Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | ||
Sep. 30, 2013 | Nov. 08, 2013 | Nov. 08, 2013 | |
Common Class A [Member] | Common Class B [Member] | ||
Entity Information [Line Items] | ' | ' | ' |
Entity Registrant Name | 'KCG HOLDINGS, INC. | ' | ' |
Entity Central Index Key | '0001569391 | ' | ' |
Document Type | '10-Q | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'Q3 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 122,430,198 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues | ' | ' | ' | ' |
Trading revenues, net | $230,471 | $92,556 | $415,495 | $333,737 |
Commissions and fees | 109,079 | 25,542 | 164,391 | 79,487 |
Interest, net | -177 | -781 | -970 | -1,998 |
Investment income and other, net | 128,446 | 13,285 | 119,207 | 14,015 |
Total revenues | 467,819 | 130,602 | 698,123 | 425,241 |
Expenses | ' | ' | ' | ' |
Employee compensation and benefits | 129,631 | 31,875 | 236,983 | 111,395 |
Execution and clearance fees | 81,023 | 42,267 | 167,931 | 144,656 |
Communications and data processing | 44,046 | 21,681 | 86,040 | 67,380 |
Interest | 23,870 | 706 | 26,515 | 2,002 |
Depreciation and amortization | 20,091 | 7,574 | 36,004 | 27,180 |
Payments for order flow | 16,431 | 717 | 17,468 | 2,128 |
Professional fees | 9,077 | 2,575 | 38,928 | 7,690 |
Occupancy and equipment rentals | 8,898 | 3,240 | 15,454 | 8,865 |
Business development | 2,644 | 6 | 2,686 | 19 |
Writedown of assets and lease loss accrual | 936 | 0 | 4,248 | 0 |
Other | 11,318 | 5,349 | 30,028 | 19,002 |
Total expenses | 347,965 | 115,990 | 662,285 | 390,317 |
Income from continuing operations before income taxes | 119,854 | 14,612 | 35,838 | 34,924 |
Income tax (benefit) expense | -107,767 | 4,805 | -102,478 | 10,368 |
Income from continuing operations, net of tax | 227,621 | 9,807 | 138,316 | 24,556 |
Loss from discontinued operations, net of tax | -784 | 0 | -784 | 0 |
Net income | $226,837 | $9,807 | $137,532 | $24,556 |
Basic earnings per share from continuing operations (in dollars per share) | $1.99 | $0.21 | $2.02 | $0.49 |
Diluted earnings per share from continuing operations (in dollars per share) | $1.98 | $0.21 | $2.01 | $0.49 |
Basic loss per share from discontinued operations (in dollars per share) | ($0.01) | $0 | ($0.01) | $0 |
Diluted loss per share from discontinued operations (in dollars per share) | ($0.01) | $0 | ($0.01) | $0 |
Basic earnings per share (in dollars per share) | $1.99 | $0.21 | $2 | $0.49 |
Diluted earnings per share (in dollars per share) | $1.98 | $0.21 | $2 | $0.49 |
Shares used in computation of basic earnings (loss) per share (in shares) | 114,113 | 46,411 | 68,632 | 49,619 |
Shares used in computation of diluted earnings (loss) per share (in shares) | 114,773 | 46,411 | 68,855 | 49,619 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Net income | $226,837 | $9,807 | $137,532 | $24,556 |
Unrealized (loss) gain on available for sale securities, net of tax | -118,918 | 66,704 | -114,368 | 66,704 |
Cumulative translation adjustment, net of tax | -4,695 | 0 | -5,098 | 0 |
Comprehensive income | $103,224 | $76,511 | $18,066 | $91,260 |
CONSOLIDATED_STATEMENTS_OF_FIN
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Assets | ' | ' |
Cash and cash equivalents | $798,712,000 | $427,631,000 |
Cash and cash equivalents segregated under federal and other regulations | 216,442,000 | 0 |
Financial instruments owned, at fair value, including securities pledged to counterparties that had the right to deliver or repledge of $961,479 at September 30, 2013 and $52,261 at December 31, 2012: | ' | ' |
Equities | 2,156,466,000 | 378,933,000 |
Listed options | 288,227,000 | 92,305,000 |
Debt securities | 79,284,000 | 183,637,000 |
Total financial instruments owned, at fair value | 2,523,977,000 | 654,875,000 |
Collateralized agreements: | ' | ' |
Securities borrowed | 1,370,921,000 | 52,261,000 |
Receivable from brokers, dealers and clearing organizations | 1,330,113,000 | 142,969,000 |
Fixed assets and leasehold improvements, less accumulated depreciation and amortization | 161,865,000 | 83,341,000 |
Investments | 125,889,000 | 248,438,000 |
Goodwill | 18,398,000 | 4,645,000 |
Intangible assets, less accumulated amortization | 192,045,000 | 46,123,000 |
Deferred tax asset | 169,619,000 | 4,180,000 |
Assets within discontinued operations | 6,098,299,000 | 0 |
Other assets | 287,015,000 | 23,073,000 |
Total assets | 13,293,295,000 | 1,687,536,000 |
Financial instruments sold, not yet purchased, at fair value: | ' | ' |
Equities | 1,848,728,000 | 423,740,000 |
Listed options | 229,722,000 | 69,757,000 |
Debt securities | 79,057,000 | 19,056,000 |
Other financial instruments | 5,431,000 | 0 |
Total financial instruments sold, not yet purchased, at fair value | 2,162,938,000 | 512,553,000 |
Collateralized financings: | ' | ' |
Securities loaned | 543,451,000 | 0 |
Financial instruments sold under agreements to repurchase | 595,029,000 | 0 |
Total collateralized financings | 1,138,480,000 | 0 |
Payable to brokers, dealers and clearing organizations | 666,178,000 | 24,185,000 |
Payable to customers | 486,136,000 | 0 |
Accrued compensation expense | 130,158,000 | 27,728,000 |
Accrued expenses and other liabilities | 220,648,000 | 118,068,000 |
Capital lease obligations | 12,453,000 | 24,191,000 |
Liabilities within discontinued operations | 6,006,024,000 | 0 |
Short-term debt | 235,000,000 | 0 |
Long-term debt | 722,259,000 | 15,000,000 |
Total liabilities | 11,780,274,000 | 721,725,000 |
Redeemable preferred member's equity | 0 | 311,139,000 |
Members' equity | 0 | 654,672,000 |
Equity | ' | ' |
Additional paid-in capital | 1,299,907,000 | 0 |
Retained earnings | 226,837,000 | 0 |
Treasury stock, at cost; 928 shares at September 30, 2013 | -9,811,000 | 0 |
Accumulated other comprehensive loss | -5,147,000 | 0 |
Total equity | 1,513,021,000 | 654,672,000 |
Total liabilities, redeemable preferred member's equity and equity | 13,293,295,000 | 1,687,536,000 |
Common Class A [Member] | ' | ' |
Equity | ' | ' |
Shares authorized: 1,000,000 at September 30, 2013; Shares issued: 123,515 at September 30, 2013; Shares outstanding: 122,587 at September 30, 2013 | $1,235,000 | $0 |
CONSOLIDATED_STATEMENTS_OF_FIN1
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Financial instruments owned, at fair value, securities pledged | $961,479 | $55,141 |
Treasury stock, shares | 928,000 | 0 |
Common Class A [Member] | ' | ' |
Class A common stock Shares authorized | 1,000,000,000 | 0 |
Class A common stock, Shares issued | 123,515,000 | 0 |
Class A common stock, Shares outstanding | 122,587,000 | 0 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Total | Redeemable preferred members' equity [Member} | Members Equity [Member] | Unrecognized Compensation [Member] | Common Class A [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated other comprehensive loss [Member] | Knight Capital Group, Inc., Total [Member] |
In Thousands, unless otherwise specified | ||||||||||
Balance at Dec. 31, 2012 | $654,672 | $311,139 | $559,292 | ($18,939) | $0 | $0 | $0 | $0 | $114,319 | $654,672 |
Balance, Shares at Dec. 31, 2012 | ' | ' | ' | ' | 0 | ' | ' | 0 | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contributions | 30,278 | ' | 11,339 | 18,939 | ' | ' | ' | ' | ' | ' |
Repurchase of Membership interests | -5,833 | ' | -5,833 | ' | ' | ' | ' | ' | ' | ' |
Distributions | -2,054 | ' | -2,054 | ' | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | -89,305 | ' | ' | ' | ' | ' | 4,147 | -85,158 |
Modification of redemption value | ' | -21,565 | 21,565 | ' | ' | ' | ' | ' | ' | 21,565 |
Balance at Jun. 30, 2013 | ' | 289,574 | 495,004 | 0 | 0 | 0 | 0 | 0 | 118,466 | 613,470 |
Balance, Shares at Jun. 30, 2013 | ' | ' | ' | ' | 0 | ' | ' | 0 | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | 226,837 | ' | ' | ' | ' | ' | 226,837 | ' | ' | 226,837 |
Gain on investment in Knight Capital Group, Inc. | ' | ' | ' | ' | ' | ' | ' | ' | 9,103 | 9,103 |
Equity issued to General Atlantic | 55,000 | ' | 55,000 | ' | ' | ' | ' | ' | ' | ' |
Exchange of membership interest for shares of KCG Class A Common Stock (in shares) | ' | ' | ' | ' | 75,868 | ' | ' | ' | ' | ' |
Exchange of membership interests for shares of KCG Class A Common Stock | 205,172 | 289,574 | -550,004 | ' | 759 | 754,417 | ' | ' | ' | ' |
Exchange of membership interests for warrants to purchase KCG Class A Common Stock | 74,896 | ' | ' | ' | ' | 74,896 | ' | ' | ' | ' |
Issuance of KCG Class A Common Stock to Knight stockholders | ' | ' | ' | ' | 419 | 459,190 | ' | ' | ' | 459,609 |
Issuance of KCG Class A Common Stock, Shares | ' | ' | ' | ' | 41,889 | ' | ' | ' | ' | ' |
KCG Common Stock repurchased | ' | ' | ' | ' | ' | ' | ' | -9,811 | ' | -9,811 |
Knight common stock repurchased, Shares | ' | ' | ' | ' | ' | ' | ' | -928 | ' | ' |
Stock-based compensation | ' | ' | ' | ' | 57 | 11,404 | ' | ' | ' | 11,461 |
Stock-based compensation, Shares | ' | ' | ' | ' | 5,758 | ' | ' | ' | ' | ' |
Unrealized (loss) gain on available for sale securities, net of tax | ' | ' | ' | ' | ' | ' | ' | ' | -49 | -49 |
Cumulative translation adjustment | ' | ' | ' | ' | ' | ' | ' | ' | -4,695 | -4,695 |
Reclassification of investment in Knight out of other comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | -127,972 | -127,972 |
Balance at Sep. 30, 2013 | $1,513,021 | $0 | $0 | $0 | $1,235 | $1,299,907 | $226,837 | ($9,811) | ($5,147) | $1,513,021 |
Balance, Shares at Sep. 30, 2013 | ' | ' | ' | ' | 123,515 | ' | ' | 928 | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities | ' | ' |
Net income | $137,532 | $24,556 |
Loss from discontinued operations, net of tax | 784 | 0 |
Income from continuing operations, net of tax | 138,316 | 24,556 |
Adjustments to reconcile income from continuing operations, net of tax to net cash provided by (used in) operating activities | ' | ' |
Non-cash gain on Knight Common Stock | -127,972 | 0 |
Deferred tax benefit | -103,499 | 0 |
Depreciation and amortization | 36,004 | 27,180 |
Stock and unit-based compensation | 41,537 | 10,152 |
Unrealized gain (loss) on investments | 5,625 | -12,705 |
Writedown of assets and lease loss accrual | 4,248 | 0 |
Amortization of debt offering costs | 2,479 | 427 |
Deferred rent | -247 | 1,422 |
Operating activities from discontinued operations | -962 | 0 |
(Increase) decrease in operating assets | ' | ' |
Cash and securities segregated under federal and other regulations | -13,397 | 0 |
Financial instruments owned, at fair value | 68,827 | -503,396 |
Securities borrowed | -159,679 | -32,673 |
Receivable from brokers, dealers and clearing organizations | 179,403 | 33,235 |
Other assets | 31,059 | 3,837 |
Financial instruments sold, not yet purchased, at fair value | ' | ' |
Financial instruments sold, not yet purchased, at fair value | 137,389 | 344,087 |
Securities loaned | -83,440 | 0 |
Financial instruments sold under agreements to repurchase | 50,029 | 0 |
Payable to brokers, dealers and clearing organizations | 6,079 | 79,226 |
Payable to customers | -41,782 | 0 |
Accrued compensation expense | 12,537 | -34,291 |
Accrued expenses and other liabilities | -21,988 | -22,184 |
Net cash provided by (used in) operating activities | 160,566 | -81,127 |
Cash flows from investing activities | ' | ' |
Cash acquired upon acquisition of Knight Capital Group, Inc. | 509,133 | 0 |
Proceeds and distributions from investments | 3,251 | 19,820 |
Purchases of investments | -17,506 | -35,631 |
Purchases of investments | -85 | -89,689 |
Investing activities from discontinued operations | -12,963 | 0 |
Net Cash Provided by (Used in) Investing Activities | 507,756 | -105,500 |
Cash flows from financing activities | ' | ' |
Proceeds from issuance of Credit Agreement | 535,000 | 0 |
Proceeds from Senior Secured Notes | 305,000 | 0 |
Payment of debt issuance cost | -34,592 | 0 |
Issuance of equity to General Atlantic | 55,000 | 0 |
Payment to former Knight Capital Group, Inc. stockholders | -720,000 | 0 |
Repayment of Knight Convertible Notes | -257,741 | 0 |
Funding of collateral account for Knight Convertible Notes | -117,259 | 0 |
Borrowings under unsecured credit facility | 0 | 46,750 |
Borrowings under secured credit facility | 25,000 | 0 |
Repayment of secured credit facility | -25,000 | 0 |
Repayment of notes | -15,000 | 0 |
Borrowings under capital lease obligations | 0 | 13,758 |
Principal payments on capital lease obligations | -11,738 | -10,679 |
Members' distributions | -21,002 | -47,383 |
Cost of common stock repurchased | -9,811 | 0 |
Net cash used in financing activities | -292,143 | 2,446 |
Effect of exchange rate changes on cash and cash equivalents | -5,098 | 0 |
Increase (decrease) in cash and cash equivalents | 371,081 | -184,181 |
Cash and cash equivalents at beginning of period | 427,631 | 607,689 |
Cash and cash equivalents at end of period | 798,712 | 423,508 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 25,734 | 6,097 |
Cash paid for income taxes | $9,071 | $19,932 |
Organization_and_Description_o
Organization and Description of the Business | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization and Description of the Business | ' |
Organization and Description of the Business | |
On December 19, 2012, Knight Capital Group, Inc.(“Knight”), GETCO Holding Company, LLC (“GETCO”) and an affiliate of GETCO entered into an agreement and plan of merger (as amended and restated on April 15, 2013 the “Merger Agreement”) for a series of strategic business combinations (the “Mergers”). The Mergers were approved by the respective stockholders and unitholders of both companies at special meetings held on June 25, 2013, and the Mergers were completed on July 1, 2013. As a result of the Mergers, Knight and GETCO each became a wholly-owned subsidiary of KCG Holdings, Inc. (collectively with its subsidiaries, “KCG” or the “Company”). | |
The Mergers took place in order to combine the businesses, intellectual capital and resources of the two companies to more successfully compete in the highly regulated and technologically advanced marketplace and to allow for further diversification of each company's revenues from principal and agency trading across asset classes and regions. The Mergers were treated as a purchase of Knight by GETCO for accounting and financial reporting purposes. As a result, the financial results for the third quarter of 2013 comprise three months of results of KCG, while the results for the nine months ended September 30, 2013 comprise third quarter KCG results and GETCO only results for the first half of 2013. All periods prior to 2013 comprise solely the results of GETCO. On November 12, 2013, the Company’s management concluded that, due to errors within GETCO’s Consolidated Statement of Financial Condition and related Consolidated Statement of Changes in Equity at December 31, 2012 and Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and Consolidated Statement of Cash Flows for the nine months ended September 30, 2012, such documents needed to be restated to correct prior SEC filings. The financial information presented herein for December 31, 2012 and the nine months ended September 30, 2012 reflects that restatement. For more information on the restatement, see the Current Report on Form 8-K filed by the Company on November 12, 2013. | |
KCG is a leading independent securities firm offering clients a range of services designed to address trading needs across asset classes, product types and time zones. The firm combines advanced technology with exceptional client service across market making, agency execution and trading venues. KCG has multiple access points to trade global equities, fixed income, currencies and commodities via voice or automated execution. | |
As of September 30, 2013, the Company's operating segments comprised the following: (i) Market Making; (ii) Global Execution Services; and (iii) Corporate and Other. | |
Market Making | |
The Market Making segment principally consists of market making in the cash, futures and/or options markets across global equities, fixed income, commodities and foreign currencies. As a market maker, the Company commits capital for trade executions by offering to buy securities from, or sell securities to, institutions and broker-dealers. The Market Making segment primarily includes client direct and exchange-based electronic market making activities, including trade executions as an equities Designated Market Maker (“DMM”) on the New York Stock Exchange ("NYSE") and NYSE Amex Equities ("NYSE Amex"). The Company is an active participant in all major global equity and futures exchanges and also trades on substantially all domestic electronic options exchanges. As a complement to electronic market making, the Company’s cash trading business handles specialized orders and also transacts on the OTC Bulletin Board, marketplaces operated by the OTC Markets Group Inc. and the Alternative Investment Market (“AIM”) of the London Stock Exchange. | |
Global Execution Services | |
The Global Execution Services segment provides agency execution services and operates trading venues. This segment offers access via its electronic agency-based platforms to markets and self-directed trading in equities, options, fixed income, foreign exchange and futures. In contrast to Market Making, the Global Execution Services segment generally does not act as a principal to transactions that are executed within this segment; however, it will commit capital on behalf of clients as needed, and generally earns commissions for acting as agent between the principals to the trade. Global Execution Services includes high touch equity sales and trading (including exchange traded funds ("ETFs") aided by its network of sales employees. This segment also facilitates client orders through program, block and riskless principal trades. Additionally, the Global Execution Services segment includes the futures commission merchant ("FCM") business, which provides clients with futures execution and clearing services on major U.S. and European futures and options exchanges. | |
Corporate and Other | |
The Corporate and Other segment invests in strategic financial services-oriented opportunities, allocates, deploys and monitors all capital, and maintains corporate overhead expenses and all other income and expenses that are not attributable to the other segments. The Corporate and Other segment also houses functions that support the Company’s other segments such as self-clearing services, including stock lending activities. | |
Discontinued Operations | |
Management of the Company from time to time conducts a strategic review of its businesses and evaluates their potential value in the marketplace relative to their current and expected returns. To the extent management and the Company's Board of Directors determine a business may return a higher value to stockholders through a divestiture, or is no longer core to the Company's strategy, management may pursue a sale process. | |
In July 2013, KCG entered into an agreement to sell Urban Financial Group, Inc. (“Urban”), the reverse mortgage origination and securitization business that it acquired as a result of the Mergers, to an investor group. The transaction is expected to be completed in the fourth quarter of 2013. As a result, the business is considered to be held for sale and its results of operations have been reported in Loss from discontinued operations, net of tax on the Consolidated Statements of Operations. Assets and Liabilities related to Urban are reported in Assets within discontinued operations and Liabilities within discontinued operations on the Consolidated Statements of Financial Condition. Completion of the sale is subject to certain customary conditions, including receipt of required regulatory approvals by the Government National Mortgage Association (“GNMA”), the U.S. Department of Housing and Urban Development ("HUD"), the Federal National Mortgage Association ("FNMA"), and states and territories in which Urban operates, and the absence of any law or order prohibiting the consummation of the sale of Urban. | |
Discontinued operations also includes residual revenue and expenses related to Knight's former institutional fixed income sales and trading business, which was sold in June 2013, and asset management business, which Knight decided to exit prior to the closing of the Mergers. See Footnote 4 "Discontinued Operations" for further discussion. |
Merger_of_GETCO_and_Knight
Merger of GETCO and Knight | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||||||||||||||
Merger With GETCO and Knight | ' | ||||||||||||||||||||||||
Merger of GETCO and Knight | |||||||||||||||||||||||||
Background | |||||||||||||||||||||||||
Pursuant to the Merger Agreement, upon completion of the Mergers, subject to proration and certain specified exceptions, each outstanding share of Knight Class A common stock, par value $0.01 per share (“Knight Common Stock”) was converted into the right to elect to receive either $3.75 per share in cash or one third of a share of KCG Class A common stock, par value $0.01 per share (“KCG Class A Common Stock”). Pursuant to the proration procedures provided in the Merger Agreement and taking into account the waiver by Jefferies LLC, Knight's largest stockholder before the Mergers, of its right to receive cash consideration with respect to certain of its shares, former Knight stockholders eligible for election received a cash payment of approximately $720.0 million. | |||||||||||||||||||||||||
Upon completion of the Mergers, GETCO unitholders received, in aggregate, 75.9 million shares of KCG Class A Common Stock and 24.3 million warrants to acquire shares of KCG Class A Common Stock. The warrants comprise 8.1 million Class A warrants, having a $12.00 exercise price and exercisable for a four-year term; 8.1 million Class B warrants, having a $13.50 exercise price and exercisable for a five-year term; and 8.1 million Class C warrants, having a $15.00 exercise price and exercisable for a six-year term (collectively the “KCG Warrants”). | |||||||||||||||||||||||||
Upon completion of the Mergers, Knight's stockholders received, in the aggregate, $720.0 million in cash and 41.9 million shares of KCG Class A Common Stock. After taking into account the election results and the shares of KCG Class A Common Stock issued to former unitholders of GETCO and former stockholders of Knight, 116.8 million shares (including unvested restricted stock units ("RSUs")) of KCG Class A Common Stock were outstanding as of July 1, 2013. | |||||||||||||||||||||||||
Accounting treatment of the Mergers | |||||||||||||||||||||||||
The Mergers are accounted for as a purchase of Knight by GETCO under accounting principles generally accepted in the United States of America ("GAAP") based on, among other factors, the controlling ownership position of the former GETCO unitholders as of the closing of the Mergers. Under the purchase method of accounting, the assets and liabilities of Knight, as of July 1, 2013 were recorded at their respective fair values and added to the carrying value of GETCO's existing assets and liabilities. The reported financial condition and results of operations of KCG for the periods following the Mergers reflect Knight's and GETCO's balances and reflect the impact of purchase accounting adjustments, including revised amortization and depreciation expense for acquired assets. As GETCO is the accounting acquirer, the financial results for KCG for the nine months ended September 30, 2013 comprise third quarter results of KCG and the results of GETCO for the six months ended June 30, 2013. All periods prior to 2013 comprise solely the results of GETCO. | |||||||||||||||||||||||||
Prior to the Mergers, GETCO treated its investment in Knight as an available-for-sale security, which it recorded at fair value, with any gains or losses recorded in other comprehensive income within equity. On the acquisition date, as a result of the Mergers, the Company reversed the cumulative gain that it had recorded in other comprehensive income within equity and recognized a gain of $128.0 million in Investment income and other, net on its Consolidated Statements of Operations for the three and nine months ended September 30, 2013. | |||||||||||||||||||||||||
All GETCO earnings per share and unit share outstanding amounts in this Quarterly Report on Form 10-Q have been calculated as if the conversion of GETCO units to KCG Class A Common Stock took place on January 1, 2012, at the exchange ratio, as defined in the Merger Agreement. See Footnote 15 "Earnings Per Share". | |||||||||||||||||||||||||
Purchase price and goodwill | |||||||||||||||||||||||||
The Knight acquisition was accounted for using the acquisition method of accounting. The aggregate purchase price of $1.37 billion was determined as the sum of the fair value of KCG shares issued to former Knight stockholders at closing; the fair value of Knight employee stock based awards attributable to periods prior to closing; and the fair value of the Knight Common Stock owned by GETCO and its subsidiaries immediately prior to the Mergers (and subsequently canceled in conjunction with the Mergers). | |||||||||||||||||||||||||
The purchase price has been allocated to the assets acquired and liabilities assumed using their estimated fair values at July 1, 2013, the closing date of the Mergers. The Company has not yet completed all of its analyses to finalize the allocation of the purchase price to the Knight acquired assets and liabilities. The allocation of the purchase price may be modified over the measurement period, as more information is obtained about the fair values of assets acquired and liabilities assumed. | |||||||||||||||||||||||||
Tax treatment of the Mergers | |||||||||||||||||||||||||
The Company believes that the Mergers will be treated as a transaction described in Section 351 of the Internal Revenue Code, and both Knight and GETCO have received tax opinions from external legal counsel to that effect. Knight’s tax basis in its assets and liabilities therefore generally carries over to the Company following the Mergers. Upon completion of the Mergers, the Company became a corporation subject to U.S. corporate income taxes and, following the Mergers, the Company recorded deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and measures them using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. | |||||||||||||||||||||||||
The Company recorded net deferred tax assets of $65.9 million with respect to recording Knight’s assets and liabilities under the purchase method of accounting as described above as well as recording the value of tax net operating losses ('NOLs”) and other tax attributes acquired as a result of the Mergers, as described in Footnote 13 “Income Taxes”. These deferred tax assets are included in Other assets in the table below. | |||||||||||||||||||||||||
The following table reflects the preliminary allocation of the purchase price to the assets acquired and liabilities assumed at the acquisition date (in thousands): | |||||||||||||||||||||||||
Identifiable Net Assets | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 509,133 | |||||||||||||||||||||||
Cash and securities segregated under federal and other regulations | 203,045 | ||||||||||||||||||||||||
Financial instruments owned | 1,937,929 | ||||||||||||||||||||||||
Securities borrowed | 1,158,981 | ||||||||||||||||||||||||
Receivable from brokers, dealers and clearing organizations | 1,366,974 | ||||||||||||||||||||||||
Fixed assets and leasehold improvements, net | 84,596 | ||||||||||||||||||||||||
Investments | 106,353 | ||||||||||||||||||||||||
Intangible assets | 156,800 | ||||||||||||||||||||||||
Assets within discontinued operations | 5,607,063 | ||||||||||||||||||||||||
Other assets | 211,735 | ||||||||||||||||||||||||
Total Assets | $ | 11,342,609 | |||||||||||||||||||||||
Financial instruments sold, not yet purchased | $ | 1,512,983 | |||||||||||||||||||||||
Collateralized financings | 1,166,211 | ||||||||||||||||||||||||
Payable to brokers, dealers and clearing organizations | 635,914 | ||||||||||||||||||||||||
Payable to customers | 527,918 | ||||||||||||||||||||||||
Accrued compensation expense | 107,409 | ||||||||||||||||||||||||
Accrued expenses and other liabilities | 139,624 | ||||||||||||||||||||||||
Liabilities within discontinued operations | 5,518,168 | ||||||||||||||||||||||||
Long-term debt | 375,000 | ||||||||||||||||||||||||
Total Liabilities | $ | 9,983,227 | |||||||||||||||||||||||
Total identified assets acquired, net of assumed liabilities | 1,359,382 | ||||||||||||||||||||||||
Goodwill | 13,753 | ||||||||||||||||||||||||
Total Purchase Price | $ | 1,373,135 | |||||||||||||||||||||||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill were as follows (dollars in thousands): | |||||||||||||||||||||||||
Amortization | |||||||||||||||||||||||||
Amount | Years | ||||||||||||||||||||||||
Technology | $ | 110,000 | 5 years | ||||||||||||||||||||||
Customer relationships | 35,000 | 9 - 11 years | |||||||||||||||||||||||
Trade names | 4,000 | 10 years | |||||||||||||||||||||||
Trading rights | 7,800 | 7 years | |||||||||||||||||||||||
Intangible assets | 156,800 | ||||||||||||||||||||||||
Goodwill | 13,753 | ||||||||||||||||||||||||
Total | $ | 170,553 | |||||||||||||||||||||||
Goodwill has been primarily assigned to the Market Making segment of the Company. None of the goodwill is expected to be deductible for tax purposes; however, as described in Tax treatment of the Mergers above, Knight’s tax basis in its assets, including certain goodwill, has carried over to the Company as a result of the Mergers. | |||||||||||||||||||||||||
The Company recorded $1.2 million and $27.6 million of costs related to the Mergers for the three and nine months ended September 30, 2013, respectively. | |||||||||||||||||||||||||
Included in KCG results for the three months ended September 30, 2013 are results from the businesses acquired as a result of the Mergers as follows: | |||||||||||||||||||||||||
Three months ended September 30, | |||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||
Revenues | $ | 240,805 | |||||||||||||||||||||||
Income from continuing operations, before income taxes | 21,164 | ||||||||||||||||||||||||
Three months ended September 30, 2012 | Nine months ended September 30, 2013 | Nine months ended September 30, 2012 | |||||||||||||||||||||||
Reported | Pro Forma | Reported | Pro Forma | Reported | Pro Forma | ||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||||
Revenue | $ | 130,602 | $ | (120,210 | ) | $ | 698,123 | $ | 1,099,518 | $ | 425,241 | $ | 677,955 | ||||||||||||
Net income from continuing operations | 9,807 | (303,413 | ) | 138,316 | (10,494 | ) | 24,556 | (274,981 | ) | ||||||||||||||||
Net income | 9,807 | (387,350 | ) | 137,532 | (39,554 | ) | 24,556 | (350,831 | ) | ||||||||||||||||
Diluted earnings (loss) per share from continuing operations | $ | 0.21 | $ | (6.54 | ) | $ | 2.01 | $ | (0.15 | ) | $ | 0.49 | $ | (5.54 | ) | ||||||||||
Diluted earnings (loss) per share | $ | 0.21 | $ | (8.35 | ) | $ | 2 | $ | (0.57 | ) | $ | 0.49 | $ | (7.07 | ) | ||||||||||
The pro forma results are based on adding the pre-tax historical results of GETCO and Knight, and adjusting primarily for amortization of intangibles created in the Mergers, debt raised in conjunction with the Mergers and income taxes as if the Company was subject to U.S. corporate income taxes for all periods presented. The pro forma data assumes all GETCO units have been converted to KCG Class A Common Stock on January 1, 2012 and excludes any gain recognized on Knight Common Stock. The pro forma disclosures do not include adjustments to reflect the Company's operating costs or expected differences in the way funds generated by the Company are invested. The pro forma data is intended for informational purposes and is not indicative of the future results of operations. |
Significant_Accounting_Policie
Significant Accounting Policies | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Significant Accounting Policies | ' | |||||||||||||||
Significant Accounting Policies | ||||||||||||||||
Basis of consolidation and form of presentation | ||||||||||||||||
The accompanying unaudited Consolidated Financial Statements, prepared in conformity with GAAP, include the accounts of the Company and its subsidiaries and should be read in conjunction with the audited consolidated financial statements of GETCO for the year ended December 31, 2012 contained in the Current Report on Form 8-K filed by the Company on November 12, 2013 and in the Current Report on Form 8-K filed by the Company on July 1, 2013 and with the audited consolidated financial statements of Knight for the year ended December 31, 2012 in the Current Report on Form 8-K filed by Knight on May 13, 2013. All significant intercompany transactions and balances have been eliminated. | ||||||||||||||||
Certain reclassifications have been made to the prior periods’ Consolidated Financial Statements in order to conform to the current period presentation. Such reclassifications are immaterial to both current and all previously issued financial statements taken as a whole and have no effect on previously reported Consolidated Net income. | ||||||||||||||||
The Company consolidates all of its subsidiaries as well as any variable interest entity (“VIE”) for which it is considered to be the primary beneficiary. The Company performs a qualitative assessment to determine if a VIE should be consolidated. As described in more detail below, the primary attributes the Company assesses include the entity’s capital structure and power. The Company will consolidate a VIE if it has both i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and ii) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. As of September 30, 2013 and December 31, 2012, the Company was not considered to be a primary beneficiary of any VIE. | ||||||||||||||||
Cash and cash equivalents | ||||||||||||||||
Cash and cash equivalents include money market accounts, which are payable on demand, and short-term investments with an original maturity of less than 90 days. The carrying amount of such cash equivalents approximates their fair value due to the short-term nature of these instruments. | ||||||||||||||||
Cash and securities segregated under federal and other regulations | ||||||||||||||||
The Company maintains custody of customer funds and, as a result, it is subject to various regulatory rules and regulations. As a result of these customer holdings, the Company is obligated by the U.S. Securities and Exchange Commission (“SEC”) and the Commodities Futures Trading Commission (“CFTC”) to segregate or set aside cash and/or qualified securities to satisfy these regulations, which have been promulgated to protect customer assets. The amounts recognized as Cash and securities segregated under federal and other regulations approximate fair value. | ||||||||||||||||
Market making, sales, trading and execution activities | ||||||||||||||||
Financial instruments owned and Financial instruments sold, not yet purchased, which relate to market making and trading activities, include listed and OTC equity securities, listed equity options and fixed income securities which are recorded on a trade date basis and carried at fair value. Trading revenue, net (trading gains, net of trading losses) are also recorded on a trade date basis. | ||||||||||||||||
Commissions (which includes commission equivalents earned on institutional client orders and commissions on futures transactions) and related expenses are also recorded on a trade date basis. Commissions earned by the Company’s FCM are recorded net of any commissions paid to independent brokers and are recognized on a half-turn basis. | ||||||||||||||||
The Company’s third party clearing agreements call for payment or receipt of interest income, net of transaction-related interest charged by clearing brokers, for facilitating the settlement and financing of securities transactions. Interest income and interest expense which have been netted within Interest, net on the Consolidated Statements of Operations are as follows (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest Income | $ | 3,992 | $ | 1,170 | $ | 6,022 | $ | 1,847 | ||||||||
Interest Expense | (4,169 | ) | (1,951 | ) | (6,992 | ) | (3,845 | ) | ||||||||
Interest, net | $ | (177 | ) | $ | (781 | ) | $ | (970 | ) | $ | (1,998 | ) | ||||
Dividend income relating to securities owned and dividend expense relating to securities sold, not yet purchased, derived primarily from the Company’s market making activities are included as a component of Trading revenue, net on the Consolidated Statements of Operations. Trading revenue, net includes dividend income and expense as follows (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Dividend Income | $ | 9,009 | $ | 288 | $ | 11,484 | $ | 1,049 | ||||||||
Dividend Expense | $ | (6,899 | ) | $ | (809 | ) | $ | (8,035 | ) | $ | (1,321 | ) | ||||
Payments for order flow represent payments to broker-dealer clients, in the normal course of business, for directing their order flow in U.S. equities and options to the Company. | ||||||||||||||||
Fair value of financial instruments | ||||||||||||||||
The Company values its financial instruments using a hierarchy of fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. | ||||||||||||||||
The fair value hierarchy can be summarized as follows: | ||||||||||||||||
• | Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. | |||||||||||||||
• | Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. | |||||||||||||||
• | Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. | |||||||||||||||
Changes in fair value are recognized in earnings each period for financial instruments that are carried at fair value. See Footnote 6 “Fair Value of Financial Instruments” for a description of valuation methodologies applied to the classes of financial instruments at fair value. | ||||||||||||||||
Collateralized agreements and financings | ||||||||||||||||
Collateralized agreements consist of securities borrowed and collateralized financings include securities loaned and financial instruments sold under agreements to repurchase. | ||||||||||||||||
