"Agence France Trésor (AFT), on behalf of the Minister of the Economy, Finance and Economic Recovery, has decided to suspend Morgan Stanley from its status of SVT (Spécialiste en Valeurs du Trésor - Primary Dealer) for a minimum period of three months, with effect from 4 August, 2020," the AFT said late on Monday.

The AFT said the suspension arose after the execution on June 16, 2015, of transactions that seriously affected the liquidity of the French sovereign bond market and a failure by Morgan Stanley to disclose an investigation by the French AMF watchdog into those transactions.

Morgan Stanley said it had taken note of the AFT's decision, adding that it was working on remedial measures and hoped to regain its primary dealership status with the French state treasury as soon as possible.

Last December Morgan Stanley was fined 20 million euros (18.00 million pounds) by the AMF for manipulation of sovereign bonds, which the bank is appealing against.

The AMF had said that a large sale of government bonds on June 16, 2015 disrupted the French MTS Global Market bond trading system, causing transactions to be suspended for four minutes and liquidity levels to drop for about an hour.

(Reporting by Sudip Kar-Gupta; Editing by Tom Hogue and David Goodman)