Management’s discussion and analysis 114 JPMorgan Chase & Co. /2017 Annual Report Derivative contracts In the normal course of business, the Firm uses derivative instruments predominantly for market-making activities.
Derivatives enable counterparties to manage exposures to fluctuations in interest rates, currencies and other markets.
The Firm also uses derivative instruments to manage its own credit and other market risk exposure.
The nature of the counterparty and the settlement mechanism of the derivative affect the credit risk to which the Firm is exposed.
For OTC derivatives the Firm is exposed to the credit risk of the derivative counterparty.
For exchangetraded derivatives (“ETD”), such as futures and options, and “cleared” over-the-counter (“OTC-cleared”) derivatives, the Firm is generally exposed to the credit risk of the relevant CCP.
Where possible, the Firm seeks to mitigate its credit risk exposures arising from derivative transactions through the use of legally enforceable master netting arrangements and collateral agreements.
For further discussion of derivative contracts, counterparties and settlement types, see Note 5.
The following table summarizes the net derivative receivables for the periods presented.
## Table 0 ##
(a) Includes collateral related to derivative instruments where an appropriate legal opinion has not been either sought or obtained.
Derivative receivables reported on the Consolidated balance sheets were $56.5 billion and $64.1 billion at December 31, 2017 and 2016, respectively.
Derivative receivables decreased predominantly as a result of clientdriven market-making activities in CIB Markets, which reduced foreign exchange and interest rate derivative receivables, and increased equity derivative receivables, driven by market movements.
Derivative receivables amounts represent the fair value of the derivative contracts after giving effect to legally enforceable master netting agreements and cash collateral held by the Firm.
However, in management’s view, the appropriate measure of current credit risk should also take into consideration additional liquid securities (primarily U. S.  government and agency securities and other group of seven nations (“G7”) government bonds) and other cash collateral held by the Firm aggregating $16.1 billion and $22.7 billion at December 31, 2017 and 2016, respectively, that may be used as security when the fair value of the client’s exposure is in the Firm’s favor.
In addition to the collateral described in the preceding paragraph, the Firm also holds additional collateral (primarily cash, G7 government securities, other liquid government-agency and guaranteed securities, and corporate debt and equity securities) delivered by clients at the initiation of transactions, as well as collateral related to contracts that have a non-daily call frequency and collateral that the Firm has agreed to return but has not yet settled as of the reporting date.
Although this collateral does not reduce the balances and is not included in the table above, it is available as security against potential exposure that could arise should the fair value of the client’s derivative transactions move in the Firm’s favor.
The derivative receivables fair value, net of all collateral, also does not include other credit enhancements, such as letters of credit.
For additional information on the Firm’s use of collateral agreements, see Note 5.
While useful as a current view of credit exposure, the net fair value of the derivative receivables does not capture the potential future variability of that credit exposure.
To capture the potential future variability of credit exposure, the Firm calculates, on a client-by-client basis, three measures of potential derivatives-related credit loss: Peak, Derivative Risk Equivalent (“DRE”), and Average exposure (“AVG”).
These measures all incorporate netting and collateral benefits, where applicable.
Peak represents a conservative measure of potential exposure to a counterparty calculated in a manner that is broadly equivalent to a 97.5% confidence level over the life of the transaction.
Peak is the primary measure used by the Firm for setting of credit limits for derivative transactions, senior management reporting and derivatives exposure management.
DRE exposure is a measure that expresses the risk of derivative exposure on a basis intended to be equivalent to the risk of loan exposures.
DRE is a less extreme measure of potential credit loss than Peak and is used for aggregating derivative credit risk exposures with loans and other credit risk.
Finally, AVG is a measure of the expected fair value of the Firm’s derivative receivables at future time periods, including the benefit of collateral.
AVG exposure over the total life of the derivative contract is used as the primary metric for pricing purposes and is used to calculate credit risk capital and the CVA, as further described below.
