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Derivatives
 9 Months Ended
Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
In the normal course of operations, the Company enters into derivative contracts to facilitate client transactions, hedge principal positions and facilitate hedging activities of affiliated companies. These derivative contracts primarily consist of FX swaps, FX/commodities options, futures and forwards.
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):
September 30, 2022December 31, 2021
Derivative contractAssetsLiabilities
Notional
Amounts1
AssetsLiabilities
Notional
Amounts1
FX swaps$10,109 $7,510 $878,294 $2,487 $1,490 $571,280 
Futures826 — 7,803,533 — 940 3,914,813 
Forwards28 617 52,278 392 419 207,966 
Interest rate swaps5 — 7,214,691 — — — 
     Total$10,968 $8,127 $15,948,796 $2,879 $2,849 $4,694,059 
____________________________
1Notional amounts represent the sum of gross long and short derivative contracts, an indication of the volume of the Company’s derivative activity, and do not represent anticipated losses.
Certain of the Company’s FX swaps are with Cantor. See Note 13—“Related Party Transactions,” for additional information related to these transactions.
The replacement costs of contracts in a gain position were $11.0 million and $2.9 million, as of September 30, 2022 and December 31, 2021, respectively.
The following tables present information about the offsetting of derivative instruments (in thousands):
September 30, 2022
Gross
Amounts		Gross
Amounts
Offset
Net Amounts
Presented
in the
Statements
of Financial
Condition1
Assets
FX swaps$13,257 $(3,148)$10,109 
Futures107,721 (106,895)826 
Forwards29 (1)28 
Interest rate swaps483 (478)5 
Total derivative assets$121,490 $(110,522)$10,968 
Liabilities
FX swaps$10,658 $(3,148)$7,510 
Forwards618 (1)617 
Futures106,895 (106,895)— 
Interest rate swaps478 (478)— 
Total derivative liabilities$118,649 $(110,522)$8,127 
December 31, 2021
Gross
Amounts		Gross
Amounts
Offset
Net Amounts
Presented
in the
Statements
of Financial
Condition1
Assets
Forwards$452 $(60)$392 
FX swaps3,025 (538)2,487 
Futures70,497 (70,497)— 
Total derivative assets$73,974 $(71,095)$2,879 
Liabilities
FX swaps$2,028 $(538)$1,490 
Forwards479 (60)419 
Futures71,437 (70,497)940 
Total derivative liabilities$73,944 $(71,095)$2,849 
____________________________
1There were no additional balances in gross amounts not offset as of September 30, 2022 and December 31, 2021.
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 table below summarizes gains and (losses) on derivative contracts (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
Derivative contract2022202120222021
Futures$4,054 $3,102 $12,295 $10,258 
FX swaps750 28 1,680 166 
FX/commodities options55 87 203 251 
Interest rate swaps5 — 5 — 
Forwards— 28 — — 
Gains, net$4,864 $3,245 $14,183 $10,675