Derivative Instruments

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

See Note 15 Consolidated Company-Sponsored Investment Funds for disclosure of derivative instruments held by our consolidated company-sponsored investment funds.

We enter into various futures, forwards, options and swaps to economically hedge certain seed capital investments. Also, we have currency forwards that help us to economically hedge certain balance sheet exposures. In addition, our options desk trades long and short exchange-traded equity options. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging.

The notional value, fair value and gains and losses recognized in investment gains (losses) as of December 31, 2024 and 2023 for derivative instruments (excluding derivative instruments relating to our options desk trading activities discussed below) not designated as hedging instruments were as follows:


	Notional Value			Derivative Assets			Derivative Liabilities			Gains (Losses)
	(in thousands)
December 31, 2024
Exchange-traded futures		$	157,787		$	2,835		$	33		$	(2,744)
Currency forwards		27,368			4,881			4,656			1,690
Interest rate swaps		17,667			367			14			310
Credit default swaps		199,720			4,172			9,099			(2,675)
Total return swaps		216,468			663			1,087			(3,823)
Option swaps		50,459			8,023			55			(688)
Total derivatives		$	669,469		$	20,941		$	14,944		$	(7,930)
December 31, 2023
Exchange-traded futures		$	116,344		$	1		$	3,511		$	(2,038)
Currency forwards		34,440			4,951			5,597			(82)
Interest rate swaps		11,345			294			349			110
Credit default swaps		139,607			9,265			4,197			(6,850)
Total return swaps		95,021			6			4,391			(5,443)
Option swaps		50,232			1			135			(2,107)
Total derivatives		$	446,989		$	14,518		$	18,180		$	(16,410)

As of December 31, 2024 and 2023, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on our consolidated statements of financial condition. Gains and losses on derivative instruments are reported in investment gains (losses) on the consolidated statements of income.

We may be exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments. We minimize our counterparty exposure through a credit review and approval process. In addition, we have executed various collateral arrangements with counterparties to the over-the-counter derivative transactions that require both pledging and accepting collateral in the form of cash. As of December 31, 2024 and 2023, we held $10.4 million and $5.7 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers and dealers in our consolidated statements of financial condition.

Although notional amount is the typical measure of volume in the derivatives market, it is not used as a measure of credit risk. Generally, the current credit exposure of our derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received. A derivative with positive value (a derivative asset) indicates existence of credit risk because the counterparty would owe us if the contract were closed. Alternatively, a derivative contract with negative value (a derivative liability) indicates we would owe money to the counterparty if the contract were closed. Generally, if there is more than one derivative transaction with a single counterparty, a master netting arrangement exists with respect to derivative transactions with that counterparty to provide for aggregate net settlement.

Our standardized contracts for over-the-counter derivative transactions, known as ISDA master agreements, provide for collateralization. As of December 31, 2024 and 2023, we delivered $5.2 million and $7.8 million, respectively, of cash collateral into brokerage accounts. We report this cash collateral in cash and cash equivalents in our consolidated statements of financial condition.

As a result of the deconsolidation of the BRS business on April 1, 2024, we no longer have long and short exchange-traded equity options. As of December 31, 2023, these equity options were classified as held for sale on our consolidated statement of financial condition. For further discussion, see Note 24 Divestiture.

Prior to the deconsolidation of the BRS business, our options desk provided our clients with equity derivative strategies and execution for exchange-traded options on single stocks, exchange-traded funds and indices. While predominately agency-based, the options desk had the ability to commit capital to facilitate a client's transaction. Our options desk hedged the risk associated with this activity by taking offsetting positions in equities. For the three months ended March 31, 2024 (prior to our deconsolidation of the BRS business on April 1, 2024), we recognized losses of $2.0 million on equity options activity. For the year ended December 31, 2023, we recognized $4.9 million of losses on equity options activity, respectively. These losses are recognized in investment gains (losses) in the consolidated statements of income.