Derivatives

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2016 (in thousands):



	Assets
	Notional¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	16,949,152	$	180,695	$	(60,555	)	$	120,140	$	—		$	120,140
Interest rate swaps	1,403,408		34,442		—			34,442		(4,567		)	29,875
Energy contracts	835,566		64,140		(28,298		)	35,842		(71		)	35,771
Agricultural contracts	53,209		1,382		(515		)	867		—			867
Foreign exchange contracts	580,886		494,349		—			494,349		(5,183		)	489,166
Equity option contracts	100,924		4,357		—			4,357		(730		)	3,627
Total customer risk management programs	19,923,145		779,365		(89,368		)	689,997		(10,551		)	679,446
Internal risk management programs	2,514,169		10,426		—			10,426		—			10,426
Total derivative contracts	$	22,437,314	$	789,791	$	(89,368	)	$	700,423	$	(10,551	)	$	689,872

	Liabilities
	Notional¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	16,637,532	$	176,928	$	(60,555	)	$	116,373	$	—		$	116,373
Interest rate swaps	1,403,408		34,442		—			34,442		(11,977		)	22,465
Energy contracts	820,365		64,306		(28,298		)	36,008		(31,534		)	4,474
Agricultural contracts	53,216		1,365		(515		)	850		(769		)	81
Foreign exchange contracts	580,712		494,695		—			494,695		(3,630		)	491,065
Equity option contracts	100,924		4,357		—			4,357		—			4,357
Total customer risk management programs	19,596,157		776,093		(89,368		)	686,725		(47,910		)	638,815
Internal risk management programs	2,582,202		25,716		—			25,716		—			25,716
Total derivative contracts	$	22,178,359	$	801,809	$	(89,368	)	$	712,441	$	(47,910	)	$	664,531


¹	Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.

When bilateral netting agreements exist between the Company and its counterparties that create a single legal claim or obligation to pay or receive the net amount in settlement of the individual derivative contracts, the Company reports derivative assets and liabilities on a net by counterparty basis. Contracts may also require the Company to provide or receive cash margin as collateral for derivative assets and liabilities. Derivative assets and liabilities are reported net of cash margin when certain conditions are met.

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2015 (in thousands):



	Assets
	Notional¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	14,583,052	$	43,270	$	(28,305	)	$	14,965	$	—		$	14,965
Interest rate swaps	1,332,044		31,744		—			31,744		(1,424		)	30,320
Energy contracts	470,613		83,045		(22,970		)	60,075		(18,606		)	41,469
Agricultural contracts	61,662		2,591		(1,158		)	1,433		—			1,433
Foreign exchange contracts	546,572		498,830		—			498,830		(4,140		)	494,690
Equity option contracts	137,278		3,780		—			3,780		(470		)	3,310
Total customer risk management programs	17,131,221		663,260		(52,433		)	610,827		(24,640		)	586,187
Internal risk management programs	22,000		83		—			83		—			83
Total derivative contracts	$	17,153,221	$	663,343	$	(52,433	)	$	610,910	$	(24,640	)	$	586,270

	Liabilities
	Notional¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	14,168,927	$	40,141	$	(28,305	)	$	11,836	$	(1,308	)	$	10,528
Interest rate swaps	1,332,044		31,928		—			31,928		(20,530		)	11,398
Energy contracts	463,703		81,869		(22,970		)	58,899		—			58,899
Agricultural contracts	61,657		2,579		(1,158		)	1,421		(1,248		)	173
Foreign exchange contracts	546,405		498,574		—			498,574		(1,951		)	496,623
Equity option contracts	137,278		3,780		—			3,780		—			3,780
Total customer risk management programs	16,710,014		658,871		(52,433		)	606,438		(25,037		)	581,401
Internal risk management programs	75,000		300		—			300		—			300
Total derivative contracts	$	16,785,014	$	659,171	$	(52,433	)	$	606,738	$	(25,037	)	$	581,701


¹	Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.

The following summarizes the pre-tax net gains (losses) on derivative instruments and where they are recorded in the Consolidated Statement of Earnings (in thousands):



	Year Ended December 31,
	2016						2015					2014
	Brokerage and Trading Revenue			Gain (Loss) on Derivatives, Net			Brokerage and Trading Revenue			Gain (Loss) on Derivatives, Net		Brokerage and Trading Revenue		Gain (Loss) on Derivatives, Net
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	38,523		$	—		$	33,877		$	—	$	27,007	$	—
Interest rate swaps	2,589			—			2,066			—		2,494		—
Energy contracts	5,027			—			4,060			—		6,572		—
Agricultural contracts	111			—			123			—		146		—
Foreign exchange contracts	945			—			797			—		1,581		—
Equity option contracts	—			—			—			—		—		—
Total customer risk management programs	47,195			—			40,923			—		37,800		—
Internal risk management programs	(4,592		)	(15,685		)	(209		)	430		—		2,776
Total derivative contracts	$	42,603		$	(15,685	)	$	40,714		$	430	$	37,800	$	2,776

As discussed in Note 7, certain derivative contracts not designated as hedging instruments related to mortgage loan commitments and forward sales contracts are included in Residential mortgage loans held for sale on the Consolidated Balance Sheets. See Note 7 for additional discussion of notional, fair value and impact on earnings of these contracts. Forward sales contracts are not considered swaps under the Commodity and Futures Trading Commission final rules.

No derivative contracts have been designated as hedging instruments for financial reporting purposes.