v3.26.1
Derivative instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative instruments Derivative instruments
We use derivatives to manage exposure to market risk, including interest rate risk, equity price risk and foreign currency risk, as well as credit risk. Our trading activities are focused on acting as a market-maker for our customers and facilitating customer trades in compliance with the Volcker Rule.

The notional amounts for derivative financial instruments express the dollar volume of the transactions; however, credit risk is much smaller. We perform credit reviews and enter into netting agreements and collateral arrangements to minimize the credit risk of derivative financial instruments. We enter into offsetting positions to reduce exposure to foreign currency, interest rate and equity price risk.

Use of derivative financial instruments involves reliance on counterparties. Failure of a counterparty to honor its obligation under a derivative contract is a risk we assume whenever we engage in a derivative contract. There were no counterparty default losses recorded in the second quarter of 2026.

Hedging derivatives

We utilize interest rate swap agreements, including forward starting swaps, to manage our exposure to interest rate fluctuations. We enter into fair value hedges as an interest rate risk management strategy to reduce fair value variability by converting certain fixed rate interest payments associated with available-for-sale securities, loans and long-term debt to floating interest rates. We also utilize interest rate swaps and forward exchange contracts as cash flow hedges to manage our exposure to interest rate and foreign exchange rate changes. In designating interest rate swaps as hedges, we utilize both partial-term and full-term hedge strategies. In addition, the Company utilizes portfolio layer method hedge strategies to manage interest rate risk of certain closed portfolios of fixed rate securities and loans. Throughout the period of a portfolio layer method hedge, basis adjustments are maintained at the portfolio level and are only allocated to individual assets in certain circumstances. These include instances in which the hedged portfolio amount falls below the designated hedged layer notional amount, or in instances of voluntary de-designation.
The available-for-sale securities hedged consist of U.S. Treasury, U.S. government agency, agency and non-agency commercial MBS, agency and non-agency RMBS, non-U.S. government and foreign covered bonds. At June 30, 2026, $59.8 billion designated par value of available-for-sale securities were hedged with interest rate swaps designated as fair value hedges that had notional values of $59.6 billion.

At June 30, 2026, $1.4 billion of interest rate swaps were designated as portfolio layer method fair value hedges of loans against a closed portfolio of fixed rate loans of $2.8 billion, essentially converting $1.4 billion of fixed rate loans to floating rates.

The Company also utilizes interest rate swaps as a cash flow hedge to convert floating interest receipts to a fixed rate. At June 30, 2026, $2.6 billion of interest rate swaps, with terms of less than three years, were designated as cash flow hedges of loans and securities. For qualifying cash flow hedges, changes in the derivative fair value are recorded in OCI and then transferred to earnings in the period in which the hedged forecasted transaction impacts earnings. In the second quarter of 2026 and second quarter of 2025, the Company did not experience any hedged forecasted transactions that failed to occur. Over the next 12 months, we expect that $10 million of net after-tax losses in OCI will be reclassified to net interest income associated with cash flow hedges.

At June 30, 2026, $29.2 billion par value of long-term debt was hedged with interest rate swaps designated
as fair value hedges that had notional values of $29.2 billion.

In addition, we utilize forward foreign exchange contracts as hedges to mitigate foreign exchange exposures. We use forward foreign exchange contracts as cash flow hedges to convert certain forecasted non-U.S. dollar revenue and expenses into U.S. dollars. We use forward foreign exchange contracts as cash flow hedges to hedge our foreign exchange exposure to currencies such as the Indian rupee, euro, Polish zloty, British pound, Singapore dollar and Hong Kong dollar used in revenue and expense transactions for entities that have the U.S. dollar as their functional currency. As of June 30, 2026, the hedged forecasted foreign currency transactions and designated forward foreign exchange contract hedges were $771 million (notional), with a net pre-tax loss of $9 million recorded in accumulated OCI. Over the next 12 months, a loss of $9 million will be reclassified into earnings.

Forward foreign exchange contracts are also used to hedge the value of our net investments in foreign subsidiaries. The derivatives employed are designated as hedges of changes in the value of our foreign investments due to exchange rates. The change in fair market value of these forward foreign exchange contracts is reported within foreign currency translation adjustments in shareholders’ equity, net of tax. At June 30, 2026, forward foreign exchange contracts with notional amounts totaling $11.5 billion were designated as net investment hedges.


