Financial Assets And Financial Liabilities

9 Months Ended

Sep. 30, 2020

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 tables below present, by level within the fair value hierarchy (see Note 2), financial assets and liabilities, measured at fair value on a recurring basis for the periods indicated. 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, 2020

	Level 1		Level 2		Level 3		Total

	(in millions)
Securities segregated for regulatory purposes	$	4,974	$	—	$	—	$	4,974
Financial instruments owned, at fair value
Stocks		375		—		1		376
Options		29		—		—		29
Warrants		—		—		—		—
U.S. and foreign government securities		28		—		—		28
Corporate bonds		—		—		3		3
Currency forward contracts		—		16		—		16
Total financial instruments owned, at fair value		432		16		4		452

Other assets - other investments at fair value		48		—		—		48
Total financial assets at fair value	$	5,454	$	16	$	4	$	5,474



	Financial Liabilities at Fair Value as of September 30, 2020
	Level 1		Level 2		Level 3		Total

	(in millions)
Financial instruments sold, but not yet purchased, at fair value
Stocks	$	158	$	—	$	—	$	158
Options		27		—		—		27
Currency forward contracts		—		2		—		2
Total financial instruments sold, but not yet purchased, at fair value		185		2		—		187
Total financial liabilities at fair value	$	185	$	2	$	—	$	187


	Financial Assets at Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total

	(in millions)
Securities segregated for regulatory purposes	$	3,797	$	—	$	—	$	3,797
Financial instruments owned, at fair value
Stocks		540		—		—		540
Options		1,333		—		—		1,333
Warrants		—		—		—		—
U.S. and foreign government securities		34		—		—		34
Corporate bonds		—		—		3		3
Currency forward contracts		—		6		—		6
Total financial instruments owned, at fair value		1,907		6		3		1,916

Other assets - other investments at fair value		36		—		—		36
Total financial assets at fair value	$	5,740	$	6	$	3	$	5,749

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	Financial Liabilities at Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total

	(in millions)
Financial instruments sold, but not yet purchased, at fair value
Stocks	$	183	$	—	$	—	$	183
Options		273		—		—		273
Currency forward contracts		—		1		—		1
Total financial instruments sold, but not yet purchased, at fair value		456		1		—		457
Total financial liabilities at fair value	$	456	$	1	$	—	$	457

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, 2020, Level 3 financial assets included $3 million in corporate bonds and $1 million in stocks which were not traded in active markets and were valued by the Company based on internal estimates.

Financial Assets and Liabilities Not Measured at Fair Value

The tables below 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 for the periods indicated. The tables below exclude certain financial instruments such as equity investments and all non-financial assets and liabilities.



	September 30, 2020
	Carrying ‎Value		Fair ‎Value		Level 1		Level 2		Level 3

	(in millions)
Financial assets, not measured at fair value
Cash and cash equivalents	$	3,292	$	3,292	$	3,292	$	—	$	—
Cash - segregated for regulatory purposes		12,789		12,789		12,789		—		—
Securities - segregated for regulatory purposes		24,342		24,342		—		24,342		—
Securities borrowed		3,995		3,995		—		3,995		—
Securities purchased under agreements to resell		1,401		1,401		—		1,401		—
Receivables from customer		30,343		30,343		—		30,343		—
Receivables from broker, dealers, and clearing organizations		2,575		2,575		—		2,575		—
Interest receivable		69		69		—		69		—
Other assets		11		11		—		2		9
Total financial assets, not measured at fair value	$	78,817	$	78,817	$	16,081	$	62,727	$	9



Financial liabilities, not measured at fair value
Short-term borrowings	$	628	$	628	$	—	$	628	$	—
Securities loaned		5,738		5,738		—		5,738		—
Payables to customer		68,830		68,830		—		68,830		—
Payables to brokers, dealers and clearing organizations		313		313		—		313		—
Interest payable		3		3		—		3		—
Total financial liabilities, not measured at fair value	$	75,512	$	75,512	$	—	$	75,512	$	—

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	December 31, 2019
	Carrying ‎Value		Fair ‎Value		Level 1		Level 2		Level 3

