Fair Value Measurements

3 Months Ended

Mar. 31, 2024

4. Fair Value Measurements

The following table summarizes the valuation of the Company’s assets and liabilities measured at fair value as categorized based on the hierarchy described in Note 2:



	Level 1		Level 2		Level 3		Total
	(In thousands)
As of March 31, 2024
Assets
Money market funds	$	18,571	$	—	$	—	$	18,571
Securities available-for-sale
Corporate debt		—		25,389		—		25,389
Trading securities
U.S. Treasuries		—		99,427		—		99,427
Mutual funds held in rabbi trust		—		11,015		—		11,015
Total assets	$	18,571	$	135,831	$	—	$	154,402

Liabilities
Foreign currency forward position		—		196		—		196
Total liabilities	$	—	$	196	$	—	$	196

As of December 31, 2023
Assets
Money market funds	$	18,634	$	—	$	—	$	18,634
Securities available-for-sale
Corporate debt		—		24,694		—		24,694
Trading securities
U.S. Treasuries		—		99,682		—		99,682
Mutual funds held in rabbi trust		—		10,485		—		10,485
Foreign currency forward position		—		1,901		—		1,901
Total assets	$	18,634	$	136,762	$	—	$	155,396

Money market funds are included in cash and cash equivalents on the Consolidated Statements of Financial Condition. Securities available-for-sale and trading securities are included in investments, at fair value on the Consolidated Statements of Financial Condition. Securities classified within Level 2 were valued using a market approach utilizing prices and other relevant information generated by market transactions involving comparable assets. The foreign currency forward contracts are included in either other assets or accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition, and are classified within Level 2 as the valuation inputs are based on quoted market prices. The mutual funds held in a rabbi trust represent investments associated with the Company’s deferred cash incentive plan.

The table below presents the carrying value, fair value and fair value hierarchy category of the Company's financial assets and liabilities that are not measured at fair value on the Consolidated Statements of Financial Condition. The carrying values of the Company's financial assets and liabilities not measured at fair value categorized in the fair value hierarchy as Level 1 and Level 2 approximate fair value due to the short-term nature of the underlying assets and liabilities.


	Carrying Value		Fair Value		Level 1		Level 2		Level 3		Total
	(In thousands)
As of March 31, 2024
Financial assets not measured at fair value:
Cash	$	358,108	$	358,108	$	358,108	$	—	$	—	$	358,108
Cash segregated under federal regulations		45,629		45,629		45,629		—		—		45,629
Accounts receivable, net of allowance		99,878		99,878		—		99,878		—		99,878
Receivables from broker-dealers, clearing organizations and customers		662,888		662,888		112,713		550,175		—		662,888
Total	$	1,166,503	$	1,166,503	$	516,450	$	650,053	$	—	$	1,166,503

Financial liabilities not measured at fair value:
Payables to broker-dealers, clearing organizations and customers	$	465,703	$	465,703	$	—	$	465,703	$	—	$	465,703

As of December 31, 2023
Financial assets not measured at fair value:
Cash	$	432,646	$	432,646	$	432,646	$	—	$	—	$	432,646
Cash segregated under federal regulations		45,122		45,122		45,122		—		—		45,122
Accounts receivable, net of allowance		89,839		89,839		—		89,839		—		89,839
Receivables from broker-dealers, clearing organizations and customers		687,936		687,936		115,151		572,785		—		687,936
Total	$	1,255,543	$	1,255,543	$	592,919	$	662,624	$	—	$	1,255,543

Financial liabilities not measured at fair value:
Payables to broker-dealers, clearing organizations and customers	$	537,398	$	537,398	$	—	$	537,398	$	—	$	537,398

During the three months ended March 31, 2024 and 2023 there were no transfers between Level 1, Level 2 and Level 3 securities.

