Business Segments

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Business Segments

Business Segments

As of December 31, 2014, the Company's operating segments comprised the following: (i) Market Making; (ii) Global Execution Services; and (iii) Corporate and Other.

The Market Making segment principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, banks and institutions. Principal trading in the Market Making segment primarily consists of direct-to-client and non-client exchange-based electronic market making, including trade executions conducted as an equities DMM on the NYSE and NYSE Amex. The Company is an active participant on all major global equity and futures exchanges and also trades on substantially all domestic electronic options exchanges. As a complement to electronic market making, the Company’s cash trading business handles specialized orders and also transacts on the OTC Bulletin Board, marketplaces operated by the OTC Markets Group Inc. and the AIM of the London Stock Exchange.

The Global Execution Services segment comprises agency execution services and trading venues, offering trading in global equities, futures, options, foreign exchange, and fixed income to institutions, banks and broker dealers. The Company generally earns commissions as an agent between principals for transactions that are executed within this segment; however, the Company may commit capital on behalf of clients as needed. Agency-based, execution-only trading in the segment is done primarily through a variety of access points including: (i) algorithmic trading and order routing in global equities; (ii) institutional sales traders executing program, block and riskless principal trades in global equities and ETFs; (iii) an institutional spot foreign exchange ECN; (iv) a fixed income ECN that also offers trading applications; and (v) an ATS for global equities.

The Corporate and Other segment invests principally in strategic financial services-oriented opportunities; allocates, deploys and monitors all capital; and maintains corporate overhead expenses and all other income and expenses that are not attributable to the other segments. The Corporate and Other segment also contains functions that support the Company’s other segments such as self-clearing services, including stock lending activities.

The Company’s revenues, income (loss) from continuing operations before income taxes (“Pre-tax earnings”) and total assets by segment are summarized in the following table (in thousands):

	Market Making		Global Execution Services			Corporate and Other			Consolidated Total
For the year ended December 31, 2014:
Revenues	$	901,152	$	345,710		$	69,369		$	1,316,232
Pre-tax earnings	146,713		11,056			(72,582		)	85,187
Total assets	4,401,021		786,734			1,642,899			6,830,654
For the year ended December 31, 2013:
Revenues	$	688,197	$	197,765		$	141,374		$	1,027,336
Pre-tax earnings	103,612		(25,794		)	(52,842		)	24,978
Total assets	3,939,965		1,106,448			1,950,591			6,997,004
For the year ended December 31, 2012:
Revenues	$	495,427	$	36,211		$	19,596		$	551,234
Pre-tax earnings	34,887		(7,330		)	(1,130		)	26,427
Total assets	1,408,516		33,623			245,397			1,687,536

In the first quarter of 2014, the Company began to charge the Market Making and Global Execution Services segments for the cost of aggregate debt interest. The interest amount charged to each of the segments is determined based on capital limits and requirements. Historically, debt interest was included within the Corporate and Other segment. This change in the measurement of segment profitability has no impact on the consolidated results and will only be reported prospectively, and will not be reflected in financial results prior to January 1, 2014. For the year ended December 31, 2014 debt interest expense included in the results of the Market Making and Global Execution Services segments was $24.7 million and $7.1 million, respectively.

Included in total assets within Global Execution Services at December 31, 2014 is $40.5 million related to KCG Hotspot. As noted in Footnote 4 "Discontinued Operations & Assets and Liabilities Held for Sale", such assets are included as Assets held for sale at December 31, 2014. See Footnote 27 "Subsequent Event"

The Company operates in the U.S. and internationally, primarily in Europe and Asia. The following table presents Revenues by geographic area.

	U.S.		International		Consolidated Total
For the year ended December 31, 2014:
Revenues	$	1,127,088	$	189,144	$	1,316,232
For the year ended December 31, 2013:
Revenues	$	834,410	$	192,926	$	1,027,336
For the year ended December 31, 2012:
Revenues	$	340,117	$	211,117	$	551,234