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CREDIT LOSSES

6 Months Ended

Jun. 30, 2021

6. CREDIT LOSSES

Current expected credit losses are estimated for accounts receivable and notes receivable. The notes receivable included within other assets, net on the condensed consolidated balance sheets primarily relate to the consolidated audit trail (“CAT”), which involves the creation of an audit trail that strives to enhance regulators’ ability to monitor trading activity in the U.S. markets through a phased implementation. While the funding of the CAT is ultimately expected to be provided by both self-regulatory organizations (“SROs”) (which includes the Exchanges) and industry members, until fee filings associated with the funding model are approved by the SEC, the funding to date has solely been provided by the SROs. The funding by the SROs has been done in exchange for promissory notes, which are expected to be repaid once such industry member fees are collected. Until those fees are collected, the SROs may continue to incur additional significant costs. The allowance for notes receivable credit losses associated with the CAT is calculated using a probability of default methodology. Accounts receivable represent amounts due from the Company’s member firms. The allowance for accounts receivable credit losses is calculated using an aging schedule.

The following represents the changes in allowance for credit losses during the six months ended June 30, 2021 (in millions):


	Balance at January 1, 2021		Current period provision for expected credit losses		Write-offs charged against the allowance		Recoveries collected		Balance at June 30, 2021
Allowance for notes receivable credit losses	$	30.1	$	—	$	—	$	—	$	30.1
Allowance for accounts receivable credit losses		0.6		0.5		(0.2)		—		0.9
Total allowance for credit losses	$	30.7	$	0.5	$	(0.2)	$	—	$	31.0

- Definition

The entire disclosure for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security.

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