Fair Value

The Company’s financial instruments recorded at fair value have been categorized based upon a fair value hierarchy in accordance with accounting guidance, as described in Footnote 2 “Significant Accounting Policies.” The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value (in thousands):



	Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2016	Level 1		Level 2		Level 3		Total
Assets
Financial instruments owned, at fair value:
Equities	$	2,343,033	$	—	$	—	$	2,343,033
Corporate debt	127,237		—		—		127,237
U.S. government and Non-U.S. government obligations	50,461		—		—		50,461
Listed options	19,100		—		—		19,100
Foreign currency forward contracts	—		30		—		30
Total Financial instruments owned, at fair value	2,539,831		30		—		2,539,861
Investments⁽¹⁾	9,198		—		—		9,198
Other ⁽²⁾	—		62,824		2,846		65,670
Total assets held at fair value	$	2,549,029	$	62,854	$	2,846	$	2,614,729
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equities	$	1,821,957	$	—	$	—	$	1,821,957
Corporate debt	123,561		—		—		123,561
U.S. government and Non-U.S. government obligations	87,661		—		—		87,661
Listed options	12,961		—		—		12,961
Total liabilities held at fair value	$	2,046,140	$	—	$	—	$	2,046,140


⁽¹⁾	Investments comprise our investments in CME Group and Bats and are included within Investments on the Consolidated Statements of Financial Condition. See Footnote 9 "Investments" for additional information.


⁽²⁾	Other primarily consists of a $60.5 million receivable from Bats related to the sale of KCG Hotspot and a $2.8 million receivable from the sale of an investment, both of which are included within Other Assets, and $2.3 million primarily related to deferred compensation investments which is included within Investments on the Consolidated Statements of Financial Condition.



	Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2015	Level 1		Level 2		Level 3		Total
Assets
Financial instruments owned, at fair value:
Equities	$	2,129,208	$	—	$	—	$	2,129,208
Listed options	178,360		—		—		178,360
U.S. government and Non-U.S. government obligations	41,706		—		—		41,706
Corporate debt	94,681		—		—		94,681
Foreign currency forward contracts	—		445		—		445
Total Financial instruments owned, at fair value	2,443,955		445		—		2,444,400
Investment in CME Group ⁽¹⁾	1,814		—		—		1,814
Other ⁽²⁾	—		65,732		5,789		71,521
Total assets held at fair value	$	2,445,769	$	66,177	$	5,789	$	2,517,735
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equities	$	1,856,171	$	—	$	—	$	1,856,171
Listed options	151,893		—		—		151,893
U.S. government obligations	21,056		—		—		21,056
Corporate debt	84,284		—		—		84,284
Total liabilities held at fair value	$	2,113,404	$	—	$	—	$	2,113,404


⁽¹⁾	Investment in CME Group is included within Investments on the Consolidated Statements of Financial Condition. See Footnote 9 "Investments" for additional information.


⁽²⁾	Other primarily consists of a $64.2 million receivable from Bats related to the sale of KCG Hotspot and a $5.8 million receivable from the sale of an investment, both of which are included in Other assets, and $1.5 million primarily related to deferred compensation investments which is included within Investments on the Consolidated Statements of Financial Condition.

The Company's derivative financial instruments are also held at fair value. See Footnote 5 "Derivative Financial Instruments" for further information.

The Company’s equities, listed options, U.S. government and non-U.S. government obligations, corporate debt and strategic investments that are publicly traded and for which the Company does not exert significant influence on operating and financial policies are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations with reasonable levels of price transparency.

The types of instruments that trade in markets that are not considered to be active, but are valued based on observable inputs such as quoted market prices or alternative pricing sources with reasonable levels of price transparency are generally classified within Level 2 of the fair value hierarchy.

As of both December 31, 2016 and 2015, a receivable related to the sale of an investment was classified within Level 3 of the fair value hierarchy.

There were no transfers of assets or liabilities held at fair value between levels of the fair value hierarchy for any periods presented.

The following is a summary of changes in fair value of the Company's financial assets that have been categorized within Level 3 of the fair value hierarchy at December 31, 2016 and 2015 (in thousands):



	Level 3 Financial Assets for the year ended December 31, 2016
	Balance at January 1, 2016		Realized gains(losses) during period		Unrealized gains (losses) during the period		Purchases		Sales		Settlements			Issuances		Transfers in or (out) of Level 3		Balance at December 31, 2016
Receivable from sold investment	$	5,789	$	—	$	980	$	—	$	—	$	(3,923	)	$	—	$	—	$	2,846



	Level 3 Financial Assets for the year ended December 31, 2015
	Balance at January 1, 2015		Realized gains(losses) during period		Unrealized gains (losses) during the period		Purchases		Sales		Settlements		Issuances		Transfers in or (out) of Level 3		Balance at December 31, 2015
Receivable from sold investment	$	—	$	—	$	—	$	—	$	—	$	—	$	5,789	$	—	$	5,789

The unrealized gain of $1.0 million for the year ended December 31, 2016 is included within Investment income and other, net on the Consolidated Statements of Operations.

The following is a description of the valuation basis, techniques and significant inputs used by the Company in valuing its Level 2 and Level 3 assets and liabilities.

Foreign currency forward contracts

At December 31, 2016 and December 31, 2015, the Company had foreign currency forward contracts with a notional value of 735.0 million Indian Rupees ($10.7 million) and 850.0 million Indian Rupees ($13.0 million), respectively. These forward contracts are used to hedge the Company’s investment in its Indian subsidiary.

The fair value of these forward contracts were determined based upon spot foreign exchange rates and dealer quotations.

Other

Other primarily consists of the fair value of the Company's receivable from Bats from the sale of KCG Hotspot as more fully described in Footnote 3 "Discontinued Operations, Assets of Businesses Held for Sale & Sales of Businesses". Also included in this category are deferred compensation investments which comprise investments in liquid mutual funds that the Company acquires to hedge its obligations to employees under certain non-qualified deferred compensation arrangements. These mutual fund investments can generally be redeemed at any time and are valued based upon quoted market prices.

The Company has elected the fair value option related to its receivable from Bats. It considers the receivable to be a Level 2 asset in the fair value hierarchy as the fair value is derived from observable significant inputs such as contractual cash flows and market discount rates.

The Company has elected the fair value option related to a receivable originating from the sale of an investment which is classified within Level 3 of the fair value hierarchy. As of December 31, 2016, the range of undiscounted amounts the Company may receive for this receivable is between $0 and $4.6 million. The valuation of this financial instrument was based upon the use of a model developed by Company management. Inputs into this model were based upon risk profiles of similar financial instruments in the market and reflects management’s judgment relating to the appropriate discount on the receivable as well as a financial assessment of the debtor. To the extent that valuations based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Movements in these unobservable inputs would not materially impact the Company's results of operations.