Brian T. Shea - Senior Executive Vice President and Chief Executive Officer of Pershing LLC Andy Clark - Art Certosimo - Senior Executive Vice President and Chief Executive Officer of Alternative and Broker-Dealer Services Thomas P. Gibbons - Vice Chairman, Chief Financial Officer and Senior Executive Vice President Gerald L. Hassell - Chairman, Chief Executive officer, President, President of The Bank of New York, President of The Mellon Bank N A and Member of Executive Committee Karen B. Peetz - Vice Chairman, Chief Executive Officer of Financial Markets & Treasury Services and Senior Executive Vice President Timothy F. Keaney - Executive Vice President, Chief Global Client Management officer, Senior Executive Vice President, Vice Chairman and Chief Executive officer of Asset Servicing Curtis Y. Arledge - Chief Executive Officer

Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division Brian Bedell - ISI Group Inc., Research Division Glenn Schorr - Nomura Securities Co. Ltd., Research Division John W. Stilmar - SunTrust Robinson Humphrey, Inc., Research Division Marty Mosby - Guggenheim Securities, LLC, Research Division Rob Rutschow - Credit Agricole Securities (USA) Inc., Research Division Howard Chen - Crédit Suisse AG, Research Division Kenneth M. Usdin - Jefferies & Company, Inc., Research Division Betsy Graseck - Morgan Stanley, Research Division Alexander Blostein - Goldman Sachs Group Inc., Research Division

Good morning, ladies and gentlemen, and welcome to the fourth quarter 2011 earnings conference call hosted by BNY Mellon. [Operator Instructions] Please note that this conference call webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials without BNY Mellon's consent. I will now turn the call over to Mr. Andy Clark. Mr. Clark, you may begin.

Thanks, Wendy, and welcome, everyone. With us today are Gerald Hassell, our Chairman, President and CEO; Todd Gibbons, our CFO; as well as several members of our executive management team. Before we begin, let me remind you that our remarks today may include forward-looking statements. Actual results may differ materially from those indicated or implied by the forward-looking statements as a result of various factors. These factors include those identified in the cautionary statement on Page 13 of the press release and those identified in our documents filed with the SEC that are available on our website, bnymellon.com. Forward-looking statements in this call speak only as of today, January 18, 2012, and we will not update forward-looking statements. This morning's press release provides the highlights of our results. We also have the Quarterly Earnings Review document available on our website, which provides a quarterly review of the total company and the individual businesses. We'll be using the Quarterly Earnings Review document to discuss our results. Now I'd like to turn the call over to Gerald. Gerald?

Thanks, Andy. And good morning, everyone, and thanks for joining us on what I know is a very busy day for you all. For the quarter, we generated net income of $505 million and earnings per share of $0.42, which compares to $0.54 in the fourth quarter of last year. I should note that the fourth quarter of 2011 included a restructuring charge related to our efficiency initiatives and some other items that Todd will cover in just a minute. Obviously, it was a tough revenue quarter as our results reflected the ongoing macro environment challenges. The general uncertainty in the financial markets resulted in lower-than-normal levels of client activity. Now a good indicator of that is the combined share volume on the New York Stock Exchange and NASDAQ, which was down 6% year-over-year and 18% sequentially. It clearly has an impact on areas like our investment services fee revenues. Investors have been very risk averse. We saw a lack of organic growth as our clients reallocated their assets in a more defensive posture, significantly to cash, in response to uncertainty in the markets. Money market fund managers, including our own, have been particularly conservative. They shortened durations and reduced European exposure, which resulted in lower yields and even higher money market fee fund waivers. Now despite those challenges, we were pleased with what we were able to accomplish in terms of winning new business, strengthening our balance sheet, controlling expenses and positioning our company for 2012. We are continuing to win new business. In Asset Management, we had positive long-term flows in every quarter in 2011. And in the fourth quarter, we had another strong quarter in terms of new assets under custody wins. Our balance sheet continues to strengthen in terms of liquidity, asset quality and capital. On…

