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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended September 30, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-23554
StoneX Group Inc.
(Exact name of registrant as specified in its charter)

Delaware |  | 59-2921318
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

230 Park Ave, 10th Floor
New York, NY 10169
(Address of principal executive offices) (Zip Code)
(212) 485-3500
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Act:

Title of Each Class |  | Trading Symbol |  | Name of each exchange on which registered
Common Stock, $0.01 par value |  | SNEX |  | The Nasdaq Stock Market LLC

Securities registered under Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of March 31, 2023, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $1,547.4 million.
As of November 22, 2023, there were 20,870,019 shares of the registrant’s common stock outstanding.

Table of Contents
Document Incorporated by Reference
Certain portions of the definitive Proxy Statement for the Registrant’s Annual Meeting of Stockholders to be held on February 27, 2024 are incorporated by reference into Part III of this Annual Report on Form 10-K.

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StoneX Group Inc.
Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2023
Table of Contents

|  | Page
PART I |
Item 1. | Business | 3
Item 1A. | Risk Factors | 18
Item 1B. | Unresolved Staff Comments | 30
Item 2. | Properties | 30
Item 3. | Legal Proceedings | 30
Item 4. | Mine Safety Disclosures | 30
PART II |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 31
Item 6. | Reserved | 32
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 64
Item 8. | Financial Statements and Supplementary Data | 67
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 125
Item 9A. | Controls and Procedures | 125
Item 9B. | Other Information | 126
Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspection | 126
PART III |
Item 10. | Directors, Executive Officers and Corporate Governance | 127
Item 11. | Executive Compensation | 127
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 127
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 127
Item 14. | Principal Accountant Fees and Services | 127
PART IV |
Item 15. | Exhibits and Financial Statement Schedules | 128
Item 16. | Form 10-K Summary | 130
Signatures |  | 131

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Throughout this document, unless the context otherwise requires, the terms “Company”, “we”, “us” and “our” refer to StoneX Group Inc. and its consolidated subsidiaries.
Cautionary Statement about Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” (refer to Part I, Item 1A). We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
PART I
Item 1. Business
Overview of Business and Strategy
We operate a global financial services network that connects companies, organizations, traders and investors to the global market ecosystem through a unique blend of digital platforms, end-to-end clearing and execution services, high touch service and deep expertise. We strive to be the one trusted partner to our clients, providing our network, product and services to allow them to pursue trading opportunities, manage their market risks, make investments and improve their business performance. Our businesses are supported by our global infrastructure of regulated operating subsidiaries, our advanced technology platforms and our team of more than 4,000 employees as of September 30, 2023. We believe our client-first approach differentiates us from large banking institutions, engenders trust and has enabled us to establish market leading positions in a number of complex fields in financial markets around the world.
We offer a vertically integrated product suite, beginning with high-touch and electronic access to nearly all major financial markets worldwide, as well as numerous liquidity venues. We deliver this access through the entire lifecycle of a trade, from deep market expertise and on-the-ground intelligence to best execution and finally post-trade clearing, custody and settlement services. We believe this is a unique product offering outside of the bulge bracket banks, which creates long-term relationships with our clients. Our business model has created a revenue stream that is diversified by asset class, client type and geography, earning commissions and spreads as clients execute transactions across our global network, monetizing non-trading client activity including interest and fee earnings on client balances as well as earning consulting and fees for our market intelligence and risk management services.
We currently serve more than 54,000 commercial, institutional, and global payments clients, and over 400,000 retail accounts located in more than 180 countries. Our clients include commercial entities, regional, national and introducing broker-dealers, asset managers, insurance companies, brokers, institutional and individual investors, professional traders, commercial and investment banks as well as government and non-governmental organizations (“NGOs”). We believe our clients value us for our attention to their needs, our expertise and flexibility, our global reach, our ability to provide access to liquidity in hard-to-reach markets and opportunities, and our status as a well-capitalized and regulatory-compliant organization.
We engage in direct sales efforts to seek new clients, with a strategy of extending our services to potential clients that are similar in size and operations to our existing client base. In executing this strategy, we intend to both target new geographic locations and expand the services offered in geographic locations in which we currently operate in an effort to increase our market share or where there is an unmet demand for our services. Through our web and mobile sites, including StoneX.com, StoneXOne.com, FOREX.com, and Cityindex.com we seek to attract and onboard new clients generated from digital marketing and brand advertising initiatives. We also pursue new clients through indirect channels, including our StoneX Marketing Partners affiliate program, StoneX.com/marketing partnerships; our relationships with introducing brokers, who solicit clients on our behalf; and white label partners, who offer our services to their clients under their own brand. In addition, we selectively pursue small- to medium-sized acquisitions, focusing primarily on targets that satisfy specified criteria, including client-centric organizations that may help us expand into new asset classes, client segments and geographies where we currently have a small or limited market presence.
We believe we are well positioned to capitalize on key trends impacting the financial services sector. Among others, these trends include the impact of increased regulation on banking institutions and other financial services providers; increased consolidation, especially of smaller sub-scale financial services providers and independent securities clearing firms; the growing importance and complexity of conducting secure cross-border transactions; and the demand among financial institutions to transact with well-capitalized counterparties.
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We focus on mitigating exposure to market risk, ensuring adequate liquidity to maintain our daily operations and making non-interest expenses variable, to the greatest extent possible. Our strategy is to utilize a centralized and disciplined process for capital allocation, risk management and cost control, while delegating the execution of strategic objectives and day-to-day management to experienced individuals. This requires high quality managers, a clear communication of performance objectives and strong financial and compliance controls. We believe this strategy will enable us to build a more scalable and significantly larger organization that embraces an entrepreneurial approach to business, supported and underpinned by strong centralized financial and compliance controls.
Available Information
Our internet address is www.stonex.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, statements of changes in beneficial ownership and press releases are available free of charge in the Investor Relations section of this website. Our website also includes information regarding our corporate governance, including our Code of Ethics, which governs our directors, officers and employees. The content of our website is not incorporated by reference into this report or any other filings with the Securities and Exchange Commission (“SEC”).
Capabilities
We connect our clients to global financial and physical markets and liquidity sources to enable them with efficient access to a broad array of financial and physical products through a combination of high-touch service and digital platforms in pursuit of their business objectives. Our financial network connects our clients to over 40 derivatives exchanges, 185 foreign exchange markets, most global securities exchanges and over 18,000 over-the-counter markets.
Execution
We provide trade execution services to our clients via both high-touch service and electronically through a wide variety of technology platforms that connect them to markets across the globe. Asset and product types include listed futures and options on futures, equities, mutual funds, ETFs, equity options, foreign currencies, corporate, government and municipal bonds and unit investment trusts.
Clearing
We provide competitive and efficient clearing on all major futures exchanges globally. One of our subsidiaries is one of the largest non-bank futures commission merchant (“FCM”) in the United States (“U.S.”) as measured by its $6.1 billion in required client segregated assets as of September 30, 2023 and our United Kingdom (“U.K.”) subsidiary is one of only eight Category One ring dealing members of the London Metals Exchange (the “LME”). In addition, we act as an independent full-service provider of clearing, custody, research and security-based lending products in the global securities markets. We provide multi-asset prime brokerage, outsourced trading and custody, as well as self-clearing and introduced clearing services for hedge funds, mutual funds and family offices. We provide prime brokerage services in major foreign currency pairs and swap transactions to institutional clients. Additionally, we provide clearing of foreign exchange transactions, as well as clearing of a wide range of over-the-counter (“OTC”) products.
OTC / Market-Making
We offer clients access to the OTC markets for a broad range of traded commodities, global securities, foreign currencies, contracts for difference (“CFD”) and interest rate products. For clients with commodity price and financial risk, our customized and tailored OTC structures help mitigate those risks by integrating the processes of product design, execution of the underlying components of the structured risk product, transaction reporting and valuation.
We provide market-making and execution in a variety of financial products including commodity derivatives, unlisted American Depository Receipts (“ADRs”) and Global Depository Receipts (“GDRs”), foreign ordinary shares, and foreign currencies. In addition, we are an institutional dealer in fixed income securities including U.S. Treasury, U.S. government agency, agency mortgage-backed, asset-backed, corporate, emerging market, convertible and high-yield securities.
Global Payments
We have built a scalable platform to provide end-to-end global payment solutions to banks and commercial businesses, as well as charities, NGOs and government organizations. We offer payments services in more than 140 currencies. In this business, we primarily act as a principal in buying and selling foreign currencies on a spot basis deriving revenue from the difference between the purchase and sale prices. Through our comprehensive platform and our commitment to client service, we provide simple and fast execution, delivering funds in any of these countries quickly through our global network of approximately 375 correspondent banking relationships.
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Advisory Services
We provide value-added advisory services and high-touch trade execution across a variety of financial markets, including commodities, foreign currencies, interest rates, institutional asset management and independent wealth management. For commercial clients with exposure to commodities, foreign currencies and interest rates, we work through our proprietary Integrated Risk Management Program (“IRMP®”) to systematically identify and quantify their risks and then develop strategic plans to effectively manage these risks with a view to protecting their margins and ultimately improving their bottom lines.
We also participate in the underwriting and trading of agency mortgage-backed, commercial mortgage-backed, asset-backed and municipal securities as well as structured credit in domestic and international markets. Through our asset management activities, we leverage our specialist expertise in niche markets to provide institutional investors with tailored investment products. Through our independent wealth management business, we provide advisory services to the growing retail investor market.
Market Intelligence
Our Market Intelligence platform provides our clients with access to deep data and incisive commentary from our expert traders and analysts from across our global network. This platform focuses on providing local, actionable insights and detailed intelligence from every market we trade, through the lens of our professionals, who leverage first-hand knowledge and personal connections to deliver a unique advantage for our clients.
Physical Trading
We act as a principal to support the needs of our clients in a variety of physical commodities, primarily precious metals, as well as across the commodity complex, including energy and renewable fuels, grains, oil seeds, cotton, coffee, cocoa, edible oils and feed products. Through these activities, we have the ability to offer a simplified risk management approach to our commercial clients by embedding more complex hedging structures as part of each physical contract to provide clients with enhanced price risk mitigation. We also offer clients efficient off-take or supply services, as well as logistics management.
Operating Segments
Our business activities are managed through four operating segments, including Commercial, Institutional, Retail, and Global Payments, as follows:
Commercial
The Commercial segment comprises the activities associated with the identification, management, hedging and monitoring of various commodity and financial risks faced by commercial entities in their business cycles, including risks related to interest rates, foreign exchange, agricultural commodities, energy and renewable fuels, industrial metals, precious metals, and other physical commodities.
We offer our commercial clients a comprehensive array of products and services, including risk management and hedging services, execution and clearing of exchange-traded and OTC products, voice brokerage, market intelligence and physical trading as well as commodity financing and logistics services. We believe our ability to provide these high-value-added products and services, differentiates us from our competitors and maximizes the opportunity to retain our clients.
Our risk management consulting services are designed to quantify and monitor commercial entities’ exposure to commodity and financial risk. Upon assessing this exposure, we develop a plan to control and hedge these risks with post-trade reporting against specific client objectives. Our clients are assisted in the execution of their hedging strategies through a wide range of products from listed exchange-traded futures and options to basic OTC instruments that offer greater flexibility, to structured OTC products designed for customized solutions and physical contracts.
Our execution and clearing services span virtually all traded commodity markets, with the largest concentrations in agricultural and energy commodities (consisting primarily of grains, energy and renewable fuels, coffee, sugar, cotton, and food service), as well as precious and base metals products. We also provide execution of foreign currency forwards and options and interest rate swaps as well as a wide range of structured product solutions to our commercial clients who are seeking cost-effective hedging strategies. Generally, our clients direct their own trading activity, and our risk management consultants do not have discretionary authority to transact trades on behalf of our clients.
We provide a full range of physical trading capabilities in precious metals markets providing our clients the ability to purchase physical gold and other precious metals, in multiple forms, and in denominations of their choice. In our precious metals activities, we act as a principal, committing our own capital to buy and sell precious metals on a spot and forward basis.
In addition, we act as a principal to facilitate financing, structured pricing and logistics services to clients across the commodity complex, including energy and renewable fuels, grains, oil seeds, cotton, coffee, cocoa, edible oils and feed products. We provide financing to commercial commodity-related companies against physical inventories.
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We generally mitigate the price risk associated with commodities held in inventory through the use of derivatives. We do not elect hedge accounting under accounting principles generally accepted in the United States of America (“U.S. GAAP”) in accounting for this price risk mitigation.
Within this segment we organize our marketing efforts into client industry product lines including agricultural, energy and renewable fuels, metals and various other commodities, servicing commercial producers, end users and intermediaries around the world.
Competitive Environment - Commercial Segment
Industry participants include producers/end-users, wholesalers and merchants, corporations, introducing brokers, grain elevators, merchandisers, importer/exporter and market intermediaries such as FCMs and swaps dealers, and liquidity venues such as commodity exchanges, financial exchanges and OTC markets. Commercial entities face a variety of risks, including risks related to commodity input pricing, supply chain management and inventory financing, interest rate changes, exchange rate changes, and price and quantity volatility in their outputs. Market intermediaries facilitate the identification, management and hedging of commodity and financial risks on behalf of commercial entities by designing and executing hedging programs through the use of various hedging instruments, including futures and options traded on exchanges or plain vanilla and more complex structured products traded bi-laterally on the OTC markets. Commercial entities occasionally prefer to manage exposure to physical commodities through direct purchase and sale agreements for which they may utilize the services of physical commodity merchants.
The need for, and volume of, client hedging activity is driven by commodity supply and demand dynamics, quantity and quality of commodity production and consumption, both locally and globally, trading of various commodities, and economic and geopolitical factors. In addition, the price levels and price volatility of various commodities generally increase the need of commercial clients to hedge. FCMs, swaps dealers, physical commodity merchants and other intermediaries and service providers create value for commercial clients by managing risks across the clients’ operations, allowing them to focus on their core expertise. In addition, commercial clients often face financial risks such as interest rate and exchange rate volatility, which these intermediaries help to mitigate. Physical commodity merchants serve clients by providing trading, hedging, inventory financing and logistics services.
Competitors in the Commercial segment include independent (non-bank) FCMs, FCMs affiliated with large commodity producers, global banks and independent and bank-owned swaps dealers. Although global banks represent the vast majority of client segregated assets, they tend to focus on larger clients. Independent, non-bank FCMs tend to focus on serving small- to mid-sized commercial clients where they face less competition from the global banks. Over the last 14 years since the financial crisis, global banks have increased the minimum size of clients they are willing to serve, in part due to decreasing profit margins often driven by regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) in the United States and the revised Markets in Financial Instruments Directive (“MiFID II”) and accompanying regulation, Markets in Financial Instruments Regulation (“MiFIR”) in Europe. This has presented an opportunity for non-bank participants in this industry, such as us, to acquire small and mid-sized clients and increase market share.
We strive to increase market share and attract new clients that are underserved by the global banks, capitalizing on our position as one of few publicly listed mid-sized financial services companies offering our clients access to global futures and options products through our well-capitalized independent FCM, structured OTC products through our swaps dealer as well as our physical commodity offerings. We have also taken advantage of opportunities to consolidate sub-scale competitors into our Commercial businesses.
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Institutional
We provide institutional clients with a complete suite of equity trading services to help them find liquidity with best execution, consistent liquidity across a robust array of fixed income products, competitive and efficient clearing and execution in all major futures and securities exchanges globally, as well as prime brokerage in equities and major foreign currency pairs and swap transactions. In addition, we originate, structure and place debt instruments in the domestic and international capital markets. These instruments include agency mortgage-backed, commercial mortgage-backed, asset-backed and municipal securities, as well as structured credit.
Securities
We provide value-added solutions that facilitate cross-border trading in equity securities and believe our clients value our ability to manage complex transactions, including foreign exchange, utilizing our local understanding of market convention, liquidity and settlement protocols around the world. Our clients include U.S.-based regional and national broker-dealers and institutions investing or executing client transactions in international markets and foreign institutions seeking access to the U.S. securities markets. We make markets in more than 16,000 equities on the NYSE, NASDAQ, and various OTC markets, including ETFs and over 7,000 ADRs, GDRs and foreign securities making us one of the leading market makers in foreign securities. In addition, we make prices in more than 10,000 foreign equities listed on foreign exchanges. We are also a broker-dealer in Argentina, Brazil and in the U.K., where we are active in providing institutional executions in the local capital markets.
We act as an institutional dealer in fixed income securities, including U.S. Treasury, U.S. government agency, agency mortgage-backed and asset-backed securities, as well as investment grade, high yield, convertible and emerging market debt to a client base including asset managers, commercial bank trust and investment departments, broker-dealers and insurance companies.
We are an independent full-service provider to introducing broker-dealers (“IBD’s”) of clearing, custody, research, syndicated and security-based lending products and services, including a proprietary technology platform which offers efficient connectivity to ensure a positive client experience through the clearing and settlement process. We believe we are one of the leading mid-market clearers in the securities industry, with approximately 100 correspondent clearing relationships with over $23 billion in assets under management or administration as of September 30, 2023.
We operate an asset management business in which we earn fees, commissions and other revenues for management of third party assets and investment gains or losses on our investments in funds and proprietary accounts managed either by our investment managers or by independent investment managers.
Listed Derivatives
We provide competitive and efficient clearing and execution in all major futures exchanges globally. Through our platforms, client orders are accepted and directed to the appropriate exchange for execution. We then facilitate the clearing of clients’ transactions. Clearing involves the matching of clients’ trades with the exchange, the collection and management of client margin deposits to support the transactions, and the accounting and reporting of the transactions to clients.
As of September 30, 2023, our U.S. FCM held $6.1 billion in required client segregated assets, which makes us one the largest non-bank FCMs in the U.S., as measured by required client segregated assets. We seek to leverage our capabilities and capacity in clearing to financial institutions, institutional trading firms, professional traders and introducing brokers as well as offering facilities management or outsourcing solutions to other FCMs.
Foreign Exchange
We provide prime brokerage foreign exchange (“FX”) services to financial institutions and professional traders. We provide our clients with the full range of OTC products, including 24-hour a day execution of spot, forwards and options, as well as non-deliverable forwards in both liquid and exotic currencies.
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Competitive Environment - Institutional Segment
The industry in which we provide services within our Institutional segment comprises activities associated with the trading of, and investment in, various financial assets, including equity and debt securities, commodities, foreign currencies, interest rates, and derivatives, both exchange-traded and OTC. This industry also includes various services provided to participants in the financial markets, which allow participants access to liquidity and execution venues, as well as clearing and settlement of transactions. Industry participants include institutional and retail investors, banks, insurance companies, fund managers, hedge funds, investment advisers, proprietary trading firms, commodity trading advisors and commodity pool operators, and foreign institutions and investors seeking access to U.S. markets, as well as various market intermediaries such as market makers, regional and national broker-dealers, independent broker-dealers, FCMs, and investment banks and liquidity venues, such as securities and derivatives exchanges and OTC marketplaces.
Trading and investing activity across asset classes is driven by growth in wealth and savings, investors’ asset allocation and diversification needs, including across geographies, and return objectives, risk management needs and the availability of speculative arbitrage opportunities. Volatility in asset prices generally drives increased trading activity and increased demand for execution and clearing services.
Broker-dealers, FCMs, investment banks and other intermediaries create value for institutional clients by facilitating client access to various financial markets, including securities and derivatives exchanges, proprietary sources of liquidity, OTC markets, other institutions and international markets. Market intermediaries can act as market-makers or principal traders that facilitate client trading activity by matching orders internally. Market intermediaries can also act as agents that accept orders, direct them to the appropriate market and facilitate the clearing of client transactions, which involves matching client trades with the exchange, collecting and managing client margin deposits to support the transactions, and accounting and reporting these transactions to clients.
Certain market intermediaries, predominantly investment banks, also provide advisory services, securities underwriting, loan syndications, security-based lending products and services, custodial services, investment research products, asset management services and technology platforms for client connectivity.
Competitors in the securities and clearing and execution businesses include global banks, institutional broker-dealers, correspondent clearers, independent broker-dealers, clearing FCMs and market-makers. We compete to secure clients based on quality of execution and client service, global access and local market expertise, and the breadth of our product offerings.
Regulatory burdens for FCMs and broker-dealers have increased since the financial crisis, which has led to increased complexity and capital requirements that have disproportionately affected smaller firms, driving consolidation. We have benefited from these trends and expect them to continue, and we seek opportunities to participate in further industry consolidation.
Retail
We provide our retail clients around the world access to over 18,000 global financial markets, including spot foreign exchange and CFDs, which are investment products with returns linked to the performance of underlying assets, and both financial trading and physical investment in precious metals. In addition, our independent wealth management business offers a comprehensive product suite to retail investors in the United States.
Retail Forex and CFDs
We are a provider of trading services and solutions in the global financial markets, including spot foreign exchange (“forex”) and CFDs. We offer CFDs on currencies, commodities, indices, individual equities, cryptocurrencies, bonds, options and interest rate products.
We seek to attract and support our clients through direct and indirect channels. Our primary direct channels for our retail forex and CFD business are our mobile platforms and internet websites, FOREX.com and Cityindex.com, which are available in multiple languages, including English, Chinese, Japanese, Spanish and Arabic. Our indirect channels include our relationships with introducing brokers, who solicit clients on our behalf, and white label partners, who offer our trading services to their clients under their own brand.
Our proprietary trading technology provides our clients with an enhanced client experience and multiple ways to trade and manage their accounts, tailored to their level of experience and preferred mode of access. In addition, we selectively offer third party trading tools that we believe complement our proprietary offerings. We believe that our proprietary trading technology is a significant competitive advantage because we have the ability to adapt quickly to our clients’ changing needs.
We have longstanding relationships with a large number of institutional liquidity providers, as well as access to multiple liquidity venues. They allow us to offer our clients superior liquidity and more competitive pricing with tighter bid/offer spreads than many of our competitors. In addition, we have developed a proprietary pricing engine that aggregates quotes from
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our liquidity sources to ensure that our prices accurately reflect current market price levels and allow us to provide our clients with fast, accurate trade execution.
We have proprietary technology to handle numerous aspects of account onboarding and client service, including the account opening and client verification process, fast online account funding and withdrawals with a wide variety of automated payment methods, and on-demand delivery of client information, such as account statements and other account-related reporting. We also offer account opening and funding functions on our mobile trading applications in order to provide a superior experience to the large number of clients who trade primarily through their mobile devices. Given the highly regulated and global nature of our business, these processes are customized to each regulatory jurisdiction in which we operate, and are further tailored to client needs and preferences in specific countries in order to make it easier for clients in these countries to open accounts with us and then to fund and trade in those accounts.
In connection with our retail business, we look to acquire new clients as cost-efficiently as possible, primarily through online marketing efforts such as advertising on third-party websites, search engine marketing and affiliate marketing. Our experienced in-house marketing team creates highly targeted online campaigns tailored to experienced traders, as well as marketing programs and materials designed to support and educate newer traders. We use sophisticated tracking and measurement techniques to monitor the results of individual campaigns and continually work to optimize our overall marketing results.
We also work with introducing brokers in order to expand our client base. We work with a variety of different types of introducing brokers, ranging from small, specialized firms that specifically identify and solicit clients interested in forex and CFD trading, to larger, more established financial services firms.
Independent Wealth Management
Our independent broker/dealer, SA Stone Wealth Management Inc. (“SA Stone”), member FINRA/SIPC, together with its affiliated SEC-registered investment advisor, SA Stone Investment Advisors Inc., provides an integrated platform of technology, comprehensive wealth management and investment services to registered representatives, investment advisor representatives and registered investment advisors nationwide. The firm supports more than 400 independent professionals with best-in-class service and products.
Retail Precious Metals
Our physical retail precious metals business is principally conducted within Coininvest GmbH. Through our website Stonexbullion.com, we offer clients the ability to purchase physical gold and other precious metals, in multiple forms, including coins and bars, in denominations of their choice, to add to their investment portfolios.
Competitive Environment - Retail
The market for our retail services is rapidly evolving and highly competitive. Our competitors vary by region in terms of regulatory status, breadth of product offering, size and geographic scope of operations. In the retail forex and CFD industry, we compete with both regulated firms focused on forex and CFDs, as well as with global multi-asset trading firms. In wealth management, our competitors vary from large integrated banks and on-line brokerage firms to smaller regional registered investment advisory firms, where competition is driven by reduced commission rates, continued development of online trading platforms and applications and client service.
Global Payments
We provide customized payment, technology and treasury services to banks and commercial businesses as well as charities, NGOs and government organizations. We provide transparent pricing and offer local currency payments services in more than 180 countries and 140 currencies, which we believe is more than any other payments solutions provider.
Our proprietary platforms allow our clients to connect to us digitally and seamlessly with customized solutions for each of our client groups that fit their specific needs.
We utilize the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) network as well as direct application programming interfaces (“APIs”) to service almost 100 financial institutions globally and connect them to our approximately 375 correspondent banks around the world enabling them to make local currency payments in a cost effective and secure manner.
Through our platforms and our commitment to client service, we believe we are able to provide simple and fast execution, ensuring delivery of funds in local currency to any of the countries we service quickly through our global network of correspondent banks. We primarily act as a principal in buying and selling foreign currencies on a spot basis and derive revenue from the difference between the purchase and sale prices.
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We believe our clients value our ability to provide exchange rates that are significantly more competitive than those offered by large international banks, a competitive advantage that stems from our years of foreign exchange expertise focused on smaller, less liquid currencies.
Competitive Environment - Global Payments
Increasing globalization and growth of international trade, as well as the need of corporations, institutions and individuals to move money across borders efficiently, have driven growing activity in the global payments industry. As the world becomes increasingly interconnected, corporations require the ability to cost-effectively exchange foreign currencies and to send and receive payments from clients and suppliers. NGOs also demand cross-border payment services as they attempt to bring funding, goods and services to their target geographies and recipients at the lowest possible cost. Even banks require lower cost implementation of foreign exchange transactions, as they are otherwise dependent on correspondent banks, which may subject such transactions to expensive and opaque pricing.
Volume growth in the global payments market has been steady, driving revenue growth for cross-border payments providers. Increasingly, this volume growth comes from transactions to emerging economies, benefiting those few providers such as us who have a strong competitive position in those emerging economies and an extensive correspondent bank network that would be difficult to replicate. As reported in the Boston Consulting Group 2023 Global Payments Report, global payments revenues reached $1.6 trillion in 2022 and are expected to grow to $2.2 trillion in 2027 with Latin America, the Middle East, Africa and Europe expected to see the highest growth rates during this period which we believe has potential to directly benefit our payments business.
The global payments market has historically been dominated by large Organization for Economic Co-operation and Development (“OECD”) banks that provide G20 to non-G20 foreign exchange rates to clients. Such banks, however, are reliant on their correspondent banking network for foreign exchange rates, which often results in uncompetitive rates and a lack of transparency. These issues are further exacerbated by a lack of uniform regulation in the business-to-business (“B2B”) global payments sector, with no coordinated regulatory framework, even among significant OECD countries.
We believe that the general lack of transparency in bank offerings in the global payments market with regard to fees and exchange rates, the banks’ often more expensive services, as well as the lack of systematic regulation, have opened opportunities for competitors in this market. As a result, the fast-growing space has attracted significant investor interest. Independent providers have entered the market, leveraging technology to lower client acquisition costs and providing an enhanced client experience through online platforms. In the global payments market, we believe we are one of those independent providers and disruptors offering significant value to our bank, corporate and NGO/charities clients, providing competitive and transparent payments solutions.
Acquisitions during Fiscal Year 2023
Incomm S.A.S.
In February 2023, one of the Company’s subsidiaries, StoneX Commodity Solutions LLC acquired all of the outstanding shares of Incomm S.A.S. (“Incomm”), which is based in Colombia. Incomm specializes in supporting the import of grain and feed products for Colombian clients and is a proven resource in management of customs clearing, inventory management at destination ports and providing non-recourse trade finance for destination buyers via local Colombian banks.
Cotton Distributors Inc.
In October 2022, our wholly owned subsidiary, StoneX (Netherlands) B.V., acquired CDI-Societe Cotonniere De Distribution S.A (“CDI”), based in Switzerland. CDI operates a global cotton merchant business with a strong network of producers in Brazil and West Africa as well as buyers throughout Asia.
Acquisitions during Fiscal Year 2021
Chasing Returns Limited
In August 2021, our wholly owned subsidiary, StoneX (Netherlands) B.V., acquired Chasing Returns Limited, based in Ireland. Chasing Returns Limited specializes in financial behavioral science designed to assist traders in analyzing trends and decision making. We utilize the capabilities of Chasing Returns Limited to enhance our offerings to retail clients.
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EncoreFx Ltd.
In December 2020, we acquired EncoreFx Ltd., which was incorporated in the State of Washington, and subsequently renamed as StoneX Payment Services Ltd. StoneX Payment Services Ltd. is registered as a money services business with the Financial Crimes Enforcement Network (“FinCEN”), and has over thirty state money transmitter licenses in the U.S., is also registered with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) and holds a money transmitter license in Canada. Its primary operations include providing foreign-currency exchange risk management and global payment solutions services to small and medium sized businesses engaged in the import and export industry.
Regulation
Overview
Our business and the industries in which we operate are highly regulated. Our operating subsidiaries are regulated in a number of jurisdictions including the U.S., the U.K, Luxembourg, Germany, Cyprus, Argentina, Brazil, Dubai, Nigeria, Hong Kong, Singapore, Japan, Australia, Canada and the Cayman Islands. Government regulators and self-regulatory organizations oversee the conduct of our business in many ways, and a number perform regular examinations to monitor our compliance with applicable statutes, regulations and rules. These statutes, regulations and rules cover all aspects of our business, including:
•maintaining specified minimum amounts of capital and limiting withdrawals of funds from our regulated operating subsidiaries;
•the treatment of client assets, including custody, control, safekeeping and, in certain countries, segregation of our client funds and securities;
•the methods by which clients can fund accounts with us;
•sales and marketing activities, including our interaction with, and solicitation of, clients;
•disclosures to clients, including those related to product risks, self-dealing and material conflicts of interest;
•the collection, use, transfer and protection of client personal information;
•anti-money laundering practices;
•recordkeeping and reporting requirements; and
•continuing education and licensing requirements for our employees, and supervision of the conduct of directors, officers and employees.
In some jurisdictions in which we offer our products and services, we are not subject to regulation because there is no established regulatory regime that covers our products and services or due to the manner in which we offer our products and services. We consult with legal counsel in jurisdictions in which we operate on a regular basis, or where we have a material concentration of clients, as to whether we have the required authorizations, licenses or approvals or whether we may conduct our business cross-border with residents in that jurisdiction without obtaining local regulatory authorization, approval or consent. To the extent that we wish to serve clients in a jurisdiction in which we determine licensing or registration is required, we may also elect to direct such clients to a licensed white label or other partner, rather than pursuing licensing or registration ourselves.
Though we conduct our business in a manner which we believe complies with applicable local law, regulators may assert authority over activities that they deem to take place within the jurisdiction they regulate, and new laws, rules or regulations may be enacted that change the regulatory landscape and result in new, or clarify preexisting, registration or licensing requirements.
The primary responsibility for ensuring that we maintain compliance with all applicable regulatory requirements is vested in our legal and compliance departments. In addition, our legal and compliance departments are responsible for our ongoing training and education programs, supervision of our personnel required to be licensed by one or more of our regulators, review of sales, marketing and other communications and other related functions. Also where appropriate, our sales employees are licensed pursuant to applicable regulation.
Failure to comply with our regulatory requirements could result in a variety of sanctions, including, but not limited to, revocation of applicable licenses and registrations, restrictions or limitations on our ability to carry on our business, suspensions of individual employees and significant fines.
U.S. Regulation
The commodities industry in the U.S. is subject to extensive regulation under federal law. We are required to comply with a wide range of requirements imposed by the Commodity Futures Trading Commission (the “CFTC”) and the National Futures Association (the “NFA”). Similarly, t he securities industry in the United States is subject to extensive regulation under federal and state securities laws. We must comply with a wide range of requirements imposed by the SEC, state securities commissions, the Municipal Securities Rulemaking Board (“MSRB”) and the Financial Industry Regulatory Authority
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(“FINRA”). These regulatory bodies safeguard the integrity of the financial markets and protect the interests of investors in these markets. They also impose minimum capital requirements on regulated entities.
In connection with our wealth management business, one of our subsidiaries, SA Stone Investment Advisors Inc., is registered with, and subject to oversight by, the SEC as an investment adviser. As such, in its relations with its advisory clients, SA Stone Investment Advisers Inc. is subject to the fiduciary and other obligations imposed on investment advisers under the Investment Advisers Act of 1940 and the rules and regulations promulgated thereunder, as well as various state securities laws. These laws and regulations include obligations relating to, among other things, custody and management of client assets, marketing activities, self-dealing and full disclosure of material conflicts of interest, and generally grant the SEC and other supervisory bodies administrative powers to address non-compliance.
The CFTC and NFA also regulate our forex, futures and swaps trading activities. Historically, the principal legislation covering our U.S. forex business was the Commodity Exchange Act, which provides for federal regulation of all commodities and futures trading activities. In recent years, as is the case of other companies in the financial services industry, our forex business has been subject to increasing regulatory oversight. The CFTC Reauthorization Act of 2019, which grants the CFTC express authority to regulate the retail forex industry, includes a series of additional rules which regulate various aspects of our business, including additional risk disclosures to retail forex clients, further limitations on sales and marketing materials and additional rules and interpretive notices regarding NFA mandated Information Systems Security Programs, including training and notification requirements for cybersecurity incidents.
Net Capital Requirements
Many of our subsidiaries are regulated and subject to minimum and/or net capital requirements. All of our subsidiaries are in compliance with their capital regulatory requirements as of September 30, 2023. Additional information on our subsidiaries subject to significant net capital and minimum net capital requirements can be found in Note 21 to the Consolidated Financial Statements.
Segregated Client Assets
We maintain client segregated deposits from our clients relating to their trading of futures and options on futures on U.S. commodities exchanges, making us subject to CFTC regulation 1.20, which specifies that such funds must be held in segregation and not commingled with the firm’s own assets. We maintain acknowledgment letters from each depository at which we maintain client segregated deposits in which the depository acknowledges the nature of funds on deposit in the account. In addition, CFTC regulations require filing of a daily segregation calculation which compares the assets held in clients segregated depositories (“segregated assets”) to the firm’s total segregated assets held on deposit from clients (“segregated liabilities”). The amount of client segregated assets must be in excess of the segregated liabilities owed to clients and any shortfall in such assets must be immediately communicated to the CFTC.
In addition, we are subject to CFTC regulation 1.25, which governs the acceptable investment of client segregated assets. This regulation allows for the investment of client segregated assets in readily marketable instruments including U.S. Treasury securities, municipal securities, government sponsored enterprise securities, certificates of deposit, commercial paper and corporate notes or bonds which are guaranteed by the U.S. under the Temporary Liquidity Guarantee Program, interest in money market mutual funds, and repurchase transactions with unaffiliated entities in otherwise allowable securities. We predominately invest our client segregated assets in U.S. Treasury securities and interest-bearing bank deposits.
In addition, in our capacity as a securities clearing broker-dealer, we clear transactions for clients and certain proprietary accounts of broker-dealers (“PABs”). In accordance with Rule 15c3-3 of the Securities Exchange Act of 1934 (“Rule 15c3-3”), we maintain special reserve bank accounts (“SRBAs”) for the exclusive benefit of securities clients and PABs.
Secured Client Assets
We maintain client secured deposits from our clients relating to their trading of futures and options on futures traded on, or subject to the rules of, a foreign board of trade, making us subject to CFTC Regulation 30.7, which requires that such funds must be carried in separate accounts in an amount sufficient to satisfy all of our current obligations to clients trading foreign futures and foreign options on foreign commodity exchanges or boards of trade, which are designated as secured clients’ accounts.
Retail Forex Client Assets
As a Retail Foreign Exchange dealer (“RFED”) registered with the CFTC and member of NFA, we maintain deposits from clients relating to their trading of OTC foreign exchange contracts whereby we act as counterparty to client trading activity making us subject to CFTC regulation 5.8, which specifies that such funds must be held in designated accounts at qualifying institutions in the United States or money center countries as defined by CFTC regulation 1.49. In addition, CFTC regulations require filing of a daily retail forex obligation calculation which compares the assets held for clients with qualifying institutions (“retail forex assets”) to the firm’s total obligation to retail forex clients, also known as net liquidating value (“retail forex
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liabilities”). The amount of retail forex assets must be in excess of the retail forex liabilities owed to clients and any shortfall in such assets must be immediately communicated to the CFTC.
Dodd-Frank
Like other companies in the financial services industry, the Dodd-Frank Act provides for a number of significant provisions affecting our business. Notably, the Dodd-Frank Act requires the registration of swap dealers with the CFTC and provides framework for:
•swap data reporting and record keeping on counterparties and data repositories;
•centralized clearing for swaps, with limited exceptions for end-users;
•the requirement to execute swaps on regulated swap execution facilities;
•the imposition on swap dealers to exchange margin on uncleared swaps with counterparties; and
•the requirement to comply with new capital rules.
We are a CFTC registered swap dealer, whose business is overseen by the NFA. The CFTC imposes rules over net capital requirements, as well as the exchange of initial margin between registered swap dealers and certain counterparties.
With respect to our retail OTC business, the Dodd-Frank Act includes:
•rules that require us to ensure that our clients residing in the United States have accounts open only with our U.S. registered NFA-member operating entity; and
•rules that essentially require all retail transactions in any commodity product other than a retail foreign currency transaction that is traded on a leveraged basis to be executed on an exchange, rather than OTC.
OFAC
The U.S. maintains various economic sanctions programs administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). The OFAC administered sanctions take many forms, but generally prohibit or restrict trade and investment in and with sanctions targets, and in some cases require blocking of the target’s assets. Violations of any of the OFAC-administered sanctions are punishable by civil fines, criminal fines, and imprisonment. We believe that we have implemented, and that we maintain, appropriate internal practices, procedures and controls to enable us to comply with applicable OFAC requirements.
U.S. Patriot Act
We are subject to a variety of statutory and regulatory requirements concerning our relationships with clients and the review and monitoring of their transactions. Specifically, we are subject to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), which requires that we maintain a comprehensive anti-money laundering (“AML”) program, a customer identification program (“CIP”), designate an AML compliance officer, provide specified employee training and conduct an annual independent audit of our AML program. The USA PATRIOT Act seeks to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering. Anti-money laundering laws outside of the U.S. contain similar provisions. We believe that we have implemented, and that we maintain, appropriate internal practices, procedures and controls to enable us to comply with the provisions of the USA PATRIOT Act and other anti-money laundering laws.
FINCEN CDD Final Rule
Additionally, our US legal entities qualifying as covered financial institutions are subject to the Customer Due Diligence Rule (“the CDD Rule”), which clarifies and strengthens customer due diligence requirements. This applies to our U.S. broker dealer(s) in securities, FCMs, and introducing brokers in commodities. The CDD Rule requires these covered financial institutions to identify and verify the identity of the natural persons (known as beneficial owners) of legal entity customers who own, control, and profit from companies when those companies open accounts.
The CDD Rule has four core requirements. It requires covered financial institutions to establish and maintain written policies and procedures that are reasonably designed to:
•identify and verify the identity of customer;
•identify and verify the identity of the beneficial owners of companies opening accounts;
•understand the nature and purpose of customer relationships to develop customer risk profiles; and
•conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
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With respect to the requirement to obtain beneficial ownership information, financial institutions will have to identify and verify the identity of any individual who owns 25 percent or more of a legal entity, and an individual who controls the legal entity. A Beneficial Ownership Form or an acceptable equivalent is also required. These requirements are applied to customers which meet the CDD Rule Criteria.
European and United Kingdom Regulation
The Financial Conduct Authority (“FCA”), the regulator of investment firms in the U.K., regulates our U.K. subsidiary as a Markets in Financial Instruments Directive (“MiFID”) investment firm under U.K. law. In Europe, our regulated subsidiaries are subject to E.U. regulation. Across the U.K. and E.U., the respective transpositions of the Market Abuse Regulation, and the General Data Protection Regulation, also apply.
Applicable regulations also impose regulatory capital, as well as conduct of business, governance, and other requirements on these entities. The client assets (“CASS”) rules in the FCA regulations include those that govern the handling of client money and other assets which, under certain circumstances must be segregated from the firm’s own assets.
CFD’s referencing cryptocurrencies
The FCA has adopted rules to ban the sale of CFDs referencing cryptocurrencies to retail consumers, which became effective in January 2021.
Client Money Rules
We are subject to the FCA’s Client Money rules, under which we are required to:
•maintain adequate segregation of client funds;
•maintain adequate records in order to identify appropriate client details;
•have adequate organizational arrangements in place to minimize the risk that client money may be paid for by the account of a client whose money has not yet been received by us;
•undertake daily internal and external client money reconciliations within an appropriate risk and control framework; and
•appoint an individual who is responsible for CASS oversight.
Anti-Money Laundering and Sanctions
As in the U.S., our U.K. and European entities are subject to statutory and regulatory requirements concerning relationships with customers and the review and monitoring of their transactions. Regulated firms in both the U.K. and in the European Union (“E.U.”) must have robust governance, effective risk procedures and adequate internal control mechanisms to manage the exposure to financial crime risk. The measures require the U.K. and E.U. entities to verify customer identity and understand the nature and purpose of the proposed relationship on the basis of documents, data or information obtained from a reliable and independent source; and review and monitor their customer’s transactions and activities to identify anything suspicious.
Our U.K. and E.U. entities take a risk-based approach and senior management are responsible for addressing these risks. There is a requirement to regularly identify and assess the exposure to financial crime risk and report to the governing body on the same. This enables the targeting of financial crime resources on the areas of greatest risk. Procedures in the U.K. and E.U. are based on guidance and requirements issued both at a national and supranational level.
The FCA and the financial supervisory authorities in the E.U. require our entities to have systems and controls in place to enable them to identify, assess, monitor and manage financial crime risk. Accordingly, we have implemented appropriate systems and controls which are proportionate to the nature, scale and complexity of our activities. We provide relevant training to our employees in relation to financial crime. As required, our Europe, Middle East and Africa (“EMEA”) Money Laundering Reporting Officer as well as the Money Laundering Reporting Officer appointed in respect of each of the entities in the E.U. provide regular reports on the operation and effectiveness of these systems and controls, including details of our regular assessments of the adequacy of these systems and controls to ensure their compliance with the local regulatory requirements.
Our financial crime systems and controls also include routine screening to identify where customers and others with whom we transact may be subject to financial sanctions, including measures initiated or adopted by inter alia the U.K. Treasury, E.U. or OFAC (as required in the U.S.)
EMIR
The E.U. European Market Infrastructure Regulation (Regulation (EU) 648/2012) (“EMIR”) imposes requirements on entities that enter into any form of derivative contract and applies directly to firms in the E.U. that trade derivatives and indirectly to non-E.U. firms that trade derivatives with E.U. firms. Accordingly, under these rules, we are required to:
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•report all derivative contracts and their lifecycle events (concluded, modified and terminated) to which we are a party to a trade repository either by ourselves or through a third party;
•keep all records relating to concluding of derivative contracts and any subsequent modification for 5 years;
•comply with the risk management requirements for OTC bilateral derivatives, including portfolio reconciliation, portfolio compression, record keeping, dispute resolution and margining; and
•clear through central counterparties all OTC derivatives which will be subject to the mandatory clearing obligation.
MiFID
Where firms offer “execution only” services for certain financial instruments which are deemed “complex”, E.U. Markets in Financial Instruments Directive II (Directive 2014/65/EU) (“MiFID II”) requires firms to assess the appropriateness of those investments for retail clients. For this assessment, we are required to collect information about our existing and potential clients’ knowledge and experience with regard to specific products and services, including:
•the types of services, transactions and financial instruments with which the retail client is familiar;
•the nature, volume, and frequency of the retail client’s transactions in financial instruments and the period over which they have been carried out; and
•the level of education, and profession or relevant former profession of the retail client or potential retail client.
We are required to offer to a retail client or transact for them only those products that are deemed appropriate for their knowledge, experience and other circumstances. If the retail client demands a product that has been assessed as inappropriate for the retail client’s circumstances by us, we may either refuse to offer the product to the client or allow them access to the product but we are required to give the retail client a warning that the product may be inappropriate to its circumstances. We are not required to undertake this analysis for professional clients as we are entitled to assume that a professional client has the necessary knowledge and experience in order to understand the risks involved in relation to the particular products or services for which they have been classified as a professional client.
In addition to the requirements described above, MiFID II requires that:
•firms carry out an appropriateness assessment before providing an execution only service to retail clients;
•transparency is given to derivatives traded on regulated markets, multi-lateral trading facilities (“MTFs”), and organized trading facilities (“OTFs”);
•transactions are reported for those financial instruments traded on MTFs, OTFs, and those financial instruments where the underlying instrument is traded on a Trading Venue; and
•E.U. Member State regulators ban or restrict the marketing, distribution or sale of a financial instrument or types of financial practice where there is a threat to investor protection, the orderly functioning and integrity of markets or to financial stability. The European Banking Authority and the European Securities and Markets Authority have similar powers to impose a ban on an E.U.-wide basis or in relation to a particular E.U. Member State.
Packaged Retail and Insurance-based Investment Products
Our U.K. entities are required to comply with the PRIIPs Regulation in relation to packaged retail and insurance-based investment products (“PRIIPs”) that they manufacture, advise on or sell to retail clients. The FCA regards derivatives (including options, futures, and contracts for difference) as falling within the definition of a PRIIP. The regime requires us to provide retail clients with a standardized key information document (“KID”) in good time before any transaction in derivatives is concluded or for transactions concluded by distance communications, after the transaction has taken place, but only if it is not possible to provide the KID in advance and the client consents.
Payments Services Regulations 2017
The Payments Services Regulations 2017 (“PSRs”) implemented the second Payments Services Directive (“PSD II”) in the U.K. The most significant development contained in the PSD II is the requirement for payment services firms to introduce strong customer authentication (“SCA”) on the payment platforms which was required to be fully implemented by March 2022.
Brexit
The U.K. left the E.U. in January 2020 pursuant to a Withdrawal Agreement. It entered into a transition period which expired on December 31, 2020. Following the expiration of this transition period, British investment and payment firms have lost the right to conduct business within European Economic Area (“EEA”) states based on their ‘home’ state authorization. Without appropriate authorization, British firms are largely restricted to providing business to clients that are domiciled in the EEA on a ‘reverse solicitation’ basis. Furthermore, British investment firms have lost certain rights with respect to access to, or providing
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their clients with a connection to, certain infrastructural assets that are necessary for the provision of certain services. An example is the provision of direct electronic access to trading venues authorized in the E.U.
StoneX Financial Ltd put in place a comprehensive Brexit contingency plan to mitigate the risks associated with Brexit. This included the transfer of assets, services and clients to StoneX Financial Ltd’s subsidiary (StoneX Financial GmbH) and sister company (StoneX Financial Europe S.A).
Similarly, the group has executed a plan to mitigate the risks associated with Brexit for retail clients including the establishment of a licensed entity in Cyprus, StoneX Europe Ltd.
U.K. Investment Firm Prudential Regime
The U.K. implemented a new prudential regime that replaced the previously existing Capital Requirements Regulation (“CRR”) and fourth Capital Requirements Directive (“CRD IV”) in January 2022. The U.K. Investment Firm Prudential Regime (“IFPR”) introduced a more appropriate regime for investment firms, which are currently regulated under rules designed for banks. StoneX Financial Ltd has implemented all required prudential changes under this regime.
E.U. Conflict Minerals Regulation
The E.U. Conflict Minerals Regulation (“CMR”) became effective in January 2021, and in the U.K, the FCA has recognized the Global Precious Metals Code in the U.K. The CMR requires importers to conduct due diligence on their gold, tantalum, tin, and tungsten supply chains to identify minerals that may have originated from conflict zones. The new requirements are largely based on existing guidance issued by the Organisation for Cooperation and Development (“OECD”) which StoneX Financial Ltd already applies, as part of its policies and procedures. StoneX Financial Ltd is a full member of the London Bullion Market Association which sets out and oversees adherence to the principles to promote the integrity and effective functioning of the global precious metals market.
Other International Regulation
Our operating subsidiaries in jurisdictions outside of the U.S., U.K., and E.U. are registered with, or obtained a license from, local regulatory bodies that seek to protect clients by imposing requirements relating to capital adequacy and other matters.
Several of our foreign subsidiaries are subject to certain business rules, including those that govern the treatment of client money and other assets which under certain circumstances for certain classes of client must be segregated from the firm’s own assets.
Asia Pacific
In the Asia Pacific region, our subsidiaries operate under licenses and/or authority from various regulators. In Singapore, StoneX Financial Pte. Ltd. is regulated by the Monetary Authority of Singapore for dealing in capital market products and as a major payments institution. In addition, also in Singapore, StoneX APAC Pte. Ltd. is licensed as an Approved International Commodity Trading Company and is regulated as a Dealer under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of AML/CFT. In Hong Kong, StoneX Financial (HK) Limited is regulated by the Hong Kong Securities and Futures Commission for Dealing in Futures Contracts and Securities. In Australia, StoneX Financial Pty Ltd is regulated by the Australian Securities and Investments Commission for dealing in Derivatives, Leveraged FX and Securities. In Japan, StoneX Securities Co. Ltd. is regulated by the Financial Services Agency for dealing in FX.
The foregoing regulators are members of the International Organization of Securities Commissions which promotes adherence to internationally recognized standards for securities regulation encompassing the key objectives of protecting investors, ensuring that markets are fair, efficient, and transparent, and reducing systematic risk.
Privacy and Data Protection
Our business is subject to rules and regulations adopted by state, federal and foreign governments, and regulatory organizations governing data privacy, including for example the California Consumer Privacy Act (“CCPA”) and the European General Data Protection Regulation (“GDPR”). Additional states, as well as foreign jurisdictions, have enacted or are proposing similar data protection regimes, resulting in a rapidly evolving landscape governing how we collect, use, transfer and protect personal data.
Exchange Memberships
Through our various operating subsidiaries, we are member of a number of exchanges, including the Chicago Mercantile Exchange, the Chicago Board of Trade, the New York Mercantile Exchange, COMEX, InterContinental Exchange, Inc., the Minneapolis Grain Exchange, the London Metal Exchange, ICE Europe Ltd, Eurex Exchange, Dubai Mercantile Exchange, Euronext Amsterdam, Euronext Paris, European Energy Exchange, B3 S.A., Bitnomial Exchange LLC, Norexco ASA, the Rosario Futures Exchange, ICE Futures Abu Dhabi, Small Exchange, Inc., Nodal Exchange and the Singapore Exchange. These exchanges impose their own requirements on a variety of matters, in some cases addressing capital adequacy, protection of client assets, record-keeping and reporting.
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Failure to comply with our exchange membership requirements could result in a variety of consequences, including, but not limited to fines and revocation of memberships, which would limit on our ability to carry on our business with these exchanges.
Human Capital Management
We believe that our success is determined in large part by the quality and dedication of our people and by the empowerment of our employees to serve and engage our clients globally. At the direction of our Executive Committee and in furtherance of our strategies as a whole, our worldwide human resources officers are responsible for developing and executing our human capital strategy. This includes the attraction, acquisition, development and engagement of talent to deliver on our strategy and the design of employee compensation, incentive, welfare and benefits programs. We focus on the following factors in order to implement and develop our human capital strategy:
•Employee Compensation and Incentives
•Evaluation of Employee Performance, Training and Talent Development
•Employee Health and Welfare
•Diversity and Inclusion
Employee Compensation and Incentives
Ensuring that our employees are well-compensated and have the appropriate incentives in place to meet and exceed their potential is a central part of our human capital strategy. Our entrepreneurial culture ties pay to performance in a variety of ways, including incentive compensation, merit-based bonus programs and variable compensation. We grant options and restricted stock to our employees and also encourage our employees to acquire an ownership stake in our business by sponsoring restricted stock plans for directors, officers and employees. Furthermore, our Nominating & Governance Committee imposes requirements that our directors and executive officers maintain a financial interest in our stock by owning vested Company stock, fostering an additional sense of ownership and alignment of interests.
Evaluation of Employee Performance, Training and Talent Development
We commit to our employees by encouraging their growth and professional development through performance management, training and talent development, including:
•Performance evaluations. Employee performance is evaluated annually through written self-assessments which are reviewed in discussions with supervisors and managers. Employee performance is assessed based on a variety of key performance indicators, including achievement of objectives specific to the employee’s department or role, an assessment of company core competencies, feedback from peers and subordinate employees and managers in other departments and an assessment conducted by the employee’s direct manager.
•Business Unit Trainin g. Business units provide hands-on training to their employees to equip them for success in their roles and provide increased opportunities to develop their careers.
•Manager Training. Management training is provided to certain senior leaders and mid-level managers. This training covers, among other topics, talent review, development of underperforming employees, handling employee misconduct and coaching and success workshops.
•Know-Your-Business Programs. We make available to employees a monthly “Know-Your-Business” program led by senior managers, including our CEO, to provide our employees with the opportunity to learn about our diverse product and service offerings, as well as familiarize themselves with the various operational and administrative support areas.
•Virtual Networking and Mentoring Programs. We have established networking and mentoring programs to provide an additional means for employees to connect with each other, learn about different parts of our business and to help each other further develop their careers.
Employee Health and Welfare
We believe that doing our part to maintain the health and welfare of our employees is a critical element for achieving commercial success. As such, we provide our employees with comprehensive health benefits and offer a wellness program which focuses on employee health strategies and includes a discount to employee medical premiums for the completion of wellness initiatives. We promote a culture of hard work and achievement that also strives to provide an appropriate work-life balance for our employees. We conduct employee surveys annually to collect feedback and incorporate into our planning. In addition, we offer employee assistance programs, including confidential assistance for financial, mental and physical well-being. Finally, we believe that the well-being of our employees is enhanced when they can give back to their local communities or charities and have established the “Collective Giving” program to facilitate participation by our employees in these initiatives and provide a company match for charitable contributions and volunteer hours.
