Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | ||
Mar. 31, 2014 | 8-May-14 | 8-May-14 | |
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 | 31-Mar-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'Q1 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 125,162,487 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenues | ' | ' |
Trading revenues, net | $258,297 | $86,765 |
Commissions and fees | 112,257 | 25,499 |
Interest, net | 948 | -121 |
Investment income and other, net | 12,155 | 2,849 |
Total revenues | 383,657 | 114,992 |
Expenses | ' | ' |
Employee compensation and benefits | 122,319 | 32,209 |
Execution and clearance fees | 75,501 | 40,957 |
Communications and data processing | 36,796 | 20,694 |
Payments for order flow | 22,032 | 589 |
Depreciation and amortization | 20,103 | 8,167 |
Debt interest expense | 9,524 | 473 |
Collateralized financing interest | 6,162 | 0 |
Occupancy and equipment rentals | 8,285 | 3,296 |
Professional fees | 5,402 | 6,725 |
Business development | 1,683 | 25 |
Writedown of capitalized debt costs | 7,557 | 0 |
Writedown of assets and lease loss accrual, net | 266 | 2,238 |
Other | 8,643 | 4,477 |
Total expenses | 324,273 | 119,850 |
Income from continuing operations before income taxes | 59,384 | -4,858 |
Income tax expense | 22,467 | 1,974 |
Income (loss) from continuing operations, net of tax | 36,917 | -6,832 |
Loss from discontinued operations, net of tax | -1,253 | 0 |
Net income (loss) | $35,664 | ($6,832) |
Basic earnings per share from continuing operations (in dollars per share) | $0.32 | ($0.15) |
Diluted earnings per share from continuing operations (in dollars per share) | $0.31 | ($0.15) |
Basic loss per share from discontinued operations (in dollars per share) | ($0.01) | $0 |
Diluted loss per share from discontinued operations (in dollars per share) | ($0.01) | $0 |
Basic earnings per share (in dollars per share) | $0.31 | ($0.15) |
Diluted earnings per share (in dollars per share) | $0.30 | ($0.15) |
Shares used in computation of basic earnings (loss) per share (in shares) | 115,569 | 45,452 |
Shares used in computation of diluted earnings (loss) per share (in shares) | 117,898 | 45,452 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net income (loss) | $35,664 | ($6,832) |
Other comprehensive income (loss): | ' | ' |
Unrealized (loss) gain on available for sale securities, net of tax | -137 | 11,944 |
Cumulative translation adjustment, net of tax | 201 | 84 |
Comprehensive income | $35,728 | $5,196 |
CONSOLIDATED_STATEMENTS_OF_FIN
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Assets | ' | ' |
Cash and cash equivalents | $651,096,000 | $674,281,000 |
Cash and cash equivalents segregated under federal and other regulations | 208,836,000 | 183,082,000 |
Financial instruments owned, at fair value, including securities pledged to counterparties that had the right to deliver or repledge of $549,657 at March 31, 2014 and $552,242 at December 31, 2013: | ' | ' |
Equities | 2,205,013,000 | 2,298,785,000 |
Listed options | 231,150,000 | 339,798,000 |
Debt securities | 153,176,000 | 83,256,000 |
Total financial instruments owned, at fair value | 2,589,339,000 | 2,721,839,000 |
Collateralized agreements: | ' | ' |
Securities borrowed | 1,367,050,000 | 1,357,387,000 |
Receivable from brokers, dealers and clearing organizations | 1,472,860,000 | 1,257,251,000 |
Fixed assets and leasehold improvements, less accumulated depreciation and amortization | 140,874,000 | 146,668,000 |
Investments | 96,369,000 | 125,413,000 |
Goodwill and Intangible assets, less accumulated amortization | 202,280,000 | 208,451,000 |
Deferred tax asset, net | 172,156,000 | 172,503,000 |
Other assets | 129,416,000 | 147,322,000 |
Total assets | 7,030,276,000 | 6,994,197,000 |
Financial instruments sold, not yet purchased, at fair value: | ' | ' |
Equities | 1,776,702,000 | 1,851,006,000 |
Listed options | 193,822,000 | 252,282,000 |
Debt securities | 110,903,000 | 57,198,000 |
Other financial instruments | 639,000 | 5,014,000 |
Total financial instruments sold, not yet purchased, at fair value | 2,082,066,000 | 2,165,500,000 |
Collateralized financings: | ' | ' |
Securities loaned | 724,947,000 | 733,230,000 |
Financial instruments sold under agreements to repurchase | 864,985,000 | 640,950,000 |
Total collateralized financings | 1,589,932,000 | 1,374,180,000 |
Payable to brokers, dealers and clearing organizations | 517,580,000 | 474,108,000 |
Payable to customers | 552,119,000 | 481,041,000 |
Accrued compensation expense | 54,591,000 | 149,430,000 |
Accrued expenses and other liabilities | 185,440,000 | 173,103,000 |
Capital lease obligations | 10,101,000 | 10,039,000 |
Debt | 472,259,000 | 657,259,000 |
Total liabilities | 5,464,088,000 | 5,484,660,000 |
Equity | ' | ' |
Additional paid-in capital | 1,331,988,000 | 1,306,549,000 |
Retained earnings | 247,342,000 | 211,678,000 |
Treasury stock, at cost; 1,497 at March 31, 2014 and 1,079 shares at December 31, 2013 | -15,879,000 | -11,324,000 |
Accumulated other comprehensive income | 1,465,000 | 1,401,000 |
Total equity | 1,566,188,000 | 1,509,537,000 |
Total liabilities and equity | 7,030,276,000 | 6,994,197,000 |
Common Class A [Member] | ' | ' |
Equity | ' | ' |
Shares authorized: 1,000,000 at March 31, 2014 and December 31, 2013; Shares issued: 127,192 at March 31, 2014 and 123,317 at December 31, 2013; Shares outstanding: 125,695 at March 31, 2014 and 122,238 at December 31, 2013 | $1,272,000 | $1,233,000 |
CONSOLIDATED_STATEMENTS_OF_FIN1
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Financial instruments owned, at fair value, securities pledged | $549,657 | $552,242 |
Treasury stock, shares | 1,497,000 | 1,079,000 |
Common Class A [Member] | ' | ' |
Class A common stock Shares authorized | 1,000,000,000 | 1,000,000,000 |
Class A common stock, Shares issued | 127,192,000 | 123,317,000 |
Class A common stock, Shares outstanding | 125,695,000 | 122,238,000 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Total | Common Class A [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total Equity [Member] |
In Thousands, unless otherwise specified | |||||||
Balance at Dec. 31, 2013 (As Reported [Member]) | ' | $1,233 | $1,306,549 | $209,393 | ($11,324) | $1,401 | $1,507,252 |
Balance (Change to Equity Method of Accounting [Member]) | ' | ' | ' | 2,285 | ' | ' | 2,285 |
Balance at Dec. 31, 2013 | 1,509,537 | 1,233 | 1,306,549 | 211,678 | -11,324 | 1,401 | 1,509,537 |
Balance (in shares) at Dec. 31, 2013 (As Reported [Member]) | ' | 123,317 | ' | ' | 1,079 | ' | ' |
Balance (in shares) at Dec. 31, 2013 | ' | 123,317 | ' | ' | 1,079 | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Class A Common Stock repurchased (in shares) | ' | ' | ' | ' | -418 | ' | ' |
Class A Common Stock repurchased | ' | ' | ' | ' | -4,555 | ' | -4,555 |
Stock-based compensation (in shares) | ' | 3,875 | ' | ' | ' | ' | ' |
Stock-based compensation | ' | 39 | 25,439 | ' | ' | ' | 25,478 |
Unrealized loss on available for sale securities | ' | ' | ' | ' | ' | -137 | -137 |
Cumulative translation adjustment | ' | ' | ' | ' | ' | 201 | 201 |
Net income | 35,664 | ' | ' | 35,664 | ' | ' | 35,664 |
Balance at Mar. 31, 2014 | $1,566,188 | $1,272 | $1,331,988 | $247,342 | ($15,879) | $1,465 | $1,566,188 |
Balance (in shares) at Mar. 31, 2014 | ' | 127,192 | ' | ' | 1,497 | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities | ' | ' |
Net income (loss) | $35,664 | ($6,832) |
Loss from discontinued operations, net of tax | -1,253 | 0 |
Income (loss) from continuing operations, net of tax | 36,917 | -6,832 |
Adjustments to reconcile income (loss) from continuing operations, net of tax to net cash provided by (used in) operating activities | ' | ' |
Depreciation and amortization | 20,103 | 8,167 |
Stock and unit-based compensation | 17,025 | 2,918 |
Gains on investments | 12,738 | 2,814 |
Writedown of assets and lease loss accrual, net | 266 | 2,238 |
Writedown and amortization of debt offering costs | 8,766 | 113 |
Deferred rent | -68 | 0 |
Operating activities from discontinued operations | -1,253 | 0 |
(Increase) decrease in operating assets | ' | ' |
Cash and cash equivalents segregated under federal and other regulations | -25,754 | 0 |
Financial instruments owned, at fair value | 132,500 | -28,463 |
Securities borrowed | -9,663 | -19,269 |
Receivable from brokers, dealers and clearing organizations | -215,609 | -62,656 |
Other assets | 9,485 | 2,193 |
(Decrease) increase in operating liabilities | ' | ' |
Financial instruments sold, not yet purchased, at fair value | -83,434 | 74,690 |
Securities loaned | -8,283 | 0 |
Financial instruments sold under agreements to repurchase | 224,035 | 0 |
Payable to brokers, dealers and clearing organizations | 43,472 | -18,830 |
Payable to customers | 71,078 | 0 |
Accrued compensation expense | -86,388 | -19,453 |
Accrued expenses and other liabilities | 12,141 | 6,400 |
Net cash provided by (used in) operating activities | 132,598 | -61,598 |
Cash flows from investing activities | ' | ' |
Proceeds and distributions from investments | 42,365 | 1,201 |
Purchases of investments | -5,816 | -6,157 |
Capitalized software development costs | -2,321 | 0 |
Purchases of investments | -582 | 0 |
Net cash provided by (used in) investing activities | 33,646 | -4,956 |
Cash flows from financing activities | ' | ' |
Partial repayment of Credit Agreement | -185,000 | 0 |
Borrowings under capital lease obligations | 4,310 | 0 |
Principal payments on capital lease obligations | -4,248 | -4,965 |
Cost of common stock repurchased | -4,555 | 0 |
Borrowings under secured credit facility | 0 | 25,000 |
Repayment of secured credit facility | 0 | -25,000 |
Repurchase of members' interest | 0 | -4,042 |
Net cash used in financing activities | -189,493 | -9,007 |
Effect of exchange rate changes on cash and cash equivalents | 64 | 84 |
Decrease in cash and cash equivalents | -23,185 | -75,477 |
Cash and cash equivalents at beginning of period | 674,281 | 427,631 |
Cash and cash equivalents at end of period | 651,096 | 352,154 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 13,577 | 1,325 |
Cash paid for income taxes | $793 | $4,234 |
Organization_and_Description_o
Organization and Description of the Business | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization and Description of the Business | ' |
Organization and Description of the Business | |
KCG Holdings, Inc. (collectively with its subsidiaries, "KCG" or the "Company") 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 Company combines advanced technology with specialized client service across market making, agency execution and trading venues and also engages in principal trading via exchange-based electronic market making. KCG has multiple access points to trade global equities, options, fixed income, currencies and commodities via voice or automated execution. | |
On December 19, 2012, Knight Capital Group, Inc.(“Knight”) and GETCO Holding Company, LLC (“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. | |
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 three months ended March 31, 2013 comprise the results of GETCO only and the financial results for the three months ended March 31, 2014 comprise the results of KCG. | |
As of March 31, 2014, 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 options markets across global equities, options, fixed income, foreign currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, institutions and banks. Principal trading in the Market Making segment primarily consists of direct-to-client and non-client exchange-based electronic market making, including trade executions conducted 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 on all major global equity and futures exchanges and also trades on substantially all domestic electronic options exchanges. As a complement to electronic market making, the 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 comprises agency execution services and trading venues, offering trading in global equities, options, foreign exchange, fixed income and futures to institutions, banks and broker dealers. The Company generally earns commissions as an agent between principals to transactions that are executed within this segment, however, the Company will commit capital on behalf of clients as needed. Agency-based, execution-only trading in the segment is done primarily through a variety of access points including: (i) self-directed trading in global equities through a suite of algorithms or via the Company's execution management system; (ii) institutional high touch sales traders executing program, block and riskless principal trades in global equities and exchange traded funds ("ETFs"); (iii) an institutional spot foreign exchange electronic communication network ("ECN"); (iv) a fixed income ECN that also offers trading applications; (v) an alternative trading system ("ATS") for global equities; and (vi) futures execution and clearing through a futures commission merchant ("FCM"). | |
Corporate and Other | |
The Corporate and Other segment invests principally 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 contains 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, or is no longer core to the Company's strategy, the Company may divest or exit such business. | |
In July 2013, KCG entered into an agreement to sell to an investor group Urban Financial of America, LLC, formerly known as Urban Financial Group, Inc. (“Urban”), the reverse mortgage origination and securitization business that was previously owned by Knight. The transaction was completed in the fourth quarter of 2013, and residual expenses of Urban's operations and costs of the related sale have been reported in Loss from discontinued operations, net of tax on the Consolidated Statements of Operations for the three months ended March 31, 2014. See Footnote 4 "Discontinued Operations" for further discussion. |
Merger_of_GETCO_and_Knight
Merger of GETCO and Knight | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Business Combinations [Abstract] | ' | ||||||
Merger With GETCO and Knight | ' | ||||||
Merger of GETCO and Knight | |||||||
Background | |||||||
Pursuant to the Merger Agreement, 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”). Former Knight stockholders received cash payments aggregating $720.0 million and 41.9 million shares of KCG Class A Common Stock. | |||||||
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”). | |||||||
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 three months ended March 31, 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 as a component of equity. | |||||||
All GETCO earnings per share and unit share outstanding amounts in these financial statements have been calculated as if the conversion of GETCO units to KCG Class A Common Stock took place on January 1, 2013, at the exchange ratio as defined in the Merger Agreement. See Footnote 17 "Earnings Per Share" for further discussion. | |||||||
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. In the first quarter of 2014, the Company, based upon updated information, recorded purchase accounting adjustments that increased by $0.7 million each the amounts of goodwill and accrued expenses on the Consolidated Statements of Financial Condition. The Company has not yet completed all of its analysis to finalize the allocation of the purchase price to the Knight acquired assets and liabilities. The allocation of the purchase price has been and may be further 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. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. | |||||||
The Company recorded net deferred tax assets of $62.3 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 a tax net operating loss ("NOL”) carryforwards and other tax attributes acquired as a result of the Mergers, as described in Footnote 14 “Income Taxes”. | |||||||
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 cash equivalents 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 | 1,369,474 | ||||||
Fixed assets and leasehold improvements | 80,280 | ||||||
Investments | 106,353 | ||||||
Intangible assets | 155,425 | ||||||
Assets within discontinued operations | 5,607,063 | ||||||
Deferred tax asset, net | 62,329 | ||||||
Other assets | 141,617 | ||||||
Total Assets | $ | 11,331,629 | |||||
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 | 127,204 | ||||||
Liabilities within discontinued operations | 5,518,168 | ||||||
Long-term debt | 375,000 | ||||||
Total Liabilities | $ | 9,970,807 | |||||
Total identified assets acquired, net of assumed liabilities | 1,360,822 | ||||||
Goodwill | 12,312 | ||||||
Total Purchase Price | $ | 1,373,134 | |||||
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. | |||||||
Amounts preliminarily allocated to intangible assets and goodwill, and the amortization period for intangible assets with finite useful lives, were as follows (dollars in thousands): | |||||||
Amortization | |||||||
Amount | Years | ||||||
Technology | $ | 110,504 | 5 years | ||||
Customer relationships | 35,000 | 9 - 11 years | |||||
Trade names | 4,000 | 10 years | |||||
Trading rights (1) | 5,921 | 7 years | |||||
Intangible assets | 155,425 | ||||||
Goodwill | 12,312 | ||||||
Total | $ | 167,737 | |||||
-1 | Trading rights include both assets with a finite useful life and assets with an indefinite useful life. The 7 years amortization period only applies to assets with a finite useful life. |
Significant_Accounting_Policie
Significant Accounting Policies | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Accounting Policies [Abstract] | ' | |||||||
Significant Accounting Policies | ' | |||||||
Significant Accounting Policies | ||||||||
Basis of consolidation and form of presentation | ||||||||
The Consolidated Financial Statements, prepared in conformity with GAAP, include the accounts of the Company and its subsidiaries. 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. | ||||||||
Change in accounting principle | ||||||||
As discussed in Footnote 9 "Investments", during the first quarter of 2014 the Company changed its method of accounting for its investment in BATS Global Markets, Inc. ("BATS") following the merger of BATS and Direct Edge Holdings LLC ("Direct Edge"). | ||||||||
As a result of the change in accounting principle, the Consolidated Statement of Financial Condition at December 31, 2013 has been adjusted as follows: Investments increased by approximately $3.4 million, Deferred tax asset, net decreased by $1.1 million and Retained earnings increased by $2.3 million. The Consolidated Statement of Operations for the three months ended March 31, 2013 has been adjusted to increase Investment income and other, net by $2.4 million. | ||||||||
During the first quarter of 2014 the Company recognized income of $9.6 million related to the merger of BATS and Direct Edge which is recorded within Investment income and other, net in the Consolidated Statements of Operations. The $9.6 million comprises a partial realized gain with respect to the Company's investment in Direct Edge of $16.2 million offset, in part, by the Company's share of BATS' and Direct Edge's merger related transaction costs that were charged against their respective earnings of $6.6 million. | ||||||||
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 cash equivalents segregated under federal and other regulations | ||||||||
The Company maintains custody of customer funds and is obligated by rules and regulations mandated by the U.S. Securities and Exchange Commission (“SEC”) and the Commodity 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 cash equivalents 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, relate to market making and trading activities, include listed and other equity securities, listed equity options and fixed income securities which are recorded on a trade date basis and carried at fair value. Trading revenues, net, which comprises 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 such 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 ended March 31, | ||||||||
2014 | 2013 | |||||||
Interest Income | $ | 3,351 | $ | 987 | ||||
Interest Expense | (2,403 | ) | (1,108 | ) | ||||
Interest, net | $ | 948 | $ | (121 | ) | |||
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 ended March 31, | ||||||||
2014 | 2013 | |||||||
Dividend Income | $ | 9,783 | $ | 502 | ||||
Dividend Expense | $ | (7,575 | ) | $ | (416 | ) | ||
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, and obtains additional collateral or refunds excess collateral 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. | |||||||
The Company’s securities borrowed, securities loaned and financial instruments sold under agreements to repurchase 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. | ||||||||
Investments | ||||||||
Investments primarily comprise strategic noncontrolling equity ownership interests in financial services-related businesses and are held by the Company's non-broker dealer subsidiaries. These strategic investments are accounted for under either the equity method, at cost or at fair value. The equity method of accounting is used when the Company has significant influence. Strategic investments are held at cost, less impairment if any, when the investment does not have a readily determined fair value, and the Company is not considered to exert significant influence on operating and financial policies of the investee. Strategic investments with a readily determinable fair value are held at fair value. | ||||||||
Prior to the Mergers, GETCO had a strategic investment in Knight which was classified as available for sale and held at fair value with any unrealized gains or losses recorded in Other comprehensive income or 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. | ||||||||
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 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 amortizes intangible assets with a finite life 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. | ||||||||
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's foreign subsidiaries generally use the U.S. dollar as their functional currency. Effective January 1, 2014, one of the Company's U.K. subsidiaries changed its functional currency from British pounds to U.S. dollars. The Company has a subsidiary in India that utilizes the Indian rupee as its functional currency. | ||||||||
