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The Final Terms relating to each issue of Regulation S Warrants will contain (without limitation) such of the
following information as is applicable in respect of such Regulation S Warrants. All references to numbered
conditions are to the terms and conditions of the Regulation S Warrants set out in Schedule 1 of the Agency
Agreement (as defined in the Regulation S Warrant Conditions) and reproduced in the Base Prospectus and words
and expressions defined in those terms and conditions shall have the same meaning in the applicable Regulation S
Warrant Final Terms.
MORGAN STANLEY ASIA PRODUCTS LIMITED (incorporated with limited liability in the Cayman Islands)
Guaranteed by
(incorporated in Delaware, U.S.A.)
Warrant Programme
The Warrants and the Guarantee have not been, and will not be, registered under the United States Securities
Act of 1933, as amended (the Securities Act), or the securities laws of any State in the United States. The
Warrants and the Guarantee may not be offered, sold or delivered at any time, directly or indirectly, within
the United States or to, or for the account or benefit of, U.S. persons as such term is defined in Regulation S
under the Securities Act.
600,000 American Style Regulation S Cash Settled Call Warrants due 14 June 2018 linked to local ordinary
shares of Kweichow Moutai Co., Ltd. (China Connect)
This document constitutes the Final Terms relating to the issue of Regulation S Warrants described herein. This
document constitutes final terms for the purposes of Article 5.4 of Directive 2003/71/EC, as amended (the
Prospectus Directive).
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Base
Prospectus dated 21 September 2017 approved by the Central Bank of Ireland on 21 September 2017 (as
supplemented from time to time, the Base Prospectus). These Final Terms contain the final terms of the Regulation
S Warrants and must be read in conjunction with such Base Prospectus in order to obtain full information on the
Issuer and the Regulation S Warrants themselves. Copies of such Base Prospectus are available free of charge to the
public during normal business hours at the registered office of the Issuer and from the specified office of the Irish
Agent, or may be downloaded free of charge from http://www.ise.ie/Market-Data-Announcements/Debt/Individual-
Debt-Instrument-Data/Dept-Security-Documents/?progID=121&FIELDSORT=docId.
References herein to numbered Conditions are to the Terms and Conditions of the Regulation S Warrants and words
and expressions defined in such terms and conditions shall bear the same meaning in these Final Terms, save as
where otherwise expressly provided.
Part A - Information about the Warrants
1.(a) The series number of the Warrants; I2623
1.(b) Whether or not the Warrants are to be consolidated
and form a single series with the warrants of an
existing series;
No.
2. Whether the Warrants are Share Warrants, Index
Warrants or Fund Warrants or Warrants linked to a
Basket;
Share Warrants relating to the local ordinary shares
of Kweichow Moutai Co., Ltd. (the Share Company)
with the Bloomberg Code 600519 C1 (the Shares)
3. Launch Date; 14 December 2017
4. The Issue Date of the Warrants; 19 December 2017
5. Whether the Warrants are American Style Warrants
or European Style Warrants;
American Style Warrants
6. Whether the Warrants are Call Warrants or Put
Warrants;
Call Warrants
7. Whether the Warrants are Global Warrants or
Definitive Warrants;
Global Warrants exchangeable into Definitive
Warrants in registered form in limited circumstances
as set out in the Conditions
8.(a) If the Warrants are Share Warrants, Fund Warrants
or Warrants linked to a Basket of Units or Shares,
whether the Warrants are Market Access Warrants
or Outperformance Warrants;
Market Access Warrants
8.(b) If the Warrants are Market Access Warrants,
whether they are China Market Access Warrants;
Yes
8.(c) If the Warrants are Outperformance Warrants,
whether Upfront Discount is applicable, and if so,
the Upfront Discount (as a percentage);
Not applicable
8.(d) If the Warrants are Outperformance Warrants,
whether Daily Accrual is applicable, and if so, the
Daily Accrual Rate (as a percentage) (except
where Rerate is also applicable, in which case,
please see paragraph 8.(f));
Not applicable
8(e) If the Warrants are Outperformance Warrants, and
Upfront Discount or Daily Accrual is applicable,
the Commission Rate (as a percentage);
Not applicable
8.(f) If the Warrants are Outperformance Warrants,
whether Daily Accrual and Rerate are applicable
and if so, the Daily Accrual Rate (as a percentage)
in respect of the First Period;
Not applicable
8.(f)(i) If the Warrants are Outperformance Warrants and
Daily Accrual and Rerate are applicable, the
Rerate Date;
Not applicable
8.(f)(ii) If Rerate is applicable, Default Adjusted Rate (as a
percentage);
Not applicable
8.(g) If the Warrants are Outperformance Warrants,
whether Variable Daily Accrual is applicable, and
if so, the Variable Daily Accrual Rate (as a
percentage);
Not applicable
9. The number of Warrants being issued; 600,000
10.(a) The Issue Price per Warrant; United States Dollars (USD) 100.5401, being the
Issuer’s weighted average execution price (in
Renminbi (RMB)) of the Shares converted into the
Settlement Currency at the Exchange Rate.
