GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2012

6. GOODWILL AND INTANGIBLE ASSETS

Goodwill—Changes in the carrying amount of the Company’s goodwill for the years ended December 31, 2012 and 2011 were as follows:

	December 31, 2011		Goodwill acquired		Adjustments			Foreign currency translation		December 31, 2012
Goodwill
Americas Brokerage	$	83,289	$	—	$	—		$	—	$	83,289
EMEA Brokerage	13,851		—		—			546		14,397
Asia Brokerage	—		—		—			—		—
Clearing and Backed Trading	40,675		—		(945		)	1,870		41,600
All Other	128,691		—		—			—		128,691
	$	266,506	$	—	$	(945	)	$	2,416	$	267,977

	December 31, 2010		Goodwill acquired		Adjustments			Foreign currency translation			December 31, 2011
Goodwill
Americas Brokerage	$	83,289	$	—	$	—		$	—		$	83,289
EMEA Brokerage	13,895		—		—			(44		)	13,851
Asia Brokerage	—		—		—			—			—
Clearing and Backed Trading	42,413		—		(1,546		)	(192		)	40,675
All Other	128,691		—		—			—			128,691
	$	268,288	$	—	$	(1,546	)	$	(236	)	$	266,506

During the second quarter of 2011, the Company recorded adjustments to its purchase price allocation, during the initial measurement period, for Kyte in the net amount of $1,546.

During the fourth quarter of 2012, the Company identified an error in its consolidated financial statements for the years ended December 31, 2011 and 2010 related to the 2010 acquisition of Kyte. The adjustment was based on information available to management during the initial measurement period, but was not corrected during that period. The error resulted in an overstatement of both goodwill and non-controlling interests. In accordance with authoritative guidance issued by the FASB, the Company corrected this error in the current period by adjusting both goodwill and non-controlling interests by $945. The Company believes this error was immaterial to all periods affected.

Goodwill is required to be tested for impairment at least annually and more frequently when indicators of impairment exist. All of the Company’s goodwill is allocated to its reporting units and the goodwill impairment tests are performed at the reporting unit level. The Company determined Americas Brokerage, EMEA Brokerage, Asia Brokerage, Clearing and Backed Trading, Trayport, and Fenics to be its reporting units. Based on the results of the annual impairment tests performed as of November 1, 2012 and 2011, respectively, no goodwill impairment was recognized during the years ended December 31, 2012 and 2011.

In 2011, the Company performed a qualitative assessment on the Trayport, Fenics, and Americas Brokerage reporting units and noted that it is more likely than not that the fair value of each reporting unit is greater than its carrying amount. However, for the EMEA Brokerage and Clearing and Backed Trading reporting units, the Company elected to bypass the qualitative assessment and perform a two-step goodwill impairment test. As a result of the two-step impairment test, the fair value of EMEA Brokerage and Clearing and Backed Trading were substantially in excess of their respective carrying values.

In 2012, the Company performed a qualitative assessment on the Trayport and Fenics reporting units and noted that it is more likely than not that the fair value of each reporting unit is greater than its carrying amount. However, for the Americas Brokerage, EMEA Brokerage, and Clearing and Backed Trading reporting units, the Company elected to bypass the qualitative assessment and perform a two-step goodwill impairment test. As a result of the two-step impairment test, the fair value of the Americas brokerage and EMEA brokerage reporting units were substantially in excess of their respective carrying values.

The Clearing and Backed Trading reporting unit’s fair value exceeded its carrying value by approximately 2.5%. The Company estimated the fair value of the Clearing and Backed Trading reporting unit using a weighted average of both the market and income approaches. Under the market approach, the fair value of the reporting unit was based on applying market multiples to its estimated projected revenues and earnings. Key assumptions included management’s budgeted statement of operations for the year ended December 31, 2013 and estimated growth rate assumptions for future periods, a range of forward market multiples of comparable companies and a reasonable control premium to apply to the derived market multiples. The applicable multiples were selected based on the similarities and differences between the Company’s Clearing and Backed Trading reporting unit and guideline companies in the same sector, including profitability, growth prospects, size, as well as overall risks. The estimated control premium was determined based upon general consideration of premiums paid in individual transactions over a period of time. Under the income approach, the fair value of the reporting unit was based on the present value of estimated future cash flows. Key assumptions used in estimating these cash flows included applying business growth rate assumptions to future cash flows over a period of time and an estimated terminal value thereafter. The Company discounted the resulting expected cash flows using an estimated weighted average cost of capital to arrive at a present value amount that approximates fair value. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment evaluation for the Clearing and Backed trading reporting segment.

As a result of continued economic uncertainty and current market dynamics, determining whether an impairment of the goodwill asset exists is increasingly difficult and requires management to exercise significant judgment. In addition, to the extent that securities valuations or trading volumes are depressed for prolonged periods of time and market conditions stagnate or worsen as a result of local or global economic conditions, the revenues and profitability of the Company’s Clearing and Backed Trading reporting unit may be adversely affected. In addition, control premiums, industry earnings multiples and discount rates are impacted by economic conditions. As a result, subsequent impairment tests may be more frequent and be based upon more negative assumptions and future cash flow projections, which may result in an impairment of the Company’s Clearing and Backed Trading reporting unit at such time. Any impairment could reduce materially the recorded amount of goodwill with corresponding a charge to the Company’s earnings.

Intangible Assets—Intangible assets consisted of the following:

	December 31, 2012						December 31, 2011
	Gross amount		Accumulated amortization and foreign currency translation		Net carrying value		Gross amount		Accumulated amortization and foreign currency translation		Net carrying value
Amortized intangible assets:
Customer relationships	$	77,426	$	35,597	$	41,829	$	77,151	$	27,606	$	49,545
Trade names	8,951		6,181		2,770		8,951		5,719		3,232
Core technology	6,400		5,835		565		6,400		4,777		1,623
Non-compete agreements	3,874		3,656		218		3,874		3,463		411
Favorable lease agreements	620		500		120		620		420		200
Patents	3,131		723		2,408		3,131		225		2,906
Licenses	537		65		472		—		—		—
Unamortized intangible assets:
Proprietary knowledge	110		—		110		110		—		110
Total	$	101,049	$	52,557	$	48,492	$	100,237	$	42,210	$	58,027

In July 2011, the Company completed an asset purchase of certain patents from a third party for consideration in the amount of $3,100. The patents have a weighted-average useful life of approximately 6 years.

Amortization expense for the years ending December 31, 2012, 2011 and 2010 was $11,293, $12,190 and $7,815, respectively.

At December 31, 2012, expected amortization expense for the definite lived intangible assets is as follows:

2013	$	9,465
2014	8,714
2015	8,618
2016	6,592
2017	3,204
Thereafter	11,789
Total	$	48,382

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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