Assets and liabilities of this Indian subsidiary 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 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 March 31, 2014 and 2013, the Company recorded losses on foreign currency transactions of $0.8 million and $0.6 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 income or loss 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 restricted stock units ("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 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 projected sub-lease income upon the date the Company ceases to use the excess real estate. 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. | ||||||||
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. | ||||||||
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 March 2013, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“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 was effective for reporting periods beginning after December 15, 2013. The adoption of this ASU did not have an impact 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 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 was effective for reporting periods beginning after December 15, 2013. 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 April 2014, the FASB issued an ASU which changes the criteria for determining which disposals are required to be presented as discontinued operations and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The updated guidance is effective for interim and annual reporting periods beginning after December 31, 2014, with early adoption permitted. |
Discontinued_Operations
Discontinued Operations | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||
Discontinued Operations | ' | |||
Discontinued Operations | ||||
In July 2013, the Company entered into an agreement to sell to an investor group Urban, the reverse mortgage origination and securitization business that was previously owned by Knight. The transaction was completed in the fourth quarter of 2013, and, as a result, the residual expenses of Urban's operations and costs of the related sale have been included in Loss from discontinued operations, net of tax within the Consolidated Statements of Operations for the three months ended March 31, 2014. | ||||
The revenues and results of operations of discontinued operations are summarized as follows (in thousands): | ||||
For the three months ended March 31, | ||||
2014 | ||||
Additional Loss on Sale | $ | (1,312 | ) | |
Expenses: | ||||
Compensation | $ | 46 | ||
Other expenses | 662 | |||
Total Expenses | 708 | |||
Pre-tax loss from discontinued operations | (2,020 | ) | ||
Income tax benefit | 767 | |||
Loss from discontinued operations, net of tax | $ | (1,253 | ) |
Assets_Segregated_or_Held_in_S
Assets Segregated or Held in Separate Accounts Under Federal or Other Regulations | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Cash and Cash Equivalents [Abstract] | ' | |||||||
Assets Segregated or Held in Separate 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): | ||||||||
March 31, | 31-Dec-13 | |||||||
2014 | ||||||||
Cash and cash equivalents segregated under federal or other regulations | $ | 208,836 | $ | 183,082 | ||||
Receivables from brokers, dealers and clearing organizations (1) | 317,059 | 304,294 | ||||||
Total assets segregated or held in separate accounts under federal or other regulations | $ | 525,895 | $ | 487,376 | ||||
(1) Segregated assets included within Receivables from brokers, dealers and clearing organizations comprise cash and cash equivalents and U.S. government obligations primarily held as deposits with exchange clearing organizations. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
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 | |||||||||||||||||||||||||
31-Mar-14 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Financial instruments owned, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 2,205,013 | $ | — | $ | — | $ | 2,205,013 | |||||||||||||||||
Listed options | 231,150 | — | — | 231,150 | |||||||||||||||||||||
U.S. government and Non-U.S. government obligations (2) | 97,676 | — | — | 97,676 | |||||||||||||||||||||
Corporate debt | 55,500 | — | — | 55,500 | |||||||||||||||||||||
Total Financial instruments owned, at fair value | 2,589,339 | — | — | 2,589,339 | |||||||||||||||||||||
Securities on deposit with clearing organizations (3) | 200,004 | — | — | 200,004 | |||||||||||||||||||||
Investment in CME Group (4) | 3,703 | — | — | 3,703 | |||||||||||||||||||||
Deferred compensation investments (4) | — | 718 | — | 718 | |||||||||||||||||||||
Investment in Deephaven Funds (4) | — | 1,257 | — | 1,257 | |||||||||||||||||||||
Total assets held at fair value | $ | 2,793,046 | $ | 1,975 | $ | — | $ | 2,795,021 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Financial instruments sold, not yet purchased, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 1,776,702 | $ | — | $ | — | $ | 1,776,702 | |||||||||||||||||
Listed options | 193,822 | — | — | 193,822 | |||||||||||||||||||||
U.S. government obligations (2) | 48,233 | — | — | 48,233 | |||||||||||||||||||||
Corporate debt | 62,670 | — | — | 62,670 | |||||||||||||||||||||
Foreign currency forward contracts | — | 639 | — | 639 | |||||||||||||||||||||
Total liabilities held at fair value | $ | 2,081,427 | $ | 639 | $ | — | $ | 2,082,066 | |||||||||||||||||
(1) | Equities of $736.5 million have been netted by their respective long and short positions by CUSIP number. | ||||||||||||||||||||||||
(2) | U.S. Government Obligations of $0.4 million have been netted by their respective long and short positions by CUSIP number. | ||||||||||||||||||||||||
(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) | Investment in CME Group, Deferred compensation investments and Investment in Deephaven Funds are included within Investments on the Consolidated Statements of Financial Condition. | ||||||||||||||||||||||||
Assets and Liabilities Measured at | |||||||||||||||||||||||||
Fair Value on a Recurring Basis | |||||||||||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Financial instruments owned, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 2,298,785 | $ | — | $ | — | $ | 2,298,785 | |||||||||||||||||
Listed options | 339,798 | — | — | 339,798 | |||||||||||||||||||||
U.S. government obligations and corporate bonds | 40,053 | — | — | 40,053 | |||||||||||||||||||||
Corporate debt | 43,203 | — | — | 43,203 | |||||||||||||||||||||
Total Financial instruments owned, at fair value | 2,721,839 | — | — | 2,721,839 | |||||||||||||||||||||
Securities on deposit with clearing organizations (2) | 170,235 | — | — | 170,235 | |||||||||||||||||||||
Investment in CME Group (3) | 3,925 | — | — | 3,925 | |||||||||||||||||||||
Deferred compensation investments (3) | — | 117 | — | 117 | |||||||||||||||||||||
Investment in Deephaven Funds (3) | — | 1,958 | — | 1,958 | |||||||||||||||||||||
Total assets held at fair value | $ | 2,895,999 | $ | 2,075 | $ | — | $ | 2,898,074 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Financial instruments sold, not yet purchased, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 1,851,006 | $ | — | $ | — | $ | 1,851,006 | |||||||||||||||||
Listed options | 252,282 | — | — | 252,282 | |||||||||||||||||||||
U.S. government obligations | 15,076 | — | — | 15,076 | |||||||||||||||||||||
Corporate debt | 42,122 | — | — | 42,122 | |||||||||||||||||||||
Foreign currency forward contracts | — | 5,014 | — | 5,014 | |||||||||||||||||||||
Total liabilities held at fair value | $ | 2,160,486 | $ | 5,014 | $ | — | $ | 2,165,500 | |||||||||||||||||
(1) Equities of $697.9 million have been netted by their respective long and short positions by CUSIP number. | |||||||||||||||||||||||||
(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) Investment in CME Group, Deferred compensation investments and Investment in Deephaven Funds are included within Investments on the Consolidated Statements of Financial Condition. | |||||||||||||||||||||||||
The Company’s equities, listed options, U.S. government and non-U.S. government obligations, corporate debt and strategic investments that are actively traded 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. | |||||||||||||||||||||||||
As of March 31, 2014 and December 31, 2013 the Company had no financial instruments classified within Level 3 of the fair value hierarchy. | |||||||||||||||||||||||||
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 assets or liabilities held at fair value between levels of the fair value hierarchy for any periods presented. | |||||||||||||||||||||||||
The Company’s foreign currency forward contracts, deferred compensation investments and 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 March 31, 2014, the Company had foreign currency forward contracts with a notional value of 427.2 million Indian Rupees ($6.2 million U.S. dollars) that are used to hedge the Company’s investment in its Indian subsidiary. The fair value of these contracts was determined based upon spot foreign exchange rates, LIBOR interest rates and dealer quotations. These foreign currency forward contracts do not qualify as net investment hedges and any gains and losses are recorded in Investment income and other, net on the Consolidated Statement of Operations. | |||||||||||||||||||||||||
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. | |||||||||||||||||||||||||
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 amounts and positions included in the tables below for futures contracts are classified as Level 1 and swaps and forward contracts are classified as Level 2 in the fair value hierarchy. | |||||||||||||||||||||||||
The following tables summarize the fair value of derivative instruments and futures contracts trading activities in the Consolidated Statements of Financial Condition and the gains and losses included in the Consolidated Statements of Operations (fair value and gain (loss) in thousands): | |||||||||||||||||||||||||
31-Mar-14 | |||||||||||||||||||||||||
Financial Statements | Assets | Liabilities | |||||||||||||||||||||||
Location | Fair Value | Contracts | Fair Value | Contracts | |||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | $ | 107 | 315 | $ | 103 | 826 | ||||||||||||||||||
Forward contracts | Financial instruments sold, not yet purchased, at fair value | 433 | 1 | 1,072 | 1 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 1,300 | 2,146 | 1,739 | 2,802 | ||||||||||||||||||||
Listed options | Financial instruments owned/sold, not yet purchased, at fair value | 231,150 | 691,862 | 193,822 | 679,822 | ||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 2,339 | 15,417 | 1,440 | 18,489 | ||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 1,732 | 4,323 | 1,933 | 4,229 | ||||||||||||||||||||
Total | $ | 237,061 | 714,064 | $ | 200,109 | 706,169 | |||||||||||||||||||
31-Dec-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 | $ | 89 | 892 | $ | 142 | 533 | ||||||||||||||||||
Forward contracts | Other assets | 6,913 | 1 | 6,501 | 1 | ||||||||||||||||||||
Forward contracts(1) | Financial instruments sold, not yet purchased, at fair value | — | — | 5,014 | 1 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 223 | 1,069 | 1,089 | 1,046 | ||||||||||||||||||||
Swap contracts | Receivables from/Payables to brokers, dealers and clearing organizations | — | — | 18 | 1 | ||||||||||||||||||||
Listed options | Financial instruments owned/sold, not yet purchased, at fair value | 339,798 | 730,020 | 252,282 | 755,947 | ||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 4,815 | 18,280 | 2,259 | 15,202 | ||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 3,392 | 10,629 | 1,773 | 3,806 | ||||||||||||||||||||
Total | $ | 355,230 | 760,891 | $ | 269,078 | 776,537 | |||||||||||||||||||
(1) | Designated as hedging instrument. | ||||||||||||||||||||||||
Gain (Loss) Recognized | |||||||||||||||||||||||||
Financial Statements | For the three months | ||||||||||||||||||||||||
ended March 31, | |||||||||||||||||||||||||
Location | 2014 | 2013 | |||||||||||||||||||||||
Derivative instruments not designated as hedging instruments: | |||||||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | $ | 2,842 | $ | 2,571 | ||||||||||||||||||||
Forward contracts | Trading revenues, net | 432 | — | ||||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 8,737 | 9,666 | ||||||||||||||||||||||
Swap contracts | Trading revenues, net | 1,282 | 4,058 | ||||||||||||||||||||||
Listed options (1) | Trading revenues, net | (73,876 | ) | 17,161 | |||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 8,829 | 20,024 | ||||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 13,570 | 11,388 | ||||||||||||||||||||||
$ | (38,184 | ) | $ | 64,868 | |||||||||||||||||||||
Derivative instruments designated as hedging instruments: | |||||||||||||||||||||||||
Foreign exchange - forward contract | Accumulated other comprehensive income | $ | 168 | $ | — | ||||||||||||||||||||
(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. | ||||||||||||||||||||||||
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): | |||||||||||||||||||||||||
31-Mar-14 | 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 | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Listed options | $ | 231,150 | $ | — | $ | 231,150 | $ | — | $ | — | $ | 231,150 | |||||||||||||
Securities borrowed | 1,367,050 | — | 1,367,050 | 1,336,102 | — | 30,948 | |||||||||||||||||||
Receivable from brokers, dealers and clearing organizations (1) | 41,315 | $ | — | 41,315 | 41,315 | $ | — | — | |||||||||||||||||
Foreign currency forward contracts | 433 | $ | 433 | — | — | $ | — | — | |||||||||||||||||
Futures | 5,478 | $ | 4,175 | 1,303 | — | $ | — | 1,303 | |||||||||||||||||
Total Assets | $ | 1,645,426 | $ | 4,608 | $ | 1,640,818 | $ | 1,377,417 | $ | — | $ | 263,401 | |||||||||||||
Liabilities | |||||||||||||||||||||||||
Listed options | $ | 193,822 | $ | — | $ | 193,822 | $ | — | $ | 16,675 | $ | 177,147 | |||||||||||||
Securities loaned | 724,947 | — | 724,947 | 716,348 | — | 8,599 | |||||||||||||||||||
Financial instruments sold under agreements to repurchase | 864,985 | — | 864,985 | 864,977 | — | 8 | |||||||||||||||||||
Foreign currency forward contracts | 1,072 | 433 | 639 | — | 639 | — | |||||||||||||||||||
Futures | 5,215 | 5,215 | — | — | — | — | |||||||||||||||||||
Total Liabilities | $ | 1,790,041 | $ | 5,648 | $ | 1,784,393 | $ | 1,581,325 | $ | 17,314 | $ | 185,754 | |||||||||||||
(1) Represents reverse repurchase agreements at broker dealer. | |||||||||||||||||||||||||
31-Dec-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 | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Listed options | $ | 339,798 | $ | — | $ | 339,798 | $ | — | $ | — | $ | 339,798 | |||||||||||||
Securities borrowed | 1,357,387 | — | 1,357,387 | 1,326,220 | — | 31,167 | |||||||||||||||||||
Receivable from brokers, dealers and clearing organizations (1) | 24,366 | — | 24,366 | 24,249 | — | 117 | |||||||||||||||||||
Foreign currency forward contracts | 6,913 | 6,501 | 412 | — | — | 412 | |||||||||||||||||||
Futures | 8,519 | 4,369 | 4,150 | — | — | 4,150 | |||||||||||||||||||
Total Assets | $ | 1,736,983 | $ | 10,870 | $ | 1,726,113 | $ | 1,350,469 | $ | — | $ | 375,644 | |||||||||||||
Liabilities | |||||||||||||||||||||||||
Listed options | $ | 252,282 | $ | — | $ | 252,282 | $ | — | $ | 10,924 | $ | 241,358 | |||||||||||||
Securities loaned | 733,230 | — | 733,230 | 726,948 | — | 6,282 | |||||||||||||||||||
Financial instruments sold under agreements to repurchase | 640,950 | — | 640,950 | 640,948 | — | 2 | |||||||||||||||||||
Foreign currency forward contracts | 11,515 | 6,501 | 5,014 | — | — | 5,014 | |||||||||||||||||||
Futures | 5,263 | 5,263 | — | — | — | — | |||||||||||||||||||
Swaps | 18 | — | 18 | — | — | 18 | |||||||||||||||||||
Total Liabilities | $ | 1,643,258 | $ | 11,764 | $ | 1,631,494 | $ | 1,367,896 | $ | 10,924 | $ | 252,674 | |||||||||||||
(1) Represents reverse repurchase agreements at broker dealer. |
Collateralized_Transactions
Collateralized Transactions | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Collateralized Agreements [Abstract] | ' | |||||||
Collateralized Transactions | ' | |||||||
Collateralized Transactions | ||||||||
The Company receives financial instruments as collateral in connection with securities borrowed and financial instruments purchased under agreements to resell. Such financial instruments generally consist of equities, convertible securities and obligations of the U.S. Government, but may also include obligations of federal agencies, foreign governments and corporations. In most cases the Company is permitted to deliver or repledge these financial instruments in connection with securities lending, other secured financings or for meeting settlement obligations. | ||||||||
The table below presents financial instruments at fair value received as collateral and included within Securities borrowed or Receivable from brokers, dealers and clearing organizations on the Consolidated Statements of Financial Condition 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 party (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Collateral permitted to be delivered or repledged | $ | 1,369,805 | $ | 1,315,803 | ||||
Collateral that was delivered or repledged | 1,276,689 | 1,231,468 | ||||||
Collateral permitted to be further repledged by the receiving counterparty | 178,549 | 142,938 | ||||||
In order to finance securities positions, 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. | ||||||||
The table below presents information about assets pledged by the Company (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Financial instruments owned, at fair value, pledged to counterparties that had the right to deliver or repledge | $ | 549,657 | $ | 552,242 | ||||
Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge | 932,885 | 676,956 | ||||||
Receivable_from_and_Payable_to
Receivable from and Payable to Brokers, Dealers and Clearing Organizations | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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): | ||||||||
March 31, | December 31, 2013 | |||||||
2014 | ||||||||
Receivable: | ||||||||
Clearing organizations and other | $ | 856,658 | $ | 750,440 | ||||
Assets segregated or held in separate accounts under federal or other regulations | 317,059 | 304,294 | ||||||
Securities failed to deliver | 299,143 | 202,517 | ||||||
Total Receivable | $ | 1,472,860 | $ | 1,257,251 | ||||
Payable: | ||||||||
Clearing organizations and other | $ | 387,774 | $ | 425,196 | ||||
Securities failed to receive | 129,806 | 48,912 | ||||||
Total Payable | $ | 517,580 | $ | 474,108 | ||||
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 | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Investments [Abstract] | ' | |||||||
Investments | ' | |||||||
Investments | ||||||||
Investments comprise strategic investments and investment in the Deephaven Funds. Investments consist of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Strategic investments: | ||||||||
Investments accounted for under the equity method | $ | 81,738 | $ | 110,460 | ||||
Investments held at fair value | 3,703 | 3,925 | ||||||
Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost | 8,953 | 8,953 | ||||||
Total Strategic investments | 94,394 | 123,338 | ||||||
Deferred compensation investments | 718 | 117 | ||||||
Investment in Deephaven Funds | 1,257 | 1,958 | ||||||
Total Investments | $ | 96,369 | $ | 125,413 | ||||
Investments held at fair value are accounted for as available for sale securities and any unrealized gains or losses are recorded in Other comprehensive income. | ||||||||
Merger of BATS and Direct Edge | ||||||||
In January 2014, BATS and Direct Edge, each of whose equity the Company held as an investment, completed their previously announced merger into BATS. Prior to the merger, the Company accounted for its investment in BATS under the cost method and accounted for its investment in Direct Edge under the equity method. Following the merger, the Company owns 16.7% of the overall equity of BATS and holds 19.9% of the voting equity and a board seat. Based on these facts, the Company will account for its interest in BATS under the equity method. This change in accounting principle is applied retrospectively and, as such, the Company will present its financial results for all prior periods with BATS accounted for under the equity method. See Footnote 3 "Significant Accounting Policies" for a discussion of the effect of this retrospective adjustment. | ||||||||
The Company received approximately $41.7 million from the aggregate distributions paid by BATS and Direct Edge at or around the close of the merger, which the Company recorded as a return of capital under the equity method of accounting. | ||||||||
During the first quarter of 2014 the Company recognized income of $9.6 million related to the merger of BATS and Direct Edge which is recorded within Investment income and other, net in the Consolidated Statements of Operations. The $9.6 million comprises a partial realized gain with respect to the Company's investment in Direct Edge of $16.2 million offset, in part, by the Company's share of BATS' and Direct Edge's merger related transaction costs that were charged against their respective earnings of $6.6 million. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
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 be impaired. 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, $155.4 million and $12.3 million in identifiable intangible assets and goodwill, respectively, were recorded by the Company on the date of the Mergers. | |||||||||
No events occurred in the three months ended March 31, 2014 or 2013 that would indicate that the carrying amounts of the Company’s goodwill or intangible assets may not be recoverable. In December 2013, the Company assessed the impairment of goodwill and intangible assets as part of its annual assessment and concluded that there was no impairment. | |||||||||
The following table summarizes the Company’s goodwill by segment (in thousands): | |||||||||
March 31, | December 31, 2013 | ||||||||
2014 | |||||||||
Market Making | $ | 16,075 | $ | 16,075 | |||||
Global Execution Services | 881 | 881 | |||||||
Total | $ | 16,956 | $ | 16,956 | |||||
Intangible assets with definite useful lives are amortized over their estimated remaining useful lives, the majority of which have been determined to range from three to 10 years. The weighted average remaining life of the Company’s intangible assets with definite useful lives at March 31, 2014 and December 31, 2013 is approximately six years. | |||||||||
The following tables summarize the Company’s Intangible assets, net of accumulated amortization by segment and type (in thousands): | |||||||||
March 31, | December 31, 2013 | ||||||||
2014 | |||||||||
Market Making | |||||||||
