Documentation and Entity Inform
Documentation and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 07, 2018 | |
Entity Registrant Name | Interactive Brokers Group, Inc. | |
Entity Central Index Key | 1,381,197 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Fiscal Year Focus | 2,018 | |
Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Common Class A | ||
Common Stock Shares Outstanding | 75,084,350 | |
Common Class B | ||
Common Stock Shares Outstanding | 100 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 2,500 | $ 1,732 |
Cash - segregated for regulatory purposes | 7,686 | 6,547 |
Securities - segregated for regulatory purposes | 13,368 | 13,685 |
Securities borrowed | 3,588 | 2,957 |
Securities purchased under agreements to resell | 533 | 2,035 |
Financial instruments owned, at fair value: | ||
Financial instruments owned | 1,841 | 1,950 |
Financial instruments owned and pledged as collateral | 247 | 1,204 |
Total financial instruments owned, at fair value | 2,088 | 3,154 |
Receivables: | ||
Customers, less allowance for doubtful accounts of $41 and $40 as of June 30, 2018 and December 31, 2017 | 28,970 | 29,821 |
Receivables from brokers, dealers and clearing organizations | 1,134 | 823 |
Interest receivable | 117 | 116 |
Total receivables | 30,221 | 30,760 |
Other assets | 319 | 292 |
Total assets | 60,303 | 61,162 |
Liabilities and equity | ||
Short-term borrowings | 193 | 15 |
Securities loaned | 4,091 | 4,444 |
Securities sold under agreements to repurchase | 1,316 | |
Financial instruments sold, not yet purchased, at fair value | 630 | 767 |
Payables: | ||
Payables to customers | 48,239 | 47,548 |
Payables to brokers, dealers and clearing organizations | 100 | 283 |
Payable to affiliate | 159 | 187 |
Accounts payable, accrued expenses and other liabilities | 162 | 147 |
Interest payable | 29 | 22 |
Total payables | 48,689 | 48,187 |
Total liabilities | 53,603 | 54,729 |
Stockholders' equity: | ||
Additional paid-in capital | 865 | 832 |
Retained earnings | 323 | 251 |
Accumulated other comprehensive income, net of income taxes of $0 and $1 as of June 30, 2018 and December 31, 2017 | (3) | 9 |
Treasury stock, at cost, 129,448 and 133,294 shares as of June 30, 2018 and December 31, 2017 | (3) | (3) |
Total stockholders' equity | 1,183 | 1,090 |
Noncontrolling interests | 5,517 | 5,343 |
Total equity | 6,700 | 6,433 |
Total liabilities and stockholders' equity | 60,303 | 61,162 |
Common Class A | ||
Stockholders' equity: | ||
Common stock | 1 | 1 |
Common Class B | ||
Stockholders' equity: | ||
Common stock |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Allowance for doubtful accounts | $ 41 | $ 40 |
Accumulated Other Comprehensive Income, Tax | $ 0 | $ 1 |
Treasury stock shares | 129,448 | 133,294 |
Common Class A | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 73,674,391 | 71,609,049 |
Common stock, shares outstanding | 73,544,943 | 71,475,755 |
Common Class B | ||
Shares authorized | 100 | 100 |
Common stock, shares issued | 100 | 100 |
Common stock, shares outstanding | 100 | 100 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Commissions | $ 185 | $ 160 | $ 405 | $ 314 |
Interest income | 333 | 206 | 644 | 383 |
Trading gains | 12 | 13 | 25 | 15 |
Other income | 23 | 59 | 100 | 135 |
Total revenues | 553 | 438 | 1,174 | 847 |
Interest expense | 108 | 51 | 202 | 86 |
Total net revenues | 445 | 387 | 972 | 761 |
Non-interest expenses: | ||||
Execution and clearing | 66 | 63 | 139 | 124 |
Employee compensation and benefits | 68 | 66 | 138 | 128 |
Occupancy, depreciation and amortization | 11 | 10 | 23 | 23 |
Communications | 7 | 7 | 13 | 15 |
General and administrative | 22 | 36 | 45 | 52 |
Customer bad debt | 1 | 3 | 2 | |
Total non-interest expenses | 174 | 183 | 361 | 344 |
Income before income taxes | 271 | 204 | 611 | 417 |
Income tax expense | 13 | 17 | 34 | 35 |
Net income | 258 | 187 | 577 | 382 |
Less net income attributable to noncontrolling interests | 217 | 164 | 490 | 335 |
Net income available for common stockholders | $ 41 | $ 23 | $ 87 | $ 47 |
Earnings per share: | ||||
Basic | $ 0.57 | $ 0.33 | $ 1.21 | $ 0.68 |
Diluted | $ 0.57 | $ 0.32 | $ 1.20 | $ 0.67 |
Weighted average common shares outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 72,476,729 | 69,087,853 | 71,979,104 | 68,539,526 |
Weighted Average Number of Shares Outstanding, Diluted | 73,329,496 | 70,063,427 | 72,923,744 | 69,613,567 |
Comprehensive income: | ||||
Net income available for common stockholders | $ 41 | $ 23 | $ 87 | $ 47 |
Other comprehensive income: | ||||
Cumulative translation adjustment, before income taxes | (14) | 6 | (13) | 10 |
Income taxes related to items of other comprehensive income | (1) | (1) | ||
Other comprehensive income (loss), net of tax | (13) | 6 | (12) | 10 |
Comprehensive income available for common stockholders | 28 | 29 | 75 | 57 |
Comprehensive income attributable to noncontrolling interests: | ||||
Net income attributable to noncontrolling interests | 217 | 164 | 490 | 335 |
Other comprehensive income - cumulative translation adjustment | (65) | 31 | (58) | 50 |
Comprehensive income attributable to noncontrolling interests | $ 152 | $ 195 | $ 432 | $ 385 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 577 | $ 382 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Deferred income taxes | 11 | 15 |
Depreciation and amortization | 12 | 12 |
Employee stock plan compensation | 29 | 25 |
Unrealized (gain) loss on other investments, net | (2) | (1) |
Bad debt expense | 3 | 2 |
Impairment loss | 1 | 21 |
Change in operating assets and liabilities: | ||
Securities - segregated for regulatory purposes | 317 | 1,116 |
Securities borrowed | (631) | (266) |
Securities purchased under agreements to resell | 1,502 | (255) |
Financial instruments owned, at fair value | 1,068 | 1,464 |
Receivables from customers | 848 | (3,426) |
Other receivables | (312) | (126) |
Other assets | (14) | 5 |
Securities loaned | (353) | (661) |
Securities sold under agreement to repurchase | (1,316) | |
Financial instruments sold but not yet purchased, at fair value | (137) | (1,171) |
Payable to customers | 691 | 4,219 |
Other payables | (162) | 231 |
Net cash provided by operating activities | 2,132 | 1,586 |
Cash flows from investing activities: | ||
Purchases of other investments | (21) | |
Purchase of property and equipment | (15) | (10) |
Net cash used in investing activities | (36) | (10) |
Cash flows from financing activities: | ||
Short-term borrowings, net | 178 | (65) |
Dividends paid to stockholders | (14) | (14) |
Distributions to noncontrolling interests | (250) | (82) |
Repurchases of common stock for employee tax withholding under stock incentive plans | (45) | (21) |
Proceeds from sales of treasury stock | 40 | 21 |
Payments made under the Tax Receivable Agreement | (28) | |
Net cash used in financing activities | (119) | (161) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (70) | 61 |
Net increase in cash, cash equivalents, and restricted cash | 1,907 | 1,476 |
Cash, cash equivalents, and restricted cash at beginning of period | 8,279 | 7,549 |
Cash, cash equivalents, and restricted cash at end of period | 10,186 | 9,025 |
Cash, cash equivalents, and restricted cash | ||
Cash, cash equivalents, and restricted cash | 8,279 | 7,549 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 195 | 77 |
Cash paid for taxes, net | 26 | 17 |
Non-cash financing activities: | ||
Adjustments to additional paid-in capital for changes in proportionate ownership in IBG LLC | 28 | 28 |
Adjustments to noncontrolling interests for changes in proportionate ownership in IBG LLC | $ (28) | $ (28) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Millions | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] | Total Stockholders' Equity [Member] | Non-controlling Interests [Member] | Total |
Balance at Dec. 31, 2016 | $ 1 | $ 775 | $ (3) | $ 203 | $ (2) | $ 974 | $ 4,846 | $ 5,820 |
Common stock, shares issued at Dec. 31, 2016 | 68,119,412 | |||||||
Common Stock distributed pursuant to stock incentive plans (in shares) | 2,265,002 | |||||||
Compensation for stock grants vesting in the future | 4 | 4 | 21 | 25 | ||||
Repurchase of common stock for employee tax withholding under stock incentive plans | (21) | (21) | (21) | |||||
Sales of treasury stock | 21 | 21 | 21 | |||||
Dividends paid to stockholders | (14) | (14) | (14) | |||||
Distributions from IBG LLC to noncontrolling interests | (82) | (82) | ||||||
Adjustments for changes in proportionate ownership in IBG LLC | 28 | 28 | (28) | |||||
Comprehensive Income | 47 | 10 | 57 | 385 | 442 | |||
Balance at Jun. 30, 2017 | $ 1 | 807 | (3) | 236 | 8 | 1,049 | 5,142 | 6,191 |
Common stock, shares issued at Jun. 30, 2017 | 70,384,414 | |||||||
Balance at Dec. 31, 2017 | $ 1 | 832 | (3) | 251 | 9 | 1,090 | 5,343 | 6,433 |
Common stock, shares issued at Dec. 31, 2017 | 71,609,049 | |||||||
Common Stock distributed pursuant to stock incentive plans (in shares) | 2,065,342 | |||||||
Compensation for stock grants vesting in the future | 5 | 5 | 24 | 29 | ||||
Repurchase of common stock for employee tax withholding under stock incentive plans | (45) | (45) | (45) | |||||
Sales of treasury stock | 45 | (1) | 44 | (4) | 40 | |||
Dividends paid to stockholders | (14) | (14) | (14) | |||||
Distributions from IBG LLC to noncontrolling interests | (250) | (250) | ||||||
Adjustments for changes in proportionate ownership in IBG LLC | 28 | 28 | (28) | |||||
Comprehensive Income | 87 | (12) | 75 | 432 | 507 | |||
Balance at Jun. 30, 2018 | $ 1 | $ 865 | $ (3) | $ 323 | $ (3) | $ 1,183 | $ 5,517 | $ 6,700 |
Common stock, shares issued at Jun. 30, 2018 | 73,674,391 |
Organization Of Business
Organization Of Business | 6 Months Ended |
Jun. 30, 2018 | |
Organization Of Business [Abstract] | |
Organization Of Business | 1. Organization of Business Interactive Brokers Group, Inc. (“IBG, Inc.”) is a Delaware holding company whose primary asset is its ownership of approximately 17.8% of the membership interests of IBG LLC, which, in turn, owns operating subsidiaries (collectively, “IBG LLC”). IBG, Inc. together with IBG LLC and its consolidated subsidiaries (collectively, “the Company”), is an automated global electronic broker specializing in executing and clearing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on more than 120 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers. In the United States of America (“U.S.”), the Company conducts its business primarily from its headquarters in Greenwich, Connecticut and from Chicago, Illinois. Abroad, the Company conducts its business through offices located in Canada, the United Kingdom , Switzerland, India, China (Hong Kong and Shanghai), Japan, and Australia. As of June 30, 2018 , the Company had 1,310 employees worldwide. IBG LLC is a Connecticut limited liability company that conducts its business through its operating subsidiaries (collectively, the “Operating Companies”): Interactive Brokers LLC (“IB LLC”); Interactive Brokers (India) Private Limited (“IBI”); Timber Hill LLC (“TH LLC”); Timber Hill Canada Company (“THC”); Interactive Brokers Software Services (India) Private Limited (“IBSSI”); IB Global Investments LLC (“IBGIL”); IB Exchange Corp. (“IBEC”) and its subsidiaries , Interactive Brokers Canada Inc. (“IBC”) , Interactive Brokers (U.K.) Limited and its subsidiary, Interactive Brokers (U.K.) Nominee Limited (collectively, “IBUK”) , Interactive Brokers Securities Japan, Inc. (“IBSJ”) , Interactive Brokers Hong Kong Limited (“IBHK”) , Interactive Brokers Australia Pty Limited and its subsidiary, Interactive Brokers Australia Nominees Pty Limited (collectively, “IBA”) , IB Business Services (Shanghai) Company Limited (“IBBSS”), Timber Hill Europe AG and its subsidiary, Timber Hill (Liechtenstein) AG (collectively, “THE”) , Interactive Brokers Hungary KFT (“IBH”) , Interactive Brokers Software Services Estonia OU (“IBEST”) , Interactive Brokers Software Services Russia (“IBRUS”) , Interactive Brokers Corp. (“IB Corp”), Covestor, Inc. and its subsidiary, Covestor Limited (collectively, “Covestor”) , and Greenwich Advisor Compliance Services Corp . (“Greenwich Compliance”). The Company operates in two business segments: electronic brokerage and market making, both supported by corporate. The Company conducts its electronic brokerage business through certain Interactive Brokers subsidiaries, which provide electronic execution and clearing services to customers worldwide. The Company conducts its market making business principally through its Timber Hill subsidiaries and it currently consists of customer facilitation in products such as CFDs, ETFs and single stock futures, as well as exchange traded market making activities in a few select markets outside the U.S. (See Note 2 – Discontinued Operations and Costs Associated with Exit or Disposal Activities.) Corporate enables the Company to operate cohesively and effectively by providing support via development services and control functions to the business segments and also by executing the Company’s currency diversification strategy. Certain of the Operating Companies are members of various securities and commodities exchanges in North America, Europe and the Asia/Pacific region and are subject to regulatory capital and other requirements (see Note 14 ). IB LLC, IBC, IBUK, IBSJ, IBHK, IBI and IBA carry securities accounts for customers or perform custodial functions relating to customer securities. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Basis of Presentation These condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10 ‑Q. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on March 1, 2018. The condensed consolidated financial information as of December 31, 2017 has been derived from the audited consolidated financial statements not included herein. These condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the periods presented. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. Principles of Consolidation, including Noncontrolling Interests These condensed consolidated financial statements include the accounts of IBG, Inc. and its majority and wholly owned subsidiaries. As sole managing member of IBG LLC, IBG, Inc. exerts control over IBG LLC’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “ Consolidation, ” the Company consolidates IBG LLC’s financial statements and records the interests in IBG LLC that it does not own as noncontrolling interests. The Company’s policy is to consolidate all other entities in which it owns more than 50% unless it does not have control. All inter ‑company balances and transactions have been eliminated. Condensed Consolidated Statements of Cash Flows and Financial Condition Presentation Changes On January 1, 2018, the Company adopted FASB Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash” (“ASU 2016-18”). This accounting update requires an entity to include in its cash and cash equivalents amounts that are deemed to be restricted cash and to present a reconciliation of such amounts in the statement of cash flows. Restricted cash represents cash and cash equivalents that are subject to withdrawal or usage restrictions. For purposes of the condensed consolidated statements of cash flows, cash, cash equivalents, and restricted cash consist of “cash and cash equivalents” and “cash – segregated for regulatory purposes.” ASU 2016-18 also requires prior periods to be retrospectively adjusted to conform to the current period presentation. Upon adoption, the Company recorded an increase of $1,286 million in net cash provided by operating activities, for the six months ended June 30, 2017 to reflect the reclassification of changes in restricted cash balances from the operating section to the cash, cash equivalent, and restricted cash balances within the condensed consolidated statements of cash flows. In addition, the Company reclassified restricted cash amounts previously included within “cash and securities – segregated for regulatory purposes” into a separate line item, “cash – segregated for regulatory purposes,” in the condensed consolidated statements of financial condition to be consistent with the presentation of restricted cash in the condensed consolidated statements of cash flows under ASU 2016-18. Previously reported amounts in the condensed consolidated statements of financial condition and notes to the condensed consolidated financial statements have been adjusted to conform to the current presentation . Discontinued Operations and Costs Associated with Exit or Disposal Activities On March 8, 2017, the Company announced its intention to discontinue its options market making activities globally. Additionally, as previously announced, on September 29, 2017 the Company completed the transfer of its U.S. options market making operations to Two Sigma Securities, LLC. The Company also exited the majority of its market making activities outside of the U.S. by December 31, 2017 and expects to report discontinued operations when it meets the criteria under FASB Topic ASC 205-20, “Discontinued Operations.” The Company recognized approximately $25 million in one-time restructuring costs during the year ended December 31, 2017. The one-time restructuring costs included approximately $22 million of non-cash expenditures, consisting of impairment of the carrying value of certain exchange trading rights and stock-based compensation and $3 million of cash expenditures primarily related to severance costs for employee terminations. During the six months ended June 30, 2018, the Company did no t incur any additional restructuring costs. During the six months ended June 30, 2017, the Company recorded restructuring costs of approximately $21 million for the impairment of exchange trading rights, included in general and administrative expenses and approximately $2 million in severance costs resulting from obligations related to employment terminations, included in employee compensation and benefits in the condensed consolidated statements of comprehensive income. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these condensed consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for doubtful accounts, valuation of certain investments, compensation accruals, current and deferred income taxes, costs associated with exit or disposal activities, and contingency reserves. Fair Value Substantially all of the Company’s assets and liabilities, including financial instruments are carried at fair value based on published market prices and are marked to market, or are assets and liabilities which are short ‑term in nature and are carried at amounts that approximate fair value. The Company applies the fair value hierarchy in accordance with FASB ASC Topic 820, “ Fair Value Measurement” (“ASC Topic 820”) , to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices for similar assets in an active market, quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly. Level 3 Prices or valuations that require inputs that are both significant to fair value measurement and unobservable. Financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are generally classified as Level 1 of the fair value hierarchy. The Company’s Level 1 financial instruments, which are valued using quoted market prices as published by exchanges and clearing houses or otherwise broadly distributed in active markets, include active listed stocks, options, warrants and discount certificates, and U.S. and foreign government securities. The Company does not adjust quoted prices for financial instruments classified as Level 1 of the fair value hierarchy, even in the event that the Company may hold a large position whereby a purchase or sale could reasonably impact quoted prices. Currency forward contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. Other securities that are not traded in active markets are also classified as Level 2 of the fair value hierarchy. Level 3 financial instruments are comprised of securities that have been delisted or otherwise are no longer tradable in active markets and have been valued by the Company based on internal estimates. Earnings per Share Earnings per share (“EPS”) is computed in accordance with FASB ASC Topic 260, “ Earnings per Share .” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s stock-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares. Stock ‑Based Compensation The Company follows FASB ASC Topic 718, “ Compensation - Stock Compensation” (“ASC Topic 718”) , to account for its stock ‑based compensation plans. ASC Topic 718 requires all share ‑based payments to employees to be recognized in the condensed consolidated financial statements using a fair value ‑based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50% in the year of grant in recognition of the plans’ post-employment provisions (as described below) and the remaining 50% over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100% of awards are expensed when granted. Awards granted under stock ‑based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with the Company. The plans provide that employees who discontinue employment with the Company without cause and continue to meet the terms of the plans’ post ‑employment provisions will be eligible to earn 50% of previously granted but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100% of previously granted but not yet earned awards. Cash and Cash Equivalents Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing houses. Cash and Securities - Segregated for Regulatory Purposes As a result of customer activities, certain Operating Companies are obligated by rules mandated by their primary regulators to segregate or set aside cash or qualified securities to satisfy such regulations, which have been promulgated to protect customer assets. Securities segregated for regulatory purposes consisted of U.S. government securities of $4.4 billion and $4.5 billion as of June 30 , 2018 and December 31, 2017, respectively, and securities purchased under agreements to resell in the amount of $9.0 billion and $9.2 billion as of June 30 , 2018 and December 31, 2017, respectively, which amounts approximate fair value. Securities Borrowed and Securities Loaned Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Company to provide counterparties with collateral, which may be in the form of cash, letters of credit or other securities. With respect to securities loaned, the Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities borrowed and securities loaned entered into with the same counterparty that meet the offsetting requirements prescribed in FASB ASC Topic 210-20, “Balance Sheet – Offsetting” (“ASC Topic 210-20”). Securities lending fees received and paid by the Company are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income. Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase Securities purchased under agreements to resell and securities sold under agreements to repurchase, which are reported as collateralized financing transactions, are recorded at contract value, which approximates fair value. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities purchased under agreements to resell transactions and securities sold under agreements to repurchase transactions entered into with the same counterparty that meet the offsetting requirements prescribed in ASC Topic 210-20. Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased, at Fair Value Financial instrument transactions are accounted for on a trade date basis. Financial instruments owned and financial instruments sold, but not yet purchased are stated at fair value based upon quoted market prices, or if not available, are valued by the Company based on internal estimates (see Fair Value above). The Company’s financial instruments pledged to counterparties where the counterparty has the right, by contract or custom, to sell or repledge the financial instruments are reported as financial instruments owned and pledged as collateral in the condensed consolidated statements of financial condition. Customer Receivables and Payables Customer securities transactions are recorded on a settlement date basis and customer commodities transactions are recorded on a trade date basis. Receivables from and payables to customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. Securities owned by customers, including those that collateralize margin loans or other similar transactions, are not reported in the condensed consolidated statements of financial condition. Amounts receivable from customers that are determined by management to be uncollectible are recorded as customer bad debt expense in the condensed consolidated statements of comprehensive income. Receivables from and Payables to Brokers, Dealers and Clearing Organizations Receivables from and payables to brokers, dealers and clearing organizations include net receivables and payables from unsettled trades, including amounts related to futures and options on futures contracts executed on behalf of customers, amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“fails to deliver”) and cash deposits. Payables to brokers, dealers and clearing organizations also include amounts payable for securities not received by the Company from a seller by the settlement date (“fails to receive”). Investments The Company makes certain strategic investments related to its business and accounts for these investments (a) under the equity method of accounting as required under FASB ASC Topic 323, “ Investments - Equity Method and Joint Ventures ” or (b) at fair value or, if the investment in equity securities does not have a readily determinable fair value, at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer in accordance with FASB ASC Topic 321, “Investments in Equity Securities.” Investments accounted for under the equity method, including where the investee is a limited partnership or limited liability company, are recorded at the fair value amount of the Company’s initial investment and are adjusted each period for the Company’s share of the investee’s income or loss. The Company’s share of the income or losses from equity method investments is included in other income in the condensed consolidated statements of comprehensive income. The recorded amounts of the Company’s equity method investments, $23 million as of June 30 , 2018 ( $ 23 million as of December 31, 2017), which are included in other assets in the condensed consolidated statements of financial condition, increase or decrease accordingly. Contributions paid to and distributions received from equity method investees are recorded as additions or reductions, respectively, to the respective investment balance. Investments in equity securities that do not qualify for equity method accounting are recorded at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The recorded amounts of the Company’s investments in such equity securities, $26 million as of June 30 , 2018 ( $5 million as of December 31, 2017) are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received. The Company also holds exchange memberships and investments in equity securities of certain exchanges, as required to qualify as a clearing member. Such investments, $5 million as of June 30 , 2018 ( $6 million as of December 31, 2017), are recorded at cost less impairment, and are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received. A judgmental aspect of accounting for investments is evaluating whether a decline in the value of an investment has occurred. The evaluation of an impairment is dependent on specific quantitative and qualitative factors and circumstances surrounding an investment, including recurring operating losses, credit defaults and subsequent rounds of financing. The Company’s equity investments do not have readily determinable market values. All investments are reviewed for changes in circumstances or occurrence of events that suggest the Company’s investment may not be recoverable. An impairment loss, if any, is recognized in the period the determination is made . Property, Equipment, and Intangible Assets Property, equipment, and intangible assets, which are included in other assets in the condensed consolidated statements of financial condition, consist of leasehold improvements, computer equipment, software developed for the Company’s internal use, office furniture, equipment and acquired technology . Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight ‑line method. Equipment is depreciated over the estimated useful lives of the assets, while leasehold improvements are amortized over the lesser of the estimated economic useful life of the asset or the term of the lease. Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years. Intangible assets with a finite life are amortized on a straight line basis over their estimated useful lives of three years, and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the condensed consolidated statements of financial condition and any resulting gain or loss is recorded in other income in the condensed consolidated statements of comprehensive income. Fully depreciated (or amortized) assets are retired on an annual basis. Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “ Comprehensive Income. ” Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Company’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of non-U.S. subsidiaries , net of related income taxes, where applicable. In general, the practice and intention of the Company is to reinvest the earnings of its non ‑U.S. subsidiaries in those operations, therefore tax is usually not accrued on OCI. The Company’s non ‑U.S. domiciled subsidiaries have a functional currency that is other than the U.S. dollar. Such subsidiaries’ assets and liabilities are translated into U.S. dollars at period ‑end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the U.S. dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the condensed consolidated statements of financial condition. During the three months ended June 30, 2018, the Company liquidated its Australian subsidiary, Timber Hill Australia Pty Limited, and accordingly reclassified the accumulated OCI of $32 million to other income and the related accumulated tax effect of $1 million to income tax expense in the condensed consolidated statements of comprehensive income . Revenue Recognition Commissions Commissions earned for executing and/or clearing transactions are accrued on a trade date basis and are reported as commissions in the condensed consolidated statements of comprehensive income. See Note 8 for further information on revenue from contracts with customers. Interest Income and Expense The Company earns interest income and incurs interest expense primarily in connection with its electronic brokerage customer business and its securities lending activities, which are recorded on an accrual basis and are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income. Trading Gains Trading gains and losses are recorded on trade date and are reported on a net basis. Trading gains and losses are comprised of changes in the fair value of financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value (i.e., unrealized gains and losses) and realized gains and losses related to the Company’s market making business segment. Included in trading gains are net gains and losses on stocks, U.S. and foreign government securities, options, futures, foreign exchange and other derivative instruments. Dividends are integral to the valuation of stocks and interest is integral to the valuation of fixed income instruments. Accordingly, both dividends and interest income and expense attributable to financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are reported on a net basis in trading gains in the condensed consolidated statements of comprehensive income. Foreign Currency Gains and Losses Foreign currency balances are assets and liabilities in currencies other than the Company’s functional currency. At every reporting date, the Company revalues its foreign currency balances to its functional currency at the spot exchange rate and records the associated foreign currency gains and losses. These foreign currency gains and losses are reported in the condensed consolidated statements of comprehensive income, as follows: (a) foreign currency gains and losses related to the Company’s currency diversification strategy are reported in other income; (b) foreign currency gains and losses related to the market making core-business activities are reported in trading gains; (c) foreign currency gains and losses arising from currency swap transactions in the electronic brokerage business are reported in interest income; and (d) all other foreign currency gains and losses are reported in other income . R ebates Rebates consist of volume discounts, credits or payments received from exchanges or other market centers related to the placement and/or removal of liquidity from the order flow in the marketplace and are recorded on an accrual basis. Rebates are recorded net within execution and clearing expenses in the condensed consolidated statements of comprehensive income. Rebates received for trades executed on behalf of customers that elect tiered pricing are passed, in whole or part, to these customers; and such pass-through amounts are recorded net within commissions in the condensed consolidated statements of comprehensive income. Income Taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, “ Income Taxes” (“ASC Topic 740”) . The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws (see Note 11) and reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgments and estimates. Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statements recognition of underlying assets and liabilities. In evaluating the ability to recover deferred tax assets within the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax ‑planning strategies, and results of recent operations. In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax ‑planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested. The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, significantly revising the U.S corporate income tax law by, among other things, reducing the corporate income tax rate from 35% to 21% and implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries (see Note 11). The Company records tax liabilities in accordance with ASC Topic 740 and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available. The Company recognizes a tax benefit from an uncertain tax position only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. The Company recognizes interest related to income tax matters as interest income or interest expense and penalties related to income tax matters as income tax expense in the condensed consolidated statements of comprehensive income. Recently Issued Accounting Pronouncements Following is a summary of recently issued FASB Accounting Standards Updates (“ASUs”) that have affected or may affect the Company’s condensed consolidated financial statements : Affects Status ASU 2016-02 Leases (Topic 842) : Requires the recognition of a right-of-use asset and a lease liability for leases previously classified as operating lease in the statements of financial condition. Effective for fiscal years beginning after December 15, 2018. ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Effective for fiscal years beginning after December 15, 2019. ASU 2017-04 Intangibles - Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment. Effective for fiscal years beginning after December 15, 2019. ASU 2017-08 Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): A mending the amortization period for certain purchased callable debt securities held at a premium. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. ASU 2017-11 Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): changing the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. ASU 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. ASU 2018-02 Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Effective for fiscal years and first interim periods beginning after December 15, 2018. ASU 2018-03 Technical Correction and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018. ASU 2018-07 Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. ASU 2018-08 Not for Profit Entities (Topic 958) and Other Expenses - Contributions (Topic 720): Clarifying the Scope and the Accounting for Contributions Received and Contributions Made. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Ado |
Trading Activities And Related
Trading Activities And Related Risks | 6 Months Ended |
Jun. 30, 2018 | |
Trading Activities And Related Risks [Abstract] | |
Trading Activities And Related Risks | 3. Trading Activities and Related Risks The Company’s trading activities include providing securities brokerage and market making services. Trading activities expose the Company to market and credit risks. These risks are managed in accordance with established risk management policies and procedures. To accomplish this, management has established a risk management process that includes: • a regular review of the risk management process by executive management as part of its oversight role; • defined risk management policies and procedures supported by a rigorous analytic framework; and • articulated risk tolerance levels as defined by executive management that are regularly reviewed to ensure that the Company’s risk ‑taking is consistent with its business strategy, capital structure, and current and anticipated market conditions. Market Risk The Company is exposed to various market risks. Exposures to market risks arise from equity price risk, foreign currency exchange rate fluctuations and changes in interest rates. The Company seeks to mitigate market risk associated with trading inventories by employing hedging strategies that correlate rate, price and spread movements of trading inventories and related financing and hedging activities. The Company uses a combination of cash instruments and exchange traded derivatives to hedge its market exposures. The Company does not apply hedge accounting. The following discussion describes the types of market risk faced: Equity Price Risk Equity price risk arises from the possibility that equity security prices will fluctuate, affecting the value of equity securities and other instruments that derive their value from a particular stock, a defined basket of stocks, or a stock index. The Company is subject to equity price risk primarily in financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value. The Company attempts to limit such risks by continuously reevaluating prices and by diversifying its portfolio across many different options, futures and underlying securities and avoiding concentrations of positions based on the same underlying security. Currency Risk Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact the value of financial instruments. The Company manages this risk using spot (i.e., cash) currency transactions, currency futures contracts and currency forward contracts. As a global electronic broker and market maker trading on exchanges around the world in multiple currencies, the Company is exposed to foreign currency risk. The Company actively manages its currency exposure using a currency diversification strategy that is based on a defined basket of 14 currencies internally referred to as the “GLOBAL.” These strategies minimize the fluctuation of the Company’s net worth as expressed in GLOBALs, thereby diversifying its risk in alignment with these global currencies, weighted by the Company’s view of their importance. As the Company’s financial results are reported in U.S. dollars, the change in the value of the GLOBAL as expressed in U.S. dollars affects the Company’s earnings. The impact of this currency diversification strategy in the Company’s earnings is included in other income in the condensed consolidated statements of comprehensive income. In light of the Company’s decision to discontinue its options market making activities globally, the Company removed the Singapore dollar (SGD) and realigned the relative weight of the U.S. dollar (USD) versus the other currency components to better reflect its businesses going forward. The new composition went into effect as of the close of business on March 31, 2017. Interest Rate Risk Interest rate risk arises from the possibility that changes in interest rates will affect the value of financial instruments. The Company is exposed to interest rate risk on cash and margin balances, positions carried in equity and fixed income securities, options, futures and on its borrowings. These risks are managed through investment policies and by entering into interest rate futures contracts. Credit Risk The Company is exposed to risk of loss if a customer, counterparty or issuer fails to perform its obligations under contractual terms (“default risk”). Both cash instruments and derivatives expose the Company to default risk. The Company has established policies and procedures for mitigating credit risk on principal transactions, including reviewing and establishing limits for credit exposure, maintaining collateral, and continually assessing the creditworthiness of counterparties. The Company’s credit risk is limited in that substantially all of the contracts entered into are settled directly at securities and commodities clearing houses and a small portion is settled through member firms and banks with substantial financial and operational resources. The Company seeks to control the risks associated with its customer margin activities by requiring customers to maintain collateral in compliance with regulatory and internal guidelines. In the normal course of business, the Company executes, settles, and finances various customer securities transactions. Execution of these transactions includes the purchase and sale of securities which exposes the Company to default risk arising from the potential that customers or counterparties may fail to satisfy their obligations. In these situations, the Company may be required to purchase or sell financial instruments at unfavorable market prices to satisfy obligations to customers or counterparties. Liabilities to other brokers and dealers related to unsettled transactions (i.e., securities fails to receive) are recorded at the amount for which the securities were purchased, and are paid upon receipt of the securities from other brokers or dealers. In the case of aged securities fails to receive, the Company may purchase the underlying security in the market and seek reimbursement for any losses from the counterparty. For cash management purposes, the Company enters into short ‑term securities purchased under agreements to resell and securities sold under agreements to repurchase transactions (“repos”) in addition to securities borrowing and lending arrangements, all of which may result in credit exposure in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Repos are collateralized by securities with a market value in excess of the obligation under the contract. Similarly, securities lending agreements are collateralized by deposits of cash or securities. The Company attempts to minimize credit risk associated with these activities by monitoring collateral values on a daily basis and requiring additional collateral to be deposited with or returned to the Company as permitted under contractual provisions. Concentrations of Credit Risk The Company’s exposure to credit risk associated with its trading and other activities is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. Concentrations of credit risk can be affected by changes in political, industry, or economic factors. To reduce the potential for risk concentration, credit limits are established and exposure is monitored in light of changing counterparty and market conditions. As of June 30, 2018, the Company did not have any material concentrations of credit risk outside the ordinary course of business. Off ‑Balance Sheet Risks The Company may be exposed to a risk of loss not reflected in the condensed consolidated financial statements to settle futures and certain over ‑the ‑counter contracts at contracted prices, which may require repurchase or sale of the underlying products in the market at prevailing prices. Accordingly, these transactions result in off ‑balance sheet risk as the Company’s cost to liquidate such contracts may exceed the amounts reported in the Company’s condensed consolidated statements of financial condition. |