	(in millions)
Financial assets, not measured at fair value
Cash and cash equivalents	$	2,882	$	2,882	$	2,882	$	—	$	—
Cash - segregated for regulatory purposes		9,400		9,400		9,400		—		—
Securities - segregated for regulatory purposes		14,027		14,027		—		14,027		—
Securities borrowed		3,916		3,916		—		3,916		—
Securities purchased under agreements to resell		3,111		3,111		—		3,111		—
Receivables from customer		31,304		31,304		—		31,304		—
Receivables from broker, dealers, and clearing organizations		685		685		—		685		—
Interest receivable		158		158		—		158		—
Other assets		9		9		—		3		6
Total financial assets, not measured at fair value	$	65,492	$	65,492	$	12,282	$	53,204	$	6



Financial liabilities, not measured at fair value
Short-term borrowings	$	16	$	16	$	—	$	16	$	—
Securities loaned		4,410		4,410		—		4,410		—
Securities sold under agreements to repurchase		1,909		1,909		—		1,909		—
Payables to customer		56,248		56,248		—		56,248		—
Payables to brokers, dealers and clearing organizations		220		220		—		220		—
Interest payable		29		29		—		29		—
Total financial liabilities, not measured at fair value	$	62,832	$	62,832	$	—	$	62,832	$	—

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.

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The tables below present the netting of financial assets and of financial liabilities for the periods indicated.



	September 30, 2020
	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	$	24,342	¹	$	—		$	24,342	$	(24,342)	$	—
Securities borrowed		3,995			—			3,995		(3,822)		173
Securities purchased under agreements to resell		1,401			—			1,401		(1,401)		—
Financial instruments owned, at fair value
Options		29			—			29		(26)		3
Currency forward contracts		16			—			16		—		16
Total	$	29,783		$	—		$	29,783	$	(29,591)	$	192


	(in millions)
Offsetting of financial liabilities
Securities loaned	$	5,738	$	—	$	5,738	$	(5,404)	$	334
Financial instruments sold, but not yet purchased, at fair value
Options		27		—		27		(26)		1
Currency forward contracts		2		—		2		—		2
Total	$	5,767	$	—	$	5,767	$	(5,430)	$	337

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	December 31, 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	$	14,027	¹	$	—		$	14,027	$	(14,027)	$	—
Securities borrowed		3,916			—			3,916		(3,765)		151
Securities purchased under agreements to resell		3,111			—			3,111		(3,111)		—
Financial instruments owned, at fair value
Options		1,333			—			1,333		(267)		1,066
Currency forward contracts		6			—			6		—		6
Total	$	22,393		$	—		$	22,393	$	(21,170)	$	1,223


	(in millions)
Offsetting of financial liabilities
Securities loaned	$	4,410	$	—	$	4,410	$	(4,186)	$	224
Securities sold under agreements to repurchase		1,909		—		1,909		(1,909)		—
Financial instruments sold, but not yet purchased, at fair value
Options		273		—		273		(267)		6
Currency forward contracts		1		—		1		—		1
Total	$	6,593	$	—	$	6,593	$	(6,362)	$	231

________________________

(1)As of September 30, 2020 and December 31, 2019, the Company had $24.3 billion and $14.0 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.
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(2)The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at September 30, 2020 and December 31, 2019.

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Secured Financing Transactions – Maturities and Collateral Pledged

The tables below present gross obligations for securities loaned transactions by remaining contractual maturity and class of collateral pledged for the periods indicated.



	September 30, 2020
	Remaining Contractual Maturity
	Overnight		Less than		30 – 90		Over 90
	and Open		30 days		days		days		Total

	(in millions)
Securities loaned
Stocks	$	5,696	$	—	$	—	$	—	$	5,696
Corporate bonds		41		—		—		—		41
Foreign government securities		1		—		—		—		1
Total	$	5,738	$	—	$	—	$	—	$	5,738


	December 31, 2019
	Remaining Contractual Maturity
	Overnight		Less than		30 – 90		Over 90
	and Open		30 days		days		days		Total

	(in millions)
Securities loaned
Stocks	$	4,356	$	—	$	—	$	—	$	4,356
Corporate bonds		54		—		—		—		54
Total securities loaned		4,410		—		—		—		4,410

Securities sold under agreements to repurchase
U.S. government securities		1,909		—		—		—		1,909
Total	$	6,319	$	—	$	—	$	—	$	6,319

- 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.

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