UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

____________________

(Mark One)



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~March~~December 31, 2020



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number 000-23554

~~INTL FCStone~~StoneX Group Inc.

(Exact name of registrant as specified in its charter)



Delaware						59-2921318
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

155 East 44th Street, Suite 900

New York, NY 10017

(Address of principal executive offices) (Zip Code)

(212) 485-3500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

~~INTL~~SNEX

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x ☒No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, ora smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer, ” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

~~Large accelerated filer~~

~~Accelerated filer~~

Non-accelerated filer

~~(Do not check if a smaller reporting company)~~

Smaller reporting company

o☐

Emerging growth company

o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

As of ~~May~~February 4, ~~2020,~~2021, there were ~~19,217,710~~19,644,704 shares of the registrant’s common stock outstanding.

~~INTL FCStone~~

Table of Contents

StoneX Group Inc.

Quarterly Report on Form 10-Q for the Quarterly Period Ended ~~March~~December 31, 2020

Table of Contents


				Page
Part I. FINANCIAL INFORMATION

			~~Page~~
~~Part I. FINANCIAL INFORMATION~~

Item 1.	Financial Statements (Unaudited)

		Condensed Consolidated Balance Sheets		1

		Condensed Consolidated Income Statements		2

		Condensed Consolidated Statements of Comprehensive Income		3

		Condensed Consolidated Statements of Cash Flows		4

		Condensed Consolidated Statements of Stockholders’ Equity		6

		Notes to Condensed Consolidated Financial Statements		7

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		3330

Item 3.		Quantitative and Qualitative Disclosures about Market Risk		6154

Item 4.		Controls and Procedures		6356

Part II. OTHER INFORMATION

Item 1.		Legal Proceedings		6356

Item 1A.		Risk Factors		6356

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		6457

Item 6.		Exhibits		6457

Signatures				6457

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

~~INTL FCStone~~StoneX Group Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions, except par value and share amounts) March 31,
2020 September 30,
2019
ASSETS
Cash and cash equivalents $ 519.5
$ 471.3
Cash, securities and other assets segregated under federal and other regulations (including $8.1 and $306 at fair value at March 31, 2020 and September 30, 2019, respectively) 1,176.1
1,049.9
Collateralized transactions:
Securities purchased under agreements to resell 1,260.0
1,424.5
Securities borrowed 1,063.8
1,423.2
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net (including $378.7 and $626.9 at fair value at March 31, 2020 and September 30, 2019, respectively) 3,359.5
2,540.5
Receivable from clients, net 481.1
422.3
Notes receivable, net 3.9
2.9
Income taxes receivable 1.5
5.2
Financial instruments owned, at fair value (includes securities pledged as collateral that can be sold or repledged of $743.6 and $478.8 at March 31, 2020 and September 30, 2019, respectively) 2,525.7
2,175.2
Physical commodities inventory, net (including $194.1 and $151.9 at fair value at March 31, 2020 and September 30, 2019, respectively) 255.2
229.3
Deferred income taxes, net 14.0
18.0
Property and equipment, net 43.0
43.9
Operating right of use assets 31.6
—
Goodwill and intangible assets, net 73.1
67.9
Other assets 62.9
62.0
Total assets $ 10,870.9
$ 9,936.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and other accrued liabilities (including $1.8 million at fair value at March 31, 2020 and September 30, 2019, respectively) $ 184.8
$ 157.5
Operating lease liabilities 34.2
—
Payables to:
Clients 4,531.5
3,589.5
Broker-dealers, clearing organizations and counterparties (including $95.8 and $5.6 at fair value at March 31, 2020 and September 30, 2019, respectively) 429.2
266.2
Lenders under loans 275.0
202.3
Senior secured term loan, net 184.3
167.6
Income taxes payable 10.6
10.4
Collateralized transactions:
Securities sold under agreements to repurchase 2,800.3
2,773.7
Securities loaned 1,068.8
1,459.9
Financial instruments sold, not yet purchased, at fair value 703.6
714.8
Total liabilities 10,222.3
9,341.9
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; no shares issued or outstanding —
—
Common stock, $0.01 par value. Authorized 30,000,000 shares; 21,638,425 issued and 19,216,468 outstanding at March 31, 2020 and 21,297,317 issued and 19,075,360 outstanding at September 30, 2019 0.2
0.2
Common stock in treasury, at cost - 2,421,957 shares at March 31, 2020 and 2,221,957 shares at September 30, 2019 (57.6 ) (50.1 )
Additional paid-in-capital 285.8
276.8
Retained earnings 458.4
402.1
Accumulated other comprehensive loss (38.2 ) (34.8 )
Total equity 648.6
594.2
Total liabilities and stockholders' equity $ 10,870.9
$ 9,936.1

~~See accompanying notes to condensed consolidated financial statements.~~

~~INTL FCStone Inc.~~

~~Condensed Consolidated Income Statements~~

~~(Unaudited)~~

Three Months Ended March 31, Six Months Ended March 31,
(in millions, except share and per share amounts) 2020 2019 2020 2019
Revenues:
Sales of physical commodities $ 20,016.9
$ 6,929.5
$ 30,994.9
$ 13,225.3
Principal gains, net 168.5
110.3
281.0
203.1
Commission and clearing fees 116.6
85.1
203.8
184.6
Consulting, management, and account fees 22.6
19.1
43.9
38.2
Interest income 41.7
48.2
87.7
93.2
Total revenues 20,366.3
7,192.2
31,611.3
13,744.4
Cost of sales of physical commodities 19,999.5
6,921.1
30,967.7
13,208.6
Operating revenues 366.8
271.1
643.6
535.8
Transaction-based clearing expenses 63.8
42.7
110.1
92.8
Introducing broker commissions 29.6
24.8
55.8
57.4
Interest expense 30.0
38.4
63.8
71.4
Net operating revenues 243.4
165.2
413.9
314.2
Compensation and other expenses:
Compensation and benefits 136.7
97.9
240.7
187.0
Trading systems and market information 11.2
9.5
21.6
18.7
Occupancy and equipment rental 4.9
5.0
9.9
9.4
Professional fees 4.7
5.0
10.7
10.3
Travel and business development 3.2
4.0
7.7
7.8
Non-trading technology and support 5.9
5.0
11.9
9.2
Depreciation and amortization 4.2
3.2
8.1
6.1
Communications 1.5
2.0
3.1
3.3
Bad debts 4.4
0.7
4.4
1.0
Recovery of bad debt on physical coal —
—
—
(2.4 )
Other 10.6
7.4
18.1
13.9
Total compensation and other expenses 187.3
139.7
336.2
264.3
Other gain —
5.4
0.1
5.4
Income before tax 56.1
30.9
77.8
55.3
Income tax expense 16.8
7.5
22.2
13.7
Net income $ 39.3
$ 23.4
$ 55.6
$ 41.6
Earnings per share:
Basic $ 2.03
$ 1.23
$ 2.88
$ 2.19
Diluted $ 2.00
$ 1.21
$ 2.84
$ 2.15
Weighted-average number of common shares outstanding:
Basic 18,872,937
18,753,490
18,811,268
18,706,104
Diluted 19,189,953
19,004,793
19,132,497
18,999,889


(in millions, except par value and share amounts)	December 31, 2020		September 30, 2020
ASSETS
Cash and cash equivalents	$	1,033.7	$	952.6
Cash, securities and other assets segregated under federal and other regulations (including $2.0 million and $2.6 million at fair value at December 31, 2020 and September 30, 2020, respectively)	2,203.9		1,920.2
Collateralized transactions:
Securities purchased under agreements to resell	1,935.6		1,696.2
Securities borrowed	1,227.8		1,440.0


Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net (including $1,193.9 million and $1,775.8 million at fair value at December 31, 2020 and September 30, 2020, respectively)	3,590.1		3,629.9
Receivable from clients, net	247.8		411.4
Notes receivable, net	4.7		1.7
Income taxes receivable	20.5		16.6
Financial instruments owned, at fair value (includes securities pledged as collateral that can be sold or repledged of $713.2 million and $468.6 million at December 31, 2020 and September 30, 2020, respectively)	2,852.4		2,727.7
Physical commodities inventory, net (including $299.5 million and $215.7 million at fair value at December 31, 2020 and September 30, 2020, respectively)	439.1		281.1
Deferred income taxes, net	39.3		36.9
Property and equipment, net	73.4		62.1
Operating right of use assets	99.1		101.5
Goodwill and intangible assets, net	106.4		109.5
Other assets	101.0		87.5
Total assets	$	13,974.8	$	13,474.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and other accrued liabilities (including $1.3 million and $1.5 million at fair value at December 31, 2020 and September 30, 2020, respectively)	$	244.5	$	272.6
Operating lease liabilities	118.0		118.7
Payables to:
Clients	5,891.2		5,689.0
Broker-dealers, clearing organizations and counterparties (including $30.6 million and $14.7 million at fair value at December 31, 2020 and September 30, 2020, respectively)	314.8		537.5
Lenders under loans	373.6		268.1
Senior secured borrowings, net	513.8		515.5
Income taxes payable	18.9		22.6
Collateralized transactions:
Securities sold under agreements to repurchase	3,635.3		3,155.5
Securities loaned	1,237.8		1,441.9
Financial instruments sold, not yet purchased, at fair value	827.4		686.0

Total liabilities	13,175.3		12,707.4
Commitments and contingencies (Note 11)	0		0
Stockholders' equity:

Preferred stock, $0.01 par value. Authorized 1,000,000 shares; 0 shares issued or outstanding	0		0
Common stock, $0.01 par value. Authorized 30,000,000 shares; 22,026,627 issued and 19,604,670 outstanding at December 31, 2020 and 21,798,551 issued and 19,376,594 outstanding at September 30, 2020	0.2		0.2
Common stock in treasury, at cost - 2,421,957 shares at December 31, 2020 and September 30, 2020, respectively	(57.6)		(57.6)
Additional paid-in-capital	297.4		292.6
Retained earnings	585.7		572.4
Accumulated other comprehensive loss, net	(26.2)		(40.1)


Total equity	799.5		767.5
Total liabilities and stockholders' equity	$	13,974.8	$	13,474.9

See accompanying notes to condensed consolidated financial statements.

~~INTL FCStone~~

Table of Contents

StoneX Group Inc.

Condensed Consolidated Income Statements ~~of Comprehensive Income~~

(Unaudited)

Three Months Ended March 31, Six Months Ended March 31,
(in millions) 2020 2019 2020 2019
Net income $ 39.3
$ 23.4
$ 55.6
$ 41.6
Other comprehensive (loss) income:
Foreign currency translation adjustment (3.4 ) —
(2.7 ) 0.3
Other comprehensive (loss) income (3.4 ) —
(2.7 ) 0.3
Comprehensive income $ 35.9
$ 23.4
$ 52.9
$ 41.9


	Three Months Ended December 31,
(in millions, except share and per share amounts)	2020		2019
Revenues:
Sales of physical commodities	$	8,883.5	$	10,978.0
Principal gains, net	203.4		112.5
Commission and clearing fees	119.4		87.2
Consulting, management, and account fees	23.0		21.3
Interest income	21.2		46.0
Total revenues	9,250.5		11,245.0
Cost of sales of physical commodities	8,870.4		10,968.2
Operating revenues	380.1		276.8
Transaction-based clearing expenses	65.4		46.3
Introducing broker commissions	38.2		26.2
Interest expense	9.9		31.1
Interest expense on corporate funding	10.5		2.7
Net operating revenues	256.1		170.5
Compensation and other expenses:
Compensation and benefits	153.6		104.0
Trading systems and market information	13.7		10.4
Professional fees	9.3		6.0
Non-trading technology and support	10.9		6.0
Occupancy and equipment rental	8.6		5.0
Selling and marketing	8.8		1.4
Travel and business development	1.0		4.5
Communications	2.3		1.6
Depreciation and amortization	8.4		3.9
Bad debts	1.5		0
Other	11.1		6.1
Total compensation and other expenses	229.2		148.9
Other gain	0		0.1
Income before tax	26.9		21.7
Income tax expense	7.4		5.4
Net income	$	19.5	$	16.3
Earnings per share:
Basic	$	1.00	$	0.85
Diluted	$	0.98	$	0.84
Weighted-average number of common shares outstanding:
Basic	18,940,876		18,750,270
Diluted	19,470,853		19,074,562

See accompanying notes to condensed consolidated financial statements.

~~INTL FCStone~~

Table of Contents

StoneX Group Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended December 31,
(in millions)	2020		2019
Net income	$	19.5	$	16.3
Other comprehensive income:
Foreign currency translation adjustment	13.9		0.7








Other comprehensive income	13.9		0.7
Comprehensive income	$	33.4	$	17.0

See accompanying notes to condensed consolidated financial statements.

Table of Contents

StoneX Group Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended March 31,							Three Months Ended December 31,
(in millions)	2020			2019			(in millions)	2020		2019
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	55.6		$	41.6		Net income	$	19.5	$	16.3
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash (used in) provided by operating activities:							Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	8.1			6.1			Depreciation and amortization	8.4		3.9
Amortization of right of use assets							Amortization of right of use assets	2.8		1.5
Bad debts	4.4			1.0			Bad debts	1.5		0
Recovery of bad debt on physical coal	—			(2.4		)

Deferred income taxes	(1.0		)	(0.4		)	Deferred income taxes	0.2		(0.6)
Amortization of debt issuance costs	0.7			0.8			Amortization of debt issuance costs	1.0		0.4
Amortization of share-based compensation	5.0			3.8			Amortization of share-based compensation	3.1		2.6
Bargain purchase gain on acquisition	—			(5.4		)

Changes in operating assets and liabilities, net:							Changes in operating assets and liabilities, net:
Securities and other assets segregated under federal and other regulations	297.9			407.5			Securities and other assets segregated under federal and other regulations	2.8		299.0
Securities purchased under agreements to resell	164.5			(371.6		)	Securities purchased under agreements to resell	(239.4)		(178.6)
Securities borrowed	359.4			(1,064.3		)	Securities borrowed	212.2		(4.5)
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net	(52.2		)	5.8			Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net	(350.8)		281.1
Receivables from clients, net	(63.2		)	(17.2		)	Receivables from clients, net	153.9		93.3
Notes receivable, net	(1.0		)	1.2			Notes receivable, net	(3.0)		(2.9)
Income taxes receivable	8.7			0.1			Income taxes receivable	(4.5)		0.5
Financial instruments owned, at fair value	(350.5		)	(534.8		)	Financial instruments owned, at fair value	(124.7)		(2.2)
Physical commodities inventory, net	(25.9		)	(57.3		)	Physical commodities inventory, net	(158.0)		(20.4)
Operating right of use assets	3.9			—

Other assets	—			(9.6		)	Other assets	(7.1)		(4.1)
Accounts payable and other accrued liabilities	30.2			(19.7		)	Accounts payable and other accrued liabilities	(27.8)		(25.8)
Operating lease liabilities	(4.0		)	—			Operating lease liabilities	(1.6)		(1.3)
Payables to clients	942.0			(642.6		)	Payables to clients	202.0		114.2
Payables to broker-dealers, clearing organizations and counterparties	163.0			485.4			Payables to broker-dealers, clearing organizations and counterparties	(222.7)		14.4
Income taxes payable	0.1			2.7			Income taxes payable	(3.7)		0.4
Securities sold under agreements to repurchase	26.6			448.0			Securities sold under agreements to repurchase	479.8		157.9
Securities loaned	(391.1		)	1,098.6			Securities loaned	(204.1)		(29.1)
Financial instruments sold, not yet purchased, at fair value	(11.2		)	85.8			Financial instruments sold, not yet purchased, at fair value	141.4		(48.4)
Net cash provided by (used in) operating activities	1,170.0			(136.9		)
Net cash (used in) provided by operating activities							Net cash (used in) provided by operating activities	(118.8)		667.6
Cash flows from investing activities:							Cash flows from investing activities:

Cash paid for acquisitions, net	(7.8		)	(7.8		)	Cash paid for acquisitions, net	(0.4)		(5.1)

Purchase of property and equipment	(4.5		)	(7.3		)	Purchase of property and equipment	(22.4)		(1.8)
Net cash used in investing activities	(12.3		)	(15.1		)	Net cash used in investing activities	(22.8)		(6.9)
Cash flows from financing activities:							Cash flows from financing activities:
Net change in payables to lenders under loans with maturities 90 days or less	111.6			(98.0		)	Net change in payables to lenders under loans with maturities 90 days or less	91.5		(106.0)
Proceeds from payables to lenders under loans with maturities greater than 90 days	311.5			—			Proceeds from payables to lenders under loans with maturities greater than 90 days	67.0		180.5
Repayments of payables to lenders under loans with maturities greater than 90 days	(350.0		)	—			Repayments of payables to lenders under loans with maturities greater than 90 days	(62.0)		(138.0)
Proceeds from issuance of senior secured term loan	21.5			175.0			Proceeds from issuance of senior secured term loan	0		21.5
Repayments of senior secured term loan	(4.9		)	(2.2		)	Repayments of senior secured term loan	(2.4)		(2.5)

Issuance of note payable							Issuance of note payable	9.0		0
Repayments of note payable	(0.4		)	(0.4		)	Repayments of note payable	0		(0.1)
Deferred payments on acquisitions	(0.2		)	—			Deferred payments on acquisitions	(0.3)		0
Repurchase of common stock	(7.5		)	—			Repurchase of common stock	0		(0.4)
Debt issuance costs	(1.5		)	(3.2		)	Debt issuance costs	0		(0.2)
Exercise of stock options	4.0			0.8			Exercise of stock options	1.7		1.5
Net cash provided by financing activities	84.1			72.0

Net cash provided by (used in) financing activities							Net cash provided by (used in) financing activities	104.5		(43.7)
Effect of exchange rates on cash, segregated cash, cash equivalents, and segregated cash equivalents	(2.7		)	0.3			Effect of exchange rates on cash, segregated cash, cash equivalents, and segregated cash equivalents	14.1		0.7
Net increase (decrease) in cash, segregated cash, cash equivalents, and segregated cash equivalents	1,239.1			(79.7		)
Net (decrease) increase in cash, segregated cash, cash equivalents, and segregated cash equivalents							Net (decrease) increase in cash, segregated cash, cash equivalents, and segregated cash equivalents	(23.0)		617.7
Cash, segregated cash, cash equivalents, and segregated cash equivalents at beginning of period	2,451.3			2,190.1			Cash, segregated cash, cash equivalents, and segregated cash equivalents at beginning of period	4,468.4		2,451.3
Cash, segregated cash, cash equivalents, and segregated cash equivalents at end of period	$	3,690.4		$	2,110.4		Cash, segregated cash, cash equivalents, and segregated cash equivalents at end of period	$	4,445.4	$	3,069.0
Supplemental disclosure of cash flow information:							Supplemental disclosure of cash flow information:
Cash paid for interest	$	64.3		$	69.8		Cash paid for interest	$	27.5	$	33.0
Income taxes paid, net of cash refunds	$	13.2		$	11.3		Income taxes paid, net of cash refunds	$	14.4	$	5.2
Supplemental disclosure of non-cash investing and financing activities:							Supplemental disclosure of non-cash investing and financing activities:
Identified intangible assets and goodwill on acquisitions	$	7.2		$	2.7		Identified intangible assets and goodwill on acquisitions	$	0.5	$	4.4

Acquisition of business:							Acquisition of business:
Assets acquired	$	352.6		$	25.9		Assets acquired	$	0.1	$	296.5
Liabilities assumed	(352.0		)	(7.3		)	Liabilities assumed	(0.2)		(295.8)
Total net assets acquired	$	0.6		$	18.6
Total net (liabilities) assets assumed							Total net (liabilities) assets assumed	$	(0.1)	$	0.7

See accompanying notes to condensed consolidated financial statements.