Equity And Earnings Per Share
Equity And Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Equity And Earnings Per Share [Abstract] | |
Equity And Earnings Per Share | 4. Equity and Earnings p er Share In connection with IBG, Inc.’s initial public offering of Class A common stock (“IPO”) in May 2007, it purchased 10.0% of the membership interests in IBG LLC from IBG Holdings LLC (“Holdings”), became the sole managing member of IBG LLC and began to consolidate IBG LLC’s financial results into its financial statements. Holdings owns all of IBG, Inc.’s Class B common stock, which has voting rights in proportion to its ownership interests in IBG LLC . The table below shows the amount of IBG LLC membership interests held by IBG, Inc. and Holdings as of June 30 , 2018. IBG, Inc. Holdings Total Ownership % 17.8% 82.2% 100.0% Membership interests 73,544,946 340,229,444 413,774,390 These condensed consolidated financial statements reflect the results of operations and financial position of IBG, Inc., including consolidation of its investment in IBG LLC and its subsidiaries. The noncontrolling interests in IBG LLC attributable to Holdings are reported as a component of total equity in the condensed consolidated statements of financial condition. Recapitalization and Post ‑IPO Capital Structure Immediately prior to and immediately following the consummation of the IPO, IBG, Inc., Holdings, IBG LLC and the members of IBG LLC consummated a series of transactions collectively referred to herein as the “Recapitalization.” In connection with the Recapitalization, IBG, Inc., Holdings and the historical members of IBG LLC entered into an exchange agreement, dated as of May 3, 2007 (the “Exchange Agreement”), pursuant to which the historical members of IBG LLC received membership interests in Holdings in exchange for their membership interests in IBG LLC. Additionally, IBG, Inc. became the sole managing member of IBG LLC. In connection with the consummation of the IPO, Holdings used the net proceeds to redeem 10.0% of members’ interests in Holdings in proportion to their interests. Immediately following the Recapitalization and IPO, Holdings owned approximately 90% of IBG LLC and 100% of IBG, Inc.’s Class B common stock, which has voting power in IBG, Inc. in proportion to Holdings’ ownership of IBG LLC. Since consummation of the IPO and Recapitalization, IBG, Inc.’s equity capital structure has been comprised of Class A and Class B common stock. All shares of common stock have a par value of $0.01 per share and have identical rights to earnings and dividends and in liquidation. As of June 30 , 2018 and December 31, 2017 , 1,000,000,000 shares of Class A common stock were authorized, of which 73,674,391 and 71,609,049 shares have been issued; and 73,544,943 and 71,475,755 shares were outstanding, respectively. Class B common stock is comprised of 100 authorized shares, of which 100 shares were issued and outstanding as of June 30 , 2018 and December 31, 2017 , respectively. In addition, 10,000 shares of preferred stock have been authorized, of which no shares are issued or outstanding as of June 30 , 2018 and December 31, 2017 , respectively. As a result of a federal income tax election made by IBG LLC applicable to the acquisition of IBG LLC member interests by IBG, Inc., the income tax basis of the assets of IBG LLC acquired by IBG, Inc. have been adjusted based on the amount paid for such interests. Deferred tax assets were recorded as of the IPO date and in connection with subsequent redemptions of Holdings member interests in exchange for common stock. These deferred tax assets are included in other assets in the Company’s condensed consolidated statements of financial condition and are being amortized as additional deferred income tax expense over 15 years from the IPO date and from the additional redemption dates, respectively, as allowable under current tax law. As of June 30 , 2018 and December 31, 2017 , the unamortized balance of these deferred tax assets was $137 million and $146 million, respectively. IBG, Inc. also entered into an agreement (the “Tax Receivable Agreement”) with Holdings to pay Holdings (for the benefit of the former members of IBG LLC) 85% of the tax savings that IBG, Inc. actually realizes as the result of tax basis increases. These payables to Holdings are reported as payable to affiliate in the Company’s condensed consolidated statements of financial condition. The remaining 15% is accounted for as a permanent increase to additional paid ‑in capital in the Company’s condensed consolidated statements of financial condition . The cumulative amounts of deferred tax assets, payables to Holdings and additional paid ‑in capital arising from stock offerings from the date of the IPO through June 30 , 2018 were $483 million, $410 million , and $73 million, respectively. Amounts payable under the Tax Receivable Agreement are payable to Holdings annually following the filing of IBG, Inc.’s federal income tax return. The Company has paid Holdings a cumulative total of $159 million through June 30 , 2018 pursuant to the terms of the Tax Receivable Agreement. The Exchange Agreement, as amended, provides for future redemptions of member interests and for the purchase of member interests in IBG LLC by IBG, Inc. from Holdings, which could result in IBG, Inc. acquiring the remaining member interests in IBG LLC that it does not own. On an annual basis, members of Holdings are able to request redemption of their interests. At the time of IBG, Inc.’s IPO in 2007, three hundred sixty (360) million shares of authorized common stock were reserved for future sales and redemptions. From 2008 through 2010, Holdings redeemed 5,013,259 IBG LLC interests with a total value of $114 million, which redemptions were funded using cash on hand at IBG LLC. Upon cash redemption these IBG LLC interests were retired. From 2011 through 2017, IBG, Inc. issued 13,858,355 shares of common stock (with a fair value of $410 million) directly to Holdings in exchange for an equivalent number of member interests in IBG LLC . As a consequence of these redemption transactions, and distribution of shares to employees (see Note 10 ), IBG, Inc. ’ s interest in IBG LLC has increased to approximately 17.8% , with Holdings owning the remaining 82.2% as of June 30 , 2018 . The redemptions also resulted in an increase in the Holdings interest held by Mr. Thomas Peterffy and his affiliates from approximately 84.6% at the IPO to approximately 89.2% as of June 30 , 2018 . On July 27, 2018, the Company filed a Prospectus Supplement on Form 424B5 (File Number 333-219552) with the SEC to issue 1, 537,727 , shares of common stock in exchange for an equivalent number of shares of member interests in IBG LLC. This issuance of shares increased the Company’s ownership in IBG LLC from 17.8% to 18.1 %. Earnings per Share Basic earnings per share is calculated utilizing net income available for common stockholders divided by the weighted average number of shares of Class A and Class B common stock outstanding for that period. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions, except share or per share amounts) Basic earnings per share Net income available for common stockholders $ 41 $ 23 $ 87 $ 47 Weighted average shares of common stock outstanding Class A 72,476,629 69,087,753 71,979,004 68,539,426 Class B 100 100 100 100 72,476,729 69,087,853 71,979,104 68,539,526 Basic earnings per share $ 0.57 $ 0.33 $ 1.21 $ 0.68 Diluted earnings per share are calculated utilizing the Company’s basic net income available for common stockholders divided by diluted weighted average shares outstanding with no adjustments to net income available to common stockholders for potentially dilutive common shares. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions, except share or per share amounts) Diluted earnings per share Net income available for common stockholders $ 41 $ 23 $ 87 $ 47 Weighted average shares of common stock outstanding Class A Issued and outstanding 72,476,629 69,087,753 71,979,004 68,539,426 Potentially dilutive common shares Issuable pursuant to employee stock incentive plans 852,767 975,574 944,640 1,074,041 Class B 100 100 100 100 73,329,496 70,063,427 72,923,744 69,613,567 Diluted earnings per share $ 0.57 $ 0.32 $ 1.20 $ 0.67 Member Distributions and Stockholder Dividends During the six months ended June 30 , 2018 , IBG LLC made distributions totaling $303 million , to its members, of which IBG, Inc. ’ s proportionate share was $53 million. In March and June 2018, t he Company paid quarterly cash dividends of $0.10 per share of c ommon s tock, totaling $7 million and $7 million, respectively . On July 17, 2018 , the Company declared a cash dividend of $0.10 per common share, payable on September 14, 2018 to stockholders of record as of August 31, 2018 . |
Comprehensive Income
Comprehensive Income | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income Detail [Abstract] | |
Comprehensive Income | 5. Comprehensive Income The following table presents comprehensive income and earnings per share on comprehensive income : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions, except share or per share amounts) Comprehensive income available for common stockholders $ 28 $ 29 $ 75 $ 57 Earnings per share on comprehensive income Basic $ 0.39 $ 0.42 $ 1.05 $ 0.83 Diluted $ 0.39 $ 0.41 $ 1.03 $ 0.81 Weighted average common shares outstanding Basic 72,476,729 69,087,853 71,979,104 68,539,526 Diluted 73,329,496 70,063,427 72,923,744 69,613,567 |
Financial Assets And Financial
Financial Assets And Financial Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Financial Assets And Financial Liabilities [Abstract] | |
Financial Assets And Financial Liabilities | 6. Financial Assets and Financial Liabilities Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables set forth, by level within the fair value hierarchy (see Note 2), financial assets and liabilities, measured at fair value on a recurring basis as of June 30 , 2018 and December 31, 2017 . As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement. Financial Assets At Fair Value as of June 30, 2018 Level 1 Level 2 Level 3 Total (in millions) Securities segregated for regulatory purposes $ 4,370 $ — $ — $ 4,370 Financial instruments owned, at fair value Stocks 712 — 1 713 Options 1,207 — — 1,207 Warrants and discount certificates 2 — — 2 U.S. and foreign government securities 156 — — 156 Corporate and municipal bonds — 1 3 4 Currency forward contracts — 6 — 6 Total financial instruments owned, at fair value 2,077 7 4 2,088 Total financial assets at fair value $ 6,447 $ 7 $ 4 $ 6,458 Financial Liabilities At Fair Value as of June 30, 2018 Level 1 Level 2 Level 3 Total (in millions) Financial instruments sold, but not yet purchased, at fair value Stocks $ 199 $ — $ — $ 199 Options 426 — — 426 Currency forward contracts — 5 — 5 Total financial instruments sold, but not yet purchased, at fair value 625 5 — 630 Total financial liabilities at fair value $ 625 $ 5 $ — $ 630 Financial Assets At Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total (in millions) Securities segregated for regulatory purposes $ 4,519 $ — $ — $ 4,519 Financial instruments owned, at fair value Stocks 2,000 — 1 2,001 Options 1,052 — — 1,052 Warrants and discount certificates 5 — — 5 U.S. and foreign government securities 60 — — 60 Corporate and municipal bonds — 1 3 4 Currency forward contracts — 32 — 32 Total financial instruments owned, at fair value 3,117 33 4 3,154 Total financial assets at fair value $ 7,636 $ 33 $ 4 $ 7,673 Financial Liabilities At Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total (in millions) Financial instruments sold, but not yet purchased, at fair value Stocks $ 302 $ — $ — $ 302 Options 464 — — 464 Currency forward contracts — 1 — 1 Total financial instruments sold, but not yet purchased, at fair value 766 1 — 767 Total financial liabilities at fair value $ 766 $ 1 $ — $ 767 Transfers between Level 1 and Level 2 Transfers of financial assets and financial liabilities at fair value to or from Levels 1 and 2 arise where the market for a specific financial instrument has become active or inactive during the period. The fair values transferred are ascribed as if the financial assets or financial liabilities had been transferred as of the end of the period. During the six months ended June 30, 2018 and 2017 , there were no transfers between levels for financial assets and liabilities, at fair value. Level 3 Financial Assets and Financial Liabilities The Company’s Level 3 financial assets are comprised of delisted and illiquid securities reported within financial instruments owned, at fair value in the condensed consolidated statements of financial condition. As of June 30, 2018, Level 3 financial assets included $1 million in stocks and $3 million in corporate and municipal bonds, which were not traded in active markets and were valued by the Company based on internal estimates . During the six months ended June 30 , 2018 and 2017, there were no transfers between levels for financial assets and liabilities, at fair value. Trading Gains from Market Making Transactions Trading gains and losses from market making transactions reported in the condensed consolidated statements of comprehensive income, by major product type, are comprised of : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions) Equities $ 12 $ 17 $ 25 $ 20 Foreign exchange — (4) — (5) Total trading gains, net $ 12 $ 13 $ 25 $ 15 These transactions are related to the Company’s financial instruments owned and financial instruments sold, but not yet purchased, at fair value and include both derivative and non ‑derivative financial instruments, including exchange traded options and futures. These gains and losses also include market making related dividend income and expense. Financial Assets and Liabilities Not Measured at Fair Value The following table s represent the carrying value, fair value, and fair value hierarchy category of certain financial assets and liabilities that are not recorded at fair value in the Company's condensed consolidated statements of financial condition. The following table excludes certain financial instruments such as equity investments and all non-financial assets and liabilities : June 30, 2018 Carrying Value Fair Value Level 1 Level 2 Level 3 (in millions) Financial assets, not measured at fair value Cash and cash equivalents $ 2,500 $ 2,500 $ 2,500 $ - $ - Cash - segregated for regulatory purposes 7,686 7,686 7,686 - - Securities - segregated for regulatory purposes 8,998 8,998 - 8,998 - Securities borrowed 3,588 3,588 - 3,588 - Securities purchased under agreements to resell 533 533 - 533 - Receivables from customer 28,970 28,970 - 28,970 - Receivables from broker, dealers, and clearing organizations 1,134 1,134 - 1,134 - Interest receivable 117 117 - 117 - Other assets 5 6 - 6 - Total financial assets, not measured at fair value $ 53,531 $ 53,532 $ 10,186 $ 43,346 $ - Financial liabilities, not measured at fair value Short-term borrowings $ 193 $ 193 $ - $ 193 $ - Securities loaned 4,091 4,091 - 4,091 - Securities sold under agreements to repurchase - - - - - Payables to customer 48,239 48,239 - 48,239 - Payables to brokers, dealers and clearing organizations 100 100 - 100 - Interest payable 29 29 - 29 - Total financial liabilities, not measured at fair value $ 52,652 $ 52,652 $ - $ 52,652 $ - December 31, 2017 Carrying Value Fair Value Level 1 Level 2 Level 3 (in millions) Financial assets, not measured at fair value Cash and cash equivalents $ 1,732 $ 1,732 $ 1,732 $ - $ - Cash - segregated for regulatory purposes 6,547 6,547 6,547 - - Securities - segregated for regulatory purposes 9,166 9,166 - 9,166 - Securities borrowed 2,957 2,957 - 2,957 - Securities purchased under agreements to resell 2,035 2,035 - 2,035 - Receivables from customer 29,821 29,821 - 29,821 - Receivables from broker, dealers, and clearing organizations 823 823 - 823 - Interest receivable 116 116 - 116 - Other assets 6 6 - 6 - Total financial assets, not measured at fair value $ 53,203 $ 53,203 $ 8,279 $ 44,924 $ - Financial liabilities, not measured at fair value Short-term borrowings $ 15 $ 15 $ - $ 15 $ - Securities loaned 4,444 4,444 - 4,444 - Securities sold under agreements to repurchase 1,316 1,316 - 1,316 - Payables to customer 47,548 47,548 - 47,548 - Payables to brokers, dealers and clearing organizations 283 283 - 283 - Interest payable 22 22 - 22 - Total financial liabilities, not measured at fair value $ 53,628 $ 53,628 $ - $ 53,628 $ - Netting of Financial Assets and Financial Liabilities It is the Company’s policy to net securities borrowed and securities loaned, and securities purchased under agreements to resell and securities sold under agreements to repurchase that meet the offsetting requirements prescribed in ASC Topic 210-20. In the tables below, the amounts of financial instruments that are not offset in the condensed consolidated statements of financial condition, but could be netted against cash or financial instruments with specific counterparties under master netting agreements, according to the terms of the agreements, including clearing houses (exchange traded options, warrants and discount certificates) or over the counter currency forward contract counterparties, are presented to provide financial statement readers with the Company’s net payable or receivable with counterparties for these financial instruments. The following tables set forth the netting of financial assets and of financial liabilities as of June 30 , 2018 and December 31, 2017: June 30, 2018 Gross Amounts Net Amounts Amounts Not Offset Amounts Offset in the Presented in in the Condensed of Financial Condensed the Condensed Consolidated Statement Assets and Consolidated Consolidated of Financial Condition Liabilities Statement of Statement of Cash or Financial Recognized Financial Condition 2 Financial Condition Instruments Net Amount (in millions) Offsetting of Financial Assets Securities segregated for regulatory purposes - purchased under agreements to resell $ 8,998 1 $ — $ 8,998 $ (8,998) $ — Securities borrowed 3,588 — 3,588 (3,451) 137 Securities purchased under agreements to resell 533 — 533 (533) — Financial Instruments owned, at fair value Options 1,207 — 1,207 (425) 782 Warrants and discount certificates 2 — 2 — 2 Currency forward contracts 6 — 6 — 6 Total $ 14,334 $ — $ 14,334 $ (13,407) $ 927 (in millions) Offsetting of Financial Liabilities Securities loaned $ 4,091 $ — $ 4,091 $ (3,885) $ 206 Securities sold under agreements to repurchase — — — — — Financial instruments sold, but not yet purchased, at fair value Options 426 — 426 (425) 1 Warrants and discount certificates — — — — — Currency forward contracts 5 — 5 — 5 Total $ 4,522 $ — $ 4,522 $ (4,310) $ 212 December 31, 2017 Gross Amounts Net Amounts Amounts Not Offset Amounts Offset in the Presented in in the Condensed of Financial Condensed the Condensed Consolidated Statement Assets and Consolidated Consolidated of Financial Condition Liabilities Statement of Statement of Cash or Financial Recognized Financial Condition 2 Financial Condition Instruments Net Amount (in millions) Offsetting of Financial Assets Securities segregated for regulatory purposes - purchased under agreements to resell $ 9,166 1 $ — $ 9,166 $ (9,166) $ — Securities borrowed 2,957 — 2,957 (2,822) 135 Securities purchased under agreements to resell 2,035 — 2,035 (2,035) — Financial Instruments owned, at fair value Options 1,052 — 1,052 (451) 601 Warrants and discount certificates 5 — 5 — 5 Currency forward contracts 32 — 32 — 32 Total $ 15,247 $ — $ 15,247 $ (14,474) $ 773 (in millions) Offsetting of Financial Liabilities Securities loaned $ 4,444 $ — $ 4,444 $ (4,201) $ 243 Securities sold under agreements to repurchase 1,316 — 1,316 (1,316) — Financial instruments sold, but not yet purchased, at fair value Options 464 — 464 (451) 13 Warrants and discount certificates — — — — — Currency forward contracts 1 — 1 — 1 Total $ 6,225 $ — $ 6,225 $ (5,968) $ 257 (1) As of June 30 , 2018 and December 31, 2017 , the Company had $9.0 billion and $ 9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “ s ecurities - segregated for regulatory purposes” in the condensed consolidated statements of financial condition. (2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at June 30 , 2018 and December 31, 2017 . Secured Financing Transactions – Maturities and Collateral Pledged The following table s present gross obligations for securities loaned transactions by remaining contractual maturity and class of collateral pledged as of June 30, 2018 and December 31, 2017: June 30, 2018 Remaining Contractual Maturity Overnight Less than 30 – 90 Over 90 and Open 30 days days days Total (in millions) Securities loaned Stocks $ 4,039 $ - $ - $ - $ 4,039 Corporate bonds 52 - - - 52 Foreign government securities - - - - - Total securities loaned $ 4,091 $ - $ - $ - $ 4,091 December 31, 2017 Remaining Contractual Maturity Overnight Less than 30 – 90 Over 90 and Open 30 days days days Total (in millions) Securities Loaned Stocks $ 4,389 $ - $ - $ - $ 4,389 Corporate bonds 55 - - - 55 Total securities loaned 4,444 - - - 4,444 Securities sold under agreements to repurchase U.S. government securities 1,316 - - - 1,316 Total $ 5,760 $ - $ - $ - $ 5,760 |
Collateralized Transactions
Collateralized Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure Collateralized Transactions [Abstract] | |
