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Financial Assets And Financial Liabilities | 9 Months Ended
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Sep. 30, 2019
Financial Assets And Financial Liabilities [Abstract] |
Financial Assets And Financial Liabilities | 6. Financial Assets and Financial Liabilities Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables set forth, by level within the fair value hierarchy (see Note 2), financial assets and liabilities, measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018. As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement.
|  | Financial Assets at Fair Value as of September 30, 2019
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (in millions)
Securities segregated for regulatory purposes |  | $ | 3,787 |  | $ | — |  | $ | — |  | $ | 3,787
Financial instruments owned, at fair value |  |  |  |  |  |  |  |  |  |  |  |
Stocks |  |  | 543 |  |  | — |  |  | — |  |  | 543
Options |  |  | 1,293 |  |  | — |  |  | — |  |  | 1,293
Warrants |  |  | — |  |  | — |  |  | — |  |  | —
U.S. and foreign government securities |  |  | 42 |  |  | — |  |  | — |  |  | 42
Corporate bonds |  |  | — |  |  | — |  |  | 3 |  |  | 3
Currency forward contracts |  |  | — |  |  | 2 |  |  | — |  |  | 2
Total financial instruments owned, at fair value |  |  | 1,878 |  |  | 2 |  |  | 3 |  |  | 1,883
Other assets - other investments at fair value |  |  | 43 |  |  | — |  |  | — |  |  | 43
Total financial assets at fair value |  | $ | 5,708 |  | $ | 2 |  | $ | 3 |  | $ | 5,713
|  | Financial Liabilities at Fair Value as of September 30, 2019
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (in millions)
Financial instruments sold, but not yet purchased, at fair value |  |  |  |  |  |  |  |  |  |  |  |
Stocks |  | $ | 467 |  | $ | — |  | $ | — |  | $ | 467
Options |  |  | 495 |  |  | — |  |  | — |  |  | 495
Currency forward contracts |  |  | — |  |  | 15 |  |  | — |  |  | 15
Total financial instruments sold, but not yet purchased, at fair value |  |  | 962 |  |  | 15 |  |  | — |  |  | 977
Total financial liabilities at fair value |  | $ | 962 |  | $ | 15 |  | $ | — |  | $ | 977
‎
|  | Financial Assets at Fair Value as of December 31, 2018
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (in millions)
Securities segregated for regulatory purposes |  | $ | 4,213 |  | $ | — |  | $ | — |  | $ | 4,213
Financial instruments owned, at fair value |  |  |  |  |  |  |  |  |  |  |  |
Stocks |  |  | 494 |  |  | — |  |  | — |  |  | 494
Options |  |  | 1,479 |  |  | — |  |  | — |  |  | 1,479
Warrants |  |  | 1 |  |  | — |  |  | — |  |  | 1
U.S. and foreign government securities |  |  | 113 |  |  | — |  |  | — |  |  | 113
Corporate and municipal bonds |  |  | — |  |  | 1 |  |  | 3 |  |  | 4
Currency forward contracts |  |  | — |  |  | 28 |  |  | — |  |  | 28
Total financial instruments owned, at fair value |  |  | 2,087 |  |  | 29 |  |  | 3 |  |  | 2,119
Total financial assets at fair value |  | $ | 6,300 |  | $ | 29 |  | $ | 3 |  | $ | 6,332
|  | Financial Liabilities at Fair Value as of December 31, 2018
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (in millions)
Financial instruments sold, but not yet purchased, at fair value |  |  |  |  |  |  |  |  |  |  |  |
Stocks |  | $ | 273 |  | $ | — |  | $ | — |  | $ | 273
Options |  |  | 404 |  |  | — |  |  | — |  |  | 404
Currency forward contracts |  |  | — |  |  | 4 |  |  | — |  |  | 4
Total financial instruments sold, but not yet purchased, at fair value |  |  | 677 |  |  | 4 |  |  | — |  |  | 681
Total financial liabilities at fair value |  | $ | 677 |  | $ | 4 |  | $ | — |  | $ | 681
