firm’s involvement with these VIEs include its secondary
market-making activities and the securities held in its
Investment securities portfolio (see Note 7).

In general, the Firm’s exposure to loss in consolidated VIEs islimited to losses that would be absorbed on the VIE net assets
recognized in its financial statements, net of amounts
absorbed by third-party variable interest holders.

The Firm’s maximum exposure to loss is dependent on thenature of the Firm’s variable interest in the VIE and is limited
to the notional amounts of certain liquidity facilities and othercredit support, total return swaps and written put options, aswell as the fair value of certain other derivatives andinvestments the Firm has made in the VIE.
The Firm’s maximum exposure to loss in the previous tables
does not include the offsetting benefit of hedges or any
reductions associated with the amount of collateral held as
December 2023 Form 10-K

130

Table of Contents

Notes to Consolidated Financial Statements
part of a transaction with the VIE or any party to the VIE
directly against a specific exposure to loss.

securities issued by VIEs backed by student loans andcommercial mortgage loans. Transactions sponsored by thefederal mortgage agencies include an explicit or implicit
guarantee provided by the U.S. government. Additionally, theFirm holds certain commercial mortgage-backed securities
issued by VIEs retained as a result of the Firm's securitization
activities. See Note 7 for further information on theInvestment securities portfolio.

Liabilities issued by VIEs generally are non-recourse to theFirm.
Detail of Mortgage- and Asset-Backed Securitization Assets
At December 31, 2023

$ in millions

UPB

Debt and
EquityInterests

At December 31, 2022
UPB

Debt and
EquityInterests

Residential mortgages$ 17,346 $3,355 $ 20,428 $2,570Commercial mortgages

74,5908,342

67,5404,236

U.S. agency collateralized
mortgage obligations

42,917

6,675

32,567

4,729

2,831

3,066

Other consumer orcommercial loans
Total

10,053$ 144,906 $

21,203 $ 123,601 $Municipal Tender Option Bond Trusts
In a municipal tender option bond trust transaction, the clienttransfers a municipal bond to a trust. The trust issues shortterm securities that the Firm, as the remarketing agent, sells toinvestors. The client generally retains a residual interest. The
short-term securities are supported by a liquidity facility
pursuant to which the investors may put their short-term
interests. In most programs, a third-party provider will
provide such liquidity facility; in some programs, the Firm
provides this liquidity facility.

1,569
13,104

Securitization Activities
In a securitization transaction, the Firm transfers assets(generally commercial or residential mortgage loans or
securities) to an SPE; sells to investors most of the beneficial
interests, such as notes or certificates, issued by the SPE; and,in many cases, retains other beneficial interests. The purchaseof the transferred assets by the SPE is financed through thesale of these interests.

The Firm may, in lieu of purchasing short-term securities forremarketing, decide to extend a temporary loan to the trust.
The client can generally terminate the transaction at any time.
The liquidity provider can generally terminate the transaction
upon the occurrence of certain events. When the transaction is
terminated, the municipal bond is generally sold or returned tothe client. Any losses suffered by the liquidity provider upon
the sale of the bond are the responsibility of the client. Thisobligation is generally collateralized. Liquidity facilities
provided to municipal tender option bond trusts are classified
as derivatives. The Firm consolidates any municipal tender
option bond trusts in which it holds the residual interest.

In many securitization transactions involving commercial
mortgage loans, the Firm transfers a portion of the assets to
the SPE with unrelated parties transferring the remaining
assets. In addition, mainly in securitization transactions
involving residential mortgage loans, the Firm may also enter
into derivative transactions, primarily interest rate swaps orinterest rate caps, with the SPE.

Credit Protection Purchased through Credit-Linked Notes

Although not obligated, the Firm generally makes a market in
the securities issued by SPEs in securitization transactions. Asa market maker, the Firm offers to buy these securities from,and sell these securities to, investors. Securities purchased
through these market-making activities are not considered tobe retained interests; these beneficial interests generally areincluded in Trading assets—Corporate and other debt and aremeasured at fair value.

CLN transactions are designed to provide investors with
exposure to certain credit risk on referenced assets. In thesetransactions, the Firm transfers assets (generally high-quality
securities or money-market investments) to an SPE, enters
into a derivative transaction in which the SPE sells protection
on an unrelated referenced asset or group of assets, through acredit derivative, and sells the securities issued by the SPE to
investors. In some transactions, the Firm may also enter into
interest rate or currency swaps with the SPE. Depending on
the structure, the assets and liabilities of the SPE may beconsolidated and recognized in the Firm’s balance sheet or
accounted for as a sale of assets.

The Firm enters into derivatives, generally interest rate swaps
and interest rate caps, with a senior payment priority in many
securitization transactions. The risks associated with these andsimilar derivatives with SPEs are essentially the same as
similar derivatives with non-SPE counterparties and aremanaged as part of the Firm’s overall exposure. See Note 6
for further information on derivative instruments and hedging
activities.

Upon the occurrence of a credit event related to the referenced
asset, the SPE will deliver securities collateral as payment to
the Firm, which exposes the Firm to changes in thecollateral’s value.

Investment Securities

Derivative payments by the SPE are collateralized. The risks
associated with these and similar derivatives with SPEs are
essentially the same as those with non-SPE counterparties andare managed as part of the Firm’s overall exposure.

The Firm holds securities issued by VIEs within theInvestment securities portfolio. These securities are composedof those related to transactions sponsored by the federalmortgage agencies and predominantly the most senior
131

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Other Structured Financings

Transferred Assets with Continuing Involvement
At December 31, 2023

The Firm invests in interests issued by entities that develop
and own low-income communities (including low-income
housing projects) and entities that construct and own facilities
that will generate energy from renewable resources. Theinterests entitle the Firm to a share of tax credits and tax
losses generated by these projects. In addition, the Firm has
issued guarantees to investors in certain low-income housing
funds. The guarantees are designed to return an investor’s
contribution to a fund and the investor’s share of tax losses
and tax credits expected to be generated by the fund. The
Firm is also involved with entities designed to provide taxefficient yields to the Firm or its clients.

RML$ in millions
2, 3

SPE assets (UPB)

CML

U.S. Agency
CMO$ 4,333 $ 73,818 $CLN and
Other1

12,083 $ 12,438

Retained interests
Investment grade$

Non-investment grade
Total

$

149 $

653 $

460 $

—

83

788

—

69

460 $

69

232 $ 1,441 $Interests purchased in the secondary market3
Investment grade$

Non-investment grade

20 $

22 $

42 $

—

—

16

—

—

Total

$

20 $

38 $

42 $

—

Derivative assets

$

— $

— $

— $

1,073

—

—

—

426

Derivative liabilities

Collateralized Loan and Debt Obligations

At December 31, 2022
RML

$ in millions

CLOs and CDOs are SPEs that purchase a pool of assets
consisting of corporate loans, corporate bonds, ABS orsynthetic exposures on similar assets through derivatives andissue multiple tranches of debt and equity securities toinvestors. The Firm underwrites the securities issued incertain CLO transactions on behalf of unaffiliated sponsors
and provides advisory services to these unaffiliated sponsors.
The Firm sells corporate loans to many of these SPEs, insome cases representing a significant portion of the total
assets purchased. Although not obligated, the Firm generally
makes a market in the securities issued by SPEs in thesetransactions and may retain unsold securities. These beneficial
interests are included in Trading assets and are measured atfair value.

SPE assets (UPB)2, 3

CML

U.S. Agency
CMO$ 3,732 $ 73,069 $CLN and
Other1

6,448 $ 10,928

Retained interests
Investment grade$

Non-investment grade
Total

$

137 $

927 $

367 $

—

26

465

11

44

378 $

44

163 $ 1,392 $Interests purchased in the secondary market5
Investment grade$

Non-investment grade

82 $

51 $

10 $

—

35

23

—

—

Total

$

117 $

74 $

10 $

—

Derivative assets

$

— $

— $

— $

1,114

—

—

—

201

Derivative liabilities

Fair Value at December 31, 2023
Level 2$ in millions

Level 3

Total

Retained interests
Investment grade

Equity-Linked Notes$

Non-investment grade
Total

ELN transactions are designed to provide investors with
exposure to certain risks related to the specific equity security,
equity index or other index. In an ELN transaction, the Firm
typically transfers to an SPE either a note issued by the Firm,
the payments on which are linked to the performance of a
specific equity security, equity index or other index, or debt
securities issued by other companies and a derivative contract,
the terms of which will relate to the performance of a specificequity security, equity index or other index. These ELNtransactions with SPEs were not consolidated at December
31, 2023 or December 31, 2022.

$

576 $

— $

10

56

576
66

586 $

56 $

642

Interests purchased in the secondary market3
Investment grade$

Non-investment grade

77 $

7 $

84

12

4

16

Total

$

89 $

11 $

100

Derivative assets$

1,073 $

— $

1,073

426

—

426

Derivative liabilities

Fair Value at December 31, 2022
Level 2$ in millions

Level 3

Total

Retained interests
Investment grade$

Non-investment grade
Total

$

489 $

— $

25

16

489
41

514 $

16 $

530

140 $

3 $

143

42

16

58

19 $

201

— $

1,114

Interests purchased in the secondary market3
Investment grade$

Non-investment grade
Total

$

182 $

Derivative assets$

1,114 $

Derivative liabilities

153

48

201

RML—Residential mortgage loans
CML—Commercial mortgage loans
1. Amounts include CLO transactions managed by unrelated third parties.
2. Amounts include assets transferred by unrelated transferors.
3. Amounts include transactions where the Firm also holds retained interests as partof the transfer.

The previous tables include transactions with SPEs in which
the Firm, acting as principal, transferred financial assets with
December 2023 Form 10-K

132

Table of Contents

Notes to Consolidated Financial Statements
16. Regulatory Requirements

continuing involvement and received sales treatment. The
transferred assets are carried at fair value prior tosecuritization, and any changes in fair value are recognized in
the income statement. The Firm may act as underwriter of thebeneficial interests issued by these securitization vehicles, forwhich Investment banking revenues are recognized. The Firm
may retain interests in the securitized financial assets as one
or more tranches of the securitization. Certain retainedinterests are carried at fair value in the balance sheet withchanges in fair value recognized in the income statement. Fairvalue for these interests is measured using techniques that areconsistent with the valuation techniques applied to the Firm’s
major categories of assets and liabilities as described in Notes
2 and 4. Further, as permitted by applicable guidance, certaintransfers of assets where the Firm’s only continuing
involvement is a derivative are only reported in the following
Assets Sold with Retained Exposure table.

Regulatory Capital Framework
The Firm is an FHC under the Bank Holding Company Act of1956, as amended, and is subject to the regulation andoversight of the Board of Governors of the Federal Reserve
System (“Federal Reserve”). The Federal Reserve establishes
capital requirements for the Firm, including “wellcapitalized” standards, and evaluates the Firm’s compliancewith such capital requirements. The OCC establishes similar
capital requirements and standards for the Firm’s U.S. banksubsidiaries, including, among others, MSBNA and
MSPBNA (together, “U.S. Bank Subsidiaries”). The
regulatory capital requirements are largely based on the BaselIII capital standards established by the Basel Committee on
Banking Supervision and also implement certain provisions of
the Dodd-Frank Wall Street Reform and Consumer Protection
Act. In addition, many of the Firm’s regulated subsidiaries are
subject to regulatory capital requirements, including regulated
subsidiaries registered as swap dealers with the CFTC or
conditionally registered as security-based swap dealers with
the SEC or registered as broker-dealers or futures commission
merchants.

Proceeds from New Securitization Transactions and Sales of
Loans
2023

$ in millions

New transactions1

2022

2021

$ 21,051 $ 22,136 $ 57,528

Retained interests
Sales of corporate loans to CLO SPEs1, 2

4,311

4,862

8,822

24

62

169

1. Net gains on new transactions and sales of corporate loans to CLO entities at thetime of the sale were not material for all periods presented.
2. Sponsored by non-affiliates.

Regulatory Capital Requirements
The Firm is required to maintain minimum risk-based andleverage-based capital ratios under regulatory capitalrequirements. A summary of the calculations of regulatory
capital and RWA follows.

The Firm has provided, or otherwise agreed to be responsible
for, representations and warranties regarding certain assets
transferred in securitization transactions sponsored by the
Firm (see Note 14).

Risk-Based Regulatory Capital. Risk-based capital ratio
requirements apply to Common Equity Tier 1 capital, Tier 1
capital and Total capital (which includes Tier 2 capital), eachas a percentage of RWA, and consist of regulatory minimum
required ratios plus the Firm’s capital buffer requirement.
Capital requirements require certain adjustments to, anddeductions from, capital for purposes of determining theseratios.

Assets Sold with Retained Exposure$ in millions

At
December 31,
2023

At
December 31,
2022

Gross cash proceeds from sale of assets1$

60,766 $49,059$62,221 $47,281

1,546

116

93

1,893

Fair value
Assets sold
Derivative assets recognized in the balance
sheet
Derivative liabilities recognized in thebalance sheet

CECL Deferral. Beginning on January 1, 2020, the Firmelected to defer the effect of the adoption of CECL on its riskbased and leverage-based capital amounts and ratios, as well
as RWA, adjusted average assets and supplementary leverage
exposure calculations, over a five-year transition period. The
deferral impacts began to phase in at 25% per year fromJanuary 1, 2022 and are phased-in at 50% from January 1,
2023. The deferral impacts will become fully phased-in
beginning on January 1, 2025.

1. The carrying value of assets derecognized at the time of sale approximates grosscash proceeds.

The Firm enters into transactions in which it sells securities,
primarily equities, and contemporaneously enters intobilateral OTC derivatives with the purchasers of the
securities, through which it retains exposure to the soldsecurities.

133

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
The Firm’s risk-based capital ratios are computed under both(i) the Standardized Approach and (ii) the Advanced
Approach. The credit risk RWA calculations between the two
approaches differ in that the Standardized Approach requires
calculation of RWA using prescribed risk weights, whereas
the Advanced Approach utilizes models to calculate exposureamounts and risk weights. At December 31, 2023 andDecember 31, 2022, the differences between the actual andrequired ratio were lower under the Standardized Approach.

Capital Buffer Requirements
At
At
December 31, December 31,
2023
2022
Standardized Standardized

At December
31, 2023 andDecember 31,
2022
Advanced

Capital buffers
Capital conservation buffer

—

—

SCB

5.4%

5.8%

2.5%
N/A

G-SIB capital surcharge

3.0%

3.0%

3.0%

CCyB1

0%

0%

0%

Capital buffer requirement

8.4%

8.8%

5.5%

Leverage-Based Regulatory Capital. Leverage-based capitalrequirements include a minimum Tier 1 leverage ratio of 4%,
a minimum SLR of 3% and an enhanced SLR capital bufferof at least 2%.

1. The CCyB can be set up to 2.5% but is currently set by the Federal Reserve atzero.

The capital buffer requirement represents the amount ofCommon Equity Tier 1 capital the Firm must maintain above
the minimum risk-based capital requirements in order to avoid
restrictions on the Firm’s ability to make capital distributions,
including the payment of dividends and the repurchase ofstock, and to pay discretionary bonuses to executive officers.
The Firm’s capital buffer requirement computed under the
standardized approaches for calculating credit risk and market
risk RWA (“Standardized Approach”) is equal to the sum of
the SCB, G-SIB capital surcharge and CCyB, and the capital
buffer requirement computed under the applicable advanced
approaches for calculating credit risk, market risk andoperational risk RWA (“Advanced Approach”) is equal to thesum of the 2.5% capital conservation buffer, G-SIB capitalsurcharge and CCyB.

