We are exposed to certain foreign currency risks. Where possible, we identify exposures in our business that can be offset internally. Where no natural offset is identified, we may choose to enter into various derivative transactions. These instruments have the effect of reducing our exposure to unfavorable changes in foreign currency rates. The Company’s board of directors reviews and approves policies for managing this risk as summarized below. Additional information regarding our derivative financial instruments can be found in Note 11 — Fair Value Measurements and Note 17 — Accumulated Other Comprehensive Loss.

Certain non-U.S. subsidiaries receive revenue and incur expenses in currencies other than their functional currency, and as a result, the foreign subsidiary’s functional currency revenue and/or expenses will fluctuate as the currency rates change. Additionally, the forecast Pounds sterling expenses of our London brokerage market operations may exceed their Pounds sterling revenue, and the entity with such operations may also hold significant foreign currency asset or liability positions in the condensed consolidated balance sheet. To reduce such variability, we use foreign exchange contracts to hedge against this currency risk.

These derivatives were designated as hedging instruments and at June 30, 2022 and December 31, 2021 had total notional amounts of $134 million and $155 million, respectively, and had a net liability fair value of $5 million and a net asset fair value of $3 million, respectively.

At June 30, 2022, the Company estimates, based on current exchange rates, there will be $4 million of net derivative losses on forward exchange rates reclassified from accumulated other comprehensive loss into earnings within the next twelve months as the forecast transactions affect earnings. At June 30, 2022, our longest outstanding maturity was 1.7 years.

The effects of the material derivative instruments that are designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2022 and 2021 are below. Amounts pertaining to the ineffective portion of hedging instruments and those excluded from effectiveness testing were immaterial for the three and six months ended June 30, 2022 and 2021.


	(Loss)/gain recognized in OCI (effective element)
	Three months ended June 30,					Six months ended June 30,
	2022			2021		2022			2021
Forward exchange contracts	$	(5	)	$	1	$	(6	)	$	5


Location of gain/(loss) reclassified from Accumulated OCL into income (effective element)	Gain/(loss) reclassified from Accumulated OCL into income (effective element)
	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022		2021
Revenue	$	1		$	(1	)	$	1	$	(2	)
Salaries and benefits		(1	)		2			1		3
Discontinued operations		—			2			—		3
	$	—		$	3		$	2	$	4

We also enter into foreign currency transactions, primarily to hedge certain intercompany loans and other balance sheet exposures in currencies other than the functional currency of a given entity. These derivatives are not generally designated as hedging instruments, and at June 30, 2022 and December 31, 2021, we had notional amounts of $2.0 billion and $2.9 billion, respectively. At June 30, 2022 and December 31, 2021, we had a net liability fair value of $11 million and a net asset fair value of $15 million, respectively.

The effects of derivatives that have not been designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2022 and 2021 are as follows:


		Loss recognized in income
		Three Months Ended June 30,						Six Months Ended June 30,
Derivatives not designated as hedging instruments:	Location of loss recognized in income	2022			2021			2022			2021
Forward exchange contracts	Other income, net	$	(20	)	$	(13	)	$	(26	)	$	(29	)