Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 06, 2015 | |
Entity Information [Line Items] | ||
Entity Registrant Name | KCG HOLDINGS, INC. | |
Entity Central Index Key | 1,569,391 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Common Class A [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 93,846,985 | |
Common Class B [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | ||||
Trading revenues, net | $ 170,750 | $ 206,780 | $ 379,545 | $ 465,077 |
Commissions and fees | 87,370 | 104,776 | 187,331 | 217,033 |
Interest, net | (596) | (289) | (619) | 659 |
Investment income and other, net | 4,358 | 2,866 | 391,781 | 15,021 |
Total revenues | 261,882 | 314,133 | 958,038 | 697,790 |
Expenses | ||||
Employee compensation and benefits | 109,471 | 103,430 | 216,189 | 225,749 |
Execution and clearance fees | 62,598 | 73,242 | 131,071 | 148,743 |
Communications and data processing | 34,240 | 38,279 | 68,004 | 75,075 |
Depreciation and amortization | 20,726 | 19,823 | 41,341 | 39,926 |
Payments for order flow | 14,935 | 18,076 | 30,156 | 40,108 |
Debt interest expense | 9,989 | 7,497 | 18,452 | 17,021 |
Collateralized financing interest | 8,859 | 6,395 | 17,315 | 12,557 |
Occupancy and equipment rentals | 7,474 | 8,235 | 14,814 | 16,520 |
Professional fees | 5,694 | 7,337 | 16,875 | 12,739 |
Business development | 3,025 | 2,609 | 4,882 | 4,292 |
Debt extinguishment charges | 25,006 | 1,995 | 25,006 | 9,552 |
Other real estate related charges | 6,327 | 1,941 | 6,459 | 2,207 |
Other | 10,652 | 10,767 | 18,460 | 19,410 |
Total expenses | 318,996 | 299,626 | 609,024 | 623,899 |
(Loss) Income from continuing operations before income taxes | (57,114) | 14,507 | 349,014 | 73,891 |
Income tax (benefit) expense | (37,952) | 5,520 | 118,875 | 27,987 |
(Loss) Income from continuing operations, net of tax | (19,162) | 8,987 | 230,139 | 45,904 |
Loss from discontinued operations, net of tax | 0 | (67) | 0 | (1,320) |
Net (loss) income | $ (19,162) | $ 8,920 | $ 230,139 | $ 44,584 |
Basic (loss) earnings per share from continuing operations (in dollars per share) | $ (0.18) | $ 0.08 | $ 2.08 | $ 0.40 |
Diluted (loss) earnings per share from continuing operations (in dollars per share) | (0.18) | 0.08 | 2.02 | 0.39 |
Basic loss per share from discontinued operations (in dollars per share) | 0 | 0 | 0 | (0.01) |
Diluted loss per share from discontinued operations (in dollars per share) | 0 | 0 | 0 | (0.01) |
Basic (loss) earnings per share (in dollars per share) | (0.18) | 0.08 | 2.08 | 0.39 |
Diluted (loss) earnings per share (in dollars per share) | $ (0.18) | $ 0.08 | $ 2.02 | $ 0.38 |
Shares used in computation of basic earnings (loss) per share | 108,588 | 114,859 | 110,890 | 115,282 |
Shares used in computation of diluted earnings (loss) per share | 108,588 | 117,601 | 113,809 | 118,170 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (19,162) | $ 8,920 | $ 230,139 | $ 44,584 |
Other comprehensive income (loss): | ||||
Unrealized (loss) gain on available for sale securities, net of tax | (51) | (96) | 137 | (233) |
Cumulative translation adjustment, net of tax | (433) | 291 | (1,056) | 492 |
Comprehensive (loss) income | $ (19,646) | $ 9,115 | $ 229,220 | $ 44,843 |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and cash equivalents | $ 541,292 | $ 578,768 |
Cash and cash equivalents segregated under federal and other regulations | 3,600 | 3,361 |
Financial instruments owned, at fair value, including securities pledged to counterparties that had the right to deliver or repledge of $429,665 at June 30, 2015 and $536,124 at December 31, 2014: | ||
Equities | 2,391,499 | 2,479,910 |
Listed options | 117,934 | 144,586 |
Debt securities | 185,938 | 82,815 |
Other financial instruments | 355 | 60 |
Total financial instruments owned, at fair value | 2,695,726 | 2,707,371 |
Collateralized agreements: | ||
Securities borrowed | 1,871,312 | 1,632,062 |
Receivable from brokers, dealers and clearing organizations | 690,291 | 1,188,833 |
Fixed assets and leasehold improvements, less accumulated depreciation and amortization | 116,849 | 134,051 |
Investments | 107,348 | 100,726 |
Goodwill and Intangible assets, less accumulated amortization | 144,798 | 152,594 |
Deferred tax asset, net | 180,673 | 154,759 |
Assets of business held for sale | 0 | 40,484 |
Other assets | 234,459 | 137,645 |
Total assets | 6,586,348 | 6,830,654 |
Financial instruments sold, not yet purchased, at fair value: | ||
Equities | 1,785,493 | 2,069,342 |
Listed options | 93,113 | 115,362 |
Debt securities | 159,551 | 101,003 |
Total financial instruments sold, not yet purchased, at fair value | 2,038,157 | 2,285,707 |
Collateralized financings: | ||
Securities loaned | 741,732 | 707,744 |
Financial instruments sold under agreements to repurchase | 995,667 | 933,576 |
Total collateralized financings | 1,737,399 | 1,641,320 |
Payable to brokers, dealers and clearing organizations | 529,748 | 676,089 |
Payable to customers | 38,282 | 22,110 |
Accrued compensation expense | 64,040 | 114,559 |
Accrued expenses and other liabilities | 144,391 | 136,977 |
Income taxes payable | 64,107 | 0 |
Capital lease obligations | 3,877 | 6,700 |
Liabilities of business held for sale | 0 | 2,356 |
Debt | 495,113 | 422,259 |
Total liabilities | 5,115,114 | 5,308,077 |
Equity | ||
Class A Common Stock, Shares authorized: 1,000,000 at June 30, 2015 and December 31, 2014; Shares issued: 105,929 at June 30, 2015 and 127,508 at December 31, 2014; Shares outstanding: 94,419 at June 30, 2015 and 116,860 at December 31, 2014 | 1,059 | 1,275 |
Additional paid-in capital | 1,429,368 | 1,369,298 |
Retained earnings | 173,155 | 272,780 |
Treasury stock, at cost; 11,510 shares at June 30, 2015 and 10,649 shares at December 31, 2014 | (133,562) | (122,909) |
Accumulated other comprehensive income | 1,214 | 2,133 |
Total equity | 1,471,234 | 1,522,577 |
Total liabilities and equity | $ 6,586,348 | $ 6,830,654 |
CONSOLIDATED STATEMENTS OF FIN5
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Financial instruments owned, at fair value, securities pledged | $ 429,665 | $ 536,124 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 105,929,000 | 127,508,000 |
Common stock, shares outstanding | 94,419,000 | 116,860,000 |
Treasury stock, shares | 11,510,000 | 10,649,000 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 6 months ended Jun. 30, 2015 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member]Common Class A [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income [Member] |
Balance (in shares) at Dec. 31, 2014 | 127,508 | |||||
Balance at Dec. 31, 2014 | $ 1,522,577 | $ 1,275 | $ 1,369,298 | $ 272,780 | $ 2,133 | |
Balance (in shares) at Dec. 31, 2014 | (10,649) | (10,649) | ||||
Balance at Dec. 31, 2014 | $ (122,909) | $ (122,909) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
KCG Class A Common Stock repurchased and retired via Tender offer, shares | (23,571) | |||||
KCG Class A Common Stock repurchased and retired via Tender Offer | (330,000) | $ (236) | (329,764) | |||
KCG Class A Common Stock repurchased, shares | (861) | |||||
KCG Class A Common Stock repurchased | (10,653) | $ (10,653) | ||||
Stock-based compensation, shares | 1,844 | |||||
Stock-based compensation | 58,579 | $ 18 | 58,561 | |||
Options exercised, shares | 118 | |||||
Options exercised | 1,046 | $ 2 | 1,044 | |||
Warrants exercised, shares | 30 | |||||
Warrants exercised | 247 | 247 | ||||
Income tax provision-stock based compensation | 218 | 218 | ||||
Unrealized gain on available for sale securities, net | 137 | 137 | ||||
Cumulative translation adjustment, net | (1,056) | (1,056) | ||||
Net income | 230,139 | 230,139 | ||||
Balance (in shares) at Jun. 30, 2015 | 105,929 | |||||
Balance at Jun. 30, 2015 | $ 1,471,234 | $ 1,059 | $ 1,429,368 | $ 173,155 | $ 1,214 | |
Balance (in shares) at Jun. 30, 2015 | (11,510) | (11,510) | ||||
Balance at Jun. 30, 2015 | $ (133,562) | $ (133,562) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities | ||
Net (loss) income | $ 230,139 | $ 44,584 |
Loss from discontinued operations, net of tax | 0 | (1,320) |
Income from continuing operations, net of tax | 230,139 | 45,904 |
Adjustments to reconcile income from continuing operations, net of tax to net cash (used in) provided by operating activities | ||
Realized gain from sale of KCG Hotspot | (385,026) | 0 |
Deferred taxes | (25,781) | 0 |
Unrealized gain on investments | (4,661) | (15,140) |
Stock and unit-based compensation | 56,422 | 32,907 |
Depreciation and amortization | 41,341 | 39,926 |
Debt discount accretion and other debt related expenses | 10,627 | 11,557 |
Other real estate related charges | 6,459 | 2,207 |
Deferred rent | 421 | (129) |
Receivable from BATS | (709) | 0 |
Operating activities from discontinued operations | 0 | (1,119) |
(Increase) decrease in operating assets | ||
Cash and cash equivalents segregated under federal and other regulations | (239) | (51,267) |
Financial instruments owned, at fair value | 11,645 | (167,968) |
Securities borrowed | (239,250) | (245,080) |
Receivable from brokers, dealers and clearing organizations | 498,543 | (331,675) |
Other assets | (32,938) | (8,009) |
(Decrease) increase in operating liabilities | ||
Financial instruments sold, not yet purchased, at fair value | (247,549) | 236,612 |
Securities loaned | 33,988 | 91,433 |
Financial instruments sold under agreements to repurchase | 62,091 | 309,160 |
Payable to brokers, dealers and clearing organizations | (146,341) | 173,012 |
Payable to customers | 16,172 | 141,323 |
Accrued compensation expense | (49,374) | (60,825) |
Accrued expenses and other liabilities | 6,965 | (10,993) |
Income taxes payable | 64,107 | 0 |
Net cash (used in) provided by operating activities | (92,948) | 191,836 |
Cash flows from investing activities | ||
Cash received from sale of KCG Hotspot, net of cash provided | 360,928 | 0 |
Proceeds and distributions from investments | 2,517 | 48,627 |
Purchases of fixed assets and leasehold improvements | (13,238) | (14,781) |
Capitalized software development costs | (9,244) | (5,615) |
Purchases of investments | (2,376) | (593) |
Sale of trading rights | 0 | 554 |
Net cash provided by investing activities | 338,587 | 28,192 |
Cash flows from financing activities | ||
Repayment of Credit Agreement | 0 | (235,000) |
Proceeds from issuance of 6.875% Senior Secured Notes, net | 494,810 | 0 |
Repayment of 8.25% Senior Secured Notes | (305,000) | 0 |
Repayment of convertible notes | (117,259) | 0 |
Payment of debt issuance costs | (12,645) | 0 |
Borrowings under capital lease obligations | 0 | 4,525 |
Principal payments on capital lease obligations | (2,823) | (5,342) |
Cost of common stock repurchased - Tender Offer | (330,000) | 0 |
Cost of common stock repurchased | (10,653) | (58,119) |
Stock options exercised | 1,046 | 0 |
Warrants exercised | 247 | 0 |
Income tax provision on stock awards exercised | 218 | 0 |
Net cash used in financing activities | (282,059) | (293,936) |
Effect of exchange rate changes on cash and cash equivalents | (1,056) | 492 |
(Decrease) increase in cash and cash equivalents | (37,476) | (73,416) |
Cash and cash equivalents at beginning of period | 578,768 | 674,281 |
Cash and cash equivalents at end of period | 541,292 | 600,865 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 39,140 | 39,129 |
Cash paid for income taxes | 63,242 | 14,040 |
Non-cash investing activities - Contribution of fixed assets to joint venture | $ 1,927 | $ 0 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - Senior Secured Notes [Member] | Jun. 30, 2015 | Mar. 10, 2015 | Dec. 31, 2014 | Jun. 05, 2013 |
6.875% Senior Secured Notes [Member] | ||||
Interest rate | 6.875% | 6.875% | ||
8.25% Senior Secured Notes [Member] | ||||
Interest rate | 8.25% | 8.25% | 8.25% |
Organization and Description of
Organization and Description of the Business | 6 Months Ended |
Jun. 30, 2015 | |
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 direct-to-client and non-client exchange-based electronic market making. KCG has multiple access points to trade global equities, options, futures, fixed income, currencies and commodities via voice or automated execution. KCG was formed as a result of a strategic business combination (the “Mergers”) of Knight Capital Group, Inc.(“Knight”) and GETCO Holding Company, LLC (“GETCO”) in July 2013. As of June 30, 2015 , 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, 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, banks and institutions. 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 in unlisted securities traded over-the-counter and through 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, futures, options, and fixed income to institutions, banks and broker dealers. The Company generally earns commissions as an agent between principals for transactions that are executed within this segment; however, the Company may 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) algorithmic trading and order routing in global equities and options; (ii) institutional sales traders executing program, block and riskless principal trades in global equities and exchange traded funds ("ETFs"); (iii) a fixed income electronic communications network ("ECN") that also offers trading applications; and (iv) an alternative trading system ("ATS") for global equities. 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. Sales of Businesses Management 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 its strategy, the Company may divest or exit such business. In November 2013, the Company sold Urban Financial of America, LLC, (“Urban”), the reverse mortgage origination and securitization business that was previously owned by Knight to an investor group. In November 2014, the Company sold certain assets and liabilities related to its Futures Commission Merchant (“FCM”) business to Wedbush Securities Inc. In March 2015, the Company sold KCG Hotspot, the Company's spot institutional foreign exchange ECN, to BATS Global Markets, Inc. ("BATS"). See Footnote 4 "Sales of Businesses". |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of consolidation and form of presentation The Consolidated Financial Statements, prepared in conformity with generally accepted accounting principles ("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 10 "Investments", as a result of the merger of BATS and Direct Edge Holdings LLC ("Direct Edge") in the first quarter of 2014, the Company changed its method of accounting for its investment in BATS from the cost method to the equity method. 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. These assets would be categorized as Level 1 in the fair value hierarchy if they were required to be recorded at fair value. 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. These assets would be categorized as Level 1 in the fair value hierarchy if they were required to be recorded at 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, and include listed and other equity securities, listed equity options and fixed income securities which are recorded on a trade date basis and are reported at fair value. Trading revenues, net, which comprises trading gains, net of trading losses, are also recorded on a trade date basis. Commissions, which primarily comprise commission equivalents earned on institutional client orders and volume based fees earned from providing liquidity to other trading venues, as well as related expenses, are also recorded on a trade date basis. In 2014, commissions earned by the Company’s former FCM, which was sold in November 2014, were recorded net of any commissions paid to independent brokers and 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 June 30, For the six months ended June 30, 2015 2014 2015 2014 Interest Income $ 3,302 $ 3,777 $ 7,073 $ 7,128 Interest Expense (3,898 ) (4,066 ) (7,692 ) (6,469 ) Interest, net $ (596 ) $ (289 ) $ (619 ) $ 659 Dividend income relating to financial instruments owned and dividend expense relating to financial instruments sold, not yet purchased, are derived primarily from the Company’s market making activities and are included as a component of Trading revenues, net on the Consolidated Statements of Operations. Trading revenues, net includes dividend income and expense as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Dividend Income $ 13,973 $ 9,832 $ 30,717 $ 19,615 Dividend Expense $ (10,104 ) $ (8,203 ) $ (20,357 ) $ (15,778 ) 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” 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. 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 posts 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 substantially collateralized pursuant to the terms of the underlying agreements. 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 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 that are publicly traded are held at fair value and classified as available for sale securities on the Consolidated Statements of Financial Condition. Strategic investments are reviewed on an ongoing basis to ensure that the carrying values of the investments have not been impaired. If the Company determines that an impairment loss on a strategic investment has occurred due to a decline in fair value or other market conditions, the investment is written down to its estimated fair value. The Company maintains a non-qualified deferred compensation plan for certain employees and directors. This plan provides a return to the participants based upon the performance of various investments. In order to hedge its liability under this plan, the Company generally acquires the underlying investments and holds such investments until the deferred compensation liabilities are satisfied. Changes in value of such investments are recorded in Investment income and other, net, with a corresponding charge or credit to Employee compensation and benefits on the Consolidated Statements of Operations. Deferred compensation investments primarily consist of mutual funds, which are accounted for at fair value. Goodwill and intangible assets The Company tests goodwill and intangible assets with an indefinite useful life for impairment annually or when an event occurs or circumstances change that signifies that the carrying amounts may not be recoverable. 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 primarily relate to amounts due on cash and margin transactions. Due to their short-term nature, such amounts approximate fair value. Repurchases of common stock The Company may repurchase shares of KCG Class A Common Stock in the open market or through privately negotiated transactions. The Company may structure such repurchases as either a purchase of treasury stock or a retirement of shares. The Company records its purchases of treasury stock, which include shares repurchased in satisfaction of tax withholding obligations upon vesting of restricted awards, at cost as a separate component of stockholders’ equity. The Company may re-issue treasury stock, at average cost, for the acquisition of new businesses and in certain other circumstances. For shares that are retired, the Company records its repurchases at cost, as a reduction in Class A Common Stock for the par value of such retired shares and a reduction in Retained earnings for the balance. 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 the 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, net of tax 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 June 30, 2015 and 2014, the Company recorded a loss of $0.4 million and a gain of $35 thousand , respectively on foreign currency transactions. For the six months ended June 30, 2015 and 2014, the Company recorded losses of $0.6 million and $0.7 million , respectively on foreign currency transactions. 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 on the Consolidated Statements of Financial Condition and Cumulative translation adjustment, net of tax, on 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. Expected forfeitures are considered in determining stock-based employee compensation expense. See Footnote 14 "Stock-Based Compensation" for further discussion. 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 The Company is a corporation subject to U.S. corporate income tax as well as non-U.S. income taxes in the jurisdictions in which it operates. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and measures them using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. The Company evaluates the recoverability of future tax deductions by assessing the adequacy of future expected taxable income from all sources, including reversal of temporary differences and forecasted operating earnings. Variable interest entities A variable interest entity (“VIE”) is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company will be considered to have a controlling financial interest and will consolidate a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Since January 2015, the Company has owned 50% of the voting shares and 50% of the equity of a joint venture (“JV”) which maintains microwave communication networks in the U.S. and Europe. The Company and its JV partner each use the microwave networks in connection with their respective trading activities, and the JV sells excess bandwidth that is not utilized by the JV members to third parties. The Company pays the JV for the communication services that it uses, and such amounts are recorded within Communications and data processing on the Consolidated Statements of Operations. The Company does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; therefore it does not have a controlling financial interest in the JV and does not consolidate the JV. The Company records its interest in the JV under the equity method of accounting and records its investment in the JV within Investments and its amounts payable for communication services within Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition. The Company records its pro-rata share of the JV’s earnings or losses within Investment income and other, net on the Consolidated Statements of Operations. The Company’s exposure to the obligations of this VIE is generally limited to its interests in the JV, which is the carrying value of the equity investment in the JV. The following table presents the Company’s nonconsolidated VIE at June 30, 2015 (in thousands): Carrying Amount Maximum Exposure to loss Asset Liability VIE's assets Equity investment $ 2,982 $ 732 $ 2,982 $ 9,548 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 April 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) that amends the requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting are limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. The updated guidance is effective prospectively to all disposals occurring for interim and annual reporting periods after December 15, 2014, with early adoption permitted. The Company early adopted this ASU in 2014, which resulted in additional disclosures within the Company's Consolidated Financial Statements. In June 2014, the FASB issued an ASU that amends the accounting and disclosure guidance on repurchase agreements. The amended guidance requires entities to account for repurchase-to-maturity transactions as secured borrowings. Additional disclosures will be required for the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes and additional disclosures about certain transferred financial assets accounted for as sales were effective for reporting periods beginning after December 15, 2014. The additional disclosures for securities financing transactions are required for annual reporting periods beginning after December 15, 2014 and for interim reporting periods beginning after March 15, 2015. Other than additional disclosure requirements, the adoption of this ASU did not have an impact on the Company’s Consolidated Financial Statements. Recent accounting guidance to be adopted in future periods In May 2014, the FASB issued an ASU that updates the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements. In June 2014, the FASB issued an ASU to resolve diverse accounting treatment for share based awards in which the terms of the award are related to a performance target that affects vesting. The ASU requires an entity to treat a performance target that could be achieved after the requisite service period as a performance condition. Additionally, compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved, and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered; if the performance target becomes probable of being achieved before the end of the requisite service period, then the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The guidance is effective for reporting periods beginning after December 15, 2015 and may be applied prospectively or retrospectively. The Company does not expect adoption of this ASU to have an impact on the Company’s Consolidated Financial Statements. In August 2014, the FASB issued an ASU that requires an entity’s management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for reporting periods beginning after December 15, 2016. Other than additional disclosure requirements, the adoption of this ASU is not expected to have an impact on the Company’s Consolidated Financial Statements. In February 2015, the FASB issued an ASU which requires entities to evaluate whether they should consolidate certain legal entities. The ASU simplifies consolidation accounting by reducing the number of consolidation models that an entity may apply. The guidance is effective for reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements. In April 2015, the FASB issued an ASU regarding simplification of the presentation of debt issuance costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the Consolidated Statement of Financial Condition as a direct deduction from the carrying amount of that debt liability. The guidance is effective retrospectively for reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements. |
Tender Offer
Tender Offer | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Tender Offer | Tender Offer On April 2, 2015, the Company’s Board of Directors authorized the repurchase of up to $400.0 million (including the previously unused $55.0 million of authority under the previously authorized repurchase program) of KCG Class A Common Stock and warrants to purchase shares of KCG Class A Common Stock (the "Warrants"). On May 4, 2015, the Company commenced a “modified Dutch auction” tender offer ("Tender Offer") that expired on June 2, 2015. Under the terms of the Tender Offer, stockholders had the opportunity to sell up to $330.0 million of KCG Class A Common Stock to the Company at specified prices per share of not less than $13.50 and not greater than $14.00 , or at the purchase price determined by KCG in accordance with the terms of the Tender Offer. Following the expiration of the Tender Offer on June 2, 2015 and based on the number of shares tendered and the prices specified by the tendering stockholders, the Company accepted for purchase 23.6 million shares of the Company’s Class A Common Stock at a purchase price of $14.00 per share, for a cost of $330.0 million excluding fees and expenses related to the Tender Offer. The 23.6 million shares of KCG Class A Common Stock that the Company accepted for purchase in the Tender Offer were retired as of June 9, 2015. As a result, the Company reduced Class A Common Stock and Retained earnings on the Consolidated Statements of Financial Condition by $0.2 million and $329.8 million , respectfully. As the Tender Offer was oversubscribed, shares of KCG Common Stock were accepted on a pro rata basis (except for tenders of odd lots, which were accepted in full) at a proration factor, after giving effect to the priority of odd lots, of approximately 29.1% . As of June 30, 2015, approximately $70.0 million in authority remains under the share repurchase program. The Company incurred expenses of $2.1 million in connection with the Tender Offer, which were recorded within Professional fees in the Consolidated Statements of Operations for the three and six months ended June 30, 2015. Warrants As a portion of the consideration in the Mergers, former GETCO unitholders received, in addition to KCG Class A Common Stock, 24.3 million Class A, Class B and Class C Warrants, which were issued in accordance with the Warrant Agreement, dated July 1, 2013, between KCG and Computershare Shareowner Services LLC (the “Warrant Agreement”) and which are subject to the terms and conditions of the Warrant Agreement. The Warrant Agreement includes various anti-dilution and similar provisions that require adjustments to the exercise prices of the Class A, Class B and Class C Warrants and/or the number of shares of KCG Class A Common Stock issuable upon exercise of the Warrants upon certain events and actions taken by the Company, including the Company’s repurchase of KCG Class A Common Stock through a public tender offer. As a result of the Company’s Tender Offer, as described above, the exercise price of each of the Class A, Class B and Class C Warrants was adjusted in accordance with the terms of the Warrant Agreement. All other terms of the Warrants remained the same. As of June 8, 2015, the adjusted exercise price for each class of Warrants and the activity for the period ended June 30, 2015 was as follows (Warrants in thousands): Class A Class B Class C Original Exercise Price $ 12.00 $ 13.50 $ 15.00 Adjusted Exercise Price $ 11.70 $ 13.16 $ 14.63 Initial term (years) 4 5 6 Expiration 7/1/2017 7/1/2018 7/1/2019 Total Warrants - Outstanding at January 1, 2015 8,114 8,114 8,113 24,341 Exercised (133 ) — — (133 ) Warrants - Outstanding at June 30, 2015 7,980 8,114 8,113 24,207 |