The Firm’s Regulatory Capital and Capital Ratios$ in millions

Required At December Required
Ratio1
31, 2023
Ratio1At December
31, 2022

Risk-based capital
Common Equity Tier 1 capital$

69,448$68,670Tier 1 capital

78,183

Total capital

88,87486,575

Total RWA

456,053447,849

77,191

Common Equity Tier 1
capital ratio

12.9%

15.2%

13.3%

15.3%

Tier 1 capital ratio

14.4%

17.1%

14.8%

17.2%

Total capital ratio

16.4%

19.5%

16.8%

19.3%

$ in millions

Required At December 31,
Ratio12023

At December 31,
2022

Leverage-based capital

Risk-Based Regulatory Capital Ratio Requirements
At
At
December 31, December 31,
2023
2022
Regulatory
MinimumStandardized Standardized

Adjusted average assets2
Tier 1 leverage ratio

At December
31, 2023 andDecember 31,
2022
Advanced

Supplementary leverage exposure3
SLR

4.5%

12.9%

13.3%

10.0%

Tier 1 capital
ratio

6.0%

14.4%

14.8%

11.5%

Total capital
ratio

8.0%

16.4%

16.8%

13.5%

1. Required ratios represent the regulatory minimum plus the capital buffer
requirement.

Risk-Weighted Assets$

1,150,772$

1,399,403

6.7%$

1,429,552
5.5%

6.7%
5.5%

U.S. Bank Subsidiaries’ Regulatory Capital and Capital
Ratios

RWA reflects both the Firm’s on- and off-balance sheet risk,
as well as capital charges attributable to the risk of loss
arising from the following:

The OCC establishes capital requirements for the U.S. Bank
Subsidiaries, and evaluates their compliance with such capitalrequirements. Regulatory capital requirements for the U.S.
Bank Subsidiaries are calculated in a similar manner to theFirm’s regulatory capital requirements, although G-SIB
capital surcharge and SCB requirements do not apply to the
U.S. Bank Subsidiaries.

• Credit Risk: The failure of a borrower, counterparty or
issuer to meet its financial obligations to the Firm;• Market Risk: Adverse changes in the level of one or moremarket prices, rates, indices, volatilities, correlations orother market factors, such as market liquidity; and• Operational Risk: Inadequate or failed processes or systems
from human factors or from external events (e.g., fraud,
theft, legal and compliance risks, cyberattacks or damage tophysical assets).
December 2023 Form 10-K

5.0%

1,159,626

1. Required ratios are inclusive of any buffers applicable as of the date presented.
2. Adjusted average assets represents the denominator of the Tier 1 leverage ratio
and is composed of the average daily balance of consolidated on-balance sheet
assets for the quarters ending on the respective balance sheet dates, reduced bydisallowed goodwill, intangible assets, investments in covered funds, defined
benefit pension plan assets, after-tax gain on sale from assets sold into
securitizations, investments in the Firm’s own capital instruments, certain defined
tax assets and other capital deductions.
3. Supplementary leverage exposure is the sum of Adjusted average assets used in
the Tier 1 leverage ratio and other adjustments, primarily: (i) for derivatives,potential future exposure and the effective notional principal amount of sold credit
protection, offset by qualifying purchased credit protection; (ii) the counterparty
credit risk for repo-style transactions; and (iii) the credit equivalent amount for offbalance sheet exposures.

Requiredratios1
Common Equity
Tier 1 capital
ratio

$
4.0%

The OCC’s regulatory capital framework includes Prompt
Corrective Action (“PCA”) standards, including “wellcapitalized” PCA standards that are based on specified
regulatory capital ratio minimums. For the Firm to remain an
134

Table of Contents

Notes to Consolidated Financial Statements
FHC, its U.S. Bank Subsidiaries must remain well-capitalizedin accordance with the OCC’s PCA standards. In addition,
failure by the U.S. Bank Subsidiaries to meet minimum
capital requirements may result in certain mandatory anddiscretionary actions by regulators that, if undertaken, could
have a direct material effect on the U.S. Bank Subsidiaries’
and the Firm’s financial statements.

Other Regulatory Capital Requirements

At December 31, 2023 and December 31, 2022, MSBNA and
MSPBNA risk-based capital ratios are based on theStandardized Approach rules. Beginning on January 1, 2020,
MSBNA and MSPBNA elected to defer the effect of the
adoption of CECL on risk-based capital amounts and ratios,
as well as RWA, adjusted average assets and supplementary
leverage exposure calculations, over a five-year transition
period. The deferral impacts began to phase in at 25% peryear from January 1, 2022 and are phased-in at 50% fromJanuary 1, 2023. The deferral impacts will become fully
phased-in beginning on January 1, 2025.

MS&Co. is registered as a broker-dealer and a futurescommission merchant with the SEC and the CFTC,
respectively, and is registered as a swap dealer with the
CFTC.

MS&Co. Regulatory Capital$ in millions

At December
31, 2023
Amount

Ratio

Ratio

Risk-based capital
Common Equity
Tier 1 capital

6.5 %7.0 % $ 21,925

21.7 % $20,043 20.5 %Tier 1 capital

8.0 %

8.5 %

21,92521.7 % 20,043

20.5 %

Total capital

10.0 %

10.5 %

22,83322.6 % 20,694

21.1 %

Tier 1 leverage

5.0 %4.0 % $ 21,925

10.6 % $20,043 10.1 %

SLR

6.0 %

3.0 %

8.2 % 20,043$ in millions

RequiredRatio1

8.1 %At December
31, 2023

At December
31, 2022

AmountAmountRatio

Risk-based capital
6.5 %Tier 1 capital

8.0 %

8.5 %

15,388 25.8 % 15,546 27.5 %Total capital

10.0 %

10.5 %

15,675 26.3 % 15,695 27.8 %Tier 1 leverage

5.0 %4.0 % $ 15,388

7.5 % $15,546

7.6 %

SLR

6.0 %

3.0 %

7.2 % 15,546

7.4 %

7.0 % $ 15,388 25.8 % $15,546 27.5 %Leverage-based capital
15,38817,224

13,676

12,861• MSSB, a registered U.S. broker-dealer and introducing
broker for the futures business, is subject to, respectively,
the minimum net capital requirements of the SEC and
CFTC.
• MSIP, a London-based broker-dealer subsidiary, is subject
to the capital requirements of the Prudential Regulation
Authority (“PRA”). MSIP is also conditionally registeredwith the SEC as a security-based swap dealer and registeredwith the CFTC as a swap dealer. It currently complies withhome-country capital requirements in lieu of SEC and
CFTC capital requirements pursuant to applicable
substituted compliance rules and interim no-action relief,
respectively.
• Morgan Stanley Europe Holdings SE Group (“MSEHSE
Group”), including MSESE, a Germany-based brokerdealer, is subject to the capital requirements of theEuropean Central Bank, BaFin and the German Central
Bank. MSESE is also conditionally registered with the SEC
as a security-based swap dealer and registered with the
CFTC as a swap dealer. It currently complies with homecountry capital requirements in lieu of SEC and CFTC
capital requirements pursuant to applicable substitutedcompliance rules and interim no-action relief, respectively.
• MSMS, a Tokyo-based broker-dealer subsidiary, is subject
to the capital requirements of the Financial Services

Ratio

Common Equity
Tier 1 capital

18,121 $Certain other subsidiaries are also subject to various
regulatory capital requirements. Such subsidiaries include thefollowing, each of which operated with capital in excess of
their respective regulatory capital requirements as ofDecember 31, 2023 and December 31, 2022, as applicable:

MSPBNA’s Regulatory Capital
WellCapitalized
Requirement$

Other Regulated Subsidiaries

Leverage-based capital
21,925

Net capitalAt
December 31, 2022

As an Alternative Net Capital broker-dealer, and inaccordance with Securities Exchange Act of 1934 (“ExchangeAct”) Rule 15c3-1, Appendix E, MS&Co. is subject tominimum net capital and tentative net capital requirements
and operates with capital in excess of its regulatory capitalrequirements. As a futures commission merchant andregistered swap dealer, MS&Co. is subject to CFTC capitalrequirements. In addition, MS&Co. must notify the SEC if its
tentative net capital falls below certain levels. At December
31, 2023 and December 31, 2022, MS&Co. exceeded its net
capital requirement and had tentative net capital in excess ofthe minimum and notification requirements.

At December
31, 2022
AmountAt
December 31, 2023

Excess net capital

MSBNA’s Regulatory Capital
WellCapitalized Required
Requirement
Ratio1$ in millions

1. Required ratios are inclusive of any buffers applicable as of the date presented.
Failure to maintain the buffers would result in restrictions on the ability to makecapital distributions, including the payment of dividends.

Additionally, MSBNA is conditionally registered with the
SEC as a security-based swap dealer and is registered with the
CFTC as a swap dealer. However, as MSBNA is prudentiallyregulated as a bank, its capital requirements continue to be
determined by the OCC.

135

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
17. Total Equity

Agency. MSMS is also registered with the CFTC as a swap
dealer but is currently complying with home-country capitalrequirements in lieu of CFTC capital requirements pursuant
to interim no-action relief.
• MSCS, a U.S. entity and the Firm’s primary non-banksecurity-based swap dealer, is conditionally registered with
the SEC as a security-based swap dealer, registered with the
SEC as an OTC derivatives dealer and registered with the
CFTC as a swap dealer. MSCS is subject to the capitalrequirements of both regulators.
• MSCG, a U.S. entity, is registered with the CFTC as a swap
dealer and is subject to its capital requirements.

Morgan Stanley Shareholders’ Equity
Preferred Stock
SharesOutstanding$ in millions,
except per
share dataAt
December 31,
2023

Carrying Value
Liquidation
Preference
per ShareAt
December 31,
2023

At
December 31,
2022

SeriesA

44,000 $25,000 $1,100 $

1,100

C1519,882

1,000

408

408

E

34,50025,000862

862

Certain other U.S. and non-U.S. subsidiaries of the Firm aresubject to various securities, commodities and banking
regulations, and capital adequacy requirements promulgatedby the regulatory and exchange authorities of the countries inwhich they operate. These subsidiaries have also consistently
operated with capital in excess of their local capital adequacy
requirements.

F

34,00025,000

850

850

I

40,00025,000

1,000

1,000

K

40,00025,000

1,000

1,000

L

20,00025,000

500

500

M

400,000

1,000

430

430

N

3,000

100,000

300

300

O

52,00025,000

1,300

1,300

P

40,00025,000

1,000

1,000

Restrictions on Payments

Total

The regulatory capital requirements referred to above, andcertain covenants contained in various agreements governingindebtedness of the Firm, may restrict the Firm’s ability towithdraw capital from its subsidiaries. The following table
represents net assets of consolidated subsidiaries that may be
restricted as to the payment of cash dividends and advances to
the Parent Company.

1. Series C preferred stock is held by MUFG.

$

8,750 $

Shares authorized$ in millions

At
December 31,
2023

Restricted net assets$

The Firm’s preferred stock has a preference over its common
stock upon liquidation. The Firm’s preferred stock qualifies as
and is included in Tier 1 capital in accordance with regulatory
capital requirements (see Note 16).
Description of Preferred Stock as of December 31, 2023

At
December 31,
2022

49,008 $8,750
30,000,000

Series1, 2

45,896

SharesIssuedA

44,000C51,160,791

E

34,500F

34,000I

Depositary
Sharesper Share
1,000

Redemption
Price
per Share3
$

Date4

25,000Currently redeemable

N/A

1,100

Currently redeemable

1,000

25,000Currently redeemable

1,000

25,000January 15, 2024

40,0001,000

25,000

October 15, 2024

K

40,0001,000

25,000April 15, 2027

L

20,0001,000

25,000January 15, 2025

M

400,000

N/A

1,000

September 15, 2026

N

3,000

100

100,000

October 2, 2025O652,0001,000

25,000January 15, 2027

P7

40,0001,000

25,000

October 15, 2027

1. All shares issued are non-cumulative. Each share has a par value of $0.01, except
Series C.
2. Dividends on Series A are based on a floating rate, and dividends on Series C, L
and O are based on a fixed rate. Dividends on all other Series are based on a fixedto-floating rate.
3. Series A and C are redeemable at the redemption price plus accrued and unpaid
dividends, regardless of whether dividends are actually declared, up to but
excluding the date of redemption. All other Series are redeemable at theredemption price plus any declared and unpaid dividends, up to but excluding thedate fixed for redemption.
4. Series A and C are currently redeemable at the Firm’s option, in whole or in part,from time to time. Series E is currently redeemable, and all other Series are
redeemable, at the Firm’s option (i) in whole or in part, from time to time, on any
dividend payment date on or after the redemption date or (ii) in whole but not in partat any time within 90 days following a regulatory capital treatment event (asdescribed in the terms of that series).
5. Series C is non-voting perpetual preferred stock. Dividends on the Series C
preferred stock are payable, on a non-cumulative basis, as and if declared by the
Board of Directors, in cash, at the rate of 10% per annum of the liquidationpreference of $1,000 per share.
6. The Firm issued Series O Preferred Stock on October 25, 2021.
7. The Firm issued Series P Preferred Stock on August 2, 2022.

December 2023 Form 10-K

136

Table of Contents

Notes to Consolidated Financial Statements
Common Stock

Dividends
2023

Rollforward of Common Stock Outstanding2023

in millions

Shares outstanding at beginning of period

Per
Share1$ in millions, except per
share data

2022

1,675

1,772

Treasury stock purchases1

(71)

(124)

Other2

23

27

1,627

1,675

2022
Per
Share1

Total

2021
Per
Share1

Total

Total

Preferred Stock SeriesA$ 1,522 $67$1,061 $47$ 1,022 $

44

C

100

52

100

52

100

52

E

1,791

62

1,781

60

1,781

60

F

1,719

58

1,719

59

1,719

60

1. The Firm’s Board of Directors has authorized the repurchase of the Firm’s
outstanding stock under a share repurchase program (“Share Repurchase
Program”). In addition to the Firm’s Share Repurchase Program, Treasury stock
purchases include repurchases of common stock for employee tax withholding.
2. Other includes net shares issued to and forfeited from employee stock trusts andissued for RSU conversions.

H2

—

—

—

—

719

38

I

1,594

64

1,594

64

1,594

64

J

—

—

—

—

253

15

K

1,463

59

1,463

59

1,463

59

L

1,219

24

1,219

24

1,219

24

Share Repurchases

M3

59

24

59

24

59

24

N4

9,160

27

5,300

16

5,300

16

O

1,063

55

1,063

55

236

12

P

1,625

65

736

29

—

Shares outstanding at end of period2023$ in millions

Repurchases of common stock under the Firm’s
Share Repurchase Program

$

2022

5,300 $

9,865

Total Preferred stock
Common stock

On June 30, 2023, the Firm announced that its Board of
Directors reauthorized a multi-year repurchase program of up
to $20 billion of outstanding common stock, without a set
expiration date, beginning in the third quarter of 2023, which
will be exercised from time to time as conditions warrant.

2023

2022

2021

1,628

1,691

1,785

18

22

29

1,646

1,713

1,814

2

3

—

Effect of dilutive RSUs and PSUs
Weighted average common shares outstanding
and common stock equivalents, diluted
Weighted average antidilutive common stock
equivalents (excluded from the computation ofdiluted EPS)$

$ 3.25 $ 5,393

489

—
$

$ 2.95 $ 5,108468$ 2.10 $ 3,818

Accumulated Other Comprehensive Income (Loss)1$ in millions

December 31,
2020
OCI during theperiodDecember 31,
2021
OCI during theperiodDecember 31,
2022
OCI during theperiodDecember 31,
2023

Common Shares Outstanding for Basic and Diluted EPS
Weighted average common shares outstanding,
basic

557

1. Common and Preferred Stock dividends are payable quarterly unless otherwise
noted.
2. A notice of redemption was issued for Series H preferred stock on November 19,
2021. Dividends declared on Series H following the issuance of the notice ofredemption were recognized as Interest expense and are excluded from the 2021
amounts.
3. Series M is payable semiannually until September 15, 2026 and thereafter will bepayable quarterly.
4. Series N was payable semiannually until March 15, 2023 and thereafter is payable
quarterly.

