12.

Derivatives and Hedging Activity

We are exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, we enter into various derivative instruments that reduce these risks by creating offsetting exposures. We generally do not enter into derivative transactions for trading or speculative purposes.

Foreign Exchange Risk Management

We are exposed to foreign exchange risk when we earn revenues, pay expenses, or enter into monetary intercompany transfers denominated in a currency that differs from our functional currency, or other transactions that are denominated in a currency other than our functional currency. We use foreign exchange derivatives, typically forward contracts and options, to reduce our overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years.

Interest Rate Risk Management

We enter into various long-term debt agreements. We use interest rate derivatives, typically swaps, to reduce our exposure to the effects of interest rate fluctuations on the forecasted interest rates for up to two years into the future.

We have not received or pledged any collateral related to derivative arrangements at September 30, 2017.

The notional and fair values of derivative instruments are as follows at September 30, 2017 and December 31, 2016 (in millions):


	Notional Amount				Derivative Assets (1)				Derivative Liabilities (2)
	Sept 30, 2017		Dec 31, 2016		Sept 30, 2017		Dec 31, 2016		Sept 30, 2017		Dec 31, 2016

Derivatives accounted for as hedges:
Interest rate contracts	$	200.0	$	200.0	$	1.6	$	11.4	$	0.1	$	—
Foreign exchange contracts (3)		6.8		4.1		6.3		2.1		10.3		17.5

Total	$	206.8	$	204.1	$	7.9	$	13.5	$	10.4	$	17.5

(1)	Included within other current assets, $5.0 million and $12.5 million at September 30, 2017 and December 31, 2016, respectively, and other noncurrent assets, $2.9 million and $1.0 million at September 30, 2017 and December 31, 2016, respectively.

(2)	Included within other current liabilities, $9.0 million and $11.8 million at September 30, 2017 and December 31, 2016, respectively, and other noncurrent liabilities, $1.5 million and $5.7 million at September 30, 2017 and December 31, 2016, respectively.

(3)

Included within foreign exchange contracts at September 30, 2017 were $135.8 million of call options offset with $134.2 million of put options, and $54.9 million of buy forwards offset with $41.0 million of sell forwards. Included within foreign exchange contracts at December 31, 2016 were $78.3 million of call options offset with $78.3 million of put options, and $61.6 million of buy forwards offset with $57.5 million of sell forwards.

The amounts of derivative gains (losses) recognized in accumulated other comprehensive loss for the nine-month periods ended September 30, 2017 and 2016 were as follows (in millions):


	Commission			Compensation		Operating		Interest
	Revenue			Expense		Expense		Expense			Total
September 30, 2017
Cash flow hedges:
Interest rate contracts	$	—		$	—	$	—	$	(1.6	)	$	(1.6	)
Foreign exchange contracts		7.9			2.3		1.6		—			11.8

Total	$	7.9		$	2.3	$	1.6	$	(1.6	)	$	10.2


September 30, 2016
Cash flow hedges:
Interest rate contracts	$	—		$	—	$	—	$	(3.3	)	$	(3.3	)
Foreign exchange contracts		(17.3	)		0.7		0.5		—			(16.1	)

Total	$	(17.3	)	$	0.7	$	0.5	$	(3.3	)	$	(19.4	)

The amounts of derivative gains (losses) reclassified from accumulated other comprehensive loss into income (effective portion) for the nine-month periods ended September 30, 2017 and 2016 were as follows (in millions):


	Commission			Compensation		Operating		Interest
	Revenue			Expense		Expense		Expense		Total
September 30, 2017
Cash flow hedges:
Interest rate contracts	$	—		$	—	$	—	$	—	$	—
Foreign exchange contracts		(7.6	)		1.1		0.8		—		(5.7	)

Total	$	(7.6	)	$	1.1	$	0.8	$	—	$	(5.7	)


September 30, 2016
Cash flow hedges:
Interest rate contracts	$	—		$	—	$	—	$	—	$	—
Foreign exchange contracts		(5.7	)		0.3		0.2		—		(5.2	)

Total	$	(5.7	)	$	0.3	$	0.2	$	—	$	(5.2	)

We estimate that approximately $0.1 million of pretax gain currently included within accumulated other comprehensive loss will be reclassified into earnings in the next twelve months. The amount of gain (loss) recognized in earnings on the ineffective portion of derivatives for nine-months ended September 30, 2017 and 2016 was $0.4 million and $0.4 million, respectively.