Sales of Businesses
Sales of Businesses | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sales of Businesses | Sales of Businesses 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 November 2013, and, as a result, the revenues and 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 and six months ended June 30, 2014. The revenues and results of operations of discontinued operations are summarized as follows (in thousands): For the three months ended June 30, 2014 For the six months ended June 30, 2014 Additional Loss on Sale $ (1 ) $ (1,313 ) Expenses: Compensation $ 126 $ 171 Other expenses (19 ) 645 Total Expenses 107 816 Loss from discontinued operations (108 ) (2,129 ) Income tax benefit 41 809 Loss from discontinued operations, net of tax $ (67 ) $ (1,320 ) In September 2014, KCG entered into an agreement to sell certain assets and liabilities related to its FCM business to Wedbush Securities Inc. The transaction closed on November 30, 2014 and as such, there are no assets or liabilities related to the FCM business on the December 31, 2014 Consolidated Statement of Financial Condition. As a result of KCG’ s decision to early adopt the aforementioned ASU that amended the requirements for reporting discontinued operations, the FCM is not considered a discontinued operation, and therefore the results of the FCM’s operations for the three and six months ended June 30, 2014 are included in the Global Execution Services segment and in Continuing Operations on the Consolidated Statements of Operations. In October 2014, the Company announced that it began to explore strategic options for KCG Hotspot. KCG Hotspot was a single disposal group that was considered to be held-for-sale as of December 31, 2014 and, as a result, certain assets and liabilities related to KCG Hotspot were included in Assets of business held for sale and Liabilities of business held for sale on the Consolidated Statement of Financial Condition as of December 31, 2014. The Company determined that the sale of KCG Hotspot did not represent a strategic shift that would have a major effect on its operations and financial results, and therefore KCG Hotspot did not meet the requirements to be treated as a discontinued operation under the recently adopted ASU relating to discontinued operations. As such, the results of KCG Hotspot's operations are included in the Global Execution Services segment and in Continuing Operations on the Consolidated Statements of Operations for all applicable periods presented, including the first six months of 2015, through the sale date of March 13, 2015. In March 2015, the Company completed the sale of KCG Hotspot to BATS. The Company and BATS have agreed to share certain tax benefits, which could result in future payments to the Company of up to approximately $70.0 million in the three -year period following the close, consisting of a $50 million payment in 2018 and annual payments of up to $6.6 million per year (the "Annual Payments"), from 2016 up to and including 2018. The additional potential payments were recorded at fair value in Other assets on the Consolidated Statements of Financial Condition and as of June 30, 2015, have a fair value of $62.8 million . The Annual Payments were contingent on KCG Hotspot achieving various levels of trading volumes through June 2015. That contingency has been removed because the trading levels were achieved. However, the Annual Payments remain contingent on BATS generating sufficient taxable net income to receive the tax benefits. The Company recorded a gain upon completion of the sale of $385.0 million , which is recorded as Investment income and other, net on the Consolidated Statements of Operations for the six months ended June 30, 2015. The net gain on the date of the sale of Hotspot of $373.8 million included direct costs associated with the sale which comprised professional fees of $6.7 million and compensation of $4.5 million , which are recorded in Professional fees and Employee compensation and benefits, respectively, on the Consolidated Statements of Operations for the six months ended June 30, 2015. The Company has elected the fair value option related to the $62.8 million receivable from BATS. It considers the receivable to be a Level 2 asset in the fair value hierarchy as the fair value is derived from observable inputs such as projected cash flows and market discount rates. The KCG Hotspot assets and liabilities held for sale as of December 31, 2014 are summarized as follows (in thousands): December 31, 2014 Assets: Fixed assets, less accumulated depreciation $ 391 Intangible assets, net accumulated amortization 34,696 Other assets 5,397 Total assets of business held for sale $ 40,484 Liabilities: Accrued compensation expense $ 2,298 Accrued expenses and other liabilities 58 Total liabilities of business held for sale $ 2,356 |
Assets Segregated or Held in Se
Assets Segregated or Held in Separate Accounts Under Federal or Other Regulations | 6 Months Ended |
Jun. 30, 2015 | |
Regulated Operations [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 relate to the Company’s regulated businesses and consist of the following (in thousands): June 30, December 31, 2014 Cash and cash equivalents segregated under federal or other regulations $ 3,600 $ 3,361 Total assets segregated or held in separate accounts under federal or other regulations $ 3,600 $ 3,361 |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value 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 2 “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 June 30, 2015 Level 1 Level 2 Level 3 Total Assets Financial instruments owned, at fair value: Equities (1) $ 2,391,499 $ — $ — $ 2,391,499 Listed options 117,934 — — 117,934 U.S. government and Non-U.S. government obligations 117,725 — — 117,725 Corporate debt 68,213 — — 68,213 Foreign currency forward contracts — 355 — 355 Total Financial instruments owned, at fair value 2,695,371 355 — 2,695,726 Investment in CME Group (2) 4,655 — — 4,655 Other (3) — 64,406 — 64,406 Total assets held at fair value $ 2,700,026 $ 64,761 $ — $ 2,764,787 Liabilities Financial instruments sold, not yet purchased, at fair value: Equities (1) $ 1,785,493 $ — $ — $ 1,785,493 Listed options 93,113 — — 93,113 U.S. government obligations 91,272 — — 91,272 Corporate debt 68,279 — — 68,279 Total liabilities held at fair value $ 2,038,157 $ — $ — $ 2,038,157 (1) Equities of $826.5 million have been netted by their respective long and short positions by CUSIP number. (2) Investment in CME Group is included within Investments on the Consolidated Statements of Financial Condition. (3) Other consists of $62.8 million receivable from BATS related to the sale of KCG Hotspot and $1.6 million of deferred compensation investments which are included within Other assets and Investments, respectively, on the Consolidated Statements of Financial Condition. Assets and Liabilities Measured at Fair Value on a Recurring Basis December 31, 2014 Level 1 Level 2 Level 3 Total Assets Financial instruments owned, at fair value: Equities (1) $ 2,479,910 $ — $ — $ 2,479,910 Listed options 144,586 — — 144,586 U.S. government and Non-U.S. government obligations 22,983 — — 22,983 Corporate debt (2) 59,832 — — 59,832 Foreign currency forward contracts — 60 — 60 Total Financial instruments owned, at fair value 2,707,311 60 — 2,707,371 Investment in CME Group (3) 4,435 — — 4,435 Other investments (3) — 1,014 — 1,014 Total assets held at fair value $ 2,711,746 $ 1,074 $ — $ 2,712,820 Liabilities Financial instruments sold, not yet purchased, at fair value: Equities (1) $ 2,069,342 $ — $ — $ 2,069,342 Listed options 115,362 — — 115,362 U.S. government obligations 18,953 — — 18,953 Corporate debt (2) 82,050 — — 82,050 Total liabilities held at fair value $ 2,285,707 $ — $ — $ 2,285,707 (1) Equities of $743.1 million have been netted by their respective long and short positions by CUSIP number. (2) Corporate debt instruments of $0.3 million have been netted by their respective long and short positions by CUSIP number. (3) Investment in CME Group and Other investments, which primarily consist of deferred compensation investments, 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 publicly 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 June 30, 2015 and December 31, 2014 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 relate to goodwill and intangible assets arising from various acquisitions which would be classified as Level 3 within the fair value hierarchy. See Footnote 11 “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, and other investments 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 June 30, 2015 and December 31, 2014, the Company had foreign currency forward contracts with a notional value of 825.0 million Indian Rupees ( $12.5 million U.S. dollars) and 700.0 million Indian Rupees ( $10.9 million U.S. dollars), respectfully. These forward contracts are used to hedge the Company’s investment in its Indian subsidiary. The fair value of this forward contract was determined based upon spot foreign exchange rates and dealer quotations. Other Other primarily consists of the fair value of the Company's receivable from BATS as more fully described in Footnote 4 "Sales of Businesses". Also included in this category are deferred compensation investments which 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. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company enters into derivative transactions as part of its trading activities and 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. 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 while swaps and forward contracts are classified as Level 2 in the fair value hierarchy. The following tables summarize the fair value and number of derivative instruments held at June 30, 2015 and December 31, 2014 and the gains and losses included in the Consolidated Statements of Operations for the periods then ended. These instruments include those classified as Financial Instruments, owned at fair value, Financial instruments sold, not yet purchased at fair value, as well as futures contracts which are reported within Receivable from or Payable to brokers, dealers and clearing organizations in the Consolidated Statements of Financial Condition (fair value and gain (loss) in thousands): June 30, 2015 Financial Statements Assets Liabilities Location Fair Value Contracts Fair Value Contracts Foreign currency Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations $ 973 10,740 $ 322 6,932 Forward contracts Financial instruments owned at fair value 355 0.001 1 — — Equity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 17,539 24,777 15,673 21,936 Swap contracts Receivable from brokers, dealers and clearing organizations 22 1 — — Listed options Financial instruments owned/sold, not yet purchased, at fair value 117,934 308,805 93,113 314,616 Fixed income Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 3,704 5,827 4,201 8,028 Commodity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 47,368 14,912 49,825 16,010 Total $ 187,895 365,063 $ 163,134 367,522 December 31, 2014 Financial Statements Assets Liabilities Location Fair Value Contracts Fair Value Contracts Foreign currency Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations $ 1,212 8,108 $ 651 9,090 Forward contracts Financial instruments owned at fair value 60 1 — — Equity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 1,790 2,590 2,047 3,085 Swap contracts Receivable from/Payable to brokers, dealers and clearing organizations 98 1 13 1 Listed options Financial instruments owned/sold, not yet purchased, at fair value 144,586 426,747 115,362 437,383 Fixed income Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 6,432 11,901 6,891 10,628 Commodity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 15,246 8,894 14,847 9,105 Total $ 169,424 458,242 $ 139,811 469,292 Gain (Loss) Recognized Financial Statements For the three months ended June 30, For the six months ended June 30, Location 2015 2014 2015 2014 Derivative instruments not designated as hedging instruments: Foreign currency Futures contracts Trading revenues, net $ (202 ) $ 2,952 $ 806 $ 5,794 Forward contracts Investment income and other, net 284 (120 ) (10 ) 312 Equity Futures contracts Trading revenues, net 11,361 6,044 13,738 14,781 Swap contracts Trading revenues, net 739 1,061 1,068 2,343 Listed options (1) Trading revenues, net (2,631 ) 2,212 (16,181 ) (71,664 ) Fixed income Futures contracts Trading revenues, net 16,377 5,118 24,921 13,947 Commodity Futures contracts Trading revenues, net 9,568 12,435 25,003 26,005 $ 35,496 $ 29,702 $ 49,345 $ (8,482 ) Derivative instruments designated as hedging instruments: Foreign exchange - forward contract Accumulated other comprehensive income $ (6 ) $ — $ (6 ) $ 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 revenues, net on the Company’s Consolidated Statements of Operations. The Company has entered into and may continue to enter into International Swaps and Derivative Association, Inc (“ISDA”) master netting agreements with counterparties. Master agreements provide protection in bankruptcy in certain circumstances and, where legally enforceable, enable receivables and payables with the same counterparty to be settled or otherwise eliminated by applying amounts due against all or a portion of an amount due from the counterparty or a third party. The Company may also enter into bilateral trading agreements and other customer agreements that provide for the netting of receivables and payables with a given counterparty as a single net obligation. Under the ISDA master netting agreements, the Company typically also executes credit support annexes, which provide for collateral, either in the form of cash or securities, to be posted or paid by a counterparty based on the fair value of the derivative receivable or payable based on the rates and parameters established in the credit support annex. In the event of counterparty’s default, provisions of the ISDA master agreement permit acceleration and termination of all outstanding transactions covered by the agreement such that a single amount is owed by, or to, the non-defaulting party. Any collateral posted can be applied to the net obligations, with any excess returned and the collateralized party has a right to liquidate the collateral. Any residual claim after netting is treated along with other unsecured claims in bankruptcy court. The Company is also a party to clearing agreements with various central clearing parties. Under these arrangements, the central clearing counterparty facilitates settlement between counterparties based on the net payable owed or receivable due and, with respect to daily settlement, cash is generally only required to be deposited to the extent of the net amount. In the event of default, a net termination amount is determined based on the market values of all outstanding positions and the clearing organization or clearing member provides for the liquidation and settlement of the net termination amount among all counterparties to the open derivative contracts. The table below provides information regarding (1) the extent to which, under enforceable master netting arrangements, such balances are presented net in the Consolidated Statements of Financial Condition as appropriate under GAAP and (2) the extent to which other rights of offset associated with these arrangements exist and could have had an effect on our financial position (in thousands): June 30, 2015 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition (3) Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Listed options $ 117,934 $ — $ 117,934 $ — $ — $ 117,934 Foreign currency forward contracts 355 — 355 — — 355 Swaps 22 — 22 — — 22 Futures 69,584 66,284 3,300 — — 3,300 Total Assets $ 187,895 $ 66,284 $ 121,611 $ — $ — $ 121,611 Liabilities Listed options $ 93,113 $ — $ 93,113 $ — $ 11,422 $ 81,691 Futures 70,021 70,021 — — — — Total Liabilities $ 163,134 $ 70,021 $ 93,113 $ — $ 11,422 $ 81,691 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) The full amount of the liabilities related to futures of $70.0 million has been netted against the assets related to futures of $64.7 million as the Company maintains margin in excess of the net liability and such margin is utilized to offset any excess liability. December 31, 2014 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Listed options $ 144,586 $ — $ 144,586 $ — $ — $ 144,586 Foreign currency forward contracts 60 — 60 — — 60 Swaps 98 13 85 — — 85 Futures 24,680 24,436 244 — — 244 Total Assets $ 169,424 $ 24,449 $ 144,975 $ — $ — $ 144,975 Liabilities Listed options $ 115,362 $ — $ 115,362 $ — $ 17,359 $ 98,003 Futures 24,436 24,436 — — — — Swaps 13 13 — — — — Total Liabilities $ 139,811 $ 24,449 $ 115,362 $ — $ 17,359 $ 98,003 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. 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 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. 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. |
Collateralized Transactions
Collateralized Transactions | 6 Months Ended |
Jun. 30, 2015 | |
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, corporate obligations and obligations of the U.S. government, but may also include obligations of federal agencies, foreign governments and convertible securities. 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): June 30, December 31, Collateral permitted to be delivered or repledged $ 1,816,698 $ 1,586,700 Collateral that was delivered or repledged 1,704,373 1,485,267 Collateral permitted to be further repledged by the receiving counterparty 345,956 147,696 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 equities, corporate obligations and obligations of the U.S. government, but may also include obligations of federal agencies, foreign governments and convertible securities. The table below presents information about assets pledged by the Company (in thousands): June 30, December 31, Financial instruments owned, at fair value, pledged to counterparties that have the right to deliver or repledge $ 429,665 $ 536,124 Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge 1,057,213 979,652 The table below presents the gross carrying value of Securities loaned and Financial instruments sold under agreements to repurchase by class of collateral pledged (in thousands): June 30, 2015 Financial instruments sold under agreements to repurchase Asset Class Securities Loaned Equities $ 726,413 $ 879,472 U.S. government obligations — 85,667 Corporate debt 15,319 30,528 Total $ 741,732 $ 995,667 December 31, 2014 Financial instruments sold under agreements to repurchase Asset Class Securities Loaned Equities $ 696,162 $ 832,614 U.S. government obligations — 73,576 Corporate debt 11,582 27,386 Total $ 707,744 $ 933,576 The Company may enter into master netting agreements and collateral arrangements with counterparties in order to manage its exposure to credit risk associated with securities financing transactions. Such transactions are generally executed under standard industry agreements, including, but not limited to, master securities lending agreements (securities lending transactions) and master repurchase agreements (repurchase transactions). Master agreements provide protection in bankruptcy in certain circumstances and, where legally enforceable, enable receivables and payables with the same counterparty to be settled or otherwise eliminated by applying amounts due against all or a portion of an amount due from the counterparty or a third party. The Company may also enter into bilateral trading agreements and other customer agreements that provide for the netting of receivables and payables with a given counterparty as a single net obligation. In the event of counterparty’s default, provisions of the master agreement permit acceleration and termination of all outstanding transactions covered by the agreement such that a single amount is owed by, or to, the non-defaulting party. Any collateral posted can be applied to the net obligations, with any excess returned and the collateralized party has a right to liquidate the collateral. Any residual claim after netting is treated along with other unsecured claims in bankruptcy court. The Company is also a party to clearing agreements with various central clearing parties. Under these arrangements, the central clearing counterparty facilitates settlement between counterparties based on the net payable owed or receivable due and, with respect to daily settlement, cash is generally only required to be deposited to the extent of the net amount. In the event of default, a net termination amount is determined based on the market values of all outstanding positions and the clearing organization or clearing member provides for the liquidation and settlement of the net termination amount among all counterparties to the open repurchase and/or securities lending transactions. 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): June 30, 2015 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Securities borrowed $ 1,871,312 $ — $ 1,871,312 $ 1,806,445 $ 15,467 $ 49,400 Receivable from brokers, dealers and clearing organizations (3) 21,845 — 21,845 21,845 — — Total Assets $ 1,893,157 $ — $ 1,893,157 $ 1,828,290 $ 15,467 $ 49,400 Liabilities Securities loaned $ 741,732 $ — $ 741,732 $ 707,522 $ 15,467 $ 18,743 Financial instruments sold under agreements to repurchase 995,667 — 995,667 995,574 — 93 Total Liabilities $ 1,737,399 $ — $ 1,737,399 $ 1,703,096 $ 15,467 $ 18,836 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) Represents financial instruments repurchased under agreement to resell. December 31, 2014 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Securities borrowed $ 1,632,062 $ — $ 1,632,062 $ 1,570,194 $ 15,782 $ 46,086 Receivable from brokers, dealers and clearing organizations (3) 21,545 — 21,545 21,425 — 120 Total Assets $ 1,653,607 $ — $ 1,653,607 $ 1,591,619 $ 15,782 $ 46,206 Liabilities Securities loaned $ 707,744 $ — $ 707,744 $ 682,389 $ 15,782 $ 9,573 Financial instruments sold under agreements to repurchase 933,576 — 933,576 933,560 — 16 Total Liabilities $ 1,641,320 $ — $ 1,641,320 $ 1,615,949 $ 15,782 $ 9,589 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) Represents financial instruments purchased under agreement to resell. See Footnote 7 "Derivative Financial Instruments" for information related to the offsetting of derivatives in the Company's Consolidated Financial Statements. Maturities of Securities loaned and Financial instruments sold under agreements to repurchase are provided in the table below (dollars in thousands): As of June 30, 2015 Overnight 0 - 30 days 31 - 60 days 61 - 90 days Total Securities loaned $ 741,732 $ — $ — $ — $ 741,732 Financial instruments sold under agreements to repurchase 85,667 535,000 225,000 150,000 995,667 Total $ 827,399 $ 535,000 $ 225,000 $ 150,000 $ 1,737,399 As of December 31, 2014 Overnight 0 - 30 days 31 - 60 days 61 - 90 days Total Securities loaned $ 707,744 $ — $ — $ — $ 707,744 Financial instruments sold under agreements to repurchase 73,576 410,000 325,000 125,000 933,576 Total $ 781,320 $ 410,000 $ 325,000 $ 125,000 $ 1,641,320 |
Receivable from and Payable to
Receivable from and Payable to Brokers, Dealers and Clearing Organizations | 6 Months Ended |
Jun. 30, 2015 | |
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): June 30, December 31, 2014 Receivable: Clearing organizations and other $ 476,488 $ 1,073,480 Financial instruments purchased under agreement to resell 21,845 21,545 Securities failed to deliver 191,958 93,808 Total Receivable $ 690,291 $ 1,188,833 Payable: Clearing organizations and other $ 461,000 $ 350,627 Securities failed to receive 68,748 325,462 Total Payable $ 529,748 $ 676,089 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 | 6 Months Ended |
Jun. 30, 2015 | |
Investments [Abstract] | |
Investments | Investments Investments primarily comprise strategic investments and deferred compensation investments. Investments consist of the following (in thousands): June 30, December 31, Strategic investments: Investments accounted for under the equity method $ 92,148 $ 86,328 Investments held at fair value 4,655 4,435 Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost 8,948 8,949 Total Strategic investments 105,751 99,712 Other investments 1,597 1,014 Total Investments $ 107,348 $ 100,726 For the three months ended June 30, 2015 and 2014, the Company recorded income of $2.3 million and $2.1 million , respectively, related to Investments accounted for under the equity method of accounting, which is recorded within Investment income and other, net in the Consolidated Statements of Operations. For the six months ended June 30, 2015 and 2014, the Company recorded income of $4.5 million and $15.2 million , respectively, related to Investments accounted for under the equity method of accounting. The Company's investments accounted for under the equity method are considered to be related parties. See Footnote 13 "Related Parties". Investments held at fair value are accounted for as available for sale securities and any unrealized gains or losses are recorded net of tax 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, merged, with BATS being the surviving entity in the merger. 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 has appointed a director to BATS' board of directors. Based on these facts, the Company accounts for its interest in BATS under the equity method. The Company received approximately $42.2 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 earnings of $6.6 million . |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill and intangible assets with indefinite lives are 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 one 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 two 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. No events occurred in the six months ended June 30, 2015 or 2014 that would indicate that the carrying amounts of the Company’s goodwill or intangible assets may not be recoverable. In the fourth quarter of 2014, 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): June 30, December 31, 2014 Market Making $ 16,404 $ 16,404 Global Execution Services 907 907 Total $ 17,311 $ 17,311 Intangible assets with definite useful lives are amortized over their estimated remaining useful lives, the majority of which have been determined to range from one to eight years. The weighted average remaining life of the Company’s intangible assets with definite useful lives at June 30, 2015 and December 31, 2014 was approximately four and five years, respectively. The following tables summarize the Company’s Intangible assets, net of accumulated amortization by segment and type (in thousands): June 30, December 31, 2014 Market Making Technology $ 49,951 $ 50,542 Trading rights 42,025 44,358 Total 91,976 94,900 Global Execution Services (1) Technology 15,600 18,200 Customer relationships 10,111 10,833 Trade names 800 850 Total 26,511 29,883 Corporate and Other Technology 9,000 10,500 Total $ 127,487 $ 135,283 (1) Excluded from the December 31, 2014 balance is $34.7 million of intangibles related to the KCG Hotspot which was held for sale at that time. As noted in Footnote 4 "Sales of Businesses", such amount is included in Assets of business held for sale at December 31, 2014. June 30, December 31, 2014 Technology (1) Gross carrying amount $ 124,305 $ 115,804 Accumulated amortization (49,754 ) (36,562 ) Net carrying amount 74,551 79,242 Trading rights (2) Gross carrying amount 62,468 62,468 Accumulated amortization (20,443 ) (18,110 ) Net carrying amount 42,025 44,358 Customer relationships (3) Gross carrying amount 13,000 13,000 Accumulated amortization (2,889 ) (2,167 ) Net carrying amount 10,111 10,833 Trade names (4) Gross carrying amount 1,000 1,000 Accumulated amortization (200 ) (150 ) Net carrying amount 800 850 Total Gross carrying amount 200,773 192,272 Accumulated amortization (73,286 ) (56,989 ) Net carrying amount $ 127,487 $ 135,283 (1) The weighted average remaining life for technology, including capitalized internal use software, was approximately two and three years as of June 30, 2015 and December 31, 2014 , respectively. Excluded from the December 31, 2014 balance is $13.1 million of technology assets related to KCG Hotspot which as noted in Footnote 4 "Sales of Businesses", is included in Assets of business held for sale at December 31, 2014. (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 was approximately six and seven years as of June 30, 2015 and December 31, 2014 , respectively. As of June 30, 2015 and December 31, 2014, $6.8 million of trading rights had indefinite useful lives. (3) Customer relationships relate to KCG BondPoint. The weighted average remaining life was approximately 7 and 8 years as of June 30, 2015 and December 31, 2014 , respectively. Lives may be reduced depending upon actual retention rates. Excluded from the December 31, 2014 balance is $19.0 million of customer relationships related to KCG Hotspot which as noted in Footnote 4 "Sales of Businesses", is included in Assets of business held for sale at December 31, 2014. (4) Trade names relate to KCG BondPoint. The weighted average remaining life was approximately 8 and 9 years as of June 30, 2015 and December 31, 2014 , respectively. Excluded from the December 31, 2014 balance is $2.6 million of the trade name related to KCG Hotspot which as noted in Footnote 4 "Sales of Businesses", is included in Assets of business held for sale at December 31, 2014. The following table summarizes the Company’s amortization expense from continuing operations relating to Intangible assets (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Amortization expense $ 8,317 $ 8,732 $ 17,566 $ 17,226 As of June 30, 2015 , the following table summarizes the Company’s estimated amortization expense for future periods (in thousands): Amortization expense For the six months ended December 31, 2015 $ 16,594 For the year ended December 31, 2016 32,856 For the year ended December 31, 2017 30,075 For the year ended December 31, 2018 16,763 For the year ended December 31, 2019 6,211 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt The carrying value and fair value of the Company's debt is as follows (in thousands): June 30, 2015 December 31, 2014 Carrying Amount Fair Value Carrying Amount Fair Value Cash Convertible Senior Subordinated Notes $ — $ — $ 117,259 $ 116,819 8.25% Senior Secured Notes — — 305,000 309,194 6.875% Senior Secured Notes 495,113 480,259 — — Total Debt $ 495,113 $ 480,259 $ 422,259 $ 426,013 The fair value of the Company's 6.875% Senior Secured Notes, 8.25% Senior Secured Notes and Cash Convertible Senior Subordinated Notes are based upon the value of such debt in the secondary market. All of the above liabilities would 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 "Securities Act"). In connection with the closing of the Mergers, on July 1, 2013, KCG became a party to the indenture under which the Convertible Notes were issued. On March 16, 2015, the Convertible Notes became due and were paid off in full with a payment of $119.3 million comprising $117.3 million in principal and $2.1 million in interest. The Convertible Notes bore 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 . 