Pursuant to the Share Repurchase Program, the Firm
considers, among other things, business segment capitalneeds, as well as stock-based compensation and benefit planrequirements. Share repurchases under the program will be
exercised from time to time at prices the Firm deems
appropriate subject to various factors, including the Firm’s
capital position and market conditions. The share repurchases
may be effected through open market purchases or privately
negotiated transactions, including through Rule 10b5-1 plans,
and may be suspended at any time.

in millions

$

CTA

AFS
Securities

Pension
and
Other

DVA

Cash
Flow
HedgesTotal$ (795) $1,787 $

(498) $(2,456) $— $ (1,962)(207)(1,542)

(53)

662

—

(1,140)(1,002)

245

(551)

(1,794)—(3,102)(202)(4,437)

43

1,449

(4)

(3,151)(1,204)(4,192)

(508)

(345)

(4)

(6,253)

51

1,098

(87)

(1,250)20(168)$ (1,153) $ (3,094) $(595) $(1,595) $16 $ (6,421)

CTA—Cumulative foreign currency translation adjustments
1. Amounts are net of tax and noncontrolling interests.

137

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Components of Period Changes in OCI

2021
2023

$ in millions

Pre-tax
IncomeAfter-tax
NonGainTax Benefit
Gaincontrolling(Loss) (Provision) (Loss)
Interests$ in millions$

Reclassified to earnings
Net OCI$Net

OCI activity(73) $

53 $(20) $(71) $

51

—

—

—

—

—

(73) $

53 $(20) $(71) $

51$ 1,488 $Reclassified to earnings
Net OCI

(49)$ 1,439 $(353) $ 1,135 $
12

(37)

(341) $ 1,098 $Net OCI
OCI activity$

Reclassified to earnings
Net OCI(96) $Net OCI(37)(72) $

— $

(72)

(18)

3

(15)

—

(15)

$ (114) $27 $(87) $— $(87)

OCI activity$(1,728) $424 $ (1,304) $Reclassified to earnings
Net OCI19$(1,709) $

(5)

14

419 $ (1,290) $Net OCI
OCI activity$

Reclassified to earnings

Net OCI

14(40) $ (1,250)

Net OCI

$

9 $

(1) $

8 $

— $

8

16

(4)

12

— $

12

25 $

(5) $

20 $

— $

20

$ in millions$ (179) $(217) $(396) $—

59

59

$ (179) $(158) $

(337) $

Reclassified to earnings

Net

Net OCI59(135) $ (202)$(5,720) $Reclassified to earnings
Net OCI(70)$(5,790) $1,337 $ (4,383) $
16

(54)

1,353 $ (4,437) $— $ (4,383)—(54)— $ (4,437)

Pension and other
OCI activity$

Reclassified to earnings
Net OCI$38 $(13) $

25 $

— $

25

22

(4)

18

—

18

60 $

(17) $

43 $

— $

43

Change in net DVA
OCI activity$ 1,982 $Reclassified to earnings
Net OCI

—$ 1,982 $(480) $ 1,502 $——(480) $ 1,502 $53 $ 1,449——

53 $ 1,449

Change in fair value of cash flow hedge derivatives
OCI activity$

Reclassified to earnings
Net OCI

$

(4) $

— $

(4) $

— $

(4)

—

—

—

—

—

(4) $

— $

(4) $

— $

(4)

December 2023 Form 10-K—

422 $ (1,381) $— $ (1,381)

49

—

(161)

(161)

$(2,013) $471 $ (1,542) $— $ (1,542)$ (101) $26 $(75) $

— $

31

(9)

22

—

22

$

(70) $

17 $(53) $

— $

(53)

$

882 $

(213) $

669 $

34 $

635

36

(9)

27

—

27

918 $

(222) $

696 $

34 $

662

(75)

$

$ in millions

Associated with net investments in
subsidiaries with a non-U.S. dollar
functional currency$

At
December 31,
2022(2,917) $(3,136)

1,764

1,932

$

(1,153) $(1,204)

Carrying value of net investments in nonU.S. dollar functional currency subsidiaries
subject to hedges$

18,761 $17,023Cumulative foreign currency translation adjustments include
gains or losses resulting from translating foreign currency
financial statements from their respective functional
currencies to U.S. dollars, net of hedge gains or losses andrelated tax effects. The Firm uses foreign currency contracts
to manage the currency exposure relating to its net
investments in non-U.S. dollar functional currency
subsidiaries and determines the amount of exposure to hedge
on a pre-tax basis. The Firm may also elect not to hedge its
net investments in certain foreign operations due to market
conditions or other reasons, including the availability ofvarious currency contracts at acceptable costs. Information
relating to the effects on cumulative foreign currencytranslation adjustments that resulted from the translation offoreign currency financial statements and from gains andlosses from hedges of the Firm’s net investments in non-U.S.
dollar functional currency subsidiaries is summarized in theprevious table.

Change in net unrealized gains (losses) on AFS securities
OCI activity

(210)

At
December 31,
2023

Total

(135) $ (261)—$(1,803) $Hedges, net of tax

CTA
OCI activity—(124) $ (207)

Cumulative Foreign Currency Translation Adjustments

2022
Pre-tax Income Tax After-tax
NonGain
BenefitGaincontrolling(Loss) (Provision) (Loss)
Interests(331) $

Reclassified to earnings

Change in fair value of cash flow hedge derivatives
OCI activity(191) $

(124) $ (207)

Change in net DVA(40) $ (1,264)—$ (140) $Reclassified to earnings

Change in net DVA
OCI activity—

Pension and other— $ 1,098

24 $(331) $—

Reclassified to earnings

Pension and other
OCI activity(191) $—

Change in net unrealized gains (losses) on AFS securities— $ 1,135—$ (140) $Reclassified to earnings

Change in net unrealized gains (losses) on AFS securities
OCI activity

Net

CTA

CTA
OCI activity

Pre-tax Income Tax After-tax
NonGain
BenefitGaincontrolling(Loss) (Provision) (Loss)
Interests

138

Table of Contents

Notes to Consolidated Financial Statements
18. Interest Income and Interest Expense

Stock-Based Compensation Expense
2023

2022

2021

1,607 $

1,827 $

1,834

PSUs

91

40

251

7

ESPP

11

8

$ in millions

2023$ in millions

2022

2021

RSUs

Interest income
Cash and cash equivalents1$

3,408 $

914 $

$

—

Investment securities

3,992

3,066

2,759

Total

$

1,709 $

1,875 $

2,085

Loans

12,424

6,988

4,209

Retirement-eligible awards1

$

178 $

176 $

192

Securities purchased under agreements toresell2

7,762

2,188

(181)

Securities borrowed3

5,191

1,020

(1,017)

1. Total expense includes stock-based compensation anticipated to be awarded in
January of the following year that does not contain a future service requirement.

Trading assets, net of Trading liabilities

4,488

2,484

2,038

Customer receivables and Other1

13,016

4,935

1,596

Total interest income$ 50,281 $ 21,595 $Tax Benefit Related to Stock-Based Compensation Expense

9,411

Deposits

Tax benefit1$

8,216 $

1,825 $

409

Borrowings

11,437

5,054

2,725

Securities sold under agreements torepurchase4

6,737

1,760

93

784

503

401

14,8773,126(2,262)

Securities loaned5
Customer payables and Other6
Total interest expense$ 42,051 $ 12,268 $1,366

Net interest

$

8,045

8,230 $

9,327 $$

Customer and other payables

4,139

4,360

4,273

2021
432

At
December 31,
20231

To be recognized in:
2024

$

2025
Total

560
238

Thereafter

66
$

864

1. Amounts do not include forfeitures or 2023 performance year compensation
awarded in January 2024, which will begin to be amortized in 2024.

In connection with awards under its stock-based
compensation plans, the Firm is authorized to issue shares ofcommon stock held in treasury or newly issued shares.
The Firm generally uses treasury shares, if available, todeliver shares to employees or employee stock trusts and has
an ongoing repurchase authorization that includes repurchases
in connection with awards under its stock-based
compensation plans.

At
December 31,
2022

4,206 $

427 $$ in millions

Accrued Interest

Customer and other receivables

2022

382 $

Unrecognized Compensation Cost Related to Stock-BasedAwards Granted

Interest income and Interest expense are classified in theincome statement based on the nature of the instrument andrelated market conventions. When 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.

$ in millions$

1. Excludes income tax consequences related to employee share-based award
conversions.

1. In the fourth quarter of 2023, interest bearing Cash and cash equivalents andrelated interest were presented separately for the first time. The prior periodamounts for Customer receivables and Other have been disaggregated to exclude
Cash and cash equivalents to align with the current presentation.
2. Includes interest paid on Securities purchased under agreements to resell.
3. Includes fees paid on Securities borrowed.
4. Includes interest received on Securities sold under agreements to repurchase.
5. Includes fees received on Securities loaned.
6. Includes fees received from Equity Financing customers related to their shorttransactions, which can be under either margin or securities lending arrangements.

At
December 31,
2023

2023

$ in millions

Interest expense

Common Shares Available for Future Awards under StockBased Compensation Plans

in millions

19. Deferred Compensation Plans and CarriedInterest Compensation

SharesAt
December 31,
2023
121

See Note 17 for additional information on the Firm’s Share
Repurchase Program.

Stock-Based Compensation Plans
Certain current and former employees of the Firm participate
in the Firm’s stock-based compensation plans. These plansinclude RSUs, PSUs and an ESPP.

Restricted Stock Units
RSUs are subject to vesting over time, generally one to sevenyears from the date of award, contingent upon continued
employment and subject to restrictions on sale, transfer orassignment until conversion to common stock. All or a
portion of an award may be forfeited if employment isterminated before the end of the relevant vesting period orcanceled after the relevant vesting period in certain situations.
Recipients of RSUs may have voting rights, at the Firm’s
discretion, and generally receive dividend equivalents if theawards vest.
139

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Vested and Unvested RSU Activity

PSU Awards - Fair Value on Award Date
2023
Number of
Sharesshares in millions

RSUs at beginning of period

2023

Weighted
AverageAward Date
Fair Value

MS Average ROTCE/ Relative ROTCE1

$

2022

2021

85.76 $ 100.12 $MS Relative TSR—

102.17

74.87
83.70

63 $

76.31

Awarded19

93.55

Conversions to common stock

(21)

61.23

Forfeited

(2)

88.02

RSUs at end of period1

59 $

86.92

The MS Relative TSR fair values on the award date were
estimated using a Monte Carlo simulation and the following
assumptions.

$

5,523

Monte Carlo Simulation Assumptions

RSUs awarded in 2022

96.61

RSUs awarded in 2021

77.28

Risk-Free
Interest Rate

Aggregate intrinsic value of RSUs at end of period(dollars in millions)

1. Weighted average price on award date

Weighted average award date fair value

Expected
Stock Price
Volatility

Correlation
CoefficientAward year

1. At December 31, 2023, the weighted average remaining term until delivery for theoutstanding RSUs was approximately 1.1 years.

2022

1.3 %

38.9 %

0.91

2021

0.2 %

39.0 %

0.92

Unvested RSU Activity
2023
Number of
Sharesshares in millions

The risk-free interest rate was determined based on the yields
available on U.S. Treasury zero-coupon issues. The expected
stock price volatility was determined using historicalvolatility. The correlation coefficient was developed based on
historical price data of the Firm and the S&P 500 Financials
Sector Index. The model uses an expected dividend yield
equivalent to reinvesting dividends.

Weighted
AverageAward Date
Fair Value

Unvested RSUs at beginning of period

35 $

83.41

Awarded19

93.55

Vested

(25)

84.28

Forfeited

(1)

89.44

Unvested RSUs at end of period1

28 $

89.16

Deferred Cash-Based Compensation Plans

1. Unvested RSUs represent awards where recipients have yet to satisfy either the
explicit vesting terms or retirement-eligible requirements.

DCP generally provide a return to the plan participants based
upon the performance of each participant’s referenced
investments.

Fair Value of RSU Activity1$ in millions

Conversions to common stock
Vested

$

2023

2022

2021

2,019 $

2,301 $

1,539

2,260

2,433

1,647

Deferred Cash-Based Compensation Expense2023$ in millions

1. Fair value of converted stock is based on the share price at conversion. Fair value ofvested stock is based on the share price at date of vesting.

Deferred cash-based awards$

Return on referenced investments

Performance-Based Stock Units
PSUs vest and convert to shares of common stock only if theFirm satisfies, over a three-year performance period,
performance goals that are determined on the award date. The
number of PSUs that may vest ranges from 0% to 150% of
the target award, based on the Firm’s level of achievement of
the specified performance goals. One-half of a PSU award isearned based on the Firm’s average return on tangible
common equity (“MS Average ROTCE”) over the
performance period. The other half of a PSU award is earned
based on the Firm’s total shareholder return, relative to thetotal shareholder return of the S&P 500 Financials Sector
Index (“MS Relative TSR”) for awards granted prior to 2023,
or for PSU awards granted in 2023 based on the MS Average
ROTCE relative to the Return on Tangible Common Equityof each member of the defined comparison group (“MSRelative ROTCE”). PSUs have vesting, conversion andcancellation provisions that are generally similar to those of
RSUs. At December 31, 2023, approximately 2.8 million
PSUs at target were outstanding.

December 2023 Form 10-K

2022

2021

693 $

761 $

810

668

(716)

526

Total

$

1,361 $

45 $

1,336

Retirement-eligible awards1

$

259 $

264 $

253

1. Total expense includes deferred cash-based compensation anticipated to beawarded in January of the following year that does not contain a future service
requirement.

Carried Interest Compensation
The Firm generally recognizes compensation expense for any
portion of carried interest (both realized and unrealized) thatis allocated to employees.
Carried Interest Compensation Expense2023$ in millions

Expense

140

$

44 $

2022
225 $

2021
346

Table of Contents

Notes to Consolidated Financial Statements
20. Employee Benefit Plans

gains and losses and prior service credit over the averageremaining service period of active participants.

Pension Plans

Weighted Average Assumptions Used to Determine Net
Periodic Benefit Expense (Income)Net Periodic Benefit Expense (Income)Pension Plans

Pension Plans
2023$ in millions

Service cost, benefits earned during theperiod

$

2022

2021

20 $

19 $

19

Interest cost on projected benefit obligation

140

111

104

Expected return on plan assets

(99)

(56)

(48)

1

1

1
34

Net amortization of prior service cost
Amortization of net gains and losses

(9)

25

Plan settlements

$

2 $

— $

—

Net periodic benefit expense

$

55 $

100 $

110

2023

2022

2021

Discount rate

4.93 %

2.80 %

2.43 %

Expected long-term rate of return on plan
assets3.54 %

1.71 %

1.42 %

The accounting for pension plans involves certain
assumptions and estimates. The expected long-term rate of
return for the U.S. Qualified Plan was estimated bycomputing a weighted average of the underlying long-term
expected returns based on the investment managers’ target
allocations.

Certain current and former U.S. employees of the Firm and its
U.S. affiliates who were hired before July 1, 2007 are coveredby the U.S. pension plan, a non-contributory defined benefit
pension plan that is qualified under Section 401(a) of theInternal Revenue Code (“U.S. Qualified Plan”). The U.S.
Qualified Plan has ceased future benefit accruals.