Thanks, Gerald, and good morning, everyone. As I take you through the numbers, my comments will follow the Quarterly Earnings Review beginning on Page 2. Earnings for the quarter were $0.42. And as Gerald noted, that included a restructuring charge of $107 million or approximately $0.06, and that was related to our efficiency efforts. And there was about $0.02 of charges related to a higher provision and higher M&I expenses. Our results included the impact of lower volumes, as Gerald mentioned, generally reflecting the uncertainty in the financial markets, and we saw that especially late in the quarter. Combined share volume on the exchanges was down meaningfully. Year-over-year key international markets were down substantially, and the U.S. indices were flat. And more specifically to our results, we were impacted by the new seasonality that we experienced in our Depositary Receipts business. So in this environment, our success is really based on our ability to reduce the growth rate of operating expenses, and we made some pretty good progress, as Gerald had noted. Now let's look at the highlights on a year-over-year basis. Total revenue was $3.5 billion. That's down 6%. Investment Services fees were down 8%, and that's primarily due to lower DR revenue but it also was impacted by lower volumes and higher money market fee waivers. As you'll recall, the seasonal spike in corporate actions in our DR business that normally occur in the fourth quarter now occur in the third quarter. If you adjust for that seasonal impact, Investment Services fees decreased 3%. Investment Management and performance fees were down 9%. That too was driven by higher money market fee waivers, lower performance fees and weaker international equity markets that were partially offset by net new business. Net interest revenue here was a bright spot. It was…

Thanks, Todd, and I think we can open it up for questions.

[Operator Instructions] Our first question today is from Glenn Schorr with Nomura.

So timing sometimes gets in the way here but I just think it's a little interesting. Assets under management up 5% quarter-on-quarter, fees are flat. Assets under custody fees, flat quarter-on-quarter, fees are down, whether you want to include the seasonality in DR or not. Is there a little function of timing there? Is -- there's a little money market in there, but is the mix of business changing such that the relationship between the assets and the fees don't match as much as they did in the past?

Yes. Why don't I start on that and then ask Todd and maybe Curtis or Tim to jump in. I think we saw one client activity on the volumes decline to the shift into risk-off mode. So assets went into cash, or frankly, they went into deposits. And so you don't get an asset under custody fee if it's in a bank deposit. The same would hold true in the Asset Management side. So I think we just saw, as the year end approached last year, complete risk-off mode, so a decline in volumes, movement into cash, more risk averse, which doesn't allow for fee activity here in Investment Services or Investment Management area. We do think that that's short lived. Investors do have to invest. They do have to get a return, and I just think we saw a very soft fourth quarter that we don't expect to continue for the long term. But I know, Curtis, maybe you want to comment on the Investment Management side.

Yes, absolutely. From an Investment Management perspective, I mean the growth in AUM has absolute come in fixed income and as Todd mentioned, equity indexed products, so lower fee products in general. We've actually held our own pretty well in equity flows, where the industry, a pretty tough year generally. So we're happy about that. I think that what you're seeing in fees is really the impact of 2 things. And Glenn, to your point, it is a bit of a timing dynamic around performance fees. We have very strong quarter in the fourth quarter of 2010. We had a pretty good quarter this quarter just not as strong, and then fee waivers have definitely had a very significant impact as Todd mentioned. So money market fee waivers and lower performance fees are causing an offset to nice business -- new business growth.

Let me add a little bit to that Glenn and then maybe Tim wants to add something as well. One of the things that you don't see is -- in the fee side is as money moves out of money market funds, we are seeing it come onto our balance sheet, and that's why we've seen some of the growth in net interest revenue. It's not as meaningful as it would have been in the fee side in this very low interest rate environment, but that's masking some of the move. So there is some modest offset, not as much as we would like, just in the growth of the balance sheet due to that risk-off trade. Now Tim, if you have anything to add.

No, Todd. The only last point maybe I'd make is, Glenn, that we only converted about $165 billion for the quarter in new business. So that -- on a relative basis, as you look backwards, that was one of our lower quarters. The good news is of the $1.2 trillion that we won, we still have yet to convert about $530 billion.