10.(b) Currency in which Warrants are denominated and
to be traded;
USD
11. The Strike Price per Warrant (which may be
subject to adjustment in accordance with
Condition 19 or 20 in the case of Index Warrants,
Share Warrants or Fund Warrants, respectively);
USD 0.00001
12. The Relevant Jurisdiction of the Warrants; The People’s Republic of China
13.(a) If Issuer Optional Early Termination is
applicable;
Yes
13.(b) If Issuer Optional Early Termination is applicable,
the number of Business Day’s written notice
required to be given by the Issuer in order to
terminate;
Five (5) Business Days
13.(c) If Issuer Optional Early Termination is applicable,
whether Issuer Break Fee is applicable and if so,
the Issuer Break Fee Rate (as a percentage) and if
the Issuer Break Fee Rate is Flat or Amortised;
Not applicable
13.(d) If Issuer Break Fee Rate is Amortised and Day
Count Fraction is applicable, the start date and
end date over which Day Count Fraction applies;
Not applicable
14. If the Warrants are China Market Access Warrants,
whether Tax Event is applicable;
Applicable
15.(a) If Warrantholder Break Fee is applicable, and if
so, the Warrantholder Break Fee Rate (as a
percentage) and if the Warrantholder Break Fee
Rate is Flat or Amortised;
Not applicable
15.(b) If Warrantholder Break Fee Rate is Amortised and
Day Count Fraction is applicable, the start date
and end date over which Day Count Fraction
applies;
Not applicable
16.(a) If the Warrants are Index Warrants, whether
Commissions applies and if so, the Commissions
(as a percentage);
Not applicable
16.(b) If the Warrants are Index Warrants, whether
Outperformance is applicable, and if so, if
Outperformance Average, Outperformance Initial
or Outperformance Final is applicable and the
Outperformance Rate (as a percentage);
Not applicable
16.(c) If the Warrants are Index Warrants, the Index
Initial;
Not applicable
16.(d) If the Warrants are Index Warrants, the Index
Final;
Not applicable
16.(e) If the Warrants are Index Warrants, the Index
Average;
Not applicable
17. The Settlement Price per Warrant (which may be
subject to adjustment in accordance with
As defined in Condition 21
Condition 19 or 20 in the case of Index Warrants,
Share Warrants or Fund Warrants, respectively);
18.(a) The Cash Settlement Amount per Warrant; As specified in Condition 3(b)
18.(b) Whether a Management Fee is applicable, and if
so, the Management Fee Rate (as a percentage);
Not applicable
19. Valuation Date(s); The Actual Exercise Date or the Expiration Date (as
applicable)
20.(a) Whether Averaging is applicable; No; Option 2
20.(b) If Averaging applies, Averaging Dates; Not applicable
20.(c) If Averaging applies, whether, in the event of a
Disrupted Day (as defined in Condition 21)
occurring on an Averaging Date, Omission,
Postponement or Modified Postponement (as
defined in Condition 21) applies;
Not applicable
21. Settlement Date; As defined in Condition 21
22. In the case of European Style Warrants, the
Exercise Date for the Warrants;
Not applicable
23. In the case of American Style Warrants, the
Exercise Period in respect of the Warrants;
From the fifth Business Day following the date of
purchase of the Warrants up to and including 10:00
a.m. Brussels or Luxembourg time as appropriate,
depending upon whether the Warrants are held
through Euroclear or Clearstream, Luxembourg on
the Expiration Date.
24. In the case of American Style Warrants, the
Expiration Date for the Warrants;
14 June 2018
25. In the case of American Style Warrants, whether
Automatic Exercise will apply;
Yes
26. The Ratio identifying the number of Warrants per
underlying Share, Index, Unit or Basket which
shall be applied to the Settlement Price in order to
ascertain the Cash Settlement Amount for each
Warrant (such Ratio shall be subject to adjustment
in accordance with Condition 19 or 20 in respect
of Index Warrants, Share Warrants and Fund
Warrants, respectively);
One Warrant per Share
27. The applicable Business Day Centre(s) for the
purposes of the definitions of Business Day in
Condition 21;
London, New York and Shanghai
28.(a) Whether Exchange Rate is applicable; Yes
28.(b) If Exchange Rate is applicable, the applicable
Exchange Rate for conversion of any amount into
the relevant Settlement Currency for the purposes
of determining the Cash Settlement Amount (as
defined in Condition 21) and details of when and
how such rate is to be ascertained;
As defined in Condition 21
29. The Settlement Currency for the payment of the USD
Cash Settlement Amount;
30.(a) In the case of American Style Warrants, the
Minimum Exercise Number;
One Warrant
30.(b) In the case of American Style Warrants, the
Maximum Exercise Number;
600,000
31.(a) The Minimum Purchase Amount of the Warrants; One Warrant
31.(b) The Minimum Trading Amount of Warrants; One Warrant
32. The Relevant Time; As defined in Condition 21
33. Whether Alternative Provisions are applicable; No
34. Whether Alternative Index Cash Settlement
Amount is applicable;
No
35. If Alternative Index Cash Settlement Amount is
applicable, the Commission Rate;
Not applicable
36.(a) For the purposes of Condition 19 (Additional
Terms for Index Warrants), details of the
Exchange and Related Exchange (if any);
Exchange(s): Not applicable
Related Exchange(s): Not applicable
36.(b) For the purposes of Condition 19 (Additional
Terms for Index Warrants), details of the relevant
Sponsor;
Not applicable
37. For the purposes of Condition 20 (Additional
Terms for Share Warrants and Fund Warrants),
details of the relevant Exchange and Related
Exchange (if any);
Exchange(s): Shanghai Stock Exchange (China
Connect)
Related Exchange(s): All Exchanges
38. Whether Exchange Settlement Failure is
applicable;
Yes
39. In respect of Fund Warrants, applicable
Extraordinary Fund Event(s);
Not applicable
40. If a Fund Insolvency Event is applicable under
paragraph 39, the Fund Insolvency Entity;
Not applicable
41. If an Adviser Resignation Event and/or Regulatory
Action is applicable under paragraph [39], the
Fund Administrator, the Fund Adviser or any
other relevant key person for the purposes of
Condition 20(c)(ii);
Not applicable
42. If the Warrants are Fund Warrants, the Fund
Interest;
Not applicable
43. If NAV Threshold Event or Elective Extraordinary
Fund Event is applicable under paragraph [39], the
NAV Threshold Amount;
Not applicable
44. In the case where Fund Modification, Strategy
Breach, Fund Investment Modification and/or
Elective Extraordinary Fund Event is applicable
under paragraph [39], any relevant Additional
Fund Documents;
Not applicable
45. If Reporting Disruption is applicable under Not applicable
paragraph 39, the relevant time period;
46. Details of any certifications required in the
Exercise Notice;
Certification relating to China as indicated in the
form of Exercise Notice in the Agency Agreement
(unless otherwise agreed by the Issuer).
