13. Securities Financing Activities

In connection with the August 1, 2016, acquisition of First Niagara, we began to enter into repurchase agreements to finance overnight interest paid on acquired customer sweep deposits. We also continue to enter into repurchase and reverse repurchase agreements and to settle other securities obligations. We account for these securities financing agreements as collateralized financing transactions. Repurchase and reverse repurchase agreements are recorded on the balance sheet at the amounts that the securities will be subsequently sold or repurchased. Securities borrowed transactions are recorded on the balance sheet at the amounts of cash collateral advanced. While our securities financing agreements incorporate a right of set off, the assets and liabilities are reported on a gross basis. Reverse repurchase agreements and securities borrowed transactions are included in “short-term investments” on the balance sheet; repurchase agreements are included in “federal funds purchased and securities sold under repurchase agreements.”

The following table summarizes our securities financing agreements at September 30, 2016, December 31, 2015, and September 30, 2015:



	September 30, 2016
in millions	Gross Amount Presented in Balance Sheet		Netting Adjustments ^(a)			Collateral ^(b)			Net Amounts
Offsetting of financial assets:
Reverse repurchase agreements	$	9	$	(9	)	—			—
Total	$	9	$	(9	)	—			—

Offsetting of financial liabilities:
Repurchase agreements ^(c)	$	318	$	(9	)	$	(309	)	—
Total	$	318	$	(9	)	$	(309	)	—



	December 31, 2015
in millions	Gross Amount Presented in Balance Sheet		Netting Adjustments^(a)	Collateral ^(b)			Net Amounts
Offsetting of financial assets:
Reverse repurchase agreements	$	1	—	$	(1	)	—
Total	$	1	—	$	(1	)	—

Offsetting of financial liabilities:
Repurchase agreements ^(c)	—		—	—			—
Total	—		—	—			—



	September 30, 2015
in millions	Gross Amount Presented in Balance Sheet		Netting Adjustments ^(a)			Collateral ^(b)			Net Amounts
Offsetting of financial assets:
Reverse repurchase agreements	$	4	$	(4	)	—			—
Total	$	4	$	(4	)	—			—

Offsetting of financial liabilities:
Repurchase agreements ^(c)	$	6	$	(4	)	$	(2	)	—
Total	$	6	$	(4	)	$	(2	)	—


(a)	Netting adjustments take into account the impact of master netting agreements that allow us to settle with a single counterparty on a net basis.


(b)	These adjustments take into account the impact of bilateral collateral agreements that allow us to offset the net positions with the related collateral. The application of collateral cannot reduce the net position below zero. Therefore, excess collateral, if any, is not reflected above.


(c)	Repurchase agreements are collateralized by Federal Agency CMOs and U.S. Treasury securities and contracted on an overnight basis. These securities are reported in "securities available for sale" on our balance sheet.

As of September 30, 2016, assets pledged as collateral against acquired First Niagara repurchase agreements totaled $309 million and were comprised solely of Federal Agency CMOs. Collateral related to the acquired repurchase agreements is posted to a third-party custodian and cannot be sold or repledged by the secured party. The risk related to a decline in the market value of collateral pledged is minimal given the collateral's high credit quality and the overnight duration of the repurchase agreements acquired from First Niagara.

Like other financing transactions, securities financing agreements contain an element of credit risk. To mitigate and manage credit risk exposure, we generally enter into master netting agreements and other collateral arrangements that give us the right, in the event of default, to liquidate collateral held and to offset receivables and payables with the same counterparty. Additionally, we establish and monitor limits on our counterparty credit risk exposure by product type. For the reverse repurchase agreements, we monitor the value of the underlying securities we received from counterparties and either request additional collateral or return a portion of the collateral based on the value of those securities. We generally hold collateral in the form of highly rated securities issued by the U.S. Treasury and fixed income securities. In addition, we may need to provide collateral to counterparties under our repurchase agreements. With the exception of collateral pledged against acquired First Niagara repurchase agreements, the collateral we pledge and receive can generally be sold or repledged by the secured parties.