8.25% 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 “8.25% Senior Secured Notes”) pursuant to an indenture, dated June 5, 2013 (as amended and supplemented, the "8.25% 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 8.25% Senior Secured Notes plus certain escrow agent fees and expenses of $3.0 million . The 8.25% Senior Secured Notes were scheduled to mature on June 15, 2018 and bore 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 8.25% Senior Secured Notes Indenture provided that KCG could redeem the 8.25% Senior Secured Notes, in whole or in part, at any time prior to June 15, 2015 at a price equal to 100% of the aggregate principal amount of the 8.25% Senior Secured Notes to be redeemed, plus a make-whole premium and accrued and unpaid interest, if any. On March 13, 2015, KCG provided 30 days ’ notice that it would be calling its existing 8.25% Senior Secured Notes, effective April 13, 2015. On March 13, 2015, the Company used a portion of the gross proceeds from the 6.875% Senior Secured Notes (as defined below), to deposit in an escrow account maintained by The Bank of New York Mellon, the trustee of the 8.25% Senior Secured Notes (“Bank of New York”) an amount sufficient to redeem the 8.25% Senior Secured Notes in full and accordingly satisfied and discharged the 8.25% Senior Secured Notes Indenture. The Company funded $330.2 million into an escrow account maintained by Bank of New York comprising the following: principal of $305.0 million , accrued interest for the period from December 16, 2014 to April 13, 2015 of $8.2 million , make whole premium which includes 4.125% early redemption cost plus additional interest due from April 13, 2015 through June 15, 2015 totaling $16.5 million , and additional funds to cover other miscellaneous charges of $0.4 million . On April 13, 2015, the escrow amount of $330.2 million was released and the required amount was paid out to the 8.25% Senior Secured Notes holders to redeem the 8.25% Senior Secured Notes. The 8.25% Senior Secured Notes Indenture was satisfied and discharged on March 13, 2015. Upon the release of the $330.2 million escrow account, the Company recognized charges for a make-whole premium of $16.5 million and the write off of capitalized debt costs of $8.5 million which are recorded as Debt extinguishment charges in the Consolidated Statements of Operations for the three and six months ended June 30, 2015. 6.875% Senior Secured Notes On March 10, 2015, the Company entered into a purchase agreement with Jefferies LLC, as initial purchaser (the “Initial Purchaser”), pursuant to which the Company agreed to sell, and the Initial Purchaser agreed to purchase, $500.0 million aggregate principal amount of 6.875% Senior Secured Notes (the “6.875% Senior Secured Notes”), pursuant to an indenture dated March 13, 2015 (the “6.875% Indenture”), in a private offering exempt from registration under the Securities Act. The 6.875% Senior Secured Notes were resold by the Initial Purchaser to qualified institutional buyers in reliance on Rule 144A and Regulation S under the Securities Act. The 6.875% Senior Secured Notes mature on March 15, 2020 and bear interest at a rate of 6.875% per year, payable on March 15 and September 15 of each year, beginning on September 15, 2015. The 6.875% Senior Secured Notes were issued at 98.962% with net proceeds (before fees and expenses) of $494.8 million and a yield to maturity of 7.083% . On March 13, 2015, KCG and certain subsidiary guarantors (the "6.875% Guarantors") under the 6.875% Indenture, fully and unconditionally guaranteed on a joint and several basis the 6.875% Senior Secured Notes. The 6.875% Senior Secured Notes and the obligations under the 6.875% Indenture are currently secured by pledges of all of the equity interests in each of KCG’s and the 6.875% Guarantors’ existing and future domestic subsidiaries (but limited to 66% of the voting equity interests of controlled foreign company subsidiaries and excluding equity interests in regulated subsidiaries to the extent that such pledge would have a material adverse regulatory effect or is not permitted by applicable law) and security interests in substantially all other tangible and intangible assets of KCG and the 6.875% Guarantors, in each case subject to customary exclusions; provided, however, that if in the future KCG or any of the 6.875% Guarantors enter into certain first lien obligations (as described in the 6.875% Indenture) the collateral agent is authorized by the holders of the 6.875% Senior Secured Notes to enter into an Intercreditor Agreement pursuant to which the lien securing the 6.875% Senior Secured Notes would be contractually subordinated to the lien securing such first lien obligations, to the extent of the value of the collateral securing such obligations. The 6.875% Senior Secured Notes are effectively subordinated to any existing and future indebtedness that is secured by assets that do not constitute collateral under the 6.875% Senior Secured Notes to the extent of the value of such assets. All of the 6.875% Guarantors are wholly-owned subsidiaries of KCG. On or after March 15, 2017, KCG may redeem all or a part of the 6.875% Senior Secured Notes upon not less than 30 nor more than 60 days ’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and additional interest on the 6.875% Senior Secured Notes redeemed, to the applicable redemption date, if redeemed during the 12 -month period beginning on March 15 of the years indicated below: Year Percentage 2017 103.438 % 2018 101.719 % 2019 and thereafter 100.000 % KCG may also redeem the 6.875% Senior Secured Notes, in whole or in part, at any time prior to March 15, 2017 at a price equal to 100% of the aggregate principal amount of the 6.875% Senior Secured Notes to be redeemed, plus a contractual make-whole premium and accrued and unpaid interest. In addition, at any time on or prior to March 15, 2017, KCG may redeem up to 40% of the aggregate principal amount of the 6.875% Senior Secured Notes with the net cash proceeds of certain equity offerings, at a price equal to 106.875% of the aggregate principal amount of the 6.875% Senior Secured Notes, plus accrued and unpaid interest, if any. The 6.875% 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 June 30, 2015, the Company was in compliance with these covenants. If at any time the 6.875% Senior Secured Notes are rated investment grade by Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Group and no default or event of default has occurred and is continuing under the 6.875% Indenture, certain of the restrictive covenants will be suspended and will not apply to KCG or its restricted subsidiaries; provided, however, that such covenants will be reinstated if the 6.875% Senior Secured Notes subsequently cease to be rated or are no longer assigned an investment grade rating by both rating agencies. The 6.875% Senior Secured Notes and the guarantee of the 6.875% Senior Secured Notes have not been registered under the Securities Act or the securities laws of any other jurisdiction and have no registration rights and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company has determined that the terms of the 6.875% Senior Secured Notes do not give rise to a bifurcatable derivative instrument under GAAP. The Company incurred issuance costs of approximately $12.6 million in connection with the issuance of the 6.875% Senior Secured Notes. The issuance costs are recorded within Other assets on the Consolidated Statements of Financial Condition and are being amortized over the remaining term of the 6.875% Senior Secured Notes. Including issuance costs and original issue discount, the 6.875% Senior Secured Notes had an effective yield of 7.588% . 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. In 2013, the Company repaid $300.0 million of principal of the First Lien Credit Facility. A portion of the $300.0 million totaling $117.3 million was drawn from cash held in a collateral account and the remainder of the $300.0 million was paid out of available cash, including proceeds from the sale of Urban. In the first half of 2014, the Company repaid the remaining $235.0 million of principal of the First Lien Credit Facility out of available cash and the Credit Agreement was terminated. In conjunction with these payments, the Company wrote down $9.6 million of its capitalized debt costs associated with the Credit Agreement. Revolving Credit Agreement On June 5, 2015, KCG Americas LLC ("KCGA"), a wholly-owned broker dealer subsidiary of KCG, as borrower, and KCG, as guarantor, entered into a credit agreement (the "KCGA Facility Agreement”) with a consortium of banks. The KCGA Facility Agreement replaced the prior KCGA credit agreement, dated July 1, 2013, which was terminated as of June 5, 2015. The KCGA Facility Agreement comprises two classes of revolving loans in a total aggregate committed amount of $355.0 million , including 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 (limited to a maximum loan amount of $115.0 million ). The KCGA Revolving Facility also provides for future increases of the revolving credit facility of up to $145.0 million to a total of $500.0 million on certain terms and conditions. Borrowings under the KCGA Revolving Facility bear interest, at the 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 1.50% per annum and (b) for each Borrowing Base B loan, a margin of 2.50% per annum. For each Eurodollar Loan, the interest rate per annum is equal to an adjusted LIBOR rate corresponding to an interest period of one, two or three months plus (a) for each Borrowing Base A loan, a margin of 1.50% per annum and (b) for each Borrowing Base B loan, a margin of 2.50% per annum. As of June 30, 2015, 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 ("NSCC"). KCGA is charged a commitment fee at a rate of 0.40% 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 5, 2017. The KCGA Revolving Facility is fully and unconditionally guaranteed on an unsecured basis by KCG and, to the extent elected by KCGA, any of its or KCG’s other 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 June 30, 2015, the Company was in compliance with these covenants. The KCGA Facility Agreement also contains events of default customary for facilities of its type, including: nonpayment of principal, interest, fees and other amounts when due, inaccuracy of representations and warranties in any material respect; violation of covenants; cross-default and cross-acceleration to material indebtedness; bankruptcy and insolvency events; material judgments; ERISA events; collateral matters; certain regulatory matters; and a “change of control”; subject, where appropriate, to threshold, notice and grace period provisions. The terms of the prior KCGA credit agreement were substantially the same as the terms of the KCGA Facility Agreement, except that: (i) the facility size was $450.0 million with an uncommitted incremental revolving credit facility of up to $300.0 million on certain terms and conditions; (ii) for each Base Rate Loan, the interest rate per annum was equal to the greater of the federal funds rate or an adjusted one-month LIBOR rate plus (a) for each Revolving A Loan, a margin of 1.75% per annum and (b) for each Revolving B Loan, a margin of 2.25% per annum and for each Eurodollar Loan, the interest rate per annum was equal to an adjusted LIBOR rate corresponding to the interest period plus (a) for each Revolving A Loan, a margin of 1.75% per annum and (b) for each Revolving B loan, a margin of 2.25% per annum; (iii) the Revolving B Sublimit was $150.0 million ; and (iv) the commitment fee was 0.35% . In connection with the KCGA Revolving Facility, the Company incurred issuance costs of $1.4 million which are recorded within Other assets on the Consolidated Statements of Financial Condition and are 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 June 30, For the six months ended June 30, 2015 2014 2015 2014 Interest expense (1) $ 26,226 $ 7,349 $ 34,385 $ 16,765 Amortization of debt issuance cost (2) 9,428 2,791 10,362 11,557 Commitment fee 403 394 797 788 Total $ 36,057 $ 10,534 $ 45,544 $ 29,110 (1) The three and six months ended June 30, 2015 includes a $16.5 million charge for a contractual make-whole premium, as a result of the early retirement of the $305 million 8.25% Senior Secured Notes in April 2015, which was recorded as Debt extinguishment charges on the Consolidated Statements of Operations (2) The three and six months ended June 30, 2015 includes a $8.5 million charge for the writedown of capitalized debt costs, as a result of the early retirement of the $305 million 8.25% Senior Secured Notes in April 2015, which was recorded as Debt extinguishment charges on the Consolidated Statements of Operations. Of the $2.8 million of amortization of debt issuance cost incurred during the three months ended June 30, 2014, $2.0 million is included in Debt extinguishment charges and $0.8 million is in Other expenses in the Consolidated Statements of Operations. Of the $11.6 million of amortization of debt issuance cost incurred during the six months ended June 30, 2014, $9.6 million is included in Debt extinguishment charges and $2.0 million is in Other expenses in the Consolidated Statements of Operations. The writedown amounts were incurred as a result of the $50.0 million and $235.0 million repayment of the First Lien Credit Facility made during the three and six months ended June 30, 2014, respectively. |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties The Company interacts with one party which is the beneficial owner of more than 10 percent of KCG’s Class A Common Stock. It also has trading and other activities with certain investees for which KCG accounts for under the equity method of accounting. Each is considered a related party for all applicable periods. See Footnote 10 "Investments" for the carrying value of these investees at June 30, 2015 and December 31, 2014 and for the Company's income with respect to its equity earnings from these investees for the three and six months ended June 30, 2015 and 2014. The Company earns revenues, incurs expenses and maintains balances with these related parties or their affiliates in the ordinary course of business. As of the date and period indicated below, the Company had the following balances and transactions with its related parties or their affiliates (in thousands): For the three months ended June 30, For the six months ended June 30, Statements of Operations 2015 2014 2015 2014 Revenues Commissions and fees $ 2,636 $ 2,740 $ 6,128 $ 7,886 Trading revenues, net 1,804 541 3,905 1,355 Interest, net 131 130 357 318 Total revenues from related parties $ 4,571 $ 3,411 $ 10,390 $ 9,559 Expenses Execution and clearance fees (1) $ (4,180 ) $ (2,537 ) $ (8,808 ) $ (6,548 ) Communications and data processing 1,299 — 2,409 — Payment for order flow 1,073 — 2,253 — Collateralized financing interest 134 120 247 279 Professional fees — — 5,507 — — Other expense 656 434 1,277 834 Total expenses incurred with respect to related parties $ (1,018 ) $ (1,983 ) $ 2,885 $ (5,435 ) (1) Represents net volume based fees received from providing liquidity to related trading venues. Statements of Financial Condition June 30, December 31, Assets Securities borrowed $ 45,466 $ 26,110 Receivable from brokers, dealers and clearing organizations 107,946 20,075 Other assets 67,167 — Liabilities Securities loaned $ 1,267 $ 7,376 Payable to brokers, dealers and clearing organizations 40,128 8,509 Accrued expenses and other liabilities 4,626 5,667 In March 2015, the Company completed the sale of KCG Hotspot to BATS, a related party. The Company recorded a gain on sale of $385.0 million which is included as Investment income and other, net on the Consolidated Statements of Operations for the six months ended June 30, 2015. The Company and BATS have agreed to share certain tax benefits, which could result in future payments to the Company of up to approximately $70.0 million in the three -year period following the close. The additional potential payments were recorded at their estimated fair value of $62.8 million in Other assets on the June 30, 2015 Consolidated Statement of Financial Condition and in the table above. See Footnote 4 "Sales of businesses" for additional information. Additionally, for the first half of 2015, the Company paid one of the related parties $16.8 million in fees related to financing and advisory activities. The $16.8 million comprised $11.3 million that was capitalized as deferred debt costs within Other assets on the Consolidated Statement of Financial Condition and $5.5 million that was recorded as Professional fees in the Consolidated Statement of Operations and included in the table above. In the ordinary course of business, the Company enters into foreign exchange contracts with related parties. As part of the Company’s Tender Offer, it accepted for purchase validly tendered shares of the KCG Class A Common Stock at $14.00 per share from the following directors and stockholders, or their affiliates, who owned more than 10% of KCG Class A Common Stock (in thousands): Name Title/ Relationship Number of Shares Purchased Total Purchase Price Stephen Schuler and related entities (1) Director/Stockholder 1,708 $ 23,918 Daniel Tierney and related entities (2) Director/Stockholder 1,798 25,176 GA-GTCO Interholdco, LLC (3) Stockholder 8,285 115,989 Jefferies LLC Stockholder 6,533 91,458 (1) Includes (i) Stephen Schuler, (ii) Serenity Investments, LLC, a limited liability company organized under the laws of the state of Alaska (“Serenity”), of which Mr. Schuler and his wife separately hold equity interests that together represent a controlling interest and with respect to which Mr. Schuler may be deemed to share voting and dispositive power and (iii) the Schuler Family GST Trust dated June 6, 2003, a trust that holds securities with respect to which Mr. Schuler may be deemed to share voting and dispositive power. Mr. Schuler disclaims beneficial ownership of the securities held by Serenity except to the extent of his pecuniary interest therein. (2) Includes (i) Daniel Tierney and (ii) the Daniel V. Tierney 2011 Trust (the “Tierney Trust”), a trust of which Daniel Tierney is the settlor and beneficiary. Mr. Tierney does not have or share voting or dispositive power over the securities held by the Tierney Trust, but does have the power to revoke the Tierney Trust and acquire beneficial ownership of such securities within 60 days . Mr. Tierney disclaims beneficial ownership of the securities held by the Tierney Trust. (3) GA-GTCO Interholdco, LLC, an affiliate of General Atlantic, has appointed two directors to the Company’s board of directors (Rene Kern, an employee of General Atlantic and John C. (Hans) Morris, a former employee of General Atlantic). Neither director participated in the Tender Offer with respect to shares they hold directly. The purchases from the individuals and entities listed above were on the same terms that were available to all of the Company’s stockholders. See Footnote 3 "Tender Offer" for additional information on the Tender Offer. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation KCG Equity Incentive Plan KCG Holdings, Inc. Amended and Restated Equity Incentive Plan (the "KCG Plan") was initially assumed from Knight in connection with the Mergers, and since the Mergers, has been maintained by the Company for the purpose of granting incentive awards to officers, employees and directors of the Company. In April 2015, the Company’s Board of Directors approved and adopted an amended and restated version of the KCG Plan, the KCG Holdings, Inc. 2015 Amended and Restated Equity Incentive Plan (“the Amended 2015 Plan”), subject to approval by the KCG stockholders which was obtained on May 12, 2015 at the Company’s annual meeting of stockholders. The Amended 2015 Plan removed a legacy provision that required, subject to limited exceptions, that awards of restricted stock units ("RSUs") and restricted shares be subject to minimum three year vesting for time-based awards and minimum one year vesting for performance-based awards. The Company expects that future equity awards granted as a component of annual incentive compensation (the “Annual Equity Awards”) under the Amended 2015 Plan will provide for continued vesting following a grantee’s voluntary resignation of employment, subject to ongoing compliance with non-competition and non-solicitation requirements through the duration of the vesting period. In the second quarter of 2015, the Compensation Committee of the Company’s Board of Directors (the "Compensation Committee") amended the terms of existing RSUs awarded as Annual Equity Awards in respect of the 2012, 2013 and 2014 performance years (the "Outstanding Annual RSUs") to provide for the continued vesting as outlined above (the “Continued Vesting Amendment”). As of June 30, 2015, there were approximately 28.7 million shares authorized for issuance under the Amended 2015 Plan, of which approximately 15.4 million shares are available for grant (subject to adjustment as provided under the Amended 2015 Plan). The Amended 2015 Plan is administered by the Compensation Committee, and allows for the grant of stock options, stock appreciation rights ("SARs"), restricted stock and RSUs (collectively, the “awards”), as defined by the Amended 2015 Plan. In addition to overall limitations on the aggregate number of awards that may be granted, the Amended 2015 Plan also limits the number of awards that may be granted to a single individual. Restricted Shares and Restricted Stock Units The Company has historically awarded RSUs to eligible officers, employees and directors as a component of annual incentive compensation, and has also made off-cycle grants of RSUs for purposes of one-time, special or retention awards ("Off-Cycle Grants"). The majority of RSUs that have been granted by the Company vest ratably over three years and are subject to accelerated vesting, or continued vesting, following the grantee’s termination of employment, in accordance with the applicable award documents and employment agreements between the Company and the grantee. Officers, employees and directors generally become vested in outstanding RSUs upon a qualifying retirement, and the Amended 2015 Plan otherwise provides the Compensation Committee with the discretion to fully vest participants in outstanding RSUs in certain other circumstances. As a result of implementing the Continued Vesting Amendment described above, the Outstanding Annual RSUs are no longer considered to have a service condition from an expense perspective. This change resulted in the acceleration of the unrecognized expense associated with such awards and the Company recorded a charge of $28.8 million in Employee compensation and benefits in the Consolidated Statements of Operations for the three and six months ended June 30, 2015. Beginning in the second quarter of 2015, the Company also began to recognize the expense associated with anticipated Annual Equity Awards that are expected to be awarded to employees in early 2016 as part of their annual incentive compensation in respect of the 2015 performance year. The Company measures compensation expense related to Off-Cycle Grants (and previously for Outstanding Annual RSUs) based on the fair value of KCG Class A Common Stock at the date of grant. For anticipated Annual Equity Awards related to the 2015 performance year which are expected to be granted in early 2016, the Company accrues compensation expense based on the estimated value of such future awards. The amount accrued during the year for Annual Equity Grants is included in Accrued compensation on the Consolidated Statements of Financial Condition. Compensation expense from continuing operations relating to RSUs, which is primarily recorded in Employee compensation and benefits, and the corresponding income tax benefit, which is recorded in Income tax (benefit) expense on the Consolidated Statements of Operations are presented in the following table (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Stock award compensation expense (1) $ 40,041 $ 14,937 $ 54,296 $ 31,175 Income tax benefit 15,216 5,676 20,632 11,846 (1) Included in the 2015 amounts is $28.8 million of accelerated stock compensation expense related to the Outstanding Annual RSUs as a result of implementing the Continued Vesting Amendment. The following table summarizes restricted awards activity for the six months ended June 30, 2015 (awards in thousands): Restricted Stock Units Number of Units Weighted- Average Grant date Fair Value Outstanding at December 31, 2014 9,147 $ 10.77 Granted 2,439 12.25 Vested (2,209 ) 11.07 Forfeited (595 ) 11.36 Outstanding at June 30, 2015 8,782 $ 11.06 There is $21.3 million of unamortized compensation related to unvested RSUs outstanding at June 30, 2015 (awards not comprising the Outstanding Annual RSUs). The cost of these unvested RSUs, unless a modification occurs, is expected to be recognized over a weighted average life of 1.08 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. The stock options and SARs outstanding as of the date hereof have each been granted with an exercise price not less than the market value of KCG Class A Common Stock on the grant date and 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. Like RSUs, stock 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. The Company issues new shares upon stock option exercises by its employees and directors, and may either issue new shares or provide a cash payment upon SARs exercises by its employees. The Company estimates the fair value of each stock option and SAR granted as of its respective grant date using the Black-Scholes option-pricing model. The principal assumptions utilized in valuing stock options and SARs and the methodology for estimating the inputs to such model include: 1) risk-free interest rate, the estimate of which is based on the yield of U.S. zero coupon securities with a maturity equal to the expected life of the stock option or SAR; 2) expected volatility, the estimate of which is based on several factors including implied volatility of market-traded stock 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, the estimate of which is based on internal studies of historical experience and projected exercise behavior based on different employee groups and specific stock option and SAR characteristics, including the effect of employee terminations. There were no stock options or SARs granted during the six months ended June 30, 2015 or 2014. 