47.(a) Whether the Warrants are Additional Warrants; No
47.(b) If the Warrants are Additional Warrants, whether
they are Fungible Additional Warrants or Non-
Fungible Additional Warrants;
Not applicable
47.(c) If the Warrants are Non-Fungible Additional
Warrants, the Original Series;
Not applicable
48. The method of distribution of the Warrants
(syndicated or non-syndicated) including, if any,
the names of any Dealers other than or in addition
to Morgan Stanley & Co. International plc
(Additional Dealers);
Private placement
Non-Syndicated
49. Potential Section 871(m) transaction under the
U.S. Internal Revenue Code (Code).
The Issuer believes the Warrants should not be
subject to withholding under Section 871(m) of the
Code.
Responsibility Statement:
The Issuer accepts responsibility for the information contained in these Final Terms. The Guarantor accepts
responsibility for the information contained in these Final Terms in relation to itself and the Guarantee. To the best
of the knowledge and belief of the Issuer (who has taken all reasonable care to ensure that such is the case), the
information contained in the Base Prospectus, as completed by these Final Terms in relation to the Warrants, is in
accordance with the facts and does not omit anything likely to affect the import of such information. To the best of
the knowledge and belief of the Guarantor (who has taken all reasonable care to ensure that such is the case), the
information contained in the Base Prospectus, in relation to itself and the Guarantee, as completed by these Final
Terms in relation to the Warrants, is in accordance with the facts and does not omit anything likely to affect the
import of such information.
The information included in these Final Terms with regard to the underlying shares (the Information) consists of
extracts from or summaries of information in respect of the underlying assets that is publicly available from
Bloomberg Financial Markets Information Services and is not necessarily the latest information available. The
Issuer only confirms that the Information has been accurately reproduced and that, so far as it is aware, and is able to
ascertain from information published by the issuer, owner or sponsor, as the case may be, of such underlying assets,
no facts have been omitted that would render the reproduced extracts or summaries inaccurate or misleading. The
Issuer makes no representation that the Information, any other publicly available information or any other publicly
available documents regarding the underlying assets to which the Warrants relate are accurate or complete. There
can be no assurance that all events occurring prior to the date of these Final Terms that would affect the trading price
of the underlying assets to which the Warrants relate (and therefore the trading price and value of the Warrants) have
been publicly disclosed. Subsequent disclosure of any such events or the disclosure or failure to disclose material
future events concerning the underlying assets to which the Warrants relate could affect the trading price and value
of the Warrants.
The Warrants are not intended, from 1 January 2018, to be offered, sold or otherwise made available to and, with
effect from such date, should not be offered, sold or otherwise made available to any retail investor in European
Economic Area. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of DIRECTIVE 2014/65/EU (MIFID II); (ii) a customer within the meaning of
the Directive 2002/92/EC, where that customer would not qualify as a professional client as defined in point (10) of
Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive 2003/71/EC, as amended.
Consequently no key information document required by Regulation (EU) No 1286/2014 (the PRIIPs Regulation)
for offering or selling the Warrants or otherwise making them available to retail investors in the European
Economic Area has been prepared and therefore offering or selling the Warrants or otherwise making them available
to any retail investor in the European Economic Area may be unlawful under the PRIIPs Regulation.
The Central Bank of Ireland has approved the Base Prospectus dated 21 September 2017 under Part 7 of the
Prospectus (Directive 2003/71/EC) Regulations 2005 as amended (the Regulation) as having been drawn up in
accordance with the Regulation and Commission Regulation (EC) No 809/2004 and has further approved the Base
Prospectus Supplement dated 12 December 2017.
The Issuer does not intend to provide any post-issuance information in relation to any assets and/or underlying in
relation to any issue of Warrants constituting derivative securities (as such term is used in the Commission
Regulation (EC) No. 809/2004).
Signed on behalf of the Issuer:
By:........................................................................................
Duly authorised
PART B – Other Information
1 Listing and admission to trading
(i) Listing: Ireland
(ii) Admission to trading: The issue of Warrants is conditional upon the
Irish Stock Exchange granting listing of the
Warrants. Listing of the Warrants on the Irish
Stock Exchange is expected to occur on 19
December 2017.
2 Rating
Ratings: The Regulation S Warrants to be issued have not
been rated.
3 Notification
The Central Bank of Ireland has provided the competent authority(ies) of Ireland with a
certificate of approval attesting that the Base Prospectus dated 21 September 2017, has been
drawn up in accordance with the provisions of the Prospectus Directive and Commission
Regulation (EC) No 809/2004 and has further approved the Base Prospectus Supplement
dated 12 December 2017.
4 Interests of natural and legal persons involved in the issue
Save for any fees payable to the Dealers, so far as the Issuer is aware, no person involved in
the issue of the Warrants has an interest material to the offer.
5 Details relating to the Underlying Asset(s)
(i) Underlying Asset(s): The Shares
(ii) Issuer of Underlying Asset: Kweichow Moutai Co., Ltd.