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Diversity and Inclusion
We believe that we are more successful commercially with a diverse employee population and encourage hiring and promotion practices that focus on the best talent and the most effective performers, regardless of gender, national origin, ethnicity or other protected class. We have adopted an Affinity Group Policy which provides a framework for groups of employees to interact over areas of common interest. To date, our employees have formed two affinity groups, the Women of StoneX, which focuses on supporting and developing our female employees, and the Philanthropy group, which aims to inspire, educate and mobilize our employees’ collective giving efforts. In addition, our Board includes two female directors and two self-identified diverse directors, and our Nominating and Governance Committee is actively focused on issues of diversity and inclusion as part of its overall mandate. Because we operate a global business across multiple business segments, products and service areas, we believe it is especially important that we attract employees with diverse backgrounds and the capability to address client needs across the numerous cultures in the countries in which we operate. We continually analyze and monitor gender and ethnicity across our employee population and report regularly into Executive Committee and the Board.
Foreign Operations
We operate in a number of foreign jurisdictions, including Canada, Ireland, the U.K., Cyprus, Luxembourg, Germany, Argentina, Brazil, Colombia, Uruguay, Paraguay, Mexico, Nigeria, Dubai, China, India, Hong Kong, Australia, Singapore, Japan, Cayman Islands, Bermuda and Poland. We established wholly owned subsidiaries in the Netherlands, Cayman Islands and Bermuda but do not have offices or employees in those countries.
Intellectual Property
We rely on a combination of trademark, copyright, trade secret and unfair competition laws in the United States and other jurisdictions to protect our proprietary technology, intellectual property rights and our brands (e.g., StoneX, IRMP, FOREX.com, GAIN Capital, and City Index). We also enter into confidentiality and invention assignment agreements with our employees and consultants, and confidentiality agreements with other third parties. We rigorously control access to our proprietary technology. Currently, we do not have any pending or issued patents.
We use a variety of service marks that have been registered with the U.S. Patent and Trademark Office (“USPTO”), including: StoneX, IRMP, FCStone, FC Stone, CommodityNetwork, CoffeeNetwork, GAIN Capital, FOREX.com, It’s Your World. Trade It., GAIN Capital Futures, and GAIN Futures. We have applications pending with the USPTO for StoneX One, StoneHedge and Global Payments Connect. We also have registered trademarks covering our City Index brand name and logo in a variety of jurisdictions, including Australia, the U.K., the E.U., Singapore and China. We also have pursued trademark protection through the Madrid Protocol covering our StoneX brand name in a variety of jurisdictions. To date, we have received grants of registration in Australia, Brazil, Benelux, Columbia, the U.K., Japan, South Korea, Mexico, Singapore and are awaiting examination resolutions in other jurisdictions.
Business Risks
We seek to mitigate the market and credit risks arising from our financial trading activities through an active risk management program. The principal objective of this program is to limit trading risk to an acceptable level while maximizing the return generated on the risk assumed.
We have a defined risk policy administered by our risk management committee, which reports to the Risk Committee of our Board of Directors. We established specific exposure limits for inventory positions in every business, as well as specific issuer limits and counterparty limits. We designed these limits to ensure that in a situation of unexpectedly large or rapid movements or disruptions in one or more markets, systemic financial distress, and the failure of a counterparty or the default of an issuer, the potential estimated loss will remain within acceptable levels. The Risk Committee of our Board of Directors reviews the performance of the risk management committee on a quarterly basis to monitor compliance with the established risk policy.
Item 1A. Risk Factors
We face a variety of risks that could adversely impact our financial condition and results of operations, set forth below.
Macroeconomic Risks
Our ability to achieve consistent profitability is subject to uncertainty due to the nature of our businesses and the markets in which we operate. Our revenues and operating results may fluctuate significantly because of the following factors:
•market conditions, such as price levels and volatility in the commodities, securities and foreign exchange markets in which we operate;
•changes in the volume of our market-making and trading activities;
•changes in the value of our financial instruments, currency and commodities positions and our ability to manage related risks; and
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•the level and volatility of interest rates.
There have been significant declines in trading volumes in the financial markets generally in the past and there may be similar declines in trading volumes generally or across our platforms in particular in the future. Any one or more of the above factors may contribute to reduced trading volumes. Our revenues and profitability are likely to decline significantly during periods of stagnant economic conditions or decreased trading volume in the U.S. and global financial markets.
Although we continue our efforts to diversify the sources of our revenues, it is likely that our revenues and operating results will continue to fluctuate substantially in the future and such fluctuations could result in losses. These losses could have a material adverse effect on our business, financial condition and operating results.
Our net operating revenues may decrease due to changes in client trading volumes which are dependent in large part on commodity prices and commodity price volatility. Our clients’ trading volumes are largely driven by the degree of volatility—the magnitude and frequency of fluctuations—in prices of commodities. Higher volatility increases the need to hedge contractual price risk and creates opportunities for arbitrage trading. Energy and agricultural commodities markets periodically experience significant price volatility. In addition to price volatility, increases in commodity prices generally lead to increased trading volume. As prices of commodities rise, especially energy prices, new participants enter the markets to address their growing risk-management needs or to take advantage of greater trading opportunities. Sustained periods of stability in the prices of commodities or generally lower prices could result in lower trading volumes and, potentially, lower revenues. In addition, lower volatility and lower volumes could lead to lower client balances held on deposit, which in turn may reduce the amount of interest revenue and account fees we collect based on these deposits.
Factors that are particularly likely to affect price volatility and price levels of commodities include supply and demand of commodities, weather conditions affecting certain commodities, national and international economic and geopolitical conditions, including the war in Ukraine and the Israel-Hamas war, the perceived stability of commodities and financial markets, the level and volatility of interest rates and inflation and the financial strength of market participants.
Low short-term interest rates negatively impact our profitability. We earn interest and fee income on client balances left on deposit with us. We have generated significant interest-related revenue in both the current and prior periods and a decline in short-term interest rates or a decline in the amount of client funds on deposit may have a material adverse effect on our profitability in the future.
Short-term interest rates are highly sensitive to factors that are beyond our control and we can provide no assurance as to whether short-term interest rates will decline in the future.
Our financial position and results of operations may be adversely affected by unfavorable economic and financial market conditions as well as catastrophic events and crises such as the recent COVID-19 pandemic, wars and geopolitical tensions.
Economic and financial market conditions, including conditions impacted by public health emergencies, such as the recent COVID-19 pandemic, and geopolitical events such as terrorism, the Israel-Hamas war and escalating tensions in the Middle East, the ongoing war between Ukraine and Russia and related sanctions imposed by the U.S. Department of Treasury and other governing bodies in countries in which we conduct business, have created significant market volatility, uncertainty and economic disruption. While increased volatility is typically a driver of increased client activity and growth in our operating revenues, longer periods of extreme volatility and dislocation in global securities, foreign exchange and commodity markets may affect our ability to establish effective offsetting positions in our principal trading and market-making activities which may expose us to trading losses. In addition, in the event that a global recession or slowdown occurs, this could lead to extended periods of low short-term interest rates and decreased volatility which could adversely affect our profitability. We also may be exposed to increased counterparty default, liquidity and credit risks with respect to our client accounts, which means if our clients experience losses in excess of the funds they have deposited with us, we may not be able to recover the negative client equity from our clients. In these circumstances, we may nonetheless be required to fund positions with counterparties using our own funds, which in turn would reduce our liquidity buffers. If any of these risks materialize, our operating results or ability to conduct our business may be materially adversely affected.
In addition, the recent COVID-19 pandemic led to increased operational and cybersecurity risks and may again do so in the future. These risks have included, among others, increased demand on our information technology resources and systems and the increased risk of phishing and other cybersecurity attacks. In the event of a significant COVID-19 resurgence, any failure to effectively manage these increased operational and cybersecurity demands and risks may materially adversely affect our results of operations and the ability to conduct our business. For a further discussion of cybersecurity risks, see Technology and Cybersecurity Risks below.
To the extent that our business, financial condition, liquidity or results of operations are adversely affected by catastrophic events and crises, including public health emergencies such as the recent COVID-19 pandemic and conflicts such as the wars in Ukraine and Israel, these events may also have the effect of heightening many of the other risks described herein and in any future Quarterly Reports on Form 10-Q or other filings we make with the SEC.
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Business Risks
We face risks associated with our market-making and trading activities. A significant portion of our operating revenues are generated through our market making and trading activities. The success of our market-making and trading activities principally depends on:
•the price volatility of specific financial instruments, currencies and commodities;
•our ability to attract order flow and our competitiveness;
•the skill of our personnel, including the efficiency of our order execution, quality of our client service and the sophistication of our trading technology;
•the availability of sufficient capital, in order to provide enhanced liquidity to our clients; and
•general market conditions.
We conduct our market-making and trading activities predominantly as a principal and therefore hold positions that bear the risk of significant price fluctuations, rapid changes in the liquidity of markets, deterioration in the creditworthiness of our counterparties and other risks that may cause the value of our positions to decline, which would lead to lower operating revenues.
In addition, as a market maker, while we seek to hedge our exposure to market risk relating to the positions we hold, at any given moment, our unhedged exposure subjects us to market risk, including the risk of significant losses. Principal gains and losses resulting from our positions could have a disproportionate effect, positive or negative, on our financial condition and results of operations for any particular reporting period. These risks are increased when we have concentrated positions in securities of a single issuer or issuers in specific countries and markets, which is the case from time-to-time.
Declines in the volume of securities, commodities and derivative transactions and in market liquidity generally may result in lower revenues from market-making and trading activities. Changes in price levels of securities and commodities and other assets, and in interest and foreign exchange rates also may result in reduced trading activity and reduce our revenues from market-making transactions. Changes in price levels also may result in losses in the fair value of securities, commodities and other assets held in inventory. Sudden sharp changes in the fair value of securities, commodities and other assets can result in a number of adverse consequences for our business, including illiquid markets, fair value losses arising from positions held by us, and the failure of buyers and sellers of securities, commodities and other assets to fulfill their settlement obligations. Any change in market volume, price or liquidity or any other of these factors could have a material adverse effect on our business, financial condition and operating results.
We operate as a principal in the OTC derivatives markets which involves significant risks associated with commodity derivative instruments in which we transact. We offer OTC derivatives to our clients in which we act as a principal counterparty. We endeavor to simultaneously offset the underlying risk of the instruments, such as commodity price risk, by establishing corresponding offsetting positions with commodity counterparties, or alternatively we may offset those transactions with similar but not identical positions on an exchange. To the extent that we are unable to simultaneously offset an open OTC derivative position or the offsetting transaction is not effective to fully eliminate the derivative risk, we have market risk exposure on these unmatched transactions. Our exposure varies based on the size of our overall positions, the terms and liquidity of the instruments we offer to our clients and the amount of time the positions remain open.
While we mitigate market risk on OTC derivative positions with strict risk limits, limited holding periods and active risk management, adverse movements in the referenced assets or rates underlying these positions or a downturn or disruption in the markets for these positions could result in a substantial loss. In addition, any principal gains and losses resulting from these positions could have a disproportionate effect, positive or negative, on our financial condition and results of operations for any particular reporting period.
Transactions involving OTC derivative contracts may be adversely affected by fluctuations in the level, volatility, correlation or relationship between market prices, rates, indices and/or other factors. These types of instruments may also suffer from illiquidity in the market or in a related market.
OTC derivative transactions are subject to unique risks. OTC derivative transactions are subject to the risk that, as a result of mismatches or delays in the timing of cash flows due from or to counterparties in OTC derivative transactions or related hedging, trading, collateral or other transactions, we or our counterparty may not have adequate cash available to fund our or its current obligations.
We could incur material losses pursuant to OTC derivative transactions because of inadequacies in or failures of our internal systems and controls for monitoring and quantifying the risk and contractual obligations associated with OTC derivative transactions and related transactions or for detecting human error, systems failure or management failure.
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OTC derivative transactions may generally be modified or terminated only by mutual consent of the parties to any such transaction (other than in certain limited default and other specified situations (e.g., market disruption events)) and subject to agreement on individually negotiated terms. Accordingly, it may not be possible to modify, terminate or offset obligations or exposure to the risk associated with a transaction prior to its scheduled termination date.
In addition, we note that as a result of rules adopted by U.S. and foreign regulators concerning certain financial contracts, including OTC derivatives, entered into with our counterparties that have been designated as global systemically important banking organizations, we may be restricted in our ability to terminate such contracts following the occurrence of certain insolvency-related default events. Transactions with these counterparties, therefore, carry heightened risk in the event that the counterparty defaults on its obligations to us.
We are subject to margin funding requirements on short notice. Our business involves establishment and carrying of substantial open positions for clients on futures exchanges and in the OTC derivatives markets. We are required to post and maintain margin or credit support for these positions. Although we collect margin or other deposits from our clients for these positions, significant adverse price movements can occur which will require us to post margin or other deposits on short notice, whether or not we are able to collect additional margin or credit support from our clients. We maintain borrowing facilities for the purpose of funding margin and credit support and have in place procedures for collecting margin and other deposits from clients on a same-day basis; however, there can be no assurance that these facilities and procedures will provide us with sufficient funds to satisfy funds to satisfy any additional margin or credit support we may be required to post in the event of severe adverse price movements affecting the open positions of our clients. Generally, if a client is unable to meet its margin call, we promptly liquidate the client’s account. However, there can be no assurance that in each case the liquidation of the account will not result in a loss to us or that liquidation will be feasible, given market conditions, size of the account and tenor of the positions.
We are exposed to counterparty credit risk whereby the failure by persons with whom we do business to meet their financial obligations could adversely affect our business, financial condition and results of operations. We are exposed to the risk that our counterparties fail to meet their obligations to us or to other parties, resulting in significant financial loss to us. These risks include:
•failure by our clients and counterparties to fulfill contractual obligations and honor commitments to us;
•failure by clients to deposit additional collateral for their margin loans during periods of significant price declines;
•failure by our clients to meet their margin obligations;
•failure by our hedge counterparties to meet their obligations to us;
•failure by our clearing brokers and banks to adequately discharge their obligations on a timely basis or remain solvent; and
•default by clearing members in the clearing houses in the U.S. and abroad of which we are members which could cause us to absorb shortfalls pro rata with other clearing members.
These and similar events could materially affect our business, financial condition and results of operations. While we have policies, procedures and automated controls in place to identify and manage our credit risk, there can be no assurance that they will effectively mitigate our credit risk exposure. If our policies, procedures and automated controls fail, our business, financial condition and results of operations may be adversely affected.
We are subject to risk of default by financial institutions that hold our funds and our clients’ funds. We have significant deposits of our own funds and our clients' funds with banks and other financial institutions, including liquidity providers. Although we did not have any material deposits with any of the banks affected by the banking crisis (such as the closure of Silicon Valley Bank, receiverships of First Republic Bank and Signature Bank, and acquisition of Credit Suisse Group AG), we could experience losses on our holdings of cash and investments due to failures of other financial institutions and other parties. If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, we might not be able to fully recover the assets we have deposited, or deposited on our customers’ behalf, since in certain cases, we will be among the institution’s unsecured creditors. As a result, our business, financial condition and results of operations could be materially adversely affected by the loss of these funds.
We rely on relationships with introducing brokers for obtaining some of our clients and our business or reputation could be harmed by such introducing broker misconduct or errors. We have relationships with introducing brokers, both domestic and international, who solicit clients for their execution and/or advisory services. Those introducing brokers work to establish execution and/or clearing accounts with our entities for those new client relationships but generally serve as the primary relationship and customer service point for those clients. Many of our relationships with introducing brokers are non-exclusive or may be canceled on relatively short notice. In addition, our introducing brokers have no obligation to provide new client relationships or minimum levels of transaction volume. To the extent any of our competitors offers more attractive compensation terms to one or more of our introducing brokers, we could lose the brokers’ services or be required to increase the
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compensation we pay to retain the brokers. Further, we may agree to set the compensation for one or more introducing brokers at a level where, based on the transaction volume generated by clients directed to us by such brokers, it would have been more economically attractive to seek to acquire the clients directly rather than through the introducing broker. Our failure to maintain our relationships with these introducing brokers or the failure of these introducing brokers to establish and maintain client relationships could result in a loss of revenues, which would adversely affect our business.
We may be held responsible by regulators or third-party plaintiffs for any improper conduct by our introducing brokers, even though we do not control their activities. This may be the case even when the introducing brokers are separately regulated. Many of our introducing brokers operate websites, which they use to advertise our services or direct clients to us and there may be statements on such websites in relation to our services that may not be accurate and may not comply with applicable rules and regulations. Any disciplinary action taken against us relating to the activities of our introducing brokers, or directly against any of our introducing brokers could have a material adverse effect on our reputation, damage our brand name and adversely affect our business, financial condition and operating results.
Products linked to cryptocurrencies could expose us to technology, regulatory and financial risks. We offer derivative products linked to Bitcoin and other cryptocurrencies in certain jurisdictions, and may expand the types of these products offered, the associated types of cryptocurrencies and the jurisdictions in which the products are offered. The distributed ledger technology underlying cryptocurrencies and other similar financial assets is evolving at a rapid pace and may be vulnerable to cyberattacks or have other inherent weaknesses that are not yet apparent. We may be, or may become, exposed to risks related to cryptocurrencies or other financial products that rely on distributed ledger technology through our facilitation of clients’ activities involving such financial products linked to distributed ledger technology.
There is currently no broadly accepted regulatory framework for Bitcoin or other cryptocurrencies, and the regulation of cryptocurrencies is developing and changing rapidly in the U.S. and other countries around the world. For example, in the U.S., it is unclear whether many cryptocurrencies are “securities” under federal securities laws, and the implications for us if any of our products linked to cryptocurrencies are determined to be securities could be significant and adverse. In addition, some market observers have asserted that historical material price fluctuations in many cryptocurrency markets, such as that for Bitcoin, may indicate the propensity for cryptocurrency markets to “bubble,” and if markets for any cryptocurrencies linked to our products suffer severe fluctuations, our clients could experience significant losses and we could lose their business.
The manner in which we account for certain of our precious metals and energy commodities inventory may increase the volatility of our reported earnings. Our net income is subject to volatility due to the manner in which we report our precious metals and energy commodities inventory held by subsidiaries that are not broker-dealers. Our precious metals and energy inventory held in subsidiaries which are not broker-dealers is stated at the lower of cost or net realizable value. We generally mitigate the price risk associated with our commodities inventory through the use of derivatives. We do not elect hedge accounting under U.S. GAAP for this price risk mitigation. In such situations, any unrealized gains in our precious metals and energy inventory in our non-broker-dealer subsidiaries are not recognized under U.S. GAAP, but unrealized gains and losses in related derivative positions are recognized under U.S. GAAP. As a result, our reported earnings from these business segments are subject to greater volatility than the earnings from our other business segments.
Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risk, which could harm our business. Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk, including risks that are unidentified or unanticipated. Our risk management policies and procedures require, among other things, that we record and monitor thousands of transactions each day and we face the significant risk that we are not able to appropriately manage the risk associated with the large volume of transactions.
Our risk management policies and procedures rely on a combination of technology and human controls and supervision that are subject to error and failure. Some of our methods for managing risk are discretionary by nature and are based on internally developed controls and observed historical market behavior, and also involve reliance on standard industry practices. These methods may not adequately prevent losses, particularly as they relate to extreme market movements, which may be significantly greater than historical fluctuations in the market. In addition, our risk management policies and procedures also may not adequately prevent losses due to technical errors if our testing and quality control practices are not effective in preventing software or hardware failures. To the extent that we elect to adjust our risk management policies and procedures to allow for an increase in risk tolerance, we will be exposed to the risk of greater losses. Even if we our risk management procedures are effective in mitigating known risks, new unanticipated risks may arise and we may not be protected against significant financial loss stemming from these unanticipated risks. These new risks may emerge if, among other reasons, regulators adopt new interpretations of existing laws, new laws are adopted or third-parties initiate litigation against us based on new, novel or unanticipated legal theories. Our risk management policies and procedures may not prevent us from experiencing a material adverse effect on our financial condition and results of operations and cash flows.
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Technology and Cybersecurity Risks
Our revenues, operational costs, regulatory compliance and client satisfaction could be adversely affected by the failure of a vendor or other third party to continue providing services to us. We rely on vendors and other third-parties to provide us with services that are essential to our ability to provide clients with our products and services. These services range from core infrastructure, such as utilities, communications and web hosting services, to systems that allow us to execute and process transactions entered into by our clients.
If these vendors or other third-parties suffer operations issues, including as a result of cyber attacks, and they are unable to continue to provide these services to us, we may be exposed to a variety of risks, including loss of revenue if our clients cannot trade with us, increased costs if we are required to employ alternative solutions and reputational harm.
In addition, some of our vendors hold sensitive information on our behalf, including personally identifiable information relating to our clients. If this data were to be compromised, either as a result of a cyber attack or otherwise, we could be in breach of our obligations to our clients, as well as applicable data protections laws, which could materially adversely affect our results of operations and reputation.
Cyber attacks directed at our vendors may also make us more vulnerable to being targeted for cyber attacks ourselves if the bad actors are able to obtain information relating to our company and / or systems.
If one of our vendors experiences a cyberbreach of its own systems or has data that it holds misappropriated, we could be exposed to a number of additional risks, including:
a.heightened risk that we will not be able to comply with applicable regulatory requirements;
b.increased risk that external parties will be able to execute fraudulent transactions using our systems;
c.losses from fraudulent transactions, as well as potential liability for losses suffered by our clients;
d.increased operational costs to remediate the consequences of the external party’s security breach; and
e.reputational harm arising from the perception that our systems may not be secure.
In some cases, operational issues or security breaches affecting our vendors may require us to take steps to protect the integrity of our own operational systems or to safeguard confidential information that we hold, including restricting the ability of our clients to trade or have access to their accounts. These actions could potentially diminish customer satisfaction and confidence in us, materially adversely affecting our results of operations.
For example, on January 31, 2023, we were notified by ION Group, one of our vendors which provides back office trade processing services relating to certain of our listed derivatives businesses, that it had experienced a cybersecurity incident, which rendered certain of its services inaccessible to us and its other clients. As a result of the incident, we imposed restrictions on clients of our UK subsidiary relating to the trading of listed derivatives. During February 2023, these services were restored and the restrictions on clients’ activities were lifted.
Furthermore, the widespread and expanding interconnectivity among financial institutions, clearing banks, CCPs, payment processors, financial technology companies, securities exchanges, clearing houses and other financial market infrastructures increases the risk that the disruption of an operational system involving one institution or entity, including due to a cyber attack, may cause industry-wide operational disruptions that could materially affect our ability to conduct business.
Internal or third-party computer and communications systems failures, capacity constraints and breaches of security could increase our operating costs and/or credit losses, decrease net operating revenues and cause us to lose clients. We are heavily dependent on the capacity and reliability of the computer and communications systems supporting our operations, whether owned and operated internally or by vendors or third parties, including those used for execution and clearance of our clients’ trades and our market-making activities. We receive and process a large portion of our trade orders through electronic means, such as through public and private communications networks. These computer and communications systems and networks are subject to performance degradation or failure due to any number of reasons, including loss of power, acts of war or terrorism, human error, natural disasters, fire, sabotage, hardware or software malfunctions or defects, computer viruses, cyber attacks, intentional acts of vandalism, client error or misuse, lack of proper maintenance or monitoring and similar events. While we currently maintain business continuity and disaster recovery plans (the “BCPs”), which are intended to minimize service interruptions and secure data integrity, our BCPs may not be sufficient or work effectively during an emergency.
Similarly, although some contracts with our third-party providers, such as our hosting facility providers, require adequate disaster recovery or business continuity capabilities, we cannot be certain that these will be adequate or implemented properly. Our disaster recovery and business continuity plans are heavily reliant on the availability of the internet and mobile phone technology, so any disruption of those systems would likely affect our ability to recover promptly from a crisis situation. If we are unable to execute our disaster recovery and business continuity plans, or if our plans prove insufficient for a particular situation or take longer than expected to implement in a crisis situation, our business, financial condition and results of
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operations could be materially adversely affected, and our business interruption insurance may not adequately compensate us for losses that may occur.
Our inability to avoid or adequately address the failure of our key computer and communication systems exposes us to significant risks, including:
•unanticipated disruptions in service to our clients;
•slower response times, delays in trade execution and failed settlement of trades;
•incomplete, untimely or inaccurate accounting, recording, reporting or processing of trades;
•financial losses; and
•litigation or other client claims and regulatory sanctions.
We hold a large amount of personally identifiable information relating to our clients and other counterparties, which exposes us to significant regulatory and financial risks if such information is not properly safeguarded. In connection with our business, we collect and retain personally identifiable information of our clients. The continued occurrence of high-profile data breaches provides evidence of the serious threats to information security in general and as it relates to our business. Our clients expect that we will adequately protect their personal information, and the regulatory environment surrounding information security and privacy is rapidly evolving and increasingly demanding. Protecting against security breaches, including cyber-security attacks, is an increasing challenge, and penetrated or compromised data systems or the intentional or inadvertent release or disclosure of data has in the past, and may in the future, result in theft, loss or fraudulent or unlawful use of client or company data. It is possible that our security controls over personally identifiable information, our training of employees on data security and other practices we follow may not prevent the improper disclosure of personally identifiable information that we collect, store and manage.
We are exposed to significant risks relating to cybersecurity attacks against our trading platforms, internal databases and other technology systems. Cybersecurity attacks across industries, including ours, are increasing in sophistication and frequency and may range from uncoordinated individual attempts to measures targeted specifically at us. These attacks include but are not limited to, malicious software or viruses, attempts to gain unauthorized access to, or otherwise disrupt, our information systems, attempts to gain unauthorized access to proprietary information, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. Cybersecurity failures may be caused by employee error or malfeasance, system errors or vulnerabilities, including vulnerabilities of our vendors, suppliers, and their products. We have been subject to cybersecurity attacks in the past, including breaches of our information technology systems, and may experience them in the future, potentially with more frequency or sophistication. Although we maintain cyber risk insurance, this insurance may not be sufficient to cover all of our losses from any future breaches of our systems.
System failures, inadvertent disclosure of client personal information and/or cybersecurity breaches expose us to financial losses, regulatory fines or sanctions and third-party litigation. The degradation or failure of the communications and computer systems on which we rely, due to internal system issues, vendor or other third party issues, cybersecurity attacks or for other reasons, or the significant theft, loss or fraudulent use of client information under any circumstances, may lead to financial losses, litigation or arbitration claims filed by or on behalf of our clients, and regulatory investigations and sanctions against us. These events could also have a negative effect on our reputation, which in turn could cause us to lose existing clients to our competitors or make it more difficult for us to attract new clients in the future.
Rapid market or technological changes may render our technology obsolete or decrease the attractiveness of our products and services to our clients. We must continue to enhance and improve our electronic trading platforms. The financial services industry is characterized by significant structural changes, increasingly complex systems and infrastructures, changes in clients’ needs and preferences and new business models. If new industry standards and practices emerge and our competitors release new technology before us, our existing technology, systems and electronic trading platforms may become obsolete or our existing business may be harmed. Our future success will depend on our ability to:
•enhance our existing products and services;
•develop and/or license new products and technologies that address the increasingly sophisticated and varied needs of our clients and prospective clients;
•continue to attract highly-skilled technology personnel; and
•respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis.
Developing our electronic trading platforms and other technology entails significant technical and business risks. We may use new technologies ineffectively or we may fail to adapt our electronic trading platforms, information databases and network infrastructure to client requirements or emerging industry standards. If we face material delays in introducing new services, products and enhancements, our clients may forego the use of our platforms and use those of our competitors.
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Further, the adoption of new internet, networking, cloud, telecommunications or blockchain technologies may require us to devote substantial resources to modify and adapt our services. We cannot assure that we will be able to successfully implement new technologies or adapt our proprietary technology and transaction-processing systems to client requirements or emerging industry standards. We cannot assure that we will be able to respond in a timely manner to changing market conditions or client requirements.
Debt Financing and Indebtedness Risks
The success of our business depends on us having access to significant liquidity. Our business requires substantial cash to support our operating activities, including establishing and carrying substantial open positions for clients on futures exchanges and in the OTC derivatives markets by posting and maintaining margin or credit support for these positions. Although we collect margin or other deposits from our clients for these positions, significant adverse price movements can occur which will require us to post margin or other deposits on short notice, whether or not we are able to collect additional margin or credit support from our clients. We have systems in place to collect margin and other deposits from clients on a same-day basis, however, there can be no assurance that these facilities and systems will be enable us to obtain additional cash on a timely basis. As such, the Company is highly dependent on its lines of credit and other financing facilities in order to fund margin calls and other operating activities and the loss of access to these sources of financing could materially adversely affect our results of operations, financial condition and cash flows.
In addition, tightening of the credit markets could limit our ability to obtain external financing to fund our operations and capital expenditures, if and when needed. For example, Signature Bank was a lender under certain of our facilities, and although we did not experience any adverse impact upon the receivership of Signature Bank, we could experience reduced access to liquidity due to failures of other financial institutions and other parties. If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could substantially and negatively impact our financial condition and ability to do business.
Our significant level of indebtedness could adversely affect our business, financial condition and results of operations. As of September 30, 2023, our total consolidated indebtedness was $683.1 million, and we may increase our indebtedness in the future as we continue to expand our business. The level of our indebtedness could have material adverse effects on our business, financial condition and results of operations, including:
•requiring that an increasing portion of our cash flow from operations be used for the payment of interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, capital expenditures, acquisitions, investments and general corporate requirements;
•limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, investments and general corporate requirements:
•limiting our flexibility in planning for, or reacting to, changes in the economy, the markets, regulatory requirements, our operations or business;
•increasing the risk of a future downgrade of our credit ratings, which could increase future debt costs; and restricting our ability to borrow additional funds or refinance existing debt as needed or take advantage of business opportunities as they arise.
We may incur additional indebtedness in the future, including secured indebtedness. If new indebtedness is added to our current indebtedness levels, the related risks that we now face could increase materially.
As of September 30, 2023, $341.0 million of our borrowings are subject to variable interest rates and as such in periods of rising interest rates, our cost of funds will increase, which could reduce our net income.
Committed credit facilities currently available to us might not be renewed. As of September 30, 2023, we had five committed credit facilities under which we could borrow up to $1,200.0 million, consisting of:
•a $500.0 million facility for general working capital requirements, committed until April 21, 2026;
•a $190.0 million facility for short-term funding of margin to commodity exchanges, committed until October 29, 2024;
•a $400.0 million committed facility for financing commodity financing arrangements and commodity repurchase agreements, committed until July 28, 2024;
•a $100.0 million facility for short-term funding of margin to commodity exchanges, committed until October 12, 2024; and
•a $10.0 million facility for general working capital requirements, committed until September 6, 2024;
It is possible that these facilities might not be renewed at the end of their commitment periods and that we will be unable to replace them with other facilities on terms favorable to us or at all. If our credit facilities are unavailable or are insufficient to
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support future levels of business activity, our business, financial condition and results of operations may be materially adversely affected. In addition, in such circumstances, we may need to raise additional debt or equity financing on terms that are unattractive or dilutive to our current shareholders. Moreover, if we cannot raise additional funds on acceptable terms, we may not be able to develop or enhance our business, take advantage of future opportunities or respond to competitive pressure or unanticipated requirements, leading to reduced profitability.
The agreements governing our notes and other debt contain financial covenants that impose restrictions on our business. The indenture governing our 8.625% Senior Secured Notes due 2025 and the agreements governing our above-mentioned committed credit facilities impose significant operating and financial restrictions and limit our ability and that of our restricted subsidiaries to incur and guarantee additional indebtedness, pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock and prepay, redeem or repurchase certain debt, among other restrictions.
Our failure to comply with these restrictive covenants, as well as others contained in any future debt instruments entered into from time to time, could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations and result in our being required to repay these borrowings before their maturity. Our inability to generate sufficient cash flow to satisfy our debt obligations, to obtain additional debt or to refinance our obligations on commercially reasonable terms would have a material adverse effect on our business, financial condition and results of operations.
Global Regulatory Risks
The scope and complexity of the regulation to which we are subject creates significant risks for us. The securities and derivatives industries are subject to extensive regulation under federal, state and foreign laws. In addition, the SEC, the CFTC, FINRA, the MSRB, the FCA, the Financial Services Authority, the Cyprus Securities and Exchange Commission, the Investment Industry Regulatory Organization of Canada, the U.S. Office of Special Counsel, the Monetary Authority of Singapore, the Australian Securities and Investments Commission, the Cayman Islands Monetary Authority, the NFA, the CME Group, Inc. and other self-regulatory organizations (commonly referred to as SROs), state securities commissions, and foreign securities regulators require compliance with their respective rules and regulations.
These regulations govern a broad and diverse range of our activities, including, without limitation, risk management, disclosures to clients, reporting requirements, client identification and anti-money laundering requirements, safeguarding client assets and personal information and the conduct of our directors, officers and employees.
Failure to comply with any of these laws, rules or regulations could result in material adverse effects on or business, results of operations and financial condition, including as a result of regulatory investigations and enforcement proceedings, civil litigation, fines and/or other settlement payments. In addition, changes in existing rules or regulations, including the interpretation thereof, or the adoption of new rules or regulations, could subject us to increased cost and risk of regulatory investigation or civil litigation, on or more of which could have a material adverse effect on our business, financial condition and results of operations.
The cost of complying with our regulatory requirements is significant and could increase materially in the future.
We have incurred and expect to continue to incur significant costs to comply with our regulatory requirements, including with respect to the development, operation and continued enhancement of our trading platforms and technology solutions relating to trade execution, trade reporting, trade surveillance and transaction monitoring, record keeping and data reporting. New regulations, including amendments of existing rules, could result in material increases in operating costs in order to comply with additional regulatory requirements.
We are exposed to significant risk from civil litigation and regulatory enforcement actions against us. As a result of the broad scope of our highly regulated business activities and our large and diverse client population, we are a party to a significant number of lawsuits and regulatory investigations and proceedings, which are costly and time consuming to defend or address and expose us to risk of loss and fines and penalties. Moreover, the amounts involved in the trades we execute, together with the potential for rapid price movements in the products we offer, can result in potentially large damage claims in any litigation that arises in connection with such trades.
In addition, the volume of claims and the amount of damages and fines claimed in litigation and regulatory proceedings against financial services firms has been increasing and may continue to increase. The risks relating to litigation and regulatory investigations and enforcement actions will also increase as our business expands.
For a further discussion of litigation risks, see Item 3—Legal Proceedings below and Note 13 - Commitments and Contingencies in the Consolidated Financial Statements.
Certain of our subsidiaries are required to maintain significant levels of net capital and if our subsidiaries fail to meet these requirements, we face suspension, expulsion or limitation on our product lines. Our regulated subsidiaries are subject to a number of requirements to maintain specific levels of net capital. Failure to maintain the required net capital may subject our
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subsidiaries to suspension or revocation of their license or registration or expulsion from regulatory bodies. Any of these developments could have a material adverse effect on our business, results of operations and financial condition.
In addition to these net capital requirements, certain of our subsidiaries are subject to the deposit and/or collateral requirements of the clearing houses and exchanges in which such subsidiaries participate. These requirements may fluctuate significantly from time to time based upon the nature and size of client trading activity. Failure to meet such requirements could result in our inability to continue to participate in such clearinghouses and exchanges, which could have a material adverse effect on our business, financial condition and results of operation.
Changes in existing net capital rules or the issuance of new rules could restrict our operations or limit our ability to issue dividends or repay debt. Our business depends on the use of capital, most of which is generated and held by our operating subsidiaries. If there are changes to existing net capital rules, or new rules are issued, that require us to hold additional capital at our operating subsidiaries, we may be unable to issue dividends from our subsidiaries to fund our operations or repay our debt, which could have a material adverse effect on our business, financial condition and results of operation.
Rapidly evolving regulations regarding data privacy could increase our costs and adversely affect our business. Our business is subject to rules and regulations adopted by state, federal and foreign governments, and regulatory organizations governing data privacy, including, but not limited to for example, the California Consumer Privacy Act (“CCPA”) and the European General Data Protection Regulation (“GDPR”). Additional states, as well as foreign jurisdictions, have enacted or are proposing similar data protection regimes, resulting in a rapidly evolving landscape governing how we collect, use, transfers and protect personal data. These new regulations, as well as changes to existing rules, could result in material increases in operating costs and impact the manner in which our products and services can be offered to our clients. Any failure to comply with the CCPA, GDPR or other applicable data protection regulations could subject us to risk of regulatory investigation, penalties, civil litigation and reputational harm, and could have a material adverse effect on our business, financial condition and results of operation.
International Operations Risks
Our international operations involve special challenges that we may not be able to meet, which could adversely affect our business, financial condition and results of operation. We engage in a significant amount of business with clients in markets outside the United States. We face certain additional risks that are inherent in doing business in international markets, particularly in the regulated industries in which we participate. These risks include an inability to manage and coordinate the various regulatory requirements of multiple jurisdictions that are constantly evolving and are also subject to unexpected change, difficulties of debt collection and enforcement of contractual rights in foreign jurisdictions and reduced protection for intellectual property rights.
Fluctuations in currency exchange rates could negatively impact our earnings. A significant portion of our international business is conducted in currencies other than the U.S. dollar, and changes in foreign exchange rates relative to the U.S. dollar can therefore affect the value of our non‑U.S. dollar net assets, revenues and expenses. Although we closely monitor potential exposures as a result of these fluctuations in currencies and adopt strategies designed to reduce the impact of these fluctuations on our financial results, there can be no assurance that we will be successful in managing our foreign exchange risk and potential movements in the U.S. dollar against other currencies could adversely affect our results of operations. Our exposure to currency exchange rate fluctuations will grow if the relative contribution of our operations outside the U.S. increases. Any material fluctuations in currencies could have a material effect on our financial condition, results of operations and cash flows.
Our international operations are subject to the political, legal and economic risks associated with politically unstable and less developed regions of the world, including the risk of war and other international conflicts and actions by governmental authorities, insurgent groups, terrorists and others. Our international operations are subject to specific risks that are more likely to arise in politically unstable and less developed regions of the world. We may conduct business in countries that are the subject of actual or threatened war, terrorist activity, outbreaks of pandemic or contagious diseases, such as COVID-19, political instability, civil strife and other geopolitical uncertainty, economic and financial instability, highly inflationary environment, unexpected changes in regulatory requirements, tariffs and other trade barriers, exchange rate fluctuations, applicable currency controls, the imposition of restrictions on currency conversion or the transfer of funds and difficulties in staffing and managing foreign operations, including reliance on local experts. As a result of these and other factors, the currencies of these countries may be unstable. Future instability in such currencies or the imposition of governmental or regulatory restrictions on such currencies or on business in such countries could impede our foreign business.
As we operate or otherwise extend our services in certain jurisdictions without local registration, licensing or authorization, we may be subject to possible enforcement action and sanction for our operations in such jurisdictions if our operations are determined to have violated regulations in those jurisdictions. Further, we may be required to cease operations in one or more of the countries in which we operate without registration, licensing or authorization, or our growth may be limited by newly imposed regulatory or other restrictions. A portion of our trading volume is attributable to clients in jurisdictions in
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which we or our white label partners are not currently licensed or authorized by the local government or applicable self-regulatory organization. This includes jurisdictions, such as China, from which we derive revenue and profit, and in which the local government has not adopted specific regulations governing the trading of foreign exchange and CFD products of the types we offer to clients, and jurisdictions in which we operate or otherwise extend our services in reliance on exemptions from the regulatory regime. We determine the nature and extent of services we can offer and the manner in which we conduct our business in the various jurisdictions in which we serve clients based on a variety of factors, including legal advice received from local counsel, our review of applicable U.S. and local laws and regulations and, in some cases, our discussions with local regulators. In cases in which we operate in jurisdictions based on local legal advice and/or cross border in a manner that we believe does not require us to be regulated in a particular jurisdiction, we are exposed to the risk that our legal, regulatory and other analysis is subsequently determined by a local regulatory agency or other authority to be incorrect and that we have not been in compliance with local laws or regulations, including local licensing or authorization requirements, and to the risk that the regulatory environment in a jurisdiction may change, including in a circumstance where laws or regulations or licensing or authorization requirements that previously were not enforced become subject to enforcement.
In such jurisdictions in which we are not licensed or authorized, we may be subject to a variety of restrictions regarding the manner in which we conduct our business or serve clients, including restrictions on:
•our sales and marketing activities;
•the use of a website specifically targeted to potential clients in a particular country;
•our ability to have a physical presence in a particular country; or
•the types of services we may offer clients physically present in each country.
These restrictions may have a material adverse effect on our results of operations and financial condition and/or may limit our ability to grow or continue to operate our business in any such jurisdiction or may result in increased overhead costs or degradation in our services in that jurisdiction. Consequently, we cannot assure you that our operations in jurisdictions where we are not licensed or authorized will continue uninterrupted or that our international expansion plans will be achieved.
We may be subject to possible enforcement action and penalties if we are determined to have previously offered, or currently offer, our services in violation of applicable laws and regulations in any of the markets in which we serve clients. In any such case, we may be required to cease the conduct of our business with clients in one or more jurisdictions. We may also determine that compliance with the laws or licensing, authorization or other regulatory requirements for continuing the business in one or more jurisdictions are too onerous to justify making the necessary changes. In addition, any such event could negatively impact our relationship with the regulators or self-regulatory organizations in the jurisdictions where we are subject to regulation.
Our operations are required to comply with specific anti-corruption and record-keeping laws and regulations applicable to companies conducting business internationally, and if we violate these laws and regulations, it could adversely affect our business and subject us to broader liability. Our international business operations are subject to various anti-corruption laws and regulations, including restrictions imposed by the Foreign Corrupt Practices Act (the “FCPA”) and trade sanctions administered by OFAC. The FCPA is intended to prohibit bribery of foreign officials and requires companies whose securities are listed in the U.S. to keep books and records that accurately and fairly reflect those companies’ transactions and to devise and maintain an adequate system of internal accounting controls. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against designated foreign states, organizations and individuals. Though we have policies in place designed to comply with applicable OFAC sanctions, rules and regulations as well as the FCPA and equivalent laws and rules of other jurisdictions, including the UK Bribery Act 2010, there can be no assurance that, in the future, the operations of our businesses will not violate these laws and regulations, and we could be exposed to claims for damages, financial penalties, reputational harm, incarceration of employees and restrictions on our operations and cash flows.
The U.K.’s withdrawal from the European Union could have an adverse effect on our business and financial results. On January 31, 2020, the U.K. withdrew from membership in the E.U., which exit, referred to as Brexit, has caused disruptions to, and created uncertainty surrounding, our business in the U.K. and E.U., including the elimination of our historical right to serve clients in the E.U. from the U.K. on a passport basis and changes to U.K. and E.U. immigration policy, limiting our access to and ability to compete for and hire, skilled employees in both the U.K. and the E.U. Brexit could also impact our existing and future relationships with suppliers and employees in the U.K. and E.U. by disrupting the free movement of goods, services, and people between the U.K., the E.U., and elsewhere. As a result, Brexit could have an adverse effect on our future business, financial results and operations.
The long-term impact of the U.K.’s revised agreement with the E.U. and others is unclear. Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate. Further, uncertainty around these and related issues could lead to adverse effects on the economy of the U.K. and the other economies in which we operate. There can be no assurance that any or all of these events will not have a material adverse effect on our business, financial results and operations.
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Competition Risk
We are subject to intense competition. We derive a significant portion of our revenues from market-making and trading activities involving securities, commodities and foreign exchange. The market for these services, particularly market-making services through electronic platforms, is rapidly evolving and intensely competitive. We expect competition to continue and increase in the future. We compete primarily with wholesale, national and regional broker-dealers and FCMs, as well as electronic communications networks and retail brokers. We compete primarily on the basis of our expertise and quality of service.
We also derive a significant portion of our revenues from commodities risk management services. The commodity risk management industry is very competitive and we expect competition to continue to intensify in the future. Our primary competitors in this industry include both large, diversified financial institutions and commodity-oriented businesses, smaller firms that focus on specific products or regional markets and independent FCMs.
A number of our competitors have significantly greater financial, technical, marketing and other resources than we have. Some of them:
•offer alternative forms of financial intermediation as a result of superior technology and greater availability of information;
•offer a wider range of services and products than we offer;
•are larger and better capitalized;
•have greater name recognition; and
•have more extensive client bases.
These competitors may be able to respond more quickly to new or evolving opportunities and client requirements. They may also be able to undertake more extensive promotional activities and offer more attractive terms to clients.
Alternatively, some of our competitors are smaller, subject to lower capital requirements, and may be able to adopt and implement emerging technologies more quickly.
Recent advances in computing and communications technology are substantially changing the means by which market-making and brokerage services are delivered, including more direct access on-line to a wide variety of services and information. This has created demand for more sophisticated levels of client service. Providing these services may entail considerable cost without an offsetting increase in revenues. In addition, current and potential competitors have established or may establish cooperative relationships or may consolidate to enhance their services and products. New competitors or alliances among competitors may emerge and they may acquire significant market share.
We cannot assure you that we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not have a material adverse effect on our business, results of operation and financial condition.
Organizational Risks
Our growth has depended significantly on acquisitions. A large proportion of our historical growth has been achieved through acquisitions of complementary businesses, technologies or services. Our operating revenues grew from $1,106.1 million in fiscal 2019 to $2,914.1 million in fiscal 2023 principally as a result of several acquisitions. We cannot provide any assurances that we will be able to engage in additional suitable acquisitions on attractive terms or at all, or that we would be able to obtain financing for future transactions. If we are not able enter into additional transactions, our growth may be adversely affected.
There are numerous significant risks associated with acquisitions and our failure to adequately manage these risks could lead to financial loss and a failure to realize the benefits of the transactions. There are a number of significant challenges that need to be overcome in order to realize the benefits of acquisitions, including:
•integrating the management teams, strategies, cultures, technologies and operations of the acquired companies;
•retaining and assimilating the key personnel of acquired companies;
•retaining existing clients of the acquired companies;
•creating uniform standards, controls, procedures, policies and information systems; and
•achieving revenue growth.
If these risks are not appropriately managed, we may fail to realize the anticipated benefits of such acquisitions or incur unanticipated liabilities, any of which could materially affect our business, financial condition and operating results. In addition, in connection with our acquisitions, we may be required to issue common stock, which would dilute our existing shareholders, or incur additional debt, which would increase our operating costs and potentially strain our liquidity. Moreover, acquisitions
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could lead to increases in amortization expenses, impairments of goodwill and purchased long-lived assets or restructuring charges, any of which could materially harm our financial condition or results.
Acquisitions give rise to unforeseen issues. Acquisitions involve considerable risk, including the potential disruption of each company’s ongoing business and the distraction of their respective management teams, unanticipated expenses and unforeseen liabilities. Our failure to address these risks or other problems encountered in connection with acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions or incur unanticipated liabilities, any of which could adversely affect our business, financial condition and operating results.
From time to time, we may enter into negotiations for acquisitions or investments that are not ultimately consummated. Such negotiations could result in significant diversion of management time, as well as out-of-pocket costs.
The consideration paid in connection with an investment or acquisition also affects our financial results. If we were to proceed with one or more significant acquisitions in which the consideration included cash, we could be required to use a substantial portion of our available cash to consummate any acquisition. To the extent we issue shares of capital stock or other rights to purchase capital stock, including options or other rights, existing stockholders may be diluted and earnings per share may decrease. In addition, acquisitions may result in the incurrence of debt, large non-recurring write-offs, such as of acquired in-process research and development costs, and restructuring charges.
We depend on our ability to attract and retain key personnel. Competition for key personnel and other highly qualified management, sales, trading, compliance and technical personnel is significant. It is possible that we will be unable to retain our key personnel and to attract, assimilate or retain other highly qualified personnel in the future. The loss of the services of any of our key personnel or the inability to identify, hire, train and retain other qualified personnel in the future could have a material adverse effect on our business, financial condition and operating results.
From time to time, other companies in the financial sector have experienced losses of sales and trading professionals. The level of competition to attract these professionals is intense. It is possible that we will lose professionals due to increased competition or other factors in the future. The loss of a sales and trading professional, particularly a senior professional with broad industry expertise, could have a material adverse effect on our business, financial condition and operating results.
Certain provisions of Delaware law and our charter may adversely affect the rights of holders of our common stock and make a takeover of us more difficult. We are organized under the laws of the State of Delaware. Certain provisions of Delaware law may have the effect of delaying or preventing a change in control. In addition, certain provisions of our certificate of incorporation may have anti-takeover effects and may delay, defer or prevent a takeover attempt that a stockholder might consider in its best interest. Our certificate of incorporation authorizes the board to determine the terms of our unissued series of preferred stock and to fix the number of shares of any series of preferred stock without any vote or action by our stockholders. As a result, the board can authorize and issue shares of preferred stock with voting or conversion rights that could adversely affect the voting or other rights of holders of our common stock. In addition, the issuance of preferred stock may have the effect of delaying or preventing a change of control, because the rights given to the holders of a series of preferred stock may prohibit a merger, reorganization, sale, liquidation or other extraordinary corporate transaction.
Item 1B. Unresolved Staff Comments
We have received no written comments regarding our periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of our fiscal year 2023 that remain unresolved.
Item 2. Properties
We have offices, operations and data centers located around the world. Our corporate headquarters is located at 230 Park Avenue, New York, New York. We have significant operations located in London, Chicago, and Kansas City, along with many other locations globally. We believe that our facilities are adequate to meet our anticipated requirements for current lines of business. Most of our offices support multiple or all of our segments. All our offices and other principal business properties are leased, except for a portion of our space in Buenos Aires, which we own.
Item 3. Legal Proceedings
For information regarding certain legal proceedings to which we are currently a party, see Note 13, “Commitments and Contingencies - Legal and Regulatory Proceedings” in the notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is listed on The NASDAQ Stock Market LLC (“NASDAQ”) under the symbol ‘SNEX’. Our common stock trades on the NASDAQ Global Select Market.
Holders of Record
As of September 30, 2023, there were 553 registered holders of record of our common stock. This figure excludes the beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.
Dividends
We have never declared any cash dividends on our common stock, and do not currently have any plans to pay dividends on our common stock. The payment of cash dividends in the future is subject to the discretion of our Board of Directors and will depend on our earnings, financial condition, capital requirements, contractual restrictions and other relevant factors. Our credit agreements currently prohibit the payment of cash dividends by us.
Recent Sales of Unregistered Securities
We did not have any sales of unregistered equity securities for the fiscal years ended September 30, 2023, 2022 and 2021.
Issuer Purchases of Equity Securities
On August 30, 2023, our Board of Directors authorized the repurchase of up to 1.0 million shares of our outstanding common stock from time to time in open market purchases and private transactions, commencing on October 1, 2023 and ending on September 30, 2024. This authorization replaced the previous authorization to purchase up to 1.0 million shares during fiscal 2023. The repurchases are subject to the discretion of the senior management team to implement our stock repurchase plan, and subject to market conditions and as permitted by securities laws and other legal, regulatory and contractual requirements and covenants.
Our common stock repurchase program activity for the three months ended September 30, 2023 was as follows:

Period | Total Number of Shares Purchased (1) |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Program |  | Maximum Number of Shares Remaining to be Purchased Under the Program
July 1, 2023 to July 31, 2023 | 219 |  |  | $ | 91.15 |  |  | — |  |  | 1,000,000 |
August 1, 2023 to August 31, 2023 | — |  |  | — |  |  | — |  |  | 1,000,000 |
September 1, 2023 to September 30, 2023 | — |  |  | — |  |  | — |  |  | 1,000,000 |
Total | 219 |  |  | $ | 91.15 |  |  | — |  |  |

(1) Includes 219 shares repurchased to satisfy withholding tax obligations due upon the vesting of stock-based awards.
Securities Authorized for Issuance under Equity Compensation Plans
Information relating to compensation plans under which our equity securities are authorized for issuance is set forth in Part III, Item 12 of this Annual Report on Form 10-K.
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Stock Performance Graph
The following graph compares the cumulative total return on the Company’s common stock for the most recent five years with the cumulative return on the S&P 500 Index and the NYSE/Arca Securities Broker/Dealer Index, assuming an initial investment of $100 on September 30, 2018, with all dividends reinvested. The stock price performance is not intended to forecast or be indicative of future performance.
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Throughout this document, unless the context otherwise requires, the terms “Company”, “we”, “us” and “our” refer to StoneX Group Inc. and its consolidated subsidiaries.
The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the control of the Company, including adverse changes in economic, political and market conditions, losses from our market-making and trading activities arising from counterparty failures and changes in market conditions, the loss of key personnel, the impact of increasing competition, the impact of changes in government regulation, the possibility of liabilities arising from violations of foreign, United States (“U.S.”) federal and U.S. state securities laws, the impact of changes in technology in the securities and commodities trading industries and the potential impact of public health emergencies, such as the recent COVID-19 pandemic on our business, operations, results of operations, financial condition, workforce or the operations or decisions of our clients, suppliers or business customers. Although we believe that our forward-looking statements are based upon reasonable assumptions regarding our business and future market conditions, there can be no assurances that our actual results will not differ materially from any results expressed or implied by our forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. We caution readers that any forward-looking statements are not guarantees of future performance.
Overview
We operate a global financial services network that connects companies, organizations, traders and investors to the global market ecosystem through a unique blend of digital platforms, end-to-end clearing and execution services, high touch service and deep expertise. We strive to be the one trusted partner to our clients, providing our network, products and services to allow them to pursue trading opportunities, manage their market risks, make investments and improve their business performance. Our businesses are supported by our global infrastructure of regulated operating subsidiaries, our advanced technology platforms and our team of more than 4,000 employees as of September 30, 2023. We believe our client-first approach differentiates us from large banking institutions, engenders trust and has enabled us to establish leadership positions in a number of complex fields in financial markets around the world. For additional information, see Overview of Business and Strategy within Item 1. Business section of this Annual Report on Form 10-K.
We report our operating segments based primarily on the nature of the clients we serve (commercial, institutional, and retail), and a fourth operating segment, our global payments business. This structure allows us to efficiently serve clients in more than 180 countries and manage our large global footprint. See Segment Information for a listing of business activities performed within our reportable segments.
StoneX Group Inc. and its trade name "StoneX" carry forward the foundation established by Saul Stone in 1924 to today's modern financial services firm. Today, we provide an institutional-grade financial services ecosystem, connecting our clients to 40 derivatives exchanges, 180 foreign exchange markets, most global securities exchanges and over 18,000 over-the-counter markets via our networks of highly integrated digital platforms and experienced professionals. Our platform delivers support throughout the entire lifecycle of a transaction, from consulting and boots-on-the-ground intelligence, to efficient execution, to post-trade clearing, custody and settlement.
Current Trends Affecting the Financial Services Industry
Economic and financial market conditions, including conditions impacted by public health emergencies, such as the recent COVID-19 pandemic, the recent banking crisis (such as the closure of Silicon Valley Bank, receiverships of First Republic Bank and Signature Bank, and acquisition of Credit Suisse Group AG), and geopolitical events such as terrorism, the Israel-Hamas war and escalating tensions in the Middle East, the ongoing war between Ukraine and Russia and related sanctions imposed by the U.S. Department of Treasury and other governing bodies in countries in which we conduct business, have created significant market volatility, uncertainty and economic disruption. While increased volatility is typically a driver of increased client activity and growth in our operating revenues, longer periods of extreme volatility and dislocation in global securities, foreign exchange and commodity markets may affect our ability to establish effective offsetting positions in our principal trading and market-making activities which may expose us to trading losses. In addition, in the event that a global recession or slowdown occurs, this could lead to extended periods of low short-term interest rates and decreased volatility which could adversely affect our profitability. We also may be exposed to increased counterparty default, liquidity and credit risks with respect to our client accounts, which means if our clients experience losses in excess of the funds they have deposited with us, we may not be able to recover the negative balance from our clients. In these circumstances, we may nonetheless be required to fund positions with counterparties using our own funds, which in turn would reduce our liquidity buffers. If any of these risks materialize, our operating results or ability to conduct our business may be materially adversely affected.
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In addition, the recent COVID-19 pandemic led to increased operational and cybersecurity risks and it or similar events may again do so in the future. These risks have included, among others, increased demand on our information technology resources and systems and the increased risk of phishing and other cybersecurity attacks. In the event of a significant COVID-19 resurgence or the emergence of a similar event in the future, any failure to effectively manage these increased operational and cybersecurity demands and risks may materially adversely affect our results of operations and the ability to conduct our business. For a further discussion of cybersecurity risks, see Technology and Cybersecurity Risks below.
See “Risk Factors” in Part I, Item 1A in this Form 10-K for a discussion of other risks that may affect our financial condition and results of operations.
Executive Summary
Our fiscal 2023 was marked by the effects of heightened inflationary pressures, the tightening of monetary policy in most major markets around the world and the resulting significant increase in short term interest rates. Geopolitical uncertainty remained throughout the year, however market volatility has generally declined since the Russian invasion of the Ukraine in the prior year. Against this backdrop, we experienced a tightening of spreads across all of our products with the exception of global payments. However, through continued client engagement and onboarding, as well as expansion of our product offering we grew transactional volumes in all products, with the exception of FX/CFD contracts.
In fiscal 2023 we continued to experience strong growth in our listed derivative client balances, which increased $1,441 million to $7,137 million, while average money-market/FDIC sweep balances decreased $446 million to $1,338 million. The overall increase in client balances, combined with the significant increase in short term interest rates compared to the prior year, led to an increase in interest and fee income on client balances of $295.4 million, or 331%, to $384.7 million in the fiscal year ended September 30, 2023.
Operating revenues increased $806.7 million, or 38%, to $2,914.1 million in the fiscal year ended September 30, 2023 compared to $2,107.4 million in the fiscal year ended September 30, 2022, led by our Commercial and Institutional segments which added $170.6 million and $681.8 million, respectively, compared to the fiscal year ended September 30, 2022. Our Global Payments segments added $40.6 million, while our Retail segment experienced a $93.7 million decline, compared to the fiscal year ended September 30, 2022.
Overall segment income increased $87.8 million, or 13%, compared to the fiscal year ended September 30, 2022. The growth in segment income was led by our Commercial segment which increased $102.4 million, or 36% compared to the fiscal year ended September 30, 2022. Institutional and Global Payments segment income increased $43.3 million and $11.7 million, respectively, compared to the fiscal year ended September 30, 2022. This growth was partially tempered by a $69.6 million decline in Retail segment income compared to the fiscal year ended September 30, 2022.
The significant increase in short term interest rates during fiscal 2023 drove an increase in interest expense paid on client balances of $131.5 million, to $148.9 million, compared to the fiscal year ended September 30, 2022. Interest expense related to corporate funding purposes increased $12.8 million to $57.5 million in the fiscal year ended September 30, 2023 compared to $44.7 million in the fiscal year ended September 30, 2022.
On the expense side, we continue to focus on maintaining our variable cost model and limiting the growth of our non-variable
expenses. In fiscal 2023, variable expenses were 52% of total expenses compared to 56% in the prior year. Non-variable expenses, excluding bad debts increased $112.5 million compared to the fiscal year ended September 30, 2022, principally due to higher fixed compensation and benefits, non-trading technology and support, travel and business development, trading system and market information, and depreciation and amortization.
Net income increased $31.4 million to $238.5 million in the fiscal year ended September 30, 2023 compared to $207.1 million in the fiscal year ended September 30, 2022. Diluted earnings per share were $11.18 for the fiscal year ended September 30, 2023 compared to $10.01 in the fiscal year ended September 30, 2022.
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Selected Summary Financial Information
Results of Operations
Our total revenues, as reported, combine gross revenues for the physical commodities business and net revenues for all other businesses. Management believes that operating revenues, which deduct the cost of sales of physical commodities from total revenues, is a more useful financial measure with which to assess our results of operations. The table below sets forth our operating revenues, as well as other key financial measures, for the periods indicated.
Financial Overview

| Year Ended September 30,
(in millions) | 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Revenues: |  |  |  |  |  |  |  |  |
Sales of physical commodities | $ | 58,131.2 |  |  | (9)% |  | $ | 64,052.6 |  |  | 56% |  | $ | 40,961.6 |
Principal gains, net | 1,079.9 |  |  | (6)% |  | 1,145.2 |  |  | 28% |  | 892.0 |
Commission and clearing fees | 498.4 |  |  | (2)% |  | 507.9 |  |  | 4% |  | 487.2 |
Consulting, management, and account fees | 159.0 |  |  | 43% |  | 111.3 |  |  | 22% |  | 91.0 |
Interest income | 987.6 |  |  | 351% |  | 219.0 |  |  | 114% |  | 102.4 |
Total revenues | 60,856.1 |  |  | (8)% |  | 66,036.0 |  |  | 55% |  | 42,534.2 |
Cost of sales of physical commodities | 57,942.0 |  |  | (9)% |  | 63,928.6 |  |  | 56% |  | 40,861.1 |
Operating revenues | 2,914.1 |  |  | 38% |  | 2,107.4 |  |  | 26% |  | 1,673.1 |
Transaction-based clearing expenses | 271.8 |  |  | (7)% |  | 291.2 |  |  | 7% |  | 271.7 |
Introducing broker commissions | 161.6 |  |  | 1% |  | 160.1 |  |  | —% |  | 160.5 |
Interest expense | 802.2 |  |  | 492% |  | 135.5 |  |  | 173% |  | 49.6 |
Interest expense on corporate funding | 57.5 |  |  | 29% |  | 44.7 |  |  | 8% |  | 41.3 |
Net operating revenues | 1,621.0 |  |  | 10% |  | 1,475.9 |  |  | 28% |  | 1,150.0 |
Compensation and benefits | 868.6 |  |  | 9% |  | 794.8 |  |  | 17% |  | 679.1 |
Bad debts, net of recoveries | 16.5 |  |  | 4% |  | 15.8 |  |  | 52% |  | 10.4 |
Other expenses | 438.3 |  |  | 11% |  | 394.5 |  |  | 27% |  | 309.8 |
Total compensation and other expenses | 1,323.4 |  |  | 10% |  | 1,205.1 |  |  | 21% |  | 999.3 |
Gain on acquisitions and other gains, net | 25.4 |  |  | 297% |  | 6.4 |  |  | 88% |  | 3.4 |
Income before tax | 323.0 |  |  | 17% |  | 277.2 |  |  | 80% |  | 154.1 |
Income tax expense | 84.5 |  |  | 21% |  | 70.1 |  |  | 85% |  | 37.8 |
Net income | $ | 238.5 |  |  | 15% |  | $ | 207.1 |  |  | 78% |  | $ | 116.3 |
Return on average stockholders’ equity | 19.5% |  |  |  | 21.0% |  |  |  | 13.9%

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The tables below present operating revenues disaggregated across the key products we provide to our clients and select operating data and metrics used by management in evaluating our performance, for the periods indicated.

| Year Ended September 30,
| 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Operating Revenues (in millions): |  |  |  |  |  |  |  |  |
Listed derivatives | $ | 416.5 |  |  | (3)% |  | $ | 430.5 |  |  | 11% |  | $ | 387.6 |
Over-the-counter (“OTC”) derivatives | 232.2 |  |  | 11% |  | 208.3 |  |  | 45% |  | 143.4 |
Securities | 1,064.0 |  |  | 74% |  | 610.4 |  |  | 14% |  | 533.6 |
FX / Contracts for difference (“CFD”) contracts | 261.9 |  |  | (23)% |  | 339.3 |  |  | 40% |  | 242.0 |
Global payments | 208.3 |  |  | 24% |  | 167.8 |  |  | 25% |  | 133.8 |
Physical contracts | 244.9 |  |  | 26% |  | 194.3 |  |  | 27% |  | 152.6 |
Interest / fees earned on client balances | 384.7 |  |  | 331% |  | 89.3 |  |  | 243% |  | 26.0 |
Other | 109.4 |  |  | 32% |  | 82.7 |  |  | 19% |  | 69.5 |
Corporate Unallocated | 31.7 |  |  | 306% |  | 7.8 |  |  | 359% |  | 1.7 |
Eliminations | (39.5) |  |  | 72% |  | (23.0) |  |  | 35% |  | (17.1) |
| $ | 2,914.1 |  |  | 38% |  | $ | 2,107.4 |  |  | 26% |  | $ | 1,673.1 |

| Year Ended September 30,
| 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Volumes and Other Select Data (all $ amounts are U.S. dollar or U.S. dollar equivalents):
Listed derivatives (contracts, 000’s) | 160,292 |  |  | —% |  | 160,609 |  |  | 10% |  | 146,101 |
Listed derivatives, average rate per contract (1) | $ | 2.44 |  |  | (4)% |  | $ | 2.53 |  |  | (1)% |  | $ | 2.55 |
Average client equity - listed derivatives (millions) | $ | 7,137 |  |  | 25% |  | $ | 5,696 |  |  | 48% |  | $ | 3,842 |
OTC derivatives (contracts, 000’s) | 3,553 |  |  | 20% |  | 2,968 |  |  | 16% |  | 2,557 |
OTC derivatives, average rate per contract | $ | 65.78 |  |  | (7)% |  | $ | 70.49 |  |  | 27% |  | $ | 55.70 |
Securities average daily volume (“ADV”) (millions) | $ | 5,257 |  |  | 52% |  | $ | 3,459 |  |  | 25% |  | $ | 2,776 |
Securities rate per million (“RPM”) (2) | $ | 301 |  |  | (40)% |  | $ | 503 |  |  | (15)% |  | $ | 593 |
Average money market / FDIC sweep client balances (millions) | $ | 1,338 |  |  | (25)% |  | $ | 1,784 |  |  | 21% |  | $ | 1,471 |
FX / CFD contracts ADV (millions) | $ | 11,943 |  |  | (10)% |  | $ | 13,273 |  |  | 25% |  | $ | 10,636 |
FX / CFD contracts RPM | $ | 87 |  |  | (12)% |  | $ | 99 |  |  | 11% |  | $ | 89 |
Global Payments ADV (millions) | $ | 67 |  |  | 8% |  | $ | 62 |  |  | 15% |  | $ | 54 |
Global Payments RPM | $ | 12,367 |  |  | 14% |  | $ | 10,880 |  |  | 10% |  | $ | 9,921 |

(1) | Give up fees, related to contract execution for clients of other FCMs, as well as cash and voice brokerage revenues are excluded from the calculation of listed derivatives, average rate per contract.
(2) | Interest expense associated with our fixed income activities is deducted from operating revenues in the calculation of Securities RPM, while interest income related to securities lending is excluded.

Operating Revenues
Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Operating revenues from listed derivatives declined $14.0 million, or 3%, to $416.5 million in the fiscal year ended September 30, 2023 compared to $430.5 million in the fiscal year ended September 30, 2022, principally resulting from a 4% decline in the average rate per contract.
Operating revenues in OTC derivatives increased $23.9 million, or 11%, to $232.2 million in the fiscal year ended September 30, 2023 compared to $208.3 million in the fiscal year ended September 30, 2022. This growth was principally driven by a 20% increase in OTC contract volumes, partially offset by a 7% decline in the average rate per contract.
Operating revenue from securities transactions increased $453.6 million, or 74%, to $1,064.0 million in the fiscal year ended September 30, 2023 compared to $610.4 million in the fiscal year ended September 30, 2022. This increase was principally due to a 52% increase in securities ADV, as well as a significant increase in interest rates. Carried interest on fixed income securities is a component of operating revenues, however interest expense associated with financing these positions is not. As a result of the significant increase in short-term interest rates, we have amended our calculation of securities RPM, in the table above, to present the RPM after deducting from operating revenues the interest expense associated with our fixed income activities. Net operating revenues derived from securities transactions decreased $39.3 million, or 11%, to $325.6 million in the fiscal year ended September 30, 2023 compared to $364.9 million in the three months ended September 30, 2022. This decline principally resulted from the 40% decline in RPM principally due to a tightening of spreads and a change in product mix.
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Operating revenues from FX/CFD contracts declined $77.4 million, or 23%, to $261.9 million in the fiscal year ended September 30, 2023 compared to $339.3 million in the fiscal year ended September 30, 2022, principally as a result of a 10% decline in FX/CFD contracts ADV, as well as a 12% decline in FX/CFD contracts RPM.
Operating revenues from global payments increased by $40.5 million, or 24%, to $208.3 million in the fiscal year ended September 30, 2023 compared to $167.8 million in the fiscal year ended September 30, 2022, principally as a result of an 8% increase in ADV, as well as a 14% increase in payments RPM.
Operating revenues from physical contracts increased $50.6 million, or 26%, to $244.9 million in the fiscal year ended September 30, 2023 compared to $194.3 million in the fiscal year ended September 30, 2022, principally due to increased client activity in agricultural and energy commodities, including the CDI acquisition effective October 31, 2022.
Interest and fee income earned on client balances, which is associated with our listed and OTC derivative businesses, as well as our correspondent clearing and independent wealth management businesses, increased $295.4 million, or 331%, to $384.7 million in the fiscal year ended September 30, 2023 compared to $89.3 million in the fiscal year ended September 30, 2022, principally as a result of the impact of the significant increase in short-term interest rates, as well as a 25% increase in average client equity, which was partially offset by a 25% decline in average money market/FDIC sweep client balances.
Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Operating revenues increased $434.3 million, or 26%, to $2,107.4 million in the year ended September 30, 2022 compared to $1,673.1 million in the year ended September 30, 2021. The table above displays operating revenues disaggregated across the key products we provide to our clients.
Operating revenues derived from listed derivatives increased $42.9 million, or 11%, to $430.5 million in the year ended September 30, 2022 compared to $387.6 million in the year ended September 30, 2021, principally driven by a 10% increase in listed derivative volumes.
Operating revenues in OTC derivatives increased $64.9 million, or 45%, to $208.3 million in the year ended September 30, 2022 compared to $143.4 million in the year ended September 30, 2021. This growth was principally driven by increased client activity in agricultural and soft commodity markets which resulted in a 16% increase in OTC contract volumes, as well as a 27% increase in the average rate per contract as a result of wider spreads in FX hedging and energy and renewable fuels markets.
Operating revenue from securities transactions increased $76.8 million, or 14%, to $610.4 million in the year ended September 30, 2022 compared to $533.6 million in the year ended September 30, 2021. This increase was principally a result of a 25% increase in securities ADV driven by increased client activity in fixed income markets, which was partially offset by a 15% decline in RPM as a result of lower spreads in equity products.
Operating revenues from FX/CFD contracts increased $97.3 million, or 40%, to $339.3 million in the year ended September 30, 2022 compared to $242.0 million in the year ended September 30, 2021, principally as a result of a 25% increase in FX/CFD contracts ADV, as well as a 11% increase in FX/CFD contracts RPM, both of which were driven by heightened volatility in global financial markets.
Operating revenues from global payments increased by $34.0 million, or 25%, to $167.8 million in the year ended September 30, 2022 compared to $133.8 million in the year ended September 30, 2021, principally as a result of a 15% increase in ADV, as well as a 10% increase in payments RPM.
Operating revenues from physical contracts increased $41.7 million, or 27%, to $194.3 million in the year ended September 30, 2022 compared to $152.6 million in the year ended September 30, 2021, principally due to increased client activity in agricultural and energy commodities, as well as continued strong client demand for precious metals.
Interest and fee income earned on client balances, which is associated with our listed and OTC derivative businesses, as well as our correspondent clearing and independent wealth management businesses, increased $63.3 million, or 243%, to $89.3 million in the year ended September 30, 2022 compared to $26.0 million in the year ended September 30, 2021, principally as a result of an increase in short term interest rates as well as increases in average client equity and average FDIC sweep client balances of 48% and 21%, respectively.
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Interest and Transactional Expenses
Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Transaction-based clearing expenses

| Year Ended September 30,
| 2023 |  | 2022 |  | $ Change |  | % Change
Transaction-based clearing expenses | $ | 271.8 |  |  | $ | 291.2 |  |  | $ | (19.4) |  |  | (7) | %
Percentage of operating revenues | 9 | % |  | 14 | % |  |  |  |

The decrease in transaction-based clearing expense was principally due to lower ADR conversion and short-rebate fees in the Equity Capital Markets business, lower bank fees and transactional regulatory fees in the Retail Forex business, which related vendor optimization and decreased FX/CFD ADV, respectively, lower fees in the Exchange-Traded Futures & Options business, principally related to a decrease in contracts traded, and lower fees in the Global Payments business. These decreases were partially offset by higher fees in the Debt Capital Markets business, due to an increase in the ADV and higher exchange fees in the Financial Ag & Energy and LME Metals businesses, due to an increase in exchange-traded volumes. The decline in the percentage of operating revenues was principally due to the impact of the significant increase in interest income on operating revenues.
Introducing broker commissions

| Year Ended September 30,
| 2023 |  | 2022 |  | $ Change |  | % Change
Introducing broker commissions | $ | 161.6 |  |  | $ | 160.1 |  |  | $ | 1.5 |  |  | 1 | %
Percentage of operating revenues | 6 | % |  | 8 | % |  |  |  |

Introducing broker commission expense increased modestly period-over-period. Higher costs in our Physical Ag & Energy business, related to incremental expense from the CDI acquisition, effective October 31, 2022, Financial Ag & Energy, Asset Management and Global Payments businesses were partially offset by decreased expenses in our Independent Wealth Management and Retail Forex businesses, principally due to lower trading volumes and revenues. The decline in the percentage of operating revenues was principally due to the impact of the significant increase in interest income on operating revenues.
Interest expense

| Year Ended September 30,
| 2023 |  | 2022 |  | $ Change |  | % Change
Interest expense attributable to: |  |  |  |  |  |  |
Trading activities: |  |  |  |  |  |  |
Institutional dealer in fixed income securities | $ | 556.7 |  |  | $ | 62.3 |  |  | $ | 494.4 |  |  | 794 | %
Securities borrowing | 39.4 |  |  | 23.0 |  |  | 16.4 |  |  | 71 | %
Client balances on deposit | 148.9 |  |  | 17.4 |  |  | 131.5 |  |  | 756 | %
Short-term financing facilities of subsidiaries and other direct interest of operating segments | 57.2 |  |  | 32.8 |  |  | 24.4 |  |  | 74 | %
| 802.2 |  |  | 135.5 |  |  | 666.7 |  |  | 492 | %
Corporate funding | 57.5 |  |  | 44.7 |  |  | 12.8 |  |  | 29 | %
Total interest expense | $ | 859.7 |  |  | $ | 180.2 |  |  | $ | 679.5 |  |  | 377 | %

The increase in interest expense attributable to trading activities was principally due to the significant increase in short-term interest rates, an increase in ADV in our fixed income business, and an increase in client balances on which we pay interest. The increase in interest expense attributable to corporate funding was principally due to higher short-term interest rates on our revolving credit facility as well as an increase in average borrowings.
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Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Transaction-based clearing expenses

| Year Ended September 30,
| 2022 |  | 2021 |  | $ Change |  | % Change
Transaction-based clearing expenses | $ | 291.2 |  |  | $ | 271.7 |  |  | $ | 19.5 |  |  | 7 | %
Percentage of operating revenues | 14 | % |  | 16 | % |  |  |  |

The increase in expense was principally due to higher clearing and ADR conversion fees in the Equity Capital Markets business, higher costs related to listed derivatives within the Financial Ag & Energy and Exchange-Traded Futures & Options businesses, and higher costs in our Debt Capital Markets, Global Payments, and Retail Forex businesses due to increased average daily volumes. The decline in the percentage of operating revenues was principally due to the increase in interest income.
Introducing broker commissions

| Year Ended September 30,
| 2022 |  | 2021 |  | $ Change |  | % Change
Introducing broker commissions | $ | 160.1 |  |  | $ | 160.5 |  |  | $ | (0.4) |  |  | — | %
Percentage of operating revenues | 8 | % |  | 10 | % |  |  |  |

The modest decrease in introducing broker commissions was principally due to lower costs within our Financial Ag & Energy and Retail Forex businesses, partially offset by increased activity in our Exchange-Traded Futures & Options, LME Metals, Physical Ag & Energy and Global Payments businesses. The decline in the percentage of operating revenues was principally due to the increase in interest income.
Interest expense

| Year Ended September 30,
| 2022 |  | 2021 |  | $ Change |  | % Change
Interest expense attributable to: |  |  |  |  |  |  |
Trading activities: |  |  |  |  |  |  |
Institutional dealer in fixed income securities | $ | 62.3 |  |  | $ | 9.6 |  |  | $ | 52.7 |  |  | 549 | %
Securities borrowing | 23.0 |  |  | 17.6 |  |  | 5.4 |  |  | 31 | %
Client balances on deposit | 17.4 |  |  | 1.5 |  |  | 15.9 |  |  | 1,060 | %
Short-term financing facilities of subsidiaries and other direct interest of operating segments | 32.8 |  |  | 20.9 |  |  | 11.9 |  |  | 57 | %
| 135.5 |  |  | 49.6 |  |  | 85.9 |  |  | 173 | %
Corporate funding | 44.7 |  |  | 41.3 |  |  | 3.4 |  |  | 8 | %
Total interest expense | $ | 180.2 |  |  | $ | 90.9 |  |  | $ | 89.3 |  |  | 98 | %

The increase in interest expense attributable to trading activities was principally due to the increase in fixed income business activities within our Institutional segment, increased interest on client balances principally due to higher short-term rates, and increased average borrowings within our Commercial segment, along with the impact of the increases in short-term interest rates.
Net Operating Revenues
Net operating revenues is one of the key measures used by management to assess the performance of our operating segments. Net operating revenue is calculated as operating revenue less transaction-based clearing expenses, introducing broker commissions and interest expense. Transaction-based clearing expenses represent variable expenses paid to executing brokers, exchanges, clearing organizations and banks in relation to our transactional volumes. Introducing broker commissions include commission paid to non-employee third parties that have introduced clients to us. Net operating revenues represent revenues available to pay variable compensation to risk management consultants and traders and direct non-variable expenses, as well as variable and non-variable expenses of operational and administrative employees, including our executive management team.
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The table below presents net operating revenues disaggregated across the key products we provide to our clients used by management in evaluating our performance, for the periods indicated.

| Year Ended September 30,
| 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Net Operating Revenues (in millions): |  |  |  |  |  |  |  |  |
Listed derivatives | $ | 195.5 |  |  | (7)% |  | $ | 209.4 |  |  | 20% |  | $ | 173.8 |
OTC derivatives | 232.1 |  |  | 11% |  | 208.3 |  |  | 45% |  | 143.4 |
Securities | 325.6 |  |  | (11)% |  | 364.9 |  |  | 2% |  | 357.8 |
FX / CFD contracts | 224.2 |  |  | (23)% |  | 291.9 |  |  | 51% |  | 193.2 |
Global Payments | 199.2 |  |  | 26% |  | 158.4 |  |  | 25% |  | 126.4 |
Physical contracts | 202.7 |  |  | 17% |  | 173.2 |  |  | 27% |  | 136.2 |
Interest, net / fees earned on client balances | 237.0 |  |  | 239% |  | 70.0 |  |  | 206% |  | 22.9 |
Other | 67.6 |  |  | 14% |  | 59.3 |  |  | 16% |  | 51.1 |
Corporate Unallocated | (62.9) |  |  | 6% |  | (59.5) |  |  | 9% |  | (54.8) |
| $ | 1,621.0 |  |  | 10% |  | $ | 1,475.9 |  |  | 28% |  | $ | 1,150.0 |

Compensation and Other Expenses
The following table presents a summary of expenses, other than interest and transactional expenses.

| Year Ended September 30,
(in millions) | 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Compensation and benefits: |  |  |  |  |  |  |  |  |
Variable compensation and benefits | $ | 483.2 |  |  | 1% |  | $ | 478.1 |  |  | 27% |  | $ | 377.7 |
Fixed compensation and benefits | 385.4 |  |  | 22% |  | 316.7 |  |  | 5% |  | 301.4 |
| 868.6 |  |  | 9% |  | 794.8 |  |  | 17% |  | 679.1 |
Other expenses: |  |  |  |  |  |  |  |  |
Trading systems and market information | 74.0 |  |  | 12% |  | 66.2 |  |  | 13% |  | 58.8 |
Professional fees | 57.0 |  |  | 5% |  | 54.3 |  |  | 33% |  | 40.9 |
Non-trading technology and support | 61.6 |  |  | 18% |  | 52.4 |  |  | 14% |  | 46.0 |
Occupancy and equipment rental | 40.4 |  |  | 12% |  | 36.1 |  |  | 6% |  | 34.2 |
Selling and marketing | 54.0 |  |  | (2)% |  | 55.3 |  |  | 66% |  | 33.3 |
Travel and business development | 24.8 |  |  | 47% |  | 16.9 |  |  | 276% |  | 4.5 |
Communications | 9.1 |  |  | 10% |  | 8.3 |  |  | (11)% |  | 9.3 |
Depreciation and amortization | 51.0 |  |  | 15% |  | 44.4 |  |  | 22% |  | 36.5 |
Bad debts, net of recoveries | 16.5 |  |  | 4% |  | 15.8 |  |  | 52% |  | 10.4 |
Other | 66.4 |  |  | 10% |  | 60.6 |  |  | 31% |  | 46.3 |
| 454.8 |  |  | 11% |  | 410.3 |  |  | 28% |  | 320.2 |
Total compensation and other expenses | $ | 1,323.4 |  |  | 10% |  | $ | 1,205.1 |  |  | 21% |  | $ | 999.3 |

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Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Compensation and Other Expenses: Compensation and other expenses increased $118.3 million, or 10%, to $1,323.4 million in the fiscal year ended September 30, 2023 compared to $1,205.1 million in the fiscal year ended September 30, 2022.
Compensation and Benefits:

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | $ Change |  | % Change
Compensation and benefits: |  |  |  |  |  |  |
Variable compensation and benefits |  |  |  |  |  |  |
Front office | $ | 407.3 |  |  | $ | 410.4 |  |  | $ | (3.1) |  |  | (1) | %
Administrative, executive, and centralized and local operations | 75.9 |  |  | 67.7 |  |  | 8.2 |  |  | 12 | %
Total variable compensation and benefits | 483.2 |  |  | 478.1 |  |  | 5.1 |  |  | 1 | %
Variable compensation and benefits as a percentage of net operating revenues | 30 | % |  | 32 | % |  |  |  |
Fixed compensation and benefits: |  |  |  |  |  |  |
Non-variable salaries | 266.8 |  |  | 225.8 |  |  | 41.0 |  |  | 18 | %
Employee benefits and other compensation, excluding share-based compensation | 90.6 |  |  | 73.1 |  |  | 17.5 |  |  | 24 | %
Share-based compensation | 28.0 |  |  | 17.8 |  |  | 10.2 |  |  | 57 | %
Total fixed compensation and benefits | 385.4 |  |  | 316.7 |  |  | 68.7 |  |  | 22 | %
Total compensation and benefits | $ | 868.6 |  |  | $ | 794.8 |  |  | $ | 73.8 |  |  | 9 | %
Total compensation and benefits as a percentage of operating revenues | 30 | % |  | 38 | % |  |  |  |
Number of employees, end of period | 4,137 |  |  | 3,615 |  |  | 522 |  |  | 14 | %

Non-variable salaries increased principally due to the increase in headcount resulting from expanding capabilities among our business lines and the CDI acquisition, as well as the growth in our operational and overhead departments supporting our business growth, as well as the impact of annual merit increases.
Employee benefits and other compensation, excluding share-based compensation, increased principally related to higher severance, payroll taxes, benefits, and retirement costs. During the fiscal year ended September 30, 2023, severance costs were $14.9 million, principally related to a reorganization within the Global Payments business. During the fiscal year ended September 30, 2022, severance costs were $2.6 million. Partially offsetting the increases was an increase in employee-elected deferred incentive, which is exchanged for restricted stock that will be amortized over a thirty-six month period following the grant date. Share-based compensation, which contains stock option and restricted stock expense, increased principally due to higher employee participation in the Company’s restricted stock plan, as well as from $3.3 million in accelerated share-based compensation for employee departures related to retirements and certain business reorganizations during the fiscal year ended September 30, 2023.
Other Expenses: Other non-compensation expenses increased $44.5 million, or 11%, to $454.8 million in the fiscal year ended September 30, 2023 compared to $410.3 million in the fiscal year ended September 30, 2022.
Trading systems and market information costs increased $7.8 million, principally due to higher market information costs in the Debt Capital Markets, Retail Forex, and Financial Ag & Energy businesses.
Non-trading technology and support increased $9.2 million, principally due to higher non-trading software maintenance and support costs related to various IT systems primarily within our Core IT and other overhead departments.
Occupancy and equipment rental costs increased $4.3 million, principally due to increases in costs in London and Singapore, as well as incremental costs from the CDI acquisition.
Travel and business development increased $7.9 million, principally due to higher transportation and lodging costs across all business lines and support departments following periods of reduced travel.
Depreciation and amortization increased $6.6 million, principally due to the incremental depreciation expense from internally developed software placed into service.
Bad debt expense, net of recoveries increased $0.7 million over the prior year. During the fiscal year ended September 30, 2023, bad debt expense, net of recovery was $16.5 million, principally related to bad debt expense of $15.1 million of client receivables in the Physical Ag & Energy business, $2.3 million of client trading account deficits in our Retail FX segment, and $0.6 million in client trading account deficits in our Financial Ag & Energy business, partially offset by net recoveries of $1.4 million of client trading account deficits in our Exchange-traded Futures & Options business. During the fiscal year ended September 30, 2022, bad debt expense, net of recoveries was $15.8 million, principally related to client trading account deficits
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in our Commercial, Institutional, Retail, and Global Payments segments of $11.6 million, $1.8 million, $2.3 million, and $0.1 million, respectively.
Gain on Acquisition and Other Gains, net: The results of the fiscal year ended September 30, 2023 include a nonrecurring gain of $23.5 million related to the CDI acquisition, as well as a nonrecurring gain related to proceeds received of $2.1 million resulting from an institutional-based foreign exchange antitrust class action settlement. The results of the fiscal year ended September 30, 2022 included a nonrecurring gain related to proceeds received of $6.4 million resulting from a foreign exchange antitrust class action settlement in our Retail segment.
Provision for Taxes: Our effective income tax rate was 26% and 25% for fiscal years ended September 30, 2023 and 2022, respectively. The effective income tax rate for the fiscal years ended September 30, 2023 and 2022 was higher than the U.S. federal statutory rate of 21% due to U.S. state and local taxes, changes in valuation allowances, U.K. bank tax, U.S. permanent differences, and the amount of foreign earnings taxed at higher tax rates. The gain on acquisition of $23.5 million in the fiscal year ended September 30, 2023 was not taxable and reduced the effective income tax rate 1.4%.
Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Compensation and Other Expenses: Compensation and other expenses increased $205.8 million, or 21%, to $1,205.1 million in the fiscal year ended September 30, 2022 compared to $999.3 million in the fiscal year ended September 30, 2021.
Compensation and Benefits:

| Year Ended September 30,
(in millions) | 2022 |  | 2021 |  | $ Change |  | % Change
Compensation and benefits: |  |  |  |  |  |  |
Variable compensation and benefits |  |  |  |  |  |  |
Front office | $ | 410.4 |  |  | $ | 333.5 |  |  | $ | 76.9 |  |  | 23 | %
Administrative, executive, and centralized and local operations | 67.7 |  |  | 44.2 |  |  | 23.5 |  |  | 53 | %
Total variable compensation and benefits | 478.1 |  |  | 377.7 |  |  | 100.4 |  |  | 27 | %
Variable compensation and benefits as a percentage of net operating revenues | 32 | % |  | 33 | % |  |  |  |
Fixed compensation and benefits: |  |  |  |  |  |  |
Non-variable salaries | 225.8 |  |  | 204.7 |  |  | 21.1 |  |  | 10 | %
Employee benefits and other compensation, excluding share-based compensation | 73.1 |  |  | 82.8 |  |  | (9.7) |  |  | (12) | %
Share-based compensation | 17.8 |  |  | 13.9 |  |  | 3.9 |  |  | 28 | %
Total fixed compensation and benefits | 316.7 |  |  | 301.4 |  |  | 15.3 |  |  | 5 | %
Total compensation and benefits | $ | 794.8 |  |  | $ | 679.1 |  |  | $ | 115.7 |  |  | 17 | %
Total compensation and benefits as a percentage of operating revenues | 38 | % |  | 41 | % |  |  |  |
Number of employees, end of period | 3,615 |  |  | 3,242 |  |  | 373 |  |  | 12 | %

Non-variable salaries increased principally due to increased headcount resulting from expanded capabilities among our business lines, as well as the growth in our operational and overhead departments supporting our business growth.
Employee benefits and other compensation, excluding share-based compensation, decreased principally due to increased employee-elected deferred incentive, which was exchanged for restricted stock that is amortized over a thirty-six month period following the grant date and lower severance costs, partially offset by higher payroll, benefits, and retirement costs from the increased headcount. During the year ended September 30, 2022, severance costs were $2.6 million. During the year ended September 30, 2021, severance costs were $7.7 million, principally due to the departure of certain senior officers. Share-based compensation included stock option and restricted stock expense.
Other Expenses: Other non-compensation expenses increased $90.1 million, or 28%, to $410.3 million in the year ended September 30, 2022 compared to $320.2 million in the year ended September 30, 2021.
Trading systems and market information costs increased $7.4 million, principally due to higher costs in the Retail Forex, Debt Capital Markets, and LME Metals businesses.
Professional fees increased $13.4 million, principally due to higher legal and other consulting fees.
Non-trading technology and support increased $6.4 million, principally due to higher non-trading software implementation costs related to various IT systems.
Selling and marketing costs increased $22.0 million, principally due to increased campaigns related to our Retail Forex business, as well as costs of holding our bi-annual global sales and strategy meeting in March 2022.
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Travel and business development increased $12.4 million principally due to several business line specific development meetings, as well as increases along all business lines with the lifting of certain social distancing and travel restrictions, following periods of limited travel due to responses by governments and societies to the COVID-19 pandemic.
Depreciation and amortization increased $7.9 million, principally due to the incremental depreciation expense from internally developed software placed into service.
Other expenses increased $14.3 million, principally due to higher insurance costs, non-income taxes, non-variable direct business related costs, and non-compensation employee based expenses.
Bad debt expense, net of recoveries increased $5.4 million over the prior year. During the year ended September 30, 2022, bad debt expense, net of recovery was $15.8 million, principally related to client trading account deficits in our Commercial, Institutional, Retail, and Global Payments segments of $11.6 million, $1.8 million, $2.3 million, and $0.1 million, respectively. During the year ended September 30, 2021, bad debts, net of recoveries were $10.4 million, principally related to client trading account deficits in our Commercial, Institutional, and Retail segments of $3.4 million, $0.6 million, and $1.1 million, respectively. Additionally, we recorded bad debt expense of $5.1 million related to trade receivables with physical clients.
Gain on Acquisitions and Other Gains, net: The results of the year ended September 30, 2022 include a nonrecurring gain of $6.4 million related to a foreign exchange antitrust class action settlement received in March 2022. The results of the year ended September 30, 2021 included a gain of $3.3 million related to an adjustment to the liabilities assumed as part of the Gain acquisition initially determined values, as of August 1, 2020.
Provision for Taxes: The effective income tax rate was 25% for the years ended September 30, 2022 and 2021. The effective income tax rate for the fiscal year ended September 30, 2022 and 2021 was higher than the U.S. federal statutory rate of 21% due to U.S. state and local taxes, changes in valuation allowances, U.K. bank tax, U.S. permanent differences, and the amount of foreign earnings taxed at higher tax rates. The gain on acquisition of $3.3 million in the year ended September 30, 2021 was not taxable and reduced the effective income tax rate 0.5%.
Variable vs. Fixed Expenses
The table below presents our variable expenses and non-variable expenses as a percentage of total non-interest expenses for the periods indicted.

| Year Ended September 30,
(in millions) | 2023 |  | % of Total |  | 2022 |  | % of Total |  | 2021 |  | % of Total
Variable compensation and benefits | $ | 483.2 |  |  | 28% |  | $ | 478.1 |  |  | 29% |  | $ | 377.7 |  |  | 26%
Transaction-based clearing expenses | 271.8 |  |  | 15% |  | 291.2 |  |  | 17% |  | 271.7 |  |  | 19%
Introducing broker commissions | 161.6 |  |  | 9% |  | 160.1 |  |  | 10% |  | 160.5 |  |  | 11%
Total variable expenses | 916.6 |  |  | 52% |  | 929.4 |  |  | 56% |  | 809.9 |  |  | 56%
Fixed compensation and benefits | 385.4 |  |  | 22% |  | 316.7 |  |  | 19% |  | 301.4 |  |  | 21%
Other fixed expenses | 438.3 |  |  | 25% |  | 394.5 |  |  | 24% |  | 309.8 |  |  | 22%
Bad debts, net of recoveries | 16.5 |  |  | 1% |  | 15.8 |  |  | 1% |  | 10.4 |  |  | 1%
Total non-variable expenses | 840.2 |  |  | 48% |  | 727.0 |  |  | 44% |  | 621.6 |  |  | 44%
Total non-interest expenses | $ | 1,756.8 |  |  | 100% |  | $ | 1,656.4 |  |  | 100% |  | $ | 1,431.5 |  |  | 100%

Our variable expenses include variable compensation paid to traders and risk management consultants, bonuses paid to operational, administrative, and executive employees, transaction-based clearing expenses and introducing broker commissions. We seek to make our non-interest expenses variable to the greatest extent possible, and to keep our fixed costs as low as possible.
During the fiscal year ended September 30, 2023, non-variable expenses, excluding bad debts, net of recoveries, increased $112.5 million, or 16%, compared to the fiscal year ended September 30, 2022.
During the year ended September 30, 2022, non-variable expenses, excluding bad debts, net of recoveries, increased $100.0 million, or 16%, compared to the year ended September 30, 2021.
Segment Information
Our operating segments are based principally on the nature of the clients we serve (commercial, institutional, and retail), and a fourth operating segment, our global payments business. We manage our business in this manner due to our large global footprint, in which we have more than 4,000 employees allowing us to serve clients in more than 180 countries.
Our business activities are managed as operating segments, which are our reportable segments for financial reporting purposes, as shown below.
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StoneX Group Inc.
Commercial |  | Institutional |  | Retail |  | Global Payments
Primary Activities: |  | Primary Activities: |  | Primary Activities: |  | Primary Activities:
Financial Ag & Energy |  | Equity Capital Markets |  | Retail Forex |  | Global Payments
LME Metals |  | Debt Capital Markets |  | Retail Precious Metals |  | Payment Technology Services
Physical Ag & Energy |  | FX Prime Brokerage |  | Independent Wealth Management |  |
Precious Metals |  | Exchange-Traded Futures & Options |  |  |  |
|  | Correspondent Clearing |  |  |  |

Operating revenues, net operating revenues, net contribution and segment income are some of the key measures used by management to assess the performance of each segment and for decisions regarding the allocation of our resources. Operating revenues are calculated as total revenues less cost of sales of physical commodities.
Net operating revenue is calculated as operating revenue less transaction-based clearing expenses, introducing broker commissions and interest expense.
Net contribution is calculated as net operating revenues less variable compensation. Variable compensation paid to risk management consultants and traders generally represents a fixed percentage, that can vary by revenue type, of an amount equal to revenues generated, and in some cases, revenues generated less transaction-based clearing expenses, base salaries and an overhead allocation.
Segment income is calculated as net contribution less non-variable direct segment costs. These non-variable direct expenses include trader base compensation and benefits, operational charges, trading systems and market information, professional fees, travel and business development, communications, bad debts, trade errors and direct marketing expenses.
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Total Segment Results
The following table presents summary information concerning all of our business segments on a combined basis, excluding unallocated overhead, for the periods indicated.

| Year Ended September 30,
(in millions) | 2023 |  | % of Operating Revenues |  | 2022 |  | % of Operating Revenues |  | 2021 |  | % of Operating Revenues
Sales of physical commodities | $ | 58,131.2 |  |  |  |  | $ | 64,052.6 |  |  |  |  | $ | 40,961.6 |  |  |
Principal gains, net | 1,077.4 |  |  |  |  | 1,150.5 |  |  |  |  | 899.0 |  |  |
Commission and clearing fees | 500.3 |  |  |  |  | 509.6 |  |  |  |  | 488.4 |  |  |
Consulting, management, and account fees | 155.6 |  |  |  |  | 108.5 |  |  |  |  | 86.5 |  |  |
Interest income | 999.4 |  |  |  |  | 230.0 |  |  |  |  | 114.1 |  |  |
Total revenues | 60,863.9 |  |  |  |  | 66,051.2 |  |  |  |  | 42,549.6 |  |  |
Cost of sales of physical commodities | 57,942.0 |  |  |  |  | 63,928.6 |  |  |  |  | 40,861.1 |  |  |
Operating revenues | 2,921.9 |  |  | 100% |  | 2,122.6 |  |  | 100% |  | 1,688.5 |  |  | 100%
Transaction-based clearing expenses | 271.6 |  |  | 9% |  | 292.3 |  |  | 14% |  | 270.3 |  |  | 16%
Introducing broker commissions | 161.6 |  |  | 6% |  | 160.3 |  |  | 8% |  | 161.2 |  |  | 10%
Interest expense | 804.8 |  |  | 28% |  | 134.6 |  |  | 6% |  | 52.2 |  |  | 3%
Net operating revenues | 1,683.9 |  |  |  |  | 1,535.4 |  |  |  |  | 1,204.8 |  |  |
Variable direct compensation and benefits | 410.3 |  |  | 14% |  | 413.5 |  |  | 19% |  | 336.1 |  |  | 20%
Net contribution | 1,273.6 |  |  |  |  | 1,121.9 |  |  |  |  | 868.7 |  |  |
Fixed compensation and benefits | 204.9 |  |  |  |  | 175.7 |  |  |  |  | 162.3 |  |  |
Other fixed expenses | 290.8 |  |  |  |  | 261.1 |  |  |  |  | 189.8 |  |  |
Bad debts, net of recoveries | 16.5 |  |  |  |  | 15.8 |  |  |  |  | 10.4 |  |  |
Total non-variable direct expenses | 512.2 |  |  | 18% |  | 452.6 |  |  | 21% |  | 362.5 |  |  | 21%
Other gains | 2.1 |  |  |  |  | 6.4 |  |  |  |  | — |  |  |
Segment income | $ | 763.5 |  |  |  |  | $ | 675.7 |  |  |  |  | $ | 506.2 |  |  |

Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Net contribution for all of our business segments increased $151.7 million, or 14%, to $1,273.6 million in the fiscal year ended September 30, 2023 compared to $1,121.9 million in the fiscal year ended September 30, 2022. Segment income increased $87.8 million, or 13%, to $763.5 million in the fiscal year ended September 30, 2023 compared to $675.7 million in the fiscal year ended September 30, 2022.
Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Net contribution for all of our business segments increased $253.2 million, or 29%, to $1,121.9 million in the fiscal year ended September 30, 2022 compared to $868.7 million in the year ended September 30, 2021. Segment income increased $169.5 million, or 33%, to $675.7 million in the fiscal year ended September 30, 2022 compared to $506.2 million in the year ended September 30, 2021.
Commercial
We offer our commercial clients a comprehensive array of products and services, including risk management and hedging services, execution and clearing of exchange-traded and OTC products, voice brokerage, market intelligence and physical trading, as well as commodity financing and logistics services. We believe our ability to provide these high-value-added products and services differentiates us from our competitors and maximizes our ability to retain our clients.
The tables below present the financial performance, a disaggregation of operating revenues, and select operating data and metrics used by management in evaluating the performance of the Commercial segment, for the periods indicated.
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| Year Ended September 30,
(in millions) | 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Revenues: |  |  |  |  |  |  |  |  |
Sales of physical commodities | $ | 57,559.9 |  |  | (9)% |  | $ | 63,162.7 |  |  | 60% |  | $ | 39,420.3 |
Principal gains, net | 331.5 |  |  | (3)% |  | 343.0 |  |  | 40% |  | 245.5 |
Commission and clearing fees | 178.0 |  |  | 5% |  | 168.8 |  |  | (5)% |  | 178.3 |
Consulting, management and account fees | 25.7 |  |  | 17% |  | 21.9 |  |  | 11% |  | 19.7 |
Interest income | 154.1 |  |  | 229% |  | 46.8 |  |  | 132% |  | 20.2 |
Total revenues | 58,249.2 |  |  | (9)% |  | 63,743.2 |  |  | 60% |  | 39,884.0 |
Cost of sales of physical commodities | 57,386.5 |  |  | (9)% |  | 63,051.1 |  |  | 60% |  | 39,349.2 |
Operating revenues | 862.7 |  |  | 25% |  | 692.1 |  |  | 29% |  | 534.8 |
Transaction-based clearing expenses | 60.7 |  |  | 9% |  | 55.9 |  |  | 4% |  | 54.0 |
Introducing broker commissions | 40.1 |  |  | 27% |  | 31.5 |  |  | (9)% |  | 34.7 |
Interest expense | 40.6 |  |  | 123% |  | 18.2 |  |  | 40% |  | 13.0 |
Net operating revenues | 721.3 |  |  | 23% |  | 586.5 |  |  | 35% |  | 433.1 |
Variable direct compensation and benefits | 176.4 |  |  | 3% |  | 171.2 |  |  | 28% |  | 133.4 |
Net contribution | 544.9 |  |  | 31% |  | 415.3 |  |  | 39% |  | 299.7 |
Fixed compensation and benefits | 61.1 |  |  | 23% |  | 49.8 |  |  | —% |  | 49.9 |
Other fixed expenses | 77.4 |  |  | 18% |  | 65.6 |  |  | 34% |  | 49.1 |
Bad debts, net of recoveries | 15.7 |  |  | 35% |  | 11.6 |  |  | 36% |  | 8.5 |
Total non-variable direct expenses | 154.2 |  |  | 21% |  | 127.0 |  |  | 18% |  | 107.5 |
Segment income | $ | 390.7 |  |  | 36% |  | $ | 288.3 |  |  | 50% |  | $ | 192.2 |

| Year Ended September 30,
| 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Operating Revenues (in millions): |  |  |  |  |  |  |  |  |
Listed derivatives | $ | 230.5 |  |  | (4)% |  | $ | 240.5 |  |  | 8% |  | $ | 223.5 |
OTC derivatives | 232.2 |  |  | 11% |  | 208.3 |  |  | 45% |  | 143.4 |
Physical contracts | 232.9 |  |  | 29% |  | 180.4 |  |  | 36% |  | 132.2 |
Interest / fees earned on client balances | 142.2 |  |  | 244% |  | 41.3 |  |  | 183% |  | 14.6 |
Other | 24.9 |  |  | 15% |  | 21.6 |  |  | 2% |  | 21.1 |
| $ | 862.7 |  |  | 25% |  | $ | 692.1 |  |  | 29% |  | $ | 534.8 |
Select data (all $ amounts are U.S. dollar equivalent): |  |  |  |
Listed derivatives (contracts, 000’s) | 34,430 |  |  | 14% |  | 30,323 |  |  | (2)% |  | 30,904 |
Listed derivatives, average rate per contract (1) | $ | 6.37 |  |  | (16)% |  | $ | 7.54 |  |  | 9% |  | $ | 6.92 |
Average client equity - listed derivatives (millions) | $ | 1,927 |  |  | (10)% |  | $ | 2,149 |  |  | 30% |  | $ | 1,648 |
Over-the-counter (“OTC”) derivatives (contracts, 000’s) | 3,553 |  |  | 20% |  | 2,968 |  |  | 16% |  | 2,557 |
OTC derivatives, average rate per contract | $ | 65.78 |  |  | (7)% |  | $ | 70.49 |  |  | 27% |  | $ | 55.70 |
(1) Give up fees, related to contract execution for clients of other FCMs, as well as cash and voice brokerage are excluded from the calculation of listed derivatives, average rate per contract.

For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements.
Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Operating revenues increased $170.6 million, or 25%, to $862.7 million in the fiscal year ended September 30, 2023 compared to $692.1 million in the fiscal year ended September 30, 2022. Net operating revenues increased $134.8 million, or 23%, to $721.3 million in the fiscal year ended September 30, 2023 compared to $586.5 million in the fiscal year ended September 30, 2022.
Operating revenues derived from listed derivatives declined $10.0 million, or 4%, to $230.5 million in the fiscal year ended September 30, 2023 compared to $240.5 million in the fiscal year ended September 30, 2022. This decline was principally driven by a 16% decline in the average rate per contract as the prior year period experienced wider spreads in LME markets related to the Russian invasion of Ukraine and the resulting effect on base metal commodity prices. This decline was partially offset by a 14% increase in listed derivative contract volumes compared to the prior year period.
Operating revenues derived from OTC transactions increased $23.9 million, or 11%, to $232.2 million in the fiscal year ended September 30, 2023 compared to $208.3 million in the fiscal year ended September 30, 2022. This increase was principally
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driven by a 20% increase in OTC volumes, most notably in agricultural and soft commodities, which was partially offset by a 7% decline in the average rate per contract compared to the prior year.
Operating revenues derived from physical transactions increased $52.5 million, or 29%, to $232.9 million in the fiscal year ended September 30, 2023 compared to $180.4 million in the fiscal year ended September 30, 2022, principally due to the CDI acquisition, effective October 31, 2022, as well as increased client activity in agricultural and energy commodities.
Interest and fee income earned on client balances increased $100.9 million, or 244%, to $142.2 million in the fiscal year ended September 30, 2023 compared to $41.3 million in the fiscal year ended September 30, 2022, as a result of a significant increase in short-term interest rates, which was partially offset by a 10% decrease in average client equity to $1,927 million in the fiscal year ended September 30, 2023.
Variable expenses, excluding interest, expressed as a percentage of operating revenues declined to 32% in the fiscal year ended September 30, 2023 compared to 37% in the fiscal year ended September 30, 2022, primarily as the result of the increase in interest/fees earned on client balances, which is generally not a component of variable compensation.
Segment income increased $102.4 million, or 36%, to $390.7 million in the fiscal year ended September 30, 2023 compared to $288.3 million in the fiscal year ended September 30, 2022, principally due to the growth in operating revenues which was partially offset by a $27.2 million increase in non-variable direct expenses. The increase in non-variable direct expenses was primarily due to a $11.3 million increase in fixed compensation and benefits, a $4.1 million increase in bad debts, net of recoveries, a $2.9 million increase in depreciation and amortization, a $2.7 million increase in travel and business development and a $2.2 million increase in selling and marketing expense.
Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Operating revenues increased $157.3 million, or 29%, to $692.1 million in the year ended September 30, 2022 compared to $534.8 million in the year ended September 30, 2021. Net operating revenues increased $153.4 million, or 35%, to $586.5 million in the year ended September 30, 2022 compared to $433.1 million in the year ended September 30, 2021.
Operating revenues derived from listed derivatives increased $17.0 million, or 8%, to $240.5 million in the year ended September 30, 2022 compared to $223.5 million in the year ended September 30, 2021. This increase was principally driven by a 9% increase in the average rate per contract as a result of wider spreads in LME commodity markets which was partially offset by a 2% decrease in contract volumes as a result of decline in agricultural and soft commodity client volumes.
Operating revenues derived from OTC transactions increased $64.9 million, or 45%, to $208.3 million in the year ended September 30, 2022 compared to $143.4 million in the year ended September 30, 2021. This increase was driven by a 16% increase in OTC volumes, primarily in agricultural and soft commodities as well as a 27% increase in the average rate per contract as a result of wider spreads in FX hedging and energy and renewable fuels markets.
Operating revenues derived from physical transactions increased $48.2 million, or 36%, to $180.4 million in the year ended September 30, 2022 compared to $132.2 million in the year ended September 30, 2021, principally due to increased client activity in agricultural and energy commodities as well as continued strong client demand for precious metals. Operating revenues during the year ended September 30, 2022 were favorably impacted by realized gains of $1.7 million on the sale of physical inventories carried at the lower of cost or net realizable value, for which losses on related derivative positions were recognized in prior periods. Operating revenues during the year ended September 30, 2021 included unrealized losses on derivative positions held against physical inventories carried at the lower of cost or net realizable value of $2.2 million, and sold in subsequent quarters. In addition, the year ended September 30, 2021 included a $1.9 million loss on the liquidation of certain physical inventories of crude oil and low sulfur fuel oil as a result of quality degradation and additional costs to sell.
Interest and fee income earned on client balances increased $26.7 million, or 183%, to $41.3 million in the year ended September 30, 2022 compared to $14.6 million in the year ended September 30, 2022, as result of both a 30% increase in average client equity to $2,149 million as well as an increase in short term interest rates.
Variable expenses, excluding interest, expressed as a percentage of operating revenues declined to 37% in the year ended September 30, 2022 compared to 42% in the year ended September 30, 2021, primarily as the result of the increase in interest income.
Segment income increased $96.1 million, or 50%, to $288.3 million in the year ended September 30, 2022 compared to $192.2 million in the year ended September 30, 2021, principally driven by the growth in operating revenues which was partially offset by a $16.5 million increase in other fixed expenses and a $3.1 million increase in bad debts, net of recoveries and impairment. The increase in other fixed expenses principally related to a $4.0 million increase in shared service allocations, a $3.2 million increase in travel and business development, a $2.8 million increase in professional fees, a $1.9 million increase in insurance expense and a $1.5 million increase in selling and marketing.
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Institutional
We provide institutional clients with a complete suite of equity trading services to help them find liquidity with best execution, consistent liquidity across a robust array of fixed income products, competitive and efficient clearing and execution in all major futures and securities exchanges globally as well as prime brokerage in equities and major foreign currency pairs and swap transactions. In addition, we originate, structure and place debt instruments in the international and domestic capital markets. These instruments include asset-backed securities (primarily in Argentina) and domestic municipal securities.
The tables below present the financial performance, a disaggregation of operating revenues, and select operating data and metrics used by management in evaluating the performance of the Institutional segment, for the periods indicated.

| Year Ended September 30,
(in millions) | 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Revenues: |  |  |  |  |  |  |  |  |
Sales of physical commodities | $ | — |  |  | —% |  | $ | — |  |  | —% |  | $ | — |
Principal gains, net | 359.2 |  |  | 7% |  | 337.2 |  |  | 8% |  | 312.0 |
Commission and clearing fees | 268.8 |  |  | (5)% |  | 283.8 |  |  | 15% |  | 246.0 |
Consulting, management, and account fees | 72.9 |  |  | 126% |  | 32.2 |  |  | 79% |  | 18.0 |
Interest income | 812.7 |  |  | 355% |  | 178.6 |  |  | 93% |  | 92.4 |
Total revenues | 1,513.6 |  |  | 82% |  | 831.8 |  |  | 24% |  | 668.4 |
Cost of sales of physical commodities | — |  |  | —% |  | — |  |  | —% |  | — |
Operating revenues | 1,513.6 |  |  | 82% |  | 831.8 |  |  | 24% |  | 668.4 |
Transaction-based clearing expenses | 187.9 |  |  | (7)% |  | 202.4 |  |  | 10% |  | 184.1 |
Introducing broker commissions | 35.4 |  |  | 12% |  | 31.7 |  |  | 15% |  | 27.5 |
Interest expense | 758.3 |  |  | 564% |  | 114.2 |  |  | 205% |  | 37.4 |
Net operating revenues | 532.0 |  |  | 10% |  | 483.5 |  |  | 15% |  | 419.4 |
Variable compensation and benefits | 180.5 |  |  | (4)% |  | 188.4 |  |  | 19% |  | 158.5 |
Net contribution | 351.5 |  |  | 19% |  | 295.1 |  |  | 13% |  | 260.9 |
Fixed compensation and benefits | 59.7 |  |  | 16% |  | 51.3 |  |  | 11% |  | 46.1 |
Other fixed expenses | 77.5 |  |  | 15% |  | 67.4 |  |  | 45% |  | 46.5 |
Bad debts, net of recoveries | (1.5) |  |  | (183)% |  | 1.8 |  |  | 200% |  | 0.6 |
Total non-variable direct expenses | 135.7 |  |  | 13% |  | 120.5 |  |  | 29% |  | 93.2 |
Other gain | 2.1 |  |  | n/m |  | — |  |  | n/m |  | — |
Segment income | $ | 217.9 |  |  | 25% |  | $ | 174.6 |  |  | 4% |  | $ | 167.7 |

| Year Ended September 30,
| 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Operating Revenues (in millions): |  |  |  |  |  |  |  |  |
Listed derivatives | $ | 186.0 |  |  | (2)% |  | $ | 190.0 |  |  | 16% |  | $ | 164.1 |
Securities | 973.6 |  |  | 90% |  | 513.4 |  |  | 18% |  | 436.0 |
FX contracts | 39.4 |  |  | 39% |  | 28.4 |  |  | 76% |  | 16.1 |
Interest / fees earned on client balances | 239.5 |  |  | 420% |  | 46.1 |  |  | 352% |  | 10.2 |
Other | 75.1 |  |  | 39% |  | 53.9 |  |  | 28% |  | 42.0 |
| $ | 1,513.6 |  |  | 82% |  | $ | 831.8 |  |  | 24% |  | $ | 668.4 |
Volumes and Other Select Data (all $ amounts are U.S. dollar equivalents): |  |  |  |
Listed derivatives (contracts, 000’s) | 125,862 |  |  | (3)% |  | 130,285 |  |  | 13% |  | 115,197 |
Listed derivatives, average rate per contract (1) | $ | 1.36 |  |  | —% |  | $ | 1.36 |  |  | (1)% |  | $ | 1.38 |
Average client equity - listed derivatives (millions) | $ | 5,210 |  |  | 47% |  | $ | 3,547 |  |  | 62% |  | $ | 2,195 |
Securities ADV ( millions) | $ | 5,257 |  |  | 52% |  | $ | 3,459 |  |  | 25% |  | $ | 2,776 |
Securities RPM (2) | $ | 301 |  |  | (40)% |  | $ | 503 |  |  | (15)% |  | $ | 593 |
Average money market / FDIC sweep client balances (millions) | $ | 1,338 |  |  | (25)% |  | $ | 1,784 |  |  | 21% |  | $ | 1,471 |
FX contracts ADV ( millions) | $ | 4,321 |  |  | 8% |  | $ | 3,983 |  |  | 142% |  | $ | 1,647 |
FX contracts RPM | $ | 37 |  |  | 32% |  | $ | 28 |  |  | (26)% |  | $ | 38 |
n/m = not meaningful to present as a percentage |  |  |  |  |  |  |  |  |
(1) Give up fees, related to contract excution for clients of other FCMs, are excluded from the calculation of listed derivative, average rate per contract.
(2) Interest expense associated with our fixed income activities is deducted from operating revenues in the calculation of Securities RPM, while interest income related to securities lending is excluded.