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) expense on the Consolidated Statements of Operations are as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Stock option and SAR compensation expense $ 928 $ 958 $ 1,941 $ 1,920 Income tax benefit 353 364 738 730 The following table summarizes stock option and SAR activity and stock options exercisable for the six months ended June 30, 2015 (awards in thousands): Number of Stock Awards Weighted- Average Exercise Price Aggregate Intrinsic Value Weighted- Average Remaining Life (years) Outstanding at December 31, 2014 (1) 4,691 $ 17.41 Granted at market value — — Exercised (118 ) 8.24 Forfeited or expired (62 ) 29.12 Outstanding at June 30, 2015 (1) 4,511 $ 17.49 $ 4,524 2.91 Exercisable at June 30, 2015 1,685 $ 21.11 $ 1,418 2.79 Available for future grants at June 30, 2015 (2) 15,370 (1) Includes 1.7 million SARs. (2) Represents options, SARs and awards available for grant under the Amended 2015 Plan. The aggregate intrinsic value is the amount by which the closing price of KCG Class A Common Stock exceeds the exercise price of the stock options multiplied by the number of shares. The total intrinsic value and cash received from options exercised during the six months ended June 30, 2015 is $0.6 million and $1.0 million , respectively. There were no stock options or SARs exercised during the six months ended June 30, 2014. There is $1.4 million of unamortized compensation related to unvested stock options and SARs outstanding at June 30, 2015 . The cost of these unvested awards is expected to be recognized over a weighted average life of 0.4 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 on the Consolidated Statements of Operations. Given that the units vested in connection with the Mergers, the Company fully amortized the costs associated with these units as of June 30, 2013. Deferred compensation payable at both June 30, 2015 and December 31, 2014 related to incentive units was $2.9 million 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 six months ended June 30, 2015 (units in thousands): Vested Incentive units at December 31, 2014 38 Issued — Vested — Exercised (3 ) Canceled — Incentive units at June 30, 2015 36 Totals may not add due to rounding. Compensation expense (benefit) related to the Incentive units which are recorded within Employee compensation and benefits on the Consolidated Statements of Operations are as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Incentive units $ 33 $ (14 ) 185 (188 ) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes 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. The following table reconciles the U.S. federal statutory income tax rate to the Company's actual income tax rate from continuing operations (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 U.S. federal statutory income tax rate 35.0 % 35.0 % 35.0 % 35.0 % U.S. state and local income taxes, net of U.S. 3.0 % 4.7 % 2.8 % 2.6 % Recognition of state deferred tax assets and net operating losses, net of U.S. federal income tax effect 28.4 % — % (4.7 )% — % Nondeductible expenses (1) 0.2 % 1.5 % — % 0.6 % Foreign Taxes — % (1.1 )% — % (0.1 )% Other, net (0.2 )% (2.1 )% 0.9 % (0.2 )% Actual income tax rate (2) 66.4 % 38.0 % 34.0 % 37.9 % (1) Nondeductible expenses include nondeductible meals and entertainment. (2) Represents a benefit on Loss from continuing operations before income taxes for the three months ended June 30, 2015. 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 the majority of its federal deferred tax assets in the future, and except as noted below with respect to certain net operating losses ("NOLs"), no valuation allowance has been recorded at June 30, 2015 with respect to such federal deferred tax assets. Management believes that positive evidence including the Company's history of sustainable profitability, actual profitability, and its forecasts of future profitability outweighs the negative evidence. 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 that 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 June 30, 2015 , the Company had total U.S. federal NOL carryforwards of $133.5 million , of which $28.5 million were generated by Knight in periods prior to the Mergers. At June 30, 2015 the Company recorded a deferred tax asset related to these federal NOLs of $46.7 million and a partially offsetting valuation allowance of $6.8 million which represents the portion of these NOL carryforwards that are considered more likely than not to expire unutilized. Prior to the second quarter of 2015, the Company had recorded a partial valuation allowance against certain state and local net operating losses and other deferred tax assets as it was more likely than not that the benefit of such items would not be realized. During the second quarter of 2015, the Company reversed this valuation allowance as these loss carryforwards and other deferred tax assets are now expected to be utilized based upon an internal restructuring. At June 30, 2015 , the Company had, in multiple jurisdictions, aggregate state and local NOL carryforwards of $1.76 billion , all of which were generated by Knight in periods prior to the Mergers. The Company recorded deferred income tax assets related to these NOLs of $50.8 million as of June 30, 2015 and partially offsetting valuation allowances of $29.1 million , which represents the portion of these NOLs that are considered more likely than not to expire unutilized. Certain of these carryforwards are subject to annual limitations on utilization and these NOLs will begin to expire in 2019. At June 30, 2015 , 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 $19.5 million for these NOL carryforwards as of June 30, 2015 along with an offsetting U.S. federal deferred tax liability of $19.5 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 June 30, 2015 , the Company had U.S. Federal tax credit carryforwards comprising general business credit carryforwards of $4.4 million and alternative minimum tax credit carryforwards $6.8 million . As of June 30, 2015 , the Company is subject to U.S. Federal income tax examinations for the tax years 2011 through 2013, and to non-U.S. income tax examinations for the tax years 2007 through 2014. In addition, the Company is subject to state and local income tax examinations in various jurisdictions for the tax years 2007 through 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. At June 30, 2015 , the Company had $2.4 million of unrecognized tax benefits, all of which would affect the Company's effective tax rate if recognized. At December 31, 2014, the Company had $2.2 million of unrecognized tax benefits, all of which would affect the Company’s effective tax rate if recognized. 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 Comprehensive
Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2015 | |
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 and six months ended June 30, 2015 and 2014 (in thousands): Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Adjustments Total Balance March 31, 2015 $ 540 $ 1,158 $ 1,698 Other comprehensive income (loss) (51 ) (433 ) (484 ) Balance June 30, 2015 $ 489 $ 725 $ 1,214 Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Adjustments Total Balance December 31, 2014 $ 352 $ 1,781 $ 2,133 Other comprehensive income (loss) 137 (1,056 ) (919 ) Balance June 30, 2015 $ 489 $ 725 $ 1,214 Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Adjustments Total Balance March 31, 2014 $ (101 ) $ 1,566 $ 1,465 Other comprehensive income (loss) (96 ) 291 195 Balance June 30, 2014 $ (197 ) $ 1,857 $ 1,660 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) (233 ) 492 259 Balance June 30, 2014 $ (197 ) $ 1,857 $ 1,660 |
Writedowns and Other Charges
Writedowns and Other Charges | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Writedowns and Other Charges | Writedowns and Other Charges Debt extinguishment charges During the second quarter of 2015, the Company wrote off $8.5 million of capitalized debt costs and paid $16.5 million as a contractual make-whole premium related to the early retirement of the Company's 8.25% Senior Secured Notes. See Footnote 12 "Debt" for further details. During the three and six months ended June 30, 2014, the Company made $50.0 million and $235.0 million principal repayments under the Credit Agreement, respectively. As a result, the Company wrote off $2.0 million and $9.6 million , respectively, in capitalized debt costs. Other real estate related charges During the second quarter of 2015, the Company recorded $6.3 million of accelerated amortization and depreciation of leasehold improvements and fixed assets related to excess real estate in its Jersey City and Chicago offices. See Footnote 23 "Subsequent events" for further discussion on real estate matters. The Company recorded a $0.1 million lease loss accrual related to excess real estate capacity in the first quarter of 2015. For the three and six months ended June 30, 2014, the Company recorded $1.9 million and $2.2 million , respectively, of net lease loss accruals related to excess real estate capacity. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2015 | |
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 the Company's 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 to purchase shares of the Company's Class A Common Stock were exercised and restricted awards were to vest. The number of such RSUs, options, Warrants and SARs excluded from the EPS calculation was approximately 21.0 million and 28.3 million for the three months ended June 30, 2015 and 2014, respectively. The number of such RSUs, options, Warrants and SARs excluded from the EPS calculation was approximately 18.3 million and 28.3 million for the six months ended June 30, 2015 and 2014, respectively. Such RSUs, options, Warrants and SARs were excluded from the EPS 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 the Company's Class A Common Stock. The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations from continuing operations for the three and six months ended June 30, 2015 and 2014 (in thousands): For the three months ended June 30, 2015 2014 Numerator / Denominator / shares Numerator / net income Denominator / shares (Loss) Income from continuing operations and shares used in basic calculations $ (19,162 ) 108,588 $ 8,987 114,859 Effect of dilutive stock based awards Restricted awards — 2,653 Stock options and SARs — 89 Warrants — — (Loss) Income from continuing operations and shares used in diluted calculations $ (19,162 ) 108,588 $ 8,987 117,601 Basic (loss) earnings per common share from continuing operations $ (0.18 ) $ 0.08 Diluted (loss) earnings per common share from continuing operations $ (0.18 ) $ 0.08 For the six months ended June 30, 2015 2014 Numerator / Denominator / shares Numerator / net income Denominator / shares Income from continuing operations and shares used in basic calculations $ 230,139 110,890 $ 45,904 115,282 Effect of dilutive stock based awards Restricted awards 2,192 2,796 Stock options and SARs 340 92 Warrants 387 — Income from continuing operations and shares used in diluted calculations $ 230,139 113,809 $ 45,904 118,170 Basic earnings per common share from continuing operations $ 2.08 $ 0.40 Diluted earnings per common share from continuing operations $ 2.02 $ 0.39 |
Significant Clients
Significant Clients | 6 Months Ended |
Jun. 30, 2015 | |
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 market making dollar value traded by the Company. No clients accounted for more than 10% of the Company’s U.S. equity dollar value traded during the three and six months ended June 30, 2015 or 2014. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 6 Months Ended |
Jun. 30, 2015 | |
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 carries 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 KCG's and 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. Thereafter, Knight was named as a defendant in two putative class action complaints ( one of which was voluntarily dismissed and the other of which is described in more detail below) and one purported derivative lawsuit, all of which related to the technology issue. The purported derivative action was resolved as part of a settlement entered by the Delaware Court of Chancery in September 2014. Knight 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 claims described in the derivative demand letters were resolved as part of the aforementioned Delaware settlement and the requests for inspection of documents have not been pursued. Legal Litigation Related to the August 1, 2012 Technology Issue On October 26, 2012, Knight, its then-Chairman and Chief Executive Officer, Thomas M. Joyce, and its then-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 (the “Fernandez Action”). 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 (the "Class Period") paid an inflated price. The defendants filed a motion to dismiss the second amended complaint on February 18, 2014 which was fully briefed as of June 5, 2014. In November 2014, prior to the court’s decision on defendants’ motion to dismiss, the parties participated in a court-ordered mediation. Following the mediation, in December 2014 the parties reached an agreement in principle to settle the Fernandez Action. On February 9, 2015, the parties entered into a Stipulation of Settlement that, once approved by the District Court, will resolve the litigation and result in the Fernandez Action being dismissed with prejudice. Pursuant to an Order filed on March 2, 2015, the District Court preliminarily approved the settlement of the Fernandez Action and set July 1, 2015 for the final settlement hearing. Under the terms of the proposed settlement, Knight agreed that certain of its insurance carriers would pay $13.0 million to stockholders in the class. The settlement requires no direct payment by any of the defendants. Under the proposed settlement, defendants and various of their related persons and entities will receive a full release of all claims that were or could have been brought in the action as well as all claims that arise out of, are based upon or relate to the allegations, transactions, facts, representations, omissions or other matters involved in the complaints filed in the action or any statement communicated to the public during the Class Period, and the purchase, acquisition or sale of the Company’s stock during the Class Period. The proposed settlement contains no admission of any liability or wrongdoing on the part of the defendants, each of whom continues to deny all of the allegations against them and believes that the claims are without merit. The settlement will not have an effect on the Company’s results of operations because the full amount of the proposed settlement will be paid by the Company’s insurance carriers. As of April 1, 2015, the full amount of the proposed settlement was deposited by the insurance carriers into an escrow account. On July 1, 2015, the District Court held a final settlement hearing, during which the District Court approved the settlement. On July 6, 2015, the District Court entered the judgment and the case was closed. 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 self-regulatory organization ("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. SROs, as well actions brought by private plaintiffs, which arise from its business activities. There has recently been an increased focus by regulators on Anti-Money Laundering and sanctions for non-compliance by broker-dealers and similar entities, as well as an enhanced interest on transactions involving microcap securities. The Company is currently the subject of various regulatory reviews and investigations by both U.S. and foreign regulators and SROs, including the SEC, the Department of Justice, FINRA, FCA and the AMF. In some instances, these matters may rise to a disciplinary action and/or a civil or administrative action. In addition, there has been an increased focus by Congress, federal and state regulators, the SROs and the media on market structure issues, and in particular, high frequency trading, ATS manner of operations, 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 has received information requests from various authorities, including the SEC, requesting, among other items, information regarding these market structure matters, which the Company is in process of responding. In May 2015, the Company received a Wells Notice from the staff of the New York office of the SEC concerning the handling of orders by KCGA (formerly, Knight Capital Americas LLC) in Over-the-Counter securities quoted on OTC Link (an inter-dealer quotation system formerly referred to as the “Pink Sheets”) during the period of January 1, 2010 through July 2013, which indicated that the staff made a preliminary determination to recommend that the Commission file an enforcement action alleging that KCGA violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. KCGA and the staff of the SEC recently reached an agreement in principle pursuant to which KCGA would pay a fine in the sum of $300,000 , disgorge approximately $686,000 and pay approximately $70,000 in prejudgment interest. The proposed settlement would take the form of an administrative cease-and-desist order in which KCGA would neither admit nor deny the Commission’s findings. The agreement in principle is subject to final agreement on the settlement papers and final approval by the SEC. As of June 30, 2015, the Company has fully accrued for the amount of the proposed settlement. 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 June 30, 2015 , the obligations have a weighted-average interest rate of 3.41% 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 June 30, 2015 consist of (in thousands): Minimum Payments Six months ended December 31, 2015 $ 1,278 2016 2,126 2017 620 Total $ 4,024 The total interest expense related to capital leases for the three and six months ended June 30, 2015 , and 2014 included in the Consolidated Statements Operations is as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Interest expense - Capital leases $ 54 $ 102 $ 122 $ 190 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 $4.3 million and $5.0 million for the three months ended June 30, 2015 and 2014 , respectively, and $8.9 million and $10.1 million for the six months ended June 30, 2015 and 2014 , 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 June 30, 2015 , 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 Obligations Sublease Income Net Lease Obligations Six months ending December 31, 2015 $ 13,883 $ 2,470 $ 11,413 Year ending December 31, 2016 27,938 4,994 22,944 Year ending December 31, 2017 26,395 4,508 21,887 Year ending December 31, 2018 25,550 4,211 21,339 Year ending December 31, 2019 23,671 3,630 20,041 Thereafter through December 31, 2027 64,589 10,244 54,345 Total $ 182,026 $ 30,057 $ 151,969 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 June 30, 2015 , the Company had provided letters of credit for $11.5 million , collateralized by cash, as a guarantee for several of its lease obligations and for a trading JV. 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. Guarantees The Company is a member of exchanges that trade and clear futures contracts. Associated with its memberships, the Company may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the exchange. Although the rules governing different exchange memberships vary, in general the Company’s guarantee obligations would arise only if the exchange had previously exhausted its resources. In addition, any such guarantee obligation would be apportioned among the other nondefaulting members of the exchange. Any potential contingent liability under these membership agreements cannot be estimated. The Company has not recorded any contingent liability in the financial statements for these agreements and management believes that any potential requirement to make payments under these agreements is remote. There were no compensation guarantees at June 30, 2015 or 2014 that extended beyond the respective year end. |
Financial instruments with Off-
Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk | Derivative Financial Instruments The Company enters into derivative transactions as part of its trading activities and 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. 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 while swaps and forward contracts are classified as Level 2 in the fair value hierarchy. The following tables summarize the fair value and number of derivative instruments held at June 30, 2015 and December 31, 2014 and the gains and losses included in the Consolidated Statements of Operations for the periods then ended. These instruments include those classified as Financial Instruments, owned at fair value, Financial instruments sold, not yet purchased at fair value, as well as futures contracts which are reported within Receivable from or Payable to brokers, dealers and clearing organizations in the Consolidated Statements of Financial Condition (fair value and gain (loss) in thousands): June 30, 2015 Financial Statements Assets Liabilities Location Fair Value Contracts Fair Value Contracts Foreign currency Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations $ 973 10,740 $ 322 6,932 Forward contracts Financial instruments owned at fair value 355 0.001 1 — — Equity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 17,539 24,777 15,673 21,936 Swap contracts Receivable from brokers, dealers and clearing organizations 22 1 — — Listed options Financial instruments owned/sold, not yet purchased, at fair value 117,934 308,805 93,113 314,616 Fixed income Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 3,704 5,827 4,201 8,028 Commodity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 47,368 14,912 49,825 16,010 Total $ 187,895 365,063 $ 163,134 367,522 December 31, 2014 Financial Statements Assets Liabilities Location Fair Value Contracts Fair Value Contracts Foreign currency Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations $ 1,212 8,108 $ 651 9,090 Forward contracts Financial instruments owned at fair value 60 1 — — Equity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 1,790 2,590 2,047 3,085 Swap contracts Receivable from/Payable to brokers, dealers and clearing organizations 98 1 13 1 Listed options Financial instruments owned/sold, not yet purchased, at fair value 144,586 426,747 115,362 437,383 Fixed income Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 6,432 11,901 6,891 10,628 Commodity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 15,246 8,894 14,847 9,105 Total $ 169,424 458,242 $ 139,811 469,292 Gain (Loss) Recognized Financial Statements For the three months ended June 30, For the six months ended June 30, Location 2015 2014 2015 2014 Derivative instruments not designated as hedging instruments: Foreign currency Futures contracts Trading revenues, net $ (202 ) $ 2,952 $ 806 $ 5,794 Forward contracts Investment income and other, net 284 (120 ) (10 ) 312 Equity Futures contracts Trading revenues, net 11,361 6,044 13,738 14,781 Swap contracts Trading revenues, net 739 1,061 1,068 2,343 Listed options (1) Trading revenues, net (2,631 ) 2,212 (16,181 ) (71,664 ) Fixed income Futures contracts Trading revenues, net 16,377 5,118 24,921 13,947 Commodity Futures contracts Trading revenues, net 9,568 12,435 25,003 26,005 $ 35,496 $ 29,702 $ 49,345 $ (8,482 ) Derivative instruments designated as hedging instruments: Foreign exchange - forward contract Accumulated other comprehensive income $ (6 ) $ — $ (6 ) $ 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 revenues, net on the Company’s Consolidated Statements of Operations. The Company has entered into and may continue to enter into International Swaps and Derivative Association, Inc (“ISDA”) master netting agreements with counterparties. Master agreements provide protection in bankruptcy in certain circumstances and, where legally enforceable, enable receivables and payables with the same counterparty to be settled or otherwise eliminated by applying amounts due against all or a portion of an amount due from the counterparty or a third party. The Company may also enter into bilateral trading agreements and other customer agreements that provide for the netting of receivables and payables with a given counterparty as a single net obligation. Under the ISDA master netting agreements, the Company typically also executes credit support annexes, which provide for collateral, either in the form of cash or securities, to be posted or paid by a counterparty based on the fair value of the derivative receivable or payable based on the rates and parameters established in the credit support annex. In the event of counterparty’s default, provisions of the ISDA master agreement permit acceleration and termination of all outstanding transactions covered by the agreement such that a single amount is owed by, or to, the non-defaulting party. Any collateral posted can be applied to the net obligations, with any excess returned and the collateralized party has a right to liquidate the collateral. Any residual claim after netting is treated along with other unsecured claims in bankruptcy court. The Company is also a party to clearing agreements with various central clearing parties. Under these arrangements, the central clearing counterparty facilitates settlement between counterparties based on the net payable owed or receivable due and, with respect to daily settlement, cash is generally only required to be deposited to the extent of the net amount. In the event of default, a net termination amount is determined based on the market values of all outstanding positions and the clearing organization or clearing member provides for the liquidation and settlement of the net termination amount among all counterparties to the open derivative contracts. The table below provides information regarding (1) the extent to which, under enforceable master netting arrangements, such balances are presented net in the Consolidated Statements of Financial Condition as appropriate under GAAP and (2) the extent to which other rights of offset associated with these arrangements exist and could have had an effect on our financial position (in thousands): June 30, 2015 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition (3) Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Listed options $ 117,934 $ — $ 117,934 $ — $ — $ 117,934 Foreign currency forward contracts 355 — 355 — — 355 Swaps 22 — 22 — — 22 Futures 69,584 66,284 3,300 — — 3,300 Total Assets $ 187,895 $ 66,284 $ 121,611 $ — $ — $ 121,611 Liabilities Listed options $ 93,113 $ — $ 93,113 $ — $ 11,422 $ 81,691 Futures 70,021 70,021 — — — — Total Liabilities $ 163,134 $ 70,021 $ 93,113 $ — $ 11,422 $ 81,691 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) The full amount of the liabilities related to futures of $70.0 million has been netted against the assets related to futures of $64.7 million as the Company maintains margin in excess of the net liability and such margin is utilized to offset any excess liability. December 31, 2014 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Listed options $ 144,586 $ — $ 144,586 $ — $ — $ 144,586 Foreign currency forward contracts 60 — 60 — — 60 Swaps 98 13 85 — — 85 Futures 24,680 24,436 244 — — 244 Total Assets $ 169,424 $ 24,449 $ 144,975 $ — $ — $ 144,975 Liabilities Listed options $ 115,362 $ — $ 115,362 $ — $ 17,359 $ 98,003 Futures 24,436 24,436 — — — — Swaps 13 13 — — — — Total Liabilities $ 139,811 $ 24,449 $ 115,362 $ — $ 17,359 $ 98,003 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. 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 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. 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 | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments As of June 30, 2015 , 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, 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, banks and institutions. 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 in unlisted securities traded over-the-counter and through marketplaces operated by the OTC Markets Group Inc. and the AIM of the London Stock Exchange. The Global Execution Services segment comprises agency execution services and trading venues, offering trading in global equities, futures, options, and fixed income to institutions, banks and broker dealers. The Company generally earns commissions as an agent between principals for transactions that are executed within this segment; however, the Company may 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) algorithmic trading and order routing in global equities and options; (ii) institutional sales traders executing program, block and riskless principal trades in global equities and ETFs; (iii) a fixed income ECN that also offers trading applications; and (iv) an ATS for global equities. 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. 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 Making Global Execution Services Corporate and Other Consolidated Total For the three months ended June 30, 2015: Revenues $ 192,328 $ 63,522 $ 6,032 $ 261,882 Pre-tax earnings 4,402 (9,937 ) (51,579 ) (57,114 ) Total assets 4,627,324 710,575 1,248,449 6,586,348 For the three months ended June 30, 2014: Revenues $ 218,446 $ 85,903 $ 9,784 $ 314,133 Pre-tax earnings 36,004 736 (22,233 ) 14,507 Total assets 4,303,928 1,560,919 1,797,627 7,662,474 For the six months ended June 30, 2015: Revenues $ 416,876 $ 527,788 $ 13,374 $ 958,038 Pre-tax earnings 43,742 371,121 (65,849 ) 349,014 Total assets 4,627,324 710,575 1,248,449 6,586,348 For the six months ended June 30, 2014: Revenues $ 495,792 $ 173,123 $ 28,875 $ 697,790 Pre-tax earnings 112,036 2,752 (40,897 ) 73,891 Total assets 4,303,928 1,560,919 1,797,627 7,662,474 In the first quarter of 2015, the Company began to allocate costs incurred to operate its self-clearing function to the Market Making and Global Execution Services segments and no longer report it as a distinct business within the Corporate and Other segment. Previously, these support costs were embedded within the internal clearing rates charged by the Corporate and Other segment to the various businesses, which eliminated during consolidation. Additionally, prior to 2015, funding costs of inventory positions were recorded in the Corporate and Other segment, primarily within Collateralized financing interest on the Consolidated Statements of Operations. These costs were subsequently charged out to the Market Making and Global Execution Services segments primarily through the Interest, net line item, with an equal and offsetting revenue item within the Corporate and Other segment. With the move of the self clearing team to a support function, these third party costs are now charged directly to the businesses within the Market Making and Global Execution Services segments. This shift in how the Company’s self clearing unit is reported has no impact to the Consolidated Statements of Operations, nor any of the individual line items within it. However, on a segment level, this decreases the amount of total revenues reported by the Corporate and Other segment, as it no longer records the offsetting revenue for these third party funding costs. This change in the measurement of segment profitability, which has no impact to the consolidated results, is reported prospectively, and, therefore, is not reflected in the financial results for any period prior to January 1, 2015. Included in Revenues and Pre-tax earnings within Global Execution Services for the six months ended June 30, 2015 are results of KCG Hotspot up through March 13, 2015, the date of the sale. Also included in Revenues and Pre-tax earnings for the six months ended June 30, 2015 is a gain related to the sale of KCG Hotspot of $385.0 million and $373.8 million , respectively. Additionally, Revenue and Pre-tax earnings from KCG Hotspot and the Company's former FCM business are included in the Global Execution Services segment for the three and six months ended June 30, 2014. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the date the Consolidated Financial Statements were issued. The Company did not have any subsequent events requiring adjustment or disclosure in the Consolidated Financial Statements except the following: Relocation of Global Headquarters In July 2015, the Company entered into an agreement to relocate its global headquarters from Jersey City, NJ to New York City. Under a plan authorized by the Board of Directors, the Company will reduce occupied space and consolidate offices in Jersey City, NJ and New York, NY. The Company’s new headquarters will encompass 169,000 square feet at 300 Vesey Street, in lower Manhattan. The relocation is expected to be substantially completed by the end of 2016. The Company expects to recognize net charges in the third quarter of 2015 of approximately $20.0 million with respect to the early termination of its leases at its Jersey City, NJ and New York, NY premises. The Company also expects to record accelerated amortization and depreciation in the third quarter of 2015 of approximately $1.8 million as a result of abandoning a portion of such space in the third quarter of 2015, and additional amortization and depreciation of approximately $5.0 million per quarter through the end of 2016 as a result of shortening the remaining useful lives of these premises. |