Collateralized Transactions | 7. Collateralized Transactions The Company enters into securities borrowing and lending transactions and agreements to repurchase and resell securities to finance trading inventory, to obtain securities for settlement and to earn residual interest rate spreads. In addition, the Company’s customers pledge their securities owned to collateralize margin loans. Under these transactions, the Company either receives or provides collateral, including equity, corporate debt and U.S. government securities. Under typical agreements, the Company is permitted to sell or repledge securities received as collateral and use these securities to secure securities purchased under agreements to resell, enter into securities lending transactions or deliver these securities to counterparties to cover short positions. The Company also engages in securities financing transactions with and for customers through margin lending. Customer receivables generated from margin lending activity are collateralized by customer ‑owned securities held by the Company. Customers’ required margin levels and established credit limits are monitored continuously by risk management staff using automated systems. Pursuant to the Company’s policy and as enforced by such systems, customers are required to deposit additional collateral or reduce positions, when necessary to avoid automatic liquidation of their positions. Margin loans are extended to customers on a demand basis and are not committed facilities. Factors considered in the acceptance or rejection of margin loans are the amount of the loan, the degree of leverage being employed in the customer account and an overall evaluation of the customer’s portfolio to ensure proper diversification or, in the case of concentrated positions, appropriate liquidity of the underlying collateral. Additionally, transactions relating to concentrated or restricted positions are limited or prohibited by raising the level of required margin collateral (to 100% in the extreme case). Underlying collateral for margin loans is evaluated with respect to the liquidity of the collateral positions, valuation of securities, volatility analysis and an evaluation of industry concentrations. Adherence to the Company’s collateral policies significantly limits the Company’s credit exposure to margin loans in the event of a customer’s default. Under margin lending agreements, the Company may request additional margin collateral from customers and may sell securities that have not been paid for or purchase securities sold but not delivered from customers, if necessary. As of June 30 , 2018 and December 31, 2017 , approximately $29.0 billion and $29.8 billion, respectively, of customer margin loans were outstanding. The following table summarizes the amounts related to collateralized transactions as of June 30 , 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Permitted Sold or Permitted Sold or to Repledge Repledged to Repledge Repledged (in millions) Securities lending transactions $ 24,396 $ 3,568 $ 23,662 $ 3,041 Securities purchased under agreements to resell transactions (1) 9,543 9,483 11,231 11,231 Customer margin assets 29,849 8,300 30,236 9,013 $ 63,788 $ 21,351 $ 65,129 $ 23,285 (1) As of June 30 , 2018 , $9.0 billion or 95% (as of December 31, 2017 , $9.2 billion or 82% ) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3. In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements. As of June 30, 2018 and December 31, 2017, the majority of the Company’s U.S. and foreign government securities owned were pledged to clearing organizations. Financial instruments owned and pledged as collateral, including amounts pledged to affiliates, where the counterparty has the right to repledge, as of June 30, 2018 and December 31, 2017 are presented in the following table : June 30, December 31, 2018 2017 (in millions) Stocks $ 115 $ 1,150 U.S. and foreign government securities 132 54 $ 247 $ 1,204 |
Revenue From Contracts With Cus
Revenue From Contracts With Customers | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenues From Contracts With Customers | 8 . Revenues from Contracts with Customers Adoption On January 1, 2018, the Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”) using the modified retrospective method (i.e., applied prospectively effective January 1, 2018 without revising prior periods), which had no impact on the Company’s opening retained earnings. Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised service. Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those promised services ( i.e. , the “transaction price”). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration, if any. The Company’s revenues from contracts with customers are recognized when the performance obligations are satisfied at an amount that reflects the consideration expected to be received in exchange for such services. The majority of the Company’s performance obligations are satisfied at a point in time and are typically collected from customers by debiting their brokerage account with the Company. Nature of Services The Company’s services under contracts with customers are mainly related to its electronic brokerage business. The Company’s main sources of revenues from contracts with customers are as follows: - Commissions are charged to customers for order execution services and trade clearing and settlement services. The Company recognizes revenue at the time of execution of the order (i.e., trade date). Commissions are generally collected from cleared customers on trade date and from non-cleared customers monthly. - Market data fees are charged to customers for market data services to which they subscribe, that are delivered by the Company. The Company recognizes revenue monthly and collects the fees monthly, generally in arrears. - Risk exposure fees are charged to customers who carry positions with market risk that exceeds defined thresholds. The Company recognizes revenue and collects the fees daily. - Payments for order flow are earned from various options exchanges based upon options trading volume originated by the Company that meets certain criteria. The Company recognizes revenue daily. Payments for order flow are collected monthly, in arrears. - Minimum activity fees – are charged to customers that do not generate the required minimum monthly commission. The Company recognizes revenue monthly and collects the fees monthly, in arrears. The Company’s electronic brokerage business also earns revenues from other services, including order cancelation or modification fees, position transfer fees, telecommunications fees, withdrawal fees, and bank sweep program fees, among others. Disaggregation of Revenue The following table sets forth revenue from contracts with customers by business segment, geographic location, and major types of services for the three months and six months ended June 30 , 2018, as follows: Three Months Ended June 30, 2018 Electronic brokerage Market making Corporate Total (in millions) Geographic location 1 United States $ 157 $ 1 $ 1 $ 159 International 62 - - 62 $ 219 $ 1 $ 1 $ 221 Major types of services Commissions $ 185 $ - $ - $ 185 Market data fees 2 11 - - 11 Risk exposure fees 2 7 - - 7 Payments for order flow 2 5 - - 5 Minimum activity fees 2 5 - - 5 Other 2 6 1 1 8 $ 219 $ 1 $ 1 $ 221 Six Months Ended June 30, 2018 Electronic brokerage Market making Corporate Total (in millions) Geographic location 1 United States $ 339 $ 3 $ 1 $ 343 International 134 - - 134 $ 473 $ 3 $ 1 $ 477 Major types of services Commissions $ 405 $ - $ - $ 405 Market data fees 2 22 - - 22 Risk exposure fees 2 15 - - 15 Payments for order flow 2 10 - - 10 Minimum activity fees 2 10 - - 10 Other 2 11 3 1 15 $ 473 $ 3 $ 1 $ 477 (1) Based on the location of the subsidiaries in which the revenues are recorded. (2) Included in other income on the condensed consolidated statements of comprehensive income. Receivables and Contract Balances Receivables arise when the Company has an unconditional right to receive payment under a contract with a customer and are derecognized when the cash is received. Receivables of $11 million, as of June 30, 2018, are reported in other assets in the condensed consolidated statements of financial condition. Contract assets arise when the revenue associated with the contract is recognized prior to the Company’s unconditional right to receive payment under a contract with a customer (i.e., unbilled receivable) and are derecognized when either it becomes a receivable or the cash is received. Contract assets are reported in other assets in the condensed consolidated statements of financial condition. As of June 30, 2018, contract asset balances were not material. Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized either when a milestone is met triggering the contractual right to bill the customer or when the performance obligation is satisfied. Contract liabilities are reported in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition. As of June 30, 2018, contract liability balances were not material. |
Other Income
Other Income | 6 Months Ended |
Jun. 30, 2018 | |
Other Income [Abstract] | |
Other Income | 9 . Other Income The components of other income for the three months and six months ended June 30, 2018 and 2017 were: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions) Market data fees 1 $ 11 $ 9 $ 22 $ 18 Minimum activity fees 1 5 5 10 10 Risk exposure fees 1 7 6 15 11 Payments for order flow 1 5 4 10 8 Gains on financial instruments, at fair value and other investments, net 9 — 11 2 Gains (losses) from currency diversification strategy, net (21) 29 17 78 Other, net 7 6 15 8 $ 23 $ 59 $ 100 $ 135 (1) See Note 8 for description of these revenues. Gains on financial instruments, at fair value and other investments, net include (1) realized and unrealized gains and losses on financial instruments that (a) are held for purposes other than the Company’s market making activities, (b) are subject to restrictions, or (c) are accounted for under the equity method and (2) dividends on investments accounted at cost less impairment. |
Employee Incentive Plans
Employee Incentive Plans | 6 Months Ended |
Jun. 30, 2018 | |
Employee Incentive Plans [Abstract] | |
Employee Incentive Plans | 10 . Employee Incentive Plans Defined Contribution Plan The Company offers substantially all employees of U.S.-based Operating Companies who have met minimum service requirements the opportunity to participate in defined contribution retirement plans qualifying under the provisions of Section 401(k) of the Internal Revenue Code. The general purpose of this plan is to provide employees with an incentive to make regular savings in order to provide additional financial security during retirement. This plan provides for the Company to match 50% of the employees’ pre-tax contribution, up to a maximum of 10% of eligible earnings. The employee is vested in the matching contribution incrementally over six years of service. Included in employee compensation and benefits expenses in the condensed consolidated statements of comprehensive income were $2 million of plan contributions for each of the six months ended June 30, 2018 and 2017 . 2007 ROI Unit Stock Plan In connection with the IPO, the Company adopted the IBG , Inc. 2007 ROI Unit Stock Plan (“ ROI Unit Stock Plan”). An aggregate of 1,271,009 shares of restricted common stock (consisting of 1,250,000 shares issued under the ROI Unit Stock Plan and 21,009 shares under the 2007 Stock Incentive Plan, as described below), with a fair value at the date of grant of $38 million were issued to IBG LLC and held as treasury stock . As of June 30 , 2018 , the Company has distributed all shares of restricted common stock under the ROI Unit Stock Plan. 2007 Stock Incentive Plan In 2017, the Company amended the 2007 Stock Incentive Plan (the “Stock Incentive Plan”) to extend its term for a ten-year period through April 4, 2027, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018. Under the Company’s Stock Incentive Plan, up to 30 million shares of the Company’s common stock may be issued to satisfy vested restricted stock units granted to directors, officers, employees, contractors and consultants of the Company. The purpose of the Stock Incentive Plan is to promote the Company’s long ‑term financial success by attracting, retaining , and rewarding eligible participants. As a result of the Company’s organizational structure, a description of which can be found in “Business – Our Organizational Structure” in Part I Item 1 of the Company’s A nnual Report on Form 10 - K , there is no dilutive effect upon ownership of common stockholders of issuing shares under the Stock Incentive Plan. The issuances do not dilute the book value of the ownership of common stockholders since the restricted stock units are granted at market value , and upon their vesting and the related issuance of shares of c ommon stock, the ownership of IBG, Inc. in IBG LLC, increases proportionately to the shares issued. As a result of such proportionate increase in share ownership, the dilution upon issuance of common stock is borne by IBG LLC’s majority member (i.e., noncontrolling interest), Holdings, and not by IBG, Inc. or its common stockholders . Additionally, dilution of earnings that may take place after issuance of common stock is reflected in EPS reported in the Company’s financial statements. The EPS dilution can be neither estimated nor projected, but historically it has not been material. The Stock Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors. The Compensation Committee has discretionary authority to determine the eligibility to participate in the Stock Incentive Plan and establishes the terms and conditions of the awards, including the number of awards granted to each participant and all other terms and conditions applicable to such awards in individual grant agreements. Awards are expected to be made primarily through grants of restricted stock units . Stock Incentive Plan awards are subject to issuance over time . All previously granted but not yet earned awards may be cancelled by the Company upon the participant ’s termination of employment or violation of certain applicable covenants prior to issuance, unless determined otherwise by the Compensation Committee. The Stock Incentive Plan provides that, upon a change in control, the Compensation Committee may, at its discretion, fully vest any granted but not yet earned awards under the Stock Incentive Plan, or provide that any such granted but not yet earned awards will be honored or assumed, or new rights substituted by the new employer on a substantially similar basis and on terms and conditions substantially comparable to those of the Stock Incentive Plan. The Company expect s to continue to grant awards on or about December 31 of each year to eligible participants as part of an overall plan of equity compensation. Restricted stock units vest and become distributable to participants in accordance with the following schedule: • 10% on the first vesting date, which is on or about May 9 of each year; and • an additional 15% on each of the following six anniversaries of the first vesting, assuming continued employment with the Company and compliance with non-competition and other applicable covenants. Awards granted to external directors vest, and are distributed, over a five ‑year period ( 20% per year) commencing one year after the date of grant. A total of 24,263 restricted stock units have been granted to the external directors cumulatively since the plan’s inception . Stock Incentive Plan awards grant ed (excluding 21,009 shares issued pursuant to the ROI Unit Stock Plan described above) and the related fair values since the plan’s inception are presented in the table below: Fair Value at Date of Grant Units ($ millions) Prior periods (since inception) 20,888,468 $ 397 December 31, 2015 1,211,533 52 December 31, 2016 1,451,136 55 December 31, 2017 946,489 1 57 24,497,626 $ 561 (1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 23,082 additional restricted stock units during the six months ended June 30 , 2018. Estimated future grants under the Stock Incentive Plan are accrued for ratably during each year (see Note 2). In accordance with the vesting schedule, outstanding awards vest and are distributed to participants yearly on or about May 9 of each year . At the end of each year, there are no vested awards that remain undistributed. Compensation expense related to the Stock Incentive Plan recognized in the condensed consolidated statements of comprehensive income was $29 million and $25 million for the six months ended June 30, 2018 and 2017 , respectively. Estimated future compensation costs for unvested awards, net of credits for cancelled awards , as of June 30, 2018 are $30 million. The following summarizes the Stock Incentive Plan and ROI Unit Stock Plan activities from December 31, 2017 through June 30, 2018 : Stock ROI Unit Incentive Plan Stock Plan Units Shares Balance, December 31, 2017 6,473,720 1 3,849 Granted — — Cancelled (42,289) — Distributed (2,065,342) (3,849) Balance, June 30, 2018 4,366,089 — (1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 23,082 additional restricted stock units during the six months ended June 30 , 2018. Awards previously granted but not yet earned under the stock plans are subject to the plans’ post-employment provisions in the event a participant ceases employment with the Company . Through June 30, 2018 , a total of 809,059 restricted stock units have been distributed under these post ‑employment provisions. These distributions are included in the table above. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Taxes [Abstract] | |
Income Taxes | 11 . Income Taxes Income tax expense for the six months ended June 30, 2018 and 2017 differs from the U.S. federal statutory rate primarily due to the taxation treatment of income attributable to noncontrolling interests in IBG LLC and the enactment of the Tax Act, as discussed below. These noncontrolling interests are subject to U.S. taxation as partnerships. Accordingly, the income attributable to these noncontrolling interests is reported in the condensed consolidated statements of comprehensive income, but the related U.S. income tax expense attributable to these noncontrolling interests is not reported by the Company as it is the obligation of the individual members. Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation. Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the common stock offerings (see Note 4), differences in the valuation of financial assets and liabilities, and for other temporary differences arising from the deductibility of compensation and depreciation expenses in different time periods for accounting and income tax return purposes. The Tax Act, as previously described, makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate to 21% , e f fective January 1, 2018; (2) requiring a one-time transition tax on certain undistributed earnings of foreign subsidiaries to be paid over eight years ; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax, a new minimum tax; (7) creating a new limitation on deductible interest expense; (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (9) repealing the Section 199 manufacturing deduction; and (10) full expensing of qualified property for tax return purposes. The SEC staff issued Staff Accounting Bulletin 118 (“ SAB 118 ”) , which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the enactment of the Tax Act for entities to complete the accounting under ASC Topic 740. In accordance with SAB 118, an entity must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC Topic 740 is complete. To the extent that an entity’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, the entity must record a provisional estimate on its financial statements. However, i f an entity cannot determine a provisional estimate to be included on its financial statements, the entity should continue to apply ASC Topic 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. The Company’s accounting for the following elements of the Tax Act is incomplete. However, the Company has made reasonable estimates of certain effects and, therefore, recorded provisional adjustments as follows: Reduction of U.S. federal corporate tax rate: The Tax Act reduces the corporate tax rate to 21% , effective January 1, 2018. For certain of the Company’s deferred tax assets and liabilities, the Company recognized a provisional net decrease of $115 million with a corresponding adjustment to deferred income tax expense (or deferred tax benefit) for the year ended December, 31, 2017. As of June 30, 2018, the Company has not made any adjustments to the provisional amount recorded as of December 31, 2017. While the Company has made a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the Tax Act, including, but not limited to, the calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences. The Company is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Deemed Repatriation Transition Tax : The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings of certain foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 earnings of the relevant foreign subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. As of December 31, 2017, the Company recognized a provisional Transition Tax obligation of $62 million and for the six months ended June 30, 2018 has not made any adjustments to the provisional amount recorded. This amount may change when the calculation of post-1986 foreign earnings and profits previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets are finalized. The Company does not expect any significant changes, but it is continuing to gather additional information to more precisely compute the amount of the Transition Tax. The Tax Act creates a new requirement that g lobal intangible low taxe d income (“GILTI”) earned by controlled foreign corporations (“CFC”s) must be included currently in the gross income of the CFC’s U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC-tested income” over the deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S shareholder’s pro rata share of the qualified business asset investment in each CFC with respect to which it is a U.S shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. Under U.S. GAAP, the Company is allowed to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company selected the period cost method. As of and for the six months ended June 30, 2018 and 2017 , the Company had no unrecognized tax and no valuation allowances on deferred tax assets were required. The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. As of June 30 , 2018, the Company is no longer subject to U.S. Federal and State income tax examinations for tax years prior to 2010, and to non-U.S. income tax examinations for tax years prior to 2008. As of June 30, 2018 , accumulated earnings held by non ‑U.S. subsidiaries totaled $1.1 billion ( as of December 31, $1.1 billion ). Of this amount, approximately $0.3 billion ( as of December 31, 2017 $0.3 billion ) is attributable to earnings of the Company ’ s foreign subsidiaries that are considered “ pass ‑through ” entities for U.S. income tax purposes. Since the Company accounts for U.S. income taxes on these earnings on a current basis, no additional U.S. tax consequences would result from the repatriation of these earnings other than that which would be due arising from currency fluctuations between the time the earnings are reported for U.S. tax purposes and when they are remitted. With respect to certain of these subsidiaries ’ accumulated earnings (approximately $0.2 billion and $0.2 billion as of June 30, 2018 and December 31, 2017 , respectively), repatriation would result in additional foreign taxes in the form of dividend withholding tax imposed on the recipient of the distribution or dividend distribution tax imposed on the payor of the distribution. The Company has not provided for its proportionate share of these additional foreign taxes as it does not intend to repatriate these earnings in the foreseeable future. For the same reason, the Company has not provided deferred U.S. tax on cumulative translation adjustments associated with these earnings. |