• | Securities borrowed and securities loaned transactions are recorded at the amount of cash collateral advanced or received. Securities borrowed transactions facilitate the securities settlement process and require the Company to deposit cash or other collateral with the lender. Securities loaned transactions help finance the Company’s securities inventory whereby the Company lends stock to counterparties in exchange for the receipt of cash or other collateral from the borrower. In these transactions, the Company receives or lends cash or other collateral in an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of securities borrowed or loaned on a daily basis, with additional collateral obtained or refunded as necessary. | |||||||||||||||
• | Financial instruments sold under agreements to repurchase are used to finance inventories of securities and other financial instruments and are recorded at their contractual amount. The Company has entered into bilateral and tri-party term and overnight repurchase agreements which bear interest at negotiated rates. The Company receives cash and makes delivery of financial instruments to a custodian who monitors the market value of these instruments on a daily basis. The market value of the instruments delivered must be equal to or in excess of the principal amount loaned under the repurchase agreements plus the agreed upon margin requirement. The custodian may request additional collateral, if appropriate. | |||||||||||||||
Collateralized agreements related to Urban are recorded within Liabilities within discontinued operations on the Consolidated Statements of Financial Condition, and comprise: | ||||||||||||||||
• | Other secured financings, which represent contractual agreements used to finance financial instruments, are recorded at their contractual amount. These agreements are short-term in nature with durations of typically less than one month and bear interest at negotiated rates. Urban receives cash and pledges financial instruments to banks and other financial institutions as collateral for these secured financing arrangements. The market value of the collateral delivered must be in excess of the principal amount loaned plus the agreed upon margin requirement under the secured financings. The banks and other financial institutions may request additional collateral, if appropriate. | |||||||||||||||
• | Liability to GNMA trusts, at fair value, represent the liability associated with Urban’s securitization of HECMs where the securitization does not meet the GAAP criteria for sale treatment. | |||||||||||||||
The Company’s securities borrowed, securities loaned, financial instruments sold under agreements to repurchase and other secured financings are recorded at amounts that approximate fair value. These items are recorded based upon their contractual terms and are not materially sensitive to shifts in interest rates because they are short-term in nature and are fully collateralized. These items would be categorized as Level 2 in the fair value hierarchy if they were required to be recorded at fair value. | ||||||||||||||||
Securitization activities | ||||||||||||||||
Urban, which KCG has entered into a definitive agreement to sell as described in Footnote 1 "Organization and Description of the Business" and Footnote 4 "Discontinued Operations", securitizes home equity conversion mortgages (“HECMs”) under its GNMA issuance authority. Securitization and transfer of financial assets to a third party are generally accounted for as sales when an issuer has relinquished control over the transferred assets. Based upon the current structure of the GNMA securitization program, the Company believes that Urban has not met the GAAP criteria for relinquishing control over the transferred assets and therefore its securitizations fail to meet the GAAP criteria for sale accounting. As such, the Company continues to recognize the HECMs in Assets within discontinued operations, and the Company recognizes a corresponding liability to the GNMA trusts in Liabilities within discontinued operations on the Consolidated Statements of Financial Condition. The associated change in fair value of the securitized HECM loan inventory is recorded in Loss from discontinued operations, net of tax on the Consolidated Statements of Operations. | ||||||||||||||||
Investments | ||||||||||||||||
Investments primarily comprise strategic investments and deferred compensation investments. Strategic investments include noncontrolling equity ownership interests held by the Company within its non-broker-dealer subsidiaries, primarily in financial services-related businesses. Strategic investments are accounted for under the equity method or at cost. The equity method of accounting is used when the Company has significant influence, generally considered to be between 20% and 50% equity ownership in a corporation or greater than 3% to 5% of a partnership interest. Strategic investments are held at cost, less impairment if any, when the Company is not considered to exert significant influence on operating and financial policies of the investee. | ||||||||||||||||
Prior to the Mergers, the Company had a strategic investment in Knight which was classified as available for sale securities. Any gain or losses in the fair value of this investment were recorded in Other comprehensive income (loss). | ||||||||||||||||
Strategic investments are reviewed on an ongoing basis to ensure that the carrying values of the investments have not been impaired. If the Company determines that an impairment loss on a strategic investment has occurred due to a decline in fair value or other market conditions, the investment is written down to its estimated fair value. | ||||||||||||||||
The Company maintains a non-qualified deferred compensation plan for certain employees and directors. This plan provides a return to the participants based upon the performance of various investments. In order to hedge its liability under this plan, the Company generally acquires the underlying investments and holds such investments until the deferred compensation liabilities are satisfied. Changes in value of such investments are recorded in Investment income and other, net, with a corresponding charge or credit to Employee compensation and benefits on the Consolidated Statements of Operations. Deferred compensation investments primarily consist of mutual funds, which are accounted for at fair value. | ||||||||||||||||
Goodwill and intangible assets | ||||||||||||||||
The Company tests goodwill and intangible assets with an indefinite useful life for impairment annually or when an event occurs or circumstances change that signifies the existence of an impairment. The Company amortizes other intangible assets on a straight line basis over their estimated useful lives and tests for recoverability whenever events indicate that the carrying amounts may not be recoverable. | ||||||||||||||||
Discontinued operations and Assets and Liabilities | ||||||||||||||||
Revenues and expenses associated with a business line that has been disposed of through closure or sale, or are considered held for sale, are included in Loss from discontinued operations, net of tax on the Consolidated Statements of Operations. Assets and liabilities of a disposal group classified as discontinued operations are included in Assets within discontinued operations and Liabilities within discontinued operations, respectively, on the Consolidated Statements of Financial Condition. Cash flows from discontinued operations are presented on the Consolidated Statements of Cash Flows within operating, investing and financing activities, as applicable. | ||||||||||||||||
Payable to customers | ||||||||||||||||
Payable to customers arise primarily from futures transactions and include amounts due on cash and margin transactions. Due to their short-term nature, such amounts approximate fair value. | ||||||||||||||||
Treasury stock | ||||||||||||||||
The Company records its purchases of treasury stock at cost as a separate component of stockholders’ equity. The Company may obtain treasury stock through purchases in the open market or through privately negotiated transactions. Certain treasury stock repurchases represent shares of KCG Class A Common Stock repurchased in satisfaction of tax withholding obligations upon vesting of restricted awards. The Company may re-issue treasury stock, at average cost, for the acquisition of new businesses or, in certain instances, as inducement grants to new hires. | ||||||||||||||||
Foreign currency translation and foreign currency forward contracts | ||||||||||||||||
The Company has foreign subsidiaries that do not utilize the U.S. dollar as their functional currency. | ||||||||||||||||
Assets and liabilities of the foreign subsidiaries having non-U.S. dollar functional currencies are translated at exchange rates at the end of a period. Revenues and expenses are translated at average exchange rates during the period. Gains and losses resulting from translating foreign currency financial statements into U.S. dollars are included in Accumulated other comprehensive (loss) income on the Consolidated Statements of Financial Condition and Cumulative translation adjustment on the Consolidated Statements of Comprehensive Income. Gains or losses resulting from foreign currency transactions are included in Investment income and other, net on the Company’s Consolidated Statements of Operations. For the three months ended September 30, 2013 and 2012, the Company recorded a loss of $0.1 million and a gain of $0.2 million, respectively. For the nine months ended September 30, 2013 and 2012, the Company recorded a loss of $1.3 million and a gain of $0.3 million, respectively. | ||||||||||||||||
The Company seeks to reduce the impact of fluctuations in foreign exchange rates on its net investment in certain non-U.S. operations through the use of foreign currency forward contracts. For foreign currency forward contracts designated as hedges, the Company assesses its risk management objectives and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair value of the forward contracts. For qualifying net investment hedges, any gains or losses, to the extent effective, are included in Accumulated other comprehensive (loss) income on the Consolidated Statements of Financial Condition and the Consolidated Statements of Comprehensive Income. The ineffective portion, if any, is recorded in Investment income and other, net on the Consolidated Statements of Operations. | ||||||||||||||||
Stock and unit based compensation | ||||||||||||||||
Stock and unit based compensation is measured based on the grant date fair value of the awards. These costs are amortized over the requisite service period, which is typically the vesting period. Expected forfeitures are considered in determining stock-based employee compensation expense. | ||||||||||||||||
The Company applies a non-substantive vesting period approach for stock-based awards related to KCG Class A Common Stock whereby the expense is accelerated for those employees and directors that receive options, stock appreciation rights ("SARs") and RSUs and are eligible to retire prior to the vesting of such awards. | ||||||||||||||||
Soft dollar expense | ||||||||||||||||
Under a commission management program, the Company allows institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third parties. As the Company acts as an agent in these transactions, it records such expenses on a net basis within Commissions and fees on the Consolidated Statements of Operations. | ||||||||||||||||
Depreciation, amortization and occupancy | ||||||||||||||||
Fixed assets are depreciated on a straight-line basis over their estimated useful lives of three to seven years. Leasehold improvements are being amortized on a straight-line basis over the shorter of the term of the related office lease or the expected useful life of the assets. The Company capitalizes certain costs associated with the acquisition or development of internal-use software and amortizes the software over its estimated useful life of three years, commencing at the time the software is placed in service. The Company reviews fixed assets and leasehold improvements for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. | ||||||||||||||||
The Company recognizes rent expense under operating leases with fixed rent escalations, lease incentives and free rent periods on a straight-line basis over the lease term beginning on the date the Company takes possession of or controls the use of the space, including during free rent periods. | ||||||||||||||||
Lease loss accrual | ||||||||||||||||
The Company’s policy is to identify excess real estate capacity and where applicable, accrue for related future costs, net of estimated sub-lease income. In the event the Company is able to sublease the excess real estate after recording a lease loss, such accrual is adjusted to the extent the actual terms of sub-leased property differ from the assumptions used in the calculation of the accrual. In the event that the Company concludes that previously determined excess real estate is needed for the Company’s use, such lease loss accrual is adjusted accordingly. | ||||||||||||||||
Income taxes | ||||||||||||||||
Prior to the Mergers, GETCO and the majority of its subsidiaries were treated as partnerships or disregarded entities for U.S. income tax purposes and, accordingly, were not subject to federal income taxes. Instead, the former GETCO members were liable for federal income taxes on their proportionate share of taxable income. Upon completion of the Mergers, the Company became a corporation subject to U.S. corporate income taxes and, following the Mergers, the Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and measures them using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. The Company evaluates the recoverability of future tax deductions by assessing the adequacy of future expected taxable income from all sources, including reversal of temporary differences and forecasted operating earnings. | ||||||||||||||||
Variable interest entities | ||||||||||||||||
A VIE is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company has a controlling financial interest and will consolidate a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. | ||||||||||||||||
VIEs generally finance the purchase of assets by issuing debt and equity securities that are either collateralized by or indexed to the assets held by the VIE. The debt and equity securities issued by a VIE may include tranches of varying levels of subordination. The Company’s involvement with VIEs includes purchased interests and commitments to VIEs. | ||||||||||||||||
The Company is principally involved with VIEs through Urban’s securitization of HECM loan inventory. Urban sells HECM loans to GNMA trusts, which have the characteristics of a VIE, and Urban retains certain commitments and obligations to the GNMA trusts. Urban's maximum exposure to loss is the value of its obligations as issuer and servicer of the GNMA trusts. Securitized HECM loan inventory variable interests are recorded in Assets and liabilities within discontinued operations. | ||||||||||||||||
The following table presents the Company’s nonconsolidated VIEs at September 30, 2013 (in thousands): | ||||||||||||||||
30-Sep-13 | ||||||||||||||||
Securitized | ||||||||||||||||
HECM loan | ||||||||||||||||
inventory recorded within Assets within discontinued operations | ||||||||||||||||
Carrying value of the variable interests | ||||||||||||||||
Assets | $ | — | ||||||||||||||
Liabilities | 1,326 | |||||||||||||||
Maximum exposure to loss in nonconsolidated VIEs | ||||||||||||||||
Commitments | 43,932 | |||||||||||||||
Purchased interests | — | |||||||||||||||
The Company did not have any nonconsolidated VIEs at December 31, 2012. | ||||||||||||||||
Use of estimates | ||||||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. | ||||||||||||||||
Recently adopted accounting guidance | ||||||||||||||||
In December 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) that requires additional disclosures about financial assets and liabilities that are subject to netting arrangements. Under the ASU, financial assets and liabilities must be disclosed at their respective gross asset and liability amounts, the amounts offset on the balance sheet and a description of the respective netting agreements. The new disclosures are required for reporting periods beginning on or after January 1, 2013, and are to be applied retrospectively. Other than requiring additional disclosures, the adoption of this ASU did not have an impact on the Company's Consolidated Financial Statements. | ||||||||||||||||
In February 2013, the FASB issued an ASU that requires additional disclosure requirements for items reclassified out of accumulated other comprehensive income. This new guidance requires entities to present either on the face of the income statement or in the notes to the financial statements the effects on the specific line items of the income statement for amounts reclassified out of accumulated other comprehensive income. This ASU is effective for reporting periods beginning after December 15, 2012. Other than additional disclosure requirements, the adoption of this ASU did not have an impact on the Company's Consolidated Financial Statements. | ||||||||||||||||
Recent accounting guidance to be adopted in future periods | ||||||||||||||||
In March 2013, the FASB issued an ASU concerning the parent's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This ASU provides for the release of the cumulative translation adjustment into net income when a parent sells a part or all of its investment within a foreign entity, no longer holds a controlling interest in an investment in a foreign entity or obtains control of an investment in a foreign entity that was previously recognized as an equity method investment. This ASU is effective for reporting periods beginning after December 15, 2013, however early adoption is permitted. The Company is evaluating the impact of this ASU on the Company's Consolidated Financial Statements. | ||||||||||||||||
In July 2013, the FASB issued an ASU to clarify the financial statement presentation of an unrecognized tax benefit when a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a NOL carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. The ASU is required for reporting periods beginning after December 15, 2013. Upon adoption, entities are required to apply the provisions of the ASU prospectively for all unrecognized tax benefits that exist at the adoption date, however, the ASU also indicates that retrospective application is permitted. The Company is currently evaluating the impact that such adoption will have on its Consolidated Financial Statements. |
Discontinued_Operations
Discontinued Operations | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||
Discontinued Operations | ' | |||
Discontinued Operations | ||||
In July 2013, the Company entered into an agreement to sell Urban, its reverse mortgage origination and securitization business that it acquired as a result of the Mergers, to an investor group. The transaction is expected to be completed in the fourth quarter of 2013. Completion of the sale is subject to certain customary conditions, including receipt of required regulatory approvals by GNMA, HUD, FNMA, and states and territories in which Urban operates and the absence of any law or order prohibiting the consummation of the sale of Urban. As a result, assets and liabilities related to Urban are classified as Assets within discontinued operations and Liabilities within discontinued operations on the Consolidated Statements of Financial Condition as of September 30, 2013 and the results of operations have been included in Loss from discontinued operations, net of tax within the Consolidated Statements of Operations for the three and nine months ended September 30, 2013. | ||||
The revenues and results of operations of discontinued operations are summarized as follows (in thousands): | ||||
For the three and nine months | ||||
ended September 30, | ||||
2013 | ||||
Revenues | $ | 22,114 | ||
Expenses: | ||||
Compensation | $ | 8,379 | ||
Execution and clearance fees | 2,840 | |||
Payments for order flow | 5,286 | |||
Other expenses | 6,873 | |||
Total Expenses | 23,378 | |||
Pre-tax loss from discontinued operations | (1,264 | ) | ||
Income tax benefit | 480 | |||
Loss from discontinued operations, net of tax | $ | (784 | ) | |
Assets and liabilities within discontinued operations are presented in the following table (in thousands): | ||||
September 30, | ||||
2013 | ||||
Assets within discontinued operations: | ||||
Cash and cash equivalents | $ | 15,702 | ||
Securitized HECM loan inventory | 5,841,664 | |||
Loan inventory | 177,674 | |||
Receivable from brokers, dealers and clearing organizations | 37,411 | |||
Other assets | 25,848 | |||
Total assets | $ | 6,098,299 | ||
Liabilities within discontinued operations: | ||||
Liability to GNMA trusts | 5,803,859 | |||
Other secured financings | 129,552 | |||
Payable to brokers, dealers and clearing organizations | 8,538 | |||
Accrued compensation expense | 4,717 | |||
Accrued expenses and other liabilities | 59,358 | |||
Total liabilities | $ | 6,006,024 | ||
The operations and cash flows of Urban will be eliminated from the ongoing operations of the Company as a result of the pending sale. The Company will not have significant continuing involvement in the operations of Urban after the sale is completed. |
Assets_Segregated_or_Held_in_S
Assets Segregated or Held in Seperate Accounts Under Federal or Other Regulations | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Cash and Cash Equivalents [Abstract] | ' | |||
Assets Segregated or Held in Seperate Accounts Under Federal or Other Regulations | ' | |||
Assets Segregated or Held in Separate Accounts Under Federal or Other Regulations | ||||
Cash and securities segregated under U.S. federal and other regulations primarily relate to the Company’s FCM business and consist of the following (in thousands): | ||||
September 30, | ||||
2013 | ||||
Cash and cash equivalents segregated under federal or other regulations | $ | 216,442 | ||
Receivables from brokers, dealers and clearing organizations | 282,650 | |||
Total assets segregated or held in separate accounts under federal or other regulations | $ | 499,092 | ||
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||||||||||
The Company’s financial instruments recorded at fair value have been categorized based upon a fair value hierarchy in accordance with accounting guidance, as described in Footnote 3 “Significant Accounting Policies.” The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value (in thousands): | |||||||||||||||||||||||||
Assets and Liabilities Measured at | |||||||||||||||||||||||||
Fair Value on a Recurring Basis | |||||||||||||||||||||||||
30-Sep-13 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Financial instruments owned, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 2,156,466 | $ | — | $ | — | $ | 2,156,466 | |||||||||||||||||
Listed options | 288,227 | — | — | 288,227 | |||||||||||||||||||||
U.S. government and Non-U.S. government obligations | 32,678 | — | — | 32,678 | |||||||||||||||||||||
Corporate debt | 46,606 | — | — | 46,606 | |||||||||||||||||||||
Total Financial instruments owned, at fair value | 2,523,977 | — | — | 2,523,977 | |||||||||||||||||||||
Securities on deposit with clearing organizations (2) | 160,369 | — | — | 160,369 | |||||||||||||||||||||
Deferred compensation investments (3) | — | 84 | — | 84 | |||||||||||||||||||||
Investment in Deephaven Funds (3) | — | 1,430 | — | 1,430 | |||||||||||||||||||||
Assets within discontinued operations: | — | ||||||||||||||||||||||||
Securitized HECM loan inventory (4) | — | 5,841,664 | — | 5,841,664 | |||||||||||||||||||||
Loan inventory | — | 177,674 | — | 177,674 | |||||||||||||||||||||
Total fair value of financial instrument assets | $ | 2,684,346 | $ | 6,020,852 | $ | — | $ | 8,705,198 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Financial instruments sold, not yet purchased, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 1,848,729 | $ | — | $ | — | $ | 1,848,729 | |||||||||||||||||
U.S. government obligations | 29,441 | — | — | 29,441 | |||||||||||||||||||||
Corporate debt | 49,616 | — | — | 49,616 | |||||||||||||||||||||
Listed options | 229,721 | — | — | 229,721 | |||||||||||||||||||||
Foreign currency forward contracts | — | 5,431 | — | 5,431 | |||||||||||||||||||||
Total Financial instruments sold, not yet purchased, at fair value | 2,157,507 | 5,431 | — | 2,162,938 | |||||||||||||||||||||
Liabilities within discontinued operations: | |||||||||||||||||||||||||
Liability to GNMA trusts, at fair value (4) | — | 5,803,859 | — | 5,803,859 | |||||||||||||||||||||
Total fair value of financial instrument liabilities | $ | 2,157,507 | $ | 5,809,290 | $ | — | $ | 7,966,797 | |||||||||||||||||
________________________________________ | |||||||||||||||||||||||||
(1) | Equities of $1.22 billion have been netted by their respective CUSIP number and their long and short positions. | ||||||||||||||||||||||||
(2) | Securities on deposit with clearing organizations consist of U.S. government obligations and are recorded within Receivable from brokers, dealers and clearing organizations on the Consolidated Statements of Financial Condition. | ||||||||||||||||||||||||
(3) | Deferred compensation investments and Investment in Deephaven Funds are included within Investments on the Consolidated Statements of Financial Condition. | ||||||||||||||||||||||||
(4) | Represents HECMs that have been securitized into HECM Mortgage Backed Securities (“HMBS”) where the securitization is not accounted for as a sale of the underlying HECMs. See Securitized HECM loan inventory below for full description. | ||||||||||||||||||||||||
Assets and Liabilities Measured at | |||||||||||||||||||||||||
Fair Value on a Recurring Basis | |||||||||||||||||||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Financial instruments owned, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 378,933 | $ | — | $ | — | $ | 378,933 | |||||||||||||||||
Listed options | 92,305 | — | — | 92,305 | |||||||||||||||||||||
U.S. government obligations and corporate bonds | 68,765 | — | — | 68,765 | |||||||||||||||||||||
Mutual funds - Bond Funds | 114,872 | — | 114,872 | ||||||||||||||||||||||
Total Financial instruments owned, at fair value | 654,875 | — | — | 654,875 | |||||||||||||||||||||
Securities on deposit with clearing organizations | 7,147 | — | 7,147 | ||||||||||||||||||||||
Investment - Knight preferred shares | 199,632 | — | 199,632 | ||||||||||||||||||||||
Total fair value of financial instrument assets | $ | 861,654 | $ | — | $ | — | $ | 861,654 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Financial instruments sold, not yet purchased, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 423,740 | $ | — | $ | — | $ | 423,740 | |||||||||||||||||
U.S. government obligations | 19,056 | — | — | 19,056 | |||||||||||||||||||||
Listed options | 69,757 | — | — | 69,757 | |||||||||||||||||||||
Total Financial instruments sold, not yet purchased, at fair value | 512,553 | — | — | 512,553 | |||||||||||||||||||||
Total fair value of financial instrument liabilities | $ | 512,553 | $ | — | $ | — | $ | 512,553 | |||||||||||||||||
___________________________________ | |||||||||||||||||||||||||
(1) Equities of $5.9 million have been netted by their respective CUSIP number and their long and short positions. | |||||||||||||||||||||||||
The Company’s equities, listed options, U.S. government and non-U.S. government obligations, and rated corporate debt are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations with reasonable levels of price transparency. | |||||||||||||||||||||||||
The types of instruments that trade in markets that are not considered to be active, but are valued based on observable inputs such as quoted market prices or alternative pricing sources with reasonable levels of price transparency are generally classified within Level 2 of the fair value hierarchy. | |||||||||||||||||||||||||
Certain instruments are classified within Level 3 of the fair value hierarchy because they trade infrequently and therefore have little or no price transparency. For those instruments that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. | |||||||||||||||||||||||||
The Company’s assets measured at fair value on a nonrecurring basis solely relates to goodwill and intangible assets arising from various acquisitions which would be classified as Level 3 within the fair value hierarchy. See Footnote 10 “Goodwill and Intangible Assets” for additional information. | |||||||||||||||||||||||||
There were no transfers of financial instruments between levels of the fair value hierarchy for any periods presented. | |||||||||||||||||||||||||
The Company’s loan inventory, foreign currency forward contracts , deferred compensation investments and its remaining investment in the Deephaven Funds are classified within Level 2 of the fair value hierarchy. | |||||||||||||||||||||||||
The following is a description of the valuation basis, techniques and significant inputs used by the Company in valuing its Level 2 assets and liabilities: | |||||||||||||||||||||||||
Foreign currency forward contracts | |||||||||||||||||||||||||
At September 30, 2013, the Company had foreign currency forward contracts with a notional value of 80.0 million British pounds that are used to hedge the Company’s investment in its European subsidiaries. The fair value of these contracts was determined based upon spot foreign exchange rates, LIBOR interest rates and dealer quotations. | |||||||||||||||||||||||||
Deferred compensation investments | |||||||||||||||||||||||||
Deferred compensation investments comprise investments in liquid mutual funds that the Company acquires to hedge its obligations to employees and directors under certain non-qualified deferred compensation arrangements. These mutual fund investments can generally be redeemed at any time and are valued based upon quoted market prices. | |||||||||||||||||||||||||
Investment in Deephaven Funds | |||||||||||||||||||||||||
Investment in Deephaven Funds represents the Company's residual investment in certain funds that were formerly managed by Deephaven Capital Management, a former Knight subsidiary. These investments are in the process of liquidation and are valued based upon the fair value of the underlying investments within such funds. | |||||||||||||||||||||||||
Loan inventory (within Assets within discontinued operations) | |||||||||||||||||||||||||
The Company’s loan inventory primarily comprises newly issued HECMs that Urban has originated or purchased and for which the Company has elected to account for at fair value. Significant inputs that are used in determining fair value include LIBOR and U.S. treasury interest rates, weighted average coupon and pricing of actively-traded HMBS and dealer quotations for HECMs. These instruments are recorded within Assets within discontinued operations on the Company's Consolidated Statements of Financial Condition. | |||||||||||||||||||||||||
Securitized HECM loan inventory (within Assets within discontinued operations) | |||||||||||||||||||||||||
Securitized HECM loan inventory comprises HECMs that Urban has securitized into HMBS. The Company has recorded the securitized loans within Assets within discontinued operations and a corresponding liability recorded as Liability to GNMA trusts, at fair value, within Liabilities within discontinued operations on its Consolidated Statements of Financial Condition. As of September 30, 2013 all of the HMBS created by the Urban have been sold to third parties. Significant inputs that are used in determining fair value include LIBOR and U.S. treasury interest rates, weighted average coupon and pricing of actively-traded HMBS and dealer quotations for HECMs. | |||||||||||||||||||||||||
Derivative Instruments | |||||||||||||||||||||||||
Fair value of derivative instruments | |||||||||||||||||||||||||
The Company enters into derivative transactions, primarily with respect to making markets in listed domestic options. In addition, the Company enters into derivatives to manage foreign currency exposure. Cash flows associated with such derivative activities are included in cash flows from operating activities on the Consolidated Statements of Cash Flows, when applicable. | |||||||||||||||||||||||||
Futures | |||||||||||||||||||||||||
During the normal course of business, the Company enters into futures contracts. These financial instruments are subject to varying degrees of risks whereby the fair value of the securities underlying the financial instruments, may be in excess of, or less than, the contract amount. The Company is obligated to post collateral against certain futures contracts. | |||||||||||||||||||||||||
The following tables summarize the fair value of derivative instruments and futures contract trading activities in the Consolidated Statements of Financial Condition and the gains and losses included in the Consolidated Statements of Operations (fair value in thousands): | |||||||||||||||||||||||||
30-Sep-13 | |||||||||||||||||||||||||
Financial Statements | Assets | Liabilities | |||||||||||||||||||||||
Location | Fair Value | Contracts | Fair Value | Contracts | |||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | $ | 21 | 651 | $ | 62 | 244 | ||||||||||||||||||
Forward contracts (1) | Financial instruments owned, at fair value | — | — | 5,431 | 2 | ||||||||||||||||||||
Forward contracts (1) | Receivables from/Payables to brokers, dealers and clearing organizations | 331 | 1 | — | — | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 1,442 | 3,059 | 595 | 1,046 | ||||||||||||||||||||
Swap contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 230 | 1 | — | — | ||||||||||||||||||||
Listed options | Financial instruments owned, at fair value | 288,227 | 772,768 | 229,721 | 753,979 | ||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 4,183 | 24,400 | 1,724 | 6,601 | ||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 732 | 2,278 | 1,478 | 3,565 | ||||||||||||||||||||
Total | $ | 295,166 | 803,158 | $ | 239,011 | 765,437 | |||||||||||||||||||
(1) Designated as hedging instrument | |||||||||||||||||||||||||
31-Dec-12 | |||||||||||||||||||||||||
Financial Statements | Assets | Liabilities | |||||||||||||||||||||||
Location | Fair Value | Contracts | Fair Value | Contracts | |||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | $ | 8 | 500 | $ | — | 95 | ||||||||||||||||||
Forward contracts | Accrued expenses and other liabilities | — | — | 110 | 1 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 498 | 1,027 | 70 | 234 | ||||||||||||||||||||
Swap contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 570 | 1 | — | — | ||||||||||||||||||||
Listed options | Financial instruments owned, at fair value | 92,305 | 199,324 | 69,757 | 196,804 | ||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 3,474 | 42,143 | 5,043 | 61,398 | ||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 428 | 1,385 | 410 | 1,824 | ||||||||||||||||||||
Total | $ | 97,283 | 244,380 | $ | 75,390 | 260,356 | |||||||||||||||||||
Gain (Loss) Recognized | |||||||||||||||||||||||||
Financial Statements | For the three months | ||||||||||||||||||||||||
ended September 30, | |||||||||||||||||||||||||
Location | 2013 | 2012 | |||||||||||||||||||||||
Derivative instruments not designated as hedging instruments: | |||||||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | $ | 3,825 | $ | 4,493 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 17,461 | 10,724 | ||||||||||||||||||||||
Swap contracts | Trading revenues, net | 1,884 | 1,985 | ||||||||||||||||||||||
Listed options (1) | Trading revenues, net | 17,044 | 24,582 | ||||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 22,008 | 15,557 | ||||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 18,774 | 8,792 | ||||||||||||||||||||||
$ | 80,996 | $ | 66,133 | ||||||||||||||||||||||
Derivative instruments designated as hedging instruments: | |||||||||||||||||||||||||
Foreign exchange - forward contract | Accumulated other comprehensive (loss) | $ | (4,948 | ) | $ | — | |||||||||||||||||||
(1) | Realized gains and losses on listed equity options relate to the Company’s market making activities in such options. Such market making activities also comprise trading in the underlying equity securities with gains and losses on such securities generally offsetting the gains and losses reported in this table. Gains and losses on such equity securities are also included in Trading revenue, net on the Company’s Consolidated Statements of Operations. | ||||||||||||||||||||||||
Gain (Loss) Recognized | |||||||||||||||||||||||||
Financial Statements | For the nine months ended September 30, | ||||||||||||||||||||||||
Location | 2013 | 2012 | |||||||||||||||||||||||
Derivative instruments not designated as hedging instruments: | |||||||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | $ | 9,243 | $ | 16,446 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 44,125 | 62,241 | ||||||||||||||||||||||
Swap contracts | Trading revenues, net | 10,755 | 5,007 | ||||||||||||||||||||||
Listed options (1) | Trading revenues, net | 63,322 | 41,455 | ||||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 64,211 | 66,573 | ||||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 44,053 | 26,065 | ||||||||||||||||||||||
$ | 235,709 | $ | 217,787 | ||||||||||||||||||||||
Derivative instruments designated as hedging instruments: | |||||||||||||||||||||||||
Foreign exchange - forward contract | Accumulated other comprehensive (loss) | $ | (4,948 | ) | $ | — | |||||||||||||||||||
(1) | Realized gains and losses on listed options relate to the Company’s market making activities in such options. Such market making activities also comprise trading in the underlying equity securities with gains and losses on such securities generally offsetting the gains and losses reported in this table. Gains and losses on such equity securities are also included in Trading revenue, net on the Company’s Consolidated Statements of Operations. | ||||||||||||||||||||||||
