Credit Agreements and Short-term Financing

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Credit Agreements and Short-term Financing

11. Credit Agreements and Short-term Financing

Credit Agreement

On October 15, 2021, the Company entered into a three-year revolving credit facility (the “Credit Agreement”) provided by a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent, which provides aggregate commitments totaling $500.0 million, consisting of a revolving credit facility and a $5.0 million letter of credit sub-limit for standby letters of credit and a $50.0 million sub-limit for swingline loans. The Credit Agreement will mature on October 15, 2024, with the Company's option to request up to two additional 364-day extensions at the discretion of each lender and subject to customary conditions. Subject to satisfaction of certain specified conditions, the Company is permitted to upsize the Credit Agreement by up to $250.0 million in total.

Borrowings under the Credit Agreement bore interest at a rate per annum equal to the base rate or adjusted LIBOR plus an applicable margin that varies with the Company’s consolidated total leverage ratio. On March 28, 2023, the Company entered into a first amendment to the Credit Agreement, which among other things, established customary Secured Overnight Financing Rate (“SOFR”) provisions in lieu of the London Interbank Offered Rate (“LIBOR”) provisions set forth in the Credit Agreement. Following such amendment, borrowings under the Credit Agreement will bear interest at a rate per annum equal to the alternate base rate or the adjusted term SOFR rate, plus an applicable margin that varies with the Company’s consolidated total leverage ratio.

The Credit Agreement requires that the Company satisfy certain covenants, including a requirement to not exceed a maximum consolidated total leverage ratio. As of March 31, 2023, the Company had no letters of credit outstanding and $500.0 million in available borrowing capacity under the Credit Agreement. The Company incurred $0.1 million of interest expense under the Credit Agreement for each of the three months ended March 31, 2023 and 2022.

Uncommitted Collateralized Agreements

In connection with its self-clearing operations, the Company’s U.S. broker-dealer subsidiary maintains agreements with its settlement bank to allow the subsidiary to borrow in the aggregate of up to $450.0 million on an uncommitted basis, collateralized by eligible securities pledged by the subsidiary to the settlement bank, subject to certain haircuts. Borrowings under these agreements will bear interest at a base rate per annum equal to the higher of the upper range of the Federal Funds Rate, 0.25% or one-month SOFR, plus 1.00%.

The Company incurred $0.1 million of interest expense on borrowings under such agreements during the three months ended March 31, 2023. The Company incurred no interest expense on borrowings under such agreements during the three months ended March 31, 2022. As of March 31, 2023, the Company had no borrowings outstanding and up to $450.0 million in available uncommitted borrowing capacity under such agreements.

Short-term Financing

Under arrangements with their settlement banks, certain of the Company’s U.S. and U.K. operating subsidiaries may receive overnight financing in the form of bank overdrafts. The Company incurred interest expense on such overnight financing of $0.1 million for each of the three months ended March 31, 2023 and 2022. As of March 31, 2023, the Company had no overdrafts payable outstanding.