In the normal course of operations, the Company enters into derivative contracts. These derivative contracts primarily consist of foreign exchange swaps, foreign exchange/commodities options, futures and forwards. The Company enters into derivative contracts to facilitate client transactions, hedge principal positions and facilitate hedging activities of affiliated companies.

Derivative contracts can be exchange-traded or OTC. Exchange-traded derivatives typically fall within Level 1 or Level 2 of the fair value hierarchy depending on whether they are deemed to be actively traded or not. The Company generally values exchange-traded derivatives using their closing prices. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. For OTC derivatives that trade in liquid markets, such as forwards, swaps and options, model inputs can generally be verified and model selection does not involve significant management judgment. Such instruments are typically classified within Level 2 of the fair value hierarchy.

The Company does not designate any derivative contracts as hedges for accounting purposes. U.S. GAAP guidance requires that an entity recognize all derivative contracts as either assets or liabilities in the consolidated statements of financial condition and measure those instruments at fair value. The fair value of all derivative contracts is recorded on a net-by-counterparty basis where a legal right to offset exists under an enforceable netting agreement. Derivative contracts are recorded as part of “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” and “Payables to broker-dealers, clearing organizations, customers and related broker-dealers” in the Company’s consolidated statements of financial condition.

The fair value of derivative contracts, computed in accordance with the Company’s netting policy, is set forth below (in thousands):

	December 31, 2019						December 31, 2018
Derivative contract	Assets		Liabilities		Notional Amounts¹		Assets		Liabilities		Notional Amounts¹
FX/commodities options	$	26	$	—	$	4,487	$	39	$	88,016	$	4,745,428
Forwards		564		1,285		110,051		236		639		79,008
FX swaps		1,278		2,244		555,519		1,611		2,072		482,295
Futures		—		624		11,106,203		93		402		13,067,925
Total	$	1,868	$	4,153	$	11,776,260	$	1,979	$	91,129	$	18,374,656

Certain of the Company’s FX swaps are with Cantor. See Note 14—“Related Party Transactions” for additional information related to these transactions.

The replacement cost of contracts in a gain position were $1.9 million and $2.0 million, as of December 31, 2019 and 2018, respectively.

The following tables present information about the offsetting of derivative instruments as of December 31, 2019 and 2018 (in thousands):

	December 31, 2019
						Net Amounts Presented in the
	Gross Amounts		Gross Amounts Offset			Statements of Financial Condition
Assets
FX/commodities options	$	26	$	—		$	26
Forwards		706		(142	)		564
FX swaps		1,672		(394	)		1,278
Futures		2,044		(2,044	)		—
Total derivative assets	$	4,448	$	(2,580	)	$	1,868
Liabilities
FX swaps	$	2,638	$	(394	)	$	2,244
Forwards		1,427		(142	)		1,285
Futures		2,668		(2,044	)		624
Total derivative assets	$	6,733	$	(2,580	)	$	4,153

	December 31, 2018
						Net Amounts Presented in the
	Gross Amounts		Gross Amounts Offset			Statements of Financial Condition
Assets
FX/commodities options	$	482,751	$	(482,712	)	$	39
Forwards		253		(17	)		236
FX swaps		1,938		(327	)		1,611
Futures		57,479		(57,386	)		93
Total derivative assets	$	542,421	$	(540,442	)	$	1,979
Liabilities
FX/commodities options	$	570,728	$	(482,712	)	$	88,016
FX swaps		2,399		(327	)		2,072
Forwards		656		(17	)		639
Futures		57,788		(57,386	)		402
Total derivative liabilities	$	631,571	$	(540,442	)	$	91,129

There were no additional balances in gross amounts not offset as of December 31, 2019 and December 31, 2018, respectively.

The change in fair value of derivative contracts is reported as part of “Principal transactions” in the Company’s consolidated statements of operations. The change in fair value of equity options related to marketable securities is included as part of “Other income (loss)” in the Company’s consolidated statements of operations.

The table below summarizes gains and losses on derivative contracts for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Year Ended December 31,
Derivative contract	2019			2018			2017
FX/commodities options	$	252		$	14,657		$	12,852
Futures		15,316			16,484			8,306
Forwards		(3,597	)		(222	)		(38	)
FX swaps		2,340			1,271			1,332
Equity options		318			102			591
Interest rate swaps		—			(5	)		47
Gains (losses)	$	14,629		$	32,287		$	23,090