AUS
NZ
UK
CA
USA
IND
Morgan Stanley Finance LLC has introduced Callable Contingent Income Buffered Securities with Downside Factor maturing on January 27, 2027, linked to the iShares Bitcoin Trust ETF's performance. Priced at $1,000 per security and issued on July 28, 2026, these securities provide investors with an annual contingent coupon opportunity of 16.30%, while exposing principal to significant risk. This structured product highlights Morgan Stanley's ongoing efforts to expand Bitcoin-related derivatives offerings for institutional investors managing digital asset exposure.
Key Points
- Trading under NYSE ticker: MS-PQ
- Morgan Stanley Finance LLC issued callable buffered securities tied to iShares Bitcoin Trust ETF, maturing January 27, 2027
- Annual contingent coupon rate of 16.30%; coupon barrier set at $29.872 (80% of initial level); monthly coupon payment dates through maturity
- Principal at risk if iShares Bitcoin Trust ETF falls below buffer; investors lose 1.25% per 1% decline beyond buffer; callable starting August 27, 2026
Structured Investment Details and Issuer Guarantee
These securities are unsecured obligations of Morgan Stanley Finance LLC, fully and unconditionally guaranteed by Morgan Stanley. Issued under MSFL's Series A Global Medium-Term Notes program, they represent principal-at-risk instruments designed for investors accepting potential capital loss in exchange for enhanced income. Each security has a stated principal of $1,000, issued at par. The estimated value on pricing date was approximately $981.30 per security, within $25.00 of this estimate.
There is no guaranteed principal repayment or fixed interest independent of the underlying asset’s performance. The securities feature a call option allowing Morgan Stanley to redeem early based on a risk-neutral valuation model if economic conditions justify redemption. These securities are registered under SEC Registration Statement Nos. 333-293641 and 333-293641-01, with the pricing supplement filed July 23, 2026, under Rule 424(b)(2).
Contingent Coupon Structure and Observation Schedule
The securities pay a contingent coupon at an annualized rate of 16.30%, payable monthly only if the iShares Bitcoin Trust ETF’s closing price on observation dates meets or exceeds the coupon barrier of $29.872 (80% of initial level). If the ETF closes below this barrier on any observation date, no coupon is paid for that period, meaning investors risk receiving no coupons during the entire term despite the stated rate.
Coupon payments are scheduled monthly, with payments on non-business days made the next business day without adjustment. The final observation date is January 22, 2027, subject to postponement for non-trading days or market disruptions. The final coupon payment will be made on maturity, January 27, 2027. This monthly observation ties investor returns closely to Bitcoin ETF performance.
Callable Features and Early Redemption Terms
Starting August 27, 2026, Morgan Stanley may call the securities if the risk-neutral valuation model indicates economic rationality for redemption. The model factors in current market levels, volatilities, correlations, and Morgan Stanley’s credit spreads as of pricing. The calculation agent selects a determination date within three business days before or on the observation date preceding each potential call date.
Potential call dates are August 27, September 25, October 27, November 27, and December 28, 2026. No early redemption can occur before August 27, 2026. Upon early call, investors receive principal plus any contingent coupon due for that period, after which no further payments are made. Redemption notices will be provided no later than the observation date before the call date, limiting investor response time.
Maturity Payment and Downside Protection Mechanism
At maturity, the securities incorporate a buffer providing limited downside protection but no upside participation in Bitcoin ETF gains. If the ETF’s final level is at or above the buffer level, investors receive principal plus any final contingent coupon. If below, investors incur amplified losses via a downside factor, losing 1.25% of principal for every 1% decline beyond the buffer.
This structure means maturity payments can be substantially less than principal, potentially zero under adverse market conditions. Investors do not benefit from any appreciation in the underlying ETF, capping upside while exposing full downside risk.
Underlying Asset and Key Dates
The securities are linked to the iShares Bitcoin Trust ETF, a publicly traded fund providing Bitcoin exposure. The strike date is July 22, 2026, with pricing on July 23, 2026, and issuance on July 28, 2026. The final observation date for maturity payment determination is January 22, 2027, subject to adjustments for non-trading days or market disruptions.
Using an actively traded Bitcoin ETF ensures transparent pricing and valuation clarity. However, performance depends entirely on Bitcoin market fluctuations, offering concentrated directional exposure. The choice of iShares Bitcoin Trust ETF targets institutional and fee-based advisory clients seeking structured Bitcoin exposure without direct cryptocurrency custody or exchange trading.
Credit Risk and Guarantee Details
All payments depend on Morgan Stanley’s creditworthiness, exposing investors to counterparty risk. While Morgan Stanley Finance LLC issues the securities as unsecured obligations, Morgan Stanley provides a full unconditional guarantee. However, this guarantee depends solely on Morgan Stanley’s financial health.
The securities are unsecured with no claim on the underlying ETF or Bitcoin holdings. They are not bank deposits, not FDIC insured, nor guaranteed by any governmental agency. Investors rely entirely on Morgan Stanley and MSFL’s credit strength for repayment.
Investor Suitability and Risk Considerations
These securities suit investors willing to risk principal loss and the possibility of no coupon payments throughout the term. Investors must also accept early redemption risk at Morgan Stanley’s discretion based on the valuation model. The 16.30% contingent coupon compensates for principal risk and coupon barrier uncertainty.
The principal-at-risk nature means no guaranteed principal recovery, differing from traditional bonds. The combination of contingent coupons, callable features, and downside leverage creates a complex risk-return profile appropriate only for sophisticated investors familiar with structured derivatives and Bitcoin price dynamics. Sales are limited to fee-based advisory accounts, targeting institutional and high-net-worth investors with professional advisory access.
Distribution and Pricing Approach
Morgan Stanley & Co. LLC, an MSFL affiliate and Morgan Stanley subsidiary, acts as distribution agent. MS & Co. intends to sell securities purchased from MSFL to unaffiliated dealers for resale to fee-based advisory accounts at $1,000 per security. No sales commissions will be paid, distinguishing this from commission-based offerings.
The pricing date estimated value of approximately $981.30 per security reflects a discount due to embedded option features. Morgan Stanley’s internal risk-neutral valuation accounts for contingent coupons, call options, and downside leverage. Commission and fee details are disclosed in the pricing supplement but not specified in the filing.
Regulatory Filings and Documentation
These securities incorporate terms from the product supplement, tax supplement, and prospectus dated April 8, 2026. Investors must review the preliminary pricing supplement alongside these documents for full terms. The filing complies with Rule 424(b)(2) under the Securities Act of 1933, representing a registered public offering.
The SEC and state regulators have neither approved nor disapproved these securities, nor verified the accuracy or completeness of the pricing supplement or related documents. This standard disclaimer clarifies that regulatory filing confirms completeness but not endorsement of investment suitability or merits. Investors should carefully assess risk disclosures and suitability before investing.