Assets and Liabilities Subject to Netting | |||||||||||||||||||||||||
The gross amounts of assets and liabilities subject to netting and gross amounts offset in the Consolidated Statements of Financial Condition were as follows (in thousands): | |||||||||||||||||||||||||
30-Sep-13 | Gross Amounts Recognized | Gross Amounts Offset in the Statements of Financial Condition | Net Amounts of Assets Presented in the Statements of Financial Condition | Gross Amounts Not Offset in the Statement of Financial Condition | Net Amount | ||||||||||||||||||||
Financial Instruments | Cash Collateral Received | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Listed options | $ | 288,227 | $ | — | $ | 288,227 | $ | — | $ | — | $ | 288,227 | |||||||||||||
Securities borrowed | 1,370,921 | — | 1,370,921 | 1,329,508 | — | 41,413 | |||||||||||||||||||
Total Assets | $ | 1,659,148 | $ | — | $ | 1,659,148 | $ | 1,329,508 | $ | — | $ | 329,640 | |||||||||||||
Liabilities | |||||||||||||||||||||||||
Listed options | $ | 229,722 | $ | — | $ | 229,722 | $ | — | $ | 5,064 | $ | 224,658 | |||||||||||||
Securities loaned | 543,451 | — | 543,451 | 533,266 | — | 10,185 | |||||||||||||||||||
Financial instruments sold under agreements to repurchase | 595,029 | — | 595,029 | 595,022 | — | 7 | |||||||||||||||||||
Foreign currency forward contracts | 5,431 | — | 5,431 | — | — | 5,431 | |||||||||||||||||||
Total Liabilities | $ | 1,373,633 | $ | — | $ | 1,373,633 | $ | 1,128,288 | $ | 5,064 | $ | 240,281 | |||||||||||||
31-Dec-12 | Gross Amounts Recognized | Gross Amounts Offset in the Statements of Financial Condition | Net Amounts of Assets Presented in the Statements of Financial Condition | Gross Amounts Not Offset in the Statement of Financial Condition | Net Amount | ||||||||||||||||||||
Financial Instruments | Cash Collateral Received | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Listed options | $ | 92,305 | $ | — | $ | 92,305 | $ | — | $ | — | $ | 92,305 | |||||||||||||
Securities borrowed | 52,261 | — | 52,261 | 50,717 | 1,544 | ||||||||||||||||||||
Total Assets | $ | 144,566 | $ | — | $ | 144,566 | $ | 50,717 | $ | — | $ | 93,849 | |||||||||||||
Liabilities | |||||||||||||||||||||||||
Listed options | $ | 69,757 | $ | — | $ | 69,757 | $ | — | $ | 1,393 | $ | 68,364 | |||||||||||||
Total Liabilities | $ | 69,757 | $ | — | $ | 69,757 | $ | — | $ | 1,393 | $ | 68,364 | |||||||||||||
Collateralized_Transactions
Collateralized Transactions | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Collateralized Agreements [Abstract] | ' | |||||||
Collateralized Transactions | ' | |||||||
Collateralized Transactions | ||||||||
The Company receives financial instruments as collateral in connection with securities borrowed. Such financial instruments generally consist of equity and convertible securities but may include obligations of the U.S. government, federal agencies, foreign government and corporations. In most cases, the Company is permitted to deliver or repledge these financial instruments in connection with securities lending and other secured financings for meeting settlement requirements. | ||||||||
The table below presents financial instruments at fair value received as collateral that were permitted to be delivered or repledged and that were delivered or repledged by the Company as well as the fair value of financial instruments which could be further repledged by the receiving counterparty (in thousands): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Collateral permitted to be delivered or repledged | $ | 1,317,369 | $ | 50,717 | ||||
Collateral that was delivered or repledged | 1,210,408 | 50,717 | ||||||
Collateral permitted to be further repledged by the receiving counterparty | 149,891 | — | ||||||
In order to finance securities positions and loan inventory, the Company also pledges financial instruments that it owns to counterparties who, in turn, are permitted to deliver or repledge them. Under these transactions, the Company pledges certain financial instruments owned to collateralize repurchase agreements and other secured financings. Repurchase agreements and other secured financings are short-term and mature within one year. Financial instruments owned and pledged to counterparties that do not have the right to sell or repledge such financial instruments consist of equity securities and loans. | ||||||||
The table below presents information about assets pledged by the Company (in thousands): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Financial instruments owned, at fair value, pledged to counterparties that had the right to deliver or repledge (1) | $ | 6,803,143 | $ | 52,261 | ||||
Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge | 732,481 | — | ||||||
(1) | Financial instruments owned, at fair value, pledged to counterparties that had the right to deliver or repledge includes $5.84 billion recorded within Assets within discontinued operations as of September 30, 2013. |
Receivable_from_and_Payable_to
Receivable from and Payable to Brokers, Dealers and Clearing Organizations | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Brokers and Dealers [Abstract] | ' | |||||||
Receivable from and Payable to Brokers, Dealers and Clearing Organizations | ' | |||||||
Receivable from and Payable to Brokers, Dealers and Clearing Organizations | ||||||||
Amounts receivable from and payable to brokers, dealers and clearing organizations consist of the following (in thousands): | ||||||||
September 30, | 31-Dec-12 | |||||||
2013 | ||||||||
Receivable: | ||||||||
Clearing organizations and other | $ | 1,096,308 | $ | 140,089 | ||||
Securities failed to deliver | 233,805 | 2,880 | ||||||
Total Receivable | $ | 1,330,113 | $ | 142,969 | ||||
Payable: | ||||||||
Clearing organizations and other | $ | 564,592 | $ | 15,879 | ||||
Securities failed to receive | 101,586 | 8,306 | ||||||
Total Payable | $ | 666,178 | $ | 24,185 | ||||
Management believes that the carrying value of amounts receivable from and payable to brokers, dealers and clearing organizations approximates fair value since they are short term in nature. |
Investments
Investments | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Investments [Abstract] | ' | |||||||
Investments | ' | |||||||
Investments | ||||||||
Investments comprise strategic investments, including limited partnership investments, deferred compensation investments related to employee and director deferred compensation plans and investment in the Deephaven Funds. Investments consist of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Strategic investments: | ||||||||
Investments accounted for under the equity method | $ | 82,476 | $ | — | ||||
Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost | 41,899 | 48,806 | ||||||
Total Strategic investments | 124,375 | 48,806 | ||||||
Deferred compensation investments | 84 | — | ||||||
Knight preferred shares | — | 199,632 | ||||||
Investment in Deephaven Funds | 1,430 | — | ||||||
Total Investments | $ | 125,889 | $ | 248,438 | ||||
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||
Goodwill and Intangible Assets | ||||||||||||||||
Goodwill is assessed for impairment annually or when events indicate that the amounts may not be recoverable. The Company assesses goodwill for impairment at the reporting unit level. The Company’s reporting units are the components of its business segments for which discrete financial information is available and is regularly reviewed by the Company’s management. As part of the assessment for impairment, the Company considers the cash flows of the respective reporting unit and assesses the fair value of the respective reporting unit as well as the overall market value of the Company compared to its net book value. The assessment of fair value of the reporting units is principally performed using a discounted cash flow methodology with a risk-adjusted weighted average cost of capital which the Company believes to be the most reliable indicator of the fair values of its respective reporting units. The Company also assesses the fair value of each reporting unit based upon its estimated market value and assesses the Company’s overall market value based upon the market price of KCG Class A Common Stock. | ||||||||||||||||
Intangible assets are assessed for recoverability when events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. The Company assesses intangible assets for impairment at the “asset group” level which is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. As part of the assessment for impairment, the Company considers the cash flows of the respective asset group and assesses the fair value of the respective asset group. Step 1 of the impairment assessment for intangibles is performed using undiscounted cash flow models, which indicates whether the future cash flows of the asset group are sufficient to recover the book value of such asset group. When an asset is not considered to be recoverable, step 2 of the impairment assessment is performed using a discounted cash flow methodology with a risk-adjusted weighted average cost of capital to determine the fair value of the intangible asset group. In cases where amortizable intangible assets and goodwill are assessed for impairment at the same time, the amortizable intangibles are assessed for impairment prior to goodwill being assessed. | ||||||||||||||||
As discussed in Footnote 2 "Merger of GETCO and Knight", as a result of the Mergers, $156.8 million and $13.8 million in identifiable intangible assets and goodwill, respectively, were recorded by the Company. | ||||||||||||||||
No events occurred in the three or nine months ended September 30, 2013 or 2012 that would indicate that the carrying amounts of the Company’s goodwill or intangible assets may not be recoverable. | ||||||||||||||||
The following table summarizes the Company’s Goodwill by segment (in thousands): | ||||||||||||||||
September 30, | 31-Dec-12 | |||||||||||||||
2013 | ||||||||||||||||
Market Making | $ | 15,159 | $ | 4,645 | ||||||||||||
Global Execution Services | 3,239 | — | ||||||||||||||
Total | $ | 18,398 | $ | 4,645 | ||||||||||||
Intangible assets are amortized over their estimated remaining useful lives, the majority of which have been determined to range from four to 12 years. The weighted average remaining life of the Company’s intangible assets at September 30, 2013 and December 31, 2012 is approximately 7 years and 10 years, respectively. | ||||||||||||||||
The following tables summarize the Company’s Intangible assets, net of accumulated amortization by segment and type (in thousands): | ||||||||||||||||
September 30, | 31-Dec-12 | |||||||||||||||
2013 | ||||||||||||||||
Market Making | ||||||||||||||||
Trading rights | $ | 47,065 | $ | 42,635 | ||||||||||||
Technology | 52,791 | 3,488 | ||||||||||||||
Total | 99,856 | 46,123 | ||||||||||||||
Global Execution Services | ||||||||||||||||
Customer relationships | 34,139 | — | ||||||||||||||
Trade names | 3,900 | — | ||||||||||||||
Technology | 39,900 | — | ||||||||||||||
Total | 77,939 | — | ||||||||||||||
Corporate and Other | ||||||||||||||||
Technology | 14,250 | |||||||||||||||
Consolidated Total | $ | 192,045 | $ | 46,123 | ||||||||||||
September 30, | 31-Dec-12 | |||||||||||||||
2013 | ||||||||||||||||
Customer relationships (1) | Gross carrying amount | $ | 35,000 | $ | — | |||||||||||
Accumulated amortization | (861 | ) | — | |||||||||||||
Net carrying amount | 34,139 | — | ||||||||||||||
Trading rights (2) | Gross carrying amount | 59,628 | 51,828 | |||||||||||||
Accumulated amortization | (12,563 | ) | (9,193 | ) | ||||||||||||
Net carrying amount | 47,065 | 42,635 | ||||||||||||||
Trade names (3) | Gross carrying amount | 4,000 | — | |||||||||||||
Accumulated amortization | (100 | ) | — | |||||||||||||
Net carrying amount | 3,900 | — | ||||||||||||||
Technology (4) | Gross carrying amount | 115,580 | 5,580 | |||||||||||||
Accumulated amortization | (8,639 | ) | (2,092 | ) | ||||||||||||
Net carrying amount | 106,941 | 3,488 | ||||||||||||||
Total | Gross carrying amount | 214,208 | 57,408 | |||||||||||||
Accumulated amortization | (22,163 | ) | (11,285 | ) | ||||||||||||
Net carrying amount | $ | 192,045 | $ | 46,123 | ||||||||||||
________________________________________ | ||||||||||||||||
(1) | Customer relationships relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of September 30, 2013. Lives may be reduced depending upon actual retention rates. | |||||||||||||||
(2) | Trading rights provide the Company with the rights to trade on certain exchanges. The weighted average remaining life is approximately 9 and 10 years as of September 30, 2013 and December 31, 2012, respectively. | |||||||||||||||
(3) | Trade names relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of September 30, 2013. | |||||||||||||||
(4) | The weighted average remaining life is approximately five and three years as of September 30, 2013 and December 31, 2012, respectively. | |||||||||||||||
The following table summarizes the Company’s amortization expense from continuing operations relating to Intangible assets (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Amortization expense | $ | 8,119 | $ | 1,380 | $ | 10,878 | $ | 4,139 | ||||||||
As of September 30, 2013, the following table summarizes the Company’s estimated amortization expense for future periods (in thousands): | ||||||||||||||||
Amortization | ||||||||||||||||
expense | ||||||||||||||||
For the three months ending December 31, 2013 | $ | 8,119 | ||||||||||||||
For the year ended December 31, 2014 | 32,477 | |||||||||||||||
For the year ended December 31, 2015 | 31,780 | |||||||||||||||
For the year ended December 31, 2016 | 31,082 | |||||||||||||||
For the year ended December 31, 2017 | 31,082 | |||||||||||||||
LongTerm_Debt
Long-Term Debt | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||
Long-Term Debt | ' | |||||||||||||||
Long-Term Debt | ||||||||||||||||
The carrying value and fair value of the Company's Long-term debt is as follows (in thousands): | ||||||||||||||||
30-Sep-13 | 31-Dec-12 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Notes | $ | — | $ | — | $ | 15,000 | $ | 15,000 | ||||||||
Senior Secured Notes | 305,000 | 299,663 | — | — | ||||||||||||
Credit Agreement | 535,000 | 535,000 | — | — | ||||||||||||
Convertible Notes | 117,259 | 117,845 | — | — | ||||||||||||
Total | 957,259 | 952,508 | 15,000 | 15,000 | ||||||||||||
Less: Current portion | 235,000 | 235,000 | — | — | ||||||||||||
Total Long-term debt | $ | 722,259 | $ | 717,508 | $ | 15,000 | $ | 15,000 | ||||||||
Notes Payable | ||||||||||||||||
In October 2011, the Company issued $15.0 million in notes to a single lender. The notes bore interest at 5.95% per annum, required no principal amortization over the term and were scheduled to mature in October 2018. The note agreement included certain covenants which required the Company, among other things, to maintain compliance with debt to net worth ratios, maintain minimum levels of liquid net assets and maintain minimum net capital levels in regulated subsidiaries. At December 31, 2012, the Company was in compliance with these covenants. In connection with the Mergers, on May 31, 2013, the Company provided irrevocable notice to the lender to prepay the notes. The $15.0 million in notes were subsequently repaid on July 1, 2013 along with accrued interest and a $3.0 million early termination payment. | ||||||||||||||||
Long-Term Debt in connection with Mergers | ||||||||||||||||
In connection with the Mergers, KCG entered into a series of debt agreement transactions. Described below are the details of these transactions. | ||||||||||||||||
Senior Secured Notes Indenture | ||||||||||||||||
On June 5, 2013 GETCO Financing Escrow LLC (“Finance LLC”), a wholly-owned subsidiary of GETCO, issued 8.250% senior secured notes due 2018 in the aggregate principal amount of $305.0 million (the “Senior Secured Notes”) pursuant to an indenture, dated June 5, 2013 (as amended, the "Senior Secured Notes Indenture"). On July 1, 2013, KCG entered into a first supplemental indenture (the “First Supplemental Indenture”) pursuant to which KCG assumed all of the obligations of Finance LLC which comprised the Senior Secured Notes plus certain escrow agent fees and expenses of $3.0 million. | ||||||||||||||||
On July 1, 2013, KCG and certain subsidiary guarantors (the "Guarantors") under the First Lien Credit Facility, as defined below, entered into a Second Supplemental Indenture, whereby the Senior Secured Notes and the obligations under the Senior Secured Notes Indenture will be fully and unconditionally guaranteed on a joint and several basis by the Guarantors and are secured by second-priority pledges and second-priority security interests in, and mortgages on, the collateral securing the First Lien Credit Facility, subject to certain exceptions. | ||||||||||||||||
The Senior Secured Notes mature on June 15, 2018 and bear interest at a rate of 8.250% per year, payable on June 15 and December 15 of each year, beginning on December 15, 2013. | ||||||||||||||||
The Senior Secured Notes Indenture contains customary affirmative and negative covenants, including limitations on indebtedness, liens, hedging agreements, investments, loans and advances, asset sales, mergers and acquisitions, dividends, transactions with affiliates, prepayments of other indebtedness, restrictions on subsidiaries and issuance of capital stock. As of September 30, 2013, the Company was in compliance with the covenants. | ||||||||||||||||
On July 1, 2013, KCG and the Guarantors entered into a joinder to the registration rights agreement dated June 5, 2013, between Finance LLC and Jefferies LLC as representative of the initial purchasers of the Senior Secured Notes. Pursuant to the registration rights agreement, KCG shall use commercially reasonable efforts to (i) file an exchange offer registration statement with the SEC with respect to a registered offer to exchange the Senior Secured Notes, (ii) issue exchange securities within 365 days after June 5, 2013, and, (iii) in certain circumstances, file a shelf registration statement with respect to resales of the Senior Secured Notes. If KCG and the Guarantors fail to comply with certain obligations under the Senior Secured Notes Registration Rights Agreement, additional interest of up to 1.00% per annum will accrue on the Senior Secured Notes. | ||||||||||||||||
First Lien Credit Facility | ||||||||||||||||
On July 1, 2013, KCG, as borrower, entered into a first lien senior secured credit agreement (the “Credit Agreement”) with Jefferies Finance LLC and Goldman Sachs Bank USA. The Credit Agreement was in the amount of $535.0 million (the “First Lien Credit Facility”), all of which was drawn on July 1, 2013. The First Lien Credit Facility also provides for a future incremental first lien senior secured revolving credit facility of up to $50.0 million, including letter of credit and swingline sub-facilities, on certain terms and conditions contained in the Credit Agreement. For the three months ended September 30, 2013, there were no borrowings made against the $50.0 million first lien senior secured revolving credit facility. | ||||||||||||||||
The First Lien Credit Facility bears interest, at KCG's option, at a rate based on the prime rate (“First Lien Prime Rate Loans”) or based on LIBOR (“First Lien Eurodollar Loans”). First Lien Prime Rate Loans bear interest at a rate per annum equal to the greatest of prime rate, 2.25%, the federal funds rate plus 0.50%, and an adjusted one-month LIBOR rate plus 1.00%, in each case plus an applicable margin of 3.50%. First Lien Eurodollar Loans bear interest at a rate per annum equal to the adjusted LIBOR rate (subject to a 1.25% LIBOR floor) corresponding to the interest period plus an applicable margin of 4.50% per annum. As of September 30, 2013, the interest rate was 5.75% per annum. | ||||||||||||||||
The First Lien Credit Facility matures on December 5, 2017. The First Lien Credit Facility requires an amortization payment of $235.0 million on 7/1/2014 followed by quarterly amortization payments of $7.5 million on each September 30, December 31, March 31 and June 30, with the balance due on maturity. | ||||||||||||||||
Optional prepayments of borrowings under the First Lien Credit Facility are permitted at any time, without premium or penalty, subject, however, to a 1% prepayment premium for optional prepayments of the First Lien Credit Facility made prior to July 1, 2014 with a new or replacement term loan facility with an “effective” interest rate less than that applicable to the First Lien Credit Facility. | ||||||||||||||||
The First Lien Credit Facility is fully and unconditionally guaranteed on a joint and several basis by all of KCG's existing and future direct and indirect 100% owned domestic subsidiaries, other than certain subsidiaries including regulated broker-dealers and other regulated subsidiaries that, in each case, are not permitted to provide such guarantees under applicable law. | ||||||||||||||||
The First Lien Credit Facility contains customary affirmative and negative covenants, including limitations on indebtedness, liens, hedging agreements, investments, loans and advances, asset sales, mergers and acquisitions, dividends, transactions with affiliates, prepayments of other indebtedness, restrictions on subsidiaries, capital expenditures and issuance of capital stock. It also contains financial maintenance covenants establishing a maximum consolidated first lien leverage ratio, a minimum consolidated interest coverage ratio and a minimum consolidated tangible net worth. | ||||||||||||||||
The Company incurred issuance costs of $34.6 million in connection with the issuance of Senior Secured Notes and Credit Agreement. The issuance costs are recorded within Other assets on the Consolidated Statements of Financial Condition and are amortized over the respective terms of the Senior Secured Notes and the Credit Agreement. Including issuance costs, the Senior Secured Notes and Credit Agreements have effective yields of 9.0% and 7.6%, respectively. Subsequent to September 30, 2013, the Company made a $200.0 million principal prepayment under the Credit Agreement. See Footnote 20 "Subsequent Events" for further discussion. | ||||||||||||||||
Revolving Credit Agreement | ||||||||||||||||
On July 1, 2013, OCTEG, LLC (“OCTEG”), and Knight Capital Americas LLC ("KCA"), each of which are wholly-owned broker-dealer subsidiaries of KCG effective July 1, 2013, as borrowers, and KCG, as guarantor, entered into a credit agreement (the “OCTEG-KCA Facility Agreement”) with a consortium of banks and financial institutions. The OCTEG-KCA Facility Agreement replaces an existing credit agreement, dated as of June 6, 2012, among OCTEG and three banks. | ||||||||||||||||
The OCTEG-KCA Facility Agreement comprises two classes of revolving loans in a total committed amount of $450.0 million, together with a swingline facility with a $50.0 million sub-limit, subject to two borrowing bases (collectively, the “OCTEG-KCA Revolving Facility”): Borrowing Base A and Borrowing Base B. The OCTEG-KCA Revolving Facility also provides for a future increase of the revolving credit facility of up to $300.0 million to a total of $750.0 million on certain terms and conditions. | ||||||||||||||||
Borrowings under the OCTEG-KCA Facility shall bear interest, at the applicable borrower's option, at a rate based on the federal funds rate (“Base Rate Loans”) or based on LIBOR (“Eurodollar Loans”), in each case plus an applicable margin. For each Base Rate Loan, the interest rate per annum is equal to the greater of the federal funds rate or an adjusted one-month LIBOR rate plus (a) for each Borrowing Base A loan, a margin of 1.75% per annum and (b) for each Borrowing Base B loan, a margin of 2.25% per annum. For each Eurodollar Loan, the interest rate per annum is equal to an adjusted LIBOR rate corresponding to the interest period plus (a) for each Borrowing Base A loan, a margin of 1.75% per annum and (b) for each Borrowing Base B loan, a margin of 2.25% per annum. As of September 30, 2013, there were no outstanding borrowings under the OCTEG-KCA Facility Agreement. | ||||||||||||||||
The borrowers will be charged a commitment fee at a rate of 0.35% per annum on the average daily amount of the unused portion of the OCTEG-KCA Facility Agreement. | ||||||||||||||||
The loans under the OCTEG-KCA Facility Agreement will mature on 6/6/2015. The OCTEG-KCA Revolving Facility is fully and unconditionally guaranteed on an unsecured basis by KCG and, to the extent elected by OCTEG or KCA, any of their respective subsidiaries. It is secured by first-priority pledges of and liens on certain eligible securities, subject to applicable concentration limits, in the case of Borrowing Base A loans, and by first-priority pledges of and liens on the right to the return of certain eligible NSCC margin deposits, in the case of Borrowing Base B loans. | ||||||||||||||||
The OCTEG-KCA Revolving Facility includes customary affirmative and negative covenants, including limitations on indebtedness, liens, hedging agreements, investments, loans and advances, asset sales, mergers and acquisitions, dividends, transactions with affiliates, restrictions on subsidiaries, issuance of capital stock, negative pledges and business activities. It contains financial maintenance covenants establishing a minimum total regulatory capital for each of OCTEG and KCA, a maximum total asset to total regulatory capital ratio for each of OCTEG and KCA, a minimum excess net capital limit for each of OCTEG and KCA, a minimum liquidity ratio for KCA, and a minimum tangible net worth threshold for KCG. As of September 30, 2013, the Company was in compliance with the covenants. | ||||||||||||||||
In connection with the OCTEG-KCA Revolving Facility, the Company incurred issuance costs of $1.2 million which is recorded within Other assets on the Consolidated Statements of Financial Condition and is being amortized over the term of the OCTEG-KCA Revolving Facility. | ||||||||||||||||
OCTEG and KCA shall each be obligated only with respect to the principal and interest of their own borrowings, and not the interest and principal of the other borrower's borrowings. | ||||||||||||||||
Cash Convertible Senior Subordinated Notes | ||||||||||||||||
In March 2010, Knight issued $375.0 million of Cash Convertible Senior Subordinated Notes (the “Convertible Notes”) due on March 15, 2015 in a private offering exempt from registration under the Securities Act of 1933, as amended. | ||||||||||||||||
The Convertible Notes bear interest at a rate of 3.50% per year, payable semi-annually in arrears, on March 15 and September 15 of each year, commencing on September 15, 2010 and will mature on March 15, 2015, subject to earlier repurchase or conversion. The Convertible Notes are reported as Long-term debt in the Company’s Consolidated Statements of Financial Condition. | ||||||||||||||||
As a result of the Mergers, on July 1, 2013, KCG became a party to the Company's existing $375.0 million Convertible Notes. On July 1, 2013, the Company delivered a notice (the “Convertible Notes Notice”) to the holders of the Notes. The Convertible Notes Notice advised holders of the Convertible Notes of the following (among others): | ||||||||||||||||
• | The completion of the Mergers on July 1, 2013 and the results of the election of the holders of KCG Class A Common Stock to receive cash consideration for such KCG Class A Common Stock constitutes a “Fundamental Change"; | |||||||||||||||
• | Each holder of the Convertible Notes has the right to deliver a “Fundamental Change Repurchase Notice ” requiring Knight to repurchase all or any portion of the principal amount of the Convertible Notes at a Fundamental Change Repurchase Price of 100% of the principal amount plus accrued and unpaid interest on August 5, 2013, the Fundamental Change Repurchase Date; and | |||||||||||||||
• | The Company deposited with the paying agent an amount of money sufficient to repurchase all of the Convertible Notes to be repurchased; and upon payment by the paying agent such Convertible Notes will cease to be outstanding. | |||||||||||||||
On July 1, 2013, $375.0 million, which was the amount needed to repurchase the aggregate amount of Knight's Convertible Notes in full at maturity, was deposited in a cash collateral account under the sole dominion and control of the collateral agent under the First Lien Credit Facility (the "Collateral Account"). | ||||||||||||||||
On 8/5/2013, a total of $257.7 million in principal amount of the Convertible Notes were repurchased using funds deposited in the Collateral Account. The repurchase included accrued and unpaid interest of $3.6 million. At 9/30/2013, $117.3 million remained in the Collateral Account which is included in Other assets on the Consolidated Statements of Financial Condition. See Footnote 20 "Subsequent Events" for a discussion of the consent solicitation related to the Collateral Account. | ||||||||||||||||
The Company recorded expenses with respect to the Long term debt as follows (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest expense | $ | 19,173 | $ | 688 | $ | 21,366 | $ | 1,134 | ||||||||
Amortization of debt issuance cost (1) | 2,007 | 103 | 2,479 | 152 | ||||||||||||
Commitment fee (1) | 267 | 390 | 9,204 | 390 | ||||||||||||
Total | $ | 21,447 | $ | 1,181 | $ | 33,049 | $ | 1,676 | ||||||||
(1) | Included in Other expense. |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Share-based Compensation [Abstract] | ' | ||||||||||||||||
Stock-Based Compensation | ' | ||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
KCG Equity Incentive Plan | |||||||||||||||||
The Knight Capital Group, Inc. Amended and Restated 2010 Equity Incentive Plan was established to provide long-term incentive compensation to employees and directors of the Company. As a result of the Mergers, on July 1, 2013, this plan was assumed by KCG and was renamed the KCG Holdings, Inc. Amended and Restated Equity Incentive Plan ("the KCG Plan"). At such time, the Knight Capital Group, Inc. 2009 Executive Incentive Plan was also assumed by KCG in connection with the Mergers and was renamed the KCG Holdings, Inc. Amended and Restated Executive Incentive Plan. As of July 1, 2013, the number of shares reserved for issuance under the KCG Plan was 20.7 million (based on a conversion ratio of one third of a share of KCG Class A Common Stock for each share of Knight Class A Common Stock). | |||||||||||||||||
The KCG Plan is administered by the Compensation Committee of the Company’s Board of Directors, and allows for the grant of options, SARs, restricted stock and RSUs (collectively, the “awards”), as defined by the KCG Plan. In addition to overall limitations on the aggregate number of awards that may be granted, the KCG Plan also limits the number of awards that may be granted to a single individual. The KCG Plan replaced prior Knight stockholder-approved equity plans for future equity grants and no additional grants will be made under those historical Knight stock plans. However, the terms and conditions of any outstanding equity grants under the historical Knight stock plans are not affected. | |||||||||||||||||
As a result of the Mergers on July 1, 2013, each outstanding Knight stock option, whether vested or unvested, was automatically replaced with an option to purchase KCG Class A Common Stock equal to one third of the number of shares of Knight Common Stock subject to such original stock option immediately prior to the completion of the Mergers (rounded down to the nearest whole share of KCG Class A Common Stock). The exercise price per share of KCG Class A Common Stock is equal to the exercise price per share of Knight Common Stock subject to such Company stock option multiplied by three (rounded up to the nearest whole cent). Pursuant to the terms of the applicable Knight stock plans and award agreements, each option granted on or prior to December 19, 2012 immediately vested. There were no Knight stock options granted subsequent to December 19, 2012 through June 30, 2013. | |||||||||||||||||
As a result of the Mergers, each Knight restricted share granted after December 19, 2012 and each outstanding Knight RSU was replaced with a restricted share or restricted stock unit, as applicable, equal to one third of a share of common stock of KCG (rounded to the nearest whole share). Knight awards granted on or prior to December 19, 2012 (except for RSUs that vest based upon performance) automatically vested upon the completion of the Mergers. Knight awards granted after December 19, 2012 (and RSUs granted on or prior to December 19, 2012 that vest based on performance) will continue to vest in accordance with their existing vesting schedule, subject to acceleration under certain circumstances. | |||||||||||||||||
Restricted Shares and Restricted Stock Units | |||||||||||||||||
Eligible employees and directors may receive restricted shares and/or RSUs (collectively “restricted awards”) as a portion of their total compensation. The majority of restricted awards vest ratably over three years and are subject to accelerated vesting, or continued vesting, following certain termination circumstances, in accordance with the applicable award documents. For certain restricted awards, the Company has the right to fully vest employees and directors upon retirement and in certain other circumstances. | |||||||||||||||||
The Company measures compensation cost related to restricted awards based on the fair value of KCG Class A Common Stock at the date of grant. Compensation expense from continuing operations relating to restricted awards, primarily recorded in Employee compensation and benefits, and the corresponding income tax benefit, which was recorded in Income tax benefit on the Consolidated Statements of Operations are presented in the following table (in thousands): | |||||||||||||||||
For the three months | |||||||||||||||||
ended September 30, | |||||||||||||||||
2013 | |||||||||||||||||
Stock award compensation expense | $ | 12,234 | |||||||||||||||
Income tax benefit | 4,649 | ||||||||||||||||
The following table summarizes restricted awards activity, including awards related to employees working in businesses that are included within discontinued operations, for the three months ended September 30, 2013 (awards in thousands): | |||||||||||||||||
Restricted Stock Units | |||||||||||||||||
Number of | Weighted- | ||||||||||||||||
Units | Average | ||||||||||||||||
Grant date | |||||||||||||||||
Fair Value | |||||||||||||||||
1-Jul-13 | — | $ | — | ||||||||||||||
Conversion of outstanding Knight RSUs | 3,251 | 11.22 | |||||||||||||||
Granted | 6,004 | 10.58 | |||||||||||||||
Vested | (45 | ) | 11.07 | ||||||||||||||
Forfeited | (246 | ) | 11.45 | ||||||||||||||
Outstanding at September 30, 2013 | 8,963 | $ | 10.78 | ||||||||||||||
There is $79.6 million of unamortized compensation related to the unvested restricted awards outstanding at September 30, 2013. The cost of these unvested restricted shares is expected to be recognized over a weighted average life of 2.5 years. | |||||||||||||||||
Stock Options and Stock Appreciation Rights | |||||||||||||||||
The Company’s policy is to grant options for the purchase of shares of KCG Class A Common Stock and SARs to purchase or receive the cash value of shares of KCG Class A Common Stock, in each case at not less than market value. Options and SARs generally vest ratably over a three year period and expire on the fifth or tenth anniversary of the grant date, pursuant to the terms of the applicable award agreement. Options and SARs continue to vest following certain termination circumstances, in accordance with the applicable award agreements. Options and SARs are otherwise canceled if employment is terminated before the end of the relevant vesting period. The Company’s policy is to issue new shares upon option exercises by its employees and directors. The Company may issue new shares or provide a cash payment upon SARs exercises by its employees. | |||||||||||||||||
The fair value of each option and SAR granted is estimated as of its respective grant date using the Black-Scholes option-pricing model. Stock options and SARs are granted with exercise prices equal to or greater than the market value of the Company’s common stock at the date of grant as defined by the stock plans. The principal assumptions utilized in valuing options and SARs and the methodology for estimating such model inputs include: 1) risk-free interest rate—estimate is based on the yield of U.S. zero coupon securities with a maturity equal to the expected life of the option or SAR; 2) expected volatility—estimate is based on several factors including implied volatility of market-traded options on the Company’s common stock on the grant date and the volatility of the Company’s common stock; and 3) expected option or SAR life—estimate is based on internal studies of historical experience and projected exercise behavior based on different employee groups and specific option and SAR characteristics, including the effect of employee terminations. | |||||||||||||||||
Compensation expense from continuing operations relating to stock options and SARs, all of which was recorded in Employee compensation and benefits, as well as the corresponding income tax benefit, which is recorded in Income tax benefit on the Consolidated Statements of Operations are as follows (in thousands): | |||||||||||||||||
For the three months | |||||||||||||||||
ended September 30, | |||||||||||||||||
2013 | |||||||||||||||||
Stock option and SAR compensation expense | $ | 915 | |||||||||||||||
Income tax benefit | 348 | ||||||||||||||||
The following table summarizes stock option and SAR activity and stock options exercisable for the three months ended September 30, 2013 (awards in thousands): | |||||||||||||||||
Number of Stock Awards | Weighted- | Aggregate | Weighted- | ||||||||||||||
Average | Intrinsic | Average | |||||||||||||||
Exercise | Value | Remaining | |||||||||||||||
Price | Life (years) | ||||||||||||||||
1-Jul-13 | — | $ | — | ||||||||||||||
Conversion of outstanding Knight options | 782 | 41.25 | |||||||||||||||
Granted at market value (1) | 4,324 | 15.19 | |||||||||||||||