Transfers between Level 1 and Level 2 Transfers of financial assets and financial liabilities at fair value to or from Levels 1 and 2 arise where the market for a specific financial instrument has become active or inactive during the period. The fair values transferred are ascribed as if the financial assets or financial liabilities had been transferred as of the end of the period. Level 3 Financial Assets and Financial Liabilities The Company’s Level 3 financial assets are comprised of delisted and illiquid securities reported within financial instruments owned, at fair value in the condensed consolidated statements of financial condition. As of September 30, 2019, Level 3 financial assets included $3 million in corporate bonds, which were not traded in active markets and were valued by the Company based on internal estimates. During the nine months ended September 30, 2019 and 2018, no transfers occurred between levels for financial assets and liabilities, at fair value. ‎ Trading Gains from Market Making Transactions Trading gains and losses from market making transactions reported in the condensed consolidated statements of comprehensive income, by major product type, are comprised of:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
|  | (in millions)
Equities |  | $ | 7 |  | $ | 7 |  | $ | 20 |  | $ | 32
Foreign exchange |  |  | — |  |  | — |  |  | — |  |  | —
Total trading gains, net |  | $ | 7 |  | $ | 7 |  | $ | 20 |  | $ | 32
These transactions are related to the Company’s financial instruments owned and financial instruments sold, but not yet purchased, at fair value and include both derivative and non-derivative financial instruments, including exchange traded options and futures. These gains and losses also include market making related dividend income and expense. Financial Assets and Liabilities Not Measured at Fair Value The following tables represent the carrying value, fair value, and fair value hierarchy category of certain financial assets and liabilities that are not recorded at fair value in the Company's condensed consolidated statements of financial condition. The following table excludes certain financial instruments such as equity investments and all non-financial assets and liabilities:
|  | September 30, 2019
|  | Carrying ‎Value |  | Fair ‎Value |  | Level 1 |  | Level 2 |  | Level 3
|  | (in millions)
Financial assets, not measured at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 3,035 |  | $ | 3,035 |  | $ | 3,035 |  | $ | — |  | $ | —
Cash - segregated for regulatory purposes |  |  | 8,794 |  |  | 8,794 |  |  | 8,794 |  |  | — |  |  | —
Securities - segregated for regulatory purposes |  |  | 17,459 |  |  | 17,459 |  |  | — |  |  | 17,459 |  |  | —
Securities borrowed |  |  | 4,010 |  |  | 4,010 |  |  | — |  |  | 4,010 |  |  | —
Securities purchased under agreements to resell |  |  | 1,391 |  |  | 1,391 |  |  | — |  |  | 1,391 |  |  | —
Receivables from customer |  |  | 25,970 |  |  | 25,970 |  |  | — |  |  | 25,970 |  |  | —
Receivables from broker, dealers, and clearing organizations |  |  | 868 |  |  | 868 |  |  | — |  |  | 868 |  |  | —
Interest receivable |  |  | 131 |  |  | 131 |  |  | — |  |  | 131 |  |  | —
Other assets |  |  | 9 |  |  | 9 |  |  | — |  |  | 4 |  |  | 5
Total financial assets, not measured at fair value |  | $ | 61,667 |  | $ | 61,667 |  | $ | 11,829 |  | $ | 49,833 |  | $ | 5
Financial liabilities, not measured at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term borrowings |  | $ | 15 |  | $ | 15 |  | $ | — |  | $ | 15 |  | $ | —
Securities loaned |  |  | 3,955 |  |  | 3,955 |  |  | — |  |  | 3,955 |  |  | —
Payables to customer |  |  | 54,474 |  |  | 54,474 |  |  | — |  |  | 54,474 |  |  | —
Payables to brokers, dealers and clearing organizations |  |  | 245 |  |  | 245 |  |  | — |  |  | 245 |  |  | —
Interest payable |  |  | 37 |  |  | 37 |  |  | — |  |  | 37 |  |  | —
Total financial liabilities, not measured at fair value |  | $ | 58,726 |  | $ | 58,726 |  | $ | — |  | $ | 58,726 |  | $ | —
‎
|  | December 31, 2018
|  | Carrying ‎Value |  | Fair ‎Value |  | Level 1 |  | Level 2 |  | Level 3
|  | (in millions)
Financial assets, not measured at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 2,597 |  | $ | 2,597 |  | $ | 2,597 |  | $ | — |  | $ | —
Cash - segregated for regulatory purposes |  |  | 7,503 |  |  | 7,503 |  |  | 7,503 |  |  | — |  |  | —
Securities - segregated for regulatory purposes |  |  | 11,382 |  |  | 11,382 |  |  | — |  |  | 11,382 |  |  | —
