Fair Value of Financial Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Hierarchy of Financial Assets and Liabilities under U.S. GAAP Guidance

The following table sets forth by level within the fair value hierarchy financial assets and liabilities accounted for at fair value under U.S. GAAP guidance (in thousands):



	As of December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	36,795	$	—	$	—	$	36,795
Nasdaq Forwards	—		—		26,502		26,502
Loans held for sale, at fair value	—		215,290		—		215,290
Rate lock commitments	—		—		32,035		32,035
Forward sale contracts	—		—		14,389		14,389
Total	$	36,795	$	215,290	$	72,926	$	325,011
Liabilities:
Accounts payable, accrued expenses and other liabilities—contingent consideration	$	—	$	—	$	45,172	$	45,172
Rate lock commitments	—		—		12,124		12,124
Forwards sale contracts	—		—		13,537		13,537
Total	$	—	$	—	$	70,833	$	70,833



	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	48,942	$	—	$	—	$	48,942
Nasdaq Forwards	—		—		77,619		77,619
Loans held for sale, at fair value	—		990,864		—		990,864
Rate lock commitments	—		—		6,732		6,732
Forwards sale contracts	—		—		8,177		8,177
Total	$	48,942	$	990,864	$	92,528	$	1,132,334
Liabilities:
Accounts payable, accrued expenses and other liabilities—contingent consideration	$	—	$	—	$	32,551	$	32,551
Rate lock commitments	—		—		7,470		7,470
Forwards sale contracts	—		—		9,208		9,208
Total	$	—	$	—	$	49,229	$	49,229

Changes in Level 3 RBC Forwards, Rate Lock Commitments, Forwards and Contingent Consideration Measured at Fair Value on Recurring Basis

Changes in Level 3 Nasdaq Forwards, rate lock commitments, forwards and contingent consideration measured at fair value on recurring basis were as follows (in thousands):



	As of December 31, 2019
	Opening Balance		Total realized and unrealized gains (losses) included in Net income			Issuances		Settlements			Closing Balance		Unrealized gains (losses) outstanding as of December 31, 2019
Assets:
Rate lock commitments	$	6,732	$	32,035		$	—	$	(6,732	)	$	32,035	$	32,035
Forward sale contracts	8,177		14,389			—		(8,177		)	14,389		14,389
Nasdaq Forwards	77,619		(51,117		)	—		—			26,502		26,502
Total	$	92,528	$	(4,693	)	$	—	$	(14,909	)	$	72,926	$	72,926
	Opening Balance		Total realized and unrealized (gains) losses included in Net income			Issuances		Settlements			Closing Balance		Unrealized (gains) losses outstanding as of December 31, 2019
Liabilities:
Accounts payable, accrued expenses and other liabilities – contingent consideration	$	32,551	$	2,287		$	14,957	$	(4,623	)	$	45,172	$	2,287
Rate lock commitments	7,470		12,124			—		(7,470		)	12,124		12,124
Forward sale contracts	9,208		13,537			—		(9,208		)	13,537		13,537
Total	$	49,229	$	27,948		$	14,957	$	(21,301	)	$	70,833	$	27,948



	As of December 31, 2018
	Opening Balance		Total realized and unrealized gains (losses) included in Net income		Issuances		Settlements			Closing Balance		Unrealized gains (losses) outstanding as of December 31, 2018
Assets:
Rate lock commitments	$	2,923	$	6,732	$	—	$	(2,923	)	$	6,732	$	6,732
Forward sale contracts	3,753		8,177		—		(3,753		)	8,177		8,177
Nasdaq Forwards	—		19,002		58,617		—			77,619		19,002
Total	$	6,676	$	33,911	$	58,617	$	(6,676	)	$	92,528	$	33,911
	Opening Balance		Total realized and unrealized (gains) losses included in Net income		Issuances		Settlements			Closing Balance		Unrealized (gains) losses outstanding as of December 31, 2018
Liabilities:
Accounts payable, accrued expenses and other liabilities – contingent consideration	$	23,711	$	700	$	12,615	$	(4,475	)	$	32,551	$	700
Rate lock commitments	2,390		7,470		—		(2,390		)	7,470		7,470
Forward sale contracts	657		9,208		—		(657		)	9,208		9,208
Total	$	26,758	$	17,378	$	12,615	$	(7,522	)	$	49,229	$	17,378

Quantitative Information about Level 3 Fair Value Measurements

The following tables present quantitative information about the significant unobservable inputs utilized by Newmark in the fair value measurement of Level 3 assets and liabilities measured at fair value on a recurring basis:



December 31, 2019
Level 3 assets and liabilities	Assets		Liabilities		Significant Unobservable Inputs	Range		Weighted Average
Accounts payable, accrued expenses and other liabilities:
Contingent consideration	$	—	$	45,172	Discount rate	0.3%-10.4%	⁽¹⁾	8.6%
					Probability of meeting earnout and contingencies	90%-100%	⁽¹⁾	98.1%
					Financial forecast information
Derivative assets and liabilities:
Nasdaq Forwards	$	26,502	$	—	Implied volatility	25.7%-34.8%	⁽²⁾	32.2%
Forward sale contracts	$	14,389	$	13,537	Counterparty credit risk	N/A		N/A
Rate lock commitments	$	32,035	$	12,124	Counterparty credit risk	N/A		N/A



December 31, 2018
Level 3 assets and liabilities	Assets		Liabilities		Significant Unobservable Inputs	Range		Weighted Average
Accounts payable, accrued expenses and other liabilities:
Contingent consideration	—		$	32,551	Discount rate	0.3%-10.4%		8.2%
					Probability of meeting earnout and contingencies	99%-100%	⁽¹⁾	99.6%
					Financial forecast information
Derivative assets and liabilities:
Nasdaq Forwards	$	77,619	$	—	Volatility	23.7%-34.8%	⁽²⁾	30.2%
Forward sale contracts	$	8,177	$	9,208	Counterparty credit risk	N/A		N/A
Rate lock commitments	$	6,732	$	7,470	Counterparty credit risk	N/A		N/A


⁽¹⁾	Newmark’s estimate of contingent consideration as of December 31, 2019 and 2018 was based on the acquired business’ projected future financial performance, including revenues.

(2)The volatility of Newmark’s Nasdaq Forwards is primarily based on the volatility of the underlying Nasdaq stock price.