- Business Continuity Planning Information
- USA PATRIOT Act Notice
- SEC Order Execution and Routing Disclosure
- Equity Order Handling under FINRA Rule 5320
- Handling of Block Orders under FINRA's Front Running Rule
- Margin Disclosure Statement
- Legal Disclaimer
- Morgan Stanley's Material Auction Rate Securities Practices and Procedures
- Disclosure of Futures Commission Merchant / Introducing Broker Material Conflicts of Interest
- Transactional Futures Transfer
- Futures Risk Disclosure Statement
- CFTC 1.55 Firm Specific Disclosure Information
- Voice Recording Disclosure
- Asset Allocation Disclosure
- Important Information About Mutual Funds and Revenue Sharing
- Morgan Stanley CD Disclosure Statement
- Morgan Stanley Jumbo CD Disclosure Statement
- Gain/(Loss) Information
- Pricing of Securities
- Securities Based Lending
- Global CurrencySM Disclosure Statement
- ETF Data Analytics Licensing Fees
- Margin Interest Rate Schedule
To our Clients and Prospective Clients of our Securities Businesses:
As part of our ongoing commitment to inform and engage our clients, we would like to give you an update on Morgan Stanley Smith Barney LLC's (“Morgan Stanley”) Business Continuity Planning ("BCP") Program for the Americas.
To read the remainder of this notice please download Business Continuity Planning Information
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT OR ESTABLISHING A NEW CUSTOMER RELATIONSHIP
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all U.S. financial institutions to obtain, verify, and record information that identifies each individual or institution that opens an account or establishes a customer relationship with Morgan Stanley Smith Barney LLC ("Morgan Stanley").
What this means: If you enter into a new customer relationship with Morgan Stanley, the Firm will ask for your name, address, date of birth (as applicable) and other identification information. This information will be used to verify your identity. As appropriate, the Firm may, in its discretion, ask for additional documentation or information. If all required documentation or information is not provided, Morgan Stanley may be unable to open an account or establish a relationship with you.
U.S. Securities and Exchange Commission ("SEC") Rule 606 of Regulation NMS requires all brokerage firms to make publically available quarterly reports that present statistical information about non-directed customer orders in covered equity and option securities and provide a discussion of the material aspects of the brokerage firm's relationship with each venue identified in the report, including a description of any arrangement for payment for order flow any profit sharing arrangement. Non-directed orders are orders that have not been instructed to be routed to a specific execution venue. Morgan Stanley Smith Barney LLC ("Morgan Stanley") does not accept standing directed order instructions but will accept directed order instructions on a per order basis subject to our discretion and execution venue availability. For non-directed orders, Morgan Stanley has selected the venues to which it routed customer orders for execution during the applicable quarter. To obtain further information about the rule, you may access the following web site addresses: http://www.sec.gov/rules/final/34-43590.htm and http://www.sec.gov/interps/legal/mrslb13a.htm.
The SEC-mandated report for the most recent quarter can be found by clicking the following link: http://external.s3.com/rule606/mswm/. In addition to this report, you will also find disclosures that provide additional information relevant to Morgan Stanley's order routing and handling practices.
Morgan Stanley Smith Barney LLC ("Morgan Stanley") is committed to providing the best execution for customers’ orders. In furtherance of this commitment, Morgan Stanley considers several factors, including price, the available liquidity pool, execution speed, transaction costs, service and opportunities for price improvement in determining where to route customer orders for execution. Industry regulations require that we disclose whether we receive compensation for directing client orders for execution to various dealers, national securities exchanges, alternative trading systems (“ATS”), including electronic communications networks (“ECNs”), and other market centers. This Compensation is commonly referred to as “payment for order flow.”
Morgan Stanley, either directly or indirectly, may route customer equity orders to national securities exchanges, ATSs, including ECNs, and other market centers, including its affiliate Morgan Stanley & Co. LLC (“Morgan Stanley & Co.”). Certain market centers offer cash credits for orders that provide liquidity to their books and charge explicit fees for orders that extract liquidity from their books (and certain market centers invert this practice). From time to time, the amount of credits that Morgan Stanley receives from one or more such market centers may exceed the amount Morgan Stanley is charged. Morgan Stanley receives the benefit of these credits, either directly or indirectly, and such payments constitute payment for order flow. Morgan Stanley may also receive incremental pricing benefits from exchanges and/or ECNs if certain volume thresholds are met.
