# MORGAN STANLEY CAPITAL SERVICES, LLC X-17A-5 (2026-02-26) — Broker-dealer annual report

- Company: MORGAN STANLEY CAPITAL SERVICES, LLC
- Form: X-17A-5
- Filed: 2026-02-26
- Accession: 0001193125-26-076779
- CIK: 1891397
- Website: deloitte.com

Original filing: https://www.sec.gov/Archives/edgar/data/1891397/000119312526076779/d13161dfull.pdf

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# MORGAN STANLEY CAPITAL SERVICES LLC

# STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2025 AND INDEPENDENT AUDITOR'S REPORT

\*\*\*\*\*\*\*\*\*\*\*

Filed Pursuant to Rule Rule 18a-7(d)(2) under the Securities Exchange Act of 1934 as a Public Document.

Note: A copy of this report, the Morgan Stanley Capital Services LLC Statement of Financial Condition as of December 31, 2025, may be mailed to you at no cost by calling 1 (833) 445-2492.

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|                 | '@E6 #?4@>6,2I6D                         |       |
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|                 | '@E6 +F3D6BF6?EG6?E                      |       |
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**Deloitte & Touche LLP**  30 Rockefeller Plaza New York, NY 10112-0015 USA

Tel: 1 212 492 4000 Fax: 1 212 489 1687 www.deloitte.com

# INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Sole Member of Morgan Stanley Capital Services LLC

# Opinion

We have audited the statement of financial condition of Morgan Stanley Capital Services LLC (the "Company"), as of December 31, 2025, and the related notes (the "financial statement").

In our opinion the accompanying financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2025, in accordance with accounting principles generally accepted in the United States of America.

# Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statement section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

# Responsibilities of Management for the Financial Statement

Management is responsible for the preparation and fair presentation of the financial statement in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statement that is free from material misstatement, whether due to fraud or error.

In preparing the financial statement, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the financial statement is available to be issued.

# Auditor's Responsibilities for the Audit of the Financial Statement

Our objectives are to obtain reasonable assurance about whether the financial statement as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statement.

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**Deloitte & Touche LLP**  30 Rockefeller Plaza New York, NY 10112-0015 USA

Tel: 1 212 492 4000 Fax: 1 212 489 1687 www.deloitte.com

In performing an audit in accordance with GAAS, we:

- x Exercise professional judgment and maintain professional skepticism throughout the audit.
- x Identify and assess the risks of material misstatement of the financial statement, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement.
- x Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- x Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statement.
- x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

February 26, 2026

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{9}------------------------------------------------

ASU 2025-11 - Interim Reporting (Issued December 2025). This update improves the navigability of interim disclosure requirements and clarifies when that guidance is applicable. The amendments also add a principle for disclosing material events since the last annual reporting period, which aligns U.S. GAAP interim financial statement requirements with SEC regulations for registrants. The amendments do not expand or reduce existing disclosure requirements, rather they provide clarity on existing interim reporting requirements. The update is effective for interim periods beginning January 1, 2028, with early adoption permitted. Amendments may be applied prospectively or retrospectively. The Company is currently evaluating the disclosure impact of this accounting update; however, the Company does not expect a material impact on our statement of financial condition upon adoption.

# 3. Cash and Cash Equivalents

Cash and cash equivalents is comprised of the following:

|                         |      | At December 31, 2025 |
|-------------------------|------|----------------------|
| Cash and due from banks | ಕ್ಕಾ | 49                   |
| Restricted cash         |      | 2,595                |
| Total                   | ತಿ   | 2,644                |
|                         |      |                      |

For additional information on cash and cash equivalents, including restricted cash, see Note 2.

## 4. Related Party Transactions

The Company enters into transactions with the Ultimate Parent and its consolidated subsidiaries (the "Firm") in order to, among other things, manage risk, meet collateral requirements with respect to its OTC derivatives, satisfy liquidity requirements, and fund its business activities. These transactions include OTC derivatives, collateralized financings and assets sold with retained exposure as described in Notes 6, 7 and 12, respectively.

The Company also obtains funding and subordinated liabilities from the Parent as described in Notes 8 and 9, respectively.

Trading assets and liabilities with affiliates primarily include OTC derivative contracts. See Notes 5 and 6 for further information.

As part of its normal trading activity, the Company enters into OTC derivatives transactions with its affiliates in order to manage the relevant market risks, such as interest rate, foreign exchange and equity risk. In managing those risks, the Company may enter into OTC derivatives with third-party counterparties or other affiliates. The Company also facilitates foreign exchange transactions for affiliates as part of the Firm's currency management function.

Receivables from brokers, dealers and clearing organizations includes initial and variation margin requirements posted to exchanges by broker-dealer affiliates that clear certain derivatives and futures contracts for the Company after consideration of eligible offset as described in Note 2. Receivables from broker dealers also includes unsettled trades with MS&Co.Payables to brokers, dealers and clearing organizations includes margin loans (net of related cash and short sale proceeds) with MS&Co. in order to fund a portion of the Company's corporate equities trading activity.

Receivables from and payables to customers include amounts arising from cash collateral posted to and received from affiliates, including broker dealer affiliates, related to bilateral OTC derivatives after consideration of eligible offset as described in Note 2. Payables to customers also include amounts arising from cash margin posted to and received from affiliates related to certain reverse repurchase and repurchase agreements.

Other secured financings includes OTC derivative contracts with affiliates which are not classified as Trading liabilities because they fail the initial net investment criterion as described further in Note 8.

The Company has agreements with affiliates for other activities, including a tax sharing agreement with the Ultimate Parent as described in Note 14 and other activities as described further below. Unsettled amounts for these activities are recorded within receivables from or payables to affiliates, and are payable on demand

The Company applies global transfer pricing policies among affiliates. These policies are consistent with the 2022 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. The Firm continues to engage in negotiations of Advance Pricing Agreements with selected tax authorities in respect of its key transfer pricing methodologies. The agreements reached to date do not materially impact the Company's statement of financial condition.

The Company shares the majority of its non-interest expenses with MS&Co., which is the primary employing entity for the U.S. business activities undertaken by the Company, based on the level of activity on the Company relative to MS&Co.

{10}------------------------------------------------

|                                                       | <.,.5+.:<br> |  |  |
|-------------------------------------------------------|--------------|--|--|
| ;;.<;*6-:.,.2>*+4.;/:75*//242*<.-<br>,758*62.;        |              |  |  |
| .@5.;10.@52>B6C.92;A@                                 | <br><br>     |  |  |
| (?.16;4.@@2A@.A3.6?C.9B2                              | <br>         |  |  |
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| '20B?6A62@/<??<D21                                    | <br>         |  |  |
| &2026C./92@	B@A<:2?@                                  | <br>         |  |  |
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| &2026C./92@	22@6;A2?2@A.;1<A52?                       | <br>         |  |  |
|                                                       |              |  |  |

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| (?.16;496./696A62@.A3.6?C.9B2                      | <br><br> |
|----------------------------------------------------|----------|
| '20B?6A62@@<91B;12?.4?22:2;A@A<?2=B?05.@2          | <br>     |
| '20B?6A62@9<.;21                                   | <br>     |
| \$A52?@20B?2136;.;06;4@.A3.6?C.9B2                 | <br>     |
| %.F./92@	B@A<:2?@                                  | <br>     |
| %.F./92@	?<82?@12.92?@.;1092.?6;4<br><?4.;6G.A6<;@ | <br>     |
| %.F./92@H ;A2?2@A16C612;1.;1<A52?                  | <br>     |
| \$A52?96./696A62@                                  | <br>     |
| <??<D6;4@6;09B12@<br>.A3.6?C.9B2                   | <br>     |
| 'B/<?16;.A2112/A                                   | <br>     |