Commitments, Contingencies And
Commitments, Contingencies And Guarantees | 6 Months Ended |
Jun. 30, 2018 | |
Commitments, Contingencies And Guarantees [Abstract] | |
Commitments, Contingencies And Guarantees | 12 . Commitments, Contingencies and Guarantees Litigation The Company is subject to certain pending and threatened legal actions which arise out of the normal course of business. Litigation is inherently unpredictable, particularly in proceedings where claimants seek substantial or indeterminate damages, or which are in their early stages. The Company has not been able to quantify the actual loss or range of loss related to such legal proceedings, the manner in which they will be resolved, the timing of final resolution or the ultimate settlement. Management believes that the resolution of these actions will not have a material effect, if any, on the Company’s business or financial condition, but may have a material impact on the results of operations for a given period. The Company accounts for potential losses related to litigation in accordance with FASB ASC Topic 450, “Contingencies.” As of June 30, 2018 and 2017, reserves provided for potential losses related to litigation matters were not material. Trading Technologies Matter On February 3, 2010, Trading Technologies International, Inc. (“Trading Technologies”) filed a complaint in the U.S. District Court for the Northern District of Illinois, Eastern Division, against IBG, Inc., IBG LLC, Holdings, and IB LLC. Thereafter, Trading Technologies dismissed IBG, Inc. and Holdings from the case, leaving only IBG LLC and IB LLC as defendants (“Defendants”). The operative complaint, as amended, alleges that the Defendants have infringed and continue to infringe twelve U.S. patents held by Trading Technologies. Trading Technologies is seeking, among other things, unspecified damages and injunctive relief (“the Litigation”). The Defendants filed an answer to Trading Technologies’ amended complaint, as well as related counterclaims. The Defendants deny Trading Technologies’ claims, assert that the asserted patents are not infringed and are invalid, and assert several other defenses as well. Trading Technologies also filed patent infringement lawsuits against approximately a dozen other companies in the same court. The Litigation was consolidated with the other lawsuits filed by Trading Technologies. The Defendants and/or certain codefendants filed petitions with the United States Patent and Trademark Office (“USPTO”) for Covered Business Method Review (“CBM Review”) on the asserted patents. The District Court granted the Defendants’ motion to stay the Litigation pending the CBM Reviews. The USPTO Patent Trial Appeal Board found ten of the twelve asserted patents to be not patentable and two patents to be patentable. The Defendants have filed app eals on the claims that were held to be patentable. It is difficult to predict the outcome of the matter, however, the Company believes it has meritorious defenses to the allegations made in the complaint and intends to defend itself vigorously against them. However, litigation is inherently uncertain and there can be no guarantee that the Company will prevail or that the Litigation can be settled on favorable terms. Class Action Matter On December 18, 2015, a former individual customer filed a purported class action complaint against IB LLC, IBG, Inc., and Thomas Frank, PhD, the Company’s Executive Vice President and Chief Information Officer, in the U.S. District Court for the District of Connecticut. The complaint alleges that the purported class of IB LLC’s customers were harmed by alleged “flaws” in the computerized system used to close out (i.e., liquidate) positions in customer brokerage accounts that have margin deficiencies. The complaint seeks, among other things, undefined compensatory damages and declaratory and injunctive relief. On September 28, 2016, the Court issued an order granting the Company’s motion to dismiss the complaint in its entirety, and without providing plaintiff leave to amend. On September 28, 2017, plaintiff appealed to the United States Court of Appeals for the Second Circuit and oral argument has been scheduled for September 7, 2018. The Company believes that the appeal, like the original complaint, lacks merit. Further, even if the Court’s dismissal were to be overturned on appeal, the Company does not believe that a purported class action is appropriate given the great differences in portfolios, markets and many other circumstances surrounding the liquidation of any particular customer’s margin-deficient account. IB LLC and the related defendants intend to continue to defend themselves vigorously against the case and, consistent with past practice in connection with this type of unwarranted action, any potential claims for counsel fees and expenses incurred in defending the case shall be fully pursued against the plaintiff. Guarantees Certain of the Operating Companies provide guarantees to securities and commodities clearing houses and exchanges which meet the accounting definition of a guarantee under FASB ASC Topic 460, “Guarantees.” Under standard membership agreements, clearing house and exchange members are required to guarantee collectively the performance of other members. Under the agreements, if a member becomes unable to satisfy its obligations, other members would be required to meet shortfalls. In the opinion of management, the Operating Companies’ liability under these arrangements is not quantifiable and could exceed the cash and securities they have posted as collateral. However, the potential for these Operating Companies to be required to make payments under these arrangements is remote. Accordingly, no contingent liability is carried in the condensed consolidated statements of financial condition for these arrangements. In connection with its retail brokerage business, IB LLC or other electronic brokerage Operating Companies perform securities and commodities execution, clearance and settlement on behalf of their customers for whom they commit to settle trades submitted by such customers with the respective clearing houses. If a customer fails to fulfill its settlement obligations, the respective Operating Company must fulfill those settlement obligations. No contingent liability is carried on the condensed consolidated statements of financial condition for such customer obligations. Other Commitments Certain clearing houses, clearing banks and firms used by certain Operating Companies are given a security interest in certain assets of those Operating Companies held by those clearing organizations. These assets may be applied to satisfy the obligations of those Operating Companies to the respective clearing organizations. |
Segment And Geographic Informat
Segment And Geographic Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment And Geographic Information [Abstract] | |
Segment And Geographic Information | 13. Segment and Geographic Information The Company has two operating business segments: electronic brokerage and market making. These segments are supported by the corporate segment, which provides centralized services and executes the Company’s currency diversification strategy. The Company conducts its electronic brokerage business through certain Interactive Brokers subsidiaries, which provide electronic trade execution and clearing services to customers worldwide. The Company conducts its remaining market making business (see Note 2 – Discontinued Operations and Costs Associated with Exit or Disposal Cost) principally through its Timber Hill subsidiaries on some of the world’s leading exchanges and market centers, primarily in exchange ‑traded equities, equity options and equity ‑index options and futures. Significant transactions and balances between the Operating Companies occur, primarily as a result of certain Operating Companies holding exchange or clearing organization memberships, which are utilized to provide execution and clearing services to affiliates. Charges for transactions between segments are designed to approximate full costs. Intra ‑segment and intra ‑region income and expenses and related balances have been eliminated in this segment and geographic information to reflect the external business conducted in each segment or geographic region. Corporate items include non ‑allocated corporate income and expenses that are not attributed to segments for performance measurement, net gains and losses on positions held as part of the Company’s overall currency diversification strategy, corporate assets and eliminations. Management believes that the following information by business segment provides a reasonable representation of each segment’s contribution to total net revenues and income before income taxes for the three months and six months ended June 30, 2018, and 2017 , and total assets as of June 30, 2018 and December 31, 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions) Net revenues Electronic brokerage $ 443 $ 334 $ 908 $ 648 Market making 22 23 43 31 Corporate (20) 30 21 82 Total net revenues $ 445 $ 387 $ 972 $ 761 Income before income taxes Electronic brokerage $ 283 $ 198 $ 574 $ 383 Market making 9 (24) 18 (46) Corporate (21) 30 19 80 Total income before income taxes $ 271 $ 204 $ 611 $ 417 June 30, December 31, 2018 2017 (in millions) Segment assets Electronic brokerage $ 58,355 $ 58,787 Market making 2,781 8,469 Corporate (833) (6,094) Total assets $ 60,303 $ 61,162 The Company operates its automated global business in the U.S. and international markets on more than 120 electronic exchanges and market centers. A significant portion of the Company’s net revenues are generated by subsidiaries operating outside the U.S. International operations are comprised of electronic brokerage and market making activities in 29 countries in Europe, Asia and the Americas (outside the U.S.). The following table presents total net revenues and income before income taxes by geographic area for the three months and six months ended June 30, 2018 and 2017 . The geographic analysis presented below is based on the location of the subsidiaries in which the transactions are recorded. This geographic information does not reflect the way the Company’s business is managed. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions) Net revenues United States $ 345 $ 316 $ 765 $ 619 International 100 71 207 142 Total net revenues $ 445 $ 387 $ 972 $ 761 Income before income taxes United States $ 231 $ 186 $ 525 $ 381 International 40 18 86 36 Total income before income taxes $ 271 $ 204 $ 611 $ 417 |
Regulatory Requirements
Regulatory Requirements | 6 Months Ended |
Jun. 30, 2018 | |
Regulatory Requirements [Abstract] | |
Regulatory Requirements | 14 . Regulatory Requirements As of June 30, 2018 , aggregate excess regulatory capital for all of the Operating Companies was $5.1 billion. IB LLC, TH LLC and IB Corp are subject to the Uniform Net Capital Rule (Rule 15c3 ‑1) under the Exchange Act, IB LLC is also subject to the Commodities and Futures Trading Commission’s minimum financial requirements (Regulation 1.17), and THE is subject to the Swiss Financial Market Supervisory Authority eligible equity requirement. IBA is subject to the Australian Securities Exchange liquid capital requirement, THLI is subject to the Financial Market Authority Liechtenstein eligible capital requirements, THC and IBC are subject to the Investment Industry Regulatory Organization of Canada risk adjusted capital requirement, IBUK is subject to the U.K. Financial Conduct Authority Capital Requirements Directive, IBHK is subject to the Hong Kong Securities Futures Commission liquid capital requirement, IBI is subject to the National Stock Exchange of India net capital requirements and IBSJ is subject to the Japanese Financial Supervisory Agency capital requirements. The following table summarizes capital, capital requirements and excess regulatory capital: Net Capital/ Eligible Equity Requirement Excess (in millions) IB LLC $ 4,161 $ 465 $ 3,696 TH LLC 213 - 213 THE 617 92 525 Other regulated Operating Companies 813 161 652 $ 5,804 $ 718 $ 5,086 Regulatory capital requirements could restrict the Operating Companies from expanding their business and declaring dividends if their net capital does not meet regulatory requirements. Also, certain Operating Companies are subject to other regulatory restrictions and requirements. As of June 30, 2018 , all of the regulated Operating Companies were in compliance with their respective regulatory capital requirements. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 15 . Related Party Transactions Receivable from affiliate, reported in other assets in the condensed consolidated statement of financial condition, represents amounts advanced to Holdings and payable to affiliate represents amounts payable to Holdings under the Tax Receivable Agreement (see Note 4). Included in receivables from and payables to customers in the condensed consolidated statements of financial condition as of June 30, 2018 and December 31, 2017 were accounts receivable from directors, officers and their affiliates of $233 million and $ 250 million and payables of $974 million and $ 648 million, respectively. The Company may extend credit to these related parties in connection with margin and securities loans. Such loans are (i) made in the ordinary course of business, (ii) are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the company, and (iii) do not involve more than the normal risk of collectability or present other unfavorable features. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16 . Subsequent Events As required by FASB ASC Topic 855, “ Subsequent Events,” the Company has evaluated subsequent events for adjustment to or disclosure in its condensed consolidated financial statements through the date the condensed consolidated financial statements were issued. Except as disclosed in Note 4, no other recordable or disclosable events occurred. ***** |
Significant Accounting Polici23
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10 ‑Q. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on March 1, 2018. The condensed consolidated financial information as of December 31, 2017 has been derived from the audited consolidated financial statements not included herein. These condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the periods presented. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. |
Principles Of Consolidation, Including Noncontrolling Interests | Principles of Consolidation, including Noncontrolling Interests These condensed consolidated financial statements include the accounts of IBG, Inc. and its majority and wholly owned subsidiaries. As sole managing member of IBG LLC, IBG, Inc. exerts control over IBG LLC’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “ Consolidation, ” the Company consolidates IBG LLC’s financial statements and records the interests in IBG LLC that it does not own as noncontrolling interests. The Company’s policy is to consolidate all other entities in which it owns more than 50% unless it does not have control. All inter ‑company balances and transactions have been eliminated. |
Condensed Consolidated Statements of Cash Flows and Financial Condition Presentation Changes | Condensed Consolidated Statements of Cash Flows and Financial Condition Presentation Changes On January 1, 2018, the Company adopted FASB Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash” (“ASU 2016-18”). This accounting update requires an entity to include in its cash and cash equivalents amounts that are deemed to be restricted cash and to present a reconciliation of such amounts in the statement of cash flows. Restricted cash represents cash and cash equivalents that are subject to withdrawal or usage restrictions. For purposes of the condensed consolidated statements of cash flows, cash, cash equivalents, and restricted cash consist of “cash and cash equivalents” and “cash – segregated for regulatory purposes.” ASU 2016-18 also requires prior periods to be retrospectively adjusted to conform to the current period presentation. Upon adoption, the Company recorded an increase of $1,286 million in net cash provided by operating activities, for the six months ended June 30, 2017 to reflect the reclassification of changes in restricted cash balances from the operating section to the cash, cash equivalent, and restricted cash balances within the condensed consolidated statements of cash flows. In addition, the Company reclassified restricted cash amounts previously included within “cash and securities – segregated for regulatory purposes” into a separate line item, “cash – segregated for regulatory purposes,” in the condensed consolidated statements of financial condition to be consistent with the presentation of restricted cash in the condensed consolidated statements of cash flows under ASU 2016-18. Previously reported amounts in the condensed consolidated statements of financial condition and notes to the condensed consolidated financial statements have been adjusted to conform to the current presentation . |
Discontinued Operations And Costs Associated With Exit Or Disposal Activities | Discontinued Operations and Costs Associated with Exit or Disposal Activities On March 8, 2017, the Company announced its intention to discontinue its options market making activities globally. Additionally, as previously announced, on September 29, 2017 the Company completed the transfer of its U.S. options market making operations to Two Sigma Securities, LLC. The Company also exited the majority of its market making activities outside of the U.S. by December 31, 2017 and expects to report discontinued operations when it meets the criteria under FASB Topic ASC 205-20, “Discontinued Operations.” The Company recognized approximately $25 million in one-time restructuring costs during the year ended December 31, 2017. The one-time restructuring costs included approximately $22 million of non-cash expenditures, consisting of impairment of the carrying value of certain exchange trading rights and stock-based compensation and $3 million of cash expenditures primarily related to severance costs for employee terminations. During the six months ended June 30, 2018, the Company did no t incur any additional restructuring costs. During the six months ended June 30, 2017, the Company recorded restructuring costs of approximately $21 million for the impairment of exchange trading rights, included in general and administrative expenses and approximately $2 million in severance costs resulting from obligations related to employment terminations, included in employee compensation and benefits in the condensed consolidated statements of comprehensive income. |
Use Of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these condensed consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for doubtful accounts, valuation of certain investments, compensation accruals, current and deferred income taxes, costs associated with exit or disposal activities, and contingency reserves. |
Fair Value | Fair Value Substantially all of the Company’s assets and liabilities, including financial instruments are carried at fair value based on published market prices and are marked to market, or are assets and liabilities which are short ‑term in nature and are carried at amounts that approximate fair value. The Company applies the fair value hierarchy in accordance with FASB ASC Topic 820, “ Fair Value Measurement” (“ASC Topic 820”) , to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices for similar assets in an active market, quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly. Level 3 Prices or valuations that require inputs that are both significant to fair value measurement and unobservable. Financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are generally classified as Level 1 of the fair value hierarchy. The Company’s Level 1 financial instruments, which are valued using quoted market prices as published by exchanges and clearing houses or otherwise broadly distributed in active markets, include active listed stocks, options, warrants and discount certificates, and U.S. and foreign government securities. The Company does not adjust quoted prices for financial instruments classified as Level 1 of the fair value hierarchy, even in the event that the Company may hold a large position whereby a purchase or sale could reasonably impact quoted prices. Currency forward contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. Other securities that are not traded in active markets are also classified as Level 2 of the fair value hierarchy. Level 3 financial instruments are comprised of securities that have been delisted or otherwise are no longer tradable in active markets and have been valued by the Company based on internal estimates. |
Earnings Per Share | Earnings per Share Earnings per share (“EPS”) is computed in accordance with FASB ASC Topic 260, “ Earnings per Share .” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s stock-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares. |