Benefit Obligation and Funded Status
Rollforward of the Projected Benefit Obligation and Fair Valueof Plan Assets
Pension Plans
2023$ in millions

Unfunded supplementary plans (“Supplemental Plans”) covercertain executives. Liabilities for benefits payable under the
Supplemental Plans are accrued by the Firm and are funded
when paid. The Morgan Stanley Supplemental Executive
Retirement and Excess Plan (“SEREP”), a non-contributory
defined benefit plan that is not qualified under Section 401(a)of the Internal Revenue Code, has ceased future benefit
accruals.

Rollforward of projected benefit obligation

Certain of the Firm’s non-U.S. subsidiaries also have defined
benefit pension plans covering their eligible current andformer employees.

Rollforward of fair value of plan assets

The Firm’s pension plans generally provide pension benefits
that are based on each employee’s years of credited service
and on compensation levels specified in the plans.

Benefit obligation at beginning of year

4,081

20

19

Interest cost

140

111

Actuarial (gain) loss1

79(1,064)

Plan settlements

(13)

(2)

Benefits paid

(164)

(196)

Projected benefit obligation at end of year $Fair value of plan assets at beginning of year $

6

(42)

2,975 $

2,907

2,416 $

3,605

Actual return on plan assets

78

(982)

Employer contributions

89

37

Benefits paid

(164)

(196)

Plan settlements

(13)

(2)

Other216(46)

Fair value of plan assets at end of year$

2,422 $

2,416

Funded (unfunded) status$(553) $

(491)

Amounts recognized in the balance sheet
Pension Plans
2023$ in millions

$

2022

Assets2021(768) $

(691)

(100)

26

(112)

Amortization of prior service cost

1

1

1

Amortization of net gains and losses

(9)

25

34

Plan settlements and curtailments

3

—

—

(105)

52

(77)

(821) $

(716) $

(768)

Changes recognized in OCI$$

Liabilities(716) $Net gain (loss)

Ending balance

2,907 $

Service cost

Other2

Rollforward of Pre-tax AOCI

Beginning balance

$

2022

Net amount recognized

$

84 $

75

(637)

(566)

(553) $

(491)

1. Primarily reflects the impact of year-over-year discount rate fluctuations.
2. Includes the impact of foreign currency exchange rate changes and plancurtailments.

Accumulated Benefit Obligation

The Firm generally amortizes into net periodic benefit
expense (income) the unrecognized net gains and losses
exceeding 10% of the greater of the projected benefit
obligation or the market-related value of plan assets. The U.S.
pension plans amortize the unrecognized net gains and losses
over the average life expectancy of participants. The
remaining plans generally amortize the unrecognized net

141$ in millions

At
December 31,
2023

Pension plans$At
December 31,
2022

2,956 $

2,891

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Pension Plans with Projected Benefit Obligations in Excessof the Fair Value of Plan Assets$ in millions

At
December 31,
2023

Projected benefit obligation$

At December 31, 2022
$ in millions

At
December 31,
2022

2,821 $

2,746

Accumulated benefit obligation

2,803

2,731

Fair value of plan assets

2,184

2,180

Level 1

Level 2

Level 3

Total

AssetsCash and cash equivalents$

U.S. government and agency
securities

The pension plans included in the table above may differ
based on their funding status as of December 31 of each year.

4 $

— $

— $

4

1,788

267

—

2,055

Corporate and other debt—CDO

—

—

—

—

Derivative contracts

—

(2)

—

(2)

Other investments

—

—

64

64

Other receivables1
Total—$ 1,792 $

21

—

21

286 $

64 $

2,142

Assets Measured at NAV

Weighted Average Assumptions Used to Determine Projected
Benefit Obligation

Commingled trust funds:
Money market

Pension Plans
At
December 31,
2023
Discount rate

44

Foreign funds:At
December 31,
2022

4.75 %

Fixed income

4.93 %

55

Liquidity

20

Targeted cash flow

158

Total

The discount rates used to determine the benefit obligation
were selected by the Firm, in consultation with its
independent actuary. The U.S. pension plans use a pension
discount yield curve based on the characteristics of the plans,each determined independently. The pension discount yield
curve represents spot discount yields based on duration
implicit in a representative broad-based Aa-rated corporatebond universe of high-quality fixed income investments. For
all non-U.S. pension plans, the assumed discount rates are
based on the nature of liabilities, local economic
environments and available bond indices.

$277

Liabilities
Other payables1
Total liabilities

$

—

(3)

—

— $

(3) $

— $

(3)

$

2,416

Fair value of plan assets(3)

1. Other receivables and other payables are valued at their carrying value, whichapproximates fair value.

Rollforward of Level 3 Plan Assets
2023$ in millions

Balance at beginning of period

$

2022
64 $

65

Realized and unrealized gains

2—

Purchases, sales and settlements, net

5

(1)

71 $

64

Plan Assets

Balance at end of period

Fair Value of Plan Assets

There were no transfers between levels during 2023 and 2022.
At December 31, 2023
Level 1$ in millions

Level 2

Level 3

The U.S. Qualified Plan assets represent 87% and 88% of the
Firm’s total pension plan assets at December 31, 2023 andDecember 2022, respectively. The U.S. Qualified Plan uses a
combination of active and risk-controlled fixed income
investment strategies. The fixed income asset allocationconsists primarily of fixed income securities and related
derivative instruments designed to approximate the expectedcash flows of the plan’s liabilities to help reduce plan
exposure to interest rate variation and to better align assets
with the obligation. The longer-duration fixed income
allocation is expected to help protect the plan’s funded status
and maintain the stability of plan contributions over the longrun. The investment portfolio performance is assessed bycomparing actual investment performance with changes in theestimated present value of the U.S. Qualified Plan’s benefit
obligation.

Total

AssetsCash and cash equivalents$

U.S. government and agency
securities

6 $

— $

— $

6

1,800

230

—

2,030

Corporate and other debt—CDO

—

—

—

—

Derivative contracts

—

3

—

3

Other investments

—

—

71

71

Other receivables1
Total

1$ 1,807 $

15

—

16

248 $

71 $

2,126

Assets Measured at NAV
Commingled trust funds:
Money market

64

Foreign funds:
Fixed income

62

Liquidity

171

Targeted cash flow

14

Total

$

311

Derivative instruments are permitted in the U.S. Qualified
Plan’s investment portfolio only to the extent that they
comply with all of the plan’s investment policy guidelines andare consistent with the plan’s risk and return objectives.

Liabilities
1

Other payables

Total liabilities
Fair value of plan assets

$

(1)

(14)

—

(1) $

(14) $

— $

(15)

$

2,422

$

(15)

As a fundamental operating principle, any restrictions on theunderlying assets apply to the respective derivative product.
This includes percentage allocations and credit quality.
Derivatives are used solely for the purpose of enhancing
December 2023 Form 10-K

142

Table of Contents

Notes to Consolidated Financial Statements
investment returns in the underlying assets and not tocircumvent portfolio restrictions.

401(k) Plans
2023$ in millions

ExpensePlan assets are measured at fair value using valuation
techniques that are consistent with the valuation techniquesapplied to the Firm’s major categories of assets and liabilities
as described in Notes 2 and 4. OTC derivative contracts
consist of investments in interest rate swaps and total returnswaps. Other investments consist of insurance contracts heldby non-U.S.-based plans. The insurance contracts are valued
based on the premium reserve of the insurer for a guaranteethat the insurer has given to the employee benefit plan thatapproximates fair value. The insurance contracts are
categorized in Level 3 of the fair value hierarchy.

$

397 $

2022
355 $

2021
357

U.S. employees meeting certain eligibility requirements may
participate in the Firm’s 401(k) plan.
Eligible employees receive discretionary 401(k) matching
cash contributions as determined annually by the Firm. The
Firm generally matched eligible employee contributions up to
the IRS limit at 4%, or 5% up to a certain compensation level,in 2023 and 2022. Eligible employees with eligible pay lessthan or equal to $100,000 also received a fixed contribution
equal to 2% of eligible pay. Contributions are invested among
available funds according to each participant’s investment
direction and are included in the Firm’s 401(k) expense.

Commingled trust funds are privately offered funds regulated,supervised and subject to periodic examination by a U.S.
federal or state agency and available to institutional clients.
The trust must be maintained for the collective investment or
reinvestment of assets contributed to it from U.S. taxqualified employee benefit plans maintained by more than one
employer or controlled group of corporations. The sponsor of
the commingled trust funds values the funds based on the fairvalue of the underlying securities. Commingled trust funds
are redeemable at NAV at the measurement date or in the near
future.

Non-U.S. Defined Contribution Pension Plans
2023$ in millions

Expense

$

173 $

2022
163 $

2021
149

The Firm maintains separate defined contribution pension
plans that cover eligible employees of certain non-U.S.
subsidiaries. Under such plans, contributions are generally
determined based on a fixed rate of base salary with certain
vesting requirements.

Some non-U.S.-based plans hold foreign funds that consist ofinvestments in fixed income funds and liquidity funds. Fixed
income funds are designed to provide a series of fixed annual
cash flows achieved by investing in government and corporate
bonds. Liquidity funds place a high priority on capitalpreservation, stable value and a high liquidity of assets.
Foreign funds are readily redeemable at NAV.
The Firm generally considers the NAV of commingled trust
funds and foreign funds provided by the fund manager to be
the best estimate of fair value.
Expected Contributions
The Firm’s policy is to fund at least the amount sufficient tomeet minimum funding requirements under applicable
employee benefit and tax laws. At December 31, 2023, theFirm expected to contribute approximately $40 million to its
pension plans in 2024 based upon the plans’ current funded
status and expected asset return assumptions for 2024.
Expected Future Benefit Payments
At December 31, 2023
Pension Plans$ in millions

2024

$

154

2025

160

2026

167

2027

174

2028

180

2029-2033

967

143

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
21. Income Taxes

Deferred Tax Assets and Liabilities

Components of Provision for Income Taxes$ in millions

2023$ in millions

2022

Net operating loss and tax credit
carryforwards

U.S.:
$

State and local

1,190 $

2,518 $

2,554

542

442

475

$

Valuation of net trading inventory,
investments and receivables

24

197

267

405

551

Japan

139

105

105

Hong Kong

39

29

192

2

Less: Deferred tax assets valuation
allowance

432

236

470

Deferred tax assets after valuation allowance $3,046 $

3,759 $

4,544

Other
Total

$

2,487

755

595

1,897

1,743

Other
Total deferred tax assets

78

35

5,621

5,148

211

205

5,410 $

4,943

Gross deferred tax liabilities
Fixed assets

Deferred

Intangibles and goodwill

U.S.:
Federal$(295) $

(803) $

(11)

(59)

(142)

33

(43)

25

38

U.K.

12

55

(37)

Japan

(13)

20

4

Hong Kong

(2)

(1)

(9)
(14)

State and local
Non-U.S.:
Brazil1

Other2

(63)

(3)

Total

$

(463) $

(849) $

4

Provision for income taxes$

2,583 $

2,910 $

4,548

2022

2021

21.0 %

21.0 %

21.0 %

U.S. state and local income taxes, net of
U.S. federal income tax benefits

3.4

1.8

2.1

Domestic tax credits and tax exempt income

(1.3)

(0.9)

(0.6)

Non-U.S. earnings

1.9

0.6

1.3

(1.5)

(1.7)

(0.6)

Employee share-based awards
1

Non-taxable income

(2.3)

Other

0.7

Effective income tax rate

21.9 %

807
2,019

Total deferred tax liabilities$

2,775 $

2,826

Net deferred tax assets$

2,635 $

2,117

The Firm believes the recognized net deferred tax assets (after
valuation allowance) at December 31, 2023 are more likely
than not to be realized based on expectations as to futuretaxable income in the jurisdictions in which it operates.
The earnings of certain foreign subsidiaries and affiliates areindefinitely reinvested due to regulatory and other capitalrequirements in foreign jurisdictions. As of December 31,
2023 and December 31, 2022, the unrecognized deferred tax
liability attributable to indefinitely reinvested earnings is $302
million and $429 million, respectively.

Reconciliation of the U.S. Federal Statutory Income Tax Rateto the Effective Income Tax Rate
2023

772
2,003

Deferred income taxes reflect the net tax effects of temporary
differences between the financial reporting and tax bases ofassets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when such differences are
expected to reverse.

1. In 2023, Brazil was presented separately for the first time. The prior period amounts
for Other have been disaggregated to exclude Brazil to align with the current
presentation.
2. Other Non-U.S. tax provisions for 2023, 2022 and 2021 primarily include, Singapore
and Germany.

U.S. federal statutory income tax rate

288

2,636

Allowance for credit losses and otherreserves

437

U.K.

255 $

Employee compensation and benefit plans

Non-U.S.:
Brazil1

At
December 31,
2022

Gross deferred tax assets

2021

Current
FederalAt
December 31,
2023

Rollforward of Unrecognized Tax Benefits2023$ in millions

2022

2021

(0.4)

Balance at beginning of period

0.7

0.3

20.7 %

23.1 %

Increases based on tax positions related tothe current period

147

256

201

Increases based on tax positions related toprior periods

141

64

74

Decreases based on tax positions related toprior periods

(73)

(134)

(37)

Decreases related to settlements with taxing
authorities

(79)

(6)

(10)

(0.8)

1. In 2023, Non-taxable income was presented separately for the first time. The priorperiod amounts for Non-U.S. earnings and Other have been disaggregated to
exclude Non-taxable income to align with the current presentation.

$

Decreases related to lapse of statute oflimitations

1,129 $

971 $

755

(21)

(22)

(12)

Balance at end of period$

1,244 $

1,129 $

971

Net unrecognized tax benefits1$

1,090 $

1,007 $

860

1. Represent ending unrecognized tax benefits adjusted for the impact of the federal
benefit of state issues, competent authority arrangements and foreign tax credit
offsets. If recognized, these net benefits would favorably impact the effective tax
rate in future periods.

It is reasonably possible that significant changes in thebalance of unrecognized tax benefits may occur within thenext 12 months. At this time, however, it is not possible toreasonably estimate the expected change to the total amount
December 2023 Form 10-K

144

Table of Contents

Notes to Consolidated Financial Statementsof unrecognized tax benefits and the impact on the Firm’s
effective tax rate over the next 12 months.

Selected Financial Information by Business Segment

Interest Expense (Benefit) Associated with Unrecognized Tax
Benefits, Net of Federal and State Income Tax Benefits$ in millions

2023$ in millions

Recognized in income statement$

Accrued at end of period

2022

2023
Investment bankingISIM$ 4,578 $454 $14,468177

Trading
Investments

2021

WM

I/E

Total

— $

(84) $ 4,948

823

(59)

31

62

334

—

573

15,263

65 $

39 $

14

Commissions and fees1

2,540

2,279

—

(282)

4,537

237

175

142

Asset management1, 2

596

14,019

5,231

(229)

19,617

Other

480

513

(7)

(11)

975

Interest and penalties related to unrecognized tax benefits arerecognized as a component of the provision for income taxes.
Penalties related to unrecognized tax benefits for the years
mentioned above were immaterial.

Total non-interest revenues

22,83918,150

5,499

(575)

45,913

Interest income

36,81515,015135(1,684)50,281

Interest expense

36,594

6,897

264(1,704)42,051

221

8,118

(129)

20

8,230

Net revenues$ 23,060 $ 26,268 $ 5,370 $ (555) $ 54,143

Earliest Tax Year Subject to Examination in Major Tax
Jurisdictions

Provision for credit losses$

Jurisdiction

Total non-interest expenses$ 18,183 $ 19,607 $ 4,528 $ (520) $ 41,798

Income before provision forincome taxes$ 4,476 $ 6,530 $Net interest

Compensation and benefits
Non-compensation expenses

Tax Year

U.S.

2017

New York State and New York City

2010

U.K.