Significant Accounting Polici32
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
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 generally accepted accounting principles ("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 | Change in accounting principle As discussed in Footnote 10 "Investments", as a result of the merger of BATS and Direct Edge Holdings LLC ("Direct Edge") in the first quarter of 2014, the Company changed its method of accounting for its investment in BATS from the cost method to the equity method. |
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. These assets would be categorized as Level 1 in the fair value hierarchy if they were required to be recorded at fair value. |
Cash and cash equivalents 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. These assets would be categorized as Level 1 in the fair value hierarchy if they were required to be recorded at 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, and include listed and other equity securities, listed equity options and fixed income securities which are recorded on a trade date basis and are reported at fair value. Trading revenues, net, which comprises trading gains, net of trading losses, are also recorded on a trade date basis. Commissions, which primarily comprise commission equivalents earned on institutional client orders and volume based fees earned from providing liquidity to other trading venues, as well as related expenses, are also recorded on a trade date basis. In 2014, commissions earned by the Company’s former FCM, which was sold in November 2014, were recorded net of any commissions paid to independent brokers and 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. Dividend income relating to financial instruments owned and dividend expense relating to financial instruments sold, not yet purchased, are derived primarily from the Company’s market making activities and are included as a component of Trading revenues, net on the Consolidated Statements of Operations. |
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. |
Collateralized agreements and financings | Collateralized agreements and financings Collateralized agreements consist of securities borrowed. 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 posts 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. |
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 substantially collateralized pursuant to the terms of the underlying agreements. 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 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 that are publicly traded are held at fair value and classified as available for sale securities on the Consolidated Statements of Financial Condition. Strategic investments are reviewed on an ongoing basis to ensure that the carrying values of the investments have not been impaired. If the Company determines that an impairment loss on a strategic investment has occurred due to a decline in fair value or other market conditions, the investment is written down to its estimated fair value. The Company maintains a non-qualified deferred compensation plan for certain employees and directors. This plan provides a return to the participants based upon the performance of various investments. In order to hedge its liability under this plan, the Company generally acquires the underlying investments and holds such investments until the deferred compensation liabilities are satisfied. Changes in value of such investments are recorded in Investment income and other, net, with a corresponding charge or credit to Employee compensation and benefits on the Consolidated Statements of Operations. Deferred compensation investments primarily consist of mutual funds, which are accounted for at fair value. |
Goodwill and intangible assets | Goodwill and intangible assets The Company tests goodwill and intangible assets with an indefinite useful life for impairment annually or when an event occurs or circumstances change that signifies that the carrying amounts may not be recoverable. 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 primarily relate to amounts due on cash and margin transactions. Due to their short-term nature, such amounts approximate fair value. |
Repurchase of common stock | Repurchases of common stock The Company may repurchase shares of KCG Class A Common Stock in the open market or through privately negotiated transactions. The Company may structure such repurchases as either a purchase of treasury stock or a retirement of shares. The Company records its purchases of treasury stock, which include shares repurchased in satisfaction of tax withholding obligations upon vesting of restricted awards, at cost as a separate component of stockholders’ equity. The Company may re-issue treasury stock, at average cost, for the acquisition of new businesses and in certain other circumstances. For shares that are retired, the Company records its repurchases at cost, as a reduction in Class A Common Stock for the par value of such retired shares and a reduction in Retained earnings for the balance. |
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 the 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, net of tax 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 June 30, 2015 and 2014, the Company recorded a loss of $0.4 million and a gain of $35 thousand , respectively on foreign currency transactions. For the six months ended June 30, 2015 and 2014, the Company recorded losses of $0.6 million and $0.7 million , respectively on foreign currency transactions. 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 on the Consolidated Statements of Financial Condition and Cumulative translation adjustment, net of tax, on 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 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. Expected forfeitures are considered in determining stock-based employee compensation expense. |
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 The Company is a corporation subject to U.S. corporate income tax as well as non-U.S. income taxes in the jurisdictions in which it operates. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and measures them using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. The Company evaluates the recoverability of future tax deductions by assessing the adequacy of future expected taxable income from all sources, including reversal of temporary differences and forecasted operating earnings. |
Variable interest entities | Variable interest entities A variable interest entity (“VIE”) is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company will be considered to have a controlling financial interest and will consolidate a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Since January 2015, the Company has owned 50% of the voting shares and 50% of the equity of a joint venture (“JV”) which maintains microwave communication networks in the U.S. and Europe. The Company and its JV partner each use the microwave networks in connection with their respective trading activities, and the JV sells excess bandwidth that is not utilized by the JV members to third parties. The Company pays the JV for the communication services that it uses, and such amounts are recorded within Communications and data processing on the Consolidated Statements of Operations. The Company does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; therefore it does not have a controlling financial interest in the JV and does not consolidate the JV. The Company records its interest in the JV under the equity method of accounting and records its investment in the JV within Investments and its amounts payable for communication services within Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition. The Company records its pro-rata share of the JV’s earnings or losses within Investment income and other, net on the Consolidated Statements of Operations. The Company’s exposure to the obligations of this VIE is generally limited to its interests in the JV, which is the carrying value of the equity investment in the JV. |
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 April 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) that amends the requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting are limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. The updated guidance is effective prospectively to all disposals occurring for interim and annual reporting periods after December 15, 2014, with early adoption permitted. The Company early adopted this ASU in 2014, which resulted in additional disclosures within the Company's Consolidated Financial Statements. In June 2014, the FASB issued an ASU that amends the accounting and disclosure guidance on repurchase agreements. The amended guidance requires entities to account for repurchase-to-maturity transactions as secured borrowings. Additional disclosures will be required for the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes and additional disclosures about certain transferred financial assets accounted for as sales were effective for reporting periods beginning after December 15, 2014. The additional disclosures for securities financing transactions are required for annual reporting periods beginning after December 15, 2014 and for interim reporting periods beginning after March 15, 2015. Other than additional disclosure requirements, the adoption of this ASU did not have an impact on the Company’s Consolidated Financial Statements. Recent accounting guidance to be adopted in future periods In May 2014, the FASB issued an ASU that updates the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements. In June 2014, the FASB issued an ASU to resolve diverse accounting treatment for share based awards in which the terms of the award are related to a performance target that affects vesting. The ASU requires an entity to treat a performance target that could be achieved after the requisite service period as a performance condition. Additionally, compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved, and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered; if the performance target becomes probable of being achieved before the end of the requisite service period, then the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The guidance is effective for reporting periods beginning after December 15, 2015 and may be applied prospectively or retrospectively. The Company does not expect adoption of this ASU to have an impact on the Company’s Consolidated Financial Statements. In August 2014, the FASB issued an ASU that requires an entity’s management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for reporting periods beginning after December 15, 2016. Other than additional disclosure requirements, the adoption of this ASU is not expected to have an impact on the Company’s Consolidated Financial Statements. In February 2015, the FASB issued an ASU which requires entities to evaluate whether they should consolidate certain legal entities. The ASU simplifies consolidation accounting by reducing the number of consolidation models that an entity may apply. The guidance is effective for reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements. In April 2015, the FASB issued an ASU regarding simplification of the presentation of debt issuance costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the Consolidated Statement of Financial Condition as a direct deduction from the carrying amount of that debt liability. The guidance is effective retrospectively for reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements. |
Significant Accounting Polici33
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, For the six months ended June 30, 2015 2014 2015 2014 Interest Income $ 3,302 $ 3,777 $ 7,073 $ 7,128 Interest Expense (3,898 ) (4,066 ) (7,692 ) (6,469 ) Interest, net $ (596 ) $ (289 ) $ (619 ) $ 659 |
Net Trading Revenue Including Dividend Income and Expense | Trading revenues, net includes dividend income and expense as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Dividend Income $ 13,973 $ 9,832 $ 30,717 $ 19,615 Dividend Expense $ (10,104 ) $ (8,203 ) $ (20,357 ) $ (15,778 ) |
Schedule of Variable Interest Entities | The following table presents the Company’s nonconsolidated VIE at June 30, 2015 (in thousands): Carrying Amount Maximum Exposure to loss Asset Liability VIE's assets Equity investment $ 2,982 $ 732 $ 2,982 $ 9,548 |
Tender Offer (Tables)
Tender Offer (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Schedule of Stockholders' Equity Note, Warrants or Rights | As of June 8, 2015, the adjusted exercise price for each class of Warrants and the activity for the period ended June 30, 2015 was as follows (Warrants in thousands): Class A Class B Class C Original Exercise Price $ 12.00 $ 13.50 $ 15.00 Adjusted Exercise Price $ 11.70 $ 13.16 $ 14.63 Initial term (years) 4 5 6 Expiration 7/1/2017 7/1/2018 7/1/2019 Total Warrants - Outstanding at January 1, 2015 8,114 8,114 8,113 24,341 Exercised (133 ) — — (133 ) Warrants - Outstanding at June 30, 2015 7,980 8,114 8,113 24,207 |
Sales of Businesses (Tables)
Sales of Businesses (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of Balance Sheet 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 June 30, 2014 For the six months ended June 30, 2014 Additional Loss on Sale $ (1 ) $ (1,313 ) Expenses: Compensation $ 126 $ 171 Other expenses (19 ) 645 Total Expenses 107 816 Loss from discontinued operations (108 ) (2,129 ) Income tax benefit 41 809 Loss from discontinued operations, net of tax $ (67 ) $ (1,320 ) The KCG Hotspot assets and liabilities held for sale as of December 31, 2014 are summarized as follows (in thousands): December 31, 2014 Assets: Fixed assets, less accumulated depreciation $ 391 Intangible assets, net accumulated amortization 34,696 Other assets 5,397 Total assets of business held for sale $ 40,484 Liabilities: Accrued compensation expense $ 2,298 Accrued expenses and other liabilities 58 Total liabilities of business held for sale $ 2,356 |
Assets Segregated or Held in 36
Assets Segregated or Held in Separate Accounts Under Federal or Other Regulations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Regulated Operations [Abstract] | |
Cash and Securities Segregated Under U.S. Federal and Other Regulation | Cash and securities segregated under U.S. federal and other regulations relate to the Company’s regulated businesses and consist of the following (in thousands): June 30, December 31, 2014 Cash and cash equivalents segregated under federal or other regulations $ 3,600 $ 3,361 Total assets segregated or held in separate accounts under federal or other regulations $ 3,600 $ 3,361 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 Level 1 Level 2 Level 3 Total Assets Financial instruments owned, at fair value: Equities (1) $ 2,391,499 $ — $ — $ 2,391,499 Listed options 117,934 — — 117,934 U.S. government and Non-U.S. government obligations 117,725 — — 117,725 Corporate debt 68,213 — — 68,213 Foreign currency forward contracts — 355 — 355 Total Financial instruments owned, at fair value 2,695,371 355 — 2,695,726 Investment in CME Group (2) 4,655 — — 4,655 Other (3) — 64,406 — 64,406 Total assets held at fair value $ 2,700,026 $ 64,761 $ — $ 2,764,787 Liabilities Financial instruments sold, not yet purchased, at fair value: Equities (1) $ 1,785,493 $ — $ — $ 1,785,493 Listed options 93,113 — — 93,113 U.S. government obligations 91,272 — — 91,272 Corporate debt 68,279 — — 68,279 Total liabilities held at fair value $ 2,038,157 $ — $ — $ 2,038,157 (1) Equities of $826.5 million have been netted by their respective long and short positions by CUSIP number. (2) Investment in CME Group is included within Investments on the Consolidated Statements of Financial Condition. (3) Other consists of $62.8 million receivable from BATS related to the sale of KCG Hotspot and $1.6 million of deferred compensation investments which are included within Other assets and Investments, respectively, on the Consolidated Statements of Financial Condition. Assets and Liabilities Measured at Fair Value on a Recurring Basis December 31, 2014 Level 1 Level 2 Level 3 Total Assets Financial instruments owned, at fair value: Equities (1) $ 2,479,910 $ — $ — $ 2,479,910 Listed options 144,586 — — 144,586 U.S. government and Non-U.S. government obligations 22,983 — — 22,983 Corporate debt (2) 59,832 — — 59,832 Foreign currency forward contracts — 60 — 60 Total Financial instruments owned, at fair value 2,707,311 60 — 2,707,371 Investment in CME Group (3) 4,435 — — 4,435 Other investments (3) — 1,014 — 1,014 Total assets held at fair value $ 2,711,746 $ 1,074 $ — $ 2,712,820 Liabilities Financial instruments sold, not yet purchased, at fair value: Equities (1) $ 2,069,342 $ — $ — $ 2,069,342 Listed options 115,362 — — 115,362 U.S. government obligations 18,953 — — 18,953 Corporate debt (2) 82,050 — — 82,050 Total liabilities held at fair value $ 2,285,707 $ — $ — $ 2,285,707 (1) Equities of $743.1 million have been netted by their respective long and short positions by CUSIP number. (2) Corporate debt instruments of $0.3 million have been netted by their respective long and short positions by CUSIP number. (3) Investment in CME Group and Other investments, which primarily consist of deferred compensation investments, are included within Investments on the Consolidated Statements of Financial Condition. |
Derivative Financial Instrume38
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
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 and number of derivative instruments held at June 30, 2015 and December 31, 2014 and the gains and losses included in the Consolidated Statements of Operations for the periods then ended. These instruments include those classified as Financial Instruments, owned at fair value, Financial instruments sold, not yet purchased at fair value, as well as futures contracts which are reported within Receivable from or Payable to brokers, dealers and clearing organizations in the Consolidated Statements of Financial Condition (fair value and gain (loss) in thousands): June 30, 2015 Financial Statements Assets Liabilities Location Fair Value Contracts Fair Value Contracts Foreign currency Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations $ 973 10,740 $ 322 6,932 Forward contracts Financial instruments owned at fair value 355 0.001 1 — — Equity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 17,539 24,777 15,673 21,936 Swap contracts Receivable from brokers, dealers and clearing organizations 22 1 — — Listed options Financial instruments owned/sold, not yet purchased, at fair value 117,934 308,805 93,113 314,616 Fixed income Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 3,704 5,827 4,201 8,028 Commodity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 47,368 14,912 49,825 16,010 Total $ 187,895 365,063 $ 163,134 367,522 December 31, 2014 Financial Statements Assets Liabilities Location Fair Value Contracts Fair Value Contracts Foreign currency Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations $ 1,212 8,108 $ 651 9,090 Forward contracts Financial instruments owned at fair value 60 1 — — Equity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 1,790 2,590 2,047 3,085 Swap contracts Receivable from/Payable to brokers, dealers and clearing organizations 98 1 13 1 Listed options Financial instruments owned/sold, not yet purchased, at fair value 144,586 426,747 115,362 437,383 Fixed income Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 6,432 11,901 6,891 10,628 Commodity Futures contracts Receivable from/Payable to brokers, dealers and clearing organizations 15,246 8,894 14,847 9,105 Total $ 169,424 458,242 $ 139,811 469,292 |
Fair Value of Derivative Instruments Gain Loss Recognized | Gain (Loss) Recognized Financial Statements For the three months ended June 30, For the six months ended June 30, Location 2015 2014 2015 2014 Derivative instruments not designated as hedging instruments: Foreign currency Futures contracts Trading revenues, net $ (202 ) $ 2,952 $ 806 $ 5,794 Forward contracts Investment income and other, net 284 (120 ) (10 ) 312 Equity Futures contracts Trading revenues, net 11,361 6,044 13,738 14,781 Swap contracts Trading revenues, net 739 1,061 1,068 2,343 Listed options (1) Trading revenues, net (2,631 ) 2,212 (16,181 ) (71,664 ) Fixed income Futures contracts Trading revenues, net 16,377 5,118 24,921 13,947 Commodity Futures contracts Trading revenues, net 9,568 12,435 25,003 26,005 $ 35,496 $ 29,702 $ 49,345 $ (8,482 ) Derivative instruments designated as hedging instruments: Foreign exchange - forward contract Accumulated other comprehensive income $ (6 ) $ — $ (6 ) $ 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 revenues, net on the Company’s Consolidated Statements of Operations. |
Derivative Instruments, Gain (Loss), Offsetting Table | The table below provides information regarding (1) the extent to which, under enforceable master netting arrangements, such balances are presented net in the Consolidated Statements of Financial Condition as appropriate under GAAP and (2) the extent to which other rights of offset associated with these arrangements exist and could have had an effect on our financial position (in thousands): June 30, 2015 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition (3) Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Listed options $ 117,934 $ — $ 117,934 $ — $ — $ 117,934 Foreign currency forward contracts 355 — 355 — — 355 Swaps 22 — 22 — — 22 Futures 69,584 66,284 3,300 — — 3,300 Total Assets $ 187,895 $ 66,284 $ 121,611 $ — $ — $ 121,611 Liabilities Listed options $ 93,113 $ — $ 93,113 $ — $ 11,422 $ 81,691 Futures 70,021 70,021 — — — — Total Liabilities $ 163,134 $ 70,021 $ 93,113 $ — $ 11,422 $ 81,691 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) The full amount of the liabilities related to futures of $70.0 million has been netted against the assets related to futures of $64.7 million as the Company maintains margin in excess of the net liability and such margin is utilized to offset any excess liability. December 31, 2014 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Listed options $ 144,586 $ — $ 144,586 $ — $ — $ 144,586 Foreign currency forward contracts 60 — 60 — — 60 Swaps 98 13 85 — — 85 Futures 24,680 24,436 244 — — 244 Total Assets $ 169,424 $ 24,449 $ 144,975 $ — $ — $ 144,975 Liabilities Listed options $ 115,362 $ — $ 115,362 $ — $ 17,359 $ 98,003 Futures 24,436 24,436 — — — — Swaps 13 13 — — — — Total Liabilities $ 139,811 $ 24,449 $ 115,362 $ — $ 17,359 $ 98,003 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. |
Collateralized Transactions (Ta
Collateralized Transactions (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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): June 30, December 31, Collateral permitted to be delivered or repledged $ 1,816,698 $ 1,586,700 Collateral that was delivered or repledged 1,704,373 1,485,267 Collateral permitted to be further repledged by the receiving counterparty 345,956 147,696 |
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): June 30, December 31, Financial instruments owned, at fair value, pledged to counterparties that have the right to deliver or repledge $ 429,665 $ 536,124 Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge 1,057,213 979,652 |
Schedule of Agreements to Repurchase by Class of Collateral Pledged | The table below presents the gross carrying value of Securities loaned and Financial instruments sold under agreements to repurchase by class of collateral pledged (in thousands): June 30, 2015 Financial instruments sold under agreements to repurchase Asset Class Securities Loaned Equities $ 726,413 $ 879,472 U.S. government obligations — 85,667 Corporate debt 15,319 30,528 Total $ 741,732 $ 995,667 December 31, 2014 Financial instruments sold under agreements to repurchase Asset Class Securities Loaned Equities $ 696,162 $ 832,614 U.S. government obligations — 73,576 Corporate debt 11,582 27,386 Total $ 707,744 $ 933,576 |
Assets 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): June 30, 2015 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Securities borrowed $ 1,871,312 $ — $ 1,871,312 $ 1,806,445 $ 15,467 $ 49,400 Receivable from brokers, dealers and clearing organizations (3) 21,845 — 21,845 21,845 — — Total Assets $ 1,893,157 $ — $ 1,893,157 $ 1,828,290 $ 15,467 $ 49,400 Liabilities Securities loaned $ 741,732 $ — $ 741,732 $ 707,522 $ 15,467 $ 18,743 Financial instruments sold under agreements to repurchase 995,667 — 995,667 995,574 — 93 Total Liabilities $ 1,737,399 $ — $ 1,737,399 $ 1,703,096 $ 15,467 $ 18,836 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) Represents financial instruments repurchased under agreement to resell. December 31, 2014 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Securities borrowed $ 1,632,062 $ — $ 1,632,062 $ 1,570,194 $ 15,782 $ 46,086 Receivable from brokers, dealers and clearing organizations (3) 21,545 — 21,545 21,425 — 120 Total Assets $ 1,653,607 $ — $ 1,653,607 $ 1,591,619 $ 15,782 $ 46,206 Liabilities Securities loaned $ 707,744 $ — $ 707,744 $ 682,389 $ 15,782 $ 9,573 Financial instruments sold under agreements to repurchase 933,576 — 933,576 933,560 — 16 Total Liabilities $ 1,641,320 $ — $ 1,641,320 $ 1,615,949 $ 15,782 $ 9,589 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) Represents financial instruments purchased under agreement to resell. |