~~INTL FCStone~~

Table of Contents

StoneX Group Inc.

Condensed Consolidated Statements of Cash Flows - Continued

(Unaudited)

The following table provides a reconciliation of cash, segregated cash, cash equivalents, and segregated cash equivalents reported within the condensed consolidated balance sheets.


	December 31,
(in millions)	2020		2019
Cash and cash equivalents	$	1,033.7	$	338.9

Cash segregated under federal and other regulations(1)	2,193.7		1,073.9
Securities segregated under federal and other regulations(1)	0		299.5
Cash segregated and deposited with or pledged to exchange-clearing organizations and other futures commission merchants (“FCMs”)(2)	1,208.4		993.0
Securities segregated and pledged to exchange-clearing organizations(2)	9.6		363.7
Total cash, segregated cash, cash equivalents, and segregated cash equivalents shown in the condensed consolidated statements of cash flows	$	4,445.4	$	3,069.0

March 31,
(in millions) 2020 2019
Cash and cash equivalents $ 519.5
$ 274.4
Cash segregated under federal and other regulations⁽¹⁾
1,168.0
723.3
Cash segregated and deposited with or pledged to exchange-clearing organizations and other futures commission merchants (“FCMs”)⁽²⁾
1,896.7
993.9
Securities segregated and pledged to exchange-clearing organizations⁽²⁾
106.2
118.8
Total cash, segregated cash, cash equivalents, and segregated cash equivalents shown in the condensed consolidated statements of cash flows $ 3,690.4
$ 2,110.4

⁽¹⁾Represents segregated client cash and United States (“U.S.”) Treasury obligations held at third-party banks. Excludes segregated commodity warehouse receipts, segregated ~~United States (“U.S.”) Treasury~~U.S.Treasury obligations with original or acquired maturities of greater than 90 days, and other assets of ~~$8.1~~$10.2 million and ~~$235.7~~$7.0 million as of ~~March~~December 31, 2020 and 2019, respectively, included within ‘Cash, securities and other assets segregated under federal and other regulations’ on the condensed consolidated balance sheets.

⁽²⁾Represents segregated client cash and U.S. Treasury obligations on deposit with, or pledged to, exchange clearing organizations and other FCMs. Excludes non-segregated cash, segregated ~~securities~~U.S. Treasury obligations pledged to exchange-clearing organizations with original or acquired maturities greater than 90 days, and other assets of ~~$1,356.6~~$2,372.1 million and ~~$1,154.1~~$1,023.3 million as of ~~March~~December 31, 2020 and 2019, respectively, included within ‘Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net’ on the condensed consolidated balance sheets.

See accompanying notes to condensed consolidated financial statements.

~~INTL FCStone~~

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StoneX Group Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Three months ended December 31, 2019
(in millions)	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net		Total
Balances as of September 30, 2019	$	0.2	$	(50.1)	$	276.8	$	402.1	$	(34.8)	$	594.2
ASU 2018-02 cumulative transition adjustment							0.7		(0.7)		$	0
Adjusted Balances as of September 30, 2019	0.2		(50.1)		276.8		402.8		(35.5)		594.2
Net income							16.3				16.3
Other comprehensive income									0.7		0.7
Exercise of stock options					1.5						1.5
Share-based compensation					2.6						2.6
Repurchase of common stock			(0.4)								(0.4)
Balances as of December 31, 2019	$	0.2	$	(50.5)	$	280.9	$	419.1	$	(34.8)	$	614.9


	Three months ended March 31, 2019															Three months ended December 31, 2020
(in millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net			Total		(in millions)	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net		Total
Balances as of December 31, 2018	$	0.2	$	(46.3	)	$	269.7	$	335.2	$	(32.8	)	$	526.0
Balances as of September 30, 2020															Balances as of September 30, 2020	$	0.2	$	(57.6)	$	292.6	$	572.4	$	(40.1)	$	767.5
ASU 2016-13 cumulative transition adjustment															ASU 2016-13 cumulative transition adjustment							(6.2)				(6.2)
Adjusted Balances as of September 30, 2020															Adjusted Balances as of September 30, 2020	0.2		(57.6)		292.6		566.2		(40.1)		761.3
Net income								23.4					23.4		Net income							19.5				19.5
Other comprehensive income															Other comprehensive income									13.9		13.9
Exercise of stock options						0.5							0.5		Exercise of stock options					1.7						1.7
Share-based compensation						1.9							1.9		Share-based compensation					3.1						3.1
Balances as of March 31, 2019	$	0.2	$	(46.3	)	$	272.1	$	358.6	$	(32.8	)	$	551.8
Repurchase of common stock															Repurchase of common stock			—								—
Balances as of December 31, 2020															Balances as of December 31, 2020	$	0.2	$	(57.6)	$	297.4	$	585.7	$	(26.2)	$	799.5

Three months ended March 31, 2020
(in millions) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss, net Total
Balances as of December 31, 2019 $ 0.2
$ (50.5 ) $ 280.9
$ 419.1
$ (34.8 ) $ 614.9
Net income 39.3
39.3
Other comprehensive loss (3.4 ) (3.4 )
Exercise of stock options 2.5
2.5
Share-based compensation 2.4
2.4
Repurchase of stock (7.1 ) (7.1 )
Balances as of March 31, 2020 $ 0.2
$ (57.6 ) $ 285.8
$ 458.4
$ (38.2 ) $ 648.6

Six Months Ended March 31, 2019
(in millions) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss, net Total
Balances as of September 30, 2018 $ 0.2
$ (46.3 ) $ 267.5
$ 317.0
$ (33.1 ) $ 505.3
Net income 41.6
41.6
Other comprehensive gain 0.3
0.3
Exercise of stock options 0.8
0.8
Share-based compensation 3.8
3.8
Balances as of March 31, 2019 $ 0.2
$ (46.3 ) $ 272.1
$ 358.6
$ (32.8 ) $ 551.8

Six Months Ended March 31, 2020
(in millions) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss, net Total
Balances as of September 30, 2019 $ 0.2
$ (50.1 ) $ 276.8
$ 402.1
$ (34.8 ) $ 594.2
ASU 2018-02 cumulative transition adjustment 0.7
(0.7 ) —
Adjusted Balances as of September 30, 2019 0.2
(50.1 ) 276.8
402.8
(35.5 ) 594.2
Net income 55.6
55.6
Other comprehensive loss (2.7 ) (2.7 )
Exercise of stock options 4.0
4.0
Share-based compensation 5.0
5.0
Repurchase of stock (7.5 ) (7.5 )
Balances as of March 31, 2020 $ 0.2
$ (57.6 ) $ 285.8
$ 458.4
$ (38.2 ) $ 648.6

See accompanying notes to condensed consolidated financial statements.

~~INTL FCStone~~

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StoneX Group Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of Presentation and Consolidation and Accounting Standards Adopted

~~INTL FCStone~~StoneX Group Inc., a Delaware corporation, and its consolidated subsidiaries (collectively ~~“INTL”~~“StoneX” or “the Company”), is a global ~~brokerage and~~ financial services ~~firm~~network that connects companies, organizations, traders and investors to the global market ecosystem through a unique blend of digital platforms, end-to-end clearing and execution services, high touch service and deep expertise. The Company strives to be the one trusted partner to its clients, providing its network, product and services to allow them to pursue trading opportunities, manage their market risks, make investments and improve their business performance. The Company offers a vertically integrated product suite, beginning with high-touch and electronic access to nearly all major financial markets worldwide, as well as numerous liquidity venues. It delivers this access through the entire lifecycle of a trade, from deep market expertise and on-the-ground intelligence, to best execution ~~risk management~~ and ~~advisory services,~~finally post-trade clearing, custody and settlement services. The Company has created a revenue stream that is diversified by asset class, client type and geography, earning commissions and spreads as clients execute transactions across our financial network, monetizing non-trading client activity including interest and fee earnings on client balances as well as earning consulting and fees for our market intelligence and ~~clearing services across asset classes and markets around the world. The Company’s services include comprehensive~~ risk management advisory services for commercial clients; execution of listed futures and options on futures contracts on all major commodity exchanges; structured over-the-counter (“OTC”) products in a wide range of commodities; physical trading and hedging of precious metals and select other commodities; trading of more than ~~140~~ ~~foreign currencies; market-making in international equities; fixed income; debt origination and asset management.~~services.

The Company provides these services to a diverse group of more than ~~30,000~~32,000 commercial and institutional clients and over ~~125,000~~330,000 retail clients located in more than 130 countries, including ~~producers, processors~~commercial entities, asset managers, regional, national and end-users of nearly all widely-traded physical commodities to manage their risks and enhance margins; to commercial counterparties who are end-users of the Company’s products and services; to governmental and non-governmental organizations; and to commercial banks,introducing broker-dealers, insurance companies, brokers, institutional investors and ~~major~~professional traders, commercial and investment ~~banks.~~banks and government and non-governmental organizations (“NGOs”).

The Company’s common stock trades on The NASDAQ Global Select Market under the symbol “SNEX”.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated balance sheet as of September 30, ~~2019,~~2020, which has been derived from the audited consolidated balance sheet of September 30, ~~2019,~~2020, and the unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the condensed consolidated financial statements for the interim periods presented have been reflected as required by Rule 10-01 of Regulation S-X.

Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019~~2020 filed with the SEC.

These condensed consolidated financial statements include the accounts of ~~INTL FCStone~~StoneX Group Inc. and all other entities in which the Company has a controlling financial interest. All material intercompany transactions and balances have been eliminated in consolidation.

The Company’s fiscal year end is September 30, and the fiscal quarters end on December 31, March 31, June 30 and September 30. Unless otherwise stated, all dates refer to fiscal years and fiscal interim periods.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant of these estimates and assumptions relate to fair value measurement for financial instruments and investments, revenue recognition, the provision for bad debts, valuation of inventories, valuation of goodwill and intangible assets, incomes taxes, and contingencies. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. These estimates and assumptions were considered and made in context with the information reasonably available to the Company and the unknown future impacts of the novel coronavirus (“COVID-19”) as of December 31, 2020 and through the date of this Form 10-Q.

In the condensed consolidated income statements, the total revenues reported combine gross revenues for the physical commodities business and net revenues for all other businesses. The subtotal ‘operating revenues’ in the condensed consolidated income statements is calculated by deducting cost of sales of physical commodities from total revenues. The subtotal ‘net operating revenues’ in the condensed consolidated income statements is calculated as operating revenues less

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transaction-based clearing expenses, introducing broker commissions and interest expense. Transaction-based clearing expenses represent variable expenses paid to executing brokers, exchanges, clearing organizations and banks in relation to transactional volumes. Introducing broker commissions include commission paid to non-employee third parties that have introduced clients to the Company. Net operating revenues represent revenues available to pay variable compensation to risk management consultants and traders and direct non-variable expenses, as well as variable and non-variable expenses of operational and administrative employees.

Reclassifications

During the year ended September 30, 2020, the Company reclassified certain selling and marketing related costs in connection with the acquisition of Gain Capital Holdings, Inc. (“Gain”). In performing this reclassification, the Company has made retrospective adjustments to the consolidated income statements for the three months ended December 31, 2019. For the three months ended December 31, 2019, selling and marketing related costs of $1.4 million were reclassified from ‘Other’ expense to ‘Selling and marketing’ expense.

Accounting Standards Adopted

In ~~February~~June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU ~~2018-10, Codification Improvements to Topic 842, Leases~~No. 2016-13, “Measurement of Credit Losses on Financial Instruments”, which significantly changes the ways entities recognize credit losses on financial instruments. The guidance is effective for public business entities for annual and ~~ASU 2018-11, Leases (Topic 842) Targeted Improvements.~~interim periods in fiscal years beginning after December 15, 2019. In ~~March~~April 2019, the FASB issued ASU ~~2019-01, Leases (Topic 842) Codification Improvements. Among~~No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, which among other things, ~~this updated~~included several amendments to ASU No. 2016-13 changing how a company considers expected recoveries and contractual extensions or renewal options when estimating expected credit losses.

The guidance ~~provides~~replaces the previous incurred loss impairment guidance and introduces a new credit reserving model known as the Current Expected Credit Loss (“CECL”) model, which is based on expected losses over the life of an ~~optional transition method, which allows for~~asset, and applies to financial assets carried at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. The allowance must reflect management’s estimate of credit losses over the ~~initial application~~life of the ~~new accounting standard at~~assets taking future economic changes into consideration.

The Company adopted this guidance on October 1, 2020, using the ~~adoption date~~modified retrospective approach and ~~the recognition of~~recognized a cumulative-effect adjustment of $6.2 million, net of tax of $2.0 million, to the opening balance sheet of retained earnings as- see notes 5 and 11. The adoption impact was attributable to an increase in allowance for credit losses on a group of approximately 300 client deficit accounts, originated in November 2018, of the ~~beginning~~FCM division of the Company’s wholly owned subsidiary, StoneX Financial Inc. Results for reporting periods beginning after October 1, 2020 are presented using the CECL model, while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP.

Current Expected Credit Losses

Beginning October 1, 2020, the Company estimates its allowance for credit losses on financial assets measured at amortized cost based on expected credit losses over the life of ~~adoption.~~ the financial asset. In determining expected credit losses, the Company considers a number of factors including, but not limited to, historical collection experience, current and forecasted economic and business conditions, internal and external credit risk ratings, collateral terms, payment terms and aging of the financial asset.

The Company ~~adopted~~estimates expected credit losses primarily using a probability of default (“PD”)/loss given default (“LGD”) model (“PD/LGD model”), under which the ~~new ASUs on October 1, 2019,~~expected credit loss is calculated as the product of PD, LGD and exposure at default.

Additionally, for collateralized transactions, the Company elects to measure expected credit losses using the ~~effective date modified retrospective transition approach~~fair value of collateral received where the borrower is required to, and ~~has not restated comparative periods.~~ reasonably expected to, replenish the amount of collateral securing the receivable as a result of changes in the fair value of such collateral.

Note 2 – Earnings per Share

The Company ~~elected~~presents basic and diluted earnings per share (“EPS”) using the ~~package~~two-class method which requires all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends and therefore participate in undistributed earnings with common stockholders be included in computing earnings per share. Under the two-class method, net income is reduced by the amount of ~~practical expedients permitted under~~dividends declared in the ~~transition guidance within~~period for each class of common stock and participating security. The remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. Restricted stock awards granted to certain employees and directors contain non-forfeitable rights to dividends at the ~~new standard, which among other things, allowed~~same rate as common stock and are considered participating securities. Basic EPS has been computed by dividing net income by the ~~Company to not reassess contracts to determine if they contain leases, lease classification~~weighted-average number of common shares outstanding.

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The following is a reconciliation of the numerator and ~~initial direct costs.~~ denominator of the diluted earnings per share computations for the periods presented below.


	Three Months Ended December 31,
(in millions, except share amounts)	2020		2019
Numerator:
Net income	$	19.5	$	16.3
Less: Allocation to participating securities	(0.5)		(0.3)
Net income allocated to common stockholders	$	19.0	$	16.0






Denominator:
Weighted average number of:
Common shares outstanding	18,940,876		18,750,270
Dilutive potential common shares outstanding:
Share-based awards	529,977		324,292
Diluted weighted-average common shares	19,470,853		19,074,562

The ~~Company’s~~dilutive effect of share-based awards is reflected in diluted net income per share by application of the ~~new standard resulted in changes~~treasury stock method, which includes consideration of unamortized share-based compensation expense.

Options to ~~the condensed consolidated balance sheet but did not have an impact on the condensed consolidated income statement. See Note 2 for more information.~~

~~In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification~~purchase 2,265 and 1,022,350 shares of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this updated standard allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The Company adopted this standard on October 1, 2019 and, as a result, recorded a $0.7 million reclassification between accumulated other comprehensive loss, net and retained earnings.

~~Note 2 – Leases~~

The Company currently leases office space under non-cancelable operating leases with third parties as of March 31, 2020. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Certain office space leases include one or more options to renew, with renewal terms that can extend the lease term from three to ten years, and some of which include the Company’s option to terminate the leases within two years of the balance sheet date. The Company has not considered any renewal options in the lease terms of its office space leases as the Company does not believe it is reasonably certain that any of the rights will be exercised. In determining the term of certain office space leases, the Company has not included the periods covered by an option to terminate if the Company believes it is reasonably certain to do so.

As the office space leases do not provide an implicit rate, the Company applies a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The Company applied a collateralized incremental borrowing rate as of October 1, 2019 for operating leases that commenced prior to that date. For office space leases executed by subsidiaries, including foreign subsidiaries, the Company has applied the incremental borrowing rate of the parent company. The Company believes this is a reasonable approach as its subsidiaries either do not have their own treasury functions or the credit facilities available to its subsidiaries do not permit the financing of right-of-use assets. Additionally, in certain instances, the parent company provides a guarantee of the lease payments to the lessor under office space leases executed by its subsidiaries. As such, the Company believes that the pricing of subsidiary leases is more significantly influenced by the credit standing of the parent company than that of its subsidiaries.

Certain office space leases contain variable lease payments related to fair market rent adjustments and local inflation index measures. The Company estimates variable lease payments based upon information available at the lease commencement date in determining the present value of lease payments. The Company applied information available as of October 1, 2019 for operating leases that commenced prior to that date.

The Company has elected to not separate lease components from nonlease components for all office space leases. The Company does not have any financing leases as of March 31, 2020. Operating lease expense is recognized on a straight-line basis over the lease term and is reported within ‘occupancy and equipment rental’ on the condensed consolidated statement of income.

