Fair Value Measurements

3 Months Ended

Mar. 31, 2021

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, 2021
Money market funds	$	11,327	$	—		$	—	$	11,327
Trading securities
Corporate debt		—		13,806			—		13,806
Mutual funds held in rabbi trust		—		10,502			—		10,502
Foreign currency forward position		—		(1,349	)		—		(1,349	)
Total	$	11,327	$	22,959		$	—	$	34,286

As of December 31, 2020
Money market funds	$	20,856	$	—		$	—	$	20,856
Trading securities
Corporate debt		—		19,222			—		19,222
Mutual funds held in rabbi trust		—		8,889			—		8,889
Foreign currency forward position		—		(805	)		—		(805	)
Total	$	20,856	$	27,306		$	—	$	48,162

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 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. There were no financial assets classified within Level 3 during the three months ended March 31, 2021 and 2020.

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 Statement 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, 2021
Financial assets not measured at fair value:
Cash and cash equivalents	$	390,915	$	390,915	$	390,915	$	—	$	—	$	390,915
Cash segregated under federal regulations		50,083		50,083		50,083		—		—		50,083
Accounts receivable, net of allowance		87,452		87,452		87,452		—		—		87,452
Receivables from broker-dealers, clearing organizations and customers		564,957		564,957		111,594		453,363		—		564,957
Total	$	1,093,407	$	1,093,407	$	640,044	$	453,363	$	—	$	1,093,407

Financial liabilities not measured at fair value:
Payables to broker-dealers, clearing organizations and customers	$	308,268	$	308,268	$	—	$	308,268	$	—	$	308,268

As of December 31, 2020
Financial assets not measured at fair value:
Cash and cash equivalents	$	460,858	$	460,858	$	460,858	$	—	$	—	$	460,858
Cash segregated under federal regulations		50,059		50,059		50,059		—		—		50,059
Accounts receivable, net of allowance		79,577		79,577		—		79,577		—		79,577
Receivables from broker-dealers, clearing organizations and customers		279,915		279,915		97,043		182,872		—		279,915
Total	$	870,409	$	870,409	$	607,960	$	262,449	$	—	$	870,409

Financial liabilities not measured at fair value:
Payables to broker-dealers, clearing organizations and customers	$	133,326	$	133,326	$	—	$	133,326	$	—	$	133,326

The Company enters into foreign currency forward contracts to hedge the net investment in the Company’s U.K. subsidiaries. The Company designates each foreign currency forward contract as a hedge and assesses the risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. These hedges are for a one-month period and are used to limit exposure to foreign currency exchange rate fluctuations. The fair value of the asset is included in prepaid expenses and other assets and the fair value of the liability is included in accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. Gains or losses on foreign currency forward contracts designated as hedges are included in accumulated other comprehensive loss in the Consolidated Statements of Financial Condition. The following table summarizes the Company’s foreign currency forward position:

	As of
	March 31, 2021			December 31, 2020
	(In thousands)
Notional value	$	196,085		$	157,057
Fair value of notional		197,434			157,862
Fair value of the (liability)	$	(1,349	)	$	(805	)

The following table summarizes the Company’s investments:

	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
	(In thousands)
As of March 31, 2021
Trading securities
Corporate debt	$	13,721	$	85	$	—	$	13,806
Mutual funds held in rabbi trust		10,172		330		—		10,502
Total trading securities		23,893		415		—		24,308
Total investments	$	23,893	$	415	$	—	$	24,308

As of December 31, 2020
Trading securities
Corporate debt	$	19,081	$	141	$	—	$	19,222
Mutual funds held in rabbi trust		7,680		1,209		—		8,889
Total investments	$	26,761	$	1,350	$	—	$	28,111

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

	As of
	March 31, 2021		December 31, 2020
	(In thousands)
Less than one year	$	17,191	$	18,290
Due in 1 - 5 years		7,117		9,821
Total	$	24,308	$	28,111

Proceeds from the sales and maturities of investments during the three months ended March 31, 2021 and 2020 were $5.5 million and $111.4 million, respectively.

- 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.

+ References + Details