{11}------------------------------------------------

# 5. Fair Value

#### Assets and Liabilities Measured at Fair Value

|                            | At December 31, 2025 |         |    |           |           |         |             |           |
|----------------------------|----------------------|---------|----|-----------|-----------|---------|-------------|-----------|
|                            |                      | Level 1 |    | Level 2   | Level 3   | Netting |             | Total     |
| Assets at fair value:      |                      |         |    |           |           |         |             |           |
| Trading assets:            |                      |         |    |           |           |         |             |           |
| U.S. treasury securities   | ക്ക                  | 21,404  | ਉ  | -         | ಕೆ        |         | ಲ್ಲಿ        | 21,404    |
| Corporate equities1        |                      | 15,084  |    | ব         | 5         |         |             | 15,093    |
| Other debt                 |                      |         |    | 3,870     |           |         |             | 3,870     |
| Derivative contracts:      |                      |         |    |           |           |         |             |           |
| Interest rate              |                      | 54      |    | 213,534   | 1,007     |         |             | 214,595   |
| Credit                     |                      |         |    | 15,416    | 141       |         |             | 15,557    |
| Foreign exchange           |                      | 6       |    | 79,105    | 271       |         |             | 79,382    |
| Equity                     |                      | 11      |    | 21,257    | 284       |         |             | 21,552    |
| Commodity and other        |                      |         |    | 1,251     | 497       |         |             | 1,748     |
| Netting2                   |                      | (42)    |    | (293,565) | (1,491)   |         | (30,400)    | (325,498) |
| Total derivative contracts |                      | 29      |    | 36,998    | 709       |         | (30,400)    | 7,336     |
| Total trading assets       | ക്ക                  | 36,517  | ਦੇ | 40,872    | 714<br>ਨੇ | ക       | (30,400) \$ | 47,703    |

|                            |     | At December 31, 2025 |    |                                                                                                                                                                                |     |             |             |     |           |
|----------------------------|-----|----------------------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|-------------|-------------|-----|-----------|
|                            |     | Level 1              |    | Level 2                                                                                                                                                                        |     | Level 3     | Netting     |     | l ota     |
| Liabilities at fair value: |     |                      |    |                                                                                                                                                                                |     |             |             |     |           |
| Trading liabilities:       |     |                      |    |                                                                                                                                                                                |     |             |             |     |           |
| U.S. treasury securities   | ക്ക | 5,187                | ਉ  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ക്ക |             |             | ക്ക | 5,187     |
| Corporate equities1        |     | 16,093               |    | 6                                                                                                                                                                              |     | 1           |             |     | 16,100    |
| Other debt                 |     |                      |    | 38                                                                                                                                                                             |     |             |             |     | 38        |
| Derivative contracts:      |     |                      |    |                                                                                                                                                                                |     |             |             |     |           |
| Interest rate              |     | 60                   |    | 201,489                                                                                                                                                                        |     | 644         |             |     | 202,193   |
| Credit                     |     |                      |    | 14,984                                                                                                                                                                         |     | 172         |             |     | 15,156    |
| Foreign exchange           |     | 66                   |    | 76,400                                                                                                                                                                         |     | 164         |             |     | 76,630    |
| Equity                     |     | 1                    |    | 26,552                                                                                                                                                                         |     | 295         |             |     | 26,848    |
| Commodity and other        |     |                      |    | 1,179                                                                                                                                                                          |     | 517         |             |     | 1,696     |
| Netting2                   |     | (42)                 |    | (293,565)                                                                                                                                                                      |     | (1,491)     | (13,702)    |     | (308,800) |
| Total derivative contracts |     | 85                   |    | 27,039                                                                                                                                                                         |     | 301         | (13,702)    |     | 13,723    |
| Total trading liabilities  | ക്ക | 21,365               | ಕೆ | 27,083                                                                                                                                                                         | ਨੇ  | 302<br>ಕ್ಕೆ | (13,702) \$ |     | 35,048    |
| Other secured financings   |     |                      |    | ਰੇਰੇ                                                                                                                                                                           |     |             |             |     | ਰੇਰੇ      |
| Borrowings                 |     |                      |    | દર્ડ                                                                                                                                                                           |     | 10          |             |     | 73        |

1. For trading purposes, the Company holds or sellities issued by entities in diverse industries and of varing sizes. Corporate equities are generally used to economically hedge equity derivative contracts.

2. For positions with the same counterparty that cross over the fair value hierarchy, both counterpary netting and cash collateral netting are included in the column titled "Neting". Positions classified within the same counterparty are netted within the column for that level. For further information on derivative instruments, see Note 6.

{12}------------------------------------------------

## Fair Value Measurements

## Valuation Techniques for Assets and Liabilities Measured at Fair Value

| Asset and Liability/Valuation Technique                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Valuation Hierarchy Classification                                                                                                                                                                                                                                                                                        |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| U.S. Treasury Securities<br>Fair value is determined using quoted market prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | · Level 1 - as actively traded and prices<br>are observable                                                                                                                                                                                                                                                               |
| Other Debt<br>Other debt referencing Listed fund units are generally marked to the exchange-traded price if ·<br>actively traded.<br>· Other debt includes transfers of financial assets that failed to meet the accounting criteria for a<br>purchase.<br>Other debt includes hybrid financial instruments with embedded derivatives. See the Derivative<br>Contracts section below for a description of the valuation technique applied.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Generally Level 2<br>Level 3 - in instances where the<br>unobservable<br>inputs<br>are<br>deemed<br>significant                                                                                                                                                                                                           |
| Corporate Equities<br>Exchange-traded equity securities are generally valued based on quoted prices from the exchange.<br>To the extent these securities are actively traded, valuation adjustments are not applied.<br>Unlisted equity securities are generally valued based on an assessment of each security,<br>considering rounds of financing and third-party transactions, discounted cash flow analyses and<br>market-based information, including comparable transactions, trading multiples and changes in .<br>market outlook, among other factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Level 1 - actively traded exchange-traded<br>securities and fund units<br>Level 2 - if not actively traded, inputs are<br>observable or if undergoing a recent M&A<br>event or corporate action<br>Level 3 - if not actively traded, inputs are<br>unobservable or if undergoing an aged<br>M&A event or corporate action |
| Exchanged-Traded Derivative Contracts<br>Exchange-traded derivatives that are actively traded are valued based on quoted prices from the .<br>exchange.<br>Exchange-traded derivatives that are not actively traded are valued using the same techniques as<br>those applied to OTC derivatives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Level 1 - when actively traded<br>Level 2 - when not actively traded                                                                                                                                                                                                                                                      |
| OTC Derivative Contracts<br>OTC derivative contracts include forward, swap and option contracts related to interest rates,<br>foreign currencies, credit standing of reference entities, equity prices, or commodity prices.<br>Depending on the product and the terms of the transaction, the fair value of OTC derivative products<br>can be modelled using a series of techniques, including closed-form analytic formulas, such as the .<br>Black-Scholes option-pricing model, simulation models or a combination thereof. Many pricing<br>models do not entail material subjectivity as the methodologies employed do not necessitate<br>significant judgment since model inputs may be observed from actively quoted markets, as is the<br>case for generic interest rate swaps, many equity, commodity and foreign currency option contracts,<br>and certain CDS. In the case of more established derivative products, the pricing models used by<br>the Company are widely accepted by the financial services industry.<br>More complex OTC derivative products are typically less liquid and require more judgment in the<br>implementation of the valuation technique since direct trading activity or quotes are unobservable.<br>This includes certain types of interest rate derivatives with both volatility and correlation exposure,<br>equity or foreign currency derivatives that are either longer-dated or include exposure to multiple<br>underlying, and credit derivatives, including CDS on certain mortgage or ABS and basket CDS.<br>Where required inputs are unobservable, relationships to observable data points, based on historic<br>and/or implied observations, may be employed as a technique to estimate the model input values.<br>For further information on the valuation techniques for OTC derivative products, see Note 2. | Level 2 - when valued using observable<br>inputs supported by market liquidity or<br>where the unobservable input is not<br>deemed significant<br>Level 3 - when valued using observable<br>inputs with limited market liquidity or if an<br>unobservable input is deemed significant                                     |
| Other Secured Financings and Borrowings<br>Borrowings and Other secured financings are contracts that are not classified as OTC derivatives<br>because they fail the initial net investment criterion. See the Derivative Contracts section above for<br>a description of the valuation technique applied to the Company's Borrowings and Other secured<br>financings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Level 2 - If value based on observable<br>market data for comparable instruments,<br>or where the unobservable input is not<br>deemed significant<br>Level 3 -<br>in instances where the<br>unobservable<br>deemed<br>inputs<br>are<br>significant                                                                        |