The three year AVG exposure was $29.0 billion and $31.1 billion at December 31, 2017 and 2016, respectively, compared with derivative receivables, net of all collateral, of $40.4 billion and $41.4 billion at December 31, 2017 and 2016, respectively.
The fair value of the Firm’s derivative receivables incorporates CVA to reflect the credit quality of counterparties.
CVA is based on the Firm’s AVG to a counterparty and the counterparty’s credit spread in the credit derivatives market.
The Firm believes that active risk management is essential to controlling the dynamic credit risk in the derivatives portfolio.
In addition, the Firm’s risk management process takes into consideration the potential
## Table 1 ##
(a) Exchange-traded derivative balances that relate to futures contracts are settled daily.
(b) Net derivatives receivable included cash collateral netted of $55.5 billion and $71.9 billion at December 31, 2017 and 2016, respectively.
Net derivatives payable included cash collateral netted of $45.5 billion and $57.3 billion related to OTC and OTC-cleared derivatives at December 31, 2017 and 2016, respectively.
(c) Represents liquid security collateral as well as cash collateral held at third-party custodians related to derivative instruments where an appropriate legal opinion has been obtained.
For some counterparties, the collateral amounts of financial instruments may exceed the derivative receivables and derivative payables balances.
Where this is the case, the total amount reported is limited to the net derivative receivables and net derivative payables balances with that counterparty.
(d) Derivative collateral relates only to OTC and OTC-cleared derivative instruments.
Note 24 – Income taxes JPMorgan Chase and its eligible subsidiaries file a consolidated U. S.  federal income tax return.
JPMorgan Chase uses the asset and liability method to provide income taxes on all transactions recorded in the Consolidated Financial Statements.
This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes.
Accordingly, a deferred tax asset or liability for each temporary difference is determined based on the tax rates that the Firm expects to be in effect when the underlying items of income and expense are realized.
JPMorgan Chase’s expense for income taxes includes the current and deferred portions of that expense.
A valuation allowance is established to reduce deferred tax assets to the amount the Firm expects to realize.
Due to the inherent complexities arising from the nature of the Firm’s businesses, and from conducting business and being taxed in a substantial number of jurisdictions, significant judgments and estimates are required to be made.
Agreement of tax liabilities between JPMorgan Chase and the many tax jurisdictions in which the Firm files tax returns may not be finalized for several years.
Thus, the Firm’s final tax-related assets and liabilities may ultimately be different from those currently reported.
Effective tax rate and expense A reconciliation of the applicable statutory U. S.  federal income tax rate to the effective tax rate for each of the years ended December 31, 2017, 2016 and 2015, is presented in the following table.
Effective tax rate
## Table 2 ##
(a) Predominantly includes earnings of U. K.  subsidiaries that were deemed to be reinvested indefinitely through December 31, 2017.
Impact of the TCJA On December 22, 2017, the TCJA was signed into law.
The Firm’s effective tax rate increased in 2017 driven by a $1.9 billion income tax expense representing the estimated impact of the enactment of the TCJA.
The $1.9 billion tax expense was predominantly driven by a deemed repatriation of the Firm’s unremitted non-U.
S.  earnings and adjustments to the value of certain tax-oriented investments partially offset by a benefit from the revaluation of the Firm’s net deferred tax liability.
The deemed repatriation of the Firm’s unremitted non-U.
S.  earnings is based on the post-1986 earnings and profits of each controlled foreign corporation.
The calculation resulted in an estimated income tax expense of $3.7 billion.
Furthermore, accounting for income taxes requires the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future.
The Firm remeasured its deferred tax asset and liability balances in the fourth quarter of 2017 to the new statutory U. S.  federal income tax rate of 21% as well as any federal benefit associated with state and local deferred income taxes.
The remeasurement resulted in an estimated income tax benefit of $2.1 billion.
The deemed repatriation and remeasurement of deferred taxes were calculated based on all available information and published legislative guidance.