(iii) ISIN/Security information code relating
to the Underlying Asset(s):
600519 C1(China Connect)
(iv) Description of Underlying Asset(s): Not applicable
(v) Details of where information about the
past and the further performance on the
Underlying Asset(s) and its volatility can
be obtained:
Bloomberg Financial Markets Information
Services
6 Operational information
(i) ISIN: KYG6272P3290
(ii) Common Code: 174019177
(iii) Any clearing system(s) other than
Euroclear Bank S.A./N.V. and
Clearstream Banking, S.A. and the
relevant identification number(s):
Not applicable
7 Additional Disclosure in relation to the Shares
(i) Jurisdiction of incorporation: The People’s Republic of China
(ii) Closing price as at the Launch Date: The closing price of Kweichow Moutai Co.,
Ltd. as at the Launch Date was RMB 664.55 on
the Shanghai Stock Exchange
8 Authorisation
The Issuer has obtained all necessary consents, approvals and authorisations in the Cayman
Islands in connection with the establishment and the updates of the Programme and the issue
of the Warrants. The establishment of the Programme and the issue of the Warrants pursuant
to this Base Prospectus dated 21 September 2017 was authorised by resolutions of the board
of directors of the Issuer passed on 19 September 2017.
The Guarantor has obtained all necessary consents, approvals, and authorisations in
connection with the execution, delivery and performance of the Guarantee.
9 Summary
(iii) Issue specific summary: The summary for this series of Warrants is
annexed to these Final Terms.
SUMMARY
This section comprises a summary in the format, and with the content, required by Article 5(2) of the Prospectus
Directive.
Summaries are made up of disclosure requirements known as elements (Elements). These Elements are set out in
Sections A to E below (and numbered A.1 to E.7). This summary contains all the Elements required for a summary
for the type of securities offered under this Base Prospectus and the type of issuer. Because some Elements are not
required, there are gaps in the numbering sequence of the Elements. Even though an Element may need to be
inserted in the summary because of the type of securities and the type of issuer, it is possible that no relevant
information can be given regarding the Element, in which case the Element shall be described as “not applicable”.
Section A – Introduction and warnings
A.1 This summary must be read as an introduction to this Base Prospectus. Any decision to invest in the Warrants should be
based on a consideration of the Base Prospectus as a whole, including any documents incorporated by reference. Where a
claim relating to the information contained in this Base Prospectus is brought before a court, the plaintiff investor might,
under the national legislation of Member States, be required to bear the costs of translating the Base Prospectus before the
legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary, including any
translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other
parts of the Base Prospectus or it does not provide, when read together with the other parts of the Base Prospectus, key
information in order to aid investors when considering whether to invest in the Warrants.
A.2 Consent by the Issuer will be required for the use of this Base Prospectus in relation to any subsequent resale or final
placement of the Warrants by any financial intermediary.
Any consent (if given) by the Issuer shall indicate: (a) the offer period within which any subsequent resale or final
placement of the Warrants by such financial intermediary can be made and for which consent to the use of the Base
Prospectus is given; and (b) any other conditions which are relevant for the use of the Base Prospectus. Information on the terms and conditions of the offer of the Warrants by the Issuer is to be provided at the time of the offer
by the Issuer.
Section B – Issuer and Guarantor
Issuer
B.1 The legal and
commercial name
of the Issuer
Morgan Stanley Asia Products Limited.
B.2 The domicile and
legal form of the
Issuer, the
legislation under
which the Issuer
operates and its
country of
incorporation
The Issuer is an exempted company incorporated with limited liability in the Cayman Islands
pursuant to the Companies Law (2004 Revision) of the Cayman Islands (as amended from time to
time).
The Issuer is domiciled in the Cayman Islands.
B.4b A description of
any known trends
affecting the
Issuer and the
industries in
which it operates
The business of the Guarantor (the ultimate holding company of the Issuer) in the past has been,
and in the future may continue to be, materially affected by many factors, including: the effect of
economic and political conditions and geopolitical events, including the United Kingdom’s (the
U.K.) anticipated withdrawal from the European Union (the E.U.); sovereign risk; the effect of
market conditions, particularly in the global equity, fixed income, currency, credit and
commodities markets, including corporate and mortgage (commercial and residential) lending
and commercial real estate markets and energy markets; the impact of current, pending and
future legislation (including with respect to the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Dodd-Frank Act)) or changes thereto, regulation (including capital, leverage,
funding, liquidity and tax requirements), policies (including fiscal and monetary policies
established by central banks and financial regulators, and changes to global trade policies), and
other legal and regulatory actions in the United States of America (U.S.) and worldwide; the
level and volatility of equity, fixed income and commodity prices (including oil prices), interest
rates, currency values and other market indices; the availability and cost of both credit and
capital as well as the credit ratings assigned to the Guarantor’s unsecured short-term and long-
term debt; investor, consumer and business sentiment and confidence in the financial markets;
the performance and results of the Guarantor’s acquisitions, divestitures, joint ventures, strategic
alliances or other strategic arrangements; the Guarantor’s reputation and the general perception
of the financial services industry; inflation, natural disasters, pandemics and acts of war or
terrorism; the actions and initiatives of current and potential competitors as well as governments,
central banks, regulators and self-regulatory organizations; the effectiveness of the Guarantor’s
risk management policies; technological changes instituted by the Guarantor, its competitors or
counterparties and technological risks, including cybersecurity, business continuity and related
operational risks); the Guarantor’s ability to provide innovative products and services and
execute its strategic objectives; or a combination of these or other factors. In addition,
legislative, legal and regulatory developments related to the Guarantor’s businesses are likely to
increase costs, thereby affecting results of operations.