The Company enters into foreign currency forward contracts as an economic hedge against certain foreign currency transaction gains and losses in the Consolidated Statements of Operations. These forward contracts are for three-month periods and are used to limit exposure to foreign currency exchange rate fluctuations. The Company records the fair value of the asset in prepaid expenses and other assets or the fair value of the liability in accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. The following table summarizes the Company’s foreign currency forward position:


	As of
	March 31, 2024			December 31, 2023
	(In thousands)
Notional value	$	63,305		$	61,858
Fair value of notional		63,109			63,759
Fair value of the (liability)/asset	$	(196	)	$	1,901

Realized and unrealized gains and losses on foreign currency forward contracts are included in other, net in the Consolidated Statements of Operations. The Company recorded a net realized gain of $1.3 million and a net unrealized loss of $2.1 million for the three months ended March 31, 2024. The Company recorded a net realized loss of $1.7 million and a net unrealized gain of $2.5 million for the three months ended March 31, 2023. The Company records collateral deposits with its counterparty bank in prepaid expenses and other assets on the Consolidated Statements of Financial Condition. As of March 31, 2024, the Company did not maintain a collateral deposit with its counterparty bank.

The following table summarizes the Company’s investments:


	Amortized cost			Gross unrealized gains		Gross unrealized losses			Fair value
		(In thousands)
As of March 31, 2024
Securities available-for-sale
Corporate debt	$		25,473	$	25	$	(109	)	$	25,389
Trading securities
U.S. Treasuries			99,682		—		(255	)		99,427
Mutual funds held in rabbi trust			10,818		629		(432	)		11,015
Total investments	$		135,973	$	654	$	(796	)	$	135,831

As of December 31, 2023
Securities available-for-sale
Corporate debt	$		24,705	$	55	$	(66	)	$	24,694
Trading securities
U.S. Treasuries			99,236		446		—			99,682
Mutual funds held in rabbi trust			10,962		172		(649	)		10,485
Total investments	$		134,903	$	673	$	(715	)	$	134,861

Purchases of investments during the three months ended March 31, 2024 and 2023 were $5.0 million and $22.9 million, respectively. Proceeds from the sales and maturities of investments during the three months ended March 31, 2024 and 2023 were $4.3 million and $1.0 million, respectively.

The following table summarizes the Company’s unrealized and realized gains and losses on investments:


	Three Months Ended March 31,
	2024			2023
	(In thousands)
Unrealized gains/(losses)
Securities available-for-sale
Corporate debt	$	(73	)	$	(55	)
Trading securities
U.S. Treasuries		(255	)		420
Mutual funds held in rabbi trust		674			585
Total investments	$	346		$	950

Realized gains/(losses)
Securities available-for-sale
Corporate debt	$	2		$	(17	)
Trading securities
Mutual funds held in rabbi trust		35			—
Total investments	$	37		$	(17	)

Unrealized gains and losses on securities available-for-sale are included in accumulated other comprehensive loss on the Consolidated Statements of Financial Condition. Realized gains and losses on securities available-for-sale and realized and unrealized gains and losses on trading securities are included in other, net on the Consolidated Statements of Operations.

The following table summarizes the fair value of the investments based upon the contractual maturities:


	Less than one year		Due in 1 - 5 years		Total
	(In thousands)
As of March 31, 2024
Securities available-for-sale
Corporate debt	$	11,480	$	13,909	$	25,389
Trading securities
U.S. Treasuries		49,757		49,670		99,427
Mutual funds held in rabbi trust		11,015		—		11,015
Total	$	72,252	$	63,579	$	135,831

As of December 31, 2023
Securities available-for-sale
Corporate debt	$	10,727	$	13,967	$	24,694
Trading securities
U.S. Treasuries		49,756		49,926		99,682
Mutual funds held in rabbi trust		10,485		—		10,485
Total	$	70,968	$	63,893	$	134,861

The following table provides fair values and unrealized losses on the Company’s available-for-sale investments and the aging of securities’ continuous unrealized loss positions:


	Less than Twelve Months					Twelve Months or More					Total
	Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses
	(In thousands)
As of March 31, 2024
Corporate debt	$	17,958	$	(100	)	$	2,043	$	(9	)	$	20,001	$	(109	)

As of December 31, 2023
Corporate debt	$	17,658	$	(66	)	$	—	$	—		$	17,658	$	(66	)

During the three months ended March 31, 2024 and 2023, the Company did not recognize any credit losses on its available-for-sale securities. The unrealized losses on securities are due to changes in interest rates and market liquidity.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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