In addition, Morgan Stanley may route certain customer orders (including orders for fixed income securities, preferred shares and convertible bonds) to Morgan Stanley & Co. on behalf of Morgan Stanley. These arrangements between Morgan Stanley & Co. and Morgan Stanley are intended to facilitate trade execution for our customers, with apportionment of resulting expenses and revenue from the trading activity between Morgan Stanley and Morgan Stanley & Co.
Morgan Stanley & Co. participates in exchange-sponsored listed option payment for order flow programs and accepts payment for order flow for certain listed option orders. In the course of providing liquidity, Morgan Stanley & Co. may preference certain option orders to Morgan Stanley & Co.'s options market maker, or third party market makers for execution.
Notwithstanding the foregoing, Morgan Stanley regularly and rigorously monitors the quality of the executions provided by all market centers to which customer orders are routed to ensure those market centers are providing the best execution reasonably available under the circumstances.
On request of a customer, Morgan Stanley will disclose to such customer the identity of the venue to which such customer’s orders were routed for execution in the six months prior to the request, whether the orders were directed orders or non-directed orders, and the time of the transactions, if any, that resulted from such orders.
Morgan Stanley Smith Barney LLC ("Morgan Stanley") wishes to inform our clients of the following as a result of FINRA Rule 5320, the Order Protection Rule. FINRA Rule 5320 can be obtained at http://www.finra.org/.
Your orders for equity securities that are less than 10,000 shares or $100,000 will continue to receive priority over Morgan Stanley or our trade routing destination's principal orders. Morgan Stanley may trade principally at prices that would satisfy these trading orders through the use of internal controls, such as information barriers and separate lines of supervision, that operate to prevent a trading unit that handles principal positions from obtaining knowledge of these orders.
Your orders that are for more than 10,000 shares or $100,000 may be worked alongside principal orders handled by Morgan Stanley or our trade routing destinations and may not receive priority over these principal orders. Morgan Stanley or our trade routing destinations may trade principally alongside these orders to the extent that this principal activity either hedges or liquidates risk resulting from client stock or derivative facilitation. So long as either order is trading on a systematic, automated basis (e.g., through the use of a VWAP algorithm, which will trade based on the market's volume-weighted average price during the trading day), in certain instances, principal discretionary orders may also be worked concurrently with your orders. You can instruct us that with respect to all or part of your orders that you do not wish Morgan Stanley or our trade routing destinations to trade principally ahead of, or along side this type of order. Such instruction will limit the range of execution alternatives that we and our routing destinations are able to offer.
Pre-Market & Post-Market Orders
Morgan Stanley Smith Barney LLC ("Morgan Stanley") does not ordinarily accept orders for execution outside of normal market hours (before 9:30 am or after 4:00 pm). Unless otherwise agreed, all orders received prior to 9:30 will be executed through the primary market opening mechanism. Should Morgan Stanley accept an order for execution outside of normal market hours, the business practices discussed above will apply to the handling of such orders.
The following is being provided pursuant to FINRA Rule 5270 regarding Front Running of Block Transactions. We are required to provide clients with the following information concerning the placing of block trading orders and how those block orders are handled:
Morgan Stanley and its trade routing destinations may trade principally at prices that would satisfy your block trading order when the principal trades are unrelated to your block order. When the principal trades are not unrelated, we or our trade routing destinations may trade principally ahead of, or alongside, your block order for the purpose of fulfilling, or facilitating the execution of, your order. For these orders you may instruct us that you do not wish us or our trade routing destinations to trade principally ahead of, or alongside, your order. However, such instruction will limit the range of execution alternatives that we are able to offer.
A copy of Rule 5270 can be obtained at http://www.finra.org/. Please contact your Morgan Stanley Financial Advisor if you require more information regarding how your block orders are handled.
