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
March 31, 2017	Level 1		Level 2		Level 3		Total
Assets
Financial instruments owned, at fair value:
Equities	$	2,179,211	$	—	$	—	$	2,179,211
Corporate debt	91,314		—		—		91,314
U.S. government and Non-U.S. government obligations	37,618		—		—		37,618
Listed options	12,299		—		—		12,299
Total Financial instruments owned, at fair value	2,320,442		—		—		2,320,442
Investments⁽¹⁾	2,379		2,234		—		4,613
Other ⁽²⁾	—		54,142		2,838		56,980
Total assets held at fair value	$	2,322,821	$	56,376	$	2,838	$	2,382,035
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equities	$	1,694,374	$	—	$	—	$	1,694,374
Corporate debt	85,926		—		—		85,926
U.S. government and Non-U.S. government obligations	91,242		—		—		91,242
Listed options	35,835		—		—		35,835
Foreign currency forward contracts	—		598		—		598
Total liabilities held at fair value	$	1,907,377	$	598	$	—	$	1,907,975


⁽¹⁾	Investments comprise $2.4 million of Level 1 investments in CME Group and $2.2 million of Level 2 investments primarily related to deferred compensation investments, all of which are included within Investments on the Consolidated Statements of Financial Condition. See Footnote 8 "Investments" for additional information.


⁽²⁾	Other primarily consists of a $54.1 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 on the Consolidated Statements of Financial Condition.



	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		2,286		—		11,484
Other ⁽²⁾	—		60,538		2,846		63,384
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
Listed options	12,961		—		—		12,961
U.S. government obligations	87,661		—		—		87,661
Corporate debt	123,561		—		—		123,561
Total liabilities held at fair value	$	2,046,140	$	—	$	—	$	2,046,140


⁽¹⁾	Investments comprise $9.2 million of Level 1 investments in CME Group and Bats and also includes $2.3 million of Level 2 investments primarily related to deferred compensation investments, all of which are included within Investments on the Consolidated Statements of Financial Condition. See Footnote 8 "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 in Other assets 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 March 31, 2017 and December 31, 2016, 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 March 31, 2017 and December 31, 2016 (in thousands):



	Level 3 Financial Assets as of March 31, 2017
	Balance at January 1, 2017		Realized gains(losses) during period		Unrealized gains (losses) during the period			Purchases		Sales		Settlements		Issuances		Transfers in or (out) of Level 3		Balance at March 31, 2017
Receivable from sold investment	$	2,846	$	—	$	(8	)	$	—	$	—	$	—	$	—	$	—	$	2,838



	Level 3 Financial Assets as of 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

Unrealized gains or losses are 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 March 31, 2017 and December 31, 2016, the Company had a foreign currency forward contract with a notional value of 735.0 million Indian Rupees ($11.3 million). This forward contract is 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.

Investments

Investments primarily include 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.

Other

Other primarily consists of the fair value of the Company's receivable from Bats/CBOE from the sale of KCG Hotspot as more fully described in Footnote 3 "Assets of Business Held for Sale & Sales of Businesses".

The Company has elected the fair value option related to its receivable from Bats/CBOE. 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 March 31, 2017, 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.