For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements.
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Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Operating revenues increased $681.8 million, or 82%, to $1,513.6 million in the fiscal year ended September 30, 2023 compared to $831.8 million in the fiscal year ended September 30, 2022. Net operating revenues increased $48.5 million, or 10%, to $532.0 million in the fiscal year ended September 30, 2023 compared to $483.5 million in the fiscal year ended September 30, 2022.
Operating revenues derived from listed derivatives declined $4.0 million, or 2%, to $186.0 million in the fiscal year ended September 30, 2023 compared to $190.0 million in the fiscal year ended September 30, 2022, principally driven by a 3% decline in listed derivative contract volumes as the average rate per contract was flat compared to the fiscal year ended September 30, 2022.
Operating revenues derived from securities transactions increased $460.2 million, or 90%, to $973.6 million in the fiscal year ended September 30, 2023 compared to $513.4 million in the fiscal year ended September 30, 2022. The ADV of securities traded increased 52%, principally driven by increased client activity in both equity and fixed income markets. Carried interest on fixed income securities is a component of operating revenues, however interest expense associated with financing these positions is not. As a result of the significant increase in short-term interest rates, we have amended our calculation of the securities RPM, in the table above, to present the RPM after deducting from operating revenues the interest expense associated with our fixed income activities. The securities RPM decreased 40% in the fiscal year ended September 30, 2023 compared to the fiscal year ended September 30, 2022, principally due to a tightening of spreads and a change in product mix.
Operating revenues derived from FX contracts increased $11.0 million, or 39%, to $39.4 million in the fiscal year ended September 30, 2023 compared to $28.4 million in the fiscal year ended September 30, 2022, primarily driven by a 8% increase in the ADV of FX contracts traded as well as a 32% increase in the average rate per contract.
Finally, interest and fee income earned on client balances, which is associated with our listed derivative business, as well as our correspondent clearing businesses, increased $193.4 million, to $239.5 million in the fiscal year ended September 30, 2023 compared to $46.1 million in the fiscal year ended September 30, 2022, principally driven by a significant increase in short-term interest rates, as well as a 47% increase in average client equity compared to the prior year period, which was partially offset by a 25% decline in average money market / FDIC sweep client balances.
As a result of the increase in short-term interest rates and the increase in the ADV, interest expense increased $644.1 million, to $758.3 million in the fiscal year ended September 30, 2023 compared to $114.2 million the fiscal year ended September 30, 2022, with interest expense directly associated with serving as an institutional dealer in fixed income securities increasing $494.4 million, interest paid to clients increasing $117.7 million and interest expense directly attributable to securities lending activities increasing $16.4 million compared to the prior year period.
Variable expenses, excluding interest, expressed as a percentage of operating revenues declined to 27% in the fiscal year ended September 30, 2023 compared to 51% in the fiscal year ended September 30, 2022, principally as the result of the increase in interest/fees earned on client balances, which is generally not a component of variable compensation.
Segment income increased $43.3 million, or 25%, to $217.9 million in the fiscal year ended September 30, 2023 compared to $174.6 million in the fiscal year ended September 30, 2022, primarily as a result of the increase in net operating revenues noted above, as well as a $2.1 million foreign exchange antitrust class action settlement received in our institutional foreign exchange prime brokerage business. The increase in net operating revenues was partially offset by a $15.2 million, or 13% increase in non-variable direct expenses versus the fiscal year ended September 30, 2022. The increase in non-variable direct expenses was primarily related to a $8.4 million increase in fixed compensation and benefits, a $3.8 million increase in trade systems and market information, a $2.4 million increase in non-trading technology and support, a $1.5 million increase in professional fees and a $1.9 million increase in travel and business development. These increases were partially offset by a $3.3 million positive variance in bad debts, net of recoveries compared to the fiscal year ended September 30, 2022. Segment income was also favorably impacted by a nonrecurring gain related to proceeds received of $2.1 million resulting from an institutional-based foreign exchange antitrust class action settlement.
Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Operating revenues increased $163.4 million, or 24%, to $831.8 million in the year ended September 30, 2022 compared to $668.4 million in the year ended September 30, 2021. Net operating revenues increased $64.1 million, or 15%, to $483.5 million in the year ended September 30, 2022 compared to $419.4 million in the year ended September 30, 2021.
Operating revenues derived from listed derivatives increased $25.9 million, or 16%, to $190.0 million in the year ended September 30, 2022 compared to $164.1 million in the year ended September 30, 2021, principally driven by a 13% increase in listed derivative contract volumes compared to the year ended September 30, 2021, as a result of both an increase in market volatility as well as an increase in the number of clients in this business. This was partially offset by a 1% decline in the average rate per contract in the year ended September 30, 2022 compared to the year ended September 30, 2021.
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Operating revenues derived from securities transactions increased $77.4 million, or 18%, to $513.4 million in the year ended September 30, 2022 compared to $436.0 million in the year ended September 30, 2021. The ADV of securities traded increased 25%, principally driven by increased client activity in fixed income markets and to a lesser extent equity products. The RPM traded declined 15% in the year ended September 30, 2022 compared to the year ended September 30, 2021.
Operating revenues derived from FX contracts increased $12.3 million, or 76%, to $28.4 million in the year ended September 30, 2022 compared to $16.1 million in the year ended September 30, 2021, primarily driven by a 142% increase in the ADV of FX contracts traded as a result of heightened volatility in global FX markets. The effect of the increase in ADV was partially offset by a 26% decline in the average rate per contract due to changes in product and client mix.
Finally, interest and fee income earned on client balances, which is associated with our listed derivative business, as well as our correspondent clearing and independent wealth management businesses, increased $35.9 million, or 352%, to $46.1 million in the year ended September 30, 2022 compared to $10.2 million in the year ended September 30, 2021, as result of a 62% increase in average client equity and a 21% increase in average FDIC sweep client balances combined with a significant increase in short term interest rates.
As a result of the increase in short term interest rates and the increase in ADV, interest expense increased 205% compared to the prior year, with interest expense directly associated with serving as an institutional dealer in fixed income securities increasing $52.7 million, interest paid to clients increasing $14.5 million and interest expense directly attributable to securities lending activities increasing $5.4 million compared to the prior year period.
Variable expenses, excluding interest, expressed as a percentage of operating revenues declined to 51% in the year ended September 30, 2022 compared to 55% in the year ended September 30, 2021, primarily as the result of the increase in interest income.
Segment income increased $6.9 million, or 4%, to $174.6 million in the year ended September 30, 2022 compared to $167.7 million in the year ended September 30, 2021, primarily as a result of the increase in net operating revenues noted above, which was partially offset by a $26.1 million, or 28% increase in non-variable direct expenses, excluding bad debts versus the year ended September 30, 2021. The increase in non-variable direct expenses, excluding bad debts was primarily related to a $5.2 million increase in fixed compensation and benefits, a $3.9 million increase in trade systems and market information, a $6.2 million increase in professional fees and a $3.0 million increase in travel and business development.
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Retail
We provide our retail clients around the world access to over 18,000 global financial markets, including spot foreign exchange ("forex") and CFDs, which are investment products with returns linked to the performance of underlying assets, and both financial trading and physical investment in precious metals. In addition, our independent wealth management business offers a comprehensive product suite to retail investors in the United States.
The tables below present the financial performance, a disaggregation of operating revenues, and select operating data and metrics used by management in evaluating the performance of the Retail segment, for the periods indicated.

| Year Ended September 30,
(in millions) | 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Sales of physical commodities | $ | 571.3 |  |  | (36)% |  | $ | 889.9 |  |  | (42)% |  | $ | 1,541.3 |
Principal gains, net | 186.4 |  |  | (39)% |  | 307.4 |  |  | 45% |  | 212.7 |
Commission and clearing fees | 46.3 |  |  | (9)% |  | 50.8 |  |  | (14)% |  | 58.9 |
Consulting, management, and account fees | 53.6 |  |  | 4% |  | 51.6 |  |  | 13% |  | 45.5 |
Interest income | 30.9 |  |  | 587% |  | 4.5 |  |  | 200% |  | 1.5 |
Total revenues | 888.5 |  |  | (32)% |  | 1,304.2 |  |  | (30)% |  | 1,859.9 |
Cost of physical commodities sold | 555.5 |  |  | (37)% |  | 877.5 |  |  | (42)% |  | 1,511.9 |
Operating revenues | 333.0 |  |  | (22)% |  | 426.7 |  |  | 23% |  | 348.0 |
Transaction-based clearing expenses | 16.2 |  |  | (38)% |  | 26.2 |  |  | 2% |  | 25.7 |
Introducing broker commissions | 83.8 |  |  | (12)% |  | 95.6 |  |  | (3)% |  | 98.2 |
Interest expense | 5.7 |  |  | 185% |  | 2.0 |  |  | 18% |  | 1.7 |
Net operating revenues | 227.3 |  |  | (25)% |  | 302.9 |  |  | 36% |  | 222.4 |
Variable compensation and benefits | 14.6 |  |  | (35)% |  | 22.6 |  |  | 26% |  | 18.0 |
Net contribution | 212.7 |  |  | (24)% |  | 280.3 |  |  | 37% |  | 204.4 |
Fixed compensation and benefits | 47.5 |  |  | (15)% |  | 55.7 |  |  | 8% |  | 51.6 |
Other fixed expenses | 117.1 |  |  | 3% |  | 113.3 |  |  | 35% |  | 83.9 |
Bad debts, net of recoveries | 2.3 |  |  | —% |  | 2.3 |  |  | 109% |  | 1.1 |
Total non-variable direct expenses | 166.9 |  |  | (3)% |  | 171.3 |  |  | 25% |  | 136.6 |
Other gain | — |  |  | (100)% |  | 6.4 |  |  | n/m |  | — |
Segment income | $ | 45.8 |  |  | (60)% |  | $ | 115.4 |  |  | 70% |  | $ | 67.8 |

The tables below reflect a disaggregation of operating revenues and select operating data and metrics used by management in evaluating performance of our Retail segment for the periods indicated.

| Year Ended September 30,
| 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Operating Revenues (in millions): |  |  |  |  |  |  |  |  |
Securities | $ | 90.4 |  |  | (7)% |  | $ | 97.0 |  |  | (1)% |  | $ | 97.6 |
FX / CFD contracts | 222.5 |  |  | (28)% |  | 310.9 |  |  | 38% |  | 225.9 |
Physical contracts | 12.0 |  |  | (14)% |  | 13.9 |  |  | (32)% |  | 20.4 |
Interest / fees earned on client balances | 3.0 |  |  | 58% |  | 1.9 |  |  | 58% |  | 1.2 |
Other | 5.1 |  |  | 70% |  | 3.0 |  |  | 3% |  | 2.9 |
| $ | 333.0 |  |  | (22)% |  | $ | 426.7 |  |  | 23% |  | $ | 348.0 |
Select data (all $ amounts are U.S. dollar equivalents): |  |  |  |
FX / CFD contracts ADV (millions) | $ | 7,622 |  |  | (18)% |  | $ | 9,290 |  |  | 3% |  | $ | 8,989 |
FX / CFD contracts RPM | $ | 115 |  |  | (11)% |  | $ | 129 |  |  | 32% |  | $ | 98 |

For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements.
Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Operating revenues decreased $93.7 million, or 22%, to $333.0 million in the fiscal year ended September 30, 2023 compared to $426.7 million in the fiscal year ended September 30, 2022. Net operating revenues decreased $75.6 million, or 25%, to $227.3 million in the fiscal year ended September 30, 2023 compared to $302.9 million in the fiscal year ended September 30, 2022.
Operating revenues derived from FX/CFD contracts declined $88.4 million, or 28%, to $222.5 million, primarily as a result of 11% and 18% declines in RPM and FX/CFD contracts ADV, respectively, compared to the fiscal year ended September 30, 2022. These declines were principally driven by diminished volatility and tighter trading ranges in our larger volume markets which resulted in reduced client trading activity and spread capture.
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Operating revenues derived from securities transactions, which are related to our independent wealth management activities, declined $6.6 million, or 7%, to $90.4 million in the fiscal year ended September 30, 2023 compared to $97.0 million in the fiscal year ended September 30, 2022.
Operating revenues derived from physical contracts increased $1.9 million, or 14%, to $12.0 million in the fiscal year ended September 30, 2023 compared to $13.9 million in the fiscal year ended September 30, 2022.
Interest and fee income earned on client balances increased $1.1 million, or 58%, to $3.0 million primarily as a result of an increase in short-term interest rates.
Variable expenses, excluding interest, as a percentage of operating revenues were 34% in the fiscal year ended September 30, 2023 compared to 34% in the fiscal year ended September 30, 2022.
Segment income decreased $69.6 million, or 60%, to $45.8 million in the fiscal year ended September 30, 2023 compared to $115.4 million in the fiscal year ended September 30, 2022, primarily as a result of the decline in net operating revenues noted above. Non-variable direct expenses declined $4.4 million, or 3%, compared to the fiscal year ended September 30, 2022, principally driven by a $3.3 million decline in direct selling and marketing costs. The fiscal year ended September 30, 2022 included a non-recurring $6.4 million foreign exchange antitrust class action settlement received in our Retail forex business.
Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Operating revenues increased $78.7 million, or 23%, to $426.7 million in the year ended September 30, 2022 compared to $348.0 million in the year ended September 30, 2021. Net operating revenues increased $80.5 million, or 36%, to $302.9 million in the year ended September 30, 2022 compared to $222.4 million in the year ended September 30, 2021.
Operating revenues derived from FX / CFD contracts increased $85.0 million, or 38%, to $310.9 million, primarily as a result of a 32% increase in RPM and a 3% increase in FX/CFD contracts ADV compared to the year ended September 30, 2021. These increases were principally driven by heightened volatility which results in increased client trading activity and spread capture.
Operating revenues derived from securities transactions declined $0.6 million, or 1%, to $97.0 million in the year ended September 30, 2022 compared to $97.6 million in the year ended September 30, 2021.
Operating revenues derived from physical contracts declined $6.5 million, or 32%, to $13.9 million in the year ended September 30, 2022 compared to $20.4 million in the year ended September 30, 2021, with the comparative prior year period reflecting a strong performance related to heightened client activity caused by the Covid-19 pandemic.
Interest and fee income earned on client balances increased $0.7 million, or 58%, to $1.9 million primarily as a result of an increase in short term interest rates.
Variable expenses, excluding interest, as a percentage of operating revenues were 34% in the year ended September 30, 2022 compared to 41% in the year ended September 30, 2021, with the decrease in the variable rate percentage being driven by the strong growth in operating revenues derived from FX/CFD contracts which has a lower variable rate cost base.
Segment income increased $47.6 million, or 70%, to $115.4 million in the year ended September 30, 2022 compared to $67.8 million in the year ended September 30, 2021, primarily as a result of the increase in net operating revenues noted above, as well as a $6.4 million foreign exchange antitrust class action settlement received in the year ended September 30, 2022 in our Retail forex business. Non-variable direct expenses increased $34.7 million, or 25%, compared to the year ended September 30, 2021. The increase in non-variable direct expenses, was primarily a result of a $14.9 million increase in selling and marketing expenses, a $4.1 million increase in fixed compensation and benefits, a $3.6 million increase depreciation and amortization, a $2.5 million increase in trading systems and market information, a $1.9 million increase in travel and business development and a $1.4 million increase in professional fees.
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Global Payments
We provide customized payment, technology and treasury services to banks and commercial businesses as well as charities and non-governmental and government organizations. We provide transparent pricing and offer payments services in more than 180 countries and 140 currencies, which we believe is more than any other payments solutions provider.
The tables below present the financial performance, a disaggregation of operating revenues, and select operating data and metrics used by management in evaluating the performance of the Global Payments segment for the periods indicated.

| Year Ended September 30,
(in millions) | 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Revenues: |  |  |  |  |  |  |  |  |
Sales of physical commodities | $ | — |  |  | —% |  | $ | — |  |  | —% |  | $ | — |
Principal gains, net | 200.3 |  |  | 23% |  | 162.9 |  |  | 26% |  | 128.8 |
Commission and clearing fees | 7.2 |  |  | 16% |  | 6.2 |  |  | 19% |  | 5.2 |
Consulting, management, account fees | 3.4 |  |  | 21% |  | 2.8 |  |  | (15)% |  | 3.3 |
Interest income | 1.7 |  |  | 1,600% |  | 0.1 |  |  | n/m |  | — |
Total revenues | 212.6 |  |  | 24% |  | 172.0 |  |  | 25% |  | 137.3 |
Cost of sales of physical commodities | — |  |  | —% |  | — |  |  | —% |  | — |
Operating revenues | 212.6 |  |  | 24% |  | 172.0 |  |  | 25% |  | 137.3 |
Transaction-based clearing expenses | 6.8 |  |  | (13)% |  | 7.8 |  |  | 20% |  | 6.5 |
Introducing broker commissions | 2.3 |  |  | 53% |  | 1.5 |  |  | 88% |  | 0.8 |
Interest expense | 0.2 |  |  | —% |  | 0.2 |  |  | 100% |  | 0.1 |
Net operating revenues | 203.3 |  |  | 25% |  | 162.5 |  |  | 25% |  | 129.9 |
Variable compensation and benefits | 38.8 |  |  | 24% |  | 31.3 |  |  | 19% |  | 26.2 |
Net contribution | 164.5 |  |  | 25% |  | 131.2 |  |  | 27% |  | 103.7 |
Fixed compensation and benefits | 36.6 |  |  | 94% |  | 18.9 |  |  | 29% |  | 14.7 |
Other fixed expenses | 18.8 |  |  | 27% |  | 14.8 |  |  | 44% |  | 10.3 |
Bad debts | — |  |  | (100)% |  | 0.1 |  |  | (50)% |  | 0.2 |
Total non-variable direct expenses | 55.4 |  |  | 64% |  | 33.8 |  |  | 34% |  | 25.2 |
Segment income | $ | 109.1 |  |  | 12% |  | $ | 97.4 |  |  | 24% |  | $ | 78.5 |

| Year Ended September 30,
| 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Operating Revenues (in millions): |  |  |  |  |  |  |  |  |
Payments | $ | 208.3 |  |  | 24% |  | $ | 167.8 |  |  | 25% |  | $ | 133.8 |
Other | 4.3 |  |  | 2% |  | 4.2 |  |  | 20% |  | 3.5 |
| $ | 212.6 |  |  | 24% |  | $ | 172.0 |  |  | 25% |  | $ | 137.3 |
Select data (all $ amounts are U.S. dollar equivalents): |  |  |  |
Global Payments ADV (millions) | $ | 67 |  |  | 8% |  | $ | 62 |  |  | 15% |  | $ | 54 |
Global Payments RPM | $ | 12,367 |  |  | 14% |  | $ | 10,880 |  |  | 10% |  | $ | 9,921 |

For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements.
Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Operating revenues increased $40.6 million, or 24%, to $212.6 million in the fiscal year ended September 30, 2023 compared to $172.0 million in the fiscal year ended September 30, 2022. Net operating revenues increased $40.8 million, or 25%, to $203.3 million in the fiscal year ended September 30, 2023 compared to $162.5 million in the fiscal year ended September 30, 2022.
The increase in operating revenues was primarily driven by an 8% increase in the average daily volume, as well as a 14% increase in the RPM traded compared to the fiscal year ended September 30, 2022.
Variable expenses, excluding interest, expressed as a percentage of operating revenues were 23% in the fiscal year ended September 30, 2023 compared to 24% in the fiscal year ended September 30, 2022.
Segment income increased $11.7 million, or 12%, to $109.1 million in the fiscal year ended September 30, 2023 compared to $97.4 million in the fiscal year ended September 30, 2022. This increase was primarily driven by the increase in net operating revenues noted above, which was partially offset by a $21.6 million increase in non-variable direct expenses. The increase in non-variable direct expenses was primarily driven by a $17.7 million increase in fixed compensation and benefits, including
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$10.0 million in severance related to a reorganization of the business. This reorganization plan will include a decline in variable compensation and benefits as a percentage of operating revenues going forward.
Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Operating revenues increased $34.7 million, or 25%, to $172.0 million in the year ended September 30, 2022 compared to $137.3 million in the year ended September 30, 2021. Net operating revenues increased $32.6 million, or 25%, to $162.5 million in the year ended September 30, 2022 compared to $129.9 million in the year ended September 30, 2021.
The increase in operating revenues was primarily driven by a 15% increase in the average daily volume as well as a 10% increase in the RPM traded compared to the year ended September 30, 2021.
Variable expenses, excluding interest, expressed as a percentage of operating revenues were 24% in both the years ended September 30, 2022 and 2021.
Segment income increased $18.9 million, or 24%, to $97.4 million in the year ended September 30, 2022 compared to $78.5 million in the year ended September 30, 2021. This increase primarily resulted from the increase in net operating revenues, partially offset by a $8.6 million increase in non-variable direct expenses versus the prior year period, which includes a $4.2 million increase in fixed compensation and benefits, a $1.2 million increase in travel and business development and a $0.7 million increase in non-trading technology and support.
Unallocated Costs and Expenses
The following table is a breakout of our unallocated costs and expenses from the total costs and expenses shown above. The unallocated costs and expenses include certain shared services such as information technology, accounting and treasury, credit and risk, legal and compliance, and human resources and other activities.

| Year Ended September 30,
(in millions) | 2023 |  | % Change |  | 2022 |  | % Change |  | 2021
Compensation and benefits: |  |  |  |  |  |  |  |  |
Variable compensation and benefits | $ | 67.6 |  |  | 14% |  | $ | 59.5 |  |  | 58% |  | $ | 37.6 |
Fixed compensation and benefits | 156.4 |  |  | 31% |  | 119.2 |  |  | —% |  | 119.1 |
| 224.0 |  |  | 25% |  | 178.7 |  |  | 14% |  | 156.7 |
Other expenses: |  |  |  |  |  |  |  |  |
Occupancy and equipment rental | 39.4 |  |  | 10% |  | 35.7 |  |  | 8% |  | 33.1 |
Non-trading technology and support | 43.1 |  |  | 13% |  | 38.3 |  |  | 20% |  | 31.8 |
Professional fees | 26.3 |  |  | 1% |  | 26.1 |  |  | 13% |  | 23.0 |
Depreciation and amortization | 22.6 |  |  | 4% |  | 21.7 |  |  | 14% |  | 19.0 |
Communications | 6.6 |  |  | 20% |  | 5.5 |  |  | (15)% |  | 6.5 |
Selling and marketing | 4.4 |  |  | (24)% |  | 5.8 |  |  | 241% |  | 1.7 |
Trading systems and market information | 7.7 |  |  | 67% |  | 4.6 |  |  | 10% |  | 4.2 |
Travel and business development | 5.5 |  |  | 38% |  | 4.0 |  |  | 208% |  | 1.3 |
Other | 21.3 |  |  | 15% |  | 18.6 |  |  | (21)% |  | 23.4 |
| 176.9 |  |  | 10% |  | 160.3 |  |  | 11% |  | 144.0 |
Total compensation and other expenses | $ | 400.9 |  |  | 18% |  | $ | 339.0 |  |  | 13% |  | $ | 300.7 |

Year Ended September 30, 2023 Compared to Year Ended September 30, 2022
Total unallocated costs and other expenses increased $61.9 million, or 18%, to $400.9 million in the fiscal year ended September 30, 2023 compared to $339.0 million in the fiscal year ended September 30, 2022. Compensation and benefits increased $45.3 million, or 25%, to $224.0 million in the fiscal year ended September 30, 2023 compared to $178.7 million in the fiscal year ended September 30, 2022.
The increase in variable and non-variable compensation is partially related to the move of certain client engagement teams out of discrete business lines and into shared services, and replacing compensation expense in those discrete business lines with a non-variable charge. Additionally, the increase in non-variable compensation is partially a result of hiring among our compliance and IT departments, principally due to company growth, and within the accounting department, principally due to the CDI acquisition.
Also, the increase in non-variable compensation is related to annual merit increases, as well as the acceleration of share-based compensation related to employee departures that are related to retirements and certain business reorganizations. Additionally, the increase in variable compensation is principally due to higher performance, and to a lessor extent, an increase in headcount.
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Other non-compensation expenses increased $16.6 million, or 10%, to $176.9 million in the fiscal year ended September 30, 2023 compared to $160.3 million in the fiscal year ended September 30, 2022 principally due to higher occupancy costs, principally related to an increase in property tax assessments in London, non-trading technology maintenance and support costs for the various systems used by the support services departments, and travel and business development costs, partially offset by lower selling and marketing costs due principally to the bi-annual global sales and strategy meeting held in March 2022.
Year Ended September 30, 2022 Compared to Year Ended September 30, 2021
Total unallocated costs and other expenses increased $38.3 million, or 13%, to $339.0 million in the year ended September 30, 2022 compared to $300.7 million in the year ended September 30, 2021. Compensation and benefits increased $22.0 million, or 14%, to $178.7 million in the year ended September 30, 2022 compared to $156.7 million in the year ended September 30, 2021.
During the year ended September 30, 2022, the increase in variable compensation and benefits was principally related to higher incentives driven by increased company performance over the prior year. Fixed compensation and benefits increased modestly during the year ended September 30, 2022, principally due to increased headcount, partially offset by lower severance costs. During the year ended September 30, 2022, severance costs were $0.9 million. During the year ended September 30, 2021, severance costs were $3.5 million, principally due to the departure of certain corporate senior officers.
During the year ended September 30, 2022, the increase in non-trading technology and support is principally due to an increase in non-trading software licensing and maintenance costs within our IT department. During the year ended September 30, 2022, the increase in selling and marketing expenses is principally due to the costs of holding our bi-annual global sales and strategy meeting in March 2022. During the year ended September 30, 2022, the increase in travel and business development is principally due to increased travel among the support functions with the lifting of certain social distancing and travel restrictions, following periods of limited travel due to responses by governments and societies to the COVID-19 pandemic.
Liquidity, Financial Condition and Capital Resources
Overview
Liquidity is our ability to generate sufficient funding to meet all of our cash needs. Liquidity is of critical importance to us and imperative to maintaining our operations on a daily basis. Senior management establishes liquidity and capital policies, which we monitor and review for funding from both internal and external sources. We continuously evaluate how effectively our policies support our business operations. We have historically financed our liquidity and capital needs principally with funds generated from our subsidiaries' operations, issuing debt and equity securities, and accessing committed credit facilities. We plan to finance our future operating liquidity and regulatory capital needs in a manner consistent with our past practice. Liquidity and capital matters are reported regularly to our Board of Directors.
Regulatory
StoneX Financial Inc. is registered as a broker-dealer with the SEC and is a member of both FINRA and MSRB. In addition, StoneX Financial Inc. is registered as a futures commission merchant with the CFTC and NFA, and a member of various commodities and futures exchanges in the U.S. and abroad. StoneX Financial Inc. has a responsibility to meet margin calls at all exchanges on a daily basis, and even on an intra-day basis, if deemed necessary by relevant regulators or exchanges. We require our clients to make margin deposits the next business day, and we require our largest clients to make intra-day margin payments during periods of significant price movement. Margin required to be posted to the exchanges is a function of our clients’ net open positions and required margin per contract. StoneX Financial Inc. is subject to minimum capital requirements under Section 4(f)(b) of the Commodity Exchange Act, Part 1.17 of the rules and regulations of the CFTC and the SEC Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 1934. StoneX Financial Inc. is also subject to Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (“Customer Protection Rule”).
Gain Capital Group, LLC is registered as both a futures commission merchant and registered foreign exchange dealer, subject to minimum capital requirements under Section 4(f)(b) of the Commodity Exchange Act, Part 1.17 of the rules and regulations of the CFTC and NFA Financial Requirements, Sections 1 and 11.
StoneX Markets LLC is a CFTC registered swap dealer, whose business is overseen by the NFA. The CFTC imposes rules over net capital requirements, as well as the exchange of initial margin between registered swap dealers and certain counterparties.
These rules specify the minimum amount of capital that must be available to support our clients’ account balances and open trading positions, including the amount of assets that StoneX Financial Inc., Gain Capital Group, LLC and StoneX Markets LLC must maintain in relatively liquid form. Further, the rules are designed to maintain general financial integrity and liquidity.
StoneX Financial Ltd is regulated by the FCA, the regulator of investment firms in the U.K. as a MiFID investment firm under U.K. law, and is subject to regulations which impose regulatory capital requirements. In Europe, our regulated subsidiaries are subject to E.U. regulation. Across the U.K. and E.U., the respective transpositions of the Market Abuse Regulation, and the
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General Data Protection Regulation, also apply. StoneX Financial Ltd is a member of various commodities and futures exchanges in the U.K. and Europe and has the responsibility to meet margin calls at all exchanges on a daily basis and intra-day basis, as necessary. StoneX Financial Ltd is required to be compliant with the U.K.’s ‘MIFIDPRU’ regulation. To comply with these standards, we have implemented daily liquidity procedures, conduct periodic reviews of liquidity by stressed scenarios, and are required to maintain enough liquidity for the firm to survive for one year under the appropriate stressed conditions.
The regulations discussed above limit funds available for dividends to us. As a result, we may be unable to access our operating subsidiaries’ funds when we need them.
In our physical commodities trading, commercial hedging OTC, securities and foreign exchange trading activities, we may be required upon to meet margin calls with our various trading counterparties based upon the underlying open transactions we have in place with those counterparties.
We continuously review our overall credit and capital needs to ensure that our capital base, both stockholders’ equity and debt, as well as available credit facilities can appropriately support the anticipated financing needs of our operating subsidiaries.
As of September 30, 2023, we had total equity of $1,379.1 million, outstanding loans under revolving credit and other facilities of $341.0 million and $342.1 million outstanding on our senior secured notes, net of deferred financing costs.
A substantial portion of our assets are liquid. As of September 30, 2023, approximately 97% of our assets consisted of cash; securities purchased under agreements to resell; securities borrowed; deposits with and receivables from exchange-clearing organizations, broker-dealers, clearing organizations and counterparties; client receivables; marketable financial instruments and investments; and physical commodities inventory. All assets that are not client and counterparty deposit financed are financed by our equity capital, bank loans, short-term borrowings from financial instruments sold, not yet purchased and under repurchase agreements, securities loaned and other payables.
As of September 30, 2023, we had deferred tax assets totaling $45.4 million. We are required to assess the need for deferred tax asset valuation allowances at each reporting period. We record a valuation allowance against deferred tax assets when it is considered more likely than not that we will not realize all or a portion of our deferred tax assets. The valuation allowance for deferred tax assets as of September 30, 2023 and 2022 was $12.4 million and $15.8 million, respectively. The valuation allowances as of September 30, 2023 and 2022 were primarily related to U.S. state and local, and foreign net operating loss carryforwards and foreign tax credits that, in the judgment of management, are not more likely than not to be realized.
Client and Counterparty Credit and Liquidity Risk
Our operations expose us to credit risk related to our clients and counterparties. The risk includes liquidity risk to the extent our clients or counterparties are unable to make timely payment of margin or other credit support. We are indirectly exposed to the financing and liquidity risks of our clients and counterparties, including the risks that our clients and counterparties may not be able to finance their operations.
As a clearing broker, we act on behalf of our clients for all trades consummated on exchanges. We must pay initial and variation margin to the exchanges, on a net basis, before we receive the required payments from our clients. Accordingly, we are responsible for our clients’ obligations with respect to these transactions, which exposes us to significant credit risk. Our clients are required to make any margin deposits the next business day, and we require our largest clients to make intra-day margin payments during periods of significant price movement. Our clients are obligated to maintain initial margin requirements at the level set by the respective exchanges, but we have the ability to increase margin requirements for clients based on their open positions, trading activity, or market conditions.
As it relates to OTC derivative transactions, we act as a principal, which exposes us to the credit risk of both our clients and the counterparties with which we offset our client positions. As with exchange-traded transactions, our OTC transactions require that we meet initial and variation margin payments on behalf of our clients before we receive related required payments from our clients. OTC clients are required to post sufficient collateral to meet margin requirements based on value-at-risk models as well as variation margin requirements based on the price movement of the commodity or security in which they transact. Our clients are required to make any margin deposits the next business day, and we may require our largest clients to make intra-day margin payments during periods of significant price movement. In this business as well, we have the ability to increase the margin requirements for clients based on their open positions, trading activity, or market conditions. On a limited basis, we provide credit thresholds to certain clients, based on internal evaluations and monitoring of client creditworthiness.
In addition, with OTC transactions, we are at risk that a counterparty will fail to meet its obligations to us when due. We would then be exposed to the risk that the settlement of a transaction which is due a client will not be collected from the respective counterparty with which the transaction was offset. We continuously monitor the credit quality of our respective counterparties and mark our positions held with each counterparty to market on a daily basis.
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We enter into securities purchased under agreements to resell, securities sold under agreements to repurchase, securities borrowed and securities loaned transactions to, among other things, finance financial instruments, acquire securities to cover short positions, acquire securities for settlement, and to accommodate counterparties’ needs. In connection with these agreements and transactions, it is our policy to receive or pledge cash or securities to adequately collateralize such agreements and transactions in accordance with general industry guidelines and practices. The collateral is valued daily and we may require counterparties to deposit additional collateral or return collateral pledged, when appropriate.
OptionSellers
In November 2018, balances in approximately 300 accounts of the FCM division of our wholly owned subsidiary, StoneX Financial Inc., declined below required maintenance margin levels and into deficit balances. All positions in these accounts, which were managed by OptionSellers.com Inc. (“OptionSellers”), an independent Commodity Trading Advisor (“CTA”), were liquidated in accordance with StoneX Financial Inc.’s client agreements and obligations under market regulation standards. As of September 30, 2023, the receivable from these client accounts, net of collections and other allowable deductions was $17.2 million, with no individual account receivable exceeding $1.4 million. As of September 30, 2023, the allowance against these uncollected balances was $5.1 million. The Company is pursuing collection of the uncollected balances through arbitration proceedings against the account holders. The Company will consider developments in these proceedings, and any other relevant matters, in determining whether any changes in the allowance against the uncollected balances are required.
Depending on future collections and the outcomes of arbitration proceedings, any provisions for bad debts and actual losses may or may not be material to our financial results. However, we believe that the likelihood of a material adverse outcome is remote, and do not believe that any potential losses related to this matter would impact our ability to comply with our ongoing liquidity, capital, and regulatory requirements. Additional information on this matter can be found in Note 13 of the Consolidated Financial Statements.
Primary Sources and Uses of Cash
Our cash and cash equivalents and client cash and securities held for clients are held at banks, deposits at liquidity providers, investments in money market funds that invest in highly liquid investment grade securities including U.S. treasury bills, as well as investments in U.S treasury bills. In general, we believe all of our investments and deposits are of high credit quality and we have more than adequate liquidity to conduct our businesses.
Our assets and liabilities may vary significantly from period to period due to changing client requirements, economic and market conditions and our growth. Our total assets as of September 30, 2023 and 2022, were $21.9 billion and $19.9 billion, respectively. Our operating activities generate or utilize cash as a result of net income or loss earned or incurred during each period and fluctuations in our assets and liabilities. The most significant fluctuations arise from changes in the level of client activity, commodities prices and changes in the balances of financial instruments and commodities inventory. Certain of our subsidiaries occasionally utilize their margin line credit facilities, on a short-term basis, to meet intraday settlements with the commodity exchanges prior to collecting margin funds from their clients.
The majority of the assets of StoneX Financial Inc., StoneX Financial Ltd, StoneX Markets LLC, and Gain Capital Group, LLC are restricted from being transferred to us or other affiliates due to specific regulatory requirements. This restriction has no current impact on our ability to meet our cash obligations, and no such impact is expected in the future.
We have liquidity and funding policies and processes in place that are intended to maintain sufficient flexibility to address both company-specific and industry liquidity needs. The majority of our excess funds is held with high-quality institutions, under highly liquid reverse repurchase agreements, U.S. government obligations, interest earning cash deposits and AA-rated money market investments.
We do not intend to distribute earnings of our foreign subsidiaries in a taxable manner, and therefore intend to limit distributions to earnings previously taxed in the U.S., or earnings that would qualify for the 100 percent dividends received deduction, and earnings that would not result in any significant foreign taxes. We repatriated $35.5 million and $29.7 million for the fiscal years ended September 30, 2023 and 2022, respectively, of earnings previously taxed in the U.S. resulting in no significant incremental taxes. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries.
Senior Secured Notes
In June 2020, we issued $350.0 million in aggregate principal amount of our 8.625% Senior Secured Notes due 2025 (the “Notes”) at the offering price of 98.5% of the aggregate principal amount. The Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, on a senior second lien secured basis, by certain subsidiaries of the Company that guarantee the Company’s senior committed credit facility and certain of its domestic subsidiaries.
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The Notes will mature on June 15, 2025. Interest on the Notes accrues at a rate of 8.625% per annum and is payable semiannually in arrears on June 15 and December 15 of each year. We incurred debt issuance costs of $9.5 million in connection with the issuance of the Notes, which are being amortized over the term of the Notes under the effective interest method. We have had the right, since June 15, 2022, to redeem the Notes, in whole or in part, at the redemption prices set forth in the indenture.
Committed Credit Facilities
As of September 30, 2023, we had five committed bank credit facilities, totaling $1,200.0 million, of which $278.0 million was outstanding. Additional information regarding our bank credit facilities can be found in Note 11 of the Consolidated Financial Statements. The credit facilities include:
•A first-lien senior secured syndicated loan facility under which $500.0 million is available to us for general working capital requirements and capital expenditures. The revolving credit facility was amended during the year ended September 30, 2023 to increase the amount available and extend the maturity date to April 21, 2026. The maturity date remains April 21, 2025 for one lender representing $42.5 million of the facility commitment.
•An unsecured line of credit committed until October 29, 2024, under which $190.0 million is available to our wholly owned subsidiary, StoneX Financial Inc. to provide short term funding of margin to commodity exchanges as necessary.
•A syndicated borrowing facility committed until July 28, 2024, under which $400.0 million is available to our wholly owned subsidiary, StoneX Commodity Solutions LLC (“StoneX Commodity Solutions”) to finance commodity financing arrangements and commodity repurchase agreements.
•An unsecured syndicated loan facility committed until October 12, 2024, under which our subsidiary, StoneX Financial Ltd is entitled to borrow up to $100.0 million, subject to certain terms and conditions of the credit agreement. This facility is intended to provide short-term funding of margin to commodity exchanges as necessary.
•An unsecured revolving credit facility committed until September 6, 2024, under which $10.0 million is available to our wholly owned subsidiary, StoneX Financial Pte. Ltd. for general working capital requirements.
Our facility agreements contain certain financial covenants relating to financial measures on a consolidated basis, as well as on a stand-alone subsidiary basis, in certain cases, including minimum tangible net worth, minimum regulatory capital, minimum net unencumbered liquid assets, maximum net loss, minimum fixed charge coverage ratio and maximum funded debt to net worth ratio. Failure to comply with any such covenants could result in the debt becoming payable on demand. As of September 30, 2023, we and our subsidiaries are in compliance with all of our financial covenants under the outstanding facilities.
In accordance with required disclosure as part of our first-lien senior secured syndicated revolving loan facility, during the trailing twelve months ended September 30, 2023, interest expense directly attributable to trading activities includes $556.7 million in connection with trading activities conducted as an institutional dealer in fixed income securities, and $39.4 million in connection with securities lending activities.
As reflected above, $410.0 million of the Company’s committed credit facilities are scheduled to expire during the upcoming year. The Company intends to renew or replace all of its facilities as they expire over time, and based on the Company’s liquidity position and capital structure, the Company believes it will be able to do so.
Uncommitted Credit Facilities
We have access to certain uncommitted financing agreements that support our ordinary course securities and commodities inventories. The agreements are subject to certain borrowing terms and conditions. As of September 30, 2023 and September 30, 2022, the Company had $55.5 million and $0.0 million total borrowings outstanding under these uncommitted credit facilities, respectively.
Other Capital Considerations
Our activities are subject to various significant governmental regulations and capital adequacy requirements, both in the U.S. and in the international jurisdictions in which we operate. Our subsidiaries are in compliance with all of their capital regulatory requirements as of September 30, 2023. Additional information on our subsidiaries subject to significant net capital and minimum net capital requirements can be found in Note 21 of the Consolidated Financial Statements.
Our subsidiary, StoneX Markets LLC, is a CFTC registered swap dealer, and under these capital rules is subject to a minimum regulatory capital requirement. StoneX Markets has elected to utilize the “bank-based” approach, as reflected in CFTC Rule 23.101(a)(1)(i) to calculate its capital requirements. Under the “bank-based” approach StoneX Markets must satisfy the following capital requirements: Common Equity Tier 1 (“CET1”) capital of at least $20 million; (ii) CET1 equal to at least
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6.5% of its risk weighted assets (“RWA”); (iii) CET1, Additional Tier 1, and Tier 2 (collectively, total aggregate Bank Holding Company (“BHC”) capital) equal to at least 8% of its RWA; (iv) total aggregate BHC capital equal to 8% of its uncleared swap margin; and (v) the minimum capital required by NFA. Aggregate BHC capital and the related net capital requirement may fluctuate on a daily basis.
Compliance with this or other swap-related regulatory capital requirements may require us to devote more capital to these businesses or otherwise restructure our operations, such as by combining these businesses with other regulated subsidiaries that must also satisfy regulatory capital requirements. StoneX Markets LLC has faced, and may continue to face, increased costs due to the registration and regulatory requirements listed above, as may any other of our subsidiaries that may be required to register, or may register voluntarily, as a swap dealer and/or swap execution facility.
Cash Flows
We include client cash and securities that meet the short term requirement for cash classification to be segregated for regulatory purposes in our consolidated statements of cash flows. We hold a significant amount of U.S. Treasury obligations which represent investment of client funds or client-owned investments pledged in lieu of cash margin. U.S. Treasury securities held with third-party banks or pledged with exchange-clearing organizations representing investments of client funds or which are held for particular clients in lieu of cash margin are included in the beginning and ending cash balances reconciled on our consolidated statements of cash flows to the extent that they have an original or acquired maturity of 90 days or less and, therefore, meet the definition of a segregated cash equivalent. Purchases and sales of U.S. Treasury securities representing investment of clients’ funds and U.S. Treasury securities pledged or redeemed by particular clients in lieu of cash margin are presented as operating uses and sources of cash, respectively, within the operating section of the consolidated statements of cash flows if they have an original or acquired maturity of greater than 90 days. Typically, there is an offsetting use or source of cash related to the change in the payables to clients. However, we will report a use of cash in periods where segregated U.S. Treasury securities that meet the aforementioned definition of a segregated cash equivalent mature and are replaced with U.S. Treasury securities that have original or acquired maturities that are greater than 90 days.
Our cash, segregated cash, cash equivalents, and segregated cash equivalents decreased from $6,285.1 million as of September 30, 2022 to $6,041.7 million as of September 30, 2023, a net decrease of $243.4 million. Net cash of $23.7 million was used in operating activities, including movements typical of our operations, with large changes coming from financial instruments owned, payable to broker dealers, funds with broker dealers and clearing organizations, as well as securities purchased and securities sold.
Net cash used in financing activities during the fiscal year ended September 30, 2023 included significant outflows from payables to lenders under 90 days of $119.3 million, net outflows from payables to lenders greater than 90 days of $35.0 million and payments of deferred acquisitions costs of $18.7 million. Also, we received $3.7 million related to employee stock option exercises. We did not repurchase any of our outstanding common stock during the years ended September 30, 2023 and September 30, 2022.
In the broker-dealer and related trading industries, companies report trading activities in the operating section of the statement of cash flows. Due to the daily price volatility in the commodities market, as well as changes in margin requirements, fluctuations in the balances of deposits held at various exchanges, marketable securities and client commodity accounts may occur from day-to-day. A use of cash, as calculated on the consolidated statement of cash flows, includes unrestricted cash transferred and pledged to the exchanges or guaranty funds. These funds are held in interest-bearing deposit accounts at the exchanges, and based on daily exchange requirements, may be withdrawn and returned to unrestricted cash. Additionally, within our unregulated OTC and foreign exchange operations, cash deposits received from clients are reflected as cash provided from operations. Subsequent transfer of these cash deposits to counterparties or exchanges to margin their open positions will be reflected as an operating use of cash to the extent the transfer occurs in a different period than the cash deposit was received.
Unrealized gains and losses on open positions revalued at prevailing foreign currency exchange rates are included in trading revenue but have no direct impact on cash flow from operations. Similarly, gains and losses become realized when client transactions are liquidated, though they do not affect cash flow. To some extent, the amount of net deposits made by our clients in any given period is influenced by the impact of gains and losses on our client balances, such that clients may be required to post additional funds to maintain open positions or may choose to withdraw excess funds on open positions.
We continuously evaluate opportunities to expand our business. Investing activities include $46.9 million in capital expenditures for property and equipment during the fiscal year ended September 30, 2023 compared to $49.5 million during the fiscal year ended September 30, 2022 and $62.1 million during the fiscal year ended September 30, 2021. Capital expenditures over the past three years have primarily included software development, core information technology hardware acquisitions, and leasehold improvements on office space.
Investing activities also include $6.1 million in cash payments for the acquisition of businesses during the fiscal year ended September 30, 2023 compared to $0.2 million during the fiscal year ended September 30, 2022 and $2.4 million during the
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fiscal year ended September 30, 2021. Further information about business acquisitions is contained in Note 20 to the Consolidated Financial Statements. These amounts were offset by smaller inflows related to sales of equipment and exchange membership stock, mainly in the year ended September 30, 2021.
On August 30, 2023, our Board of Directors authorized the repurchase of up to 1.0 million shares of our outstanding common stock in open market purchases and private transactions, commencing on October 1, 2023 and ending on September 30, 2024. The repurchases are subject to the discretion of the senior management team to implement our stock repurchase plan, and subject to market conditions and as permitted by securities laws and other legal, regulatory and contractual requirements and covenants.
Apart from what has been disclosed above, there are no known trends, events or uncertainties that have had or are likely to have a material impact on our liquidity, financial condition and capital resources.
Contractual Obligations
The following table summarizes our cash payment obligations as of September 30, 2023:

|  |  | Payments Due by Period
(in millions) | Total |  | Less than 1 year |  | 1 - 3 Years |  | 3 - 5 Years |  | After 5 Years
Operating lease obligations | $ | 183.3 |  |  | $ | 19.9 |  |  | $ | 39.9 |  |  | $ | 37.6 |  |  | $ | 85.9 |
Purchase obligations(1) | 5,703.4 |  |  | 5,703.4 |  |  | — |  |  | — |  |  | — |
Payable to lenders under loans | 341.0 |  |  | 159.1 |  |  | 181.9 |  |  | — |  |  | — |
Senior secured borrowings | 347.9 |  |  | — |  |  | 347.9 |  |  | — |  |  | — |
Contingent acquisition consideration | 1.5 |  |  | — |  |  | — |  |  | 1.5 |  |  | — |
Other | 60.8 |  |  | 19.1 |  |  | 23.3 |  |  | 14.0 |  |  | 4.4 |
| $ | 6,637.9 |  |  | $ | 5,901.5 |  |  | $ | 593.0 |  |  | $ | 53.1 |  |  | $ | 90.3 |