Exercised | — | — | |||||||||||||||
Forfeited or expired | (79 | ) | 45.81 | ||||||||||||||
Outstanding at September 30, 2013 (1) | 5,027 | $ | 18.76 | $ | 387 | 4.49 | |||||||||||
Exercisable at September 30, 2013 | 703 | $ | 40.74 | $ | 381 | 2.61 | |||||||||||
Available for future grants at September 30, 2013 * | 6,327 | ||||||||||||||||
* Represents both options and awards available for grant. | |||||||||||||||||
(1) Includes 1.7 million of SARs. | |||||||||||||||||
The aggregate intrinsic value is the amount by which the closing price of the Company’s common stock exceeds the exercise price of the stock options multiplied by the number of shares. There were no stock options exercised during the three months ended September 30, 2013. | |||||||||||||||||
There is $7.2 million unamortized compensation related to unvested stock options and SARs outstanding at September 30, 2013. The cost of these unvested awards is expected to be recognized over a weighted average life of 2.2 years. | |||||||||||||||||
Incentive units | |||||||||||||||||
Prior to the Mergers, GETCO awarded deferred compensation to its employees in the form of incentive units that generally vest over time. The value of these incentive units is determined based on the same methodology used to value the GETCO Class B unit awards and the amount expensed is determined based on this valuation multiplied by the percent vested. In connection with the Mergers, all outstanding unvested incentive units vested and were converted into units based on the applicable exchange ratio of GETCO units to KCG Class A Common Stock. The units are marked to the current stock price of KCG Class A Common Stock at the end of each period with the resulting change in the liability reflected as either an expense or gain. Given that the units vested in connection with the Mergers, the Company fully amortized the units as of June 30, 2013. The accelerated amortization of incentive units recorded during the nine months ended September 30, 2013 was $1.3 million. Deferred compensation payable at September 30, 2013 and December 31, 2012 related to incentive units was $3.0 million and $3.5 million, respectively, and is included in accounts Accrued compensation expense on the Consolidated Statements of Financial Condition. | |||||||||||||||||
The following is a summary of the changes in the incentive units for the nine months ended September 30, 2013 (units in thousands): | |||||||||||||||||
Vested | Unvested | ||||||||||||||||
Incentive units at January 1, 2013 | 24 | 45 | |||||||||||||||
Issued | 1 | 12 | |||||||||||||||
Vested | 53 | (53 | ) | ||||||||||||||
Exercised | (22 | ) | — | ||||||||||||||
Canceled | (1 | ) | (4 | ) | |||||||||||||
Incentive units at September 30, 2013 | 55 | — | |||||||||||||||
Class B units | |||||||||||||||||
Prior to the Mergers, the Company granted membership unit awards to employees in the form of Class B units. Prior to 2012, these primarily consisted of non-voting units which vest three years from the grant date, provided certain conditions of employment and performance were met by the employee. In 2012, the Company changed the vesting of units granted in 2012 to an annual vesting of one-third of the units over the 3 year period. Upon termination of employment, the Company had the option to repurchase all or a portion of the units granted within six months. The purchase price for the unvested units was determined as a percentage of grant date fair value. The Company classified these unit awards as equity as the employees received full membership rights with respect to allocation of income and participation in member distributions. In connection with the Mergers, all outstanding unvested Class B units vested on June 25, 2013. The accelerated amortization of Class B units recorded during the nine months ended September 30, 2013 was $9.4 million. | |||||||||||||||||
The following is a schedule of the changes in the Company’s unvested Class B units (units in thousands): | |||||||||||||||||
Units | Weighted Average Grant Price | ||||||||||||||||
Unvested as of December 31, 2012 | 417 | $ | 89.99 | ||||||||||||||
Issued | 58 | 73.54 | |||||||||||||||
Vested | (438 | ) | 87.86 | ||||||||||||||
Forfeited | (37 | ) | 89.28 | ||||||||||||||
Unvested as of September 30, 2013 | — | $ | — | ||||||||||||||
Class E units | |||||||||||||||||
In 2012, the Company also granted employees profit interests in the form of Class E units. Prior to 2012, Class E units primarily vested three years from the grant date. For units granted in 2012, the Company changed the vesting of Class E units to an annual vesting of one-third of the units over the three year period and provided the Company an option to repurchase the units at the end of 5 years. Class E units allowed for future appreciation in excess of the Company’s value over a certain strike price per unit and allocation of income once the units are vested. Upon the departure of an employee, the Class E units were forfeited whether vested or not, and if vested, the cash value of the Class E units above their strike price was paid to the employee. The Company classified these unit awards as equity. In connection with the Mergers all outstanding unvested Class E units vested on June 25, 2013 and were canceled for no consideration. The accelerated amortization of the Class E units recorded during the three and nine months ended September 30, 2013 was $0 and $3.5 million, respectively. | |||||||||||||||||
The following is a schedule of the changes in the Company’s unvested Class E units (units in thousands): | |||||||||||||||||
Units | Weighted Average Grant Price | ||||||||||||||||
Unvested as of December 31, 2012 | 476 | $ | 36.78 | ||||||||||||||
Issued | — | — | |||||||||||||||
Vested | (442 | ) | 37.24 | ||||||||||||||
Forfeited | (34 | ) | 30.89 | ||||||||||||||
Unvested as of September 30, 2013 | — | $ | — | ||||||||||||||
Compensation expense (benefit) related to the Class B, Class E and Incentive units, all of which are recorded within Employee compensation and benefits on the Consolidated Statements of Operations are as follows (in thousands): | |||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Class B and E units | $ | — | $ | 5,429 | $ | 19,860 | $ | 9,124 | |||||||||
Incentive units | (875 | ) | 368 | 1,428 | 788 | ||||||||||||
Total | $ | (875 | ) | $ | 5,797 | $ | 21,288 | $ | 9,912 | ||||||||
Income_Taxes
Income Taxes | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ' | |||||||||||||||
Income Taxes | ' | |||||||||||||||
Income Taxes | ||||||||||||||||
Following the Mergers, the Company and its subsidiaries will file a consolidated federal income tax return as well as combined state income tax returns in certain jurisdictions. In other jurisdictions, the Company and its subsidiaries will file separate company state and local income tax returns. Prior to the Mergers, GETCO and the majority of its subsidiaries were treated as partnerships or disregarded entities for U.S. income tax purposes and, accordingly, were not subject to federal income taxes. Instead, former GETCO members were liable for federal income taxes on their proportionate share of taxable income; however, certain subsidiaries were subject to corporate income taxes related to the taxable income generated by their operations. | ||||||||||||||||
Upon completion of the Mergers, the Company became subject to U.S. corporate income taxes. As described in Footnote 2 “Merger of GETCO and Knight”, following the Mergers the Company recorded $65.9 million of deferred tax assets as a result of recording Knight’s assets and liabilities under the purchase method of accounting as well as recording the value of Knight’s NOLs and tax credit carryforwards as described below. | ||||||||||||||||
As a result of the Company becoming subject to U.S. corporate income taxes, the Company also recorded a nonrecurring $103.5 million deferred tax benefit and corresponding deferred tax asset relating to GETCO's existing tax attributes. This deferred tax asset primarily relates to differences between GETCO’s book and tax bases in its intangible assets and its strategic investments. | ||||||||||||||||
The following table reconciles the U.S. federal statutory income tax to the Company's actual income tax from continuing operations (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
U.S. federal statutory income tax (benefit) expense | $ | 41,949 | $ | 5,114 | $ | 12,543 | $ | 12,224 | ||||||||
Income not subject to U.S. corporate income tax | (44,790 | ) | (3,515 | ) | (14,071 | ) | (9,801 | ) | ||||||||
U.S. state and local income taxes, net of U.S. federal income tax effect | (391 | ) | 533 | 82 | 825 | |||||||||||
Deferred tax benefit resulting from the Company becoming subject to U.S. corporate income taxes | (103,499 | ) | — | (103,499 | ) | — | ||||||||||
Nondeductible charges (1) | (1,114 | ) | 74 | (944 | ) | 166 | ||||||||||
Foreign taxes | — | 2,581 | 3,559 | 6,958 | ||||||||||||
Other, net | 78 | 18 | (148 | ) | (4 | ) | ||||||||||
Income tax (benefit) expense | $ | (107,767 | ) | $ | 4,805 | $ | (102,478 | ) | $ | 10,368 | ||||||
(1) Nondeductible charges include nondeductible compensation and meals and entertainment. | ||||||||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. Valuation allowances recorded on the balance sheet dates are necessary in cases where management believes that it is more likely than not that some portion or all of the deferred tax assets will not be realized. | ||||||||||||||||
Based on the weight of the positive and negative evidence considered, management believes that it is more likely than not that the Company will be able to realize its federal deferred tax assets in the future, and therefore no valuation allowance has been recorded at September 30, 2013. Management believes that positive evidence including the Company's history of sustainable profitability, and its forecasts of future profitability outweighs the negative evidence. Also, a significant portion of Knight’s customer base has remained unchanged and the overall businesses acquired as a result of the Mergers are profitable, and the Company does not expect losses to recur. The Company has recorded a full valuation allowance against state and local deferred tax assets as it is more likely than not that the benefit of such items will not be realized due to limitations on utilization in the particular jurisdictions in which the Company operates. | ||||||||||||||||
Included in the Company’s deferred tax assets are benefits associated with NOL carryforwards generated by Knight in periods prior to the Mergers. At September 30, 2013, the Company had projected overall U.S. federal NOL carryforwards of $89.2 million. The Company recorded a related deferred income tax asset for its NOLs of $31.2 million as of September 30, 2013, and an offsetting valuation allowance of $6.8 million which represents the portion of these net operating loss carryforwards that are considered more likely than not to expire unutilized. | ||||||||||||||||
In accordance with Section 382 of the Internal Revenue Code, a change in equity ownership of greater than 50% of a corporation within a three-year period results in an annual limitation on the corporation’s ability to utilize its NOL carryforwards that were created during tax periods prior to the change in ownership. As a result of the Mergers as well as prior ownership changes, Knight experienced ownership changes under Section 382 and as a result, the rate of utilization of NOL carryforwards generated by Knight may be limited. The Company does not believe these limitations will have a significant effect on the Company's ability to utilize its anticipated federal NOL carryforward. The Company's U.S. federal NOL carryforwards will begin to expire in 2019. | ||||||||||||||||
At September 30, 2013 the Company recorded a valuation allowance for substantially all of its state and local NOL carryforwards as it is more likely than not that the benefit of such items will not be realized due to limitations on utilization in the particular jurisdictions in which the Company operates. Certain of these carryforwards are subject to annual limitations on utilization and they will begin to expire in 2019. | ||||||||||||||||
At September 30, 2013, the Company had non-U.S. NOL carryforwards of $68.7 million which were generated by Knight in periods prior to the Mergers. The Company recorded a foreign deferred income tax asset of $17.9 million for these NOL carryforwards as of September 30, 2013, along with an offsetting U.S. federal deferred tax liability of $17.9 million for the expected future reduction in U.S. foreign tax credits associated with the use of the non U.S. loss carryforwards. These non-U.S. net operating losses may be carried forward indefinitely. At September 30, 2013 the Company had tax credit carryforwards which were generated by Knight in periods prior to the Mergers, comprising foreign tax credit carryforwards of $3.2 million (and an offsetting valuation allowance of $1.6 million), general business credit carryforwards of $2.5 million and alternative minimum tax credit carryforwards $6.8 million. | ||||||||||||||||
At September 30, 2013, the Company had $1.4 million of unrecognized tax benefits, all of which would affect the Company's effective tax rate if recognized. | ||||||||||||||||
As of September 30, 2013, the Company is subject to U.S. Federal income tax examinations for the tax years 2009 through 2012, and to non U.S. income tax examinations for the tax years 2007 through 2012. In addition, the Company is subject to state and local income tax examinations in various jurisdictions for the tax years 2007 through 2012. The final outcome of these examinations is not yet determinable. However, the Company anticipates that adjustments to the unrecognized tax benefits, if any, will not result in a material change to the results of operations or financial condition. | ||||||||||||||||
The Company's policy for recording interest and penalties associated with audits is to record such items as a component of income or loss from continuing operations before income taxes. Penalties, if any, are recorded in Other expenses and interest paid or received is recorded in Interest expense and Interest, net, on the Consolidated Statements of Operations. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Loss | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Equity [Abstract] | ' | ||||||||||||
Accumulated Other Comprehensive Loss | ' | ||||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||
The following table presents changes in Accumulated other comprehensive loss, net of tax by component for the nine months ended September 30, 2013 (in thousands): | |||||||||||||
Unrealized Gains (Losses) on Available-for-Sale Securities | Foreign Currency Translation Adjustments | Total | |||||||||||
Balance January 1, 2013 | $ | 114,319 | $ | — | $ | 114,319 | |||||||
Other comprehensive income | 13,604 | (5,098 | ) | 8,506 | |||||||||
Reclassification of gain on investment in Knight Common Stock | (127,972 | ) | — | (127,972 | ) | ||||||||
Net current-period other comprehensive loss | (114,368 | ) | (5,098 | ) | (119,466 | ) | |||||||
Balance September 30, 2013 | $ | (49 | ) | $ | (5,098 | ) | $ | (5,147 | ) |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Earnings Per Share | ' | |||||||||||||||
Earnings Per Share | ||||||||||||||||
Basic earnings or loss per common share (“EPS”) has been calculated by dividing net income from continuing operations by the weighted average shares of KCG Class A Common Stock outstanding during each respective period. Diluted EPS reflects the potential reduction in EPS using the treasury stock method to reflect the impact of common stock equivalents if stock options, SARs and warrants were exercised and restricted awards were to vest. | ||||||||||||||||
The number of such options, warrants and SARs excluded was approximately 28.8 million for the three and nine months ended September 30, 2013. The computation of diluted shares can vary among periods due in part to the change in the average price of KCG Class A Common Stock. | ||||||||||||||||
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations from continuing operations for the three and nine months ended September 30, 2013 and 2012 (in thousands): | ||||||||||||||||
For the three months ended September 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Numerator / | Denominator / | Numerator / | Denominator / | |||||||||||||
net | ||||||||||||||||
net income | shares | income | shares | |||||||||||||
Income from continuing operations and shares used in basic calculations | $ | 227,621 | 114,113 | $ | 9,807 | 46,411 | ||||||||||
Effect of dilutive stock based awards | 660 | — | ||||||||||||||
Income from continuing operations and shares used in diluted calculations | $ | 227,621 | 114,773 | $ | 9,807 | 46,411 | ||||||||||
Basic earnings per share from continuing operations | $ | 1.99 | $ | 0.21 | ||||||||||||
Diluted earnings per share from continuing operations | $ | 1.98 | $ | 0.21 | ||||||||||||
For the nine months ended September 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Numerator / | Denominator / | Numerator / | Denominator / | |||||||||||||
net | ||||||||||||||||
net income | shares | income | shares | |||||||||||||
Income from continuing operations and shares used in basic calculations | $ | 138,316 | 68,632 | $ | 24,556 | 49,619 | ||||||||||
Effect of dilutive stock based awards | 223 | — | ||||||||||||||
Income from continuing operations and shares used in diluted calculations | $ | 138,316 | 68,855 | $ | 24,556 | 49,619 | ||||||||||
Basic earnings per share from continuing operations | $ | 2.02 | $ | 0.49 | ||||||||||||
Diluted earnings per share from continuing operations | $ | 2.01 | $ | 0.49 | ||||||||||||
The number of shares used to calculate EPS for 2012 are GETCO units converted into KCG shares using an exchange ratio as detailed in the Merger Agreement. |
Significant_Clients
Significant Clients | 9 Months Ended |
Sep. 30, 2013 | |
Risks and Uncertainties [Abstract] | ' |
Significant Clients | ' |
Significant Clients | |
The Company considers significant clients to be those clients who account for 10% or more of the total U.S. equity dollar value traded by the Company. No clients accounted for more than 10% of the Company’s U.S. equity dollar value traded for the three and nine months ended September 30, 2013 or 2012. |
Commitments_and_Contingent_Lia
Commitments and Contingent Liabilities | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||||||||||||
Commitments and Contingent Liabilities | ' | |||||||||||||||
Commitments and Contingent Liabilities | ||||||||||||||||
Legal Proceedings | ||||||||||||||||
In the ordinary course of business, the nature of the Company’s business subjects it to claims, lawsuits, regulatory examinations and other proceedings. The Company and Knight are subject to several of these matters at the present time. Given the inherent difficulty of predicting the outcome of the litigation and regulatory matters, particularly in cases or proceedings in which substantial or indeterminate damages or fines are sought, or where cases or proceedings are in the early stages, the Company cannot estimate losses or ranges of losses for cases or proceedings where there is only a reasonable possibility that a loss may be incurred. There can be no assurance that these matters will not have a material adverse effect on the Company’s results of operations in any future period and a material judgment could have a material adverse impact on the Company’s financial condition and results of operations. However, it is the opinion of management, after consultation with legal counsel that, based on information currently available, the ultimate outcome of these matters will not have a material adverse impact on the business, financial condition or operating results of the Company although they might be material to the operating results for any particular period, depending, in part, upon operating results for that period. | ||||||||||||||||
As previously disclosed in Knight's public filings, Knight experienced a technology issue at the open of trading at the NYSE on August 1, 2012. This issue was related to the installation of trading software and resulted in the Company's broker-dealer subsidiary, KCA, sending numerous erroneous orders in NYSE-listed and NYSE Arca securities into the market. As noted in Knight's Form 10-K for the year ended December 31, 2012, Knight has since been named in two putative class actions and one derivative lawsuit relating to the technology issue and has received several derivative demand letters and/or requests for the inspection or production of certain books and records pursuant to Delaware law related to the technology issue and the raising of $400.0 million in equity financing through a convertible preferred stock offering to certain investors (the "August 6, 2012 recapitalization"). | ||||||||||||||||
After the announcement on December 19, 2012 of the signing of the Merger Agreement Knight, GETCO, GA-GTCO, as well as the individual members of Knight's Board of Directors prior to the Mergers (the “Individual Defendants”), were named as defendants in several lawsuits brought by certain purported Knight stockholders challenging the proposed Mergers. The lawsuits generally allege, among other things, that the Mergers failed to properly value Knight, that the Individual Defendants breached their fiduciary duties in approving the Merger Agreement and that those breaches were aided and abetted by GETCO and GA-GTCO. The lawsuits, among other things, seek to enjoin the defendants from completing the Mergers on the agreed-upon terms, rescission of the Mergers (to the extent the Mergers have already been consummated), monetary relief and attorneys' fees and costs. | ||||||||||||||||
While the Company is currently unable to predict the outcome of any possible litigation related to the technology issue, the August 6, 2012 recapitalization, or the Mergers, an unfavorable outcome in one or more of these matters could have a material adverse effect on the Company's financial condition or ongoing results of operations. In addition, the Company expects to incur additional expenses in defending against such litigation. | ||||||||||||||||
Legal | ||||||||||||||||
On October 26, 2012, Knight, its Chairman and Chief Executive Officer, Thomas M. Joyce, and its Executive Vice President, Chief Operating Officer and Chief Financial Officer, Steven Bisgay, were named as defendants in an action entitled Fernandez v. Knight Capital Group, Inc. in the U.S. District Court for the District of New Jersey. Generally, this putative class action complaint alleges that the defendants made material misstatements and/or failed to disclose matters related to the events of August 1. The plaintiff asserts claims under Sections 10(b) and 20 and Rule 10b-5 of the federal securities laws, claiming that he and a class of Knight's stockholders who purchased Knight's Class A Common Stock between January 19, 2012 and August 1, 2012 paid an inflated price. Following the appointment of a lead plaintiff and counsel, the plaintiff filed an amended complaint on March 14, 2013, alleging generally that the defendants made material misstatements and/or failed to disclose matters related to the events of August 1. More specifically, the plaintiff alleges that defendants made false and misleading statements concerning Knight's risk management procedures and protocols, available cash and liquidity, Value at Risk and internal controls over financial reporting. The plaintiff asserts claims under Sections 10(b) and 20 and Rule 10b-5 of the federal securities laws, claiming that it and a class of Knights stockholders who purchased Knight's securities between November 30, 2011 and August 1, 2012 paid an inflated price. On May 13, 2013, Knight filed a motion to dismiss the amended complaint. The motion to dismiss was fully briefed as of August 2013, and the Company is awaiting a decision. | ||||||||||||||||
As noted above, Knight received several demand letters requesting that it commence a lawsuit against certain directors and officers for alleged breaches of fiduciary duties, waste, wrongdoing, mismanagement and/or demanding that it produce certain books and records pursuant to Delaware law concerning the technology issue and the August 6 recapitalization. | ||||||||||||||||
Mergers Litigation | ||||||||||||||||
Delaware Litigation. On December 28, 2012, a purported stockholder class action complaint was filed in the Court of Chancery of the State of Delaware, captioned Ann Jimenez McMillan v. Thomas M. Joyce, et al., Case No. 8163-VCP. The complaint names as defendants Knight, the Individual Defendants, GETCO, and GA-GTCO, LLC. The complaint generally alleges, among other things, that the Individual Defendants violated their fiduciary duties by accepting an inadequate merger price, approving the transaction despite material conflicts of interest, and agreeing to a number of improper deal protection devices and voting agreements, which allegedly make it less likely that other bidders would make successful competing offers for Knight. The complaint also alleges that Knight, GETCO, and GA-GTCO, LLC aided and abetted these purported breaches of fiduciary duties. The relief sought includes, among other things, an injunction prohibiting consummation of the Mergers, rescission of the Mergers (to the extent the Mergers have already been consummated), and attorneys' fees and costs. On December 28, 2012, a purported stockholder class action complaint was filed in the Court of Chancery of the State of Delaware, captioned Chrislaine Dominique v. Thomas M. Joyce, et al., Case No. 8159-VCP. The complaint names as defendants Knight, the Individual Defendants, GETCO, and GA-GTCO, LLC. The complaint generally alleges, among other things, that the Individual Defendants violated their fiduciary duties by accepting an inadequate merger price, approving the transaction despite material conflicts of interest, including that they were appointed by an investor group that included GETCO, and agreeing to a number of improper deal protection devices, which allegedly make it less likely that other bidders would make successful competing offers for Knight. The complaint also alleges that Knight and GETCO aided and abetted these purported breaches of fiduciary duties. The relief sought includes, among other things, an injunction prohibiting consummation of the Mergers, rescission of the Mergers (to the extent the Mergers have already been consummated), and attorneys' fees and costs. On January 31, 2013, the Court of Chancery consolidated for all purposes the McMillan and Dominique actions into a single action captioned In re Knight Capital Group, Inc. Shareholder Litigation, C.A. No. 8159-VCP. On March 5, 2013, the co-lead plaintiffs in the Delaware Consolidated Action filed an amended complaint and motions for expedited discovery and a preliminary injunction. In addition to the allegations in the initial complaints, the Delaware amended complaint contains allegations that the Knight Board of Directors breached its fiduciary duties by providing stockholders with allegedly deficient disclosures about the proposed transaction in the Company's Preliminary Form S-4, filed with the SEC on February 13, 2013 (the “Preliminary Proxy”). | ||||||||||||||||
New Jersey Litigation. On December 31, 2012, a purported stockholder class action complaint was filed in the Superior Court of New Jersey, Chancery Division of Hudson County, NJ, captioned Charles Bryan v. Knight Capital, et al., Case No. HUD-C-001-13. The complaint names as defendants Knight, the Individual Defendants, Jefferies & Company, Inc., Jefferies High Yield Trading, LLC, TD Ameritrade Holding Corp., Blackstone Capital Partners VI L.P., Blackstone Family Investment Partnership VI-ESC L.P., Blackstone Family Investment Partnership VI L.P., Stephens Investments Holdings LLC, Stifel Financial Corp., GETCO Strategic Investments, LLC, GETCO Holding Company LLC, and GA-GTCO, LLC. The complaint generally alleges that the Individual Defendants breached their fiduciary duties by accepting an inadequate merger price, agreeing to a number of improper deal protection devices and voting agreements, which allegedly make it less likely that other bidders would make successful competing offers for Knight and approving the transaction despite material conflicts of interest, including that they were appointed by an investor group that included GETCO. The complaint further alleges that the entity defendants (except for Knight and GA-GTCO, LLC) breached alleged fiduciary duties in connection with the Individual Defendants' approval of the Mergers. The complaint also alleges that GETCO and GA-GTCO, LLC aided and abetted the Individual Defendants' purported breaches of fiduciary duty. The relief sought includes, among other things, an injunction prohibiting the consummation of the Mergers, rescission of the Mergers (to the extent the Mergers have already been consummated), and attorneys' fees and costs. | ||||||||||||||||
On December 31, 2012, a purported stockholder class action complaint was filed in the Superior Court of New Jersey, Chancery Division of Hudson County, NJ, captioned James Ward v. Knight Capital, et al., Case No. HUD-C-0003-13. The complaint names as defendants Knight, the Individual Defendants, Jefferies & Company, Inc., Jefferies High Yield Trading, LLC, TD Ameritrade Holding Corp., Blackstone Capital Partners VI L.P., Blackstone Family Investment Partnership VI-ESC L.P., Blackstone Family Investment Partnership VI L.P., Stephens Investments Holdings LLC, Stifel Financial Corp., GETCO Strategic Investments, LLC, GETCO Holding Company LLC, and GA-GTCO, LLC. The complaint generally alleges that the Individual Defendants breached their fiduciary duties by accepting an inadequate merger price, agreeing to a number of improper deal protection devices and voting agreements, which allegedly make it less likely that other bidders would make successful competing offers for Knight and approving the transaction despite material conflicts of interest, including that they were appointed by an investor group that included GETCO. The complaint further alleges that the entity defendants (except for Knight and GA-GTCO, LLC) breached alleged fiduciary duties in connection with the Individual Defendants' approval of the Mergers. The complaint also alleges that GETCO and GA-GTCO, LLC aided and abetted the Individual Defendants' purported breaches of fiduciary duty. The relief sought includes, among other things, an injunction prohibiting the consummation of the Mergers, rescission of the Mergers (to the extent the Mergers have already been consummated), and attorneys' fees and costs. On February 20, 2013, Knight moved to dismiss or, in the alternative, stay the New Jersey actions in deference to the first-filed Delaware actions. The New Jersey court granted the motion on March 28, 2013, and ordered that the New Jersey actions be stayed for all purposes in deference to the first-filed Delaware actions. | ||||||||||||||||
New York Litigation. On January 15, 2013, Knight, the Individual Defendants, GETCO, GA-GTCO, LLC and General Atlantic were named as defendants in an action entitled Joel Rosenfeld v. Thomas M. Joyce, et al., Case No. 6540147/2013, in the Supreme Court of the State of New York (New York County). The plaintiff, Joel Rosenfeld, is one of the stockholders mentioned above who previously sent Knight a derivative demand letter. Generally, this complaint asserts both derivative and class action claims. First, it purports to assert derivative claims, which allege, among other things, that the seven Knight directors who were serving as of August 1, 2012 breached their fiduciary duties and wasted corporate assets by failing to erect and oversee effective safeguards to prevent against technology issues, such as the one that occurred on August 1, 2012, for which Knight incurred a realized pre-tax loss of approximately $457.6 million. Second, it asserts putative class action claims resulting from the proposed Mergers for (1) breach of fiduciary duty against the Individual Defendants; and (2) aiding and abetting the purported breach of fiduciary duty against GETCO, GA-GTCO, LLC, and General Atlantic. The complaint generally alleges that the Individual Defendants breached their fiduciary duties by approving the Mergers at an inadequate price, agreeing to a number of improper deal protection devices and voting agreements, which allegedly make it less likely that other bidders would make successful competing offers for Knight, and that certain of Knight's directors have conflicts of interest in connection with the transaction, including that certain directors sought to enter into the transaction to avoid potential liability relating to the derivative claims asserted in the complaint. With respect to the merger claims, the plaintiff seeks, among other things, to enjoin the proposed Mergers, rescission of the proposed Mergers (to the extent they have already been consummated) and attorneys' fees. With respect to the derivative claims, the plaintiff seeks, among other things, an order requiring the Knight directors who were serving as of August 1, 2012 to pay restitution and/or compensatory damages in favor of Knight and/or the proposed class of Knight stockholders. On March 14, 2013, the plaintiff filed an amended complaint, which, in addition to the allegations in the initial complaint, contains allegations that the Knight Board of Directors breached its fiduciary duties by providing stockholders with allegedly deficient disclosures about the proposed transaction in the Preliminary Proxy. On March 21, 2013, the plaintiff moved by order to show cause for expedited discovery in support of his claims. The New York court issued an order on March 25, 2013, setting a hearing on the plaintiff's motion for April 4, 2013. On March 28, 2013, the parties in the New York action reached an agreement with respect to the matters raised in the plaintiff's motion and other aspects of the action, and as a result, on March 29, 2013, the plaintiff withdrew his motion for expedited discovery. On April 9, 2013, the New York court granted permission for the plaintiff to withdraw his motion. | ||||||||||||||||
As previously disclosed in the Current Report on Form 8-K filed by Knight on June 14, 2013, on June 10, 2013, the defendants entered into a memorandum of understanding with the plaintiffs in the Delaware shareholder actions and New York shareholder action regarding the settlement of those actions. In connection with the settlement, Knight and GETCO agreed to make supplemental disclosures to the joint proxy statement/prospectus filed with the SEC on May 28, 2013 (the “Proxy Statement”). In addition, Knight and GETCO agreed to make certain revisions to Knight's risk committee charter, as well as to KCG's risk committee charter. | ||||||||||||||||
The memorandum of understanding contemplates that the parties will enter into a stipulation of settlement. The stipulation of settlement will be subject to customary conditions, including court approval following notice to Knight's former stockholders. In the event that the parties enter into a stipulation of settlement, a hearing will be scheduled at which the Delaware Court of Chancery will consider the fairness, reasonableness and adequacy of the settlement. If the settlement is finally approved by the court, it will resolve and release all claims that were brought or could have been brought in the Delaware, New York, and New Jersey shareholder actions, including claims challenging any aspect of the Mergers, the Merger Agreement, or any disclosure made in connection therewith, pursuant to terms that will be disclosed to Knight's former stockholders prior to final approval of the settlement. In addition, in connection with the settlement, the parties contemplate that plaintiffs' counsel will file a petition in the Delaware Court of Chancery for an award of attorneys' fees and expenses to be paid by KCG. There can be no assurance that the parties will enter into a stipulation of settlement, or that the court will approve any proposed settlement. In such event, the proposed settlement as contemplated by the memorandum of understanding may be terminated. | ||||||||||||||||
The settlement is not, and should not be construed as, an admission of wrongdoing or liability by any of the defendants. The defendants continue to believe that the shareholder actions challenging the Mergers are without merit and vigorously deny the allegations that Knight's directors breached their fiduciary duties. Likewise, defendants do not believe that any disclosures regarding the Mergers are required under applicable laws other than that which have already been provided in the Proxy Statement. Nonetheless, the defendants entered into the memorandum of understanding to avoid the risk of the putative stockholder class action delaying or adversely affecting the Mergers, to minimize the substantial expense, burden, distraction and inconvenience of continued litigation and to fully and finally resolve the claims in the shareholder actions. | ||||||||||||||||
Regulatory | ||||||||||||||||
As previously discussed in Knight's public filings, on August 9, 2012, the SEC began an examination of KCA's compliance with SEC Rule 15c3-5 (the “Market Access Rule”) and other rules and regulations as they relate to the August 1, 2012 technology issue. The SEC issued a formal order of investigation concerning Knight and KCA on August 29, 2012. | ||||||||||||||||
On October 16, 2013, KCA reached a settlement with the SEC relating to the August 1, 2012 technology issue as described further in Footnote 20 "Subsequent Events". | ||||||||||||||||
The full amount of this settlement had been accrued on Knight's July 1, 2013 balance sheet acquired by the Company. | ||||||||||||||||
Other Legal and Regulatory Matters | ||||||||||||||||
