10. FEDERAL FUNDS/SECURITIES BORROWED, LOANED, AND SUBJECT TO REPURCHASE AGREEMENTS

Federal funds sold and securities borrowed or purchased under agreements to resell, at their respective carrying values, consisted of the following at September 30, 2013 and December 31, 2012:

*In millions of dollars*	September 30, 2013		December 31, 2012

Federal funds sold	$	90	$	97
Securities purchased under agreements to resell		147,232		138,549
Deposits paid for securities borrowed		126,357		122,665

Total	$	273,679	$	261,311

Federal funds purchased and securities loaned or sold under agreements to repurchase, at their respective carrying values, consisted of the following at September 30, 2013 and December 31, 2012:

*In millions of dollars*	September 30, 2013		December 31, 2012

Federal funds purchased	$	596	$	1,005
Securities sold under agreements to repurchase		188,963		182,330
Deposits received for securities loaned		26,828		27,901

Total	$	216,387	$	211,236

The resale and repurchase agreements represent collateralized financing transactions. The Company executes these transactions through its broker-dealer subsidiaries to facilitate customer matched-book activity and to efficiently fund a portion of the Company's trading inventory. Transactions executed by the Company's bank subsidiaries primarily facilitate customer financing activity.

It is the Company's policy to take possession of the underlying collateral, monitor its market value relative to the amounts due under the agreements and, when necessary, require prompt transfer of additional collateral in order to maintain contractual margin protection. Collateral typically consists of government and government-agency securities, corporate and municipal bonds, and mortgage-backed and other asset-backed securities.

The resale and repurchase agreements are generally documented under industry standard agreements that allow the prompt close-out of all transactions (including the liquidation of securities held) and the offsetting of obligations to return cash or securities, as the case may be, by the non-defaulting party, following a payment or other type of default under the relevant master agreement. Events of default generally include: (i) failure to deliver cash or securities as required under the transaction, (ii) failure to provide or return cash or securities as used for margining purposes, (iii) breach of representation, (iv) cross-default to another transaction entered into among the parties, or, in some cases, their affiliates, and (v) a repudiation of obligations under the agreement. The counterparty that receives the securities in these transactions is generally unrestricted in its use of the securities, with the exception of transactions executed on a tri-party basis.

The majority of the resale and repurchase agreements are recorded at fair value, as described in Note 22 to the Consolidated Financial Statements. The remaining portion is carried at the amount of cash initially advanced or received, plus accrued interest, as specified in the respective agreements.

The securities borrowing and lending agreements also represent collateralized financing transactions similar to the resale and repurchase agreements. Collateral typically consists of government and government-agency securities and corporate debt and equity securities.

Similar to the resale and repurchase agreements, securities borrowing and lending agreements are generally documented under industry standard agreements that allow the prompt close-out of all transactions (including the liquidation of securities held) and the offsetting of obligations to return cash or securities, as the case may be, by the non-defaulting party, following a payment or other default by the other party under the relevant master agreement. Events of default and rights to use securities under the securities borrowing and lending agreements are similar to the resale and repurchase agreements referenced above.

A majority of securities borrowing and lending agreements are recorded at the amount of cash advanced or received. The remaining portion is recorded at fair value as the Company elected the fair value option for certain securities borrowed and loaned portfolios, as described in Note 22 to the Consolidated Financial Statements. With respect to securities loaned, the Company receives cash collateral in an amount generally in excess of the market value of the securities loaned. The Company monitors the market value of securities borrowed and securities loaned on a daily basis and obtains or posts additional collateral in order to maintain contractual margin protection.

The enforceability of offsetting rights incorporated in the master netting agreements for resale and repurchase agreements and securities borrowing and lending agreements is evidenced to the extent that a supportive legal opinion has been obtained from counsel of recognized standing which provides the requisite level of certainty regarding the enforceability of these agreements and that the exercise of rights by the non-defaulting party to terminate and close-out transactions on a net basis under these agreements will not be stayed, or avoided under applicable law upon an event of default including bankruptcy, insolvency or similar proceeding.

A legal opinion may not have been sought or obtained for certain jurisdictions where local law is silent or sufficiently ambiguous to determine the enforceability of offsetting rights or where adverse case law or conflicting regulation may cast doubt on the enforceability of such rights. In some jurisdictions and for some counterparty types, the insolvency law for a particular counterparty type may be nonexistent or unclear as overlapping regimes may exist. For example, this may be the case for certain sovereigns, municipalities, central banks and U.S. pension plans.

The following tables present the gross and net resale and repurchase agreements and securities borrowing and lending agreements and the related offsetting amount permitted under ASC 210-20-45, as of September 30, 2013 and December 31, 2012. The tables also include amounts related to financial instruments that are not permitted to be offset under ASC 210-20-45 but would be eligible for offsetting to the extent an event of default occurred and a legal opinion supporting enforceability of the offsetting rights has been obtained. Remaining exposures continue to be secured by financial collateral, but the Company may not have sought or been able to obtain a legal opinion evidencing enforceability of the offsetting right.

	As of September 30, 2013

*In millions of dollars*	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheet(1)		Net Amounts of Assets includeded on the Consolidated Balance Sheet(2)		Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting Upon Counterparty Default(3)		Net Amounts(4)
Securities purchased under agreements to resell	$	205,688	$	58,456	$	147,232	$	112,829	$	34,403
Deposits paid for securities borrowed		126,357		—		126,357		27,445		98,912

Total	$	332,045	$	58,456	$	273,589	$	140,274	$	133,315

*In millions of dollars*	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheet(1)		Net Amounts of Liabilities included on the Consolidated Balance Sheet(2)		Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting Upon Counterparty Default(3)		Net Amounts(4)

Securities sold under agreements to repurchase	$	247,419	$	58,456	$	188,963	$	87,378	$	101,585
Deposits received for securities loaned		26,828		—		26,828		7,250		19,578

Total	$	274,247	$	58,456	$	215,791	$	94,628	$	121,163

	As of December 31, 2012

*In millions of dollars*	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheet(1)		Net Amounts of Assets includeded on the Consolidated Balance Sheet(2)		Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting Upon Counterparty Default(3)		Net Amounts(4)
Securities purchased under agreements to resell	$	187,950	$	49,401	$	138,549	$	111,745	$	26,804
Deposits paid for securities borrowed		122,665		—		122,665		34,733		87,932

Total	$	310,615	$	49,401	$	261,214	$	146,478	$	114,736

*In millions of dollars*	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheet(1)		Net Amounts of Liabilities included on the Consolidated Balance Sheet(2)		Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting Upon Counterparty Default(3)		Net Amounts(4)

Securities sold under agreements to repurchase	$	231,731	$	49,401	$	182,330	$	104,681	$	77,649
Deposits received for securities loaned		27,901		—		27,901		15,579		12,322

Total	$	259,632	$	49,401	$	210,231	$	120,260	$	89,971

(1): Includes financial instruments subject to enforceable master netting agreements that are permitted to be offset under ASC 210-20-45.
(2): The total of this column for each period excludes Federal funds sold/purchased. See table on prior page.
(3): Includes financial instruments subject to enforceable master netting agreements that are not permitted to be offset under ASC 210-20-45 but would be eligible for offsetting to the extent an event of default has occurred and a legal opinion supporting enforceability of the offsetting right has been obtained.
(4): Remaining exposures continue to be secured by financial collateral, but the Company may not have sought or been able to obtain a legal opinion evidencing enforceability of the offsetting right.