~~As of March 31, 2020, the Company recorded operating lease right-of-use assets and operating lease liabilities of $31.6 million and $34.2 million, respectively.~~

~~The following table presents operating lease costs and other information as of and for the three and six months ended March 31, 2020 (in millions, except as stated):~~

Three Months Ended March 31, Six Months Ended March 31,
2020 2020
Operating lease costs ⁽¹⁾
$ 3.5
$ 7.0

Supplemental cash flow information and non-cash activity:
Cash paid for amounts included in the measurement of operating lease liabilities $ 2.8
$ 5.5
Right-of-use assets obtained in exchange for operating lease liabilities $ 0.4
$ 35.0

Lease term and discount rate information:
Weighted average remaining lease term (years) 4.21
Weighted average discount rate 5.1 %

⁽¹⁾ ~~Includes short-term leases and variable lease costs, which are immaterial.~~

~~The maturities of the lease liabilities are as follows as of March 31, 2020 (in millions):~~

Remainder of 2020 $ 6.0
2021 10.3
2022 7.7
2023 6.1
2024 4.3
After 2024 3.5
Total lease payments⁽²⁾
37.9
Less: interest 3.7
Present value of lease liabilities $ 34.2

⁽²⁾ Total lease payments excludes $80.9 million of legally binding lease payments for a lease executed for a new corporate headquarters in New York City, which was signed during the three months ended March 31, 2020, but has not yet commenced.

In accordance with the disclosure requirements for the adoption of Topic 842, the Company is presenting its operating lease commitment table as of September 30, 2019, which was previously disclosed in Note 12 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019 (in millions):

2020 $ 11.2
2021 9.9
2022 7.5
2023 6.2
2024 5.8
Thereafter 2.6
$ 43.2

~~Note 3 – Revenue from Contracts with Clients~~

The Company accounts for revenue earned from contracts with clients for services such as the execution, clearing, brokering, and custody of futures and options on futures contracts, OTC derivatives, and securities, investment management, and underwriting services under FASB Accounting Standards Codification (“ASC”) 606, Revenues from Contracts with Customers (Topic 606). As such, revenues for these services are recognized when the performance obligations related to the underlying transaction are completed.

Revenues are recognized when control of the promised goods or services are transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenues are analyzed to

determine whether the Company is the principal (i.e. reports revenue on a gross basis) or agent (i.e., reports revenues on a net basis) in the contract. Principal or agent designations depend primarily on the control an entity has over the good or service before control is transferred to a client. The indicators of which party exercises control include primary responsibility over performance obligations, inventory risk before the good or service is transferred, and discretion in establishing the price.

Topic 606 does not apply to revenues associated with dealing, or market-making, activities in financial instruments or contracts in the capacity of a principal, including derivative sales contracts which result in physical settlement and interest income.

~~The Company’s revenues from contracts with clients subject to Topic 606 represent approximately 0.7% and 1.4% of the Company’s total revenues~~common stock for the three months ended ~~March~~December 31, 2020 and 2019, ~~respectively. The Company’s revenues~~respectively, were excluded from ~~contracts with clients subject to Topic 606 represent approximately 0.8% and 1.6%~~the calculation of ~~the Company’s total revenues for the six months ended March 31, 2020 and 2019, respectively.~~diluted earnings per share as they would have been anti-dilutive.

The Company’ revenues from contracts with clients subject to Topic 606 represent approximately 37.9% and 38.4% of the Company’s operating revenues for the three months ended March 31, 2020 and 2019, respectively. The Company’ revenues from contracts with clients subject to Topic 606 represent approximately 38.5% and 41.6% of the Company’s operating revenues for the six months ended March 31, 2020 and 2019, respectively.

This includes all of the Company’s commission and clearing fees and consulting, management, and account fees revenues. Revenues within the scope of Topic 606 are presented within ‘Commission and clearing fees’ and ‘Consulting, management, and account fees’ on the condensed consolidated income statements. Revenues that are not within the scope of Topic 606 are presented within ‘Sales of physical commodities’, ‘Principal gains, net’, and ‘Interest income’ on the condensed consolidated income statements.

The following table represents a disaggregation of the Company’s total revenues separated between revenues from contracts with clients and other sources of revenue for the three and six months ended March 31, 2020 and 2019 (in millions):

Three Months Ended March 31, Six Months Ended March 31,
2020 2019 2020 2019
Revenues from contracts with clients:
Commission and clearing fees:
Sales-based:
Exchange-traded futures and options $ 40.1
$ 31.2
$ 72.5
$ 70.3
OTC derivative brokerage 6.7
7.3
12.2
16.2
Equities and fixed income 7.1
3.6
11.4
6.8
Mutual funds 1.6
1.9
2.9
4.5
Insurance and annuity products 2.4
1.5
4.5
3.0
Other 0.5
0.5
0.8
0.7
Total sales-based commission 58.4
46.0
104.3
101.5
Trailing:
Mutual funds 3.5
3.0
6.6
6.2
Insurance and annuity products 4.0
3.4
7.7
7.1
Total trailing commission 7.5
6.4
14.3
13.3

Clearing fees 41.6
26.8
71.1
59.4
Trade conversion fees 4.2
3.3
5.7
4.9
Other 4.9
2.6
8.4
5.5
Total commission and clearing fees: 116.6
85.1
203.8
184.6

Consulting, management, and account fees:
Underwriting fees 0.2
0.2
0.4
0.5
Asset management fees 8.7
6.0
16.2
12.2
Advisory and consulting fees 5.7
4.7
11.3
9.7
Sweep program fees 3.6
4.1
7.6
7.9
Client account fees 3.1
2.5
6.1
5.2
Other 1.3
1.6
2.3
2.7
Total consulting, management, and account fees 22.6
19.1
43.9
38.2
Total revenues from contracts with clients $ 139.2
$ 104.2
$ 247.7
$ 222.8

Method of revenue recognition:
Point-in-time $ 113.7
$ 83.0
$ 198.3
$ 179.7
Time elapsed 25.5
21.2
49.4
43.1
Total revenues from contracts with clients 139.2
104.2
247.7
222.8
Other sources of revenues
Physical precious metals trading 19,694.7
6,660.9
30,352.7
12,616.4
Physical agricultural and energy product trading 322.2
268.6
642.2
608.9
Principal gains, net 168.5
110.3
281.0
203.1
Interest income 41.7
48.2
87.7
93.2
Total revenues $ 20,366.3
$ 7,192.2
$ 31,611.3
$ 13,744.4

Primary geographic region:
United States $ 585.6
$ 456.6
$ 1,097.9
$ 983.6
Europe 150.0
53.8
261.6
107.1
South America 16.3
12.4
31.5
23.9
Middle East and Asia 19,613.3
6,667.3
30,218.8
12,625.9
Other 1.1
2.1
1.5
3.9
Total revenues $ 20,366.3
$ 7,192.2
$ 31,611.3
$ 13,744.4

The substantial majority of the Company’s performance obligations for revenues from contracts with clients are satisfied at a point in time and are typically collected from clients by debiting their accounts with the Company.

Commission and clearing fees revenue is primarily related to the Commercial Hedging and Clearing and Execution Services reportable segments. Consulting, management, and accounts fees are primarily related to the Commercial Hedging, Clearing and Execution Services, and Securities reportable segments. Principal gains, net is primarily related to the Commercial

Hedging, Global Payments, and Securities reportable segments. Interest income is primarily related to the Commercial Hedging, Securities, and Clearing and Execution Services reportable segments. Physical precious metals trading and physical agricultural and energy product trading revenues are primarily related to the Physical Commodities reportable segment.

~~Remaining Performance Obligations~~

Remaining performance obligations are services that the Company has committed to perform in the future in connection with its contracts with clients. The Company’s remaining performance obligations are generally related to its risk management consulting and asset management contracts with clients. Revenues associated with remaining performance obligations related to these contracts with clients are not material to the overall consolidated results of the Company. For the Company’s asset management activities, where fees are calculated based on a percentage of the fair value of eligible assets in client’s accounts, future revenue associated with remaining performance obligations cannot be determined as such fees are subject to fluctuations in the fair value of eligible assets in clients’ accounts.

Note ~~4 – Earnings per Share~~

The Company presents basic and diluted earnings per share (“EPS”) using the two-class method which requires all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends and therefore participate in undistributed earnings with common stockholders be included in computing earnings per share. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating security. The remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. Restricted stock awards granted to certain employees and directors contain non-forfeitable rights to dividends at the same rate as common stock and are considered participating securities. Basic EPS has been computed by dividing net income by the weighted-average number of common shares outstanding.

~~The following is a reconciliation of the numerator and denominator of the diluted earnings per share computations for the periods presented below.~~

Three Months Ended March 31, Six Months Ended March 31,
(in millions, except share amounts) 2020 2019 2020 2019
Numerator:
Net income $ 39.3
$ 23.4
$ 55.6
$ 41.6
Less: Allocation to participating securities (0.9 ) (0.4 ) (1.2 ) (0.7 )
Net income allocated to common stockholders $ 38.4
$ 23.0
$ 54.4
$ 40.9
Denominator:
Weighted average number of:
Common shares outstanding 18,872,937
18,753,490
18,811,268
18,706,104
Dilutive potential common shares outstanding:
Share-based awards 317,016
251,303
321,229
293,785
Diluted weighted-average common shares 19,189,953
19,004,793
19,132,497
18,999,889

The dilutive effect of share-based awards is reflected in diluted earnings per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense required under the Compensation – Stock Compensation Topic of the ASC.

Options to purchase 945,211 and 1,032,077 shares of common stock for the three months ended March 31, 2020 and 2019, respectively, and options to purchase 981,088 and 704,863 shares of common stock for the six months ended March 31, 2020 and 2019, respectively, were excluded from the calculation of diluted earnings per share as they would have been anti-dilutive.

~~Note 5~~3 – Assets and Liabilities, at Fair Value

Fair value is defined by U.S. GAAP as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants on the measurement date.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company is required to develop a set of assumptions that reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.

The Company has designed independent price verification controls and periodically performs such controls to ensure the reasonableness of such values.

In accordance with FASB ASC 820, Fair Value Measurement, the Company groups its assets and liabilities measured at fair value in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 - Valuation is based upon unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 1 consists of financial assets and liabilities whose fair values are estimated using quoted market prices.

Level 2 - Valuation is based upon quoted prices for identical or similar assets or liabilities in markets that are less active, that is, markets in which there are few transactions for the asset or liability that are observable for substantially the full term. Included in Level 2 are those financial assets and liabilities for which fair values are estimated using models or other valuation methodologies. These models are primarily industry-standard models that consider various observable inputs, including time value, yield curve, volatility factors, observable current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures.

Level 3 - Valuation is based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Level 3 comprises financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are not readily observable from objective sources. Level 3 includes contingent liabilities that have been valued using an income approach based upon management developed discounted cash flow projections, which are an unobservable input. The Company had ~~$1.8~~$1.3 million and $1.5 million of contingent liabilities classified within Level 3 of the fair value hierarchy as of ~~March~~December 31, 2020 and September 30, ~~2019.~~2020, respectively. The Company had no Level 3 assets as of ~~March~~December 31, 2020 and September 30, ~~2019.~~2020.

Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets

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for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A market is active if there are sufficient transactions on an ongoing basis to provide current pricing information for the asset or liability, pricing information is released publicly, and price quotations do not vary substantially either over time or among market participants. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity.

The guidance requires the Company to consider counterparty credit risk of all parties of outstanding derivative instruments that would be considered by a market participant in the transfer or settlement of such contracts (exit price). The Company’s exposure to credit risk on derivative financial instruments principally relates to the portfolio of OTC derivative contracts as all exchange-traded contracts held can be settled on an active market with a credit guarantee from the respective exchange. The Company requires each counterparty to deposit margin collateral for all OTC instruments and is also required to deposit margin collateral with counterparties. The Company has assessed the nature of these deposits and used its discretion to adjust each based on the underlying credit considerations for the counterparty and determined that the collateral deposits minimize the exposure to counterparty credit risk in the evaluation of the fair value of OTC instruments as determined by a market participant.

Fair value of financial and nonfinancial assets and liabilities that are carried on the Condensed Consolidated Balance Sheets at fair value on a recurring basis

Cash and cash equivalents reported at fair value on a recurring basis includes certificates of deposit and money market mutual funds, which are stated at cost plus accrued interest, which approximates fair value.

Cash, securities and other assets segregated under federal and other regulations reported at fair value on a recurring basis include the value of pledged investments, primarily U.S. Treasury obligations and commodities warehouse receipts.

Deposits with and receivables from broker-dealers, clearing organizations and counterparties and payable to clients and broker-dealers, clearing organizations and counterparties ~~include~~includes the fair value of pledged investments, primarily U.S. Treasury obligations and foreign government obligations. These balances also include the fair value of exchange-traded options on futures and OTC ~~derivative financial instruments.~~forwards, swaps and options.

Financial instruments owned and sold, not yet purchased include the fair value of equity securities, which includes common, preferred, and foreign ordinary shares, ~~ADRs, GDRs,~~American Depository Receipts (“ADRs”), Global Depository Receipts (“GDRs”), and exchange-traded funds (“ETFs”), corporate and municipal bonds, U.S. Treasury obligations, U.S. government agency obligations, foreign government obligations, agency mortgage-backed obligations, asset-backed obligations, derivative financial instruments, commodities warehouse receipts, exchange firm common stock, ~~and mutual funds~~ and investments in managed funds. The fair value of exchange firm common stock is determined by quoted market prices.

Cash equivalents, debt and equity securities, commodities warehouse receipts, physical commodities inventory, derivative financial instruments and contingent liabilities are carried at fair value, on a recurring basis, and are classified and disclosed into three levels in the fair value hierarchy.

The following section describes the valuation methodologies used by the Company to measure classes of financial instruments at fair value and specifies the level within the fair value hierarchy where various financial instruments are classified.

The Company uses quoted prices in active markets, where available, and classifies such instruments within Level 1 of the fair value hierarchy. Examples include U.S. Treasury obligations, foreign government obligations, commodities warehouse receipts, certain equity securities traded in active markets, physical precious metals inventory held by a regulated broker-dealer subsidiary, exchange firm common stock, investments in managed funds, as well as options on futures contracts traded on national exchanges. The fair value of exchange firm common stock is determined by recent sale transactions and is included within Level 1.

When instruments are traded in secondary markets and observable prices are not available for substantially the full term, the Company generally relies on internal valuation techniques based upon observable inputs for comparable financial instruments, or prices obtained from third-party pricing services or brokers or a combination thereof, and accordingly, classified these instruments as Level 2. Examples include corporate and municipal bonds, U.S. government agency obligations, agency-mortgage backed obligations, asset-backed obligations, certain equity securities traded in less active markets, and OTC derivative contracts, which include purchase and sale commitments related to the Company’s agricultural and energy commodities.

Certain derivatives without a quoted price in an active market and derivatives executed OTC are valued using internal valuation techniques, including pricing models which utilize significant inputs observable to market participants. The valuation techniques and inputs depend on the type of derivative and the nature of the underlying instrument. The key inputs depend upon the type of derivative and the nature of the underlying instrument and include interest yield curves, foreign exchange rates,

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commodity prices, volatilities and correlation. These derivative instruments are included within Level 2 of the fair value hierarchy.

Physical commodities inventory includes precious metals that are a part of the trading activities of a regulated broker-dealer subsidiary and is recorded at fair value using exchange-quoted prices. Physical commodities inventory also includes agricultural commodities that are a part of the trading activities of a non-broker dealer subsidiary and are recorded at net realizable value using exchange-quoted prices. The fair value of precious metals physical commodities inventory is based upon unadjusted exchange-quoted prices and is, therefore, classified within Level 1 of the fair value hierarchy. The fair value of agricultural physical commodities inventory and the related OTC firm sale and purchase commitments are generally based upon exchange-quoted prices, adjusted for basis or differences in local markets, broker or dealer quotations or market transactions in either listed or OTC markets. Exchange-quoted prices are adjusted for location and quality because the exchange-quoted prices for agricultural and energy related products represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis or local market adjustments are observable inputs or have an insignificant impact on the measurement of fair value and, therefore, the agricultural physical commodities inventory as well as the related OTC forward firm sale and purchase commitments have been included within Level 2 of the fair value hierarchy.

With the exception of certain derivative instruments where the valuation approach is disclosed above, financial instruments owned and sold are primarily valued using third-party pricing sources. Third-party pricing vendors compile prices from various sources and often apply matrix pricing for similar securities when market-observable transactions for the instruments are not observable for substantially the full term. The Company reviews the pricing methodologies used by third-party pricing vendors in order to evaluate the fair value hierarchy classification of vendor-priced financial instruments and the accuracy of vendor pricing, which typically involves the comparison of primary vendor prices to internal trader prices or secondary vendor prices. When evaluating the propriety of vendor-priced financial instruments using secondary prices, considerations include the range and quality of vendor prices, level of observable transactions for identical and similar instruments, and judgments based upon knowledge of a particular market and asset class. If the primary vendor price does not represent fair value, justification for using a secondary price, including source data used to make the determination, is subject to review and approval by authorized personnel prior to using a secondary price. Financial instruments owned and sold that are valued using third party pricing sources are included within either Level 1 or Level 2 of the fair value hierarchy based upon the observability of the inputs used and the level of activity in the market.

The fair value estimates presented herein are based on pertinent information available to management as of ~~March~~December 31, 2020 and September 30, ~~2019.~~2020. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these condensed consolidated financial statements since that date and current estimates of fair value may differ significantly from the amounts presented ~~herein.~~herein, particularly in light of the uncertain impacts of COVID-19.

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The following ~~tables set~~table sets forth the Company’s financial and nonfinancial assets and liabilities accounted for at fair value, on a recurring basis, as of ~~March~~December 31, 2020 by level in the fair value hierarchy.

