NOTE 4 - TRADING ASSETS AND LIABILITIES

The fair values of the components of trading assets and liabilities as of December 31 were as follows:



(Dollars in millions)	2012		2011
Trading Assets:
U.S. Treasury securities		$111		$144
Federal agency securities	462		478
U.S. states and political subdivisions	34		54
MBS - agency	432		412
CDO/CLO securities	55		45
ABS	36		37
Corporate and other debt securities	567		345
CP	28		229
Equity securities	100		91
Derivatives ¹	1,905		2,414
Trading loans ²	2,319		2,030
Total trading assets		$6,049		$6,279
Trading Liabilities:
U.S. Treasury securities		$582		$569
Corporate and other debt securities	173		77
Equity securities	9		37
Derivatives ¹	397		1,123
Total trading liabilities		$1,161		$1,806

¹Amounts are offset with cash collateral received from or deposited with counterparties when the contracts are subject to ISDA master netting arrangements.

²Includes loans related to TRS.

Various trading products and instruments are used as part of the Company’s overall balance sheet management strategies and to support client requirements executed through the Bank and/or its broker/dealer subsidiary. The Company manages the potential market volatility associated with the trading instruments that are utilized for balance sheet management with appropriate risk management strategies. The size, volume and nature of the trading products and instruments can vary based on economic, client specific, and Company specific asset or liability conditions. Product offerings to clients include debt securities, loans traded in the secondary market, equity securities, derivative and foreign exchange contracts, and similar financial instruments. Other trading-related activities include acting as a market maker in certain debt and equity securities and related derivatives. The Company has policies and procedures to manage market risk associated with client trading activities and assumes a limited degree of market risk by managing the size and nature of its exposure. The Company has pledged $727 million and $770 million of certain trading assets and cash equivalents to secure $703 million and $747 million of repurchase agreements as of December 31, 2012 and 2011, respectively.