{13}------------------------------------------------

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{14}------------------------------------------------

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{15}------------------------------------------------

## **,90=(;0=,5:;9<4,5;:**

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| .:2>*<2>.,76<:*,<;                                                                                                |          |                 |  |               |  |                   |  |       |                 |               |   |                   |       |
| ;A2?2@A?.A2                                                                                                       |          |                 |  | I             |  |                   |  |       |                 |               |   |                   |       |
| ?216A                                                                                                             |          |                 |  |               |  | I                 |  |       |                 |               |   | I                 |       |
| <?264;2E05.;42                                                                                                    |          |                 |  | I             |  |                   |  |       |                 |               | I |                   |       |
| >B6AF                                                                                                             |          |                 |  | I             |  |                   |  |       |                 |               | I |                   |       |
| <::<16AF.;1<A52?                                                                                                  |          |                 |  | I             |  | I                 |  |       |                 |               | I | I                 |       |
| &7<*40:7;;-.:2>*<2>.,76<:*,<;                                                                                     |          |                 |  |               |  |                   |  |       | <br>            | <br>          |   |                   | <br>  |
| 57=6<;7//;.<                                                                                                      |          |                 |  |               |  |                   |  |       |                 |               |   |                   |       |
| <B;A2?=.?AF;2AA6;4                                                                                                |          |                 |  |               |  |                   |  |       |                 |               |   |                   |       |
| .@50<99.A2?.9;2AA6;4                                                                                              |          |                 |  | I             |  | I                 |  |       |                 |               |   |                   |       |
| &7<*4-.:2>*<2>.*;;.<;                                                                                             |          |                 |  |               |  |                   |  |       |                 |               |   |                   |       |
| 57=6<;67<7//;.<                                                                                                   |          |                 |  |               |  |                   |  |       |                 |               |   |                   |       |
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| !.<*57=6<;                                                                                                        | <br>     |                 |  |               |  |                   |  | <br>  |                 |               |   |                   |       |
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{16}------------------------------------------------

|                                                                                                                                          | Derivative Liabilities at At December 31, 2025 |                |                     |             |                  |                           |                     |              |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|----------------|---------------------|-------------|------------------|---------------------------|---------------------|--------------|--|--|
|                                                                                                                                          |                                                |                | Fair Value          |             | Notional2        |                           |                     |              |  |  |
|                                                                                                                                          | Bilateral<br>OTC                               | Cleared<br>OTC | Exchange-<br>Traded | Total       | Bilateral<br>OTC | Cleared<br>OTC            | Exchange-<br>Traded | Total        |  |  |
| Derivative contracts:                                                                                                                    |                                                |                |                     |             |                  |                           |                     |              |  |  |
| Interest rate                                                                                                                            | \$ 201,940                                     | ਵ<br>193       | ક<br>60             | \$ 202,193  | \$ 9,774,863     | \$ 1,727,857              | ಕಾ<br>74,829        | \$11,577,549 |  |  |
| Credit                                                                                                                                   | 11,821                                         | 3.335          |                     | 15.156      | 438,234          | 122,352                   |                     | 560,586      |  |  |
| Foreign exchange                                                                                                                         | 76.564                                         |                | 66                  | 76,630      | 3,639,938        |                           | 13,552              | 3,653,490    |  |  |
| Equity                                                                                                                                   | 26,816                                         |                | 32                  | 26,848      | 844,323          |                           | 757                 | 845,080      |  |  |
| Commodity and other                                                                                                                      | 1,696                                          |                |                     | 1,696       | 35,629           |                           |                     | 35.629       |  |  |
| Total gross derivative contracts                                                                                                         | 318,837                                        | 3,528          | 158                 | 322,523     |                  | \$14,732,987 \$ 1,850,209 | S<br>89,138         | \$16,672,334 |  |  |
| Amounts offset                                                                                                                           |                                                |                |                     |             |                  |                           |                     |              |  |  |
| Counterparty netting                                                                                                                     | (291,974)                                      | (3,252)        | (65)                | (295,291)   |                  |                           |                     |              |  |  |
| Cash collateral netting                                                                                                                  | (13,421)                                       | (88)           |                     | (13,509)    |                  |                           |                     |              |  |  |
| Total derivative liabilities                                                                                                             | 13,442                                         | 188            | ਰੇਤੇ                | 13,723      |                  |                           |                     |              |  |  |
| Amounts not offset1                                                                                                                      |                                                |                |                     |             |                  |                           |                     |              |  |  |
| Financial instruments collateral                                                                                                         | (1,468)                                        |                |                     | (1,468)     |                  |                           |                     |              |  |  |
| Net amounts                                                                                                                              | 11,974 \$<br>မှာ                               | 188            | କ୍ତ<br>ਰੇਤੇ         | த<br>12,255 |                  |                           |                     |              |  |  |
| Amounts for which master netting or collateral agreements are not in place or may<br>not be legally enforceable, included in Net Amounts |                                                |                |                     | 43<br>611   |                  |                           |                     |              |  |  |

1. Amounts relate to master neting agreements that have been determined by the Company to be legally enforceable in the event of default but where certain other criteria are not met in accordance with applicable offsetting accounting guidance.

2. Notional amounts of derivative contracts generally overstate in most circumstances, notional anounts are only used as a reference point from which to calculate amounts owed between the contract. Furthermore, notional amounts do not reflect the benefit of legally enforceable netting arrangements or risk mitigating transactions.

#### Credit Risk-Related Contingencies

The following table presents the aggregate fair value of OTC derivative contracts that contain credit risk-related contingent features that are in a net liability position for which the Company has posted collateral in the normal course of business.

#### Net Derivative Liabilities and Collateral Posted

|                                        |      | At<br>December<br>31, 2025 |
|----------------------------------------|------|----------------------------|
| Net derivative liabilities with credit |      |                            |
| risk-related contingent features       | ક્તિ | 8.419                      |
| Collateral posted                      |      | 5.326                      |

The additional collateral or termination payments which may be called in the event of a future credit rating downgrade vary by contract and can be based on either the counterparty's or the Ultimate Parent's ratings by either or both of Moody's and S&P. The table below shows the future potential collateral amounts and termination payments for the Company that could be called or required by counterparties or exchange and clearing organizations in the event of one-notch or two-notch downgrade scenarios based on the relevant contractual downgrade triggers.

## Incremental Collateral or Termination Pavments upon Potential Future Ratings Downgrades

|                                                                 | At December<br>31, 2025 |    |  |  |
|-----------------------------------------------------------------|-------------------------|----|--|--|
| One-notch downgrade                                             | S                       | 51 |  |  |
| Two-notch downgrade                                             |                         | 21 |  |  |
| Bilateral downgrade agreements included in the<br>amounts above | ಕಿ                      | 61 |  |  |

1. Amounts represent arrangements between the Company and counterparties where upon the downgrade of the counterparty or the Ultimate Parent, the counterparty or the Company must deliver collateral to the other party. These bilateral downgrade arrangements are used by the Company to manage the risk of counterparty downgrades.