The following table presents the pre-tax gains (losses) related to our fair value hedging activities recognized in the consolidated income statement.

Income statement impact of fair value hedges
(in millions)Location of gains (losses)2Q262Q25YTD26YTD25
Interest rate fair value hedges of available-for-sale securities
DerivativeInterest income$222 $(249)$440 $(647)
Hedged itemInterest income(221)249 (439)647 
Interest rate fair value hedges of long-term debt
DerivativeInterest expense(212)275 (354)686 
Hedged itemInterest expense212 (275)354 (686)
Interest rate fair value hedges of loans
DerivativeInterest income1 2 (4)(9)
Hedged itemInterest income(1)(2)4 9 
Gain (loss) recognized in the consolidated income statement due to fair value hedging relationships$1 $— $1 $— 
The following table presents the pre-tax impact of hedging derivatives used in net investment and cash flow hedging relationships.

Impact of derivative instruments used in net investment and cash flow hedging relationships
(in millions)Gain (loss) recognized in accumulated OCILocation of gain or (loss) reclassified from accumulated OCI into income Gain (loss) reclassified from accumulated OCI into income
2Q262Q25YTD26YTD252Q262Q25YTD26YTD25
Net investment hedges
FX contracts$90 $(735)$312 $(1,111)Investment and other revenue$— $— $— $21 
Cash flow hedges
FX contracts$6 $(7)$(10)$(6)Staff expense and investment and other revenue$(12)$(1)$(17)$(4)
Interest rate contracts(9)— (24)— Net interest income1 — — — 
Total$(3)$(7)$(34)$(6)$(11)$(1)$(17)$(4)


The following table presents information on the hedged items in fair value hedging relationships.

Hedged items in fair value hedging relationshipsCarrying amount of hedged
asset or liability
Hedge accounting basis adjustment increase (decrease) (a)
(in millions)June 30, 2026Dec. 31, 2025June 30, 2026Dec. 31, 2025
Available-for-sale securities (b)
$55,743 $46,420 $(1,280)$(910)
Loans (c)
$2,811 $2,939 $(5)$(9)
Long-term debt$28,522 $28,375 $(617)$(264)
(a)    Includes $244 million and $332 million of basis adjustment decreases on discontinued hedges associated with available-for-sale securities at June 30, 2026 and Dec. 31, 2025, respectively, and $11 million and $10 million of basis adjustment increases on discontinued hedges associated with long-term debt at June 30, 2026 and Dec. 31, 2025, respectively.
(b)    At June 30, 2026 and Dec. 31, 2025, the amortized cost of the available-for-sale securities included in closed portfolios subject to portfolio layer method hedging was $17.4 billion and $15.1 billion, respectively, of which the notional amount hedged was $11.9 billion and $8.9 billion, respectively. The cumulative basis adjustments for active hedging relationships associated with such hedges as of June 30, 2026 and Dec. 31, 2025 were a decrease of $156 million and an increase of $1 million, respectively.
(c)    At June 30, 2026 and Dec. 31, 2025, loans included in closed portfolios subject to portfolio layer method hedging were $2.8 billion and $2.9 billion, respectively, of which $1.4 billion and $1.4 billion, respectively, was designated as hedged. The cumulative basis adjustments for active hedging relationships associated with such hedges as of June 30, 2026 and Dec. 31, 2025 were a decrease of $5 million and $9 million, respectively.
The following table summarizes the notional amount and carrying values of our total derivatives portfolio.

