Derivative Instruments

3 Months Ended

Mar. 31, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

See Note 14, Consolidated Company-Sponsored Investment Funds, for disclosure of derivative instruments held by our consolidated company-sponsored investment funds.

We enter 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 and fair value as of March 31, 2025 and December 31, 2024 for derivative instruments (excluding derivative instruments relating to our options desk trading activities discussed below) not designated as hedging instruments were as follows:


			Fair Value
	Notional Value		Derivative Assets		Derivative Liabilities
	(in thousands)
March 31, 2025:
Exchange-traded futures	$	170,508	$	876	$	324
Currency forwards	75,686		4,811		5,268
Interest rate swaps	17,282		87		117
Credit default swaps	241,508		735		5,774
Total return swaps	192,631		1,396		7,640
Option swaps	50,522		6,399		30
Total derivatives	$	748,137	$	14,304	$	19,153

December 31, 2024:
Exchange-traded futures	$	157,787	$	2,835	$	33
Currency forwards	27,368		4,881		4,656
Interest rate swaps	17,667		367		14
Credit default swaps	199,720		4,172		9,099
Total return swaps	216,468		663		1,087
Option swaps	50,459		8,023		55
Total derivatives	$	669,469	$	20,941	$	14,944

As of March 31, 2025 and December 31, 2024, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on our condensed consolidated statements of financial condition.

The gains and losses for derivative instruments for the three months ended March 31, 2025 and 2024 recognized in investment gains (losses) in the condensed consolidated statements of income were as follows:


	Three Months Ended March 31,
		2025		2024
		(in thousands)
Exchange-traded futures		$	258	$	(1,579)
Currency forwards		(655)		364
Interest rate swaps		(352)		143
Credit default swaps		434		(829)
Total return swaps		(11,417)		(3,256)
Option swaps		(1,044)		207
Net (losses) on derivative instruments		$	(12,776)	$	(4,950)

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 March 31, 2025 and December 31, 2024, we held $7.2 million and $10.4 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers and dealers in our condensed consolidated statements of financial condition.

Although notional amount typically is utilized as the 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 March 31, 2025 and December 31, 2024, we delivered $11.6 million and $5.2 million, respectively, of cash collateral into brokerage accounts. We report this cash collateral in cash and cash equivalents in our condensed consolidated statement of financial condition.

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.