Depending on your specific investment objectives and financial position, the investments discussed or recommended in this Web site may or may not be suitable for you. It is up to you to weigh any decision carefully. This material does not provide individually tailored investment advice. It has been prepared without regard to individual financial circumstances and objectives. The strategies and/or investments discussed in the material may not be suitable for all investors. Morgan Stanley Smith Barney LLC ("Morgan Stanley") recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
The views and opinions expressed herein do not necessarily reflect those of Morgan Stanley. The information and figures contained herein has been obtained from sources outside of Morgan Stanley and Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of information or data from sources outside of Morgan Stanley. Morgan Stanley is not responsible for the information, data contained in this document. Neither the information provided nor any opinion expressed constitutes either a recommendation by Morgan Stanley Wealth Management or a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
Opinions, where and when expressed, are subject to change without notice. Information was obtained from sources considered reliable, but no representation is made as to its accuracy.
The purpose of this document is to provide you with information about some of the material conflicts of interest that may arise between you and Morgan Stanley Smith Barney LLC's (“Morgan Stanley”) as futures commission merchant ("FCM") and Morgan Stanley Smith Barney LLC as introducing broker ("IB" and together with FCM referred to as "FCM/IB" or "we") in connection with FCM/IB performing services for you with respect to futures, options on futures, swaps (as defined in the Commodity Exchange Act), forwards or other commodity derivatives ("Contracts"). Conflicts of interests can arise in particular when FCM/IB has an economic or other incentive to act, or persuade you to act, in a way that favors FCM/IB or its affiliates.
Under applicable law, including regulations of the Commodity Futures Trading Commission ("CFTC"), not all swaps are required to be executed on an exchange or swap execution facility (each, a "Trading Facility"), even if a Trading Facility lists the swap for trading. In such circumstances, it may be financially advantageous for FCM/IB or its affiliate to execute a swap with you bilaterally in the over-the-counter market rather than on a Trading Facility and, to the extent permitted by applicable law, we may have an incentive to persuade you to execute your swap bilaterally.
Applicable law may permit you to choose the CFTC-registered derivatives clearing organization ("Clearing House") to which you submit a swap for clearing. You should be aware that FCM/IB may not be a member of, or may not otherwise be able to submit your swap to, the Clearing House of your choice. FCM/IB consequently has an incentive to persuade you to use a Clearing House of which FCM/IB or its affiliate is a member.
You also should be aware that FCM/IB or its affiliate may own stock in, or have some other form of ownership interest in, one or more U.S. or foreign Trading Facilities or Clearing Houses where your transactions in Contracts may be executed and/or cleared. As a result, FCM/IB or its affiliate may receive financial or other benefits related to its ownership interest when Contracts are executed on a given Trading Facility or cleared through a given Clearing House, and FCM/IB would, in such circumstances, have an incentive to cause Contracts to be executed on that Trading Facility or cleared by that Clearing House. In addition, employees and officers of FCM/IB or its affiliate may also serve on the board of directors or on one or more committees of a Trading Facility or Clearing House.
In addition, Trading Facilities and Clearing Houses may from time to time have in place other arrangements that provide their members or participants with volume, market-making or other discounts or credits, may call for members or participants to pre-pay fees based on volume thresholds, or may provide other incentive or arrangements that are intended to encourage market participants to trade on or direct trades to that Trading Facility or Clearing House. FCM/IB or its affiliate may participate in and obtain financial benefits from such incentive programs.
When we provide execution services to you (either in conjunction with clearing services or in an execution-only capacity), we may direct orders to affiliated or unaffiliated market-makers, other executing firms, individual brokers or brokerage groups for execution. When such affiliated or unaffiliated parties are used, they may, where permitted, agree to price concessions, volume discounts or refunds, rebates or similar payments in return for receiving such business. Likewise, where permitted by law and the rules of the applicable Trading Facility, we may solicit a counterparty to trade opposite your order or enter into transactions for its own account or the account of other counterparties that may, at times, be adverse to your interests in a Contract. In such circumstances, that counterparty may make payments and/or pay a commission to FCM/IB in connection with that transaction. The results of your transactions may differ significantly from the results achieved by us for our own account, our affiliates, or for other customers.
