Derivative Financial Instruments

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company enters into derivative transactions, primarily with respect to making markets in listed domestic options. In addition, the Company enters into derivatives to manage foreign currency exposure. Cash flows associated with such derivative activities are included in cash flows from operating activities on the Consolidated Statements of Cash Flows, when applicable.

During the normal course of business, the Company enters into futures contracts. These financial instruments are subject to varying degrees of risks whereby the fair value of the securities underlying the financial instruments, may be in excess of, or less than, the contract amount. The Company is obligated to post collateral against certain futures contracts.

The amounts and positions included in the tables below for futures contracts are classified as Level 1 while swaps and forward contracts are classified as Level 2 in the fair value hierarchy.

The following tables summarize the fair value and number of derivative instruments held at December 31, 2014 and 2013 and the gains and losses included in the Consolidated Statements of Operations for the periods then ended. These instruments include those classified as Financial Instruments, owned at fair value, Financial instruments sold, not yet purchased at fair value, as well as futures contracts which are reported within Receivable from or Payable to brokers, dealers and clearing organizations in the Consolidated Statements of Financial Condition (fair value and gain (loss) in thousands):

		December 31, 2014
	Financial Statements	Assets			Liabilities
	Location	Fair Value		Contracts	Fair Value		Contracts
Foreign currency
Futures contracts	Receivable from/Payable to brokers, dealers and clearing organizations	$	1,212	8,108	$	651	9,090
Forward contracts	Financial instruments owned at fair value	60		1	—		—
Equity
Futures contracts	Receivable from/Payable to brokers, dealers and clearing organizations	1,790		2,590	2,047		3,085
Swap contracts	Receivable from brokers, dealers and clearing organizations	98		1	13		1
Listed options	Financial instruments owned/sold, not yet purchased, at fair value	144,586		426,747	115,362		437,383
Fixed income
Futures contracts	Receivable from/Payable to brokers, dealers and clearing organizations	6,432		11,901	6,891		10,628
Commodity
Futures contracts	Receivable from/Payable to brokers, dealers and clearing organizations	15,245		8,894	14,847		9,105
Total		$	169,423	458,242	$	139,811	469,292

		December 31, 2013
	Financial Statements	Assets			Liabilities
	Location	Fair Value		Contracts	Fair Value		Contracts
Foreign currency
Futures contracts	Receivable from/Payable to brokers, dealers and clearing organizations	$	89	892	$	142	533
Forward contracts	Other assets	6,913		1	6,501		1
Forward contracts(1)	Financial instruments sold, not yet purchased, at fair value	—		—	5,014		1
Equity
Futures contracts	Receivable from/Payable to brokers, dealers and clearing organizations	223		1,069	1,089		1,046
Swap contracts	Receivable from/Payable to brokers, dealers and clearing organizations	—		—	18		1
Listed options	Financial instruments owned/sold, not yet purchased, at fair value	339,798		730,020	252,282		755,947
Fixed income
Futures contracts	Receivable from/Payable to brokers, dealers and clearing organizations	4,815		18,280	2,259		15,202
Commodity
Futures contracts	Receivable from/Payable to brokers, dealers and clearing organizations	3,392		10,629	1,773		3,806
Total		$	355,230	760,891	$	269,078	776,537

⁽¹⁾  Designated as hedging instrument.

		Gain (Loss) Recognized
	Financial Statements	For the year ended December 31,
	Location	2014			2013			2012
Derivative instruments not designated as hedging instruments:
Foreign currency
Futures contracts	Trading revenues, net	$	10,535		$	12,191		$	19,699
Forward contracts	Investment Income and other, net	526			—			—
Equity
Futures contracts	Trading revenues, net	25,247			50,073			76,089
Swap contracts	Trading revenues, net	5,277			11,736			8,116
Listed options (1)	Trading revenues, net	(37,439		)	37,035			50,446
Fixed income
Futures contracts	Trading revenues, net	31,277			80,511			81,933
Commodity
Futures contracts	Trading revenues, net	55,295			62,215			35,952
		$	90,718		$	253,761		$	272,235
Derivative instruments designated as hedging instruments:
Foreign exchange - forward contract	Accumulated other comprehensive income	$	—		$	(3,298	)	$	—

⁽¹⁾  Realized gains and losses on listed equity options relate to the Company’s market making activities in such options. Such market making activities also comprise trading in the underlying equity securities with gains and losses on such securities generally offsetting the gains and losses reported in this table. Gains and losses on such equity securities are also included in Trading revenues, net on the Company’s Consolidated Statements of Operations.

Financial instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk

As a market maker in global equities, fixed income, futures, options, commodities and currencies, the majority of the Company’s securities transactions are conducted as principal or riskless principal with broker dealers and institutional counterparties primarily located in the United States. The Company self-clears substantially all of its U.S. equity and option securities transactions. The Company clears a portion of its securities transactions through third party clearing brokers. Foreign transactions are settled pursuant to global custody and clearing agreements with major U.S. banks. Substantially all of the Company’s credit exposures are concentrated with its clearing brokers, broker dealer and institutional counterparties. The Company’s policy is to monitor the credit standing of counterparties with which it conducts business.

In the normal course of its operations, the Company enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company believes the risk of significant loss is minimal.

Financial instruments sold, not yet purchased, at fair value represent obligations to purchase such securities (or underlying securities) at a future date. The Company may incur a loss if the market value of the securities subsequently increases.

The Company currently has no loans outstanding to any former or current executive officer or director.