Technology | $ | 52,244 | $ | 53,315 | |||||
Trading rights | 47,230 | 48,920 | |||||||
Total | 99,474 | 102,235 | |||||||
Global Execution Services | |||||||||
Technology | 36,983 | 38,682 | |||||||
Customer relationships | 32,417 | 33,278 | |||||||
Trade names | 3,700 | 3,800 | |||||||
Total | 73,100 | 75,760 | |||||||
Corporate and Other | |||||||||
Technology | 12,750 | 13,500 | |||||||
Consolidated Total | $ | 185,324 | $ | 191,495 | |||||
March 31, | December 31, 2013 | ||||||||
2014 | |||||||||
Technology (1) | Gross carrying amount | $ | 123,222 | $ | 120,346 | ||||
Accumulated amortization | (21,245 | ) | (14,849 | ) | |||||
Net carrying amount | 101,977 | 105,497 | |||||||
Trading rights (2) | Gross carrying amount | 61,897 | 62,450 | ||||||
Accumulated amortization | (14,667 | ) | (13,530 | ) | |||||
Net carrying amount | 47,230 | 48,920 | |||||||
Customer relationships (3) | Gross carrying amount | 35,000 | 35,000 | ||||||
Accumulated amortization | (2,583 | ) | (1,722 | ) | |||||
Net carrying amount | 32,417 | 33,278 | |||||||
Trade names (4) | Gross carrying amount | 4,000 | 4,000 | ||||||
Accumulated amortization | (300 | ) | (200 | ) | |||||
Net carrying amount | 3,700 | 3,800 | |||||||
Total | Gross carrying amount | 224,119 | 221,796 | ||||||
Accumulated amortization | (38,795 | ) | (30,301 | ) | |||||
Net carrying amount | $ | 185,324 | $ | 191,495 | |||||
(1) | The weighted average remaining life for technology, including capitalized software, is approximately 4 years as of March 31, 2014 and December 31, 2013. | ||||||||
(2) | Trading rights provide the Company with the rights to trade on certain exchanges. The weighted average remaining life of trading rights with definite useful lives is approximately 8 years as of March 31, 2014 and December 31, 2013. As of March 31, 2014 and December 31, 2013, $7.1 million and $7.6 million, respectively, of trading rights have indefinite useful lives. | ||||||||
(3) | Customer relationships relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of March 31, 2014 and December 31, 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 9 and 10 years as of March 31, 2014 and December 31, 2013, respectively. | ||||||||
The following table summarizes the Company’s amortization expense from continuing operations relating to Intangible assets (in thousands): | |||||||||
For the three months ended March 31, | |||||||||
2014 | 2013 | ||||||||
Amortization expense | $ | 8,494 | $ | 1,380 | |||||
As of March 31, 2014, the following table summarizes the Company’s estimated amortization expense for future periods (in thousands): | |||||||||
Amortization | |||||||||
expense | |||||||||
For the nine months ended December 31, 2014 | $ | 26,476 | |||||||
For the year ended December 31, 2015 | 33,544 | ||||||||
For the year ended December 31, 2016 | 32,046 | ||||||||
For the year ended December 31, 2017 | 30,396 | ||||||||
For the year ended December 31, 2018 | 19,396 | ||||||||
Debt
Debt | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||
Debt | ' | |||||||||||||||
Debt | ||||||||||||||||
The carrying value and fair value of the Company's debt is as follows (in thousands): | ||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Cash Convertible Senior Subordinated Notes | 117,259 | 116,673 | 117,259 | 118,432 | ||||||||||||
Senior Secured Notes | 305,000 | 327,494 | 305,000 | 320,823 | ||||||||||||
First Lien Credit Facility | 50,000 | 50,000 | 235,000 | 235,000 | ||||||||||||
Total Debt | $ | 472,259 | $ | 494,167 | $ | 657,259 | $ | 674,255 | ||||||||
The fair value of the Cash Convertible Senior Subordinated Notes and Senior Secured Notes is based upon the value of such debt in the secondary market. The carrying value of the First Lien Credit facility approximated fair value as it was not materially sensitive to shifts in interest rates due to its floating interest rate, which also considers changes in the Company's credit risks and financial condition. These liabilities would all be categorized as Level 2 in the fair value hierarchy if they were required to be recorded at fair value. | ||||||||||||||||
Cash Convertible Senior Subordinated Notes | ||||||||||||||||
In March 2010, Knight issued $375.0 million aggregate principal amount 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 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 Knight's $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 had the right to deliver a “Fundamental Change Repurchase Notice ” requiring the Company 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 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"). | ||||||||||||||||
After the Mergers, 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. In October 2013, after receiving consent from the Holders of the Senior Secured Notes (as defined below), the funds remaining in the Collateral Account were used to repay a portion of the First Lien Credit Facility. As of March 31, 2014 and December 31, 2013 there were no funds in the Collateral Account. As of March 31, 2014 and December 31, 2013, $117.3 million of the Convertible Notes were outstanding. | ||||||||||||||||
Debt incurred in connection with Mergers | ||||||||||||||||
In connection with the Mergers, KCG entered into a series of debt financing transactions. Described below are the details of these transactions. | ||||||||||||||||
Senior Secured Notes | ||||||||||||||||
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 and supplemented, 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 March 31, 2014, 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, (the "Senior Secured Notes Registration Rights Agreement") 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 in exchange for the Senior Secured Notes a new series of exchange notes 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 begin to accrue and be payable on the Senior Secured Notes. | ||||||||||||||||
In October 2013, the Company received consents from holders ("Holders") of 99.7% of the aggregate principal amount of the Senior Secured Notes outstanding 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. 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 of the Convertible Notes at any price, including at a premium or at a discount from the face value thereof, with any available cash. | ||||||||||||||||
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 provided for a future uncommitted 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 March 31, 2014, 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 March 31, 2014, 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 July 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. | ||||||||||||||||
In connection with the consent solicitation and the Third Supplemental Indenture, the Company entered into an amendment to its Credit Agreement (the "Credit Agreement Amendment") 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 the 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 the Collateral Account will be required to be used to prepay a portion of the principal amount of borrowings under the First Lien Credit Facility. On October 23, 2013, as permitted by the Credit Agreement Amendment, the Company applied 100% of the $117.3 million cash set aside in the Collateral Account 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 of the Convertible Notes at any price, including at a premium or at a discount from the face value thereof, with any available cash. | ||||||||||||||||
The Company incurred issuance costs of $37.4 million in connection with the issuance of Senior Secured Notes, Credit Agreement and consent solicitation. The remaining 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 8.3%, respectively. | ||||||||||||||||
In 2013, the Company repaid $300.0 million of principal of the First Lien Credit Facility. A portion of the $300.0 million was drawn from $117.3 million in cash held in the Collateral Account and the remainder of the $300.0 million was paid out of available cash including proceeds from the sale of Urban. In conjunction with these payments, the Company wrote down $13.2 million of its capitalized debt costs associated with the Credit Agreement. | ||||||||||||||||
During the first quarter of 2014, the Company repaid $185.0 million of principal of the First Lien Credit Facility out of available cash leaving a balance due under the First Lien Credit Facility of $50.0 million as of March 31, 2014. In conjunction with these payments, the Company wrote down $7.6 million of its capitalized debt costs associated with the Credit Agreement. | ||||||||||||||||
Subsequent to March 31, 2014, the Company made a final $50.0 million principal repayment under the First Lien Credit Facility. With the repayment, the First Lien Credit Facility was fully repaid and the Credit Agreement was terminated. See Footnote 22 "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 "KCGA Facility Agreement”) with a consortium of banks and financial institutions. The KCGA Facility Agreement replaces an existing credit agreement, dated as of June 6, 2012, among OCTEG and three banks. | ||||||||||||||||
The KCGA 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 “KCGA Revolving Facility”): Borrowing Base A and Borrowing Base B. The KCGA 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. | ||||||||||||||||
The KCGA Revolving Facility was amended on October 24, 2013 to permit OCTEG to be removed as a borrower under the KCGA Revolving Facility. As of January 1, 2014, OCTEG was merged with and into KCA and KCA was renamed KCG Americas LLC ("KCGA"). | ||||||||||||||||
Borrowings under the KCGA Revolving 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 March 31, 2014, there were no outstanding borrowings under the KCGA Facility Agreement. | ||||||||||||||||
The proceeds of the Borrowing Base A loans may be used solely to finance the purchase and settlement of securities. The proceeds of Borrowing Base B loans may be used solely to fund clearing deposits with the National Securities Clearing Corporation. | ||||||||||||||||
The borrower is being charged a commitment fee at a rate of 0.35% per annum on the average daily amount of the unused portion of the KCGA Facility Agreement. | ||||||||||||||||
The loans under the KCGA Facility Agreement will mature on June 6, 2015. The KCGA Revolving Facility is fully and unconditionally guaranteed on an unsecured basis by KCG and, to the extent elected by KCGA, 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 KCGA Facility Agreement 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 KCGA, a maximum total asset to total regulatory capital ratio for KCGA, a minimum excess net capital limit for KCGA, a minimum liquidity ratio for KCGA, and a minimum tangible net worth threshold for KCGA. As of March 31, 2014, the Company was in compliance with the covenants. | ||||||||||||||||
In connection with the KCGA 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 it is being amortized over the term of the facility. | ||||||||||||||||
The Company recorded expenses with respect to the Debt as follows (in thousands): | ||||||||||||||||
For the three months ended March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Interest expense | $ | 9,416 | $ | 473 | ||||||||||||
Amortization of debt issuance cost (1) | 8,766 | 103 | ||||||||||||||
Commitment fee (1) | 397 | 309 | ||||||||||||||
Total | $ | 18,579 | $ | 885 | ||||||||||||
(1) | $7.6 million of the amortization of debt issuance costs is included in Writedown of debt issuance costs while $1.6 million which includes the remaining amortization of debt issuance costs and the commitment fee is included in Other expense. The writedown amount was incurred as a result of the $185.0 million repayment of the First Lien Credit Facility. |
Related_Parties
Related Parties | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Related Party Transactions [Abstract] | ' | |||||||
Related Parties | ' | |||||||
Related Parties | ||||||||
In the normal course of business the Company interacts with Jefferies LLC (together with certain of its affiliates, “Jefferies”), BATS and, prior to its merger with BATS, Direct Edge, each of which is considered to be a related party as of March 31, 2014, and in the case of BATS only, as of March 31, 2013. As of March 31, 2014, Jefferies was the beneficial owner of more than 10 percent of KCG’s Class A Common Stock and KCG owned more than 10 percent of the equity of BATS. Following the Mergers and prior to Direct Edge's merger with BATS in January 2014, KCG owned more than 10 percent of the equity of Direct Edge. Neither Jefferies nor Direct Edge was a related party as of March 31, 2013. | ||||||||
The Company earns revenues, incurs expenses and maintains balances with these related parties or their affiliates. As of the date and period indicated below, the Company had the following balances and transactions with the related parties or their affiliates (in thousands): | ||||||||
For the three months ended March 31, | ||||||||
Statement of Operations | 2014 | 2013 | ||||||
Revenues | ||||||||
Commissions and fees | $ | 5,146 | $ | — | ||||
Trading revenues, net | 814 | — | ||||||
Interest, net | 188 | — | ||||||
Total revenues from related parties | $ | 6,148 | $ | — | ||||
Expenses | ||||||||
Execution and clearance fees(1) | $ | (4,292 | ) | $ | (4,894 | ) | ||
Interest expense | 159 | — | ||||||
Other expense | 400 | — | ||||||
Total expenses incurred with respect to related parties | $ | (3,733 | ) | $ | (4,894 | ) | ||
(1) Represents net volume based fees received from providing liquidity to related trading venues. | ||||||||
Statements of Financial Condition | March 31, | December 31, | ||||||
2014 | 2013 | |||||||
Assets | ||||||||
Securities borrowed | $ | 47,107 | $ | 57,732 | ||||
Receivable from brokers, dealers and clearing organizations | 95,089 | 20,826 | ||||||
Other assets | — | 277 | ||||||
Liabilities | ||||||||
Securities loaned | $ | 10,731 | $ | 116,062 | ||||
Payable to brokers, dealers and clearing organizations | 98,389 | 17,820 | ||||||
Accrued expenses and other liabilities | 3,664 | 179 | ||||||
In the ordinary course of business, the Company enters into foreign exchange contracts with related parties. |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
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"). As of March 31, 2014, there were approximately 33.0 million shares authorized for issuance under the KCG Plan (subject to adjustment as provided under the KCG Plan). | ||||||||||||||
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 KCG restricted share or RSU, as applicable, in respect of one third of a share of common stock of KCG (rounded to the nearest whole share). Knight restricted share and RSU awards granted on or prior to December 19, 2012 (except for RSUs subject to performance-based vesting conditions) 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 were subject to performance-based vesting conditions) 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 and employment agreements between the Company and the participant. 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, which is primarily recorded in Employee compensation and benefits, and the corresponding income tax benefit, which is recorded in Income tax expense on the Consolidated Statements of Operations are presented in the following table (in thousands): | ||||||||||||||
For the three months ended March 31, | ||||||||||||||
2014 | ||||||||||||||
Stock award compensation expense | $ | 16,238 | ||||||||||||
Income tax benefit | 6,170 | |||||||||||||
The following table summarizes restricted awards activity for the three months ended March 31, 2014 (awards in thousands): | ||||||||||||||
Restricted Stock Units | ||||||||||||||
Number of | Weighted- | |||||||||||||
Units | Average | |||||||||||||
Grant date | ||||||||||||||
Fair Value | ||||||||||||||
Outstanding at December 31, 2013 | 8,420 | $ | 10.71 | |||||||||||
Granted | 4,022 | 11.08 | ||||||||||||
Vested | (977 | ) | 11.08 | |||||||||||
Forfeited | (147 | ) | 13.04 | |||||||||||
Outstanding at March 31, 2014 | 11,318 | $ | 10.78 | |||||||||||
There is $85.5 million of unamortized compensation related to unvested RSUs outstanding at March 31, 2014. The cost of these unvested RSUs is expected to be recognized over a weighted average life of 2.2 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 with an exercise price not less than the market value of KCG Class A Common Stock on the grant date. 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 are subject to accelerated vesting, or continued vesting following certain termination circumstances, in accordance with the applicable award agreements and employment agreements between the Company and the participant. 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. There were no stock options granted during the three months ended March 31, 2014 and 2013. | ||||||||||||||
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 March 31, | ||||||||||||||
2014 | ||||||||||||||
Stock option and SAR compensation expense | $ | 961 | ||||||||||||
Income tax benefit | 365 | |||||||||||||
The following table summarizes stock option and SAR activity and stock options exercisable for the three months ended March 31, 2014 (awards in thousands): | ||||||||||||||
Number of Stock Awards | Weighted- | Aggregate | Weighted- | |||||||||||
Average | Intrinsic | Average | ||||||||||||
Exercise | Value | Remaining | ||||||||||||
Price | Life (years) | |||||||||||||
Outstanding at December 31, 2013 (1) | 4,967 | $ | 18.45 | |||||||||||
Granted at market value | — | — | ||||||||||||
Exercised | — | — | ||||||||||||
Forfeited or expired | (78 | ) | 40.32 | |||||||||||
Outstanding at March 31, 2014 (1) | 4,889 | $ | 18.1 | $ | 3,372 | 4.05 | ||||||||
Exercisable at March 31, 2014 | 565 | $ | 40.38 | $ | — | 2.25 | ||||||||
Available for future grants at March 31, 2014 (2) | 15,775 | |||||||||||||
(1) Includes 1.7 million of SARs. | ||||||||||||||
(2) Represents both options and awards available for grant. | ||||||||||||||
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 March 31, 2014. | ||||||||||||||
There is $6.1 million of unamortized compensation related to unvested stock options and SARs outstanding at March 31, 2014. The cost of these unvested awards is expected to be recognized over a weighted average life of 1.6 years. | ||||||||||||||
Incentive units | ||||||||||||||
Prior to the Mergers, GETCO awarded deferred compensation to its employees in the form of incentive units that generally vested over time. The value of these incentive units was determined at the date of grant based on the estimated enterprise value of GETCO and the amount expensed was 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 included in Employee compensation and benefits. Given that the units vested in connection with the Mergers, the Company fully amortized the units as of June 30, 2013. Deferred compensation payable at March 31, 2014 and December 31, 2013 related to incentive units was $3.5 million and $3.8 million, respectively, and is included in Accrued compensation expense on the Consolidated Statements of Financial Condition. | ||||||||||||||
The following is a summary of the changes in the incentive units for the three months ended March 31, 2014 (units in thousands): | ||||||||||||||
Vested | ||||||||||||||
Incentive units at December 31, 2013 | 49 | |||||||||||||
Issued | — | |||||||||||||
Vested | — | |||||||||||||
Exercised | (4 | ) | ||||||||||||
Canceled | — | |||||||||||||
Incentive units at March 31, 2014 | 45 | |||||||||||||
Class B units | ||||||||||||||
Prior to the Mergers, GETCO granted membership unit awards to employees in the form of Class B units. The Class B units were valued based on the same methodology used to value the GETCO incentive units. Prior to 2012, these non-voting units vested in full three years from the grant date, provided certain conditions of employment and performance were met by the employee. In 2012, GETCO changed the vesting of units granted in 2012 to annual vesting of one-third of the units over a three year period. Upon termination of employment, GETCO 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. GETCO 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. | ||||||||||||||
Class E units | ||||||||||||||
In 2012, GETCO also granted employees profit interests in the form of Class E units. Prior to 2012, Class E units primarily vested in full three years from the grant date. For units granted in 2012, GETCO changed the vesting of Class E units to an annual vesting of one-third of the units over the three year period and provided GETCO an option to repurchase the units at the end of 5 years. Class E units allowed for future appreciation in excess of the GETCO'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. GETCO 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. | ||||||||||||||
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): | ||||||||||||||
For the three months ended March 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Class B and E units | $ | — | $ | 2,918 | ||||||||||
Incentive units | (174 | ) | 409 | |||||||||||
Total | $ | (174 | ) | $ | 3,327 | |||||||||
Income_Taxes
Income Taxes | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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 $62.3 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, upon the closing of the Mergers on July 1, 2013, 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 ended March 31, | ||||||||
2014 | 2013 | |||||||
U.S. federal statutory income tax (benefit) expense | $ | 20,784 | $ | (1,700 | ) | |||
Income not subject to U.S. corporate income tax | — | 1,745 | ||||||
U.S. state and local income taxes, net of U.S. federal income tax effect | 1,280 | 226 | ||||||
Nondeductible expenses (1) | 203 | 38 | ||||||
Foreign taxes | 63 | 1,798 | ||||||
Other, net | 137 | (133 | ) | |||||
Income tax expense | $ | 22,467 | $ | 1,974 | ||||
(1) Nondeductible expenses 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 March 31, 2014. Management believes that positive evidence including the Company's history of sustainable profitability, actual profitability for the first quarter of 2014, and its forecasts of future profitability outweighs the negative evidence. 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 March 31, 2014, the Company had projected overall U.S. federal NOL carryforwards of $194.5 million of which $89.0 million resulted from the acquisition of Knight. The Company recorded a related deferred income tax asset for $68.1 million and an offsetting valuation allowance of $6.8 million at March 31, 2014, which represents the portion of these net operating loss carryforwards that are considered more likely than not to expire unutilized. The Company did not have any NOLs or related deferred tax assets at March 31, 2013. | ||||||||
