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Published on 10/16/2012 in the Prospect News Structured Products Daily.

Morgan Stanley plans contingent income autocallables tied to Apple

By Susanna Moon

Chicago, Oct. 16 - Morgan Stanley plans to price contingent income autocallable securities due October 2015 with step-up redemption threshold level linked to the common stock of Apple Inc., according to an FWP filing with the Securities and Exchange Commission.

If Apple stock closes at or above the 75% downside threshold level on a quarterly determination date, the notes will pay a contingent payment of 3.5625% to 4.0625. The exact contingent quarterly payment will be set at pricing.

If the stock closes at or above the redemption threshold level on any of the first 11 quarterly determination dates, the notes will be redeemed at par plus the contingent payment. The threshold will be 105% of the initial level for the first four determination dates, stepping up to 110% of the initial level for the next four dates and to 115% of the initial price after that.

If the notes are not called, the payout at maturity will be par plus the contingent payment unless the final share price is less than the downside threshold level, in which case the payout will be a number of Apple shares equal to $10.00 divided by the initial share price or, at Morgan Stanley's option, the cash equivalent.

Morgan Stanley & Co. LLC is the agent.

The notes will price and settle in October.

The Cusip number is 61755S792.


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