(1) Represents an estimate of contractual purchase commitments in the ordinary course of business primarily for the purchase of precious metals and agricultural and energy commodities. Unpriced contract commitments have been estimated using September 30, 2023 fair values. The purchase commitments for less than one year will be partially offset by corresponding sales commitments of $5,689.0 million.
Total contractual obligations exclude defined benefit pension obligations. We comply with the minimum funding requirements, and accordingly contributed $0.1 million to our defined benefit pension plans during the year ended September 30, 2023. During the year ending September 30, 2024, we anticipate making future benefit payments of $2.1 million related to the defined benefit plans. Additional information on the funded status of these plans can be found in Note 17 of the Consolidated Financial Statements.
Based upon our current operations, we believe that cash flow from operations, available cash and available borrowings under our credit facilities will be adequate to meet our future liquidity needs.
Off Balance Sheet Arrangements
We are party to certain financial instruments with off-balance sheet risk in the normal course of business as a registered securities broker-dealer, futures commission merchant, U.K. based financial services firm, provisionally registered swap dealer and from our market-making and proprietary trading in the foreign exchange and commodities and debt securities markets. These financial instruments include futures, forward and foreign exchange contracts, exchange-traded and OTC options, To Be Announced (“TBA”) securities and interest rate swaps. Derivative financial instruments involve varying degrees of off-balance sheet market risk whereby changes in the fair values of underlying financial instruments may result in changes in the fair value of the financial instruments in excess of the amounts reflected in the Consolidated Balance Sheets. Exposure to market risk is influenced by a number of factors, including the relationships between the financial instruments and our positions, as well as the volatility and liquidity in the markets in which the financial instruments are traded. The principal risk components of financial instruments include, among other things, interest rate volatility, the duration of the underlying instruments and changes in commodity pricing and foreign exchange rates. We attempt to manage our exposure to market risk through various techniques. Aggregate market limits have been established and market risk measures are routinely monitored against these limits. Derivative contracts are traded along with cash transactions because of the integrated nature of the markets for such products. We manage the risks associated with derivatives on an aggregate basis along with the risks associated with our proprietary trading and market-making activities in cash instruments as part of our firm-wide risk management policies.
A significant portion of these instruments are primarily the execution of orders for commodity futures and options on futures contracts on behalf of our clients, substantially all of which are transacted on a margin basis. Such transactions may expose us to significant credit risk in the event margin requirements are not sufficient to fully cover losses which clients may incur. We control the risks associated with these transactions by requiring clients to maintain margin deposits in compliance with both
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clearing organization requirements and internal guidelines. We monitor required margin levels daily and, therefore, may require clients to deposit additional collateral or reduce positions when necessary. We also establish contract limits for clients, which are monitored daily. We evaluate each client’s creditworthiness on a case-by-case basis. Clearing, financing, and settlement activities may require us to maintain funds with or pledge securities as collateral with other financial institutions. Generally, these exposures to exchanges are subject to netting of open positions and collateral, while exposures to clients are subject to netting, per the terms of the client agreements, which reduce the exposure to us by permitting receivables and payables with such clients to be offset in the event of a client default. Management believes that the margin deposits held are adequate to minimize the risk of material loss that could be created by positions held at that time. Additionally, we monitor collateral fair value on a daily basis and adjust collateral levels in the event of excess market exposure. Generally, these exposures to both counterparties and clients are subject to master netting agreements and the terms of the client agreements, which reduce our exposure.
As a broker-dealer in U.S. Treasury obligations, U.S. government agency obligations, agency mortgage-backed obligations, and asset-backed obligations, we are engaged in various securities trading, borrowing and lending activities serving solely institutional counterparties. Our exposure to credit risk associated with the nonperformance of counterparties in fulfilling their contractual obligations pursuant to these securities transactions and market risk associated with the sale of securities not yet purchased can be directly impacted by volatile trading markets which may impair their ability to satisfy outstanding obligations to us. In the event of non-performance and unfavorable market price movements, we may be required to purchase or sell financial instruments, which may result in a loss to us.
We transact OTC and foreign exchange contracts with our clients, and our OTC and foreign exchange trade desks will generally offset the client’s transaction simultaneously with one of our trading counterparties or will offset that transaction with a similar, but not identical, position on the exchange. These unmatched transactions are intended to be short-term in nature and are conducted to facilitate the most effective transaction for our client.
Additionally, we hold options and futures on options contracts resulting from market-making and proprietary trading activities in these product lines. We assist clients in our commodities trading business to protect the value of their future production (precious or base metals) by selling them put options on an OTC basis. We also provide our physical commodities trading business clients with sophisticated option products, including combinations of buying and selling puts and calls. We mitigate our risk by effecting offsetting options with market counterparties or through the purchase or sale of exchange-traded commodities futures. The risk mitigation of offsetting options is not within the documented hedging designation requirements of the Derivatives and Hedging Topic of the ASC.
As part of the activities discussed above, we carry short positions. We sell financial instruments that we do not own, borrow the financial instruments to make good delivery, and therefore are obliged to purchase such financial instruments at a future date in order to return the borrowed financial instruments. We record these obligations in the consolidated financial statements as of September 30, 2023 and 2022, at fair value of the related financial instruments, totaling $3,085.6 million and $2,469.6 million, respectively. These positions are held to offset the risks related to financial assets owned, and reported in our Consolidated Balance Sheets in Financial instruments owned, at fair value, and Physical commodities inventory, net. We will incur losses if the fair value of the Financial instruments sold, not yet purchased, increases subsequent to September 30, 2023, which might be partially or wholly offset by gains in the value of assets held as of September 30, 2023. The totals of $3,085.6 million and $2,469.6 million include a net liability of $288.3 million and $384.0 million for derivatives, based on their fair value as of September 30, 2023 and 2022, respectively.
We do not anticipate non-performance by counterparties in the above situations. We have a policy of reviewing the credit standing of each counterparty with which we conduct business. We have credit guidelines that limit our current and potential credit exposure to any one counterparty. We administer limits, monitor credit exposure, and periodically review the financial soundness of counterparties. We manage the credit exposure relating to our trading activities in various ways, including entering into collateral arrangements and limiting the duration of exposure. Risk is mitigated in certain cases by closing out transactions and entering into risk reducing transactions.
We are a member of various exchanges that trade and clear futures and option contracts. We are also a member of and provide guaranties to securities clearinghouses and exchanges in connection with client trading activities. Associated with our memberships, we may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the exchanges. While the rules governing different exchange memberships vary, in general our guaranty obligations would arise only if the exchange had previously exhausted its resources. In addition, any such guaranty obligation would be apportioned among the other non-defaulting members of the exchange. Our liability under these arrangements is not quantifiable and could exceed the cash and securities we have posted as collateral at the exchanges. However, management believes that the potential for us to be required to make payments under these arrangements is remote. Accordingly, no contingent liability for these arrangements has been recorded in the Consolidated Balance Sheets as of September 30, 2023 and 2022.
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Effects of Inflation
Increases in our expenses, such as compensation and benefits, transaction-based clearing expenses, occupancy and equipment rental, may result from inflation, which may not be readily recoverable from increasing the prices of our services. While rising interest rates are generally favorable for us, to the extent that inflation has other adverse effects on the financial markets and on the value of the financial instruments held in inventory, it may adversely affect our financial position and results of operations.
Critical Accounting Policies
Preparing consolidated financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions affecting reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, as well as the recorded amounts of revenue and expenses during the reported period. The accounting policies discussed in this section are those that we consider the most critical to the financial statements. Therefore, understanding these policies is important to understanding our reported and potential future results of operations and financial position.
Valuation of Financial Instruments and Foreign Currencies
Description
Substantially all financial instruments are reflected in the consolidated financial statements at fair value, or amounts that approximate fair value due to their short-term nature or level of collateralization. These financial instruments include: cash and cash equivalents; cash, securities and other assets segregated under federal and other regulations; securities purchased under agreements to resell; securities borrowed; deposits with and receivables from broker-dealers, clearing organizations, and counterparties; financial instruments owned; securities sold under agreements to repurchase; securities loaned; and financial instruments sold, but not yet purchased. Unrealized gains and losses related to these financial instruments, when we are principal to the transaction, are reflected in earnings.
Foreign currency translation is an estimate critical to consolidating in our reporting currency. The value of certain assets and liabilities denominated in foreign currencies, including foreign currencies sold, not yet purchased, are converted into their U.S. dollar equivalents at the foreign exchange rates in effect at the close of business at the end of the accounting period. For foreign currency transactions completed during each reporting period, the relevant exchange rate at the time is used before translation into U.S. dollar equivalent for consolidated reporting.
Judgment and Uncertainties
At each period end, using professional judgment and industry expertise, we select fair values for financial instruments. Where available, we price from independent sources such as listed market prices, third-party pricing services, or broker dealer price quotations. We use fair values derived from pricing models that consider current market and contractual prices for the underlying financial instruments or commodities, as well as time value and yield curve or volatility factors underlying the positions. In some cases, even though the value of a security is derived from an independent market price, or broker or dealer quote, we may need to make certain assumptions to determine the fair value.
Effect if Actual Results Differ From Assumptions
Our valuation assumptions may be incorrect, and the actual value realized upon closing any position could be different from estimated carrying value, because of changes in prices, assumptions, or the overall business environment. We believe that the likelihood that of such an outcome is low and, if it should be the case, it is likely to not be significant. This view is supported by a few key factors:
•Valuations for substantially all of the financial instruments, most of which are in highly liquid markets, are available from independent, well-known publishers of market information.
•We have robust controls and procedures surrounding pricing and our various technologies involved in it.
•The relevant positions are generally short-term in nature.
•The Company holds positions in a wide range of products, such that an error in a limited number of prices is unlikely to cause a significant change to the overall result and pricing issues in a wide array of products is very unlikely.
Revenue Recognition
Description
A significant portion of our revenues are derived principally, from realized and unrealized trading income in securities, derivative instruments, commodities and foreign currencies purchased or sold for our account. We record realized and unrealized trading income on a trade date basis. We state financial instruments owned and financial instruments sold, not yet purchased and foreign currencies sold, not yet purchased, at fair value with related changes in unrealized appreciation or
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depreciation reflected in Principal gains, net in the Consolidated Income Statements. We record fee and interest income on the accrual basis and dividend income is recognized on the ex-dividend date.
A substantial amount of our revenues derive from Commission and clearing fees. These revenue types involve less complexity than Principal gains, net would, as, generally, we are an agent in the underlying transactions. We recognize revenues on a trade date basis for the transactions, as, typically, our obligation is met at that point and there are no future obligations to consider.
We recognize revenue on commodities that are purchased for physical delivery to clients when we meet our obligations to our clients and in an amount equal to the consideration we expect to receive at that point in time.
Judgment and Uncertainties
Judgments, outside of the valuation considerations previously discussed, relate to the timing and appropriateness of revenue recognition and whether we have fulfilled our performance obligations.
Effect if Actual Results Differ From Assumptions
If we misapply the relevant guidance or incorrectly recognize revenue that we have not earned, earnings may be misstated. We do not believe that such a possibility is reasonably likely, because we have developed systems and controls for each of our businesses to capture all known transactions in the appropriate reporting period. In addition, the overwhelming majority of our revenue is recognized upon trade consummation, as we satisfy our performance obligations, and we do not need to estimate when that may have occurred.
Income Taxes
Description
We are subject to income taxes in the U.S. and numerous foreign jurisdictions.
Judgment and Uncertainties
Judgment is required in determining the consolidated income taxes and in evaluating tax positions, including evaluating income tax uncertainties. As a result, the company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. We do not currently have any uncertain tax positions.
Income taxes are accounted for under the asset and liability method, recognizing the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled, with any change in tax rates recognized in income in the period that includes the enactment date. Management considers all relevant evidence for each jurisdiction to determine valuation allowances. If we change our determination as to the amount of deferred tax assets we expect to realize, we adjust our valuation allowance with a corresponding impact to income tax expense in the period in which such determination is made.
Effect if Actual Results Differ From Assumptions
We believe that our accruals for tax liabilities are adequate for all open audit years. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. To the extent circumstances arise requiring us to change our judgment regarding the adequacy of existing tax accounts, we do not believe such a change is likely to be material to our financial statements. The tax accounts in total are relatively immaterial to the balance sheet, which, when combined with their likelihood of being misstated, particularly our valuation allowances given our positive earnings trend in recent years, results in a generally insignificant risk to us.
Accounting Standards Update
In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under Accounting Standards Codification Topic 606, Revenue from Contacts with Customers, in order to recognize contract liabilities in alignment with the definition of performance obligations. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, which means that it will be effective for our fiscal year beginning October 1, 2023. Early adoption is permitted. We do not believe that adoption of ASU 2021-08 will have a significant impact on our consolidated financial statements. We do not expect any other recently issued accounting pronouncements to have a significant effect on our financial statements.
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Item 7A. Quantitative and Qualitative Disclosures about Market Risk
See also Note 4 to the Consolidated Financial Statements, ‘Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk’.
Market Risk
We conduct our market-making and trading activities predominantly as a principal, which subjects our capital to significant risks. These risks include, but are not limited to, absolute and relative price movements, price volatility and changes in liquidity, over which we have virtually no control. Our exposure to market risk varies in accordance with the volume of client-driven market-making transactions, the size of the proprietary positions and the volatility of the financial instruments traded.
We seek to mitigate exposure to market risk by utilizing a variety of qualitative and quantitative techniques:
•Diversification of business activities and instruments;
•Limitations on positions;
•Allocation of capital and limits based on estimated weighted risks; and
•Daily monitoring of positions and mark-to-market profitability.
We utilize derivative products in a trading capacity as a dealer to satisfy client needs and mitigate risk. We manage risks from both derivatives and non-derivative cash instruments on a consolidated basis. The risks of derivatives should not be viewed in isolation, but in aggregate with our other trading activities.
We are exposed to market risk in connection with our retail trading activities. Because we act as counterparty to our retail clients’ transactions, we are exposed to risk on each trade that the value of our position will decline. Accordingly, accurate and efficient management of our net exposure is a high priority, and we have developed policies addressing both our automated and manual procedures to manage our exposure. These risk-management policies and procedures are established and reviewed regularly by the Risk Committee of our Board of Directors. Our risk-management policies require quantitative analyses by instrument, as well as assessment of a range of market inputs, including trade size, dealing rate, client margin and market liquidity. Our risk-management procedures require our team of senior traders to monitor risk exposure on a continuous basis and update senior management both informally over the course of the trading day and formally through intraday and end of day reporting. A key component of our approach to managing market risk is that we do not initiate market positions for our own account in anticipation of future movements in the relative prices of products we offer.
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Management believes that the volatility of revenues is a key indicator of the effectiveness of its risk management techniques. The graph below summarizes volatility of our daily revenue, determined on a marked-to-market basis, during the year ended September 30, 2023.
In our Securities market-making and trading activities, we maintain inventories of equity and debt securities. In our Commercial segment, our positions include physical commodities inventories, precious metals on lease, forwards, futures and options on futures, and OTC derivatives. Our commodity trading activities are managed as one consolidated book for each commodity encompassing both cash positions and derivative instruments. We monitor the aggregate position for each commodity in equivalent physical ounces, metric tons, or other relevant unit.
Interest Rate Risk
In the ordinary course of our operations, we have interest rate risk from the possibility that changes in interest rates will affect the values of financial instruments and impact interest income earned. Within our domestic institutional dealer in fixed income securities business, we maintain a significant amount of trading assets and liabilities which are sensitive to changes in interest rates. These trading activities primarily consist of securities trading in connection with U.S. Treasury, U.S. government agency, agency mortgage-backed and agency asset-backed obligations as well as investment grade, high-yield, convertible and emerging markets debt securities. Derivative instruments, which consist of futures, TBA securities and forward settling transactions, are used to manage risk exposures in the trading inventory. We enter into TBA securities transactions for the sole purpose of managing risk associated with mortgage-backed securities.
In addition, we generate interest income from the positive spread earned on client deposits. We typically invest in U.S. Treasury bills, notes, and obligations issued by government sponsored entities, reverse repurchase agreements involving U.S. Treasury bills and government obligations or AA-rated money market funds. In some instances, we maintain interest earning cash deposits with banks, clearing organizations and counterparties. We have an investment policy which establishes acceptable standards of credit quality and limits the amount of funds that can be invested within a particular fund, institution, clearing organization or counterparty. We estimate that as of September 30, 2023, an immediate 25 basis point decrease in short-term interest rates would result in approximately $4.2 million less in annual net income.
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We manage interest expense using a combination of variable and fixed rate debt. The debt instruments are carried at their unpaid principal balance which approximates fair value. As of September 30, 2023, $341.0 million of outstanding principal debt was variable-rate debt. We are subject to earnings and liquidity risks for changes in the interest rate on this debt. As of September 30, 2023, $347.9 million of outstanding principal debt was fixed-rate long-term debt.
Foreign Currency Risk
Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact the value of our earnings and assets. Entities that have assets and liabilities denominated in currencies other than the primary economic environment in which the entity operates are subject to remeasurement. Principally, all sales are denominated in the functional currency of the subsidiary, while related operating costs are denominated in the currency of the local country and translated into USD for consolidated reporting purposes. Although the majority of the assets and liabilities of these subsidiaries are denominated in the functional currency of the subsidiary, they may also hold assets or liabilities denominated in other currencies. As a result, our results of operations and financial position are exposed to changing currency rates. We have executed hedging transactions in relation to certain currencies to mitigate our exposure to volatility in those certain foreign currency exchange rates. From time-to-time, we may consider entering into larger hedges in those certain contracts or hedging transactions in additional currencies to mitigate our exposure to more foreign currency exchange rates. These hedging transactions may not be successful.
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ITEM 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
StoneX Group Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of StoneX Group Inc. and subsidiaries (the Company) as of September 30, 2023 and 2022, the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of cash flows, and consolidated statements of stockholders’ equity for each of the years in the three-year period ended September 30, 2023, and the related notes and financial statement schedule (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated November 24, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue recognition for unrealized gains and losses from market making activities
As discussed in Note 15 to the consolidated financial statements, the Company recognized revenue of $1,079.9 million for principal gains, net from transactions or contracts for the which the Company acted as principal, a portion of which related to unrealized gains and losses derived from over-the-counter derivatives and foreign exchange market making activities (collectively, Unrealized Gains and Losses). Such Unrealized Gains and Losses represent the change in fair value for those financial instruments owned and sold, not yet purchased that are held by the Company as of year-end and reflected in earnings.
We identified revenue recognition related to certain Unrealized Gains and Losses as a critical audit matter. A high degree of auditor subjectivity and judgement was involved in determining the sufficiency and timing of audit procedures required to evaluate the existence and accuracy of certain Unrealized Gains and Losses reflected in earnings as of September 30, 2023.
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The following are primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to Unrealized Gains and Losses, including controls over the computations of Unrealized Gains and Losses, as well as controls ensuring that trading subledger values were not modified within these computations. We evaluated Unrealized Gains and Losses as of September 30, 2023 by assessing the Company’s revenue recognition, comparing inputs to Unrealized Gains and Losses computations prepared by the Company to source documents and recalculating Unrealized Gains and Losses recorded. We also assessed the sufficiency of the audit evidence obtained related to Unrealized Gains and Losses by evaluating the cumulative results of the audit procedures and potential management bias.
/s/ KPMG LLP
We have served as the Company’s auditor since 2010.
Kansas City, Missouri
November 24, 2023
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Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
StoneX Group Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited StoneX Group Inc. and subsidiaries' (the Company) internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2023 and 2022, the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of cash flows and consolidated statements of stockholders’ equity, for each of the years in the three-year period ended September 30, 2023, and the related notes and financial statement schedule (collectively, the consolidated financial statements), and our report dated November 24, 2023 expressed an unqualified opinion on those consolidated financial statements.
The Company acquired CDI Société Cotonniere De Distribution S.A. and subsidiaries and Incomm S.A.S. during 2023, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023, CDI Société Cotonniere De Distribution S.A. and subsidiaries’ and Incomm S.A.S.’s internal control over financial reporting associated with aggregate total assets of $151.2 million and aggregate total revenues of $388.6 million included in the consolidated financial statements of the Company as of and for the year ended September 30, 2023. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of CDI Société Cotonniere De Distribution S.A. and subsidiaries and Incomm S.A.S.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Kansas City, Missouri
November 24, 2023
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StoneX Group Inc.
Consolidated Balance Sheets

(in millions, except par value and share amounts) | September 30, 2023 |  | September 30, 2022
ASSETS |  |  |
Cash and cash equivalents | $ | 1,108.3 |  |  | $ | 1,108.5 |
Cash, securities and other assets segregated under federal and other regulations (including $5.8 million and $805.7 million at fair value at September 30, 2023 and 2022, respectively) | 2,426.3 |  |  | 3,267.2 |
Collateralized transactions: |  |  |
Securities purchased under agreements to resell | 2,979.5 |  |  | 1,672.0 |
Securities borrowed | 1,129.1 |  |  | 1,209.8 |
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net (including $4,248.3 million and $2,817.2 million at fair value at September 30, 2023 and 2022, respectively) | 7,443.8 |  |  | 6,842.6 |
Receivable from clients, net (including $(7.9) million a nd $(0.5) million at fair value at September 30, 2023 and 2022, respectively) | 683.1 |  |  | 566.2 |
Notes receivable, net | 5.2 |  |  | 5.1 |
Income taxes receivable | 25.1 |  |  | 16.8 |
Financial instruments owned, at fair value (includes securities pledged as collateral that can be sold or repledged of $1,466.4 million and $2,372.3 million at September 30, 2023 and 2022, respectively) | 5,044.8 |  |  | 4,167.3 |
Physical commodities inventory, net (including $386.5 million and $359.8 million at fair value at September 30, 2023 and 2022, respectively) | 537.3 |  |  | 513.5 |
Deferred tax assets | 45.4 |  |  | 52.0 |
Property and equipment, net | 123.5 |  |  | 112.9 |
Operating right of use assets | 122.1 |  |  | 121.8 |
Goodwill and intangible assets, net | 82.4 |  |  | 86.2 |
Other assets | 182.8 |  |  | 117.7 |
Total assets | $ | 21,938.7 |  |  | $ | 19,859.6 |
LIABILITIES AND EQUITY |  |  |
Liabilities: |  |  |
Accounts payable and other accrued liabilities (including $1.5 million and $0.0 million at fair value at September 30, 2023 and 2022, respectively) | $ | 533.0 |  |  | $ | 400.6 |
Operating lease liabilities | 149.3 |  |  | 143.0 |
Payables to: |  |  |
Clients (including $79.8 million and $(1,392.4) million at fair value at September 30, 2023 and 2022, respectively) | 9,976.0 |  |  | 9,891.0 |
Broker-dealers, clearing organizations and counterparties (including $10.2 million and $55.8 million at fair value at September 30, 2023 and 2022, respectively) | 442.4 |  |  | 659.8 |
Lenders under loans | 341.0 |  |  | 485.1 |
Senior secured borrowings, net | 342.1 |  |  | 339.1 |
Income taxes payable | 38.2 |  |  | 16.2 |
Deferred tax liabilities | 8.1 |  |  | — |
Collateralized transactions: |  |  |
Securities sold under agreements to repurchase | 4,526.6 |  |  | 3,195.6 |
Securities loaned | 1,117.3 |  |  | 1,189.5 |
Financial instruments sold, not yet purchased, at fair value | 3,085.6 |  |  | 2,469.6 |
Total liabilities | 20,559.6 |  |  | 18,789.5 |
Commitments and contingencies (Note 13) |  |  |
Stockholders' equity: |  |  |
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; no shares issued or outstanding | — |  |  | — |
Common stock, $0.01 par value. Authorized 200,000,000 shares; 23,403,960 issued and 20,796,637 outstanding at September 30, 2023 and 22,911,227 issued and 20,303,904 outstanding at September 30, 2022 | 0.2 |  |  | 0.2 |
Common stock in treasury, at cost. 2,607,323 shares at September 30, 2023 and September 30, 2022 | (69.3) |  |  | (69.3) |
Additional paid-in-capital | 371.9 |  |  | 340.2 |
Retained earnings | 1,128.1 |  |  | 889.6 |
Accumulated other comprehensive loss, net | (51.8) |  |  | (90.6) |
Total equity | 1,379.1 |  |  | 1,070.1 |
Total liabilities and stockholders' equity | $ | 21,938.7 |  |  | $ | 19,859.6 |

See accompanying notes to consolidated financial statements.
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StoneX Group Inc.
Consolidated Income Statements

| Year Ended September 30,
(in millions, except share and per share amounts) | 2023 |  | 2022 |  | 2021
Revenues: |  |  |  |  |
Sales of physical commodities | $ | 58,131.2 |  |  | $ | 64,052.6 |  |  | $ | 40,961.6 |
Principal gains, net | 1,079.9 |  |  | 1,145.2 |  |  | 892.0 |
Commission and clearing fees | 498.4 |  |  | 507.9 |  |  | 487.2 |
Consulting, management, and account fees | 159.0 |  |  | 111.3 |  |  | 91.0 |
Interest income | 987.6 |  |  | 219.0 |  |  | 102.4 |
Total revenues | 60,856.1 |  |  | 66,036.0 |  |  | 42,534.2 |
Cost of sales of physical commodities | 57,942.0 |  |  | 63,928.6 |  |  | 40,861.1 |
Operating revenues | 2,914.1 |  |  | 2,107.4 |  |  | 1,673.1 |
Transaction-based clearing expenses | 271.8 |  |  | 291.2 |  |  | 271.7 |
Introducing broker commissions | 161.6 |  |  | 160.1 |  |  | 160.5 |
Interest expense | 802.2 |  |  | 135.5 |  |  | 49.6 |
Interest expense on corporate funding | 57.5 |  |  | 44.7 |  |  | 41.3 |
Net operating revenues | 1,621.0 |  |  | 1,475.9 |  |  | 1,150.0 |
Compensation and other expenses: |  |  |  |  |
Compensation and benefits | 868.6 |  |  | 794.8 |  |  | 679.1 |
Trading systems and market information | 74.0 |  |  | 66.2 |  |  | 58.8 |
Professional fees | 57.0 |  |  | 54.3 |  |  | 40.9 |
Non-trading technology and support | 61.6 |  |  | 52.4 |  |  | 46.0 |
Occupancy and equipment rental | 40.4 |  |  | 36.1 |  |  | 34.2 |
Selling and marketing | 54.0 |  |  | 55.3 |  |  | 33.3 |
Travel and business development | 24.8 |  |  | 16.9 |  |  | 4.5 |
Communications | 9.1 |  |  | 8.3 |  |  | 9.3 |
Depreciation and amortization | 51.0 |  |  | 44.4 |  |  | 36.5 |
Bad debts, net of recoveries | 16.5 |  |  | 15.8 |  |  | 10.4 |
Other | 66.4 |  |  | 60.6 |  |  | 46.3 |
Total compensation and other expenses | 1,323.4 |  |  | 1,205.1 |  |  | 999.3 |
Gain on acquisitions and other gains, net | 25.4 |  |  | 6.4 |  |  | 3.4 |
Income before tax | 323.0 |  |  | 277.2 |  |  | 154.1 |
Income tax expense | 84.5 |  |  | 70.1 |  |  | 37.8 |
Net income | $ | 238.5 |  |  | $ | 207.1 |  |  | $ | 116.3 |
Earnings per share: |  |  |  |  |
Basic | $ | 11.55 |  |  | $ | 10.27 |  |  | $ | 5.90 |
Diluted | $ | 11.18 |  |  | $ | 10.01 |  |  | $ | 5.74 |
Weighted-average number of common shares outstanding: |  |  |  |  |
Basic | 19,957,333 |  |  | 19,570,403 |  |  | 19,130,643 |
Diluted | 20,619,340 |  |  | 20,067,540 |  |  | 19,678,168 |

See accompanying notes to consolidated financial statements.
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StoneX Group Inc.
Consolidated Statements of Comprehensive Income

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Net income | $ | 238.5 |  |  | $ | 207.1 |  |  | $ | 116.3 |
Other comprehensive income/(loss), net of tax: |  |  |  |  |
Foreign currency translation adjustment | 3.2 |  |  | (11.7) |  |  | 13.3 |
Cash flow hedges | 35.1 |  |  | (53.5) |  |  | — |
Pension liabilities adjustment | 0.5 |  |  | (0.3) |  |  | 1.5 |
Reclassification of adjustment for losses included in net income: |  |  |  |  |
Periodic pension costs (included in compensation and benefits) | — |  |  | — |  |  | 0.2 |
Reclassification adjustment for losses included in net income | — |  |  | — |  |  | 0.2 |
Other comprehensive income/(loss) | 38.8 |  |  | (65.5) |  |  | 15.0 |
Comprehensive income | $ | 277.3 |  |  | $ | 141.6 |  |  | $ | 131.3 |

See accompanying notes to consolidated financial statements.
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StoneX Group Inc.
Consolidated Statements of Cash Flows

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Cash flows from operating activities: |  |  |  |  |
Net income | $ | 238.5 |  |  | $ | 207.1 |  |  | $ | 116.3 |
Adjustments to reconcile net income to net cash (used in)/provided by operating activities: |  |  |  |  |
Depreciation and amortization | 51.0 |  |  | 44.4 |  |  | 36.5 |
Amortization of operating right of use assets | 14.0 |  |  | 15.9 |  |  | 12.2 |
Provision for bad debts, net of recoveries | 16.5 |  |  | 15.8 |  |  | 10.4 |
Deferred income taxes | (2.4) |  |  | (0.3) |  |  | 3.2 |
Amortization and extinguishment of debt issuance costs | 5.8 |  |  | 4.5 |  |  | 3.9 |
Actuarial adjustment on pension and postretirement benefits | 0.3 |  |  | (0.1) |  |  | (0.3) |
Amortization of share-based compensation expense | 28.0 |  |  | 17.8 |  |  | 13.9 |
Gain on acquisition | (23.5) |  |  | — |  |  | (3.3) |
Gain on stock sales of clearing organization memberships | — |  |  | — |  |  | (0.7) |
Changes in operating assets and liabilities, net: |  |  |  |  |
Securities and other assets segregated under federal and other regulations | 599.5 |  |  | (591.5) |  |  | (1.0) |
Securities purchased under agreements to resell | (1,307.5) |  |  | 567.9 |  |  | (543.7) |
Securities borrowed | 80.7 |  |  | 953.3 |  |  | (723.1) |
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net | (595.6) |  |  | (2,174.3) |  |  | (132.0) |
Receivable from clients, net | (80.5) |  |  | (119.7) |  |  | (68.3) |
Notes receivable, net | (0.1) |  |  | 1.0 |  |  | (4.4) |
Income taxes receivable | (13.4) |  |  | 10.4 |  |  | (9.6) |
Financial instruments owned, at fair value | (857.9) |  |  | 187.3 |  |  | (1,626.9) |
Physical commodities inventory, net | (1.3) |  |  | (67.2) |  |  | (166.4) |
Other assets | (60.4) |  |  | (9.8) |  |  | (16.7) |
Accounts payable and other accrued liabilities | 82.5 |  |  | 101.4 |  |  | 35.7 |
Operating lease liabilities | (8.0) |  |  | (16.0) |  |  | (8.6) |
Payable to clients | 81.4 |  |  | 2,055.1 |  |  | 2,146.7 |
Payable to broker-dealers, clearing organizations and counterparties | (217.8) |  |  | 46.3 |  |  | 76.0 |
Income taxes payable | 29.3 |  |  | 2.8 |  |  | (9.4) |
Securities sold under agreements to repurchase | 1,331.0 |  |  | (1,145.3) |  |  | 1,185.4 |
Securities loaned | (72.2) |  |  | (964.1) |  |  | 711.7 |
Financial instruments sold, not yet purchased, at fair value | 658.4 |  |  | 627.8 |  |  | 1,085.2 |
Net cash (used in)/provided by operating activities | (23.7) |  |  | (229.5) |  |  | 2,122.7 |
Cash flows from investing activities: |  |  |  |  |
Proceeds from stock sales of clearing organization memberships | — |  |  | 0.2 |  |  | 1.6 |
Cash paid for acquisitions, net of cash acquired | (6.1) |  |  | (0.2) |  |  | (2.4) |
Sale of property and equipment | — |  |  | — |  |  | 3.1 |
Purchase of property and equipment and internally developed software | (46.9) |  |  | (49.5) |  |  | (62.1) |
Net cash used in investing activities | (53.0) |  |  | (49.5) |  |  | (59.8) |
Cash flows from financing activities: |  |  |  |  |
Net change in lenders under loans with maturities 90 days or less | (119.3) |  |  | 211.5 |  |  | (33.5) |
Proceeds from lenders under loans with maturities greater than 90 days | 187.0 |  |  | 547.0 |  |  | 191.4 |
Repayments of lenders under loans with maturities greater than 90 days | (222.0) |  |  | (522.0) |  |  | (186.4) |
Repayments of senior secured term loan | — |  |  | (170.3) |  |  | (9.8) |
Repayment of senior secured notes | — |  |  | (0.5) |  |  | (1.6) |
Issuance of note payable | — |  |  | — |  |  | 9.0 |
Deferred payments on acquisitions | (18.7) |  |  | (3.0) |  |  | (2.2) |
Payment of contingent consideration | — |  |  | (3.6) |  |  | — |
Share repurchase | — |  |  | — |  |  | (11.7) |
Exercise of stock options | 3.7 |  |  | 6.7 |  |  | 9.2 |
Net cash (used in)/provided by financing activities | (169.3) |  |  | 65.8 |  |  | (35.6) |
Effect of exchange rates on cash, segregated cash, cash equivalents, and segregated cash equivalents | 2.6 |  |  | (11.2) |  |  | 13.8 |
Net (decrease)/increase in cash, segregated cash, cash equivalents, and segregated cash equivalents | (243.4) |  |  | (224.4) |  |  | 2,041.1 |
Cash, segregated cash, cash equivalents, and segregated cash equivalents at beginning of period | 6,285.1 |  |  | 6,509.5 |  |  | 4,468.4 |
Cash, segregated cash, cash equivalents, and segregated cash equivalents at end of period | $ | 6,041.7 |  |  | $ | 6,285.1 |  |  | $ | 6,509.5 |

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(continued) |  |  |  |  |
| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Supplemental disclosure of cash flow information: |  |  |  |  |
Cash paid for interest | $ | 786.5 |  |  | $ | 149.2 |  |  | $ | 87.0 |
Income taxes paid, net of cash refunds | $ | 71.0 |  |  | $ | 56.3 |  |  | $ | 52.0 |
Supplemental disclosure of non-cash investing and financing activities: |  |  |  |  |
Identified intangible assets and goodwill on acquisitions | $ | 10.6 |  |  | $ | 0.2 |  |  | $ | 6.5 |
Additional consideration payable related to acquisitions | $ | 11.1 |  |  | $ | — |  |  | $ | 3.9 |
Acquisition of businesses: |  |  |  |  |
Assets acquired | $ | 141.6 |  |  | $ | — |  |  | $ | 6.5 |
Liabilities acquired | (84.1) |  |  | — |  |  | (4.1) |
Total net assets acquired | $ | 57.5 |  |  | $ | — |  |  | $ | 2.4 |

The following table provides a reconciliation of cash, segregated cash, cash equivalents, and segregated cash equivalents reported within the Consolidated Balance Sheets.

| September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Cash and cash equivalents | $ | 1,108.3 |  |  | $ | 1,108.5 |  |  | $ | 1,109.6 |
Cash segregated under federal and other regulations(1) | 2,420.5 |  |  | 2,461.6 |  |  | 2,260.3 |
Securities segregated under federal and other regulations(1) | — |  |  | 200.0 |  |  | — |
Cash segregated and deposited with or pledged to exchange-clearing organizations and other futures commission merchants (“FCMs”)(2) | 1,256.5 |  |  | 2,138.2 |  |  | 2,739.6 |
Securities segregated and pledged to exchange-clearing organizations(2) | 1,256.4 |  |  | 376.8 |  |  | 400.0 |
Total cash, segregated cash, cash equivalents, and segregated cash equivalents shown in the consolidated statements of cash flows | $ | 6,041.7 |  |  | $ | 6,285.1 |  |  | $ | 6,509.5 |

(1) Represents segregated client cash held at third-party banks. Excludes segregated commodity warehouse receipts, segregated United States (“U.S.”) Treasury obligations with original or acquired maturities of greater than 90 days, and other assets, combined totaling $5.8 million, $605.6 million, and $14.1 million as of September 30, 2023, 2022, and 2021, respectively, included within Cash, securities and other assets segregated under federal and other regulations on the Consolidated Balance Sheets.
(2) Represents segregated client cash and U.S. Treasury obligations on deposit with, or pledged to, exchange clearing organizations and other FCMs. Excludes non-segregated cash, segregated securities pledged to exchange-clearing organizations with original or acquired maturities greater than 90 days, and other assets, combined totaling $4,930.9 million, $4,327.6 million, and $2,153.3 million as of September 30, 2023, 2022, and 2021, respectively, included within Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net on the Consolidated Balance Sheets.
See accompanying notes to consolidated financial statements.
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StoneX Group Inc.
Consolidated Statements of Stockholders’ Equity

(in millions) | Common Stock |  | Treasury Stock |  | Additional Paid-in Capital |  | Retained Earnings |  | Accumulated Other Comprehensive Loss, net |  | Total
Balances as of September 30, 2020 | $ | 0.2 |  |  | $ | (57.6) |  |  | $ | 292.6 |  |  | $ | 572.4 |  |  | $ | (40.1) |  |  | $ | 767.5 |
ASU 2016-13 cumulative transition adjustment | — |  |  | — |  |  | — |  |  | (6.2) |  |  | — |  |  | (6.2) |
Adjusted balances as of September 30, 2020 | 0.2 |  |  | (57.6) |  |  | 292.6 |  |  | 566.2 |  |  | (40.1) |  |  | 761.3 |
Net income | — |  |  | — |  |  | — |  |  | 116.3 |  |  | — |  |  | 116.3 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 15.0 |  |  | 15.0 |
Exercise of stock options | — |  |  | — |  |  | 9.2 |  |  | — |  |  | — |  |  | 9.2 |
Share-based compensation | — |  |  | — |  |  | 13.9 |  |  | — |  |  | — |  |  | 13.9 |
Repurchase of stock | — |  |  | (11.7) |  |  | — |  |  | — |  |  | — |  |  | (11.7) |
Balances as of September 30, 2021 | 0.2 |  |  | (69.3) |  |  | 315.7 |  |  | 682.5 |  |  | (25.1) |  |  | 904.0 |
Net income | — |  |  | — |  |  | — |  |  | 207.1 |  |  | — |  |  | 207.1 |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (65.5) |  |  | (65.5) |
Exercise of stock options | — |  |  | — |  |  | 6.7 |  |  | — |  |  | — |  |  | 6.7 |
Share-based compensation | — |  |  | — |  |  | 17.8 |  |  | — |  |  | — |  |  | 17.8 |
Balances as of September 30, 2022 | 0.2 |  |  | (69.3) |  |  | 340.2 |  |  | 889.6 |  |  | (90.6) |  |  | 1,070.1 |
Net income | — |  |  | — |  |  | — |  |  | 238.5 |  |  | — |  |  | 238.5 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 38.8 |  |  | 38.8 |
Exercise of stock options | — |  |  | — |  |  | 3.7 |  |  | — |  |  | — |  |  | 3.7 |
Share-based compensation | — |  |  | — |  |  | 28.0 |  |  | — |  |  | — |  |  | 28.0 |
Balances as of September 30, 2023 | $ | 0.2 |  |  | $ | (69.3) |  |  | $ | 371.9 |  |  | $ | 1,128.1 |  |  | $ | (51.8) |  |  | $ | 1,379.1 |

See accompanying notes to consolidated financial statements.
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StoneX Group Inc.
Notes to Consolidated Financial Statements
Note 1 – Description of Business and Significant Accounting Policies
StoneX Group Inc., a Delaware corporation, and its consolidated subsidiaries (collectively “SNEX” or “the Company”), is a global financial services network that connects companies, organizations, traders and investors to the global market ecosystem through a unique blend of digital platforms, end-to-end clearing and execution services, high touch service, and deep expertise. The Company strives to be its clients’ sole trusted partner, providing its networks, products, and services to allow them to pursue trading opportunities, manage market risks, make investments and improve business performance. The Company offers a vertically integrated product suite, beginning with high-touch and electronic access to nearly all major financial markets worldwide, as well as numerous liquidity venues. The Company delivers access and service through the entire trade lifecycle, by delivering deep market expertise and on-the-ground intelligence, best execution, and finally post-trade clearing, custody, as well as settlement services. The Company has created revenue streams, diversified by asset class, client type and geography, that earn commissions and spreads as clients execute transactions across the Company’s financial networks, while the Company monetizes non-trading client activity including interest and fee earnings on client balances as well as earning consulting and fees for market intelligence and risk management services.
The Company provides these services to a diverse group of clients in more than 180 countries. These clients include more than 54,000 commercial, institutional, and global payments clients and over 400,000 retail clients. The Company’s clients include commercial entities, asset managers, regional, national and introducing broker-dealers, insurance companies, brokers, institutional investors and professional traders, commercial and investment banks, and government and non-governmental organizations (“NGOs”).
Basis of Presentation
The accompanying consolidated financial statements include the accounts of StoneX Group Inc. and all entities in which the Company has a controlling financial interest. All material intercompany transactions and balances have been eliminated in consolidation.
In the Consolidated Income Statements, total revenues reported combine gross revenues for the physical commodities business and net revenues for all other businesses. The subtotal Operating revenues in the Consolidated Income Statements is physical commodities cost of sales deducted from total revenues. The subtotal Net operating revenues in the Consolidated Income Statements is operating revenues less transaction-based clearing expenses, introducing broker commissions, and interest expense. Transaction-based clearing expenses are variable expenses paid to executing brokers, exchanges, clearing organizations, and banks, typically related to transactional volumes. Introducing broker commissions include commission paid to non-employee third parties that have introduced clients to the Company. Net operating revenues represent revenues available to pay variable compensation to risk management consultants and traders, certain non-variable expenses, as well as variable and non-variable expenses related to both operational and administrative employees.
Use of Estimates
Preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires that management make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. The most significant of these estimates and assumptions in the current year relate to fair value measurements for financial instruments, revenue recognition, valuation of inventories, acquisition valuation, and income taxes. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. The Company reviews all significant estimates affecting the financial statements on a recurring basis and records the effect of any necessary adjustments prior to financial statement issuance. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.
Foreign Currency Translation
The Company’s consolidated financial statements are reported in U.S. dollars. The Company’s subsidiaries maintain their records either in U.S. dollars or, as appropriate, the currencies of the countries in which they operate. The method of translating local currency financial information into U.S. dollars depends on whether the economy in which the foreign subsidiary operates has been designated as highly inflationary. Economies with a three-year cumulative inflation rate of more than 100% are considered highly inflationary.
Assets and liabilities of foreign subsidiaries in non-highly inflationary economies are translated into U.S. dollars using rates of exchange at the balance sheet date. Translation adjustments are recorded in other comprehensive income (loss). Revenues and expense are translated at rates of exchange in effect at relevant times during the year. Transaction gains and losses related to changes in currency rates are recorded in earnings.
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Foreign subsidiaries that operate in highly inflationary countries use the U.S. dollar as their functional currency. Local currency monetary assets and liabilities are remeasured into U.S. dollars using rates of exchange as of each balance sheet date, with remeasurement adjustments and other transaction gains and losses recognized in earnings. Nonmonetary assets and liabilities
do not fluctuate with changes in the local currency exchange rates to the dollar as the translated amounts for nonmonetary assets and liabilities at the end of the accounting period in which the economy becomes highly inflationary becomes the accounting basis for those assets and liabilities in the period of change and subsequent periods. Revenues and expenses are translated at rates of exchange in effect at relevant times during the year.
The Company operates asset management and debt trading businesses in Argentina through various wholly-owned subsidiaries. Operating revenues from the Company’s Argentinean subsidiaries were approximately 1% of the consolidated operating revenues for the fiscal year ended September 30, 2023. The operating environment in Argentina continues to present business challenges, including ongoing devaluation of the Argentine peso and significant inflation. Based upon inflationary data published by the International Practices Task Force of the Center for Audit Quality, the economy of Argentina became highly inflationary during the three months ended June 30, 2018, and continues to be considered highly inflationary.
Beginning July 1, 2018, the Company designated Argentina’s economy as highly inflationary for accounting purposes. As a result, the Company has accounted for its Argentinean entities using the U.S. dollar as their functional currency, beginning in the quarter ending September 30, 2018. The Company has implemented strategies to reduce exposure to the Argentine peso. As a result of Argentina’s highly inflationary status, the Company recorded translation gains through earnings of $6.6 million and $2.1 million for the years ended September 30, 2023 and 2022, respectively. The Company recorded de minimis translation adjustments through earnings for the year ended September 30, 2021.
At September 30, 2023, the Company had net monetary liabilities denominated in Argentine pesos of $0.2 million, compared to net monetary assets of $0.4 million at September 30, 2022. The Company held cash and cash equivalents denominated in Argentine pesos of $0.8 million and less than $0.1 million as of September 30, 2023 and 2022, respectively. At September 30, 2023 and 2022, the Company had net nonmonetary assets denominated in Argentine pesos of $0.7 million and $1.1 million, respectively.
Cash and Cash Equivalents
The Company considers cash held at banks and all highly liquid investments not held for trading purposes, with original or acquired maturities of 90 days or less, including certificates of deposit and money market mutual funds, to be cash and cash equivalents. Cash and cash equivalents consists of cash, certificates of deposit, and money market mutual funds not deposited with or pledged to clearing organizations, broker-dealers, clearing organizations or counterparties, or segregated under federal or other regulations. Certificates of deposit are stated at cost plus accrued interest, which approximates fair value, and may be withdrawn at any time, at the discretion of the Company. Money market mutual funds are stated at their net asset value.
Cash, Securities and Other Assets Segregated under Federal and other Regulations
Pursuant to requirements of the Commodity Exchange Act and Commission Regulation 30.7 of the U.S. Commodity Futures Trading Commission (“CFTC”) in the U.S., the Markets in Financial Instruments Implementing Directive 2006/73/EC underpinning the Client Asset (“CASS”) rules in the Financial Services Authority (“FSA”) handbook in the United Kingdom (“U.K.”), and the Securities & Futures Act (“SFA”) in Singapore, funds deposited by clients relating to futures and options on futures contracts in regulated commodities must be carried in separate accounts, which are designated as segregated or secured client accounts. Additionally, in accordance with Rule 15c3-3 of the Securities Exchange Act of 1934 (“Rule 15c3-3”), the Company maintains separate accounts for the exclusive benefit of securities clients and proprietary accounts of broker dealers (“PABs”). Rule 15c3-3 requires the Company to maintain special reserve bank accounts (“SRBAs”) for the exclusive benefit of securities clients and PABs. The deposits in segregated client accounts and SRBAs are not commingled with Company funds. Under the FSA’s rules, certain categories of clients may choose to opt-out of segregation. As of September 30, 2023 and 2022, cash, securities, and other assets segregated under federal and other regulations consisted of cash held at banks of approximately $2,420.5 million and $2,461.6 million, respectively, U.S. Treasury obligations of approximately $0.0 million and $786.0 million, respectively, and commodities warehouse receipts of approximately $5.8 million and $19.7 million, respectively (see fair value measurements discussion in Note 3).
Collateralized Transactions
The Company enters into securities purchased under agreements to resell, securities sold under agreements to repurchase, securities borrowed transactions, and securities loaned transactions primarily to fund principal debt trading, acquire securities to cover short positions, acquire securities for settlement, or meet counterparty needs under matched-booked trading strategies.
These transactions are accounted for as collateralized financing transactions and are recorded at their contractual amounts plus accrued interest. In connection with these agreements and transactions, it is the Company’s policy to receive or pledge cash or securities to collateralize such agreements and transactions in accordance with contractual arrangements. The Company monitors the fair value of its collateral on a daily basis, and the Company may require counterparties, or may be required by
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counterparties, to deposit additional collateral or return collateral pledged. Interest income and interest expense are recognized over the life of the arrangements and are recorded in the Consolidated Income Statements as Interest income or Interest expense, as applicable. The carrying amount of these transactions approximate fair value due to their short-term nature and the level of collateralization.
Repurchase and Reverse repurchase agreement netting
The Company undertakes certain clearing arrangements and related agreements that meet the criteria for netting under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 210-20, Balance Sheet – Offsetting. Netting occurs within Securities purchased under agreements to resell and Securities sold under agreements to repurchase. More details can be found in Note 12.
Deposits with and Receivables from Broker-dealers, Clearing Organizations and Counterparties, and Payables to Broker-dealers, Clearing Organizations and Counterparties
As required by regulations of the CFTC, FSA, and Monetary Authority of Singapore (“MAS”), client funds received to margin, guaranty, and/or secure commodity futures and futures on options as well as retail foreign exchange transactions are segregated and accounted for separately from the general assets of the Company. Deposits with broker-dealers, clearing organizations, and counterparties pertain primarily to deposits made to satisfy margin requirements on client and proprietary open futures and options on futures positions and to satisfy the requirements set by clearing exchanges for clearing membership. The Company also pledges margin deposits with various counterparties for over-the-counter (“OTC”) derivative contracts. These deposits are also included in deposits with broker-dealers, clearing organizations, and counterparties. The Company also deposits cash margin with various securities clearing organizations as an ongoing condition of the securities clearing relationships, and these deposits are included in deposits with and receivables from broker-dealers, clearing organizations, and counterparties. Deposits with and receivables from broker-dealers, clearing organizations, and counterparties are reported gross, except where a right of offset exists. As of September 30, 2023 and 2022, the Company had cash and cash equivalents on deposit with or pledged to broker-dealers, clearing organizations, and counterparties of approximately $2,512.9 million and $2,515.0 million, respectively.
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties also includes guaranty deposits with clearing exchanges. The guaranty deposits are held by the clearing exchanges for use in potential default situations by one or more members of the clearing exchanges. The guaranty deposits may be applied to the Company’s obligations to the clearing exchange, or to the clearing exchange’s obligations to unrelated parties.
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties also include securities pledged to clearing exchanges. These securities are either pledged to the Company by its clients or represent investments of client funds. It is the Company’s practice to include client-owned securities on its Consolidated Balance Sheets, as the rights to those securities have been transferred to the Company under the terms of the relevant futures trading agreements. Securities pledged primarily include U.S. Treasury obligations, foreign government obligations, and certain ETFs. Securities that are not client-owned, and represent an investment of client funds, are adjusted to fair value with associated changes in unrealized gains or losses recorded in Interest income in the Consolidated Income Statements. For client-owned securities, the change in fair value is offset against the payable to clients with no impact recognized in the Consolidated Income Statements. The total fair value of such client owned and non-client owned securities included within Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net was $4,041.6 million and $4,272.9 million as of September 30, 2023 and 2022, respectively.
Management has considered guidance required by ASC 860, Transfers and Servicing as it relates to securities pledged by clients to margin their futures and options on futures trading accounts. Management believes that the transferor surrenders control over those assets because: (a) the transferred assets have been isolated from the transferor—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (b) each transferee has the right to pledge or exchange the assets (or beneficial interests) it received, and no condition both constrains the transferee (or holder) from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the transferor and (c) the transferor does not maintain effective control over the transferred assets through either (1) an agreement that both entitles and obligates the transferor to repurchase or redeem them before their maturity or (2) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call. Under this guidance, the Company reflects the client collateral assets and corresponding liabilities in the Company’s Consolidated Balance Sheets as of September 30, 2023 and 2022.
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties also includes amounts due from clearing exchanges for unrealized gains and losses associated with clients’ options on futures contracts. See discussion in the Financial Instruments section below for additional information on the Company’s accounting policies for derivative contracts. For client-owned derivative contracts, the fair value is offset against the payable to clients with no impact recognized on the Consolidated Income Statements.
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The Company maintains client omnibus and proprietary accounts with other clearing organizations. The equity balances in those accounts, along with any margin cash or securities deposited with the clearing organizations are included in deposits with and receivables from broker-dealers, clearing organizations, and counterparties.
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties also include amounts due from or due to clearing exchanges for daily variation settlements on open futures and options on futures positions. The variation settlements due from or due to clearing exchanges are paid in cash on the following business day. Variation settlements equal the daily settlement of futures contracts and premiums on options on futures contracts.
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties further include amounts receivable for securities sold but not yet delivered by the Company on settlement date (“fails-to-deliver”) and net receivables arising from unsettled proprietary trades.
Payables to broker-dealers, clearing organizations, and counterparties primarily include amounts payable for securities purchased but not yet received by the Company on settlement date (“fails-to-receive”) and net payables arising from unsettled proprietary trades.
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, and payables to broker-dealers, clearing organizations and counterparties also include amounts related to the value of registered broker-dealer clients cross-currency payment transactions related to the Global Payments segment. These amounts arise due to a clearing period before funds are received and payments are made, which usually is one to two business days.
Receivable from and Payables to Clients
Receivable from clients, net includes the total of net deficits in individual exchange-traded futures and OTC derivative trading accounts carried by the Company. Client deficits arise from realized and unrealized trading losses on client OTC, futures, options on futures, swaps and forwards and amounts due on cash and margin transactions. Client deficit accounts are reported gross of client accounts that contain net credit or positive balances, except where a right of offset exists. Net deficits in individual futures exchange-traded and OTC derivative trading accounts include both secured and unsecured deficit balances due from clients as of the balance sheet date. Secured deficit amounts are backed by U.S. Treasury obligations and commodity warehouse receipts. These U.S Treasury obligations and commodity warehouse receipts are netted against the secured deficit amounts when conditions necessary for the right to offset exist.
Receivable from clients, net also includes the net amounts receivable from securities clients in connection with the settlement of regular-way cash securities, margin loans to clients, and client cash debits. It is the Company’s policy to report margin loans and payables that arise due to positive cash flows in the same client’s accounts on a net basis when the conditions for netting as specified in U.S. GAAP are met. Clients’ securities transactions cleared by the Company are recorded on a settlement date basis, but the Company makes accruals necessary to adjust any uncompleted transactions to a trade date basis for consolidated reporting, under U.S. GAAP. Securities cleared by the Company and pledged to the Company as a condition of custodial clearing arrangements are owned by the clients, including those that collateralize margin or other similar transactions, and are not reflected on the Consolidated Balance Sheets as the Company does not have title to, or beneficial interests, in those assets. The carrying value of the receivables and payables approximates fair value due to their short-term nature.
Receivable from clients, net also include amounts receivable from non-broker-dealer clients for securities sold but not yet delivered by the Company on settlement date (“fails-to-deliver”) and net receivables arising from unsettled proprietary trades.
Payables to clients represent the total of client accounts with credit or positive balances. Client accounts are used primarily in connection with exchange-traded and OTC commodity, foreign exchange, precious metals, and securities transactions and include gains and losses on open trades as well as securities and cash margin deposits made as required by the Company, the exchange-clearing organizations or other clearing organizations. Client accounts with credit or positive balances are reported gross of client deficit accounts, except where a right of offset exists.
Payables to broker-dealers and counterparties also includes amounts payable to non-broker-dealer clients for securities purchased but not yet received by the Company on settlement date (“fails-to-receive”) and net payables arising from unsettled proprietary trades.
Receivable from and payables to clients also include amounts related to the value of non-registered broker-dealer clients’ cross-currency payment transactions related to the Global Payments segment. These amounts arise due to a clearing period before the funds are received and payments are made, which usually is one to two business days.
The future collectability of receivable from clients can be impacted by the Company’s collection efforts, client financial stability, and the general economic climate. In determining collectability, the Company considers a number of factors including, but not limited to, historical collection experience, current and forecasted economic and business conditions, internal and external credit risk ratings, collateral terms, payment terms and aging of the financial asset, as well as specific-identification in
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certain circumstances. The Company evaluates accounts that it believes may become uncollectible on a specific identification basis, through reviewing daily margin deficit reports, the historical daily aging of the receivables, and by monitoring the financial strength of its clients. The Company may unilaterally close client trading positions in certain circumstances. In addition, to evaluate client margining and collateral requirements, client positions are stress tested regularly and monitored for excessive concentration levels relative to the overall market size. Furthermore, in certain instances, the Company is indemnified and able to charge back introducing broker-dealers for bad debts incurred by their clients.
The Company generally writes off an outstanding receivable balance when all economic means of recovery have been exhausted. That determination considers information such as the occurrence of significant changes in the client’s financial position such that the client can no longer pay the obligation, or that the proceeds from collateral will not be sufficient to pay the balance.
Notes Receivable
Accrual of commodity financing income on any note is discontinued when, in the opinion of management, there is reasonable doubt as to the timely collectability of interest or principal. Nonaccrual notes are returned to an accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely payment of principal and interest. The Company records a charge against earnings for notes receivable losses when management believes that the collection of outstanding principal is not probable.
Physical Commodities Inventory
Inventories of certain agricultural commodities are carried at net realizable value, which approximates fair value less disposal costs. Agricultural commodities inventories have reliable, readily determinable and realizable market prices, relatively predictable and insignificant costs of disposal, and are available for immediate delivery. Changes in the fair values of these agricultural commodities inventories are included as a component of Cost of sales of physical commodities in the Consolidated Income Statements.
Inventories of energy related products are valued at the lower of cost or net realizable value. Inventories of precious metals held by subsidiaries that are not broker-dealers are valued at the lower of cost or net realizable value, using the weighted-average price and first-in first-out costing method. Changes in the values of these inventories are included as a component of Cost of sales of physical commodities in the Consolidated Income Statements.
Precious metals inventory held by StoneX Financial Ltd, a U.K. based broker-dealer subsidiary, is measured at fair value, with changes in fair value included as a component of Principal gains, net in the Consolidated Income Statements, in accordance with U.S. GAAP accounting requirements for broker-dealers.
Property and Equipment
Property and equipment is stated at cost, net of accumulated depreciation and amortization and depreciated using the straight-line method over the estimated useful life. Leasehold improvements are amortized on a straight-line basis over the estimated useful life of the improvement or the term of the lease, whichever is shorter. Expenditures that increase the value or productive capacity of assets are capitalized. When an asset is retired, sold, or otherwise disposed of, the carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in earnings. The Company had no assets held for sale at September 30, 2023 and 2022.
The Company accounts for costs incurred to develop its trading platforms and related software in accordance with ASC 350-40, Internal-Use Software, which requires that such technology be capitalized in the application development stage. Costs related to planning, training, administration, and non-value added maintenance are charged to expense as incurred. Capitalized software development costs are amortized over the useful life of the software, which the Company generally estimates at three years.
In accordance with ASC 360-10, Property, Plant and Equipment, the Company periodically evaluates the carrying value of long-lived assets when events and circumstances warrant such review. The carrying value of a long-lived asset is considered impaired when the anticipated identifiable undiscounted cash flows from such an asset (or asset group) are less than carrying value. In that event, a loss is recognized in the amount by which the carrying value exceeds fair market value of the long-lived asset. The Company has identified no impairment indicators as of September 30, 2023 and 2022. This standard applies to assets held for use and not to assets held for sale.
Acquisitions
The Company applies acquisition accounting on the date of acquisition to those transactions meeting the definition of a business under ASC 805. Applying acquisition accounting requires the Company to allocate the purchase consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed on acquisition date. In determining the fair value of identifiable assets acquired and liabilities assumed, the Company frequently utilizes a third-party valuation specialist. The Company applies certain significant assumptions, estimates, and judgments in determining the fair value of assets acquired
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and liabilities assumed on acquisition date. These significant assumptions, estimates, and judgments include, but are not limited to, cash flow forecasts, discount rates, client churn rates, royalty rates, and economic lives. Any excess of the purchase consideration over the fair value of the net assets acquired is recorded as goodwill. Alternatively, in an instance where the fair value of the net assets acquired exceeds the purchase consideration, the Company records a bargain purchase gain in the Consolidated Income Statements at the date of acquisition. While the Company uses its best estimates and assumptions as a part of the purchase price allocation to accurately value assets acquired and liabilities assumed at the acquisition date, these estimates are inherently uncertain and subject to refinement. As a result, during the remeasurement period, which may extend one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill or bargain purchase gain. Upon conclusion of the measurement period or final determination of the fair values of assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Consolidated Income Statements rather than adjusted through goodwill or bargain purchase gains. The Company includes the post-acquisition results of acquired businesses in the Consolidated Income Statements from the date of acquisition. Acquisition related costs, such as fees for attorneys, accountants, and investment bankers, are expensed as incurred and are not capitalized as part of the purchase price.
Goodwill and Identifiable Intangible Assets
Goodwill is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. Goodwill is not subject to amortization, but rather is evaluated for impairment at least annually. The Company evaluates its goodwill for impairment during the fourth quarter of its fiscal year or more frequently if indicators of potential impairment exist, in accordance with ASC 350, Intangibles - Goodwill and Other. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit (generally defined as the businesses for which financial information is available and reviewed regularly by management) with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. However, if the estimated fair value is below carrying value, further analysis is required to determine the amount of the impairment.
In the course of evaluating the potential impairment of goodwill, the Company may perform either a qualitative or a quantitative assessment. The Company’s qualitative assessment of potential impairment may result in the determination that a quantitative impairment analysis is not necessary. Under this elective process, the Company assesses qualitative factors to determine whether the existence of events or circumstances leads the Company to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events and circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing a quantitative analysis is not required. However, if the Company concludes otherwise, then the Company performs a quantitative impairment analysis.
If the Company either chooses not to perform a qualitative assessment, or the Company chooses to perform a qualitative assessment but is unable to qualitatively conclude that no impairment has occurred, then the Company performs a quantitative evaluation. In the case of a quantitative assessment, the Company estimates the fair value of the reporting unit with which the goodwill that is subject to the quantitative analysis is associated and compares it to the carrying value. If the estimated fair value of a reporting unit is less than its carrying value, the Company estimates the fair value of all assets and liabilities of the reporting unit, including goodwill. If the carrying value of the reporting unit’s goodwill is greater than the estimated fair value, an impairment charge is recognized for the excess. The fair value of the Company’s reporting units exceeded their respective carrying values under the qualitative assessment approach. No goodwill impairment charges were recorded for any of the periods presented, nor were any indicators present.
Identifiable intangible assets subject to amortization are amortized using the straight-line method over their estimated period of benefit, ranging from five to twenty years. Both definite and indefinite lived identifiable intangible assets are tested for impairment whenever events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. Residual value is presumed to be zero for all identifiable intangible assets. No intangible impairment charges were recorded for any of the periods presented, nor were any indicators present.
Financial Instruments Owned and Sold, Not Yet Purchased
Financial instruments owned and sold, not yet purchased, at fair value consist of financial instruments carried at fair value, measured on a recurring basis, or amounts that approximate fair value. Related realized and unrealized gains and losses are recognized in current period earnings within Principal gains, net, Interest income, Interest expense, and Cost of sales of physical commodities in the Consolidated Income Statements. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.
Financial instruments owned and sold, not yet purchased comprise primarily the financial instruments held by the Company’s broker-dealer subsidiaries and the Company’s OTC derivative swap dealer. Financial instruments owned and financial instruments sold, not yet purchased, includes trading securities that the Company holds as a principal. The Company has not classified any financial instruments owned or sold, not yet purchased, as available-for-sale or held-to-maturity.
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Financial instruments owned and sold, not yet purchased includes derivative instruments that the Company holds as a principal which are primarily transacted on an OTC basis. As a derivatives dealer, the Company utilizes these instruments to manage exposures to foreign currency, commodity price and interest rate risks for the Company and its clients. The Company’s objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. The Company’s derivative instruments also include forward purchase and sale commitments for the physical delivery of agricultural and energy related commodities in a future period. Contracts for the sale of agricultural and energy commodities generally do not extend beyond one year, while contracts to purchase agricultural and energy commodities generally relate to the current or future crop year.
Derivative instruments are measured at fair value on a recurring basis. For derivatives for which the Company does not elect hedge accounting, realized and unrealized gains and losses from the changes in fair value of derivative instruments are recognized immediately in current period earnings. Realized and unrealized gains and losses from the derivative instruments in which the Company acts as a dealer are included within Principal gains, net on the Consolidated Income Statements. Realized and unrealized gains and losses on firm purchase and sale commitments are included within Cost of sales of physical commodities on the Consolidated Income Statements.
To reduce credit exposure on the derivative instruments for which the Company acts as a dealer, the Company may enter into a master netting arrangement that allows for settlement of all derivative transactions with each counterparty. In addition, the credit support annex that accompanies master netting arrangements allows parties to the master netting agreement to mitigate their credit risk by requiring the party which is out of the money to post collateral. The Company accepts collateral in the form of cash or other marketable securities. Where permitted, the Company elects to net-by-counterparty certain derivative instruments entered into under a legally enforceable master netting agreement and, therefore, the fair value of those derivative instruments are netted by counterparty in the Consolidated Balance Sheets. As the Company elects to net-by-counterparty the fair value of such derivative instruments, the Company also nets-by-counterparty cash collateral exchanged as part of those derivative instruments.
The Company also brokers foreign exchange forwards, options and cash, or spot, transactions between clients and external counterparties. A portion of the contracts are arranged on an offsetting basis, limiting the Company’s risk to performance of the two offsetting parties. The offsetting nature of the contracts eliminates the effects of market fluctuations on the Company’s operating results. Due to the Company’s role as a principal participating in both sides of these contracts, the amounts are presented gross on the Consolidated Balance Sheets at their respective fair values, net of offsetting assets and liabilities.
The Company holds proprietary positions in its foreign exchange line of business. On a limited basis, the Company’s foreign exchange trade desk will accept a client transaction and will offset that transaction with a similar but not identical position with a counterparty. These unmatched transactions are intended to be short-term in nature and are often conducted to facilitate the most effective transaction for the Company’s client. These spot and forward contracts are accounted for as free-standing derivatives and reported in the Consolidated Balance Sheets at their fair values.
The Company may lease commodities to or from clients or counterparties. These commodity leases, which primarily involve precious metals, are recorded at fair value utilizing the fair value option based on guidance in ASC 825-10, Financial Instruments - Fair Value Option. These commodities leases represent hybrid financial instruments which contain both a dollar denominated loan host contract and an embedded forward derivative contract on the underlying commodities, which can be settled in either cash or metals. As permitted by the fair value option election, the entire instrument is recorded at fair value as either an asset or liability in the Consolidated Balance Sheets. The Company elects to value all of its commodities lease agreements at fair value using the fair value option.
For further information regarding the types of financial instruments owned and sold, not yet purchased, as well as the related valuation techniques refer to Note 3.
Derivative instruments and hedging activities
The Company executes interest rate swaps and foreign currency hedges to lessen the impacts of changes to interest rates and currency exchange rates, respectively, as well as benefit from favorable conditions. The Company recognizes all derivative instruments as either assets or liabilities at fair value. For all of the Company’s derivative positions that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivatives is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. Gains and losses on derivatives representing any ineffective component of the hedge are recognized in current earnings. All of the Company’s cash flow hedges have been deemed effective as of September 30, 2023 for both accounting and tax purposes. The Company has elected hedge accounting for both U.S. GAAP and tax purposes. The Company maintains formal documentation through a periodic memo and accounting analysis that cover what is being hedged, how it is being hedged, hedge effectiveness, the nature of the risk being hedged, among other required analyses. Company policy further includes a quarterly probability analysis covering hedge effectiveness.
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Exchange and Clearing Organization Memberships
The Company or its affiliates are required to hold certain exchange and clearing organization memberships and pledges them for clearing purposes, in order to provide the right to process trades directly with the respective venues. Exchange memberships include seats on the Chicago Board of Trade (“CBOT”), the Minneapolis Grain Exchange, the New York Mercantile Exchange (“NYMEX”), the Commodity Exchange, Inc. (“COMEX”) Division of the New York Mercantile Exchange, Mercado de Valores de Buenos Aires S.A. (“MERVAL”), the Chicago Mercantile Exchange (“CME”) Growth and Emerging Markets, InterContinental Exchange, Inc. (“ICE”) Futures US, and the London Metal Exchange (“LME”). Exchange firm and clearing organization common stock include shares of CME Group, Inc., ICE, LME Holdings Limited, and the Depository Trust & Clearing Corporation (“DTCC”).
Exchange and clearing organization memberships required in order to conduct business through the respective venues are recorded at cost and are included in Other assets on the Consolidated Balance Sheets. Equity investments in exchange firm common stock not required in order to conduct business on the exchanges are classified as trading securities included within Financial instruments owned, at fair value on the Consolidated Balance Sheets and recorded at fair value, with unrealized gains and losses recorded as a component of Principal gains, net on the Consolidated Income Statements. The fair value of exchange firm common stock not required in order to conduct business on the exchanges is determined from quoted market prices.
Exchange memberships that represent both (a) an ownership interest and the right to conduct business in the respective venues and are held for operating purposes, or (b) an ownership interest, which must be held by the Company to conduct business in the respective venues are accounted for as an ownership interest at cost with appropriate consideration for other-than-temporary impairment.
Alternatively, exchange memberships, or seats, that only represent the right to conduct business on an exchange, but not an ownership interest in the exchange, are accounted for as intangible assets at cost with potential impairment determined under Accounting Standards Codification 350-30- Intangibles - Goodwill and Other. As of and during the year ended September 30, 2023, there were no indicators of impairment that would suggest that the carrying value of exchange memberships that don’t represent an ownership interest are impaired, primarily based upon projections of future cash flows and earnings attributable to access these respective venues.
Commodity Financing
The Company also participates in commodity repurchase transactions that are accounted for as commodity inventory and purchases and sales of physical commodities as opposed to secured borrowings. The repurchase price under these arrangements is not fixed at the time of execution and, therefore, does not meet all the criteria to be accounted for as product financing arrangements.
Lenders Under Loans
Lenders under loans are accounted for at amortized cost, which approximates fair value due to variable rates of interest.
Senior Secured Borrowings
Senior secured borrowings are accounted for at amortized cost, and are stated net of unamortized deferred financing costs and original issue discount.
Contingent Consideration
For acquisitions which include contingent consideration as a component of the purchase price, the Company estimates and records the fair value of the contingent consideration at the acquisition date. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration, and any change in fair value is recognized in the Consolidated Income Statements. Estimating contingent consideration fair value incorporates assumptions regarding future operating results, discount rates, and probabilities assigned to various potential operating results scenarios.
Revenue Recognition
The Company accounts for revenue earned from contracts with clients for services such as the execution, clearing, brokering, and custody of futures and options on futures contracts, OTC derivatives, and securities, investment management, and underwriting services under FASB ASC 606, Revenue from Contracts with Customers (“Topic 606”). Revenues for these services are recognized when the performance obligations related to the underlying transaction are completed.
Only when goods or services are transferred to clients are revenues recognized and the amount reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. Revenues are analyzed to determine whether the Company is the principal (i.e. reports revenue on a gross basis) or agent (i.e., reports revenues on a net basis) in the contract. Principal or agent designations depend primarily on the control an entity has over the good or service before control is
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transferred to a client. The indicators of which party exercises control include primary responsibility over performance obligations, inventory risk before the good or service is transferred, and discretion in establishing the price.
The revenue recognition model does not apply to revenues associated with dealing, or market-making, activities in financial instruments or contracts in the capacity of a principal, including derivative sales contracts which result in physical settlement and interest income.
Refer to Note 15 for further discussion of the Company’s significant accounting policies related to revenue recognition.
Cost of Sales of Physical Commodities
Cost of sales of physical commodities include finished commodity or raw material and processing costs along with operating costs relating to the receipt, storage and delivery of physical commodities. Cost of sales of physical commodities also includes changes in the fair value of agricultural commodity inventories held for sale and adjustments for related forward purchase and sale commitments and exchange-traded futures and options contracts. Cost of sales of physical commodities further includes lower of cost or net realizable value for energy commodities and certain precious metals.
Interest Expense
Interest expense is recognized on an accrual basis. Interest expense is incurred on outstanding balances on the Company’s credit facilities. Interest expense is also incurred on fixed income securities sold, not yet purchased, that the Company holds in its market-marking businesses. Interest expense is also incurred from collateralized transactions, including securities loaned and securities sold under agreements to repurchase.
Transaction-Based Clearing Expenses
Clearing fees and related expenses include primarily variable expenses for clearing and settlement services, including fees the Company pays to executing brokers, exchanges, clearing organizations and banks. These fees are based on transaction volume and recorded as expense on trade date. Clearing fees are passed on to clients and are presented gross in the consolidated statements of income as the Company acts as a principal for these transactions.
Introducing Broker Commissions
Introducing broker commissions include commissions paid to non-employee individuals or organizations that maintain relationships with clients and introduce them to the Company. Introducing brokers accept exchange-based futures and options orders from those clients, while the Company directly provides all account, transaction and margining services, including accepting money, securities and property from the clients. Introducing brokers bring clients to the Company’s OTC business as well. Introducing broker commissions are determined monthly and settled regularly.
Compensation and Benefits
Compensation and benefits consists primarily of salaries, incentive compensation, variable compensation, including commissions, related payroll taxes and employee benefits. The Company classifies employees as either risk management consultants / traders, operational or administrative personnel, which includes executive officers. Variable compensation paid to risk management consultants and traders generally represents a fixed percentage of revenues generated, and in some cases, revenues produced less direct costs and an overhead allocation. The Company accrues commission expense on a trade-date basis.
Share-Based Compensation
The Company accounts for share-based compensation from option and restricted stock unit awards in accordance with the guidance in ASC 718-10, Compensation - Stock Compensation. The cost of employee services received in exchange for a share-based award is generally measured based on the grant-date fair value of the award. Share-based employee awards that require future service are amortized over the relevant service period. Forfeitures are accounted for as they occur in determining share-based employee compensation expense. For awards granted, compensation cost is recognized on a straight-line basis over the vesting period for the entire award.
Selling and Marketing
The Company generally expenses Selling and marketing costs as incurred. The Company’s policy includes expensing commercial media development costs as incurred, rather than deferring them until the related commercial airs. The Company expenses air time, such as television air-time, as used.
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Income Taxes
Income tax expense includes U.S. federal, state and local and foreign income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. Accounting for income taxes aims to recognize the amount of taxes payable or refundable for the current year. The Company utilizes 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 Company expects to be in effect when the underlying items of income and expense are realized. Judgment is required in assessing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns, including the repatriation of undistributed earnings of foreign subsidiaries. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authority, based upon the technical merits of the position. The tax benefit recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. See Note 19 for further information on the Company’s income taxes.
Additional Paid-In Capital
The Company’s additional paid-in capital (“APIC”) consists of stockholder contributions that are in excess of par value of common stock, also including amounts related to stock options exercises and share-based compensation.
Comprehensive Income
Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income. Other comprehensive income (loss) includes net actuarial gains and losses from defined benefit pension plans, the unrealized gains and losses from the Company’s cash flow hedges, as well as and gains and losses on foreign currency translations.
Preferred Stock
The Company is authorized to issue one million shares of preferred stock, par value of $0.01 per share, in one or more classes or series to be established by the Company’s Board of Directors. As of September 30, 2023 and 2022, no preferred shares were outstanding and the Company’s Board of Directors had not established any class or series of shares.
Accounting Standards Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU removed certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The Company adopted this standard as of October 1, 2021 on a prospective basis, as permitted by the standard. There was no cumulative effect adjustment recorded to retained earnings. The effects of this standard on the Company’s consolidated financial position, results of operations and cash flows are not material.
In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments”, which significantly changes the ways entities recognize credit losses on financial instruments. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019. In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, which among other things, included several amendments to ASU No. 2016-13, changing how a company considers expected recoveries and contractual extensions or renewal options when estimating expected credit losses.
The guidance replaces the previous incurred loss impairment guidance and introduces a new credit reserving model known as the Current Expected Credit Loss (“CECL”) model, which is based on expected losses over the life of an asset, and applies to financial assets carried at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. The allowance must reflect management’s estimate of credit losses over the life of the assets taking future economic changes into consideration.
The Company adopted this guidance on October 1, 2020, using the modified retrospective approach, which resulted in a recognized cumulative-effect adjustment of $6.2 million, net of tax of $2.0 million, to the opening balance of retained earnings - see Note 5 and Note 13. The adoption impact was attributable to an increase in allowance for credit losses related to the OptionSellers.com Inc. clients discussed in further detail within Note 13 of the consolidated financial statements. Results for reporting periods beginning after October 1, 2020 are presented using the CECL model, while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP.
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Current Expected Credit Losses
The Company estimates its allowance for credit losses on financial assets measured at amortized cost based on expected credit losses over the life of the financial asset. In determining expected credit losses, the Company considers a number of factors including, but not limited to, historical collection experience, current and forecasted economic and business conditions, internal and external credit risk ratings, collateral terms, payment terms and aging of the financial asset.
The Company estimates expected credit losses primarily using a probability of default (“PD”)/loss given default (“LGD”) model (“PD/LGD model”), under which the expected credit loss is calculated as the product of PD, LGD and exposure at default.
Additionally, for collateralized transactions, the Company elects to measure expected credit losses using the fair value of collateral received where the borrower is required to, and reasonably expected to, replenish the amount of collateral securing the receivable as a result of changes in the fair value of such collateral.
Note 2 – Earnings per Share
The Company presents basic and diluted earnings per share (“EPS”) using the two-class method which requires all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends and therefore participate in undistributed earnings with common stockholders be included in computing earnings per share. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating security. The remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. Restricted stock awards granted to certain employees and directors contain non-forfeitable rights to dividends at the same rate as common stock, and are considered participating securities. Basic EPS has been computed by dividing net income by the weighted-average number of common shares outstanding.
The following is a reconciliation of the numerator and denominator of the diluted net income per share computations for the periods presented below.