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 March 31, 2014 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 March 31, 2014, the Company had non-U.S. NOL carryforwards of $86.4 million of which $65.7 million were generated by Knight in periods prior to the Mergers. The Company recorded a foreign deferred income tax asset of $19.1 million for these NOL carryforwards as of March 31, 2014, along with an offsetting U.S. federal deferred tax liability of $18.9 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 March 31, 2014, the Company had tax credit carryforwards which were generated by Knight in periods prior to the Mergers, general business credit carryforwards of $2.5 million and alternative minimum tax credit carryforwards $6.8 million. | ||||||||
At March 31, 2014, the Company had $1.5 million of unrecognized tax benefits, all of which would affect the Company's effective tax rate if recognized. The Company had no such unrecognized tax benefits at March 31, 2014. | ||||||||
As of March 31, 2014, the Company is subject to U.S. Federal income tax examinations for the tax years 2009 through July 1, 2013, 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 July 1, 2013. 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 Debt interest expense and Interest, net, on the Consolidated Statements of Operations. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Equity [Abstract] | ' | ||||||||||||
Accumulated Other Comprehensive Income | ' | ||||||||||||
Accumulated Other Comprehensive Income | |||||||||||||
The following table presents changes in Accumulated other comprehensive income, net of tax by component for the three months ended March 31, 2014 and 2013 (in thousands): | |||||||||||||
Unrealized Gains (Losses) on Available-for-Sale Securities | Foreign Currency Translation Adjustments | Total | |||||||||||
Balance December 31, 2013 | $ | 36 | $ | 1,365 | $ | 1,401 | |||||||
Other comprehensive income (loss) | (137 | ) | 201 | 64 | |||||||||
Balance March 31, 2014 | $ | (101 | ) | $ | 1,566 | $ | 1,465 | ||||||
Unrealized Gains on Available-for-Sale Securities | Foreign Currency Translation Adjustments | Total | |||||||||||
Balance December 31, 2012 | $ | 114,319 | $ | — | $ | 114,319 | |||||||
Other comprehensive income | 11,944 | 84 | 12,028 | ||||||||||
Balance March 31, 2013 | $ | 126,263 | $ | 84 | $ | 126,347 | |||||||
For the three months ended March 31, 2013, the Company recorded $11.9 million in unrealized gains related to GETCO's investment in Knight prior to the Mergers. |
Writedowns_and_Other_Charges
Writedowns and Other Charges | 3 Months Ended |
Mar. 31, 2014 | |
Restructuring and Related Activities [Abstract] | ' |
Writedowns and Other Charges | ' |
Writedowns and Other Charges | |
Writedown of capitalized deal costs | |
During the first quarter of 2014, the Company made $185.0 million in principal repayments under the Credit Agreement. As a result, $7.6 million in capitalized deal costs were written down. | |
Lease loss accrual | |
For the three months ended March 31, 2014 , the Company recorded a $0.3 million net lease loss accrual related to excess real estate capacity. | |
Writedown of assets | |
For the three months ended March 31, 2013, the Company recorded $2.2 million in writedown of assets primarily related to leasehold improvements and fixed assets in connection with the shut down of the Company's Hong Kong office. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
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 (loss) 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 28.4 million for the three months ended March 31, 2014. Such options, warrants and SARS were excluded from the calculation as their inclusion would have an anti-dilutive impact on the EPS calculation. 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 months ended March 31, 2014 and 2013 (in thousands): | ||||||||||||||||
For the three months ended March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Numerator / | Denominator / | Numerator / | Denominator / | |||||||||||||
net income | shares | net income | shares | |||||||||||||
Income from continuing operations and shares used in basic calculations | $ | 36,917 | 115,569 | $ | (6,832 | ) | 45,452 | |||||||||
Effect of dilutive stock based awards | 2,329 | — | ||||||||||||||
Income from continuing operations and shares used in diluted calculations | $ | 36,917 | 117,898 | $ | (6,832 | ) | 45,452 | |||||||||
Basic earnings per common share from continuing operations | $ | 0.32 | $ | (0.15 | ) | |||||||||||
Diluted earnings per common share from continuing operations | $ | 0.31 | $ | (0.15 | ) | |||||||||||
Prior to the Mergers, GETCO units comprised preferred and common units, and net income was allocated among the various classes of units based upon participation rights in undistributed earnings. The number of shares used to calculate EPS for 2013 are GETCO units converted into KCG shares using an exchange ratio as detailed in the Merger Agreement. |
Significant_Clients
Significant Clients | 3 Months Ended |
Mar. 31, 2014 | |
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 three months ended March 31, 2014 or 2013. |
Commitments_and_Contingent_Lia
Commitments and Contingent Liabilities | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
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 its subsidiaries 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. In addition, there are numerous factors that result in a greater degree of complexity in class-action lawsuits as compared to other types of litigation. Due to the many intricacies involved in class-action lawsuits particularly in the early stages of such matters, obtaining clarity on a reasonable estimate is difficult which may call into question its reliability. 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 ordinary 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 reporting period, depending, in part, upon operating results for that period. The Company, Knight and GETCO carry directors and officers liability insurance coverage for potential claims, including securities actions, against the Company, Knight and GETCO and their respective directors and officers. | ||||||||||||
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 KCA sending numerous erroneous orders in NYSE-listed and NYSE Arca securities into the market. Knight has since been named as a defendant in two putative class action complaints (one of which was voluntarily dismissed) and one derivative lawsuit, all of which relate to the technology issue. Knight has also 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 the 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 existing or future litigation related to the August 1 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 its financial condition or ongoing results of operations. In addition, the Company expects to incur additional expenses in defending against such litigation. | ||||||||||||
Legal | ||||||||||||
Litigation Related to the August 1, 2012 Technology Issue | ||||||||||||
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, Case No. 2:12-cv-06760. Generally, this putative class action complaint alleged that the defendants made material misstatements and/or failed to disclose matters related to the events of August 1, 2012. The plaintiff asserted claims under Sections 10(b) and 20 and Rule 10b-5 of the federal securities laws, claiming that he and a purported 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, 2012. The plaintiff asserted claims under Sections 10(b) and 20 and Rule 10b-5 of the federal securities laws, claiming that it and a purported class of Knight's 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, which was fully briefed as of August 2013. Before the court rendered a decision on the motion to dismiss, the plaintiff filed a second amended complaint on December 20, 2013, alleging generally that the defendants made material misstatements and/or failed to disclose matters related to the events of August 1, 2012. More specifically, the plaintiff referred to KCA's October 2013 settlement with the SEC and alleged that the 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 asserted claims under Sections 10(b) and 20 and Rule 10b-5 of the federal securities laws, claiming that it and a purported class of Knight's stockholders who purchased Knight's securities between May 10, 2011 and August 1, 2012 paid an inflated price. The defendants filed a motion to dismiss the second amended complaint on February 18, 2014, and the motion is scheduled to be fully briefed by June 5, 2014. | ||||||||||||
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, 2012 recapitalization. The Company responded to each of these demand letters and, except as noted below in the New York litigation, none of these letters has resulted in litigation. | ||||||||||||
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. | ||||||||||||
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. | ||||||||||||
Trading Litigation | ||||||||||||
On April 18, 2014, KCG and 40 other market participants were named as defendants in a purported class action complaint entitled City of Providence v. BATS Global Markets, Inc. et al., 14-cv-2811, in the U.S. District Court for the Southern District of New York on behalf of public stockholders who purchased and/or sold stock in the United States during the period from on and after April 18, 2009 on a U.S.-based public stock exchange or alternative trading venue. Generally, the complaint alleges that defendants engaged in manipulative, self-dealing and deceptive conduct in connection with the trading of securities. The claims are made pursuant to Sections 10b and 20A and Rule 10b-5 of the Securities Exchange Act of 1934. The complaint seeks, among other things, equitable and injunctive relief, as well as unspecified compensatory damages, restitution and disgorgement. On May 2, 2014, a second lawsuit, American European Insurance Co. v. BATS Global Markets, Inc. et al., 14-cv-3133, was filed in the same court on behalf of the same purported class of public stockholders containing substantially similar allegations and seeking similar relief. | ||||||||||||
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, 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 addition, there has been an increased focus by regulators, the New York Attorney General, Congress and the media on market structure issues, and in particular, high frequency trading, market fragmentation and complexity, colocation, access to market data feeds and remuneration arrangements, such as payment for order flow and exchange fee structures. The Company recently received an information request from the SEC requesting, among other items, information regarding these market structure matters, to which the Company is in the process of responding. | ||||||||||||
Lease and Contract Obligations | ||||||||||||
Capital Leases | ||||||||||||
The Company enters into capitalized lease obligations related to certain computer equipment. These obligations represent drawdowns under a revolving secured lending facility with a single lender. At March 31, 2014, the obligations have a weighted-average interest rate of 4.08% 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 March 31, 2014 consist of (in thousands): | ||||||||||||
Minimum Payments | ||||||||||||
Nine months ending December 31, 2014 | $ | 6,341 | ||||||||||
2015 | 3,054 | |||||||||||
2016 | 982 | |||||||||||
2017 | 164 | |||||||||||
Total | $ | 10,541 | ||||||||||
The total interest expense related to capital leases for the three months ended March 31, 2014, and 2013 included in the Consolidated Statements Operations is as follows (in thousands): | ||||||||||||
For the three months ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Interest expense - Capital leases | $ | 88 | $ | 250 | ||||||||
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 $5.1 million and $2.5 million for the three months ended March 31, 2014 and 2013, 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 March 31, 2014, 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 | ||||||||||
Nine months ending December 31, 2014 | $ | 22,775 | $ | 3,157 | $ | 19,618 | ||||||
Year ending December 31, 2015 | 29,525 | 4,914 | 24,611 | |||||||||
Year ending December 31, 2016 | 29,183 | 4,850 | 24,333 | |||||||||
Year ending December 31, 2017 | 27,640 | 4,426 | 23,214 | |||||||||
Year ending December 31, 2018 | 26,796 | 2,720 | 24,076 | |||||||||
Thereafter through December 31, 2027 | 82,676 | 12,521 | 70,155 | |||||||||
Total | $ | 218,595 | $ | 32,588 | $ | 186,007 | ||||||
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 March 31, 2014, 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. |
Financial_instruments_with_Off
Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk | 3 Months Ended |
Mar. 31, 2014 | |
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 in global equities, fixed income, futures, options, commodities and foreign currencies, 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 March 31, 2014 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 | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Business Segments | ' | |||||||||||||||
Business Segments | ||||||||||||||||
As of March 31, 2014, 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 options markets across global equities, options, fixed income, foreign currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, institutions and banks. Principal trading in the Market Making segment primarily consists of direct-to-client and non-client exchange-based electronic market making, including trade executions conducted as an equities DMM on the NYSE and NYSE Amex. The Company is an active participant on all major global equity and futures exchanges and also trades on substantially all domestic electronic options exchanges. As a complement to electronic market making, the 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 AIM of the London Stock Exchange. | ||||||||||||||||
The Global Execution Services segment comprises agency execution services and trading venues, offering trading in global equities, options, foreign exchange, fixed income and futures to institutions, banks and broker dealers. The Company generally earns commissions as an agent between principals to transactions that are executed within this segment, however, the Company will commit capital on behalf of clients as needed. Agency-based, execution-only trading in the segment is done primarily through a variety of access points: (i) self-directed trading in global equities through a suite of algorithms or via an execution management system; (ii) institutional high touch sales traders executing program, block and riskless principal trades in global equities and ETFs; (iii) an institutional spot foreign exchange ECN; (iv) a fixed income ECN that also offers trading applications; (v) an ATS for global equities; and (vi) futures execution and clearing through a FCM. | ||||||||||||||||
The Corporate and Other segment principally 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 contains 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 March 31, 2014: | ||||||||||||||||
Revenues | $ | 277,346 | $ | 87,220 | $ | 19,091 | $ | 383,657 | ||||||||
Pre-tax earnings | 76,032 | 2,016 | (18,664 | ) | 59,384 | |||||||||||
Total assets | 3,931,292 | 1,264,245 | 1,834,739 | 7,030,276 | ||||||||||||
For the three months ended March 31, 2013 | ||||||||||||||||
Revenues | $ | 102,067 | $ | 9,274 | $ | 3,651 | $ | 114,992 | ||||||||
Pre-tax earnings | 5,887 | (1,827 | ) | (8,918 | ) | (4,858 | ) | |||||||||
Total assets | 1,434,354 | 29,448 | 261,119 | 1,724,921 | ||||||||||||
In the first quarter of 2014, the Company began to charge the Market Making and Global Execution Services segments for the cost of aggregate debt interest. The interest amount charged to each of the segments is determined based on capital limits and requirements. Historically, debt interest was included within the Corporate and Other segment. This change in the measurement of segment profitability has no impact on the consolidated results and will only be reported prospectively, and will not be reflected in any prior period financial results. For the three months ended March 31, 2014 debt interest expense included in the results of the Market Making and Global Execution Services was $7.2 million and $2.4 million, respectively. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Subsequent Events | |
Principal repayment under Credit Agreement | |
On April 15, 2014, the Company made a final $50.0 million principal repayment under the First Lien Credit Facility and will record an additional $2.0 million in writedown of capitalized debt costs in the second quarter of 2014. With the repayment, the Company has fully repaid the $535.0 million First Lien Credit Facility entered into on July 1, 2013 and terminated the Credit Agreement ahead of its December 5, 2017 maturity date. | |
Stock repurchase program | |
On May 1, 2014, the Board of Directors of the Company approved a program to repurchase up to a total of $150.0 million of shares of the Company's outstanding KCG Class A Common Stock and KCG Warrants, subject to compliance with the covenants contained in the Company’s debt agreements. Under the repurchase program, the Company may repurchase KCG Class A Common Stock or KCG Warrants from time to time in open market transactions, accelerated stock buyback programs, tender offers, privately negotiated transactions or by other means. Repurchases of shares may also be made under a Rule 10b5-1 plan. The size of the program is based on the maximum amount of repurchases currently permitted under covenants contained in the Senior Secured Notes. The timing and amount of repurchase transactions will be based on market conditions, share price, legal requirements and other factors. The program has no expiration date and may be suspended, modified or discontinued at any time without prior notice. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 3 Months Ended | |
Mar. 31, 2014 | ||
Accounting Policies [Abstract] | ' | |
Basis of consolidation and form of presentation | ' | |
Basis of consolidation and form of presentation | ||
The Consolidated Financial Statements, prepared in conformity with GAAP, include the accounts of the Company and its subsidiaries. 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. | ||
Change in Accounting Principal | ' | |
Change in accounting principle | ||
As discussed in Footnote 9 "Investments", during the first quarter of 2014 the Company changed its method of accounting for its investment in BATS Global Markets, Inc. ("BATS") following the merger of BATS and Direct Edge Holdings LLC ("Direct Edge"). | ||
As a result of the change in accounting principle, the Consolidated Statement of Financial Condition at December 31, 2013 has been adjusted as follows: Investments increased by approximately $3.4 million, Deferred tax asset, net decreased by $1.1 million and Retained earnings increased by $2.3 million. The Consolidated Statement of Operations for the three months ended March 31, 2013 has been adjusted to increase Investment income and other, net by $2.4 million. | ||
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 cash equivalents segregated under federal and other regulations | ||
The Company maintains custody of customer funds and is obligated by rules and regulations mandated by the U.S. Securities and Exchange Commission (“SEC”) and the Commodity 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 cash equivalents 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, relate to market making and trading activities, include listed and other equity securities, listed equity options and fixed income securities which are recorded on a trade date basis and carried at fair value. Trading revenues, net, which comprises 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. | ||
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, and obtains additional collateral or refunds excess collateral 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. | |
The Company’s securities borrowed, securities loaned and financial instruments sold under agreements to repurchase 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 | ' | |
The Company’s securities borrowed, securities loaned and financial instruments sold under agreements to repurchase 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. | ||
Investments | ' | |
Investments | ||
Investments primarily comprise strategic noncontrolling equity ownership interests in financial services-related businesses and are held by the Company's non-broker dealer subsidiaries. These strategic investments are accounted for under either the equity method, at cost or at fair value. The equity method of accounting is used when the Company has significant influence. Strategic investments are held at cost, less impairment if any, when the investment does not have a readily determined fair value, and the Company is not considered to exert significant influence on operating and financial policies of the investee. Strategic investments with a readily determinable fair value are held at fair value. | ||
Prior to the Mergers, GETCO had a strategic investment in Knight which was classified as available for sale and held at fair value with any unrealized gains or losses recorded in Other comprehensive income or 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. | ||
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 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 amortizes intangible assets with a finite life 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. | ||
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's foreign subsidiaries generally use the U.S. dollar as their functional currency. Effective January 1, 2014, one of the Company's U.K. subsidiaries changed its functional currency from British pounds to U.S. dollars. The Company has a subsidiary in India that utilizes the Indian rupee as its functional currency. | ||
Assets and liabilities of this Indian subsidiary 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 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 March 31, 2014 and 2013, the Company recorded losses on foreign currency transactions of $0.8 million and $0.6 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 income or loss 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 restricted stock units ("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 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 projected sub-lease income upon the date the Company ceases to use the excess real estate. 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. | ||
