Citibank 2015 Annual Report Download - page 201

183
12. BROKERAGE RECEIVABLES AND BROKERAGE
PAYABLES
The Company has receivables and payables for financial instruments sold
to and purchased from brokers, dealers and customers, which arise in the
ordinary course of business. The Company is exposed to risk of loss from the
inability of brokers, dealers or customers to pay for purchases or to deliver the
financial instruments sold, in which case the Company would have to sell or
purchase the financial instruments at prevailing market prices. Credit risk
is reduced to the extent that an exchange or clearing organization acts as a
counterparty to the transaction and replaces the broker, dealer or customer
in question.
The Company seeks to protect itself from the risks associated with customer
activities by requiring customers to maintain margin collateral in compliance
with regulatory and internal guidelines. Margin levels are monitored daily,
and customers deposit additional collateral as required. Where customers
cannot meet collateral requirements, the Company may liquidate sufficient
underlying financial instruments to bring the customer into compliance with
the required margin level.
Exposure to credit risk is impacted by market volatility, which may impair
the ability of clients to satisfy their obligations to the Company. Credit limits
are established and closely monitored for customers and for brokers and
dealers engaged in forwards, futures and other transactions deemed to be
credit sensitive.
Brokerage receivables and Brokerage payables consisted of the following:
December 31,
In millions of dollars 2015 2014
Receivables from customers $10,435 $10,380
Receivables from brokers, dealers, and clearing organizations 17,248 18,039
Total brokerage receivables (1) $27,683 $28,419
Payables to customers $35,653 $33,984
Payables to brokers, dealers, and clearing organizations 18,069 18,196
Total brokerage payables (1) $53,722 $52,180
(1) Brokerage receivables and payables are accounted for in accordance with the AICPA Audit and
Accounting Guide for Brokers and Dealers in Securities as codified in ASC 940-320.