Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

The table below summarizes the maturities and the paid fixed interest rates for the hedged senior and subordinated notes:

June 30, 2016	Maturity	Paid Fixed Interest Rate
Senior Notes
	2018	1.35%
	2020	2.55%
	2021	1.95%
	2021	4.38%
	2023	3.70%
	2024	3.30%
	2025	3.55%
	2026	2.65%
Subordinated Notes
	2018	4.96%
	2023	3.10%

Schedule of Outstanding Hedges: (Notional Amount)

The following table presents the aggregate contractual, or notional, amounts of derivative financial instruments entered into in connection with our trading and asset-and-liability management activities as of the dates indicated:

(In millions)	June 30, 2016		December 31, 2015
Derivatives not designated as hedging instruments:
Interest-rate contracts:
Swap agreements and forwards	$	9	$	336
Futures	11,302		2,621
Foreign exchange contracts:
Forward, swap and spot	1,419,570		1,274,277
Options purchased	—		403
Options written	—		404
Futures	167		—
Credit derivative contracts:
Credit swap agreements(1)	37		141
Commodity and equity contracts:
Commodity(1)	151		113
Equity(1)	103		87
Other:
Stable value contracts	26,071		24,583
Deferred value awards(2)	506		320
Derivatives designated as hedging instruments:
Interest-rate contracts:
Swap agreements	10,364		9,398
Foreign exchange contracts:
Forward and swap	4,812		4,515

⁽¹⁾ Primarily composed of positions held by a consolidated sponsored investment fund, more fully described in Note 11.

⁽²⁾ Represents grants of deferred value awards to employees; refer to Note 12 in the 2015 Form 10-K , "Derivatives Not Designated as Hedging Instruments" for additional information.

Notional Amount of Interest Rate Swap Agreements Designated as Fair Value and Cash Flow Hedges

The following tables present the aggregate notional amounts of these interest-rate contracts and the related assets or liabilities being hedged as of the dates indicated:

	June 30, 2016(1)
(In millions)	Fair Value Hedges
Investment securities available-for-sale	$	1,614
Long-term debt(2)	8,750
Total	$	10,364

	December 31, 2015(1)
(In millions)	Fair Value Hedges
Investment securities available-for-sale	$	1,698
Long-term debt(2)	7,700
Total	$	9,398

⁽¹⁾ As of June 30, 2016 and December 31, 2015, there were no interest-rate contracts designated as cash flow hedges.

⁽²⁾ As of June 30, 2016, these fair value hedges increased the carrying value of long-term debt presented in our consolidated statement of condition by $458 million. As of December 31, 2015, these fair value hedges increased the carrying value of long-term debt presented in our consolidated statement of condition by $105 million.

Contractual and Weighted-Average Interest Rates, Which Include the Effects of Hedges Related to Financial Instruments

The following table presents the contractual and weighted-average interest rates for long-term debt, which include the effects of the fair value hedges presented in the table above, for the periods indicated:

	Three Months Ended June 30,
	2016				2015
	Contractual Rates		Rate  Including Impact of Hedges		Contractual Rates		Rate  Including Impact of Hedges
Long-term debt	3.43	%	2.24	%	3.70	%	2.67	%
	Six Months Ended June 30,
	2016				2015
	Contractual Rates		Rate  Including Impact of Hedges		Contractual Rates		Rate  Including Impact of Hedges
Long-term debt	3.43	%	2.22	%	3.61	%	2.60	%

Schedule of the Fair Values of Derivative Financial Instruments

The following tables present the fair value of derivative financial instruments, excluding the impact of master netting agreements, recorded in our consolidated statement of condition as of the dates indicated. The impact of master netting agreements is disclosed in Note 8.

Derivative Assets(1)
	Fair Value
(In millions)	June 30, 2016		December 31, 2015
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	20,472	$	10,799
Interest-rate contracts	1		2
Other derivative contracts	5		5
Total	$	20,478	$	10,806
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	396	$	517
Interest-rate contracts	506		133
Total	$	902	$	650

⁽¹⁾ Derivative assets are included within other assets in our consolidated statement of condition.

Derivative Liabilities(1)
	Fair Value
(In millions)	June 30, 2016		December 31, 2015
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	20,522	$	10,795
Other derivative contracts	161		103
Interest-rate contracts	1		2
Total	$	20,684	$	10,900
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	98	$	73
Interest-rate contracts	211		180
Total	$	309	$	253

⁽¹⁾ Derivative liabilities are included within other liabilities in our consolidated statement of condition.

Impact of Derivatives on Consolidated Statement of Income

The following tables present the impact of our use of derivative financial instruments on our consolidated statement of income for the periods indicated:

	Location of Gain (Loss) on Derivative in Consolidated Statement of Income	Amount of Gain (Loss) on Derivative Recognized in Consolidated Statement of Income
		Three Months Ended June 30,						Six Months Ended June 30,
(In millions)		2016			2015			2016			2015
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Trading services revenue	$	162		$	165		$	316		$	369
Interest-rate contracts	Processing fees and other revenue	—			—			1			—
Interest-rate contracts	Trading services revenue	(3		)	(1		)	(4		)	(1		)
Credit derivative contracts	Trading services revenue	—			—			(1		)	—
Other derivative contracts	Trading services revenue	(4		)	1			(4		)	3
Total		$	155		$	165		$	308		$	371

	Location of (Gain) Loss on Derivative in Consolidated Statement of Income	Amount of (Gain) Loss on Derivative Recognized in Consolidated Statement of Income
		Three Months Ended June 30,				Six Months Ended June 30,
(In millions)		2016		2015		2016		2015
Derivatives not designated as hedging instruments:
Other derivative contracts	Compensation and employee benefits	$	57	$	33	$	127	$	92
Total		$	57	$	33	$	127	$	92

