Derivatives

9 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives

7. DERIVATIVES

The Company enters into forward foreign currency exchange rate contracts, interest rate swaps, interest rate futures, total return swap contracts on various equity and debt indices and other derivative contracts to economically hedge exposures to fluctuations in currency exchange rates, interest rates and equity and debt prices. The Company reports its derivative instruments separately as assets and liabilities unless a legal right of set-off exists under a master netting agreement enforceable by law. The Company’s derivative instruments are recorded at their fair value, and are included in “other assets” and “other liabilities” on the condensed consolidated statements of financial condition. Gains and losses on the Company’s derivative instruments are generally included in “interest income” and “interest expense”, respectively, or “revenue-other”, depending on the nature of the underlying item, in the condensed consolidated statements of operations.

In addition to the derivative instruments described above, the Company records derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements, the fair value of which is based on the value of the underlying investments, adjusted for estimated forfeitures, and is included in “accrued compensation and benefits” in the condensed consolidated statements of financial condition. Changes in the fair value of the derivative liabilities are included in “compensation and benefits” in the condensed consolidated statements of operations, the impact of which equally offsets the changes in the fair value of investments which are currently expected to be delivered upon settlement of LFI and other similar deferred compensation arrangements, which are reported in “revenue-other” in the condensed consolidated statements of operations.

The table below presents the fair value of the Company’s derivative instruments reported within “other assets” and “other liabilities” and the fair value of the Company’s derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements reported within “accrued compensation and benefits” (see Note 14) on the accompanying condensed consolidated statements of financial condition as of September 30, 2019 and December 31, 2018:

	September 30,		December 31,
	2019		2018
Derivative Assets:
Forward foreign currency exchange rate contracts	$	3,278	$	1,543
Total return swaps and other (a)		-		10,424
	$	3,278	$	11,967
Derivative Liabilities:
Forward foreign currency exchange rate contracts	$	2,371	$	939
Total return swaps and other (a)		3,719		1
LFI and other similar deferred compensation arrangements		222,026		188,022
	$	228,116	$	188,962

(a) For total return swaps, amounts represent the netting of gross derivative assets and liabilities of $518 and $4,237 as of September 30, 2019, respectively, and $10,792 and $369 as of December 31, 2018, respectively, for contracts with the same counterparty under legally enforceable master netting agreements. Such amounts are recorded “net” in “other assets”, with receivables for net cash collateral under such contracts of $5,580 as of September 30, 2019.

Net gains (losses) with respect to derivative instruments (predominantly reflected in “revenue-other”) and the Company’s derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements (included in “compensation and benefits” expense) as reflected on the accompanying condensed consolidated statements of operations for the three month and nine month periods ended September 30, 2019 and 2018, were as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Forward foreign currency exchange rate contracts	$	3,969		$	1,431		$	5,065		$	5,184
LFI and other similar deferred compensation arrangements		(1,764	)		(3,647	)		(22,118	)		(1,712	)
Total return swaps and other		1,324			(1,847	)		(8,309	)		599
Total	$	3,529		$	(4,063	)	$	(25,362	)	$	4,071