JPMorgan Chase enters into resale, repurchase, securities borrowed and securities loaned agreements (collectively, “securities financing agreements”) primarily to finance the Firm’s inventory positions, acquire securities to cover short sales, accommodate customers’ financing needs, settle other securities obligations and to deploy the Firm’s excess cash.

Securities financing agreements are treated as collateralized financings on the Firm’s Consolidated balance sheets. Where appropriate under applicable accounting guidance, securities financing agreements with the same counterparty are reported on a net basis. Refer to Note 1 for further discussion of the offsetting of assets and liabilities. Fees received and paid in connection with securities financing agreements are recorded over the life of the agreement in interest income and interest expense on the Consolidated statements of income.

The Firm has elected the fair value option for certain securities financing agreements. Refer to Note 3 for further information regarding the fair value option. The securities financing agreements for which the fair value option has been elected are reported within securities purchased under resale agreements, securities loaned or sold under repurchase agreements, and securities borrowed on the Consolidated balance sheets. Generally, for agreements carried at fair value, current-period interest accruals are recorded within interest income and interest expense, with changes in fair value reported in principal transactions revenue. However, for financial instruments containing embedded derivatives that would be separately accounted for in accordance with accounting guidance for hybrid instruments, all changes in fair value, including any interest elements, are reported in principal transactions revenue.

Securities financing agreements not elected under the fair value option are measured at amortized cost. As a result of the Firm’s credit risk mitigation practices described below, the Firm did not hold any allowance for credit losses with respect to resale and securities borrowed arrangements as of December 31, 2020 and 2019.

Credit risk mitigation practices

Securities financing agreements expose the Firm primarily to credit and liquidity risk. To manage these risks, the Firm monitors the value of the underlying securities (predominantly high-quality securities collateral, including government-issued debt and U.S. GSEs and government agencies MBS) that it has received from or provided to its counterparties compared to the value of cash proceeds and exchanged collateral, and either requests additional collateral or returns securities or collateral when appropriate. Margin levels are initially established based upon the counterparty, the type of underlying securities, and the permissible collateral, and are monitored on an ongoing basis.

In resale and securities borrowed agreements, the Firm is exposed to credit risk to the extent that the value of the securities received is less than initial cash principal advanced and any collateral amounts exchanged. In repurchase and securities loaned agreements, credit risk exposure arises to the extent that the value of underlying securities advanced exceeds the value of the initial cash principal received, and any collateral amounts exchanged.

Additionally, the Firm typically enters into master netting agreements and other similar arrangements with its counterparties, which provide for the right to liquidate the underlying securities and any collateral amounts exchanged in the event of a counterparty default. It is also the Firm’s policy to take possession, where possible, of the securities underlying resale and securities borrowed agreements. Refer to Note 29 for further information regarding assets pledged and collateral received in securities financing agreements.

The table below summarizes the gross and net amounts of the Firm’s securities financing agreements, as of December 31, 2020 and 2019. When the Firm has obtained an appropriate legal opinion with respect to a master netting agreement with a counterparty and where other relevant netting criteria under U.S. GAAP are met, the Firm nets, on the Consolidated balance sheets, the balances outstanding under its securities financing agreements with the same counterparty. In addition, the Firm exchanges securities and/or cash collateral with its counterparty to reduce the economic exposure with the counterparty, but such collateral is not eligible for net Consolidated balance sheet

presentation. Where the Firm has obtained an appropriate legal opinion with respect to the counterparty master netting agreement, such collateral, along with securities financing balances that do not meet all these relevant netting criteria under U.S. GAAP, is presented in the table below as “Amounts not nettable on the Consolidated balance sheets,” and reduces the “Net amounts” presented. Where a legal opinion has not been either sought or obtained, the securities financing balances are presented gross in the “Net amounts” below.


