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Financial Instruments Subject to Off-Balance Sheet Credit Risk
 9 Months Ended
Sep. 30, 2019
Offsetting [Abstract]  
Financial Instruments Subject to Off-Balance Sheet Credit Risk Financial Instruments Subject to Off-Balance Sheet Credit Risk

Resale agreements: Schwab enters into collateralized resale agreements principally with other broker-dealers, which could result in losses in the event the counterparty fails to purchase the securities held as collateral for the cash advanced and the fair value of the securities declines. To mitigate this risk, Schwab requires that the counterparty deliver securities to a custodian, to be held as collateral, with a fair value at or in excess of the resale price. Schwab also sets standards for the credit quality of the counterparty, monitors the fair value of the underlying securities as compared to the related receivable, including accrued interest, and requires additional collateral where deemed appropriate. The collateral provided under these resale agreements is utilized to meet obligations under broker-dealer client protection rules, which place limitations on our ability to access such segregated securities. For Schwab to repledge or sell this collateral, we would be required to deposit cash and/or securities of an equal amount into our segregated reserve bank accounts in order to meet our segregated cash and investment requirement. Schwab’s resale agreements are not subject to master netting arrangements.

Securities lending: Schwab loans brokerage client securities temporarily to other brokers and clearing houses in connection with its securities lending activities and receives cash as collateral for the securities loaned. Increases in security prices may cause the fair value of the securities loaned to exceed the amount of cash received as collateral. In the event the counterparty to
these transactions does not return the loaned securities or provide additional cash collateral, we may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy our client obligations. Schwab mitigates this risk by requiring credit approvals for counterparties, monitoring the fair value of securities loaned, and requiring additional cash as collateral when necessary. We also borrow securities from other broker-dealers to fulfill short sales by brokerage clients and deliver cash to the lender in exchange for the securities. The fair value of these borrowed securities was $860 million and $99 million at September 30, 2019 and December 31, 2018, respectively. Substantially all of our securities lending transactions are through a program with a clearing organization, which guarantees the return of cash to us and is subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities lending transactions. Therefore, the securities loaned and securities borrowed are presented gross in the condensed consolidated balance sheets.
The following table presents information about our resale agreements and securities lending activity depicting the potential effect of rights of setoff between these recognized assets and recognized liabilities at September 30, 2019 and December 31, 2018:
 
 
Gross
Assets/
Liabilities
 
Gross Amounts
Offset in the
Condensed
Consolidated
Balance Sheets
 
Net Amounts
Presented in the
Condensed
Consolidated
Balance Sheets
 
Gross Amounts Not Offset in the
Condensed Consolidated
Balance Sheets
 
Net
Amount
 
 
 
 
Counterparty
Offsetting
 
Collateral
 
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Resale agreements (1)
 
$
9,707

 
$
—

 
$
9,707

 
$
—

 
$
(9,707
)
(2) 
 
$
—

Securities borrowed (3)
 
877

 
—

 
877

 
(871
)
 
(6
)
 
 
—

Total
 
$
10,584

 
$
—

 
$
10,584

 
$
(871
)
 
$
(9,713
)
 
 
$
—

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities loaned (4,5)
 
$
1,471

 
$
—

 
$
1,471

 
$
(871
)
 
$
(489
)
 
 
$
111

Total
 
$
1,471

 
$
—

 
$
1,471

 
$
(871
)
 
$
(489
)
 
 
$
111

 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Resale agreements (1)
 
$
7,195

 
$
—

 
$
7,195

 
$
—

 
$
(7,195
)
(2) 
 
$
—

Securities borrowed (3)
 
101

 
—

 
101

 
(98
)
 
(3
)
 
 
—

Total
 
$
7,296

 
$
—

 
$
7,296

 
$
(98
)
 
$
(7,198
)
 
 
$
—

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities loaned (4,5)
 
$
1,184

 
$
—

 
$
1,184

 
$
(98
)
 
$
(975
)
 
 
$
111

Total
 
$
1,184

 
$
—

 
$
1,184

 
$
(98
)
 
$
(975
)
 
 
$
111

(1) Included in cash and investments segregated and on deposit for regulatory purposes in the condensed consolidated balance sheets.
(2) Actual collateral was greater than or equal to 102% of the related assets. At September 30, 2019 and December 31, 2018, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $9.9 billion and $7.4 billion, respectively.
(3) Included in receivables from brokers, dealers, and clearing organizations in the condensed consolidated balance sheets.
(4) Included in payables to brokers, dealers, and clearing organizations in the condensed consolidated balance sheets. The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned at September 30, 2019 and December 31, 2018.
(5) Securities loaned are predominantly comprised of equity securities held in client brokerage accounts with overnight and continuous remaining contractual maturities.

Margin lending: Clients with margin loans have agreed to allow Schwab to pledge securities in their brokerage accounts in accordance with federal regulations. The following table summarizes the fair value of client securities that were available, under such regulations, that could have been used as collateral, and the amounts that we had pledged:
 
 
 
 
 
 
September 30, 2019
 
December 31, 2018
Fair value of client securities available to be pledged
 
$
26,614

 
$
26,628

Fair value of client securities pledged for:
 
 
 
 
Fulfillment of requirements with the Options Clearing Corporation (1)
 
1,778

 
2,315

Fulfillment of client short sales
 
2,023

 
1,292

Securities lending to other broker-dealers
 
1,204

 
974

Total collateral pledged
 
$
5,005

 
$
4,581

Note: Excludes amounts available and pledged for securities lending from fully-paid client securities. The fair value of fully-paid client securities available and pledged was $139 million as of September 30, 2019 and $97 million as of December 31, 2018.
(1)  
Client securities pledged to fulfill client margin requirements for open option contracts established with the Options Clearing Corporation.