In addition, where permitted by applicable law (including, where applicable, the rules of the applicable Trading Facility), FCM/IB, its directors, officers, employees and affiliates may act on the other side of your order or transaction by the purchase or sale for an account, or the execution of a transaction with a counterparty, in which FCM/IB or a person affiliated with FCM/IB has a direct or indirect interest, or may effect any such order with a counterparty that provides FCM/IB or its affiliates with discounts related to fees for Contracts or other products. In cases where we have offered you a discounted commission or clearing fee for Contracts executed through FCM/IB as agent or with FCM/IB or its affiliate acting as counterparty, FCM/IB or its affiliate may be doing so because of the enhanced profit potential resulting from acting as executing broker or counterparty.
FCM/IB or its affiliate may act as, among other things, an investor, research provider, placement agent, underwriter, distributor, remarketing agent, structurer, securitizer, lender, investment manager, investment adviser, commodity trading advisor, municipal advisor, market maker, trader, prime broker or clearing broker. In those and other capacities, FCM/IB, its directors, officers, employees and affiliates may take or hold positions in, or advise other customers and counterparties concerning, or publish research or express a view with respect to, a Contract or a related financial instrument that may be the subject of advice from us to you. Any such positions and other advice may not be consistent with, or may be contrary to, your interests or to positions which are the subject of advice previously provided by FCM/IB or its affiliate to you, and unless otherwise disclosed in writing, we are not necessarily acting in your best interest and are not assessing the suitability for you of any Contract or related financial instrument. Acting in one or more of the capacities noted above may give FCM/IB or its affiliate access to information relating to markets, investments and products. As a result, FCM/IB or its affiliate may be in possession of information which, if known to you, might cause you to seek to dispose of, retain or increase your position in one or more Contracts or other financial instruments. FCM/IB and its affiliate will be under no duty to make any such information available to you, except to the extent we have agreed in writing or as may be required under applicable law.
The bulk transfer of Morgan Stanley Smith Barney LLC ("Morgan Stanley") futures accounts to Morgan Stanley & Co. LLC occurred over the weekend of August 2-3, 2014. For information regarding this transfer please refer to the Bulk Transfer Notice that MSSB provided to account holders. Your Financial Advisor or Private Wealth Advisor is available to answer any questions you may have regarding the transfer.
The Commodity Futures Trading Commission ("CFTC") has revised their Risk Disclosure Statement to include several additional disclosures intended to provide participants in the futures markets with enhanced information to further their understanding of the risks of engaging in the futures markets. Please click here and review this Risk Disclosure Statement and contact your Financial Advisor or Private Wealth Advisor with any questions you may have.
Commodity Futures Trading Commission ("CFTC") Regulation 1.55 requires Futures Commission Merchants ("FCM's") to
post firm specific disclosure information on their public website.
For Morgan Stanley & Co. LLC financial information and firm disclosure document please click here.
For Morgan Stanley financial information please click here.
In accordance with applicable laws and regulations, Morgan Stanley Smith Barney LLC's (“Morgan Stanley”) records certain telephone conversations with outside parties. By communicating with Morgan Stanley, you consent to the voice recording of conversations with personnel of Morgan Stanley and its affiliates.
Asset allocation and diversification do not guarantee a profit or protect against a loss.
For Revenue Sharing Arrangements, please click here.
