Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

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, 2020		December 31, 2019
Derivatives not designated as hedging instruments:
Interest-rate contracts:
Futures	$	2,500	$	4,368
Foreign exchange contracts:
Forward, swap and spot	2,614,018		2,378,808
Options purchased	1,165		1,581
Options written	907		1,110
Futures	1,436		1,040
Other:
Stable value contracts(1)	29,060		26,895
Deferred value awards(2)	426		389
Derivatives designated as hedging instruments:
Interest-rate contracts:
Swap agreements	15,929		15,196
Foreign exchange contracts:
Forward and swap	5,516		3,176

⁽¹⁾ The notional value of the stable value contracts represents our maximum exposure. However, exposure to various stable value contracts is generally contractually limited to substantially lower amounts than the notional values.

⁽²⁾ Represents grants of deferred value awards to employees; refer to pages 147 to 148 in Note 10 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.

Schedule of Derivative Assets at Fair Value

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 provided in Note 8.

	Fair Value
	Derivative Assets(1)				Derivative Liabilities(2)
(In millions)	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	15,974	$	15,140	$	15,547	$	15,054
Other derivative contracts	—		—		185		182
Total	$	15,974	$	15,140	$	15,732	$	15,236
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	16	$	—	$	138	$	96
Interest-rate contracts	51		8		56		49
Total	$	67	$	8	$	194	$	145

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

⁽²⁾ Derivative liabilities are included within accrued expenses and other liabilities in our consolidated statement of condition.

Schedule of Derivative Liabilities at Fair Value

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 provided in Note 8.

	Fair Value
	Derivative Assets(1)				Derivative Liabilities(2)
(In millions)	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	15,974	$	15,140	$	15,547	$	15,054
Other derivative contracts	—		—		185		182
Total	$	15,974	$	15,140	$	15,732	$	15,236
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	16	$	—	$	138	$	96
Interest-rate contracts	51		8		56		49
Total	$	67	$	8	$	194	$	145

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

⁽²⁾ Derivative liabilities are included within accrued expenses and other liabilities in our consolidated statement of condition.

Impact of Derivative Financial Instruments On 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)		2020			2019			2020			2019
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Foreign exchange trading services revenue	$	215		$	156		$	548		$	316
Foreign exchange contracts	Interest expense	17			(59		)	19			(98		)
Interest rate contracts	Foreign exchange trading services revenue	—			—			3			(1		)
Other derivative contracts	Compensation and employee benefits	(45		)	(46		)	(112		)	(120		)
Total		$	187		$	51		$	458		$	97

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

		Three Months Ended June 30,								Three Months Ended June 30,
		2020			2019					2020			2019
(In millions)	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
Derivatives designated as fair value hedges:
Interest rate contracts	Net interest income	$	3		$	(8	)	Available-for-sale securities(1)	Net interest income	$	(4	)	$	7
Interest rate contracts	Net interest income	36			185			Long-term debt	Net interest income	(39		)	(183		)
Total		$	39		$	177				$	(43	)	$	(176	)
		Six Months Ended June 30,								Six Months Ended June 30,
		2020			2019					2020			2019
(In millions)	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
Derivatives designated as fair value hedges:
Interest rate contracts	Net interest income	(8		)	(11		)	Available-for-sale securities(2)	Net interest income	6			11
Interest rate contracts	Net interest income	583			291			Long-term debt	Net interest income	(574		)	(285		)
Total		$	575		$	280				$	(568	)	$	(274	)

⁽¹⁾ In the three months ended June 30, 2020, $3 million of net unrealized gains on AFS investment securities designated in fair value hedges was recognized in OCI compared to $5 million of net unrealized gains in the same period in 2019.

⁽²⁾ In the six months ended June 30, 2020, $4 million of net unrealized losses on AFS investment securities designated in fair value hedges was recognized in OCI compared to $3 million of net unrealized gains in the same period in 2019.

	Three Months Ended June 30,							Three Months Ended June 30,
	2020			2019				2020		2019
(In millions)	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative						Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives designated as cash flow hedges:
Interest rate contracts	$	21		$	21		Net interest income	$	14	$	(2	)
Foreign exchange contracts	9			(15		)	Net interest income	7		7
Total derivatives designated as cash flow hedges	$	30		$	6			$	21	$	5
Derivatives designated as net investment hedges:
Foreign exchange contracts	$	(86	)	$	(2	)	Gains (Losses) related to investment securities, net	$	—	$	—
Total derivatives designated as net investment hedges	(86		)	(2		)		—		—
Total	$	(56	)	$	4			$	21	$	5
	Six Months Ended June 30,							Six Months Ended June 30,
	2020			2019				2020		2019
(In millions)	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative						Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives designated as cash flow hedges:
Interest rate contracts	$	179		$	31		Net interest income	$	14	$	(4	)
Foreign exchange contracts	19			12			Net interest income	14		14
Total derivatives designated as cash flow hedges	$	198		$	43			$	28	$	10
Derivatives designated as net investment hedges:
Foreign exchange contracts	$	22		$	18		Gains (losses) related to investment securities, net	$	—	$	—
Total derivatives designated as net investment hedges	22			18				—		—
Total	$	220		$	61			$	28	$	10

Schedule of Outstanding Hedges: (Notional Amount)

The following table shows the carrying amount and associated cumulative basis adjustments related to the application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships:

	June 30, 2020
	Hedged Items Currently Designated				Hedged Items No Longer Designated(1)
(In millions)	Carrying Amount of Assets and Liabilities		Cumulative Hedge Accounting Basis Adjustments		Carrying Amount of Assets and Liabilities		Cumulative Hedge Accounting Basis Adjustments
Long-term debt	$	10,515	$	762	$	1,200	$	(2	)
Available-for-sale securities	873		55		—		—
Total	$	11,388	$	817	$	1,200	$	(2	)
	December 31, 2019
	Hedged Items Currently Designated				Hedged Items No Longer Designated(1)
(In millions)	Carrying Amount of Assets and Liabilities		Cumulative Hedge Accounting Basis Adjustments		Carrying Amount of Assets and Liabilities		Cumulative Hedge Accounting Basis Adjustments
Long-term debt	$	9,769	$	164	$	1,199	$	(8	)
Available-for-sale securities	940		49		—		—
Total	$	10,709	$	213	$	1,199	$	(8	)

⁽¹⁾ Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date.