XML 28 R17.htm IDEA: XBRL DOCUMENT v3.25.1
Revenue Recognition
 3 Months Ended
Mar. 31, 2025
Revenue Recognition [Abstract]  
Revenue Recognition

11. Revenue Recognition

 

Refer to Note 2 – Summary of Significant Accounting Policies in Company’s 2024 Form 10-K for detail on the Company’s primary sources of revenue and the corresponding accounting treatment. There were no significant changes to the accounting policies for revenue recognition and except as set forth below, those policies were unchanged during the three months ended March 31, 2025.

 

Principal Transactions and Proprietary Trading

 

The Company continuously invests in treasury bill and treasury notes as part of its normal operations to meet deposit requirements, which are primarily in the line item “Cash and securities segregated for regulatory purposes” on the statements of financial condition, in order to enhance its yield on its excess 15c3-3 deposits. In 2025, the Company acquired the Investment in Equity Security and the unrealized gain related to this investment is included in the “Unrealized gain on investment in equity security” line in the table below. Refer to Note 1 – Organization and Basis of Presentation, Note 4 – Fair Value Measurements, and Item 2. – Management’s Discussions and Analysis of Financial Condition and Results of Operations for further detail.

 

Restricted Equity Securities

 

The following table represents detail related to principal transactions and proprietary trading.

 

   Three Months Ended March 31, 
   2025   2024   Increase (Decrease) 
Principal transactions and proprietary trading            
Realized and unrealized gain on primarily riskless principal transactions  $3,712,000   $3,443,000   $269,000 
Unrealized gain on investment in equity security   9,233,000    
—
    9,233,000 
Realized and unrealized gain on portfolio of U.S. government securities   16,000    63,000    (47,000)
Total Principal transactions and proprietary trading  $12,961,000   $3,506,000   $9,455,000 

 

Disaggregation of Revenue

 

The Company generated a significant portion of its revenue from financial instruments comprising of margin revenue, securities lending, principal transactions and proprietary trading, and interest revenue. These net interest and other revenues are not within the scope of FASB ASC Topic 606 – “Revenue from Contracts with Customers” (“Topic 606”), because they are generated from financial instruments covered by various other areas of GAAP. Market making activities are not within the scope of Topic 606, as they do not meet the definition of a contract with a customer under the standard. Consequently, revenue and expenses related to market making activity are accounted for separately and not included in the revenue figures presented in accordance with Topic 606.

 

The Company also has fee revenue and transaction revenue which are within the scope of Topic 606. Revenue from contracts with customers includes commission income charged to retail clients for executing transactions, markups on riskless principal transactions charged to retail clients for executing transactions, distribution income received from mutual funds for client transactions, stock locate fees charged to counterparties for providing locate services, payment for order flow received for executing transactions, and administrative fees to retail clients including for maintenance and other ancillary services. Under Topic 606, Revenue from Contracts with Customers, requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. 

The table below presents detailed information on the Company’s recognition of revenue from contracts with customers as well as revenues from financial instruments, which are outside the scope of Topic 606, by major types of services for the periods indicated.

 

  

Three Months Ended

March 31,

 
   2025   2024 
Revenues from Contracts with Customers        
Principal transactions and proprietary trading        
Riskless principal transactions with customers  $3,740,000   $3,562,000 
           
Commissions and fees          
Brokerage commissions   1,543,000    1,892,000 
Distribution fees   357,000    325,000 
Insurance commissions   202,000    82,000 
           
Stock borrow / stock loan          
Retail fees (rebates)   6,000    (9,000)
Stock locate services   4,032,000    3,598,000 
           
Other income          
Administrative fees   528,000    342,000 
Payment for order flow   246,000    295,000 
Other commissions   
—
    (9,000)
           
Advisory fees   748,000    490,000 
           
Total Revenues from contracts with customers  $11,402,000   $10,568,000 
           
Revenue outside the scope of Topic 606          
Principal transactions and proprietary trading          
Proprietary trading   (12,000)   (56,000)
Principal transactions - equity investment   9,233,000    
—
 
           
Interest, marketing and distribution fees          
Margin interest   3,395,000    3,976,000 
Interest income   3,050,000    4,281,000 
Marking and distribution fees   500,000    506,000 
           
Stock borrow / stock loan          
Stock rebate revenue   799,000    509,000 
           
Market making   552,000    672,000 
           
Total Revenue Outside the Scope of Topic 606   17,517,000    9,888,000 
           
Total Revenue  $28,919,000   $20,456,000