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): June 30, 2015 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Securities borrowed $ 1,871,312 $ — $ 1,871,312 $ 1,806,445 $ 15,467 $ 49,400 Receivable from brokers, dealers and clearing organizations (3) 21,845 — 21,845 21,845 — — Total Assets $ 1,893,157 $ — $ 1,893,157 $ 1,828,290 $ 15,467 $ 49,400 Liabilities Securities loaned $ 741,732 $ — $ 741,732 $ 707,522 $ 15,467 $ 18,743 Financial instruments sold under agreements to repurchase 995,667 — 995,667 995,574 — 93 Total Liabilities $ 1,737,399 $ — $ 1,737,399 $ 1,703,096 $ 15,467 $ 18,836 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) Represents financial instruments repurchased under agreement to resell. December 31, 2014 Gross Amounts Recognized Gross Amounts Offset in the Statements of Financial Condition Net Amounts Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statement of Financial Condition Net Amount Available Collateral (1) Counterparty Netting (2) Assets Securities borrowed $ 1,632,062 $ — $ 1,632,062 $ 1,570,194 $ 15,782 $ 46,086 Receivable from brokers, dealers and clearing organizations (3) 21,545 — 21,545 21,425 — 120 Total Assets $ 1,653,607 $ — $ 1,653,607 $ 1,591,619 $ 15,782 $ 46,206 Liabilities Securities loaned $ 707,744 $ — $ 707,744 $ 682,389 $ 15,782 $ 9,573 Financial instruments sold under agreements to repurchase 933,576 — 933,576 933,560 — 16 Total Liabilities $ 1,641,320 $ — $ 1,641,320 $ 1,615,949 $ 15,782 $ 9,589 (1) Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (2) Under master netting agreements with its counterparties, the company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met. (3) Represents financial instruments purchased under agreement to resell. |
Maturities of Assets Sold Under Repurchase Agreements | Maturities of Securities loaned and Financial instruments sold under agreements to repurchase are provided in the table below (dollars in thousands): As of June 30, 2015 Overnight 0 - 30 days 31 - 60 days 61 - 90 days Total Securities loaned $ 741,732 $ — $ — $ — $ 741,732 Financial instruments sold under agreements to repurchase 85,667 535,000 225,000 150,000 995,667 Total $ 827,399 $ 535,000 $ 225,000 $ 150,000 $ 1,737,399 As of December 31, 2014 Overnight 0 - 30 days 31 - 60 days 61 - 90 days Total Securities loaned $ 707,744 $ — $ — $ — $ 707,744 Financial instruments sold under agreements to repurchase 73,576 410,000 325,000 125,000 933,576 Total $ 781,320 $ 410,000 $ 325,000 $ 125,000 $ 1,641,320 |
Receivable from and Payable t40
Receivable from and Payable to Brokers, Dealers and Clearing Organizations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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): June 30, December 31, 2014 Receivable: Clearing organizations and other $ 476,488 $ 1,073,480 Financial instruments purchased under agreement to resell 21,845 21,545 Securities failed to deliver 191,958 93,808 Total Receivable $ 690,291 $ 1,188,833 Payable: Clearing organizations and other $ 461,000 $ 350,627 Securities failed to receive 68,748 325,462 Total Payable $ 529,748 $ 676,089 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Investments [Abstract] | |
Summary of Investments | Investments primarily comprise strategic investments and deferred compensation investments. Investments consist of the following (in thousands): June 30, December 31, Strategic investments: Investments accounted for under the equity method $ 92,148 $ 86,328 Investments held at fair value 4,655 4,435 Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost 8,948 8,949 Total Strategic investments 105,751 99,712 Other investments 1,597 1,014 Total Investments $ 107,348 $ 100,726 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill | The following table summarizes the Company’s goodwill by segment (in thousands): June 30, December 31, 2014 Market Making $ 16,404 $ 16,404 Global Execution Services 907 907 Total $ 17,311 $ 17,311 |
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): June 30, December 31, 2014 Market Making Technology $ 49,951 $ 50,542 Trading rights 42,025 44,358 Total 91,976 94,900 Global Execution Services (1) Technology 15,600 18,200 Customer relationships 10,111 10,833 Trade names 800 850 Total 26,511 29,883 Corporate and Other Technology 9,000 10,500 Total $ 127,487 $ 135,283 (1) Excluded from the December 31, 2014 balance is $34.7 million of intangibles related to the KCG Hotspot which was held for sale at that time. As noted in Footnote 4 "Sales of Businesses", such amount is included in Assets of business held for sale at December 31, 2014. June 30, December 31, 2014 Technology (1) Gross carrying amount $ 124,305 $ 115,804 Accumulated amortization (49,754 ) (36,562 ) Net carrying amount 74,551 79,242 Trading rights (2) Gross carrying amount 62,468 62,468 Accumulated amortization (20,443 ) (18,110 ) Net carrying amount 42,025 44,358 Customer relationships (3) Gross carrying amount 13,000 13,000 Accumulated amortization (2,889 ) (2,167 ) Net carrying amount 10,111 10,833 Trade names (4) Gross carrying amount 1,000 1,000 Accumulated amortization (200 ) (150 ) Net carrying amount 800 850 Total Gross carrying amount 200,773 192,272 Accumulated amortization (73,286 ) (56,989 ) Net carrying amount $ 127,487 $ 135,283 (1) The weighted average remaining life for technology, including capitalized internal use software, was approximately two and three years as of June 30, 2015 and December 31, 2014 , respectively. Excluded from the December 31, 2014 balance is $13.1 million of technology assets related to KCG Hotspot which as noted in Footnote 4 "Sales of Businesses", is included in Assets of business held for sale at December 31, 2014. (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 was approximately six and seven years as of June 30, 2015 and December 31, 2014 , respectively. As of June 30, 2015 and December 31, 2014, $6.8 million of trading rights had indefinite useful lives. (3) Customer relationships relate to KCG BondPoint. The weighted average remaining life was approximately 7 and 8 years as of June 30, 2015 and December 31, 2014 , respectively. Lives may be reduced depending upon actual retention rates. Excluded from the December 31, 2014 balance is $19.0 million of customer relationships related to KCG Hotspot which as noted in Footnote 4 "Sales of Businesses", is included in Assets of business held for sale at December 31, 2014. (4) Trade names relate to KCG BondPoint. The weighted average remaining life was approximately 8 and 9 years as of June 30, 2015 and December 31, 2014 , respectively. Excluded from the December 31, 2014 balance is $2.6 million of the trade name related to KCG Hotspot which as noted in Footnote 4 "Sales of Businesses", is included in Assets of business held for sale at December 31, 2014. |
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 June 30, For the six months ended June 30, 2015 2014 2015 2014 Amortization expense $ 8,317 $ 8,732 $ 17,566 $ 17,226 |
Summary of Estimated Amortization Expense for Future Years | As of June 30, 2015 , the following table summarizes the Company’s estimated amortization expense for future periods (in thousands): Amortization expense For the six months ended December 31, 2015 $ 16,594 For the year ended December 31, 2016 32,856 For the year ended December 31, 2017 30,075 For the year ended December 31, 2018 16,763 For the year ended December 31, 2019 6,211 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Summary of Long-term Debt | The carrying value and fair value of the Company's debt is as follows (in thousands): June 30, 2015 December 31, 2014 Carrying Amount Fair Value Carrying Amount Fair Value Cash Convertible Senior Subordinated Notes $ — $ — $ 117,259 $ 116,819 8.25% Senior Secured Notes — — 305,000 309,194 6.875% Senior Secured Notes 495,113 480,259 — — Total Debt $ 495,113 $ 480,259 $ 422,259 $ 426,013 |
Debt Instrument Redemption | Year Percentage 2017 103.438 % 2018 101.719 % 2019 and thereafter 100.000 % |
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 June 30, For the six months ended June 30, 2015 2014 2015 2014 Interest expense (1) $ 26,226 $ 7,349 $ 34,385 $ 16,765 Amortization of debt issuance cost (2) 9,428 2,791 10,362 11,557 Commitment fee 403 394 797 788 Total $ 36,057 $ 10,534 $ 45,544 $ 29,110 (1) The three and six months ended June 30, 2015 includes a $16.5 million charge for a contractual make-whole premium, as a result of the early retirement of the $305 million 8.25% Senior Secured Notes in April 2015, which was recorded as Debt extinguishment charges on the Consolidated Statements of Operations (2) The three and six months ended June 30, 2015 includes a $8.5 million charge for the writedown of capitalized debt costs, as a result of the early retirement of the $305 million 8.25% Senior Secured Notes in April 2015, which was recorded as Debt extinguishment charges on the Consolidated Statements of Operations. Of the $2.8 million of amortization of debt issuance cost incurred during the three months ended June 30, 2014, $2.0 million is included in Debt extinguishment charges and $0.8 million is in Other expenses in the Consolidated Statements of Operations. Of the $11.6 million of amortization of debt issuance cost incurred during the six months ended June 30, 2014, $9.6 million is included in Debt extinguishment charges and $2.0 million is in Other expenses in the Consolidated Statements of Operations. The writedown amounts were incurred as a result of the $50.0 million and $235.0 million repayment of the First Lien Credit Facility made during the three and six months ended June 30, 2014, respectively. |
Related Parties (Tables)
Related Parties (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 its related parties or their affiliates (in thousands): For the three months ended June 30, For the six months ended June 30, Statements of Operations 2015 2014 2015 2014 Revenues Commissions and fees $ 2,636 $ 2,740 $ 6,128 $ 7,886 Trading revenues, net 1,804 541 3,905 1,355 Interest, net 131 130 357 318 Total revenues from related parties $ 4,571 $ 3,411 $ 10,390 $ 9,559 Expenses Execution and clearance fees (1) $ (4,180 ) $ (2,537 ) $ (8,808 ) $ (6,548 ) Communications and data processing 1,299 — 2,409 — Payment for order flow 1,073 — 2,253 — Collateralized financing interest 134 120 247 279 Professional fees — — 5,507 — — Other expense 656 434 1,277 834 Total expenses incurred with respect to related parties $ (1,018 ) $ (1,983 ) $ 2,885 $ (5,435 ) (1) Represents net volume based fees received from providing liquidity to related trading venues. Statements of Financial Condition June 30, December 31, Assets Securities borrowed $ 45,466 $ 26,110 Receivable from brokers, dealers and clearing organizations 107,946 20,075 Other assets 67,167 — Liabilities Securities loaned $ 1,267 $ 7,376 Payable to brokers, dealers and clearing organizations 40,128 8,509 Accrued expenses and other liabilities 4,626 5,667 |
Schedule of Tender Offer | As part of the Company’s Tender Offer, it accepted for purchase validly tendered shares of the KCG Class A Common Stock at $14.00 per share from the following directors and stockholders, or their affiliates, who owned more than 10% of KCG Class A Common Stock (in thousands): Name Title/ Relationship Number of Shares Purchased Total Purchase Price Stephen Schuler and related entities (1) Director/Stockholder 1,708 $ 23,918 Daniel Tierney and related entities (2) Director/Stockholder 1,798 25,176 GA-GTCO Interholdco, LLC (3) Stockholder 8,285 115,989 Jefferies LLC Stockholder 6,533 91,458 (1) Includes (i) Stephen Schuler, (ii) Serenity Investments, LLC, a limited liability company organized under the laws of the state of Alaska (“Serenity”), of which Mr. Schuler and his wife separately hold equity interests that together represent a controlling interest and with respect to which Mr. Schuler may be deemed to share voting and dispositive power and (iii) the Schuler Family GST Trust dated June 6, 2003, a trust that holds securities with respect to which Mr. Schuler may be deemed to share voting and dispositive power. Mr. Schuler disclaims beneficial ownership of the securities held by Serenity except to the extent of his pecuniary interest therein. (2) Includes (i) Daniel Tierney and (ii) the Daniel V. Tierney 2011 Trust (the “Tierney Trust”), a trust of which Daniel Tierney is the settlor and beneficiary. Mr. Tierney does not have or share voting or dispositive power over the securities held by the Tierney Trust, but does have the power to revoke the Tierney Trust and acquire beneficial ownership of such securities within 60 days . Mr. Tierney disclaims beneficial ownership of the securities held by the Tierney Trust. (3) GA-GTCO Interholdco, LLC, an affiliate of General Atlantic, has appointed two directors to the Company’s board of directors (Rene Kern, an employee of General Atlantic and John C. (Hans) Morris, a former employee of General Atlantic). Neither director participated in the Tender Offer with respect to shares they hold directly. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Compensation Expense Relating to Restricted Awards | For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Stock award compensation expense (1) $ 40,041 $ 14,937 $ 54,296 $ 31,175 Income tax benefit 15,216 5,676 20,632 11,846 (1) Included in the 2015 amounts is $28.8 million of accelerated stock compensation expense related to the Outstanding Annual RSUs as a result of implementing the Continued Vesting Amendment. The following is a summary of the changes in the incentive units for the six months ended June 30, 2015 (units in thousands): Vested Incentive units at December 31, 2014 38 Issued — Vested — Exercised (3 ) Canceled — Incentive units at June 30, 2015 36 |
Summary of Restricted Awards Activity | The following table summarizes restricted awards activity for the six months ended June 30, 2015 (awards in thousands): Restricted Stock Units Number of Units Weighted- Average Grant date Fair Value Outstanding at December 31, 2014 9,147 $ 10.77 Granted 2,439 12.25 Vested (2,209 ) 11.07 Forfeited (595 ) 11.36 Outstanding at June 30, 2015 8,782 $ 11.06 |
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) expense on the Consolidated Statements of Operations are as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Stock option and SAR compensation expense $ 928 $ 958 $ 1,941 $ 1,920 Income tax benefit 353 364 738 730 |
Summary of Stock Option Activity | The following table summarizes stock option and SAR activity and stock options exercisable for the six months ended June 30, 2015 (awards in thousands): Number of Stock Awards Weighted- Average Exercise Price Aggregate Intrinsic Value Weighted- Average Remaining Life (years) Outstanding at December 31, 2014 (1) 4,691 $ 17.41 Granted at market value — — Exercised (118 ) 8.24 Forfeited or expired (62 ) 29.12 Outstanding at June 30, 2015 (1) 4,511 $ 17.49 $ 4,524 2.91 Exercisable at June 30, 2015 1,685 $ 21.11 $ 1,418 2.79 Available for future grants at June 30, 2015 (2) 15,370 (1) Includes 1.7 million SARs. (2) Represents options, SARs and awards available for grant under the Amended 2015 Plan. |
Schedule of Compensation Costs | Compensation expense (benefit) related to the Incentive units which are recorded within Employee compensation and benefits on the Consolidated Statements of Operations are as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Incentive units $ 33 $ (14 ) 185 (188 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Tax Rate Reconciliation | The following table reconciles the U.S. federal statutory income tax rate to the Company's actual income tax rate from continuing operations (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 U.S. federal statutory income tax rate 35.0 % 35.0 % 35.0 % 35.0 % U.S. state and local income taxes, net of U.S. 3.0 % 4.7 % 2.8 % 2.6 % Recognition of state deferred tax assets and net operating losses, net of U.S. federal income tax effect 28.4 % — % (4.7 )% — % Nondeductible expenses (1) 0.2 % 1.5 % — % 0.6 % Foreign Taxes — % (1.1 )% — % (0.1 )% Other, net (0.2 )% (2.1 )% 0.9 % (0.2 )% Actual income tax rate (2) 66.4 % 38.0 % 34.0 % 37.9 % (1) Nondeductible expenses include nondeductible meals and entertainment. (2) Represents a benefit on Loss from continuing operations before income taxes for the three months ended June 30, 2015. |
Accumulated Other Comprehensi47
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | The following table presents changes in Accumulated other comprehensive income, net of tax by component for the three and six months ended June 30, 2015 and 2014 (in thousands): Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Adjustments Total Balance March 31, 2015 $ 540 $ 1,158 $ 1,698 Other comprehensive income (loss) (51 ) (433 ) (484 ) Balance June 30, 2015 $ 489 $ 725 $ 1,214 Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Adjustments Total Balance December 31, 2014 $ 352 $ 1,781 $ 2,133 Other comprehensive income (loss) 137 (1,056 ) (919 ) Balance June 30, 2015 $ 489 $ 725 $ 1,214 Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Adjustments Total Balance March 31, 2014 $ (101 ) $ 1,566 $ 1,465 Other comprehensive income (loss) (96 ) 291 195 Balance June 30, 2014 $ (197 ) $ 1,857 $ 1,660 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) (233 ) 492 259 Balance June 30, 2014 $ (197 ) $ 1,857 $ 1,660 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 and six months ended June 30, 2015 and 2014 (in thousands): For the three months ended June 30, 2015 2014 Numerator / Denominator / shares Numerator / net income Denominator / shares (Loss) Income from continuing operations and shares used in basic calculations $ (19,162 ) 108,588 $ 8,987 114,859 Effect of dilutive stock based awards Restricted awards — 2,653 Stock options and SARs — 89 Warrants — — (Loss) Income from continuing operations and shares used in diluted calculations $ (19,162 ) 108,588 $ 8,987 117,601 Basic (loss) earnings per common share from continuing operations $ (0.18 ) $ 0.08 Diluted (loss) earnings per common share from continuing operations $ (0.18 ) $ 0.08 For the six months ended June 30, 2015 2014 Numerator / Denominator / shares Numerator / net income Denominator / shares Income from continuing operations and shares used in basic calculations $ 230,139 110,890 $ 45,904 115,282 Effect of dilutive stock based awards Restricted awards 2,192 2,796 Stock options and SARs 340 92 Warrants 387 — Income from continuing operations and shares used in diluted calculations $ 230,139 113,809 $ 45,904 118,170 Basic earnings per common share from continuing operations $ 2.08 $ 0.40 Diluted earnings per common share from continuing operations $ 2.02 $ 0.39 |
Commitments and Contingent Li49
Commitments and Contingent Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease and Contract Obligations | The future minimum payments including interest under the capitalized leases at June 30, 2015 consist of (in thousands): Minimum Payments Six months ended December 31, 2015 $ 1,278 2016 2,126 2017 620 Total $ 4,024 |
Schedule of Interest Expense, Capital Lease | The total interest expense related to capital leases for the three and six months ended June 30, 2015 , and 2014 included in the Consolidated Statements Operations is as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Interest expense - Capital leases $ 54 $ 102 $ 122 $ 190 |
Schedule of Future Minimum Rental Payments for Operating Leases | As of June 30, 2015 , 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 Obligations Sublease Income Net Lease Obligations Six months ending December 31, 2015 $ 13,883 $ 2,470 $ 11,413 Year ending December 31, 2016 27,938 4,994 22,944 Year ending December 31, 2017 26,395 4,508 21,887 Year ending December 31, 2018 25,550 4,211 21,339 Year ending December 31, 2019 23,671 3,630 20,041 Thereafter through December 31, 2027 64,589 10,244 54,345 Total $ 182,026 $ 30,057 $ 151,969 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 Making Global Execution Services Corporate and Other Consolidated Total For the three months ended June 30, 2015: Revenues $ 192,328 $ 63,522 $ 6,032 $ 261,882 Pre-tax earnings 4,402 (9,937 ) (51,579 ) (57,114 ) Total assets 4,627,324 710,575 1,248,449 6,586,348 For the three months ended June 30, 2014: Revenues $ 218,446 $ 85,903 $ 9,784 $ 314,133 Pre-tax earnings 36,004 736 (22,233 ) 14,507 Total assets 4,303,928 1,560,919 1,797,627 7,662,474 For the six months ended June 30, 2015: Revenues $ 416,876 $ 527,788 $ 13,374 $ 958,038 Pre-tax earnings 43,742 371,121 (65,849 ) 349,014 Total assets 4,627,324 710,575 1,248,449 6,586,348 For the six months ended June 30, 2014: Revenues $ 495,792 $ 173,123 $ 28,875 $ 697,790 Pre-tax earnings 112,036 2,752 (40,897 ) 73,891 Total assets 4,303,928 1,560,919 1,797,627 7,662,474 |
Significant Accounting Polici51
Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Change in accounting principle | |||||
Investment income and other, net | $ 4,358 | $ 2,866 | $ 391,781 | $ 15,021 | |
Cash and cash equivalents | |||||
Maximum maturity of short-term investments | 90 days | ||||
VIE [Member] | |||||
Variable Interest Entity, Not Primary Beneficiary, Disclosures [Abstract] | |||||
Ownership percentage | 50.00% | ||||
Minimum [Member] | |||||
Goodwill and intangible assets | |||||
Amortization period | 1 year | ||||
Foreign currency translation and foreign currency forward contracts | |||||
Fixed assets, useful life | 3 years | ||||
Maximum [Member] | |||||
Goodwill and intangible assets | |||||
Amortization period | 8 years | ||||
Foreign currency translation and foreign currency forward contracts | |||||
Fixed assets, useful life | 7 years | ||||
Investment Income and Other, Net [Member] | |||||
Foreign currency translation and foreign currency forward contracts | |||||
Investment gains (losses) | $ (400) | $ 35 | $ (600) | $ (700) | |
Software [Member] | |||||
Goodwill and intangible assets | |||||
Amortization period | 3 years | ||||
BATS and DE [Member] | |||||
Change in accounting principle | |||||
Merger related transaction costs | $ 6,600 | ||||
BATS and DE [Member] | Investment Income and Other, Net [Member] | |||||
Change in accounting principle | |||||
Investment income and other, net | 9,600 | ||||
DE [Member] | |||||
Change in accounting principle | |||||
Investment income and other, net | $ 16,200 |
Significant Accounting Polici52
Significant Accounting Policies - Schedule of Interest Income and Interest Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accounting Policies [Abstract] | ||||
Interest Income | $ 3,302 | $ 3,777 | $ 7,073 | $ 7,128 |
Interest Expense | (3,898) | (4,066) | (7,692) | (6,469) |
Interest, net | $ (596) | $ (289) | $ (619) | $ 659 |
Significant Accounting Polici53
Significant Accounting Policies - Net Trading Revenue Including Dividend Income and Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accounting Policies [Abstract] | ||||
Dividend Income | $ 13,973 | $ 9,832 | $ 30,717 | $ 19,615 |
Dividend Expense | $ (10,104) | $ (8,203) | $ (20,357) | $ (15,778) |
Significant Accounting Polici54
Significant Accounting Policies - Nonconsolidated VIEs (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Variable Interest Entity [Line Items] | |||
Carrying Amount, Asset | $ 2,982 | ||
Carrying Amount, Liability | 732 | ||
Maximum Exposure to loss | 2,982 | ||
VIE's assets | 6,586,348 | $ 6,830,654 | $ 7,662,474 |
VIE [Member] | |||
Variable Interest Entity [Line Items] | |||
VIE's assets | $ 9,548 |
Tender Offer - Additional Infor
Tender Offer - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Jun. 02, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | May. 04, 2015 | Apr. 02, 2015 | Dec. 31, 2014 | Jul. 01, 2013 | |
Class of Stock [Line Items] | |||||||||
Authorized repurchase amount | $ 400,000,000 | ||||||||
Reduction in equity from retirement of repurchased shares | $ 330,000,000 | ||||||||
Professional fees | $ 5,694,000 | $ 7,337,000 | $ 16,875,000 | $ 12,739,000 | |||||
Warrants received (in shares) | 24,207 | 24,207 | 24,341 | ||||||
GETCO [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Warrants received (in shares) | 24,300 | ||||||||
Retained Earnings [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Reduction in equity from retirement of repurchased shares | $ 329,764,000 | ||||||||
Tender Offer [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Tender offer, odd lot, percentage | 29.10% | ||||||||
Professional fees | $ 2,100,000 | 2,100,000 | |||||||
Tender Offer [Member] | Retained Earnings [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Reduction in equity from retirement of repurchased shares | 329,800,000 | ||||||||
Common Class A [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Remaining authorized repurchase amount | $ 70,000,000 | 70,000,000 | $ 55,000,000 | ||||||
Common Class A [Member] | Common Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Reduction in equity from retirement of repurchased shares | 236,000 | ||||||||
Common Class A [Member] | Tender Offer [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Authorized repurchase amount | $ 330,000,000 | ||||||||
Share price (in usd per share) | $ 14 | ||||||||
Common Class A [Member] | Tender Offer [Member] | Common Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Reduction in equity from retirement of repurchased shares | $ 200,000 | ||||||||
Common Class A [Member] | Tender Offer [Member] | Minimum [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Share price (in usd per share) | $ 13.50 | ||||||||
Number of shares authorized to be repurchased | 23,600 | ||||||||
Common Class A [Member] | Tender Offer [Member] | Maximum [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Share price (in usd per share) | $ 14 |
Tender Offer - Warrant Activity
Tender Offer - Warrant Activity (Details) - $ / shares shares in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 08, 2015 | Jul. 01, 2013 | |
Class of Warrant or Right [Roll Forward] | |||
Warrants - Outstanding at beginning of period (in shares) | 24,341 | ||
Exercised (in shares) | (133) | ||
Warrants - Outstanding at end of period (in shares) | 24,207 | ||
Class A Warrant [Member] | |||
Class of Warrant or Right [Line Items] | |||
Exercise Price (in usd per share) | $ 11.70 | $ 12 | |
Initial term (years) | 4 years | ||
Class of Warrant or Right [Roll Forward] | |||
Warrants - Outstanding at beginning of period (in shares) | 8,114 | ||
Exercised (in shares) | (133) | ||
Warrants - Outstanding at end of period (in shares) | 7,980 | ||
Class B Warrant [Member] | |||
Class of Warrant or Right [Line Items] | |||
Exercise Price (in usd per share) | 13.16 | 13.50 | |
Initial term (years) | 5 years | ||
Class of Warrant or Right [Roll Forward] | |||
Warrants - Outstanding at beginning of period (in shares) | 8,114 | ||
Exercised (in shares) | 0 | ||
Warrants - Outstanding at end of period (in shares) | 8,114 | ||
Class C Warrant [Member] | |||
Class of Warrant or Right [Line Items] | |||
Exercise Price (in usd per share) | $ 14.63 | $ 15 | |
Initial term (years) | 6 years | ||
Class of Warrant or Right [Roll Forward] | |||
Warrants - Outstanding at beginning of period (in shares) | 8,113 | ||
Exercised (in shares) | 0 | ||
Warrants - Outstanding at end of period (in shares) | 8,113 |
Sales of Businesses - Income Di
Sales of Businesses - Income Disclosures (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Expenses: | ||||
Compensation | $ 109,471 | $ 103,430 | $ 216,189 | $ 225,749 |
Other expense | 10,652 | 10,767 | 18,460 | 19,410 |
Total expenses | 318,996 | 299,626 | 609,024 | 623,899 |
Loss from discontinued operations, net of tax | $ 0 | (67) | $ 0 | (1,320) |
Discontinued Operations [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Additional Loss on Sale | (1) | (1,313) | ||
Expenses: | ||||
Compensation | 126 | 171 | ||
Other expense | (19) | 645 | ||
Total expenses | 107 | 816 | ||
Loss from discontinued operations | (108) | (2,129) | ||
Income tax benefit | 41 | 809 | ||
Loss from discontinued operations, net of tax | $ (67) | $ (1,320) |
Sales of Businesses - Balance S
Sales of Businesses - Balance Sheet Disclosures (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Liabilities: | ||
Total liabilities of business held for sale | $ 0 | $ 2,356 |
KCG Hotspot [Member] | ||
Assets: | ||
Fixed assets, less accumulated depreciation | 391 | |
Intangible assets, net accumulated amortization | 34,696 | |
Other assets | 5,397 | |
Total assets of business held for sale | 40,484 | |
Liabilities: | ||
Accrued compensation expense | 2,298 | |
Accrued expenses and other liabilities | 58 | |
Total liabilities of business held for sale | $ 2,356 |
Sales of Businesses - Additiona
Sales of Businesses - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Professional fees | $ 5,694 | $ 7,337 | $ 16,875 | $ 12,739 | |
KCG Hotspot [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds related to tax sharing arrangement | $ 70,000 | $ 70,000 | |||
Sale period | 3 years | 3 years | |||
Additional consideration, fair value | $ 62,800 | 62,800 | |||
Gain from sale of business | 373,800 | ||||
Professional fees | 6,700 | ||||
Compensation costs | 4,500 | ||||
KCG Hotspot [Member] | Investment Income and Other, Net [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Gain from sale of business | 385,000 | ||||
KCG Hotspot [Member] | Other Assets [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Additional consideration, fair value | $ 62,800 | $ 62,800 | |||
Payment in Two Thousand Eighteen [Member] | KCG Hotspot [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds related to tax sharing arrangement | $ 50,000 | ||||
Annual Payments [Member] | KCG Hotspot [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds related to tax sharing arrangement | $ 6,600 |
Assets Segregated or Held in 60
Assets Segregated or Held in Separate Accounts Under Federal or Other Regulations - (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Regulated Operations [Abstract] | ||