Stock-Based Compensation | Stock ‑Based Compensation The Company follows FASB ASC Topic 718, “ Compensation - Stock Compensation” (“ASC Topic 718”) , to account for its stock ‑based compensation plans. ASC Topic 718 requires all share ‑based payments to employees to be recognized in the condensed consolidated financial statements using a fair value ‑based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50% in the year of grant in recognition of the plans’ post-employment provisions (as described below) and the remaining 50% over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100% of awards are expensed when granted. Awards granted under stock ‑based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with the Company. The plans provide that employees who discontinue employment with the Company without cause and continue to meet the terms of the plans’ post ‑employment provisions will be eligible to earn 50% of previously granted but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100% of previously granted but not yet earned awards. |
Cash And Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing houses. |
Cash And Securities - Segregated For Regulatory Purposes | Cash and Securities - Segregated for Regulatory Purposes As a result of customer activities, certain Operating Companies are obligated by rules mandated by their primary regulators to segregate or set aside cash or qualified securities to satisfy such regulations, which have been promulgated to protect customer assets. Securities segregated for regulatory purposes consisted of U.S. government securities of $4.4 billion and $4.5 billion as of June 30 , 2018 and December 31, 2017, respectively, and securities purchased under agreements to resell in the amount of $9.0 billion and $9.2 billion as of June 30 , 2018 and December 31, 2017, respectively, which amounts approximate fair value. |
Securities Borrowed And Securities Loaned | Securities Borrowed and Securities Loaned Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Company to provide counterparties with collateral, which may be in the form of cash, letters of credit or other securities. With respect to securities loaned, the Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities borrowed and securities loaned entered into with the same counterparty that meet the offsetting requirements prescribed in FASB ASC Topic 210-20, “Balance Sheet – Offsetting” (“ASC Topic 210-20”). Securities lending fees received and paid by the Company are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income. |
Securities Purchased Under Agreements To Resell and Secruities Sold Under Agreements to Repurchase | Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase Securities purchased under agreements to resell and securities sold under agreements to repurchase, which are reported as collateralized financing transactions, are recorded at contract value, which approximates fair value. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities purchased under agreements to resell transactions and securities sold under agreements to repurchase transactions entered into with the same counterparty that meet the offsetting requirements prescribed in ASC Topic 210-20. |
Financial Instruments Owned And Sold But Not Yet Purchased, at Fair Value | Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased, at Fair Value Financial instrument transactions are accounted for on a trade date basis. Financial instruments owned and financial instruments sold, but not yet purchased are stated at fair value based upon quoted market prices, or if not available, are valued by the Company based on internal estimates (see Fair Value above). The Company’s financial instruments pledged to counterparties where the counterparty has the right, by contract or custom, to sell or repledge the financial instruments are reported as financial instruments owned and pledged as collateral in the condensed consolidated statements of financial condition. |
Customer Receivables And Payables | Customer Receivables and Payables Customer securities transactions are recorded on a settlement date basis and customer commodities transactions are recorded on a trade date basis. Receivables from and payables to customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. Securities owned by customers, including those that collateralize margin loans or other similar transactions, are not reported in the condensed consolidated statements of financial condition. Amounts receivable from customers that are determined by management to be uncollectible are recorded as customer bad debt expense in the condensed consolidated statements of comprehensive income. |
Receivables From And Payables To Brokers, Dealers And Clearing Organizations | Receivables from and Payables to Brokers, Dealers and Clearing Organizations Receivables from and payables to brokers, dealers and clearing organizations include net receivables and payables from unsettled trades, including amounts related to futures and options on futures contracts executed on behalf of customers, amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“fails to deliver”) and cash deposits. Payables to brokers, dealers and clearing organizations also include amounts payable for securities not received by the Company from a seller by the settlement date (“fails to receive”). |
Investments | Investments The Company makes certain strategic investments related to its business and accounts for these investments (a) under the equity method of accounting as required under FASB ASC Topic 323, “ Investments - Equity Method and Joint Ventures ” or (b) at fair value or, if the investment in equity securities does not have a readily determinable fair value, at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer in accordance with FASB ASC Topic 321, “Investments in Equity Securities.” Investments accounted for under the equity method, including where the investee is a limited partnership or limited liability company, are recorded at the fair value amount of the Company’s initial investment and are adjusted each period for the Company’s share of the investee’s income or loss. The Company’s share of the income or losses from equity method investments is included in other income in the condensed consolidated statements of comprehensive income. The recorded amounts of the Company’s equity method investments, $23 million as of June 30 , 2018 ( $ 23 million as of December 31, 2017), which are included in other assets in the condensed consolidated statements of financial condition, increase or decrease accordingly. Contributions paid to and distributions received from equity method investees are recorded as additions or reductions, respectively, to the respective investment balance. Investments in equity securities that do not qualify for equity method accounting are recorded at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The recorded amounts of the Company’s investments in such equity securities, $26 million as of June 30 , 2018 ( $5 million as of December 31, 2017) are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received. The Company also holds exchange memberships and investments in equity securities of certain exchanges, as required to qualify as a clearing member. Such investments, $5 million as of June 30 , 2018 ( $6 million as of December 31, 2017), are recorded at cost less impairment, and are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received. A judgmental aspect of accounting for investments is evaluating whether a decline in the value of an investment has occurred. The evaluation of an impairment is dependent on specific quantitative and qualitative factors and circumstances surrounding an investment, including recurring operating losses, credit defaults and subsequent rounds of financing. The Company’s equity investments do not have readily determinable market values. All investments are reviewed for changes in circumstances or occurrence of events that suggest the Company’s investment may not be recoverable. An impairment loss, if any, is recognized in the period the determination is made . |
Property, Equipment, and Intangible Assets | Property, Equipment, and Intangible Assets Property, equipment, and intangible assets, which are included in other assets in the condensed consolidated statements of financial condition, consist of leasehold improvements, computer equipment, software developed for the Company’s internal use, office furniture, equipment and acquired technology . Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight ‑line method. Equipment is depreciated over the estimated useful lives of the assets, while leasehold improvements are amortized over the lesser of the estimated economic useful life of the asset or the term of the lease. Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years. Intangible assets with a finite life are amortized on a straight line basis over their estimated useful lives of three years, and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the condensed consolidated statements of financial condition and any resulting gain or loss is recorded in other income in the condensed consolidated statements of comprehensive income. Fully depreciated (or amortized) assets are retired on an annual basis. |
Comprehensive Income And Foreign Currency Translation | Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “ Comprehensive Income. ” Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Company’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of non-U.S. subsidiaries , net of related income taxes, where applicable. In general, the practice and intention of the Company is to reinvest the earnings of its non ‑U.S. subsidiaries in those operations, therefore tax is usually not accrued on OCI. The Company’s non ‑U.S. domiciled subsidiaries have a functional currency that is other than the U.S. dollar. Such subsidiaries’ assets and liabilities are translated into U.S. dollars at period ‑end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the U.S. dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the condensed consolidated statements of financial condition. During the three months ended June 30, 2018, the Company liquidated its Australian subsidiary, Timber Hill Australia Pty Limited, and accordingly reclassified the accumulated OCI of $32 million to other income and the related accumulated tax effect of $1 million to income tax expense in the condensed consolidated statements of comprehensive income . |
Revenue Recognition | Revenue Recognition Commissions Commissions earned for executing and/or clearing transactions are accrued on a trade date basis and are reported as commissions in the condensed consolidated statements of comprehensive income. See Note 8 for further information on revenue from contracts with customers. Interest Income and Expense The Company earns interest income and incurs interest expense primarily in connection with its electronic brokerage customer business and its securities lending activities, which are recorded on an accrual basis and are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income. Trading Gains Trading gains and losses are recorded on trade date and are reported on a net basis. Trading gains and losses are comprised of changes in the fair value of financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value (i.e., unrealized gains and losses) and realized gains and losses related to the Company’s market making business segment. Included in trading gains are net gains and losses on stocks, U.S. and foreign government securities, options, futures, foreign exchange and other derivative instruments. Dividends are integral to the valuation of stocks and interest is integral to the valuation of fixed income instruments. Accordingly, both dividends and interest income and expense attributable to financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are reported on a net basis in trading gains in the condensed consolidated statements of comprehensive income. Foreign Currency Gains and Losses Foreign currency balances are assets and liabilities in currencies other than the Company’s functional currency. At every reporting date, the Company revalues its foreign currency balances to its functional currency at the spot exchange rate and records the associated foreign currency gains and losses. These foreign currency gains and losses are reported in the condensed consolidated statements of comprehensive income, as follows: (a) foreign currency gains and losses related to the Company’s currency diversification strategy are reported in other income; (b) foreign currency gains and losses related to the market making core-business activities are reported in trading gains; (c) foreign currency gains and losses arising from currency swap transactions in the electronic brokerage business are reported in interest income; and (d) all other foreign currency gains and losses are reported in other income . |
Rebates | Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market centers related to the placement and/or removal of liquidity from the order flow in the marketplace and are recorded on an accrual basis. Rebates are recorded net within execution and clearing expenses in the condensed consolidated statements of comprehensive income. Rebates received for trades executed on behalf of customers that elect tiered pricing are passed, in whole or part, to these customers; and such pass-through amounts are recorded net within commissions in the condensed consolidated statements of comprehensive income. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, “ Income Taxes” (“ASC Topic 740”) . The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws (see Note 11) and reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgments and estimates. Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statements recognition of underlying assets and liabilities. In evaluating the ability to recover deferred tax assets within the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax ‑planning strategies, and results of recent operations. In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax ‑planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested. The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, significantly revising the U.S corporate income tax law by, among other things, reducing the corporate income tax rate from 35% to 21% and implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries (see Note 11). The Company records tax liabilities in accordance with ASC Topic 740 and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available. The Company recognizes a tax benefit from an uncertain tax position only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. The Company recognizes interest related to income tax matters as interest income or interest expense and penalties related to income tax matters as income tax expense in the condensed consolidated statements of comprehensive income. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Following is a summary of recently issued FASB Accounting Standards Updates (“ASUs”) that have affected or may affect the Company’s condensed consolidated financial statements : Affects Status ASU 2016-02 Leases (Topic 842) : Requires the recognition of a right-of-use asset and a lease liability for leases previously classified as operating lease in the statements of financial condition. Effective for fiscal years beginning after December 15, 2018. ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Effective for fiscal years beginning after December 15, 2019. ASU 2017-04 Intangibles - Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment. Effective for fiscal years beginning after December 15, 2019. ASU 2017-08 Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): A mending the amortization period for certain purchased callable debt securities held at a premium. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. ASU 2017-11 Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): changing the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. ASU 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. ASU 2018-02 Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Effective for fiscal years and first interim periods beginning after December 15, 2018. ASU 2018-03 Technical Correction and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018. ASU 2018-07 Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. ASU 2018-08 Not for Profit Entities (Topic 958) and Other Expenses - Contributions (Topic 720): Clarifying the Scope and the Accounting for Contributions Received and Contributions Made. Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Adoption of the ASUs that became effective during 2017 and 2018, prior to the issuance of the Company’s condensed consolidated financial statements, had no material effect on these financial statements, except as described in the notes to these financial statements |
Equity And Earnings Per Share (
Equity And Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity And Earnings Per Share [Abstract] | |
IBG LLC Ownership of Member Interests | IBG, Inc. Holdings Total Ownership % 17.8% 82.2% 100.0% Membership interests 73,544,946 340,229,444 413,774,390 |
Earnings Per Share Basic And Diluted | Basic earnings per share is calculated utilizing net income available for common stockholders divided by the weighted average number of shares of Class A and Class B common stock outstanding for that period. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions, except share or per share amounts) Basic earnings per share Net income available for common stockholders $ 41 $ 23 $ 87 $ 47 Weighted average shares of common stock outstanding Class A 72,476,629 69,087,753 71,979,004 68,539,426 Class B 100 100 100 100 72,476,729 69,087,853 71,979,104 68,539,526 Basic earnings per share $ 0.57 $ 0.33 $ 1.21 $ 0.68 Diluted earnings per share are calculated utilizing the Company’s basic net income available for common stockholders divided by diluted weighted average shares outstanding with no adjustments to net income available to common stockholders for potentially dilutive common shares. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions, except share or per share amounts) Diluted earnings per share Net income available for common stockholders $ 41 $ 23 $ 87 $ 47 Weighted average shares of common stock outstanding Class A Issued and outstanding 72,476,629 69,087,753 71,979,004 68,539,426 Potentially dilutive common shares Issuable pursuant to employee stock incentive plans 852,767 975,574 944,640 1,074,041 Class B 100 100 100 100 73,329,496 70,063,427 72,923,744 69,613,567 Diluted earnings per share $ 0.57 $ 0.32 $ 1.20 $ 0.67 |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income Detail [Abstract] | |
Comprehensive Income Table | Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions, except share or per share amounts) Comprehensive income available for common stockholders $ 28 $ 29 $ 75 $ 57 Earnings per share on comprehensive income Basic $ 0.39 $ 0.42 $ 1.05 $ 0.83 Diluted $ 0.39 $ 0.41 $ 1.03 $ 0.81 Weighted average common shares outstanding Basic 72,476,729 69,087,853 71,979,104 68,539,526 Diluted 73,329,496 70,063,427 72,923,744 69,613,567 |
Financial Assets And Financia26
Financial Assets And Financial Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Financial Assets And Financial Liabilities [Abstract] | |
Fair Value Table | Financial Assets At Fair Value as of June 30, 2018 Level 1 Level 2 Level 3 Total (in millions) Securities segregated for regulatory purposes $ 4,370 $ — $ — $ 4,370 Financial instruments owned, at fair value Stocks 712 — 1 713 Options 1,207 — — 1,207 Warrants and discount certificates 2 — — 2 U.S. and foreign government securities 156 — — 156 Corporate and municipal bonds — 1 3 4 Currency forward contracts — 6 — 6 Total financial instruments owned, at fair value 2,077 7 4 2,088 Total financial assets at fair value $ 6,447 $ 7 $ 4 $ 6,458 Financial Liabilities At Fair Value as of June 30, 2018 Level 1 Level 2 Level 3 Total (in millions) Financial instruments sold, but not yet purchased, at fair value Stocks $ 199 $ — $ — $ 199 Options 426 — — 426 Currency forward contracts — 5 — 5 Total financial instruments sold, but not yet purchased, at fair value 625 5 — 630 Total financial liabilities at fair value $ 625 $ 5 $ — $ 630 Financial Assets At Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total (in millions) Securities segregated for regulatory purposes $ 4,519 $ — $ — $ 4,519 Financial instruments owned, at fair value Stocks 2,000 — 1 2,001 Options 1,052 — — 1,052 Warrants and discount certificates 5 — — 5 U.S. and foreign government securities 60 — — 60 Corporate and municipal bonds — 1 3 4 Currency forward contracts — 32 — 32 Total financial instruments owned, at fair value 3,117 33 4 3,154 Total financial assets at fair value $ 7,636 $ 33 $ 4 $ 7,673 Financial Liabilities At Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total (in millions) Financial instruments sold, but not yet purchased, at fair value Stocks $ 302 $ — $ — $ 302 Options 464 — — 464 Currency forward contracts — 1 — 1 Total financial instruments sold, but not yet purchased, at fair value 766 1 — 767 Total financial liabilities at fair value $ 766 $ 1 $ — $ 767 |
Trading Gains From Market Making Transactions | Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions) Equities $ 12 $ 17 $ 25 $ 20 Foreign exchange — (4) — (5) Total trading gains, net $ 12 $ 13 $ 25 $ 15 |