Securities borrowed |  |  | 3,331 |  |  | 3,331 |  |  | — |  |  | 3,331 |  |  | —
Securities purchased under agreements to resell |  |  | 1,242 |  |  | 1,242 |  |  | — |  |  | 1,242 |  |  | —
Receivables from customer |  |  | 27,017 |  |  | 27,017 |  |  | — |  |  | 27,017 |  |  | —
Receivables from broker, dealers, and clearing organizations |  |  | 706 |  |  | 706 |  |  | — |  |  | 706 |  |  | —
Interest receivable |  |  | 141 |  |  | 141 |  |  | — |  |  | 141 |  |  | —
Other assets |  |  | 5 |  |  | 6 |  |  | — |  |  | 6 |  |  | —
Total financial assets, not measured at fair value |  | $ | 53,924 |  | $ | 53,925 |  | $ | 10,100 |  | $ | 43,825 |  | $ | —
Financial liabilities, not measured at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term borrowings |  | $ | 17 |  | $ | 17 |  | $ | — |  | $ | 17 |  | $ | —
Securities loaned |  |  | 4,037 |  |  | 4,037 |  |  | — |  |  | 4,037 |  |  | —
Payables to customer |  |  | 47,993 |  |  | 47,993 |  |  | — |  |  | 47,993 |  |  | —
Payables to brokers, dealers and clearing organizations |  |  | 298 |  |  | 298 |  |  | — |  |  | 298 |  |  | —
Interest payable |  |  | 41 |  |  | 41 |  |  | — |  |  | 41 |  |  | —
Total financial liabilities, not measured at fair value |  | $ | 52,386 |  | $ | 52,386 |  | $ | — |  | $ | 52,386 |  | $ | —
Netting of Financial Assets and Financial Liabilities The Company’s policy is to net securities borrowed and securities loaned, and securities purchased under agreements to resell and securities sold under agreements to repurchase that meet the offsetting requirements prescribed in ASC Topic 210-20. In the tables below, the amounts of financial instruments that are not offset in the condensed consolidated statements of financial condition, but could be netted against cash or financial instruments with specific counterparties under master netting agreements, according to the terms of the agreements, including clearing houses (exchange traded options, warrants and discount certificates) or over the counter currency forward contract counterparties, are presented to provide financial statement readers with the Company’s net payable or receivable with counterparties for these financial instruments. ‎ The following tables set forth the netting of financial assets and of financial liabilities as of September 30, 2019 and December 31, 2018:
|  | September 30, 2019
|  | Gross |  | Amounts |  |  | Net Amounts |  | Amounts Not Offset |  |  |
|  | Amounts |  | Offset in the |  |  | Presented in |  | in the Condensed |  |  |
|  | of Financial |  | Condensed |  |  | the Condensed |  | Consolidated Statement |  |  |
|  | Assets and |  | Consolidated |  |  | Consolidated |  | of Financial Condition |  |  |
|  | Liabilities |  | Statement of |  |  | Statement of |  | Cash or Financial |  |  |
|  | Recognized |  | Financial Condition | 2 |  | Financial Condition |  | Instruments |  | Net Amount
|  | (in millions)
Offsetting of financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities segregated for regulatory purposes - purchased under agreements to resell |  | $ | 17,459 | 1 |  | $ | — |  |  | $ | 17,459 |  | $ | (17,459) |  | $ | —
Securities borrowed |  |  | 4,010 |  |  |  | — |  |  |  | 4,010 |  |  | (3,856) |  |  | 154
Securities purchased under agreements to resell |  |  | 1,391 |  |  |  | — |  |  |  | 1,391 |  |  | (1,391) |  |  | —
Financial instruments owned, at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Options |  |  | 1,293 |  |  |  | — |  |  |  | 1,293 |  |  | (492) |  |  | 801
Warrants |  |  | — |  |  |  | — |  |  |  | — |  |  | — |  |  | —
Currency forward contracts |  |  | 2 |  |  |  | — |  |  |  | 2 |  |  | — |  |  | 2
Total |  | $ | 24,155 |  |  | $ | — |  |  | $ | 24,155 |  | $ | (23,198) |  | $ | 957
|  | (in millions)
Offsetting of financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities loaned |  | $ | 3,955 |  |  | $ | — |  |  | $ | 3,955 |  | $ | (3,720) |  | $ | 235
Financial instruments sold, but not yet purchased, at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Options |  |  | 495 |  |  |  | — |  |  |  | 495 |  |  | (492) |  |  | 3