These amounts are considered to be estimates under SEC Staff Accounting Bulletin No.118 as the Firm anticipates refinements to both calculations.
Anticipated refinements will result from the issuance of future legislative and accounting guidance as well as those in the normal course of business, including true-ups to the tax liability on the tax return as filed and the resolution of tax audits.
Adjustments were also recorded to income tax expense for certain tax-oriented investments.
These adjustments were driven by changes to affordable housing proportional amortization resulting from the reduction of the federal income tax rate under the TCJA.
SEC Staff Accounting Bulletin No.118 does not apply to these adjustments.

<table><tr><td>December 31, (in millions)</td><td>2017</td><td>2016</td></tr><tr><td>Interest rate</td><td>$24,673</td><td>$28,302</td></tr><tr><td>Credit derivatives</td><td>869</td><td>1,294</td></tr><tr><td>Foreign exchange</td><td>16,151</td><td>23,271</td></tr><tr><td>Equity</td><td>7,882</td><td>4,939</td></tr><tr><td>Commodity</td><td>6,948</td><td>6,272</td></tr><tr><td>Total, net of cash collateral</td><td>56,523</td><td>64,078</td></tr><tr><td>Liquid securities and other cash collateral held against derivative receivables<sup>(a)</sup></td><td>-16,108</td><td>-22,705</td></tr><tr><td>Total, net of all collateral</td><td>$40,415</td><td>$41,373</td></tr></table>
<table><tr><td></td><td colspan="4">2017</td><td colspan="4">2016</td></tr><tr><td>December 31, (in millions)</td><td>Gross derivative payables</td><td colspan="2">Amounts netted on the Consolidated balance sheets</td><td>Net derivative payables</td><td>Gross derivative payables</td><td colspan="2">Amounts netted on the Consolidated balance sheets</td><td>Net derivative payables</td></tr><tr><td>U.S. GAAP nettable derivative payables</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Interest rate contracts:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>OTC</td><td>$276,960</td><td>$-271,294</td><td></td><td>$5,666</td><td>$338,502</td><td>$-329,325</td><td></td><td>$9,177</td></tr><tr><td>OTC–cleared</td><td>6,004</td><td>-5,928</td><td></td><td>76</td><td>230,464</td><td>-230,463</td><td></td><td>1</td></tr><tr><td>Exchange-traded<sup>(a)</sup></td><td>127</td><td>-84</td><td></td><td>43</td><td>196</td><td>-175</td><td></td><td>21</td></tr><tr><td>Total interest rate contracts</td><td>283,091</td><td>-277,306</td><td></td><td>5,785</td><td>569,162</td><td>-559,963</td><td></td><td>9,199</td></tr><tr><td>Credit contracts:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>OTC</td><td>16,194</td><td>-15,170</td><td></td><td>1,024</td><td>22,366</td><td>-21,614</td><td></td><td>752</td></tr><tr><td>OTC–cleared</td><td>6,801</td><td>-6,784</td><td></td><td>17</td><td>5,641</td><td>-5,641</td><td></td><td>—</td></tr><tr><td>Total credit contracts</td><td>22,995</td><td>-21,954</td><td></td><td>1,041</td><td>28,007</td><td>-27,255</td><td></td><td>752</td></tr><tr><td>Foreign exchange contracts:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>OTC</td><td>150,966</td><td>-141,789</td><td></td><td>9,177</td><td>228,300</td><td>-213,296</td><td></td><td>15,004</td></tr><tr><td>OTC–cleared</td><td>1,555</td><td>-1,553</td><td></td><td>2</td><td>1,158</td><td>-1,158</td><td></td><td>—</td></tr><tr><td>Exchange-traded<sup>(a)</sup></td><td>98</td><td>-7</td><td></td><td>91</td><td>328</td><td>-9</td><td></td><td>319</td></tr><tr><td>Total