#### Credit Derivatives and Other Credit Contracts

The Company enters into credit derivatives, principally CDS, under which it receives or provides protection against the risk of default on a set of debt obligations issued by a specified reference entity or entities. A majority of the Company's counterparties are banks, broker-dealers and other financial institutions.

{17}------------------------------------------------

#### Maximum Potential Payout/Notional of Credit Protection Sold

|                                                         |                                        |        |       |         |      |         |      |        |   |         |        | Fair Value  |  |
|---------------------------------------------------------|----------------------------------------|--------|-------|---------|------|---------|------|--------|---|---------|--------|-------------|--|
|                                                         | Years to Maturity at December 31, 2025 |        |       |         |      |         |      |        |   |         | Asset/ |             |  |
|                                                         | < 1                                    |        |       | 1-3     |      | 3-5     |      | Over 5 |   | Total   |        | (Liability) |  |
| Single name CDS2:                                       |                                        |        |       |         |      |         |      |        |   |         |        |             |  |
| Investment grade                                        | S                                      | 19.143 | સ્ત્ર | 48.159  | ಲ್ಲಿ | 46,917  | ಲ್ಲಿ | 15,342 | e | 129.561 | ક      | 3,148       |  |
| Non-investment grade                                    |                                        | 9,119  |       | 20,226  |      | 18.732  |      | 2,134  |   | 50,211  |        | 824         |  |
| Total                                                   |                                        | 28,262 |       | 68.385  |      | 65,649  |      | 17.476 |   | 179,772 |        | 3,972       |  |
| Index and basket CDS2:                                  |                                        |        |       |         |      |         |      |        |   |         |        |             |  |
| Investment grade                                        |                                        | 8.591  |       | 14.466  |      | 13,047  |      |        |   | 36.104  |        | 1.165       |  |
| Non-investment grade                                    |                                        | 25,089 |       | 77,312  |      | 217,012 |      | 26,876 |   | 346,289 |        | 4,794       |  |
| Total                                                   |                                        | 33,680 |       | 91,778  |      | 230,059 |      | 26,876 |   | 382,393 |        | 5,959       |  |
| Total credit protection sold                            | 47                                     | 61,942 |       | 160,163 |      | 295,708 |      | 44,352 |   | 562,165 |        | 9,931       |  |
| CDS protection sold with identical protection purchased |                                        |        |       |         |      |         |      |        | S | 508,126 |        |             |  |

1. Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting

2. Investment grade hon-investment grade on the internal credit raing of the reference obligation. Internal credit ratings serve as the CRVs assessment of credit risk and the basis for a comprehensive credit risk. The Company uses quantitative models and judgement to estimate the various risk parameters related to each obligor.

#### Protection Purchased with CDS

|                           |      | At December 31, 2025 |            |                   |  |  |
|---------------------------|------|----------------------|------------|-------------------|--|--|
|                           |      | Notional             | Fair Value |                   |  |  |
|                           |      |                      |            | Asset/(Liability) |  |  |
| Single Name CDS           | ಳಿ   | 176,081 \$           |            | (3,544)           |  |  |
| Index and Basket          |      | 359.497              |            | (4,997)           |  |  |
| Tranched Index and Basket |      | 31.974               |            | (989)             |  |  |
| Total                     | ಕ್ಕೆ | 567,552 \$           |            | (9,530)           |  |  |

The purchase of credit protection does not represent the sole manner in which the Company risk manages its exposure to credit derivatives. The Company manages its exposure to these derivative 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 Company may also recover amounts on the underlying reference obligation delivered to the Company under CDS where credit protection was sold.

Single Name CDS. A CDS protects the buyer against the loss of principal on a bond or loan in case of a default by the issuer. The protection buyer pays a periodic premium (generally quarterly) over the life of the contract and is protected for the period. The Company, 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 and restructuring of the obligations of the referenced entity.

Index and Basket CDS. Index and basket CDS are products where credit protection is provided on a portfolio of single name CDS. Generally, in the event of a default on one of the underlying names, the Company pays a pro rata portion of the total notional amount of the CDS.

Tranched Index and Basket CDS. The Company also enters into tranched index and basket CDS where the 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 the tranche, they are passed on to the next most senior tranche in the capital structure.

## 7. Collateralized Transactions

The Company enters into reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions with affiliates to, among other things, acquire securities to cover short positions and settle other securities obligations, meet collateral requirements with respect to its OTC derivatives, finance its inventory positions and meet liquidity requirements.

The Company monitors the fair value of the underlying securities as compared with the related receivable or payable, including accrued interest, and requests or posts additional collateral, as required under the applicable agreement to ensure such transactions are adequately collateralized, or that excess collateral is returned.

The risk related to a decline in the market value of collateral pledged or received is managed by setting appropriate marketbased margin requirements. Increases in collateral margin calls on repurchase agreements and securities loaned transactions (collectively, "secured financing payables") due to market value declines may be mitigated by increases in collateral margin calls on reverse repurchase agreements and securities borrowed transactions with similar quality collateral. Additionally, the 

{18}------------------------------------------------

Company may request lower quality collateral pledged be replaced with higher quality collateral through collateral substitution rights in the underlying agreements.

The Company actively manages its secured financing payables in a manner that reduces the potential refinancing risk of secured financing payables of less liquid assets and also considers the quality of collateral when negotiating collateral eligibility with counterparties. The Company utilizes shorter-term secured financing payables for highly liquid assets and establishes longer tenor limits for less liquid assets, for which funding may be at risk in the event of a market disruption.

#### Offsetting of Certain Collateralized Transactions

|                                     | At December 31, 2025 |                  |                                                  |         |                           |        |                                              |  |    |  |
|-------------------------------------|----------------------|------------------|--------------------------------------------------|---------|---------------------------|--------|----------------------------------------------|--|----|--|
|                                     |                      | Gross<br>Amounts | Net<br>Amounts<br>Amounts<br>Offset<br>Presented |         | Amounts<br>Not<br>Offset' |        | Net<br>Amounts                               |  |    |  |
| Assets                              |                      |                  |                                                  |         |                           |        |                                              |  |    |  |
| Reverse<br>repurchase<br>agreements |                      |                  |                                                  |         |                           |        | \$ 58,413 \$ (2,057) \$ 56,356 \$(56,350) \$ |  | 6  |  |
| Securities<br>borrowed              |                      | 18.124           |                                                  | (6,917) |                           | 11,207 | (11,126)                                     |  | 81 |  |
| Liabilities                         |                      |                  |                                                  |         |                           |        |                                              |  |    |  |
| Repurchase<br>agreements            |                      |                  |                                                  |         |                           |        | \$ 26,940 \$ (2,057) \$ 24,883 \$(24,883) \$ |  |    |  |
| Securities<br>loaned                |                      | 7,598            |                                                  | (6,917) |                           | 681    | (681)                                        |  |    |  |

1. Amounts relate to master netting agreements that have been determined by the Company to be legally enforceable in the event of default but where certain other criteria are not met in accordance with applicable offsetting accounting guidance.

For information related to offsetting of derivatives, see Note 6.