Currency forward contracts |  |  | 15 |  |  |  | — |  |  |  | 15 |  |  | — |  |  | 15
Total |  | $ | 4,465 |  |  | $ | — |  |  | $ | 4,465 |  | $ | (4,212) |  | $ | 253
‎
|  | December 31, 2018
|  |  | Gross | Amounts |  |  | Net Amounts |  | Amounts Not Offset |  |  |
|  |  | Amounts | Offset in the |  |  | Presented in |  | in the Condensed |  |  |
|  |  | of Financial | Condensed |  |  | the Condensed |  | Consolidated Statement |  |  |
|  |  | Assets and | Consolidated |  |  | Consolidated |  | of Financial Condition |  |  |
|  |  | Liabilities | Statement of |  |  | Statement of |  | Cash or Financial |  |  |
|  |  | Recognized |  | Financial Condition | 2 |  | Financial Condition |  | Instruments |  | Net Amount
|  | (in millions)
Offsetting of financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities segregated for regulatory purposes - purchased under agreements to resell |  | $ | 11,382 | 1 |  | $ | — |  |  | $ | 11,382 |  | $ | (11,382) |  | $ | —
Securities borrowed |  |  | 3,331 |  |  |  | — |  |  |  | 3,331 |  |  | (3,199) |  |  | 132
Securities purchased under agreements to resell |  |  | 1,242 |  |  |  | — |  |  |  | 1,242 |  |  | (1,242) |  |  | —
Financial instruments owned, at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Options |  |  | 1,479 |  |  |  | — |  |  |  | 1,479 |  |  | (398) |  |  | 1,081
Warrants |  |  | 1 |  |  |  | — |  |  |  | 1 |  |  | — |  |  | 1
Currency forward contracts |  |  | 28 |  |  |  | — |  |  |  | 28 |  |  | — |  |  | 28
Total |  | $ | 17,463 |  |  | $ | — |  |  | $ | 17,463 |  | $ | (16,221) |  | $ | 1,242
|  | (in millions)
Offsetting of financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities loaned |  | $ | 4,037 |  |  | $ | — |  |  | $ | 4,037 |  | $ | (3,838) |  | $ | 199
Financial instruments sold, but not yet purchased, at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Options |  |  | 404 |  |  |  | — |  |  |  | 404 |  |  | (398) |  |  | 6
Currency forward contracts |  |  | 4 |  |  |  | — |  |  |  | 4 |  |  | — |  |  | 4
Total |  | $ | 4,445 |  |  | $ | — |  |  | $ | 4,445 |  | $ | (4,236) |  | $ | 209
(1)As of September 30, 2019 and December 31, 2018, the Company had $17.5 billion and $11.4 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “Securities - segregated for regulatory purposes” in the condensed consolidated statements of financial condition. ‎ (2)The Company did no t have any balances eligible for netting in accordance with ASC Topic 210-20 at September 30, 2019 and December 31, 2018. ‎ Secured Financing Transactions – Maturities and Collateral Pledged The following tables present gross obligations for securities loaned transactions by remaining contractual maturity and class of collateral pledged as of September 30, 2019 and December 31, 2018:
|  | September 30, 2019
|  | Remaining Contractual Maturity
|  | Overnight |  | Less than |  | 30 – 90 |  | Over 90 |  |  |
|  | and Open |  | 30 days |  | days |  | days |  | Total
|  | (in millions)
Securities loaned |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stocks |  | $ | 3,888 |  | $ | — |  | $ | — |  | $ | — |  | $ | 3,888
Corporate bonds |  |  | 66 |  |  | — |  |  | — |  |  | — |  |  | 66
Foreign government securities |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 1
Total securities loaned |  | $ | 3,955 |  | $ | — |  | $ | — |  | $ | — |  | $ | 3,955
|  | December 31, 2018
|  | Remaining Contractual Maturity
|  | Overnight |  | Less than |  | 30 – 90 |  | Over 90 |  |  |
|  | and Open |  | 30 days |  | days |  | days |  | Total
|  | (in millions)
Securities loaned |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stocks |  | $ | 3,970 |  | $ | — |  | $ | — |  | $ | — |  | $ | 3,970
Corporate bonds |  |  | 65 |  |  | — |  |  | — |  |  | — |  |  | 65
Foreign government securities |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | 2
Total securities loaned |  | $ | 4,037 |  | $ | — |  | $ | — |  | $ | — |  | $ | 4,037

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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