CREDIT LOSSES

3 Months Ended

Mar. 31, 2020

CREDIT LOSSES

CREDIT LOSSES

7. CREDIT LOSSES

Current expected credit losses are estimated for accounts receivable and notes receivable. The notes receivable included within other assets, net on the condensed consolidated balance sheets primarily relate to the consolidated audit trail (“CAT”), which involves the creation of an audit trail that strives to enhance regulators’ ability to monitor trading activity in the U.S. markets through a phased implementation. While the funding of the CAT is ultimately expected to be provided by both SROs (which includes the Exchanges) and industry members, until fee filings associated with the funding model are effective with or approved by the SEC, the funding to date has solely been provided by the SROs. The funding by the SROs has been done in exchange for promissory notes, which are expected to be repaid once such industry member fees are collected. Until the fee filings associated with the funding model are effective with or approved by the SEC, the SROs may continue to incur additional significant costs. The allowance for notes receivable credit losses associated with the CAT is calculated using a probability of default methodology. Accounts receivable represent amounts due from the Company’s member firms. The allowance for accounts receivable credit losses is calculated using an aging schedule. The following represents the changes in allowance for credit losses during the three months ended March 31, 2020:

	Balance at January 1, 2020		Current period provision for expected credit losses		Writeoffs charged against the allowance		Recoveries collected		Balance at March 31, 2020
Allowance for notes receivable credit losses	$	23.4	$	—	$	—	$	—	$	23.4
Allowance for accounts receivable credit losses		1.1		0.1		—		—		1.2
Total allowance for credit losses	$	24.5	$	0.1	$	—	$	—	$	24.6