Morgan Stanley Finance LLC filed a Free Writing Prospectus on October 28, 2026, for Contingent Income Memory Buffered Auto-Callable Securities due November 17, 2031, linked to the S&P U.S. Equity Momentum 40% VT 4% Decrement Index (SPUMP40), with a pricing date of November 12, 2026.

Key Highlights

  • Underlier: The securities are linked to the S&P U.S. Equity Momentum 40% VT 4% Decrement Index (SPUMP40), established on March 14, 2022.
  • Contingent coupon: The filing states a contingent coupon of 11.50% to 12.50% per annum, with a memory feature, paid monthly.
  • Buffer amount: A 15% buffer applies at maturity, meaning investors face a maximum loss of 85% of principal.
  • Estimated value: The filing discloses an estimated value of $902.30 per security, or within $52.30 of that estimate, against a $1,000 original issue price.
  • Auto-call feature: The securities may be automatically redeemed monthly beginning after one year if the underlier closes at or above 100% of its initial level.
  • CUSIP: 61781TC76; maturity date is November 17, 2031.

Terms and Structure of the SPUMP40 Auto-Callable Securities

According to the filing, Morgan Stanley Finance LLC is the issuer and Morgan Stanley is the guarantor of these structured securities. The securities are tied to the S&P U.S. Equity Momentum 40% VT 4% Decrement Index, which the filing notes was established on March 14, 2022, and therefore "has very limited operating history." The index applies a fixed decrement of 4% per annum, which the filing states "will adversely affect the performance of the Index in all cases, whether the Index appreciates or depreciates."

The filing discloses that a contingent coupon of 11.50% to 12.50% per annum, with a memory feature, is payable monthly, but only if the closing level of the underlier on the relevant observation date is at or above the coupon barrier level of 70% of the initial level. Automatic early redemption is triggered monthly, beginning after one year, if the underlier closes at or above the call threshold level of 100% of the initial level. The filing notes that all payments are subject to the credit risk of Morgan Stanley.

At maturity, the filing's hypothetical payment table shows that if the underlier declines by 15% or less, investors receive $1,000.00 per security. A decline of 16% yields $990.00, a decline of 50% yields $650.00, and a decline of 100% yields $150.00 per security. The filing also states that the estimated value of $902.30 per security is determined by Morgan Stanley's own pricing and valuation models, and that the securities "will not be listed on any securities exchange and secondary trading may be limited."

What Was Disclosed

Morgan Stanley Finance LLC filed a Free Writing Prospectus for Preliminary Pricing Supplement No. 19,742, disclosing the key economic terms, risk factors, estimated value, and hypothetical payment scenarios for auto-callable structured securities linked to the SPUMP40 index, due November 17, 2031.