Does that $530 billion include what you just announced as new business wins in the fourth quarter? Is that your won but not yet converted pipeline?

Exactly. And I think as Gerald mentioned in his opening comments, we see a lot of that converting by the second quarter.

That's perfect. One last one. Just curious on your thought -- your comments on the partial settlement. Maybe we could -- you mentioned the no money component. What's next? In other words, what does the settlement represent with the AG? Is the principal and how you conduct business going forward and then the -- it's up to individual clients to go about suits if that's how they want to proceed?

Well, just to clarify a bit, Glenn, the settlement was with the U.S. Attorney, not the AG. And so it was primarily around our marketing materials, and so we are -- we were happy to get that behind us. As far as the AG suits, that continues to progress. There's not much to add on that other than we think our legal defenses are very strong.

Okay, so that's something that might just have on us [ph] longer tail.

Our next question is from Howard Chen with Credit Suisse. Howard Chen - Crédit Suisse AG, Research Division: You're protecting and growing spread income really well. We're just hoping you could provide a bit more color with the deposit flows during the quarter given all that's going on at macro environment. We can see a bunch of the puts and takes within noninterest-bearing and the interest-bearing deposits, but we're just hoping you could elaborate a bit there.

Sure. It -- a lot of that tends to be, in our client base, there's a core amount and then there's some kind of what I would call episodic amounts. And we did see -- especially at quarter end, we saw a spike. When we saw it, once again, we actually saw negative repo rates at quarter end. So the core custody and trust deposits are seeing pretty continuous growth. And then from hedge funds and even in some instances, broker-dealers, we're seeing some spikes. Those spikes have mostly worn off now in the first quarter, and we're continuing at what I would call the -- what has become the new kind of core deposit base, which continues to show some modest growth. Howard Chen - Crédit Suisse AG, Research Division: Okay. And at the Investor Day, you outlined some actions focused on stabilizing the NIM. Could you just update us on where we stand on those initiatives? And is it still feasible to kind of think about stabilization given the rate environment's deteriorated a bit?

Yes, I think it is, because we are putting -- as Gerald mentioned, we're putting more and more of the cash to work. So if we -- say we move $20 billion out of the central banks, where we're earning 25 basis points and we can put them into securities and secured loans at 100 to 150 basis points, that can offset even the lower rate environment pretty rapidly. So we feel okay that we can stabilize. It's going to be hard to grow in this kind of an environment. Actually, what would grow the NIM the most is if deposits were to come off a little bit and just normalize. Howard Chen - Crédit Suisse AG, Research Division: That makes sense. And then finally for me, you touched on money market fee waivers, but we're hoping you could update us on your thoughts on when and what you expect to hear from the SEC on broader money market reform and how you're scenario planning for all of that.

Sure. Maybe Curtis might would like to...

Curtis, why don't you take that one?

So we're expecting, over the next 2 or 3 months, for the SEC to come out with some proposals. Again, they've gone in the direction of either moving to a floating NAV or to having some capital buffers put in place. There are other things that were suggested, redemption fees and some other things that have been proposed. We then think it will take 60 to 90 days of comment period and then it will go back to the SEC for a final -- any final rule changes sort of toward the second half of the year. Obviously, we're spending a lot of time thinking about where it might go, impact on clients, where the money might go, if there are significant changes to the industry. We do think that we may capture some of the shift inflows in other places, and we also think that the impact is going to be felt by clients who have [indiscernible] about how to manage their flows, as you could imagine. The point that has been made, Todd made a minute ago, that was I would tell you that the fee waiver dynamic is quite large already. And so the -- if there were a really negative impact, it has already been felt in lower yields. And so we -- today, I think that our 2a-7 business is only about 4% of total investment management pretax. So it is already -- the yield environment has already had a pretty significant impact on us.

Our next question is from Alex Blostein with Goldman Sachs.

I wanted to touch base on the comment, Todd, you made earlier about termination of certain client agreements and client arrangements I guess that are falling below your risk profile. Could you, I guess, elaborate on that a little bit further? And maybe give us a sense, as you go through this sort of client review, how many more do you think you could have, and what kind of impact that could have on your revenues.