	2020
December 31, (in millions)	Gross amounts		Amounts netted on the Consolidated balance sheets		Amounts presented on the Consolidated balance sheets		Amounts not nettable on the Consolidated balance sheets(b)		Net amounts(c)
Assets
Securities purchased under resale agreements	$	666,467	$	(370,183)	$	296,284	$	(273,206)	$	23,078
Securities borrowed	193,700		(33,065)		160,635		(115,219)		45,416
Liabilities
Securities sold under repurchase agreements	$	578,060	$	(370,183)	$	207,877	$	(191,980)	$	15,897
Securities loaned and other(a)	41,366		(33,065)		8,301		(8,257)		44


	2019
December 31, (in millions)	Gross amounts		Amounts netted on the Consolidated balance sheets		Amounts presented on the Consolidated balance sheets		Amounts not nettable on the Consolidated balance sheets(b)			Net amounts(c)
Assets
Securities purchased under resale agreements	$	628,609	$	(379,463)	$	249,146	$	(231,147)	(d)	$	17,999	(d)
Securities borrowed	166,718		(26,960)		139,758		(104,990)			34,768
Liabilities
Securities sold under repurchase agreements	$	555,172	$	(379,463)	$	175,709	$	(151,566)		$	24,143
Securities loaned and other(a)	36,649		(26,960)		9,689		(9,654)			35

(a)Includes securities-for-securities lending agreements of $3.4 billion and $3.7 billion at December 31, 2020 and 2019, respectively, accounted for at fair value, where the Firm is acting as lender. In the Consolidated balance sheets, the Firm recognizes the securities received at fair value within other assets and the obligation to return those securities within accounts payable and other liabilities.

(b)In some cases, collateral exchanged with a counterparty exceeds the net asset or liability balance with that counterparty. In such cases, the amounts reported in this column are limited to the related net asset or liability with that counterparty.

(c)Includes securities financing agreements that provide collateral rights, but where an appropriate legal opinion with respect to the master netting agreement has not been either sought or obtained. At December 31, 2020 and 2019, included $17.0 billion and $11.0 billion, respectively, of securities purchased under resale agreements; $42.1 billion and $31.9 billion, respectively, of securities borrowed; $14.5 billion and $22.7 billion, respectively, of securities sold under repurchase agreements; and $8 million and $7 million, respectively, of securities loaned and other.

(d)The prior period amounts have been revised to conform with the current period presentation.

The tables below present as of December 31, 2020 and 2019 the types of financial assets pledged in securities financing agreements and the remaining contractual maturity of the securities financing agreements.


	Gross liability balance
	2020				2019
December 31, (in millions)	Securities sold under repurchase agreements		Securities loaned and other		Securities sold under repurchase agreements		Securities loaned and other
Mortgage-backed securities:
U.S. GSEs and government agencies	$	56,744	$	—	$	34,119	$	—
Residential - nonagency	1,016		—		1,239		—
Commercial - nonagency	855		—		1,612		—
U.S. Treasury, GSEs and government agencies	315,834		143		334,398		29
Obligations of U.S. states and municipalities	1,525		2		1,181		—
Non-U.S. government debt	157,563		1,730		145,548		1,528
Corporate debt securities	22,849		1,864		13,826		1,580
Asset-backed securities	694		—		1,794		—
Equity securities	20,980		37,627		21,455		33,512
Total	$	578,060	$	41,366	$	555,172	$	36,649


	Remaining contractual maturity of the agreements
	Overnight and continuous						Greater than 90 days
2020 (in millions)			Up to 30 days		30 – 90 days				Total
Total securities sold under repurchase agreements	$	238,667	$	230,980	$	70,777	$	37,636	$	578,060
Total securities loaned and other	37,887		1,647		500		1,332		41,366


	Remaining contractual maturity of the agreements
	Overnight and continuous								Greater than 90 days
2019 (in millions)			Up to 30 days			30 – 90 days						Total
Total securities sold under repurchase agreements	$	225,134	$	195,816	(a)	$	56,020	(a)	$	78,202	(a)	$	555,172
Total securities loaned and other	32,028		1,706			937			1,978			36,649

(a)The prior period amounts have been revised to conform with the current period presentation.

Transfers not qualifying for sale accounting

At December 31, 2020 and 2019, the Firm held $598 million and $743 million, respectively, of financial assets for which the rights have been transferred to third parties; however, the transfers did not qualify as a sale in accordance with U.S. GAAP. These transfers have been recognized as collateralized financing transactions. The transferred assets are recorded in trading assets and loans, and the corresponding liabilities are recorded predominantly in short-term borrowings on the Consolidated balance sheets.