Cash and cash equivalents segregated under federal or other regulations | $ 3,600 | $ 3,361 |
Total assets segregated or held in separate accounts under federal or other regulations | $ 3,600 | $ 3,361 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | $ 2,695,726 | $ 2,707,371 |
Financial instrument assets | 2,764,787 | 2,712,820 |
Financial instruments sold, not yet purchased, at fair value | 2,038,157 | 2,285,707 |
Total fair value of financial instrument liabilities | 2,038,157 | 2,285,707 |
KCG Hotspot [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Receivable from BATS | 62,800 | |
KCG Hotspot [Member] | Other Assets and Investments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Receivable from BATS | 62,800 | |
Deferred compensation investments | 1,600 | |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 2,695,371 | 2,707,311 |
Financial instrument assets | 2,700,026 | 2,711,746 |
Total fair value of financial instrument liabilities | 2,038,157 | 2,285,707 |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 355 | 60 |
Financial instrument assets | 64,761 | 1,074 |
Total fair value of financial instrument liabilities | 0 | 0 |
Equities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 2,391,499 | 2,479,910 |
Financial instruments sold, not yet purchased, at fair value | 1,785,493 | 2,069,342 |
Securities netted by respective long and short positions | 826,500 | 743,100 |
Equities [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 2,391,499 | 2,479,910 |
Financial instruments sold, not yet purchased, at fair value | 1,785,493 | 2,069,342 |
Equities [Member] | Level 2 [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 |
Listed Options [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 117,934 | 144,586 |
Financial instruments sold, not yet purchased, at fair value | 93,113 | 115,362 |
Listed Options [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 117,934 | 144,586 |
Financial instruments sold, not yet purchased, at fair value | 93,113 | 115,362 |
Listed Options [Member] | Level 2 [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 |
US Government and Non-US Government Obligations [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 117,725 | 22,983 |
US Government and Non-US Government Obligations [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 117,725 | 22,983 |
US Government and Non-US Government Obligations [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 0 | 0 |
Corporate Debt [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 68,213 | 59,832 |
Financial instruments sold, not yet purchased, at fair value | 68,279 | 82,050 |
Securities netted by respective long and short positions | 300 | |
Corporate Debt [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 68,213 | 59,832 |
Financial instruments sold, not yet purchased, at fair value | 68,279 | 82,050 |
Corporate Debt [Member] | Level 2 [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 |
Foreign Currency Forward Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 355 | 60 |
Foreign Currency Forward Contracts [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 0 | 0 |
Foreign Currency Forward Contracts [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments owned, at fair value | 355 | 60 |
Investment in CME Group [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instrument assets | 4,655 | 4,435 |
Investment in CME Group [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instrument assets | 4,655 | 4,435 |
Investment in CME Group [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instrument assets | 0 | 0 |
Other Investments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instrument assets | 64,406 | 1,014 |
Other Investments [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instrument assets | 0 | 0 |
Other Investments [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instrument assets | 64,406 | 1,014 |
U.S. Government Obligations [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments sold, not yet purchased, at fair value | 91,272 | 18,953 |
U.S. Government Obligations [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments sold, not yet purchased, at fair value | 91,272 | 18,953 |
U.S. Government Obligations [Member] | Level 2 [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 |
Fair Value - Additional Informa
Fair Value - Additional Information (Detail) ₨ in Millions | Jun. 30, 2015INR (₨) | Jun. 30, 2015USD ($) | Dec. 31, 2014INR (₨) | Dec. 31, 2014USD ($) |
Fair Value Disclosures [Abstract] | ||||
Transfers of financial instruments between levels | $ 0 | $ 0 | ||
Transfers of financial instruments between level 2 to level 1 | 0 | 0 | ||
Notional value of foreign currency forward | ₨ 825 | $ 12,500,000 | ₨ 700 | $ 10,900,000 |
Derivative Financial Instrume63
Derivative Financial Instruments - Fair Value of Derivative Instruments (Details) $ in Thousands | Jun. 30, 2015USD ($)contract | Dec. 31, 2014USD ($)contract |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 187,895 | $ 169,424 |
Assets, Contract | contract | 365,063 | 458,242 |
Liabilities, Fair Value | $ 163,134 | $ 139,811 |
Liabilities, Contract | contract | 367,522 | 469,292 |
Foreign Currency Futures Contracts [Member] | Receivable from Brokers, Dealers and Clearing Organizations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 973 | $ 1,212 |
Assets, Contract | contract | 10,740 | 8,108 |
Liabilities, Fair Value | $ 322 | $ 651 |
Liabilities, Contract | contract | 6,932 | 9,090 |
Foreign Currency Forward Contracts [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 355 | $ 60 |
Foreign Currency Forward Contracts [Member] | Financial Instruments Owned, at Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 355 | $ 60 |
Assets, Contract | contract | 1 | 1 |
Liabilities, Fair Value | $ 0 | $ 0 |
Liabilities, Contract | contract | 0 | 0 |
Equity Futures Contracts [Member] | Receivable from Brokers, Dealers and Clearing Organizations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 17,539 | $ 1,790 |
Assets, Contract | contract | 24,777 | 2,590 |
Liabilities, Fair Value | $ 15,673 | $ 2,047 |
Liabilities, Contract | contract | 21,936 | 3,085 |
Equity Swap Contracts [Member] | Receivable from Brokers, Dealers and Clearing Organizations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 22 | $ 98 |
Assets, Contract | contract | 1 | 1 |
Liabilities, Fair Value | $ 0 | $ 13 |
Liabilities, Contract | contract | 0 | 1 |
Listed Options [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 117,934 | $ 144,586 |
Liabilities, Fair Value | 93,113 | 115,362 |
Listed Options [Member] | Financial Instruments Owned/Sold, Not Yet Purchased, at Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 117,934 | $ 144,586 |
Assets, Contract | contract | 308,805 | 426,747 |
Liabilities, Fair Value | $ 93,113 | $ 115,362 |
Liabilities, Contract | contract | 314,616 | 437,383 |
Fixed Income Futures Contracts [Member] | Receivable from Brokers, Dealers and Clearing Organizations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 3,704 | $ 6,432 |
Assets, Contract | contract | 5,827 | 11,901 |
Liabilities, Fair Value | $ 4,201 | $ 6,891 |
Liabilities, Contract | contract | 8,028 | 10,628 |
Commodity Futures Contracts [Member] | Receivable from Brokers, Dealers and Clearing Organizations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value | $ 47,368 | $ 15,246 |
Assets, Contract | contract | 14,912 | 8,894 |
Liabilities, Fair Value | $ 49,825 | $ 14,847 |
Liabilities, Contract | contract | 16,010 | 9,105 |
Derivative Financial Instrume64
Derivative Financial Instruments - Gain (Loss) Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Derivative Instruments Not Designated as Hedging Instruments [Member] | Trading Revenues, Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments not designated as hedging instruments, Gain (Loss) | $ 35,496 | $ 29,702 | $ 49,345 | $ (8,482) |
Derivative Instruments Not Designated as Hedging Instruments [Member] | Foreign Currency Futures Contracts [Member] | Trading Revenues, Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments not designated as hedging instruments, Gain (Loss) | (202) | 2,952 | 806 | 5,794 |
Derivative Instruments Not Designated as Hedging Instruments [Member] | Foreign Currency Forward Contracts [Member] | Investment Income (Loss) and Other, Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 284 | (120) | (10) | 312 |
Derivative Instruments Not Designated as Hedging Instruments [Member] | Equity Futures Contracts [Member] | Trading Revenues, Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 11,361 | 6,044 | 13,738 | 14,781 |
Derivative Instruments Not Designated as Hedging Instruments [Member] | Equity Swap Contracts [Member] | Trading Revenues, Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 739 | 1,061 | 1,068 | 2,343 |
Derivative Instruments Not Designated as Hedging Instruments [Member] | Listed Options [Member] | Trading Revenues, Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments not designated as hedging instruments, Gain (Loss) | (2,631) | 2,212 | (16,181) | (71,664) |
Derivative Instruments Not Designated as Hedging Instruments [Member] | Fixed Income Futures Contracts [Member] | Trading Revenues, Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 16,377 | 5,118 | 24,921 | 13,947 |
Derivative Instruments Not Designated as Hedging Instruments [Member] | Commodity Futures Contracts [Member] | Trading Revenues, Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments not designated as hedging instruments, Gain (Loss) | 9,568 | 12,435 | 25,003 | 26,005 |
Derivative Instruments Designated as Hedging Instruments [Member] | Foreign Currency Forward Contracts [Member] | Accumulated Other Comprehensive Income [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative instruments designated as hedging instruments | $ (6) | $ 0 | $ (6) | $ 168 |
Derivative Financial Instrume65
Derivative Financial Instruments - Netting Arrangements (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Derivative [Line Items] | ||
Gross Amounts of Recognized, Assets | $ 187,895 | $ 169,424 |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 66,284 | 24,449 |
Net Amounts Presented in the Statements of Financial Condition, Assets | 121,611 | 144,975 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Assets | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Assets | 0 | 0 |
Net Amount, Assets | 121,611 | 144,975 |
Gross Amounts of Recognized Derivatives, Liabilities | 163,134 | 139,811 |
Gross Amounts of Recognized Derivatives, Liabilities | 70,021 | 24,449 |
Net Amounts Presented in the Statements of Financial Condition, Liabilities | 93,113 | 115,362 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Liabilities | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Liabilities | 11,422 | 17,359 |
Net Amount, Liabilities | 81,691 | 98,003 |
Listed Options [Member] | ||
Derivative [Line Items] | ||
Gross Amounts of Recognized, Assets | 117,934 | 144,586 |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition, Assets | 117,934 | 144,586 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Assets | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Assets | 0 | 0 |
Net Amount, Assets | 117,934 | 144,586 |
Gross Amounts of Recognized Derivatives, Liabilities | 93,113 | 115,362 |
Gross Amounts of Recognized Derivatives, Liabilities | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition, Liabilities | 93,113 | 115,362 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Liabilities | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Liabilities | 11,422 | 17,359 |
Net Amount, Liabilities | 81,691 | 98,003 |
Foreign Currency Forward Contracts [Member] | ||
Derivative [Line Items] | ||
Gross Amounts of Recognized, Assets | 355 | 60 |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition, Assets | 355 | 60 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Assets | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Assets | 0 | 0 |
Net Amount, Assets | 355 | 60 |
Swaps [Member] | ||
Derivative [Line Items] | ||
Gross Amounts of Recognized, Assets | 22 | 98 |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 0 | 13 |
Net Amounts Presented in the Statements of Financial Condition, Assets | 22 | 85 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Assets | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Assets | 0 | 0 |
Net Amount, Assets | 22 | 85 |
Gross Amounts of Recognized Derivatives, Liabilities | 13 | |
Gross Amounts of Recognized Derivatives, Liabilities | 13 | |
Net Amounts Presented in the Statements of Financial Condition, Liabilities | 0 | |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Liabilities | 0 | |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Liabilities | 0 | |
Net Amount, Liabilities | 0 | |
Futures [Member] | ||
Derivative [Line Items] | ||
Gross Amounts of Recognized, Assets | 69,584 | 24,680 |
Gross Amounts Offset in the Statements of Financial Condition, Assets | 66,284 | 24,436 |
Net Amounts Presented in the Statements of Financial Condition, Assets | 3,300 | 244 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Assets | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Assets | 0 | 0 |
Net Amount, Assets | 3,300 | 244 |
Gross Amounts of Recognized Derivatives, Liabilities | 70,021 | 24,436 |
Gross Amounts of Recognized Derivatives, Liabilities | 70,021 | 24,436 |
Net Amounts Presented in the Statements of Financial Condition, Liabilities | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Liabilities | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Liabilities | 0 | 0 |
Net Amount, Liabilities | 0 | $ 0 |
Amount offset against liabilities to maintain margin in excess of the net liability | $ 64,700 |
Collateralized Transactions - F
Collateralized Transactions - Financial Instruments at Fair Value Received as Collateral that were Permitted to be Delivered or Repledged (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Collateralized Agreements [Abstract] | ||
Collateral permitted to be delivered or repledged | $ 1,816,698 | $ 1,586,700 |
Collateral that was delivered or repledged | 1,704,373 | 1,485,267 |
Collateral permitted to be further repledged by the receiving counterparty | $ 345,956 | $ 147,696 |
Collateralized Transactions - A
Collateralized Transactions - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2015 | |
Collateralized Agreements [Abstract] | |
Repurchase agreements and other secured financings, maturity (years) | 1 year |
Collateralized Transactions -68
Collateralized Transactions - Financial Instruments Owned and Pledged to Counterparties that Do Not Have Right to Sell or Repledge (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Repurchase Agreement Counterparty [Line Items] | ||
Financial instruments owned, at fair value, pledged to counterparties that have the right to deliver or repledge | $ 1,816,698 | $ 1,586,700 |
Right to deliver or repledge [Member] | ||
Repurchase Agreement Counterparty [Line Items] | ||
Financial instruments owned, at fair value, pledged to counterparties that have the right to deliver or repledge | 429,665 | 536,124 |
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 | $ 1,057,213 | $ 979,652 |
Collateralized Transactions -69
Collateralized Transactions - Agreements to Repurchase (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities Loaned | $ 741,732 | $ 707,744 |
Financial instruments sold under agreements to repurchase | 995,667 | 933,576 |
Equities [Member] | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities Loaned | 726,413 | 696,162 |
Financial instruments sold under agreements to repurchase | 879,472 | 832,614 |
U.S. Government Obligations [Member] | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities Loaned | 0 | 0 |
Financial instruments sold under agreements to repurchase | 85,667 | 73,576 |
Corporate Debt [Member] | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities Loaned | 15,319 | 11,582 |
Financial instruments sold under agreements to repurchase | $ 30,528 | $ 27,386 |
Collateralized Transactions - G
Collateralized Transactions - Gross Amounts Offset (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets, Securities Borrowed | ||
Gross Amounts Recognized | $ 1,871,312 | $ 1,632,062 |
Gross Amounts Offset in the Statements of Financial Condition | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition | 1,871,312 | 1,632,062 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral | 1,806,445 | 1,570,194 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting | 15,467 | 15,782 |
Net Amount | 49,400 | 46,086 |
Assets, Receivable from Brokers, Dealers and Clearing Organizations | ||
Gross Amounts Recognized | 21,845 | 21,545 |
Gross Amounts Offset in the Statements of Financial Condition | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition | 21,845 | 21,545 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral | 21,845 | 21,425 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting | 0 | 0 |
Net Amount | 0 | 120 |
Total Assets | ||
Gross Amounts of Recognized, Total Assets | 1,893,157 | 1,653,607 |
Gross Amounts Offset in the Statements of Financial Condition, Total Assets | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition, Total Assets | 1,893,157 | 1,653,607 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Total Assets | 1,828,290 | 1,591,619 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Total Assets | 15,467 | 15,782 |
Net Amount, Total Assets | 49,400 | 46,206 |
Liabilities, Securities Loaned | ||
Gross Amounts Recognized | 741,732 | 707,744 |
Gross Amounts Offset in the Statements of Financial Condition | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition | 741,732 | 707,744 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral | 707,522 | 682,389 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting | 15,467 | 15,782 |
Net Amount | 18,743 | 9,573 |
Liabilities, Financial Instruments Sold Under Agreements to Repurchase | ||
Gross Amounts Recognized | 995,667 | 933,576 |
Gross Amounts Offset in the Statements of Financial Condition | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition | 995,667 | 933,576 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral | 995,574 | 933,560 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting | 0 | 0 |
Net Amount | 93 | 16 |
Total Liabilities | ||
Gross Amounts Recognized, Total Liabilities | 1,737,399 | 1,641,320 |
Gross Amounts Offset in the Statements of Financial Condition, Total Liabilities | 0 | 0 |
Net Amounts Presented in the Statements of Financial Condition, Total Liabilities | 1,737,399 | 1,641,320 |
Gross Amounts Not Offset in the Statement of Financial Condition, Available Collateral, Total Liabilities | 1,703,096 | 1,615,949 |
Gross Amounts Not Offset in the Statement of Financial Condition, Counterparty Netting, Total Liabilities | 15,467 | 15,782 |
Net Amount, Liabilities | $ 18,836 | $ 9,589 |
Collateralized Transactions - M
Collateralized Transactions - Maturities Schedule (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | $ 1,737,399 | $ 1,641,320 |
Overnight [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 827,399 | 781,320 |
0 - 30 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 535,000 | 410,000 |
31 - 60 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 225,000 | 325,000 |
61 - 90 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 150,000 | 125,000 |
Securities Loaned [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 741,732 | 707,744 |
Securities Loaned [Member] | Overnight [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 741,732 | 707,744 |
Securities Loaned [Member] | 0 - 30 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 0 | 0 |
Securities Loaned [Member] | 31 - 60 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 0 | 0 |
Securities Loaned [Member] | 61 - 90 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 0 | 0 |
Financial Instruments Sold Under Agreements to Repurchase [Member} | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 995,667 | 933,576 |
Financial Instruments Sold Under Agreements to Repurchase [Member} | Overnight [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 85,667 | 73,576 |
Financial Instruments Sold Under Agreements to Repurchase [Member} | 0 - 30 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 535,000 | 410,000 |
Financial Instruments Sold Under Agreements to Repurchase [Member} | 31 - 60 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | 225,000 | 325,000 |
Financial Instruments Sold Under Agreements to Repurchase [Member} | 61 - 90 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets sold under agreements to repurchase | $ 150,000 | $ 125,000 |
Receivable from and Payable t72
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 ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Receivable/Payable: | ||
Clearing organizations and other | $ 476,488 | $ 1,073,480 |
Financial instruments purchased under agreement to resell | 21,845 | 21,545 |
Securities failed to deliver | 191,958 | 93,808 |
Total Receivable | 690,291 | 1,188,833 |
Clearing organizations and other | 461,000 | 350,627 |
Securities failed to receive | 68,748 | 325,462 |
Total Payable | $ 529,748 | $ 676,089 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Investments [Abstract] | ||
Investments accounted for under the equity method | $ 92,148 | $ 86,328 |
Investments held at fair value | 4,655 | 4,435 |
Common stock or equivalent of companies representing less than 20% equity ownership held at adjusted cost | 8,948 | 8,949 |
Total Strategic investments | 105,751 | 99,712 |
Other investments | 1,597 | 1,014 |
Total Investments | $ 107,348 | $ 100,726 |
Investments - Additional Inform
Investments - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Schedule of Equity Method Investments [Line Items] | |||||
Proceeds and distributions from investments | $ 2,517 | $ 48,627 | |||
Investment income and other, net | $ 4,358 | $ 2,866 | 391,781 | 15,021 | |
Investment Income and Other, Net [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Income from equity method investments | $ 2,300 | $ 2,100 | $ 4,500 | $ 15,200 | |
BATS [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage of equity in common stock of private companies cover under strategic investment | 16.70% | 16.70% | |||
Percentage of voting interest held | 19.90% | 19.90% | |||
BATS and DE [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Proceeds and distributions from investments | $ 42,200 | ||||
Merger related transaction costs | 6,600 | ||||
BATS and DE [Member] | Investment Income and Other, Net [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Investment income and other, net | 9,600 | ||||
DE [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Investment income and other, net | $ 16,200 |
Goodwill and Intangible Asset75
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Jun. 30, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill and intangible assets impairment | $ 0 | ||
Weighted average useful life | 4 years | 5 years | |
Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization period | 1 year | ||
Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization period | 8 years |
Goodwill and Intangible Asset76
Goodwill and Intangible Assets - Summary of Goodwill (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Goodwill [Line Items] | ||
Goodwill | $ 17,311 | $ 17,311 |
Operating Segments [Member] | Market Making [Member] | ||
Goodwill [Line Items] | ||
Goodwill | 16,404 | 16,404 |
Operating Segments [Member] | Global Execution Services [Member] | ||
Goodwill [Line Items] | ||
Goodwill | $ 907 | $ 907 |
Goodwill and Intangible Asset77
Goodwill and Intangible Assets - Finite-Lived Intangible Assets, Net of Accumulated Amortization (Detail) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | $ 127,487 | $ 135,283 |
KCG Hotspot [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Held for sale, intangibles | $ 34,696 | |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 2 years | 3 years |
Technology [Member] | KCG Hotspot [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Held for sale, intangibles | $ 13,100 | |
Trading Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 6 years | 7 years |
Indefinite-lived intangible assets | $ 6,800 | $ 6,800 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 7 years | 8 years |
Customer Relationships [Member] | KCG Hotspot [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Held for sale, intangibles | $ 19,000 | |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 8 years | 9 years |
Trade Names [Member] | KCG Hotspot [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Held for sale, intangibles | $ 2,600 | |
Operating Segments [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 200,773 | 192,272 |
Accumulated amortization | (73,286) | (56,989) |
Operating Segments [Member] | Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 124,305 | 115,804 |
Accumulated amortization | (49,754) | (36,562) |
Net carrying amount | 74,551 | 79,242 |
Operating Segments [Member] | Trading Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 62,468 | 62,468 |
Accumulated amortization | (20,443) | (18,110) |
Net carrying amount | 42,025 | 44,358 |
Operating Segments [Member] | Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 13,000 | 13,000 |
Accumulated amortization | (2,889) | (2,167) |
Net carrying amount | 10,111 | 10,833 |
Operating Segments [Member] | Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 1,000 | 1,000 |
Accumulated amortization | (200) | (150) |
Net carrying amount | 800 | 850 |
Operating Segments [Member] | Market Making [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | 91,976 | 94,900 |
Operating Segments [Member] | Market Making [Member] | Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | 49,951 | 50,542 |
Operating Segments [Member] | Market Making [Member] | Trading Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | 42,025 | 44,358 |
Operating Segments [Member] | Electronic Execution Services [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | 26,511 | 29,883 |
Operating Segments [Member] | Electronic Execution Services [Member] | Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | 15,600 | 18,200 |
Operating Segments [Member] | Electronic Execution Services [Member] | Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | 10,111 | 10,833 |
Operating Segments [Member] | Electronic Execution Services [Member] | Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | 800 | 850 |
Operating Segments [Member] | Corporate and Other [Member] | Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying amount | $ 9,000 | $ 10,500 |
Goodwill and Intangible Asset78
Goodwill and Intangible Assets - Summary of Amortization Expense Relating to Intangible Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 8,317 | $ 8,732 | $ 17,566 | $ 17,226 |
Goodwill and Intangible Asset79
Goodwill and Intangible Assets - Summary of Estimated Amortization Expense for Future Years (Detail) $ in Thousands | Jun. 30, 2015USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
For the six months ended December 31, 2015 | $ 16,594 |
For the year ended December 31, 2016 | 32,856 |
For the year ended December 31, 2017 | 30,075 |
For the year ended December 31, 2018 | 16,763 |
For the year ended December 31, 2019 | $ 6,211 |
Debt - Summary of Long-Term Deb
Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 10, 2015 | Dec. 31, 2014 | Jun. 05, 2013 |
Debt Disclosure [Abstract] | ||||
Cash Convertible Senior Subordinated Notes, Carrying Amount | $ 0 | $ 117,259 | ||
8.25% Senior Secured Notes, Carrying Amount | 0 | 305,000 | ||
6.875% Senior Secured Notes, Carrying Amount | 495,113 | 0 | ||
Total Debt, Carrying Amount | 495,113 | 422,259 | ||
Cash Convertible Senior Subordinated Notes, Fair Value | 0 | 116,819 | ||
8.25% Senior Secured Notes, Fair Value | 0 | 309,194 | ||
6.875% Senior Secured Notes, Fair Value | 480,259 | 0 | ||
Total Debt, Fair Value | $ 480,259 | $ 426,013 | ||
Senior Secured Notes [Member] | 8.25% Senior Secured Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 8.25% | 8.25% | 8.25% | |
Senior Secured Notes [Member] | 6.875% Senior Secured Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 6.875% | 6.875% |
Debt - Debt Redemption (Details
Debt - Debt Redemption (Details) - Senior Secured Notes [Member] - 6.875% Senior Secured Notes [Member] | Mar. 10, 2015 | Jun. 30, 2015 |
Debt Instrument [Line Items] | ||
Percentage | 106.875% | |
2017 [Member] | ||
Debt Instrument [Line Items] | ||
Percentage | 103.438% | |
2018 [Member] | ||
Debt Instrument [Line Items] | ||
Percentage | 101.719% | |
2019 and thereafter [Member] | ||
Debt Instrument [Line Items] | ||
Percentage | 100.00% |
Debt - Recorded Expenses with R
Debt - Recorded Expenses with Respect to Long-term Debt (Details) - USD ($) | Apr. 13, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Apr. 30, 2015 | Mar. 13, 2015 | Jun. 05, 2013 |
Line of Credit Facility [Line Items] | ||||||||
Interest expense | $ 26,226,000 | $ 7,349,000 | $ 34,385,000 | $ 16,765,000 | ||||
Amortization of debt issuance cost | 9,428,000 | 2,791,000 | 10,362,000 | 11,557,000 | ||||
Commitment fee | 403,000 | 394,000 | 797,000 | 788,000 | ||||
Total | 36,057,000 | 10,534,000 | 45,544,000 | 29,110,000 | ||||
Writedown of Debt Issuance Costs [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Amortization of debt issuance cost | 2,000,000 | 9,600,000 | ||||||