March 31, 2020
(in millions) Level 1 Level 2 Level 3 Netting (1) Total
Assets:
Certificates of deposit $ 9.2
$ —
$ —
$ —
$ 9.2
Money market mutual funds 7.9
—
—
—
7.9
Cash and cash equivalents 17.1
—
—
—
17.1
Commodities warehouse receipts 7.9
—
—
—
7.9
U.S. Treasury obligations 0.2
—
—
—
0.2
Securities and other assets segregated under federal and other regulations 8.1
—
—
—
8.1
U.S. Treasury obligations 350.4
—
—
—
350.4
"To be announced" (TBA) and forward settling securities —
80.5
—
(3.5 ) 77.0
Foreign government obligations 8.1
—
—
—
8.1
Derivatives 5,220.8
57.5
—
(5,335.1 ) (56.8 )
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net 5,579.3
138.0
—
(5,338.6 ) 378.7
Equity securities 184.7
19.6
—
—
204.3
Corporate and municipal bonds —
43.5
—
—
43.5
U.S. Treasury obligations 294.2
—
—
—
294.2
U.S. government agency obligations —
201.6
—
—
201.6
Foreign government obligations 2.6
—
—
—
2.6
Agency mortgage-backed obligations —
1,504.0
—
—
1,504.0
Asset-backed obligations —
16.4
—
—
16.4
Derivatives 0.7
1,990.8
—
(1,874.9 ) 116.6
Commodities leases —
28.6
—
(2.3 ) 26.3
Commodities warehouse receipts 100.5
—
—
—
100.5
Exchange firm common stock 10.4
—
—
—
10.4
Mutual funds and other 5.3
—
—
—
5.3
Financial instruments owned 598.4
3,804.5
—
(1,877.2 ) 2,525.7
Physical commodities inventory 26.3
167.8
—
—
194.1
Total assets at fair value $ 6,229.2
$ 4,110.3
$ —
$ (7,215.8 ) $ 3,123.7
Liabilities:
Accounts payable and other accrued liabilities - contingent liabilities —
—
1.8
—
1.8
TBA and forward settling securities —
98.3
—
(3.5 ) 94.8
Derivatives 5,379.7
194.5
—
(5,573.2 ) 1.0
Payable to broker-dealers, clearing organizations and counterparties 5,379.7
292.8
—
(5,576.7 ) 95.8
Equity securities 135.2
40.3
—
—
175.5
Foreign government obligations 2.1
—
—
—
2.1
Corporate and municipal bonds —
28.1
—
—
28.1
U.S. Treasury obligations 213.6
—
—
—
213.6
U.S. government agency obligations —
13.6
—
—
13.6
Agency mortgage-backed obligations —
15.0
—
—
15.0
Derivatives —
2,035.4
—
(1,882.6 ) 152.8
Commodities leases —
102.9
—
—
102.9
Financial instruments sold, not yet purchased 350.9
2,235.3
—
(1,882.6 ) 703.6
Total liabilities at fair value $ 5,730.6
$ 2,528.1
$ 1.8
$ (7,459.3 ) $ 801.2


~~(1)~~	~~Represents cash collateral and the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.~~

Except as disclosed in Note 6, there were no assets or liabilities that were measured at fair value on a nonrecurring basis as of December 31, 2020.


	December 31, 2020
(in millions)	Level 1		Level 2		Level 3		Netting (1)		Total
Assets:
Certificates of deposit	$	3.2	$	0	$	0	$	0	$	3.2
Money market mutual funds	12.2		0		0		0		12.2
Cash and cash equivalents	15.4		0		0		0		15.4
Commodities warehouse receipts	1.8		0		0		0		1.8
U.S. Treasury obligations	0.2		0		0		0		0.2
Securities and other assets segregated under federal and other regulations	2.0		0		0		0		2.0
U.S. Treasury obligations	1,197.0		0		0		0		1,197.0
To be announced ("TBA") and forward settling securities	0		28.2		0		(0.1)		28.1
Foreign government obligations	8.7		0		0		0		8.7
Derivatives	1,765.9		426.3		0		(2,232.1)		(39.9)
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net	2,971.6		454.5		0		(2,232.2)		1,193.9
Receivables from clients - Derivatives	0		351.9		0		(349.7)		2.2
Equity securities	356.0		10.1		0		0		366.1
Corporate and municipal bonds	0		85.7		0		0		85.7
U.S. Treasury obligations	313.9		0		0		0		313.9
U.S. government agency obligations	0		298.3		0		0		298.3
Foreign government obligations	2.6		0		0		0		2.6
Agency mortgage-backed obligations	0		1,522.8		0		0		1,522.8
Asset-backed obligations	0		34.0		0		0		34.0
Derivatives	0.6		597.5		0		(471.2)		126.9
Commodities leases	0		27.3		0		0		27.3
Commodities warehouse receipts	55.0		0		0		0		55.0
Exchange firm common stock	11.0		0		0		0		11.0
Mutual funds and other	8.8		0		0		0		8.8
Financial instruments owned	747.9		2,575.7		0		(471.2)		2,852.4
Physical commodities inventory	21.1		278.4		0		0		299.5
Total assets at fair value	$	3,758.0	$	3,660.5	$	0	$	(3,053.1)	$	4,365.4
Liabilities:
Accounts payable and other accrued liabilities - contingent liabilities	$	0	$	0	$	1.3	$	0	$	1.3
Payables to clients - Derivatives	1,759.8		486.9		0		(2,368.0)		(121.3)
TBA and forward settling securities	0		30.8		0		(0.1)		30.7
Derivatives	0		217.3		0		(217.4)		(0.1)
Payable to broker-dealers, clearing organizations and counterparties	0		248.1		0		(217.5)		30.6
Equity securities	317.2		1.7		0		0		318.9

Corporate and municipal bonds	0		10.8		0		0		10.8
U.S. Treasury obligations	249.4		0		0		0		249.4
U.S. government agency obligations	0		3.5		0		0		3.5
Agency mortgage-backed obligations	0		3.1		0		0		3.1
Derivatives	0		421.7		0		(181.9)		239.8
Commodities leases	0		1.9		0		0		1.9
Financial instruments sold, not yet purchased	566.6		442.7		0		(181.9)		827.4
Total liabilities at fair value	$	2,326.4	$	1,177.7	$	1.3	$	(2,767.4)	$	738.0

(1)Represents cash collateral and the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.

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The following table sets forth the Company’s financial and nonfinancial assets and liabilities accounted for at fair value, on a recurring basis, as of September 30, ~~2019~~2020 by level in the fair value hierarchy. Except as disclosed in Note 6, there were no assets or liabilities that were measured at fair value on a nonrecurring basis as of September 30, 2020.


	September 30, 2020
(in millions)	Level 1		Level 2		Level 3		Netting (1)		Total
Assets:
Certificates of deposit	$	3.2	$	0	$	0	$	0	$	3.2
Money market mutual funds	12.8		0		0		0		12.8
Cash and cash equivalents	16.0		0		0		0		16.0
Commodities warehouse receipts	2.4		0		0		0		2.4
U.S. Treasury obligations	0.2		0		0		0		0.2
Securities and other assets segregated under federal and other regulations	2.6		0		0		0		2.6
U.S. Treasury obligations	1,941.3		0		0		0		1,941.3
TBA and forward settling securities	0		31.0		0		(11.8)		19.2
Foreign government obligations	8.0		0		0		0		8.0
Derivatives	1,949.0		395.8		0		(2,537.5)		(192.7)
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net	3,898.3		426.8		0		(2,549.3)		1,775.8
Receivables from clients - Derivatives	0		235.6		0		(234.1)		1.5
Equity securities	254.9		9.4		0		0		264.3
Corporate and municipal bonds	0		66.9		0		0		66.9
U.S. Treasury obligations	419.9		0		0		0		419.9
U.S. government agency obligations	0		293.4		0		0		293.4
Foreign government obligations	2.5		0		0		0		2.5
Agency mortgage-backed obligations	0		1,384.6		0		0		1,384.6
Asset-backed obligations	0		33.0		0		0		33.0
Derivatives	0.7		652.3		0		(535.6)		117.4
Commodities leases	0		24.9		0		0		24.9
Commodities warehouse receipts	103.2		0		0		0		103.2
Exchange firm common stock	10.1		0		0		0		10.1
Mutual funds and other	7.5		0		0		0		7.5

Financial instruments owned	798.8		2,464.5		0		(535.6)		2,727.7
Physical commodities inventory	26.8		188.9		0		0		215.7
Total assets at fair value	$	4,742.5	$	3,315.8	$	0	$	(3,319.0)	$	4,739.3
Liabilities:
Accounts payable and other accrued liabilities - contingent liabilities	$	0	$	0	$	1.5	$	0	$	1.5
Payables to clients - Derivatives	2,000.8		176.4		0		(2,399.9)		(222.7)
TBA and forward settling securities	0		22.0		0		(11.8)		10.2
Derivatives	0		306.7		0		(302.2)		4.5
Payable to broker-dealers, clearing organizations and counterparties	0		328.7		0		(314.0)		14.7
Equity securities	218.0		14.9		0		0		232.9

Corporate and municipal bonds	0		22.5		0		0		22.5
U.S. Treasury obligations	247.5		0		0		0		247.5
U.S. government agency obligations	0		0.1		0		0		0.1
Agency mortgage-backed obligations	0		5.1		0		0		5.1
Derivatives	0		563.6		0		(386.8)		176.8
Commodities leases	0		1.1		0		0		1.1
Financial instruments sold, not yet purchased	465.5		607.3		0		(386.8)		686.0
Total liabilities at fair value	$	2,466.3	$	1,112.4	$	1.5	$	(3,100.7)	$	479.5

(1)Represents cash collateral and the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.

September 30, 2019
(in millions) Level 1 Level 2 Level 3 Netting (1) Total
Assets:
Certificates of deposit $ 4.9
$ —
$ —
$ —
$ 4.9
Money market mutual funds 8.9
—
—
—
8.9
Cash and cash equivalents 13.8
—
—
—
13.8
Commodities warehouse receipts 6.2
—
—
—
6.2
U.S. Treasury obligations 299.8
—
—
—
299.8
Securities and other assets segregated under federal and other regulations 306.0
—
—
—
306.0
U.S. Treasury obligations 593.9
—
—
—
593.9
TBA and forward settling securities —
9.8
—
(1.5 ) 8.3
Foreign government obligations 9.9
—
—
—
9.9
Derivatives 3,131.2
43.2
—
(3,159.6 ) 14.8
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net 3,735.0
53.0
—
(3,161.1 ) 626.9
Equity securities 159.5
9.0
—
—
168.5
Corporate and municipal bonds —
80.0
—
—
80.0
U.S. Treasury obligations 248.7
—
—
—
248.7
U.S. government agency obligations —
447.1
—
—
447.1
Foreign government obligations 0.5
—
—
—
0.5
Agency mortgage-backed obligations —
1,045.0
—
—
1,045.0
Asset-backed obligations —
29.1
—
—
29.1
Derivatives 1.0
486.3
—
(420.8 ) 66.5
Commodities leases —
28.6
—
—
28.6
Commodities warehouse receipts 48.4
—
—
—
48.4
Exchange firm common stock 12.7
—
—
—
12.7
Mutual funds and other 0.1
—
—
—
0.1
Financial instruments owned 470.9
2,125.1
—
(420.8 ) 2,175.2
Physical commodities inventory 7.1
144.8
—
—
151.9
Total assets at fair value $ 4,532.8
$ 2,322.9
$ —
$ (3,581.9 ) $ 3,273.8
Liabilities:
Accounts payable and other accrued liabilities - contingent liabilities $ —
$ —
$ 1.8
$ —
$ 1.8
TBA and forward settling securities —
6.8
—
(1.5 ) 5.3
Derivatives 3,079.1
38.3
—
(3,117.1 ) 0.3
Payable to broker-dealers, clearing organizations and counterparties 3,079.1
45.1
—
(3,118.6 ) 5.6
Equity securities 147.3
10.8
—
—
158.1
Corporate and municipal bonds —
39.2
—
—
39.2
U.S. Treasury obligations 272.3
—
—
—
272.3
U.S. government agency obligations —
43.8
—
—
43.8
Agency mortgage-backed obligations —
29.6
—
—
29.6
Derivatives —
480.3
—
(422.2 ) 58.1
Commodities leases —
113.7
—
—
113.7
Financial instruments sold, not yet purchased 419.6
717.4
—
(422.2 ) 714.8
Total liabilities at fair value $ 3,498.7
$ 762.5
$ 1.8
$ (3,540.8 ) $ 722.2

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~~(1)~~	~~Represents cash collateral and the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.~~

Realized and unrealized gains and losses are included in ‘principal gains, net’, ‘interest income’, and ‘cost of sales of physical commodities’ in the condensed consolidated income statements.

Additional disclosures about the fair value of financial instruments that are not carried on the Condensed Consolidated Balance Sheets at fair value

Many, but not all, of the financial instruments that the Company holds are recorded at fair value in the Condensed Consolidated Balance Sheets. The following represents financial instruments in which the ending balance at ~~March~~December 31, 2020 and September 30, ~~2019~~2020 was not carried at fair value in accordance with U.S. GAAP on the Condensed Consolidated Balance Sheets:

Short-term financial instruments:The carrying value of short-term financial instruments, including cash and cash equivalents, cash segregated under federal and other regulations, securities purchased under agreements to resell and securities sold under agreements to repurchase, and securities borrowed and loaned are recorded at amounts that approximate the fair value of these instruments due to their short-term nature and level of collateralization. These financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market rates. Under the fair value hierarchy, cash and cash equivalents and cash segregated under federal and other regulations are classified as Level 1. Securities purchased under agreements to resell and securities sold under agreements to repurchase, and securities borrowed and loaned are classified as Level 2 under the fair value hierarchy as they are generally overnight or short-term in nature and are collateralized by equity securities, U.S. Treasury obligations, U.S. government agency obligations, agency mortgage-backed obligations, and asset-backed obligations.

Receivables and other assets:Receivables from broker-dealers, clearing organizations, and counterparties, receivables from clients, net, notes receivables, and certain other assets are recorded at amounts that approximate fair value due to their short-term nature and are classified as Level 2 under the fair value hierarchy.

Payables:Payables to clients and payables to ~~brokers-dealers,~~broker-dealers, clearing organizations, and counterparties are recorded at amounts that approximate fair value due to their short-term nature and are classified as Level 2 under the fair value hierarchy.

Lenders under loans: Payables to lenders under loans carry variable rates of interest ~~and are relatively short-term in duration~~ and thus approximate fair value and are classified as Level 2 under the fair value hierarchy.

Senior secured ~~term loan~~borrowings, net: ~~The~~Senior secured borrowings, net includes a senior secured term loan with a carrying value of $177.2 million as of December 31, 2020, which carries a variable rate of interest and thus approximates fair value and is classified as Level 2 under the fair value hierarchy. Senior secured borrowings, net also includes the Company's 8.625% Senior Secured Notes due 2025 (the “Senior Secured Notes”) and Gain’s 5.00% Senior Notes due 2022 (the “Gain Notes”) as further described in Note 9 with a carrying value of $336.5 million as of December 31, 2020. The carrying value of the Senior Secured Notes and Gain Notes represent their principal amounts net of unamortized deferred financing costs and original issue discount. As of December 31, 2020, the Senior Secured Notes and Gain Notes had a fair value of $382.3 million and are classified as Level 2 under the fair value hierarchy.

Note 4 – Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk

The Company is party to certain financial instruments with off-balance sheet risk in the normal course of its business. The Company has sold financial instruments that it does not currently own and will therefore be obliged to purchase such financial instruments at a future date. The Company has recorded these obligations in the condensed consolidated financial statements as of December 31, 2020 and September 30, 2020 at the fair values of the related financial instruments. The Company will incur losses if the fair value of the underlying financial instruments increases subsequent to December 31, 2020. The total financial instruments sold, not yet purchased of $827.4 million and $686.0 million as of December 31, 2020 and September 30, 2020, respectively, includes $239.8 million and $176.8 million for derivative contracts, respectively, which represented a liability to the Company based on their fair values as of December 31, 2020 and September 30, 2020.

Derivatives

The Company utilizes derivative products in its trading capacity as a dealer in order to satisfy client needs and mitigate risk. The Company manages risks from both derivatives and non-derivative cash instruments on a consolidated basis. The risks of derivatives should not be viewed in isolation, but in aggregate with the Company’s other trading activities. The Company’s derivative positions are included in the condensed consolidated balance sheets in ‘deposits with and receivables from broker-dealers, clearing organizations and counterparties’, ‘receivables from clients, net’, ‘financial instruments owned and sold, not yet purchased, at fair value’, ‘payable to clients’ and ‘payables to broker-dealers, clearing organizations and counterparties’.

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Listed below are the fair values of the Company’s derivative assets and liabilities as of December 31, 2020 and September 30, 2020. Assets represent net unrealized gains and liabilities represent net unrealized losses.


	December 31, 2020				September 30, 2020
(in millions)	Assets (1)		Liabilities (1)		Assets (1)		Liabilities (1)
Derivative contracts not accounted for as hedges:
Exchange-traded commodity derivatives	$	1,594.0	$	1,600.9	$	1,637.2	$	1,747.3
OTC commodity derivatives	763.2		647.4		553.9		433.2
Exchange-traded foreign exchange derivatives	32.8		44.4		9.3		13.0
OTC foreign exchange derivatives	378.1		303.2		520.8		461.5
Exchange-traded interest rate derivatives	88.6		86.3		271.1		200.7
OTC interest rate derivatives	84.5		84.9		96.0		96.6
Exchange-traded equity index derivatives	51.1		28.2		32.1		39.8
OTC equity and indices derivatives	149.9		90.4		113.0		55.4
TBA and forward settling securities	28.2		30.8		31.0		22.0
Gross fair value of derivative contracts	$	3,170.4	$	2,916.5	$	3,264.4	$	3,069.5
Impact of netting and collateral	(3,053.1)		(2,767.4)		(3,319.0)		(3,100.7)
Total fair value included in 'Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net'	$	(11.8)			$	(173.5)
Total fair value included in 'Receivables from clients, net'	$	2.2			$	1.5
Total fair value included in 'Financial instruments owned, at fair value'	$	126.9			$	117.4
Total fair value included in 'Payables to clients'			$	(121.3)			$	(222.7)
Total fair value included in 'Payables to broker-dealers, clearing organizations and counterparties’			$	30.6			$	14.7
Total fair value included in 'Financial instruments sold, not yet purchased, at fair value'			$	239.8			$	176.8

(1)As of December 31, 2020 and September 30, 2020, the Company’s derivative contract volume for open positions were approximately 7.4 million and 7.9 million contracts, respectively.

The Company’s derivative contracts are principally held in its Commercial and Retail segments. The Company assists its Commercial segment clients in protecting the value of their future production by entering into option or forward agreements with them on an OTC basis. The Company also provides its Commercial segment clients with option products, including combinations of buying and selling puts and calls. In its Retail segment, the Company provides its retail clients with access to spot foreign exchange, precious metals trading, as well as contracts for a difference (“CFDs”) and spread bets, where permitted. The Company mitigates its risk by generally offsetting the client’s transaction simultaneously with one of the Company’s trading counterparties or will offset that transaction with a similar but not identical position on the exchange. The risk mitigation of these offsetting trades is not within the documented hedging designation requirements of the Derivatives and Hedging Topic of the ASC. These derivative contracts are traded along with cash transactions because of the integrated nature of the markets for these products. The Company manages the risks associated with derivatives on an aggregate basis along with the risks associated with its proprietary trading and market-making activities in cash instruments as part of its firm-wide risk management policies. In particular, the risks related to derivative positions may be partially offset by inventory, unrealized gains in inventory or cash collateral paid or received.