The Company owns subsidiaries including regulated entities that are subject to extensive oversight under federal, state and applicable international laws as well as SRO rules. Changes in market structure and the need to remain competitive require constant changes to the Company's systems and order handling procedures. The Company makes these changes while continuously endeavoring to comply with many complex laws and rules. Compliance, surveillance and trading issues common in the securities industry are monitored by, reported to, and/or reviewed in the ordinary course of business by the Company's regulators in the U.S. and abroad. As a major order flow execution destination and reverse mortgage originator, the Company is named from time to time in, or is asked to respond to a number of regulatory matters brought by U.S. regulators, foreign regulators and SROs that arise from its business activities. The Company is currently the subject of various regulatory reviews and investigations. In some instances, these matters may rise to a disciplinary action and/or civil or administrative action. | ||||||||||||||||
In the second quarter of 2012, Knight recorded pre-tax trading losses of $35.4 million related to the Facebook IPO. On August 1, 2012 Nasdaq’s proposed voluntary accommodation program (the “Accommodation Program”) was published in the Federal Register by the SEC. The Accommodation Program creates a fund for voluntary accommodations for qualifying Nasdaq members disadvantaged by problems that arose during the Facebook IPO. Under the Accommodation Program as proposed by Nasdaq, Knight would recover a portion of its pre-tax trading losses. The Accommodation Program was approved by the SEC on March 22, 2013 which would allow Nasdaq to compensate market participants for certain claims related to system difficulties in connection with the Facebook IPO in an amount not to exceed $62.0 million. On April 2, 2013, Knight submitted an accommodation claim to Nasdaq totaling approximately $13.0 million comprising approximately $2.6 million which would be reimbursed to customers and approximately $10.4 million to be retained by Knight (related to customer trades which had previously been reimbursed to customers by Knight). On October 25, 2013, Nasdaq provided the Company with notice that it had completed its review of the Company’s accommodation claim. In its notice, Nasdaq provided the details relating to its analysis and the amounts that Nasdaq was prepared to compensate the Company. The amount proposed by Nasdaq was approximately 17% less than the claimed amount submitted by the Company under the Accommodation Program. The Company is in the process of reviewing the details of Nasdaq’s analysis. | ||||||||||||||||
Lease and Contract Obligations | ||||||||||||||||
Capital Leases | ||||||||||||||||
During 2012, the Company entered into capitalized lease obligations related to certain computer equipment. These obligations represent drawdowns under a revolving secured lending facility with a single lender. At September 30, 2013, the obligations have a weighted-average interest rate of 3.85% per annum and are on varying 3-year terms. The carrying amounts of the capital leases approximate fair value. The future minimum payments including interest under the capitalized leases at September 30, 2013 consist of (in thousands): | ||||||||||||||||
Minimum Payments | ||||||||||||||||
Through December 31, 2013 | $ | 2,885 | ||||||||||||||
2014 | 8,222 | |||||||||||||||
2015 | 2,072 | |||||||||||||||
Total | $ | 13,179 | ||||||||||||||
The total interest expense related to capital leases for the three and nine months ended September 30, 2013 and 2012 included in the Consolidated Statements Operations is as follows (in thousands): | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest expense - Capital leases | $ | 151 | $ | 285 | $ | 602 | $ | 1,135 | ||||||||
Operating Leases | ||||||||||||||||
The Company leases office space under noncancelable operating leases. Certain office leases contain fixed dollar-based escalation clauses. Rental expense from continuing operations under the office leases was $5.6 million and $2.3 million for the three months ended September 30, 2013 and 2012, respectively, and is included in Occupancy and equipment rentals on the Consolidated Statements of Operations. Rental expense from continuing operations under the office leases was $10.4 million, and $6.4 million for the nine months ended September 30, 2013 and 2012, respectively, and is included in Occupancy and equipment rentals on the Consolidated Statements of Operations. | ||||||||||||||||
The Company leases certain computer and other equipment under noncancelable operating leases. As of September 30, 2013, future minimum rental commitments under all noncancelable office, computer and equipment leases (“Gross Lease Obligations”), and Sublease Income were as follows (in thousands): | ||||||||||||||||
Gross Lease | Sublease | Net Lease | ||||||||||||||
Obligations | Income | Obligations | ||||||||||||||
Three months ending December 31, 2013 | $ | 8,014 | $ | 525 | $ | 7,489 | ||||||||||
Year ending December 31, 2014 | 30,170 | 1,868 | 28,302 | |||||||||||||
Year ending December 31, 2015 | 28,346 | 1,494 | 26,852 | |||||||||||||
Year ending December 31, 2016 | 27,877 | 1,464 | 26,413 | |||||||||||||
Year ending December 31, 2017 | 27,262 | 1,541 | 25,721 | |||||||||||||
Thereafter through December 31, 2027 | 108,318 | 358 | 107,960 | |||||||||||||
Total | $ | 229,987 | $ | 7,250 | $ | 222,737 | ||||||||||
Contract Obligations | ||||||||||||||||
During the normal course of business, the Company collateralizes certain leases or other contractual obligations through letters of credit or segregated funds held in escrow accounts. At September 30, 2013, the Company had provided a letter of credit for $1.0 million, collateralized by U.S. Treasury Bills, as a guarantee for one of the Company’s lease obligations. In the ordinary course of business, KCG also has provided, and may provide in the future, unsecured guarantees with respect to the payment obligations of certain of its subsidiaries under trading, repurchase, financing and stock loan arrangements, as well as under certain leases. | ||||||||||||||||
Urban has floating rate HECMs which provide borrowers additional borrowing capacity of approximately $726.0 million as of September 30, 2013. This additional borrowing capacity is primarily in the form of undrawn lines of credit, with the balance generally available on a scheduled payments basis. |
Financial_instruments_with_Off
Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk | 9 Months Ended |
Sep. 30, 2013 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' |
Financial instruments with off-balance sheet risk and concentrations of credit risk | ' |
Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk | |
As a market maker of equities and options, the majority of the Company’s securities transactions are conducted as principal or riskless principal with broker-dealers and institutional counterparties primarily located in the United States. The Company self-clears substantially all of its U.S. equity and option securities transactions. The Company clears a portion of its securities transactions through third party clearing brokers. Foreign transactions are settled pursuant to global custody and clearing agreements with major U.S. banks. Substantially all of the Company’s credit exposures are concentrated with its clearing brokers, broker-dealer and institutional counterparties. The Company’s policy is to monitor the credit standing of counterparties with which it conducts business. | |
The Company, through its FCM, also provides execution and clearing services in futures and options on futures contracts to facilitate customer transactions on major U.S. and European futures and options exchanges. Customer activities may expose the Company to off-balance sheet risk in the event the FCM customer is unable to fulfill its contracted obligation as the Company guarantees the performance of its clients to the respective clearing houses or other brokers. In accordance with regulatory requirements and market practice, the Company requires its customers to meet, at a minimum, the margin requirements established by each of the exchanges at which contracts are traded. Margin is a good faith deposit from the customer that reduces risk to the Company of failure by the customer to fulfill obligations under these contracts. The Company establishes customer credit limits and monitors required margin levels on a daily basis and, pursuant to such guidelines, require customers to deposit additional collateral, or to reduce positions, when necessary. Further, the Company seeks to reduce credit risk by entering into netting agreements with customers, which permit receivables and payables with such customers to be offset in the event of a customer default. Management believes that the margin deposits and collateral held at September 30, 2013 were adequate to minimize the risk of material loss that could be created by positions held at that time. | |
In the normal course of its operations, the Company enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company believes the risk of significant loss is minimal. | |
Financial instruments sold, not yet purchased, at fair value represent obligations to purchase such securities (or underlying securities) at a future date. The Company may incur a loss if the market value of the securities subsequently increases. | |
The Company currently has no loans outstanding to any former or current executive officer or director. |
Business_Segments
Business Segments | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Business Segments | ' | |||||||||||||||
Business Segments | ||||||||||||||||
As of September 30, 2013, the Company's operating segments comprised the following: (i) Market Making; (ii) Global Execution Services; and (iii) Corporate and Other. | ||||||||||||||||
The Market Making segment principally consists of market making in the cash, futures and/or options markets across global equities, fixed income, commodities and foreign currencies. As a market maker, the Company commits capital for trade executions by offering to buy securities from, or sell securities to, institutions and broker-dealers. The Market Making segment primarily includes client direct and exchange-based electronic market making activities, including trade executions as an equities DMM on the NYSE and NYSE Amex. The Company is an active participant in all major global equity and futures exchanges and also trades on substantially all domestic electronic options exchanges. As a complement to electronic market making, the Company’s cash trading business handles specialized orders and also transacts on the OTC Bulletin Board, marketplaces operated by the OTC Markets Group Inc. and the AIM of the London Stock Exchange. | ||||||||||||||||
The Global Execution Services segment provides agency execution services and operates trading venues. This segment offers access via its electronic agency-based platforms to markets and self-directed trading in equities, options, fixed income, foreign exchange and futures. In contrast to Market Making, the Global Execution Services segment generally does not act as a principal to transactions that are executed within this segment; however, it will commit capital on behalf of clients as needed, and generally earns commissions for acting as agent between the principals to the trade. Global Execution Services includes high touch equity sales and trading (including exchange traded funds ("ETFs")) aided by its network of sales employees. This segment also facilitates client orders through program, block, and riskless principal trades. Additionally, the Global Execution Services segment includes the FCM business, which provides clients with futures execution and clearing services on major U.S. and European futures and options exchanges. | ||||||||||||||||
The Corporate and Other segment invests in strategic financial services-oriented opportunities, allocates, deploys and monitors all capital, and maintains corporate overhead expenses and all other income and expenses that are not attributable to the other segments, including the gain recognized on Knight Common Stock. The Corporate and Other segment also houses functions that support the Company’s other segments such as self-clearing services, including stock lending activities. | ||||||||||||||||
The Company’s revenues, income (loss) from continuing operations before income taxes (“Pre-tax earnings”) and total assets by segment are summarized in the following table (in thousands): | ||||||||||||||||
Market | Global Execution Services | Corporate | Consolidated | |||||||||||||
Making | and Other | Total | ||||||||||||||
For the three months ended September 30, 2013: | ||||||||||||||||
Revenues | $ | 240,110 | $ | 91,366 | $ | 136,343 | $ | 467,819 | ||||||||
Pre-tax earnings | 47,853 | (16,354 | ) | 88,355 | 119,854 | |||||||||||
Total assets | 3,882,763 | 1,426,824 | 1,885,408 | 7,194,995 | ||||||||||||
For the three months ended September 30, 2012: | ||||||||||||||||
Revenues | $ | 107,672 | $ | 9,258 | $ | 13,672 | $ | 130,602 | ||||||||
Pre-tax earnings | 8,214 | (1,120 | ) | 7,518 | 14,612 | |||||||||||
Total assets | 1,507,881 | 25,934 | 239,490 | 1,773,305 | ||||||||||||
For the nine months ended September 30, 2013: | ||||||||||||||||
Revenues | $ | 455,678 | $ | 113,701 | $ | 128,744 | $ | 698,123 | ||||||||
Pre-tax earnings | 55,608 | (21,248 | ) | 1,478 | 35,838 | |||||||||||
Total assets | 3,882,763 | 1,426,824 | 1,885,408 | 7,194,995 | ||||||||||||
For the nine months ended September 30, 2012: | ||||||||||||||||
Revenues | $ | 383,203 | $ | 27,248 | $ | 14,790 | $ | 425,241 | ||||||||
Pre-tax earnings | 37,976 | (3,839 | ) | 787 | 34,924 | |||||||||||
Total assets | 1,507,881 | 25,934 | 239,490 | 1,773,305 | ||||||||||||
Total Assets for September 30, 2013 do not include Assets within discontinued operations of $6.1 billion. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Subsequent Events | |
Consent Solicitation and Credit Agreement Amendment | |
On September 30, 2013, the Company commenced a consent solicitation with respect to its outstanding Senior Secured Notes. The Company solicited consents from registered holders (“Holders”) of the Senior Secured Notes to amend, among other things, the terms of the Senior Secured Notes among the Company, The Bank of New York Mellon, as trustee and collateral agent (the “Trustee”), and the guarantors. The amendment was sought to permit the Company to use the funds on deposit in the Collateral Account previously set aside to purchase the Convertible Notes to repay a portion of the principal amount of the borrowings under the Credit Agreement. | |
On October 15, 2013, the Company announced that it had received consents from the Holders of $304.0 million in aggregate principal amount of the Senior Secured Notes, representing 99.68% of the total aggregate principal amount, which met the consent threshold requirement under the Senior Secured Notes Indenture. | |
As a result, the Company entered into the Third Supplemental Indenture with the Trustee to amend the Senior Secured Notes Indenture to permit the purchase, redemption or repayment prior to maturity of the Convertible Notes at any price, including at a premium or at a discount from the face value thereof, with any available cash. | |
In connection with the consent solicitation and the Third Supplemental Indenture, the Company entered into an Amendment to its Credit Agreement with the consent of the requisite percentage of lenders under its First Lien Credit Facility. The Credit Agreement Amendment permits the Company to prepay a portion of the principal amount of borrowings under the First Lien Credit Facility from time to time for a period of 60 days following the effective date of the Credit Agreement Amendment out of the cash set aside in a cash collateral account under the sole dominion and control of the collateral agent under the First Lien Credit Facility for repayments of the Convertible Notes, after which period the remaining cash in that cash collateral account will be required to be used to prepay a portion of the principal amount of borrowings under the First Lien Credit Facility. The Credit Agreement Amendment also permits the purchase, redemption or repayment prior to maturity of the Convertible Notes at any price, including at a premium or at a discount from the face value thereof, with any available cash. See “Principal prepayment under Credit Agreement” for a discussion of the prepayment. | |
In conjunction with the consent solicitation, the Company paid $2.8 million to the Holders and its investment bank. This amount will be included within Other assets on the Consolidated Statements of Financial Condition and will be amortized over the remaining life of the Senior Secured Notes. | |
Principal prepayment under Credit Agreement | |
On October 23, 2013, the Company made a $200.0 million principal prepayment under the Credit Agreement. Under the terms of the Credit Agreement, an amortization payment of $235.0 million is due on July 1, 2014, followed by amortization payments of $7.5 million each quarter beginning September 30, 2014 until maturity on December 5, 2017. The $200.0 million principal prepayment reduces the first $235.0 million amortization payment under the First Lien Credit Facility to $35.0 million. | |
A portion of the $200.0 million was drawn from $117.8 million in cash held in the Collateral Account, which was recorded in Other assets on the Consolidated Statements of Financial Condition at September 30, 2013. As mentioned above, the Company secured the consents necessary from creditors to use the cash in the cash collateral account for the repayment. The remainder of the $200.0 million was paid out of available cash. | |
Settlement with SEC | |
As mentioned in Footnote 17 "Commitments and Contingent Liabilities", on October 16, 2013, KCA reached a settlement with the SEC relating to the August 1, 2012 technology issue. | |
KCA, without admitting or denying the findings, consented to the issuance of an administrative Order relating to controls and procedures required by Section 15(c)(3) of the Securities Exchange Act of 1934 and SEC Rule 15c3-5 (the “Market Access Rule”), and Rules 200(g) and 203(b) of Regulation SHO (the “Short Sale Rules”). Under the terms of the settlement, KCA was censured, paid a civil penalty in the sum of $12.0 million and is required to cease and desist from committing future violations of the Market Access Rule and the Short Sale Rules. KCA must also retain an independent consultant to conduct a comprehensive review of KCA’s compliance with the Market Access Rule. The settlement resolves the SEC’s investigation relating to the August 1, 2012 technology issue. The full amount of this settlement had been accrued on Knight's July 1, 2013 balance sheet acquired by the Company and included in Accrued expenses and other liabilities on the September 30, 2013 Consolidated Statements of Financial Condition. The foregoing description of the settlement is qualified in its entirety by the full text of the SEC’s Order which is incorporated by reference herein to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on October 16, 2013. | |
Reduction in force | |
On October 22, 2013, in connection with post-closing merger integration and rationalization of redundancies across the combined firms, the Company commenced a workforce reduction plan. The workforce reduction plan impacted approximately 5% of the Company’s global workforce, all of whom have been notified. The Company currently estimates that it will recognize a pre-tax charge in connection with the workforce reduction of approximately $9.4 million during the fourth quarter of 2013. The charge is expected to consist of severance, other one-time termination benefits, and other associated costs. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Basis of consolidation and form of presentation | ' | |||||||||||||||
Basis of consolidation and form of presentation | ||||||||||||||||
The accompanying unaudited Consolidated Financial Statements, prepared in conformity with GAAP, include the accounts of the Company and its subsidiaries and should be read in conjunction with the audited consolidated financial statements of GETCO for the year ended December 31, 2012 contained in the Current Report on Form 8-K filed by the Company on November 12, 2013 and in the Current Report on Form 8-K filed by the Company on July 1, 2013 and with the audited consolidated financial statements of Knight for the year ended December 31, 2012 in the Current Report on Form 8-K filed by Knight on May 13, 2013. All significant intercompany transactions and balances have been eliminated. | ||||||||||||||||
Certain reclassifications have been made to the prior periods’ Consolidated Financial Statements in order to conform to the current period presentation. Such reclassifications are immaterial to both current and all previously issued financial statements taken as a whole and have no effect on previously reported Consolidated Net income. | ||||||||||||||||
The Company consolidates all of its subsidiaries as well as any variable interest entity (“VIE”) for which it is considered to be the primary beneficiary. The Company performs a qualitative assessment to determine if a VIE should be consolidated. As described in more detail below, the primary attributes the Company assesses include the entity’s capital structure and power. The Company will consolidate a VIE if it has both i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and ii) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. As of September 30, 2013 and December 31, 2012, the Company was not considered to be a primary beneficiary of any VIE. | ||||||||||||||||
Cash and cash equivalents | ' | |||||||||||||||
Cash and cash equivalents | ||||||||||||||||
Cash and cash equivalents include money market accounts, which are payable on demand, and short-term investments with an original maturity of less than 90 days. The carrying amount of such cash equivalents approximates their fair value due to the short-term nature of these instruments. | ||||||||||||||||
Cash and securities segregated under federal and other regulations | ' | |||||||||||||||
Cash and securities segregated under federal and other regulations | ||||||||||||||||
The Company maintains custody of customer funds and, as a result, it is subject to various regulatory rules and regulations. As a result of these customer holdings, the Company is obligated by the U.S. Securities and Exchange Commission (“SEC”) and the Commodities Futures Trading Commission (“CFTC”) to segregate or set aside cash and/or qualified securities to satisfy these regulations, which have been promulgated to protect customer assets. The amounts recognized as Cash and securities segregated under federal and other regulations approximate fair value. | ||||||||||||||||
Market making, sales, trading and execution activities | ' | |||||||||||||||
Market making, sales, trading and execution activities | ||||||||||||||||
Financial instruments owned and Financial instruments sold, not yet purchased, which relate to market making and trading activities, include listed and OTC equity securities, listed equity options and fixed income securities which are recorded on a trade date basis and carried at fair value. Trading revenue, net (trading gains, net of trading losses) are also recorded on a trade date basis. | ||||||||||||||||
Commissions (which includes commission equivalents earned on institutional client orders and commissions on futures transactions) and related expenses are also recorded on a trade date basis. Commissions earned by the Company’s FCM are recorded net of any commissions paid to independent brokers and are recognized on a half-turn basis. | ||||||||||||||||
The Company’s third party clearing agreements call for payment or receipt of interest income, net of transaction-related interest charged by clearing brokers, for facilitating the settlement and financing of securities transactions. Interest income and interest expense which have been netted within Interest, net on the Consolidated Statements of Operations are as follows (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest Income | $ | 3,992 | $ | 1,170 | $ | 6,022 | $ | 1,847 | ||||||||
Interest Expense | (4,169 | ) | (1,951 | ) | (6,992 | ) | (3,845 | ) | ||||||||
Interest, net | $ | (177 | ) | $ | (781 | ) | $ | (970 | ) | $ | (1,998 | ) | ||||
Dividend income relating to securities owned and dividend expense relating to securities sold, not yet purchased, derived primarily from the Company’s market making activities are included as a component of Trading revenue, net on the Consolidated Statements of Operations. Trading revenue, net includes dividend income and expense as follows (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Dividend Income | $ | 9,009 | $ | 288 | $ | 11,484 | $ | 1,049 | ||||||||
Dividend Expense | $ | (6,899 | ) | $ | (809 | ) | $ | (8,035 | ) | $ | (1,321 | ) | ||||
Payments for order flow represent payments to broker-dealer clients, in the normal course of business, for directing their order flow in U.S. equities and options to the Company. | ||||||||||||||||
Fair value of financial instruments | ' | |||||||||||||||
Fair value of financial instruments | ||||||||||||||||
The Company values its financial instruments using a hierarchy of fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. | ||||||||||||||||
The fair value hierarchy can be summarized as follows: | ||||||||||||||||
• | Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. | |||||||||||||||
• | Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. | |||||||||||||||
• | Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. | |||||||||||||||
Changes in fair value are recognized in earnings each period for financial instruments that are carried at fair value. See Footnote 6 “Fair Value of Financial Instruments” for a description of valuation methodologies applied to the classes of financial instruments at fair value. | ||||||||||||||||
Collateralized agreements and financings | ' | |||||||||||||||
Collateralized agreements and financings | ||||||||||||||||
Collateralized agreements consist of securities borrowed and collateralized financings include securities loaned and financial instruments sold under agreements to repurchase. | ||||||||||||||||
• | Securities borrowed and securities loaned transactions are recorded at the amount of cash collateral advanced or received. Securities borrowed transactions facilitate the securities settlement process and require the Company to deposit cash or other collateral with the lender. Securities loaned transactions help finance the Company’s securities inventory whereby the Company lends stock to counterparties in exchange for the receipt of cash or other collateral from the borrower. In these transactions, the Company receives or lends cash or other collateral in an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of securities borrowed or loaned on a daily basis, with additional collateral obtained or refunded as necessary. | |||||||||||||||
• | Financial instruments sold under agreements to repurchase are used to finance inventories of securities and other financial instruments and are recorded at their contractual amount. The Company has entered into bilateral and tri-party term and overnight repurchase agreements which bear interest at negotiated rates. The Company receives cash and makes delivery of financial instruments to a custodian who monitors the market value of these instruments on a daily basis. The market value of the instruments delivered must be equal to or in excess of the principal amount loaned under the repurchase agreements plus the agreed upon margin requirement. The custodian may request additional collateral, if appropriate. | |||||||||||||||
Collateralized agreements related to Urban are recorded within Liabilities within discontinued operations on the Consolidated Statements of Financial Condition, and comprise: | ||||||||||||||||
• | Other secured financings, which represent contractual agreements used to finance financial instruments, are recorded at their contractual amount. These agreements are short-term in nature with durations of typically less than one month and bear interest at negotiated rates. Urban receives cash and pledges financial instruments to banks and other financial institutions as collateral for these secured financing arrangements. The market value of the collateral delivered must be in excess of the principal amount loaned plus the agreed upon margin requirement under the secured financings. The banks and other financial institutions may request additional collateral, if appropriate. | |||||||||||||||
• | Liability to GNMA trusts, at fair value, represent the liability associated with Urban’s securitization of HECMs where the securitization does not meet the GAAP criteria for sale treatment. | |||||||||||||||
The Company’s securities borrowed, securities loaned, financial instruments sold under agreements to repurchase and other secured financings are recorded at amounts that approximate fair value. These items are recorded based upon their contractual terms and are not materially sensitive to shifts in interest rates because they are short-term in nature and are fully collateralized. These items would be categorized as Level 2 in the fair value hierarchy if they were required to be recorded at fair value. | ||||||||||||||||
Securitization activities | ' | |||||||||||||||
Securitization activities | ||||||||||||||||
Urban, which KCG has entered into a definitive agreement to sell as described in Footnote 1 "Organization and Description of the Business" and Footnote 4 "Discontinued Operations", securitizes home equity conversion mortgages (“HECMs”) under its GNMA issuance authority. Securitization and transfer of financial assets to a third party are generally accounted for as sales when an issuer has relinquished control over the transferred assets. Based upon the current structure of the GNMA securitization program, the Company believes that Urban has not met the GAAP criteria for relinquishing control over the transferred assets and therefore its securitizations fail to meet the GAAP criteria for sale accounting. As such, the Company continues to recognize the HECMs in Assets within discontinued operations, and the Company recognizes a corresponding liability to the GNMA trusts in Liabilities within discontinued operations on the Consolidated Statements of Financial Condition. The associated change in fair value of the securitized HECM loan inventory is recorded in Loss from discontinued operations, net of tax on the Consolidated Statements of Operations. | ||||||||||||||||
Investments | ' | |||||||||||||||
Investments | ||||||||||||||||
Investments primarily comprise strategic investments and deferred compensation investments. Strategic investments include noncontrolling equity ownership interests held by the Company within its non-broker-dealer subsidiaries, primarily in financial services-related businesses. Strategic investments are accounted for under the equity method or at cost. The equity method of accounting is used when the Company has significant influence, generally considered to be between 20% and 50% equity ownership in a corporation or greater than 3% to 5% of a partnership interest. Strategic investments are held at cost, less impairment if any, when the Company is not considered to exert significant influence on operating and financial policies of the investee. | ||||||||||||||||
Prior to the Mergers, the Company had a strategic investment in Knight which was classified as available for sale securities. Any gain or losses in the fair value of this investment were recorded in Other comprehensive income (loss). | ||||||||||||||||
Strategic investments are reviewed on an ongoing basis to ensure that the carrying values of the investments have not been impaired. If the Company determines that an impairment loss on a strategic investment has occurred due to a decline in fair value or other market conditions, the investment is written down to its estimated fair value. | ||||||||||||||||
The Company maintains a non-qualified deferred compensation plan for certain employees and directors. This plan provides a return to the participants based upon the performance of various investments. In order to hedge its liability under this plan, the Company generally acquires the underlying investments and holds such investments until the deferred compensation liabilities are satisfied. Changes in value of such investments are recorded in Investment income and other, net, with a corresponding charge or credit to Employee compensation and benefits on the Consolidated Statements of Operations. Deferred compensation investments primarily consist of mutual funds, which are accounted for at fair value. | ||||||||||||||||
Goodwill and intangible assets | ' | |||||||||||||||
Goodwill and intangible assets | ||||||||||||||||
The Company tests goodwill and intangible assets with an indefinite useful life for impairment annually or when an event occurs or circumstances change that signifies the existence of an impairment. The Company amortizes other intangible assets on a straight line basis over their estimated useful lives and tests for recoverability whenever events indicate that the carrying amounts may not be recoverable. | ||||||||||||||||
Discontinued operations and Assets and Liabilities held for sale | ' | |||||||||||||||
Discontinued operations and Assets and Liabilities | ||||||||||||||||
Revenues and expenses associated with a business line that has been disposed of through closure or sale, or are considered held for sale, are included in Loss from discontinued operations, net of tax on the Consolidated Statements of Operations. Assets and liabilities of a disposal group classified as discontinued operations are included in Assets within discontinued operations and Liabilities within discontinued operations, respectively, on the Consolidated Statements of Financial Condition. Cash flows from discontinued operations are presented on the Consolidated Statements of Cash Flows within operating, investing and financing activities, as applicable. | ||||||||||||||||
Payable to customers | ' | |||||||||||||||
Payable to customers | ||||||||||||||||
Payable to customers arise primarily from futures transactions and include amounts due on cash and margin transactions. Due to their short-term nature, such amounts approximate fair value. | ||||||||||||||||
Treasury stock | ' | |||||||||||||||
Treasury stock | ||||||||||||||||
The Company records its purchases of treasury stock at cost as a separate component of stockholders’ equity. The Company may obtain treasury stock through purchases in the open market or through privately negotiated transactions. Certain treasury stock repurchases represent shares of KCG Class A Common Stock repurchased in satisfaction of tax withholding obligations upon vesting of restricted awards. The Company may re-issue treasury stock, at average cost, for the acquisition of new businesses or, in certain instances, as inducement grants to new hires. | ||||||||||||||||
Foreign currency translation and foreign currency forward contracts | ' | |||||||||||||||
Foreign currency translation and foreign currency forward contracts | ||||||||||||||||
The Company has foreign subsidiaries that do not utilize the U.S. dollar as their functional currency. | ||||||||||||||||
Assets and liabilities of the foreign subsidiaries having non-U.S. dollar functional currencies are translated at exchange rates at the end of a period. Revenues and expenses are translated at average exchange rates during the period. Gains and losses resulting from translating foreign currency financial statements into U.S. dollars are included in Accumulated other comprehensive (loss) income on the Consolidated Statements of Financial Condition and Cumulative translation adjustment on the Consolidated Statements of Comprehensive Income. Gains or losses resulting from foreign currency transactions are included in Investment income and other, net on the Company’s Consolidated Statements of Operations. For the three months ended September 30, 2013 and 2012, the Company recorded a loss of $0.1 million and a gain of $0.2 million, respectively. For the nine months ended September 30, 2013 and 2012, the Company recorded a loss of $1.3 million and a gain of $0.3 million, respectively. | ||||||||||||||||
The Company seeks to reduce the impact of fluctuations in foreign exchange rates on its net investment in certain non-U.S. operations through the use of foreign currency forward contracts. For foreign currency forward contracts designated as hedges, the Company assesses its risk management objectives and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair value of the forward contracts. For qualifying net investment hedges, any gains or losses, to the extent effective, are included in Accumulated other comprehensive (loss) income on the Consolidated Statements of Financial Condition and the Consolidated Statements of Comprehensive Income. The ineffective portion, if any, is recorded in Investment income and other, net on the Consolidated Statements of Operations. | ||||||||||||||||
Stock-based compensation | ' | |||||||||||||||
Stock and unit based compensation | ||||||||||||||||
Stock and unit based compensation is measured based on the grant date fair value of the awards. These costs are amortized over the requisite service period, which is typically the vesting period. Expected forfeitures are considered in determining stock-based employee compensation expense. | ||||||||||||||||
The Company applies a non-substantive vesting period approach for stock-based awards related to KCG Class A Common Stock whereby the expense is accelerated for those employees and directors that receive options, stock appreciation rights ("SARs") and RSUs and are eligible to retire prior to the vesting of such awards. | ||||||||||||||||
Soft dollar expense | ' | |||||||||||||||
Soft dollar expense | ||||||||||||||||
Under a commission management program, the Company allows institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third parties. As the Company acts as an agent in these transactions, it records such expenses on a net basis within Commissions and fees on the Consolidated Statements of Operations. | ||||||||||||||||