Other Expenses [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Amortization of debt issuance cost | 800,000 | 2,000,000 | ||||||
Senior Secured Notes [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Writedown of capitalized debt costs | 2,000,000 | 9,600,000 | ||||||
Principal payments | $ 50,000,000 | $ 235,000,000 | ||||||
Senior Secured Notes [Member] | 8.25% Senior Secured Notes [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Payment of make whole premium - 8.25% Senior Secured Notes | 16,500,000 | 16,500,000 | ||||||
Amount of debt retired | $ 305,000,000 | $ 305,000,000 | $ 305,000,000 | |||||
Writedown of capitalized debt costs | $ 8,500,000 | $ 8,500,000 | $ 8,500,000 |
Debt - Additional Information (
Debt - Additional Information (Details) | Jun. 05, 2015USD ($)debt_classborrowing_base | Apr. 13, 2015USD ($) | Mar. 16, 2015USD ($) | Mar. 13, 2015USD ($) | Mar. 10, 2015USD ($) | Jul. 01, 2013USD ($) | Jun. 05, 2013USD ($) | Mar. 31, 2010USD ($) | Jun. 15, 2015USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Apr. 13, 2015USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2013USD ($) | Apr. 30, 2015USD ($) | Dec. 31, 2014 |
Line of Credit Facility [Line Items] | |||||||||||||||||
Issue of cash convertible senior subordinated notes | $ 375,000,000 | ||||||||||||||||
Debt maturity date | Mar. 15, 2015 | ||||||||||||||||
Payment of convertible notes | $ 119,300,000 | $ 117,259,000 | $ 0 | ||||||||||||||
Payment of convertible notes, principal amount | 117,300,000 | ||||||||||||||||
Payment of convertible notes, interest portion | $ 2,100,000 | ||||||||||||||||
Notes bear interest rate per year | 3.50% | ||||||||||||||||
Date of commencing of notes | Sep. 15, 2010 | ||||||||||||||||
Debt make-whole premium | $ 25,006,000 | $ 1,995,000 | 25,006,000 | 9,552,000 | |||||||||||||
Proceeds from issuance of debt, net | 494,810,000 | 0 | |||||||||||||||
Amortization of debt issuance cost | $ 9,428,000 | 2,791,000 | 10,362,000 | 11,557,000 | |||||||||||||
First Lien Credit Facility [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Writedown of capitalized debt costs | 9,600,000 | ||||||||||||||||
Term credit agreement | $ 535,000,000 | ||||||||||||||||
Principal payments | 235,000,000 | $ 300,000,000 | |||||||||||||||
Cash held in collateral account | $ 117,300,000 | ||||||||||||||||
Revolving Credit Facility [Member] | Jefferies Finance LLC and Goldman Sachs Bank USA [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Revolving credit facility amount | 50,000,000 | ||||||||||||||||
OCTEG-KCA [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Revolving credit facility amount | 450,000,000 | ||||||||||||||||
OCTEG-KCA [Member] | Revolving Credit Facility [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Term credit agreement | $ 355,000,000 | ||||||||||||||||
Revolving credit facility amount | $ 500,000,000 | ||||||||||||||||
Number of debt instruments | debt_class | 2 | ||||||||||||||||
Increase in line of credit facility, maximum borrowing capacity | $ 145,000,000 | $ 300,000,000 | |||||||||||||||
Commitment fee percentage of average daily amount unused portion of revolving credit agreement | 0.40% | 0.35% | |||||||||||||||
Debt issuance costs incurred | $ 1,400,000 | ||||||||||||||||
OCTEG-KCA [Member] | Revolving Credit Facility [Member] | Borrowing Base A [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Percentage points added to interest rate base | 1.50% | 1.75% | |||||||||||||||
OCTEG-KCA [Member] | Revolving Credit Facility [Member] | Borrowing Base B Loan [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Revolving credit facility amount | $ 150,000,000 | ||||||||||||||||
Percentage points added to interest rate base | 2.50% | 2.25% | |||||||||||||||
OCTEG-KCA [Member] | Swingline Facilty [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Revolving credit facility amount | $ 50,000,000 | ||||||||||||||||
Number of borrowing base | borrowing_base | 2 | ||||||||||||||||
OCTEG-KCA [Member] | Swingline Facilty [Member] | Borrowing Base A and Borrowing Base B [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Revolving credit facility amount | $ 115,000,000 | ||||||||||||||||
Senior Secured Notes [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Writedown of capitalized debt costs | 2,000,000 | 9,600,000 | |||||||||||||||
Principal payments | $ 50,000,000 | $ 235,000,000 | |||||||||||||||
Senior Secured Notes [Member] | 8.25% Senior Secured Notes [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Interest rate | 8.25% | 8.25% | 8.25% | 8.25% | |||||||||||||
Aggregate principal amount | $ 305,000,000 | $ 305,000,000 | $ 305,000,000 | ||||||||||||||
Escrow agent fees and expenses | $ 3,000,000 | ||||||||||||||||
Redemption notice, period | 30 days | ||||||||||||||||
Funds held in escrow | $ 330,200,000 | $ 330,200,000 | |||||||||||||||
Accrued interest for the period | $ 8,200,000 | ||||||||||||||||
Make-whole premium percentage | 4.125% | ||||||||||||||||
Debt make-whole premium | 16,500,000 | $ 16,500,000 | |||||||||||||||
Other miscellaneous charges | $ 400,000 | ||||||||||||||||
Writedown of capitalized debt costs | $ 8,500,000 | $ 8,500,000 | $ 8,500,000 | ||||||||||||||
Senior Secured Notes [Member] | 8.25% Senior Secured Notes [Member] | Prior to June 15, 2015 [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Redemption price percentage | 100.00% | ||||||||||||||||
Senior Secured Notes [Member] | 6.875% Senior Secured Notes [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Interest rate | 6.875% | 6.875% | 6.875% | ||||||||||||||
Redemption price percentage | 106.875% | ||||||||||||||||
Issuance of debt, percentage | 98.962% | ||||||||||||||||
Proceeds from issuance of debt, net | $ 494,800,000 | ||||||||||||||||
Yield to maturity, percentage | 7.083% | 7.588% | 7.588% | ||||||||||||||
Percentage in voting equity interests of controlled foreign subsidiaries | 66.00% | ||||||||||||||||
Redemption period | 12 months | ||||||||||||||||
Maximum redemption percentage of principal amount | 40.00% | ||||||||||||||||
Senior Secured Notes [Member] | 6.875% Senior Secured Notes [Member] | Other Assets [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Deferred debt costs | $ 12,600,000 | $ 12,600,000 | |||||||||||||||
Senior Secured Notes [Member] | 6.875% Senior Secured Notes [Member] | Minimum [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Redemption notice, period | 30 days | ||||||||||||||||
Senior Secured Notes [Member] | 6.875% Senior Secured Notes [Member] | Maximum [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Redemption notice, period | 60 days | ||||||||||||||||
Senior Secured Notes [Member] | 6.875% Senior Secured Notes [Member] | Jefferies LLC [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Aggregate principal amount | $ 500,000,000 | ||||||||||||||||
Senior Secured Notes [Member] | 6.875% Senior Secured Notes [Member] | Prior to March 15, 2017 [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Redemption price percentage | 100.00% | ||||||||||||||||
Senior Secured Notes [Member] | 6.875% Indenture [Member] | |||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||
Interest rate | 6.875% |
Related Parties - Additional In
Related Parties - Additional Information (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2015USD ($) | Jun. 30, 2015USD ($)beneficial_owner | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)beneficial_owner | Jun. 30, 2014USD ($) | Jun. 02, 2015$ / shares | May. 04, 2015$ / shares | |
Related Party Transaction [Line Items] | |||||||
Professional fees | $ 5,694 | $ 7,337 | $ 16,875 | $ 12,739 | |||
Tender Offer [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Professional fees | 2,100 | 2,100 | |||||
KCG Hotspot [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Gain from sale of business | 373,800 | ||||||
Proceeds related to tax sharing arrangement | $ 70,000 | $ 70,000 | |||||
Sale period | 3 years | 3 years | |||||
Additional consideration, fair value | $ 62,800 | 62,800 | |||||
Professional fees | 6,700 | ||||||
KCG Hotspot [Member] | Other Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Additional consideration, fair value | 62,800 | 62,800 | |||||
Investment Income and Other, Net [Member] | KCG Hotspot [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Gain from sale of business | 385,000 | ||||||
Common Class A [Member] | Tender Offer [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Shares repurchased, price per share (in usd per share) | $ / shares | $ 14 | ||||||
Minimum [Member] | Common Class A [Member] | Tender Offer [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Shares repurchased, price per share (in usd per share) | $ / shares | $ 13.50 | ||||||
Related Parties [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Financing and advisory fees | 16,800 | ||||||
Professional fees | 0 | $ 0 | 5,507 | $ 0 | |||
Related Parties [Member] | Other Assets [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Deferred debt costs | $ 11,300 | $ 11,300 | |||||
Related Parties [Member] | Minimum [Member] | Common Class A [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Number of beneficial owners | beneficial_owner | 1 | 1 | |||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 10.00% | 10.00% |
Related Parties - Summary of Ba
Related Parties - Summary of Balances and Transactions with Related Parties or Their Affiliates (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Revenues | |||||
Commissions and fees | $ 87,370 | $ 104,776 | $ 187,331 | $ 217,033 | |
Trading revenues, net | 170,750 | 206,780 | 379,545 | 465,077 | |
Expenses | |||||
Execution and clearance fees | 62,598 | 73,242 | 131,071 | 148,743 | |
Communications and data processing | 34,240 | 38,279 | 68,004 | 75,075 | |
Payment for order flow | 14,935 | 18,076 | 30,156 | 40,108 | |
Collateralized financing interest | 8,859 | 6,395 | 17,315 | 12,557 | |
Professional fees | 5,694 | 7,337 | 16,875 | 12,739 | |
Other expense | 10,652 | 10,767 | 18,460 | 19,410 | |
Assets | |||||
Securities borrowed | 1,871,312 | 1,871,312 | $ 1,632,062 | ||
Receivable from brokers, dealers and clearing organizations | 690,291 | 690,291 | 1,188,833 | ||
Other assets | 234,459 | 234,459 | 137,645 | ||
Liabilities | |||||
Securities loaned | 741,732 | 741,732 | 707,744 | ||
Payable to brokers, dealers and clearing organizations | 529,748 | 529,748 | 676,089 | ||
Related Parties [Member] | |||||
Revenues | |||||
Commissions and fees | 2,636 | 2,740 | 6,128 | 7,886 | |
Trading revenues, net | 1,804 | 541 | 3,905 | 1,355 | |
Interest, net | 131 | 130 | 357 | 318 | |
Total revenues from related parties | 4,571 | 3,411 | 10,390 | 9,559 | |
Expenses | |||||
Execution and clearance fees | (4,180) | (2,537) | (8,808) | (6,548) | |
Communications and data processing | 1,299 | 0 | 2,409 | 0 | |
Payment for order flow | 1,073 | 0 | 2,253 | 0 | |
Collateralized financing interest | 134 | 120 | 247 | 279 | |
Professional fees | 0 | 0 | 5,507 | 0 | |
Other expense | 656 | 434 | 1,277 | 834 | |
Total expenses incurred with respect to related parties | (1,018) | $ (1,983) | 2,885 | $ (5,435) | |
Assets | |||||
Securities borrowed | 45,466 | 45,466 | 26,110 | ||
Receivable from brokers, dealers and clearing organizations | 107,946 | 107,946 | 20,075 | ||
Other assets | 67,167 | 67,167 | 0 | ||
Liabilities | |||||
Securities loaned | 1,267 | 1,267 | 7,376 | ||
Payable to brokers, dealers and clearing organizations | 40,128 | 40,128 | 8,509 | ||
Accrued expenses and other liabilities | $ 4,626 | $ 4,626 | $ 5,667 |
Related Parties - Schedule of S
Related Parties - Schedule of Shares Repurchased (Details) - 6 months ended Jun. 30, 2015 - USD ($) shares in Thousands, $ in Thousands | Total |
Related Party Transaction [Line Items] | |
Total Purchase Price | $ 10,653 |
Director/Stockholder [Member] | Daniel Tierney [Member] | |
Related Party Transaction [Line Items] | |
Acquisition of beneficial ownership of securities, period | 60 days |
Tender Offer [Member] | Common Class A [Member] | Director/Stockholder [Member] | Stephen Schuler [Member] | |
Related Party Transaction [Line Items] | |
Number of Shares Purchased | 1,708 |
Total Purchase Price | $ 23,918 |
Tender Offer [Member] | Common Class A [Member] | Director/Stockholder [Member] | Daniel Tierney [Member] | |
Related Party Transaction [Line Items] | |
Number of Shares Purchased | 1,798 |
Total Purchase Price | $ 25,176 |
Tender Offer [Member] | Common Class A [Member] | Stockholder [Member] | GA-GTCO Interholdco, LLC [Member] | |
Related Party Transaction [Line Items] | |
Number of Shares Purchased | 8,285 |
Total Purchase Price | $ 115,989 |
Tender Offer [Member] | Common Class A [Member] | Stockholder [Member] | Jefferies LLC [Member] | |
Related Party Transaction [Line Items] | |
Number of Shares Purchased | 6,533 |
Total Purchase Price | $ 91,458 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options granted (in shares) | 0 | 0 | |
Total intrinsic value of options exercised | $ 600 | ||
Cash received from options exercised | 1,046 | $ 0 | |
Number of stock options exercised (in shares) | 0 | ||
Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unamortized compensation related to restricted awards outstanding | $ 21,300 | ||
Cost of unvested awards expected to be recognized over a weighted average life, years | 1 year 29 days | ||
Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Stock Options [Member] | Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 5 years | ||
Stock Options [Member] | Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 10 years | ||
SARs [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
SARs granted (in shares) | 0 | 0 | |
Number of SARs exercised during period (in shares) | 0 | ||
Unamortized compensation costs | $ 1,400 | ||
Award expiration period | 4 months 24 days | ||
Stock Options and SARs [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total intrinsic value of options exercised | $ 1,418 | ||
Cash received from options exercised | $ 1,000 | ||
Number of stock options exercised (in shares) | 118,000 | ||
Incentive Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Deferred compensation payable | $ 2,900 | $ 2,900 | |
KCG Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized for grant (in shares) | 28,700,000 | ||
Number of shares available for grant | 15,400,000 |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Expense Relating to Restricted Awards (Detail) - Restricted Stock Units [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock award compensation expense | $ 40,041 | $ 14,937 | $ 54,296 | $ 31,175 |
Income tax benefit | 15,216 | $ 5,676 | 20,632 | $ 11,846 |
Accelerated stock compensation expense | 28,800 | |||
Employee Compensation and Benefits [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Accelerated stock compensation expense | $ 28,800 | $ 28,800 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Restricted Awards Activity (Detail) - 6 months ended Jun. 30, 2015 - Restricted Stock Units [Member] - $ / shares shares in Thousands | Total |
Number of Units | |
Beginning Balance (in shares) | 9,147 |
Granted (in shares) | 2,439 |
Vested (in shares) | (2,209) |
Forfeited (in shares) | (595) |
Ending Balance (in shares) | 8,782 |
Weighted- Average Grant date Fair Value | |
Beginning Balance (in dollars per share) | $ 10.77 |
Granted (in dollars per share) | 12.25 |
Vested (in dollars per share) | 11.07 |
Forfeited (in dollars per share) | 11.36 |
Ending Balance (in dollars per share) | $ 11.06 |
Stock-Based Compensation - Co90
Stock-Based Compensation - Compensation Expense Relating to Stock Options (Detail) - Stock Options and SARs [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Sep. 30, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock option and SAR compensation expense | $ 928 | $ 958 | $ 1,941 | $ 1,920 |
Income tax benefit | $ 353 | $ 364 | $ 738 | $ 730 |
Stock-Based Compensation - Su91
Stock-Based Compensation - Summary of Stock Option and SAR Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Number of Stock Awards | ||
Exercised (in shares) | 0 | |
Weighted- Average Exercise Price | ||
Aggregate Intrinsic Value of Awards, Exercisable | $ 600 | |
Stock Options and SARs [Member] | ||
Number of Stock Awards | ||
Beginning Balance (in shares) | 4,691,000 | |
Granted at market value (in shares) | 0 | |
Exercised (in shares) | (118,000) | |
Forfeited or expired (in shares) | (62,000) | |
Ending Balance (in shares) | 4,511,000 | |
Exercisable (in shares) | 1,685,000 | |
Available for future grants (in shares) | 15,370,000 | |
Weighted- Average Exercise Price | ||
Beginning Balance (in dollars per share) | $ 17.41 | |
Granted at market value (in dollars per share) | 0 | |
Exercised (in dollars per share) | 8.24 | |
Forfeited or expired (in dollars per share) | 29.12 | |
Ending Balance (in dollars per share) | 17.49 | |
Exercisable (in dollars per share) | $ 21.11 | |
Aggregate Intrinsic Value of Awards, Outstanding | $ 4,524 | |
Aggregate Intrinsic Value of Awards, Exercisable | $ 1,418 | |
Weighted-Average Remaining Life, Outstanding | 2 years 10 months 27 days | |
Weighted-Average Remaining Life, Exercisable | 2 years 9 months 14 days | |
SARs [Member] | ||
Number of Stock Awards | ||
Beginning Balance (in shares) | 1,700,000 | |
Ending Balance (in shares) | 1,700,000 |
Stock-Based Compensation - Ince
Stock-Based Compensation - Incentive Units (Details) - Incentive Units [Member] - Common Class A [Member] shares in Thousands | 6 Months Ended |
Jun. 30, 2015shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Beginning balance (in shares) | 38 |
Issued (in shares) | 0 |
Vested (in shares) | 0 |
Exercised (in shares) | (3) |
Canceled (in shares) | 0 |
Ending balance (in shares) | 36 |
Stock-Based Compensation - Co93
Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Incentive Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 33 | $ (14) | $ 185 | $ (188) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Income Tax Contingency [Line Items] | ||
NOLs, valuation allowance | $ 0 | |
General business carry forward | 4,400,000 | |
Unrecognized tax benefits that would impact effective tax rate if recognized | 2,400,000 | $ 2,200,000 |
U.S. Federal [Member] | ||
Income Tax Contingency [Line Items] | ||
Operating loss carryforwards | 133,500,000 | |
Deferred tax asset not subject to expiration | 46,700,000 | |
Deferred tax asset, valuation allowance, not subject to expiration | 6,800,000 | |
Deferred income tax asset | 19,500,000 | |
U.S. Federal [Member] | Knight [Member] | ||
Income Tax Contingency [Line Items] | ||
Operating loss carryforwards | 28,500,000 | |
State and Local Jurisdiction [Member] | ||
Income Tax Contingency [Line Items] | ||
Operating loss carryforwards | 1,760,000,000 | |
Deferred tax asset not subject to expiration | 50,800,000 | |
Deferred tax asset, valuation allowance, not subject to expiration | 29,100,000 | |
AMT Carryforward | 6,800,000 | |
Foreign Tax Authority [Member] | ||
Income Tax Contingency [Line Items] | ||
Operating loss carryforwards | 86,400,000 | |
Deferred income tax asset | 19,500,000 | |
Foreign Tax Authority [Member] | Knight [Member] | ||
Income Tax Contingency [Line Items] | ||
Operating loss carryforwards | $ 65,700,000 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Detail) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
U.S. federal statutory income tax rate | 35.00% | 35.00% | 35.00% | 35.00% |
U.S. state and local income taxes, net of U.S. federal income tax effect | 3.00% | 4.70% | 2.80% | 2.60% |
Recognition of state deferred tax assets and net operating losses, net of U.S. federal income tax effect | 28.40% | 0.00% | (4.70%) | 0.00% |
Nondeductible expenses | 0.20% | 1.50% | 0.00% | 0.60% |
Foreign Taxes | 0.00% | (1.10%) | 0.00% | (0.10%) |
Other, net | (0.20%) | (2.10%) | 0.90% | (0.20%) |
Actual income tax rate(2) | 66.40% | 38.00% | 34.00% | 37.90% |
Accumulated Other Comprehensi96
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | $ 1,698 | $ 1,465 | $ 2,133 | $ 1,401 |
Other comprehensive income (loss) | (484) | 195 | (919) | 259 |
Ending Balance | 1,214 | 1,660 | 1,214 | 1,660 |
Unrealized Gains (Losses) on Available-for-Sale Securities [Member] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | 540 | (101) | 352 | 36 |
Other comprehensive income (loss) | (51) | (96) | 137 | (233) |
Ending Balance | 489 | (197) | 489 | (197) |
Foreign Currency Translation Adjustments [Member] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | 1,158 | 1,566 | 1,781 | 1,365 |
Other comprehensive income (loss) | (433) | 291 | (1,056) | 492 |
Ending Balance | $ 725 | $ 1,857 | $ 725 | $ 1,857 |
Writedowns and Other Charges -
Writedowns and Other Charges - Additional Information (Detail) - USD ($) $ in Thousands | Apr. 13, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Jun. 05, 2013 |
Writedown Of Asset And Lease Loss Accrual [Line Items] | ||||||||
Net lease loss accrual | $ 6,459 | $ 2,207 | ||||||
Excess Real Estate Capacity [Member] | ||||||||
Writedown Of Asset And Lease Loss Accrual [Line Items] | ||||||||
Net lease loss accrual | $ 100 | $ 1,900 | 2,200 | |||||
Leasehold Improvements and Fixed Assets [Member] | ||||||||
Writedown Of Asset And Lease Loss Accrual [Line Items] | ||||||||
Accelerated amortization | $ 6,300 | |||||||
Senior Secured Notes [Member] | ||||||||
Writedown Of Asset And Lease Loss Accrual [Line Items] | ||||||||
Writedown of capitalized debt costs | 2,000 | 9,600 | ||||||
Early principal payments | $ 50,000 | $ 235,000 | ||||||
Senior Secured Notes [Member] | 8.25% Senior Secured Notes [Member] | ||||||||
Writedown Of Asset And Lease Loss Accrual [Line Items] | ||||||||
Writedown of capitalized debt costs | $ 8,500 | 8,500 | 8,500 | |||||
Payment of make whole premium - 8.25% Senior Secured Notes | $ 16,500 | $ 16,500 | ||||||
Interest rate | 8.25% | 8.25% | 8.25% | 8.25% |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Options excluded (in shares) | 21 | 28.3 | 18.3 | 28.3 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Numerators and Denominators of Basic and Diluted (Loss) Earnings Per Computations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator / net loss | ||||
(Loss) Income from continuing operations and shares used in basic calculations | $ (19,162) | $ 8,987 | $ 230,139 | $ 45,904 |
(Loss) Income from continuing operations and shares used in diluted calculations | $ (19,162) | $ 8,987 | $ 230,139 | $ 45,904 |
Denominator / shares | ||||
(Loss) Income from continuing operations and shares used in basic calculations (in shares) | 108,588 | 114,859 | 110,890 | 115,282 |
(Loss) Income from continuing operations and shares used in diluted calculations (in shares) | 108,588 | 117,601 | 113,809 | 118,170 |
Basic (loss) earnings per share from continuing operations (in dollars per share) | $ (0.18) | $ 0.08 | $ 2.08 | $ 0.40 |
Diluted (loss) earnings per share from continuing operations (in dollars per share) | $ (0.18) | $ 0.08 | $ 2.02 | $ 0.39 |
Restricted Awards [Member] | ||||
Denominator / shares | ||||
Effect of dilutive stock based awards (in shares) | 0 | 2,653 | 2,192 | 2,796 |
Stock Options and SARs [Member] | ||||
Denominator / shares | ||||
Effect of dilutive stock based awards (in shares) | 0 | 89 | 340 | 92 |
Warrants [Member] | ||||
Denominator / shares | ||||
Effect of dilutive stock based awards (in shares) | 0 | 0 | 387 | 0 |
Significant Clients - Additiona
Significant Clients - Additional Information (Detail) - Client | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Risks and Uncertainties [Abstract] | ||||
Number of significant clients | 0 | 0 | 0 | 0 |
Percentage of dollar value traded (more than) | 10.00% | 10.00% | 10.00% | 10.00% |
Commitments and Contingent L101
Commitments and Contingent Liabilities - Additional Information (Detail) | Mar. 02, 2015USD ($) | Aug. 01, 2012USD ($)lawsuit | Jun. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) |
Loss Contingencies [Line Items] | |||||||
Rental expense | $ 4,300,000 | $ 5,000,000 | $ 8,900,000 | $ 10,100,000 | |||
Compensation guarantees payable | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||
Revolving Credit Facility [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Weighted average interest rate | 3.41% | 3.41% | 3.41% | ||||
Debt term | 3 years | ||||||
Guarantee Obligations [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Letters of credit obligation | $ 11,500,000 | $ 11,500,000 | $ 11,500,000 | ||||
KCGA [Member] | Settled Litigation [Member] | Unfavorable Regulatory Action [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Litigation settlement, amount | 686,000 | ||||||
Settlement interest | 70,000 | ||||||
Settlement expense, fine | $ 300,000 | ||||||
Technology Issue [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Number of putative class action lawsuits | lawsuit | 2 | ||||||
Number of class action lawsuit voluntarily dismissed | lawsuit | 1 | ||||||
Number of derivative lawsuits | lawsuit | 1 | ||||||
Raise In equity financing | $ 400,000,000 | ||||||
Fernandez Action [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Litigation settlement, amount | $ 13,000,000 |
Commitments and Contingent L102
Commitments and Contingent Liabilities - Schedule of Capital Lease and Contract Obligations (Details) $ in Thousands | Jun. 30, 2015USD ($) |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Six months ended December 31, 2015 | $ 1,278 |
2,016 | 2,126 |
2,017 | 620 |
Total | $ 4,024 |
Commitments and Contingent L103
Commitments and Contingent Liabilities - Schedule of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Interest expense - Capital leases | $ 54 | $ 102 | $ 122 | $ 190 |
Commitments and Contingent L104
Commitments and Contingent Liabilities - Schedule of Operating Lease and Contract Obligations (Detail) $ in Thousands | Jun. 30, 2015USD ($) |
Gross Lease Obligations [Member] | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Six months ending December 31, 2015 | $ 13,883 |
Year ending December 31, 2016 | 27,938 |
Year ending December 31, 2017 | 26,395 |
Year ending December 31, 2018 | 25,550 |
Year ending December 31, 2019 | 23,671 |
Thereafter through December 31, 2027 | 64,589 |
Total | 182,026 |
Sublease Income [Member] | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Six months ending December 31, 2015 | 2,470 |
Year ending December 31, 2016 | 4,994 |
Year ending December 31, 2017 | 4,508 |
Year ending December 31, 2018 | 4,211 |
Year ending December 31, 2019 | 3,630 |
Thereafter through December 31, 2027 | 10,244 |
Total | 30,057 |
Net Lease Obligations [Member] | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Six months ending December 31, 2015 | 11,413 |
Year ending December 31, 2016 | 22,944 |
Year ending December 31, 2017 | 21,887 |
Year ending December 31, 2018 | 21,339 |
Year ending December 31, 2019 | 20,041 |
Thereafter through December 31, 2027 | 54,345 |
Total | $ 151,969 |
Financial instruments with O105
Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Derivatives, Fair Value [Line Items] | ||
Loans outstanding | $ 495,113,000 | $ 422,259,000 |
Executive Director or Officer [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Loans outstanding | $ 0 |
Business Segments (Detail)
Business Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||
Revenues | $ 261,882 | $ 314,133 | $ 958,038 | $ 697,790 | |
Pre-tax earnings | (57,114) | 14,507 | 349,014 | 73,891 | |
Total assets | 6,586,348 | 7,662,474 | 6,586,348 | 7,662,474 | $ 6,830,654 |
Operating Segments [Member] | Market Making [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 192,328 | 218,446 | 416,876 | 495,792 | |
Pre-tax earnings | 4,402 | 36,004 | 43,742 | 112,036 | |
Total assets | 4,627,324 | 4,303,928 | 4,627,324 | 4,303,928 | |
Operating Segments [Member] | Global Execution Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 63,522 | 85,903 | 527,788 | 173,123 | |
Pre-tax earnings | (9,937) | 736 | 371,121 | 2,752 | |
Total assets | 710,575 | 1,560,919 | 710,575 | 1,560,919 | |
Corporate, Non-Segment [Member] | Corporate and Other [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 6,032 | 9,784 | 13,374 | 28,875 | |
Pre-tax earnings | (51,579) | (22,233) | (65,849) | (40,897) | |
Total assets | $ 1,248,449 | $ 1,797,627 | $ 1,248,449 | $ 1,797,627 |
Business Segments - Additional
Business Segments - Additional Information (Details) - KCG Hotspot [Member] $ in Millions | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Segment Reporting Information [Line Items] | |
Gain from sale of business | $ 373.8 |
Global Execution Services [Member] | Revenues [Member] | |
Segment Reporting Information [Line Items] | |
Gain from sale of business | 385 |
Global Execution Services [Member] | Pre-tax Earnings [Member] | |
Segment Reporting Information [Line Items] | |
Gain from sale of business | $ 373.8 |
Subsequent Events (Details)
Subsequent Events (Details) ft² in Thousands, $ in Millions | 3 Months Ended | 15 Months Ended | |
Sep. 30, 2015USD ($) | Dec. 31, 2016USD ($) | Jul. 31, 2015ft² | |
New York City [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Area of new headquarters (in sq ft) | ft² | 169 | ||
New Jersey and New York [Member] | Scenario, Forecast [Member] | Early Termination of Leases [Member] | |||
Subsequent Event [Line Items] | |||
Expected net charges | $ 20 | ||
Accelerated amortization and depreciation | $ 1.8 | $ 5 |