Actively Traded Swaps

"Morgan Stanley Swaps, Packaged Execution with Cost Benefits"

Morgan Stanley's Financing Products Group provides structured and customised financing solutions, enabling clients to achieve their objectives most efficiently from both an economic and operational perspective.

Issues for which clients may use the services of the group include potential fiscal disadvantages. For example, by understanding the client strategy the group will determine the most appropriate execution vehicle for transactions. This is most widely seen in the use of Swaps (CFD's) in markets where trading taxes might apply (e.g. UK), and during dividend season in markets which impose withholding taxes.

Other areas in which clients often use the services of the group include gaining sector, index or customised basket exposure at zero tracking error for both long and short positions, as well as using synthetic futures positions where they cannot transact in the underlying.

Significantly the group can also provide both long (often at a discount) and short access to markets which might otherwise be unavailable due to regulatory restrictions, a facility that is essential in numerous emerging markets. They can also potentially provide clients with different options of participation in corporate actions in the event that they are restricted from some options due to the fund domicile.

With the creation of a product development team, Morgan Stanley can potentially assist clients in developing customised products, strategies and fiscally efficient methods for investors to invest in the underlying funds.

The services of the Financing Products Group are integrated into Prime Brokerage not only from a reporting and cross-collateralisation perspective, but also share similar financing rates ensuring clients are ambivalent between trading cash or synthetic securities. The Financing Products Group has also minimised the legal documentation requirement for transacting in a synthetic environment, again aiming to simplify the day-to-day transactions of such products.

Whilst working closely with the Prime Brokerage client base, the Financing Products Group is separated from Prime Brokerage by a Chinese wall, thereby keeping confidential client portfolio information.