The prices of securities are derived from various sources, and do not necessarily represent the prices at which those securities could have been bought or sold. Although we attempt to use reliable sources of information, we can offer no assurance as to their accuracy, reliability or completeness. Prices are as of the date shown only and are not an offer by us or our affiliates to purchase or sell any instrument or enter into any transaction or a commitment by us or them to make such an offer. For exchange traded securities, the price reflects the closing price as of the last business day of your statement period, and generally bid prices for securities that are not exchange traded. Prices of securities not actively traded may not be available, and are indicated by N/A (not available). The markets for some fixed income and preferred securities may not be liquid, and prices may be approximations or estimates. For these and for securities that trade less frequently, we rely on outside pricing services and / or computerized pricing models, which cannot always give us actual market values. Prices may be based on: recent transactions or bids, if available; independent quotation services that use computerized valuation formulae to calculate prices based on institutional quantities; or estimates. As a result, yields to call and/or maturity may be estimates as well. Prices for non-institutional quantities of some fixed income securities are likely to be different than institutional prices. In the case of certain illiquid securitized products where we cannot obtain pricing from other sources, prices may reflect good faith estimates of market value (a mid-market level, a market bid and/or market ask, or any other price or estimate within a market spread) provided by our affiliates but do not necessarily represent levels where we or our affiliates might be willing to trade with you, the valuations on such affiliate’s own books and records or theoretical model-based valuations. In addition, these prices may vary significantly from indicative prices available from other sources or values determined for other purposes, such as the calculation of collateral or margin requirements. Annuity and insurance policy information and values are provided by the annuity or insurance company, and we are not responsible for the accuracy of this information. The amounts on this statement for limited partnerships are typically obtained from a third party or from the general partners unless we have obtained other information such as an independent appraisal. Since many partnership valuations are provided only annually, they do not always represent current values. Furthermore some securities, such as limited partnerships and non-traded REITs are illiquid and have no public markets, so the amounts shown on this statement may not equal the amounts you would receive if you sold or tendered your investment. The value of mutual fund shares is determined by multiplying the net asset value (NAV) by the number of shares or units held, as reported to us by the correspondent custodian. If we cannot obtain a price or estimate, N/A appears.
Morgan Stanley Smith Barney LLC's (“Morgan Stanley”) is a registered Broker/Dealer, Member SIPC, and not a bank. Where appropriate, Morgan Stanley has entered into arrangements with banks and other third parties to assist in offering certain banking related products and services. Investment services are offered through Morgan Stanley.
Unless specifically disclosed in writing, investments and services offered through Morgan Stanley are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by, a bank and involve investment risks, including possible loss of principal amount invested.
If the securities-based loan products is a “non-purpose loan product, the proceeds may not be used to purchase, trade, or carry margin stock (or securities, with respect to Express CreditLine); repay margin debt that was used to purchase, trade or carry margin stock (or securities, with respect to Express CreditLine); and cannot be deposited into a Morgan Stanley or other brokerage account.
To be eligible for a securities-based loan, a client must have a brokerage account at Morgan Stanley that contains eligible securities, which shall serve as collateral for the securities-based loan.
Investment, insurance and other products offered through Morgan Stanley are: Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not a Bank Deposit | Not Insured By Any Federal Government Agency
For Global CurrencySM Disclosure Statement, please click here.
Morgan Stanley Smith Barney LLC ("Morgan Stanley") offers sponsors of exchange-traded funds (“ETFs”) the opportunity to purchase data analytics for Morgan Stanley transactional activity in the sponsor’s ETFs on our platforms. ETF sponsors that purchase ETF data analytics pay a flat amount (the “Fee”) based on the number of ETFs that the sponsor has available for sale at Morgan Stanley. The Fee ranges from $50,000 for sponsors with five or fewer ETFs to a maximum of $550,000 for sponsors with more than one hundred ETFs.
The Fee is generally paid by the ETF’s investment adviser, distributor or other affiliate from its own revenues, profits or retained earnings and not directly from, or as a charge applied against the ETF’s assets. However, these revenues, profits or retained earnings may be derived, in part, from fees earned for services provided to the ETF and paid from the ETF’s assets. Because ETF Sponsors pay Morgan Stanley the Fee for each of the Sponsor’s ETFs offered on our platform, the aggregate Fee is higher for ETF sponsors that have more ETFs approved for sale.
These facts present a conflict of interest for MSSB and our Financial Advisors to the extent it leads us to focus on ETFs offered by sponsors who pay higher aggregate fees. In order to mitigate these conflicts, Financial Advisors, Private Wealth Advisors and their Branch Managers do not receive additional compensation as a result of the Fee payable to Morgan Stanley.