Gross Secured Financing Payables by Remaining Contractual Maturity

|                          |    | At December 31, 2025  |  |                      |  |            |       |        |
|--------------------------|----|-----------------------|--|----------------------|--|------------|-------|--------|
|                          |    | Overnight<br>and Open |  | Less than<br>30 Days |  | 30-60 Days | Total |        |
| Repurchase<br>agreements |    | \$ 26,386 \$          |  | 554 \$               |  |            | ಕಾ    | 26,940 |
| Securities loaned        |    | 7,598                 |  |                      |  |            |       | 7.598  |
| Total                    | ತಿ | 33.984 \$             |  | 554 \$               |  |            | များ  | 34,538 |

## Gross Secured Financing Payables by Class of Collateral Pledged

|                                        |      | At December 31, 2025 |
|----------------------------------------|------|----------------------|
| Repurchase agreements                  |      |                      |
| U.S. government and agency securities  | ಿತ   | 25.021               |
| Other sovereign government obligations |      | 554                  |
| Corporate and other debt               |      | 1,362                |
| State and municipal securities         |      | 3                    |
| Total repurchase agreements            | ಲ್ಲಿ | 26,940               |
| Securities loaned                      |      |                      |
| Corporate and other debt               | ಿತ   | 668                  |
| Corporate equities                     |      | 6.918                |
| Other                                  |      | 12                   |
| Total securities loaned                |      | 7.598                |
| Total                                  | ಿ    | 34,538               |

#### Trading Assets Pledged

The Company pledges its trading assets to its affiliates to collateralize repurchase agreements and margin loans. Pledged financial instruments that can be sold or repledged by the affiliates are identified as Trading assets (pledged as collateral) in the Company's statement of financial condition. At December 31, 2025, the carrying value of Trading assets that have been loaned or pledged to counterparties, where those counterparties do not have the right to sell or repledge the collateral was \$314.

#### Collateral Received

The Company receives collateral in the form of securities in connection with its OTC derivative transactions, reverse repurchase agreements and securities borrowed. In many cases, the Company is permitted to sell or repledge these securities held as collateral and use the securities to collateralize OTC derivatives, repurchase agreements and securities loaned. At December 31, 2025, the fair value of financial instruments received as collateral where the Company is permitted to sell or repledge the securities was \$82,062 and the fair value of the portion that had been sold or repledged was \$38,093.

{19}------------------------------------------------

## 8. Borrowings and Other Secured Financings

|                                                | Fixed<br>Rate |    | Variable<br>Rate |        | Total at<br>December<br>31, 2025 |        |
|------------------------------------------------|---------------|----|------------------|--------|----------------------------------|--------|
| Original maturities of one year or<br>ess:     |               |    |                  |        |                                  |        |
| Next 12 months                                 | ತಿ            | 62 | ക                | 4,114  | ಕಾ                               | 4.176  |
| Original maturities greater than<br>one year:  |               |    |                  |        |                                  |        |
| Due in 2027                                    |               |    |                  | 5,502  |                                  | 5,502  |
| Thereafter                                     |               | 10 |                  |        |                                  | 10     |
| Total                                          | ಕ್ಕಾ          | 10 | ea               | 5.502  | ಕ್ಕಾ                             | 5,512  |
| Total Borrowings                               | \$            | 72 | \$               | 9,616  | \$                               | 9,688  |
| Weighted average coupon at period-<br>endi     |               |    |                  | 5.09 % |                                  | 5.09 % |
| Weighted average stated maturity, in<br>years' |               |    |                  |        |                                  | 1.12   |

1. Includes only borrowings with original maturities greater than one year. Weighted average coupon was calculated utilizing U.S. dollar interest rates and excludes financial instruments for which the fair value option was elected.

Borrowings with original maturities of one year or less primarily consist of unsecured borrowings from the Parent that mature in less than 12 months and hybrid financial instruments with embedded derivatives which are not classified as OTC derivatives because they fail the initial net investment criterion.

Borrowings with original maturities greater than one year consist of unsecured borrowings from the Parent which can be terminated by the Parent or the Company and repayment will be required in 13 months from the date of termination. Borrowings also consist of contracts which are not classified as OTC derivatives because they fail the initial net investment criterion.

The interest rates for unsecured borrowings from the Parent are established by the Treasury function of the Firm. These rates generally reflect the rate of interest that the Firm incurs in funding its business (the "Firm proxy rate").

## Other Secured Financings

Other secured financings are stated at fair value and include hybrid financial contracts with embedded derivatives which are not classified as OTC derivatives because they fail the initial net investment criterion.

#### Maturities and Terms of Other Secured Financings

|                                               | At December 31, 2025 |           |                          |     |    |       |
|-----------------------------------------------|----------------------|-----------|--------------------------|-----|----|-------|
|                                               |                      |           | Fixed Rate Variable Rate |     |    | Total |
| Original maturities of one<br>year or less:   |                      |           |                          |     |    |       |
| Next 12 months                                | ಳಿ                   | 5 \$      |                          | છે. |    | 5     |
| Original maturities greater<br>than one year: |                      |           |                          |     |    |       |
| Due in 2026                                   |                      | 11        |                          |     |    | 11    |
| Thereafter                                    |                      | 83        |                          |     |    | 83    |
| Total Other secured<br>financings             | ಕ್ಕಾ                 | විට අවධිව | ತಿ                       |     | ಕಿ | dd    |

## 9. Subordinated Liabilities

The Company entered into agreements with its Parent for subordinated liabilities. The agreements consist of a \$6,800 subordinated loan and a \$10,000 subordinated revolving note, of which \$6,000 was drawn.

The interest rates for the agreements are in line with the Firm proxy rate.

The maturity dates, interest rates and book value of the subordinated notes at December 31, 2025 are as follows:

| Subordinated Notes                         | Maturity Date        | Interest<br>Rate | Book Value   |       |
|--------------------------------------------|----------------------|------------------|--------------|-------|
| Cash subordination<br>agreement            | September 9.<br>2031 | 5.09 % \$        |              | 6,800 |
| Subordinated revolvinq<br>credit agreement | September 9.<br>2031 | 5.09 %           |              | 6.000 |
| Total                                      |                      |                  | ಕಾ<br>12.800 |       |

## 10. Commitments, Guarantees and Contingencies

#### Guarantees

Obligations under Guarantee Arrangements at December 31, 2025

|                                                                                            | Maximum Potential Payout/Notional |     |                                     |        |                   |  |  |
|--------------------------------------------------------------------------------------------|-----------------------------------|-----|-------------------------------------|--------|-------------------|--|--|
|                                                                                            | Years to Maturity                 |     |                                     |        |                   |  |  |
| Type of Guarantee                                                                          | < 1                               | 1-3 | 3-5                                 | Over 5 | Total             |  |  |
| Non-credit<br>derivative contracts \$ 861,119 \$ 572,419 \$ 146,467 \$ 588,307 \$2,168,312 |                                   |     |                                     |        |                   |  |  |
|                                                                                            |                                   |     | Carrying Amount Asset / (Liability) |        |                   |  |  |
| Non-credit derivative contracts1                                                           |                                   |     |                                     |        | સ્ત્ર<br>(26,822) |  |  |
| 1 Carrying amount of derivative contracts that meet the accounting definition of a         |                                   |     |                                     |        |                   |  |  |

guarantee are shown on a gross basis prior to cash collateral or counterparty netting. For further information on derivative contracts, see Note 6.

{20}------------------------------------------------

## Types of Guarantees

#### Non-Credit Derivative

Certain derivative contracts meet the accounting definition of a guarantee, including certain written options, contingent forward contracts and CDS (see Note 6 regarding credit derivatives in which the Company has sold credit protection to the counterparty). For non-credit derivative contracts that meet the accounting definition of a guarantee the notional amount is used as the maximum potential payout for certain derivative contracts, such as written interest rate caps and written foreign currency options. The Company evaluates collateral requirements for all derivatives, including derivatives that do not meet the accounting definition of a guarantee. For the effects of cash collateral and counterparty netting, see Note 6.

In certain situations, collateral may be held by the Company for those contracts that meet the definition of a guarantee. Generally, the Company sets collateral requirements by counterparty so that the collateral covers various transactions and products and is not allocated specifically to individual contracts. Also, the Company may recover amounts related to the underlying asset delivered to the Company under the derivative contract.

