Business Segments

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Business Segments

Business Segments

As of September 30, 2016, 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. KCG 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.

The Global Execution Services segment comprises agency execution services and trading venues, offering trading in global equities, options, futures and fixed income to institutions, banks and broker dealers. The Company generally earns commissions as an agent between principals for transactions; 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 and options; (ii) institutional sales traders executing program, block and riskless principal trades in global equities and ETFs; (iii) a fixed income ECN that also offers trading applications; and (iv) an ATS for U.S. equities.

In September 2016, the Company completed the acquisition of Neonet. Neonet is an independent agency broker and execution specialist based in Stockholm, Sweden. The results of Neonet, beginning on the date of acquisition, are included in this segment.

The Corporate and Other segment contains investments principally in strategic financial services-oriented opportunities; manages the deployment of capital across the organization; houses executive management functions; 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, (loss) income 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 three months ended September 30, 2016:
Revenues	$	136,107		$	63,713		$	8,712		$	208,532
Pre-tax earnings	(13,776		)	(439		)	(13,759		)	(27,974		)
Total assets	5,280,491			1,060,460			409,650			6,750,601
For the three months ended September 30, 2015:
Revenues	$	299,755		$	69,713		$	7,568		$	377,036
Pre-tax earnings	85,419			(1,050		)	(48,951		)	35,419
Total assets	5,125,761			798,956			925,452			6,850,169
For the nine months ended September 30, 2016:
Revenues	$	606,849		$	208,245		$	58,776		$	873,870
Pre-tax earnings	102,223			7,506			(23,173		)	86,556
Total assets	5,280,491			1,060,460			409,650			6,750,601
For the nine months ended September 30, 2015:
Revenues	$	716,631		$	597,502		$	20,941		$	1,335,074
Pre-tax earnings	129,160			370,072			(114,799		)	384,433
Total assets	5,125,761			798,956			925,452			6,850,169

Included in Revenues and Pre-tax earnings within Corporate and Other for the nine months ended September 30, 2016 is a $33.4 million gain from the sale of a portion of the Company's investment in Bats. Included in Revenues and Pre-tax earnings within Global Execution Services for the nine months ended September 30, 2015 are results of KCG Hotspot through March 13, 2015, the date of the sale. Also included in Revenues and Pre-tax earnings within the Global Execution Services segment for the nine months ended September 30, 2015 is a gain related to the sale of KCG Hotspot of $385.0 million and $373.8 million, respectively.

Included in total assets within Corporate and Other at September 30, 2016 is $8.2 million related to Assets of businesses held for sale. See Footnote 3 "Assets of Businesses Held for Sale & Sales of Businesses" for further information.