Yes, sure. I think that we've worked our way through that is the good news, so I don't think we'll see any additional impact, and we have some very high standards around documentation and anti money laundering and so forth. And so if our clients aren't going to meet those standards, we won't accept them as clients. That's what that was related to. And we did bump out a handful of clients, and we felt it in the -- mostly in the fourth quarter. And now that's built into our run rate, and we're building back off of that. And that...

Got you. So this had really nothing to do with the pricing not -- and the margin in those clients not being in line with what sort of you're targeting for the business.

No, that's not...

No.

This was not pricing related. It was risk related.

Yes. And Alex, they were mostly small alternative managers or small broker-dealers who came to us by way of the GIS acquisition.

Got you. Okay. Then maybe a minute on capital priorities. So you pointed out that you guys are thinking you'll be a little bit below 7%, but then you felt like you probably needed to get to 7% by the end of the year, and the buyback sort of slowed down here a little bit. Do you think that -- there's a few people out there that -- I guess that didn't want to get to higher capital level sooner. How do you think about the pace of your capital build over the course of 2012 versus buybacks?

Yes. We actually -- we feel pretty good about it. The -- we're a little -- we actually did a little better in the fourth quarter than we anticipated. A couple of things went on there. We got some meaningful paydowns, and we're a little more opportunistic against some sales of our sub-investment grade securities. So that added to the benefit of Shareowner Services, and then we had -- we thought there was going to be a bit of an OCI adjustment that didn't take place. Let me make one thing a little bit clear here though. We were pretty tight on our leverage ratio with the substantial increase when we had a 93% increase, and that was just in the free deposits, but we also had a substantial increase in the rest of our deposits. We wanted to go ahead and build that ratio off a bit during the quarter as well. So we got the benefit of having a little pop in our Basel III Tier 1, but that's not what we were actually looking for. So now that we've sewn that up, we can go back. We're comfortably in the 60% to 65% what I'll call capital deployment range between payouts, between buybacks and dividend increases, and we're also positioned to restart or complete the program that we announced last year for 2011. The regulators do give you the -- or they don't object if you -- as long as we ask for it, and we did. They don't object that we continue to proceed against that program in the first quarter, and that's what we intend to do.

Got you. And then just the last one for me. Just looking at the balance sheet and the shift in earning assets this quarter, it feels like there's a decent amount that came out of the interest-bearing deposits with banks, primarily, I guess, foreign banks. Is that just reflective of the risk appetite that you guys try to manage to given what's going on in Europe, or there's something else going on? Because obviously, there's a big bump in the Fed, and some of that came out of the, I guess, foreign banks?

Yes. I think we've been defensive on risk position as well. We don't need to leave as much short-term cash in the European banks. We're just leaving it in a handful of the -- of what we think are the strongest and the right regions. And that ended up building up a little bit in the central banks, which we intend to put back to work as we had -- as we described earlier.

Our next question is from Ken Usdin with Jefferies. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Just wondering if you could give us a little bit more color on the issuer services results and then the outlook given the closing of the Shareholder Services just to get us an understanding of what we should expect going forward. I mean, it seemed like a month ago, you were talking about a decline certainly from the pull-forward. So I'm just wondering if you can kind of -- sorry for the long question. Can you give us kind of the total? What was the real pull-forward in issuer in DRs? How did corporate trust act? And then remind us of what goes away with Shareholder so we can understand how the first quarter starting point it looks like.

Yes, Ken. Let's have Todd take the first -- the last part of your question, then we'll ask Karen to comment about the core business.

Kind of the way we'd look at it, Ken, the pull-forward from the corporate actions from the third and fourth quarter, what we did is we just averaged the revenues in the 2 quarters, and we kind of compared that to averaging the revenues in the 2 quarters in 2010. But if you average those in the third and fourth quarter, our issuer services fees were flat sequentially. That kind of gives you, I think, a good basis. And they are down about 6% on a year-over-year basis, and I think Karen can give some more color on that.

For issuer services in the aggregate.

And we're talking specifically about issuer services.