The Company transacts in derivative instruments, which consist of futures, mortgage-backed TBA securities and forward settling transactions, that are used to manage risk exposures in the Company’s fixed income portfolio. The fair value of these transactions is recorded in deposits with and receivables from and payables to broker-dealers, clearing organizations, and counterparties. Realized and unrealized gains and losses on securities and derivative transactions are reflected in ‘principal gains, net’. The Company enters into TBA securities transactions for the sole purpose of managing risk associated with the purchase of mortgage pass-through securities.

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As of December 31, 2020 and September 30, 2020, these transactions are summarized as follows:


	December 31, 2020				September 30, 2020
(in millions)	Gain / (Loss)		Notional Amounts		Gain / (Loss)		Notional Amounts

Unrealized gain on TBA securities purchased within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts	$	25.6	$	6,190.7	$	10.8	$	5,389.3
Unrealized loss on TBA securities purchased within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts	$	0	$	136.9	$	(1.7)	$	2,647.7

Unrealized gain on TBA securities sold within payables to broker-dealers, clearing organizations and counterparties and related notional amounts	$	0	(120.4)		$	2.8	$	(2,978.7)
Unrealized loss on TBA securities sold within payables to broker-dealers, clearing organizations and counterparties and related notional amounts	$	(30.8)	$	(7,613.1)	$	(13.0)	$	(6,549.4)
Unrealized gain on forward settling securities purchased within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts	$	1.4	1,392.7		$	0	$	0
Unrealized gain on forward settling securities sold within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts	$	1.2	$	(1,040.6)	$	17.4	$	(1,946.0)
Unrealized loss on forward settling securities purchased within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts	$	0	0		$	(7.3)	$	2,447.1
(1) The notional amounts of these instruments reflect the extent of the Company's involvement in TBA and forward settling securities and do not represent risk of loss due to counterparty non-performance.

The following table sets forth the Company’s net gains (losses) related to derivative financial instruments for the three months ended December 31, 2020 and 2019 in accordance with the Derivatives and Hedging Topic of the ASC. The net gains (losses) set forth below are included in ‘principal gains, net’ and ‘cost of sales of physical commodities’ in the condensed consolidated income statements.


	Three Months Ended December 31,
(in millions)	2020		2019
Commodities	$	4.2	$	18.2
Foreign exchange	36.0		2.2

Interest rate, equities, and indices	12.6		(0.4)
TBA and forward settling securities	(8.5)		(0.9)
Net gains from derivative contracts	$	44.3	$	19.1

Credit Risk

In the normal course of business, the Company purchases and sells financial instruments, commodities and foreign currencies as either a principal or agent on behalf of its clients. If either the client or counterparty fails to perform, the Company may be required to discharge the obligations of the nonperforming party. In such circumstances, the Company may sustain a loss if the fair value of the financial instrument, commodity, or foreign currency is different from the contract value of the transaction.

The majority of the Company’s transactions and, consequently, the concentration of its credit exposure are with commodity exchanges, clients, broker-dealers and other financial institutions. These activities primarily involve collateralized and uncollateralized arrangements and may result in credit exposure in the event that a counterparty fails to meet its contractual obligations. The Company’s exposure to credit risk can be directly impacted by volatile financial markets, which may impair the ability of counterparties to satisfy their contractual obligations. The Company seeks to control its credit risk through a variety of reporting and control procedures, including establishing credit and/or position limits based upon a review of the counterparties’ financial condition and credit ratings. The Company monitors collateral levels on a daily basis for compliance with regulatory and internal guidelines and requests changes in collateral levels as appropriate.

The Company is a party to financial instruments in the normal course of its business through client and proprietary trading accounts in exchange-traded and OTC derivative instruments. These instruments are primarily the result of the execution of orders for commodity futures, options on futures, OTC swaps and options and spot and forward foreign currency contracts on behalf of its clients, substantially all of which are transacted on a margin basis. Such transactions may expose the Company to significant credit risk in the event margin requirements are not sufficient to fully cover losses which clients may incur. The Company controls the risks associated with these transactions by requiring clients to maintain margin deposits in compliance with individual exchange regulations and internal guidelines. The Company monitors required margin levels daily, and

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therefore, may require clients to deposit additional collateral or reduce positions when necessary. The Company also establishes credit limits for clients, which are monitored daily. The Company evaluates each client’s creditworthiness on a case by case basis. Clearing, financing, and settlement activities may require the Company to maintain funds with or pledge securities as collateral with other financial institutions. Generally, these exposures to both clients and exchanges are subject to master netting, or client agreements, which reduce the exposure to the Company by permitting receivables and payables with such clients to be offset in the event of a client default. Management believes that the margin deposits held as of December 31, 2020 and September 30, 2020 were adequate to minimize the risk of material loss that could be created by positions held at that time. Additionally, the Company monitors collateral fair value on a daily basis and adjusts collateral levels in the event of excess market exposure.

Derivative financial instruments involve varying degrees of off-balance sheet market risk whereby changes in the fair values of underlying financial instruments may result in changes in the fair value of the financial instruments in excess of the amounts reflected in the consolidated balance sheets. Exposure to market risk is influenced by a number of factors, including the relationships between the financial instruments and the Company’s positions, as well as the volatility and liquidity in the markets in which the financial instruments are traded. The principal risk components of financial instruments include, among other things, interest rate volatility, the duration of the underlying instruments and changes in commodity pricing and foreign exchange rates. The Company attempts to manage its exposure to market risk through various techniques. Aggregate market limits have been established and market risk measures are routinely monitored against these limits.

Note ~~6 – Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk~~

The Company is party to certain financial instruments with off-balance sheet risk in the normal course of its business. The Company has sold financial instruments that it does not currently own and will therefore be obliged to purchase such financial instruments at a future date. The Company has recorded these obligations in the condensed consolidated financial statements as of March 31, 2020 and September 30, 2019 at the fair values of the related financial instruments. The Company will incur losses if the fair value of the underlying financial instruments increases subsequent to March 31, 2020. The total financial instruments sold, not yet purchased of $703.6 million and $714.8 million as of March 31, 2020 and September 30, 2019, respectively, includes $152.8 million and $58.1 million for derivative contracts, respectively, which represented a liability to the Company based on their fair values as of March 31, 2020 and September 30, 2019.

~~Derivatives~~

The Company utilizes derivative products in its trading capacity as a dealer in order to satisfy client needs and mitigate risk. The Company manages risks from both derivatives and non-derivative cash instruments on a consolidated basis. The risks of derivatives should not be viewed in isolation, but in aggregate with the Company’s other trading activities. The majority of the Company’s derivative positions are included in the condensed consolidated balance sheets in ‘Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net’, ‘Financial instruments owned, at fair value’, ‘Financial instruments sold, not yet purchased, at fair value’ and ‘Payables to broker-dealers, clearing organizations and counterparties’.

Listed below are the fair values of the Company’s derivative assets and liabilities as of March 31, 2020 and September 30, 2019. Assets represent net unrealized gains and liabilities represent net unrealized losses.

March 31, 2020 September 30, 2019
(in millions)
Assets ⁽¹⁾

Liabilities ⁽¹⁾

Assets ⁽¹⁾

Liabilities ⁽¹⁾
Derivative contracts not accounted for as hedges:
Exchange-traded commodity derivatives $ 3,201.2
$ 3,524.6
$ 1,437.1
$ 1,463.4
OTC commodity derivatives 640.1
806.0
84.2
106.2
Exchange-traded foreign exchange derivatives 15.6
18.6
36.9
33.5
OTC foreign exchange derivatives 1,306.5
1,323.3
403.2
368.8
Exchange-traded interest rate derivatives 1,613.2
1,514.7
900.1
882.0
OTC interest rate derivatives 101.7
100.6
42.1
43.6
Exchange-traded equity index derivatives 391.5
321.8
758.1
700.2
TBA and forward settling securities 80.5
98.3
9.8
6.8
Gross fair value of derivative contracts 7,350.3
7,707.9
3,671.5
3,604.5
Impact of netting and collateral (7,213.5 ) (7,459.3 ) (3,581.9 ) (3,540.8 )
Total fair value included in 'Deposits with and receivables from broker-dealers, clearing organizations, and counterparties' $ 20.2
$ 23.1

Total fair value included in 'Financial instruments owned, at fair value $ 116.6
$ 66.5

Total fair value included in 'Payables to broker-dealers, clearing organizations and counterparties $ 95.8
$ 5.6
Fair value included in 'Financial instruments sold, not yet purchased, at fair value' $ 152.8
$ 58.1


~~(1)~~	~~As of March 31, 2020 and September 30, 2019, the Company’s derivative contract volume for open positions were approximately 10.8 million and 10.6 million contracts, respectively.~~

The Company’s derivative contracts are principally held in its Commercial Hedging and Clearing and Execution Services segments. The Company assists its Commercial Hedging segment clients in protecting the value of their future production by entering into option or forward agreements with them on an OTC basis. The Company also provides its Commercial Hedging segment clients with option products, including combinations of buying and selling puts and calls. The Company mitigates its risk by offsetting the client’s transaction simultaneously with one of the Company’s trading counterparties or with a similar but not identical exchange-traded position. The risk mitigation of these offsetting trades is not within the documented hedging designation requirements of Topic 815. These derivative contracts are traded along with cash transactions because of the integrated nature of the markets for these products. The Company manages the risks associated with derivatives on an aggregate basis along with the risks associated with its proprietary trading and market-making activities in cash instruments as part of its firm-wide risk management policies. In particular, the risks related to derivative positions may be partially offset by inventory, unrealized gains in inventory or cash collateral paid or received.

The Company has derivative instruments, which consist of TBA securities and forward settling transactions that are used to manage risk exposures in the trading inventory of the Company’s domestic institutional fixed income business. The fair value on these transactions are recorded in ‘deposits with and receivables from or payables to broker-dealers, clearing organizations and counterparties, net’. Realized and unrealized gains and losses on securities and derivative transactions are reflected in ‘principal gains, net’.

~~As of March 31, 2020 and September 30, 2019, these transactions are summarized as follows:~~

March 31, 2020 September 30, 2019
(in millions) Gain / (Loss) Notional Amounts Gain / (Loss) Notional Amounts
Unrealized gain on TBA securities purchased within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts $ 72.9
$ 3,335.4
$ 3.7
$ 1,778.4
Unrealized loss on TBA securities purchased within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts $ (1.5 ) $ 554.9
$ (0.6 ) $ 234.5
Unrealized gain on TBA securities sold within payables to broker-dealers, clearing organizations and counterparties and related notional amounts $ 2.0
$ (559.9 ) $ 0.9
$ (451.6 )
Unrealized loss on TBA securities sold within payables to broker-dealers, clearing organizations and counterparties and related notional amounts $ (94.8 ) $ (4,708.7 ) $ (5.9 ) $ (2,788.0 )
Unrealized gain on forward settling securities purchased within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts $ 5.6
896.9
$ —
$ —
Unrealized loss on forward settling securities purchased within payables to broker-dealers, clearing organizations and counterparties and related notional amounts $ —
$ —
$ (0.3 ) $ 1,243.5
Unrealized gain on forward settling securities sold within deposits with and receivables from broker-dealers, clearing organizations and counterparties and related notional amounts $ —
$ —
$ 5.2
$ (581.2 )
Unrealized loss on forward settling securities sold within payables to broker-dealers, clearing organizations and counterparties and related notional amounts $ (2.0 ) (712.4 ) $ —
$ —
(1) The notional amounts of these instruments reflect the extent of the Company's involvement in TBA and forward settling securities and do not represent risk of loss due to counterparty non-performance.

The following table sets forth the Company’s net gains from derivative contracts for the three and six months ended March 31, 2020 and 2019 in accordance with Topic 815. The net gains set forth below are included in ‘Cost of sales of physical commodities’ and ‘principal gains, net’ in the condensed consolidated income statements.

Three Months Ended March 31, Six Months Ended March 31,
(in millions) 2020 2019 2020 2019
Commodities $ 61.6
$ 36.0
$ 79.8
$ 44.1
Foreign exchange 5.1
1.8
7.3
3.7
Interest rate and equity —
0.7
(0.4 ) (2.6 )
TBA and forward settling securities (34.4 ) 10.6
(35.3 ) 1.3
Net gains from derivative contracts $ 32.3
$ 49.1
$ 51.4
$ 46.5

~~Credit Risk~~

therefore may require clients to deposit additional collateral or reduce positions when necessary. The Company also establishes credit limits for clients, which are monitored daily. The Company evaluates each client’s creditworthiness on a case by case basis. Clearing, financing, and settlement activities may require the Company to maintain funds with or pledge securities as collateral with other financial institutions. Generally, these exposures to both clients and exchanges are subject to master netting, or client agreements, which reduce the exposure to the Company by permitting receivables and payables with such clients to be offset in the event of a client default. Management believes that the margin deposits held as of March 31, 2020 and September 30, 2019 were adequate to minimize the risk of material loss that could be created by positions held at that time. Additionally, the Company monitors collateral fair value on a daily basis and adjusts collateral levels in the event of excess market exposure. Generally, these exposures to both clients and counterparties are subject to master netting or client agreements which reduce the exposure to the Company.

Derivative financial instruments involve varying degrees of off-balance sheet market risk whereby changes in the fair values of underlying financial instruments may result in changes in the fair value of the financial instruments in excess of the amounts reflected in the condensed consolidated balance sheets. Exposure to market risk is influenced by a number of factors, including the relationships between the financial instruments and the Company’s positions, as well as the volatility and liquidity in the markets in which the financial instruments are traded. The principal risk components of financial instruments include, among other things, interest rate volatility, the duration of the underlying instruments and changes in foreign exchange rates. The Company attempts to manage its exposure to market risk through various techniques. Aggregate market limits have been established and market risk measures are routinely monitored against these limits.

~~Note 7~~5 – Allowance for Doubtful Accounts

The allowance for doubtful accounts related to deposits with and receivables from broker-dealers, clearing organizations, and counterparties was $1.3 million ~~and $36.9 million~~ as of ~~March~~December 31, 2020 and September 30, 2019, respectively. During the three months ended March 31, 2020, the Company charged off $35.6 million of receivables against the allowance for doubtful accounts related to the physical coal business, which the Company exited in fiscal 2018.

2020. The allowance for doubtful accounts related to receivables from clients was ~~$17.2~~$35.5 million and ~~$11.7~~$25.8 million as of ~~March~~December 31, 2020 and September 30, ~~2019,~~2020, respectively. The allowance increase is related to additional bad debt reserves as discussed below and recoverable amounts due from affiliated party and recorded in ‘other assets’ in the condensed consolidated balance sheets. The Company had no0 allowance for doubtful accounts related to notes receivable as of ~~March~~December 31, 2020 and September 30, ~~2019.~~2020.

~~During~~Activity in the allowance for doubtful accounts for the three months ended ~~March~~December 31, 2020 ~~the Company recorded bad debt expense~~was as follows:


(in millions)	2021
Balance as of September 30, 2020	$	27.1
ASU 2016-13 cumulative transition adjustment	8.2
Adjusted balance as of September 30, 2020	35.3
Provision for bad debts	1.5
Allowance charge-offs	0


Balance as of December 31, 2020	$	36.8

Note 6 – Physical Commodities Inventory

The Company’s inventories consist of ~~$4.4 million, primarily related to $3.9 million~~finished physical commodities as shown below.


(in millions)	December 31, 2020		September 30, 2020
Physical Ag & Energy(1)	$	280.7	$	201.5
Precious metals - held by broker-dealer subsidiary(2)	18.8		14.2
Precious metals - held by non-broker-dealer subsidiaries(3)	139.6		65.4
Physical commodities inventory	$	439.1	$	281.1

(1) Physical Ag & Energy consists of ~~OTC client account deficits~~agricultural commodity inventories, including corn, soybeans, wheat, dried distillers grain, canola, sorghum, coffee, cocoa, cotton, and others. The agricultural commodity inventories are carried at net realizable value, which approximates selling prices in the ~~Commercial Hedging segment, $0.3~~ordinary course of business, less disposal costs, with changes in net realizable value included as a component of ‘cost of sales of physical commodities’ on the condensed consolidated income statements. The agricultural inventories have reliable, readily determinable and realizable market prices, have relatively insignificant costs of disposal and are available for immediate delivery. Physical Ag & Energy also consists of energy related inventories, including primarily propane, gasoline, and kerosene, which are valued at the lower of cost or net realizable value.

(2) Precious metals held by the Company’s subsidiary, StoneX Financial Ltd, a United Kingdom ("UK") based broker-dealer subsidiary, is measured at fair value, with changes in fair value included as a component of ‘principal gains, net’ on the condensed consolidated income statements, in accordance with U.S. GAAP accounting requirements for broker-dealers.

(3) Precious metals inventory held by subsidiaries that are not broker-dealers are valued at the lower of cost or net realizable value.

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The Company has recorded lower of cost or net realizable adjustments for certain precious metals and energy inventory of $4.2 million and $0.7 million as of ~~client deficits~~December 31, 2020 and September 30, 2020, respectively. The adjustments are included in ‘cost of sales of physical commodities’ in the ~~Clearing & Execution Services segment and $0.2 million in uncollected receivables in~~condensed consolidated income statements.

Note 7 – Goodwill

Goodwill allocated to the Physical Commodities segment. During the three months ended March 31, 2019, the Company recorded bad debt expense of $0.7 million, primarily related to client account deficits in the Commercial Hedging segment.Company’s operating segments are as follows:

During the six months ended March 31, 2020, the Company recorded bad debt expense of $4.4 million, as discussed above. During the six months ended March 31, 2019, the Company recorded bad debt expense of $1.0 million, primarily related to client account deficits in the Commercial Hedging and Clearing & Execution Services segments.


(in millions)	December 31, 2020		September 30, 2020
Commercial	$	32.7	$	32.7
Institutional	9.8		9.8
Retail	2.2		2.2
Global Payments	10.1		10.0
Goodwill	$	54.8	$	54.7

Additionally, during the six months ended March 31, 2019, the Company reached settlements with clients, paying $8.4 million related to demurrage, dead freight, and other penalty charges regarding coal supplied during fiscal 2017. The settlement amounts paid were less than the accrued liability for the transactions recorded during fiscal 2017 and fiscal 2018, and accordingly the Company recorded a recovery on the bad debt on physical coal of $2.4 million.