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 | ||
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 March 2013, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“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 was effective for reporting periods beginning after December 15, 2013. The adoption of this ASU did not have an impact 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 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 was effective for reporting periods beginning after December 15, 2013. 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 April 2014, the FASB issued an ASU which changes the criteria for determining which disposals are required to be presented as discontinued operations and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The updated guidance is effective for interim and annual reporting periods beginning after December 31, 2014, with early adoption permitted. |
Merger_of_GETCO_and_Knight_Tab
Merger of GETCO and Knight (Tables) | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Business Combinations [Abstract] | ' | ||||||
Schedule of Business Acquisitions, by Acquisition | ' | ||||||
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 cash equivalents 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 | 1,369,474 | ||||||
Fixed assets and leasehold improvements | 80,280 | ||||||
Investments | 106,353 | ||||||
Intangible assets | 155,425 | ||||||
Assets within discontinued operations | 5,607,063 | ||||||
Deferred tax asset, net | 62,329 | ||||||
Other assets | 141,617 | ||||||
Total Assets | $ | 11,331,629 | |||||
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 | 127,204 | ||||||
Liabilities within discontinued operations | 5,518,168 | ||||||
Long-term debt | 375,000 | ||||||
Total Liabilities | $ | 9,970,807 | |||||
Total identified assets acquired, net of assumed liabilities | 1,360,822 | ||||||
Goodwill | 12,312 | ||||||
Total Purchase Price | $ | 1,373,134 | |||||
Amounts preliminarily allocated to intangible assets and goodwill, and the amortization period for intangible assets with finite useful lives, were as follows (dollars in thousands): | |||||||
Amortization | |||||||
Amount | Years | ||||||
Technology | $ | 110,504 | 5 years | ||||
Customer relationships | 35,000 | 9 - 11 years | |||||
Trade names | 4,000 | 10 years | |||||
Trading rights (1) | 5,921 | 7 years | |||||
Intangible assets | 155,425 | ||||||
Goodwill | 12,312 | ||||||
Total | $ | 167,737 | |||||
-1 | Trading rights include both assets with a finite useful life and assets with an indefinite useful life. The 7 years amortization period only applies to assets with a finite useful life. |
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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 ended March 31, | ||||||||
2014 | 2013 | |||||||
Interest Income | $ | 3,351 | $ | 987 | ||||
Interest Expense | (2,403 | ) | (1,108 | ) | ||||
Interest, net | $ | 948 | $ | (121 | ) | |||
Net Trading Revenue Including Dividend Income and Expense | ' | |||||||
Trading revenue, net includes dividend income and expense as follows (in thousands): | ||||||||
For the three months ended March 31, | ||||||||
2014 | 2013 | |||||||
Dividend Income | $ | 9,783 | $ | 502 | ||||
Dividend Expense | $ | (7,575 | ) | $ | (416 | ) |
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 3 Months Ended | |||
Mar. 31, 2014 | ||||
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 months ended March 31, | ||||
2014 | ||||
Additional Loss on Sale | $ | (1,312 | ) | |
Expenses: | ||||
Compensation | $ | 46 | ||
Other expenses | 662 | |||
Total Expenses | 708 | |||
Pre-tax loss from discontinued operations | (2,020 | ) | ||
Income tax benefit | 767 | |||
Loss from discontinued operations, net of tax | $ | (1,253 | ) |
Assets_Segregated_or_Held_in_S1
Assets Segregated or Held in Separate Accounts Under Federal or Other Regulations (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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): | ||||||||
March 31, | 31-Dec-13 | |||||||
2014 | ||||||||
Cash and cash equivalents segregated under federal or other regulations | $ | 208,836 | $ | 183,082 | ||||
Receivables from brokers, dealers and clearing organizations (1) | 317,059 | 304,294 | ||||||
Total assets segregated or held in separate accounts under federal or other regulations | $ | 525,895 | $ | 487,376 | ||||
(1) Segregated assets included within Receivables from brokers, dealers and clearing organizations comprise cash and cash equivalents and U.S. government obligations primarily held as deposits with exchange clearing organizations. |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
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 | |||||||||||||||||||||||||
31-Mar-14 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Financial instruments owned, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 2,205,013 | $ | — | $ | — | $ | 2,205,013 | |||||||||||||||||
Listed options | 231,150 | — | — | 231,150 | |||||||||||||||||||||
U.S. government and Non-U.S. government obligations (2) | 97,676 | — | — | 97,676 | |||||||||||||||||||||
Corporate debt | 55,500 | — | — | 55,500 | |||||||||||||||||||||
Total Financial instruments owned, at fair value | 2,589,339 | — | — | 2,589,339 | |||||||||||||||||||||
Securities on deposit with clearing organizations (3) | 200,004 | — | — | 200,004 | |||||||||||||||||||||
Investment in CME Group (4) | 3,703 | — | — | 3,703 | |||||||||||||||||||||
Deferred compensation investments (4) | — | 718 | — | 718 | |||||||||||||||||||||
Investment in Deephaven Funds (4) | — | 1,257 | — | 1,257 | |||||||||||||||||||||
Total assets held at fair value | $ | 2,793,046 | $ | 1,975 | $ | — | $ | 2,795,021 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Financial instruments sold, not yet purchased, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 1,776,702 | $ | — | $ | — | $ | 1,776,702 | |||||||||||||||||
Listed options | 193,822 | — | — | 193,822 | |||||||||||||||||||||
U.S. government obligations (2) | 48,233 | — | — | 48,233 | |||||||||||||||||||||
Corporate debt | 62,670 | — | — | 62,670 | |||||||||||||||||||||
Foreign currency forward contracts | — | 639 | — | 639 | |||||||||||||||||||||
Total liabilities held at fair value | $ | 2,081,427 | $ | 639 | $ | — | $ | 2,082,066 | |||||||||||||||||
(1) | Equities of $736.5 million have been netted by their respective long and short positions by CUSIP number. | ||||||||||||||||||||||||
(2) | U.S. Government Obligations of $0.4 million have been netted by their respective long and short positions by CUSIP number. | ||||||||||||||||||||||||
(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) | Investment in CME Group, Deferred compensation investments and Investment in Deephaven Funds are included within Investments on the Consolidated Statements of Financial Condition. | ||||||||||||||||||||||||
Assets and Liabilities Measured at | |||||||||||||||||||||||||
Fair Value on a Recurring Basis | |||||||||||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Financial instruments owned, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 2,298,785 | $ | — | $ | — | $ | 2,298,785 | |||||||||||||||||
Listed options | 339,798 | — | — | 339,798 | |||||||||||||||||||||
U.S. government obligations and corporate bonds | 40,053 | — | — | 40,053 | |||||||||||||||||||||
Corporate debt | 43,203 | — | — | 43,203 | |||||||||||||||||||||
Total Financial instruments owned, at fair value | 2,721,839 | — | — | 2,721,839 | |||||||||||||||||||||
Securities on deposit with clearing organizations (2) | 170,235 | — | — | 170,235 | |||||||||||||||||||||
Investment in CME Group (3) | 3,925 | — | — | 3,925 | |||||||||||||||||||||
Deferred compensation investments (3) | — | 117 | — | 117 | |||||||||||||||||||||
Investment in Deephaven Funds (3) | — | 1,958 | — | 1,958 | |||||||||||||||||||||
Total assets held at fair value | $ | 2,895,999 | $ | 2,075 | $ | — | $ | 2,898,074 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Financial instruments sold, not yet purchased, at fair value: | |||||||||||||||||||||||||
Equities (1) | $ | 1,851,006 | $ | — | $ | — | $ | 1,851,006 | |||||||||||||||||
Listed options | 252,282 | — | — | 252,282 | |||||||||||||||||||||
U.S. government obligations | 15,076 | — | — | 15,076 | |||||||||||||||||||||
Corporate debt | 42,122 | — | — | 42,122 | |||||||||||||||||||||
Foreign currency forward contracts | — | 5,014 | — | 5,014 | |||||||||||||||||||||
Total liabilities held at fair value | $ | 2,160,486 | $ | 5,014 | $ | — | $ | 2,165,500 | |||||||||||||||||
(1) Equities of $697.9 million have been netted by their respective long and short positions by CUSIP number. | |||||||||||||||||||||||||
(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) Investment in CME Group, Deferred compensation investments and Investment in Deephaven Funds are included within Investments on the Consolidated Statements of Financial Condition. | |||||||||||||||||||||||||
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 contracts trading activities in the Consolidated Statements of Financial Condition and the gains and losses included in the Consolidated Statements of Operations (fair value and gain (loss) in thousands): | |||||||||||||||||||||||||
31-Mar-14 | |||||||||||||||||||||||||
Financial Statements | Assets | Liabilities | |||||||||||||||||||||||
Location | Fair Value | Contracts | Fair Value | Contracts | |||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | $ | 107 | 315 | $ | 103 | 826 | ||||||||||||||||||
Forward contracts | Financial instruments sold, not yet purchased, at fair value | 433 | 1 | 1,072 | 1 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 1,300 | 2,146 | 1,739 | 2,802 | ||||||||||||||||||||
Listed options | Financial instruments owned/sold, not yet purchased, at fair value | 231,150 | 691,862 | 193,822 | 679,822 | ||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 2,339 | 15,417 | 1,440 | 18,489 | ||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 1,732 | 4,323 | 1,933 | 4,229 | ||||||||||||||||||||
Total | $ | 237,061 | 714,064 | $ | 200,109 | 706,169 | |||||||||||||||||||
31-Dec-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 | $ | 89 | 892 | $ | 142 | 533 | ||||||||||||||||||
Forward contracts | Other assets | 6,913 | 1 | 6,501 | 1 | ||||||||||||||||||||
Forward contracts(1) | Financial instruments sold, not yet purchased, at fair value | — | — | 5,014 | 1 | ||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 223 | 1,069 | 1,089 | 1,046 | ||||||||||||||||||||
Swap contracts | Receivables from/Payables to brokers, dealers and clearing organizations | — | — | 18 | 1 | ||||||||||||||||||||
Listed options | Financial instruments owned/sold, not yet purchased, at fair value | 339,798 | 730,020 | 252,282 | 755,947 | ||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 4,815 | 18,280 | 2,259 | 15,202 | ||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Receivables from/Payables to brokers, dealers and clearing organizations | 3,392 | 10,629 | 1,773 | 3,806 | ||||||||||||||||||||
Total | $ | 355,230 | 760,891 | $ | 269,078 | 776,537 | |||||||||||||||||||
(1) | Designated as hedging instrument. | ||||||||||||||||||||||||
Fair Value of Derivative Instruments Gain Loss Recognized | ' | ||||||||||||||||||||||||
Gain (Loss) Recognized | |||||||||||||||||||||||||
Financial Statements | For the three months | ||||||||||||||||||||||||
ended March 31, | |||||||||||||||||||||||||
Location | 2014 | 2013 | |||||||||||||||||||||||
Derivative instruments not designated as hedging instruments: | |||||||||||||||||||||||||
Foreign currency | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | $ | 2,842 | $ | 2,571 | ||||||||||||||||||||
Forward contracts | Trading revenues, net | 432 | — | ||||||||||||||||||||||
Equity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 8,737 | 9,666 | ||||||||||||||||||||||
Swap contracts | Trading revenues, net | 1,282 | 4,058 | ||||||||||||||||||||||
Listed options (1) | Trading revenues, net | (73,876 | ) | 17,161 | |||||||||||||||||||||
Fixed income | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 8,829 | 20,024 | ||||||||||||||||||||||
Commodity | |||||||||||||||||||||||||
Futures contracts | Trading revenues, net | 13,570 | 11,388 | ||||||||||||||||||||||
$ | (38,184 | ) | $ | 64,868 | |||||||||||||||||||||
Derivative instruments designated as hedging instruments: | |||||||||||||||||||||||||
Foreign exchange - forward contract | Accumulated other comprehensive income | $ | 168 | $ | — | ||||||||||||||||||||
(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. | ||||||||||||||||||||||||
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): | |||||||||||||||||||||||||
31-Mar-14 | 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 | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Listed options | $ | 231,150 | $ | — | $ | 231,150 | $ | — | $ | — | $ | 231,150 | |||||||||||||
Securities borrowed | 1,367,050 | — | 1,367,050 | 1,336,102 | — | 30,948 | |||||||||||||||||||
Receivable from brokers, dealers and clearing organizations (1) | 41,315 | $ | — | 41,315 | 41,315 | $ | — | — | |||||||||||||||||
Foreign currency forward contracts | 433 | $ | 433 | — | — | $ | — | — | |||||||||||||||||
Futures | 5,478 | $ | 4,175 | 1,303 | — | $ | — | 1,303 | |||||||||||||||||
Total Assets | $ | 1,645,426 | $ | 4,608 | $ | 1,640,818 | $ | 1,377,417 | $ | — | $ | 263,401 | |||||||||||||
Liabilities | |||||||||||||||||||||||||
Listed options | $ | 193,822 | $ | — | $ | 193,822 | $ | — | $ | 16,675 | $ | 177,147 | |||||||||||||
Securities loaned | 724,947 | — | 724,947 | 716,348 | — | 8,599 | |||||||||||||||||||
Financial instruments sold under agreements to repurchase | 864,985 | — | 864,985 | 864,977 | — | 8 | |||||||||||||||||||
Foreign currency forward contracts | 1,072 | 433 | 639 | — | 639 | — | |||||||||||||||||||
Futures | 5,215 | 5,215 | — | — | — | — | |||||||||||||||||||
Total Liabilities | $ | 1,790,041 | $ | 5,648 | $ | 1,784,393 | $ | 1,581,325 | $ | 17,314 | $ | 185,754 | |||||||||||||
(1) Represents reverse repurchase agreements at broker dealer. | |||||||||||||||||||||||||
31-Dec-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 | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Listed options | $ | 339,798 | $ | — | $ | 339,798 | $ | — | $ | — | $ | 339,798 | |||||||||||||
Securities borrowed | 1,357,387 | — | 1,357,387 | 1,326,220 | — | 31,167 | |||||||||||||||||||
Receivable from brokers, dealers and clearing organizations (1) | 24,366 | — | 24,366 | 24,249 | — | 117 | |||||||||||||||||||
Foreign currency forward contracts | 6,913 | 6,501 | 412 | — | — | 412 | |||||||||||||||||||
Futures | 8,519 | 4,369 | 4,150 | — | — | 4,150 | |||||||||||||||||||
Total Assets | $ | 1,736,983 | $ | 10,870 | $ | 1,726,113 | $ | 1,350,469 | $ | — | $ | 375,644 | |||||||||||||
Liabilities | |||||||||||||||||||||||||
Listed options | $ | 252,282 | $ | — | $ | 252,282 | $ | — | $ | 10,924 | $ | 241,358 | |||||||||||||
Securities loaned | 733,230 | — | 733,230 | 726,948 | — | 6,282 | |||||||||||||||||||
Financial instruments sold under agreements to repurchase | 640,950 | — | 640,950 | 640,948 | — | 2 | |||||||||||||||||||
Foreign currency forward contracts | 11,515 | 6,501 | 5,014 | — | — | 5,014 | |||||||||||||||||||
Futures | 5,263 | 5,263 | — | — | — | — | |||||||||||||||||||
Swaps | 18 | — | 18 | — | — | 18 | |||||||||||||||||||
Total Liabilities | $ | 1,643,258 | $ | 11,764 | $ | 1,631,494 | $ | 1,367,896 | $ | 10,924 | $ | 252,674 | |||||||||||||
(1) Represents reverse repurchase agreements at broker dealer. |
Collateralized_Transactions_Ta
Collateralized Transactions (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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 and included within Securities borrowed or Receivable from brokers, dealers and clearing organizations on the Consolidated Statements of Financial Condition 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 party (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Collateral permitted to be delivered or repledged | $ | 1,369,805 | $ | 1,315,803 | ||||
Collateral that was delivered or repledged | 1,276,689 | 1,231,468 | ||||||
Collateral permitted to be further repledged by the receiving counterparty | 178,549 | 142,938 | ||||||
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): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Financial instruments owned, at fair value, pledged to counterparties that had the right to deliver or repledge | $ | 549,657 | $ | 552,242 | ||||
Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge | 932,885 | 676,956 | ||||||
Receivable_from_and_Payable_to1
Receivable from and Payable to Brokers, Dealers and Clearing Organizations (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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): | ||||||||
March 31, | December 31, 2013 | |||||||
2014 | ||||||||
Receivable: | ||||||||
Clearing organizations and other | $ | 856,658 | $ | 750,440 | ||||
Assets segregated or held in separate accounts under federal or other regulations | 317,059 | 304,294 | ||||||
Securities failed to deliver | 299,143 | 202,517 | ||||||
Total Receivable | $ | 1,472,860 | $ | 1,257,251 | ||||
Payable: | ||||||||
Clearing organizations and other | $ | 387,774 | $ | 425,196 | ||||
Securities failed to receive | 129,806 | 48,912 | ||||||
Total Payable | $ | 517,580 | $ | 474,108 | ||||
Investments_Tables
Investments (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Investments [Abstract] | ' | |||||||
Summary of Investments | ' | |||||||
Investments comprise strategic investments and investment in the Deephaven Funds. Investments consist of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Strategic investments: | ||||||||
Investments accounted for under the equity method | $ | 81,738 | $ | 110,460 | ||||
Investments held at fair value | 3,703 | 3,925 | ||||||
Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost | 8,953 | 8,953 | ||||||
Total Strategic investments | 94,394 | 123,338 | ||||||
Deferred compensation investments | 718 | 117 | ||||||
Investment in Deephaven Funds | 1,257 | 1,958 | ||||||
Total Investments | $ | 96,369 | $ | 125,413 | ||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||
Summary of Goodwill | ' | ||||||||
The following table summarizes the Company’s goodwill by segment (in thousands): | |||||||||
March 31, | December 31, 2013 | ||||||||
2014 | |||||||||
Market Making | $ | 16,075 | $ | 16,075 | |||||
Global Execution Services | 881 | 881 | |||||||
Total | $ | 16,956 | $ | 16,956 | |||||
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): | |||||||||
March 31, | December 31, 2013 | ||||||||
2014 | |||||||||
Market Making | |||||||||
Technology | $ | 52,244 | $ | 53,315 | |||||
Trading rights | 47,230 | 48,920 | |||||||
Total | 99,474 | 102,235 | |||||||
Global Execution Services | |||||||||
Technology | 36,983 | 38,682 | |||||||
Customer relationships | 32,417 | 33,278 | |||||||
Trade names | 3,700 | 3,800 | |||||||
Total | 73,100 | 75,760 | |||||||
Corporate and Other | |||||||||
Technology | 12,750 | 13,500 | |||||||
Consolidated Total | $ | 185,324 | $ | 191,495 | |||||
March 31, | December 31, 2013 | ||||||||
2014 | |||||||||
Technology (1) | Gross carrying amount | $ | 123,222 | $ | 120,346 | ||||
Accumulated amortization | (21,245 | ) | (14,849 | ) | |||||
Net carrying amount | 101,977 | 105,497 | |||||||
Trading rights (2) | Gross carrying amount | 61,897 | 62,450 | ||||||
Accumulated amortization | (14,667 | ) | (13,530 | ) | |||||
Net carrying amount | 47,230 | 48,920 | |||||||
Customer relationships (3) | Gross carrying amount | 35,000 | 35,000 | ||||||
Accumulated amortization | (2,583 | ) | (1,722 | ) | |||||
Net carrying amount | 32,417 | 33,278 | |||||||
Trade names (4) | Gross carrying amount | 4,000 | 4,000 | ||||||
Accumulated amortization | (300 | ) | (200 | ) | |||||
Net carrying amount | 3,700 | 3,800 | |||||||
Total | Gross carrying amount | 224,119 | 221,796 | ||||||
Accumulated amortization | (38,795 | ) | (30,301 | ) | |||||
Net carrying amount | $ | 185,324 | $ | 191,495 | |||||
(1) | The weighted average remaining life for technology, including capitalized software, is approximately 4 years as of March 31, 2014 and December 31, 2013. | ||||||||
(2) | Trading rights provide the Company with the rights to trade on certain exchanges. The weighted average remaining life of trading rights with definite useful lives is approximately 8 years as of March 31, 2014 and December 31, 2013. As of March 31, 2014 and December 31, 2013, $7.1 million and $7.6 million, respectively, of trading rights have indefinite useful lives. | ||||||||
(3) | Customer relationships relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of March 31, 2014 and December 31, 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 9 and 10 years as of March 31, 2014 and December 31, 2013, 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 ended March 31, | |||||||||
2014 | 2013 | ||||||||
Amortization expense | $ | 8,494 | $ | 1,380 | |||||
Summary of Estimated Amortization Expense for Future Years | ' | ||||||||
As of March 31, 2014, the following table summarizes the Company’s estimated amortization expense for future periods (in thousands): | |||||||||
Amortization | |||||||||
expense | |||||||||
For the nine months ended December 31, 2014 | $ | 26,476 | |||||||
For the year ended December 31, 2015 | 33,544 | ||||||||
For the year ended December 31, 2016 | 32,046 | ||||||||
For the year ended December 31, 2017 | 30,396 | ||||||||
For the year ended December 31, 2018 | 19,396 | ||||||||
Debt_Tables
Debt (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||
Summary of Long-Term Debt | ' | |||||||||||||||
The carrying value and fair value of the Company's debt is as follows (in thousands): | ||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Cash Convertible Senior Subordinated Notes | 117,259 | 116,673 | 117,259 | 118,432 | ||||||||||||
Senior Secured Notes | 305,000 | 327,494 | 305,000 | 320,823 | ||||||||||||
First Lien Credit Facility | 50,000 | 50,000 | 235,000 | 235,000 | ||||||||||||
Total Debt | $ | 472,259 | $ | 494,167 | $ | 657,259 | $ | 674,255 | ||||||||
Recorded Expenses with Respect to Long-Term Debt | ' | |||||||||||||||
The Company recorded expenses with respect to the Debt as follows (in thousands): | ||||||||||||||||