Right. And Ken, I'm sure that global debt issuance was down about 7% year-on-year. And so the difference in corporate trust actually was issuance related and deal related but also money market fees in that category as well. And then the Shareholder Services business was pretty soft right before we sold it, as would be understandable. So the DR business continues to be pretty strong, and with that seasonality against the corporate actions happening now going forward in the third quarter versus the fourth quarter, that's a change that you'll see stick for the future. But the business itself, pipeline is pretty good, very large win in Brazil that'll be public soon and a pretty strong pipeline otherwise. And we expect both DRs and corporate trust to be kind of in the 3% to 5% range revenue growth next year. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: On a year-over-year basis?

Yes. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. And then -- so can you just remind us again? So the first quarter versus this fourth quarter number, just trying to understand the trajectory. So that -- so the -- you said the run rate, when it was announced, Computershare put out that it was about $282 million, $290 million revenue run rate. But to -- Karen, to your point that, that was weaker, should we presume that the run rate that comes out was lower than that?

Yes. Yes, the run rate was lower kind of toward the end. Obviously, we announced the deal in April. And as soon as you announce a deal like that, as you can imagine, new business pretty much dries up existing clients. We did lose a couple of clients before the sale, and I think that's all just understandable based on that news coming out in the marketplace. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: So the run rate is somewhere lower than the $70 million. It could -- was it meaningfully different? I'm just trying to, again, understand the moving parts between the change in the DR seasonality and then the moving parts of that line going forward.

Yes. It wasn't meaningfully different. And from a pretax perspective, that's a very low-margin business. So it really didn't have any impact on the pretax.

Yes. Ken, I don't think you'll see any impact on pretax earnings. You will see a bit of a reduction in the issuer services fee line, obviously, probably in, I'd call it -- the run rate in the past couple of years has been somewhere around $200 million. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. My second question, just regarding expenses which were -- which looked really good and obviously started to show the benefits. Can you talk us through just the decline in compensation that happened this quarter? How much of that is related to the beginning of the saves, the prior expense save, employee reductions that had already been announced versus what may have been a -- either a compensation true-up or an adjustment to the actual revenues?

Yes. Ken, a couple of things. One, we did see, as we expected, a decline in our headcount of about 900 people in the fourth quarter. So that obviously has some impact on our running rate on the compensation side. Obviously, our earnings were off, and so that lowers compensation. And so the combination of the 2 plus our initiatives starts to put in place a lower run rate in -- of those categories. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. And my last final thing, just on the capital front again. You mentioned that you'd slowed the buyback this quarter. In advance of getting the CCAR results, can you use the remainder of the authorized buyback in the -- in 1Q? And do you imagine that you will? Or will you just be trying to continue to kind of build, so to speak and build capital faster until you get those results?

Yes. Ken, we are allowed to continue the program that was approved for the -- and the Fed did not object to last year, and we plan to resume our buyback in the first quarter of this year.

Ken, let me add one thing there. We -- in a payout of 60% to 65%, that puts us in a retention every quarter, on average, of about 25 basis points increase in our Basel III Tier 1 commons. We think that's a pretty rapid retention rate, and there's no need for us -- it's -- we are now at 7.1%. So if we do that for the year, we're at 8.1% at the end of the year, we think that puts us in -- well ahead of where we need to be to meet the -- to meet our ultimate targets.

Our next question is from Mike Mayo with CLSA. Rob Rutschow - Credit Agricole Securities (USA) Inc., Research Division: It's Rob Rutschow. One question on the commercial loan growth. This quarter was pretty decent. Are you guys seeing any shift out of capital markets to non-Tier balance sheet?

Yes. The loan growth for us is principally in secured loans to our financial institution clients, and it was really putting some of our excess deposits and cash to work for those clients rather than traditional loan growth that you would experience at other commercial banks. Rob Rutschow - Credit Agricole Securities (USA) Inc., Research Division: Okay. And a follow-up on the deposits. You mentioned that some of the excess deposits have come off so far this year. Can you give us any sort of numbers or give us a sense for how much they're down so far?

