Collateralized Transactions and Assets and Liabilities Subject to Netting

Collateralized Transactions

The Company receives financial instruments as collateral in connection with securities borrowed and financial instruments purchased under agreements to resell. Such financial instruments generally consist of equities, convertible securities and obligations of the U.S. government, but may also include obligations of federal agencies, foreign governments and corporations. In most cases the Company is permitted to deliver or repledge these financial instruments in connection with securities lending, other secured financings or for meeting settlement obligations.

The table below presents financial instruments at fair value received as collateral and included within Securities borrowed or Receivable from brokers, dealers and clearing organizations on the Consolidated Statements of Financial Condition that were permitted to be delivered or repledged and that were delivered or repledged by the Company as well as the fair value of financial instruments which could be further repledged by the receiving party (in thousands):



	December 31, 2014		December 31, 2013
Collateral permitted to be delivered or repledged	$	1,586,700	$	1,315,803
Collateral that was delivered or repledged	1,485,267		1,231,468
Collateral permitted to be further repledged by the receiving counterparty	147,696		142,938

In order to finance securities positions, the Company also pledges financial instruments that it owns to counterparties who, in turn, are permitted to deliver or repledge them. Under these transactions, the Company pledges certain financial instruments owned to collateralize repurchase agreements and other secured financings. Repurchase agreements and other secured financings are short-term and mature within one year. Financial instruments owned and pledged to counterparties that do not have the right to sell or repledge such financial instruments consist of equity securities.

The table below presents information about assets pledged by the Company (in thousands):



	December 31, 2014		December 31, 2013
Financial instruments owned, at fair value, pledged to counterparties that had the right to deliver or repledge	$	536,124	$	552,242
Financial instruments owned, at fair value, pledged to counterparties that do not have the right to deliver or repledge	979,652		676,956

Assets and Liabilities Subject to Netting

The Company may enter into master netting agreements and collateral arrangements with counterparties in order to manage its exposure to credit risk associated with securities financing transactions. Such transactions are generally executed under standard industry agreements, including, but not limited to, master securities lending agreements (securities lending transactions) and master repurchase agreements (repurchase transactions). A master agreement creates a single contract under which all transactions between two counterparties are executed allowing for trade aggregation and a single net payment obligation. Master agreements provide protection in bankruptcy in certain circumstances and, where legally enforceable, enable receivables and payables with the same counterparty to be settled or otherwise eliminated by applying amounts due against all or a portion of an amount due from the counterparty or a third party. The Company may also enter into bilateral trading agreements and other customer agreements that provide for the netting of receivables and payables with a given counterparty as a single net obligation.

In the event of counterparty’s default, provisions of the master agreement permit acceleration and termination of all outstanding transactions covered by the agreement such that a single amount is owed by, or to, the non-defaulting party. Any collateral posted can be applied to the net obligations, with any excess returned and the collateralized party has a right to liquidate the collateral. Any residual claim after netting is treated along with other unsecured claims in bankruptcy court.

The Company is also a party to clearing agreements with various central clearing parties. Under these arrangements, the central clearing counterparty facilitates settlement between counterparties based on the net payable owed or receivable due and, with respect to daily settlement, cash is generally only required to be deposited to the extent of the net amount. In the event of default, a net termination amount is determined based on the market values of all outstanding positions and the clearing organization or clearing member provides for the liquidation and settlement of the net termination amount among all counterparties to the open repurchase and/or securities lending transactions.

The gross amounts of assets and liabilities subject to netting and gross amounts offset in the Consolidated Statements of Financial Condition were as follows (in thousands):



December 31, 2014	Gross Amounts Recognized		Gross Amounts Offset in the Statements of Financial Condition		Net Amounts Presented in the Statements of Financial Condition		Gross Amounts Not Offset in the Statement of Financial Condition				Net Amount
							Available Collateral⁽¹⁾		Counterparty Netting⁽²⁾
							Available Collateral⁽¹⁾		Counterparty Netting⁽²⁾
Assets
Listed options	$	144,586	$	—	$	144,586	$	—	$	—	$	144,586
Securities borrowed	1,632,062		—		1,632,062		1,570,194		15,782		46,086
Receivable from brokers, dealers and clearing organizations ⁽³⁾	21,545		—		21,545		21,425		—		120
Foreign currency forward contracts	60		—		60		—		—		60
Swaps	85		—		85		—		—		85
Futures	24,680		24,436		244		—		—		244
Total Assets	$	1,823,018	$	24,436	$	1,798,582	$	1,591,619	$	15,782	$	191,181
Liabilities
Listed options	$	115,362	$	—	$	115,362	$	—	$	17,359	$	98,003
Securities loaned	707,744		—		707,744		682,389		15,782		9,573
Financial instruments sold under agreements to repurchase	933,576		—		933,576		933,560		—		16
Futures	24,436		24,436		—		—		—		—
Total Liabilities	$	1,781,118	$	24,436	$	1,756,682	$	1,615,949	$	33,141	$	107,592

⁽¹⁾Includes securities received or delivered under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements.

⁽²⁾Under master netting agreements with its counterparties, the Company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is avalable by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met.

⁽³⁾Represents reverse repurchase agreements at broker dealer.



December 31, 2013	Gross Amounts Recognized		Gross Amounts Offset in the Statements of Financial Condition		Net Amounts Presented in the Statements of Financial Condition		Gross Amounts Not Offset in the Statement of Financial Condition				Net Amount
							Available Collateral⁽¹⁾		Counterparty Netting⁽²⁾
							Available Collateral⁽¹⁾		Counterparty Netting⁽²⁾
Assets
Listed options	$	339,798	$	—	$	339,798	$	—	$	—	$	339,798
Securities borrowed	1,357,387		—		1,357,387		1,316,110		10,110		31,167
Receivable from brokers, dealers and clearing organizations ⁽³⁾	24,366		—		24,366		24,249		—		117
Foreign currency forward contracts	6,913		6,501		412		—		—		412
Futures	8,519		4,369		4,150		—		—		4,150
Total Assets	$	1,736,983	$	10,870	$	1,726,113	$	1,340,359	$	10,110	$	375,644
Liabilities
Listed options	$	252,282	$	—	$	252,282	$	—	$	10,924	$	241,358
Securities loaned	733,230		—		733,230		716,838		10,110		6,282
Financial instruments sold under agreements to repurchase	640,950		—		640,950		640,948		—		2
Foreign currency forward contracts	11,515		6,501		5,014		—		—		5,014
Futures	5,263		5,263		—		—		—		—
Swaps	18		—		18		—		—		18
Total Liabilities	$	1,643,258	$	11,764	$	1,631,494	$	1,357,786	$	21,034	$	252,674

⁽²⁾Under master netting agreements with its counterparties, the company has the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is avalable by counterparty in the event of a counterparty's default, but which are not netted in the Statement of Financial Condition because other netting provisions under U.S. GAAP are not met.

⁽³⁾Represents reverse repurchase agreements at broker dealer.