Note 8 – ~~Physical Commodities Inventory~~

~~The Company’s inventories consist of finished physical commodities. Inventories by component of the Company’s Physical Commodities segment are shown below.~~

(in millions) March 31,
2020 September 30,
2019
Physical Ag & Energy⁽¹⁾
$ 167.8
$ 144.8
Precious metals - held by broker-dealer subsidiary⁽²⁾
26.3
7.1
Precious metals - held by non-broker-dealer subsidiaries⁽³⁾
61.1
77.4
Physical commodities inventory $ 255.2
$ 229.3

⁽¹⁾ Physical Ag & Energy consists of agricultural commodity inventories, including corn, soybeans, wheat, dried distillers grain, canola, sorghum, coffee, cocoa, cotton, and others. The agricultural commodity inventories are carried at net realizable value, which approximates selling prices in the ordinary course of business, less disposal costs, with changes in net realizable value included as a component of ‘cost of sales of physical commodities’ on the condensed consolidated income statements. The agricultural inventories have reliable, readily determinable and realizable market prices, have relatively insignificant costs of disposal and are available for immediate delivery. Physical Ag & Energy also maintains energy related inventory which is valued at the lower of cost or net realizable value.

⁽²⁾ Precious metals held by the Company’s subsidiary, INTL FCStone Ltd, a United Kingdom based broker-dealer subsidiary, is measured at fair value, with changes in fair value included as a component of ‘principal gains, net’ on the condensed consolidated income statements, in accordance with U.S. GAAP accounting requirements for broker-dealers.

⁽³⁾~~Precious metals inventory held by subsidiaries that are not broker-dealers are valued at the lower of cost or net realizable value.~~

The Company has recorded lower of cost or net realizable adjustments for certain precious metals inventory of $1.2 million and $0.5 million as of March 31, 2020 and September 30, 2019, respectively. The adjustments are included in ‘cost of sales of physical commodities’ in the condensed consolidated income statements.

~~Note 9 – Goodwill~~

~~The carrying value of goodwill is allocated to the Company’s operating segments as follows:~~

(in millions) March 31,
2020 September 30,
2019
Commercial Hedging $ 30.2
$ 30.3
Global Payments 7.6
7.6
Securities 4.6
4.6
Physical Commodities 8.7
8.7
Clearing and Execution 1.1
—
Goodwill $ 52.2
$ 51.2

The Company recorded additional goodwill of $1.1 million during the six months ended March 31, 2020 within the Clearing and Execution operating segment related to the initial purchase price allocation for the acquisition of UOB Bullion and Futures Limited as further discussed in Note 18.

~~Note 10 –~~ Intangible Assets

~~The Company recorded $3.2 million, $1.0 million, and $1.7 million of customer base intangible assets during the~~ ~~six months ended March 31, 2020~~ ~~related to the acquisitions of UOB Bullion and Futures Limited, IFCM Commodities GmbH, and Quest Capital, respectively, as further discussed in Note 18.~~

The gross and net carrying values of intangible assets as of the balance sheet dates, by major intangible asset class are as follows (in millions):


																December 31, 2020						September 30, 2020
	March 31, 2020							September 30, 2019								Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Intangible assets subject to amortization:
Intangible assets subject to amortization															Intangible assets subject to amortization
Trade/domain names															Trade/domain names	$	3.7	$	(0.3)	$	3.4	$	3.7	$	(0.2)	$	3.5
Software programs/platforms	$	5.3	$	(3.2	)	$	2.1	$	5.3	$	(3.0	)	$	2.3	Software programs/platforms	29.0		(7.1)		21.9		29.0		(4.9)		24.1
Customer base	28.2		(14.2		)	14.0		22.1		(12.5		)	9.6		Customer base	38.2		(17.7)		20.5		38.2		(16.3)		21.9
Total intangible assets subject to amortization:	33.5		(17.4		)	16.1		27.4		(15.5		)	11.9
Total intangible assets subject to amortization															Total intangible assets subject to amortization	70.9		(25.1)		45.8		70.9		(21.4)		49.5

Intangible assets not subject to amortization:
Intangible assets not subject to amortization															Intangible assets not subject to amortization
Website domains	2.1		—			2.1		2.1		—			2.1		Website domains	2.1		—		2.1		2.1		—		2.1
Business licenses	2.7		—			2.7		2.7		—			2.7		Business licenses	3.7		—		3.7		3.2		—		3.2
Total intangible assets not subject to amortization:	4.8		—			4.8		4.8		—			4.8
Total intangible assets not subject to amortization															Total intangible assets not subject to amortization	5.8		—		5.8		5.3		—		5.3
Total intangible assets	$	38.3	$	(17.4	)	$	20.9	$	32.2	$	(15.5	)	$	16.7	Total intangible assets	$	76.7	$	(25.1)	$	51.6	$	76.2	$	(21.4)	$	54.8

Amortization expense related to intangible assets was ~~$1.1~~$3.8 million and ~~$0.6~~$0.7 million for the three months ended ~~March 31, 2020 and 2019, respectively. Amortization expense related to intangible assets was $1.9 million and $1.3 million for the six months ended March~~December 31, 2020 and 2019, respectively.

As of ~~March~~December 31, 2020, the estimated future amortization expense was as follows:


(in millions)
Fiscal 2021 (remaining nine months)	$	11.3
Fiscal 2022	13.9
Fiscal 2023	12.2
Fiscal 2024	4.7
Fiscal 2025 and thereafter	3.7
Total intangible assets subject to amortization	$	45.8

(in millions)
Fiscal 2020 (remaining six months) $ 2.0
Fiscal 2021 4.0
Fiscal 2022 2.7
Fiscal 2023 2.5
Fiscal 2024 and thereafter 4.9
Total intangible assets subject to amortization $ 16.1

Note 9 – Credit Facilities

Committed Credit Facilities

The Company has 4 committed credit facilities, including a senior secured term loan, under which the Company and its subsidiaries may borrow up to $734.1 million, subject to the terms and conditions for these facilities. The amounts outstanding under these credit facilities carry variable rates of interest, thus approximating fair value. The Company’s committed credit facilities consist of the following:

•$374.1 million senior secured syndicated loan facility available to the Company for general working capital requirements and capital expenditures. The facility was originally comprised of a $196.5 million revolving credit facility and a $196.5 million Term Loan facility. The Company is required to make quarterly principal payments against the Term Loan equal to 1.25% of the original balance with the remaining balance due on the maturity date. During the three months ended December 31, 2020, the Company made scheduled quarterly principal payments against the Term Loan equal to $2.4 million, reducing the amount outstanding to $177.6 million as of December 31, 2020. Amounts repaid on the Term Loan may not be reborrowed.

•$75.0 million unsecured facility available to the Company’s wholly owned subsidiary, StoneX Financial Inc., to provide short-term funding of margin to exchange-clearing organizations, as necessary. The facility is subject to annual review and guaranteed by the Company.

•$260.0 million secured syndicated facility available to the Company’s wholly owned subsidiary, FCStone Merchant Services, LLC, to finance commodity financing arrangements and commodity repurchase agreements. The facility is guaranteed by the Company.

•$25.0 million unsecured syndicated facility available to the Company’s wholly owned subsidiary, StoneX Financial Ltd., for short-term funding of margin to exchange-clearing organizations. The facility is guaranteed by the Company.

Uncommitted Credit Facilities

The Company has a secured, uncommitted loan facility, under which StoneX Financial Ltd may borrow up to $25.0 million, collateralized by commodities warehouse receipts, to facilitate the financing of inventory of commodities, subject to certain terms and conditions of the credit agreement. There were no borrowing borrowings outstanding under this credit facility as of December 31, 2020. There were $20.0 million in borrowings outstanding under this credit facility as of September 30, 2020.

The Company has a secured, uncommitted loan facility under which StoneX Financial Inc. may borrow up to $75.0 million, collateralized by commodities warehouse receipts, to facilitate U.S. commodity exchange deliveries of its clients, subject to certain terms and conditions of the credit agreement. There were 0 borrowings outstanding under this credit facility as of December 31, 2020 and September 30, 2020.

The Company has a secured, uncommitted loan facility under which StoneX Financial Inc. may borrow for short-term funding of proprietary and client securities margin requirements, subject to certain terms and conditions of the agreement. The uncommitted amount available to be borrowed is not specified, and all requests for borrowing are subject to the sole discretion of the lender. The borrowings are secured by first liens on Company owned marketable securities or client owned securities which have been pledged to the Company. The amounts borrowed under the facilities are payable on demand. There were $10.0 million and 0 in borrowings outstanding under this credit facility as of December 31, 2020 and September 30, 2020, respectively.

The Company has secured, uncommitted loan facilities under which StoneX Financial Inc. may borrow up to $100.0 million for short-term funding of proprietary and client securities margin requirements, subject to certain terms and conditions of the agreement. The borrowings are secured by first liens on Company owned marketable securities or client owned securities which have been pledged to the Company. The amounts borrowed under the facilities are payable on demand. There were no borrowings outstanding under this credit facility as of December 31, 2020 and September 30, 2020.

Note Payable to Bank

In December 2020, the Company obtained a $9.0 million loan from a commercial bank, secured by equipment purchased with the proceeds. The note is payable in monthly installments, with the final payment due during December 2025. The note bears interest at a rate per annum equal to the Index rate, as defined in the agreement, plus 2.35%.

Senior Secured Notes

On June 11, 2020, the Company completed the issuance and sale of $350 million in aggregate principal amount of the Company’s Notes at the offering price of 98.5% of the aggregate principal amount.

The Company used the proceeds from the issuance of the Senior Secured Notes to fund the consideration for the acquisition of Gain Capital Holdings, Inc., to pay acquisition related costs, and to fund the redemption of the Gain Notes. The Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, on a senior second lien secured basis, by certain subsidiaries of the Company that guarantee the Company’s senior committed credit facility and by Gain and certain of its domestic subsidiaries.

The following table sets forth a listing of credit facilities, the current committed amounts as of the report date on the facilities, and outstanding borrowings on the facilities as well as indebtedness on a promissory note and the Senior Secured Notes as of the periods indicated:


(in millions)
						Amounts Outstanding
	Borrower	Security	Renewal/Expiration Date	Total Commitment		December 31, 2020			September 30, 2020
Committed Credit Facilities
	Term Loan	(1)	February 22, 2022	$	177.6	$	177.2	(3)	$	179.5
	Revolving Line of Credit	(1)	February 22, 2022	196.5		121.0			23.0
	Senior StoneX Group Inc. Committed Credit Facility			374.1		298.2			202.5
	StoneX Financial Inc.	None	April 2, 2021	75.0		0			0
	FCStone Merchants Services, LLC	Certain commodities assets	January 29, 2022	260.0		233.7			200.1
	StoneX Financial Ltd.	None	October 14, 2021	25.0		0			25
				$	734.1	$	531.9		$	427.6

Uncommitted Credit Facilities
	StoneX Financial Inc.	Commodities warehouse receipts and certain pledged securities	n/a	n/a		10.0			0
	StoneX Financial Ltd.	Commodities warehouse receipts	n/a	n/a		0			20.0
Note Payable to Bank		Certain equipment				9.0			0
Senior Secured Notes		(2)				336.5		(3)	336.0

Total outstanding borrowings						$	887.4		$	783.6

(1) The StoneX Group Inc. committed credit facility is secured by substantially all of the assets of StoneX Group Inc. and certain subsidiaries identified in the credit facility agreement as obligors, and pledged equity of certain subsidiaries identified in the credit facility as limited guarantors.

(2) The Senior Secured Notes and the related guarantees are secured by liens on substantially all of the Company’s and the guarantors’ assets, subject to certain customary and other exceptions and permitted liens. The liens on the assets that secure the Senior Secured Notes and the related guarantees are contractually subordinated to the liens on the assets that secure the Company’s and the guarantors’ existing and future first lien secured indebtedness, including indebtedness under the Company’s senior committed credit facility.

(3) Amounts outstanding under the Term Loan and the Senior Secured Notes are reported net of unamortized deferred financing costs and original issue discount of $0.4 million and $13.4 million, respectively.

As reflected above, $75.0 million of the Company’s committed credit facilities are scheduled to expire during the fiscal year ended September 30, 2021. The Company intends to renew or replace the facilities as they expire, and based on the Company’s liquidity position and capital structure, the Company believes it will be able to do so.

worth ratio. Failure to comply with these covenants could result in the debt becoming payable on demand. As of December 31, 2020, the Company was in compliance with all of its financial covenants under its credit facilities.

Note ~~11 – Credit Facilities~~

~~Committed Credit Facilities~~

~~The Company has~~ ~~four~~ committed credit facilities, including a senior secured term loan, under which the Company and its subsidiaries may borrow up to $766.5 million, subject to the terms and conditions for these facilities. The amounts outstanding under these credit facilities carry variable rates of interest, thus approximating fair value. The Company’s committed credit facilities consist of the following:

~~Uncommitted Credit Facilities~~

The Company has a secured, uncommitted loan facility under which INTL FCStone Financial Inc. may borrow up to $75.0 million, collateralized by commodities warehouse receipts, to facilitate U.S. commodity exchange deliveries of its clients, subject to certain terms and conditions of the credit agreement. There were no borrowings outstanding under this credit facility as of March 31, 2020, and September 30, 2019.

The Company has a secured, uncommitted loan facility under which INTL FCStone Financial Inc. may borrow for short term funding of proprietary and client securities margin requirements, subject to certain terms and conditions of the agreement. The uncommitted amount available to be borrowed is not specified, and all requests for borrowing are subject to the sole discretion of the lender. The borrowings are secured by first liens on Company owned marketable securities or client owned securities which have been pledged to the Company. The amounts borrowed under the facilities are payable on demand. There were $5.0 million and zero in borrowings outstanding under this credit facility as of March 31, 2020, and September 30, 2019, respectively.

The Company has secured, uncommitted loan facilities under which INTL FCStone Financial Inc. may borrow up to $100.0 million for short term funding of proprietary and client securities margin requirements, subject to certain terms and conditions of the agreement. The borrowings are secured by first liens on Company owned marketable securities or client owned securities which have been pledged to the Company. The amounts borrowed under the facilities are payable on demand. There were no borrowings outstanding under this credit facility as of March 31, 2020 and September 30, 2019.

The Company had a secured, uncommitted loan facility under which FCStone Merchant Services, LLC could borrow up to $20.0 million to facilitate the financing of inventory of commodities and other products or goods approved by the lender in its sole discretion, subject to certain terms and conditions of the loan facility agreement. There were $3.4 million in borrowings outstanding under this credit facility as of September 30, 2019. The credit facility was terminated during the three months ended March 31, 2020, in connection with the refinancing and extension of FCStone Merchant Services, LLC’s committed credit facility.

(in millions)
Amounts Outstanding
Borrower Security Renewal/Expiration Date Total Commitment March 31,
2020 September 30,
2019
Committed Credit Facilities
Term Loan (1) February 22, 2022 $ 185.0
$ 184.3
(2) $ 167.6
Revolving Line of Credit (1) February 22, 2022 196.5
100.0
70.0
INTL FCStone Inc. 381.5
284.3
237.6
INTL FCStone Financial Inc. None April 2, 2021
75.0

—
—
FCStone Merchants Services, LLC Certain commodities assets January 29, 2022 260.0
170.0
128.5
INTL FCStone Ltd. None July 14, 2020 50.0
—
—
$ 766.5
$ 454.3
$ 366.1

Uncommitted Credit Facilities
INTL FCStone Financial Inc. Commodities warehouse receipts and certain pledged securities n/a n/a
5.0
—
FCStone Merchant Services, LLC Certain commodities assets n/a n/a
—
3.4

Note Payable to Bank
Monthly installments, due March 2020 and secured by certain equipment —
0.4
Total outstanding borrowings $ 459.3
$ 369.9

(1) The INTL FCStone Inc. committed credit facility is secured by substantially all of the assets of INTL FCStone Inc. and certain subsidiaries identified in the credit facility agreement as obligors, and pledged equity of certain subsidiaries identified in the credit facility as limited guarantors.

~~(2) Amount outstanding under the Term Loan is reported net of unamortized deferred financing costs of 0.7 million.~~

As reflected above, $125.0 million of the Company’s committed credit facilities are scheduled to expire within twelve months of this filing. The Company intends to renew or replace the facilities when they expire, and based on the Company’s liquidity position and capital structure, the Company believes it will be able to do so.

The Company’s credit facility agreements contain financial covenants relating to financial measures on a consolidated basis, as well as on a certain stand-alone subsidiary basis, including minimum tangible net worth, minimum regulatory capital, minimum net unencumbered liquid assets, maximum net loss, minimum fixed charge coverage ratio and maximum funded debt to net worth ratio. Failure to comply with these covenants could result in the debt becoming payable on demand. As of March 31, 2020, the Company was in compliance with all of its financial covenants under its credit facilities.

~~Note 12~~10 – Securities and Commodity Financing Transactions

The Company enters into securities purchased under agreements to resell, securities sold under agreements to repurchase, securities borrowed and securities loaned transactions to, among other things, fund principal debt trading, acquire securities to cover short positions, acquire securities for settlement, and to accommodate counterparties’ needs under matched-book trading strategies. These agreements are recorded as collateralized financings at their contractual amounts plus accrued interest. The related interest is recorded in the ~~condensed~~ consolidated income statements as interest income or interest expense, as applicable. In connection with these agreements and transactions, it is the policy of the Company to receive or pledge cash or securities to adequately collateralize such agreements and transactions in accordance with contractual agreements. The collateral is valued daily and the Company may require counterparties to deposit additional collateral or return collateral pledged. ~~The carrying amounts of these agreements and transactions approximate fair value due to their short-term nature and the level of collateralization.~~

The Company pledges financial instruments owned to collateralize repurchase agreements. At ~~March~~December 31, 2020 and September 30, ~~2019,~~2020, financial instruments owned, at fair value of ~~$743.6~~$713.2 million and ~~$478.8~~$468.6 million, respectively, were pledged as collateral under repurchase agreements. The counterparty has the right to sell or repledge the collateral in connection with these transactions. These financial instruments owned have been pledged as collateral and have been parenthetically disclosed on the condensed consolidated balance sheets.

In addition, as of ~~March~~December 31, 2020 and September 30, ~~2019,~~2020, the Company pledged financial instruments owned, at fair value of ~~$1,049.3~~$1,294.9 million and ~~$1,228.9~~$1,266.4 million, respectively, to cover collateral requirements for tri-party repurchase agreements. These securities have not been parenthetically disclosed on the condensed consolidated balance sheets since the counterparties do not have the right to sell or repledge the collateral. The Company also repledged securities received under reverse repurchase agreements with a fair value of ~~$1,069.8~~$1,699.0 million and ~~$1,175.1~~$1,484.7 million, respectively, to cover collateral requirements for tri-party repurchase agreements.