| Year Ended September 30,
(in millions, except share amounts) | 2023 |  | 2022 |  | 2021
Numerator: |  |  |  |  |
Net income | $ | 238.5 |  |  | $ | 207.1 |  |  | $ | 116.3 |
Less: Allocation to participating securities | (8.1) |  |  | (6.1) |  |  | (3.5) |
Net income allocated to common stockholders | $ | 230.4 |  |  | $ | 201.0 |  |  | $ | 112.8 |
Denominator: |  |  |  |  |
Weighted average number of: |  |  |  |  |
Common shares outstanding | 19,957,333 |  |  | 19,570,403 |  |  | 19,130,643 |
Dilutive potential common shares outstanding: |  |  |  |  |
Share-based awards | 662,007 |  |  | 497,137 |  |  | 547,525 |
Diluted shares outstanding | 20,619,340 |  |  | 20,067,540 |  |  | 19,678,168 |
Earnings per share - basic | $ | 11.55 |  |  | $ | 10.27 |  |  | $ | 5.90 |
Earnings per share - diluted | $ | 11.18 |  |  | $ | 10.01 |  |  | $ | 5.74 |

The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense.
Options to purchase 247,771, 451,907 and 298,786 shares of common stock for the years ended September 30, 2023, 2022, and 2021, respectively, were excluded from the calculation of diluted earnings per share because they would have been anti-dilutive.
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Common Stock Split
On November 7, 2023, the Company announced a 3-for-2 split of its common stock, which will be effected as a stock dividend entitling each shareholder of record to receive one additional share of common stock for every two shares owned. Additional shares issued as a result of the stock dividend will be distributed after close of trading on November 24, 2023, to stockholders of record at the close of business on November 17, 2023. Cash will be distributed in lieu of fractional shares based on the opening price of a share of common stock on November 20, 2023.
The following table presents unaudited proforma earnings per share on a post-split basis for the periods indicated.

| Year Ended September 30,
(in millions, except share amounts) | 2023 |  | 2022 |  | 2021
| (Unaudited)
Numerator: |  |  |  |  |
Net income allocated to common stockholders, as reported | $ | 230.4 |  |  | $ | 201.0 |  |  | $ | 112.8 |
Proforma Denominator (with effect of stock split): |  |  |  |  |
Weighted average number of: |  |  |  |  |
Common shares outstanding | 29,936,000 |  |  | 29,355,605 |  |  | 28,695,965 |
Dilutive potential common shares outstanding: |  |  |  |  |
Share-based awards | 993,011 |  |  | 745,706 |  |  | 821,288 |
Proforma diluted shares outstanding | 30,929,011 |  |  | 30,101,311 |  |  | 29,517,253 |
Proforma earnings per share - basic | $ | 7.71 |  |  | $ | 6.85 |  |  | $ | 3.93 |
Proforma earnings per share - diluted | $ | 7.45 |  |  | $ | 6.67 |  |  | $ | 3.82 |

Note 3 – Assets and Liabilities, at Fair Value
Fair value is defined by U.S. GAAP as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants on the measurement date.
Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company is required to develop a set of assumptions that reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.
The Company has designed independent price verification controls and periodically performs such controls to ensure the reasonableness of such values.
Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A market is active if there are sufficient transactions on an ongoing basis to provide current pricing information for the asset or liability, pricing information is released publicly, and price quotations do not vary substantially either over time or among market makers. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity.
The guidance requires the Company to consider counterparty credit risk of all parties of outstanding derivative instruments that would be considered by a market participant in the transfer or settlement of such contracts (exit price). The Company’s exposure to credit risk on derivative financial instruments relates to the portfolio of OTC derivative contracts as all exchange-traded contracts held can be settled on an active market with a credit guaranty from the respective exchange. The Company requires each counterparty to deposit margin collateral for all OTC instruments and is also required to deposit margin collateral with counterparties. The Company has assessed the nature of these deposits and used its discretion to adjust each based on the underlying credit considerations for the counterparty and determined that the collateral deposits minimize the exposure to counterparty credit risk in the evaluation of the fair value of OTC instruments as determined by a market participant.
In accordance with ASC 820, Fair Value Measurement, the Company groups its assets and liabilities measured at fair value in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:
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Level 1 - Valuation is based upon unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 1 consists of financial assets and liabilities whose fair values are estimated using quoted market prices.
Level 2 - Valuation is based upon quoted prices for identical or similar assets or liabilities in markets that are less active, that is, markets in which there are few transactions for the asset or liability that are observable for substantially the full term. Included in Level 2 are those financial assets and liabilities for which fair values are estimated using models or other valuation methodologies. These models are primarily industry-standard models that consider various observable inputs, including time value, yield curve, volatility factors, observable current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures.
Level 3 - Valuation is based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Level 3 comprises financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are not readily observable from objective sources. Level 3 includes contingent liabilities that have been valued using an income approach based upon management developed discounted cash flow projections, which are an unobservable input.
Fair value of financial and nonfinancial assets and liabilities that are carried on the Consolidated Balance Sheets at fair value on a recurring basis
Cash and cash equivalents reported at fair value on a recurring basis includes certificates of deposit and money market mutual funds, which are stated at cost plus accrued interest, which approximates fair value.
Cash, securities and other assets segregated under federal and other regulations reported at fair value on a recurring basis include the value of pledged investments, primarily U.S. Treasury obligations and commodities warehouse receipts.
Deposits with and receivables from broker-dealers, clearing organizations and counterparties and payable to clients and broker-dealers, clearing organizations and counterparties includes the fair value of pledged investments, primarily U.S. Treasury obligations and foreign government obligations. These balances also include the fair value of exchange-traded options on futures and OTC forwards, swaps, and options.
Financial instruments owned and sold, not yet purchased include the fair value of equity securities, which includes common, preferred, and foreign ordinary shares, American Depository Receipts (“ADRs”), Global Depository Receipts (“GDRs”), and exchange-traded funds (“ETFs”), corporate and municipal bonds, U.S. Treasury obligations, U.S. government agency obligations, foreign government obligations, agency mortgage-backed obligations, asset-backed obligations, derivative financial instruments, commodities warehouse receipts, exchange firm common stock, and investments in managed funds. The fair value of exchange firm common stock is determined by quoted market prices.
Cash equivalents, debt and equity securities, commodities warehouse receipts, physical commodities inventory, derivative financial instruments and contingent liabilities are carried at fair value, on a recurring basis, and are classified and disclosed into three levels in the fair value hierarchy.
The following section describes the valuation methodologies used by the Company to measure classes of financial instruments at fair value and specifies the level within the fair value hierarchy where various financial instruments are classified.
The Company uses quoted prices in active markets, where available, and classifies such instruments within Level 1 of the fair value hierarchy. Examples include U.S. Treasury obligations, foreign government obligations, commodities warehouse receipts, certain equity securities traded in active markets, physical precious metals inventory held by a regulated broker-dealer subsidiary, exchange firm common stock, investments in managed funds, as well as options on futures contracts traded on national exchanges. The fair value of exchange firm common stock is determined by recent sale transactions and is included within Level 1.
When instruments are traded in secondary markets and observable prices are not available for substantially the full term, the Company generally relies on internal valuation techniques or prices obtained from third-party pricing services or brokers or a combination thereof, and accordingly, classifies these instruments as Level 2. Examples include corporate and municipal bonds, U.S. government agency obligations, agency-mortgage backed obligations, asset-backed obligations, certain equity securities traded in less active markets, and OTC derivative contracts, which include purchase and sale commitments related to the Company’s agricultural and energy commodities.
Certain derivatives without a quoted price in an active market and derivatives executed OTC are valued using internal valuation techniques, including pricing models which utilize significant inputs observable to market participants. The valuation techniques and inputs depend on the type of derivative and the nature of the underlying instrument. The key inputs depend upon the type of derivative and the nature of the underlying instrument and include interest yield curves, foreign exchange rates, commodity prices, volatilities and correlation. These derivative instruments are included within Level 2 of the fair value hierarchy.
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Physical commodities inventory includes precious metals that are a part of the trading activities of a regulated broker-dealer subsidiary that records these assets at fair value using exchange-quoted prices. Physical commodities inventory also includes agricultural commodities that are a part of the trading activities of a non-broker dealer subsidiary and are recorded at net realizable value using exchange-quoted prices. The fair value of precious metals physical commodities inventory is based upon unadjusted exchange-quoted prices and is, therefore, classified within Level 1 of the fair value hierarchy. The fair value of agricultural physical commodities inventory and related OTC firm sale and purchase commitments are generally based upon exchange-quoted prices, adjusted for basis or differences in local markets, broker or dealer quotations or market transactions in either listed or OTC markets. Exchange-quoted prices are adjusted for location and quality because the exchange-quoted prices for agricultural and energy related products represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis or local market adjustments are observable inputs or have an insignificant impact on the measurement of fair value and, therefore, the agricultural physical commodities inventory as well as the related OTC forward firm sale and purchase commitments have been included within Level 2 of the fair value hierarchy.
With the exception of certain derivative instruments where the valuation approach is disclosed above, financial instruments owned and sold are primarily valued using third-party pricing sources. Third-party pricing vendors compile prices from various sources and often apply matrix pricing for similar securities when market-observable transactions for the instruments are not observable for substantially the full term. The Company reviews the pricing methodologies used by third-party pricing vendors in order to evaluate the fair value hierarchy classification of vendor-priced financial instruments and the accuracy of vendor pricing, which typically involves the comparison of primary vendor prices to internal trader prices or secondary vendor prices. When evaluating the propriety of vendor-priced financial instruments using secondary prices, considerations include the range and quality of vendor prices, level of observable transactions for identical and similar instruments, and judgments based upon knowledge of a particular market and asset class. If a primary vendor price does not represent fair value, justification for using a secondary price, including source data used to make the determination, is subject to review and approval by authorized personnel prior to using a secondary price. Financial instruments owned and sold that are valued using third-party pricing vendors are included within either Level 1 or Level 2 of the fair value hierarchy based upon the observability of the inputs used and the level of activity in the market.
The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2023 and 2022. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.
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The following tables set forth the Company’s financial and nonfinancial assets and liabilities accounted for at fair value, on a recurring basis, as of September 30, 2023 and 2022 by level in the fair value hierarchy. All fair value measurements were performed on a recurring basis as of September 30, 2023 and 2022.

| September 30, 2023
(in millions) | Level 1 |  | Level 2 |  | Level 3 |  | Netting (1) |  | Total
Assets: |  |  |  |  |  |  |  |  |
Certificates of deposit | $ | 8.7 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 8.7 |
Money market mutual funds | 57.8 |  |  | — |  |  | — |  |  | — |  |  | 57.8 |
Cash and cash equivalents | 66.5 |  |  | — |  |  | — |  |  | — |  |  | 66.5 |
Commodities warehouse receipts | 5.8 |  |  | — |  |  | — |  |  | — |  |  | 5.8 |
Securities and other assets segregated under federal and other regulations | 5.8 |  |  | — |  |  | — |  |  | — |  |  | 5.8 |
U.S. Treasury obligations | 4,023.8 |  |  | — |  |  | — |  |  | — |  |  | 4,023.8 |
To be announced ("TBA") and forward settling securities | — |  |  | 73.5 |  |  | — |  |  | (31.7) |  |  | 41.8 |
Foreign government obligations | 17.8 |  |  | — |  |  | — |  |  | — |  |  | 17.8 |
Derivatives | 5,497.5 |  |  | 1,135.9 |  |  | — |  |  | (6,468.5) |  |  | 164.9 |
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net | 9,539.1 |  |  | 1,209.4 |  |  | — |  |  | (6,500.2) |  |  | 4,248.3 |
Receivable from clients, net - Derivatives | 61.7 |  |  | 561.3 |  |  |  |  | (630.9) |  |  | (7.9) |
Equity securities | 324.0 |  |  | 10.3 |  |  | — |  |  | — |  |  | 334.3 |
Corporate and municipal bonds | — |  |  | 284.2 |  |  | — |  |  | — |  |  | 284.2 |
U.S. Treasury obligations | 531.7 |  |  | — |  |  | — |  |  | — |  |  | 531.7 |
U.S. government agency obligations | — |  |  | 451.7 |  |  | — |  |  | — |  |  | 451.7 |
Foreign government obligations | 43.3 |  |  | — |  |  | — |  |  | — |  |  | 43.3 |
Agency mortgage-backed obligations | — |  |  | 2,865.8 |  |  | — |  |  | — |  |  | 2,865.8 |
Asset-backed obligations | — |  |  | 138.8 |  |  | — |  |  | — |  |  | 138.8 |
Derivatives | 0.6 |  |  | 868.1 |  |  | — |  |  | (600.2) |  |  | 268.5 |
Commodities leases | — |  |  | 16.0 |  |  | — |  |  | — |  |  | 16.0 |
Commodities warehouse receipts | 54.7 |  |  | — |  |  | — |  |  | — |  |  | 54.7 |
Exchange firm common stock | 12.0 |  |  | — |  |  | — |  |  | — |  |  | 12.0 |
Cash flow hedges | — |  |  | 1.7 |  |  | — |  |  | — |  |  | 1.7 |
Mutual funds and other | 39.3 |  |  | — |  |  | 2.8 |  |  | — |  |  | 42.1 |
Financial instruments owned | 1,005.6 |  |  | 4,636.6 |  |  | 2.8 |  |  | (600.2) |  |  | 5,044.8 |
Physical commodities inventory | 240.3 |  |  | 146.2 |  |  | — |  |  | — |  |  | 386.5 |
Total assets at fair value | $ | 10,919.0 |  |  | $ | 6,553.5 |  |  | $ | 2.8 |  |  | $ | (7,731.3) |  |  | $ | 9,744.0 |
Liabilities: |  |  |  |  |  |  |  |  |
Accounts payable and other accrued liabilities - contingent liabilities | $ | — |  |  | $ | — |  |  | $ | 1.5 |  |  | $ | — |  |  | $ | 1.5 |
Payables to clients - Derivatives | 5,430.7 |  |  | 226.2 |  |  | — |  |  | (5,577.1) |  |  | 79.8 |
TBA and forward settling securities | — |  |  | 47.5 |  |  | — |  |  | (31.4) |  |  | 16.1 |
Derivatives | 112.2 |  |  | 1,402.0 |  |  | — |  |  | (1,520.1) |  |  | (5.9) |
Payable to broker-dealers, clearing organizations and counterparties | 112.2 |  |  | 1,449.5 |  |  | — |  |  | (1,551.5) |  |  | 10.2 |
Equity securities | 230.6 |  |  | 5.5 |  |  | — |  |  | — |  |  | 236.1 |
Foreign government obligations | 21.5 |  |  | — |  |  | — |  |  | — |  |  | 21.5 |
Corporate and municipal bonds | — |  |  | 81.6 |  |  | — |  |  | — |  |  | 81.6 |
U.S. Treasury obligations | 2,409.3 |  |  | — |  |  | — |  |  | — |  |  | 2,409.3 |
U.S. government agency obligations | — |  |  | 5.1 |  |  | — |  |  | — |  |  | 5.1 |
Agency mortgage-backed obligations | — |  |  | 31.7 |  |  | — |  |  | — |  |  | 31.7 |
Derivatives | 2.4 |  |  | 769.2 |  |  | — |  |  | (510.4) |  |  | 261.2 |
Cash flow hedges | — |  |  | 27.1 |  |  | — |  |  | — |  |  | 27.1 |
Other | — |  |  | 10.9 |  |  | 1.1 |  |  | — |  |  | 12.0 |
Financial instruments sold, not yet purchased | 2,663.8 |  |  | 931.1 |  |  | 1.1 |  |  | (510.4) |  |  | 3,085.6 |
Total liabilities at fair value | $ | 8,206.7 |  |  | $ | 2,606.8 |  |  | $ | 2.6 |  |  | $ | (7,639.0) |  |  | $ | 3,177.1 |

(1)Represents cash collateral and the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level are included in that level.
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| September 30, 2022
(in millions) | Level 1 |  | Level 2 |  | Level 3 |  | Netting (1) |  | Total
Assets: |  |  |  |  |  |  |  |  |
Certificates of deposit | $ | 4.0 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4.0 |
Money market mutual funds | 39.5 |  |  | — |  |  | — |  |  | — |  |  | 39.5 |
Cash and cash equivalents | 43.5 |  |  | — |  |  | — |  |  | — |  |  | 43.5 |
Commodities warehouse receipts | 19.7 |  |  | — |  |  | — |  |  | — |  |  | 19.7 |
U.S. Treasury obligations | 786.0 |  |  | — |  |  | — |  |  | — |  |  | 786.0 |
Securities and other assets segregated under federal and other regulations | 805.7 |  |  | — |  |  | — |  |  | — |  |  | 805.7 |
U.S. Treasury obligations | 4,258.5 |  |  | — |  |  | — |  |  | — |  |  | 4,258.5 |
TBA and forward settling securities | — |  |  | 207.6 |  |  | — |  |  | (91.4) |  |  | 116.2 |
Foreign government obligations | 14.4 |  |  | — |  |  | — |  |  | — |  |  | 14.4 |
Derivatives | 7,714.4 |  |  | 461.4 |  |  | — |  |  | (9,747.7) |  |  | (1,571.9) |
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net | 11,987.3 |  |  | 669.0 |  |  | — |  |  | (9,839.1) |  |  | 2,817.2 |
Receivable from clients, net - Derivatives | 67.2 |  |  | 511.6 |  |  |  |  | (579.3) |  |  | (0.5) |
Equity securities | 367.9 |  |  | 11.8 |  |  | — |  |  | — |  |  | 379.7 |
Corporate and municipal bonds | — |  |  | 156.8 |  |  | — |  |  | — |  |  | 156.8 |
U.S. Treasury obligations | 347.6 |  |  | — |  |  | — |  |  | — |  |  | 347.6 |
U.S. government agency obligations | — |  |  | 343.0 |  |  | — |  |  | — |  |  | 343.0 |
Foreign government obligations | 4.8 |  |  | — |  |  | — |  |  | — |  |  | 4.8 |
Agency mortgage-backed obligations | — |  |  | 2,588.7 |  |  | — |  |  | — |  |  | 2,588.7 |
Asset-backed obligations | — |  |  | 70.7 |  |  | — |  |  | — |  |  | 70.7 |
Derivatives | 0.7 |  |  | 694.3 |  |  | — |  |  | (502.4) |  |  | 192.6 |
Commodities leases | — |  |  | 26.4 |  |  | — |  |  | — |  |  | 26.4 |
Commodities warehouse receipts | 24.9 |  |  | — |  |  | — |  |  | — |  |  | 24.9 |
Exchange firm common stock | 10.6 |  |  | — |  |  | — |  |  | — |  |  | 10.6 |
Mutual funds and other | 17.4 |  |  | 4.1 |  |  | — |  |  | — |  |  | 21.5 |
Financial instruments owned | 773.9 |  |  | 3,895.8 |  |  | — |  |  | (502.4) |  |  | 4,167.3 |
Physical commodities inventory | 136.3 |  |  | 223.5 |  |  | — |  |  | — |  |  | 359.8 |
Total assets at fair value | $ | 13,813.9 |  |  | $ | 5,299.9 |  |  | $ | — |  |  | $ | (10,920.8) |  |  | $ | 8,193.0 |
Liabilities: |  |  |  |  |  |  |  |  |
Payables to clients - Derivatives | 7,722.5 |  |  | 175.4 |  |  | — |  |  | (9,290.3) |  |  | (1,392.4) |
TBA and forward settling securities | — |  |  | 154.9 |  |  | — |  |  | (96.9) |  |  | 58.0 |
Derivatives | 58.7 |  |  | 590.6 |  |  | — |  |  | (651.5) |  |  | (2.2) |
Payable to broker-dealers, clearing organizations and counterparties | 58.7 |  |  | 745.5 |  |  | — |  |  | (748.4) |  |  | 55.8 |
Equity securities | 299.9 |  |  | 5.7 |  |  | — |  |  | — |  |  | 305.6 |
Foreign government obligations | 0.5 |  |  | — |  |  | — |  |  | — |  |  | 0.5 |
Corporate and municipal bonds | — |  |  | 63.2 |  |  | — |  |  | — |  |  | 63.2 |
U.S. Treasury obligations | 1,686.5 |  |  | — |  |  | — |  |  | — |  |  | 1,686.5 |
U.S. government agency obligations | — |  |  | 24.3 |  |  | — |  |  | — |  |  | 24.3 |
Agency mortgage-backed obligations | — |  |  | 5.4 |  |  | — |  |  | — |  |  | 5.4 |
Derivatives | — |  |  | 779.7 |  |  | — |  |  | (466.3) |  |  | 313.4 |
Cash flow hedges | — |  |  | 70.6 |  |  | — |  |  | — |  |  | 70.6 |
Commodities leases | — |  |  | — |  |  | — |  |  | — |  |  | — |
Financial instruments sold, not yet purchased | 1,986.9 |  |  | 949.0 |  |  | — |  |  | (466.3) |  |  | 2,469.6 |
Total liabilities at fair value | $ | 9,768.1 |  |  | $ | 1,869.9 |  |  | $ | — |  |  | $ | (10,505.0) |  |  | $ | 1,133.0 |

(1)Represents cash collateral and the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level are included in that level.
Realized and unrealized gains and losses are included in Principal gains, net, Interest income, and Cost of sales of physical commodities in the Consolidated Income Statements.
The fair value of an exchange-traded options on futures contract is equal to the unrealized gain or loss on the contract determined by marking the contract to the current settlement price for a like contract on the valuation date of the contract. A settlement price may not be used if the market makes a limit move with respect to a particular options on futures contract or if
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the contract’s underlying experiences significant price fluctuations after the determination of the settlement price. When a settlement price cannot be used, options on futures contracts will be valued at their fair value as determined in good faith pursuant to procedures adopted by management of the Company.
Information on Level 3 Financial Liabilities
The acquisition of CDI-Societe Cotonniere De Distribution S.A, as further discussed in Note 20, included a put and call option feature that will be settled in a future period. The future value of these options, which are both an asset and liability, is dependent upon certain financial metrics. The preceding table contains the current values in Level 3, within Financial instruments owned and Financial instruments sold, not yet purchased, respectively.
The acquisition of Incomm S.A.S., as further discussed in Note 20, included a contingent earn-out. Pursuant to the consideration agreement, the Company is required to make additional future cash payments based on a percentage of the acquired business line’s pre-tax profits. The balance of the earn-out is included in Accounts payable and other accrued liabilities in the Consolidated Balance Sheets.
The acquisition of Chasing Returns Limited, as further discussed in Note 20, included a contingent consideration arrangement as a component of the purchase price. Pursuant to the contingent consideration agreement, the Company was required to make additional cash payments based on certain implementation milestones. As of September 30, 2022, the Company had fully satisfied the liability for the contingent consideration, with payments of $3.6 million made during the year ended September 30, 2022.
Additional Disclosures about the Fair Value of Financial Instruments that are not carried on the Consolidated Balance Sheets at Fair Value
Many, but not all, of the financial instruments that the Company holds are recorded at fair value in the Consolidated Balance Sheets. The following represents financial instruments in which the ending balances at September 30, 2023 and 2022 were not carried at fair value in accordance with U.S. GAAP on our Consolidated Balance Sheets:
Short-term financial instruments: The carrying values of short-term financial instruments, including cash and cash equivalents, cash segregated under federal and other regulations, securities purchased under agreements to re-sell and securities sold under agreements to re-purchase, and securities borrowed and loaned are recorded at amounts that approximate the fair value of these instruments due to their short-term nature and level of collateralization. These financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market rates. Under the fair value hierarchy, cash and cash equivalents and cash segregated under federal and other regulations are classified as Level 1. Securities purchased under agreements to re-sell and securities sold under agreements to re-purchase, and securities borrowed and loaned are classified as Level 2 under the fair value hierarchy as they are generally overnight, or short-term in nature, and are collateralized by common stock, U.S. Treasury obligations, U.S. government agency obligations, agency mortgage-backed obligations, and asset-backed obligations.
Receivables and other assets: Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, receivable from clients, net, notes receivables, net and certain other assets are recorded at amounts that approximate fair value due to their short-term nature and are classified as Level 2 under the fair value hierarchy.
Payables: Payables to clients and payables to brokers-dealers, clearing organizations, and counterparties are recorded at amounts that approximate fair value due to their short-term nature. They are classified as Level 2 under the fair value hierarchy.
Lenders under loans: Payables to lenders under loans carry variable rates of interest and thus approximate fair value and are classified as Level 2 under the fair value hierarchy.
Senior secured borrowings, net: Senior secured borrowings, net includes the Company's 8.625% Senior Secured Notes due 2025 (the “Senior Secured Notes”), as further described in Note 11 with a carrying value of $342.1 million as of September 30, 2023. The carrying value of the Senior Secured Notes represent their principal amounts net of unamortized deferred financing costs and original issue discount. As of September 30, 2023, the Senior Secured Notes had a fair value of $351.8 million and are classified as Level 2 under the fair value hierarchy.
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Note 4 – Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk
The Company is party to certain financial instruments with off-balance sheet risk in the normal course of its business. The Company has sold financial instruments that it does not currently own and will therefore be obliged to purchase such financial instruments at a future date. The Company has recorded these obligations in the consolidated financial statements as of September 30, 2023 at the fair values of the related financial instruments. The Company will incur losses if the fair value of the underlying financial instruments increases subsequent to September 30, 2023. The total Financial instruments sold, not yet purchased, at fair value of $3,085.6 million as of September 30, 2023 includes $261.2 million for derivative contracts not designated as hedges, which represent a liability to the Company based on their fair values as of September 30, 2023.
Derivatives
The Company utilizes derivative products in its trading capacity as a dealer in order to satisfy client needs and mitigate risk. The Company manages risks from both derivatives and non-derivative cash instruments on a consolidated basis. The risks of derivatives should not be viewed in isolation, but in aggregate with the Company’s other trading activities. The Company’s derivative positions are included in the Consolidating Balance Sheets in Deposits with and receivables from broker-dealers, clearing organizations, and counterparties; Receivable from clients, net; Financial instruments owned, net; Financial instruments sold, not yet purchased, at fair value; Payables to clients; and Payables to broker-dealers, clearing organizations and counterparties.
Listed below are the fair values of the Company’s derivative assets and liabilities as of September 30, 2023 and 2022. Assets represent net unrealized gains and liabilities represent net unrealized losses.

| September 30, 2023 |  | September 30, 2022
(in millions) | Assets (1) |  | Liabilities (1) |  | Assets (1) |  | Liabilities (1)
Derivative contracts not accounted for as hedges: |  |  |  |  |  |  |
Exchange-traded commodity derivatives | $ | 1,907.0 |  |  | $ | 1,890.3 |  |  | $ | 4,520.4 |  |  | $ | 4,519.3 |
OTC commodity derivatives | 1,523.3 |  |  | 1,456.0 |  |  | 756.9 |  |  | 695.6 |
Exchange-traded foreign exchange derivatives | 4.3 |  |  | 4.3 |  |  | 25.6 |  |  | 25.7 |
OTC foreign exchange derivatives | 497.1 |  |  | 455.3 |  |  | 577.1 |  |  | 549.3 |
Exchange-traded interest rate derivatives | 1,507.6 |  |  | 1,509.8 |  |  | 2,626.8 |  |  | 2,626.7 |
OTC interest rate derivatives | 417.6 |  |  | 417.6 |  |  | 168.9 |  |  | 205.1 |
Exchange-traded equity index derivatives | 2,140.9 |  |  | 2,140.9 |  |  | 609.5 |  |  | 609.5 |
OTC equity and indices derivatives | 127.3 |  |  | 68.5 |  |  | 164.4 |  |  | 95.7 |
TBA and forward settling securities | 73.5 |  |  | 47.5 |  |  | 207.6 |  |  | 154.9 |
Total derivative contracts not accounted for as hedges | 8,198.6 |  |  | 7,990.2 |  |  | 9,657.2 |  |  | 9,481.8 |
Derivative contracts designated as hedging instruments: |  |  |  |  |  |  |
Interest rate swaps | — |  |  | 24.6 |  |  | — |  |  | 48.8 |
Foreign currency forwards | 1.7 |  |  | 2.5 |  |  | — |  |  | 21.8 |
Total derivative contracts designated as hedging instruments | 1.7 |  |  | 27.1 |  |  | — |  |  | 70.6 |
Gross fair value of derivative contracts | $ | 8,200.3 |  |  | $ | 8,017.3 |  |  | $ | 9,657.2 |  |  | $ | 9,552.4 |
Impact of netting and collateral | (7,731.3) |  |  | (7,639.0) |  |  | (10,920.8) |  |  | (10,505.0) |
Total fair value included in Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net | $ | 206.7 |  |  |  |  | $ | (1,455.7) |  |  |
Total fair value included in Receivable from clients, net | $ | (7.9) |  |  |  |  | $ | (0.5) |  |  |
Total fair value included in Financial instruments owned, at fair value | $ | 270.2 |  |  |  |  | $ | 192.6 |  |  |
Total fair value included in Payables to clients |  |  | $ | 79.8 |  |  |  |  | $ | (1,392.4) |
Total fair value included in Payables to broker-dealers, clearing organizations and counterparties |  |  | $ | 10.2 |  |  |  |  | $ | 55.8 |
Fair value included in Financial instruments sold, not yet purchased, at fair value |  |  | $ | 288.3 |  |  |  |  | $ | 384.0 |

(1)As of September 30, 2023 and 2022, the Company’s derivative contract volume for open positions was approximately 13.4 million and 13.3 million contracts, respectively.
The Company’s derivative contracts are principally held in its Institutional, Commercial, and Retail segments. The Company provides its Institutional segment clients access to exchanges at which they can carry out their trading strategies. The Company assists its Commercial segment clients in protecting the value of their future production by entering into option or forward
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agreements with them on an OTC basis. The Company also provides its Commercial segment clients with exchange products, including combinations of buying and selling puts and calls. In its Retail segment, the Company provides its retail clients with access to spot foreign exchange, precious metals trading, as well as contracts for difference (“CFD”) and spread bets, where permitted. The Company mitigates its risk by generally offsetting the client’s transaction simultaneously with one of the Company’s trading counterparties or will offset that transaction with a similar but not identical position on the exchange. The risk mitigation of these offsetting trades is not within the documented hedging designation requirements of the Derivatives and Hedging Topic of the ASC. These derivative contracts are traded along with cash transactions because of the integrated nature of the markets for these products. The Company manages the risks associated with derivatives on an aggregate basis along with the risks associated with its proprietary trading and market-making activities in cash instruments as part of its firm-wide risk management policies. In particular, the risks related to derivative positions may be partially offset by inventory, other derivatives, or cash collateral paid or received.
Hedging Activities
The Company uses interest rate derivatives, in the form of swaps, to hedge risk related to variability in overnight rates. These hedges are designated cash flow hedges, through which the Company mitigates uncertainty in its interest income by converting floating-rate interest income to fixed-rate interest income. While the swaps mitigate interest rate risk, they do introduce credit risk, which is the possibility that the Company’s trading counterparty fails to meet its obligation. The Company minimizes this risk by entering into its swaps with highly-rated, multi-national institutions. In addition to credit risk, there is market risk associated with the swap positions. The Company’s market risk is limited, because any amounts the Company must pay from having exchanged variable interest will be funded by the variable interest the Company receives on its deposits. These hedges will all mature within approximately 1 year from the end of the current period.
The Company also uses foreign currency derivatives, in the form of forward contracts, to hedge risk related to the variability in exchange rates relative to certain of the Company’s non-USD expenditures. These hedges are designated cash flow hedges, through which the Company mitigates variability in exchange rates by exchanging foreign currency for USD at fixed exchange rates at a pre-determined future date, or several cash flows at several pre-determined future dates. While the forward contracts mitigate exchange rate variability risk, they do introduce credit risk, which is the possibility that the Company’s trading counterparty fails to meet its obligation. The Company minimizes this risk by entering into its forward contracts with highly-rated, multi-national institutions. These hedges will all mature within 2 years from the end of the current period.
The Company assesses the effectiveness of its hedges at each reporting period to identify any required reclassifications into current earnings. During the fiscal years ended September 30, 2023 and 2022, the Company did not designate any portion of its hedges as ineffective and thus did not have any values in current earnings related to ineffective hedges. The fair values of derivative instruments designated for hedging held as of September 30, 2023 and 2022 are as follow:
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|  |  | September 30, 2023 |  | September 30, 2022
(in millions) | Balance Sheet Location |  | Fair Value |  | Fair Value
Asset Derivatives |  |  |  |  |
Derivatives designated as hedging instruments: |  |  |  |  |
Foreign currency forward contracts | Financial instruments owned, net |  | $ | 1.7 |  |  | $ | — |
Total derivatives designated as hedging instruments |  |  | $ | 1.7 |  |  | $ | — |
Derivative assets, net expected to be released from Other comprehensive income into earnings within the next 12 months: |  |  |  |  |
Foreign currency forward contracts |  |  | $ | 1.4 |  |  | $ | — |
Total expected to be released from Other comprehensive income into earnings |  |  | $ | 1.4 |  |  | $ | — |
Liability Derivatives |  |  |  |  |
Derivatives designated as hedging instruments: |  |  |  |  |
Interest rate contracts | Financial instruments sold, not yet purchased |  | $ | 24.6 |  |  | $ | 48.8 |
Foreign currency forward contracts | Financial instruments sold, not yet purchased |  | 2.5 |  |  | 21.8 |
Total derivatives designated as hedging instruments |  |  | $ | 27.1 |  |  | $ | 70.6 |
Derivative liabilities, net expected to be released from Other comprehensive income into earnings within the next 12 months: |  |  |  |  |
Interest rate contracts |  |  | $ | 20.3 |  |  | $ | 9.7 |
Foreign currency forward contracts |  |  | 1.0 |  |  | 8.9 |
Total expected to be released from Other comprehensive income into earnings |  |  | $ | 21.3 |  |  | $ | 18.6 |

The notional values of derivative instruments designated for hedging held as of September 30, 2023 and 2022 are as follows:

|  | September 30, 2023 |  | September 30, 2022
(in millions) |  | Notional Value |  | Notional Value
Derivatives designated as hedging instruments: |  |  |  |
Interest rate contracts |  | $ | 2,000.0 |  |  | $ | 1,500.0 |
Foreign currency forward contracts: |  |  |  |
Foreign currency forward contracts to purchase Polish Zloty: |  |  |  |
Local currency |  | zł | 156.1 |  |  | zł | — |
USD |  | $ | 34.0 |  |  | $ | — |
Foreign currency forward contracts to purchase British Pound Sterling: |  |  |  |
Local currency |  | £ | 168.0 |  |  | £ | 168.0 |
USD |  | $ | 206.9 |  |  | $ | 207.3 |

The Consolidated Income Statement effects of derivative instruments designated for hedging held for the fiscal years ended September 30, 2023 and 2022 are as follows:

(in millions) | Income Statement Location |  | Year Ended September 30, 2023 |  | Year Ended September 30, 2022 |  |
Total amounts in income related to hedges |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | Interest income |  | $ | (47.0) |  |  | $ | 2.4 |  |  |  |  |  |  |  |  |
Foreign currency forward contracts | Compensation and benefits |  | 2.3 |  |  | — |  |  |  |  |  |  |  |  |
Total derivatives designated as hedging instruments |  |  | $ | (44.7) |  |  | $ | 2.4 |  |  |  |  |  |  |  |  |
Loss on cash flow hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain reclassified from accumulated other comprehensive income into income as a result of a forecasted transaction that is no longer probable of occurring |  |  | $ | — |  |  | $ | — |  |  |  |  |  |  |  |  |

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The accumulated other comprehensive income effects of derivative instruments designated for hedging held for fiscal years ended September 30, 2023 and 2022 are as follows:

| Year Ended September 30, 2023
(in millions) | Amount of Gain Recognized in Other Comprehensive Income on Derivatives, net of tax |  | Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income |  | Amount Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives in Cash Flow Hedging Relationships: |  |  |  |  |
Interest rate contracts | $ | 18.4 |  |  | Interest Income |  | $ | (47.0) |
Foreign currency forward contracts | 16.7 |  |  | Compensation and benefits |  | 2.3 |
Total | $ | 35.1 |  |  |  |  | $ | (44.7) |

| Year Ended September 30, 2022
(in millions) | Amount of Loss Recognized in Other Comprehensive Income on Derivatives, net of tax |  | Location of Loss Reclassified from Accumulated Other Comprehensive Income into Income |  | Amount of Loss Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives in Cash Flow Hedging Relationships: |  |  |  |  |
Interest rate contracts | $ | 37.0 |  |  | Interest Income |  | $ | 2.4 |
Foreign currency forward contracts | 16.5 |  |  | N/A |  | — |
Total | $ | 53.5 |  |  |  |  | $ | 2.4 |

The following table sets forth the Company’s net gains/(losses) related to derivative financial instruments for the periods indicated, in accordance with the Derivatives and Hedging Topic of the ASC. The net gains/(losses) set forth below are included in Principal gains, net and Cost of sales of physical commodities in the Consolidated Income Statements.