B.5 Description of the
Group and the
Issuer’s position
within the Group
The Issuer has no subsidiaries. It is wholly owned by Morgan Stanley Asia Securities Products
LLC, which is itself a subsidiary of the Guarantor. The Guarantor, a financial holding company, is
a global financial services firm that maintains significant market positions in each of its business
segments – Institutional Securities, Wealth Management and Investment Management. The
Guarantor, through its subsidiaries and affiliates (together with the Guarantor, the Group),
provides a wide variety of products and services to a large and diversified group of clients and
customers, including corporations, governments, financial institutions and individuals.
B.9 Profit forecast or
estimate
Not Applicable; the Issuer has chosen not to include a profit forecast or estimate.
B.10 Qualifications in
the auditors’
report on the
Issuer’s historical
financial
information
Not Applicable; the auditors’ report contains no such qualifications in respect of the audited
reports and financial statements of the Issuer for the years ended 31 December 2015 and 2016.
B.12 Selected financial
information
relating to the
Issuer
The selected financial information set out below has been extracted without material adjustment from
the interim report for the half year ended 30 June 2017 and the audited reports and financial statements
of the Issuer for the year ended 31 December 2016.
Balance Sheet (in U.S.$ ‘000) 31 Dec 2015 31 Dec 2016 30 June 2017
Total assets 6,524,965 3,257,182 3,194,371
Total liabilities and equity 6,524,965 3,257,182 3,194,371
Condensed statement of
comprehensive income
(in U.S.$ ‘000)
31 Dec
2015
31 Dec
2016
Six months
ended 30 June
2016 2017
Net gains/ (losses) on financial
instruments classified as held
for trading
871 356 418 104
Net gains/ (losses) on financial
instruments designated at fair
value through profit or loss
(871) (356) (418) (104)
Income (net of tax) - - - -
There has been no significant change in the financial or trading position of the Issuer since 30
June 2017, the date of the latest published interim unaudited financial statements of the Issuer and
no material adverse change in the prospects of the Issuer since 31 December 2016, the date of the
latest published annual audited financial statements of the Issuer.
B.13 Recent material
events particular
to the Issuer
Not Applicable. The Issuer considers that no event particular to itself and which is to a material
extent relevant to the evaluation of its solvency has taken place since the publication of its last
annual financial statements.
B.14 Extent to which
the Issuer is
dependent on
other entities
within the Group
See Element B.5 for information about the Issuer’s position in the Group.
The Warrants issued by the Issuer are guaranteed by the Guarantor. The Arranger and Dealer,
which is also an affiliate of the Issuer, arranges and distributes the Warrants that are issued by the
Issuer. The Issuer is also reliant on the Guarantor or other members of the Group for the purposes
of entering into hedging transactions to hedge exposures under the Warrants it issues.
B.15 Principal activities
of the Issuer
The Issuer’s business consists of the issuance of financial instruments, with a primary focus on
the Asia markets, and the hedging of obligations relating thereto.
B.16 Extent to which
the Issuer is
directly or
indirectly owned
or controlled
The Issuer is wholly owned by Morgan Stanley Asia Securities Products LLC. It is indirectly
owned or controlled by the Guarantor through a number of subsidiaries.
B.18 Description and
scope of the
Guarantee
The Guarantor will absolutely, unconditionally and irrevocably guarantee the Issuer’s payment
obligations under each series of Warrants pursuant to a guarantee dated 21 September 2017 (the
Guarantee).
B.19 Section B
information about
the Guarantor
The following items B.1 to B.16 shall relate to the Guarantor as if it were the Issuer:
Guarantor
B.1 The legal and
commercial name
of the Guarantor
Morgan Stanley.
B.2 The domicile and
legal form of the
Guarantor, the
legislation under
which the
Guarantor
operates and its
country of
incorporation
The Guarantor was incorporated under the laws of the State of Delaware. As a financial holding
company, it is regulated by the Board of Governors of the Federal Reserve System (the Federal
Reserve) under the Bank Holding Company Act of 1956, as amended (the BHC Act). As a major
financial services firm that operates through its subsidiaries and affiliates, the Guarantor is subject
to extensive regulation by U.S. federal and state regulatory agencies and securities exchanges and
by regulators and exchanges in each of the major markets where it conducts its business. The
Guarantor has its registered office at The Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, U.S.A., and its principal executive office at 1585 Broadway, New
York, New York 10036, U.S.A.
The Guarantor conducts its business from its headquarters in and around New York City, its
regional offices and branches throughout the United States and its principal offices in London,
Tokyo, Hong Kong and other world financial centres.
B.4b A description of
any known trends
affecting the
Guarantor and
the industries in
which it operates
See B.4b in relation to the Issuer above.
22(9)B.14
22(13)B.14
B.5 Description of the
Group and the
Guarantor’s
position within the
Group
The Guarantor, a financial holding company, is a global financial services firm that maintains
significant market positions in each of its business segments – Institutional Securities, Wealth
Management and Investment Management. The Guarantor, through its subsidiaries and affiliates,
provides a wide variety of products and services to a large and diversified group of clients and
customers, including corporations, governments, financial institutions and individuals.
The Guarantor is the parent and financial holding company of the companies in the Group.
B.9 Profit forecast or
estimate
Not Applicable; the Guarantor has chosen not to include a profit forecast or estimate.
B.10 Qualifications in
the auditors’
report on the
Guarantor’s
historical financial
information
Not Applicable. The auditors’ report contains no such qualifications in respect of the audited
reports and financial statements of the Guarantor for the years ended 31 December 2015 and
2016.
