XML 43 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
Geographic Information and Business Segments
 3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Geographic Information and Business Segments
Geographic Information and Business Segments
 
The Company operates its business in the U.S. and internationally, primarily in Europe and Asia. Significant transactions and balances between geographic regions occur primarily as a result of certain Company’s subsidiaries incurring operating expenses such as employee compensation, communications and data processing and other overhead costs, for the purpose of providing execution, clearing and other support services to affiliates. Charges for transactions between regions are designed to approximate full costs. Intra-region income and expenses and related balances have been eliminated in the geographic information presented below to accurately reflect the external business conducted in each geographical region. The revenues are attributed to countries based on the locations of the subsidiaries. The following table presents total revenues by geographic area for the three months ended March 31, 2018 and 2017:
(in thousands)
 
2018
 
2017
Revenues:
 
 
 
 
United States
 
$
743,152

 
$
91,987

Ireland
 
14,023

 
28,251

United Kingdom
 
11,600

 
—

Singapore
 
46,200

 
27,006

Others
 
78

 
43

Total revenues
 
815,053

 
147,287



Prior to the Acquisition, the Company was managed and operated as one business, and, accordingly, operated under one reportable segment.  As a result of the acquisition of KCG, beginning in the third quarter of 2017 the Company has three operating segments: (i) Market Making; (ii) Execution Services; and (iii) Corporate.
 
The Market Making segment principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, banks and institutions. The Company engages in principal trading in the Market Making segment direct to clients as well as in a supplemental capacity on exchanges, ECNs and alternative trading systems ATSs. The Company is an active participant on all major global equity and futures exchanges and also trades on substantially all domestic electronic options exchanges. As a complement to electronic market making, the cash trading business handles specialized orders and also transacts on the OTC Bulletin Board marketplaces operated by the OTC Markets Group Inc. and the AIM. 
 
The Execution Services segment comprises agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker dealers as well as technology services revenues. The Company earns commissions and commission equivalents as an agent on behalf of clients as well as between principals to transactions; in addition, the Company will commit capital on behalf of clients as needed. Agency-based, execution-only trading in the segment is done primarily through a variety of access points including: (i) algorithmic trading and order routing in global equities and options; (ii) institutional sales traders executing program, block and riskless principal trades in global equities and ETFs; (iii) a fixed income ECN that also offers trading applications; and (iv) an ATS for U.S. equities. Technology licensing fees are earned from third parties for licensing of the Company’s proprietary risk management and trading infrastructure technology and the provision of associated management and hosting services.
 
The Corporate segment contains the Company's investments, principally in strategic trading-related opportunities and maintains corporate overhead expenses and all other income and expenses that are not attributable to the Company's other segments.
 
Management evaluates the performance of its segments on a pre-tax basis. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. The Company’s total revenues and income before income taxes and noncontrolling interest (“Pre-tax earnings”) by segment for the three months ended March 31, 2018 and 2017 are summarized in the following table:
(in thousands)
Market
Making
 
Execution
Services
 
Corporate
(1)
 
Consolidated
Total
2018:
 
 
 
 
 
 
 
Total revenue
$
432,536

 
$
383,779

 
$
(1,262
)
 
$
815,053

Income before income taxes and noncontrolling interest
163,163

 
331,185

 
(25,812
)
 
468,536

 
 
 
 
 
 
 
 
2017:
 
 
 
 
 
 
 
Total revenue
$
144,448

 
$
2,779

 
$
60

 
$
147,287

Income (loss) before income taxes and noncontrolling interest
23,465

 
489

 
(72
)
 
23,882

(1)  Amounts shown in the Corporate segment include eliminations of income statement and balance sheet items included in the Company's other segments.