Impact of derivative instruments on the balance sheetNotional valueAsset derivatives
fair value		Liability derivatives
fair value
June 30, 2026Dec. 31, 2025June 30, 2026Dec. 31, 2025June 30, 2026Dec. 31, 2025
(in millions)
Derivatives designated as hedging instruments: (a)(b)
Interest rate contracts$92,667 $74,525 $311 $305 $24 $— 
Foreign exchange contracts12,288 11,817 261 53 26 81 
Total derivatives designated as hedging instruments$572 $358 $50 $81 
Derivatives not designated as hedging instruments: (b)(c)
Interest rate contracts$251,628 $202,299 $791 $718 $1,018 $973 
Foreign exchange contracts1,501,798 1,131,252 8,836 5,517 8,666 5,351 
Equity contracts6,492 6,366 135 21 38 44 
Credit contracts249 279 — — 10 13 
Total derivatives not designated as hedging instruments$9,762 $6,256 $9,732 $6,381 
Total derivatives fair value (d)
$10,334 $6,614 $9,782 $6,462 
Effect of master netting agreements (e)
(6,797)(5,224)(7,098)(3,831)
Fair value after effect of master netting agreements$3,537 $1,390 $2,684 $2,631 
(a)    The fair value of asset derivatives and liability derivatives designated as hedging instruments is recorded as other assets and other liabilities, respectively, on the consolidated balance sheet.
(b)    For settled-to-market derivatives at clearing organizations, cash collateral exchanged is deemed a settlement of the derivative on a daily basis. The gross fair value of derivative assets and liabilities has been reduced by these cash settlements.
(c)    The fair value of asset derivatives and liability derivatives not designated as hedging instruments is recorded as trading assets and trading liabilities, respectively, on the consolidated balance sheet.
(d)    Fair values are on a gross basis, before consideration of master netting agreements, as required by ASC 815, Derivatives and Hedging.
(e)    Effect of master netting agreements includes cash collateral received and paid of $1,347 million and $1,648 million, respectively, at June 30, 2026, and $2,107 million and $714 million, respectively, at Dec. 31, 2025.


Trading activities (including trading derivatives)

Our trading activities are focused on acting as a market-maker for our customers, facilitating customer trades and risk-mitigating economic hedging in compliance with the Volcker Rule. The change in the fair value of the derivatives utilized in our trading activities is recorded in foreign exchange revenue and investment and other revenue on the consolidated income statement.

The following table presents our foreign exchange revenue and other trading revenue.

Foreign exchange revenue and other trading revenue
(in millions)2Q262Q25YTD26YTD25
Foreign exchange revenue$229 $213 $461 $369 
Other trading revenue59 59 153 130 


Foreign exchange revenue includes income from purchasing and selling foreign currencies, currency forwards, futures and options as well as foreign currency remeasurement. Other trading revenue reflects results from trading in cash instruments, including fixed income and equity securities, and
trading and economic hedging activity with non-foreign exchange derivatives.

We also use derivative financial instruments as risk-mitigating economic hedges, which are not formally designated as accounting hedges. This includes hedging the foreign currency, interest rate or market risks inherent in some of our balance sheet exposures, such as seed capital investments and deposits, as well as certain investment management fee revenue streams. We also use total return swaps to economically hedge obligations arising from the Company’s deferred compensation plan whereby the participants defer compensation and earn a return linked to the performance of investments they select. The gains or losses on these total return swaps are recorded in staff expense on the consolidated income statement. We recorded gains of $27 million in the second quarter of 2026, $15 million in the second quarter of 2025, $20 million in the first six months of 2026 and $7 million in the first six months of 2025.

We manage trading risk through a system of position limits, a value-at-risk (“VaR”) methodology based on historical simulation and other market sensitivity measures. Risk is monitored and reported to senior management by a separate unit, independent from
trading, on a daily basis. Based on certain assumptions, the VaR methodology is designed to capture the potential overnight pre-tax dollar loss from adverse changes in fair values of all trading positions. The calculation assumes a one-day holding period, utilizes a 99% confidence level and incorporates non-linear product characteristics. The VaR model is one of several statistical models used to develop economic capital results, which are allocated to lines of business for computing risk-adjusted performance.

VaR methodology does not evaluate risk attributable to extraordinary financial, economic or other occurrences. As a result, the risk assessment process includes a number of stress scenarios based upon the risk factors in the portfolio and management’s assessment of market conditions. Additional stress scenarios based upon historical market events are also performed. Stress tests may incorporate the impact of reduced market liquidity and the breakdown of historically observed correlations and extreme scenarios. VaR and other statistical measures, stress testing and sensitivity analysis are incorporated into other risk management materials.

Counterparty credit risk and collateral

We assess the credit risk of our counterparties through regular examination of their financial statements, confidential communication with the management of those counterparties and regular monitoring of publicly available credit rating information. This and other information are used to develop proprietary credit rating metrics used to assess credit quality.