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Commodities | $ | 446.5 |  |  | $ | 303.7 |  |  | $ | 207.8 |
Foreign exchange | 269.2 |  |  | 174.4 |  |  | 116.3 |
Interest rate, equities, and indices | 109.0 |  |  | 100.4 |  |  | 80.8 |
TBA and forward settling securities | 73.0 |  |  | 226.8 |  |  | (6.3) |
Net gains from derivative contracts | $ | 897.7 |  |  | $ | 805.3 |  |  | $ | 398.6 |

Credit Risk
In the normal course of business, the Company purchases and sells financial instruments, commodities and foreign currencies as either principal or agent on behalf of its clients. If either the client or counterparty fails to perform, the Company may be required to discharge the obligations of the nonperforming party. In such circumstances, the Company may sustain a loss if the fair value of the financial instrument or foreign currency is different from the contract value of the transaction.
The majority of the Company’s transactions and, consequently, the concentration of its credit exposure are with commodity exchanges, clients, broker-dealers and other financial institutions. These activities involve both collateralized and uncollateralized arrangements and may result in credit exposure in the event that a counterparty fails to meet its contractual obligations. The Company’s exposure to credit risk can be directly impacted by volatile financial markets, which may impair the ability of counterparties to satisfy their contractual obligations. The Company seeks to control its credit risk through a variety of reporting and control procedures, including establishing credit limits based upon a review of counterparties financial condition and credit ratings. The Company monitors collateral levels on a daily basis for compliance with regulatory and internal guidelines. The Company requests changes in collateral levels as appropriate.
The Company is a party to financial instruments in the normal course of its business through client and proprietary trading accounts in exchange-traded and OTC derivative instruments. These instruments are primarily the execution of orders for commodity futures, options on futures and forward foreign currency contracts on behalf of its clients, substantially all of these transactions occur on a margin basis. Such transactions may expose the Company to significant credit risk in the event margin requirements are not sufficient to fully cover losses which clients may incur. The Company controls the risks associated with these transactions by requiring clients to maintain margin deposits in compliance with individual exchange regulations and internal guidelines. The Company monitors required margin levels daily and, therefore, may require clients to deposit additional collateral or reduce positions when necessary. The Company also establishes client credit limits, which are monitored daily. The Company evaluates each client’s creditworthiness on a case by case basis. Clearing, financing, and settlement activities may require the Company to maintain funds with or pledge securities as collateral with other financial institutions. Generally,
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these exposures to both clients and counterparties are subject to master netting, or client agreements, which reduce the exposure to the Company by permitting receivables and payables with such clients to be offset in the event of a client default. Management believes that the margin deposits held as of September 30, 2023 and 2022 were adequate to minimize the risk of material loss that could be created by positions held at that time. Additionally, the Company monitors collateral fair value on a daily basis and adjusts collateral levels in the event of excess market exposure.
Derivative financial instruments involve varying degrees of off-balance sheet market risk whereby changes in the fair values of underlying financial instruments may result in changes in the fair value of the financial instruments in excess of the amounts reflected in the Consolidated Balance Sheets. Exposure to market risk is influenced by a number of factors, including the relationships between the financial instruments and the Company’s positions, as well as the volatility and liquidity in the markets in which the financial instruments are traded. The principal risk components of financial instruments include, among other things, interest rate volatility, the duration of the underlying instruments and changes in commodity pricing and foreign exchange rates. The Company attempts to manage its exposure to market risk through various techniques. Aggregate market limits have been established and market risk measures are routinely monitored against these limits.
Note 5 – Allowance for Doubtful Accounts
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net; receivable from clients, net; and notes receivable, net include allowances for doubtful accounts, which reflect the Company’s best estimates of probable losses inherent in the accounts. In determining expected credit losses and establishing its allowance for doubtful accounts, the Company considers a number of factors including, but not limited to, historical collection experience, current and forecasted economic and business conditions, internal and external credit risk ratings, collateral terms, payment terms and aging of the financial asset, as well as specific-identification in certain circumstances. The Company continually reviews its allowance for doubtful accounts.
The allowance for doubtful accounts related to deposits with and receivables from broker-dealers, clearing organizations, and counterparties was $0.1 million and $1.4 million as of September 30, 2023 and 2022. The allowance for doubtful accounts related to receivable from clients was $59.8 million and $46.4 million as of September 30, 2023 and 2022, respectively. The Company had no allowance for doubtful accounts related to notes receivable as of September 30, 2023 and 2022.
Activity in the allowance for doubtful accounts for the years ended September 30, 2023, 2022, and 2021 was as follows:

(in millions) | 2023 |  | 2022 |  | 2021
Balance, beginning of year | $ | 47.8 |  |  | $ | 39.8 |  |  | $ | 27.1 |
ASU 2016-13 cumulative transition adjustment | — |  |  | — |  |  | 8.2 |
Adjusted balance, beginning of year | 47.8 |  |  | 39.8 |  |  | 35.3 |
Provision for bad debts(1) | 12.5 |  |  | 12.4 |  |  | 10.4 |
Allowance charge-offs | (0.5) |  |  | (5.6) |  |  | (5.9) |
Other(2) | 0.1 |  |  | 1.2 |  |  | — |
Balance, end of year | $ | 59.9 |  |  | $ | 47.8 |  |  | $ | 39.8 |
(1) An additional $4.0 million is included in bad debt expense for the year ended September 30, 2023 on the consolidated income statement, which is not included in the allowance at the year then ended.
(2) Allowance increase is related to a recoverable amount due from an affiliated party and recorded in Other assets on the Consolidated Balance Sheets.

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Note 6 – Physical Commodities Inventory
The Company’s inventories consist of finished physical commodities as shown below.

| September 30,
(in millions) | 2023 |  | 2022
Physical Ag & Energy(1) | $ | 146.2 |  |  | $ | 223.6 |
Precious metals - held by broker-dealer subsidiary | 240.3 |  |  | 136.3 |
Precious metals - held by non-broker-dealer subsidiaries | 150.8 |  |  | 153.6 |
Physical commodities inventory | $ | 537.3 |  |  | $ | 513.5 |

(1) Physical Ag & Energy consists of agricultural commodity inventories, including corn, soybeans, wheat, dried distillers grain, canola, sorghum, coffee, cocoa, cotton, and various energy commodity inventories. Agricultural inventories have reliable, readily determinable and realizable market prices, have relatively insignificant costs of disposal and are available for immediate delivery. The Company records changes to these values in Cost of sales of physical commodities on the Consolidated Income Statements.
Note 7 – Property and Equipment, net
Property and equipment is stated at cost, and reported net of accumulated depreciation and amortization on the Consolidated Balance Sheets. Depreciation on property and equipment is generally calculated using the straight-line method over the relevant asset’s estimated useful life. The estimated useful lives of property and equipment range from 3 to 10 years. During the years ended September 30, 2023, 2022, and 2021, depreciation expense was $36.3 million, $30.0 million, and $21.3 million respectively.
The Company capitalized $29.9 million and $24.8 million of software development costs during the years ended September 30, 2023 and September 30, 2022.
A summary of property and equipment, at cost less accumulated depreciation and amortization as of September 30, 2023 and 2022 is as follows:

| September 30,
(in millions) | 2023 |  | 2022
Property and equipment: |  |  |
Furniture and fixtures | $ | 17.5 |  |  | $ | 16.0 |
Software | 38.1 |  |  | 34.4 |
Equipment | 49.9 |  |  | 45.3 |
Leasehold improvements | 47.7 |  |  | 43.3 |
Capitalized software development | 77.0 |  |  | 47.1 |
Total property and equipment | 230.2 |  |  | 186.1 |
Less: accumulated depreciation and amortization | (106.7) |  |  | (73.2) |
Property and equipment, net | $ | 123.5 |  |  | $ | 112.9 |

Note 8 – Goodwill
Goodwill allocated to the Company’s operating segments as of September 30, 2023 and 2022 is as follows:

| September 30,
(in millions) | 2023 |  | 2022
Commercial | $ | 33.7 |  |  | $ | 32.6 |
Institutional | 9.8 |  |  | 9.8 |
Retail | 5.8 |  |  | 5.8 |
Global Payments | 10.0 |  |  | 10.0 |
Total Goodwill | $ | 59.3 |  |  | $ | 58.2 |

The Company recorded $(0.3) million and $(0.1) million in foreign exchange revaluation adjustments on goodwill for the years ended September 30, 2023 and 2022, respectively.
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Note 9 – Intangible Assets
The Company recorded $8.5 million of customer list assets and $0.4 million of trade name assets related to the acquisition of CDI during the fiscal year ended September 30, 2023.
The gross and net carrying values of intangible assets as of the balance sheet dates, by major intangible asset class are as follows (in millions):

| September 30, 2023 |  | September 30, 2022 |
| Gross Amount |  | Accumulated Amortization |  | Net Amount |  | Gross Amount |  | Accumulated Amortization |  | Net Amount |
Intangible assets subject to amortization: |  |  |  |  |  |  |  |  |  |  |  |
Trade/domain names | $ | 4.1 |  |  | $ | (2.4) |  |  | $ | 1.7 |  |  | $ | 3.7 |  |  | $ | (1.6) |  |  | $ | 2.1 |  |
Software programs/platforms | 28.5 |  |  | (26.9) |  |  | 1.6 |  |  | 28.3 |  |  | (19.4) |  |  | 8.9 |  |
Client base | 38.3 |  |  | (24.1) |  |  | 14.2 |  |  | 29.5 |  |  | (18.0) |  |  | 11.5 |  |
Total intangible assets subject to amortization | 70.9 |  |  | (53.4) |  |  | 17.5 |  |  | 61.5 |  |  | (39.0) |  |  | 22.5 |  |
Intangible assets not subject to amortization |  |  |  |  |  |  |  |  |  |  |  |
Website domains | 1.9 |  |  | — |  |  | 1.9 |  |  | 1.8 |  |  | — |  |  | 1.8 |  |
Business licenses | 3.7 |  |  | — |  |  | 3.7 |  |  | 3.7 |  |  | — |  |  | 3.7 |  |
Total intangible assets not subject to amortization | 5.6 |  |  | — |  |  | 5.6 |  |  | 5.5 |  |  | — |  |  | 5.5 |  |
Total intangible assets | $ | 76.5 |  |  | $ | (53.4) |  |  | $ | 23.1 |  |  | $ | 67.0 |  |  | $ | (39.0) |  |  | $ | 28.0 |  |

Amortization expense related to intangible assets was $14.7 million, $14.4 million, and $15.1 million for the years ended September 30, 2023, 2022, and 2021, respectively.
As of September 30, 2023, estimated future amortization expense was as follows:

(in millions) |
Fiscal 2024 | $ | 6.7 |
Fiscal 2025 | 3.6 |
Fiscal 2026 | 2.8 |
Fiscal 2027 | 2.2 |
Fiscal 2028 and thereafter | 2.2 |
| $ | 17.5 |

Note 10 - Leases
The Company leases office space under non-cancelable operating leases with third parties as of September 30, 2023. Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Certain office space leases include one or more options to renew, with renewal terms that can extend the lease term from three to ten years, and some of which include the Company’s option to terminate the leases within two years of the balance sheet date. In determining the term of certain office space leases, the Company has not considered any renewal options in the lease terms of its office space leases as the Company does not believe it is reasonably certain that any of the rights will be exercised. Further, the Company has not included periods after termination date, if the Company holds a termination option and believes it is reasonably certain to exercise.
As the office space leases do not provide an implicit rate, the Company applies a collateralized incremental borrowing rate based on information available at lease commencement date in determining the present value of lease payments. For office space leases executed by subsidiaries, including foreign subsidiaries, the Company has applied its incremental borrowing rate. The Company believes this is a reasonable approach as its subsidiaries either do not have their own treasury functions or the credit facilities available to its subsidiaries do not permit financing of right-of-use assets. Additionally, in certain instances, the parent company provides a guaranty of the lease payments to the lessor under office space leases executed by its subsidiaries. The Company believes that pricing subsidiary leases is more significantly influenced by the credit standing of the parent company than that of its subsidiaries.
Certain office space leases contain variable lease payments related to fair market rent adjustments and local inflation index measures. The Company estimates variable lease payments based upon information available at lease commencement date in determining the present value of lease payments.
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The Company has elected to not separate lease components from nonlease components for all office space leases. The Company does not have any financing leases as of September 30, 2023. Operating lease expense is recognized on a straight-line basis over the lease term and is reported within Occupancy and equipment rental on the Consolidated Income Statements.
As of September 30, 2023 and 2022, the Company recorded operating lease right-of-use assets of $122.1 million and $121.8 million, respectively, and operating lease liabilities of $149.3 million and $143.0 million, respectively.
The following table presents operating lease costs and other related information as of and for the fiscal years ended September 30, 2023 and 2022 (in millions, except as stated):

| Year Ended September 30,
| 2023 | 2022
Operating lease costs (1) | $ | 28.0 |  | $ | 25.7 |
Supplemental cash flow information and non-cash activity: |  |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 18.4 |  | $ | 16.4 |
Right-of-use assets obtained in exchange for operating lease liabilities | $ | 14.3 |  | $ | 12.4 |
Lease term and discount rate information: |  |
Weighted average remaining lease term (years) | 9.8 | 10.9
Weighted average discount rate | 4.5 | % | 4.3 | %

(1) Includes short-term leases and variable lease costs, which are immaterial.
The maturities of the lease liabilities are as follows as of September 30, 2023 (in millions):

2024 | $ | 19.9 |
2025 | 19.7 |
2026 | 20.2 |
2027 | 19.8 |
2028 | 17.8 |
After 2028 | 85.9 |
Total lease payments | 183.3 |
Less: interest | 34.0 |
Present value of lease liabilities | $ | 149.3 |

Note 11 – Credit Facilities
Committed Credit Facilities
The Company and its subsidiaries have committed credit facilities under which they may borrow up to $1,200.0 million, subject to the terms and conditions for these facilities. The amounts outstanding under these credit facilities carry variable rates of interest, thus approximating fair value. The committed credit facilities generally have covenant requirements that relate to various leverage, debt to net worth, fixed charge, tangible net worth, excess net capital, or profitability measures, as agreed for each. The Company and its subsidiaries were in compliance with all relevant covenants as of September 30, 2023.
Uncommitted Credit Facilities
The Company has access to certain uncommitted financing agreements that support its ordinary course securities and commodities business activities. The agreements are subject to certain borrowing terms and conditions.
Notes Payable to Bank
The Company has notes payable to bank related to financing certain equipment which secures the notes.
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Senior Secured Notes
The Company issued Senior Secured Notes (the “Senior Secured Notes”) in June 2020. The Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, on a senior second lien secured basis, by certain subsidiaries of the Company that guarantee the Company’s senior committed credit facility and by Gain and certain of its domestic subsidiaries.
The Company incurred debt issuance costs of $9.5 million in connection with the issuance of the Senior Secured Notes, which are being amortized over the term of the Senior Secured Notes under the effective interest method. Since June 15, 2022, the Company has had the right to redeem the Senior Secured Notes, in whole or in part, at the redemption prices set forth in the indenture. The notes will mature on June 15, 2025.
The following table sets forth a listing of credit facilities, the current committed amounts as of the report date on the facilities, and outstanding (in millions, except for percentages):

|  |  |  |  |  |  |  | Amounts Outstanding
| Borrower | Security | Renewal or Expiration Date |  | Interest Rate |  | Total Commitment |  | September 30, 2023 |  | September 30, 2022
Committed Credit Facilities |  |  |  |  |  |  |  |  |  |
| Senior StoneX Group Inc. Committed Credit Facility | (1) | April 21, 2026 |  | Base rate - 9.50% SOFR - 7.42% |  | 500.0 |  | (5) | 150.0 |  |  | 260.0 |
| StoneX Financial Inc. (6) | None | October 29, 2024 |  | 8.00 | % |  | 190.0 |  | (5) | — |  |  | — |
| StoneX Commodity Solutions LLC | Certain assets | July 28, 2024 |  | Base rate - 8.5% SOFR - 7.69% |  | 400.0 |  | (5) | 103.0 |  |  | 217.0 |
| StoneX Financial Ltd. | None | October 12, 2024 |  | 7.81 | % |  | 100.0 |  | (5) | 25.0 |  |  | — |
| StoneX Financial Pte. Ltd. | None | September 6, 2024 |  | 7.81 | % |  | 10.0 |  |  | — |  |  | — |
|  |  |  |  |  |  | $ | 1,200.0 |  |  | $ | 278.0 |  |  | $ | 477.0 |
| Uncommitted Credit Facilities | Various | Various |  | Various |  |  | (5) | 55.5 |  |  | — |
| Notes payable to bank | Certain equipment | December 1, 2025 |  | Index rate plus 2.35% |  |  | (5) | 7.5 |  |  | 8.1 |
| Senior Secured Notes | (2) | June 15, 2025 |  | 8.625 | % |  |  | (4) | 342.1 |  | (3) | 339.1 |
Total outstanding borrowings |  |  |  |  |  |  |  | $ | 683.1 |  |  | $ | 824.2 |

(1) The StoneX Group Inc. committed credit facility is a revolving facility secured by substantially all of the assets of StoneX Group Inc. and certain subsidiaries identified in the credit facility agreement as obligors, and pledged equity of certain subsidiaries identified in the credit facility as limited guarantors. The maturity date remains April 21, 2025 for one lender representing $42.5 million of the facility commitment.
(2) The Senior Secured Notes and the related guarantees are secured by liens on substantially all of the Company’s and the guarantors’ assets, subject to certain customary and other exceptions and permitted liens. The liens on the assets that secure the Senior Secured Notes and the related guarantees are contractually subordinated to the liens on the assets that secure the Company’s and the guarantors’ existing and future first lien secured indebtedness, including indebtedness under the Company’s senior committed credit facility.
(3) Amounts outstanding under the Senior Secured Notes are reported net of unamortized deferred financing costs and original issue discount of $5.8 million.
(4) Included in Senior secured borrowings, net on the Consolidated Balance Sheets.
(5) Included in Lenders under loans on the Consolidated Balance Sheets.
(6) The table depicts an extension and an increase to available amounts that were both agreed to after fiscal year end but before the date of this report.
As reflected above, $410.0 million of the Company’s committed credit facilities are scheduled to expire during the upcoming fiscal year. The Company intends to renew or replace all of its facilities as they expire over time, and based on the Company’s liquidity position and capital structure, the Company believes it will be able to do so.
Note 12 – Securities and Commodity Financing Transactions
The Company’s repurchase agreements and securities borrowing and lending arrangements are generally recorded at cost in the Condensed Consolidated Balance Sheets, which is a reasonable approximation of their fair values due to their short-term nature. Secured borrowing and lending arrangements are entered into to obtain collateral necessary to effect settlement, finance inventory positions, meet customer needs or re-lend as part of our dealer operations. The fair value of securities loaned and borrowed is monitored daily compared with the related payable or receivable, and additional collateral or returning excess collateral is requested, as appropriate. These arrangements may serve to limit credit risk resulting from our transactions with our counterparties. Financial instruments are pledged as collateral under repurchase agreements, securities lending agreements and
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other secured arrangements, including clearing arrangements. Agreements with counterparties generally contain contractual provisions allowing counterparties the right to sell or repledge collateral. Either the Company or its counterparties may require additional collateral. All collateral is held by the Company or a custodian.
The following tables set forth the carrying value of repurchase agreements, and securities lending agreements by remaining contractual maturity (in millions):

| September 30, 2023
| Overnight and Open | Less than 30 Days | 30-90 Days | Over 90 Days | Total
Securities sold under agreements to repurchase | $ | 8,300.0 |  | $ | 786.8 |  | $ | 107.0 |  | $ | 2.6 |  | $ | 9,196.4 |
Securities loaned | 1,117.3 |  | — |  | — |  | — |  | 1,117.3 |
Gross amount of secured financing | $ | 9,417.3 |  | $ | 786.8 |  | $ | 107.0 |  | $ | 2.6 |  | $ | 10,313.7 |

| September 30, 2022
| Overnight and Open | Less than 30 Days | 30-90 Days | Over 90 Days | Total
Securities sold under agreements to repurchase | $ | 3,664.7 |  | $ | 2,279.1 |  | $ | 186.3 |  | $ | 3.4 |  | $ | 6,133.5 |
Securities loaned | 1,189.5 |  | — |  | — |  | — |  | 1,189.5 |
Gross amount of secured financing | $ | 4,854.2 |  | $ | 2,279.1 |  | $ | 186.3 |  | $ | 3.4 |  | $ | 7,323.0 |

Offsetting of Collateralized Transactions
The following table sets forth the carrying value of repurchase agreements and securities lending agreements by class of collateral pledged (in millions):

| September 30,
Securities sold under agreements to repurchase | 2023 |  | 2022
U.S. Treasury obligations | $ | 3,696.1 |  |  | $ | 1,311.0 |
U.S. government agency obligations | 542.2 |  |  | 604.1 |
Asset-backed obligations | 102.9 |  |  | 178.0 |
Agency mortgage-backed obligations | 4,371.6 |  |  | 3,762.5 |
Foreign government obligations | 148.1 |  |  | 97.2 |
Corporate bonds | 335.5 |  |  | 180.7 |
Total securities sold under agreement to repurchase | $ | 9,196.4 |  |  | $ | 6,133.5 |
Securities loaned |  |  |
Equity securities | $ | 1,117.3 |  |  | $ | 1,189.5 |
Total securities loaned | 1,117.3 |  |  | 1,189.5 |
Gross amount of secured financing | $ | 10,313.7 |  |  | $ | 7,323.0 |

The following tables provide the netting of securities purchased under agreements to resell, securities sold under agreements to repurchase, securities borrowed and securities loaned as of the periods indicated (in millions):

| September 30, 2023
Offsetting of collateralized transactions: | Gross Amounts Recognized | Amounts Offset in the Consolidated Balance Sheet | Net Amounts Presented in the Consolidated Balance Sheet
Securities purchased under agreements to resell | $ | 7,649.3 |  | $ | (4,669.8) |  | $ | 2,979.5 |
Securities borrowed | $ | 1,129.1 |  | $ | — |  | $ | 1,129.1 |
Securities sold under agreements to repurchase | $ | 9,196.4 |  | $ | (4,669.8) |  | $ | 4,526.6 |
Securities loaned | $ | 1,117.3 |  | $ | — |  | $ | 1,117.3 |

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| September 30, 2022
Offsetting of collateralized transactions: | Gross Amounts Recognized | Amounts Offset in the Consolidated Balance Sheet | Net Amounts Presented in the Consolidated Balance Sheet
Securities purchased under agreements to resell | $ | 4,609.9 |  | $ | (2,937.9) |  | $ | 1,672.0 |
Securities borrowed | $ | 1,209.8 |  | $ | — |  | $ | 1,209.8 |
Securities sold under agreements to repurchase | $ | 6,133.5 |  | $ | (2,937.9) |  | $ | 3,195.6 |
Securities loaned | $ | 1,189.5 |  | $ | — |  | $ | 1,189.5 |

The Company pledges securities owned as collateral in both tri-party and bilateral arrangements. Pledged securities under tri-party arrangements may not be repledged or sold by the Company’s counterparties, whereas bilaterally pledged securities may be. The approximate fair value of pledged securities that can be sold or repledged by the Company’s counterparties has been parenthetically disclosed on the Condensed Consolidated Balance Sheets.
The Company receives securities as collateral under reverse repurchase agreements, securities borrowed agreements, and margin securities held on behalf of counterparties. This collateral is used by the Company to cover financial instruments sold, not yet purchased; to obtain financing in the form of repurchase agreements; and to meet counterparties’ needs under lending arrangement and matched-booked trading strategies. Additional securities collateral is obtained as necessary to ensure such transactions are adequately collateralized. In many instances, the Company is permitted by contract to repledge the securities received as collateral, which may include pledges to cover collateral requirements for tri-party repurchase agreements.
The following table sets forth the carrying value, which approximates fair value because of its short term nature, of collateral pledged, received and repledged (in millions):

| September 30, 2023 |  | September 30, 2022
Securities pledged or repledged to cover collateral requirements for tri-party arrangements | $ | 4,726.6 |  |  | $ | 3,787.8 |
Securities received as collateral that may be repledged | $ | 9,180.1 |  |  | $ | 5,836.1 |
Securities received as collateral that may be repledged covering securities sold short | $ | 2,461.1 |  |  | $ | 1,615.3 |
Repledged securities borrowed and client securities held under custodial clearing arrangements to collateralize securities loaned agreements | $ | 1,097.3 |  |  | $ | 1,146.0 |

Note 13 – Commitments and Contingencies
Legal and Regulatory Proceedings
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal and regulatory proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal or regulatory proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred at the date of the financial statements and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Neither accrual nor disclosure is required for loss contingencies that are deemed remote. The Company accrues legal fees related to contingent liabilities as they are incurred.
From time to time and in the ordinary course of business, the Company is involved in various legal actions and proceedings, including tort claims, contractual disputes, employment matters, workers’ compensation claims and collections. The Company carries insurance that provides protection against certain types of claims, up to the limits of the respective policy. Additionally, the Company is subject to extensive regulation and supervision by U.S. federal and international governmental agencies and various self-regulatory organizations. The Company and its advisors periodically engage with such regulatory agencies and organizations, in the context of examinations or otherwise, to respond to inquiries, informational requests, and investigations. From time to time, such engagements result in regulatory complaints or other matters, the resolution of which can include fines and other remediation.
As of September 30, 2023 and 2022, the Consolidated Balance Sheets include loss contingency accruals, recorded during and prior to these years then ended, which are not material, individually or in the aggregate, to the Company’s financial position or liquidity. Management does not currently believe exposure from loss contingencies in excess of the amounts accrued, and in addition to the possible losses discussed below, to be material to the Company’s earnings, financial position or liquidity.
The following is a summary of a significant legal matter involving the Company:
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OptionSellers
In November 2018, balances in approximately 300 client accounts of the FCM division of the Company’s wholly owned subsidiary, StoneX Financial Inc., declined below required maintenance margin levels and into deficit balances, primarily as a result of significant and unexpected price fluctuations in the natural gas markets. All positions in these accounts, which were managed by OptionSellers.com Inc. (“OptionSellers”), an independent Commodity Trading Advisor (“CTA”), were liquidated in accordance with StoneX Financial Inc.’s client agreements and obligations under market regulation standards.
A CTA is registered with the U.S. Commodity Futures Trading Commission (“CFTC”) and a member of, and subject to audit by, the National Futures Association (“NFA”). OptionSellers was registered under a CFTC Rule 4.7 exemption for providing services only to “qualified eligible persons,” which requires the account holders authorizing OptionSellers to act as their CTA to meet or exceed certain minimum financial requirements. OptionSellers, in its role as a CTA, had been granted by each of its clients full discretionary authority to manage the trading in the clients’ accounts, while StoneX Financial Inc. acted solely as the clearing firm in its role as the FCM.
StoneX Financial Inc.’s client agreements hold account holders liable for all losses in their accounts and obligate the account holders to reimburse StoneX Financial Inc. for any deficits in their accounts. As of September 30, 2023, the receivable from these client accounts, net of collections and other allowable deductions (the “Net Client Accounts Receivable”), was $17.2 million, with no individual account receivable exceeding $1.4 million. As of September 30, 2023, the allowance against these uncollected balances was $5.1 million. The Company is pursuing collection of the uncollected balances through arbitration proceedings against the account holders. The Company will consider developments in these proceedings, and any other relevant matters, in determining whether any changes in the allowance against the uncollected balances are required.
In these and other arbitration proceedings, clients are seeking damages from StoneX Financial Inc. relating to the trading losses in their accounts.
During the fiscal year ended September 30, 2023, the Company resolved several of these arbitration claims through arbitration decisions and privately negotiated settlements. All of the arbitration panels that issued decisions during the year awarded StoneX Financial Inc. the full amount of the uncollected balances. A portion of the panels also awarded relief to account holders. The amount of relief awarded was not material to the Company, individually or in the aggregate. As noted, several of the arbitrations were resolved through privately negotiated settlement, pursuant to which the account holders agreed to pay some or all of their outstanding deficit balances. In October 2022, the Company reached an additional privately negotiated settlement of an arbitration proceeding, pursuant to which the account holders agreed to pay all of their outstanding deficit balances and the Company made certain immaterial payments to the account holders. The Company intends to continue vigorously pursuing claims through arbitration and settling cases in what the Company determines to be appropriate circumstances. The ultimate outcome of remaining arbitrations cannot presently be determined.
Depending on future collections and the outcomes of arbitration proceedings, any provisions for bad debts and actual losses may or may not be material to the Company’s financial results. However, the Company believes that the likelihood of a material adverse outcome is remote, and does not currently believe that any potential losses related to this matter would impact its ability to comply with its ongoing liquidity, capital, and regulatory requirements.
Contractual Commitments
Post-Acquisition Commitment
Subsequent to the Gain Capital Holdings, Inc (“Gain”) acquisition date of July 30, 2020 (“the Gain acquisition date”), holders of 3.6 million shares of Gain common stock outstanding at the Gain acquisition date who did not vote to approve the merger (“Dissenting Holders”, and the shares held by such Dissenting Holders, the “Dissenting Shares”) purportedly demanded appraisal rights pursuant to Section 262 of the Delaware General Corporation Law in the Court of Chancery of the State of Delaware. As of September 30, 2023, $20.1 million of merger consideration, based upon approximately 3.4 million Dissenting Shares and assuming a right to receive $6.00 per share at the acquisition date, remains payable. Any subsequent settlement with the Dissenting Holders in excess of this amount will be considered the settlement of a post-acquisition contingency to be included in the Company’s post-acquisition Consolidated Income Statements.
Purchase Commitments
The Company determines an estimate of contractual purchase commitments in the ordinary course of business primarily for the purchase of precious metals and agricultural and energy commodities. Unpriced contract commitments have been estimated using September 30, 2023 fair values. Purchase commitments and other obligations as of September 30, 2023 for less than one year, one to three years, three to five years, and after five years were $5,901.5 million, $593.0 million, $53.1 million, and $90.3 million respectively. The purchase commitments for less than one year will be offset by corresponding sales commitments of $5,689.0 million.
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Exchange Member Guaranties
The Company is a member of various exchanges that trade and clear futures and option contracts. The Company is also a member of and provides guaranties to securities clearinghouses and exchanges in connection with client trading activities. Associated with its memberships, the Company may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the exchanges. While the rules governing different exchange memberships vary, in general the Company’s guaranty obligations would arise only if the exchange had previously exhausted its resources. In addition, any such guaranty obligation would be apportioned among the other non-defaulting members of the exchange. Any potential contingent liability under these arrangements is not quantifiable and could exceed the cash and securities posted to the clearinghouse as collateral.
The Company has not recorded any contingent liability in the consolidated financial statements for these agreements and believes that any potential requirement to make payments under these agreements is remote.
Self-Insurance
The Company self-insures its medical and dental claims costs up to a stop loss amount, for eligible participating employees and retirees, and for qualified dependents, subject to deductibles and limitations. Liabilities are recognized based on claims filed and an estimate of claims incurred but not reported. The Company has purchased stop-loss coverage to limit its exposure on a per claim basis and in aggregate in the event that aggregated actual claims would exceed 120% of the actuarial estimate. The Company is insured for covered costs in excess of these limits. Although the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred, the Company does not believe that any additional potential exposure for such liabilities will have a material adverse effect on the Company’s consolidated financial position or results of operations. As of September 30, 2023 and 2022, the Company had $1.9 million and $1.3 million, respectively, accrued for self-insured medical and dental claims included in Accounts payable and other liabilities in the Consolidated Balance Sheets.
Note 14 – Accumulated Other Comprehensive Loss, Net
Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income. Other comprehensive loss and income includes losses on cash flow hedges, net actuarial gains and losses from defined benefit pension plans, and gains and losses on foreign currency translations.
The following table summarizes the changes in accumulated other comprehensive loss for the years ended September 30, 2023, 2022, and 2021.

(in millions) |  | Foreign Currency Translation Adjustment |  | Pension Benefits Adjustment |  |  |  | Cash Flow Hedge |  | Accumulated Other Comprehensive Loss, net
Balances as of September 30, 2020 |  | $ | (36.0) |  |  | $ | (4.1) |  |  |  |  | $ | — |  |  | $ | (40.1) |
Other comprehensive income |  | 13.3 |  |  | 1.5 |  |  |  |  | — |  |  | 14.8 |
Amounts reclassified from AOCI, net of tax |  | — |  |  | 0.2 |  |  |  |  | — |  |  | 0.2 |
Other comprehensive income net of tax |  | 13.3 |  |  | 1.7 |  |  |  |  | — |  |  | 15.0 |
Balances as of September 30, 2021 |  | $ | (22.7) |  |  | $ | (2.4) |  |  |  |  | $ | — |  |  | $ | (25.1) |
Other comprehensive loss |  | (11.7) |  |  | (0.3) |  |  |  |  | (53.5) |  |  | (65.5) |
Other comprehensive loss net of tax |  | (11.7) |  |  | (0.3) |  |  |  |  | (53.5) |  |  | (65.5) |
Balances as of September 30, 2022 |  | $ | (34.4) |  |  | $ | (2.7) |  |  |  |  | $ | (53.5) |  |  | $ | (90.6) |
Other comprehensive income |  | 3.2 |  |  | 0.5 |  |  |  |  | 35.1 |  |  | 38.8 |
Other comprehensive income net of tax |  | 3.2 |  |  | 0.5 |  |  |  |  | 35.1 |  |  | 38.8 |
Balances as of September 30, 2023 |  | $ | (31.2) |  |  | $ | (2.2) |  |  |  |  | $ | (18.4) |  |  | $ | (51.8) |

Note 15 – Revenue from Contracts with Clients
The Company’s revenues from contracts with clients subject to FASB ASC 606, Revenue from Contracts with Customers (“Topic 606”) represent approxim ately 5.7%, 5.5%, and 5.0% of the Company’s total revenues for the years ended September 30, 2023, 2022, and 2021, respectively.
Revenues within the scope of Topic 606 are presented within Commission and clearing fees, Consulting, management, and account fees, and Sales of physical commodities, on the Consolidated Income Statements. Revenues that are not within the scope of Topic 606 are presented within Sales of physical commodities, Principal gains, net, and Interest income on the Consolidated Income Statements.
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The following table represents a disaggregation of the Company’s total revenues separated between revenues from contracts with clients and other sources of revenue for the periods indicated (in millions):

| Year Ended September 30,
| 2023 |  | 2022 |  | 2021
Revenues from contracts with clients: |  |  |  |  |
Commission and clearing fees: |  |  |  |  |
Sales-based: |  |  |  |  |
Exchange-traded futures and options | $ | 214.1 |  |  | $ | 210.7 |  |  | $ | 190.6 |
OTC derivative brokerage | 14.5 |  |  | 16.8 |  |  | 15.9 |
Equities and fixed income | 57.8 |  |  | 62.9 |  |  | 60.5 |
Mutual funds | 3.0 |  |  | 4.1 |  |  | 5.5 |
Insurance and annuity products | 9.2 |  |  | 9.3 |  |  | 9.7 |
Other | 3.4 |  |  | 3.1 |  |  | 2.3 |
Total sales-based commission | 302.0 |  |  | 306.9 |  |  | 284.5 |
Trailing: |  |  |  |  |
Mutual funds | 12.4 |  |  | 14.1 |  |  | 14.5 |
Insurance and annuity products | 14.2 |  |  | 16.0 |  |  | 17.0 |
Total trailing commission | 26.6 |  |  | 30.1 |  |  | 31.5 |
Clearing fees | 153.3 |  |  | 153.2 |  |  | 150.9 |
Trade conversion fees | 8.5 |  |  | 11.5 |  |  | 11.2 |
Other | 8.0 |  |  | 6.2 |  |  | 9.1 |
Total commission and clearing fees | 498.4 |  |  | 507.9 |  |  | 487.2 |
Consulting, management, and account fees: |  |  |  |  |
Underwriting fees | 0.7 |  |  | 0.5 |  |  | 0.6 |
Asset management fees | 45.1 |  |  | 43.9 |  |  | 38.3 |
Advisory and consulting fees | 35.0 |  |  | 30.9 |  |  | 24.9 |
Sweep program fees | 48.6 |  |  | 13.1 |  |  | 3.0 |
Client account fees | 15.9 |  |  | 16.0 |  |  | 15.8 |
Other | 13.7 |  |  | 6.9 |  |  | 8.4 |
Total consulting, management, and account fees | 159.0 |  |  | 111.3 |  |  | 91.0 |
Sales of physical commodities: |  |  |  |  |
Precious metals sales under ASC Topic 606 | 2,836.0 |  |  | 2,988.3 |  |  | 1,541.3 |
Total revenues from contracts with clients | $ | 3,493.4 |  |  | $ | 3,607.5 |  |  | $ | 2,119.5 |
Method of revenue recognition: |  |  |  |  |
Point-in-time | $ | 3,338.1 |  |  | $ | 3,489.5 |  |  | $ | 2,021.8 |
Time elapsed | 155.3 |  |  | 118.0 |  |  | 97.7 |
Total revenues from contracts with clients | 3,493.4 |  |  | 3,607.5 |  |  | 2,119.5 |
Other sources of revenues |  |  |  |  |
Physical precious metals under ASC Topic 815 | 50,979.5 |  |  | 57,404.3 |  |  | 37,250.4 |
Physical agricultural and energy products | 4,315.7 |  |  | 3,660.0 |  |  | 2,169.9 |
Principal gains, net | 1,079.9 |  |  | 1,145.2 |  |  | 892.0 |
Interest income | 987.6 |  |  | 219.0 |  |  | 102.4 |
Total revenues | $ | 60,856.1 |  |  | $ | 66,036.0 |  |  | $ | 42,534.2 |

The substantial majority of the Company’s performance obligations for revenues from contracts with clients are satisfied at a point in time and are typically collected from clients by debiting client trading accounts with the Company.
Commission and clearing fee revenue and consulting, management, and account fees revenue are primarily related to the Commercial, Institutional and Retail reportable segments. Principal gains, net are contributed by all of the Company’s reportable segments. Interest income is primarily related to the Commercial and Institutional reportable segments. Precious metals trading and agricultural and energy product trading revenues are primarily related to the Commercial reportable segment. Precious metals retail sales revenues are primarily related to the Retail reportable segment.
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Commission and Clearing Fees
Commission revenue represents sales and brokerage commissions generated by internal brokers, introducing broker-dealers, or registered investment advisors of introducing-broker dealers for their clients’ trading activity in futures, options on futures, OTC derivatives, fixed income securities, equity securities, mutual funds, and annuities. The Company views the selling, distribution, and marketing, or any combination thereof, of mutual funds and insurance and annuity products to clients on the Company’s registered investment advisor (“RIA”) platform as a single performance obligation to the product sponsors.
The Company is the principal for commission revenue, as it is responsible for executing client purchases and sales, and maintaining relationships with product sponsors for trailing commissions. Introducing broker dealers and registered investment advisors assist the Company in performing its obligations. Accordingly, total commission revenues are reported on a gross basis.
The Company primarily generates commission revenue on exchange-traded derivatives, OTC derivatives, and securities. Exchange-traded and OTC derivative commissions are recognized at a point in time on the trade date when the client, either directly or through the use of an internal broker or introducing broker, requests the clearance and execution of a trade. Securities commissions are either sale-based commissions that are recognized at a point in time on the trade date or trailing commission that are recognized over time as earned. Sales-based securities commissions are typically a flat fee per security transaction and in certain instances are based on a percentage of the trade date transaction value.
Trailing commission revenue is generally based on a percentage of the periodic fair value of clients’ investment holdings in trail-eligible assets, and is recognized over the period during which services, such as on-going support, are performed. As trailing commission revenue is based on the fair value of clients’ investment holdings in trail-eligible assets. This variable consideration is constrained until the fair value of trail-eligible assets is determinable.
Clearing fees generally represent transaction based fees charged by the various exchanges and clearing organizations at which the Company or one of its clearing brokers is a member for the privilege of executing and clearing trades through them. Clearing fees are generally passed through to the clients’ accounts and are reported gross as the Company maintains control over the clearing and execution services provided, maintains relationships with the exchanges or clearing brokers, and has ultimate discretion in whether the fees are passed through to the clients and the rates at which they are passed through. As clearing fees are transactional based revenues they are recognized at a point in time on the trade date along with the related commission revenue when the client requests the clearance and execution of a trade.
Trade Conversion Fees
Trade conversion fees include revenue earned from converting foreign ordinary equities into an American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) and fees earned from converting an ADR or GDR into foreign ordinary equities on behalf of clients. Trade conversion revenue is recognized at a point in time on the trade date.
Underwriting Fees
Revenues from investment banking consists of revenues earned from underwriting fixed income securities, primarily municipal and asset-backed securities, and are recognized in revenues upon completion of the underlying transaction, which is generally the trade date, based upon the terms of the assignment as the performance obligation is to successfully broker a specific transaction.
Asset Management Fees
The Company earns asset management fees on Company sponsored and managed mutual funds and on the advisory accounts of independent registered investment advisors on the Company’s platform. The Company provides ongoing investment advice and acts as a custodian, providing brokerage and execution services on transactions, and performs administrative services for these accounts. This series of performance obligations transfers control of the services to the client over time as the services are performed. This revenue is recognized ratably over time to match the continued delivery of the performance obligations to the client over the life of the contract. The asset management revenue generated is based on a percentage of the market value of the eligible assets in the clients’ accounts. As such, the consideration for this revenue is variable and this variable consideration is constrained until the market value of eligible assets in the clients’ accounts is determinable.
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Advisory and Consulting Fees
Advisory and consulting fees are primarily related to risk management consulting fees which are billed and recognized as revenue on a monthly basis when risk management services are provided. Risk management consulting contracts are generally for a minimum term of six months and then continue from month to month, but may be terminated at any time after the original six months by either party upon providing written notice. Advisory and consulting fees are not variable based on client trading activities. This revenue is generally recognized ratably over time to match the continued delivery of the performance obligation to the client over the life of the contract.
Sweep Program Fees
The Company earns fees generated in lieu of interest income from a multi-bank sweep program with unaffiliated banks and money market funds. Pursuant to contractual arrangements with clients and their introducing-brokers, available cash balances in client accounts are swept into either Federal Deposit Insurance Corporation (“FDIC”) insured cash accounts at unaffiliated banks or unaffiliated money market funds for which the Company earns a portion of the income generated by the client balances for administration and recordkeeping. The fees generated by the Company’s multi-bank sweep program are reported net of the balances remitted to the introducing-brokers and the clients of introducing-brokers. These fees are paid and recognized over time to match the continued delivery of the administration and recordkeeping performance obligations to the life of the contract. The fees earned under this program are generally based upon the type of sweep account, prevailing interest rates, and the amount of client balances invested.
Client Account Fees
Client account fees represent fees earned for custodial, recordkeeping, and administrative functions performed for client accounts. These functions include statement delivery fees, account transfer fees, safekeeping fees, errors and omission insurance fees, platform fees, and other fees. Client account fees that are transactional based, such as account transfer fees, are recognized at a point in time when the related performance obligation is satisfied. Client account fees that are related to ongoing services, such as statement delivery fees and errors and omission insurance fees, are recognized over time. Client account fees that relate to ongoing services are typically billed to clients’ accounts on a monthly or quarterly basis.
Precious Metals Sales Under ASC Topic 606
The Company principally generates revenue from sale of bullion coins and small bars of precious metal via its websites. Revenues from the sale of physical precious metals are recognized when control of the inventory is transferred within the meaning of Topic 606. This revenue source primarily executes its contracts on a spot basis at agreed upon rates and amounts, which further aligns with Topic 606.
Physical Precious Metals Under ASC 815
The Company principally generates revenue from trading physical precious metals on an OTC basis. Revenues from the sale of physical precious metals are recorded on a trade date basis and generally settle on an unallocated basis. Substantially all of the Company’s sales of precious metals are conducted using sales contracts that meet the definition of derivative instruments in accordance with ASC 815, Derivatives and Hedging (“Topic 815”). The contracts underlying the Company’s commitment to deliver precious metals are referred to as fixed price forward commodity contracts because the price of the commodity is fixed at the time the order is placed. Although the contracts typically are executed on a spot basis and settle on unallocated account, the client has the option to request delivery of the precious metals, the option to net settle out of the position by executing an offsetting trade, or the option to roll the transaction to a subsequent maturity date. Thus, the sales contracts contain embedded option derivatives that would be subject to the guidance in Topic 815. As the contracts are subject to the guidance in Topic 815, the fixed price derivative sales contracts are outside the scope of Topic 606. The Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606.
Physical precious metals trading revenue generated by registered broker-dealer subsidiaries is presented on a net basis and included as a component of Principal gains, net in the Consolidated Income Statements, in accordance with U.S GAAP for broker-dealers.
Physical Agricultural and Energy Products
The Company principally generates revenue from merchandising and originating physical agricultural and energy commodities from forward firm sales commitments accounted for in accordance with Topic 815. The fixed and provisionally-priced derivative sales contracts that result in physical delivery are outside the scope of Topic 606. The Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606.
Principal Gains, Net
Principal gains, net includes revenues on financial transactions or contracts for which the Company acts as principal. This revenue is reported on a net basis and is primarily outside the scope of ASC 606. Principal gains, net includes margins
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generated from OTC derivative trades, equities, fixed income, precious metals with derivative characteristics, and foreign exchange executed with clients and other counterparties and are recognized on a trade-date basis. Principal gains, net, also includes realized and unrealized gains and losses derived principally from market making activities in OTC derivatives, equities, fixed income, and foreign exchange. Net dealer inventory and investment gains are recognized on a trade-date basis and include realized gains or losses and changes in unrealized gains or losses on investments at fair value. Principal gains, net also includes dividend income on long equity positions and dividend expense on short equity positions, which are recognized on the ex-dividend date. The following table indicates the relevant income and expense:

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Dividend income on long equity positions | $ | 32.0 |  |  | $ | 142.3 |  |  | $ | 282.7 |
Dividend expense on short equity positions | 33.3 |  |  | 134.0 |  |  | 281.3 |
Dividend (loss)/income net of dividend expense reported within Principal Gains, net | $ | (1.3) |  |  | $ | 8.3 |  |  | $ | 1.4 |

Interest Income
Interest income is generated from client funds deposited with the Company to satisfy margin required by third-party banks, exchange-clearing organizations, or other FCMs. Interest income is also generated from investing client funds in allowable securities, primarily U.S. Treasury obligations and from trading fixed income securities that the Company holds in its market-making businesses. Interest income also includes interest generated from collateralized transactions, including securities borrowed and securities purchased under agreements to resell, and from extending margin loans to clients. Interest income is recognized on an accrual basis and is not within the scope of Topic 606.
Remaining Performance Obligations
Remaining performance obligations are services that the firm has committed to perform in the future in connection with its contracts with clients. The Company’s remaining performance obligations are generally related to its risk management consulting and asset management contracts with clients. Revenues associated with remaining performance obligations related to these contracts with clients are not material to the overall consolidated results of the Company. Similar to the above, risk management consulting contracts are generally for a minimum term of six months and then continue from month to month, but may be terminated at any time after the original six months by either party upon providing written notice. Asset management contracts may be terminated by the client at any time. For the Company’s asset management activities, where fees are calculated based on a percentage of the market value of eligible assets in client’s accounts, future revenue associated with remaining performance obligations cannot be determined as such fees are subject to fluctuations in the market value of eligible assets in clients’ accounts.
Practical Expedients
The Company has applied Topic 606’s practical expedient that permits for the non-disclosure of the value of performance obligations for (i) contracts with an original expected length or one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which is has the right to invoice for services performed.
The Company has also applied Topic 606’s practical expedient that allows for no adjustment to consideration due to a significant financing component if the expectation at contract inception is such that the period between payment by the client and the transfer of the promised goods or services to the client will be one year or less.
Note 16 – Share-Based Compensation
Under the 2022 Omnibus Incentive Compensation Plan (the “Omnibus Plan”), the Company is authorized to grant up to 2.4 million shares, including both stock options and restricted stock. 1.7 million shares are available for grant as of September 30, 2023. Share-based compensation expense is included in Compensation and benefits in the Consolidated Income Statements and totaled $28.0 million, $17.8 million and $13.9 million for the years ended September 30, 2023, 2022, and 2021, respectively.
Stock Options
The Company sponsors the Omnibus Plan for its directors, officers, employees and consultants. Awards that expire or are canceled generally become available for issuance again under the Omnibus Plan. The Company settles stock option exercises with newly issued shares of common stock.
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Fair value is estimated at the grant date based on a Black-Scholes-Merton option-pricing model using the following weighted-average assumptions:

| Year Ended September 30,
| 2023 |  | 2022 |  | 2021
Expected stock price volatility | 42 | % |  | 39 | % |  | 38 | %
Expected dividend yield | — | % |  | — | % |  | — | %
Risk free interest rate | 1.60 | % |  | 1.54 | % |  | 1.68 | %
Average expected life (in years) | 4.25 |  | 5.21 |  | 4.50

Expected stock price volatility rates are primarily based on historical volatility. The Company has not paid dividends in the past and does not currently expect to do so in the future. Risk free interest rates are based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option or award. The average expected life represents the estimated period of time that options or awards granted are expected to be outstanding, based on the Company’s historical share option exercise experience for similar option grants. The weighted average fair value of options issued during the years ended September 30, 2023, 2022, and 2021 was $33.21, $22.82, and $19.83, respectively.
The following is a summary of stock option activity for the year ended September 30, 2023:

| Number of Options Outstanding |  | Weighted Average Exercise Price |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Term (in years) |  | Aggregate Intrinsic Value ($ millions)
Balances as of September 30, 2022 | 1,199,345 |  |  | $ | 50.46 |  |  | $ | 14.57 |  |  | 4.54 |  | $ | 39.0 |
Granted | 81,750 |  |  | $ | 93.70 |  |  | $ | 33.21 |  |  |  |  |
Exercised | (83,794) |  |  | $ | 47.13 |  |  | $ | 13.06 |  |  |  |  |
Forfeited | (19,849) |  |  | $ | 65.10 |  |  | $ | 23.39 |  |  |  |  |
Expired | (2,088) |  |  | $ | 49.92 |  |  | $ | 14.74 |  |  |  |  |
Balances as of September 30, 2023 | 1,175,364 |  |  | $ | 53.46 |  |  | $ | 15.82 |  |  | 3.80 |  | $ | 51.1 |
Exercisable at September 30, 2023 | 387,810 |  |  | $ | 49.20 |  |  | $ | 13.61 |  |  | 3.49 |  | $ | 18.5 |

The total compensation cost not yet recognized for non-vested awards of $9.2 million as of September 30, 2023 has a weighted-average period of 3.95 years over which the compensation expense is expected to be recognized. The total intrinsic value of options exercised during the years ended September 30, 2023, 2022, and 2021 was $4.2 million, $39.0 million and $11.7 million, respectively.
The options outstanding as of September 30, 2023 broken down by exercise price are as follows:

Exercise Price |  | Number of Options Outstanding |  | Weighted Average Exercise Price |  | Weighted Average Remaining Term (in Years)
$ | 40.00 |  | - | $ | 45.00 |  |  | 700,000 |  |  | $ | 45.00 |  |  | 3.18
$ | 45.00 |  | - | $ | 95.00 |  |  | 475,364 |  |  | $ | 65.92 |  |  | 4.71
|  |  |  | 1,175,364 |  |  | $ | 53.46 |  |  | 3.80

Restricted Stock
The Company sponsors restricted stock under the Omnibus Plan for its directors, officers, and employees. Awards that expire or are canceled generally become available for issuance again under the Omnibus Plan. The Company utilizes newly issued shares of common stock to make restricted stock grants.
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The following is a summary of restricted stock activity through September 30, 2023:

| Number of Shares Outstanding |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Term (in years) |  | Aggregate Intrinsic Value ($ millions)
Balances as of September 30, 2022 | 579,666 |  |  | $ | 60.22 |  |  | 1.22 |  | $ | 48.1 |
Granted | 413,545 |  |  | $ | 93.59 |  |  |  |  |
Vested | (305,561) |  |  | $ | 58.38 |  |  |  |  |
Forfeited | (638) |  |  | $ | 80.69 |  |  |  |  |
Balances as of September 30, 2023 | 687,012 |  |  | $ | 81.10 |  |  | 1.24 |  | $ | 66.5 |

The total compensation cost not yet recognized of $40.5 million as of September 30, 2023 has a weighted-average period of 1.24 years over which the compensation expense is expected to be recognized. Compensation expense is amortized on a straight-line basis over the vesting period. Restricted stock grants are included in the Company’s total issued and outstanding common shares.
Note 17 – Retirement Plans
Defined Benefit Retirement Plans
The Company has a frozen qualified defined benefit pension plan (the “Qualified Plan”) and a nonqualified defined benefit pension plan (the “Nonqualified Plan”), and recognizes their funded status, measured as the difference between the fair value of the plan assets and the projected benefit obligation, in Other assets or Accounts payable and other accrued liabilities in the Consolidated Balance Sheets, depending on the funded status of each plan.
The Qualified Plan assets, which are managed in a third-party trust, primarily consist of a diversified blend of approximately 90% debt securities and 10% equity investments and had a total fair value of $29.6 million and $30.9 million as of September 30, 2023 and 2022, respectively. All Qualified Plan assets fall within Level 2 of the fair value hierarchy. The benefit obligation associated with the Qualified Plan will vary over time only as a result of changes in market interest rates, the life expectancy of the plan participants, and benefit payments, since the accrual of benefits was suspended when the Qualified Plan was frozen in 2006. The benefit obligation was $24.6 million and $26.3 million and the discount rate assumption used in the measurement of this obligation was 5.80% and 5.40% as of September 30, 2023 and 2022, respectively. Related to the Qualified Plan, the Company’s net pension obligation was in a funded status of $5.0 million and $4.6 million as of September 30, 2023 and 2022, respectively.
The Nonqualified Plan assets had a total fair value of less than $0.1 million as of September 30, 2023 and 2022. The benefit obligation associated with the Nonqualified Plan will vary over time only as a result of changes in market interest rates, the life expectancy of the plan participants, and benefit payments. There are no active participants in the Nonqualified plan. The benefit obligation was $1.1 million and $1.2 million as of September 30, 2023 and 2022, respectively. Related to the Nonqualified Plan, the Company’s unfunded pension obligation was $1.1 million and $1.2 million as of September 30, 2023 and 2022, respectively.
The Company recognized a net periodic benefit cost of $0.3 million for the year ended September 30, 2023, and a net periodic benefit of $0.1 million and $0.3 million for the years ended September 30, 2022 and 2021, respectively. The expected long-term return on plan assets assumption was 4.15% for 2023. The Company made contributions of $0.1 million to the plans in the years ended September 30, 2023 and 2022. The Company complies with minimum funding requirements. The estimated undiscounted future benefit payments are expected to be $2.1 million in 2024, $2.0 million in 2025, $2.0 million in 2026, $2.1 million in 2027, $2.1 million in 2028, and $9.9 million in 2028 through 2033.
Defined Contribution Retirement Plans
The Company offers participation in the StoneX Group Inc. 401(k) Plan (“401(k) Plan”), a defined contribution plan providing retirement benefits to all domestic full-time non-temporary employees who have reached 21 years of age. Employees may contribute from 1% to 80% of their annual compensation to the 401(k) Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Service. The Company makes matching contributions to the 401(k) Plan in an amount equal to 62.5% of each participant’s eligible elective deferral contribution to the 401(k) Plan, up to 8% of employee compensation. Matching contributions vest, by participant, based on the following years of service schedule: less than two years – none, after two years – 33%, after three years – 66%, and after four years – 100%.
U.K. based employees of StoneX Group are eligible to participate in a defined contribution pension plan. The Company contributes double the employee’s contribution up to 10% of total base salary for this plan. For this plan, employees are 100% vested in both the employee and employer contributions at all times.
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For fiscal years ended September 30, 2023, 2022, and 2021, the Company’s contributions to these defined contribution plans were $19.2 million, $16.9 million and $15.2 million, respectively.
Note 18 – Other Expenses
Other expenses consisted of the following, for the periods indicated.