Financial Assets and Liabilities Not Measured at Fair Value | June 30, 2018 Carrying Value Fair Value Level 1 Level 2 Level 3 (in millions) Financial assets, not measured at fair value Cash and cash equivalents $ 2,500 $ 2,500 $ 2,500 $ - $ - Cash - segregated for regulatory purposes 7,686 7,686 7,686 - - Securities - segregated for regulatory purposes 8,998 8,998 - 8,998 - Securities borrowed 3,588 3,588 - 3,588 - Securities purchased under agreements to resell 533 533 - 533 - Receivables from customer 28,970 28,970 - 28,970 - Receivables from broker, dealers, and clearing organizations 1,134 1,134 - 1,134 - Interest receivable 117 117 - 117 - Other assets 5 6 - 6 - Total financial assets, not measured at fair value $ 53,531 $ 53,532 $ 10,186 $ 43,346 $ - Financial liabilities, not measured at fair value Short-term borrowings $ 193 $ 193 $ - $ 193 $ - Securities loaned 4,091 4,091 - 4,091 - Securities sold under agreements to repurchase - - - - - Payables to customer 48,239 48,239 - 48,239 - Payables to brokers, dealers and clearing organizations 100 100 - 100 - Interest payable 29 29 - 29 - Total financial liabilities, not measured at fair value $ 52,652 $ 52,652 $ - $ 52,652 $ - December 31, 2017 Carrying Value Fair Value Level 1 Level 2 Level 3 (in millions) Financial assets, not measured at fair value Cash and cash equivalents $ 1,732 $ 1,732 $ 1,732 $ - $ - Cash - segregated for regulatory purposes 6,547 6,547 6,547 - - Securities - segregated for regulatory purposes 9,166 9,166 - 9,166 - Securities borrowed 2,957 2,957 - 2,957 - Securities purchased under agreements to resell 2,035 2,035 - 2,035 - Receivables from customer 29,821 29,821 - 29,821 - Receivables from broker, dealers, and clearing organizations 823 823 - 823 - Interest receivable 116 116 - 116 - Other assets 6 6 - 6 - Total financial assets, not measured at fair value $ 53,203 $ 53,203 $ 8,279 $ 44,924 $ - Financial liabilities, not measured at fair value Short-term borrowings $ 15 $ 15 $ - $ 15 $ - Securities loaned 4,444 4,444 - 4,444 - Securities sold under agreements to repurchase 1,316 1,316 - 1,316 - Payables to customer 47,548 47,548 - 47,548 - Payables to brokers, dealers and clearing organizations 283 283 - 283 - Interest payable 22 22 - 22 - Total financial liabilities, not measured at fair value $ 53,628 $ 53,628 $ - $ 53,628 $ - |
Offsetting Assets | June 30, 2018 Gross Amounts Net Amounts Amounts Not Offset Amounts Offset in the Presented in in the Condensed of Financial Condensed the Condensed Consolidated Statement Assets and Consolidated Consolidated of Financial Condition Liabilities Statement of Statement of Cash or Financial Recognized Financial Condition 2 Financial Condition Instruments Net Amount (in millions) Offsetting of Financial Assets Securities segregated for regulatory purposes - purchased under agreements to resell $ 8,998 1 $ — $ 8,998 $ (8,998) $ — Securities borrowed 3,588 — 3,588 (3,451) 137 Securities purchased under agreements to resell 533 — 533 (533) — Financial Instruments owned, at fair value Options 1,207 — 1,207 (425) 782 Warrants and discount certificates 2 — 2 — 2 Currency forward contracts 6 — 6 — 6 Total $ 14,334 $ — $ 14,334 $ (13,407) $ 927 December 31, 2017 Gross Amounts Net Amounts Amounts Not Offset Amounts Offset in the Presented in in the Condensed of Financial Condensed the Condensed Consolidated Statement Assets and Consolidated Consolidated of Financial Condition Liabilities Statement of Statement of Cash or Financial Recognized Financial Condition 2 Financial Condition Instruments Net Amount (in millions) Offsetting of Financial Assets Securities segregated for regulatory purposes - purchased under agreements to resell $ 9,166 1 $ — $ 9,166 $ (9,166) $ — Securities borrowed 2,957 — 2,957 (2,822) 135 Securities purchased under agreements to resell 2,035 — 2,035 (2,035) — Financial Instruments owned, at fair value Options 1,052 — 1,052 (451) 601 Warrants and discount certificates 5 — 5 — 5 Currency forward contracts 32 — 32 — 32 Total $ 15,247 $ — $ 15,247 $ (14,474) $ 773 (1) As of June 30, 2018 and December 31, 2017, the Company had $9.0 billion and $9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “Cash and securities - segregated for regulatory purposes” in the consolidated statements of financial condition. (2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at June 30, 2018 and December 31, 2017. |
Offsetting Liabilities | (in millions) Offsetting of Financial Liabilities Securities loaned $ 4,091 $ — $ 4,091 $ (3,885) $ 206 Securities sold under agreements to repurchase — — — — — Financial instruments sold, but not yet purchased, at fair value Options 426 — 426 (425) 1 Warrants and discount certificates — — — — — Currency forward contracts 5 — 5 — 5 Total $ 4,522 $ — $ 4,522 $ (4,310) $ 212 (in millions) Offsetting of Financial Liabilities Securities loaned $ 4,444 $ — $ 4,444 $ (4,201) $ 243 Securities sold under agreements to repurchase 1,316 1,316 (1,316) Financial instruments sold, but not yet purchased, at fair value Options 464 — 464 (451) 13 Warrants and discount certificates — — — — — Currency forward contracts 1 — 1 — 1 Total $ 6,225 $ — $ 6,225 $ (5,968) $ 257 (1) As of June 30 , 2018 and December 31, 2017 , the Company had $9.0 billion and $ 9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “Cash and securities - segregated for regulatory purposes” in the consolidated statements of financial condition. (2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at June 30 , 2018 and December 31, 2017 . |
Schedule of Securities Financing Transactions | June 30, 2018 Remaining Contractual Maturity Overnight Less than 30 – 90 Over 90 and Open 30 days days days Total (in millions) Securities loaned Stocks $ 4,039 $ - $ - $ - $ 4,039 Corporate bonds 52 - - - 52 Foreign government securities - - - - - Total securities loaned $ 4,091 $ - $ - $ - $ 4,091 December 31, 2017 Remaining Contractual Maturity Overnight Less than 30 – 90 Over 90 and Open 30 days days days Total (in millions) Securities Loaned Stocks $ 4,389 $ - $ - $ - $ 4,389 Corporate bonds 55 - - - 55 Total securities loaned 4,444 - - - 4,444 Securities sold under agreements to repurchase U.S. government securities 1,316 - - - 1,316 Total $ 5,760 $ - $ - $ - $ 5,760 |
Collateralized Transactions (Ta
Collateralized Transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure Collateralized Transactions [Abstract] | |
Amounts Related To Collateralized Transactions | June 30, 2018 December 31, 2017 Permitted Sold or Permitted Sold or to Repledge Repledged to Repledge Repledged (in millions) Securities lending transactions $ 24,396 $ 3,568 $ 23,662 $ 3,041 Securities purchased under agreements to resell transactions (1) 9,543 9,483 11,231 11,231 Customer margin assets 29,849 8,300 30,236 9,013 $ 63,788 $ 21,351 $ 65,129 $ 23,285 (1) As of June 30 , 2018 , $9.0 billion or 95% (as of December 31, 2017 , $9.2 billion or 82% ) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3. |
Financial Instruments Owned and Pledged as Collateral (table) | June 30, December 31, 2018 2017 (in millions) Stocks $ 115 $ 1,150 U.S. and foreign government securities 132 54 $ 247 $ 1,204 |
Revenue From Contracts With C28
Revenue From Contracts With Customers (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Three Months Ended June 30, 2018 Electronic brokerage Market making Corporate Total (in millions) Geographic location 1 United States $ 157 $ 1 $ 1 $ 159 International 62 - - 62 $ 219 $ 1 $ 1 $ 221 Major types of services Commissions $ 185 $ - $ - $ 185 Market data fees 2 11 - - 11 Risk exposure fees 2 7 - - 7 Payments for order flow 2 5 - - 5 Minimum activity fees 2 5 - - 5 Other 2 6 1 1 8 $ 219 $ 1 $ 1 $ 221 Six Months Ended June 30, 2018 Electronic brokerage Market making Corporate Total (in millions) Geographic location 1 United States $ 339 $ 3 $ 1 $ 343 International 134 - - 134 $ 473 $ 3 $ 1 $ 477 Major types of services Commissions $ 405 $ - $ - $ 405 Market data fees 2 22 - - 22 Risk exposure fees 2 15 - - 15 Payments for order flow 2 10 - - 10 Minimum activity fees 2 10 - - 10 Other 2 11 3 1 15 $ 473 $ 3 $ 1 $ 477 (1) Based on the location of the subsidiaries in which the revenues are recorded. (2) Included in other income on the condensed consolidated statements of comprehensive income. |
Other Income (Tables)
Other Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Income [Abstract] | |
Schedule Of Components Of Other Income | Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions) Market data fees 1 $ 11 $ 9 $ 22 $ 18 Minimum activity fees 1 5 5 10 10 Risk exposure fees 1 7 6 15 11 Payments for order flow 1 5 4 10 8 Gains on financial instruments, at fair value and other investments, net 9 — 11 2 Gains (losses) from currency diversification strategy, net (21) 29 17 78 Other, net 7 6 15 8 $ 23 $ 59 $ 100 $ 135 (1) See Note 8 for description of these revenues. |
Employee Incentive Plans (Table
Employee Incentive Plans (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Employee Incentive Plans [Abstract] | |
Share Grants And Fair Value | Fair Value at Date of Grant Units ($ millions) Prior periods (since inception) 20,888,468 $ 397 December 31, 2015 1,211,533 52 December 31, 2016 1,451,136 55 December 31, 2017 946,489 1 57 24,497,626 $ 561 (1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 23,082 additional restricted stock units during the six months ended June 30 , 2018. |
2007 Stock Incentive Plan, ROI Summary | Stock ROI Unit Incentive Plan Stock Plan Units Shares Balance, December 31, 2017 6,473,720 1 3,849 Granted — — Cancelled (42,289) — Distributed (2,065,342) (3,849) Balance, June 30, 2018 4,366,089 — (1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 23,082 additional restricted stock units during the six months ended June 30 , 2018. |
Segment And Geographic Inform31
Segment And Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment And Geographic Information [Abstract] | |
Segment Information | Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions) Net revenues Electronic brokerage $ 443 $ 334 $ 908 $ 648 Market making 22 23 43 31 Corporate (20) 30 21 82 Total net revenues $ 445 $ 387 $ 972 $ 761 Income before income taxes Electronic brokerage $ 283 $ 198 $ 574 $ 383 Market making 9 (24) 18 (46) Corporate (21) 30 19 80 Total income before income taxes $ 271 $ 204 $ 611 $ 417 June 30, December 31, 2018 2017 (in millions) Segment assets Electronic brokerage $ 58,355 $ 58,787 Market making 2,781 8,469 Corporate (833) (6,094) Total assets $ 60,303 $ 61,162 |
Schedule Of Total Net Revenues And Income Before Income Taxes By Geographic Area | Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in millions) Net revenues United States $ 345 $ 316 $ 765 $ 619 International 100 71 207 142 Total net revenues $ 445 $ 387 $ 972 $ 761 Income before income taxes United States $ 231 $ 186 $ 525 $ 381 International 40 18 86 36 Total income before income taxes $ 271 $ 204 $ 611 $ 417 |
Regulatory Requirements (Tables
Regulatory Requirements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Regulatory Requirements [Abstract] | |
Summary Of Capital, Capital Requirements And Excess Capital | Net Capital/ Eligible Equity Requirement Excess (in millions) IB LLC $ 4,161 $ 465 $ 3,696 TH LLC 213 - 213 THE 617 92 525 Other regulated Operating Companies 813 161 652 $ 5,804 $ 718 $ 5,086 |
Organization Of Business (Detai
Organization Of Business (Details) | 6 Months Ended | |
Jun. 30, 2018employeesegment | May 03, 2007 | |
Number of employees | employee | 1,310 | |
Number of operating segments | segment | 2 | |
IBG LLC [Member] | ||
IBG Inc. ownership % of IBG LLC | 17.80% | 10.00% |
Significant Accounting Polici34
Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | May 03, 2007 | |
Increase in net cash from by operating activities | $ 2,132,000,000 | $ 1,586,000,000 | |||
SIP expense - Year of grant | 50.00% | ||||
SIP expense - Remaining vesting period | 50.00% | ||||
SIP expense - Employees over 59 in year of grant | 100.00% | ||||
Percent of shares cancelled post employment | 50.00% | ||||
Over 59 percent of shares eligible | 100.00% | ||||
U.S. Treasury Securities | $ 4,400,000,000 | 4,400,000,000 | $ 4,500,000,000 | ||
Securities Purchased Under Agreement to Resell Segregated for Regulatory Purposes | 9,000,000,000 | 9,000,000,000 | 9,200,000,000 | ||
Equity method investments | 23,000,000 | $ 23,000,000 | 23,000,000 | ||
Property and equipment useful lives, description | Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years. Intangible assets with a finite life are amortized on a straight line basis over their estimated useful lives of three years, and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years. | ||||
Restructuring and Related Cost, Expected Cost | 25,000,000 | ||||
Restructuring and Related Cost, Incurred Cost | $ 0 | ||||
Supplemental unemployment benefits severance benefits | 3,000,000 | ||||
Severance costs | 2,000,000 | ||||
Restructuring settlement and impairment provisions | $ 22,000,000 | ||||
Restructuring costs and asset impairment charges | 21,000,000 | ||||
AOCI gain reclassified to earnings | 32,000,000 | ||||
Accumulated tax effect | 1,000,000 | ||||
U.S. Statutory Tax Rate | 21.00% | 35.00% | |||
Equity Securities [Member] | |||||
Investments at cost | 26,000,000 | $ 26,000,000 | $ 5,000,000 | ||
Exchange Cleared [Member] | Equity Securities [Member] | |||||
Investments at cost | $ 5,000,000 | $ 5,000,000 | $ 6,000,000 | ||
Accounting Standards Update 2016-18 [Member] | |||||
Increase in net cash from by operating activities | $ 1,286,000,000 | ||||
Maximum [Member] | Computer Equipment [Member] | |||||
Property and equipment useful lives | 5 years | ||||
Maximum [Member] | Office Furniture And Equipment [Member] | |||||
Property and equipment useful lives | 7 years | ||||
Maximum [Member] | Internally Developed Software [Member] | |||||
Intangible assets useful lives | 3 years | ||||
Maximum [Member] | Finite-Lived Intangible Assets [Member] | |||||
Intangible assets useful lives | 3 years | ||||
Minimum [Member] | Computer Equipment [Member] | |||||
Property and equipment useful lives | 3 years | ||||
Minimum [Member] | Office Furniture And Equipment [Member] | |||||
Property and equipment useful lives | 5 years |
Equity And Earnings Per Share35
Equity And Earnings Per Share (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 6 Months Ended | 36 Months Ended | 84 Months Ended | 134 Months Ended | ||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2010 | Dec. 31, 2017 | Jun. 30, 2018 | Jul. 27, 2018 | May 03, 2007 | |
Equity And Earnings Per Share [Line Items] | |||||||||
IBG Holdings ownership % of IBG LLC | 82.20% | 82.20% | 82.20% | 90.00% | |||||
IBG Holdings Redemption of IBG LLC | 10.00% | ||||||||
IBG Holdings LLC Ownership Percentage of Class B Common Stock | 100.00% | ||||||||
Preferred stock shares authorized | 10,000 | 10,000 | 10,000 | 10,000 | |||||
Preferred stock shares issued | 0 | 0 | 0 | 0 | |||||
Preferred stock shares outstanding | 0 | 0 | 0 | 0 | |||||
Amortization period DTA (years) | 15 years | ||||||||
Unamortized deferred tax asset arising from equity offerings | $ 137 | $ 137 | $ 146 | $ 137 | |||||
Percent of tax savings owed to IBG Holdings LLC | 85.00% | ||||||||
Percentage of tax savings retained by IBG Inc. | 15.00% | ||||||||
Deferred tax asset from common stock offerings | 483 | $ 483 | 483 | ||||||
Tax savings owed to IBG Holdings LLC | 410 | 410 | 410 | ||||||
Tax savings retained by IBG Inc. | $ 73 | $ 73 | 73 | ||||||
Tax savings paid to IBG Holdings LLC | $ 159 | ||||||||
Shares reserved for future issuance | 360,000,000 | ||||||||
Shares redeemed by IBG Holdings from IBG LLC | 5,013,259 | ||||||||
Cash Redemptions IBG Holdings | $ 114 | ||||||||
Fair Value of Issued Shares in Exchange for Membership Interests | $ 410 | ||||||||
Shares Issued | 13,858,355 | ||||||||
Thomas Peterffy and Affiliates Ownership | 89.20% | 89.20% | 89.20% | 84.60% | |||||
Distribution from IBG LLC | $ 303 | ||||||||
Cash distribution to IBG, Inc. | $ 53 | ||||||||
Dividend per share | $ 0.10 | ||||||||
Dividends paid to common shareholders | $ 7 | $ 7 | $ 14 | $ 14 | |||||
Declaration Date | Jul. 17, 2018 | ||||||||
Payment Date | Sep. 14, 2018 | ||||||||
Record Date | Aug. 31, 2018 | ||||||||
IBG LLC [Member] | |||||||||
Equity And Earnings Per Share [Line Items] | |||||||||
IBG Inc. ownership % of IBG LLC | 17.80% | 17.80% | 17.80% | 10.00% | |||||
IBG LLC [Member] | Subsequent Event [Member] | |||||||||
Equity And Earnings Per Share [Line Items] | |||||||||
IBG Inc. ownership % of IBG LLC | 18.10% | ||||||||
Common stock, shares issued | 1,537,727 | ||||||||
Common Class A | |||||||||
Equity And Earnings Per Share [Line Items] | |||||||||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Shares authorized | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | |||||
Common stock, shares issued | 73,674,391 | 73,674,391 | 71,609,049 | 73,674,391 | |||||
Common stock, shares outstanding | 73,544,943 | 73,544,943 | 71,475,755 | 73,544,943 | |||||
Common Class B | |||||||||
Equity And Earnings Per Share [Line Items] | |||||||||
Shares authorized | 100 | 100 | 100 | 100 | |||||
Common stock, shares issued | 100 | 100 | 100 | 100 | |||||
Common stock, shares outstanding | 100 | 100 | 100 | 100 |
Equity And Earnings Per Share36
Equity And Earnings Per Share (IBG LLC Ownership of Member Interests) (Details) | Jun. 30, 2018shares |
Ownership Percentage | 100.00% |
Membership Interests | 413,774,390 |
IBG Inc [Member] | |
Ownership Percentage | 17.80% |
Membership Interests | 73,544,946 |
Holdings [Member] | |
Ownership Percentage | 82.20% |
Membership Interests | 340,229,444 |
Equity And Earnings Per Share37
Equity And Earnings Per Share (Basic Table) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Basic earnings per share: | ||||
Net income available for common stockholders | $ 41 | $ 23 | $ 87 | $ 47 |
Weighted average shares of common stock outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 72,476,729 | 69,087,853 | 71,979,104 | 68,539,526 |
Basic earnings per share | $ 0.57 | $ 0.33 | $ 1.21 | $ 0.68 |
Common Class A | ||||
Weighted average shares of common stock outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 72,476,629 | 69,087,753 | 71,979,004 | 68,539,426 |
Common Class B | ||||
Weighted average shares of common stock outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 100 | 100 | 100 | 100 |
Equity And Earnings Per Share38
Equity And Earnings Per Share (Diluted Table) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Diluted earnings per share: | ||||
Net income available for common stockholders | $ 41 | $ 23 | $ 87 | $ 47 |
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Basic | 72,476,729 | 69,087,853 | 71,979,104 | 68,539,526 |
Potentially dilutive common shares: | ||||
Issuable pursuant to employee incentive plans | 852,767 | 975,574 | 944,640 | 1,074,041 |
Weighted Average Number of Shares Outstanding, Diluted | 73,329,496 | 70,063,427 | 72,923,744 | 69,613,567 |
Earnings Per Share, Diluted | $ 0.57 | $ 0.32 | $ 1.20 | $ 0.67 |
Common Class A | ||||
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Basic | 72,476,629 | 69,087,753 | 71,979,004 | 68,539,426 |
Common Class B | ||||
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Basic | 100 | 100 | 100 | 100 |
Comprehensive Income (Details)
Comprehensive Income (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Comprehensive Income Detail [Abstract] | ||||
Comprehensive income available for common stockholders | $ 28 | $ 29 | $ 75 | $ 57 |
Earnings per share on comprehensive income: | ||||
Basic | $ 0.39 | $ 0.42 | $ 1.05 | $ 0.83 |
Diluted | $ 0.39 | $ 0.41 | $ 1.03 | $ 0.81 |
Weighted average common shares outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 72,476,729 | 69,087,853 | 71,979,104 | 68,539,526 |
Weighted Average Number of Shares Outstanding, Diluted | 73,329,496 | 70,063,427 | 72,923,744 | 69,613,567 |
Financial Assets And Financia40
Financial Assets And Financial Liabilities (Narrative) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities purchased under agreement to resell segregated for regulatory purposes | $ 9,000 | $ 9,200 |
Total financial instruments owned, at fair value | 2,088 | 3,154 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 4 | $ 4 |
Level 3 | Corporate And Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 3 | |
Level 3 | Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | $ 1 |
Financial Assets And Financia41
Financial Assets And Financial Liabilities (Fair Value Table) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities segregated for regulatory purposes | $ 4,370 | $ 4,519 |
Total financial instruments owned, at fair value | 2,088 | 3,154 |
Total Financial Assets at Fair Value | 6,458 | 7,673 |
Financial instruments sold, not yet purchased, at fair value | 630 | 767 |
Total Financial Liabilities at Fair Value | 630 | 767 |
Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 713 | 2,001 |
Financial instruments sold, not yet purchased, at fair value | 199 | 302 |
Options owned [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 1,207 | 1,052 |
Financial instruments sold, not yet purchased, at fair value | 426 | 464 |
Warrants And Discount Certificates [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 2 | 5 |
U.S. And Foreign Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 156 | 60 |
Corporate And Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 4 | 4 |
Currency Forward Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 6 | 32 |
Financial instruments sold, not yet purchased, at fair value | 5 | 1 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities segregated for regulatory purposes | 4,370 | 4,519 |
Total financial instruments owned, at fair value | 2,077 | 3,117 |
Total Financial Assets at Fair Value | 6,447 | 7,636 |
Financial instruments sold, not yet purchased, at fair value | 625 | 766 |
Total Financial Liabilities at Fair Value | 625 | 766 |
Level 1 | Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 712 | 2,000 |
Financial instruments sold, not yet purchased, at fair value | 199 | 302 |
Level 1 | Options owned [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 1,207 | 1,052 |
Financial instruments sold, not yet purchased, at fair value | 426 | 464 |
Level 1 | Warrants And Discount Certificates [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 2 | 5 |
Level 1 | U.S. And Foreign Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 156 | 60 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 7 | 33 |
Total Financial Assets at Fair Value | 7 | 33 |
Financial instruments sold, not yet purchased, at fair value | 5 | 1 |
Total Financial Liabilities at Fair Value | 5 | 1 |
Level 2 | Corporate And Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 1 | 1 |
Level 2 | Currency Forward Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 6 | 32 |