The Company also has repledged securities borrowed and client securities held under custodial clearing arrangements to collateralize securities loaned agreements with a fair value of ~~$1,025.9~~$1,224.2 million and ~~$1,414.0~~$1,410.3 million as of ~~March~~December 31, 2020, and September 30, ~~2019,~~2020, respectively.

Additionally, the Company had also pledged financial instruments owned with a fair value of ~~$21.9~~$22.2 million and ~~zero~~0 as of ~~March~~December 31, 2020, and September 30, ~~2019,~~2020, respectively, to collateralize uncommitted loan facilities with certain banks as discussed further in Note ~~11.~~9.

At ~~March~~December 31, 2020 and September 30, ~~2019,~~2020, the Company had accepted collateral that it is permitted by contract to sell or repledge. This collateral consists primarily of securities received in reverse repurchase agreements, securities borrowed agreements, and margin securities held on behalf of correspondent brokers. The fair value of such collateral at ~~March~~December 31, 2020 and September 30, ~~2019,~~2020, was ~~$2,449.2~~$3,288.4 million and ~~$3,060.2~~$3,303.1 million, respectively, of which ~~$252.2~~$255.6 million and ~~$329.8~~$285.7 million, respectively, was used to cover securities sold short which are recorded in financial instruments sold, not yet purchased on the condensed consolidated balance sheets. In the normal course of business, this collateral is used by the Company to cover financial instruments sold, not yet purchased, to obtain financing in the form of repurchase agreements, and to meet counterparties’ needs under lending arrangement and matched-booked trading strategies.

The following tables provide the contractual maturities of gross obligations under repurchase and securities lending agreements as of ~~March~~December 31, 2020 and September 30, ~~2019~~2020 (in millions):


	December 31, 2020
	Overnight and Open		Less than 30 Days		30-90 Days		Over 90 Days		Total
Securities sold under agreements to repurchase	$	1,769.5	$	1,537.5	$	167.6	$	160.7	$	3,635.3
Securities loaned	1,237.8		0		0		0		1,237.8
Gross amount of secured financing	$	3,007.3	$	1,537.5	$	167.6	$	160.7	$	4,873.1


	September 30, 2020
	Overnight and Open		Less than 30 Days		30-90 Days		Over 90 Days		Total
Securities sold under agreements to repurchase	$	1,736.3	$	1,069.2	$	325.0	$	25.0	$	3,155.5
Securities loaned	1,441.9		0		0		0		1,441.9
Gross amount of secured financing	$	3,178.2	$	1,069.2	$	325.0	$	25.0	$	4,597.4

March 31, 2020
Overnight and Open Less than 30 Days 30-90 Days Over 90 Days Total
Securities sold under agreements to repurchase $ 1,535.1
$ 737.2
$ 483.0
$ 45.0
$ 2,800.3
Securities loaned 1,068.8
—
—
—
1,068.8
Gross amount of secured financing $ 2,603.9
$ 737.2
$ 483.0
$ 45.0
$ 3,869.1

September 30, 2019
Overnight and Open Less than 30 Days 30-90 Days Over 90 Days Total
Securities sold under agreements to repurchase $ 1,553.9
$ 565.8
$ 654.0
$ —
$ 2,773.7
Securities loaned 1,459.9
—
—
—
1,459.9
Gross amount of secured financing $ 3,013.8
$ 565.8
$ 654.0
$ —
$ 4,233.6

The following table provides the underlying collateral types of the gross obligations under repurchase and securities lending agreements as of ~~March~~December 31, 2020 and September 30, ~~2019~~2020 (in millions):

The following tables provide the netting of securities purchased under agreements to resell, securities sold under agreements to repurchase, securities borrowed and securities loaned as of the periods indicated (in millions):


	December 31, 2020
Offsetting of collateralized transactions:	Gross Amounts Recognized		Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts Presented in the Condensed Consolidated Balance Sheet
Securities purchased under agreements to resell	$	1,935.6	$	0	$	1,935.6
Securities borrowed	$	1,227.8	$	0	$	1,227.8
Securities sold under agreements to repurchase	$	3,635.3	$	0	$	3,635.3
Securities loaned	$	1,237.8	$	0	$	1,237.8


	September 30, 2020
Offsetting of collateralized transactions:	Gross Amounts Recognized		Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts Presented in the Condensed Consolidated Balance Sheet
Securities purchased under agreements to resell	$	1,696.2	$	0	$	1,696.2
Securities borrowed	$	1,440.0	$	0	$	1,440.0
Securities sold under agreements to repurchase	$	3,155.5	$	0	$	3,155.5
Securities loaned	$	1,441.9	$	0	$	1,441.9

Note 11 – Commitments and Contingencies

During the week ended November 16, 2018, balances in approximately 300 client accounts of the FCM division of the Company’s wholly owned subsidiary, StoneX Financial Inc., declined below required maintenance margin levels, primarily as a result of significant and unexpected price fluctuations in the natural gas markets. All positions in these accounts, which were managed by OptionSellers.com Inc. (“OptionSellers”), an independent Commodity Trading Advisor (“CTA”), were liquidated in accordance with the StoneX Financial Inc.’s client agreements and obligations under market regulation standards.

A CTA is registered with the U.S. Commodity Futures Trading Commission (“CFTC”) and a member of, and subject to audit by, the National Futures Association (“NFA”). OptionSellers is registered under a CFTC Rule 4.7 exemption for “qualified eligible persons,” which requires the account holders authorizing OptionSellers to act as their CTA to meet or exceed certain minimum financial requirements. OptionSellers, in its role as a CTA, had been granted by each of its clients full discretionary authority to manage the trading in the client accounts, while StoneX Financial Inc. acted solely as the clearing firm in its role as the FCM.

March 31, 2020
Offsetting of collateralized transactions: Gross Amounts Recognized Amounts Offset in the Condensed Consolidated Balance Sheet Net Amounts Presented in the Condensed Consolidated Balance Sheet
Securities purchased under agreements to resell $ 1,260.0
$ —
$ 1,260.0
Securities borrowed $ 1,063.8
$ —
$ 1,063.8
Securities sold under agreements to repurchase $ 2,800.3
$ —
$ 2,800.3
Securities loaned $ 1,068.8
$ —
$ 1,068.8
StoneX Financial Inc.’s client agreements hold account holders liable for all losses in their accounts and obligate the account holders to reimburse StoneX Financial Inc. for any account deficits in their accounts. As of December 31, 2020, the aggregate receivable from these client accounts, net of collections and other allowable deductions, was $29.0 million, with no individual account receivable exceeding $1.4 million. StoneX Financial Inc. continues to pursue collection of these receivables and intends both to enforce and to defend its rights aggressively, and to claim interest and costs of collection where applicable.

During the Company’s October 1, 2020 implementation of CECL, the new credit reserving model which is based on expected losses over the life of an asset and which applies to client deficits, the Company completed an assessment of the collectibility of these accounts in light of this new guidance. As a result of the implementation, the Company recognized a cumulative-effect adjustment to record an allowance against these uncollected balances of $8.2 million. The Company continues to assess collectibility of these accounts quarterly, including the consideration of numerous arbitration proceedings the Company has initiated against these clients to recover deficit balances in their accounts. The Company believes it has a valid claim against its clients, based on the express language of the client contracts and legal precedent, and intends to pursue collection of these claims vigorously. As the Company moves through the collection and arbitration processes and additional information becomes available, the Company will continue to consider that information in its determination of any changes in the allowance against the carrying value of these uncollected balances.

Additionally, StoneX Financial Inc. has been named in arbitrations brought by clients seeking damages relating to the trading losses in these accounts. The Company believes that such cases are without merit and intends to defend them vigorously. The ultimate outcome of these arbitrations cannot presently be determined; however, the Company believes the likelihood of a material adverse outcome is remote.

Depending on future collections and arbitration proceedings, any provisions for bad debts and actual losses ultimately may or may not be material to the Company’s financial results. The Company does not currently believe that any potential losses related to this matter would materially and adversely impact its ability to comply with its ongoing liquidity, capital, and regulatory requirements.

From time to time and in the ordinary course of business, the Company is involved in various legal actions and proceedings, including tort claims, contractual disputes, employment matters, workers’ compensation claims and collections. The Company carries insurance that provides protection against certain types of claims, up to the policy limits of the insurance.

As of December 31, 2020 and September 30, 2020, the condensed consolidated balance sheets include loss contingency accruals which are not material, individually or in the aggregate, to the Company’s financial position or liquidity. In the opinion of management, possible exposure from loss contingencies in excess of the amounts accrued, is not likely to be material to the Company’s earnings, financial position or liquidity.

There have been no material changes to the legal actions and proceedings compared to September 30, 2020.

Contractual Commitments

The Company self-insures its costs related to medical and dental claims. The Company is self-insured, up to a stop loss amount, for eligible participating employees and retirees, and for qualified dependent medical and dental claims, subject to deductibles and limitations. As of December 31, 2020, the Company had $1.2 million accrued for self-insured medical and dental claims included in ‘accounts payable and other accrued liabilities’ in the condensed consolidated balance sheet.

September 30, 2019
Offsetting of collateralized transactions: Gross Amounts Recognized Amounts Offset in the Condensed Consolidated Balance Sheet Net Amounts Presented in the Condensed Consolidated Balance Sheet
Securities purchased under agreements to resell $ 1,474.4
$ (49.9 ) $ 1,424.5
Securities borrowed $ 1,423.2
$ —
$ 1,423.2
Securities sold under agreements to repurchase $ 2,823.6
$ (49.9 ) $ 2,773.7
Securities loaned $ 1,459.9
$ —
$ 1,459.9

Note 12 – Accumulated Other Comprehensive Loss, Net

Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income. Other comprehensive income includes net actuarial losses from defined benefit pension plans and foreign currency translation adjustments.

The following table summarizes the changes in accumulated other comprehensive loss, net for the three months ended December 31, 2020.


(in millions)	Foreign Currency Translation Adjustment		Pension Benefits Adjustment		Accumulated Other Comprehensive Loss, net
Balances as of September 30, 2020	$	(36.0)	$	(4.1)	$	(40.1)


Other comprehensive income	13.9		0		13.9


Balances as of December 31, 2020	$	(22.1)	$	(4.1)	$	(26.2)

Note 13 – ~~Commitments~~Revenue from Contracts with Clients

The Company accounts for revenue earned from contracts with clients for services such as the execution, clearing, brokering, and ~~Contingencies~~custody of futures and options on futures contracts, OTC derivatives, and securities, investment management, and underwriting services in accordance with FASB Accounting Standards Codification (“ASC”) 606, Revenues from Contracts with Customers (Topic 606). As such, revenues for these services are recognized when the performance obligations related to the underlying transaction are completed.

~~During the week ended November 16, 2018, balances in approximately 300 accounts~~Revenues are recognized when control of the ~~FCM division~~promised goods or services are transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenues are analyzed to determine whether the Company is the principal (i.e. reports revenue on a gross basis) or agent (i.e., reports revenues on a net basis) in the contract. Principal or agent designations depend primarily on the control an entity has over the good or service before control is transferred to a client. The indicators of which party exercises control include primary responsibility over performance obligations, inventory risk before the good or service is transferred, and discretion in establishing the price.

The Company’s revenues from contracts with clients subject to Topic 606 represent approximately 1.5% and 1.0% of the Company’s ~~wholly owned subsidiary, INTL FCStone Financial Inc.~~total revenues for the three months ended December 31, 2020 and 2019, respectively.

The Company’s revenues from contracts with clients subject to Topic 606 represent approximately 37.5% and 39.2% of the Company’s operating revenues for the three months ended December 31, 2020 and 2019, respectively.

This includes all of the Company’s commission and clearing fees and consulting, management, and account fees revenues. Revenues within the scope of Topic 606 are presented within ‘Commission and clearing fees’ and ‘Consulting, management, and account fees’ on the condensed consolidated income statements. Revenues that are not within the scope of Topic 606 are presented within ‘Sales of physical commodities’, ~~declined below required maintenance margin levels,~~‘Principal gains, net’, and ‘Interest income’ on the condensed consolidated income statements.

The following table represents a disaggregation of the Company’s total revenues separated between revenues from contracts with clients and other sources of revenue for the periods indicated.


	Three Months Ended December 31,
(in millions)	2020		2019
Revenues from contracts with clients:
Commission and clearing fees:
Sales-based:
Exchange-traded futures and options	$	46.3	$	32.4
OTC derivative brokerage	3.8		5.5
Equities and fixed income	14.4		4.3
Mutual funds	1.2		1.3
Insurance and annuity products	2.3		2.1
Other	0.2		0.3
Total sales-based commission	68.2		45.9
Trailing:
Mutual funds	3.3		3.1
Insurance and annuity products	3.9		3.7
Total trailing commission	7.2		6.8

Clearing fees	38.5		29.5
Trade conversion fees	2.1		1.5
Other	3.4		3.5
Total commission and clearing fees:	119.4		87.2

Consulting, management, and account fees:
Underwriting fees	0.2		0.2
Asset management fees	8.7		7.5
Advisory and consulting fees	6.0		5.6
Sweep program fees	0.8		4.0
Client account fees	4.1		3.0
Other	3.2		1.0
Total consulting, management, and account fees	23.0		21.3
Total revenues from contracts with clients	$	142.4	$	108.5

Method of revenue recognition:
Point-in-time	$	119.7	$	84.6
Time elapsed	22.7		23.9
Total revenues from contracts with clients	142.4		108.5
Other sources of revenues
Physical precious metals trading	8,408.9		10,658.0
Physical agricultural and energy product trading	474.6		320.0
Principal gains, net	203.4		112.5
Interest income	21.2		46.0
Total revenues	$	9,250.5	$	11,245.0

Primary geographic region:
United States	$	758.9	$	512.3
Europe	172.4		111.6
South America	14.6		15.2
Middle East and Asia	8,302.0		10,605.5
Other	2.6		0.4
Total revenues	$	9,250.5	$	11,245.0

Commission and clearing fees revenue and consulting, management, and account fees revenues are primarily related to the Commercial and Institutional reportable segments. Principal gains, net are contributed by all of the Company’s reportable segments. Interest income is primarily related to the Commercial and Institutional reportable segments. Physical precious

metals trading and physical agricultural and energy product trading revenues are primarily related to the Commercial reportable segment.

Remaining Performance Obligations

Remaining performance obligations are services that the Company has committed to perform in the future in connection with its contracts with clients. The Company’s remaining performance obligations are generally related to its risk management consulting and asset management contracts with clients. Revenues associated with remaining performance obligations related to these contracts with clients are not material to the overall consolidated results of the Company. For the Company’s asset management activities, where fees are calculated based on a percentage of the fair value of eligible assets in client’s accounts, future revenue associated with remaining performance obligations cannot be determined as ~~a result of significant and unexpected price~~such fees are subject to fluctuations in the ~~natural gas markets. All positions~~fair value of eligible assets in ~~these accounts, which were managed by OptionSellers.com Inc. (“OptionSellers”), an independent Commodity Trading Advisor (“CTA”), were liquidated in accordance with~~clients’ accounts.

Note 14 – Other Expenses

A CTA is registered with the U.S. Commodity Futures Trading Commission (“CFTC”) and a member of, and subject to audit by, the National Futures Association (“NFA”). OptionSellers is registered under a CFTC Rule 4.7 exemption for “qualified eligible persons,” which requires the account holders authorizing OptionSellers to act as their CTA to meet or exceed certain minimum financial requirements. OptionSellers, in its role as a CTA, had been granted by each of its clients full discretionary authority to manage the trading in the client accounts, while INTL FCStone Financial Inc. acted solely as the clearing firm in its role as the FCM.


	Three Months Ended December 31,
(in millions)	2020		2019
Insurance	$	1.8	$	1.0
Office supplies and printing	0.3		0.4
Other clearing related expenses	1.0		0.8
Other non-income taxes	3.8		1.3
Contingent consideration, net	0.1		0
Other	4.1		2.6
Total other expenses	$	11.1	$	6.1

INTL FCStone Financial Inc.’s client agreements hold account holders liable for all losses in their accounts and obligate the account holders to reimburse INTL FCStone Financial Inc. for any account deficits in their accounts. As of March 31, 2020, the aggregate receivable from these client accounts, net of collections and other allowable deductions, was $29.0 million, with no individual account receivable exceeding $1.4 million. INTL FCStone Financial Inc. continues to pursue collection of these receivables and intends both to enforce and to defend its rights aggressively, and to claim interest and costs of collection where applicable.

Note 15 – Income Taxes

The ~~Company has completed~~income tax provision for interim periods is comprised of income tax on ordinary income (loss) figures provided at the most recent estimated annual effective income tax rate, adjusted for the income tax effect of discrete items. Management uses an assessment of the collectability of these accounts and has concluded that it does not have a sufficient basis to record an allowance against these uncollected balances. The assessment included the consideration of numerous arbitration proceedings the Company has initiated against these clients to recover deficit balances in their accounts. The Company believes it has a valid claim against its clients,estimated annual effective income tax rate based on the ~~express language of the client contracts~~forecasted pretax income (loss) and legal precedent, and intends to pursue collection of these claims vigorously. As the Company moves through the collection and arbitration processes and additional information becomes available, the Company will continue to consider the need for an allowance against the carrying value of these uncollected balances.

Additionally, INTL FCStone Financial Inc. has been named in arbitrations brought by clients seeking damages relating to the trading losses in these accounts. The Company believes that such cases are without merit and intends to defend them vigorously. The ultimate outcome of these arbitrations cannot presently be determined, however the Company believes the likelihood of a material adverse outcome is remote.

Depending on future collections and arbitration proceedings, any provisions for bad debts and actual losses ultimately may or may not be material to the Company’s financial results. Currently, the Company does not believe that any potential losses related to this matter would impact its ability to comply with its ongoing liquidity, capital, and regulatory requirements.

~~Legal Proceedings~~

~~From time to time and~~statutory tax rates in the ~~ordinary course of business, the Company is involved in~~ various legal actions and proceedings, including tort claims, contractual disputes, employment matters, workers’ compensation claims and collections. The Company carries insurance that provides protection against certain types of claims, up to the policy limits of the insurance.

As of March 31, 2020 and September 30, 2019, the condensed consolidated balance sheets include loss contingency accruals which are not material, individually or in the aggregate, to the Company’s financial position or liquidity. In the opinion of management, possible exposure from loss contingencies in excess of the amounts accrued, is not likely to be material to the Company’s earnings, financial position or liquidity.