Provision for income taxes

2014

Japan

Net income

2019

Hong Kong

Net income applicable tononcontrolling interests

2017

Net income applicable toMorgan Stanley

The Firm is routinely under examination by the IRS and othertax authorities in certain countries, such as Japan and the
U.K., and in states and localities in which it has significant
business operations, such as New York.

— $

532

8,369

401 $

13,972

131 $

2,217

— $

—

24,558

9,814

5,635

2,311

(520)

17,240842 $(35) $ 11,813

884

1,508

199

(8)

2,583

3,592

5,022

643

(27)

9,230

139

—

4

—

143

$ 3,453 $ 5,022 $639 $(27) $ 9,087

2022
IS

$ in millions

Investment banking

WM$ 5,235 $438 $Trading

IM

I/E

Total

— $

(74) $ 5,599

14,318

(432)

(11)

53

The Firm believes that the resolution of these tax
examinations will not have a material effect on the annual
financial statements, although a resolution could have amaterial impact in the income statement and on the effective
tax rate for any period in which such resolutions occur.

Investments

(156)

51

120

—

15

Commissions and fees1

2,756

2,467

—

(285)

4,938

Asset management1, 2

580

13,872

5,332

(206)

19,578

Other

(295)

592

(2)

(12)

283

Total non-interest revenues

22,43816,988

5,439

(524)

44,341

Interest income

13,2769,579

56(1,316)

21,595

22. Segment,
Information

Interest expense

11,3212,150

120(1,323)

12,268Net interest

1,955

7,429

(64)

7

9,327

Geographic

andRevenue

The Firm structures its segments primarily based upon thenature of the financial products and services provided tocustomers and its management organization. The Firm
provides a wide range of financial products and services to its
customers in each of its business segments: Institutional
Securities, Wealth Management and Investment Management.
For a further discussion of the business segments, see Note 1.

Net revenues$ 24,393 $ 24,417 $ 5,375 $ (517) $ 53,668

Provision for credit losses$

Compensation and benefits
Non-compensation expenses

— $

280

8,246

211 $

12,534

69 $

2,273

— $

—

23,053

9,221

5,231

2,295

(501)

16,246

Total non-interest expenses$ 17,467 $ 17,765 $ 4,568 $ (501) $ 39,299

Income before provision forincome taxes$ 6,715 $ 6,583 $807 $(16) $ 14,089

Provision for income taxes

1,308

1,444

162

(4)

2,910

Net income

5,407

5,139

645

(12)

11,179

165

—

(15)

—

150

660 $

(12) $ 11,029

Net income applicable tononcontrolling interests

Revenues and expenses directly associated with each
respective business segment are included in determining its
operating results. Other revenues and expenses that are notdirectly attributable to a particular business segment are
generally allocated based on each business segment’s
respective net revenues, non-interest expenses or otherrelevant measures.

13,928Net income applicable toMorgan Stanley$ 5,242 $ 5,139 $As a result of revenues and expenses from transactions withother operating segments being treated as transactions withexternal parties for purposes of segment disclosures, the Firm
includes an Intersegment Eliminations category to reconcile
the business segment results to the consolidated results.
145

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Investment
Management
Investments
Cumulative Unrealized Carried Interest

2021
IS

$ in millions

Investment banking

WM

IM

I/E

Total

$ 10,272 $822 $— $ (100) $ 10,994

12,353

418

(53)

92

12,810

607

48

721

—

1,376

Commissions and fees1

2,878

3,019

1

(377)

5,521

Asset management1,2

583

13,966

5,576

(158)

19,967

Trading
Investments

Other

495

577

(20)

(10)

1,042

Total non-interest revenues

27,18818,850

6,225

(553)

51,710Interest income

3,752

5,821

31

(193)

9,411

Interest expense

1,107

428

36

(205)

1,366

Net interest

2,645

5,393

(5)

12

8,045

Net revenues$ 29,833 $ 24,243 $ 6,220 $ (541) $ 59,755

Provision for credit losses$

Compensation and benefits
Non-compensation expenses

(7) $

11 $

— $

— $

13,0902,373—

24,628

8,861

4,961

2,169

(536)

15,455

Total non-interest expenses$ 18,026 $ 18,051 $ 4,542 $ (536) $ 40,083

Income before provision forincome taxes$ 11,814 $ 6,181 $ 1,678 $
2,746

1,447

356

(1)

4,548

Net income

9,068

4,734

1,322

(4)

15,120Net income applicable tononcontrolling interests
Net income applicable toMorgan Stanley

111

—

(25)

—

$ 8,957 $ 4,734 $ 1,347 $Fee waivers

86

2023

2022

2021

$ 2,244$ 2,946$ 3,487

2,334

2,289

6,785

Institutional Securities—Underwriting
Firm Investment banking revenues fromcontracts with customers

91 %

90 %

2022

4,646 $

2,808 $

740

Foreign exchange

1,054

1,585

1,008

Equity1

8,929

7,515

7,331

Commodity and other

1,624

1,466

2,599

(990)

554

1,132

$

Credit
Total

93 $

2022
211 $

2021
516

2021

Other Expenses—Transaction Taxes
2023$ in millions

Transaction taxes

$

866 $

2022
910 $

2021
969

Transaction taxes are composed of securities transaction taxes
and stamp duties, which are levied on the sale or purchase of
securities listed on recognized stock exchanges in certain
markets. These taxes are imposed mainly on trades of equity
securities in Asia and EMEA. Similar transaction taxes arelevied on trades of listed derivative instruments in certain
countries.

$ 15,263 $ 13,928 $ 12,810

1. Dividend income is included within equity contracts.

The previous table summarizes realized and unrealized gains
and losses primarily related to the Firm’s Trading assets andliabilities, from derivative and non-derivative financial
instruments, included in Trading revenues in the income
statement. The Firm generally utilizes financial instruments
across a variety of product types in connection with its
market-making and related risk management strategies. The
trading revenues presented in the table are not representativeof the manner in which the Firm manages its businessactivities and are prepared in a manner similar to thepresentation of trading revenues for regulatory reporting
purposes.

December 2023 Form 10-K

2023$

Separately, the Firm’s employees, including its senior
officers, may participate on the same terms and conditions asother investors in certain funds that the Firm sponsors
primarily for client investment, and the Firm may waive or
lower applicable fees and charges for its employees.

91 %

2023

Interest rate

819

Certain Other Fee Waivers

Trading Revenues by Product Type$ in millions

787 $The Firm waives a portion of its fees in the Investment
Management business segment from certain registered money
market funds that comply with the requirements of Rule 2a-7of the Investment Company Act of 1940.

(4) $ 15,034

Detail of Investment Banking Revenues
Institutional Securities—Advisory$$ in millions

1. Substantially all revenues are from contracts with customers.
2. Includes certain fees that may relate to services performed in prior periods.

$ in millions

Net cumulative unrealized performancebased fees at risk of reversing

At
December 31,
2022

Investment Management Asset Management Revenues—
Reduction of Fees Due to Fee Waivers(5) $ 19,668

Provision for income taxes$ in millions

At
December 31,
2023

The Firm’s portion of net cumulative performance-based feesin the form of unrealized carried interest, for which the Firm
is not obligated to pay compensation, is at risk of reversing
when the return in certain funds fall below specified
performance targets. See Note 14 for information regarding
general partner guarantees, which include potential
obligations to return performance fee distributions previously
received.

4

9,165

Revenues—Net

146

Table of Contents

Notes to Consolidated Financial Statements
Net Revenues by Region

Assets by Business Segment$ in millions

At
December 31,
2023

EMEA

6,058

6,811

7,699

Institutional Securities

$

Asia

6,434

6,740

7,451

Wealth Management2023$ in millions

Americas

2022

2021

$ 41,651 $ 40,117 $ 44,605

Total

Investment Management$ 54,143 $ 53,668 $ 59,755

Total1

Income before Provision for Income Taxes$ in millions

U.S.

$

Non-U.S.1$

At
December 31,
2022

810,506 $789,837

365,168

373,305

18,01917,0891,193,693 $

1,180,231

1. Parent assets have been fully allocated to the business segments.

2023

2022

8,334 $

9,363 $ 14,082

2021

3,479

4,726

Total Assets by Region$ in millions

At
December 31,
2023

1. Non-U.S. income is defined as income generated from operations located outside
the U.S.

Americas$832,714 $853,228

EMEA

218,923

197,397

The Firm operates in both U.S. and non-U.S. markets. The
Firm’s non-U.S. business activities are principally conducted
and managed through EMEA and Asia locations. The net
revenues disclosed in the previous table reflect the regionalview of the Firm’s consolidated net revenues on a managedbasis, based on the following methodology:

Asia

142,056

129,606

1,193,693 $

1,180,231

Total

5,586

$ 11,813 $ 14,089 $ 19,668

Total

23. Parent Company
Parent Company Only—Condensed Income Statement andComprehensive Income Statement

Institutional Securities: Client location for advisory andequity underwriting, syndicate desk location for debt
underwriting, trading desk location for sales and trading.
Wealth Management:
operate.

Americas,

where

$

Dividends from bank subsidiaries

representatives

2022

2021

1,778 $

2,538 $

2,391

$ 5,770 $ 2,875 $
8,661

8,898

Total dividends from subsidiaries

12,582

11,536

8,898

Trading(775)(1,143)

229

Other

(31)

170

4

Total non-interest revenues

11,776

10,5639,131Interest income

13,596

5,805

2,648

Interest expense

13,618

6,162

2,822

(22)

(357)

(174)

11,754

10,206

8,957

Non-interest expenses

Customer and other receivables

$

252

443

9,954

8,514

Provision for (benefit from) income taxes

(520)

(456)

(203)

Net income before undistributed gain ofsubsidiaries

11,987

10,4108,717

Undistributed (loss) gain of subsidiaries(2,900)

619

6,317

Net income

9,087

11,02915,034Foreign currency translation adjustments

51

(202)

(207)

Change in net unrealized gains (losses) on
available-for-sale securities

1,098(4,437)(1,542)

(87)

43

(53)

(1,250)

1,449

662

20

(4)

—

Other comprehensive income (loss), net oftax:

At
December 31,
2022

2,339 $

287
11,467

Income before income taxes

Receivables from Contracts with Customers$ in millions

—

6,812

Net revenues

The previous table includes revenues from contracts withcustomers recognized where some or all services were
performed in prior periods. These revenues primarily include
investment banking advisory fees.

At
December 31,
2023

2021

Dividends from BHC and non-bank subsidiaries

Net interest

2023

2022

Revenues

Revenues Recognized from Prior Services
Non-interest revenues2023$ in millions

Investment Management: Client location, except certain
closed-end funds, which are based on asset location.

$ in millions$

At
December 31,
2022

Pensions and other
Change in net debt valuation adjustment

2,577

Net change in cash flow hedges

Receivables from contracts with customers, which areincluded within Customer and other receivables in the balance
sheet, arise when the Firm has both recorded revenues and theright per the contract to bill the customer.

Comprehensive income$ 8,919 $ 7,878 $ 13,894

Net income$ 9,087 $ 11,029 $ 15,034

Preferred stock dividends and other
Earnings applicable to Morgan Stanley
common shareholders

147

557

489

468

$ 8,530 $ 10,540 $ 14,566

December 2023 Form 10-K

Table of Contents

Notes to Consolidated Financial Statements
Parent Company Only—Condensed Balance Sheet$ in millions, except share data

Parent Company Only—Condensed Cash Flow Statement

At
At
December 31, December 31,
2023
2022

Net cash provided by (used for) operating
activities

AssetsCash and cash equivalents$

16,881 $25,333

4,160

10,3912021$ 24,914 $(13,064) $ 4,257

Proceeds from (payments for):AFS securities:

Investment securities:

Purchases

Available-for-sale at fair value (amortizedcost of $22,164 and $18,488; $10,179 and$14,278 were pledged to various parties)

Proceeds from sales
21,515

Held-to-maturity (fair value of $14,093 and$17,698; $10,010 and $12,948 were
pledged to various parties)

Proceeds from paydowns and maturities

17,409(9,362)(1,855)(6,275)

300

676

2,611

5,479

3,814

1,940

HTM securities:
15,284

Securities purchased under agreement toresell to affiliates

24,693Purchases—(4,228)(3,022)

Proceeds from paydowns and maturities

4,003

3,434

3,696

22,987

Securities purchased under agreements toresell with affiliates(1,706)(1,871)

13,581

Securities sold under agreements torepurchase with affiliates(8,389)11,755(7,422)

Advances to and investments in subsidiaries(10,097) (10,574) (17,083)(19,772)

19,267

Advances to subsidiaries:
Bank and BHC

38,55076,232

Non-bank

139,250

93,593

Bank and BHC

58,94959,676

Net cash provided by (used for) investing
activities

Non-bank

50,29150,366

Cash flows from financing activities

2,595

2,071

Proceeds from:372,168 $

377,325

Equity investments in subsidiaries:

Other assets$

Issuance of preferred stock, net of issuance
costs

Liabilities
Trading liabilities at fair value

2022

Cash flows from investing activities

Trading assets at fair value

Total assets

2023$ in millions

$

44 $

Issuance of Borrowings

262

1,151

(11,974)

—

994

1,275

23,78334,43142,098

Payments for:Securities sold under agreements torepurchase from affiliates

20,293

28,682

Borrowings(22,554) (14,441) (28,592)

Payables to and advances from subsidiaries

73,37076,170

Other liabilities and accrued expenses

2,539

2,282

Repurchases of common stock and employee
tax withholdings(6,178) (10,871) (12,075)

Borrowings (includes $13,404 and $12,122 atfair value)

Cash dividends(5,763)(5,401)(4,171)

176,884

169,788

Net change in advances from subsidiaries(3,029)16,707

17,042

Total liabilities

273,130

277,184

Net cash provided by (used for) financing
activities(13,741)

21,41915,577

Commitments and contingent liabilities (see Note 14)

Effect of exchange rate changes on cash andcash equivalents

147

485

380

EquityNet increase (decrease) in cash and cash
equivalents(8,452)

9,991

8,240

Cash and cash equivalents, at beginning of
period25,333

15,342

7,102

Preferred stock

8,750

8,750

Common stock, $0.01 par value:
Shares authorized: 3,500,000,000; Sharesissued: 2,038,893,979; Shares outstanding:
1,626,828,437 and 1,675,487,409

Cash and cash equivalents, at end of period $ 16,881 $ 25,333 $ 15,342
20

20Additional paid-in capital

29,832

29,339Cash and due from banks

Retained earnings

97,996

94,862

Deposits with bank subsidiaries

Employee stock trusts

5,314

4,881

Cash and cash equivalents, at end of period $ 16,881 $ 25,333 $ 15,342

Accumulated other comprehensive income(loss)(6,421)(6,253)

Common stock held in treasury at cost, $0.01
par value (412,065,542 and 363,406,570
shares)(31,139)(26,577)

Common stock issued to employee stock
trusts(5,314)(4,881)

Total shareholders’ equity

99,038100,141

372,168 $

377,325

Total liabilities and equity

Cash and cash equivalents:

Restricted cash

$

107 $
16,774$ 1,086 $75 $25,258836 $

100
15,242441

Supplemental Disclosure of Cash Flow Information
Cash payments for:
Interest$

Income taxes, net of refunds1$ 14,437 $ 5,955 $ 2,970
599

3,132

2,775

1. Represents total payments, net of refunds, made to various tax authorities andincludes taxes paid on behalf of certain subsidiaries that are subsequently settled
between the Parent Company and these subsidiaries. The settlements received
from subsidiaries were $1.6 billion, $2.6 billion and $3.0 billion for 2023, 2022 and
2021, respectively.

For information on the Parent Company’s preferred stock, seeNote 17.