Sure, Rob. Probably, on average, about $10 billion. Rob Rutschow - Credit Agricole Securities (USA) Inc., Research Division: Okay. A couple of housekeeping items. The 900 in headcount reduction, how much of that was related to the Shareholder Services sale?

None.

None.

Because it was December 31.

That was December 31, so it's -- that's not in those numbers. Rob Rutschow - Credit Agricole Securities (USA) Inc., Research Division: Okay. And then a second question. I think you guys had around $80 million in litigation cost last quarter. Can you give us a similar number for this quarter?

Yes. For obvious reasons, Rob, we don't disclose actual litigation reserves, and we -- there's no reason to give anybody an advantage there. But they were down somewhat from what we had experienced in the third quarter, and they were up pretty meaningfully from what we experienced in the fourth quarter of last year.

Our next question is from Marty Mosby with Guggenheim.

I was curious about the deterioration in the waivers on the money market accounts. What was the deterioration between third and fourth quarter and what it did, end up turning another $0.01?

Is the question why? Or -- it did hurt by another $0.01. And the reason was that the yields in the money market funds continue to decline. I mean, Curtis, you can probably give some more...

Yes. The third quarter -- the drop to the third quarter actually was the steepest drop. The first and second were not terrible. The third was bad, and the fourth was just a little bit worse than that, just kind of a full quarterly impact of this client.

And the way to think about is all the money market funds, including our own, went to more cash reserves, less European exposure. That brings the yield down. Whatever securities we're already on, the yield has come down. So with less yield available to the investor, that's where the higher money market fee waivers come in. And as we said a number of times, we think we've been at the trough, but there sure isn't much left. And we shouldn't hit ourselves. The money market fee waivers across our firm are quite significant, and we are looking at other alternatives on how to offset that.

And then on the capital front, you talked about the leverage ratio being the constraint. In other words, it wasn't the Tier 1 common ratios you were really concerned about or trying to improve. Have you looked at -- is that the ratio we should be looking at more for the trust banks relative to the other ratios?

No. I don't think so, Marty. I think this was -- probably was -- it was kind of unusual circumstances. We saw the very sharp spike, not in risk-weighted assets but just in the balance sheet, with the deposit growth in the third and also in the fourth quarter. Now that we have built that ratio up during the quarter and the fact that it will grow on a quarterly basis as we retain 35%, we don't see it any longer as a constraint.

And do you see the impact in Basel I to Basel III in the sense of how you're assets can change even in the leverage ratio due to some off-balance-sheet consolidation being trading accounts or positions and derivatives and things like that? Is that something as well that we should be kind of thinking about? Is that head or haircut you would take on that ratio as well?

Right. Actually, the constraint will be Basel -- the Basel III Tier 1 common. So that's going to be the ratio, I think, that you're going to really want to focus on. We don't see leverage as a problem.

Okay. And the last question is the 60% to 65%. Have you given any thought at the sense of distribution between what do you think dividends versus share repurchase? And how do you look at that going forward?

Well, sure. I mean, we -- with our share price below book value, we certainly like buying our shares. So we probably will lean to the -- consistent with what we've said in the past. Right now, we look for a 20% to 25% dividend payout, and we'll make up the difference in share buybacks.

Our next question is from Brian Bedell with ISI Group.

A question for Tim Keaney. Tim, can you talk a little bit about your initiative to reprice the core asset servicing business, basically, how that's going in terms of conversations with clients, whether you're seeing any attrition yet and to what extent? I guess if you can talk about it between different types of businesses, the middle office versus the core custody business.

Yes, Brian. I'd say it's still very early days. And I think as we talked about in the Investor Day, we're starting with the smaller clients, and we've got about 1,000 clients we're working our way through on the smaller end. Though it's probably still too early to give a full report out to you, but I'm somewhat encouraged by what we've seen. Certainly, as we reprice current clients, we're doing that with the new economic realities. So we're rebidding our business with minimum target profit margins and not being overly dependent on capital markets-related revenue. So I think that's probably the best way to answer your question. And when we win new business, and we have been successful with that $431 billion that we did in the last quarter, we're doing that with our new pricing disciplines in mind.

