Not only delivering innovative ideas, sophisticated products and exceptional access to capital markets to our clients but also Morgan Stanley’s strong adherence to the highest standards of integrity, excellence and client focus is essential to our goal to be the world’s first choice for financial services.
We pledge to ensure that the interests of our clients will not be unduly impaired in relation to our financial services by adequately managing transactions between you and us or our affiliated companies (hereinafter, collectively, “we or us” unless the context requires otherwise) which may cause conflict of interests in accordance with Morgan Stanley’s global policy and procedures as well as applicable law and regulations.
1. Types of Transactions That May Cause Conflicts of Interests and Examples
Transactions between you and us that may cause conflict of interests and examples of them include, without limitation, the following:
Client-Firm Conflicts: Transactions or cases where the interests between a client and Morgan Stanley (which hereinafter may be referred to the “Firm”) may be conflicted
- Access to and use of information regarding clients’ positions, strategies or trading activity either by the Firm directly or shared by the Firm with other clients.
- Handling of non-public information obtained from investment banking, lending and other activities.
- Situations where Morgan Stanley has multiple roles with respect to a client and/or transaction (e.g., advisor, underwriter, lender, principal counterparty, derivative counterparty).
- Affiliates directing business to a trading desk or other area of the Firm which may involve the sharing of fees/profits or referral fees or heightened payouts.
- Trading in one business area that may affect the value of holdings of other Morgan Stanley businesses or their clients.
- Offering or recommending products for which the Firm receives greater fees/compensation than other products.
Client-Client Conflicts: Transactions or cases where the interests between a client and another client may be conflicted
- Clients competing for executions or seeking certain types of preferential treatment, such as allocations of investment opportunities or access to Research analysts.
- Clients trading securities opposite each other or placing orders to deal in the same security.
- Clients interested in acquiring the same company.
Employee Conflicts: Transactions or cases where the interests between an employee of the Firm and a client/the Firm may be conflicted
- Compensation arrangements or incentives for the Firm or the employees involved that could affect whether a particular security or transaction is recommended or offered to a client.
- Personal trading or outside business activities (including board memberships/directorships) or investments that could raise potential conflicts with a client or the Firm.
- Acceptance of special benefits as a result of the employee’s position with the Firm from any person or organization with which the Firm has a current or potential business relationship.
- Giving or receiving gifts or entertainment to or from persons or entities with whom Morgan Stanley conducts, or intends to conduct, business of a value or frequency that may be perceived as improper inducements.
Please note that the above are examples of transactions or cases where a conflict may arise. As mentioned in more detail below, the Firm has internal controls in place to restrict or mitigate such conflicts of interests. In addition, for the avoidance of doubt, if a transaction or activity falls within the above examples, it does not necessarily mean that there is an actual conflict of interest with you or that your interests will be impaired.
2. Scope of Companies Covered by the Management of Conflict of Interests
We manage conflict of interests which may arise from or in relation to transactions entered into by Morgan Stanley affiliated companies in Japan including Morgan Stanley MUFG Securities Co., Ltd. (“MSMS”), Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Morgan Stanley Capital, K.K., Morgan Stanley Investment Management (Japan) Co., Ltd., pursuant to the Financial Instruments and Exchange Law and the regulations thereunder. We also manage conflict of interests which may arise from or in relation to transactions entered into by Morgan Stanley affiliated companies outside Japan to the extent appropriate or necessary pursuant to Morgan Stanley’s global policy.
3. Measures for the Management of Conflict of Interests
With respect to the management of conflict of interests, we adequately protect the interests of our clients by implementing, to the extent necessary and appropriate, the following measures on a standalone or combined basis considering the nature of the transaction and client and other relevant factors:
- Separation of the division effecting the transaction in question from the division effecting the other relevant transaction;
- Modifying the terms and conditions of the transaction in question or the other relevant transaction, or changing the way to conduct such transactions;
- Ceasing to enter into either or some of the transactions in question;
- Sufficiently disclosing to the client the possibility that its interests may be impaired due to the conflict of interests; and/or
- Any other appropriate measures
4. Conflict of Interests Management Structure/Mechanism
We identify transactions that may cause conflict of interests with our clients in accordance with the prescribed procedures under Morgan Stanley’s global policy and the relevant internal rules of MSMS. These transactions are then managed by implementing the measures described in paragraph 3. above. MSMS’s Legal and Compliance Division (“LCD”) is responsible, as the conflict of interests management control division, for establishing and maintaining a firm-wide structure/mechanism to appropriately manage conflict of interests with our clients independently from the business. LCD will periodically receive reports on the status of conflict of interests management in the Firm, and review the identification of transactions that may cause conflict of interests with clients, measures used in managing conflict of interests and any other relevant aspects in order to verify that our conflict of interests management is robust and adequate. When necessary, LCD will advise on or re-evaluate procedures, structures and mechanism, etc. regarding the management of conflict of interests in the Firm.
Morgan Stanley MUFG Securities Co., Ltd.