December 2023 Form 10-K

148

Table of Contents

Notes to Consolidated Financial Statements
Parent Company’s Borrowings with Original Maturities
Greater than One Year$ in millions

At
At
December 31, December 31,
2023
2022

Senior$

164,514 $
12,37012,203$

176,884 $

169,788

SubordinatedTotal

Guarantees of Debt Instruments and Warrants Issued by
Subsidiaries

157,585$ in millions

At
At
December 31, December 31,
2023
2022

Aggregate balance$

60,942 $51,136

Guarantees under Subsidiary Lease Obligations

Transactions with Subsidiaries
The Parent Company has transactions with its consolidated
subsidiaries determined on an agreed-upon basis and has
guaranteed certain unsecured lines of credit and contractual
obligations on certain of its consolidated subsidiaries.

$ in millions

At
At
December 31, December 31,
2023
2022

Aggregate balance1

$

632 $

615

1. Amounts primarily relate to the U.K.

Finance Subsidiary
The Parent Company fully and unconditionally guarantees the
securities issued by Morgan Stanley Finance LLC, a wholly
owned finance subsidiary. No other subsidiary of the Parent
Company guarantees these securities.

Guarantees
In the normal course of its business, the Parent Company
guarantees certain of its subsidiaries’ obligations on atransaction-by-transaction basis under various financial
arrangements. The Parent Company has issued guarantees onbehalf of its subsidiaries to various U.S. and non-U.S.
exchanges and clearinghouses that trade and clear securities
and/or futures contracts. Under these guarantee arrangements,
the Parent Company may be required to pay the financial
obligations of its subsidiaries related to business transacted on
or with the exchanges and clearinghouses in the event of a
subsidiary’s default on its obligations to the exchange or theclearinghouse. The Parent Company has not recorded any
contingent liability in its condensed financial statements forthese arrangements and believes that any potential
requirements to make payments under these arrangements are
remote.

Resolution and Recovery Planning
As indicated in the Firm’s 2023 resolution plan submitted to
the Federal Reserve and the FDIC, the Parent Company hasentered into an amended and restated support agreement withits material entities (including its wholly owned, direct
subsidiary Morgan Stanley Holdings LLC (the “Funding
IHC”)) and certain other subsidiaries. Under the amended andrestated secured support agreement, in the event of aresolution scenario, the Parent Company would be obligatedto contribute all of its contributable assets to its supported
entities and/or the Funding IHC. The Funding IHC would be
obligated to provide capital and liquidity, as applicable, to its
supported entities. The obligations of the Parent Company
and the Funding IHC under the amended and restated support
agreement are in most cases secured on a senior basis by theassets of the Parent Company (other than shares insubsidiaries of the Parent Company and certain other assets)
and the assets of the Funding IHC.

The Parent Company also, in the normal course of business,
provides standard indemnities to counterparties on behalf of
its subsidiaries for taxes, including U.S. and foreign
withholding taxes, on interest and other payments made onderivatives, securities and stock lending transactions, andcertain annuity products, and may also provide indemnities toor on behalf of affiliates from time to time for otherarrangements. These indemnity payments could be required,as applicable, based on a change in the tax laws, change ininterpretation of applicable tax rulings or claims arising fromcontractual relationships between affiliates. Certain contracts
contain provisions that enable the Parent Company toterminate the agreement upon the occurrence of such events.
The maximum potential amount of future payments that the
Parent Company could be required to make under theseindemnifications cannot be estimated. The Parent Company
has not recorded any contingent liability in its condensed
financial statements for these indemnifications and believes
that the occurrence of any events that would trigger payments
under these contracts is remote.

149

December 2023 Form 10-K

Table of Contents

Financial Data Supplement (Unaudited)
Average Balances and Interest Rates and Net Interest Income
2023
Average
Daily
Balance$ in millions

Interest

Effect of Volume and Rate Changes on Net Interest Income
2023 versus 2022
Increase (Decrease)
Due to Change in:2022
Average
Rate

Average
Daily
Balance

Interest

Average
Rate

Interest earning assets

Cash and cash equivalents1:

Cash and cash equivalents1:

U.S.

$ 56,920 $ 2,386

Non-U.S.

48,373

1,022

Volume$ in millions

Interest earning assets

Rate

Net Change

4.2 % $ 57,889 $

692

1.2 %

U.S.

(12) $

1,706 $

1,694

2.1 %

222

0.4 %

Non-U.S.

(37)

837

800

(260)

1,186

926

360

5,076

5,436

(284)

3,355

3,071

(7)

2,510

2,503

(67)

3,822

3,755

1

415

416

58,052

Investment
securities2

153,307

3,992

2.6 %

167,494

3,066

1.8 %

Investment
securities2

Loans2

215,628

12,4245.8 %205,069

6,988

3.4 %

Loans2

Securities purchased under agreements to resell3:$

Securities purchased under agreements to resell3:

U.S.

47,604

4,714

9.9 %

57,565

1,643

2.9 %

U.S.

Non-U.S.

61,766

3,048

4.9 %

62,585545

0.9 %Non-U.S.

Securities borrowed4:

Securities borrowed4:

U.S.

115,279

4,794

4.2 %

123,288

1,039

0.8 %

U.S.

Non-U.S.

18,514397

2.1 %

19,345(19)(0.1)%

Non-U.S.
Trading assets, net of Trading liabilities5:

Trading assets, net of Trading liabilities5:
U.S.

93,409

3,792

4.1 %

74,932

2,068

2.8 %

U.S.

510

1,214

1,724

Non-U.S.

12,788696

5.4 %

14,748416

2.8 %Non-U.S.

(55)

335

280
5,787

Customer receivables and Other1:

Customer receivables and Other1:U.S.

45,8159,585

20.9 %

56,040

3,798

6.8 %

U.S.

(693)

6,480

Non-U.S.

14,4853,431

23.7 %

15,891

1,137

7.2 %

Non-U.S.

(101)

2,395

2,294

5.7 % $ 912,898 $21,595

2.4 %(645) $

29,331 $28,686

2.4 % $ 340,741 $ 1,825

0.5 %Deposits2

10 $6,381 $

6,391

4.8 %

2.2 %

Borrowings2,6

196

6,187

6,383

Total

$ 883,888 $50,281

Change in interest income

Interest bearing liabilities
Deposits2

Interest bearing liabilities$ 342,583 $ 8,216
2, 6

Borrowings

238,164$

11,437229,255

5,054$

Securities sold under agreements to repurchase7,9:Securities sold under agreements to repurchase7,9:U.S.

22,7183,591

15.8 %

21,481

1,086

5.1 %

U.S.

63

2,442

2,505

Non-U.S.

46,392

3,146

6.8 %

39,631674

1.7 %Non-U.S.

115

2,357

2,472

Securities loaned8,9:Securities loaned8,9:
U.S.

4,244

67

1.6 %

6,277

37

0.6 %

U.S.

(12)

42

30

Non-U.S.

9,470

717

7.6 %

7,669

466

6.1 %

Non-U.S.

109

142

251
8,234

Customer payables and Other10:

Customer payables and Other10:U.S.

133,069

10,225

7.7 %

143,448

1,991

1.4 %

U.S.

(144)

8,378

Non-U.S.

63,916

4,652

7.3 %

73,291

1,135

1.5 %

Non-U.S.

(145)

3,662

3,517

4.9 % $ 861,793 $12,268

1.4 %

0.8 %

1.0 %

Total

$ 860,556 $42,051

Net interest income andnet interest rate spread $ 8,230

December 2023 Form 10-K

$ 9,327

150

Change in interest expense

$

192 $

29,591 $29,783

Change in net interest income$(837) $

(260) $

(1,097)

Table of Contents

Financial Data Supplement (Unaudited)
Average Balances and Interest Rates and Net Interest Income

Effect of Volume and Rate Changes on Net Interest Income

2021
Average
Daily
Balance$ in millions

Interest

2022 versus 2021
Increase (Decrease)
Due to Change in:

Average
Rate

Investment securities2
2

Loans

Net Change

Cash and cash equivalents1:$

Non-U.S.

Rate

Interest earning assets

Cash and cash equivalents1:
U.S.

Volume$ in millions

Interest earning assets
62,340 $

44

0.1 %

U.S.

52,106(37)(0.1)%

Non-U.S.

182,896

2,759

1.5 %

Investment securities2

(232)

539

307

166,675

4,209

2.5 %

Loans2

970

1,809

2,779

Securities purchased under agreements to resell3:

$

(3) $

651 $

648

(4)

263

259

Securities purchased under agreements to resell3:

U.S.

55,274

86

0.2 %

U.S.

Non-U.S.

53,323(267)(0.5)%

Non-U.S.

Securities borrowed4:

4

1,553

1,557

(46)

858

812

Securities borrowed4:

U.S.

99,667(825)(0.8)%

U.S.

(196)

2,060

1,864

Non-U.S.

17,387(192)(1.1)%

Non-U.S.

(22)

195

173

Trading assets, net of Trading liabilities5:

Trading assets, net of Trading liabilities5:
U.S.

77,916

1,644

2.1 %

U.S.

(63)

487

424

Non-U.S.

19,559394

2.0 %Non-U.S.

(97)

119

22
2,433

Customer receivables and Other1:

Customer receivables and Other1:U.S.

72,665

1,365

1.9 %

U.S.

(312)

2,745

Non-U.S.

21,962231

1.1 %

Non-U.S.

(64)

970

906

$ 881,770 $

9,411

1.1 %

(65) $

12,249 $12,184$ 325,500 $

409

0.1 %

Deposits2

19 $1,397 $

1,416

224,657

2,725

1.2 %

Borrowings2,6

56

2,273

2,329

Total

Change in interest income

Interest bearing liabilities
Deposits2
2,6

Borrowings$

Interest bearing liabilities$

Securities sold under agreements to repurchase7,9:Securities sold under agreements to repurchase7,9:U.S.

29,383

157

0.5 %

U.S.

(42)

971

929

Non-U.S.

27,374(64)(0.2)%

Non-U.S.

(29)

767

738

Securities loaned8,9:Securities loaned8,9:
U.S.

4,816

29

0.6 %

U.S.

Non-U.S.

5,514

372

6.7 %

Non-U.S.

9

(1)

8

145

(51)

94

(145)

3,961

3,816

17

1,555

1,572

Customer payables and Other10:

Customer payables and Other10:
U.S.

132,899(1,825)(1.4)%U.S.

Non-U.S.

76,185(437)(0.6)%

Non-U.S.

$ 826,328 $

1,366

0.2 %

Change in interest expense

$

30 $

10,872 $10,902

8,045

0.9 %

Change in net interest income$(95) $

1,377 $

1,282

Total

Net interest income and net interest rate spread$1.

In the fourth quarter of 2023, interest bearing Cash and cash equivalents andrelated interest were presented separately for the first time. The prior periodamounts for Customer receivables and Other have been disaggregated to exclude
Cash and cash equivalents to align with the current presentation.
2. Amounts include primarily U.S. balances.
3. Includes interest paid on Securities purchased under agreements to resell.
4. Includes fees paid on Securities borrowed.
5. Excludes non-interest earning assets and non-interest bearing liabilities, such as
equity securities.
6. Average daily balance includes borrowings carried at fair value, but for certain
borrowings, interest expense is considered part of fair value and is recorded in
Trading revenues.
7. Includes interest received on Securities sold under agreements to repurchase.
8. Includes fees received on Securities loaned.
9. The annualized average rate was calculated using (a) interest expense incurredon all securities sold under agreements to repurchase and securities loaned
transactions, whether or not such transactions were reported in the balance sheet
and (b) net average on-balance sheet balances, which exclude certain securitiesfor-securities transactions.
10. Includes fees received from Equity Financing customers related to their shorttransactions, which can be under either margin or securities lending
arrangements.

151

December 2023 Form 10-K

Table of Contents

Financial Data Supplement (Unaudited)
Deposits
Average Daily Deposits
2023
$ in
millions

AverageAmount2022

Average
Rate

AverageAmount2021

Average
Rate

AverageAmountAverage
Rate

Deposits1:
Savings
anddemand $ 286,513

2.0 % $ 321,316

0.4 % $ 304,664

—%

Time

56,070

4.3 %

2.7 %

20,836

1.7 %

Total

$ 342,583

0.5 % $ 325,500

0.1 %

19,425

2.4 % $ 340,741

1. The Firm’s deposits were primarily held in U.S. offices.

December 2023 Form 10-K

152

Table of Contents

Glossary of Common Terms and Acronyms
ABS
ACL
AFS
AML
AOCI
AUM
Balance
sheet
BHC
bps
Cash flow
statement
CCAR
CCyB
CDO

Asset-backed securities
Allowance for credit losses
Available-for-saleAnti-money laundering
Accumulated other comprehensive income (loss)
Assets under management or supervision
Consolidated balance sheet

CDS
CECL

Credit default swaps
Current Expected Credit Losses, as calculated
under the Financial Instruments—Credit Losses
accounting update
U.S. Commodity Futures Trading Commission
Credit-linked note(s)Collateralized loan obligation(s)Commercial mortgage-backed securities
Collateralized mortgage obligation(s)Credit Risk Management Department
Cumulative foreign currency translation
adjustments
Employee deferred cash-based compensation plans
linked to investment performance
Investments associated with certain DCP

CFTC
CLN
CLO
CMBS
CMO
CRM
CTA
DCP

IS
LCR

Institutional Securities
Liquidity coverage ratio, as adopted by the U.S.
banking agencies
LIBOR
London Interbank Offered Rate
LTV
Loan-to-value
M&A
Merger, acquisition and restructuring transaction
MSBNA
Morgan Stanley Bank, N.A.
MS&Co.
Morgan Stanley & Co. LLC
MSCG
Morgan Stanley Capital Group Inc.
MSCS
Morgan Stanley Capital Services LLC
MSEHSE
Morgan Stanley Europe Holdings SE
MSESE
Morgan Stanley Europe SE
MSIP
Morgan Stanley & Co. International plc
MSMS
Morgan Stanley MUFG Securities Co., Ltd.
MSPBNA
Morgan Stanley Private Bank, National
Association
MSSB
Morgan Stanley Smith Barney LLC
MUFG
Mitsubishi UFJ Financial Group, Inc.
MUMSS
Mitsubishi UFJ Morgan Stanley Securities Co.,Ltd.
MWh
Megawatt hour
N/A
Not Applicable
N/M
Not Meaningful
NAV
Net asset value
Non-GAAP Non-generally accepted accounting principles
NSFR
Net stable funding ratio, as adopted by the U.S.
banking agencies
OCC
Office of the Comptroller of the Currency
OCI
Other comprehensive income (loss)
OIS
Overnight index swap
OTC
Over-the-counter
PRA
Prudential Regulation Authority
PSU
Performance-based stock unit
RMBS
Residential mortgage-backed securities
ROE
Return on average common equity
ROTCE
Return on average tangible common equity
ROU
Right-of-use
RSU
Restricted stock unit
RWA
Risk-weighted assets
SCB
Stress capital buffer
SEC
U.S. Securities and Exchange Commission
SLR
Supplementary leverage ratio
SOFR
Secured Overnight Financing Rate
S&P
Standard & Poor’s
SPESpecial purpose entity
SPOE
Single point of entry
TLAC
Total loss-absorbing capacity
U.K.
United Kingdom
UPB
Unpaid principal balance
U.S.
United States of America
U.S. Bank
Morgan Stanley Bank, N.A. (“MSBNA”) andSubsidiaries Morgan Stanley Private Bank, National
Association (“MSPBNA”)
U.S. GAAP Accounting principles generally accepted in the
United States of America
VaR
Value-at-Risk
VIE
Variable interest entity
WACC
Implied weighted average cost of capital
WM
Wealth Management

Bank holding company
Basis points; one basis point equals 1/100th of 1%
Consolidated cash flow statement
Comprehensive Capital Analysis and Review
Countercyclical capital buffer
Collateralized debt obligation(s), including
Collateralized loan obligation(s)DCPinvestments
DVA
Debt valuation adjustment
EBITDA
Earnings before interest, taxes, depreciation andamortization
ELN
Equity-linked note(s)EMEAEurope, Middle East and Africa
EPS
Earnings per common share
E.U.
European Union
FDIC
Federal Deposit Insurance Corporation
FFELP
Federal Family Education Loan Program
FHC
Financial holding company
FICC
Fixed Income Clearing Corporation
FICO
Fair Isaac Corporation
Financial
Consolidated financial statements
statements
FVA
Funding valuation adjustment
FVO
Fair value option
G-SIB
Global systemically important banks
HELOC
Home Equity Line of Credit
HFI
Held-for-investment
HFS
Held-for-sale
HQLA
High-quality liquid assets
HTM
Held-to-maturity
I/EIntersegment eliminations
IHC
Intermediate holding company
IM
Investment Management
IncomeConsolidated income statement
statement
IRS
Internal Revenue Service

153

December 2023 Form 10-K

Table of Contents

ChangesinandDisagreementswithAccountants on Accounting and Financial
Disclosure

The internal control over financial reporting includes thosepolicies and procedures that:• Pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect the transactions anddispositions of the assets of the Firm;• Provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements inaccordance with U.S. GAAP and that receipts andexpenditures are being made only in accordance withauthorizations of the Firm’s management and directors; and• Provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use ordisposition of Firm assets that could have a material effecton the Firm’s financial statements.