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Non-income taxes | $ | 16.8 |  |  | $ | 13.5 |  |  | $ | 14.8 |
Insurance | 11.1 |  |  | 10.8 |  |  | 7.1 |
Employee related expenses | 10.1 |  |  | 9.6 |  |  | 7.0 |
Other direct business expenses | 14.8 |  |  | 10.0 |  |  | 6.3 |
Membership fees | 3.4 |  |  | 3.3 |  |  | 2.8 |
Director and public company expenses | 2.3 |  |  | 1.8 |  |  | 1.5 |
Office expenses | 1.9 |  |  | 1.7 |  |  | 1.3 |
Other expenses | 6.0 |  |  | 9.9 |  |  | 5.5 |
Total other expenses | $ | 66.4 |  |  | $ | 60.6 |  |  | $ | 46.3 |

During the quarter ended December 31, 2021, the Company modified its Other expenses presentation to better explain its current entities and businesses. Prior year values have been adjusted to reflect this format, but total Other expenses has not changed within this footnote or the consolidated income statements.
Note 19 – Income Taxes
Inflation Reduction Act
In August 2022, the Inflation Reduction Act of 2022 (“Act”) was signed into U.S. law. Under the Act, there is a new 15% corporate minimum tax and a new 1% excise tax on stock repurchases that are effective after December 31, 2022. Further, the Act includes provisions related to climate change, energy, and health care. These provisions should not have a material impact on the Company’s consolidated financial statements.
Income tax expense/(benefit) for the years ended September 30, 2023, 2022, and 2021 was allocated as follows:

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Income tax expense attributable to income from operations | $ | 84.5 |  |  | $ | 70.1 |  |  | $ | 37.8 |
Taxes allocated to stockholders’ equity, related to pension liabilities | 0.2 |  |  | (0.1) |  |  | 0.5 |
Taxes allocated to stockholders’ equity, related to hedge accounting | 11.1 |  |  | (17.0) |  |  | — |
Total income tax expense | $ | 95.8 |  |  | $ | 53.0 |  |  | $ | 38.3 |

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The components of income tax expense/(benefit) attributable to income from operations were as follows:

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Current taxes: |  |  |  |  |
U.S. federal | $ | 15.8 |  |  | $ | 8.2 |  |  | $ | 6.7 |
U.S. state and local | 3.9 |  |  | 3.6 |  |  | (0.1) |
Australia | 2.2 |  |  | 2.8 |  |  | 1.8 |
Brazil | 16.0 |  |  | 12.6 |  |  | 8.0 |
Germany | 4.5 |  |  | 8.9 |  |  | 6.0 |
Singapore | 4.9 |  |  | 2.0 |  |  | 1.9 |
Switzerland | 2.6 |  |  | — |  |  | — |
United Kingdom | 30.9 |  |  | 29.2 |  |  | 6.6 |
Other international | 6.1 |  |  | 3.1 |  |  | 3.7 |
Total current taxes | 86.9 |  |  | 70.4 |  |  | 34.6 |
Deferred taxes: |  |  |  |  |
U.S. federal | (1.1) |  |  | 3.4 |  |  | 1.4 |
U.S. state and local | — |  |  | (0.1) |  |  | 2.7 |
Australia | 0.1 |  |  | (0.2) |  |  | 0.3 |
Brazil | — |  |  | (0.8) |  |  | (1.3) |
Singapore | — |  |  | — |  |  | 0.4 |
Switzerland | 0.4 |  |  | — |  |  | — |
United Kingdom | (1.4) |  |  | (2.7) |  |  | 0.1 |
Other international | (0.4) |  |  | 0.1 |  |  | (0.4) |
Total deferred taxes | (2.4) |  |  | (0.3) |  |  | 3.2 |
Income tax expense | $ | 84.5 |  |  | $ | 70.1 |  |  | $ | 37.8 |

U.S. and international components of income from operations, before tax, were as follows:

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
U.S. | $ | 135.1 |  |  | $ | 50.0 |  |  | $ | 37.3 |
Australia | 7.4 |  |  | 8.7 |  |  | 7.8 |
Brazil | 35.3 |  |  | 25.3 |  |  | 13.7 |
Germany | 13.3 |  |  | 27.8 |  |  | 17.2 |
Singapore | 38.1 |  |  | 19.4 |  |  | 16.0 |
Switzerland | 22.5 |  |  | — |  |  | — |
United Kingdom | 77.7 |  |  | 104.8 |  |  | 41.4 |
Other international | (6.4) |  |  | 41.2 |  |  | 20.7 |
Income from operations, before tax | $ | 323.0 |  |  | $ | 277.2 |  |  | $ | 154.1 |

Items accounting for the difference between income taxes computed at the federal statutory rate and income tax expense were as follows:

| Year Ended September 30,
| 2023 |  | 2022 |  | 2021
Federal statutory rate effect of: | 21.0 | % |  | 21.0 | % |  | 21.0 | %
U.S. State and local income taxes | 1.0 | % |  | 1.0 | % |  | 1.8 | %
Foreign earnings and losses taxed at different rates | 1.1 | % |  | 1.1 | % |  | 1.0 | %
Change in valuation allowance | (0.4) | % |  | 0.9 | % |  | 1.9 | %
U.K. bank tax | 0.3 | % |  | 2.6 | % |  | 0.4 | %
U.S. permanent items | 0.2 | % |  | 0.2 | % |  | (1.2) | %
Non-deductible compensation | 2.0 | % |  | 0.7 | % |  | 1.9 | %
Foreign permanent items | 0.4 | % |  | (2.8) | % |  | (2.3) | %
U.S. bargain purchase gain | (1.4) | % |  | — | % |  | (0.5) | %
GILTI | 2.0 | % |  | 0.6 | % |  | 0.6 | %
Effective rate | 26.2 | % |  | 25.3 | % |  | 24.6 | %

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The components of deferred income tax assets and liabilities were as follows:

(in millions) | September 30, 2023 |  | September 30, 2022
Deferred tax assets: |  |  |
Share-based compensation | $ | 7.4 |  |  | $ | 4.8 |
Deferred compensation | 5.4 |  |  | 5.1 |
Net operating loss carryforwards | 17.2 |  |  | 18.7 |
Intangible assets | 3.8 |  |  | 6.4 |
Bad debt reserve | 9.6 |  |  | 7.8 |
Hedging | 5.9 |  |  | 17.0 |
Foreign tax credit carryforwards | 0.6 |  |  | 1.6 |
Other compensation | 7.8 |  |  | 8.0 |
Pension | 3.6 |  |  | 2.1 |
Right of use assets | 20.1 |  |  | 23.8 |
Other | 1.1 |  |  | 2.0 |
Total gross deferred tax assets | 82.5 |  |  | 97.3 |
Less valuation allowance | (12.4) |  |  | (15.8) |
Deferred tax assets | 70.1 |  |  | 81.5 |
Deferred income tax liabilities: |  |  |
Unrealized gain on securities | 2.8 |  |  | 2.5 |
Prepaid expenses | 5.0 |  |  | 3.8 |
Property and equipment | 1.6 |  |  | 2.0 |
Right of use liabilities | 17.2 |  |  | 20.8 |
Mark to market on inventory | 4.8 |  |  | — |
Other deferred liabilities | 1.4 |  |  | 0.4 |
Deferred income tax liabilities | 32.8 |  |  | 29.5 |
Deferred income taxes, net | $ | 37.3 |  |  | $ | 52.0 |

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.
As of September 30, 2023 and 2022, the Company has net operating loss carryforwards for U.S. federal, state, local, and foreign income tax purposes o f $5.4 million and $5.2 million, net of valuation allowances, respectively, which are available to offset future taxable income in these jurisdictions. The state and local net operating loss carryforwards of $4.4 million, net of valuation allowance, begin to expire after September 2023.
The Company also has $0.7 million, net of valuation allowances, of federal net operating loss carryforwards, which consist of a portion that will expire in tax years ending 2031 through 2036. The remaining portion of the federal net operating loss carryforwards do not expire, but cannot be utilized until after 2037 and are limited by Internal Revenue Code (“IRC”) Section 382. As of September 30, 2023, the Company has $0.4 million, net of valuation allowance, of foreign net operating loss carryforwards primarily in Columbia and Ireland, which have various carryforward periods.
The valuation allowance for deferred tax assets as of September 30, 2023 was $12.4 million. The net change in the total valuation allowance for the year ended September 30, 2023 was a decrease of $3.4 million. The decrease was related to the decrease in foreign net operating loss carryforwards and decreases related to foreign tax credits. The valuation allowances as of September 30, 2023 and 2022 were primarily related to U.S. state and local and foreign net operating loss carryforwards that, in the judgment of management, are not more likely than not to be realized.
T he Company does not intend to distribute earnings of its foreign subsidiaries in a taxable manner, and therefore intends to limit distributions to earnings previously taxed in the U.S., or earnings that would qualify for the 100 percent dividends received deduction, and earnings that would not result in any significant foreign taxes. The Company repatriated $35.5 million and $29.7 million during the years ended September 30, 2023 and 2022, respectively, of earnings previously taxed in the U.S. resulting in no significant incremental taxes. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries.
The Company had a de minimis balance of unrecognized tax benefits as of September 30, 2023, 2022, and 2021 that, if recognized, would affect the effective tax rate.
Accrued interest and penalties are included in the related tax liability line in the Consolidated Balance Sheets. The Company had no accrued interest and penalties included in the Consolidated Balance Sheets as of September 30, 2023 and 2022.
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The Company recognizes accrued interest and penalties related to income taxes as a component of income tax expense. The Company had a de minimis amount of interest, net of federal benefit, and penalties recognized as a component of income tax expense during the years ended September 30, 2023, 2022, and 2021.
The Company and its subsidiaries file income tax returns with the U.S. federal jurisdiction and various U.S. state and local and foreign jurisdictions. The Company has open tax years ranging from September 30, 2017 through September 30, 2023 with U.S. federal and state and local taxing authorities. In the U.K., the Company has open tax years ending September 30, 2020 to September 30, 2023. In Brazil, the Company has open tax years ranging from December 31, 2018 through December 31, 2022. In Argentina, the Company has open tax years ranging from September 30, 2016 to September 30, 2023. In Singapore, the Company has open tax years ranging from September 30, 2018 to September 30, 2023.
Note 20 – Acquisitions
The Company’s consolidated financial statements include the operating results and cash flows of the acquired businesses from the dates of acquisition.
Acquisitions in Fiscal 2023
Cotton Distributors Inc.
On October 31, 2022, the Company’s wholly owned subsidiary, StoneX Netherlands B.V., acquired CDI-Societe Cotonniere De Distribution S.A (“CDI”), based in Switzerland. CDI operates a global cotton merchant business with clients and producers in Brazil and West Africa as well as buyers throughout Asia. The purchase price is approximately $42.7 million, which is based on CDI’s estimated acquisition date tangible book value as defined by the terms of the purchase agreement and based on Swiss accounting practices, and an earn-out payment due to the seller. The earn-out value was determined by CDI’s performance with respect to certain contracts entered into before the acquisition date and settling after the closing date.
During the year ended September 30, 2023, CDI contributed $36.9 million of Net operating revenue and $18.6 million of Net income.
The measurement period for the CDI acquisition remains open as the Company finalizes certain valuation calculations related to intangible assets, net tangible asset value adjustments, the fair values of forward contracts and other derivatives. The gain on acquisition was principally due to the fair value of commodity forward purchases and sales contracts and fair value of identified intangible assets acquired exceeding the consideration paid for these assets.
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(in millions) | Fair Value
Cash and cash equivalents | $ | 8.2 |
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties | 7.7
Receivable from clients, net | 51.9
Financial instruments owned, at fair value | 45.7
Deferred income taxes, net | (3.3)
Property and equipment, net | 0.1
Physical commodities inventory, net | 22.5
Other assets | 6.7
Total fair value of tangible assets acquired | 139.5
Accounts payable and other accrued liabilities | 40.0
Financial instruments sold, not yet purchased, at fair value | 28.3
Payables to lenders under loans | 10.1
Payables to broker-dealers, clearing organizations, and counterparties | 0.4
Payables to clients | 2.6
Income taxes payable | 0.8
Total fair value of liabilities assumed | 82.2
Fair value of tangible net assets acquired | $ | 57.3 |
Identifiable intangible assets acquired |
Client relationships | $ | 4.7 |
Supplier relationships | 3.7
Trade name | 0.4
Non-compete | 0.1
Total fair value of intangible assets acquired | 8.9
Fair value of identifiable net assets acquired | 66.2
Total merger consideration | 42.7
Gain on acquisition | $ | 23.5 |

Incomm S.A.S.
On February 3, 2023, the Company’s subsidiary StoneX Commodity Solutions LLC executed a sale and purchase agreement to acquire all of the outstanding shares of Incomm S.A.S. (“Incomm”), a company duly incorporated and in existence according with the laws of Colombia. This transaction was effective on the closing date of February 3, 2023. Incomm was established to support the import of grain and feed products for Colombian clients, and is a proven resource in management of customs clearing, inventory management at destination ports and providing non-recourse trade finance for destination buyers via local Colombian banks.
The purchase price consists of $0.2 million of cash consideration and also includes a contingent earn-out valued at approximately $1.3 million with annual payments over the four years following the acquisition. The contingent earn-out payments are variable in nature, as they equal a percentage of the acquired business line’s pre-tax profits, as defined in the purchase agreement. The business activities of Incomm will be assigned to the Company’s Commercial reportable segment. The acquisition generated $1.3 million of Goodwill.
Acquisitions in Fiscal 2021
Chasing Returns Ltd.
In August 2021, the Company’s wholly owned subsidiary, StoneX Netherlands B.V., acquired Chasing Returns Limited, a Company based in Ireland, which specializes in financial behavioral science designed to assist traders in analyzing trends and decision making. Chasing Returns Limited enhances the Company’s offerings to its retail clients. The estimated purchase price was approximately $6.0 million, all of which was excess purchase price over net assets acquired. The Company recognized $2.4 million in acquired intangible assets, classified as software, and $3.6 million in goodwill.
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EncoreFx Ltd.
In December 2020, the Company acquired EncoreFx Inc., which is incorporated in the State of Washington, and is registered as a Money Services Business with FinCEN, having state money transmitter licenses and whose primary operations include providing foreign-currency exchange risk management and global payment solutions services to small and medium sized businesses. The terms of the agreement included cash consideration of $0.9 million. The transaction was accounted for as an asset acquisition. The excess of cash consideration over the asset and liabilities assumed of $0.5 million was allocated to an indefinite lived intangible asset recognized related to the licenses acquired. The intangible asset was assigned to the Global Payments reportable segment. Subsequent to the acquisition, the company was renamed as StoneX Payment Services Ltd.
Note 21 – Regulatory Requirements and Subsidiary Dividend Restrictions
The Company’s subsidiary StoneX Financial Inc. is registered as a broker dealer and member of the Financial Industry Regulatory Authority (“FINRA”) subject to the SEC Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital. StoneX Financial Inc. is also a futures commission merchant registered with the CFTC and subject to the net capital requirements of the CFTC Regulation 1.17. Under the more restrictive of these rules, StoneX Financial Inc. is required to maintain “adjusted net capital”, equivalent to the greater of $1.5 million or 8% of client and non-client risk maintenance margin requirements on all positions, as defined in such rules, regulations, and requirements. Adjusted net capital and the related net capital requirement may fluctuate on a daily basis. StoneX Financial Inc., along with certain regulated affiliates, including Gain Capital Group, LLC and others, has a restriction on dividends. For StoneX Financial Inc. withdrawn excess capital cannot reduce excess capital, after haircuts and charges, to an amount less than 120% of the greatest minimum requirement.
The Company’s subsidiary, Gain Capital Group, LLC, is subject to regulation by the CFTC and NFA and is required to maintain specific levels of regulatory capital. As a futures commission merchant and retail foreign exchange dealer, Gain Capital Group, LLC is required to maintain adjusted net capital of the greater of $1.0 million or 8% of customer and non-customer risk maintenance margin, or $20.0 million plus 5.0% of the amount of retail customer liabilities over $10.0 million, plus 10% of all liabilities owed to eligible contract participant counterparties acting as a dealer that are not an affiliate.
Swap dealers are subject to a comprehensive regulatory regime with new obligations for the swaps activities for which they are registered, including adherence to risk management policies, supervisory procedures, trade record and real time reporting requirements, as well as rules for minimum capital requirements which became effective October 6, 2021. Our subsidiary, StoneX Markets LLC, is a CFTC registered swap dealer, and under these capital rules, StoneX Markets LLC is subject to a minimum regulatory capital requirement of $20.0 million.
StoneX Financial Inc. as a registered securities carrying broker dealer is also subject to Rule 15c3-3 of the Securities Exchange Act of 1934 (“Rule 15c3-3”), which requires the Company to maintain separate accounts for the benefit of securities clients and proprietary accounts of broker dealers (“PABs”). These client protection rules require the Company to maintain special reserve bank accounts (“SRBAs”) for the exclusive benefit of securities clients and PABs. As of September 30, 2023, StoneX Financial Inc. prepared reserve computations for the client accounts and PAB accounts in accordance with the customer reserve computation guidelines set forth in Rule 15c3-3. Based upon these computations, excess of total credits over debits was $4.3 million as of September 30, 2023. The Company held $13.8 million in customer SRBAs as of September 30, 2023, and met the customer segregation and segregated deposit timing requirements of Rule 15c3-3. The total PAB credits over total PAB debits was $6.9 million as of September 30, 2023 and the PAB reserve requirement was $6.9 million as of September 30, 2023. The Company held $4.2 million in the PAB SRBA as of September 30, 2023, and made additional deposits of $3.7 million on October 3, 2023, to meet the PAB segregation and segregated deposit timing requirements of Rule 15c3-3.
Pursuant to the requirements of the Commodity Exchange Act, funds deposited by clients of StoneX Financial Inc. supporting trading of futures and options on futures on a U.S. commodities exchange must be carried in separate accounts which are designated as segregated client accounts. Pursuant to the requirements of the CFTC, funds deposited by clients of StoneX Financial Inc. related to trading futures and options on futures traded on, or subject to the rules of a foreign board of trade, must be carried in separate accounts in, which are designated as secured clients’ accounts. As of September 30, 2023, StoneX Financial Inc. had client segregated and client secured funds of $6,166.2 million and $261.0 million, respectively, compared to a minimum regulatory requirement of $6,091.9 million and $249.0 million, respectively.
The Company’s subsidiary StoneX Financial Ltd. is regulated by the Financial Conduct Authority (“FCA”), the regulator of the financial services industry in the U.K. The regulations impose regulatory capital, as well as conduct of business, governance, and other requirements. The conduct of business rules include those that govern the treatment of client money and other assets which, under certain circumstances, for certain classes of client, must be segregated from the firm’s own assets. As of September 30, 2023, StoneX Financial Ltd. had client segregated funds of $1,266.6 million, compared to a minimum regulatory requirement of $1,253.7 million.
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StoneX Financial Pte. Ltd. is regulated by the Monetary Authority of Singapore (“MAS”) and operates as an approved holder of a Capital Market Services and a Payments Service License. StoneX Financial Pte. Ltd. is subject to the requirements of MAS pursuant to the Securities and Futures Act and the Payments Services Act 2019. The regulations include those that govern the treatment of client money and other assets which under certain circumstances must be segregated from the firm’s own assets. As of September 30, 2023, StoneX Financial Pte. Ltd. had client segregated funds of $789.0 million compared to a minimum regulatory requirement of $772.4 million.
The following table details the Company’s subsidiaries with a minimum regulatory net capital requirement in excess of $10.0 million as well as the actual regulatory capital of the subsidiary as of September 30, 2023 (in millions):

Subsidiary | Regulatory Authority |  |  |  | Actual |  | Minimum Requirement
StoneX Financial Inc. | SEC and CFTC |  |  |  | $ | 353.0 |  |  | $ | 220.5 |
StoneX Financial Ltd. | FCA |  |  |  | $ | 458.5 |  |  | $ | 358.0 |
Gain Capital Group, LLC | CFTC and NFA |  |  |  | $ | 50.1 |  |  | $ | 29.3 |
StoneX Financial Pte. Ltd. | MAS |  |  |  | $ | 76.5 |  |  | $ | 24.4 |
StoneX Markets LLC | CFTC and NFA |  |  |  | $ | 221.3 |  |  | $ | 122.1 |

Certain other subsidiaries of the Company, each with a minimum requirement less than $10.0 million, are also subject to net capital requirements promulgated by authorities in the countries in which they operate. As of September 30, 2023, all of the Company’s subsidiaries were in compliance with their local regulatory requirements.
Note 22 – Segment and Geographic Information
The Company's operating segments are principally based on the nature of the clients we serve (commercial, institutional, and retail), and a fourth operating segment, its global payments business. The Company manages its business in this manner due to its large global footprint, in which it has more than 4,000 employees allowing it to serve clients in more than 180 countries.
The Company’s business activities are managed as operating segments and organized into reportable segments as follows:
•Commercial
•Institutional
•Retail
•Global Payments
Commercial
The Company offers commercial clients a comprehensive array of products and services, including risk management and hedging services, execution and clearing of exchange-traded and OTC products, voice brokerage, market intelligence and physical trading as well as commodity financing and logistics services. The ability to provide these high-value-added products and services, differentiates the Company from its competitors and maximizes the opportunity to retain clients.
Institutional
The Company provides institutional clients with a complete suite of equity trading services to help them find liquidity with best execution, consistent liquidity across a robust array of fixed income products, competitive and efficient clearing and execution in all major futures and securities exchanges globally as well as prime brokerage in equities and major foreign currency pairs and swap transactions. In addition, the Company originates, structures and place debt instruments in the international and domestic capital markets. These instruments include asset-backed securities (primarily in Argentina) and domestic municipal securities.
Retail
The Company provides retail clients around the world access to over 18,000 global financial markets, including spot foreign exchange ("forex"), both financial trading and physical investment in precious metals, as well as CFDs, which are investment products with returns linked to the performance of underlying assets. In addition, its independent wealth management business offers a comprehensive product suite to retail investors in the United States.
Global Payments
The Company provides customized payment, technology and treasury services to banks and commercial businesses as well as charities and non-governmental organizations and government organizations. The Company provides transparent pricing and
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offers payments services in more than 180 countries and 140 currencies, which it believes is more than any other payments solution provider.
********
The total revenues reported combine gross revenues from physical contracts for subsidiaries that are not broker-dealers and net revenues for all other businesses. In order to reflect the way that the Company’s management views the results, the table below also reflects the segment contribution to Operating revenues, which is shown on the face of the Consolidated Income Statements and which is calculated by deducting physical commodities cost of sales from total revenues.
Segment data includes the profitability measure of net contribution by segment. Net contribution is one of the key measures used by management to assess the performance of each segment and for decisions regarding the allocation of the Company’s resources. Net contribution is calculated as revenue less direct cost of sales, transaction-based clearing expenses, variable compensation, introducing broker commissions, and interest expense. Variable compensation paid to risk management consultants/traders generally represents a fixed percentage of revenues generated, and in some cases, revenues generated less transaction-based clearing expenses, base salaries and an overhead allocation.
Segment data also includes segment income which is calculated as net contribution less non-variable direct expenses of the segment. These non-variable direct expenses include trader base compensation and benefits, operational employee compensation and benefits, communication and data services, business development, professional fees, bad debt expense and other direct expenses.
Inter-segment revenues, expenses, receivables and payables are eliminated upon consolidation.
Total revenues, operating revenues and net operating revenues shown as “Corporate Unallocated” primarily consist of interest income from its centralized corporate treasury function. In the normal course of operations, the Company operates a centralized corporate treasury function in which it may sweep excess cash from certain subsidiaries, where permitted within regulatory limitations, in exchange for a short-term interest bearing intercompany payable, or provide excess cash to subsidiaries in exchange for a short-term interest bearing intercompany receivable in lieu of the subsidiary borrowing on external credit facilities. The intercompany receivables and payables are eliminated during consolidation; however, this practice may impact reported total assets between segments.
Net costs not allocated to operating segments include costs and expenses of certain shared services such as information technology, accounting and treasury, credit and risk, legal and compliance, and human resources and other activities.
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Information for the reportable segments is shown in accordance with the Segment Reporting Topic of the ASC as follows:

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Total revenues: |  |  |  |  |
Commercial | $ | 58,249.2 |  |  | $ | 63,743.2 |  |  | $ | 39,884.0 |
Institutional | 1,513.6 |  |  | 831.8 |  |  | 668.4 |
Retail | 888.5 |  |  | 1,304.2 |  |  | 1,859.9 |
Global Payments | 212.6 |  |  | 172.0 |  |  | 137.3 |
Corporate Unallocated | 31.7 |  |  | 7.8 |  |  | 1.7 |
Eliminations | (39.5) |  |  | (23.0) |  |  | (17.1) |
Total | $ | 60,856.1 |  |  | $ | 66,036.0 |  |  | $ | 42,534.2 |
Operating revenues: |  |  |  |  |
Commercial | $ | 862.7 |  |  | $ | 692.1 |  |  | $ | 534.8 |
Institutional | 1,513.6 |  |  | 831.8 |  |  | 668.4 |
Retail | 333.0 |  |  | 426.7 |  |  | 348.0 |
Global Payments | 212.6 |  |  | 172.0 |  |  | 137.3 |
Corporate Unallocated | 31.7 |  |  | 7.8 |  |  | 1.7 |
Eliminations | (39.5) |  |  | (23.0) |  |  | (17.1) |
Total | $ | 2,914.1 |  |  | $ | 2,107.4 |  |  | $ | 1,673.1 |
Net operating revenues (loss): |  |  |  |  |
Commercial | $ | 721.3 |  |  | $ | 586.5 |  |  | $ | 433.1 |
Institutional | 532.0 |  |  | 483.5 |  |  | 419.4 |
Retail | 227.3 |  |  | 302.9 |  |  | 222.4 |
Global Payments | 203.3 |  |  | 162.5 |  |  | 129.9 |
Corporate Unallocated | (62.9) |  |  | (59.5) |  |  | (54.8) |
Total | $ | 1,621.0 |  |  | $ | 1,475.9 |  |  | $ | 1,150.0 |
Net contribution: |  |  |  |  |
(Revenues less cost of sales of physical commodities, transaction-based clearing expenses, variable compensation, introducing broker commissions and interest expense) |  |  |  |  |
Commercial | $ | 544.9 |  |  | $ | 415.3 |  |  | $ | 299.7 |
Institutional | 351.5 |  |  | 295.1 |  |  | 260.9 |
Retail | 212.7 |  |  | 280.3 |  |  | 204.4 |
Global Payments | 164.5 |  |  | 131.2 |  |  | 103.7 |
Total | $ | 1,273.6 |  |  | $ | 1,121.9 |  |  | $ | 868.7 |
Segment income: |  |  |  |  |
(Net contribution less non-variable direct segment costs) |  |  |  |  |
Commercial (1) | $ | 390.7 |  |  | $ | 288.3 |  |  | $ | 192.2 |
Institutional | 217.9 |  |  | 174.6 |  |  | 167.7 |
Retail | 45.8 |  |  | 115.4 |  |  | 67.8 |
Global Payments | 109.1 |  |  | 97.4 |  |  | 78.5 |
Total | $ | 763.5 |  |  | $ | 675.7 |  |  | $ | 506.2 |
Reconciliation of segment income to income before tax: |  |  |  |  |
Segment income | $ | 763.5 |  |  | $ | 675.7 |  |  | $ | 506.2 |
Net costs not allocated to operating segments | (463.8) |  |  | (398.5) |  |  | (355.5) |
Gain on acquisitions and other gains, net | 23.3 |  |  | — |  |  | 3.4 |
Income before tax | $ | 323.0 |  |  | $ | 277.2 |  |  | $ | 154.1 |

(in millions) | As of September 30, 2023 |  | As of September 30, 2022 |  | As of September 30, 2021
Total assets: |  |  |  |  |
Commercial | $ | 4,676.3 |  |  | $ | 5,931.0 |  |  | $ | 3,969.9 |
Institutional | 15,059.3 |  |  | 11,687.1 |  |  | 12,403.3 |
Retail | 1,014.2 |  |  | 971.2 |  |  | 1,380.9 |
Global Payments | 376.6 |  |  | 524.0 |  |  | 243.8 |
Corporate unallocated | 812.3 |  |  | 746.3 |  |  | 841.7 |
Total | $ | 21,938.7 |  |  | $ | 19,859.6 |  |  | $ | 18,839.6 |

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Information regarding revenues and operating revenues for the ended September 30, 2023, 2022, and 2021, and information regarding long-lived assets (defined as property, equipment, leasehold improvements and software) as of September 30, 2023, 2022, and 2021 in geographic areas were as follows:

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Total revenues: |  |  |  |  |
United States | $ | 6,017.4 |  |  | $ | 5,102.3 |  |  | $ | 3,313.1 |
Europe | 3,498.9 |  |  | 3,440.2 |  |  | 1,889.6 |
South America | 271.4 |  |  | 87.2 |  |  | 64.5 |
Middle East and Asia | 51,023.6 |  |  | 57,395.5 |  |  | 37,259.1 |
Other | 44.8 |  |  | 10.8 |  |  | 7.9 |
Total | $ | 60,856.1 |  |  | $ | 66,036.0 |  |  | $ | 42,534.2 |
Operating revenues: |  |  |  |  |
United States | $ | 2,120.4 |  |  | $ | 1,448.2 |  |  | $ | 1,157.4 |
Europe | 494.3 |  |  | 474.6 |  |  | 371.3 |
South America | 127.0 |  |  | 87.2 |  |  | 64.5 |
Middle East and Asia | 127.6 |  |  | 86.6 |  |  | 72.0 |
Other | 44.8 |  |  | 10.8 |  |  | 7.9 |
Total | $ | 2,914.1 |  |  | $ | 2,107.4 |  |  | $ | 1,673.1 |
(in millions) | As of September 30, 2023 |  | As of September 30, 2022 |  | As of September 30, 2021
Long-lived assets, as defined: |  |  |  |  |
United States | $ | 76.0 |  |  | $ | 67.9 |  |  | $ | 54.1 |
Europe | 40.7 |  |  | 41.1 |  |  | 36.0 |
South America | 4.4 |  |  | 2.9 |  |  | 2.1 |
Middle East and Asia | 2.4 |  |  | 1.0 |  |  | 0.9 |
Other | — |  |  | — |  |  | 0.2 |
Total | $ | 123.5 |  |  | $ | 112.9 |  |  | $ | 93.3 |

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Schedule I
StoneX Group Inc.
Condensed Balance Sheets
Parent Company Only

(in millions) | September 30, 2023 |  | September 30, 2022
ASSETS |  |  |
Cash and cash equivalents | $ | 2.1 |  |  | $ | 6.1 |
Receivable from clients, net | — |  |  | 0.2 |
Deposits with and receivables from subsidiary broker-dealer, net | 77.0 |  |  | 89.1 |
Notes receivable, net | 5.0 |  |  | 5.0 |
Income taxes receivable | 132.1 |  |  | 55.5 |
Investment in subsidiaries(1) | 1,325.3 |  |  | 1,286.8 |
Financial instruments owned, at fair value | 7.6 |  | 5.1 |
Deferred tax assets | 7.2 |  | 14.7 |
Property and equipment, net | 66.3 |  | 62.1 |
Operating right of use assets | 65.5 |  |  | 69.0 |
Other assets | 35.6 |  |  | 30.8 |
Total assets | $ | 1,723.7 |  |  | $ | 1,624.4 |
LIABILITIES AND EQUITY |  |  |
Liabilities: |  |  |
Accounts payable and other accrued liabilities | $ | 135.7 |  |  | $ | 90.7 |
Operating lease liabilities | 91.1 |  |  | 93.3 |
Payable to subsidiaries, net | 288.3 |  |  | 293.3 |
Payable to lenders under loans | 157.5 |  |  | 268.1 |
Senior secured borrowings, net | 342.1 |  |  | 339.1 |
Financial instruments sold, not yet purchased, at fair value | 27.0 |  |  | 73.6 |
Total liabilities | 1,041.7 |  |  | 1,158.1 |
Equity: |  |  |
StoneX Group Inc. (Parent Company Only) stockholders’ equity: |  |  |
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; no shares issued or outstanding | — |  |  | — |
Common stock, $0.01 par value. Authorized 200,000,000 shares; 23,403,960 issued and 20,796,637 outstanding at September 30, 2023 and 22,911,227 issued and 20,303,904 outstanding at September 30, 2022 | 0.2 |  |  | 0.2 |
Common stock in treasury, at cost - 2,607,323 shares at September 30, 2023 and 2022 | (69.3) |  |  | (69.3) |
Additional paid-in capital | 371.9 |  |  | 340.2 |
Retained earnings(1) | 397.9 |  |  | 248.8 |
Accumulated other comprehensive loss, net | (18.7) |  |  | (53.6) |
Total StoneX Group Inc. (Parent Company Only) stockholders’ equity | 682.0 |  |  | 466.3 |
Total liabilities and equity | $ | 1,723.7 |  |  | $ | 1,624.4 |

(1) Within the Condensed Balance Sheets and Condensed Statements of Operations of StoneX Group Inc. - Parent Company Only, the Company has accounted for its investment in wholly owned subsidiaries using the cost method of accounting. Under this method, the Company’s share of the earnings or losses of such subsidiaries is not included in the Condensed Balance Sheet or Condensed Statements of Operations. If the accounting for its investment in wholly owned subsidiaries was presented under the equity method of accounting, investment in subsidiaries and retained earnings would each increase by $730.2 million as of September 30, 2023, and $640.8 million, as of September 30, 2022, respectively.
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Schedule I
StoneX Group Inc.
Condensed Statements of Operations
Parent Company Only

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Revenues: |  |  |  |  |
Management fees from affiliates | $ | 328.7 |  |  | $ | 109.9 |  |  | $ | 52.5 |
Trading gains (losses), net | 1.8 |  |  | (2.8) |  |  | (0.1) |
Consulting fees | 0.2 |  |  | 0.1 |  |  | 0.3 |
Interest income | 3.3 |  |  | 2.2 |  |  | 1.5 |
Dividend income from subsidiaries(1) | 281.1 |  |  | 124.4 |  |  | 372.7 |
Total revenues | 615.1 |  |  | 233.8 |  |  | 426.9 |
Interest expense | 83.1 |  |  | 60.9 |  |  | 49.6 |
Net revenues | 532.0 |  |  | 172.9 |  |  | 377.3 |
Non-interest expenses: |  |  |  |  |
Compensation and benefits | 137.9 |  |  | 113.7 |  |  | 99.9 |
Trade systems and market information | 10.2 |  |  | 6.5 |  |  | 6.0 |
Occupancy and equipment rental | 9.3 |  |  | 8.4 |  |  | 8.7 |
Selling and marketing | 2.2 |  |  | 4.9 |  |  | 1.0 |
Professional fees | 12.7 |  |  | 11.9 |  |  | 6.9 |
Travel and business development | 3.1 |  |  | 2.3 |  |  | 0.8 |
Non-trading technology and support | 37.4 |  |  | 30.6 |  |  | 24.9 |
Depreciation and amortization | 13.7 |  |  | 11.0 |  |  | 8.7 |
Communications | 3.4 |  |  | 1.8 |  |  | 1.7 |
Impairment | — |  |  | — |  |  | 0.1 |
Management services fees to affiliates | 188.4 |  |  | 4.3 |  |  | 3.6 |
Other | 12.1 |  |  | 12.4 |  |  | 8.7 |
Total non-interest expenses | 430.4 |  |  | 207.8 |  |  | 171.0 |
Gain on acquisitions | 2.1 |  |  | — |  |  | 3.4 |
Income (loss) before tax | 103.7 |  |  | (34.9) |  |  | 209.7 |
Income tax benefit | 45.4 |  |  | 45.0 |  |  | 33.8 |
Net income | $ | 149.1 |  |  | $ | 10.1 |  |  | $ | 243.5 |

(1) W ithin the Condensed Balance Sheets and Condensed Statements of Operations of StoneX Group Inc. - Parent Company Only, the Company has accounted for its investment in wholly owned subsidiaries using the cost method of accounting. Under this method, the Company’s share of the earnings or losses of such subsidiaries is not included in the Condensed Balance Sheet or Condensed Statements of Operations. If the accounting for its investment in wholly owned subsidiaries was presented under the equity method of accounting, total revenues would also include subsidiary earnings/(losses) of $89.4 million, $197.0 million, and $(127.2) million for the years ended September 30, 2023, 2022, and 2021, respectively.
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Schedule I
StoneX Group Inc.
Condensed Statements of Cash Flows
Parent Company Only

| Year Ended September 30,
(in millions) | 2023 |  | 2022 |  | 2021
Cash flows from operating activities: |  |  |  |  |
Net income | $ | 149.1 |  |  | $ | 10.1 |  |  | $ | 243.5 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |
Depreciation and amortization | 13.7 |  |  | 11.0 |  |  | 8.7 |
Amortization of operating right of use assets | 5.8 |  |  | 6.1 |  |  | 6.1 |
Deferred income taxes | (3.6) |  |  | 4.7 |  |  | 1.8 |
Amortization and extinguishment of debt issuance costs | 3.9 |  |  | 3.2 |  |  | 3.3 |
Loss on extinguishment of debt | — |  |  | — |  |  | 0.1 |
Amortization of share-based compensation expense | 26.2 |  |  | 16.5 |  |  | 12.9 |
Dividends | (12.7) |  |  | (9.6) |  |  | (125.0) |
Gain on acquisition | — |  |  | — |  |  | (3.3) |
Changes in operating assets and liabilities: |  |  |  |  |
Payable to subsidiaries, net | 11.0 |  |  | 113.6 |  |  | 118.3 |
Receivable from clients, net | 0.2 |  |  | 0.2 |  |  | — |
Deposits with and receivables from subsidiary broker-dealer, net | 12.1 |  |  | (89.1) |  |  | — |
Notes receivable, net | — |  |  | 1.1 |  |  | (4.4) |
Income taxes receivable | (76.6) |  |  | 8.2 |  |  | (17.4) |
Financial instruments owned, at fair value | (0.8) |  |  | (5.1) |  |  | — |
Other assets | (5.7) |  |  | (7.3) |  |  | (4.2) |
Accounts payable and other accrued liabilities | 45.8 |  |  | 12.0 |  |  | 12.7 |
Operating lease liabilities | (4.5) |  |  | (1.7) |  |  | (2.6) |
Payable to clients | — |  |  | — |  |  | (0.3) |
Financial instruments sold, not yet purchased, at fair value | (3.1) |  |  | 2.1 |  |  | (0.2) |
Net cash provided by operating activities | 160.8 |  |  | 76.0 |  |  | 250.0 |
Cash flows from investing activities: |  |  |  |  |
Capital contribution to affiliates | (40.0) |  |  | (180.8) |  |  | (170.2) |
Purchase of property and equipment and internally developed software | (17.9) |  |  | (17.8) |  |  | (22.0) |
Net cash used in investing activities | (57.9) |  |  | (198.6) |  |  | (192.2) |
Cash flows from financing activities: |  |  |  |  |
Net change in lenders under loans | (110.6) |  |  | 259.5 |  |  | (23.4) |
Repayments of senior secured term loan | — |  |  | (170.3) |  |  | (9.8) |
Repayments of senior secured notes | — |  |  | — |  |  | (1.6) |
Issuance of note payable | — |  |  | — |  |  | 9.0 |
Deferred payments on acquisitions | — |  |  | (1.9) |  |  | (2.2) |
Share repurchase | — |  |  | — |  |  | (11.7) |
Exercise of stock options | 3.7 |  |  | 6.7 |  |  | 9.2 |
Net cash (used in)/provided by financing activities | (106.9) |  |  | 94.0 |  |  | (30.5) |
Net (decrease)/increase in cash and cash equivalents | (4.0) |  |  | (28.6) |  |  | 27.3 |
Cash and cash equivalents at beginning of period | 6.1 |  |  | 34.7 |  |  | 7.4 |
Cash and cash equivalents at end of period | $ | 2.1 |  |  | $ | 6.1 |  |  | $ | 34.7 |
Supplemental disclosure of cash flow information: |  |  |  |  |
Cash paid for interest | $ | 15.3 |  |  | $ | 34.9 |  |  | $ | 28.5 |
Income taxes paid, net of cash refunds | $ | 34.9 |  |  | $ | 2.6 |  |  | $ | 9.8 |

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures
In connection with the filing of this Form 10-K, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2023. We seek to design our disclosure controls and procedures to provide reasonable assurance that the reports we file or submit under the Exchange Act contain the required information and that we submit these reports within the time periods specified in SEC rules and forms. We also seek to design these controls and procedures to ensure that we accumulate and communicate correct information to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2023.
(b)Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
There are limitations inherent in any internal control, such as the possibility of human error and the circumvention or overriding of controls. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met, and may not prevent or detect misstatements. As conditions change over time, so too may the effectiveness of internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the Company’s internal control over financial reporting as of September 30, 2023, based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023 excluded CDI-Societe Cotonniere De Distribution S.A. and subsidiaries, acquired with effect from October 31, 2022, and Incomm S.A.S., acquired with effect from February 3, 2023. These acquired businesses had aggregate total assets of $151.2 million and total revenues of $388.6 million included in the Company’s consolidated financial statements as of and for the year ended September 30, 2023.
Based on its assessment, management has concluded that our internal control over financial reporting was effective as of September 30, 2023.
KPMG LLP, an independent registered public accounting firm, was engaged to audit the effectiveness of our internal control over financial reporting as of September 30, 2023 and has issued an audit report regarding their assessment of the effectiveness of internal control over financial reporting which is included on page 69 in this Annual Report on Form 10-K.
(c)Changes in Internal Control Over Financial Reporting
During the year ended September 30, 2023, the Company completed its migration of a significant component of subsidiaries to a different accounting system. Management implemented data migration, onboarding, and post go-live controls over the new system. The rigor around the migrations allows management to conclude that this does not present an issue with internal control over financial reporting.
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Item 9B. Other Information
Insider Adoption or Termination of Trading Arrangements:
During the three months ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K, except as described below.

Name and Title |  | Type of Plan |  | Adoption Date |  | Duration or End Date |  | Aggregate Number of Securities to be Sold |  | Description of Trading Arrangement
Scott J. Branch - Director |  | Rule 10b5-1 trading arrangement |  | 7/20/2023 |  | 11/29/2024 |  | 80,000 |  |  | Sales of shares
John M. Fowler - Director |  | Rule 10b5-1 trading arrangement |  | 8/9/2023 |  | 11/29/2024 |  | 1,600 |  |  | Sales of shares

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
We will include a list of our executive officers and biographical and other information about them and our directors in the definitive Proxy Statement for our 2024 Annual Meeting of Stockholders to be held on February 27, 2024. We will file the proxy within 120 days of the end of our fiscal year ended September 30, 2023 (the “2024 Proxy Statement”). The 2024 Proxy Statement is incorporated herein by reference. Information about our Audit Committee may be found in the Proxy Statement. That information is incorporated herein by reference.
We adopted a code of ethics that applies to the directors, officers and employees of the Company and each of its subsidiaries. The code of ethics is publicly available on our website at https://ir.stonex.com/corporate-governance. If we make any substantive amendments to the code of ethics or grant any waiver, including any implicit waiver, from a provision of the code to our Chief Executive Officer, Chief Financial Officer, or Chief Accounting Officer, we will disclose the nature of the amendment or waiver on that website or in a report on Form 8-K.
Item 11. Executive Compensation
We will include information relating to our executive officer and director compensation and the compensation committee of our Board of Directors in the 2024 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
We will include information relating to security ownership of certain beneficial owners of our common stock and information relating to the security ownership of our management in the 2024 Proxy Statement and is incorporated herein by reference.
The following table provides information generally as of September 30, 2023, the last day of fiscal 2023, regarding securities to be issued on exercise of stock options, and securities remaining available for issuance under our equity compensation plans that were in effect during fiscal 2023.

Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights |  | Weighted average exercise price of outstanding options, warrants and rights |  | Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by stockholders | 1,175,364 |  |  | $ | 53.46 |  |  | 1,737,684 |
Equity compensation plans not approved by stockholders | — |  |  | — |  |  | — |
Total | 1,175,364 |  |  | $ | 53.46 |  |  | 1,737,684 |

Item 13. Certain Relationships and Related Transactions, and Director Independence
We will include information regarding certain relationships and related transactions and director independence in the 2024 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Our independent registered public accounting firm is KPMG LLP, Kansas City, MO, Auditor Firm ID: 185.
Information regarding principal accountant fees and services will be included in the 2024 Proxy Statement and is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) (1) and (2) Financial Statements and Financial Statement Schedules - All financial statement schedules are filed as part of this report under Item 8 - Financial Statements.
(3) Exhibits

2.1 |  | Agreement and Plan of Merger, dated as of February 26, 2020, by and among the Company, Merger Sub and GCAP (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed by the Company on February 27, 2020).
3.1 |  | Amended and Restated Certificate of Incorporation (incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on October 8, 2009).
3.2 |  | Certificate of Amendment of Certificate of Incorporation (incorporated by reference from the Company’s Form 10-Q filed with the SEC on August 6, 2020).
3.3 |  | Certificate of Amendment to StoneX Group Inc.’s Restated Certificate of Incorporation (incorporated by reference from the Company’s Form 8-K filed with the SEC on August 16, 2023).
3.4 |  | Amended and Restated By-laws (incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2007).
4.1 |  | Description of Registrant’s Securities *
4.2 |  | Indenture by and among the Company, the guarantors party thereto from time to time and The Bank of New York Mellon, as trustee and collateral agent, dated as of June 11, 2020 (incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on June 11, 2020).
4.3 |  | Form of 8.625% Senior Secured Notes due 2025 (included in Exhibit 4.1) (incorporated by reference from the Company's Current Report on Report 8-K filed with the SEC on June 11, 2020).
4.4 |  | First Supplemental Indenture, dated as of July 31, 2020, by and among the Company, the Guaranteeing Subsidiaries and the Trustee and Collateral Agent (incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on July 31, 2020).
4.5 |  | Security and Pledge Agreement, dated as of July 31, 2020, by and among the Company, the Domestic Guaranteeing Subsidiaries and the Collateral Agent (incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on July 31, 2020).
4.6 |  | Joinder to the Amended and Restated Credit Agreement, dated as of July 31, 2020, by and among the GAIN Guaranteeing Subsidiaries and the Administrative Agent (incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on July 31, 2020).
10.1 |  | Registration Rights Agreement, dated October 22, 2002, by and between the Company, and Sean O’Connor (incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on October 24, 2002).
10.2 |  | First Amendment to Registration Rights Agreement, dated December 6, 2002, by and between the Company and Sean O’Connor (incorporated by reference from the Company’s Form 8-K filed with the SEC on December 10, 2002).
10.3 |  | Registration Rights Agreement, dated October 22, 2002, by and between the Company and John Radziwill (incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on October 24, 2002).
10.4 |  | First Amendment to Registration Rights Agreement, dated December 6, 2002, by and between the Company and John Radziwill (incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on December 10, 2002).
10.5 |  | Farmers Commodities Corporation Supplemental Nonqualified Pension Plan (incorporated by reference from Amendment No. 2 to the Registration Statement on Form S-4 filed by FCStone Group, Inc. with the SEC on December 9, 2004) +
10.6 |  | Form of Director Indemnification Agreement (incorporated by reference from Amendment No. 3 to the Registration Statement on Form S-4 filed by FCStone Group, Inc. with the SEC on December 30, 2004)
10.7 |  | Form of Indemnification Agreement with Gain Capital Holdings Inc.’s Non-Employee Directors (incorporated by reference from Exhibit 10.20 to the Company's Annual Report on Form 10-K filed with the SEC on December 14, 2020).
10.8 |  | INTL FCStone Inc. 2016 Long-Term Performance Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form 14A filed with the SEC on January 15, 2016). +
10.9 |  | StoneX Group Inc. 2021 Omnibus Incentive Compensation Plan (incorporated by reference from Exhibit 10.8 to the Company's Annual Report on Form 10-K filed with the SEC on November 29, 2021) +
10.10 |  | StoneX Group Inc. 2021 Omnibus Incentive Compensation Plan Option Award Agreement(incorporated by reference from Exhibit 10.9 to the Company's Annual Report on Form 10-K filed with the SEC on November 29, 2021). +
10.11 |  | StoneX Group Inc. 2021 Omnibus Incentive Compensation Plan Restricted Stock Award Agreement (incorporated by reference from Exhibit 10.10 to the Company's Annual Report on Form 10-K filed with the SEC on November 29, 2021) +

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10.12 |  | StoneX Group Inc. 2021 Omnibus Incentive Compensation Plan Long Term Incentive Performance-Based Cash Compensation Award Agreement (incorporated by reference from Exhibit 10.11 to the Company's Annual Report on Form 10-K filed with the SEC on November 29, 2021) +
10.13 |  | StoneX Group Inc. 2021 Executive Performance Plan (incorporated by reference from Exhibit 10.12 to the Company's Annual Report on Form 10-K filed with the SEC on November 29, 2021) +
10.14 |  | StoneX Group Inc. 2022 Omnibus Incentive Compensation Plan (incorporated by reference from the Company’s Proxy Statement on Form 14A filed with the SEC on January 21, 2022). +
10.15 |  | StoneX Group Inc. Clawback Policy (incorporated by reference from Exhibit 10.13 to the Company's Annual Report on Form 10-K filed with the SEC on November 29, 2021) +
10.16 |  | License Agreement, dated August 9, 2007, by and between GAIN Capital Group, LLC and MetaQuotes Software Corp (incorporated by reference from Exhibit 10.19 to the Company's Annual Report on Form 10-K filed with the SEC on December 14, 2020).
10.17 |  | Amended and Restated Credit Agreement made as of February 22, 2019 by and between INTL FCStone Inc. as Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Bank of America Merrill Lynch and Capital One, National Association, as Joint Lead Arrangers and Joint Bookrunners, and Signature Bank, BMO Harris Bank N.A., BankUnited, N.A., CIBC Bank USA, Barclays Bank PLC, Cadence Bank, N.A., The Huntington National Bank, Webster Bank, National Association, and TriState Capital Bank, as additional Lenders, and with the lenders from time to time parties thereto. (incorporated by reference from the Company’s Report on Form 8-K filed with the SEC on February 27, 2019).
10.18 |  | Lender Joinder Agreement dated as of October 3, 2019, to the Amended and Restated Credit Agreement, dated as of February 22, 2019 by and between INTL FCStone Inc. as Borrower, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, by and among Bank of Hope, as New Lender, INTL FCStone Inc., as Borrower, and Bank of America, N.A., as Administrative Agent (incorporated by reference from Exhibit 10.12 to the Company's Annual Report on Form 10-K filed with the SEC on December 11, 2019).
10.19 |  | Lender Joinder Agreement dated as of November 20, 2019, to the Amended and Restated Credit Agreement, dated as of February 22, 2019 by and between INTL FCStone Inc. as Borrower, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, by and among Investors Bank, as New Lender, INTL FCStone Inc., as Borrower, and Bank of America, N.A., as Administrative Agent (incorporated by reference from Exhibit 10.13 to the Company's Annual Report on Form 10-K filed with the SEC on December 11, 2019).
10.20 |  | Fifth Amendment dated as of June 18, 2021, to the Amended and Restated Credit Agreement, dated as of February 22, 2019 by and between StoneX Group Inc. (f/k/a INTL FCStone Inc.) as Borrower, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent (incorporated by reference from Exhibit 10.17 to the Company's Annual Report on Form 10-K filed with the SEC on November 29, 2021).
10.21 |  | Sixth Amendment dated April 21, 2022, to the Amended and Restated Credit Agreement, dated as of February 22, 2019 by and between StoneX Group Inc. (f/k/a INTL FCStone Inc.) as Borrower, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent (Annex A to the Sixth Amendment contains the Amended and Restated Credit Agreement, as amended by the Sixth Amendment thereto) (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 27, 2022).
10.22 |  | Second Supplemental Indenture, dated as of April 21, 2022, by and among StoneX Payment Services Ltd., StoneX Group Inc. (f/k/a INTL FCStone Inc.), the Guaranteeing Subsidiaries and the Trustee and Collateral Agent (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 27, 2022).
10.23 |  | Intercreditor Joinder Agreement, dated April 21, 2022, by and among StoneX Payment Services Ltd., Bank of America, N.A., as Administrative Agent and Control Agent, The Bank of New York Mellon, as Indenture Trustee and Collateral Agent (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on April 27, 2022).
10.24 |  | Joinder Agreement, dated April 21, 2022, to the Amended and Restated Credit Agreement, dated as of February 22, 2019, by and between StoneX Payment Services Ltd., and Bank of America, N.A., as Administrative Agent (incorporated by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on April 27, 2022).
10.25 |  | Seventh Amendment dated June 30, 2023, to the Amended and Restated Credit Agreement, dated as of February 22, 2019 by and between StoneX Group Inc. (f/k/a INTL FCStone Inc.) as Borrower, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent (Annex A to the Seventh Amendment contains the Amended and Restated Credit Agreement, as amended by the Seventh Amendment thereto) (incorporated by reference from the Company’s Report of Form 10-Q filed with the SEC on May 2, 2023).
10.26 |  | Credit Agreement, entered into as of December 12, 2022, by and between StoneX Financial Inc., as borrower, StoneX Group Inc., as a guarantor, BMO Harris Bank N.A., as Administrative Agent, and the lenders party thereto (incorporated by reference from the Company’s Report of Form 10-Q filed with the SEC on February 7, 2023).
10.27 |  | Commitment Amount Increase Request, dated December 19, 2022, to the Credit Agreement, entered into as of December 12, 2022, by and between StoneX Financial Inc., as borrower, StoneX Group Inc., as a guarantor, BMO Harris Bank N.A., as Administrative Agent, and the lenders party thereto (incorporated by reference from the Company’s Report of Form 10-Q filed with the SEC on February 7, 2023).
10.28 |  | First Amendment dated October 31, 2023, to the Credit Agreement, entered into as of December 12, 2022, by and between StoneX Financial Inc., as borrower, StoneX Group Inc., as a guarantor, BMO Harris Bank N.A., as Administrative Agent, and the lenders party thereto.*

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10.29 |  | Third Amended and Restated Credit Agreement, entered into as of July 28, 2022, by and among StoneX Commodity Solutions LLC (formerly known as FCStone Merchant Services, LLC), as Borrower, StoneX Group Inc., as Guarantor, the several financial institutions from time to time party to this Agreement, as Lenders, and COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH, as Administrative Agent (incorporated by reference from Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 3, 2022).
10.30 |  | Amended and Restated Credit Agreement, made as of October 1 2, 202 3, by and among StoneX Financial Ltd, as Borrower, StoneX Group Inc., as Guarantor, the financial institutions from time to time party to this Agreement, as Lenders, and Barclays Bank PLC, as Administrative Agent.*
14 |  | StoneX Group Inc. Code of Ethics (incorporated by reference from Exhibit 14 to the Company's Annual Report on Form 10-K filed with the SEC on November 29, 2021).
21 |  | List of the Company’s subsidiaries. *
23.1 |  | Consent of KPMG LLP *
31.1 |  | Certification of Chief Executive Officer, pursuant to Rule 13a—14(a). *
31.2 |  | Certification of Chief Financial Officer, pursuant to Rule 13a—14(a). *
32.1 |  | Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.2 |  | Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
101.INS |  | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document*
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104 |  | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)*
* |  | Filed as part of this report.
** |  | Furnished herewith.
+ |  | Management contract or compensatory plan or arrangement

Schedules and Exhibits Excluded
All schedules and exhibits not included are not applicable, not required or would contain information which is included in the Consolidated Financial Statements, Summary of Significant Accounting Policies, or the Notes to the Consolidated Financial Statements.
Item 16. Form 10-K Summary
None.
131

Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

StoneX Group Inc. |
|  |  | /s/ SEAN M. O’CONNOR |
|  |  | Sean M. O’Connor |
|  |  | Chief Executive Officer |
|  | Dated: | November 24, 2023 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature |  | Title |  | Date
/s/ JOHN RADZIWILL |  | Director and Chairman of the Board |  | November 24, 2023
John Radziwill |  |  |  |
/s/ SEAN M. O’CONNOR |  | Director, President and Chief Executive Officer |  | November 24, 2023
Sean M. O’Connor |  | (Principal Executive Officer) |  |
/s/ ANNABELLE G. BEXIGA |  | Director |  | November 24, 2023
Annabelle G. Bexiga |  |  |  |
/s/ SCOTT J. BRANCH |  | Director |  | November 24, 2023
Scott J. Branch |  |  |  |
/s/ DIANE L. COOPER |  | Director |  | November 24, 2023
Diane L. Cooper |  |  |  |
/s/ JOHN M. FOWLER |  | Director |  | November 24, 2023
John M. Fowler |  |  |  |
/s/ STEVEN KASS |  | Director |  | November 24, 2023
Steven Kass |  |  |  |
/s/ ERIC PARTHEMORE |  | Director |  | November 24, 2023
Eric Parthemore |  |  |  |
/s/ DHAMU THAMODARAN |  | Director |  | November 24, 2023
Dhamu Thamodaran |  |  |  |
/s/ WILLIAM J. DUNAWAY |  | Chief Financial Officer |  | November 24, 2023
William J. Dunaway |  | (Principal Financial and Accounting Officer) |  |