Collateral requirements are determined after a comprehensive review of the credit quality of each counterparty. Collateral is generally held or pledged in the form of cash and/or highly liquid government securities. Collateral requirements are monitored and adjusted daily.

Additional disclosures concerning derivative financial instruments are provided in Note 12.

Disclosure of contingent features in over-the-counter (“OTC”) derivative instruments

Certain OTC derivative contracts and/or collateral agreements contain credit risk-contingent features triggered upon a rating downgrade in which the
counterparty has the right to request additional collateral or the right to terminate the contracts in a net liability position.

The following table shows the aggregate fair value of OTC derivative contracts in net liability positions that contained credit risk-contingent features and the value of collateral that has been posted.

June 30, 2026Dec. 31, 2025
(in millions)
Aggregate fair value of OTC derivatives in net liability positions (a)
$1,451 $381 
Collateral posted$1,840 $1,009 
(a)    Before consideration of cash collateral.


The aggregate fair value of OTC derivative contracts containing credit risk-contingent features can fluctuate from quarter to quarter due to changes in market conditions, composition of counterparty trades, new business or changes to the contingent features.

The Bank of New York Mellon, our largest banking subsidiary, enters into the substantial majority of our OTC derivative contracts and/or collateral agreements. As such, the contingent features may be triggered if The Bank of New York Mellon’s long-term issuer rating were downgraded.

The following table shows the fair value of contracts falling under early termination provisions that were in net liability positions for three key ratings triggers.

Potential close-out exposures (fair value) (a)
June 30, 2026Dec. 31, 2025
(in millions)
If The Bank of New York Mellon’s rating changed to: (b)
A3/A-$104 $61 
Baa2/BBB$266 $252 
Ba1/BB+$1,322 $714 
(a)    The amounts represent potential total close-out values if The Bank of New York Mellon’s long-term issuer rating were to immediately drop to the indicated levels, and do not reflect collateral posted.
(b)    Represents ratings by Moody’s/S&P.


If The Bank of New York Mellon’s debt rating had fallen below investment grade on June 30, 2026 and Dec. 31, 2025, existing collateral arrangements would have required us to post additional collateral of $99 million and $76 million, respectively.
Offsetting assets and liabilities

The following tables present derivative instruments and financial instruments and their related offsets. There were no derivative instruments or financial instruments subject to a legally enforceable netting agreement for which we are not currently netting.

Offsetting of derivative assets and financial assets at June 30, 2026
Amount not offset on the balance sheet
Gross assets recognizedAmounts offset on the balance sheet Net assets recognized on the balance sheet
(in millions)(a)Net amount
Derivatives subject to netting arrangements:
Interest rate contracts$982 $843 $139 $40 $99 
Foreign exchange contracts8,473 5,856 2,617 195 2,422 
Equity and other contracts127 98 29 — 29 
Total derivatives subject to netting arrangements
9,582 6,797 2,785 235 2,550 
Total derivatives not subject to netting arrangements
752 — 752 — 752 
Total derivatives10,334 6,797 3,537 235 3,302 
Reverse repurchase agreements287,830 262,547 (b)25,283 25,251 32 
Securities borrowing38,238 14,584 23,654 22,679 975 
Total$336,402 $283,928 $52,474 $48,165 $4,309 
(a)    Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.
(b)    Offsetting of reverse repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation (“FICC”), where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.


Offsetting of derivative assets and financial assets at Dec. 31, 2025
Amount not offset on the balance sheet
Gross assets recognizedAmounts offset on the balance sheetNet assets recognized on the balance sheet
(in millions)(a)Net amount
Derivatives subject to netting arrangements:
Interest rate contracts$874 $685 $189 $68 $121 
Foreign exchange contracts5,218 4,523 695 102 593 
Equity and other contracts17 16 1 1 — 
Total derivatives subject to netting arrangements
6,109 5,224 885 171 714 
Total derivatives not subject to netting arrangements
505 — 505 — 505 
Total derivatives6,614 5,224 1,390 171 1,219 
Reverse repurchase agreements281,361 254,532 (b)26,829 26,807 22 
Securities borrowing26,731 8,668 18,063 17,381 682 
Total$314,706 $268,424 $46,282 $44,359 $1,923 
(a)    Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.
(b)    Offsetting of reverse repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.
Offsetting of derivative liabilities and financial liabilities at June 30, 2026
Net liabilities recognized on the balance sheet
Gross liabilities recognizedAmounts offset on the balance sheet Amount not offset on the balance sheet
(in millions)(a)Net amount
Derivatives subject to netting arrangements:
Interest rate contracts$819 $495 $324 $29 $295 
Foreign exchange contracts8,200 6,568 1,632 546 1,086 
Equity and other contracts36 35 1 — 1 
Total derivatives subject to netting arrangements
9,055 7,098 1,957 575 1,382 
Total derivatives not subject to netting arrangements
727 — 727 — 727 
Total derivatives9,782 7,098 2,684 575 2,109 
Repurchase agreements281,158 262,547 (b)18,611 18,582 29 
Securities lending22,087 14,584 7,503 7,270 233 
Total$313,027 $284,229 $28,798 $26,427 $2,371 
(a)    Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.
(b)    Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.