None.

Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure
Controls and Procedures
Under the supervision and with the participation of the Firm’s
management, including the Chief Executive Officer and Chief
Financial Officer, the Firm conducted an evaluation of theeffectiveness of the Firm's disclosure controls and procedures(as defined in Rule 13a-15(e) of the Securities Exchange Actof 1934, as amended (the “Exchange Act”)). Based on thisevaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Firm’s disclosure controls andprocedures were effective as of the end of the period coveredby this annual report.

Because of its inherent limitations, internal control overfinancial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degreeof compliance with the policies or procedures may
deteriorate.

Management’s Report on Internal Control Over Financial
ReportingManagement assessed the effectiveness of the Firm’s internal
control over financial reporting as of December 31, 2023. In
making this assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of theTreadway Commission (“COSO”) in Internal Control—
Integrated Framework (2013). Based on management’s
assessment and those criteria, management believes that the
Firm maintained effective internal control over financial
reporting as of December 31, 2023.

The Firm’s management is responsible for establishing andmaintaining adequate internal control over financial reporting.
The Firm’s internal control over financial reporting isdesigned to provide reasonable assurance regarding thereliability of financial reporting and the preparation offinancial statements for external purposes in accordance withgenerally accepted accounting principles in the United Statesof America (“U.S. GAAP”).

The Firm’s independent registered public accounting firm has
audited and issued a report on the Firm’s internal control overfinancial reporting, which appears below.

December 2023 Form 10-K

154

Table of Contents

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Morgan Stanley:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reportingof Morgan Stanley and subsidiaries (the “Firm”) as ofDecember 31, 2023, based on criteria established in Internal
Control — Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway
Commission (COSO). In our opinion, the Firm maintained, inall material respects, effective internal control over financial
reporting as of December 31, 2023, based on criteria
established in Internal Control — Integrated Framework(2013) issued by COSO.

assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such otherprocedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control overFinancial Reporting
A company’s internal control over financial reporting is aprocess designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s
internal control over financial reporting includes thosepolicies and procedures that (1) pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detectionof unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on thefinancial statements.

We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)(PCAOB), the financial statements of the Firm as of and forthe year ended December 31, 2023 and our report dated
February 22, 2024 expressed an unqualified opinion on thosefinancial statements.
Basis for Opinion
The Firm’s management is responsible for maintaining
effective internal control over financial reporting and for its
assessment of the effectiveness of internal control overfinancial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the
Firm’s internal control over financial reporting based on our
audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to
the Firm in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities andExchange Commission and the PCAOB.

Because of its inherent limitations, internal control overfinancial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may
deteriorate.

We conducted our audit in accordance with the standards of
the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting wasmaintained in all material respects. Our audit included
obtaining an understanding of internal control over financial
reporting,/s/ Deloitte & Touche LLPNew York, New York
February 22, 2024

155

December 2023 Form 10-K

Table of Contents
Changes in Internal Control Over Financial Reporting

segments, although we may add offices, depending upon our
future operations.

No change in the Firm’s internal control over financial
reporting (as such term is defined in Exchange Act Rule
13a-15(f)) occurred during the quarter ended December 31,
2023 that materially affected, or is reasonably likely tomaterially affect, the Firm’s internal control over financial
reporting.

Legal Proceedings
See “Contingencies—Legal” in Note 14 to the Financial
Statements for information about our material legal
proceedings.

Other Information

Mine Safety Disclosures

On February 20, 2024 the Compensation, Management
Development and Succession Committee of the Board of
Directors (“CMDS Committee”) of Morgan Stanley approved
amendments to each of the award certificates (“Award
Certificates”) covering all outstanding performance stock
units granted under the Morgan Stanley Equity Incentive
Compensation Plan, including to executive officers of theFirm. Under the original terms of the Award Certificates,
upon termination of employment due to death or disability,
the participant vests in a prorated portion of the shares earned
by applying the performance multiplier based on service
during the performance period. The CMDS Committee
amended each Award Certificate to provide that, upon
termination of employment due to death or disability, theparticipant vests in the full number of shares earned byapplying the performance multiplier. Providing for fullvesting of performance stock units upon termination of
employment due to death or disability is consistent with theprovisions of Morgan Stanley’s restricted stock units.

Not applicable.

Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities
Morgan Stanley’s common stock trades under the symbol“MS” on the New York Stock Exchange. As of January 31,
2024, the Firm had 46,887 holders of record; however, theFirm believes the number of beneficial owners of the Firm’s
common stock exceeds this number.
The table below sets forth the information with respect topurchases made by or on behalf of the Firm of its common
stock during the fourth quarter of the year ended December
31, 2023.
Issuer Purchases of Equity Securities

This description of the Award Certificates is qualified in its
entirety by reference to the full text of the Award Certificates,
a form of which is filed hereto as Exhibit 10.22.

Disclosure Regarding ForeignThat Prevent Inspections$ in millions, except per
share data

Jurisdictions

Dollar Valueof Remaining
Authorized
Repurchase

1,948,722 $ 71.77

1,911,600 $

18,363

November

15,673,256 $ 75.59

15,368,757 $

17,200December

201,759 $ 86.45— $17,20017,823,737 $ 75.30

17,280,357

1. Includes 543,380 shares acquired by the Firm in satisfaction of the tax withholding
obligations on stock-based awards granted under the Firm’s stock-based
compensation plans during the three months ended December 31, 2023.
2. Excludes excise tax of $12 million levied on share repurchases, net of issuances,payable in April 2024.
3. Share purchases under publicly announced authorizations 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 Firm deems appropriate and may be suspended at any time.
4. The Firm’s Board of Directors has approved the repurchase of the Firm’s
outstanding common stock under a share repurchase authorization (the “Share
Repurchase Authorization”) from time to time as conditions warrant and subject tolimitations on distributions from the Federal Reserve. The Share Repurchase
Authorization is for capital management purposes and considers, among otherthings, business segment capital needs, as well as equity-based compensation andbenefit plan requirements. The Share Repurchase Authorization has no set
expiration or termination date.

Unresolved Staff Comments
The Firm from time to time receives written comments fromthe staff of the SEC regarding its periodic or current reports
under the Exchange Act. There are no comments that remainunresolved that the Firm received not less than 180 days
before the end of the year to which this report relates that the
Firm believes are material.

Properties

On June 30, 2023, the Firm announced that its Board of
Directors reauthorized a multi-year repurchase authorizationof up to $20 billion of outstanding common stock, without aset expiration date, beginning in the third quarter of 2023,
which will be exercised from time to time as conditions
warrant. For further information, see “Liquidity and Capital
Resources—Regulatory Requirements—Capital Plans, Stress
Tests and the Stress Capital Buffer.”

We have offices, operations and data centers located aroundthe world. Our global headquarters and principal executive
offices are located at 1585 Broadway, New York, New York.
Our other principal offices include locations in Manhattan andthe greater New York metropolitan area, London, Frankfurt,
Hong Kong and Tokyo. Our current facilities are adequate forour present and future operations for each of our business
December 2023 Form 10-K

Total Shares
Purchased as
Part of Share
Repurchase
Program3, 4OctoberThree Months Ended
December 31, 2023

Not applicable.

Total
Average
Number ofPrice
SharesPaid perPurchased1 Share2

156

Table of Contents

Exchange Commission or the New York Stock Exchange
LLC, on the webpage.

Stock Performance Graph

The following graph compares the cumulative total
shareholder return (rounded to the nearest whole dollar) of the
Firm’s common stock, the S&P 500 Stock Index and the S&P
500 Financials Sector Index for the last five years. The graphassumes a $100 investment at the closing price on
December 31, 2018 and reinvestment of dividends on therespective dividend payment dates without commissions. Thisgraph does not forecast future performance of the Firm’s
common stock.

Executive Compensation
Information relating to director and executive officer
compensation in Morgan Stanley’s proxy statement isincorporated by reference herein.

Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder Matters

Cumulative Total Return

Information relating to equity compensation plans andsecurity ownership of certain beneficial owners andmanagement in Morgan Stanley’s proxy statement isincorporated by reference herein.

December 31, 2018 – December 31, 2023
$300

Certain Relationships and Related Transactions
and Director Independence$200

Information regarding certain relationships and relatedtransactions in Morgan Stanley’s proxy statement isincorporated by reference herein.

$100

Information regarding director independence in Morgan
Stanley’s proxy statement is incorporated by reference herein.

$0
Dec-2018

Dec-2019

Dec-2020

Dec-2021

Dec-2022

Dec-2023

Morgan Stanley
S&P 500 Stock Index
S&P 500 Financials Sector Index

Principal Accountant Fees and Services
Information regarding principal accountant fees and services
in Morgan Stanley’s proxy statement is incorporated byreference herein.

At December 31,
2018

2019

2020

2021

2022

2023

Morgan Stanley$100.00 $132.66 $183.14 $268.50 $240.57 $274.03

S&P 500 Stock Index

100.00131.21

155.34199.89163.65206.63

S&P 500 Financials
Sector Index

100.00132.09129.77175.02156.52

175.46

Exhibits and Financial Statement Schedules
Documents filed as part of this report

Directors, Executive Officers and Corporate
Governance• The financial statements required to be filed in this annual
report on Form 10-K are included in the section titled“Financial Statements and Supplementary Data.”

Information relating to the Firm’s directors and nominees in
the Firm’s definitive proxy statement for its 2024 annual
meeting of shareholders (“Morgan Stanley’s proxystatement”) is incorporated by reference herein.

Exhibit Index1
Certain of the following exhibits, as indicated parenthetically,
were previously filed as exhibits to registration statements
filed by Morgan Stanley or its predecessor companies under
the Securities Act or to reports or registration statements filed
by Morgan Stanley or its predecessor companies under the
Exchange Act and are hereby incorporated by reference tosuch statements or reports. Morgan Stanley’s Exchange Act
file number is 1-11758. The Exchange Act file number ofMorgan Stanley Group Inc., a predecessor company(“MSG”), was 1-9085.

Information relating to the Firm’s executive officers is
contained in the “Business” section of this report under“Information about Our Executive Officers.”
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. You can find the Code of Ethics andBusiness Conduct on the webpage, www.morganstanley.com/
content/dam/msdotcom/en/about-us-governance/pdf/
MS_Code_of_Ethics_and_Business_Conduct_2023.pdf. The
Firm will post any amendments to the Code of Ethics andBusiness Conduct, and any waivers that are required to bedisclosed by the rules of either the U.S. Securities and157

December 2023 Form 10-K

Table of Contents

ExhibitNo. Description
3.1 Amended and Restated Certificate of Incorporationof Morgan Stanley, as amended to date (Exhibit 3.1
to Morgan Stanley’s quarterly report on Form 10-Q
for the quarter ended June 30, 2022).
3.2 Amended and Restated Bylaws of Morgan Stanley,as amended to date (Exhibit 3.1 to Morgan
Stanley’s current report on Form 8-K dated
December 8, 2023).
4.1* Description of Securities Registered Pursuant to
Section 12 of the Securities Exchange Act of 1934.
4.2 Amended and Restated Senior Indenture dated as of
May 1, 1999 between Morgan Stanley and The
Bank of New York, as trustee (Exhibit 4e toMorgan Stanley’s Registration Statement on Form
S-3/A (No. 333-75289) as amended by Fourth
Supplemental Senior Indenture dated as of October
8, 2007 (Exhibit 4.3 to Morgan Stanley’s annual
report on Form 10-K for the fiscal year ended
November 30, 2007).
4.3 Senior Indenture dated as of November 1, 2004
between Morgan Stanley and The Bank of New
York, as trustee (Exhibit 4-f to Morgan Stanley’s
Registration Statement on Form S-3/A (No.
333-117752), as amended by First Supplemental
Senior Indenture dated as of September 4, 2007
(Exhibit 4.5 to Morgan Stanley’s annual report on
Form 10-K for the fiscal year ended November 30,2007), Second Supplemental Senior Indenture dated
as of January 4, 2008 (Exhibit 4.1 to Morgan
Stanley’s current report on Form 8-K dated
January 4, 2008), Third Supplemental Senior
Indenture dated as of September 10, 2008 (Exhibit 4
to Morgan Stanley’s quarterly report on Form 10-Q
for the quarter ended August 31, 2008), Fourth
Supplemental Senior Indenture dated as ofDecember 1, 2008 (Exhibit 4.1 to Morgan Stanley’scurrent report on Form 8-K dated December 1,2008), Fifth Supplemental Senior Indenture dated asof April 1, 2009 (Exhibit 4 to Morgan Stanley’squarterly report on Form 10-Q for the quarter ended
March 31, 2009), Sixth Supplemental Senior
Indenture dated as of September 16, 2011 (Exhibit
4.1 to Morgan Stanley’s quarterly report on Form
10-Q for the quarter ended September 30, 2011),
Seventh Supplemental Senior Indenture dated as ofNovember 21, 2011 (Exhibit 4.4 to Morgan
Stanley’s annual report on Form 10-K for the year
ended December 31, 2011), Eighth Supplemental
Senior Indenture dated as of May 4, 2012
(Exhibit 4.1 to Morgan Stanley’s quarterly report on
Form 10-Q for the quarter ended June 30, 2012),
Ninth Supplemental Senior Indenture dated as ofMarch 10, 2014 (Exhibit 4.1 to Morgan Stanley’squarterly report on Form 10-Q for the quarter ended
March 31, 2014), Tenth Supplemental Senior
Indenture dated as of January 11, 2017 (Exhibit 4.1
to Morgan Stanley’s current report on Form 8-K
dated January 11, 2017) and Eleventh Supplemental
Senior Indenture dated as of March 24, 2021
(Exhibit 4.4 to Morgan Stanley's annual report on
Form 10-K for the year ended December 31, 2021).