For the three months ended March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Interest expense | $ | 9,416 | $ | 473 | ||||||||||||
Amortization of debt issuance cost (1) | 8,766 | 103 | ||||||||||||||
Commitment fee (1) | 397 | 309 | ||||||||||||||
Total | $ | 18,579 | $ | 885 | ||||||||||||
(1) | $7.6 million of the amortization of debt issuance costs is included in Writedown of debt issuance costs while $1.6 million which includes the remaining amortization of debt issuance costs and the commitment fee is included in Other expense. The writedown amount was incurred as a result of the $185.0 million repayment of the First Lien Credit Facility. |
Related_Parties_Tables
Related Parties (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Related Party Transactions [Abstract] | ' | |||||||
Summary of Balances and Transactions with Related Parties or Their Affiliates | ' | |||||||
As of the date and period indicated below, the Company had the following balances and transactions with the related parties or their affiliates (in thousands): | ||||||||
For the three months ended March 31, | ||||||||
Statement of Operations | 2014 | 2013 | ||||||
Revenues | ||||||||
Commissions and fees | $ | 5,146 | $ | — | ||||
Trading revenues, net | 814 | — | ||||||
Interest, net | 188 | — | ||||||
Total revenues from related parties | $ | 6,148 | $ | — | ||||
Expenses | ||||||||
Execution and clearance fees(1) | $ | (4,292 | ) | $ | (4,894 | ) | ||
Interest expense | 159 | — | ||||||
Other expense | 400 | — | ||||||
Total expenses incurred with respect to related parties | $ | (3,733 | ) | $ | (4,894 | ) | ||
(1) Represents net volume based fees received from providing liquidity to related trading venues. | ||||||||
Statements of Financial Condition | March 31, | December 31, | ||||||
2014 | 2013 | |||||||
Assets | ||||||||
Securities borrowed | $ | 47,107 | $ | 57,732 | ||||
Receivable from brokers, dealers and clearing organizations | 95,089 | 20,826 | ||||||
Other assets | — | 277 | ||||||
Liabilities | ||||||||
Securities loaned | $ | 10,731 | $ | 116,062 | ||||
Payable to brokers, dealers and clearing organizations | 98,389 | 17,820 | ||||||
Accrued expenses and other liabilities | 3,664 | 179 | ||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Share-based Compensation [Abstract] | ' | |||||||||||||
Compensation Expense Relating to Restricted Awards | ' | |||||||||||||
Compensation expense from continuing operations relating to restricted awards, which is primarily recorded in Employee compensation and benefits, and the corresponding income tax benefit, which is recorded in Income tax expense on the Consolidated Statements of Operations are presented in the following table (in thousands): | ||||||||||||||
For the three months ended March 31, | ||||||||||||||
2014 | ||||||||||||||
Stock award compensation expense | $ | 16,238 | ||||||||||||
Income tax benefit | 6,170 | |||||||||||||
The following is a summary of the changes in the incentive units for the three months ended March 31, 2014 (units in thousands): | ||||||||||||||
Vested | ||||||||||||||
Incentive units at December 31, 2013 | 49 | |||||||||||||
Issued | — | |||||||||||||
Vested | — | |||||||||||||
Exercised | (4 | ) | ||||||||||||
Canceled | — | |||||||||||||
Incentive units at March 31, 2014 | 45 | |||||||||||||
Summary of Restricted Awards Activity | ' | |||||||||||||
The following table summarizes restricted awards activity for the three months ended March 31, 2014 (awards in thousands): | ||||||||||||||
Restricted Stock Units | ||||||||||||||
Number of | Weighted- | |||||||||||||
Units | Average | |||||||||||||
Grant date | ||||||||||||||
Fair Value | ||||||||||||||
Outstanding at December 31, 2013 | 8,420 | $ | 10.71 | |||||||||||
Granted | 4,022 | 11.08 | ||||||||||||
Vested | (977 | ) | 11.08 | |||||||||||
Forfeited | (147 | ) | 13.04 | |||||||||||
Outstanding at March 31, 2014 | 11,318 | $ | 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 March 31, | ||||||||||||||
2014 | ||||||||||||||
Stock option and SAR compensation expense | $ | 961 | ||||||||||||
Income tax benefit | 365 | |||||||||||||
Summary of Stock Option Activity | ' | |||||||||||||
The following table summarizes stock option and SAR activity and stock options exercisable for the three months ended March 31, 2014 (awards in thousands): | ||||||||||||||
Number of Stock Awards | Weighted- | Aggregate | Weighted- | |||||||||||
Average | Intrinsic | Average | ||||||||||||
Exercise | Value | Remaining | ||||||||||||
Price | Life (years) | |||||||||||||
Outstanding at December 31, 2013 (1) | 4,967 | $ | 18.45 | |||||||||||
Granted at market value | — | — | ||||||||||||
Exercised | — | — | ||||||||||||
Forfeited or expired | (78 | ) | 40.32 | |||||||||||
Outstanding at March 31, 2014 (1) | 4,889 | $ | 18.1 | $ | 3,372 | 4.05 | ||||||||
Exercisable at March 31, 2014 | 565 | $ | 40.38 | $ | — | 2.25 | ||||||||
Available for future grants at March 31, 2014 (2) | 15,775 | |||||||||||||
(1) Includes 1.7 million of SARs. | ||||||||||||||
(2) Represents both options and awards available for grant. | ||||||||||||||
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): | ||||||||||||||
For the three months ended March 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Class B and E units | $ | — | $ | 2,918 | ||||||||||
Incentive units | (174 | ) | 409 | |||||||||||
Total | $ | (174 | ) | $ | 3,327 | |||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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 ended March 31, | ||||||||
2014 | 2013 | |||||||
U.S. federal statutory income tax (benefit) expense | $ | 20,784 | $ | (1,700 | ) | |||
Income not subject to U.S. corporate income tax | — | 1,745 | ||||||
U.S. state and local income taxes, net of U.S. federal income tax effect | 1,280 | 226 | ||||||
Nondeductible expenses (1) | 203 | 38 | ||||||
Foreign taxes | 63 | 1,798 | ||||||
Other, net | 137 | (133 | ) | |||||
Income tax expense | $ | 22,467 | $ | 1,974 | ||||
(1) Nondeductible expenses include nondeductible compensation and meals and entertainment. |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Equity [Abstract] | ' | ||||||||||||
Accumulated Other Comprehensive Income (Loss) | ' | ||||||||||||
The following table presents changes in Accumulated other comprehensive income, net of tax by component for the three months ended March 31, 2014 and 2013 (in thousands): | |||||||||||||
Unrealized Gains (Losses) on Available-for-Sale Securities | Foreign Currency Translation Adjustments | Total | |||||||||||
Balance December 31, 2013 | $ | 36 | $ | 1,365 | $ | 1,401 | |||||||
Other comprehensive income (loss) | (137 | ) | 201 | 64 | |||||||||
Balance March 31, 2014 | $ | (101 | ) | $ | 1,566 | $ | 1,465 | ||||||
Unrealized Gains on Available-for-Sale Securities | Foreign Currency Translation Adjustments | Total | |||||||||||
Balance December 31, 2012 | $ | 114,319 | $ | — | $ | 114,319 | |||||||
Other comprehensive income | 11,944 | 84 | 12,028 | ||||||||||
Balance March 31, 2013 | $ | 126,263 | $ | 84 | $ | 126,347 | |||||||
For the three months ended March 31, 2013, the Company recorded $11.9 million in unrealized gains related to GETCO's investment in Knight prior to the Mergers. |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Schedule of Reconciliation 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 months ended March 31, 2014 and 2013 (in thousands): | ||||||||||||||||
For the three months ended March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Numerator / | Denominator / | Numerator / | Denominator / | |||||||||||||
net income | shares | net income | shares | |||||||||||||
Income from continuing operations and shares used in basic calculations | $ | 36,917 | 115,569 | $ | (6,832 | ) | 45,452 | |||||||||
Effect of dilutive stock based awards | 2,329 | — | ||||||||||||||
Income from continuing operations and shares used in diluted calculations | $ | 36,917 | 117,898 | $ | (6,832 | ) | 45,452 | |||||||||
Basic earnings per common share from continuing operations | $ | 0.32 | $ | (0.15 | ) | |||||||||||
Diluted earnings per common share from continuing operations | $ | 0.31 | $ | (0.15 | ) | |||||||||||
Commitments_and_Contingent_Lia1
Commitments and Contingent Liabilities (Tables) | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||||||||
Schedule of Lease and Contract Obligations | ' | |||||||||||
The future minimum payments including interest under the capitalized leases at March 31, 2014 consist of (in thousands): | ||||||||||||
Minimum Payments | ||||||||||||
Nine months ending December 31, 2014 | $ | 6,341 | ||||||||||
2015 | 3,054 | |||||||||||
2016 | 982 | |||||||||||
2017 | 164 | |||||||||||
Total | $ | 10,541 | ||||||||||
Schedule of Interest Expense, Capital Lease | ' | |||||||||||
The total interest expense related to capital leases for the three months ended March 31, 2014, and 2013 included in the Consolidated Statements Operations is as follows (in thousands): | ||||||||||||
For the three months ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Interest expense - Capital leases | $ | 88 | $ | 250 | ||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | ' | |||||||||||
The Company leases certain computer and other equipment under noncancelable operating leases. As of March 31, 2014, 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 | ||||||||||
Nine months ending December 31, 2014 | $ | 22,775 | $ | 3,157 | $ | 19,618 | ||||||
Year ending December 31, 2015 | 29,525 | 4,914 | 24,611 | |||||||||
Year ending December 31, 2016 | 29,183 | 4,850 | 24,333 | |||||||||
Year ending December 31, 2017 | 27,640 | 4,426 | 23,214 | |||||||||
Year ending December 31, 2018 | 26,796 | 2,720 | 24,076 | |||||||||
Thereafter through December 31, 2027 | 82,676 | 12,521 | 70,155 | |||||||||
Total | $ | 218,595 | $ | 32,588 | $ | 186,007 | ||||||
Business_Segments_Tables
Business Segments (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
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 March 31, 2014: | ||||||||||||||||
Revenues | $ | 277,346 | $ | 87,220 | $ | 19,091 | $ | 383,657 | ||||||||
Pre-tax earnings | 76,032 | 2,016 | (18,664 | ) | 59,384 | |||||||||||
Total assets | 3,931,292 | 1,264,245 | 1,834,739 | 7,030,276 | ||||||||||||
For the three months ended March 31, 2013 | ||||||||||||||||
Revenues | $ | 102,067 | $ | 9,274 | $ | 3,651 | $ | 114,992 | ||||||||
Pre-tax earnings | 5,887 | (1,827 | ) | (8,918 | ) | (4,858 | ) | |||||||||
Total assets | 1,434,354 | 29,448 | 261,119 | 1,724,921 | ||||||||||||
In the first quarter of 2014, the Company began to charge the Market Making and Global Execution Services segments for the cost of aggregate debt interest. The interest amount charged to each of the segments is determined based on capital limits and requirements. Historically, debt interest was included within the Corporate and Other segment. This change in the measurement of segment profitability has no impact on the consolidated results and will only be reported prospectively, and will not be reflected in any prior period financial results. For the three months ended March 31, 2014 debt interest expense included in the results of the Market Making and Global Execution Services was $7.2 million and $2.4 million, respectively. |
Merger_of_GETCO_and_Knight_Det
Merger of GETCO and Knight (Detail) (USD $) | 0 Months Ended | 3 Months Ended |
Share data in Millions, except Per Share data, unless otherwise specified | Jul. 02, 2013 | Mar. 31, 2014 |
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 | ' |
Shares granted to former shareholders (in shares) | 41.9 | ' |
Jefferies [Member] | ' | ' |
Merger Transaction [Line Items] | ' | ' |
Maximum cash entitled by shareholders to receive under the agreement | $720,000,000 | ' |
GETCO [Member] | ' | ' |
Merger Transaction [Line Items] | ' | ' |
Number of shares to be received by GETCO members (in shares) | 75.9 | ' |
Number of warrants to acquire shares of common stock (in shares) | 24.3 | ' |
Warrants one [Member] | ' | ' |
Merger Transaction [Line Items] | ' | ' |
Warrants receivable from holding company (in shares) | 8.1 | ' |
Exercise price of warrant (in dollars per share) | $12 | ' |
Term of warrant | '4 years | ' |
Warrants two [Member] | ' | ' |
Merger Transaction [Line Items] | ' | ' |
Warrants receivable from holding company (in shares) | 8.1 | ' |
Exercise price of warrant (in dollars per share) | $13.50 | ' |
Term of warrant | '5 years | ' |
Warrants three [Member] | ' | ' |
Merger Transaction [Line Items] | ' | ' |
Warrants receivable from holding company (in shares) | 8.1 | ' |
Exercise price of warrant (in dollars per share) | $15 | ' |
Term of warrant | '6 years | ' |
Knight Class A Common Stock [Member] | ' | ' |
Merger Transaction [Line Items] | ' | ' |
Par Value (in dollars per share) | $0.01 | ' |
KCG Class A Common Stock [Member] | ' | ' |
Merger Transaction [Line Items] | ' | ' |
Par Value (in dollars per share) | $0.01 | ' |
Knight [Member] | ' | ' |
Merger Transaction [Line Items] | ' | ' |
Total Purchase Price | 1,373,134,000 | ' |
Goodwill adjustments | ' | 700,000 |
Deferred tax asset, net | $62,329,000 | ' |
Merger_of_GETCO_and_Knight_Ass
Merger of GETCO and Knight - Assets Acquired and Liabilities Assumed (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Jul. 02, 2013 |
In Thousands, unless otherwise specified | Knight [Member] | ||
Identifiable Net Assets | ' | ' | ' |
Cash and cash equivalents | ' | ' | $509,133 |
Cash and cash equivalents 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 | ' | ' | 1,369,474 |
Fixed assets and leasehold improvements | ' | ' | 80,280 |
Investments | ' | ' | 106,353 |
Intangible assets | ' | ' | 155,425 |
Assets within discontinued operations | ' | ' | 5,607,063 |
Deferred tax asset, net | ' | ' | 62,329 |
Other assets | ' | ' | 141,617 |
Total Assets | ' | ' | 11,331,629 |
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 | ' | ' | 127,204 |
Liabilities within discontinued operations | ' | ' | 5,518,168 |
Long-term debt | ' | ' | 375,000 |
Total Liabilities | ' | ' | 9,970,807 |
Total identified assets acquired, net of assumed liabilities | ' | ' | 1,360,822 |
Goodwill | 16,956 | 16,956 | 12,312 |
Total Purchase Price | ' | ' | $1,373,134 |
Merger_of_GETCO_and_Knight_Int
Merger of GETCO and Knight - Intangible Assets Acquired (Details) (USD $) | 3 Months Ended | 0 Months Ended | 0 Months Ended | |||||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | Jul. 02, 2013 | |
Knight [Member] | Technology [Member] | Customer relationships [Member] | Trade names [Member] | Trading rights [Member] | Minimum [Member] | Maximum [Member] | ||||
Knight [Member] | Knight [Member] | Knight [Member] | Knight [Member] | Customer relationships [Member] | Customer relationships [Member] | |||||
Knight [Member] | Knight [Member] | |||||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Intangible assets | ' | ' | $155,425 | $110,504 | $35,000 | $4,000 | $5,921 | [1] | ' | ' |
Goodwill | 16,956 | 16,956 | 12,312 | ' | ' | ' | ' | ' | ' | |
Total | ' | ' | $167,737 | ' | ' | ' | ' | ' | ' | |
Weighted average useful life | '6 years | ' | ' | '5 years | ' | '10 years | '7 years | '9 years | '11 years | |
[1] | Trading rights include both assets with a finite useful life and assets with an indefinite useful life. The 7 years amortization period only applies to assets with a finite useful life. |
Significant_Accounting_Policie3
Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Increase in investments | $96,369,000 | ' | $125,413,000 |
Increase in retained earnings | 247,342,000 | ' | 211,678,000 |
Maximum maturity of short-term investments | '90 days | ' | ' |
Investment Income, Net | 12,155,000 | 2,849,000 | ' |
Foreign currency transactions [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Investment loss | 800,000 | 600,000 | ' |
Software [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Amortization period, in years | '3 years | ' | ' |
Minimum [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Amortization period, in years | '3 years | ' | ' |
Fixed assets, useful life | '3 years | ' | ' |
Maximum [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Amortization period, in years | '10 years | ' | ' |
Fixed assets, useful life | '7 years | ' | ' |
BATS and DE [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Investment Income, Net | 9,600,000 | ' | ' |
Income (Loss) from Equity Method Investments | -6,600,000 | ' | ' |
BATS and DE [Member] | Change in Ownership Interest [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Increase in investments | ' | 3,400,000 | ' |
Decrease in deferred tax assets, net | ' | 1,100,000 | ' |
Increase in retained earnings | ' | 2,300,000 | ' |
Increase in Investment income and other | ' | 2,400,000 | ' |
Direct Edge [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Investment Income, Net | $16,200,000 | ' | ' |
Significant_Accounting_Policie4
Significant Accounting Policies - Schedule of Interest Income and Interest Expense (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Accounting Policies [Abstract] | ' | ' |
Interest Income | $3,351 | $987 |
Interest Expense | -2,403 | -1,108 |
Interest, net | $948 | ($121) |
Significant_Accounting_Policie5
Significant Accounting Policies - Net Trading Revenue Including Dividend Income and Expense (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Accounting Policies [Abstract] | ' | ' |
Dividend Income | $9,783 | $502 |
Dividend Expense | ($7,575) | ($416) |
Discontinued_Operations_Income
Discontinued Operations - Income Disclosures (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Expenses: | ' | ' |
Compensation | $122,319 | $32,209 |
Other | 8,643 | 4,477 |
Total expenses | 324,273 | 119,850 |
Loss from discontinued operations, net of tax | -1,253 | 0 |
Discontinued Operations [Member] | ' | ' |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | ' |
Additional Loss on Sale | -1,312 | ' |
Expenses: | ' | ' |
Compensation | 46 | ' |
Other | 662 | ' |
Total expenses | 708 | ' |
Pre-tax loss from discontinued operations | -2,020 | ' |
Income tax benefit | 767 | ' |
Loss from discontinued operations, net of tax | ($1,253) | ' |
Assets_Segregated_or_Held_in_S2
Assets Segregated or Held in Separate Accounts Under Federal or Other Regulations - (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2012 | |
In Thousands, unless otherwise specified | |||
Cash and Cash Equivalents [Abstract] | ' | ' | |
Cash and cash equivalents segregated under federal or other regulations | $208,836 | $183,082 | |
Receivables from brokers, dealers and clearing organizations | 317,059 | [1] | 304,294 |
Total assets segregated or held in separate accounts under federal or other regulations | $525,895 | $487,376 | |
[1] | Segregated assets included within Receivables from brokers, dealers and clearing organizations comprise cash and cash equivalents and U.S. government obligations primarily held as deposits with exchange clearing organizations. |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | $2,589,339 | $2,721,839 | ||
Total fair value of financial instrument assets | 2,795,021 | 2,898,074 | ||
Financial instruments sold, not yet purchased, at fair value | 2,082,066 | 2,165,500 | ||
Total fair value of financial instrument liabilities | 2,082,066 | 2,165,500 | ||
Equities [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 2,205,013 | [1] | 2,298,785 | [2] |
Financial instruments sold, not yet purchased, at fair value | 1,776,702 | [1] | 1,851,006 | [2] |
Listed equity options [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 231,150 | 339,798 | ||
Financial instruments sold, not yet purchased, at fair value | 193,822 | 252,282 | ||
U.S. government obligations [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 97,676 | [3] | 40,053 | |
Financial instruments sold, not yet purchased, at fair value | 48,233 | [3] | 15,076 | |
Corporate debt [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 55,500 | 43,203 | ||
Financial instruments sold, not yet purchased, at fair value | 62,670 | 42,122 | ||
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 | 200,004 | [4] | 170,235 | [4] |
CME Group [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 3,703 | [5] | 3,925 | [5] |
Deferred compensation investments [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 718 | [5] | 117 | [5] |
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 | 1,257 | [5] | 1,958 | [5] |
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 | 639 | 5,014 | ||
Level 1 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 2,589,339 | 2,721,839 | ||
Total fair value of financial instrument assets | 2,793,046 | 2,895,999 | ||
Total fair value of financial instrument liabilities | 2,081,427 | 2,160,486 | ||
Level 1 [Member] | Equities [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Financial instruments owned, at fair value | 2,205,013 | [1] | 2,298,785 | [2] |
Financial instruments sold, not yet purchased, at fair value | 1,776,702 | [1] | 1,851,006 | [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 | 231,150 | 339,798 | ||
Financial instruments sold, not yet purchased, at fair value | 193,822 | 252,282 | ||
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 | 97,676 | [3] | 40,053 | |
Financial instruments sold, not yet purchased, at fair value | 48,233 | [3] | 15,076 | |
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 | 55,500 | 43,203 | ||
Financial instruments sold, not yet purchased, at fair value | 62,670 | 42,122 | ||
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 | 200,004 | [4] | 170,235 | [4] |
Level 1 [Member] | CME Group [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 3,703 | [5] | 3,925 | [5] |
Level 1 [Member] | Deferred compensation investments [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 0 | [5] | 0 | [5] |
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 | [5] | 0 | [5] |
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 | 0 | ||
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 | 1,975 | 2,075 | ||
Total fair value of financial instrument liabilities | 639 | 5,014 | ||
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] | 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 | [3] | 0 | |
Financial instruments sold, not yet purchased, at fair value | 0 | [3] | 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 | [4] | 0 | [4] |
Level 2 [Member] | CME Group [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 0 | [5] | 0 | [5] |
Level 2 [Member] | Deferred compensation investments [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 718 | [5] | 117 | [5] |
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 | 1,257 | [5] | 1,958 | [5] |