Financial instruments sold, not yet purchased, at fair value | 5 | 1 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 4 | 4 |
Total Financial Assets at Fair Value | 4 | 4 |
Level 3 | Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 1 | 1 |
Level 3 | Corporate And Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | $ 3 | $ 3 |
Financial Assets And Financia42
Financial Assets And Financial Liabilities (Trading Gains from Market Making Transactions) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Financial Assets And Financial Liabilities [Abstract] | ||||
Equities | $ 12 | $ 17 | $ 25 | $ 20 |
Foreign exchange | (4) | (5) | ||
Total trading gains, net | $ 12 | $ 13 | $ 25 | $ 15 |
Financial Assets And Financia43
Financial Assets And Financial Liabilities (Financial Assets and Liabilities Not Measured at Fair Value) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Cash and cash equivalents | $ 2,500 | $ 1,732 | $ 2,115 |
Cash - segregated for regulatory purposes | 7,686 | 6,547 | $ 6,910 |
Securities - segregated for regulatory purposes | 13,368 | 13,685 | |
Securities borrowed | 3,588 | 2,957 | |
Securities purchased under agreements to resell | 533 | 2,035 | |
Receivables from customer | 28,970 | 29,821 | |
Receivables from brokers, dealers and clearing organizations | 1,134 | 823 | |
Interest receivable | 117 | 116 | |
Other assets | 319 | 292 | |
Short-term borrowings | 193 | 15 | |
Securities loaned | 4,091 | 4,444 | |
Securities sold under agreements to repurchase | 1,316 | ||
Payables to customers | 48,239 | 47,548 | |
Payables to brokers, dealers and clearing organizations | 100 | 283 | |
Interest payable | 29 | 22 | |
at Fair Value | |||
Cash and cash equivalents | 2,500 | 1,732 | |
Cash - segregated for regulatory purposes | 7,686 | 6,547 | |
Securities - segregated for regulatory purposes | 8,998 | 9,166 | |
Securities borrowed | 3,588 | 2,957 | |
Securities purchased under agreements to resell | 533 | 2,035 | |
Receivables from customer | 28,970 | 29,821 | |
Receivables from brokers, dealers and clearing organizations | 1,134 | 823 | |
Interest receivable | 117 | 116 | |
Other assets | 6 | 6 | |
Total financial assets, not measured at fair value | 53,532 | 53,203 | |
Short-term borrowings | 193 | 15 | |
Securities loaned | 4,091 | 4,444 | |
Securities sold under agreements to repurchase | 1,316 | ||
Payables to customers | 48,239 | 47,548 | |
Payables to brokers, dealers and clearing organizations | 100 | 283 | |
Interest payable | 29 | 22 | |
Total financial liabilities, not measured at fair value | 52,652 | 53,628 | |
Carrying Value | |||
Cash and cash equivalents | 2,500 | 1,732 | |
Cash - segregated for regulatory purposes | 7,686 | 6,547 | |
Securities - segregated for regulatory purposes | 8,998 | 9,166 | |
Securities borrowed | 3,588 | 2,957 | |
Securities purchased under agreements to resell | 533 | 2,035 | |
Receivables from customer | 28,970 | 29,821 | |
Receivables from brokers, dealers and clearing organizations | 1,134 | 823 | |
Interest receivable | 117 | 116 | |
Other assets | 5 | 6 | |
Total financial assets, not measured at fair value | 53,531 | 53,203 | |
Short-term borrowings | 193 | 15 | |
Securities loaned | 4,091 | 4,444 | |
Securities sold under agreements to repurchase | 1,316 | ||
Payables to customers | 48,239 | 47,548 | |
Payables to brokers, dealers and clearing organizations | 100 | 283 | |
Interest payable | 29 | 22 | |
Total financial liabilities, not measured at fair value | 52,652 | 53,628 | |
Level 1 | |||
Cash and cash equivalents | 2,500 | 1,732 | |
Cash - segregated for regulatory purposes | 7,686 | 6,547 | |
Total financial assets, not measured at fair value | 10,186 | 8,279 | |
Short-term borrowings | |||
Securities loaned | |||
Securities sold under agreements to repurchase | |||
Payables to customers | |||
Payables to brokers, dealers and clearing organizations | |||
Interest payable | |||
Total financial liabilities, not measured at fair value | |||
Level 2 | |||
Securities - segregated for regulatory purposes | 8,998 | 9,166 | |
Securities borrowed | 3,588 | 2,957 | |
Securities purchased under agreements to resell | 533 | 2,035 | |
Receivables from customer | 28,970 | 29,821 | |
Receivables from brokers, dealers and clearing organizations | 1,134 | 823 | |
Interest receivable | 117 | 116 | |
Other assets | 6 | 6 | |
Total financial assets, not measured at fair value | 43,346 | 44,924 | |
Short-term borrowings | 193 | 15 | |
Securities loaned | 4,091 | 4,444 | |
Securities sold under agreements to repurchase | 1,316 | ||
Payables to customers | 48,239 | 47,548 | |
Payables to brokers, dealers and clearing organizations | 100 | 283 | |
Interest payable | 29 | 22 | |
Total financial liabilities, not measured at fair value | 52,652 | 53,628 | |
Level 3 | |||
Cash and cash equivalents | |||
Cash - segregated for regulatory purposes | |||
Securities - segregated for regulatory purposes | |||
Securities borrowed | |||
Securities purchased under agreements to resell | |||
Receivables from customer | |||
Receivables from brokers, dealers and clearing organizations | |||
Interest receivable | |||
Other assets | |||
Total financial assets, not measured at fair value | |||
Short-term borrowings | |||
Securities loaned | |||
Securities sold under agreements to repurchase | |||
Payables to customers | |||
Payables to brokers, dealers and clearing organizations | |||
Interest payable | |||
Total financial liabilities, not measured at fair value |
Financial Assets And Financia44
Financial Assets And Financial Liabilities (Netting of Financial Assets) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Securities, Segregated For Regulatory Purposes, Purchased Under Agreements To Resell [Abstract] | |||
Gross Amounts of Financial Assets Recognized | [1] | $ 8,998 | $ 9,166 |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 8,998 | 9,166 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (8,998) | (9,166) | |
Net Amount | |||
Offsetting Securities Borrowed [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 3,588 | 2,957 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 3,588 | 2,957 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (3,451) | (2,822) | |
Net Amount | 137 | 135 | |
Offsetting Securities Purchased under Agreements to Resell [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 533 | 2,035 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 533 | 2,035 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (533) | (2,035) | |
Net Amount | |||
Total [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 14,334 | 15,247 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 14,334 | 15,247 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (13,407) | (14,474) | |
Net Amount | 927 | 773 | |
Options [Member] | |||
Offsetting Financial Instruments Owned, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 1,207 | 1,052 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 1,207 | 1,052 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (425) | (451) | |
Net Amount | 782 | 601 | |
Warrants And Discount Certificates [Member] | |||
Offsetting Financial Instruments Owned, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 2 | 5 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 2 | 5 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | |||
Net Amount | 2 | 5 | |
Currency Forward Contracts [Member] | |||
Offsetting Financial Instruments Owned, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 6 | 32 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 6 | 32 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | |||
Net Amount | $ 6 | $ 32 | |
[1] | As of June 30, 2018 and December 31, 2017, the Company had $9.0 billion and $9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in "securities - segregated for regulatory purposes" in the condensed consolidated statements of financial condition. | ||
[2] | The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at June 30, 2018 and December 31, 2017. |
Financial Assets And Financia45
Financial Assets And Financial Liabilities (Netting of Financial Liabilities) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Offsetting Securities Loaned [Abstract] | |||
Gross Amounts of Financial Assets Recognized | $ 4,091 | $ 4,444 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 4,091 | 4,444 | |
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | (3,885) | (4,201) | |
Net Amount | 206 | 243 | |
Securities Sold under Agreements to Repurchase [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 1,316 | ||
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 1,316 | ||
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | (1,316) | ||
Net Amount | |||
Total [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 4,522 | 6,225 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 4,522 | 6,225 | |
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | (4,310) | (5,968) | |
Net Amount | 212 | 257 | |
Options [Member] | |||
Offsetting Financial Instruments Sold, But Not Yet Purchased, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 426 | 464 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 426 | 464 | |
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | (425) | (451) | |
Net Amount | 1 | 13 | |
Warrants And Discount Certificates [Member] | |||
Offsetting Financial Instruments Sold, But Not Yet Purchased, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | |||
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | |||
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | |||
Net Amount | |||
Currency Forward Contracts [Member] | |||
Offsetting Financial Instruments Sold, But Not Yet Purchased, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 5 | 1 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 5 | 1 | |
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | |||
Net Amount | $ 5 | $ 1 | |
[1] | The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at June 30, 2018 and December 31, 2017. |
Financial Assets And Financia46
Financial Assets And Financial Liabilities (Secured Financing Transactions) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | $ 4,091 | $ 4,444 |
Securities sold under agreements to repurchase | 1,316 | |
Total | 5,760 | |
US Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities sold under agreements to repurchase | 1,316 | |
Overnight and Open [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 4,091 | 4,444 |
Total | 5,760 | |
Overnight and Open [Member] | US Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities sold under agreements to repurchase | 1,316 | |
Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 4,039 | 4,389 |
Common Stock [Member] | Overnight and Open [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 4,039 | 4,389 |
Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 52 | 55 |
Corporate Bonds [Member] | Overnight and Open [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | $ 52 | $ 55 |
Collateralized Transactions (Na
Collateralized Transactions (Narrative) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Disclosure Collateralized Transactions [Abstract] | ||
Customers, less allowance for doubtful accounts of $41 and $40 as of June 30, 2018 and December 31, 2017 | $ 28,970 | $ 29,821 |
Securities purchased under agreement to resell segregated for regulatory purposes | $ 9,000 | $ 9,200 |
Percentage of securities repledged and deposited for customers | 95.00% | 82.00% |
Collateralized Transactions (Am
Collateralized Transactions (Amounts Related to Collateralized Transactions) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Permitted To Repledge [Member] | |||
Collateralized Transactions [Line Items] | |||
Securities lending transactions | $ 24,396 | $ 23,662 | |
Agreements to resell | [1] | 9,543 | 11,231 |
Customer margin assets | 29,849 | 30,236 | |
Total collateralized transactions | 63,788 | 65,129 | |
Sold Or Repledged [Member] | |||
Collateralized Transactions [Line Items] | |||
Securities lending transactions | 3,568 | 3,041 | |
Agreements to resell | [1] | 9,483 | 11,231 |
Customer margin assets | 8,300 | 9,013 | |
Total collateralized transactions | $ 21,351 | $ 23,285 | |
[1] | As of June 30, 2018, $9.0 billion or 95% (as of December 31, 2017, $9.2 billion or 82%) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3. |
Collateralized Transactions (Fi
Collateralized Transactions (Financial instruments owned and pledged where the counterparty has the right to repledge) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Disclosure Collateralized Transactions [Abstract] | ||
Stocks | $ 115 | $ 1,150 |
U.S. and foreign government securities | 132 | 54 |
Financial Instruments Owned and Pledged as Collateral - Eligible to be Repledged by Counterparty | $ 247 | $ 1,204 |
Revenue From Contracts With C50
Revenue From Contracts With Customers (Summary of Receivables, Contract Assets and Contract Liabilities) (Details) $ in Millions | Jun. 30, 2018USD ($) |
Revenue from Contract with Customer [Abstract] | |
Receivables | $ 11 |
Revenue From Contracts With C51
Revenue From Contracts With Customers (Disaggregation of Revenue ) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 221 | $ 477 | |
Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 219 | 473 | |
Market Making [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 1 | 3 | |
Corporate [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 1 | 1 | |
United States [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 159 | 343 |
United States [Member] | Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 157 | 339 |
United States [Member] | Market Making [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 1 | 3 |
United States [Member] | Corporate [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 1 | 1 |
International [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 62 | 134 |
International [Member] | Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 62 | 134 |
Commissions [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 185 | 405 | |
Commissions [Member] | Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 185 | 405 | |
Market Data Fees [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 11 | 22 |
Market Data Fees [Member] | Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 11 | 22 |
Risk Exposure Fees [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 7 | 15 |
Risk Exposure Fees [Member] | Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 7 | 15 |
Payments For Order Flow [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 5 | 10 |
Payments For Order Flow [Member] | Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 5 | 10 |
Minimum Activity Fees [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 5 | 10 |
Minimum Activity Fees [Member] | Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 5 | 10 |
Others [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 8 | 15 |
Others [Member] | Electronic Brokerage [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 6 | 11 |
Others [Member] | Market Making [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 1 | 3 |
Others [Member] | Corporate [Member] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | $ 1 | $ 1 |
[1] | Based on the location of the subsidiaries in which the revenues are recorded.Included in other income on the condensed consolidated statements of comprehensive income. | ||
[2] | Included in other income on the condensed consolidated statements of comprehensive income. |
Other Income (Schedule Of Compo
Other Income (Schedule Of Components Of Other Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Other Income [Abstract] | |||||
Market data fees | [1] | $ 11 | $ 9 | $ 22 | $ 18 |
Minimum activity fees | [1] | 5 | 5 | 10 | 10 |
Risk exposure fees | [1] | 7 | 6 | 15 | 11 |
Payments for order flow | [1] | 5 | 4 | 10 | 8 |
Gains (losses) on financial instruments, at fair value and other investments, net | 9 | 11 | 2 | ||
Gains (losses) from currency diversification strategy, net | (21) | 29 | 17 | 78 | |
Other, net | 7 | 6 | 15 | 8 | |
Other income | $ 23 | $ 59 | $ 100 | $ 135 | |
[1] | See Note 8 for description of these revenues. |
Employee Incentive Plans (Narra
Employee Incentive Plans (Narrative) (Details) - USD ($) $ in Millions | 6 Months Ended | 134 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | May 03, 2007 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
401(k) plan contribution expense | $ 2 | $ 2 | ||
Common Stock Shares issued under ROI Unit Stock Plan | 1,271,009 | |||
ROI Shares issued to IBG LLC | 1,250,000 | |||
2007 SIP shares issued under ROI Unit Stock Plan | 21,009 | |||
Fair value ROI Treasury Stock | $ 38 | |||
Maximum shares of stock distributable under 2007 Stock Incentive Plan | 30,000,000 | 30,000,000 | ||
Stock Incentive Plan Granted Shares Adjustment | 23,082 | |||
2007 Stock Incentive Plan Compensation Expense | $ 29 | $ 25 | ||
Estimated Future 2007 Stock Incentive Plan Compensation Expense | $ 30 | $ 30 | ||
Post employment shares distribution | 809,059 | |||
2007 Stock Incentive Plan (Shares) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting Percentage, description | • 10% on the first vesting date, which is on or about May 9 of each year; and• an additional 15% on each of the following six anniversaries of the first vesting, assuming continued employment with the Company and compliance with non-competition and other applicable covenants. | |||
2007 Stock Incentive Plan (Shares) | External Director [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years | |||
Shares granted to external directors | 24,263 | |||
2007 Stock Incentive Plan (Shares) | Share-based Compensation Award, Tranche One [Member] | External Director [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage per year | 20.00% |
Employee Incentive Plans (Share
Employee Incentive Plans (Share Grants And Fair Value) (Details) - USD ($) $ in Millions | 12 Months Ended | 92 Months Ended | 128 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2017 | ||
Employee Incentive Plans [Abstract] | ||||||
Shares granted | 946,489 | [1] | 1,451,136 | 1,211,533 | 20,888,468 | |
Fair Value - Date of Grant | $ 57 | $ 55 | $ 52 | $ 397 | $ 57 | |
Shares Granted IPO to Date | 24,497,626 | |||||
Fair Value - Date of Grant IPO to Date | $ 561 | |||||
[1] | Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 23,082 additional restricted stock units during the six months ended June 30, 2018. |
Employee Incentive Plans (2007
Employee Incentive Plans (2007 Stock Incentive Plan, ROI Summary) (Details) | 6 Months Ended | |
Jun. 30, 2018shares | ||
2007 Stock Incentive Plan (Shares) | ||
Beginning Balance | 6,473,720 | [1] |
Shares Cancelled | (42,289) | |
Shares Distributed | (2,065,342) | |
Ending Balance | 4,366,089 | |
2007 ROI Unit Stock Plan (Shares) [Member] | ||
Beginning Balance | 3,849 | |
Shares Distributed | (3,849) | |
[1] | Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 23,082 additional restricted stock units during the six months ended June 30, 2018. |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Income Taxes [Abstract] | ||
U.S. Statutory Tax Rate | 21.00% | 35.00% |
Adjustment to deferred income tax expense (or deferred tax benefit) | $ 115 | |
Provisional Transition Tax obligation | 62 | |
Undistributed accumulated earnings of foreign subsidiaries | $ 1,100 | 1,100 |
Accumulated earnings of foreign pass through subsidiaries | 300 | 300 |
Accumulated earnings subject to additional foreign tax | $ 200 | $ 200 |
Segment And Geographic Inform57
Segment And Geographic Information (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2018segment | |
Segment And Geographic Information [Abstract] | |
Number of Operating Segments | 2 |
Segment And Geographic Inform58
Segment And Geographic Information (Segment Table) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||
Total net revenues | $ 445 | $ 387 | $ 972 | $ 761 | |
Income before income taxes | 271 | 204 | 611 | 417 | |
Assets | 60,303 | 60,303 | $ 61,162 | ||
Electronic Brokerage [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total net revenues | 443 | 334 | 908 | 648 | |
Income before income taxes | 283 | 198 | 574 | 383 | |
Assets | 58,355 | 58,355 | 58,787 | ||
Market Making [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total net revenues | 22 | 23 | 43 | 31 | |
Income before income taxes | 9 | (24) | 18 | (46) | |
Assets | 2,781 | 2,781 | 8,469 | ||
Corporate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total net revenues | (20) | 30 | 21 | 82 | |
Income before income taxes | (21) | $ 30 | 19 | $ 80 | |
Assets | $ (833) | $ (833) | $ (6,094) |
Segment And Geographic Inform59
Segment And Geographic Information (Geographic Table) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Total net revenues | $ 445 | $ 387 | $ 972 | $ 761 |
Income before income taxes | 271 | 204 | 611 | 417 |
United States [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 345 | 316 | 765 | 619 |
Income before income taxes | 231 | 186 | 525 | 381 |
International [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 100 | 71 | 207 | 142 |
Income before income taxes | $ 40 | $ 18 | $ 86 | $ 36 |
Regulatory Requirements (Narrat
Regulatory Requirements (Narrative) (Details) $ in Millions | Jun. 30, 2018USD ($) |
Regulatory Requirements [Abstract] | |
Excess regulatory capital | $ 5,086 |
Regulatory Requirements (Summar
Regulatory Requirements (Summary Of Capital, Capital Requirements And Excess Capital) (Details) $ in Millions | Jun. 30, 2018USD ($) |
Net Capital / Eligible Equity | $ 5,804 |
Required net capital | 718 |
Excess regulatory capital | 5,086 |
IB LLC [Member] | |
Net Capital / Eligible Equity | 4,161 |
Required net capital | 465 |
Excess regulatory capital | 3,696 |
TH LLC [Member] | |
Net Capital / Eligible Equity | 213 |
Excess regulatory capital | 213 |
THE [Member] | |
Net Capital / Eligible Equity | 617 |
Required net capital | 92 |
Excess regulatory capital | 525 |
Other Regulated Operating Companies [Member] | |
Net Capital / Eligible Equity | 813 |
Required net capital | 161 |
Excess regulatory capital | $ 652 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Related Party Transactions [Abstract] | ||
Due from Related Parties - Customers | $ 233 | $ 250 |
Due to Related Parties - Customers | $ 974 | $ 648 |