Depreciation, amortization and occupancy | ' | |||||||||||||||
Depreciation, amortization and occupancy | ||||||||||||||||
Fixed assets are depreciated on a straight-line basis over their estimated useful lives of three to seven years. Leasehold improvements are being amortized on a straight-line basis over the shorter of the term of the related office lease or the expected useful life of the assets. The Company capitalizes certain costs associated with the acquisition or development of internal-use software and amortizes the software over its estimated useful life of three years, commencing at the time the software is placed in service. The Company reviews fixed assets and leasehold improvements for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. | ||||||||||||||||
The Company recognizes rent expense under operating leases with fixed rent escalations, lease incentives and free rent periods on a straight-line basis over the lease term beginning on the date the Company takes possession of or controls the use of the space, including during free rent periods. | ||||||||||||||||
Lease loss accrual | ' | |||||||||||||||
Lease loss accrual | ||||||||||||||||
The Company’s policy is to identify excess real estate capacity and where applicable, accrue for related future costs, net of estimated sub-lease income. In the event the Company is able to sublease the excess real estate after recording a lease loss, such accrual is adjusted to the extent the actual terms of sub-leased property differ from the assumptions used in the calculation of the accrual. In the event that the Company concludes that previously determined excess real estate is needed for the Company’s use, such lease loss accrual is adjusted accordingly. | ||||||||||||||||
Income taxes | ' | |||||||||||||||
Income taxes | ||||||||||||||||
Prior to the Mergers, GETCO and the majority of its subsidiaries were treated as partnerships or disregarded entities for U.S. income tax purposes and, accordingly, were not subject to federal income taxes. Instead, the former GETCO members were liable for federal income taxes on their proportionate share of taxable income. Upon completion of the Mergers, the Company became a corporation subject to U.S. corporate income taxes and, following the Mergers, the Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and measures them using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. The Company evaluates the recoverability of future tax deductions by assessing the adequacy of future expected taxable income from all sources, including reversal of temporary differences and forecasted operating earnings | ||||||||||||||||
Variable interest entities | ' | |||||||||||||||
Variable interest entities | ||||||||||||||||
A VIE is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company has a controlling financial interest and will consolidate a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. | ||||||||||||||||
VIEs generally finance the purchase of assets by issuing debt and equity securities that are either collateralized by or indexed to the assets held by the VIE. The debt and equity securities issued by a VIE may include tranches of varying levels of subordination. The Company’s involvement with VIEs includes purchased interests and commitments to VIEs. | ||||||||||||||||
The Company is principally involved with VIEs through Urban’s securitization of HECM loan inventory. Urban sells HECM loans to GNMA trusts, which have the characteristics of a VIE, and Urban retains certain commitments and obligations to the GNMA trusts. Urban's maximum exposure to loss is the value of its obligations as issuer and servicer of the GNMA trusts. Securitized HECM loan inventory variable interests are recorded in Assets and liabilities within discontinued operations. | ||||||||||||||||
The following table presents the Company’s nonconsolidated VIEs at September 30, 2013 (in thousands): | ||||||||||||||||
30-Sep-13 | ||||||||||||||||
Securitized | ||||||||||||||||
HECM loan | ||||||||||||||||
inventory recorded within Assets within discontinued operations | ||||||||||||||||
Carrying value of the variable interests | ||||||||||||||||
Assets | $ | — | ||||||||||||||
Liabilities | 1,326 | |||||||||||||||
Maximum exposure to loss in nonconsolidated VIEs | ||||||||||||||||
Commitments | 43,932 | |||||||||||||||
Purchased interests | — | |||||||||||||||
The Company did not have any nonconsolidated VIEs at December 31, 2012 | ||||||||||||||||
Use of estimates | ' | |||||||||||||||
Use of estimates | ||||||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. | ||||||||||||||||
Recently adopted accounting guidance | ' | |||||||||||||||
Recently adopted accounting guidance | ||||||||||||||||
In December 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) that requires additional disclosures about financial assets and liabilities that are subject to netting arrangements. Under the ASU, financial assets and liabilities must be disclosed at their respective gross asset and liability amounts, the amounts offset on the balance sheet and a description of the respective netting agreements. The new disclosures are required for reporting periods beginning on or after January 1, 2013, and are to be applied retrospectively. Other than requiring additional disclosures, the adoption of this ASU did not have an impact on the Company's Consolidated Financial Statements. | ||||||||||||||||
In February 2013, the FASB issued an ASU that requires additional disclosure requirements for items reclassified out of accumulated other comprehensive income. This new guidance requires entities to present either on the face of the income statement or in the notes to the financial statements the effects on the specific line items of the income statement for amounts reclassified out of accumulated other comprehensive income. This ASU is effective for reporting periods beginning after December 15, 2012. Other than additional disclosure requirements, the adoption of this ASU did not have an impact on the Company's Consolidated Financial Statements. |
Merger_of_GETCO_and_Knight_Tab
Merger of GETCO and Knight (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | ' | ||||||||||||||||||||||||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill were as follows (dollars in thousands): | |||||||||||||||||||||||||
Amortization | |||||||||||||||||||||||||
Amount | Years | ||||||||||||||||||||||||
Technology | $ | 110,000 | 5 years | ||||||||||||||||||||||
Customer relationships | 35,000 | 9 - 11 years | |||||||||||||||||||||||
Trade names | 4,000 | 10 years | |||||||||||||||||||||||
Trading rights | 7,800 | 7 years | |||||||||||||||||||||||
Intangible assets | 156,800 | ||||||||||||||||||||||||
Goodwill | 13,753 | ||||||||||||||||||||||||
Total | $ | 170,553 | |||||||||||||||||||||||
The following table reflects the preliminary allocation of the purchase price to the assets acquired and liabilities assumed at the acquisition date (in thousands): | |||||||||||||||||||||||||
Identifiable Net Assets | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 509,133 | |||||||||||||||||||||||
Cash and securities segregated under federal and other regulations | 203,045 | ||||||||||||||||||||||||
Financial instruments owned | 1,937,929 | ||||||||||||||||||||||||
Securities borrowed | 1,158,981 | ||||||||||||||||||||||||
Receivable from brokers, dealers and clearing organizations | 1,366,974 | ||||||||||||||||||||||||
Fixed assets and leasehold improvements, net | 84,596 | ||||||||||||||||||||||||
Investments | 106,353 | ||||||||||||||||||||||||
Intangible assets | 156,800 | ||||||||||||||||||||||||
Assets within discontinued operations | 5,607,063 | ||||||||||||||||||||||||
Other assets | 211,735 | ||||||||||||||||||||||||
Total Assets | $ | 11,342,609 | |||||||||||||||||||||||
Financial instruments sold, not yet purchased | $ | 1,512,983 | |||||||||||||||||||||||
Collateralized financings | 1,166,211 | ||||||||||||||||||||||||
Payable to brokers, dealers and clearing organizations | 635,914 | ||||||||||||||||||||||||
Payable to customers | 527,918 | ||||||||||||||||||||||||
Accrued compensation expense | 107,409 | ||||||||||||||||||||||||
Accrued expenses and other liabilities | 139,624 | ||||||||||||||||||||||||
Liabilities within discontinued operations | 5,518,168 | ||||||||||||||||||||||||
Long-term debt | 375,000 | ||||||||||||||||||||||||
Total Liabilities | $ | 9,983,227 | |||||||||||||||||||||||
Total identified assets acquired, net of assumed liabilities | 1,359,382 | ||||||||||||||||||||||||
Goodwill | 13,753 | ||||||||||||||||||||||||
Total Purchase Price | $ | 1,373,135 | |||||||||||||||||||||||
Business Acquisition, Pro Forma Information | ' | ||||||||||||||||||||||||
Included in KCG results for the three months ended September 30, 2013 are results from the businesses acquired as a result of the Mergers as follows: | |||||||||||||||||||||||||
Three months ended September 30, | |||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||
Revenues | $ | 240,805 | |||||||||||||||||||||||
Income from continuing operations, before income taxes | 21,164 | ||||||||||||||||||||||||
Three months ended September 30, 2012 | Nine months ended September 30, 2013 | Nine months ended September 30, 2012 | |||||||||||||||||||||||
Reported | Pro Forma | Reported | Pro Forma | Reported | Pro Forma | ||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||||
Revenue | $ | 130,602 | $ | (120,210 | ) | $ | 698,123 | $ | 1,099,518 | $ | 425,241 | $ | 677,955 | ||||||||||||
Net income from continuing operations | 9,807 | (303,413 | ) | 138,316 | (10,494 | ) | 24,556 | (274,981 | ) | ||||||||||||||||
Net income | 9,807 | (387,350 | ) | 137,532 | (39,554 | ) | 24,556 | (350,831 | ) | ||||||||||||||||
Diluted earnings (loss) per share from continuing operations | $ | 0.21 | $ | (6.54 | ) | $ | 2.01 | $ | (0.15 | ) | $ | 0.49 | $ | (5.54 | ) | ||||||||||
Diluted earnings (loss) per share | $ | 0.21 | $ | (8.35 | ) | $ | 2 | $ | (0.57 | ) | $ | 0.49 | $ | (7.07 | ) | ||||||||||
The pro forma results are based on adding the pre-tax historical results of GETCO and Knight, and adjusting primarily for amortization of intangibles created in the Mergers, debt raised in conjunction with the Mergers and income taxes as if the Company was subject to U.S. corporate income taxes for all periods presented. The pro forma data assumes all GETCO units have been converted to KCG Class A Common Stock on January 1, 2012 and excludes any gain recognized on Knight Common Stock. The pro forma disclosures do not include adjustments to reflect the Company's operating costs or expected differences in the way funds generated by the Company are invested. The pro forma data is intended for informational purposes and is not indicative of the future results of operations. |
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Schedule of Interest Income and Interest Expense | ' | |||||||||||||||
Interest income and interest expense which have been netted within Interest, net on the Consolidated Statements of Operations are as follows (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest Income | $ | 3,992 | $ | 1,170 | $ | 6,022 | $ | 1,847 | ||||||||
Interest Expense | (4,169 | ) | (1,951 | ) | (6,992 | ) | (3,845 | ) | ||||||||
Interest, net | $ | (177 | ) | $ | (781 | ) | $ | (970 | ) | $ | (1,998 | ) | ||||
Net Trading Revenue Including Dividend Income and Expense | ' | |||||||||||||||
Trading revenue, net includes dividend income and expense as follows (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Dividend Income | $ | 9,009 | $ | 288 | $ | 11,484 | $ | 1,049 | ||||||||
Dividend Expense | $ | (6,899 | ) | $ | (809 | ) | $ | (8,035 | ) | $ | (1,321 | ) | ||||
Company's Nonconsolidated VIEs | ' | |||||||||||||||
The following table presents the Company’s nonconsolidated VIEs at September 30, 2013 (in thousands): | ||||||||||||||||
30-Sep-13 | ||||||||||||||||
Securitized | ||||||||||||||||
HECM loan | ||||||||||||||||
inventory recorded within Assets within discontinued operations | ||||||||||||||||
Carrying value of the variable interests | ||||||||||||||||
Assets | $ | — | ||||||||||||||
Liabilities | 1,326 | |||||||||||||||
Maximum exposure to loss in nonconsolidated VIEs | ||||||||||||||||
Commitments | 43,932 | |||||||||||||||
Purchased interests | — | |||||||||||||||
The Company did not have any nonconsolidated VIEs at December 31, 2012. |
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||
Summary of Revenues and Results of Operations of Discontinued Operations | ' | |||
The revenues and results of operations of discontinued operations are summarized as follows (in thousands): | ||||
For the three and nine months | ||||
ended September 30, | ||||
2013 | ||||
Revenues | $ | 22,114 | ||
Expenses: | ||||
Compensation | $ | 8,379 | ||
Execution and clearance fees | 2,840 | |||
Payments for order flow | 5,286 | |||
Other expenses | 6,873 | |||
Total Expenses | 23,378 | |||
Pre-tax loss from discontinued operations | (1,264 | ) | ||
Income tax benefit | 480 | |||
Loss from discontinued operations, net of tax | $ | (784 | ) | |
Assets and liabilities within discontinued operations are presented in the following table (in thousands): | ||||
September 30, | ||||
2013 | ||||
Assets within discontinued operations: | ||||
Cash and cash equivalents | $ | 15,702 | ||
Securitized HECM loan inventory | 5,841,664 | |||
Loan inventory | 177,674 | |||
Receivable from brokers, dealers and clearing organizations | 37,411 | |||
Other assets | 25,848 | |||
Total assets | $ | 6,098,299 | ||
Liabilities within discontinued operations: | ||||
Liability to GNMA trusts | 5,803,859 | |||
Other secured financings | 129,552 | |||
Payable to brokers, dealers and clearing organizations | 8,538 | |||
Accrued compensation expense | 4,717 | |||
Accrued expenses and other liabilities | 59,358 | |||
Total liabilities | $ | 6,006,024 | ||
Assets_Segregated_or_Held_in_S1
Assets Segregated or Held in Seperate Accounts Under Federal or Other Regulations (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Cash and Cash Equivalents [Abstract] | ' | |||
Cash and Securities Segregated Under U.S. Federal and Other Regulation | ' | |||
Cash and securities segregated under U.S. federal and other regulations primarily relate to the Company’s FCM business and consist of the following (in thousands): | ||||
September 30, | ||||
2013 | ||||
Cash and cash equivalents segregated under federal or other regulations | $ | 216,442 | ||
Receivables from brokers, dealers and clearing organizations | 282,650 | |||
Total assets segregated or held in separate accounts under federal or other regulations | $ | 499,092 | ||
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | ' | ||||||||||||||||||||||||
The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value (in thousands): | |||||||||||||||||||||||||
Assets and Liabilities Measured at | |||||||||||||||||||||||||
Fair Value on a Recurring Basis | |||||||||||||||||||||||||
30-Sep-13 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Financial instruments owned, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 2,156,466 | $ | — | $ | — | $ | 2,156,466 | |||||||||||||||||
Listed options | 288,227 | — | — | 288,227 | |||||||||||||||||||||
U.S. government and Non-U.S. government obligations | 32,678 | — | — | 32,678 | |||||||||||||||||||||
Corporate debt | 46,606 | — | — | 46,606 | |||||||||||||||||||||
Total Financial instruments owned, at fair value | 2,523,977 | — | — | 2,523,977 | |||||||||||||||||||||
Securities on deposit with clearing organizations (2) | 160,369 | — | — | 160,369 | |||||||||||||||||||||
Deferred compensation investments (3) | — | 84 | — | 84 | |||||||||||||||||||||
Investment in Deephaven Funds (3) | — | 1,430 | — | 1,430 | |||||||||||||||||||||
Assets within discontinued operations: | — | ||||||||||||||||||||||||
Securitized HECM loan inventory (4) | — | 5,841,664 | — | 5,841,664 | |||||||||||||||||||||
Loan inventory | — | 177,674 | — | 177,674 | |||||||||||||||||||||
Total fair value of financial instrument assets | $ | 2,684,346 | $ | 6,020,852 | $ | — | $ | 8,705,198 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Financial instruments sold, not yet purchased, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 1,848,729 | $ | — | $ | — | $ | 1,848,729 | |||||||||||||||||
U.S. government obligations | 29,441 | — | — | 29,441 | |||||||||||||||||||||
Corporate debt | 49,616 | — | — | 49,616 | |||||||||||||||||||||
Listed options | 229,721 | — | — | 229,721 | |||||||||||||||||||||
Foreign currency forward contracts | — | 5,431 | — | 5,431 | |||||||||||||||||||||
Total Financial instruments sold, not yet purchased, at fair value | 2,157,507 | 5,431 | — | 2,162,938 | |||||||||||||||||||||
Liabilities within discontinued operations: | |||||||||||||||||||||||||
Liability to GNMA trusts, at fair value (4) | — | 5,803,859 | — | 5,803,859 | |||||||||||||||||||||
Total fair value of financial instrument liabilities | $ | 2,157,507 | $ | 5,809,290 | $ | — | $ | 7,966,797 | |||||||||||||||||
________________________________________ | |||||||||||||||||||||||||
(1) | Equities of $1.22 billion have been netted by their respective CUSIP number and their long and short positions. | ||||||||||||||||||||||||
(2) | Securities on deposit with clearing organizations consist of U.S. government obligations and are recorded within Receivable from brokers, dealers and clearing organizations on the Consolidated Statements of Financial Condition. | ||||||||||||||||||||||||
(3) | Deferred compensation investments and Investment in Deephaven Funds are included within Investments on the Consolidated Statements of Financial Condition. | ||||||||||||||||||||||||
(4) | Represents HECMs that have been securitized into HECM Mortgage Backed Securities (“HMBS”) where the securitization is not accounted for as a sale of the underlying HECMs. See Securitized HECM loan inventory below for full description. | ||||||||||||||||||||||||
Assets and Liabilities Measured at | |||||||||||||||||||||||||
Fair Value on a Recurring Basis | |||||||||||||||||||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Financial instruments owned, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 378,933 | $ | — | $ | — | $ | 378,933 | |||||||||||||||||
Listed options | 92,305 | — | — | 92,305 | |||||||||||||||||||||
U.S. government obligations and corporate bonds | 68,765 | — | — | 68,765 | |||||||||||||||||||||
Mutual funds - Bond Funds | 114,872 | — | 114,872 | ||||||||||||||||||||||
Total Financial instruments owned, at fair value | 654,875 | — | — | 654,875 | |||||||||||||||||||||
Securities on deposit with clearing organizations | 7,147 | — | 7,147 | ||||||||||||||||||||||
Investment - Knight preferred shares | 199,632 | — | 199,632 | ||||||||||||||||||||||
Total fair value of financial instrument assets | $ | 861,654 | $ | — | $ | — | $ | 861,654 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Financial instruments sold, not yet purchased, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 423,740 | $ | — | $ | — | $ | 423,740 | |||||||||||||||||
U.S. government obligations | 19,056 | — | — | 19,056 | |||||||||||||||||||||
Listed options | 69,757 | — | — | 69,757 | |||||||||||||||||||||
Total Financial instruments sold, not yet purchased, at fair value | 512,553 | — | — | 512,553 | |||||||||||||||||||||
Total fair value of financial instrument liabilities | $ | 512,553 | $ | — | $ | — | $ | 512,553 | |||||||||||||||||
___________________________________ | |||||||||||||||||||||||||
(1) Equities of $5.9 million have been netted by their respective CUSIP number and their long and short positions. | |||||||||||||||||||||||||
Fair Value of Derivative Instruments in Consolidated Statements of Financial Condition and Effect of Changes in Fair Value on Consolidated Statements of Operations | ' | ||||||||||||||||||||||||
The following tables summarize the fair value of derivative instruments and futures contract trading activities in the Consolidated Statements of Financial Condition and the gains and losses included in the Consolidated Statements of Operations (fair value in thousands): | |||||||||||||||||||||||||
30-Sep-13 | |||||||||||||||||||||||||
Financial Statements | Assets | Liabilities | |||||||||||||||||||||||
Location | Fair Value | Contracts | Fair Value | Contracts | |||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | $ | 21 | 651 | $ | 62 | 244 | ||||||||||||||||||
Forward contracts (1) | Financial instruments owned, at fair value | — | — | 5,431 | 2 | ||||||||||||||||||||
Forward contracts (1) | Receivables from/Payables to brokers, dealers and clearing organizations | 331 | 1 | — | — | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 1,442 | 3,059 | 595 | 1,046 | ||||||||||||||||||||
Swap contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 230 | 1 | — | — | ||||||||||||||||||||
Listed options | Financial instruments owned, at fair value | 288,227 | 772,768 | 229,721 | 753,979 | ||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 4,183 | 24,400 | 1,724 | 6,601 | ||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 732 | 2,278 | 1,478 | 3,565 | ||||||||||||||||||||
Total | $ | 295,166 | 803,158 | $ | 239,011 | 765,437 | |||||||||||||||||||
(1) Designated as hedging instrument | |||||||||||||||||||||||||
31-Dec-12 | |||||||||||||||||||||||||
Financial Statements | Assets | Liabilities | |||||||||||||||||||||||
Location | Fair Value | Contracts | Fair Value | Contracts | |||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | $ | 8 | 500 | $ | — | 95 | ||||||||||||||||||
Forward contracts | Accrued expenses and other liabilities | — | — | 110 | 1 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 498 | 1,027 | 70 | 234 | ||||||||||||||||||||
Swap contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 570 | 1 | — | — | ||||||||||||||||||||
Listed options | Financial instruments owned, at fair value | 92,305 | 199,324 | 69,757 | 196,804 | ||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 3,474 | 42,143 | 5,043 | 61,398 | ||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 428 | 1,385 | 410 | 1,824 | ||||||||||||||||||||
Total | $ | 97,283 | 244,380 | $ | 75,390 | 260,356 | |||||||||||||||||||
Fair Value of Derivative Instruments Gain Loss Recognized | ' | ||||||||||||||||||||||||
Gain (Loss) Recognized | |||||||||||||||||||||||||
Financial Statements | For the three months | ||||||||||||||||||||||||
ended September 30, | |||||||||||||||||||||||||
Location | 2013 | 2012 | |||||||||||||||||||||||
Derivative instruments not designated as hedging instruments: | |||||||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | $ | 3,825 | $ | 4,493 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 17,461 | 10,724 | ||||||||||||||||||||||
Swap contracts | Trading revenues, net | 1,884 | 1,985 | ||||||||||||||||||||||
Listed options (1) | Trading revenues, net | 17,044 | 24,582 | ||||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 22,008 | 15,557 | ||||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 18,774 | 8,792 | ||||||||||||||||||||||
$ | 80,996 | $ | 66,133 | ||||||||||||||||||||||
Derivative instruments designated as hedging instruments: | |||||||||||||||||||||||||
Foreign exchange - forward contract | Accumulated other comprehensive (loss) | $ | (4,948 | ) | $ | — | |||||||||||||||||||
(1) | Realized gains and losses on listed equity options relate to the Company’s market making activities in such options. Such market making activities also comprise trading in the underlying equity securities with gains and losses on such securities generally offsetting the gains and losses reported in this table. Gains and losses on such equity securities are also included in Trading revenue, net on the Company’s Consolidated Statements of Operations. | ||||||||||||||||||||||||
Gain (Loss) Recognized | |||||||||||||||||||||||||
Financial Statements | For the nine months ended September 30, | ||||||||||||||||||||||||
Location | 2013 | 2012 | |||||||||||||||||||||||
Derivative instruments not designated as hedging instruments: | |||||||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | $ | 9,243 | $ | 16,446 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 44,125 | 62,241 | ||||||||||||||||||||||
Swap contracts | Trading revenues, net | 10,755 | 5,007 | ||||||||||||||||||||||
Listed options (1) | Trading revenues, net | 63,322 | 41,455 | ||||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 64,211 | 66,573 | ||||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 44,053 | 26,065 | ||||||||||||||||||||||
$ | 235,709 | $ | 217,787 | ||||||||||||||||||||||
Derivative instruments designated as hedging instruments: | |||||||||||||||||||||||||
Foreign exchange - forward contract | Accumulated other comprehensive (loss) | $ | (4,948 | ) | $ | — | |||||||||||||||||||
(1) | Realized gains and losses on listed options relate to the Company’s market making activities in such options. Such market making activities also comprise trading in the underlying equity securities with gains and losses on such securities generally offsetting the gains and losses reported in this table. Gains and losses on such equity securities are also included in Trading revenue, net on the Company’s Consolidated Statements of Operations. | ||||||||||||||||||||||||
Gross amounts of recognized derivative assets and gross amounts of offsets in the Consolidated Statement of Condition | ' | ||||||||||||||||||||||||
The gross amounts of assets and liabilities subject to netting and gross amounts offset in the Consolidated Statements of Financial Condition were as follows (in thousands): | |||||||||||||||||||||||||
30-Sep-13 | Gross Amounts Recognized | Gross Amounts Offset in the Statements of Financial Condition | Net Amounts of Assets Presented in the Statements of Financial Condition | Gross Amounts Not Offset in the Statement of Financial Condition | Net Amount | ||||||||||||||||||||
Financial Instruments | Cash Collateral Received | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Listed options | $ | 288,227 | $ | — | $ | 288,227 | $ | — | $ | — | $ | 288,227 | |||||||||||||
Securities borrowed | 1,370,921 | — | 1,370,921 | 1,329,508 | — | 41,413 | |||||||||||||||||||
Total Assets | $ | 1,659,148 | $ | — | $ | 1,659,148 | $ | 1,329,508 | $ | — | $ | 329,640 | |||||||||||||
Liabilities | |||||||||||||||||||||||||
Listed options | $ | 229,722 | $ | — | $ | 229,722 | $ | — | $ | 5,064 | $ | 224,658 | |||||||||||||
Securities loaned | 543,451 | — | 543,451 | 533,266 | — | 10,185 | |||||||||||||||||||
Financial instruments sold under agreements to repurchase | 595,029 | — | 595,029 | 595,022 | — | 7 | |||||||||||||||||||
Foreign currency forward contracts | 5,431 | — | 5,431 | — | — | 5,431 | |||||||||||||||||||
Total Liabilities | $ | 1,373,633 | $ | — | $ | 1,373,633 | $ | 1,128,288 | $ | 5,064 | $ | 240,281 | |||||||||||||
31-Dec-12 | Gross Amounts Recognized | Gross Amounts Offset in the Statements of Financial Condition | Net Amounts of Assets Presented in the Statements of Financial Condition | Gross Amounts Not Offset in the Statement of Financial Condition | Net Amount | ||||||||||||||||||||
Financial Instruments | Cash Collateral Received | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Listed options | $ | 92,305 | $ | — | $ | 92,305 | $ | — | $ | — | $ | 92,305 | |||||||||||||
Securities borrowed | 52,261 | — | 52,261 | 50,717 | 1,544 | ||||||||||||||||||||
Total Assets | $ | 144,566 | $ | — | $ | 144,566 | $ | 50,717 | $ | — | $ | 93,849 | |||||||||||||
Liabilities | |||||||||||||||||||||||||
Listed options | $ | 69,757 | $ | — | $ | 69,757 | $ | — | $ | 1,393 | $ | 68,364 | |||||||||||||
Total Liabilities | $ | 69,757 | $ | — | $ | 69,757 | $ | — | $ | 1,393 | $ | 68,364 | |||||||||||||
Collateralized_Transactions_Ta
Collateralized Transactions (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Collateralized Agreements [Abstract] | ' | |||||||
Financial Instruments at Fair Value Received as Collateral that were Permitted to be Delivered or Repledged | ' | |||||||
The table below presents financial instruments at fair value received as collateral that were permitted to be delivered or repledged and that were delivered or repledged by the Company as well as the fair value of financial instruments which could be further repledged by the receiving counterparty (in thousands): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Collateral permitted to be delivered or repledged | $ | 1,317,369 | $ | 50,717 | ||||
Collateral that was delivered or repledged | 1,210,408 | 50,717 | ||||||
Collateral permitted to be further repledged by the receiving counterparty | 149,891 | — | ||||||
Financial Instruments Owned and Pledged to Counterparties that Do Not Have Right to Sell or Repledge | ' | |||||||
The table below presents information about assets pledged by the Company (in thousands): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Financial instruments owned, at fair value, pledged to counterparties that had the right to deliver or repledge (1) | $ | 6,803,143 | $ | 52,261 | ||||
Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge | 732,481 | — | ||||||
(1) | Financial instruments owned, at fair value, pledged to counterparties that had the right to deliver or repledge includes $5.84 billion recorded within Assets within discontinued operations as of September 30, 2013. |
Receivable_from_and_Payable_to1
Receivable from and Payable to Brokers, Dealers and Clearing Organizations (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Brokers and Dealers [Abstract] | ' | |||||||
Schedule of Amounts Receivable from and Payable to Brokers, Dealers and Clearing Organizations | ' | |||||||
Amounts receivable from and payable to brokers, dealers and clearing organizations consist of the following (in thousands): | ||||||||
September 30, | 31-Dec-12 | |||||||
2013 | ||||||||
Receivable: | ||||||||
Clearing organizations and other | $ | 1,096,308 | $ | 140,089 | ||||
Securities failed to deliver | 233,805 | 2,880 | ||||||
Total Receivable | $ | 1,330,113 | $ | 142,969 | ||||
Payable: | ||||||||
Clearing organizations and other | $ | 564,592 | $ | 15,879 | ||||
Securities failed to receive | 101,586 | 8,306 | ||||||
Total Payable | $ | 666,178 | $ | 24,185 | ||||
Investments_Tables
Investments (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Investments [Abstract] | ' | |||||||
Summary of Investments | ' | |||||||
Investments comprise strategic investments, including limited partnership investments, deferred compensation investments related to employee and director deferred compensation plans and investment in the Deephaven Funds. Investments consist of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Strategic investments: | ||||||||
Investments accounted for under the equity method | $ | 82,476 | $ | — | ||||
Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost | 41,899 | 48,806 | ||||||
Total Strategic investments | 124,375 | 48,806 | ||||||
Deferred compensation investments | 84 | — | ||||||
Knight preferred shares | — | 199,632 | ||||||
Investment in Deephaven Funds | 1,430 | — | ||||||
Total Investments | $ | 125,889 | $ | 248,438 | ||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||
Summary of Goodwill | ' | |||||||||||||||
The following table summarizes the Company’s Goodwill by segment (in thousands): | ||||||||||||||||
September 30, | 31-Dec-12 | |||||||||||||||
2013 | ||||||||||||||||
Market Making | $ | 15,159 | $ | 4,645 | ||||||||||||
Global Execution Services | 3,239 | — | ||||||||||||||
Total | $ | 18,398 | $ | 4,645 | ||||||||||||
Finite-Lived Intangible Assets, Net of Accumulated Amortization | ' | |||||||||||||||
The following tables summarize the Company’s Intangible assets, net of accumulated amortization by segment and type (in thousands): | ||||||||||||||||
September 30, | 31-Dec-12 | |||||||||||||||
2013 | ||||||||||||||||
Market Making | ||||||||||||||||
Trading rights | $ | 47,065 | $ | 42,635 | ||||||||||||
Technology | 52,791 | 3,488 | ||||||||||||||
Total | 99,856 | 46,123 | ||||||||||||||
Global Execution Services | ||||||||||||||||
Customer relationships | 34,139 | — | ||||||||||||||
Trade names | 3,900 | — | ||||||||||||||
Technology | 39,900 | — | ||||||||||||||
Total | 77,939 | — | ||||||||||||||
Corporate and Other | ||||||||||||||||
Technology | 14,250 | |||||||||||||||
Consolidated Total | $ | 192,045 | $ | 46,123 | ||||||||||||
September 30, | 31-Dec-12 | |||||||||||||||
2013 | ||||||||||||||||
Customer relationships (1) | Gross carrying amount | $ | 35,000 | $ | — | |||||||||||
Accumulated amortization | (861 | ) | — | |||||||||||||
Net carrying amount | 34,139 | — | ||||||||||||||
Trading rights (2) | Gross carrying amount | 59,628 | 51,828 | |||||||||||||
Accumulated amortization | (12,563 | ) | (9,193 | ) | ||||||||||||
Net carrying amount | 47,065 | 42,635 | ||||||||||||||
Trade names (3) | Gross carrying amount | 4,000 | — | |||||||||||||
Accumulated amortization | (100 | ) | — | |||||||||||||
Net carrying amount | 3,900 | — | ||||||||||||||
Technology (4) | Gross carrying amount | 115,580 | 5,580 | |||||||||||||
Accumulated amortization | (8,639 | ) | (2,092 | ) | ||||||||||||
Net carrying amount | 106,941 | 3,488 | ||||||||||||||
Total | Gross carrying amount | 214,208 | 57,408 | |||||||||||||
Accumulated amortization | (22,163 | ) | (11,285 | ) | ||||||||||||
Net carrying amount | $ | 192,045 | $ | 46,123 | ||||||||||||
________________________________________ | ||||||||||||||||
(1) | Customer relationships relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of September 30, 2013. Lives may be reduced depending upon actual retention rates. | |||||||||||||||
(2) | Trading rights provide the Company with the rights to trade on certain exchanges. The weighted average remaining life is approximately 9 and 10 years as of September 30, 2013 and December 31, 2012, respectively. | |||||||||||||||
(3) | Trade names relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of September 30, 2013. | |||||||||||||||
(4) | The weighted average remaining life is approximately five and three years as of September 30, 2013 and December 31, 2012, respectively. | |||||||||||||||
Summary of Amortization Expense Relating to Intangible Assets | ' | |||||||||||||||
The following table summarizes the Company’s amortization expense from continuing operations relating to Intangible assets (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Amortization expense | $ | 8,119 | $ | 1,380 | $ | 10,878 | $ | 4,139 | ||||||||
Summary of Estimated Amortization Expense for Future Years | ' | |||||||||||||||
As of September 30, 2013, the following table summarizes the Company’s estimated amortization expense for future periods (in thousands): | ||||||||||||||||
Amortization | ||||||||||||||||
expense | ||||||||||||||||
For the three months ending December 31, 2013 | $ | 8,119 | ||||||||||||||
For the year ended December 31, 2014 | 32,477 | |||||||||||||||
For the year ended December 31, 2015 | 31,780 | |||||||||||||||
For the year ended December 31, 2016 | 31,082 | |||||||||||||||
For the year ended December 31, 2017 | 31,082 | |||||||||||||||
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||
Summary of Long-Term Debt | ' | |||||||||||||||
The carrying value and fair value of the Company's Long-term debt is as follows (in thousands): | ||||||||||||||||
30-Sep-13 | 31-Dec-12 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Notes | $ | — | $ | — | $ | 15,000 | $ | 15,000 | ||||||||
Senior Secured Notes | 305,000 | 299,663 | — | — | ||||||||||||
Credit Agreement | 535,000 | 535,000 | — | — | ||||||||||||
Convertible Notes | 117,259 | 117,845 | — | — | ||||||||||||
Total | 957,259 | 952,508 | 15,000 | 15,000 | ||||||||||||
Less: Current portion | 235,000 | 235,000 | — | — | ||||||||||||
Total Long-term debt | $ | 722,259 | $ | 717,508 | $ | 15,000 | $ | 15,000 | ||||||||
Recorded Expenses with Respect to Long-Term Debt | ' | |||||||||||||||
The Company recorded expenses with respect to the Long term debt as follows (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest expense | $ | 19,173 | $ | 688 | $ | 21,366 | $ | 1,134 | ||||||||
Amortization of debt issuance cost (1) | 2,007 | 103 | 2,479 | 152 | ||||||||||||
Commitment fee (1) | 267 | 390 | 9,204 | 390 | ||||||||||||
Total | $ | 21,447 | $ | 1,181 | $ | 33,049 | $ | 1,676 | ||||||||
(1) | Included in Other expense. |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Share-based Compensation [Abstract] | ' | ||||||||||||||||
Compensation Expense Relating to Restricted Awards | ' | ||||||||||||||||
The following is a schedule of the changes in the Company’s unvested Class E units (units in thousands): | |||||||||||||||||
Units | Weighted Average Grant Price | ||||||||||||||||
Unvested as of December 31, 2012 | 476 | $ | 36.78 | ||||||||||||||
Issued | — | — | |||||||||||||||
Vested | (442 | ) | 37.24 | ||||||||||||||
Forfeited | (34 | ) | 30.89 | ||||||||||||||
Unvested as of September 30, 2013 | — | $ | — | ||||||||||||||
The following is a schedule of the changes in the Company’s unvested Class B units (units in thousands): | |||||||||||||||||
Units | Weighted Average Grant Price | ||||||||||||||||
Unvested as of December 31, 2012 | 417 | $ | 89.99 | ||||||||||||||
Issued | 58 | 73.54 | |||||||||||||||
Vested | (438 | ) | 87.86 | ||||||||||||||
Forfeited | (37 | ) | 89.28 | ||||||||||||||
Unvested as of September 30, 2013 | — | $ | — | ||||||||||||||
The following is a schedule of the changes in the Company’s unvested Class E units (units in thousands): | |||||||||||||||||
Units | Weighted Average Grant Price | ||||||||||||||||
Unvested as of December 31, 2012 | 476 | $ | 36.78 | ||||||||||||||
Issued | — | — | |||||||||||||||
Vested | (442 | ) | 37.24 | ||||||||||||||
Forfeited | (34 | ) | 30.89 | ||||||||||||||
Unvested as of September 30, 2013 | — | $ | — | ||||||||||||||
The following is a summary of the changes in the incentive units for the nine months ended September 30, 2013 (units in thousands): | |||||||||||||||||
Vested | Unvested | ||||||||||||||||
Incentive units at January 1, 2013 | 24 | 45 | |||||||||||||||
Issued | 1 | 12 | |||||||||||||||
Vested | 53 | (53 | ) | ||||||||||||||
Exercised | (22 | ) | — | ||||||||||||||
Canceled | (1 | ) | (4 | ) | |||||||||||||
