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CREDIT LOSSES | 3 Months Ended
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Mar. 31, 2023
CREDIT LOSSES |
CREDIT LOSSES | 6. CREDIT LOSSES Current expected credit losses are estimated for accounts receivable and certain notes receivable. 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 allowance for notes receivable credit losses is associated with notes receivable included within other assets, net on the condensed consolidated balance sheets and primarily relates 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. The funding of the CAT is ultimately expected to be provided by self-regulatory organizations (“SROs”), which includes the Exchanges, FINRA and broker-dealers (who are referred to as “Industry Members” and who collectively are referred to as “Plan Participants”); however, until a funding model is established, the funding to date has solely been provided by the Plan Participants in exchange for promissory notes. In addition, until the SEC approves a funding model that shares the cost of the CAT between the SROs and Industry Members, the SROs may continue to incur additional significant costs, or result in not being able to collect on the promissory notes related to the funding of the implementation and operation of the CAT. A portion of the promissory notes is expected to be repaid by Consolidated Audit Trail, LLC once proposed plan amendments and fee filings associated with a funding model are effective and associated Industry Member fees are collected by the Consolidated Audit Trail, LLC pursuant to the CAT funding model. In addition to assessing these CAT fees to Industry Members to cover a portion of the CAT historical costs funded to date by the Plan Participant promissory notes, the proposed CAT funding model also provides a framework for ongoing costs to be funded by Consolidated Audit Trail, LLC assessing CAT fees to both Plan Participants and Industry Members. Once these ongoing CAT fees become effective through fee filings submitted by the Plan Participants, it is anticipated there will no longer be any promissory notes provided by the Plan Participants to Consolidated Audit Trail, LLC. ​ Until the fees for historical CAT costs that are associated with the promissory notes are collected from Industry Members and remitted by Consolidated Audit Trail, LLC to the Plan Participants, the Plan Participants may continue to incur additional significant costs, including additional promissory notes to fund CAT operations. The allowance for notes receivable credit losses associated with the CAT is calculated using a methodology that is primarily based on various potential outcomes under the proposed funding model pending with the SEC. ​ The following represents the changes in allowance for credit losses during the three months ended March 31, 2023 and 2022 (in millions): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Balance at December 31, 2022 | ​ | Current period provision for expected credit losses | ​ | Write-offs charged against the allowance | ​ | Recoveries collected | ​ | Balance at March 31, 2023
Allowance for notes receivable credit losses | ​ | $ | 30.1 | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | 30.1
Allowance for accounts receivable credit losses | ​ | ​ | 2.2 | ​ | ​ | 0.1 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 2.3
Total allowance for credit losses | ​ | $ | 32.3 | ​ | $ | 0.1 | ​ | $ | — | ​ | $ | — | ​ | $ | 32.4
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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 30 -Section 50 -Paragraph 7 -URI https://asc.fasb.org/extlink&oid=124269663&loc=SL82922895-210455 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=124255953&loc=SL82919272-210447 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 8 -URI https://asc.fasb.org/extlink&oid=124255953&loc=SL82919236-210447 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 20 -URI https://asc.fasb.org/extlink&oid=124255953&loc=SL82919269-210447 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 30 -Section 50 -Paragraph 4 -URI https://asc.fasb.org/extlink&oid=124269663&loc=SL82922888-210455 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 11 -URI https://asc.fasb.org/extlink&oid=124255953&loc=SL82919244-210447 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 5 -URI https://asc.fasb.org/extlink&oid=124255953&loc=SL82919230-210447 + Details
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