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 | 639 | 5,014 | ||
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 | ||
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] | 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 | [3] | 0 | |
Financial instruments sold, not yet purchased, at fair value | 0 | [3] | 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 | [4] | 0 | [4] |
Level 3 [Member] | CME Group [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 0 | [5] | 0 | [5] |
Level 3 [Member] | Deferred compensation investments [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Total fair value of financial instrument assets | 0 | [5] | 0 | [5] |
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 | [5] | 0 | [5] |
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 | $0 | ||
[1] | Equities of $736.5 million have been netted by their respective long and short positions by CUSIP number. | |||
[2] | Equities of $697.9 million have been netted by their respective long and short positions by CUSIP number. | |||
[3] | U.S. Government Obligations of $0.4 million have been netted by their respective long and short positions by CUSIP number. | |||
[4] | 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. | |||
[5] | Investment in CME Group, Deferred compensation investments and Investment in Deephaven Funds are included within Investments on the Consolidated Statements of Financial Condition. |
Fair_Value_of_Financial_Instru3
Fair Value of Financial Instruments - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Parenthetical) (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Equities [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Securities netted by respective long and short positions | $736.50 | $697.90 |
U.S. government obligations [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Securities netted by respective long and short positions | $0.40 | ' |
Fair_Value_of_Financial_Instru4
Fair Value of Financial Instruments - Additional Information (Detail) | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
USD ($) | INR | USD ($) | |
Fair Value Disclosures [Abstract] | ' | ' | ' |
Transfers of financial instruments between levels | $0 | ' | $0 |
Transfers of financial instruments between level 2 to level 1 | 0 | ' | 0 |
Transfers of financial instruments out of level 3 | 0 | ' | 0 |
Notional value of foreign currency forward | $6,200,000 | 427,200,000 | ' |
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 $) | Mar. 31, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | contract | contract | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | $237,061 | $355,230 | |
Asset Contract | 714,064 | 760,891 | |
Liabilities Fair Value | 200,109 | 269,078 | |
Liabilities Contract | 706,169 | 776,537 | |
Receivables From/Payables to Brokers, Dealers and Clearing Organizations [Member] | Derivative instruments not designated as hedging instruments [Member] | Foreign Currency Futures contracts [Member] | ' | ' | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | |
Asset Fair Value | 107 | 89 | |
Asset Contract | 315 | 892 | |
Liabilities Fair Value | 103 | 142 | |
Liabilities Contract | 826 | 533 | |
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 | 1,300 | 223 | |
Asset Contract | 2,146 | 1,069 | |
Liabilities Fair Value | 1,739 | 1,089 | |
Liabilities Contract | 2,802 | 1,046 | |
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 | ' | 0 | |
Asset Contract | ' | 0 | |
Liabilities Fair Value | ' | 18 | |
Liabilities Contract | ' | 1 | |
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 | 2,339 | 4,815 | |
Asset Contract | 15,417 | 18,280 | |
Liabilities Fair Value | 1,440 | 2,259 | |
Liabilities Contract | 18,489 | 15,202 | |
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 | 1,732 | 3,392 | |
Asset Contract | 4,323 | 10,629 | |
Liabilities Fair Value | 1,933 | 1,773 | |
Liabilities Contract | 4,229 | 3,806 | |
Financial Instruments Owned, at Fair Value [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 | 433 | ' | |
Asset Contract | 1 | ' | |
Liabilities Fair Value | 1,072 | ' | |
Liabilities Contract | 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 | 231,150 | 339,798 | |
Asset Contract | 691,862 | 730,020 | |
Liabilities Fair Value | 193,822 | 252,282 | |
Liabilities Contract | 679,822 | 755,947 | |
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 | ' | 6,913 | |
Asset Contract | ' | 1 | |
Liabilities Fair Value | ' | 6,501 | |
Liabilities Contract | ' | 1 | |
Accrued Expenses and Other Liabilties [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 | ' | $5,014 | [1] |
Liabilities Contract | ' | 1 | [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) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Accumulated other comprehensive income (loss) [Member] | 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) | $168 | $0 | ||
Trading Revenues, Net [Member] | 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) | -38,184 | 64,868 | ||
Trading Revenues, Net [Member] | Derivative instruments not designated as hedging instruments [Member] | Foreign futures contracts [Member] | ' | ' | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 2,842 | 2,571 | ||
Trading Revenues, Net [Member] | 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) | 432 | 0 | ||
Trading Revenues, Net [Member] | 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) | 8,737 | 9,666 | ||
Trading Revenues, Net [Member] | 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) | 1,282 | 4,058 | ||
Trading Revenues, Net [Member] | 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) | -73,876 | [1] | 17,161 | [1] |
Trading Revenues, Net [Member] | 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) | 8,829 | 20,024 | ||
Trading Revenues, Net [Member] | 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) | $13,570 | $11,388 | ||
[1] | Realized gains and losses on listed equity 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 $) | Mar. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized, Asset | $1,645,426 | $1,736,983 | ||
Gross Amounts Offset in the Statements of Financial Condition, Assets | 4,608 | 10,870 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 1,640,818 | 1,726,113 | ||
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, Assets | 1,377,417 | 1,350,469 | ||
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Assets | 0 | 0 | ||
Net Amount, Assets | 263,401 | 375,644 | ||
Gross Amounts of Recognized Derivatives, Liability | 1,790,041 | 1,643,258 | ||
Gross Amounts of Recognized Derivatives, Liability | 5,648 | 11,764 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 1,784,393 | 1,631,494 | ||
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments, Liability | 1,581,325 | 1,367,896 | ||
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Liability | 17,314 | 10,924 | ||
Net Amount, Liability | 185,754 | 252,674 | ||
Listed equity options [Member] | ' | ' | ||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized, Asset | 231,150 | 339,798 | ||
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | 0 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 231,150 | 339,798 | ||
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 | 231,150 | 339,798 | ||
Gross Amounts of Recognized Derivatives, Liability | 193,822 | 252,282 | ||
Gross Amounts of Recognized Derivatives, Liability | 0 | 0 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 193,822 | 252,282 | ||
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 | 16,675 | 10,924 | ||
Net Amount, Liability | 177,147 | 241,358 | ||
Securities borrowed [Member] | ' | ' | ||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized, Asset | 1,367,050 | 1,357,387 | ||
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | 0 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 1,367,050 | 1,357,387 | ||
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, Assets | 1,336,102 | 1,326,220 | ||
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Assets | 0 | 0 | ||
Net Amount, Assets | 30,948 | 31,167 | ||
Receivable from brokers, dealers and clearing organizations [Member] | ' | ' | ||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized, Asset | 41,315 | [1] | 24,366 | [1] |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | [1] | 0 | [1] |
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 41,315 | [1] | 24,366 | [1] |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, Assets | 41,315 | [1] | 24,249 | [1] |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Assets | 0 | [1] | 0 | [1] |
Net Amount, Assets | 0 | [1] | 117 | [1] |
Foreign currency forward contracts [Member] | ' | ' | ||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized, Asset | 433 | 6,913 | ||
Gross Amounts Offset in the Statements of Financial Condition, Assets | 433 | 6,501 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 0 | 412 | ||
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 | 0 | 412 | ||
Gross Amounts of Recognized Derivatives, Liability | 1,072 | 11,515 | ||
Gross Amounts of Recognized Derivatives, Liability | 433 | 6,501 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 639 | 5,014 | ||
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 | 639 | 0 | ||
Net Amount, Liability | 0 | 5,014 | ||
Futures [Member] | ' | ' | ||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized, Asset | 5,478 | 8,519 | ||
Gross Amounts Offset in the Statements of Financial Condition, Assets | 4,175 | 4,369 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Assets | 1,303 | 4,150 | ||
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 | 1,303 | 4,150 | ||
Gross Amounts of Recognized Derivatives, Liability | 5,215 | 5,263 | ||
Gross Amounts of Recognized Derivatives, Liability | 5,215 | 5,263 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 0 | 0 | ||
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 | 0 | 0 | ||
Net Amount, Liability | 0 | 0 | ||
Securities loaned [Member] | ' | ' | ||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized Derivatives, Liability | 724,947 | 733,230 | ||
Gross Amounts of Recognized Derivatives, Liability | 0 | 0 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 724,947 | 733,230 | ||
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments, Liability | 716,348 | 726,948 | ||
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Liability | 0 | 0 | ||
Net Amount, Liability | 8,599 | 6,282 | ||
Financial instruments sold under agreements to repurchase [Member} | ' | ' | ||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized Derivatives, Liability | 864,985 | 640,950 | ||
Gross Amounts of Recognized Derivatives, Liability | 0 | 0 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | 864,985 | 640,950 | ||
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments, Liability | 864,977 | 640,948 | ||
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received, Liability | 0 | 0 | ||
Net Amount, Liability | 8 | 2 | ||
Swaps [Member] | ' | ' | ||
Offsetting Liabilities [Line Items] | ' | ' | ||
Gross Amounts of Recognized Derivatives, Liability | ' | 18 | ||
Gross Amounts of Recognized Derivatives, Liability | ' | 0 | ||
Net Amounts of Assets Presented in the Statements of Financial Condition, Liability | ' | 18 | ||
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 | ' | $18 | ||
[1] | Represents reverse repurchase agreements at broker dealer. |
Collateralized_Transactions_Fi
Collateralized Transactions - Financial Instruments at Fair Value Received as Collateral that were Permitted to be Delivered or Repledged (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Collateralized Agreements [Abstract] | ' | ' |
Collateral permitted to be delivered or repledged | $1,369,805 | $1,315,803 |
Collateral that was delivered or repledged | 1,276,689 | 1,231,468 |
Collateral permitted to be further repledged by the receiving counterparty | $178,549 | $142,938 |
Collateralized_Transaction_Add
Collateralized Transaction - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2014 | |
Collateralized Agreements [Abstract] | ' |
Repurchase agreements and other secured financings, maturity (years) | '1 year |
Collateralized_Transactions_Fi1
Collateralized Transactions - Financial Instruments Owned and Pledged to Counterparties that Do Not Have Right to Sell or Repledge (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Repurchase Agreement Counterparty [Line Items] | ' | ' |
Collateral permitted to be delivered or repledged | $1,369,805 | $1,315,803 |
Right to deliver or repledge [Member] | ' | ' |
Repurchase Agreement Counterparty [Line Items] | ' | ' |
Collateral permitted to be delivered or repledged | 549,657 | 552,242 |
Not having the right to deliver or repledge [Member] | ' | ' |
Repurchase Agreement Counterparty [Line Items] | ' | ' |
Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge | $932,885 | $676,956 |
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 $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Receivable/Payable: | ' | ' |
Clearing organizations and other | $856,658 | $750,440 |
Assets segregated or held in separate accounts under federal or other regulations | 317,059 | 304,294 |
Securities failed to deliver | 299,143 | 202,517 |
Total Receivable | 1,472,860 | 1,257,251 |
Clearing organizations and other | 387,774 | 425,196 |
Securities failed to receive | 129,806 | 48,912 |
Total Payable | $517,580 | $474,108 |
Investments_Details
Investments (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Schedule of Equity Method Investments [Line Items] | ' | ' | ' |
Investments accounted for under the equity method | $81,738,000 | ' | $110,460,000 |
Investments held at fair value | 3,703,000 | ' | 3,925,000 |
Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost | 8,953,000 | ' | 8,953,000 |
Total Strategic investments | 94,394,000 | ' | 123,338,000 |
Deferred compensation investments | 718,000 | ' | 117,000 |
Investment in Deephaven Funds | 1,257,000 | ' | 1,958,000 |
Total Investments | 96,369,000 | ' | 125,413,000 |
Percentage of equity in common stock of private companies cover under strategic investment | 20.00% | ' | 20.00% |
Proceeds and distributions from investments | 42,365,000 | 1,201,000 | ' |
Investment income and other, net | 12,155,000 | 2,849,000 | ' |
BATS [Member] | ' | ' | ' |
Schedule of Equity Method Investments [Line Items] | ' | ' | ' |
Percentage of equity in common stock of private companies cover under strategic investment | 16.70% | ' | ' |
Percentage of voting interest held | 19.90% | ' | ' |
BATS and DE [Member] | ' | ' | ' |
Schedule of Equity Method Investments [Line Items] | ' | ' | ' |
Proceeds and distributions from investments | 41,700,000 | ' | ' |
Investment income and other, net | 9,600,000 | ' | ' |
Share of net loss incurred | 6,600,000 | ' | ' |
DE [Member] | ' | ' | ' |
Schedule of Equity Method Investments [Line Items] | ' | ' | ' |
Investment income and other, net | $16,200,000 | ' | ' |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets - Additional Information (Detail) (USD $) | 3 Months Ended | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Jul. 02, 2013 |
Minimum [Member] | Maximum [Member] | Knight [Member] | |||
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Amount | ' | ' | ' | ' | $155,425 |
Goodwill | $16,956 | $16,956 | ' | ' | $12,312 |
Amortization period, in years | ' | ' | '3 years | '10 years | ' |
Weighted average useful life | '6 years | ' | ' | ' | ' |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets - Summary of Goodwill (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Goodwill [Line Items] | ' | ' |
Goodwill | $16,956 | $16,956 |
Market Making [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | 16,075 | 16,075 |
Global Execution Services [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | $881 | $881 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets - Finite-Lived Intangible Assets, Net of Accumulated Amortization (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | $224,119 | $221,796 | ||
Accumulated amortization | -38,795 | -30,301 | ||
Net carrying amount | 185,324 | 191,495 | ||
Market Making [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 99,474 | 102,235 | ||
Electronic Execution Services [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 73,100 | 75,760 | ||
Technology [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | 123,222 | [1] | 120,346 | [1] |
Accumulated amortization | -21,245 | [1] | -14,849 | [1] |
Net carrying amount | 101,977 | [1] | 105,497 | [1] |
Technology [Member] | Market Making [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 52,244 | 53,315 | ||
Technology [Member] | Electronic Execution Services [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 32,417 | 33,278 | ||
Technology [Member] | Corporate and Other [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 12,750 | 13,500 | ||
Trading rights [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | 61,897 | [2] | 62,450 | [2] |
Accumulated amortization | -14,667 | [2] | -13,530 | [2] |
Net carrying amount | 47,230 | [2] | 48,920 | [2] |
Trading rights [Member] | Market Making [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 47,230 | 48,920 | ||
Customer and broker relationships [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | 35,000 | [3] | 35,000 | [3] |
Accumulated amortization | -2,583 | [3] | -1,722 | [3] |
Net carrying amount | 32,417 | [3] | 33,278 | [3] |
Customer and broker relationships [Member] | Electronic Execution Services [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | 36,983 | 38,682 | ||
Trade names [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Gross carrying amount | 4,000 | [4] | 4,000 | [4] |
Accumulated amortization | -300 | [4] | -200 | [4] |
Net carrying amount | 3,700 | [4] | 3,800 | [4] |
Trade names [Member] | Electronic Execution Services [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Net carrying amount | $3,700 | $3,800 | ||
[1] | The weighted average remaining life for technology, including capitalized software, is approximately 4 years as of MarchB 31, 2014 and DecemberB 31, 2013. | |||
[2] | Trading rights provide the Company with the rights to trade on certain exchanges. The weighted average remaining life of trading rights with definite useful lives is approximately 8 years as of MarchB 31, 2014 and DecemberB 31, 2013. As of March 31, 2014 and December 31, 2013, $7.1 million and $7.6 million, respectively, of trading rights have indefinite useful lives. | |||
[3] | Customer relationships relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of MarchB 31, 2014 and DecemberB 31, 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 9 and 10 years as of MarchB 31, 2014 and DecemberB 31, 2013, respectively. |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets - Finite-Lived Intangible Assets, Net of Accumulated Amortization (Parenthetical) (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2013 | |||
Goodwill [Line Items] | ' | ' | ||
Finite-Lived Intangible Assets, Net | $185,324,000 | $191,495,000 | ||
Technology [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Finite-Lived Intangible Assets, Net | 101,977,000 | [1] | 105,497,000 | [1] |
Amortization period, in years | '4 years | ' | ||
Trading rights [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Finite-Lived Intangible Assets, Net | 47,230,000 | [2] | 48,920,000 | [2] |
Amortization period, in years | '8 years | ' | ||
Indefinite-lived intangible assets | 7,100,000 | 7,600,000 | ||
Customer and broker relationships [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Finite-Lived Intangible Assets, Net | 32,417,000 | [3] | 33,278,000 | [3] |
Amortization period, in years | '10 years | ' | ||
Trade names [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Finite-Lived Intangible Assets, Net | $3,700,000 | [4] | $3,800,000 | [4] |
Amortization period, in years | '9 years | '10 years | ||
[1] | The weighted average remaining life for technology, including capitalized software, is approximately 4 years as of MarchB 31, 2014 and DecemberB 31, 2013. | |||
[2] | Trading rights provide the Company with the rights to trade on certain exchanges. The weighted average remaining life of trading rights with definite useful lives is approximately 8 years as of MarchB 31, 2014 and DecemberB 31, 2013. As of March 31, 2014 and December 31, 2013, $7.1 million and $7.6 million, respectively, of trading rights have indefinite useful lives. | |||
[3] | Customer relationships relate to KCG Hotspot and KCG BondPoint. The weighted average remaining life is approximately 10 years as of MarchB 31, 2014 and DecemberB 31, 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 9 and 10 years as of MarchB 31, 2014 and DecemberB 31, 2013, respectively. |
Goodwill_and_Intangible_Assets6
Goodwill and Intangible Assets - Summary of Amortization Expense Relating to Intangible Assets (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Amortization expense | $8,494 | $1,380 |
Goodwill_and_Intangible_Assets7
Goodwill and Intangible Assets - Summary of Estimated Amortization Expense for Future Years (Detail) (USD $) | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
For the nine months ended December 31, 2014 | $26,476 |
For the year ended December 31, 2015 | 33,544 |
For the year ended December 31, 2016 | 32,046 |
For the year ended December 31, 2017 | 30,396 |
For the year ended December 31, 2018 | $19,396 |
Debt_Summary_of_LongTerm_Debt_
Debt - Summary of Long-Term Debt (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Debt Disclosure [Abstract] | ' | ' |
Convertible Notes, Carrying Amount | $117,259 | $117,259 |
Convertible Notes, Fair Value | 116,673 | 118,432 |
Senior Secured Notes, Carrying Value | 305,000 | 305,000 |
Senior Secured Notes, Fair Value | 327,494 | 320,823 |
Credit Agreement, Carrying Value | 50,000 | 235,000 |
Credit Agreement, Fair Value | 50,000 | 235,000 |
Long term debt | 472,259 | 657,259 |
Total Long-term debt, Fair Value | $494,167 | $674,255 |
Debt_Additional_Information_De
Debt - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 6 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 1 Months Ended | 0 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 12 Months Ended | 3 Months Ended | ||||||||||||||||||||
Aug. 05, 2013 | Jul. 31, 2013 | Mar. 31, 2010 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Oct. 23, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Jul. 02, 2013 | Oct. 31, 2013 | Dec. 31, 2013 | Jul. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Jul. 02, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Oct. 31, 2013 | Jun. 05, 2013 | Jul. 02, 2013 | Jul. 31, 2013 | Jul. 02, 2013 | Jul. 31, 2013 | Jul. 02, 2013 | Apr. 15, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | 8-May-14 | Mar. 31, 2014 | Mar. 31, 2014 | Jul. 02, 2013 | Jul. 31, 2013 | Dec. 31, 2013 | Jul. 02, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | |||