December 2023 Form 10-K

ExhibitNo. Description
4.4 The Unit Agreement Without Holders’ Obligations,
dated as of August 29, 2008, between Morgan
Stanley and The Bank of New York Mellon, as Unit
Agent, as Trustee and Paying Agent under the
Senior Indenture referred to therein and as Warrant
Agent under the Warrant Agreement referred totherein (Exhibit 4.1 to Morgan Stanley’s current
report on Form 8-K dated August 29, 2008).
4.5 Subordinated Indenture dated as of October 1, 2004
between Morgan Stanley and The Bank of
New York, as trustee (Exhibit 4-g to Morgan
Stanley’s Registration Statement on Form S-3/A(No. 333-117752)).
4.6 Junior Subordinated Indenture dated as of
October 12, 2006 between Morgan Stanley and The
Bank of New York, as trustee (Exhibit 4.1 toMorgan Stanley’s current report on Form 8-K dated
October 12, 2006).
4.7 Deposit Agreement dated as of July 6, 2006 among
Morgan Stanley, JPMorgan Chase Bank, N.A. andthe holders from time to time of the depositary
receipts described therein (Exhibit 4.3 to Morgan
Stanley’s quarterly report on Form 10-Q for thequarter ended May 31, 2006).
4.8 Form of Deposit Agreement among Morgan
Stanley, JPMorgan Chase Bank, N.A. and theholders from time to time of the depositary receipts
representing interests in the Series A Preferred
Stock described therein (Exhibit 2.4 to Morgan
Stanley’s Registration Statement on Form 8-A dated
July 5, 2006).
4.9
Depositary Receipt for Depositary Shares,
representing Floating Rate Non-Cumulative
Preferred Stock, Series A (included in Exhibit 4.8
hereto).
4.10 Form of Deposit Agreement among Morgan
Stanley, The Bank of New York Mellon and theholders from time to time of the depositary receipts
representing interests in the Series E Preferred
Stock described therein (Exhibit 2.6 to Morgan
Stanley’s Registration Statement on Form 8-A dated
September 27, 2013).
4.11 Depositary Receipt for Depositary Shares,
representing
Fixed-to-Floating
Rate
NonCumulative Preferred Stock, Series E (included in
Exhibit 4.10 hereto).
4.12 Form of Deposit Agreement among Morgan
Stanley, The Bank of New York Mellon and theholders from time to time of the depositary receipts
representing interests in the Series F Preferred stock
described therein (Exhibit 2.4 to Morgan Stanley’s
Registration Statement on Form 8-A dated
December 9, 2013).
4.13 Depositary Receipt for Depositary Shares,
representing
Fixed-to-Floating
Rate
NonCumulative Preferred Stock, Series F (included in
Exhibit 4.12 hereto).

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Table of Contents

ExhibitNo. Description
4.14 Form of Deposit Agreement among Morgan
Stanley, The Bank of New York Mellon and theholders from time to time of the depositary receipts
representing interests in the Series I Preferred stock
described therein (Exhibit 2.4 to Morgan Stanley’s
Registration Statement on Form 8-A dated
September 17, 2014).
4.15 Depositary Receipt for Depositary Shares,
representing
Fixed-to-Floating
Rate
NonCumulative Preferred Stock, Series I (included in
Exhibit 4.14 hereto).
4.16 Form of Deposit Agreement among Morgan
Stanley, The Bank of New York Mellon and theholders from time to time of the depositary receipts
representing interests in the Series K Preferred
Stock described therein (Exhibit 2.4 to Morgan
Stanley’s Registration Statement on Form 8-A dated
January 30, 2017).
4.17 Depositary Receipt for Depositary Shares,
representing
Fixed-to-Floating
Rate
NonCumulative Preferred Stock, Series K (included in
Exhibit 4.16 hereto).
4.18 Form of Deposit Agreement among Morgan
Stanley, The Bank of New York Mellon and theholders from time to time of the depositary receipts
representing interests in the Series L Preferred
Stock described therein (Exhibit 2.4 to Morgan
Stanley’s Registration Statement on Form 8-A dated
November 22, 2019).
4.19 Depositary Receipt for Depositary Shares,
representing 4.875% Non-Cumulative Preferred
Stock, Series L (included in Exhibit 4.18 hereto).
4.20 Form of Deposit Agreement among Morgan
Stanley, The Bank of New York Mellon and theholders from time to time of the depositary receipts
representing interests in the Series N Preferred
Stock described therein (Exhibit 4.5 to Morgan
Stanley’s current report on Form 8-K dated October
2, 2020).
4.21 Depositary Receipt for Depositary Shares,
representing
Fixed-to-Floating
Rate
NonCumulative Preferred Stock, Series N (included in
Exhibit 4.20 hereto).
4.22 Form of Deposit Agreement among Morgan
Stanley, The Bank of New York Mellon and theholders from time to time of the depositary receipts
representing interests in the Series O Preferred
Stock described therein (Exhibit 2.4 to Morgan
Stanley’s Registration Statement on Form 8-A dated
October 22, 2021).
4.23 Depositary Receipt for Depositary Shares,
representing 4.250% Non-Cumulative Preferred
Stock, Series O (included in Exhibit 4.22 hereto).
4.24 Form of Deposit Agreement among Morgan
Stanley, The Bank of New York Mellon and theholders from time to time of the depositary receipts
representing interests in the Series P Preferred
Stock described therein (Exhibit 2.4 to Morgan
Stanley’s Registration Statement on Form 8-A dated
August 1, 2022).
4.25 Depositary Receipt for Depositary Shares,
representing 6.500% Non-Cumulative Preferred
Stock, Series P (included in Exhibit 4.24 hereto).

ExhibitNo. Description
10.1 Amended and Restated Trust Agreement dated as ofJanuary 1, 2018 by and between Morgan Stanley
and State Street Bank and Trust Company (Exhibit
10.1 to Morgan Stanley’s quarterly report on Form
10-Q for the quarter ended March 31, 2018).
10.2 Amended and Restated Investor Agreement dated asof June 30, 2011 by and between Morgan Stanley
and Mitsubishi UFJ Financial Group, Inc. (Exhibit
10.1 to Morgan Stanley’s current report on Form 8K dated June 30, 2011), as amended by Third
Amendment, dated October 3, 2013 (Exhibit 10.1 toMorgan Stanley’s quarterly report on Form 10-Q
for the quarter ended September 30, 2013), Fourth
Amendment, dated April 6, 2016 (Exhibit 10.1 toMorgan Stanley’s quarterly report on Form 10-Q
for the quarter ended March 31, 2016), Fifth
Amendment, dated October 4, 2018 (Exhibit 10.3 toMorgan Stanley’s annual report on Form 10-K forthe year ended December 31, 2020), Sixth
Amendment, dated April 13, 2021 (Exhibit 10.1 toMorgan Stanley’s quarterly report on Form 10-Q
for the quarter ended June 30, 2021) and Seventh
Amendment, dated October 13, 2023 (Exhibit 10.1
to Morgan Stanley’s quarterly report on Form 10-Q
for the quarter ended September 30, 2023).
10.3† Morgan Stanley 401(k) Plan, amended and restatedas of January 1, 2018 (Exhibit 10.4 to Morgan
Stanley’s annual report on Form 10-K for the year
ended December 31, 2018), as amended by
Amendment (Exhibit 10.4 to Morgan Stanley’s
annual report on Form 10-K for the year ended
December 31, 2019) and Amendment (Exhibit 10.6
to Morgan Stanley’s annual report on Form 10-K
for the year ended December 31, 2020),
Amendment (Exhibit 10.4 to Morgan Stanley’s
annual report on Form 10-K for the year ended
December 31, 2021) and Amendment (Exhibit 10.4
to Morgan Stanley’s annual report on Form 10-K
for the year ended December 31, 2022).
10.4†* Amendment to Morgan Stanley 401(k) Plan, dated
December 15, 2023.
10.5† Tax Deferred Equity Participation Plan as amended
and restated as of November 26, 2007 (Exhibit 10.9
to Morgan Stanley’s annual report on Form 10-K
for the fiscal year ended November 30, 2007).
10.6† Directors’ Equity Capital Accumulation Plan as
amended and restated as of November 1, 2022
(Exhibit 10.6 to Morgan Stanley's annual report on
Form 10-K for the year ended December 31, 2022).
10.7† Employees’ Equity Accumulation Plan as amended
and restated as of November 26, 2007
(Exhibit 10.12 to Morgan Stanley’s annual report on
Form 10-K for the fiscal year ended November 30,2007).
10.8† Employee Stock Purchase Plan as amended andrestated as of August 1, 2022 (Exhibit 10.8 toMorgan Stanley's annual report on Form 10-K forthe year ended December 31, 2022).

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December 2023 Form 10-K

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ExhibitNo. Description
10.9† Morgan
Stanley
Supplemental
Executive
Retirement and Excess Plan, amended and restatedeffective December 31, 2008 (Exhibit 10.2 toMorgan Stanley’s quarterly report on Form 10-Q
for the quarter ended March 31, 2009) as amended
by Amendment (Exhibit 10.5 to Morgan Stanley’squarterly report on Form 10-Q for the quarter ended
June 30, 2009), Amendment (Exhibit 10.19 toMorgan Stanley’s annual report on Form 10-K forthe year ended December 31, 2010), Amendment(Exhibit 10.3 to Morgan Stanley’s quarterly reporton Form 10-Q for the quarter ended June 30, 2011)
and Amendment (Exhibit 10.1 to Morgan Stanley’squarterly report on Form 10-Q for the quarter ended
September 30, 2014).
10.10† Form of Deferred Compensation Agreement under
the Pre-Tax Incentive Program 2 (Exhibit 10.12 to
MSG’s annual report for the fiscal year ended
November 30, 1996).
10.11† Morgan Stanley UK Share Ownership Plan (Exhibit
4.1 to Morgan Stanley’s Registration Statement on
Form S-8 (No. 333-146954)).
10.12† Supplementary Deed of Participation for theMorgan Stanley UK Share Ownership Plan, dated
as of November 5, 2009 (Exhibit 10.36 to Morgan
Stanley’s annual report on Form 10-K for the year
ended December 31, 2009).
10.13† Aircraft Time-Sharing Agreement, dated as ofJanuary 1, 2010, by and between Corporate
Services Support Corp. and James P. Gorman(Exhibit 10.1 to Morgan Stanley’s quarterly reporton Form 10-Q for the quarter ended March 31,2010).
10.14† Agreement between Morgan Stanley and James P.
Gorman, dated August 16, 2005, and amendment
dated December 17, 2008 (Exhibit 10.2 to Morgan
Stanley’s quarterly report on Form 10-Q for thequarter ended March 31, 2010), as amended by
Amendment (Exhibit 10.25 to Morgan Stanley’s
annual report on Form 10-K for the year ended
December 31, 2013).
10.15† Form of Restrictive Covenant Agreement (Exhibit
10 to Morgan Stanley’s current report on Form 8-K
dated November 22, 2005).
10.16† Equity Incentive Compensation Plan, as amended
and restated as of December 14, 2020 (Exhibit
10.19 to Morgan Stanley's annual report on Form
10-K for the year ended December 31, 2020).
10.17† Morgan Stanley Compensation Incentive Plan, as
amended and restated as of December 14, 2020
(Exhibit 10.24 to Morgan Stanley's annual report on
Form 10-K for the year ended December 31, 2020)
10.18† Morgan Stanley Schedule of Non-Employee
Directors Annual Compensation, effective as ofNovember 1, 2022 (Exhibit 10.18 to Morgan
Stanley's annual report on Form 10-K for the year
ended December 31, 2022).
10.19† Description of Operating Committee Medical
Coverage (Exhibit 10.2 to Morgan Stanley’squarterly report on Form 10-Q for the quarter ended
March 31, 2015).
10.20†* Form of Award Certificate for Discretionary
Retention Awards of Stock Units.
December 2023 Form 10-K

ExhibitNo. Description
10.21†* Form of Award Certificate for Discretionary
Retention Awards under the Morgan StanleyCompensation Incentive Plan.
10.22†* Form of Award Certificate for Long-Term Incentive
Program Awards.
10.23† Form of Aircraft Time-Sharing Agreement (Exhibit
10.1 to Morgan Stanley’s quarterly report on Form
10-Q for the quarter ended September 30, 2020).
21* Subsidiaries of Morgan Stanley.
22* Guarantor and Subsidiary Issuer of Registered
Guaranteed Securities.
23.1* Consent of Deloitte & Touche LLP.
24
Powers of Attorney (included on signature page).
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.
97* Morgan Stanley Compensation Recoupment Policy.
101 Interactive Data Files pursuant to Rule 405 ofRegulation S-T formatted in Inline eXtensible
Business Reporting Language (“Inline XBRL”).
104 Cover Page Interactive Data File (formatted in
Inline XBRL and contained in Exhibit 101).
1. For purposes of this Exhibit Index, references to “The Bank of New York” mean insome instances the entity successor to JPMorgan Chase Bank, N.A. or J.P. Morgan
Trust Company, National Association; references to “JPMorgan Chase Bank, N.A.”
mean the entity formerly known as The Chase Manhattan Bank, in some instances
as the successor to Chemical Bank; references to “J.P. Morgan Trust Company,
N.A.” mean the entity formerly known as Bank One Trust Company, N.A., as
successor to The First National Bank of Chicago.

* Filed herewith.
** Furnished herewith.
† Management contract or compensatory plan or
arrangement required to be filed as an exhibit to thisForm 10-K pursuant to Item 15(b).
Note: Other instruments defining the rights of holders of longterm debt securities of Morgan Stanley and its subsidiaries areomitted pursuant to Section (b)(4)(iii) of Item 601 ofRegulation S-K. Morgan Stanley hereby agrees to furnish
copies of these instruments to the U.S. Securities andExchange Commission upon request.

Form 10-K Summary
None.

160

Table of Contents

Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by theundersigned, thereunto duly authorized, on February 22,
2024.
MORGAN STANLEY(REGISTRANT)
By:

Signature

Title/s/ ERIKA H. JAMES

Director(Erika H. James)/s/ HIRONORI KAMEZAWA

Director(Hironori Kamezawa)/s/ SHELLEY B. LEIBOWITZ/s/ EDWARD PICK
(Edward Pick)
Chief Executive Officer(Shelley B. Leibowitz)/s/ STEPHEN J. LUCZO

POWER OF ATTORNEY(Stephen J. Luczo)

We, the undersigned, hereby severally constitute Sharon
Yeshaya, Eric F. Grossman and Martin M. Cohen, and eachof them singly, our true and lawful attorneys with full power
to them and each of them to sign for us, and in our names in
the capacities indicated below, any and all amendments to theannual report on Form 10-K filed with the Securities andExchange Commission, hereby ratifying and confirming oursignatures as they may be signed by our said attorneys to any
and all amendments to said annual report on Form 10-K.

/s/ JAMI MISCIK

Director

Director(Jami Miscik)/s/ MASATO MIYACHI

Director(Masato Miyachi)/s/ DENNIS M. NALLY

Director(Dennis M. Nally)

Pursuant to the requirements of the Securities Exchange Actof 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities
indicated on the 22nd day of February, 2024.
Signature

Director/s/ MARY L. SCHAPIRO

Director(Mary L. Schapiro)/s/ PERRY M. TRAQUINA

Title

Director(Perry M. Traquina)/s/ EDWARD PICK
(Edward Pick)/s/ SHARON YESHAYA(Sharon Yeshaya)/s/ RAJA J. AKRAM(Raja J. Akram)/s/ JAMES P. GORMAN

Chief Executive Officer(Principal Executive
Officer)/s/ RAYFORD WILKINS, JR.

Director(Rayford Wilkins, Jr.)

Executive Vice President
and Chief Financial Officer(Principal Financial Officer)
Deputy Chief Financial
Officer(Chief Accounting Officer
and Controller)
Chairman of the Board(James P. Gorman)/s/ THOMAS H. GLOCER

Director(Thomas H. Glocer)/s/ ROBERT H. HERZ

Director(Robert H. Herz)

161

December 2023 Form 10-K