B.12 Selected financial
information
relating to the
Guarantor
The selected financial information set out below has been extracted without material adjustment
from the unaudited financial statements included in the Morgan Stanley Quarterly Report on Form
10-Q for the quarterly period ended 30 September 2017 and the audited reports and financial
statements of the Guarantor for the year ended 31 December 2016.
Consolidated Balance
Sheets (U.S.$ in
millions)
At 31
Dec 2015
At 31
Dec 2016
At 30 September
2017 (unaudited)
Total assets 787,465 814,949 853,693
Total liabilities and
equity
787,465 814,949 853,693
Consolidated Income
Statements (U.S.$ in
millions)
2015
2016
Nine months
ended 30
September 2017
(unaudited)
Net revenues 35,155 34,631 28,445
Income from continuing
operations before income
taxes
8,495 8,848
7,932
Net income 6,279 6,123 5,553
There has been no material adverse change in the prospects of the Guarantor since 31 December
2016, the date of the latest published annual audited financial statements of the Guarantor, nor any
significant change in the financial or trading position of the Guarantor since 30 September 2017,
the date of the latest published interim unaudited financial statements of the Guarantor.
B.13 Recent material
events particular
to the Guarantor
Not Applicable. The Guarantor considers that no event particular to itself and which is to a
material extent relevant to the evaluation of its solvency has taken place since the publication of
its last annual financial statements.
B.14 Extent to which
the Guarantor is
dependent on
other entities
within the Group
The Guarantor is a holding company for a number of subsidiary companies (directly or indirectly)
and is dependent on their performance.
B.15 Principal activities The Guarantor, a financial holding company, is a global financial services firm that maintains
of the Guarantor significant market positions in each of its business segments – Institutional Securities, Wealth
Management and Investment Management. A summary of the activities of each of the Guarantor’s
business segments is as follows:
• Institutional Securities provides investment banking, sales and trading, lending and other
services to corporations, governments, financial institutions, and high to ultra-high net worth
clients. Investment banking services consist of capital raising and financial advisory services,
including services relating to the underwriting of debt, equity and other securities, as well as
advice on mergers and acquisitions, restructurings, real estate and project finance. Sales and
trading services include sales, financing and market-making activities in equity and fixed
income products, including prime brokerage services, global macro, credit and commodities
products. Lending services include originating and/or purchasing corporate loans, commercial
and residential mortgage lending, asset-backed lending, financing extended to equities and
commodities customers, and loans to municipalities. Other services include investment and
research activities.
• Wealth Management provides a comprehensive array of financial services and solutions to
individual investors and small to medium-sized businesses/ institutions covering brokerage
and investment advisory services, financial and wealth planning services, annuity and
insurance products, credit and other lending products, banking and retirement plan services.
• Investment Management provides a broad range of investment strategies and products that
span geographies, asset classes, and public and private markets, to a diverse group of clients
across institutional and intermediary channels. Strategies and products include equity, fixed
income, liquidity and alternative/other products. Institutional clients include defined
benefit/defined contribution plans, foundations, endowments, government entities, sovereign
wealth funds, insurance companies, third-party fund sponsors and corporations. Individual
clients are serviced through intermediaries, including affiliated and non-affiliated distributors.
B.16 Extent to which
the Guarantor is
directly or
indirectly owned
or controlled
The Guarantor is a publicly traded company with a principal listing of its ordinary shares on the
New York Stock Exchange.
As of 27 March 2017, the following entities beneficially own more than 5% of the Guarantor’s
common stock: Mitsubishi UFJ Financial Group, Inc. (23.5% holding); State Street (8.8%
holding); T. Rowe Price (7.1% holding); BlackRock (5.9% holding). The percentage holdings are
based on the number of common shares as of 27 March 2017.
Section C – Securities
C.1 Type and class of
Warrants
The Warrants are Regulation S Warrants which are also Share Warrants.
The Warrants will be issued in registered form and will be represented on issue by a Global
Warrant which is exchangeable for Definitive Warrants in the limited circumstances specified in
the Global Warrant. The Global Warrant will be deposited with Euroclear Bank S.A./N.A.
(Euroclear) and Clearstream Banking, societé anonyme (Clearstream, Luxembourg)with
interests in such Global Warrant being traded in the relevant clearing system(s).
ISIN: KYG6272P3290
Common Code: 174019177
C.2 Currencies Subject to compliance with all relevant laws, regulations and directives, Warrants under the
Programme may be denominated in any currency or units of exchange and settled in any
deliverable currency.
The Issue Price of the Warrants is denominated in USD and will be settled in USD.
C.5 A description of
any restrictions on
the free
transferability of
The free transfer of the Warrants is subject to the selling restrictions of the United States, the
European Economic Area (including Austria, Belgium, the Czech Republic, Denmark, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Lichtenstein, Luxembourg, the Netherlands,
Norway, Poland, Portugal, Romania, Slovakia, Spain, Sweden and the United Kingdom),
the Warrants Australia, the People’s Republic of China (PRC), the Cayman Islands, the Hong Kong Special
Administrative Region of the People’s Republic of China (Hong Kong), Kingdom of Bahrain,
Indonesia, Japan, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka,
Thailand, the Republic of Korea (South Korea), the Republic of China (Taiwan), the United Arab
Emirates and Vietnam.
Regulation S Warrants shall comply with the selling restrictions applicable to them as set out in
the section “Offering and Sale”.
The “Additional Selling Restrictions” in respect of Regulation S Warrants for which Alternative
Provisions are not applicable shall apply, for which the Relevant Jurisdiction is not India.
