JP Morgan Chase 2013 Annual Report Download - page 251

JPMorgan Chase & Co./2013 Annual Report 257
The following table presents information as of December 31, 2013 and 2012, regarding the securities sold under repurchase
agreements and securities loaned for which an appropriate legal opinion has been obtained with respect to the master netting
agreement. The below table excludes information related to repurchase agreements and securities loaned where such a legal
opinion has not been either sought or obtained.
2013 2012
Amounts not nettable on
the Consolidated balance
sheets(a)
Amounts not nettable on
the Consolidated balance
sheets(a)
December 31, (in millions) Net liability balance Financial instruments(b) Cash collateral Net amount(c) Net liability balance Financial instruments(b) Cash collateral Net amount(c)
Securities sold under
repurchase agreements
with an appropriate legal
opinion $ 145,857 $ (142,686) $ (450) $ 2,721 $ 204,405 $ (202,925) $ (162) $ 1,318
Securities loaned $ 25,372 $ (25,125) $ — $ 247 $ 29,569 $ (28,465) $ — $ 1,104
(a) For some counterparties the sum of the financial instruments and cash collateral not nettable on the Consolidated Balance Sheets may exceed the net
liability balance. Where this is the case the total amounts reported in these two columns are limited to the balance of the net repurchase agreement or
securities loaned liability with that counterparty.
(b) Includes financial instrument collateral transferred, reverse repurchase assets and securities borrowed assets with an appropriate legal opinion with
respect to the master netting agreement; these amounts are not presented net on the Consolidated Balance Sheets because other U.S. GAAP netting
criteria are not met.
(c) Net amount represents exposure of counterparties to the Firm.
JPMorgan Chase’s policy is to take possession, where
possible, of securities purchased under resale agreements
and of securities borrowed. The Firm monitors the value of
the underlying securities (primarily G7 government
securities, U.S. agency securities and agency MBS, and
equities) that it has received from its counterparties and
either requests additional collateral or returns a portion of
the collateral when appropriate in light of the market value
of the underlying securities. Margin levels are established
initially based upon the counterparty and type of collateral
and monitored on an ongoing basis to protect against
declines in collateral value in the event of default. JPMorgan
Chase typically enters into master netting agreements and
other collateral arrangements with its resale agreement and
securities borrowed counterparties, which provide for the
right to liquidate the purchased or borrowed securities in
the event of a customer default. As a result of the Firm’s
credit risk mitigation practices with respect to resale and
securities borrowed agreements as described above, the
Firm did not hold any reserves for credit impairment with
respect to these agreements as of December 31, 2013 and
2012.
For further information regarding assets pledged and
collateral received in securities financing agreements, see
Note 30 on page 325 of this Annual Report.
Transfers not qualifying for sale accounting
In addition, at December 31, 2013 and 2012, the Firm held
$14.6 billion and $9.6 billion, respectively, of financial
assets for which the rights have been transferred to third
parties; however, the transfers did not qualify as a sale in
accordance with U.S. GAAP. These transfers have been
recognized as collateralized financing transactions. The
transferred assets are recorded in trading assets, other
assets and loans, and the corresponding liabilities are
recorded in other borrowed funds, accounts payable and
other liabilities, and long-term debt, on the Consolidated
Balance Sheets.