#### Other Guarantees

#### Clearinghouse Member Guarantees

The Company is a member of various U.S. and non-U.S. clearinghouses that trade and clear securities and/or derivative contracts. Associated with its membership, the Company may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the clearinghouse. While the rules governing different clearinghouse memberships vary, in general the Company's obligations under these rules would arise only if the clearinghouse had previously exhausted its resources. The maximum potential payout under these membership agreements cannot be estimated. The Company has not recorded any contingent liability in the statement of financial condition for these agreements and believes that any potential requirement to make payments under these agreements is remote.

#### Indemnities

The Company provides an indemnity to affiliate, MSBAG, to cover certain derivative positions. The Company has agreed to indemnify against any liability which MSBAG may incur as a result of entering into swap transactions as designated by the Company. The maximum potential amount of future payment that the Company could be required to make under this indemnity is \$40. The Company has not recorded any contingent liability in it statement of financial condition for this indemnity.

The Company provides standard indemnities to counterparties for taxes, including withholding taxes, relating to certain transactions. These indemnity payments could be required based on a change in the tax laws, a change in interpretation of applicable tax rulings or a change in factual circumstances. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated

#### Contingencies

#### Legal

In addition to the matter described below, in the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection 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 of damages. In some cases, the third-party entities that are, or would otherwise be, the primary 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 trading businesses and our activities in the capital markets.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental or other regulatory agencies regarding the Company'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 Company, wealth and investment management services, and tax, accounting, and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, disgorgement, restitution, forfeiture, injunctions, limitations on our ability to conduct certain business, or other relief.

The Company contests liability and/or the amount of damages as appropriate 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 Company can reasonably estimate the amount of that loss or the range of loss, the Company accrues an estimated loss by a charge to income, including with respect to certain of the individual proceedings or investigations described below.

The Company's legal expenses can, and may in the future, fluctuate from period to period, given the current environment regarding government or regulatory agency investigations and 

{21}------------------------------------------------

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{22}------------------------------------------------

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|                                         | !7<.;;;=.-<br>+A%#; |
|-----------------------------------------|---------------------|
| * .@@2A@A5.AA52<:=.;F1<2@;<A0<;@<961.A2 |                     |
| B;=.61=?6;06=.9/.9.;02                  | <br><br>            |
| *@25=5.@87;=:.<747;;                    |                     |
| 2/A.;12>B6AF6;A2?2@A@                   | <br><br>            |
| 2?6C.A6C2@.;1<A52?0<;A?.0A@             | <br>                |
| &7<*4                                   | <br><br>            |
| *::A260>*4=.7/.@87;=:.<747;;;;.<;       |                     |
| 2/A.;12>B6AF6;A2?2@A@                   | <br><br>            |
| 2?6C.A6C2@.;1<A52?0<;A?.0A@             | <br>                |
| &7<*4                                   | <br><br>            |
| *::A260>*4=.7/.@87;=:.<747;;2*+242<2.;  |                     |
| 2?6C.A6C2@.;1<A52?0<;A?.0A@             | <br><br>I           |

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|                                                                      | <.,.5+.:<br><br> |
|----------------------------------------------------------------------|------------------|
| ?<@@0.@5=?<0221@3?<:@.92<3.@@2A@                                     | <br><br>         |
| *2:>*4=.                                                             |                  |
| @@2A@@<91                                                            | <br>             |
| 2?6C.A6C2.@@2A@?20<4;6G216;A52@A.A2:2;A<3<br>36;.;06.90<;16A6<;      | <br>             |
| 2?6C.A6C296./696A62@?20<4;6G216;A52@A.A2:2;A<br><336;.;06.90<;16A6<; | <br>             |

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,964@?EC@=8C@FAD96=A6?DFC6E92EE96D6 C:D<D 2C6 >62DFC65 2?5 4=@D6=J >@?:E@C65 2?5 2C6 >256 EC2?DA2C6?E E@ D6?:@C >2?286>6?E
 ,96&\* :D C6DA@?D:3=6 7@C 6?DFC:?8 EC2?DA2C6?4J @7 >2E6C:2= >2C<6E C:D<D >@?:E@C:?8 4@>A=:2?46 H:E9 6DE23=:D965 =:>:ED 2?5 6D42=2E:?8 C:D< 4@?46?EC2E:@?DE@2AAC@AC:2E6D6?:@C>2?286>6?E

,@6I64FE6E96D6C6DA@?D:3:=:E:6D&\*>@?:E@CDE96@>A2?JRD C:D<282:?DE=:>:ED@?288C682E6C:D<6IA@DFC6DA6C7@C>D2G2C:6EJ @7C:D<2?2=JD6DC@FE:?6=JC6A@CEDC:D<DF>>2C:6D2?5>2:?E2:?D 

{24}------------------------------------------------

.2\*2?5D46?2C:@2?2=JD:DDJDE6>D
&2C<6EC:D<:D2=D@>@?:E@C65 E9C@F89 G2C:@FD >62DFC6D 3J FD6 @7 DE2E:DE:4D :?4=F5:?8 .2\* 3J>62DFC6D@7A@D:E:@?D:K62?5D6?D:E:G:EJ2?5E9C@F89C@FE:?6 DEC6DDE6DE:?8H9:49>62DFC6DE96:>A24E@?E96G2=F6@76I:DE:?8 A@CE7@=:@D @7 DA64:7:65 492?86D :? >2C<6E 724E@CD 2?5 D46?2C:@D 56D:8?653J&\*:?4@==23@C2E:@?H:E93FD:?6DDF?:ED

## **9,+0;"0:2**

C65:E C:D< C676CD E@ E96 C:D< @7 =@DD 2C:D:?8 H96? 2 3@CC@H6C 4@F?E6CA2CEJ @C:DDF6C 5@6D ?@E >66E:ED 7:?2?4:2= @3=:82E:@?DE@ E96 @>A2?J
 C65:E C:D< :?4=F56D @F?ECJ \*:D< 2DA64ED @7 @F?ECJ\*:D<>2J>2?:76DE:?@E96CC:D<DEC:A6D2DH6==H9:49:D E96 C:D<E92EE96 6G6?ED:? @CE92E 27764E 2 7@C6:8? 4@F?ECJ 2?J 4@F?ECJ@E96CE92?E96+
>:89E25G6CD6=J27764EE96@>A2?J ,96 @>A2?J AC:>2C:=J :?4FCD 4C65:E C:D< 6IA@DFC6 E@ :?DE:EFE:@?D
 ,9:D C:D< >2J 2C:D6 7C@> 2 G2C:6EJ @7 3FD:?6DD 24E:G:E:6D :?4=F5:?8 3FE ?@E =:>:E65 E@ 6?E6C:?8 :?E@ DH2A @C 56C:G2E:G6 4@?EC24ED F?56C H9:49 4@F?E6CA2CE:6D >2J 92G6 @3=:82E:@?DE@>2<6A2J>6?EDE@E96@>A2?J6IE6?5:?84C65:E E@ 4=:6?ED AC@G:5:?8 D9@CE @C=@?8E6C> 7F?5:?8E92E:D D64FC65 3J A9JD:42= @C 7:?2?4:2= 4@==2E6C2= H9@D6 G2=F6>2J 2EE:>6D 36 :?DF77:4:6?E E@ 7F==J 4@G6C E96 =@2? C6A2J>6?E 2>@F?E A@DE:?8 >2C8:? 2?5@C 4@==2E6C2= E@ 4=62C:?89@FD6D 4=62C:?8 286?4:6D 6I492?86D 32?<D D64FC:E:6D 7:C>D 2?5 @E96C 7:?2?4:2= 4@F?E6CA2CE:6D A=24:?8 7F?5D @? 56A@D:E 2E @E96C 7:?2?4:2= :?DE:EFE:@?D E@ DFAA@CE E96 @>A2?JD 4=62C:?8 2?5 D6EE=6>6?E @3=:82E:@?D2?5:?G6DE:?8@CEC25:?8:?D64FC:E:6D2?5=@2?A@@=D H96C63JE96G2=F6@7E96D62DD6ED>2J7=F4EF2E632D65@?C62=:K65 @C6IA64E655672F=ED@?E96F?56C=J:?8@3=:82E:@?D@C=@2?D
,9:D EJA6 @7 C:D< C6BF:C6D 4C65:E 2?2=JD:D @7 DA64:7:4 4@F?E6CA2CE:6D 3@E9:?:E:2==J2?5@?2?@?8@:?832D:D
,96@>A2?J2=D@:?4FCD 4C65:E C:D<:?EC2565 D64FC:E:6DH96C63JE96 G2=F6 @7E96D62DD6ED >2J 7=F4EF2E6 32D65 @? C62=:K65 @C 6IA64E65 5672F=ED @? E96 F?56C=J:?8@3=:82E:@?D@C=@2?D