Warrants held in a clearing system must be transferred in accordance with the rules, procedures
and regulations of that clearing system
C.8 Description of the
rights attaching to
the Warrants
The Warrants are Regulation S Warrants which are also American Style Warrants and Call
Warrants to which Automatic Exercise applies.
Status: The Warrants constitute direct, unconditional, unsecured and unsubordinated obligations
of the Issuer and rank pari passu without preference amongst themselves and, subject to any
applicable statutory provisions or judicial order, at least equally with all other present and future
direct, unconditional, unsecured and unsubordinated obligations of the Issuer.
Guarantee: The Warrants have the benefit of an absolute, unconditional and irrevocable guarantee
of payments of obligations of the Issuer by the Guarantor.
The Warrants relate to the local ordinary shares of Kweichow Moutai Co., Ltd. with the
Bloomberg Code 600519 C1 (the Shares).
See C.18 for rights relating to Cash Settlement Amounts payable in respect of the Warrants.
C.11 Listing and
admission to
trading/ indication
of market where
securities will be
traded
Application is expected to be made by the Issuer (or on its behalf) for the Warrants to be admitted
to trading on the Irish Stock Exchange’s regulated market with effect from 19 December 2017.
C.15 Effect of value of
underlying
instrument(s) on
value of derivative
securities
The Cash Settlement Amount to which the holder of each Warrant is entitled is as set out in C.18.
Depending on the value of the underlying Shares on the Exercise Date, Actual Exercise Date or
Expiration Date, as the case may be, the Cash Settlement Amount may be a positive amount or it
may be zero (although it may not be lower than zero). The value of the Cash Settlement Amount
is dependent on the performance of the underlying Shares; if the Cash Settlement Amount is zero,
it represents a total loss of the amount paid for the Warrant.
C.16 Expiration/
maturity date of
derivative
securities
The Warrants expire on 14 June 2018.
C.17 Settlement
procedure for
derivative
securities
The Warrants shall be cash-settled through Clearstream, Luxembourg and/or Euroclear.
C.18 Description of
return on
derivative
securities
The returns on the Warrants shall depend on the performance of the Shares.
The Cash Settlement Amount payable in respect of each Warrant is determined as follows:
Where an Issuer Optional Termination Notice has not been given to the Warrantholders:
Max (0, Settlement Price – Strike Price) – Max (0, (Settlement Price – Issue Price) x Tax Rate),
multiplied by the Ratio (if any).
Where a valid Issuer Optional Termination Notice has been given to the Warrantholders:
Max (0, Settlement Price – Strike Price) – Max (0, (Settlement Price – Issue Price) x Tax Rate),
multiplied by the Ratio (if any).
where:
Issue Price shall have the meaning specified in the applicable Final Terms; and
Issuer Optional Termination Notice means a notice given by the Issuer to the Warrantholders
designating an optional termination date; and
Strike Price shall have the meaning specified in the applicable Final Terms; and
Tax Event means the enactment, promulgation, execution, ratification, or adoption (including
clarification, confirmation and explanation) by the Government of the People’s Republic of China
or any relevant government authority of a capital gains tax applicable to the Issuer’s holding,
possession, purchase or sale of the Shares. The Calculation Agent will determine the applicability
of such capital gains tax in its sole discretion; and
Tax Rate means, unless specified otherwise in the Final Terms, (i) the effective capital gains tax
as determined by the Calculation Agent in its sole discretion after a Tax Event, or (ii) if no such
Tax Event is determined to be effective by the Calculation Agent prior to the Exercise Date or the
Expiration Date, as applicable, a rate equal to 10% of the gains in respect of the Shares or Units,
as the case may be, in Renminbi and converted into the Settlement Currency, in each case, as
determined by the Calculation Agent in its sole discretion.
C.19 Description of
exercise price or
final reference
price of
underlying asset
in relation to
derivative
securities
The Settlement Price of each Warrant shall be
the arithmetic mean of the VWAP of each Share or Unit (as applicable) on each day on which the
Issuer, acting in good faith and a commercially reasonable manner, disposes of any Shares or
Units (as applicable) in relation to the Valuation Date converted into the Settlement Currency at
the relevant Exchange Rate.
C.20 Description of
underlying asset
and where
information on
underlying asset
can be found
The Shares have been issued by Kweichow Moutai Co., Ltd. and information relating to it can be
found at Bloomberg Financial Markets Information Services.
C.21 Listing and
admission to
trading/ indication
of market where
securities will be
traded
Application is expected to be made by the Issuer (or on its behalf) for the Warrants to be admitted
to trading on the Irish Stock Exchange’s regulated market with effect from 19 December 2017.
Section D – Risks
D.2 Key risks
regarding the
Issuer and the
Guarantor
The following key risks affect the Guarantor and, indirectly, the Issuer:
Market Risk: The Guarantor’s results of operations may be materially affected by market
fluctuations and by global and economic conditions and other factors, including changes in asset
values. Holding large and concentrated positions may expose the Guarantor to losses. These
factors may result in losses for a position or portfolio owned by the Guarantor.
Credit Risk: The Guarantor is exposed to the risk that third parties that are indebted to it will not
perform their obligations, as well as that a default by a large financial institution could adversely
affect financial markets. Such factors give rise to the risk of loss arising when a borrower,
counterparty or issuer does not meet its financial obligations to the Guarantor.
Operational Risk: The Guarantor is subject to the risk of loss, or of damage to its reputation,
resulting from inadequate or failed processes or systems, human factors or from external events
(e.g. fraud, theft, legal and compliance risks, cyber attacks or damage to physical assets). The
Guarantor may incur operational risk across the full scope of its business activities, including
revenue-generating activities (e.g. sales and trading) and support and control groups (e.g.
information technology and trade processing).