Incentive units at September 30, 2013 | 55 | — | |||||||||||||||
Compensation expense from continuing operations relating to restricted awards, primarily recorded in Employee compensation and benefits, and the corresponding income tax benefit, which was recorded in Income tax benefit on the Consolidated Statements of Operations are presented in the following table (in thousands): | |||||||||||||||||
For the three months | |||||||||||||||||
ended September 30, | |||||||||||||||||
2013 | |||||||||||||||||
Stock award compensation expense | $ | 12,234 | |||||||||||||||
Income tax benefit | 4,649 | ||||||||||||||||
Summary of Restricted Awards Activity | ' | ||||||||||||||||
The following table summarizes restricted awards activity, including awards related to employees working in businesses that are included within discontinued operations, for the three months ended September 30, 2013 (awards in thousands): | |||||||||||||||||
Restricted Stock Units | |||||||||||||||||
Number of | Weighted- | ||||||||||||||||
Units | Average | ||||||||||||||||
Grant date | |||||||||||||||||
Fair Value | |||||||||||||||||
1-Jul-13 | — | $ | — | ||||||||||||||
Conversion of outstanding Knight RSUs | 3,251 | 11.22 | |||||||||||||||
Granted | 6,004 | 10.58 | |||||||||||||||
Vested | (45 | ) | 11.07 | ||||||||||||||
Forfeited | (246 | ) | 11.45 | ||||||||||||||
Outstanding at September 30, 2013 | 8,963 | $ | 10.78 | ||||||||||||||
Compensation Expense Relating to Stock Options | ' | ||||||||||||||||
Compensation expense from continuing operations relating to stock options and SARs, all of which was recorded in Employee compensation and benefits, as well as the corresponding income tax benefit, which is recorded in Income tax benefit on the Consolidated Statements of Operations are as follows (in thousands): | |||||||||||||||||
For the three months | |||||||||||||||||
ended September 30, | |||||||||||||||||
2013 | |||||||||||||||||
Stock option and SAR compensation expense | $ | 915 | |||||||||||||||
Income tax benefit | 348 | ||||||||||||||||
Summary of Stock Option Activity | ' | ||||||||||||||||
The following table summarizes stock option and SAR activity and stock options exercisable for the three months ended September 30, 2013 (awards in thousands): | |||||||||||||||||
Number of Stock Awards | Weighted- | Aggregate | Weighted- | ||||||||||||||
Average | Intrinsic | Average | |||||||||||||||
Exercise | Value | Remaining | |||||||||||||||
Price | Life (years) | ||||||||||||||||
1-Jul-13 | — | $ | — | ||||||||||||||
Conversion of outstanding Knight options | 782 | 41.25 | |||||||||||||||
Granted at market value (1) | 4,324 | 15.19 | |||||||||||||||
Exercised | — | — | |||||||||||||||
Forfeited or expired | (79 | ) | 45.81 | ||||||||||||||
Outstanding at September 30, 2013 (1) | 5,027 | $ | 18.76 | $ | 387 | 4.49 | |||||||||||
Exercisable at September 30, 2013 | 703 | $ | 40.74 | $ | 381 | 2.61 | |||||||||||
Available for future grants at September 30, 2013 * | 6,327 | ||||||||||||||||
* Represents both options and awards available for grant. | |||||||||||||||||
(1) Includes 1.7 million of SARs. | |||||||||||||||||
Schedule of compensation costs | ' | ||||||||||||||||
Compensation expense (benefit) related to the Class B, Class E and Incentive units, all of which are recorded within Employee compensation and benefits on the Consolidated Statements of Operations are as follows (in thousands): | |||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Class B and E units | $ | — | $ | 5,429 | $ | 19,860 | $ | 9,124 | |||||||||
Incentive units | (875 | ) | 368 | 1,428 | 788 | ||||||||||||
Total | $ | (875 | ) | $ | 5,797 | $ | 21,288 | $ | 9,912 | ||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ' | |||||||||||||||
Income tax rate reconciliation | ' | |||||||||||||||
The following table reconciles the U.S. federal statutory income tax to the Company's actual income tax from continuing operations (in thousands): | ||||||||||||||||
For the three months | For the nine months | |||||||||||||||
ended September 30, | ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
U.S. federal statutory income tax (benefit) expense | $ | 41,949 | $ | 5,114 | $ | 12,543 | $ | 12,224 | ||||||||
Income not subject to U.S. corporate income tax | (44,790 | ) | (3,515 | ) | (14,071 | ) | (9,801 | ) | ||||||||
U.S. state and local income taxes, net of U.S. federal income tax effect | (391 | ) | 533 | 82 | 825 | |||||||||||
Deferred tax benefit resulting from the Company becoming subject to U.S. corporate income taxes | (103,499 | ) | — | (103,499 | ) | — | ||||||||||
Nondeductible charges (1) | (1,114 | ) | 74 | (944 | ) | 166 | ||||||||||
Foreign taxes | — | 2,581 | 3,559 | 6,958 | ||||||||||||
Other, net | 78 | 18 | (148 | ) | (4 | ) | ||||||||||
Income tax (benefit) expense | $ | (107,767 | ) | $ | 4,805 | $ | (102,478 | ) | $ | 10,368 | ||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Equity [Abstract] | ' | ||||||||||||
Accumulated Other Comprehensive Income (Loss) | ' | ||||||||||||
The following table presents changes in Accumulated other comprehensive loss, net of tax by component for the nine months ended September 30, 2013 (in thousands): | |||||||||||||
Unrealized Gains (Losses) on Available-for-Sale Securities | Foreign Currency Translation Adjustments | Total | |||||||||||
Balance January 1, 2013 | $ | 114,319 | $ | — | $ | 114,319 | |||||||
Other comprehensive income | 13,604 | (5,098 | ) | 8,506 | |||||||||
Reclassification of gain on investment in Knight Common Stock | (127,972 | ) | — | (127,972 | ) | ||||||||
Net current-period other comprehensive loss | (114,368 | ) | (5,098 | ) | (119,466 | ) | |||||||
Balance September 30, 2013 | $ | (49 | ) | $ | (5,098 | ) | $ | (5,147 | ) |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Schedule of Reconcililation of Earnings Per Share | ' | |||||||||||||||
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations from continuing operations for the three and nine months ended September 30, 2013 and 2012 (in thousands): | ||||||||||||||||
For the three months ended September 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Numerator / | Denominator / | Numerator / | Denominator / | |||||||||||||
net | ||||||||||||||||
net income | shares | income | shares | |||||||||||||
Income from continuing operations and shares used in basic calculations | $ | 227,621 | 114,113 | $ | 9,807 | 46,411 | ||||||||||
Effect of dilutive stock based awards | 660 | — | ||||||||||||||
Income from continuing operations and shares used in diluted calculations | $ | 227,621 | 114,773 | $ | 9,807 | 46,411 | ||||||||||
Basic earnings per share from continuing operations | $ | 1.99 | $ | 0.21 | ||||||||||||
Diluted earnings per share from continuing operations | $ | 1.98 | $ | 0.21 | ||||||||||||
For the nine months ended September 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Numerator / | Denominator / | Numerator / | Denominator / | |||||||||||||
net | ||||||||||||||||
net income | shares | income | shares | |||||||||||||
Income from continuing operations and shares used in basic calculations | $ | 138,316 | 68,632 | $ | 24,556 | 49,619 | ||||||||||
Effect of dilutive stock based awards | 223 | — | ||||||||||||||
Income from continuing operations and shares used in diluted calculations | $ | 138,316 | 68,855 | $ | 24,556 | 49,619 | ||||||||||
Basic earnings per share from continuing operations | $ | 2.02 | $ | 0.49 | ||||||||||||
Diluted earnings per share from continuing operations | $ | 2.01 | $ | 0.49 | ||||||||||||
Commitments_and_Contingent_Lia1
Commitments and Contingent Liabilities (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||||||||||||
Schedule of Lease and Contract Obligations | ' | |||||||||||||||
The future minimum payments including interest under the capitalized leases at September 30, 2013 consist of (in thousands): | ||||||||||||||||
Minimum Payments | ||||||||||||||||
Through December 31, 2013 | $ | 2,885 | ||||||||||||||
2014 | 8,222 | |||||||||||||||
2015 | 2,072 | |||||||||||||||
Total | $ | 13,179 | ||||||||||||||
Schedule of Interest Expense, Capital Lease | ' | |||||||||||||||
The total interest expense related to capital leases for the three and nine months ended September 30, 2013 and 2012 included in the Consolidated Statements Operations is as follows (in thousands): | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest expense - Capital leases | $ | 151 | $ | 285 | $ | 602 | $ | 1,135 | ||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | ' | |||||||||||||||
The Company leases certain computer and other equipment under noncancelable operating leases. As of September 30, 2013, future minimum rental commitments under all noncancelable office, computer and equipment leases (“Gross Lease Obligations”), and Sublease Income were as follows (in thousands): | ||||||||||||||||
Gross Lease | Sublease | Net Lease | ||||||||||||||
Obligations | Income | Obligations | ||||||||||||||
Three months ending December 31, 2013 | $ | 8,014 | $ | 525 | $ | 7,489 | ||||||||||
Year ending December 31, 2014 | 30,170 | 1,868 | 28,302 | |||||||||||||
Year ending December 31, 2015 | 28,346 | 1,494 | 26,852 | |||||||||||||
Year ending December 31, 2016 | 27,877 | 1,464 | 26,413 | |||||||||||||
Year ending December 31, 2017 | 27,262 | 1,541 | 25,721 | |||||||||||||
Thereafter through December 31, 2027 | 108,318 | 358 | 107,960 | |||||||||||||
Total | $ | 229,987 | $ | 7,250 | $ | 222,737 | ||||||||||
Business_Segments_Tables
Business Segments (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Income (Loss) from Continuing Operations Before Income Taxes and Total Assets by Segment | ' | |||||||||||||||
The Company’s revenues, income (loss) from continuing operations before income taxes (“Pre-tax earnings”) and total assets by segment are summarized in the following table (in thousands): | ||||||||||||||||
Market | Global Execution Services | Corporate | Consolidated | |||||||||||||
Making | and Other | Total | ||||||||||||||
For the three months ended September 30, 2013: | ||||||||||||||||
Revenues | $ | 240,110 | $ | 91,366 | $ | 136,343 | $ | 467,819 | ||||||||
Pre-tax earnings | 47,853 | (16,354 | ) | 88,355 | 119,854 | |||||||||||
Total assets | 3,882,763 | 1,426,824 | 1,885,408 | 7,194,995 | ||||||||||||
For the three months ended September 30, 2012: | ||||||||||||||||
Revenues | $ | 107,672 | $ | 9,258 | $ | 13,672 | $ | 130,602 | ||||||||
Pre-tax earnings | 8,214 | (1,120 | ) | 7,518 | 14,612 | |||||||||||
Total assets | 1,507,881 | 25,934 | 239,490 | 1,773,305 | ||||||||||||
For the nine months ended September 30, 2013: | ||||||||||||||||
Revenues | $ | 455,678 | $ | 113,701 | $ | 128,744 | $ | 698,123 | ||||||||
Pre-tax earnings | 55,608 | (21,248 | ) | 1,478 | 35,838 | |||||||||||
Total assets | 3,882,763 | 1,426,824 | 1,885,408 | 7,194,995 | ||||||||||||
For the nine months ended September 30, 2012: | ||||||||||||||||
Revenues | $ | 383,203 | $ | 27,248 | $ | 14,790 | $ | 425,241 | ||||||||
Pre-tax earnings | 37,976 | (3,839 | ) | 787 | 34,924 | |||||||||||
Total assets | 1,507,881 | 25,934 | 239,490 | 1,773,305 | ||||||||||||
Merger_of_GETCO_and_Knight_Det
Merger of GETCO and Knight (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Jul. 02, 2013 |
Merger Transaction [Line Items] | ' | ' | ' |
Right of Knight shareholders to elect to receive per share value in cash under the agreement (in dollars per share) | ' | $3.75 | ' |
Cash paid for acquisition | ' | ' | $720 |
Shares granted to former shareholders (in shares) | ' | 41,900,000 | ' |
Jefferies [Member] | ' | ' | ' |
Merger Transaction [Line Items] | ' | ' | ' |
Maximum cash entitled by shareholders to receive under the agreement | ' | 720 | ' |
GETCO [Member] | ' | ' | ' |
Merger Transaction [Line Items] | ' | ' | ' |
Number of shares to be received by GETCO members | ' | 75,900,000 | ' |
Number of warrants to acquire shares of common stock | 24,300,000 | 24,300,000 | ' |
Shares outstanding (in shares) | ' | ' | 116,800,000 |
Warrants one [Member] | ' | ' | ' |
Merger Transaction [Line Items] | ' | ' | ' |
Warrants receivable from holding company | ' | 8,100,000 | ' |
Exercise price of warrant (in dollars per share) | $12 | $12 | ' |
Term of warrant | ' | '4 years | ' |
Warrants two [Member] | ' | ' | ' |
Merger Transaction [Line Items] | ' | ' | ' |
Warrants receivable from holding company | ' | 8,100,000 | ' |
Exercise price of warrant (in dollars per share) | $13.50 | $13.50 | ' |
Term of warrant | ' | '5 years | ' |
Warrants three [Member] | ' | ' | ' |
Merger Transaction [Line Items] | ' | ' | ' |
Warrants receivable from holding company | ' | 8,100,000 | ' |
Exercise price of warrant (in dollars per share) | $15 | $15 | ' |
Term of warrant | ' | '6 years | ' |
Knight Class A Common Stock [Member] | ' | ' | ' |
Merger Transaction [Line Items] | ' | ' | ' |
Par Value (in dollars per share) | $0.01 | $0.01 | ' |
KCG Class A Common Stock [Member] | ' | ' | ' |
Merger Transaction [Line Items] | ' | ' | ' |
Par Value (in dollars per share) | $0.01 | $0.01 | ' |
Knight [Member] | ' | ' | ' |
Merger Transaction [Line Items] | ' | ' | ' |
Deferred tax asset | ' | ' | 65.9 |
Merger costs | 1.2 | 27.6 | ' |
Gain recognized | $128 | $128 | ' |
Merger_of_GETCO_and_Knight_Ass
Merger of GETCO and Knight - Assets Acquired and Liabilties Assumed (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Jul. 02, 2013 |
In Thousands, unless otherwise specified | Knight [Member] | ||
Identifiable Net Assets | ' | ' | ' |
Cash and cash equivalents | ' | ' | $509,133 |
Cash and securities segregated under federal and other regulations | ' | ' | 203,045 |
Financial instruments owned | ' | ' | 1,937,929 |
Securities borrowed | ' | ' | 1,158,981 |
Receivable from brokers, dealers and clearing organizations | ' | ' | 1,366,974 |
Fixed assets and leasehold improvements, net | ' | ' | 84,596 |
Investments | ' | ' | 106,353 |
Intangible assets | ' | ' | 156,800 |
Assets within discontinued operations | ' | ' | 5,607,063 |
Other assets | ' | ' | 211,735 |
Total Assets | ' | ' | 11,342,609 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ' | ' | ' |
Financial instruments sold, not yet purchased | ' | ' | 1,512,983 |
Collateralized financings | ' | ' | 1,166,211 |
Payable to brokers, dealers and clearing organizations | ' | ' | 635,914 |
Payable to customers | ' | ' | 527,918 |
Accrued compensation expense | ' | ' | 107,409 |
Accrued expenses and other liabilities | ' | ' | 139,624 |
Liabilities within discontinued operations | ' | ' | 5,518,168 |
Long-term debt | ' | ' | 375,000 |
Total Liabilities | ' | ' | 9,983,227 |
Total identified assets acquired, net of assumed liabilities | ' | ' | 1,359,382 |
Goodwill | 18,398 | 4,645 | 13,753 |
Total Purchase Price | ' | ' | $1,373,135 |
Merger_of_GETCO_and_Knight_Int
Merger of GETCO and Knight - Intangible Assets Acquired (Details) (USD $) | 9 Months Ended | 12 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 | Jul. 02, 2013 | Jul. 31, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 31, 2013 | Jul. 02, 2013 | Jul. 31, 2013 | Jul. 02, 2013 | Jul. 31, 2013 | Jul. 31, 2013 |
Knight [Member] | Technology [Member] | Technology [Member] | Customer relationships [Member] | Trade names [Member] | Trade names [Member] | Trading rights [Member] | Trading rights [Member] | Minimum [Member] | Maximum [Member] | |||
Knight [Member] | Knight [Member] | Knight [Member] | Knight [Member] | Knight [Member] | Knight [Member] | Knight [Member] | Customer relationships [Member] | Customer relationships [Member] | ||||
Knight [Member] | Knight [Member] | |||||||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount | ' | ' | $156,800 | ' | $110,000 | $35,000 | ' | $4,000 | ' | $7,800 | ' | ' |
Goodwill | 18,398 | 4,645 | 13,753 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | ' | ' | $170,553 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average useful life | '7 years | '10 years | ' | '5 years | ' | ' | '10 years | ' | '7 years | ' | '9 years | '11 years |
Merger_of_GETCO_and_Knight_Pro
Merger of GETCO and Knight - Proforma Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Revenues - Reported | $467,819 | $130,602 | $698,123 | $425,241 |
Net income from continuing operations- Reported | 119,854 | 14,612 | 35,838 | 34,924 |
Net income | 226,837 | 9,807 | 137,532 | 24,556 |
Diluted earnings per share from continuing operations (in dollars per share) | $1.98 | $0.21 | $2.01 | $0.49 |
Diluted earnings per share (in dollars per share) | $1.98 | $0.21 | $2 | $0.49 |
Knight [Member] | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Revenues | 240,805 | ' | ' | ' |
Income from continuing operations, before income taxes | 21,164 | ' | ' | ' |
Revenues - Reported | 130,602 | ' | 698,123 | 425,241 |
Revenues - Pro Forma | -120,210 | ' | 1,099,518 | 677,955 |
Net income from continuing operations- Reported | 9,807 | ' | 138,316 | 24,556 |
Net income from continuing operations - Pro Forma | -303,413 | ' | -10,494 | -274,981 |
Net income | 9,807 | ' | 137,532 | 24,556 |
Net income - Pro Forma | ($387,350) | ' | ($39,554) | ($350,831) |
Diluted earnings per share from continuing operations (in dollars per share) | $0.21 | ' | $2.01 | $0.49 |
Diluted earnings per share from continuing operations - Pro Forma | ($6.54) | ' | ($0.15) | ($5.54) |
Diluted earnings per share (in dollars per share) | $0.21 | ' | $2 | $0.49 |
Diluted earnings per share - Pro Forma | ($8.35) | ' | ($0.57) | ($7.07) |
Significant_Accounting_Policie3
Significant Accounting Policies - Additional Information (Detail) (USD $) | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Foreign currency transactions [Member] | Foreign currency transactions [Member] | Foreign currency transactions [Member] | Foreign currency transactions [Member] | Software [Member] | Minimum [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum maturity of short-term investments | '90 days | ' | ' | ' | ' | ' | ' | ' | ' |
Equity ownership | 20.00% | 20.00% | ' | ' | ' | ' | ' | 20.00% | 50.00% |
Partnership interest | ' | ' | ' | ' | ' | ' | ' | 3.00% | 5.00% |
Investment gain (loss) and other, net | ' | ' | ($0.10) | $0.20 | ($1.30) | $0.30 | ' | ' | ' |
Fixed assets, useful life | ' | ' | ' | ' | ' | ' | ' | '3 years | '7 years |
Amortization period, in years | ' | ' | ' | ' | ' | ' | '3 years | '4 years | '12 years |
Significant_Accounting_Policie4
Significant Accounting Policies - Schedule of Interest Income and Interest Expense (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Interest Income | $3,992 | $1,170 | $6,022 | $1,847 |
Interest Expense | -4,169 | -1,951 | -6,992 | -3,845 |
Interest, net | ($177) | ($781) | ($970) | ($1,998) |
Significant_Accounting_Policie5
Significant Accounting Policies - Net Trading Revenue Including Dividend Income and Expense (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Dividend Income | $9,009 | $288 | $11,484 | $1,049 |
Dividend Expense | ($6,899) | ($809) | ($8,035) | ($1,321) |
Significant_Accounting_Policie6
Significant Accounting Policies - Company's Nonconsolidated VIEs (Detail) (Securitized HECM loan inventory [Member], USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Securitized HECM loan inventory [Member] | ' |
Carrying value of the variable interests | ' |
Assets | $0 |
Liabilities | 1,326 |
Maximum exposure to loss in nonconsolidated VIEs | ' |
Commitments | 43,932 |
Purchased interests | $0 |
Discontinued_Operations_Income
Discontinued Operations - Income Disclosures (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Expenses: | ' | ' | ' | ' |
Compensation | $129,631 | $31,875 | $236,983 | $111,395 |
Payments for order flow | 16,431 | 717 | 17,468 | 2,128 |
Other | 11,318 | 5,349 | 30,028 | 19,002 |
Total expenses | 347,965 | 115,990 | 662,285 | 390,317 |
Loss from discontinued operations, net of tax | -784 | 0 | -784 | 0 |
Segment, Discontinued Operations [Member] | ' | ' | ' | ' |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | ' | ' | ' |
Revenues | 22,114 | ' | 22,114 | ' |
Expenses: | ' | ' | ' | ' |
Compensation | 8,379 | ' | 8,379 | ' |
Execution and clearance fees | 2,840 | ' | 2,840 | ' |
Payments for order flow | 5,286 | ' | 5,286 | ' |
Other | 6,873 | ' | 6,873 | ' |
Total expenses | 23,378 | ' | 23,378 | ' |
Pre-tax loss from discontinued operations | -1,264 | ' | -1,264 | ' |
Income tax benefit | 480 | ' | 480 | ' |
Loss from discontinued operations, net of tax | ($784) | ' | ($784) | ' |
Discontinued_Operations_Balanc
Discontinued Operations - Balance Sheet Disclosures (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Assets | ' | ' | ' | ' |
Cash and cash equivalents | $798,712 | $427,631 | $423,508 | $607,689 |
Other assets | 287,015 | 23,073 | ' | ' |
Total assets | 13,293,295 | 1,687,536 | ' | ' |
Liabilities within discontinued operations: | ' | ' | ' | ' |
Payable to brokers, dealers and clearing organizations | 666,178 | 24,185 | ' | ' |
Accrued expenses and other liabilities | 220,648 | 118,068 | ' | ' |
Total liabilities | 11,780,274 | 721,725 | ' | ' |
Segment, Discontinued Operations [Member] | ' | ' | ' | ' |
Assets | ' | ' | ' | ' |
Cash and cash equivalents | 15,702 | ' | ' | ' |
Securitized HECM loan inventory | 5,841,664 | ' | ' | ' |
Loan inventory | 177,674 | ' | ' | ' |
Receivable from brokers, dealers and clearing organizations | 37,411 | ' | ' | ' |
Other assets | 25,848 | ' | ' | ' |
Total assets | 6,098,299 | ' | ' | ' |
Liabilities within discontinued operations: | ' | ' | ' | ' |
Liability to GNMA trusts | 5,803,859 | ' | ' | ' |
Other secured financings | 129,552 | ' | ' | ' |
Payable to brokers, dealers and clearing organizations | 8,538 | ' | ' | ' |
Accrued compensation expense | 4,717 | ' | ' | ' |
Accrued expenses and other liabilities | 59,358 | ' | ' | ' |
Total liabilities | $6,006,024 | ' | ' | ' |
Assets_Segregated_or_Held_in_S2
Assets Segregated or Held in Separate Accounts Under Federal or Other Regulations - (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Cash and Cash Equivalents [Abstract] | ' |
Cash and cash equivalents segregated under federal or other regulations | $216,442 |
Receivables from brokers, dealers and clearing organizations | 282,650 |
Total assets segregated or held in separate accounts under federal or other regulations | $499,092 |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | ||
In Thousands, unless otherwise specified | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | $2,523,977 | $654,875 | ||
Total fair value of financial instrument assets | 8,705,198 | 861,654 | ||
Financial instruments sold, not yet purchased, at fair value | 2,162,938 | 512,553 | ||
Total fair value of financial instrument liabilities | 7,966,797 | 512,553 | ||
Equities [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 2,156,466 | [1] | 378,933 | [2] |
Financial instruments sold, not yet purchased, at fair value | 1,848,729 | 423,740 | [2] | |
Listed equity options [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 288,227 | 92,305 | ||
Financial instruments sold, not yet purchased, at fair value | 229,721 | 69,757 | ||
Corporate debt [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 46,606 | 68,765 | ||
Financial instruments sold, not yet purchased, at fair value | 49,616 | 19,056 | ||
Securities on deposit with clearing organizations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Securities on deposit with clearing organizations | 160,369 | [3] | 7,147 | |
Deferred compensation investments [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Deferred compensation investments | 84 | [4] | ' | |
Investment in Deephaven Funds [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 1,430 | [4] | 199,632 | [5] |
Securitized HECM loan inventory [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 5,841,664 | [6] | ' | |
Loan inventory [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 177,674 | 114,872 | ||
U.S. government obligations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 32,678 | ' | ||
Financial instruments sold, not yet purchased, at fair value | 29,441 | ' | ||
Foreign currency forward contracts [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments sold, not yet purchased, at fair value | 5,431 | ' | ||
Liability to GNMA trusts, at fair value [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument liabilities | 5,803,859 | [6] | ' | |
Level 1 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 2,523,977 | 654,875 | ||
Total fair value of financial instrument assets | 2,684,346 | 861,654 | ||
Financial instruments sold, not yet purchased, at fair value | 2,157,507 | 512,553 | ||
Total fair value of financial instrument liabilities | 2,157,507 | 512,553 | ||
Level 1 [Member] | Equities [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 2,156,466 | [1] | 378,933 | [2] |
Financial instruments sold, not yet purchased, at fair value | 1,848,729 | [1] | 423,740 | [2] |
Level 1 [Member] | Listed equity options [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 288,227 | 92,305 | ||
Financial instruments sold, not yet purchased, at fair value | 229,721 | 69,757 | ||
Level 1 [Member] | Corporate debt [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 46,606 | 68,765 | ||
Financial instruments sold, not yet purchased, at fair value | 49,616 | 19,056 | ||
Level 1 [Member] | Securities on deposit with clearing organizations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Securities on deposit with clearing organizations | 160,369 | [3] | 7,147 | |
Level 1 [Member] | Deferred compensation investments [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Deferred compensation investments | 0 | [4] | ' | |
Level 1 [Member] | Investment in Deephaven Funds [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 0 | [4] | 199,632 | [5] |
Level 1 [Member] | Securitized HECM loan inventory [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | [6] | ' | |
Level 1 [Member] | Loan inventory [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | 114,872 | ||
Level 1 [Member] | U.S. government obligations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 32,678 | ' | ||
Financial instruments sold, not yet purchased, at fair value | 29,441 | ' | ||
Level 1 [Member] | Foreign currency forward contracts [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments sold, not yet purchased, at fair value | 0 | ' | ||
Level 1 [Member] | Liability to GNMA trusts, at fair value [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument liabilities | 0 | [6] | ' | |
Level 2 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | 0 | ||
Total fair value of financial instrument assets | 6,020,852 | 0 | ||
Financial instruments sold, not yet purchased, at fair value | 5,431 | 0 | ||
Total fair value of financial instrument liabilities | 5,809,290 | 0 | ||
Level 2 [Member] | Equities [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | [1] | 0 | [2] |
Financial instruments sold, not yet purchased, at fair value | 0 | [1] | 0 | [2] |
Level 2 [Member] | Listed equity options [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | 0 | ||
Financial instruments sold, not yet purchased, at fair value | 0 | 0 | ||
Level 2 [Member] | Corporate debt [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | 0 | ||
Financial instruments sold, not yet purchased, at fair value | 0 | 0 | ||
Level 2 [Member] | Securities on deposit with clearing organizations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Securities on deposit with clearing organizations | 0 | [3] | ' | |
Level 2 [Member] | Deferred compensation investments [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Deferred compensation investments | 84 | [4] | ' | |
Level 2 [Member] | Investment in Deephaven Funds [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 1,430 | [4] | ' | [5] |
Level 2 [Member] | Securitized HECM loan inventory [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 5,841,664 | [6] | ' | |
Level 2 [Member] | Loan inventory [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 177,674 | ' | ||
Level 2 [Member] | U.S. government obligations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | ' | ||
Financial instruments sold, not yet purchased, at fair value | 0 | ' | ||
Level 2 [Member] | Foreign currency forward contracts [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments sold, not yet purchased, at fair value | 5,431 | ' | ||
Level 2 [Member] | Liability to GNMA trusts, at fair value [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument liabilities | 5,803,859 | [6] | ' | |
Level 3 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | 0 | ||
Total fair value of financial instrument assets | 0 | 0 | ||
Financial instruments sold, not yet purchased, at fair value | 0 | 0 | ||
Total fair value of financial instrument liabilities | 0 | 0 | ||
Level 3 [Member] | Equities [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | [1] | 0 | [2] |
Financial instruments sold, not yet purchased, at fair value | 0 | [1] | 0 | [2] |
Level 3 [Member] | Listed equity options [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | 0 | ||
Financial instruments sold, not yet purchased, at fair value | 0 | 0 | ||
Level 3 [Member] | Corporate debt [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | 0 | ||
Financial instruments sold, not yet purchased, at fair value | 0 | 0 | ||
Level 3 [Member] | Securities on deposit with clearing organizations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Securities on deposit with clearing organizations | 0 | [3] | ' | |
Level 3 [Member] | Deferred compensation investments [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Deferred compensation investments | 0 | [4] | ' | |
Level 3 [Member] | Investment in Deephaven Funds [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 0 | [4] | 0 | [5] |
Level 3 [Member] | Securitized HECM loan inventory [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | [6] | ' | |
Level 3 [Member] | Loan inventory [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | 0 | ||
Level 3 [Member] | U.S. government obligations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 0 | ' | ||
Financial instruments sold, not yet purchased, at fair value | 0 | ' | ||
Level 3 [Member] | Foreign currency forward contracts [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments sold, not yet purchased, at fair value | 0 | ' | ||
Level 3 [Member] | Liability to GNMA trusts, at fair value [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument liabilities | $0 | [6] | ' | |
[1] | Equities of $1.22 billion have been netted by their respective CUSIP number and their long and short positions. | |||
[2] | Equities of $5.9 million have been netted by their respective CUSIP number and their long and short positions. | |||
[3] | Securities on deposit with clearing organizations consist of U.S. government obligations and are recorded within Receivable from brokers, dealers and clearing organizations on the Consolidated Statements of Financial Condition. | |||
[4] | Deferred compensation investments and Investment in Deephaven Funds are included within Investments on the Consolidated Statements of Financial Condition | |||
[5] | ||||
[6] | Represents HECMs that have been securitized into HECM Mortgage Backed Securities (bHMBSb) where the securitization is not accounted for as a sale of the underlying HECMs. See Securitized HECM loan inventory below for full description. |
Fair_Value_of_Financial_Instru3
Fair Value of Financial Instruments - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Parenthetical) (Detail) (Level 1 [Member], USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Level 1 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Equities | $1,220 | $5.90 |
Fair_Value_of_Financial_Instru4
Fair Value of Financial Instruments - Additional Information (Detail) | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
USD ($) | GBP (£) | USD ($) | |
Fair Value Disclosures [Abstract] | ' | ' | ' |
Transfers of financial instruments between levels | $0 | ' | $0 |
Transfers of financial insturments between level 2 to level 1 | 0 | ' | 0 |
Transfers of financial insturments out of level 3 | 0 | ' | 0 |
Notional value of foreign currency forward | ' | £ 80,000,000 | ' |
Fair_Value_of_Financial_Instru5
Fair Value of Financial Instruments - Fair Value of Derivative Instruments in Consolidated Statements of Financial Condition and Effect of Changes in Fair Value on Consolidated Statements of Operations (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | |
In Thousands, unless otherwise specified | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | $295,166 | $97,283 | |
Asset Contract | 803,158 | 244,380 | |
Liabilities Fair Value | 239,011 | 75,390 | |
Liabilities Contract | 765,437 | 260,356 | |
Receivables From/Payables to Brokers, Dealers and Clearing Organizations [Member] | Derivative instruments not designated as hedging instruments [Member] | Foreign Exchange Future [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 21 | 8 | |
Asset Contract | 651 | 500 | |
Liabilities Fair Value | 62 | 0 | |
Liabilities Contract | 244 | 95 | |
Receivables From/Payables to Brokers, Dealers and Clearing Organizations [Member] | Derivative instruments not designated as hedging instruments [Member] | Equity Future Contracts [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 1,442 | 498 | |
Asset Contract | 3,059 | 1,027 | |
Liabilities Fair Value | 595 | 70 | |
Liabilities Contract | 1,046 | 234 | |
Receivables From/Payables to Brokers, Dealers and Clearing Organizations [Member] | Derivative instruments not designated as hedging instruments [Member] | Equity Swap [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 230 | 570 | |
Asset Contract | 1 | 1 | |
Liabilities Fair Value | 0 | 0 | |
Liabilities Contract | 0 | 0 | |
Receivables From/Payables to Brokers, Dealers and Clearing Organizations [Member] | Derivative instruments not designated as hedging instruments [Member] | Fixed Income Futures Contracts [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 4,183 | 3,474 | |
Asset Contract | 24,400 | 42,143 | |
Liabilities Fair Value | 1,724 | 5,043 | |
Liabilities Contract | 6,601 | 61,398 | |
Receivables From/Payables to Brokers, Dealers and Clearing Organizations [Member] | Derivative instruments not designated as hedging instruments [Member] | Commodity Contract [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 732 | 428 | |
Asset Contract | 2,278 | 1,385 | |
Liabilities Fair Value | 1,478 | 410 | |
Liabilities Contract | 3,565 | 1,824 | |
Receivables From/Payables to Brokers, Dealers and Clearing Organizations [Member] | Derivative instruments designated as hedging instruments [Member] | Foreign currency forward contracts [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 331 | [1] | ' |
Asset Contract | 1 | [1] | ' |
Liabilities Fair Value | 0 | [1] | ' |
Liabilities Contract | 0 | [1] | ' |
Financial Instruments Owned, at Fair Value [Member] | Derivative instruments not designated as hedging instruments [Member] | Listed equity options [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 288,227 | 92,305 | |
Asset Contract | 772,768 | 199,324 | |
Liabilities Fair Value | 229,721 | 69,757 | |
Liabilities Contract | 753,979 | 196,804 | |
Financial Instruments Owned, at Fair Value [Member] | Derivative instruments designated as hedging instruments [Member] | Foreign currency forward contracts [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 0 | [1] | ' |
Asset Contract | 0 | [1] | ' |
Liabilities Fair Value | 5,431 | [1] | ' |
Liabilities Contract | 2 | [1] | ' |
Accrued Expenses and Other Liabilties [Member] | Derivative instruments not designated as hedging instruments [Member] | Foreign currency forward contracts [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | ' | 0 | |
Asset Contract | ' | 0 | |
Liabilities Fair Value | ' | 110 | |
Liabilities Contract | ' | $1 | |
[1] | Designated as hedging instrument |
Fair_Value_of_Financial_Instru6
Fair Value of Financial Instruments - Fair Value of Derivative Instruments Gain Loss Recognized (Detail) (Trading Revenues, Net [Member], USD $) | 3 Months Ended | 9 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||
Derivative instruments not designated as hedging instruments [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Derivative instruments not designated as hedging instruments, Gain (Loss) | $80,996 | $66,133 | $235,709 | $217,787 | ||
Derivative instruments not designated as hedging instruments [Member] | Foreign currency forward contracts [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 3,825 | 4,493 | 9,243 | 16,446 | ||
Derivative instruments not designated as hedging instruments [Member] | Equity Future Contracts [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 17,461 | 10,724 | 44,125 | 62,241 | ||
Derivative instruments not designated as hedging instruments [Member] | Equity Swap [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 1,884 | 1,985 | 10,755 | 5,007 | ||
Derivative instruments not designated as hedging instruments [Member] | Stock Option [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 17,044 | 24,582 | 63,322 | [1] | 41,455 | [1] |
Derivative instruments not designated as hedging instruments [Member] | Fixed Income Futures Contracts [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 22,008 | 15,557 | 64,211 | 66,573 | ||
Derivative instruments not designated as hedging instruments [Member] | Commodity Contract [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 18,774 | 8,792 | 44,053 | 26,065 | ||
Derivative instruments designated as hedging instruments [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Accumulated other comprehensive income (loss) | ' | ' | -4,948 | 0 | ||
Derivative instruments designated as hedging instruments [Member] | Foreign currency forward contracts [Member] | ' | ' | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' | ' | ||
Accumulated other comprehensive income (loss) | ($4,948) | $0 | ' | ' | ||
[1] | Realized gains and losses on listed options relate to the Companybs market making activities in such options. Such market making activities also comprise trading in the underlying equity securities with gains and losses on such securities generally offsetting the gains and losses reported in this table. Gains and losses on such equity securities are also included in Trading revenue, net on the Companybs Consolidated Statements of Operations |