Right. Right. So the new business is coming on with a more appropriate price activity. Is part of that new business to be converted include Bridgewater?

It does. Yes, we'll be converting Bridgewater over the next 3 quarters.

Okay. And if you had to sort of say when you think you'll start to see sort of a material recalibration of revenues and expenses in this business, do you think it's more later this year or more over a couple of years?

Yes. Brian, it's a cycle. Some of our clients are on 3-year contracts. A small number of our clients are on 4 and 5 year. And I just think it's going to take patience and discipline and work through that cycle, and that's exactly what we're doing.

Yes. Great. Okay. And a question for Curtis in the Investment Management business. On the performance side, can you talk a little bit about where you think performance fees are levered to in terms of the equity markets and fixed income markets and sort of how your performance sort of dovetails with that? And I guess what I'm looking for is are new mandates coming on that are structured with large performance fee components within the mix so we can sort of get a sense going forward of how we might model that.

Yes. We have an array of investment products that have performance fees that are linked to benchmarks, either benchmarks or to absolute return goals. And so it's hard to say if equity markets are up, then performance fees are going to be up. And they are correlated. As you would guess, we have some fixed income products as well that have performance fees, but again, they're really geared more to the benchmarks than they are at the absolute level of markets. Really, it's a wide array of products that drives performance fees, so it's hard to correlate anything specific.

Okay. And then just flipping to foreign exchange trading. Can you talk a little bit about -- obviously, volatility and volumes were a weak factor for everybody this quarter. But can you talk about the mix of standing instruction within the total core foreign exchange trading?

Yes. Brian, let me pass that to Art Certosimo, who runs all of our global market activities now.

Yes. We're starting to see more volume through our negotiated channels as the FX market becomes more competitive, and we continue to develop products for clients that should offset that with our ability to capture more volume.

And what is the standing instruction mix overall? Is it still close to 40%? Or is it down significantly?

It's about 42%.

Okay. And then just lastly, what was net interest revenue discount accretion for the quarter in terms of dollar amount?

I think it was $94 million, Brian. It was down slightly but not much.

Our next question is from John Stilmar with SunTrust.

Real quickly, the move from 39% international revenue composition to 34%, clearly, de-risking and currency can have a pretty profound impact. But is there anything more that we should be thinking about aside from just specific concentrations in Europe much more rapidly de-risking than other parts of the world? Or is there another sort of business trend that might be underneath that move? Or is that just kind of the result of the couple of themes that we've talked about earlier?

Yes. The simple answer is the vast majority, the quarter-to-quarter decline in the percentage was Depositary Receipts. Depositary Receipts or non-U.S.-sourced revenues with the change in the seasonality and the significant swing in it, you saw the decline in non-U.S.-sourced revenues. So we think when you normalize all that, it's -- there might have been a percent or so decline but not much.

Okay. Perfect. And then really quickly, just wondering if we can dig in a little bit more in terms of fee waivers. And one of the discussions that was brought up earlier was potential offsets to fee waivers as you're thinking about product structure in the future. Can you go into a little bit more detail about what some of those product structures are and how enthusiastic you are for being able to recapture that -- those fee waivers absent any macro movement in rate?

Yes. Let me start on the servicing side and then Curtis, maybe you can think about a little bit on the Investment Management. The servicing side, we provide a lot of administrative services for clients to sweep their cash through us either onto our balance sheet, into various liquidity options or various money market funds. And so we may have to find a different way to structure those administrative services that we provide that have traditionally come through distribution fees. So that's one of the things we're working on. Pershing's a great example where they're trying to take some initiatives on their platform. But it's -- it is a bit of a conundrum, because the yields on the investments are so low, how much can you keep hitting the client for no return? So it is something we're looking at. We're trying to find structural ways and other ways to deal with it. And on Investment Management, Curtis?