foreign exchange contracts</td><td>152,619</td><td>-143,349</td><td></td><td>9,270</td><td>229,786</td><td>-214,463</td><td></td><td>15,323</td></tr><tr><td>Equity contracts:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>OTC</td><td>28,193</td><td>-23,969</td><td></td><td>4,224</td><td>24,688</td><td>-20,808</td><td></td><td>3,880</td></tr><tr><td>Exchange-traded<sup>(a)</sup></td><td>12,720</td><td>-12,234</td><td></td><td>486</td><td>10,004</td><td>-9,414</td><td></td><td>590</td></tr><tr><td>Total equity contracts</td><td>40,913</td><td>-36,203</td><td></td><td>4,710</td><td>34,692</td><td>-30,222</td><td></td><td>4,470</td></tr><tr><td>Commodity contracts:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>OTC</td><td>12,645</td><td>-5,508</td><td></td><td>7,137</td><td>12,885</td><td>-5,252</td><td></td><td>7,633</td></tr><tr><td>Exchange-traded<sup>(a)</sup></td><td>8,870</td><td>-8,709</td><td></td><td>161</td><td>7,099</td><td>-6,853</td><td></td><td>246</td></tr><tr><td>Total commodity contracts</td><td>21,515</td><td>-14,217</td><td></td><td>7,298</td><td>19,984</td><td>-12,105</td><td></td><td>7,879</td></tr><tr><td>Derivative payables with appropriate legal opinion</td><td>521,133</td><td>-493,029</td><td><sup>(b)</sup></td><td>28,104</td><td>881,631</td><td>-844,008</td><td><sup>(b)</sup></td><td>37,623</td></tr><tr><td>Derivative payables where an appropriate legal opinion has not been either sought or obtained</td><td>9,673</td><td></td><td></td><td>9,673</td><td>11,608</td><td></td><td></td><td>11,608</td></tr><tr><td>Total derivative payables recognized on the Consolidated balance sheets</td><td>$530,806</td><td></td><td></td><td>$37,777</td><td>$893,239</td><td></td><td></td><td>$49,231</td></tr><tr><td>Collateral not nettable on the Consolidated balance sheets<sup>(c)(d)</sup></td><td></td><td></td><td></td><td>-4,180</td><td></td><td></td><td></td><td>-8,925</td></tr><tr><td>Net amounts</td><td></td><td></td><td></td><td>$33,597</td><td></td><td></td><td></td><td>$40,306</td></tr></table>
<table><tr><td>Year ended December 31,</td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Statutory U.S. federal tax rate</td><td>35.0%</td><td>35.0%</td><td>35.0%</td></tr><tr><td>Increase/(decrease) in tax rate resulting from:</td><td></td><td></td><td></td></tr><tr><td>U.S. state and local income taxes, net of U.S. federal income tax benefit</td><td>2.2</td><td>2.4</td><td>1.5</td></tr><tr><td>Tax-exempt income</td><td>-3.3</td><td>-3.1</td><td>-3.3</td></tr><tr><td>Non-U.S. subsidiary earnings<sup>(a)</sup></td><td>-3.1</td><td>-1.7</td><td>-3.9</td></tr><tr><td>Business tax credits</td><td>-4.2</td><td>-3.9</td><td>-3.7</td></tr><tr><td>Nondeductible legal expense</td><td>—</td><td>0.3</td><td>0.8</td></tr><tr><td>Tax audit resolutions</td><td>—</td><td>—</td><td>-5.7</td></tr><tr><td>Impact of the TCJA</td><td>5.4</td><td>—</td><td>—</td></tr><tr><td>Other, net</td><td>-0.1</td><td>-0.6</td><td>-0.3</td></tr><tr><td>Effective tax rate</td><td>31.9%</td><td>28.4%</td><td>20.4%</td></tr></table>

Question: Which year is the value of Gross derivative payables for Total equity contracts the most?
Answer: 2017