,96 \*& 6DE23=:D96D AC24E:46D E@ :56?E:7J >62DFC6 >@?:E@C 6D42=2E6>:E:82E62?54@?EC@=4C65:EC:D<6IA@DFC63@E9H:E9:?2?5 24C@DD:ED3FD:?6DD24E:G:E:6D
,96@>A2?JRD4C65:EC:D<6IA@DFC6 :D 24E:G6=J >2?2865 3J \*& 2?5 E96 \* H9@ >@?:E@C C:D< 6IA@DFC6D :?4=F5:?8 >2C8:? =@2?D 2?5 4C65:E D6?D:E:G6 9:896C C:D< EC2?D24E:@?D
 \*& :D C6DA@?D:3=6 7@C 6?DFC:?8 E:>6=J 2?5 EC2?DA2C6?E 4@>>F?:42E:@? @7 >2E6C:2= 4C65:E C:D<D 4@>A=:2?46 H:E9 6DE23=:D965 =:>:ED 2?5 6D42=2E:@? @7 C:D< 4@?46?EC2E:@?D E@ 2AAC@AC:2E6D6?:@C>2?286>6?E

## **7,9(;065(3"0:2**

(A6C2E:@?2= C:D< C676CD E@ E96 C:D< @7 =@DD @C @7 52>286 E@ E96 @>A2?JRD C6AFE2E:@? C6DF=E:?8 7C@> :?256BF2E6 @C 72:=65 AC@46DD6D@CDJDE6>D7C@>9F>2?724E@CD@C7C@>6IE6C?2=6G6?ED 6
8
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 ,96 @>A2?J >2J :?4FC @A6C2E:@?2= C:D< 24C@DDE967F==D4@A6@7:ED3FD:?6DD24E:G:E:6D:?4=F5:?8C6G6?F6

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7764E:G6@A6C2E:@?2= C:D< >2?286>6?E :D 6DD6?E:2= E@ C65F4:?8 E96 :>A24E @7 @A6C2E:@?2= C:D< :?4:56?ED 2?5 >:E:82E:?8 =682= C68F=2E@CJ 2?5 C6AFE2E:@?2= C:D<D
 ,96 7C2>6H@C< :D 4@?E:?F2==J 6G@=G:?8 E@ 244@F?E 7@C 492?86D :? E96 @>A2?J 2?5 E@ C6DA@?5 E@ E96 492?8:?8C68F=2E@CJ2?53FD:?6DD6?G:C@?>6?E

## **@),9:,\*<90;@**

,96 :C>RD 4J36CD64FC:EJ 2?5 :?7@C>2E:@? D64FC:EJ A@=:4:6D AC@465FC6D 2?5 E649?@=@8:6D 2C6 56D:8?65 E@ AC@E64E E96 @>A2?JRD @H? 4=:6?E 2?5 6>A=@J66 52E2 282:?DE F?2FE9@C:K65 5:D4=@DFC6 >@5:7:42E:@? @C >:DFD6 2?5 2C6 2=D@ 56D:8?65 E@ 255C6DD C68F=2E@CJ C6BF:C6>6?ED
 ,96D6 A@=:4:6D 2?5 AC@465FC6D 4@G6C23C@25C2?86@72C62D:?4=F5:?8:56?E:7:42E:@?@7:?E6C?2= 2?5 6IE6C?2= E9C62ED 2446DD 4@?EC@= 52E2 D64FC:EJ AC@E64E:G6 4@?EC@=D56E64E:@?@7>2=:4:@FD@CF?2FE9@C:K6524E:G:EJ:?4:56?E C6DA@?D62?5C64@G6CJA=2??:?8

## **6+,3"0:2**

&@56=C:D<C676CDE@E96A@E6?E:2=7@C25G6CD64@?D6BF6?46D7C@> 564:D:@?D 32D65 @? :?4@CC64E @C >:DFD65 >@56= @FEAFED
 &@56= C:D< 42? =625 E@ 7:?2?4:2= =@DD A@@C 3FD:?6DD 2?5 DEC2E68:4 564:D:@? >2<:?8 ?@?4@>A=:2?46 H:E9 2AA=:423=6 =2HD 2?5@C C68F=2E:@?D @C 52>286 E@ E96 @>A2?JRD C6AFE2E:@?
 ,96 C:D< :?96C6?E:? 2 >@56=:D 2 7F?4E:@? @7E96 >2E6C:2=:EJ 4@>A=6I:EJ 2?5 3C@256C FD6 2?5 =2C86C A@E6?E:2= :>A24E
 &@56= C:D< :D 86?6C2E657C@>E96FD6@7>@56=D:>A24E:?87:?2?4:2=DE2E6>6?ED C68F=2E@CJ 7:=:?8D 42A:E2= 256BF24J 2DD6DD>6?ED 2?5 E96 7@C>F=2E:@?@7DEC2E68J

+@F?5 >@56= C:D< >2?286>6?E :D 2? :?E68C2= A2CE @7 E96 @>A2?JD \*:D<&2?286>6?E C2>6H@C<
&\*& :D C6DA@?D:3=6 7@C E96 @G6CD:89E @7 >@56= C:D<
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,9667764E:G6492==6?86@7>@56=D4@?D:DED@74C:E:42=2?2=JD:D3J @3;64E:G6 :?7@C>65 A2CE:6D H9@ 42? :56?E:7J >@56= =:>:E2E:@?D 2?5 2DDF>AE:@?D 2?5 5C:G6 2AAC@AC:2E6 492?86D
&\*& AC@G:56D 67764E:G6 492==6?86 @7 >@56=D :?56A6?56?E=J G2=:52E6D 2?5 2AAC@G6D>@56=D7@CFD62??F2==JC646CE:7:6D>@56=DA6C:@5:42==J C6G2=:52E6D :56?E:7:6D 2?5 EC24<D C6>65:2E:@? A=2?D 7@C >@56= =:>:E2E:@?D 2?5 C6A@CED @? >@56= C:D< >6EC:4D
 ,96 56A2CE>6?E 

