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Statement of Financial Accounting
Home›Statement of Financial Accounting›Form 424B2 MORGAN STANLEY

Form 424B2 MORGAN STANLEY

By Thomas Heikkinen
July 7, 2021
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■The rate we are prepared to pay for securities of this type, maturity and issue size is likely to be lower than the rate implied by our secondary market credit spreads and advantageous to us. Both the lower rate and the inclusion of the costs associated with issuing, selling, structuring and hedging the PLUS in the initial issue price reduce the economics of the PLUS, causing the estimated value of the PLUS is lower than the initial issue price and negatively affect secondary market prices. Assuming there is no change in market conditions or any other relevant factor, the prices, if any, at which brokers, including MS & Co., may be willing to purchase the PLUS in Secondary market transactions are likely to be significantly lower than the initial issue price, because secondary market prices will exclude issuance, selling, structuring and hedging costs that are included in the initial issue price and incurred by you and because secondary market prices will reflect our secondary market credit spreads and the bid-offer spread that any dealer would charge in a secondary market transaction of this type and other factors.

The inclusion of the costs of issuing, selling, structuring and hedging the PLUS in the initial issue price and the lower rate we are willing to pay as the issuer make the economic conditions of the PLUS less favorable for you than they would otherwise.

However, since the costs associated with issuing, selling, structuring and hedging the PLUS are not fully deducted upon issuance, for a period of up to 6 months from the date issue, to the extent that MS & Co. may buy or sell the PLUS on the secondary market, in the absence of changes in market conditions, including those related to the underlying index, and our Credit spreads in the secondary market, it would be based on values ​​greater than the estimated value, and we anticipate that these higher values ​​will also be reflected in your brokerage account statements.

■The estimated value of PLUS is determined by reference to our pricing and valuation models, which may differ from those of other brokers and is not a maximum or minimum secondary market price. These pricing and valuation models are proprietary and are based in part on subjective views of certain market data and certain assumptions about future events, which may prove to be inaccurate. Therefore, since there is no standard market method for valuing these types of securities, our models may give a higher estimated value of PLUS than those generated by others, including other brokers on the market, if they tried to value the PLUS. . Additionally, the estimated value on the date of pricing does not represent a minimum or maximum price at which resellers, including MS & Co., would be willing to purchase your PLUS in the secondary market (if applicable) at any time. moment. The value of your PLUS at any time after the date of this document will vary depending on many factors that cannot be accurately predicted, including our creditworthiness and changes in market conditions. See also “The market price of PLUS will be influenced by many unforeseeable factors” above.

■The PLUS will not be listed on any stock exchange and secondary trading may be limited. The PLUS will not be listed on any stock exchange. Therefore, there may be little or no secondary market for the PLUS. MS & Co. may, but is not obligated to, make a deal in PLUS and, if it chooses to make a deal once, may stop doing so at any time. When making a market, it will usually do so for routine secondary market size trades at prices based on its estimate of the current value of the PLUS, taking into account its bid / offer spread, our credit spreads, market volatility, the notional size of the proposed sale, the cost of unwinding the associated hedge positions, the time remaining to maturity and the likelihood that it will be able to resell most. Even though there is a secondary market, it may not provide enough liquidity for you to trade or sell the MOST easily. Since other brokers may not participate significantly in the PLUS secondary market, the price at which you can trade your PLUS will likely depend on the price, if any, at which MS & Co. is willing to trade. . If at any time MS & Co. were to stop establishing a market in the PLUS, it is likely that there would be no secondary market for the PLUS. Therefore, you should be prepared to hold onto your PLUS until maturity.

■The Calculation Agent, which is a subsidiary of Morgan Stanley and an affiliate of MSFL, will make decisions regarding the PLUS. As the Calculation Agent, MS & Co. will determine the Initial Index Value and the Final Index Value, and will calculate the amount of cash you will receive at maturity, if any. In addition, certain decisions taken by MS & Co., in its capacity as Calculation Agent, may require it to exercise its discretion and make subjective judgments, for example regarding the occurrence or not of events. disruption and the selection of an index successor or the calculation of the final index value in the event of a market disruption or termination of the underlying index. These potentially subjective determinations may adversely affect the payment made to you at maturity, if any. For more information on these types of determinations, see “Description of PLUS — Carrying Forward of Valuation Date (s)” and “Calculation Agent and Calculations” and associated definitions in the accompanying Product Supplement. In addition, MS & Co. determined the estimated value of the PLUS on the pricing date.

■The hedging and trading activities of our affiliates could potentially adversely affect the value of PLUS. One or more of our affiliates and / or third-party brokers plan to conduct hedging activities related to the PLUS (and other instruments related to the Underlying Index or its constituent stocks), including trading in the stocks. which constitute the underlying index as well as in other instruments linked to the underlying index. Therefore, these entities may unwind or adjust their hedge positions during the term of the PLUS, and the hedging strategy may involve larger and more frequent dynamic adjustments to the hedge as the valuation date approaches. Some of our affiliates also regularly trade the stocks that make up the Underlying Index and other financial instruments linked to the Underlying Index through their general broker and others.



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