Fair_Value_of_Financial_Instru7
Fair Value of Financial Instruments - Fair Value of Gross amounts offset (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Offsetting Liabilities [Line Items] | ' | ' |
Gross Amounts of Recognized, Asset | $1,659,148 | $144,566 |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | 0 |
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 1,659,148 | 144,566 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, Assets | 1,329,508 | 50,717 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Assets | 0 | 0 |
Net Amount, Assets | 329,640 | 93,849 |
Gross Amounts of Recognized Derivatives, Liability | 1,373,633 | 69,757 |
Gross Amounts of Recognized Derivatives, Liability | 0 | 0 |
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 1,373,633 | 69,757 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments, Liability | 1,128,288 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Liability | 5,064 | 1,393 |
Net Amount, Liability | 240,281 | 68,364 |
Financial instruments sold under agreements to repurchase | 595,029 | 0 |
Listed equity options [Member] | ' | ' |
Offsetting Liabilities [Line Items] | ' | ' |
Gross Amounts of Recognized, Asset | 288,227 | 92,305 |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | 0 |
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 288,227 | 92,305 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, Assets | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Assets | 0 | 0 |
Net Amount, Assets | 288,227 | 92,305 |
Gross Amounts of Recognized Derivatives, Liability | 229,722 | 69,757 |
Gross Amounts of Recognized Derivatives, Liability | 0 | 0 |
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 229,722 | 69,757 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments, Liability | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Liability | 5,064 | 1,393 |
Net Amount, Liability | 224,658 | 68,364 |
Securities borrowed [Member] | ' | ' |
Offsetting Liabilities [Line Items] | ' | ' |
Gross Amounts of Recognized, Asset | 1,370,921 | 52,261 |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | 0 |
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 1,370,921 | 52,261 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, Assets | 1,329,508 | 50,717 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Assets | 0 | ' |
Net Amount, Assets | 41,413 | 1,544 |
Securities loaned [Member] | ' | ' |
Offsetting Liabilities [Line Items] | ' | ' |
Gross Amounts of Recognized Derivatives, Liability | 543,451 | ' |
Gross Amounts of Recognized Derivatives, Liability | 0 | ' |
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 543,451 | ' |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments, Liability | 533,266 | ' |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Liability | 0 | ' |
Net Amount, Liability | 10,185 | ' |
Repurchase Agreements [Member] | ' | ' |
Offsetting Liabilities [Line Items] | ' | ' |
Gross Amounts of Recognized Derivatives, Liability | 595,029 | ' |
Gross Amounts of Recognized Derivatives, Liability | 0 | ' |
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 595,029 | ' |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments, Liability | 595,022 | ' |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Liability | 0 | ' |
Net Amount, Liability | 7 | ' |
Foreign currency forward contracts [Member] | ' | ' |
Offsetting Liabilities [Line Items] | ' | ' |
Gross Amounts of Recognized Derivatives, Liability | 5,431 | ' |
Gross Amounts of Recognized Derivatives, Liability | 0 | ' |
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 5,431 | ' |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments, Liability | 0 | ' |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Liability | 0 | ' |
Net Amount, Liability | $5,431 | ' |
Collateralized_Transactions_Fi
Collateralized Transactions - Financial Instruments at Fair Value Received as Collateral that were Permitted to be Delivered or Repledged (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Securities Financing Transaction [Line Items] | ' | ' |
Collateral permitted to be delivered or repledged | $6,803,143 | $52,261 |
Fair value of financial instruments received as collateral [Member] | ' | ' |
Securities Financing Transaction [Line Items] | ' | ' |
Collateral permitted to be delivered or repledged | 1,317,369 | 50,717 |
Collateral that was delivered or repledged | 1,210,408 | 50,717 |
Collateral permitted to be further repledged by the receiving counterparty | $149,891 | $0 |
Collateralized_Transaction_Add
Collateralized Transaction - Additional Information (Detail) | Sep. 30, 2013 |
Collateralized Agreements [Abstract] | ' |
Repurchase agreements and other secured financings, maturity (years) | 'within one year |
Collateralized_Transactions_Fi1
Collateralized Transactions - Financial Instruments Owned and Pledged to Counterparties that Do Not Have Right to Sell or Repledge (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | ||
In Thousands, unless otherwise specified | ||||
Collateralized Agreements [Line Items] | ' | ' | ||
Collateral permitted to be delivered or repledged | $6,803,143 | $52,261 | ||
Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge | 732,481 | [1] | 0 | [1] |
Assets Within Discontinued Operations [Member] | ' | ' | ||
Collateralized Agreements [Line Items] | ' | ' | ||
Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge | $5,840,000 | ' | ||
[1] | Financial instruments owned, at fair value, pledged to counterparties that had the right to deliver or repledge includes $5.84 billion recorded within Assets within discontinued operations as of September 30, 2013. |
Receivable_from_and_Payable_to2
Receivable from and Payable to Brokers, Dealers, and Clearing Organizations - Schedule of Amounts Receivable from and Payable to Brokers, Dealers and Clearing Organizations (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Receivable/Payable: | ' | ' |
Clearing organizations and other, Receivable | $1,096,308 | $140,089 |
Securities failed to deliver, Receivable | 233,805 | 2,880 |
Total Receivable | 1,330,113 | 142,969 |
Clearing organizations and other, Payable | 564,592 | 15,879 |
Securities failed to receive, Payable | 101,586 | 8,306 |
Total Payable | $666,178 | $24,185 |
Investments_Details
Investments (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | ||
In Thousands, unless otherwise specified | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Investments accounted for under the equity method | $82,476 | $0 | ||
Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost | 41,899 | 48,806 | ||
Total Strategic investments | 124,375 | 48,806 | ||
Deferred compensation investments | 84 | 0 | ||
Knight preferred shares | 0 | [1] | 199,632 | [1] |
Investment in Deephaven Funds | 1,430 | 0 | ||
Total Investments | $125,889 | $248,438 | ||
Percentage of equity in common stock of private companies cover under strategic investment | 20.00% | 20.00% | ||
[1] | September 30, 2013B December 31, 2012Strategic investments: Investments accounted for under the equity method$82,476B $bCommon stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost41,899B 48,806Total Strategic investments124,375B 48,806Deferred compensation investments84B bKnight preferred sharesbB 199,632Investment in Deephaven Funds1,430B bTotal Investments$125,889B $248,438 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets - Additional Information (Detail) (USD $) | 9 Months Ended | 12 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Jul. 02, 2013 |
Minimum [Member] | Maximum [Member] | Knight [Member] | |||
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Amount | ' | ' | ' | ' | $156,800 |
Goodwill | $18,398 | $4,645 | ' | ' | $13,753 |
Amortization period, in years | ' | ' | '4 years | '12 years | ' |
Weighted average useful life | '7 years | '10 years | ' | ' | ' |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets - Summary of Goodwill (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Goodwill [Line Items] | ' | ' |
Goodwill | $18,398 | $4,645 |
Market Making [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | 15,159 | 4,645 |
Global Execution Services [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | $3,239 | $0 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets - Finite-Lived Intangible Assets, Net of Accumulated Amortization (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | ||
In Thousands, unless otherwise specified | ||||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | $214,208 | $57,408 | ||
Accumulated amortization | -22,163 | -11,285 | ||
Net carrying amount | 192,045 | 46,123 | ||
Market Making [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 99,856 | 46,123 | ||
Electronic Execution Services [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 77,939 | 0 | ||
Trading rights [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | 59,628 | [1] | 51,828 | [1] |
Accumulated amortization | -12,563 | [1] | -9,193 | [1] |
Net carrying amount | 47,065 | [1] | 42,635 | [1] |
Trading rights [Member] | Market Making [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 47,065 | 42,635 | ||
Technology [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | 115,580 | [2] | 5,580 | [2] |
Accumulated amortization | -8,639 | [2] | -2,092 | [2] |
Net carrying amount | 106,941 | [2] | 3,488 | [2] |
Technology [Member] | Market Making [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 52,791 | 3,488 | ||
Technology [Member] | Electronic Execution Services [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 39,900 | 0 | ||
Technology [Member] | Corporate and Other [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 14,250 | ' | ||
Customer and broker relationships [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | 35,000 | [3] | 0 | [3] |
Accumulated amortization | -861 | [3] | 0 | [3] |
Net carrying amount | 34,139 | [3] | 0 | [3] |
Customer and broker relationships [Member] | Electronic Execution Services [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 34,139 | 0 | ||
Trade names [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | 4,000 | [4] | 0 | [4] |
Accumulated amortization | -100 | [4] | 0 | [4] |
Net carrying amount | 3,900 | [4] | 0 | [4] |
Trade names [Member] | Electronic Execution Services [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | $3,900 | $0 | ||
[1] | Trading rights provide the Company with the rights to trade on certain exchanges. The weighted average remaining life is approximately 9 and 10 years as of SeptemberB 30, 2013 and DecemberB 31, 2012, respectively. | |||
[2] | The weighted average remaining life is approximately five and three years as of SeptemberB 30, 2013 and DecemberB 31, 2012, respectively. | |||
[3] | Customer relationships relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of SeptemberB 30, 2013. Lives may be reduced depending upon actual retention rates. | |||
[4] | Trade names relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of SeptemberB 30, 2013. |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets - Finite-Lived Intangible Assets, Net of Accumulated Amortization (Parenthetical) (Detail) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Goodwill [Line Items] | ' | ' |
Weighted average useful life | '7 years | '10 years |
Trading rights [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Amortization period, in years | '9 years | '10 years |
Technology [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Amortization period, in years | '5 years | '3 years |
Customer and broker relationships [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Amortization period, in years | '10 years | ' |
Trade names [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Amortization period, in years | '10 years | ' |
Goodwill_and_Intangible_Assets6
Goodwill and Intangible Assets - Summary of Amortization Expense Relating to Intangible Assets (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' | ' | ' |
Amortization expense | $8,119 | $1,380 | $10,878 | $4,139 |
Goodwill_and_Intangible_Assets7
Goodwill and Intangible Assets - Summary of Estimated Amortization Expense for Future Years (Detail) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
For the three months ending December 31, 2013 | $8,119 |
For the year ended December 31, 2014 | 32,477 |
For the year ended December 31, 2015 | 31,780 |
For the year ended December 31, 2016 | 31,082 |
For the year ended December 31, 2017 | $31,082 |
LongTerm_Debt_Summary_of_LongT
Long-Term Debt - Summary of Long-Term Debt (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Debt Disclosure [Abstract] | ' | ' |
Notes, Carrying Value | $0 | $15,000 |
Notes, Fair Value | 0 | 15,000 |
Senior Secured Notes, Carrying Value | 305,000 | 0 |
Senior Secured Notes, Fair Value | 299,663 | 0 |
Credit Agreement, Carrying Value | 535,000 | 0 |
Credit Agreement, Fair Value | 535,000 | 0 |
Convertible Notes, Carrying Amount | 117,259 | 0 |
Convertible Notes, Fair Value | 117,845 | 0 |
Total, Carrying Amount | 957,259 | 15,000 |
Total, Fair Value | 952,508 | 15,000 |
Less: Current portion recorded in Accrued expenses and other liabilities, Carrying Amount | 235,000 | 0 |
Less: Current portion recorded in Accrued expenses and other liabilities, Fair Value | 235,000 | 0 |
Total Long-term debt, Carrying Amount | 722,259 | 15,000 |
Total Long-term debt, Fair Value | $717,508 | $15,000 |
LongTerm_Debt_Additional_Infor
Long-Term Debt - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | 9 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | 0 Months Ended | |||||||||||||||||||
Aug. 05, 2013 | Jul. 31, 2013 | Mar. 31, 2010 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Dec. 31, 2012 | Jul. 31, 2013 | Oct. 31, 2011 | Jun. 30, 2013 | Sep. 30, 2013 | Jun. 05, 2013 | Sep. 30, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 31, 2013 | Sep. 30, 2013 | Jul. 02, 2013 | Jul. 31, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jul. 02, 2013 | Oct. 23, 2013 | Oct. 23, 2013 | Sep. 30, 2013 | |
Notes Payable to Banks [Member] | Notes Payable to Banks [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Swingline Facilty [Member] | Swingline Facilty [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | LIBOR Floor [Member] | Prime Rate [Member] | Borrowing Base A [Member] | Borrowing Base B Loan [Member] | LIBOR [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Other Assets [Member] | ||||||||
OCTEG-KCA [Member] | OCTEG-KCA [Member] | OCTEG-KCA [Member] | OCTEG-KCA [Member] | OCTEG-KCA [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | OCTEG-KCA [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | OCTEG-KCA [Member] | OCTEG-KCA [Member] | Secured Debt [Member] | Secured Debt [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Secured Debt [Member] | Secured Debt [Member] | Revolving Credit Facility [Member] | |||||||||||
Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | OCTEG-KCA [Member] | OCTEG-KCA [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | OCTEG-KCA [Member] | ||||||||||||||||||||||||
Line of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt amount | ' | ' | ' | ' | ' | ' | ' | ' | $15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate | ' | ' | ' | ' | ' | ' | ' | ' | 5.95% | ' | ' | 8.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of days to issue securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '365 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Early repayment fee | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term credit agreement | ' | ' | ' | 535,000,000 | ' | ' | 0 | ' | ' | ' | ' | 305,000,000 | ' | ' | ' | ' | ' | ' | 535,000,000 | ' | 450,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Escrow agent fees and expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional interest percent obligation from guarantor if certain obligations are not met | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revolving credit facility amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | 50,000,000 | 750,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
increase in line of credit facility, maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate of credit agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.25% | 2.25% | ' | ' | 1.00% | ' | ' | ' |
Percentage points added to interest rate base | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.50% | ' | ' | ' | 0.50% | 1.75% | 2.25% | 3.50% | ' | ' | ' |
Interest rate at end of period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal payments in 2014 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 235,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Periodic principal payment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fee percentage of average daily amount unused portion of revolving credit agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.35% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prepayment premium percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loan guarantee percent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt issuance costs incurred | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 34,600,000 | ' | 1,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effective interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9.00% | ' | ' | ' | ' | ' | ' | 7.60% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Early principal payments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | 200,000,000 | ' |
Issue of cash convertible senior subordinated notes | ' | ' | 375,000,000 | ' | ' | 375,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash convertible senior subordinated notes due date | ' | ' | 15-Mar-15 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes bear interest rate per year | ' | ' | ' | 3.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Date of commencing of notes | ' | ' | ' | 15-Sep-10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Date of mature of notes | ' | ' | ' | 15-Mar-15 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deposit cash made to credit facilty to repurchase convertible notes | ' | 375,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repayments of convertible debt | 257,700,000 | ' | ' | 257,741,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest payable | 3,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash collateral for borrowed securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $117,300,000 |
LongTerm_Debt_Recorded_Expense
Long-Term Debt - Recorded Expenses with Respect to Long-Term Debt (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||||
Debt Disclosure [Abstract] | ' | ' | ' | ' | ||||
Interest expense | $19,173 | $688 | $21,366 | $1,134 | ||||
Amortization of debt issuance cost | 2,007 | [1] | 103 | [1] | 2,479 | [1] | 152 | [1] |
Commitment fee | 267 | [1] | 390 | [1] | 9,204 | [1] | 390 | [1] |
Total | $21,447 | $1,181 | $33,049 | $1,676 | ||||
[1] | Included in Other expense. |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | |||||
Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Jul. 02, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Stock Appreciation Rights (SARs) [Member] | Class B Units [Member] | Class E Units [Member] | Class E Units [Member] | KCG Plan [Member] | Restricted Stock [Member] | Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares authorized for grant | ' | ' | ' | ' | ' | ' | ' | 20,700,000 | ' | ' |
Percent of shares vesting over vesting period | ' | ' | ' | ' | ' | ' | 3.33% | ' | ' | ' |
Vesting period | ' | ' | ' | ' | '3 years | ' | '3 years | ' | '3 years | '3 years |
Unamortized compensation costs | ' | $1,300,000 | ' | $7,200,000 | $9,400,000 | ' | ' | ' | ' | ' |
Award expiration period | ' | ' | ' | '2 years 2 months 12 days | ' | ' | '5 years | ' | ' | ' |
Unamortized compensation related to restricted awards outstanding | ' | ' | ' | ' | ' | ' | ' | ' | 79,600,000 | ' |
Cost of unvested awards expected to be recognized over a weighted average life, years | ' | ' | ' | ' | ' | ' | ' | ' | '2 years 6 months | ' |
Number of Stock Options, Exercised (in shares) | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Employee compensation deferred tax asset | ' | 3,000,000 | 3,500,000 | ' | ' | ' | ' | ' | ' | ' |
Accelerated amortization | ' | ' | ' | ' | ' | $0 | $3,500,000 | ' | ' | ' |
StockBased_Compensation_Compen
Stock-Based Compensation - Compensation Expense Relating to Restricted Awards (Detail) (Restricted Stock [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Restricted Stock [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Stock award compensation expense | $12,234 |
Income tax benefit | $4,649 |
StockBased_Compensation_Summar
Stock-Based Compensation - Summary of Restricted Awards Activity (Detail) (Restricted Stock Units [Member], USD $) | 3 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2012 | Sep. 30, 2013 | Jun. 30, 2013 |
Restricted Stock Units [Member] | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ' | ' | ' |
Number of Shares, Beginning Balance | ' | 8,963 | 0 |
Number of Shares, Converted | 3,251 | ' | ' |
Number of Shares, Granted | 6,004 | ' | ' |
Number of Shares, Vested | -45 | ' | ' |
Number of Shares, Forfeited | -246 | ' | ' |
Number of Shares, Ending Balance | ' | 8,963 | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ' | ' | ' |
Weighted-Average Grant date Fair Value, Beginning Balance (in dollars per share) | ' | $10.78 | $0 |
Weighted Average Grant Date Fair Value, Number of Shares, Converted (in dollars per share) | $11.22 | ' | ' |
Weighted-Average Grant date Fair Value, Granted (in dollars per share) | $10.58 | ' | ' |
Weighted-Average Grant date Fair Value, Vested (in dollars per share) | $11.07 | ' | ' |
Weighted-Average Grant date Fair Value, Forfeited (in dollars per share) | $11.45 | ' | ' |
Weighted-Average Grant date Fair Value, Ending Balance (in dollars per share) | ' | $10.78 | $0 |
StockBased_Compensation_Compen1
Stock-Based Compensation - Compensation Expense Relating to Stock Options (Detail) (Stock Options [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Stock Options [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Stock option and SAR compensation expense | $915 |
Income tax benefit | $348 |
StockBased_Compensation_Summar1
Stock-Based Compensation - Summary of Stock Option Activity (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2012 | Sep. 30, 2013 | Jun. 30, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | ' | ' | |
Number of Stock Options, Beginning Balance | ' | ' | 0 | |
Number of Stock Options, Converstion Outstanding to options | 782 | ' | ' | |
Number of stock options, Granted at market value | 4,324 | ' | ' | |
Number of Stock Options, Exercised | 0 | ' | ' | |
Number of Stock Options, Forfeited or expired | -79 | ' | ' | |
Number of Stock Options, Ending Balance | ' | 5,027 | 0 | |
Number of Stock Options, Exercisable | ' | 703 | ' | |
Available for future grants | ' | 6,327 | [1] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ' | ' | ' | |
Weighted-Average Exercise Price, Beginning Balance | ' | $0 | ' | |
Weighted-Average Exercise Price, Granted at Market Value | $41.25 | ' | ' | |
Weighted-Average Exercise Price, Granted at market value | $15.19 | ' | ' | |
Weighted-Average Exercise Price, Exercised | $0 | ' | ' | |
Weighted-Average Exercise Price, Forfeited or expired | $45.81 | ' | ' | |
Weighted-Average Exercise Price, Ending Balance | ' | $18.76 | ' | |
Weighted-Average Exercise Price, Exercisable | ' | $40.74 | ' | |
Aggregate Intrinsic Value of Options, Outstanding | ' | $387 | ' | |
Aggregate Intrinsic Value of Options, Exercised | ' | $381 | ' | |
Weighted-Average Remaining Life, Outstanding | ' | '4 years 5 months 27 days | ' | |
Weighted-Average Remaining Life, Exercisable | ' | '2 years 7 months 10 days | ' | |
Stock Appreciation Rights (SARs) [Member] | ' | ' | ' | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | ' | ' | |
Number of stock options, Granted at market value | 1,700 | ' | ' | |
[1] | Represents both options and awards available for grant. |
StockBased_Compensation_Incent
Stock-Based Compensation - Incentive Units (Details) (Incentive Units [Member], Common Class A [Member]) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Incentive Units [Member] | Common Class A [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | ' |
Beginning balance, shares | 24 |
Issued, shares | 1 |
Number of Shares, Vested | -53 |
Exercised, shares | -22 |
Canceled, shares | -1 |
Ending balance, shares | 55 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ' |
Number of Shares, Beginning Balance | 45 |
Number of Shares, Granted | 12 |
Number of Shares, Forfeited | -4 |
Number of Shares, Ending Balance | 0 |
StockBased_Compensation_Class_
Stock-Based Compensation - Class B Units (Details) (Class B Units [Member], USD $) | 9 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 |
Class B Units [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ' |
Number of Shares, Beginning Balance | 417 |
Number of Shares, Granted | 58 |
Number of Shares, Vested | -438 |
Number of Shares, Forfeited | -37 |
Number of Shares, Ending Balance | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ' |
Weighted-Average Grant date Fair Value, Beginning Balance (in dollars per share) | $89.99 |
Weighted-Average Grant date Fair Value, Granted (in dollars per share) | $73.54 |
Weighted-Average Grant date Fair Value, Vested (in dollars per share) | $87.86 |
Weighted-Average Grant date Fair Value, Forfeited (in dollars per share) | $89.28 |
Weighted-Average Grant date Fair Value, Ending Balance (in dollars per share) | $0 |
StockBased_Compensation_Class_1
Stock-Based Compensation - Class E Units (Details) (Class E Units [Member], USD $) | 9 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 |
Class E Units [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ' |
Number of Shares, Beginning Balance | 476 |
Number of Shares, Granted | 0 |
Number of Shares, Vested | -442 |
Number of Shares, Forfeited | -34 |
Number of Shares, Ending Balance | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ' |
Weighted-Average Grant date Fair Value, Beginning Balance (in dollars per share) | $36.78 |
Weighted-Average Grant date Fair Value, Granted (in dollars per share) | $0 |
Weighted-Average Grant date Fair Value, Vested (in dollars per share) | $37.24 |
Weighted-Average Grant date Fair Value, Forfeited (in dollars per share) | $30.89 |
Weighted-Average Grant date Fair Value, Ending Balance (in dollars per share) | $0 |
StockBased_Compensation_Compen2
Stock-Based Compensation - Compensation Expense (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Compensation expense | ($875) | $5,797 | $21,288 | $9,912 |
Class B and E Units [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Compensation expense | 0 | 5,429 | 19,860 | 9,124 |
Incentive Units [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Compensation expense | ($875) | $368 | $1,428 | $788 |
Income_Taxes_Effective_Income_
Income Taxes - Effective Income Tax Reconciliation (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
U.S. federal statutory income tax (benefit) expense | $41,949 | $5,114 | $12,543 | $12,224 |
Income not subject to U.S. corporate income tax | -44,790 | -3,515 | -14,071 | -9,801 |
U.S. state and local income taxes, net of U.S. federal income tax effect | -391 | 533 | 82 | 825 |
Deferred tax benefit resulting from the Company becoming subject to U.S. corporate income taxes | -103,499 | 0 | -103,499 | 0 |
Nondeductible charges (1) | -1,114 | 74 | -944 | 166 |
Foreign taxes | 0 | 2,581 | 3,559 | 6,958 |
Other, net | 78 | 18 | -148 | -4 |
Income tax (benefit) expense | ($107,767) | $4,805 | ($102,478) | $10,368 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Jul. 02, 2013 | |
State and Local Jurisdiction [Member] | Foreign Tax Authority [Member] | Knight [Member] | |||||
Income Tax Contingency [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Deferred tax asset | ' | ' | ' | ' | ' | ' | $65,900,000 |
Deferred tax benefit resulting from the Company becoming subject to U.S. corporate income taxes | 103,499,000 | 0 | 103,499,000 | 0 | ' | ' | ' |
Operating loss carryforwards | 89,200,000 | ' | 89,200,000 | ' | ' | 68,700,000 | ' |
Deferred tax assets, operating loss carryforwards | 31,200,000 | ' | 31,200,000 | ' | ' | ' | ' |
Deferred tax assets, valuation allowance | 6,800,000 | ' | 6,800,000 | ' | ' | ' | ' |
Deferred income tax asset | ' | ' | ' | ' | ' | 17,900,000 | ' |
Foreign tax credit carryforwards | ' | ' | ' | ' | ' | 3,200,000 | ' |
State and local offsetting valuation allowance | ' | ' | ' | ' | ' | 1,600,000 | ' |
General business carry forward | 2,500,000 | ' | 2,500,000 | ' | ' | ' | ' |
AMT Carryforward | ' | ' | ' | ' | 6,800,000 | ' | ' |
Unrecognized tax benefits that would impact effective tax rate if recognized | $1,400,000 | ' | $1,400,000 | ' | ' | ' | ' |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Loss (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' |
Beginning Balance | $114,319 |
Other comprehensive income | 8,506 |
Amount reclassified from Accumulated Other Comprehensive Income | -127,972 |
Net current-period other comprehensive loss | -119,466 |
Ending Balance | -5,147 |
Unrealized gains on Available-for-sale Securities [Member] | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' |
Beginning Balance | 114,319 |
Other comprehensive income | 13,604 |
Amount reclassified from Accumulated Other Comprehensive Income | -127,972 |
Net current-period other comprehensive loss | -114,368 |
Ending Balance | -49 |
Foreign Currency translation adjustments [Member] | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' |
Beginning Balance | 0 |
Other comprehensive income | -5,098 |
Amount reclassified from Accumulated Other Comprehensive Income | 0 |
Net current-period other comprehensive loss | -5,098 |
Ending Balance | ($5,098) |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 3 Months Ended | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 |
Earnings Per Share [Abstract] | ' | ' |
Options excluded | 28.8 | 28.8 |
Earnings_Per_Share_Reconciliat
Earnings Per Share - Reconciliation of Numerators and Denominators of Basic and Diluted (Loss) Earnings Per Computations (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Income from continuing operations and shares used in basic calculations | $227,621 | $9,807 | $138,316 | $24,556 |
Income from continuing operations and shares used in diluted calculations | $227,621 | $9,807 | $138,316 | $24,556 |
Shares used in basic calculations (in shares) | 114,113 | 46,411 | 68,632 | 49,619 |
Effect of dilutive stock based awards (in shares) | 660 | 0 | 223 | 0 |
(Loss) Income and shares used in diluted calculations (in shares) | 114,773 | 46,411 | 68,855 | 49,619 |
Basic earnings per share from continuing operations (in dollars per share) | $1.99 | $0.21 | $2.02 | $0.49 |
Diluted earnings per share from continuing operations (in dollars per share) | $1.98 | $0.21 | $2.01 | $0.49 |
Significant_Clients_Additional
Significant Clients - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Client | Client | Client | Client | |
Risks and Uncertainties [Abstract] | ' | ' | ' | ' |
Number of significant clients | 0 | 0 | 0 | 0 |
Percentage of dollar value traded | 10.00% | 10.00% | ' | 10.00% |
Recovered_Sheet1
Commitments and Contingent liabilities - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | |||||||
Aug. 06, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2012 | Apr. 02, 2013 | Mar. 22, 2013 | Apr. 02, 2013 | Sep. 30, 2013 | Apr. 02, 2013 | Sep. 30, 2013 | |
lawsuit | Operating lease expense [Member] | Operating lease expense [Member] | Operating lease expense [Member] | Operating lease expense [Member] | Facebook IPO [Member] | Facebook IPO [Member] | Facebook IPO [Member] | Customer [Member] | Customer [Member] | Parent Company [Member] | Revolving Credit Facility [Member] | ||||||
director | Facebook IPO [Member] | Facebook IPO [Member] | Facebook IPO [Member] | ||||||||||||||
Component of Operating Other Cost and Expense [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of putative class action lawsuits | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of derivative lawsuits | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Raise In equity financing | $400,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of directors accused of breaking fiduciary duties | ' | ' | ' | 7 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pre-tax loss settlements realized | ' | ' | ' | ' | ' | 457,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restructuring charge | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35,400,000 | ' | ' | ' | ' | ' | ' |
Claims limitation related to IPO | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 62,000,000 | ' | ' | ' | ' |
Claims submitted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,000,000 | ' | 2,600,000 | ' | 10,400,000 | ' |
Percentage claimed less than submitted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 17.00% | ' | ' |
Weighted average interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.85% |
Rental expense | ' | 8,898,000 | 3,240,000 | 15,454,000 | 8,865,000 | ' | 5,600,000 | 2,300,000 | 10,400,000 | 6,400,000 | ' | ' | ' | ' | ' | ' | ' |
Letters of credit held in escrow | ' | 1,000,000 | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional borrowing capacity due to issuance of HECMs | ' | ' | ' | $726,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt term | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Recovered_Sheet2
Commitments and Contingent liabilities - Schedule of Capital Lease and Contract Obligations (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Through December 31, 2013 | $2,885 |
2014 | 8,222 |
2015 | 2,072 |
Total | $13,179 |
Commitments_and_Contingent_Lia2
Commitments and Contingent Liabilities - Schedule of Interest Expense (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Commitments and Contingencies Disclosure [Abstract] | ' | ' | ' | ' |
Interest expense - Capital leases | $151 | $285 | $602 | $1,135 |
Recovered_Sheet3
Commitments and Contingent liabilities - Schedule of Operating Lease and Contract Obligations (Detail) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Gross Lease Obligations [Member] | ' |
Sale Leaseback Transaction [Line Items] | ' |
Three months ending December 31, 2013 | $8,014 |
Year ending December 31, 2014 | 30,170 |
Year ending December 31, 2015 | 28,346 |
Year ending December 31, 2016 | 27,877 |
Year ending December 31, 2017 | 27,262 |
Thereafter through December 31, 2027 | 108,318 |
Total Amount Of Lease & Contract Obligations | 229,987 |
Sublease Income [Member] | ' |
Sale Leaseback Transaction [Line Items] | ' |
Three months ending December 31, 2013 | 525 |
Year ending December 31, 2014 | 1,868 |
Year ending December 31, 2015 | 1,494 |
Year ending December 31, 2016 | 1,464 |
Year ending December 31, 2017 | 1,541 |
Thereafter through December 31, 2027 | 358 |
Total Amount Of Lease & Contract Obligations | 7,250 |
Net Lease Obligations [Member] | ' |
Sale Leaseback Transaction [Line Items] | ' |
Three months ending December 31, 2013 | 7,489 |
Year ending December 31, 2014 | 28,302 |
Year ending December 31, 2015 | 26,852 |
Year ending December 31, 2016 | 26,413 |
Year ending December 31, 2017 | 25,721 |
Thereafter through December 31, 2027 | 107,960 |
Total Amount Of Lease & Contract Obligations | $222,737 |
Financial_instruments_with_Off1
Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Derivatives, Fair Value [Line Items] | ' | ' |
Loans outstanding | $722,259,000 | $15,000,000 |
Executive Director or Officer [Member] | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Loans outstanding | $0 | ' |
Business_Segments_Income_Loss_
Business Segments - Income (Loss) from Continuing Operations Before Income Taxes ("Pre-Tax Earnings") and Total Assets by Segment (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | $467,819,000 | $130,602,000 | $698,123,000 | $425,241,000 |
Pre-tax earnings | 119,854,000 | 14,612,000 | 35,838,000 | 34,924,000 |
Total assets | 7,194,995,000 | 1,773,305,000 | 7,194,995,000 | 1,773,305,000 |
Discontinued operations assets | ' | 6,100,000,000 | ' | 6,100,000,000 |
Market Making [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | 240,110,000 | 107,672,000 | 455,678,000 | 383,203,000 |
Pre-tax earnings | 47,853,000 | 8,214,000 | 55,608,000 | 37,976,000 |
Total assets | 3,882,763,000 | 1,507,881,000 | 3,882,763,000 | 1,507,881,000 |
Global Execution Services [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | 91,366,000 | 9,258,000 | 113,701,000 | 27,248,000 |
Pre-tax earnings | -16,354,000 | -1,120,000 | -21,248,000 | -3,839,000 |
Total assets | 1,426,824,000 | 25,934,000 | 1,426,824,000 | 25,934,000 |
Corporate and Other [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | 136,343,000 | 13,672,000 | 128,744,000 | 14,790,000 |
Pre-tax earnings | 88,355,000 | 7,518,000 | 1,478,000 | 787,000 |
Total assets | $1,885,408,000 | $239,490,000 | $1,885,408,000 | $239,490,000 |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event [Member], USD $) | Oct. 15, 2013 | Oct. 23, 2013 | Oct. 16, 2013 | Oct. 23, 2013 | Oct. 16, 2013 | Oct. 15, 2013 |
In Millions, unless otherwise specified | Employee Severance [Member] | Settlement with SEC [Member] | Revolving Credit Facility [Member] | Other Assets [Member] | Other Assets [Member] | |
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' |
Consents from holders of senior secured notes | $304 | ' | ' | ' | ' | ' |
Consents from holders of senrior secured notes, percentage of total notes | 99.68% | ' | ' | ' | ' | ' |
Prepayment period | ' | ' | ' | ' | '60 days | ' |
Consent solicitation fees | ' | ' | ' | ' | ' | 2.8 |
Principal payment | ' | ' | ' | 200 | ' | ' |
First periodic payment amount | ' | ' | ' | 235 | ' | ' |
Periodic payment | ' | ' | ' | 7.5 | ' | ' |
Reduction in first periodic payment by prepayment amount | ' | ' | ' | 35 | ' | ' |
Cash held in collateral account | ' | ' | ' | 117.8 | ' | ' |
Civil payment | ' | ' | 12 | ' | ' | ' |
Percentage of workforce reduction | ' | 5.00% | ' | ' | ' | ' |
Workforce reduction charge | ' | $9.40 | ' | ' | ' | ' |