Schedule of Differences Between the Gains (Losses) on the Derivative and the Gains (Losses) on the Hedged Item

	Location of Gain (Loss) on Derivative in Consolidated Statement of Income	Amount of Gain (Loss) on Derivative Recognized in Consolidated Statement of Income						Hedged Item in Fair Value Hedging Relationship	Location of Gain (Loss) on Hedged Item in Consolidated Statement of Income	Amount of Gain (Loss) on Hedged Item Recognized in Consolidated Statement of Income
		Three Months Ended June 30,								Three Months Ended June 30,
(In millions)		2016			2015					2016			2015
Derivatives designated as fair value hedges:
Foreign exchange contracts	Processing fees and other revenue	$	(25	)	$	12		Investment securities	Processing fees and other revenue	$	25		$	(12	)
Foreign exchange contracts	Processing fees and other revenue	(2		)	(13		)	FX deposit	Processing fees and other revenue	2			13
Interest-rate contracts	Processing fees and other revenue	(6		)	37			Available-for-sale securities	Processing fees and other revenue(1)	6			(38		)
Interest-rate contracts	Processing fees and other revenue	128			(85		)	Long-term debt	Processing fees and other revenue	(121		)	82
Total		$	95		$	(49	)			$	(88	)	$	45

	Location of Gain (Loss) on Derivative in Consolidated Statement of Income	Amount of Gain (Loss) on Derivative Recognized in Consolidated Statement of Income						Hedged Item in Fair Value Hedging Relationship	Location of Gain (Loss) on Hedged Item in Consolidated Statement of Income	Amount of Gain (Loss) on Hedged Item Recognized in Consolidated Statement of Income
		Six Months Ended June 30,								Six Months Ended June 30,
(In millions)		2016			2015					2016			2015
Derivatives designated as fair value hedges:
Foreign exchange contracts	Processing fees and other revenue	$	19		$	(52	)	Investment securities	Processing fees and other revenue	$	(19	)	$	52
Foreign exchange contracts	Processing fees and other revenue	246			(13		)	FX deposit	Processing fees and other revenue	(246		)	13
Interest-rate contracts	Processing fees and other revenue	(36		)	12			Available-for-sale securities	Processing fees and other revenue(2)	37			(12		)
Interest-rate contracts	Processing fees and other revenue	376			(17		)	Long-term debt	Processing fees and other revenue	(361		)	17
Total		$	605		$	(70	)			$	(589	)	$	70

⁽¹⁾ For the three months ended June 30, 2016 and 2015, $3 million and $22 million, respectively, of unrealized losses and unrealized gains, respectively, on AFS investment securities designated in fair value hedges was recognized in OCI.

⁽²⁾ For the six months ended June 30, 2016 and 2015, $22 million and $7 million, respectively, of unrealized losses and unrealized gains, respectively, on AFS investment securities designated in fair value hedges was recognized in OCI.

Differences between the gains (losses) on the derivative and the gains (losses) on the hedged item, excluding any amounts recorded in net interest revenue, represent hedge ineffectiveness.

	Amount of Gain (Loss) on Derivative Recognized in Other Comprehensive Income					Location of Gain (Loss) Reclassified from OCI to Consolidated Statement of Income	Amount of Gain (Loss) Reclassified from OCI to Consolidated Statement of Income					Location of Gain (Loss) on Derivative Recognized in Consolidated Statement of Income	Amount of Gain (Loss) on Derivative Recognized in Consolidated Statement of Income
	Three Months Ended June 30,						Three Months Ended June 30,						Three Months Ended June 30,
(In millions)	2016			2015			2016		2015				2016		2015
Derivatives designated as cash flow hedges:
Interest-rate contracts	$	—		$	—	Net interest revenue	$	—	$	(1	)	Net interest revenue	$	—	$	—
Foreign exchange contracts	(114		)	21		Net interest revenue	—		—			Net interest revenue	6		2
Total	$	(114	)	$	21		$	—	$	(1	)		$	6	$	2
Derivatives designated as net investment hedges:
Foreign exchange contracts	$	51		$	—	Gains (Losses) related to investment securities, net	$	—	$	—		Gains (Losses) related to investment securities, net	$	—	$	—
Total	$	51		$	—		$	—	$	—			$	—	$	—

	Amount of Gain (Loss) on Derivative Recognized in Other Comprehensive Income					Location of Gain (Loss) Reclassified from OCI to Consolidated Statement of Income	Amount of Gain (Loss) Reclassified from OCI to Consolidated Statement of Income					Location of Gain (Loss) on Derivative Recognized in Consolidated Statement of Income	Amount of Gain (Loss) on Derivative Recognized in Consolidated Statement of Income
	Six Months Ended June 30,						Six Months Ended June 30,						Six Months Ended June 30,
(In millions)	2016			2015			2016		2015				2016		2015
Derivatives designated as cash flow hedges:
Interest-rate contracts	$	—		$	—	Net interest revenue	$	—	$	(2	)	Net interest revenue	$	—	$	—
Foreign exchange contracts	(227		)	41		Net interest revenue	—		—			Net interest revenue	11		4
Total	$	(227	)	$	41		$	—	$	(2	)		$	11	$	4
Derivatives designated as net investment hedges:
Foreign exchange contracts	$	51		$	—	Gains (Losses) related to investment securities, net	$	—	$	—		Gains (Losses) related to investment securities, net	$	—	$	—
Total	$	51		$	—		$	—	$	—			$	—	$	—