{25}------------------------------------------------

2=D@@G6CD66DE9656G6=@A>6?E@74@?EC@=DE@DFAA@CE24@>A=6E6 2?5244FC2E6@>A2?JH:56>@56=:?G6?E@CJ

## **08<0+0;@"0:2**

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 %:BF:5:EJ C:D< 2=D@ 6?4@>A2DD6D E96 2DD@4:2E65 7F?5:?8 C:D<DEC:886C653JE96>2C<6E@C:5:@DJ?4C2E:4 DEC6DD6G6?EDE92E>2J?682E:G6=J27764EE96@>A2?JRD=:BF:5:EJ 2?5 >2J :>A24E :ED 23:=:EJ E@ C2:D6 ?6H 7F?5:?8
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,@6I64FE6 E96D6 C6DA@?D:3:=:E:6D %\* 6DE23=:D96D =:>:ED :? =:?6 H:E9 E96 @>A2?JD C:D< 2AA6E:E6 :56?E:7:6D 2?5 2?2=JK6D 6>6C8:?8 =:BF:5:EJ2?57F?5:?8C:D<DE@6?DFC6DF49C:D<D2C62AAC@AC:2E6=J >:E:82E65 >@?:E@CD 2?5 C6A@CED C:D< 6IA@DFC6D 282:?DE >6EC:4D 2?5 =:>:ED 2?5 C6G:6HD E96 >6E9@5@=@8:6D 2?5 2DDF>AE:@?D F?56CA:??:?8 :ED %:BF:5:EJ +EC6DD ,6DED E@ 6?DFC6 DF77:4:6?E =:BF:5:EJ2?57F?5:?8F?56C2C2?86@725G6CD6D46?2C:@D

## **65\*,5;9(;065"0:2**

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 #?255:E:@?2==@7E964@==2E6C2=96=53JE96 @>A2?J7@CC6G6CD6C6AFC492D628C66>6?ED@C3@?5D3@CC@H65 H9:49E@86E96CC6AC6D6?E652AAC@I:>2E6=J@7E96@>A2?JRD E@E2=2DD6ED2E646>36C4@?D:DED@7D64FC:E:6D:DDF653J E96 +
 8@G6C?>6?E 7656C2= 286?4:6D @C @E96C D@G6C6:8? 8@G6C?>6?ED

## **5\*64,\$(?,:**

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|                        | .,.5+.:<br> |  |
|------------------------|-------------|--|
| 2;2?.9.;1<A52??2@2?C2@ | <br>        |  |
| (<A.91232??21A.E.@@2A@ | <br>        |  |

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## **%59,\*6.50A,+\$(?,5,-0;:**

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 ,96 @>A2?J >FDE >2<6 ;F58>6?ED 2?5 :?E6CAC6E2E:@?D23@FEE962AA=:42E:@?@7E96D6:?96C6?E=J4@>A=6I E2I=2HD2?5>2<66DE:>2E6D23@FE46CE2:?:E6>D27764E:?8E2I23=6 :?4@>6H96? 56E6C>:?:?8E96 AC@G:D:@? 7@C:?4@>6E2I6D:?E96 G2C:@FDE2I;FC:D5:4E:@?D

{26}------------------------------------------------

Disputes over interpretations of the tax laws may be settled with the taxing authority upon examination or audit. The Company periodically evaluates the likelihood of assessments in each taxing jurisdiction resulting from current and subsequent years' examinations, and unrecognized tax benefits related to potential losses that may arise from tax audits are established in accordance with the relevant accounting guidance. Once established, unrecognized tax benefits are adjusted when there is more information available or when an event occurs requiring a change.

#### Rollforward of Unrecognized Tax Benefits

| Balance at December 31, 2024                                      | ಿತ   | 15 |
|-------------------------------------------------------------------|------|----|
| Increases based on tax positions related to the current<br>period |      |    |
| Increases based on tax positions related to prior<br>periods      |      | 4  |
| Balance at December 31, 2025                                      | ಲ್ಲಿ | 20 |
| Net unrecognized tax benefits'                                    | S    | 16 |
|                                                                   |      |    |

1. Represents ending unrecognized tax benefits adjusted for the impact of the federal benefit of state issues. If recognized, these net benefits would favorably impact the effective tax rate in future periods.

#### Earliest Tax Year Subject to Examination in Major Tax Jurisdictions

| Jurisdiction            | Tax Year |
|-------------------------|----------|
| United States           | 2017     |
| New York State and City | 2010     |

The Company, through its inclusion in the return of the Ultimate Parent, is routinely under examination by the IRS and other tax authorities in certain states and localities in which the Company has significant business operations, such as New York.

The Company believes that the resolution of these tax examinations will not have a material effect on the statement of financial condition.

## 15. Regulatory Requirements

#### MSCS Regulatory Capital

MSCS is a conditionally registered U.S. security-based swap dealer and a registered OTC derivatives dealer with the SEC. The Company is also registered as a swap dealer with the CFTC. Accordingly, the Company is subject to the minimum net capital requirements of SEA Rule 18a-1 and CFTC Rule 23.101.

Under the rules, MSCS is required to maintain minimum net capital of the greater of :

(a) 2% of initial margin amount on all uncleared security-based swaps, or minimum fixed amount of \$20; or

(b) 2% of initial margin amount on all uncleared swaps, or minimum fixed amount of \$20

MSCS is required to hold Tentative Net Capital in excess of \$100 and Net Capital in excess of \$20 in accordance with the market and credit risk standards of Rule 18a-1(e). MSCS is also required to notify the SEC in the event that its tentative net capital is less than \$120.

At December 31, 2025, MSCS tentative net capital of \$13,506 which is in excess of the minimum and notification requirements.

At December 31, 2025, MSCS net capital was \$8,572 which exceeded the greater minimum requirement by \$7,038.

## 16. Subsequent Event

On February 14, 2026, the Company was divided into two separate Delaware limited liability companies, one operating a fixed income business ("MSCS FID") and a second operating an institutional equity business ("MSCS IED"). MSCS FID was merged with and into MSBNA, and as part of the merger the Company subsequently made a distribution of \$2,400 of member's equity and prepaid subordinated liabilities of \$4,600 to the Parent. MSCS IED continues to be subject to the minimum net capital requirements of the SEC and CFTC.

\*\*\*\*\*\*\*

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# Glossary of Common Terms and Acronyms

| ABS     | Asset-backed securities                           | MSBNA     | Morgan Stanley Bank, N.A. (National Association)                                                                               |
|---------|---------------------------------------------------|-----------|--------------------------------------------------------------------------------------------------------------------------------|
| ASU     | Accounting standards update                       | MS&Co     | Morgan Stanley & Co. LLC                                                                                                       |
| CDS     | Credit default swap(s)                            | MSCS      | Morgan Stanley Capital Services LLC                                                                                            |
| CFTC    | Commodity Futures Trading Commission              | MSDHL     | Morgan Stanley Domestic Holdings, LLC                                                                                          |
| CRM     | Credit Risk Management Department                 | MSES      | Morgan Stanley Equity Services LLC                                                                                             |
| ELNs    | Equity Linked Notes                               | OECD      | Organization for Economic Cooperation and<br>Development                                                                       |
| FASB    | Financial Accounting Standards Board              | OTC       | Over-the-counter                                                                                                               |
| FVA     | Funding Valuation Adjustment                      | RC        | Risk and Asset Liability Committee                                                                                             |
| ICE     | Intercontinental Exchange, Inc.                   | SEA       | U.S. Securities and Exchange Act                                                                                               |
| IRS     | Internal Revenue Service                          | ട്ടുP     | Standard & Poor's                                                                                                              |
| LCH     | London Clearing House                             | SEC       | U.S. Securities and Exchange Commission                                                                                        |
| LRD     | Liquidity Risk Department                         | SPE       | Special purpose entities                                                                                                       |
| M&A     | Merger, acquisition and restructuring transaction | U.S.      | United States of America, which includes the District<br>of Columbia, Puerto Rico, and the U.S. territories and<br>possessions |
| Moody's | Moody's Investor Service, Inc                     | U.S. GAAP | Accounting principles generally accepted in the<br>United States of America                                                    |
| MRD     | Market Risk Department                            | VaR       | Value at Risk                                                                                                                  |
| MRM     | Model Risk Management Department                  | VIE       | Variable interest entity                                                                                                       |


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.