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 unaudited condensed 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 unaudited condensed 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):

	March 31, 2020						December 31, 2019
Derivative contract	Assets		Liabilities		Notional Amounts¹		Assets		Liabilities		Notional Amounts¹
FX/commodities options	$	—	$	59	$	3,392	$	26	$	—	$	4,487
Forwards		145		2,431		81,842		564		1,285		110,051
FX swaps		1,047		1,018		473,440		1,278		2,244		555,519
Futures		—		589		4,081,039		—		624		11,106,203
Total	$	1,192	$	4,097	$	4,639,713	$	1,868	$	4,153	$	11,776,260

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 $1.2 million and $1.9 million, as of March 31, 2020 and December 31, 2019, respectively.

The following tables present information about the offsetting of derivative instruments (in thousands):

	March 31, 2020
						Net Amounts Presented in the
	Gross Amounts		Gross Amounts Offset			Statements of Financial Condition¹
Assets
Forwards	$	151	$	(6	)	$	145
FX swaps		1,221		(174	)		1,047
Futures		74,974		(74,974	)		—
Total derivative assets	$	76,346	$	(75,154	)	$	1,192
Liabilities
FX/commodities options	$	59	$	—		$	59
FX swaps		1,192		(174	)		1,018
Forwards		2,437		(6	)		2,431
Futures		75,563		(74,974	)		589
Total derivative liabilities	$	79,251	$	(75,154	)	$	4,097

	December 31, 2019
						Net Amounts Presented in the
	Gross Amounts		Gross Amounts Offset			Statements of Financial Condition¹
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 liabilities	$	6,733	$	(2,580	)	$	4,153

The change in fair value of derivative contracts is reported as part of “Principal transactions” in the Company’s unaudited condensed 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 unaudited condensed consolidated statements of operations.

The table below summarizes gains and (losses) on derivative contracts (in thousands):

	Three Months Ended March 31,
Derivative contract	2020			2019
FX/commodities options	$	55		$	63
Futures		2,764			4,248
Forwards		(1,268	)		(113	)
FX swaps		236			594
Gains (losses)	$	1,787		$	4,792