Yes. No, I haven't said -- listen. Clients -- there are array of clients that use money market funds for various reasons. Generally, they want to have tremendous liquidity and get the best deals that they can. If the rules actually change on making a floating rate NAV or with capital buffers making a difficult product, I -- we think that clients are going to look for alternatives. And we've had conversations with them about everything from ultra short duration fixed income products that would be the highest quality assets and try and maintain as much liquidity as possible. Floating rate funds, obviously, are potential interesting to them because of it -- it's more stable net asset values that could be had but not necessarily completely fixed as they are today. And clients, again, depending on how they use them, how they use money market funds, have different levels of interest in each of them. But we think that if the changes actually do occur and everyone has to step back and think about what they're really going to do in a new environment, that the people will have to shift to these products. And of course, Todd talked about our deposits. Banks are clearly going to see some of the flows go to deposits, and we think we've seen some of that. So it's good to have the ability to offer both.

John, if I could, maybe Brian Shea could comment a little bit about what Pershing is trying to do.

I would just build on Curtis's comments that the retail investors are starting to shift some of their cash management sweep vehicles from traditional money market funds to FDIC-insured bank deposit sweeps, and we have a rolling array of cash management sweep options, including FDIC options. So while we had cash management growth on our platform of about 9% to 10% year-over-year, we had 34% growth in FDIC-insured sweep, which is where our customers -- investors are seeking slightly higher yields in the projection of FDIC as well. So I think what we're working on is trying to create more capacity not only internally but with other banks and working with Promontory Financial and others to get that accomplished. Hopefully, we'll see more growth in the future.

Our next question is from Betsy Graseck with Morgan Stanley.

I just wanted to ask how client flows and activity have been more recently. I know you gave information for the full quarter, but in the middle of December, with El Toro [ph] in Europe and first couple of weeks of this year -- I know it's only 2.5 weeks in, but just wanted to get a sense as to how client activity inflows have been kind of bad latter half of 4Q and then to the beginning of this quarter?

Well, certainly, the last part of the fourth quarter was very slow, and it started off the year a bit slow as well. We're hopeful that once we get through earnings season and investors start realizing they have to put money to work, for yield, we'll see normal client activity, but we did start off the year a bit slow.

Okay. And that's consistent across geographies?

Yes.

And our final question today is from Gerard Cassidy from RBC Capital Markets.

The question, Todd, on the sale of the sub-investment grade securities, what is the total amount of the old Grantor Trust in sub-investment grade about?

A little over -- it's probably about $3 billion -- is the book value that we have on.

Is there any expectation for sales this year of any of those securities?

We don't feel that -- we don't feel the urgent need to sell any of them. If we see that there is a decent bid but we don't like the particular risk profile of any security, we've offered it. And if it gets taken, that's fine. If it doesn't, we'll live with it, pretty much the position that we've taken. We've actually seen an improved bid in the -- so far in the month of January, but at this point, we really haven't done anything.

Okay. You mentioned that one of the real positives to the net interest margin expanding would be if the deposits started to shrink. Is there any evidence that your customers are taking deposits off the balance sheet or just the opposite? Are they continuing to put them on?

Yes. There's -- I would say that the -- what I've mentioned, Gerard, there are some spikes that we see some firms, some individual clients that might leave a significant amount of cash because of some kind of a transaction or something that they were doing. So that tends to -- that has fallen off. The underlying, what I call the core component of it, has been pretty stable, just showing modest growth over the last 3 quarters. We saw the big spike back in June and then it's been growing modestly thereafter.

And then when we look at your loans outstanding, you had a nice increase in the margin loans, I believe, in the quarter. Was that existing customers taking on more loans or new customers? Where did the growth come in that area?

This is Brian Shea. It's primarily driven by growth in the foreign brokers business, Pershing's Prime Services group and also, a slight -- somewhat by our traditional -- the growth of our broker dealer business. But I would say I'd give a little more credit to the Prime group as we're growing momentum in that business.

Thank you. And thank you very much, everyone, for dialing in on a busy day. And if you have other questions, please follow up with Andy Clark or the rest of our Investor Relations team. Thank you.

Thank you. If there are any additional questions or comments, you may contact Mr. Andy Clark at (212) 635-1803. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating.