Derivatives

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Newmark accounts for its derivatives at fair value and recognizes all derivatives as either assets or liabilities on the accompanying unaudited condensed consolidated balance sheets. In its normal course of business, Newmark enters into commitments to extend credit for mortgage loans at a specific rate (rate lock commitments) and commitments to deliver these loans to third-party investors at a fixed price (forward sale contracts). In addition, Newmark had previously entered into the Nasdaq Forwards (see Note 1 - “Organization and Basis of Presentation”) that are accounted for as derivatives.

The fair value of derivative contracts, computed in accordance with Newmark’s netting policy, is set forth below (in thousands):


	June 30, 2023						December 31, 2022
Derivative contract	Assets		Liabilities		Notional Amounts(1)		Assets		Liabilities		Notional Amounts(1)
Rate lock commitments	$	2,092	$	2,749	$	92,367	$	3,181	$	8,754	$	140,697

Forward sale contracts	20,485		72		1,033,824		11,139		624		278,331
Total	$	22,577	$	2,821	$	1,126,191	$	14,320	$	9,378	$	419,028

(1)Notional amounts represent the sum of gross long and short derivative contracts, an indication of the volume of Newmark’s derivative activity, and do not represent anticipated losses.

The change in fair value of rate lock commitments and forward sale contracts related to mortgage loans are reported as part of “Commercial mortgage origination, net” on the accompanying unaudited condensed consolidated statements of operations. The change in fair value of rate lock commitments are disclosed net of $(1.2) million and $(1.1) million of expenses for the three months ended June 30, 2023 and 2022, respectively, and $0.6 million and $0.2 million of expenses for the six months ended June 30, 2023 and 2022, respectively. The changes in fair value of rate lock commitments are reported as part of “Compensation and employee benefits” on the accompanying unaudited condensed consolidated statements of operations.

Gains and losses on derivative contracts, which are included on the accompanying unaudited condensed consolidated statements of operations were as follows (in thousands):


	Location of gains (losses) recognized in income for derivatives	Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
Derivatives not designed as hedging instruments:

Rate lock commitments	Commercial mortgage origination, net	(7,167)		(2,198)		(100)		(5,167)
Rate lock commitments	Compensation and employee benefits	1,238		1,123		(558)		(224)
Forward sale contracts	Commercial mortgage origination, net	18,718		(11,992)		20,414		9,524
Total		$	12,789	$	(13,067)	$	19,756	$	4,133

Derivative assets and derivative liabilities are included in “Other current assets,” “Other assets” and the “Accounts payable, accrued expenses and other liabilities,” on the accompanying unaudited condensed consolidated balance sheets.