Liquidity and Funding Risk: Liquidity is essential to the Guarantor’s businesses and the Guarantor
relies on external sources to finance a significant portion of its operations. The Guarantor’s
borrowing costs and access to the debt capital markets depend on its credit ratings. The Guarantor
is a holding company, has no operations and depends on dividends, distributions and other
payments from its subsidiaries. Further, the Guarantor’s liquidity and financial condition have in
the past been, and in the future could be, adversely affected by U.S. and international markets and
economic conditions. As a result of the foregoing, there is a risk that the Guarantor will be unable
to finance its operations due to a loss of access to the capital markets or difficulty in liquidating its
assets. Additionally, there is a risk that Morgan Stanley’s financial condition or overall soundness
is adversely affected by an inability or perceived inability to meet its financial obligations in a
timely manner. Morgan Stanley also experiences associated funding risks triggered by the market
or idiosyncratic stress events that may cause unexpected changes in funding needs or an inability
to raise new funding.
Legal, Regulatory and Compliance Risk: The Guarantor is subject to the risk of legal or regulatory
sanctions, material financial loss including fines, penalties, judgments, damages and/or
settlements, or loss to reputation it may suffer as a result of its failure to comply with laws,
regulations, rules, related self-regulatory organisation standards and codes of conduct applicable
to its business activities. The Guarantor is also subject to contractual and commercial risk, such as
the risk that a counterparty’s performance obligations will be unenforceable. Additionally, the
Guarantor is subject to anti-money laundering, anti-corruption and terrorist financing rules and
regulations.
Risk Management: The Guarantor’s risk management strategies, models and processes may not be
fully effective in mitigating its risk exposures in all market environments or against all types of
risk.
Competitive Environment: The Guarantor faces strong competition from other financial services
firms, which could lead to pricing pressures that could materially adversely affect its revenue and
profitability. Further, automated trading markets may adversely affect the Guarantor’s business
and may increase competition (for example by putting increased pressure on bid-offer spreads,
commissions, markups or comparable fees). Finally, the Guarantor’s ability to retain and attract
qualified employees is critical to the success of its business and the failure to do so may materially
adversely affect its performance.
International Risk: The Guarantor is subject to numerous political, economic, legal, tax,
operational, franchise and other risks as a result of its international operations (including risks of
possible nationalisation, expropriation, price controls, capital controls, exchange controls,
increased taxes and levies and other restrictive governmental actions, as well as the outbreak of
hostilities or political and governmental instability) which could adversely impact its businesses in
many ways.
Acquisition, Divestiture and Joint Venture Risk: The Guarantor may be unable to fully capture the
expected value from acquisitions, divestitures, joint ventures, minority stakes or strategic
alliances.
Risk relating to the exercise of potential resolution measures powers: The application of
regulatory requirements and strategies in the United States or other jurisdictions to facilitate the
orderly resolution of large financial institutions may pose a greater risk of loss for Morgan
Stanley’s security holders, and subject Morgan Stanley to other restrictions.
D.6 Key information
on the key risks
that are specific to
the Warrants
The Warrants are being issued with the intention that they will be purchased only by corporations,
partnerships and other entities or individuals having such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an investment in the
Warrants, who are experienced in investing in derivative instruments and who are familiar with
secondary market trading in instruments such as the Warrants. Prospective investors should
conduct independent investigation and analysis regarding the Warrants and the other assets on
which the obligations of the Issuer and the Guarantor to which the value of the Warrants relate as
they deem appropriate.
The price of the Warrants may fall in value and investors may lose the value of their entire
investment if, among other reasons:
the value of the relevant underlying basis of reference does not move in the anticipated
direction;
the Issuer and the Guarantor are unable to pay any amounts due under the Warrants;
the price and/or value of the assets underlying the Warrants are influenced by the
political, financial and economic stability of the country and/or region in which it is
incorporated or has a place of business;
the Guarantor’s credit rating has fallen due to a perception of a fall in the Guarantor’s
creditworthiness; or
adjustments to the Warrants made by the Calculation Agent pursuant to the terms of the
Warrants.
An investment in Warrants linked to Shares is not directly an investment in the Shares.
Warrantholders will not have any rights in relation to the underlying assets nor will it have any
recourse to the relevant issuer of the underlying Shares. Neither the Issuer nor the Guarantor has
an ability to control or predict any actions of the issuer of the underlying Shares
The Issuer may limit the number of Warrants that are exercisable on any date (other than the final
exercise date).
The Issuer shall have a right, upon giving sufficient written notice, to terminate all or some only
of the Warrants in the relevant series prior to the Expiration Date. Any payment a Warrantholder is
entitled to receive following such a termination may be less than what they could have received
had the Warrants been held to the Exercise Date or Expiration Date (as the case may be).
The terms of the Warrants may be amended or the Warrants may be terminated or suspended, in
each case by the Issuer if an Additional Disruption Event has occurred.
Section E – Offer
E.2b Reason for the
offer and use of
proceeds
The net proceeds of the issue of the Warrants will be used by the relevant Issuer for its general
business purposes, including the making of profits and the hedging of certain risks.
E.3 Terms and
Conditions of the
Offer
The Warrants will be offered to investors by the Dealer at an issue price of USD 100.5401 per
Warrant. The minimum number of Warrants that an investor may purchase is 1.
E.4 Interests of
natural and legal
persons involved
in the issue of the
So far as the Issuer is aware, no person involved in the offer of the Warrants has an interest
material to the offer.
Warrants
E.7 Estimated
expenses charged
to the investor by
the Issuer
The Warrants are offered to the investors by the Dealer and the estimated expenses are zero in
respect of all the Warrants being issued.