Offsetting of derivative liabilities and financial liabilities at Dec. 31, 2025
Net liabilities recognized on the balance sheet
Gross liabilities recognizedAmounts offset on the balance sheetAmount not offset on the balance sheet
(in millions)(a)Net amount
Derivatives subject to netting arrangements:
Interest rate contracts$740 $456 $284 $44 $240 
Foreign exchange contracts5,040 3,348 1,692 79 1,613 
Equity and other contracts31 27 4 3 1 
Total derivatives subject to netting arrangements
5,811 3,831 1,980 126 1,854 
Total derivatives not subject to netting arrangements
651 — 651 — 651 
Total derivatives6,462 3,831 2,631 126 2,505 
Repurchase agreements269,352 254,532 (b)14,820 14,820 — 
Securities lending12,840 8,668 4,172 4,005 167 
Total$288,654 $267,031 $21,623 $18,951 $2,672 
(a)    Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.
(b)    Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.
Secured borrowings

The following table presents the contract value of repurchase agreements and securities lending transactions accounted for as secured borrowings by the type of collateral provided to counterparties.

Repurchase agreements and securities lending transactions accounted for as secured borrowings
June 30, 2026Dec. 31, 2025
Remaining contractual maturityTotalRemaining contractual maturityTotal
(in millions)Overnight and continuousUp to 30 days30-90 daysOver
90 days		Overnight and continuousUp to 30 days30-90 daysOver
90 days
Repurchase agreements:
U.S. Treasury$174,719 $180 $1,378 $2,269 $178,546 $207,600 $475 $1,420 $2,101 $211,596 
Agency RMBS95,052 119 433 405 96,009 51,130 136 237 441 51,944 
Corporate bonds70 214 761 701 1,746 119 55 1,256 557 1,987 
State and political subdivisions52 24 347 918 1,341 17 25 361 328 731 
Sovereign debt/sovereign guaranteed727 474 — — 1,201 541 416 — — 957 
U.S. government agencies117 — 96 119 332 72 4 3 61 140 
Other debt securities217 72 120 42 451 71 370 246 136 823 
Equity securities— 42 1,014 476 1,532 — 15 628 531 1,174 
Total $270,954 $1,125 $4,149 $4,930 $281,158 $259,550 $1,496 $4,151 $4,155 $269,352 
Securities lending:
U.S. Treasury$2,092 $— $— $— $2,092 $754 $— $— $— $754 
Corporate bonds988 — — — 988 783 — — — 783 
Agency RMBS— — — — — 102 — — — 102 
U.S. government agencies— — — — — 2 — — — 2 
Equity securities19,007 — — — 19,007 11,199 — — — 11,199 
Total $22,087 $— $— $— $22,087 $12,840 $— $— $— $12,840 
Total secured borrowings$293,041 $1,125 $4,149 $4,930 $303,245 $272,390 $1,496 $4,151 $4,155 $282,192 
BNY’s repurchase agreements and securities lending transactions primarily encounter risk associated with liquidity. We are required to pledge collateral based on predetermined terms within the agreements. If we were to experience a decline in the fair value of the collateral pledged for these transactions, we could be required to provide additional collateral to the counterparty, therefore decreasing the amount of assets available for other liquidity needs that may arise. BNY also offers tri-party collateral agency services in the tri-party repo market where we are exposed to credit risk. In order to mitigate this risk, we require dealers to fully secure intraday credit.