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | LIBOR Floor [Member] | Prime Rate [Member] | Prime Rate [Member] | LIBOR [Member] | LIBOR [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Other Expense [Member] | Financing Interest Expense [Member] | OCTEG-KCA [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] | 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] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | First lien credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | First lien credit Facility [Member] | Swingline Facilty [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Borrowing Base A [Member] | Borrowing Base B Loan [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] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | |||||||||||||||||||||||||||||||||
Line of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
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 facility to repurchase convertible notes | ' | 375,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Repayment of Knight Convertible Notes | 257,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Interest payable | 3,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Convertible Debt | ' | ' | ' | 117,259,000 | ' | 117,259,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Term credit agreement | ' | ' | ' | 50,000,000 | ' | 235,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 535,000,000 | ' | ' | ' | 305,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 450,000,000 | ' | ' | ||
Escrow agent fees and expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Number of days to issue securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '365 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Additional interest percent obligation from guarantor if certain obligations are not met | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Amount of consenting shareholders percentage of total debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 99.70% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Prepayment period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '60 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Early principal payments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 185,000,000 | 300,000,000 | ' | ' | 185,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | 535,000,000 | 50,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ||
Write off of deferred debt issuance cost | ' | ' | ' | 8,766,000 | [1] | 103,000 | [1] | ' | ' | ' | ' | ' | ' | 13,200,000 | ' | 7,600,000 | ' | ' | ' | 7,600,000 | ' | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' | ' | 1,600,000 | 7,600,000 | ' | ' | ' | ' | ' | ' |
Cash held in collateral account | ' | ' | ' | ' | ' | ' | 117,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Revolving credit facility amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | ' | ' | 750,000,000 | ' | ' | ||
Amount outstanding | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | 50,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
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% | ' | 3.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.75% | 2.25% | ||
Interest rate at end of period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Principal payments in 2014 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 235,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Debt Instrument, Periodic 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 | ' | ' | ' | $37,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,200,000 | ' | ' | ' | ||
Effective interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.30% | ' | ' | ' | 9.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
[1] | $7.6 million of the amortization of debt issuance costs is included in Writedown of debt issuance costs while $1.6 million which includes the remaining amortization of debt issuance costs and the commitment fee is included in Other expense. The writedown amount was incurred as a result of the $185.0 million repayment of the First Lien Credit Facility. |
Debt_Recorded_Expenses_with_Re
Debt - Recorded Expenses with Respect to Long-Term Debt (Detail) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Debt Disclosure [Abstract] | ' | ' | ||
Interest expense | $9,416 | $473 | ||
Amortization of debt issuance cost | 8,766 | [1] | 103 | [1] |
Commitment fee | 397 | [1] | 309 | [1] |
Total | $18,579 | $885 | ||
[1] | $7.6 million of the amortization of debt issuance costs is included in Writedown of debt issuance costs while $1.6 million which includes the remaining amortization of debt issuance costs and the commitment fee is included in Other expense. The writedown amount was incurred as a result of the $185.0 million repayment of the First Lien Credit Facility. |
Related_Parties_Summary_of_Bal
Related Parties - Summary of Balances and Transactions with Related Parties or Their Affiliates (Detail) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Revenues | ' | ' | ' | |
Commissions and fees | $112,257 | $25,499 | ' | |
Trading revenues, net | 258,297 | 86,765 | ' | |
Expenses | ' | ' | ' | |
Execution and clearance fees | 75,501 | 40,957 | ' | |
Other expense | 8,643 | 4,477 | ' | |
Assets | ' | ' | ' | |
Securities borrowed | 1,367,050 | ' | 1,357,387 | |
Receivable from brokers, dealers and clearing organizations | 1,472,860 | ' | 1,257,251 | |
Other assets | 129,416 | ' | 147,322 | |
Liabilities | ' | ' | ' | |
Securities loaned | 724,947 | ' | 733,230 | |
Payable to brokers, dealers and clearing organizations | 517,580 | ' | 474,108 | |
Affiliated entity [Member] | ' | ' | ' | |
Revenues | ' | ' | ' | |
Commissions and fees | 5,146 | 0 | ' | |
Trading revenues, net | 814 | 0 | ' | |
Interest, net | 188 | 0 | ' | |
Total revenues from related parties | 6,148 | 0 | ' | |
Expenses | ' | ' | ' | |
Execution and clearance fees | -4,292 | [1] | -4,894 | ' |
Interest expense | 159 | 0 | ' | |
Other expense | 400 | 0 | ' | |
Total expenses incurred with respect to related parties | -3,733 | -4,894 | ' | |
Assets | ' | ' | ' | |
Securities borrowed | 47,107 | ' | 57,732 | |
Receivable from brokers, dealers and clearing organizations | 95,089 | ' | 20,826 | |
Other assets | 0 | ' | 277 | |
Liabilities | ' | ' | ' | |
Securities loaned | 10,731 | ' | 116,062 | |
Payable to brokers, dealers and clearing organizations | 98,389 | ' | 17,820 | |
Accrued expenses and other liabilities | $3,664 | ' | $179 | |
Common Class A [Member] | Minimum [Member] | Jefferies [Member] | ' | ' | ' | |
Related Party Transaction [Line Items] | ' | ' | ' | |
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 10.00% | ' | ' | |
BATS [Member] | Minimum [Member] | ' | ' | ' | |
Related Party Transaction [Line Items] | ' | ' | ' | |
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 10.00% | ' | ' | |
Direct Edge [Member] | Minimum [Member] | ' | ' | ' | |
Related Party Transaction [Line Items] | ' | ' | ' | |
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 10.00% | ' | ' | |
[1] | Represents net volume based fees received from providing liquidity to related trading venues. |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended |
In Millions, except Share data, unless otherwise specified | Mar. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Number of Stock Awards, Exercised (in shares) | 0 |
Stock Appreciation Rights (SARs) [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Unamortized compensation costs | 6.1 |
Award expiration period | '1 year 7 months 12 days |
Class B Units [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Vesting period | '3 years |
Percent of shares vesting over vesting period | 3.33% |
Class E Units [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Vesting period | '3 years |
Percent of shares vesting over vesting period | 3.33% |
Award expiration period | '5 years |
KCG Plan [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Number of shares authorized for grant (in shares) | 33,000,000 |
Restricted Stock [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Vesting period | '3 years |
Unamortized compensation related to restricted awards outstanding | 85.5 |
Cost of unvested awards expected to be recognized over a weighted average life, years | '2 years 2 months |
Stock Options [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Vesting period | '3 years |
Minimum [Member] | Stock Options [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Expiration period | '5 years |
Maximum [Member] | Stock Options [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Expiration period | '10 years |
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 | Mar. 31, 2014 |
Restricted Stock [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Stock award compensation expense | $16,238 |
Income tax benefit | $6,170 |
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 | Mar. 31, 2014 |
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 (in shares) | 8,420 |
Number of Shares, Granted (in shares) | 4,022 |
Number of Shares, Vested (in shares) | -977 |
Number of Shares, Forfeited (in shares) | -147 |
Number of Shares, Ending Balance (in shares) | 11,318 |
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) | $10.71 |
Weighted-Average Grant date Fair Value, Granted (in dollars per share) | $11.08 |
Weighted-Average Grant date Fair Value, Vested (in dollars per share) | $11.08 |
Weighted-Average Grant date Fair Value, Forfeited (in dollars per share) | $13.04 |
Weighted-Average Grant date Fair Value, Ending Balance (in dollars per share) | $10.78 |
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 | Mar. 31, 2014 |
Stock Options [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Stock option and SAR compensation expense | $961 |
Income tax benefit | $365 |
StockBased_Compensation_Summar1
Stock-Based Compensation - Summary of Stock Option Activity (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | |
Number of Stock Awards, Beginning Balance (in shares) | 4,967 | |
Number of Stock Awards, Granted at market value (in shares) | 0 | |
Number of Stock Awards, Exercised (in shares) | 0 | |
Number of Stock Awards, Forfeited or expired (in shares) | -78 | |
Number of Stock Awards, Ending Balance (in shares) | 4,889 | [1] |
Number of Stock Awards, Exercisable (in shares) | 565 | |
Available for future grants (in shares) | 15,775 | [2] |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ' | |
Weighted-Average Exercise Price, Beginning Balance (in dollars per share) | $18.45 | |
Weighted-Average Exercise Price, Granted at market value (in dollars per share) | $0 | |
Weighted-Average Exercise Price, Exercised (in dollars per share) | $0 | |
Weighted-Average Exercise Price, Forfeited or expired (in dollars per share) | $40.32 | |
Weighted-Average Exercise Price, Ending Balance (in dollars per share) | $18.10 | [1] |
Weighted-Average Exercise Price, Exercisable | $40.38 | |
Aggregate Intrinsic Value of Awards, Outstanding | $3,372 | [1] |
Aggregate Intrinsic Value of Awards, Exercised | $0 | |
Weighted-Average Remaining Life, Outstanding | '4 years 0 months 19 days | [1] |
Weighted-Average Remaining Life, Exercisable | '2 years 2 months 30 days | |
Stock Appreciation Rights (SARs) [Member] | ' | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | |
Number of Stock Awards, Granted at market value (in shares) | 1,700 | |
[1] | Includes 1.7 million of SARs. | |
[2] | Represents both options and awards available for grant. |
StockBased_Compensation_Incent
Stock-Based Compensation - Incentive Units (Details) (Incentive Units [Member], USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 |
In Millions, except Share data in Thousands, unless otherwise specified | Common Class A [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Deferred Compensation Liability, Current and Noncurrent | $3.50 | $3.80 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | ' | ' | ' |
Beginning balance (in shares) | ' | ' | 49 |
Issued (in shares) | ' | ' | 0 |
Number of Shares, Vested (in shares) | ' | ' | 0 |
Exercised (in shares) | ' | ' | -4 |
Canceled (in shares) | ' | ' | 0 |
Ending balance (in shares) | ' | ' | 45 |
StockBased_Compensation_Compen2
Stock-Based Compensation - Compensation Expense (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Compensation expense | ($174) | $3,327 |
Class B and E Units [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Compensation expense | 0 | 2,918 |
Incentive Units [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Compensation expense | ($174) | $409 |
Income_Taxes_Effective_Income_
Income Taxes - Effective Income Tax Reconciliation (Detail) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Income Tax Disclosure [Abstract] | ' | ' | ||
U.S. federal statutory income tax (benefit) expense | $20,784 | ($1,700) | ||
Income not subject to U.S. corporate income tax | 0 | 1,745 | ||
U.S. state and local income taxes, net of U.S. federal income tax effect | 1,280 | 226 | ||
Nondeductible expenses | 203 | [1] | 38 | [1] |
Foreign taxes | 63 | 1,798 | ||
Other, net | 137 | -133 | ||
Income tax expense | $22,467 | $1,974 | ||
[1] | Nondeductible expenses include nondeductible compensation and meals and entertainment. |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | ||||||
Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Jul. 02, 2013 | Mar. 31, 2014 | |
State and Local Jurisdiction [Member] | Foreign Tax Authority [Member] | Domestic Tax Authority [Member] | Knight [Member] | Knight [Member] | Knight [Member] | ||
Foreign Tax Authority [Member] | |||||||
Income Tax Contingency [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Deferred tax asset, net | ' | ' | ' | ' | ' | $62,329,000 | ' |
Deferred tax benefit resulting from the Company becoming subject to U.S. corporate income taxes | 103,500,000 | ' | ' | ' | ' | ' | ' |
Operating loss carryforwards | 194,500,000 | ' | 86,400,000 | ' | 89,000,000 | ' | 65,700,000 |
Deferred tax assets, operating loss carryforwards | 68,100,000 | ' | ' | ' | ' | ' | ' |
Deferred tax assets, valuation allowance | 6,800,000 | ' | ' | ' | ' | ' | ' |
Deferred income tax asset | ' | ' | 19,100,000 | 18,900,000 | ' | ' | ' |
General business carry forward | 2,500,000 | ' | ' | ' | ' | ' | ' |
AMT Carryforward | ' | 6,800,000 | ' | ' | ' | ' | ' |
Unrecognized tax benefits that would impact effective tax rate if recognized | $1,500,000 | ' | ' | ' | ' | ' | ' |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' |
Beginning Balance | $1,401,000 | $114,319,000 |
Other comprehensive income (loss) | 64,000 | 12,028,000 |
Ending Balance | 1,465,000 | 126,347,000 |
Unrealized gains on Available-for-sale Securities [Member] | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' |
Beginning Balance | 36,000 | 114,319,000 |
Other comprehensive income (loss) | -137,000 | 11,944,000 |
Ending Balance | -101,000 | 126,263,000 |
Foreign Currency translation adjustments [Member] | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' |
Beginning Balance | 1,365,000 | 0 |
Other comprehensive income (loss) | 201,000 | 84,000 |
Ending Balance | 1,566,000 | 84,000 |
Knight Capital Group [Member] | ' | ' |
Accumulated Other Comprehensive Income [Line Items] | ' | ' |
Unrealized Gain (Loss) on Investments | ' | $11,900,000 |
Writedowns_and_Other_Charges_A
Writedowns and Other Charges - Additional Information (Detail) (USD $) | 3 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | |||
Writedown Of Asset And Lease Loss Accrual [Line Items] | ' | ' | ||
Write off of deferred debt issuance cost | $8,766,000 | [1] | $103,000 | [1] |
Excess Real Estate Capacity [Member] | ' | ' | ||
Writedown Of Asset And Lease Loss Accrual [Line Items] | ' | ' | ||
Writedown of Assets and Lease Loss Accrual Benefit Net | 300,000 | ' | ||
Leasehold Improvements [Member] | ' | ' | ||
Writedown Of Asset And Lease Loss Accrual [Line Items] | ' | ' | ||
Asset Impairment Charges | ' | 2,200,000 | ||
Secured Debt [Member] | ' | ' | ||
Writedown Of Asset And Lease Loss Accrual [Line Items] | ' | ' | ||
Early principal payments | 185,000,000 | ' | ||
Write off of deferred debt issuance cost | $7,600,000 | ' | ||
[1] | $7.6 million of the amortization of debt issuance costs is included in Writedown of debt issuance costs while $1.6 million which includes the remaining amortization of debt issuance costs and the commitment fee is included in Other expense. The writedown amount was incurred as a result of the $185.0 million repayment of the First Lien Credit Facility. |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ' |
Options excluded (in shares) | 28.4 |
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 | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Earnings Per Share [Abstract] | ' | ' |
Income (loss) from continuing operations, net of tax | $36,917 | ($6,832) |
Income from continuing operations and shares used in diluted calculations | $36,917 | ($6,832) |
Shares used in basic calculations (in shares) | 115,569 | 45,452 |
Effect of dilutive stock based awards (in shares) | 2,329 | 0 |
(Loss) Income and shares used in diluted calculations (in shares) | 117,898 | 45,452 |
Basic earnings per share from continuing operations (in dollars per share) | $0.32 | ($0.15) |
Diluted earnings per share from continuing operations (in dollars per share) | $0.31 | ($0.15) |
Significant_Clients_Additional
Significant Clients - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Client | Client | |
Risks and Uncertainties [Abstract] | ' | ' |
Number of significant clients | 0 | 0 |
Percentage of dollar value traded | 10.00% | 10.00% |
Recovered_Sheet1
Commitments and Contingent liabilities - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | |
In Millions, unless otherwise specified | Aug. 06, 2012 | Mar. 31, 2014 | Mar. 31, 2013 |
lawsuit | director | ||
Loss Contingencies [Line Items] | ' | ' | ' |
Number of putative class action lawsuits | ' | 2 | ' |
Number of derivative lawsuits | ' | 1 | ' |
Raise In equity financing | $400 | ' | ' |
Number of directors accused of breaking fiduciary duties | ' | ' | 7 |
Pre-tax loss settlements realized | ' | ' | 457.6 |
Rental expense | ' | 5.1 | 2.5 |
Letters of credit held in escrow | ' | $1 | ' |
Revolving Credit Facility [Member] | ' | ' | ' |
Loss Contingencies [Line Items] | ' | ' | ' |
Weighted average interest rate | ' | 4.08% | ' |
Debt term | ' | '3 years | ' |
Recovered_Sheet2
Commitments and Contingent liabilities - Schedule of Capital Lease and Contract Obligations (Details) (USD $) | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Nine months ending December 31, 2014 | $6,341 |
2015 | 3,054 |
2016 | 982 |
2017 | 164 |
Total | $10,541 |
Commitments_and_Contingent_lia2
Commitments and Contingent liabilities - Schedule of Interest Expense (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Interest expense - Capital leases | $88 | $250 |
Commitments_and_Contingent_lia3
Commitments and Contingent liabilities - Schedule of Operating Lease and Contract Obligations (Detail) (USD $) | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |
Gross Lease Obligations [Member] | ' |
Sale Leaseback Transaction [Line Items] | ' |
Nine months ending December 31, 2014 | $22,775 |
Year ending December 31, 2015 | 29,525 |
Year ending December 31, 2016 | 29,183 |
Year ending December 31, 2017 | 27,640 |
Year ending December 31, 2018 | 26,796 |
Thereafter through December 31, 2027 | 82,676 |
Total Amount Of Lease & Contract Obligations | 218,595 |
Sublease Income [Member] | ' |
Sale Leaseback Transaction [Line Items] | ' |
Nine months ending December 31, 2014 | 3,157 |
Year ending December 31, 2015 | 4,914 |
Year ending December 31, 2016 | 4,850 |
Year ending December 31, 2017 | 4,426 |
Year ending December 31, 2018 | 2,720 |
Thereafter through December 31, 2027 | 12,521 |
Total Amount Of Lease & Contract Obligations | 32,588 |
Net Lease Obligations [Member] | ' |
Sale Leaseback Transaction [Line Items] | ' |
Nine months ending December 31, 2014 | 19,618 |
Year ending December 31, 2015 | 24,611 |
Year ending December 31, 2016 | 24,333 |
Year ending December 31, 2017 | 23,214 |
Year ending December 31, 2018 | 24,076 |
Thereafter through December 31, 2027 | 70,155 |
Total Amount Of Lease & Contract Obligations | $186,007 |
Financial_instruments_with_Off1
Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Derivatives, Fair Value [Line Items] | ' | ' |
Loans outstanding | $472,259,000 | $657,259,000 |
Executive Director or Officer [Member] | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Loans outstanding | $0 | ' |
Business_Segments_Detail
Business Segments (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Segment Reporting Information [Line Items] | ' | ' |
Revenues | $383,657 | $114,992 |
Pre-tax earnings | 59,384 | -4,858 |
Total assets | 7,030,276 | 1,724,921 |
Debt interest expense | 9,524 | 473 |
Market Making [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenues | 277,346 | 102,067 |
Pre-tax earnings | 76,032 | 5,887 |
Total assets | 3,931,292 | 1,434,354 |
Debt interest expense | 7,200 | ' |
Global Execution Services [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenues | 87,220 | 9,274 |
Pre-tax earnings | 2,016 | -1,827 |
Total assets | 1,264,245 | 29,448 |
Debt interest expense | 2,400 | ' |
Corporate and Other [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenues | 19,091 | 3,651 |
Pre-tax earnings | -18,664 | -8,918 |
Total assets | $1,834,739 | $261,119 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 3 Months Ended | 0 Months Ended | 9 Months Ended | |||||
Mar. 31, 2014 | Mar. 31, 2013 | 1-May-14 | Apr. 15, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | |||
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||||
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | |||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ||
Principal payment | ' | ' | ' | ' | $50,000,000 | $535,000,000 | ||
Write off of deferred debt issuance cost | 8,766,000 | [1] | 103,000 | [1] | ' | 2,000,000 | ' | ' |
Approved number of shares to be repurchased | ' | ' | $150,000,000 | ' | ' | ' | ||
[1] | $7.6 million of the amortization of debt issuance costs is included in Writedown of debt issuance costs while $1.6 million which includes the remaining amortization of debt issuance costs and the commitment fee is included in Other expense. The writedown amount was incurred as a result of the $185.0 million repayment of the First Lien Credit Facility. |