~~There have been no material changes to the legal actions and proceedings compared to September 30, 2019.~~

~~Contractual Commitments~~

The Company self-insures its costs related to medical and dental claims. The Company is self-insured, up to a stop loss amount, for eligible participating employees and retirees, and for qualified dependent medical and dental claims, subject to deductibles and limitations. As of March 31, 2020, the Company had $1.1 million accrued for self-insured medical and dental claims included in ‘accounts payable and other accrued liabilities’ in the condensed consolidated balance sheet.

~~Note 14 – Capital and Other Regulatory Requirements~~

~~The Company’s activities are subject to significant governmental regulation, both in the United States and in the international~~ jurisdictions in which it operates. The ~~subsidiaries~~Company’s effective income tax rate differs from the U.S. statutory income tax rate primarily due to state and local taxes, global intangible low taxed income (“GILTI”), and differing statutory tax rates applied to the income of non-U.S. subsidiaries. The Company records the ~~Company were~~tax effect of certain discrete items, including the effects of changes in ~~compliance~~tax laws, tax rates and adjustments with all of their regulatory requirements as of March 31, 2020. The following table details those subsidiaries with minimum regulatory requirements in excess of $5 million along with the actual balance maintained as of March 31, 2020.

(in millions) As of March 31, 2020
Subsidiary Regulatory Authority Jurisdiction Requirement Type Actual
Minimum
Requirement
INTL FCStone Financial Inc. SEC and CFTC United States Net capital $ 175.7
$ 108.3
INTL FCStone Financial Inc. CFTC United States Segregated funds $ 2,543.6
$ 2,485.9
INTL FCStone Financial Inc. CFTC United States Secured funds $ 162.5
$ 150.0
INTL FCStone Financial Inc. (1) SEC United States Customer reserve $ 33.1
$ 66.1
INTL FCStone Ltd Financial Conduct Authority ("FCA") United Kingdom Net capital $ 270.3
$ 140.0
INTL FCStone Ltd FCA United Kingdom Segregated funds $ 437.8
$ 430.1
INTL FCStone Pte. Ltd. Monetary Authority of Singapore ("MAS") Singapore Segregated funds $ 208.2
$ 202.6

~~(1) As of March 31, 2020, the Company had $33.1 million deposited~~respect to valuation allowances or other unusual or nonrecurring tax adjustments, in the customer special reserve bank account (“SRBA”). As a result of the reserve requirement determined through the weekly computation, the Company made an additional deposit of $38.1 million to the customer SRBA on April 2, 2020 to meet the customer segregation requirements under SEC Rule 15c3-3.

~~Certain other non-U.S. subsidiaries of the Company are also subject to capital adequacy requirements promulgated by authorities of the countries~~interim period in which they ~~operate. As~~occur, as an addition to, or reduction from, the income tax provision, rather than being included in the estimated effective annual income tax rate. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no income tax benefit can be recognized are excluded from the estimated annual effective income tax rate.

Deferred income tax balances reflect the effects of ~~March 31, 2020, these subsidiaries were~~temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in ~~compliance~~effect when taxes are actually paid or recovered. The Company is required to assess its deferred tax assets and the need for a valuation allowance at each reporting period. This assessment requires judgment on the part of management with ~~their local capital adequacy requirements.~~respect to benefits that may be realized. The Company will record a valuation allowance against deferred tax assets when it is considered more likely than not that all or a portion of the deferred tax assets will not be realized.

Current and Prior Period Tax Expense

~~Note 15 – Other Expenses~~

~~Other expenses~~Income tax expense of $7.4 million and $5.4 million for the three ~~and six~~ months ended ~~March~~December 31, 2020 and 2019, ~~consisted~~respectively, reflects estimated federal, foreign, state and local income taxes.

For the three months ended December 31, 2020 and 2019, the Company’s effective tax rate was 28% and 25%, respectively. The effective tax rate was higher than the U.S. federal statutory rate of 21% due to U.S. state and local taxes, GILTI, U.S. and foreign permanent differences, and the ~~following:~~amount of foreign earnings taxed at higher tax rates.

Three Months Ended March 31, Six Months Ended March 31,
(in millions) 2020 2019 2020 2019
Contingent consideration, net $ 0.1
$ —
$ 0.1
$ —
Insurance 1.0
0.9
2.0
1.7
Advertising, meetings and conferences 4.2
1.5
5.6
2.9
Office supplies and printing 0.5
0.5
0.9
1.0
Other clearing related expenses 0.6
0.7
1.4
1.1
Other non-income taxes 1.3
1.2
2.6
2.1
Other 2.9
2.6
5.5
5.1
Total other expenses $ 10.6
$ 7.4
$ 18.1
$ 13.9

Note 16 – ~~Accumulated~~Capital and Other ~~Comprehensive Loss, Net~~

~~The following table summarizes the changes in accumulated other comprehensive loss, net for the six months ended March 31, 2020.~~

(in millions) Foreign Currency Translation Adjustment Pension Benefits Adjustment Accumulated Other Comprehensive Loss
Balances as of September 30, 2019 $ (31.5 ) $ (3.3 ) $ (34.8 )
ASU 2018-02 cumulative transition adjustment —
(0.7 ) (0.7 )
Adjusted Balances as of September 30, 2019 (31.5 ) (4.0 ) (35.5 )
Other comprehensive loss (2.7 ) —
—
(2.7 )
Balances as of March 31, 2020 $ (34.2 ) $ (4.0 ) $ (38.2 )

~~Note 17 – Income Taxes~~Regulatory Requirements

The income tax provision for interim periods is comprised of income tax on jurisdiction-level income (loss) figures provided at the most recent estimated annual effective income tax rate, adjusted for the income tax effect of discrete items. Management uses an estimated annual effective income tax rate based on the forecasted pretax income (loss) and statutory tax ratesCompany’s activities are subject to significant governmental regulation, both in the ~~various~~United States and in the international jurisdictions in which it operates. The ~~Company’s effective income tax rate differs from~~subsidiaries of the ~~U.S. statutory income tax rate primarily due~~Company were in compliance with all of their regulatory requirements as of December 31, 2020. The following table details those subsidiaries with minimum regulatory requirements in excess of $5 million along with the actual balance maintained as of December 31, 2020.


(in millions)		As of December 31, 2020
Subsidiary	Regulatory Authority	Actual		Minimum Requirement
StoneX Financial Inc.	SEC and CFTC	$	253.2	$	146.8
StoneX Financial Ltd.	Financial Conduct Authority ("FCA")	$	308.4	$	142.2
Gain Capital Group, LLC	CFTC and NFA	$	76.4	$	31.3
Gain Capital U.K. Ltd.	FCA	$	169.4	$	66.7

Certain other subsidiaries of the Company, each with a minimum requirement less than $5.0 million, are also subject to state and local taxes, global intangible low taxed income (“GILTI”), and differing statutory tax rates applied to the income of non-U.S. subsidiaries. The Company records the tax effect of certain discrete items, including the effects of changes in tax laws, tax rates and adjustments with respect to valuation allowances or other unusual or nonrecurring tax adjustments,net capital requirements promulgated by authorities in the ~~interim period~~countries in which they occur, as an addition to, or reduction from, the income tax provision, rather than being included in the estimated effective annual income tax rate. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no income tax benefit can be recognized are excluded from the estimated annual effective income tax rate.

~~The Company is required to assess its deferred tax assets and the need for a valuation allowance at each reporting period. This assessment requires judgment on the part~~operate. As of management with respect to benefits that may be realized. The Company will record a valuation allowance against deferred tax assets when it is considered more likely than not that all or a portion of the deferred tax assets will not be realized.

~~Current and Prior Period Tax Expense~~

~~Income tax expense of $16.8 million and $7.5 million for the three months ended March~~December 31, 2020, ~~and 2019, respectively, and income tax expense of $22.2 million and $13.7 million for the six months ended March 31, 2020 and 2019 reflects estimated federal, foreign, state and local income taxes.~~

For the three months ended March 31, 2020 and 2019, the Company’s effective tax rate was 30% and 24%, respectively. For the three months ended March 31, 2020 and 2019, the effective rate was higher than the U.S. federal statutory rate of 21% due

~~to U.S. state and local taxes, GILTI, U.S. and foreign permanent differences, and the amount of foreign earnings taxed at higher tax rates.~~

Pre-tax income increased significantly in the three months ended March 31, 2020 as compared both to the prior quarter and the prior year. As a result of the significant increase in pre-tax income, the annual forecasted effective tax rate increased 0.6% due to state and local taxes on higher U.S.income, compared to the prior quarter ended December 31, 2019. Non-deductible compensation due to Sec. 162(m) limitations increased the effective tax rate by 0.4% as compared to the prior quarter. The amount of foreign earnings taxed at higher tax rates increased by 0.7% from the prior quarter.

For the six months ended March 31, 2020 and 2019, the Company’s effective tax rate was 29% and 25%, respectively. For the six months ended March 31, 2020 and 2019, the effective rate was higher than the U.S. federal statutory rate of 21% due to U.S. state and local taxes, GILTI, U.S. and foreign permanent differences, and the amount of foreign earnings taxed at higher tax rates. The estimated GILTI tax expense increased the effective rate approximately 1.2% and 1.3% for the six months ended March 31, 2020 and 2019, respectively. The amount of foreign earnings taxed at higher rates increased the effective tax rate approximately 3.3% and 0.5% for six months ended March 31, 2020 and 2019, respectively.

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. As of March 31, 2020 and September 30, 2019, the Company has net operating loss carryforwards for U.S. federal, state, local, and foreign income tax purposes of $7.1 million, net of valuation allowances, which are available to offset future taxable income in these jurisdictions. The state and local net operating loss carryforwards of $5.6 million, net of valuation allowance, begin to expire after September 2020. INTL Asia Pte. Ltd. has a Singapore net operating loss carryforward of $0.2 million. This Singapore net operating loss has an indefinite carryforward and, in the judgment of management, is more likely than not to be realized. As a result of the Tax Cuts and Jobs Act of 2017, the alternative minimum tax (“AMT”) credit carryforward deferred tax asset has been reclassified to income taxes receivable. As a result of the Coronavirus Aid, Relief, and Economic Security Act (CARES act), the AMT credit carryforward is refundable on the fiscal year 2019 tax return. In fiscal 2018, the Company generated $5.1 million in foreign tax credit carryforwards as part of the mandatory repatriation transition tax. These credits expire in fiscal year 2028. In the judgment of management, it is more likely than not that sufficient taxable income will be earned to utilize the foreign tax credit carryforwards during the current fiscal year.

The valuation allowance for deferred tax assets as of March 31, 2020 and September 30, 2019 was $8.4 million and $8.5 million, respectively. The valuation allowances as of March 31, 2020 and September 30, 2019 were primarily related to U.S., state and local net operating loss carryforwards and foreign net operating loss carryforwards that, in the judgment of management, are not more likely than not to be realized.

As of March 31, 2020 and September 30, 2019, the Company had accumulated undistributed earnings generated by its foreign subsidiaries of approximately $393.9 million and $383.5 million, respectively. The repatriation of these amounts would not be subject to U.S. federal income tax, but may be subject to applicable foreign withholding and state taxes in the relevant jurisdictions. The Company does not intend to distribute earnings in a taxable manner, and therefore intends to limit distributions to earnings previously taxed in the U.S., or earnings that would qualify for the 100 percent dividends received deduction, and earnings that would not result in any significant foreign withholding or state taxes. The Company has repatriated $30.0 million and $13.0 million as of March 31, 2020 and September 30, 2019, respectively, of earnings previously taxed in the U.S. resulting in no significant incremental taxes upon repatriation. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries.

The Company and its subsidiaries file income tax returns with the U.S. federal and various U.S. state and local, as well as foreign jurisdictions. The Company has open tax years ranging from September 30, 2012 through September 30, 2019 with U.S. federal and state and local taxing authorities. During the three months ending March 31, 2020, the Company closed their examination with the U.S. Internal Revenue Service for the 2016 tax year with no adjustments required. In the United Kingdom (“U.K.”), the Company has open tax years ending September 30, 2017 to September 30, 2019. The Company is currently under examination by HM Revenue and Customs in the UK for the 2017 tax year; however, no additional tax liability is expected. In Brazil, the Company has open tax years ranging from December 31, 2014 through December 31, 2019. In Argentina, the Company has open tax years ranging from September 30, 2012 to September 30, 2019. In Singapore, the Company has open tax years ranging from September 30, 2015 to September 30, 2019 and is currently under examination by the Inland Revenue Authority of Singapore for the year ended September 30, 2017; however, no additional tax liability is expected.

~~Note 18 - Acquisitions~~

~~UOB Bullion and Futures Limited~~

On March 19, 2019, the Company’s subsidiary INTL FCStone Pte Ltd executed an asset purchase agreement to acquire the futures and options brokerage and clearing business of UOB Bullion and Futures Limited, a subsidiary of United Overseas Bank Limited. Closing was conditional upon receiving regulatory approval by the Monetary Authority of Singapore. This

acquisition provides the Company access to an established institutional client base and also augments the Company’s global service capabilities in Singapore. The purchase price for the acquired assets was $5.0 million of which $2.5 million was due upon the execution of the asset purchase agreement and the remaining $2.5 million was due upon the closing of the acquisition, which occurred on October 7, 2019.

The purchase price allocation resulted in the recognition of liabilities assumed related to the futures and options on futures client account balances of approximately $351.8 million as of the acquisition date, which was recorded within ‘payables to clients’ on the condensed consolidated balance sheet, and an equal and offsetting amount of assets acquired. The allocation of the purchase price to the client accounts is considered final as of March 31, 2020.

The Company also acquired certain client base intangible assets and property and equipment in connection with the acquisition. The Company has engaged a third-party valuation specialist to assist with the valuation of the acquired intangible assets and property and equipment. As of March 31, 2020, the valuation of the acquired intangible assets and property and equipment was not yet complete as the Company continues to acquire the information necessary to complete the valuation analysis. As of March 31, 2020, given the status of the valuation analysis, $0.7 million of the purchase price was preliminary allocated to the net book value of the property and equipment acquired, $3.2 million was allocated to the client base intangible assets acquired, and the remaining excess purchase price of $1.1 million was allocated to goodwill. Once the valuation analysis is complete, the Company will record measurement period adjustments to reflect the fair value of the property and equipment and intangible assets acquired on the acquisition date.

The business acquired has been assigned to the Company’s Clearing and Execution reportable segment. The client base intangible assets have preliminary been assigned a useful life of 5 years. The revenues and net income contributed by the acquired business during the three and six months ended March 31, 2020, were not material to the Company’s condensed consolidated financial results.

In August 2019, the Company’s subsidiary, SA Stone Wealth Management, executed an asset purchase agreement to acquire certain client accounts of Quest Capital Strategies, Inc. The asset purchase agreement was subject to FINRA approval and other conditions of closing. FINRA approval was obtained and the other conditions of closing were fulfilled with the closing of the transaction occurring on December 9, 2019. The cash purchase price for the acquired client accounts was equal to $1.7 million. This transaction was accounted for as an asset acquisition at cost. The cash purchase price was allocated to the fair value of the client lists and relationships obtained and has been assigned, and will be amortized, over a useful life of seven years.

In December 2019, the Company executed a definitive purchase agreement to acquire the brokerage businesses of Tellimer Group. This transaction involves the stock purchase of 100% of Exotix Partners, LLP, based in the United Kingdom, and the stock purchase of 100% of Tellimer Capital Ltd based in Nigeria. The closing of this transaction is subject to limited conditions including regulatory approval in the relevant jurisdictions. The cash purchase price is equal to the net tangible book value of the acquired entities upon closing. Regulatory approval for the acquisition of Exotix Partners, LLP, was obtained during the three months ended March 31, 2020, with the transaction closing on April 1, 2020. The cash purchase price for the acquisition of Exotix Partners, LLP, was $4.7 million. The preliminary allocation of the cash purchase price to the fair value of assets acquired and liabilities assumed has not yet been completed.

~~IFCM Commodities~~

On January 2, 2020, the Company’s wholly owned subsidiary, INTL Netherlands B.V., executed and closed on a stock purchase agreement to acquire 100% of IFCM Commodities GmbH (“IFCM”) based in Germany. IFCM specializes in providing commodity price risk management solutions for base metals serving clients across Germany and continental Europe and historically introduced clients to INTL FCStone Ltd. This purchase is partall of the Company’s ~~overall strategic plan to expand the Company’s footprint~~subsidiaries were in ~~Germany and continental Europe in order to handle European clients and regional metals business following Brexit.~~

The cash purchase price of $1.9 million was equal to net tangible book value upon closing plus a premium of $1.0 million. The excess of the cash consideration over the fair value of the net tangible assets acquired on the closing date was allocated to the fair value of IFCM’s client relationships. This client base intangible asset has been assigned, and will be amortized over, a useful of five years.

The acquired business has been assigned to the Company’s Commercial Hedging reportable segment. The revenues and net income contributed by the acquired business during the three months ended March 31, 2020, were not material to the Company’s condensed consolidated financial results.

In January 2020, the Company’s wholly owned subsidiary, INTL FCStone Ltd, executed a stock purchase agreement to acquire 100% of GIROXX Gmbh based in Germany. Through its digital platform, GIROXX Gmbh provides online payment and foreign exchange hedging services to small and medium sized enterprises in Germany, Austria, and Switzerland. The Company offers a wide range of financial services including advisory and execution services in commodities, which will be offered to GIROXX’s institutional client base. This purchase completes a series of acquisitions and restructuring to ensure that all clients of the Company are securecompliance with their continuity of service and market access following Brexit. The closing of the transaction was conditional upon the approval of financial services regulators in Germany, which was obtained in April 2020 with the transaction closing in May 2020. The preliminary cash purchase price was approximately $4.4 million. The preliminary allocation of the cash purchase price to the fair value of assets acquired and liabilities assumed has not yet been completed.local regulatory requirements.

On February 26, 2020, the Company entered into an definitive agreement to acquire Gain Capital Holdings, Inc. (“Gain”). The Company agreed to acquire Gain for $6.00 per share in an all-cash transaction representing approximately $236.3 million in equity value.

Gain is a global provider of trading services and solutions to institutional and retail investors, specializing in both over-the-counter (“OTC”) products and exchange-traded futures and options on futures. Gain provides its clients with access to a diverse range of global OTC financial markets, including spot foreign exchange, precious metals, and contracts for a difference. As a result of the acquisition, the Company will add a new digital platform to its global financial network, significantly expand its offerings to retail clients, as well as add a complementary exchange-traded futures and options on futures business. The acquisition of Gain will also accelerate the digitization of the Company’s trading platforms.

The transaction is expected to close in the second half of calendar year 2020, subject to approval by Gain’s shareholders, regulatory approvals, and customary closing conditions. In connection with the agreement, the Company has obtained commitments for up to $350.0 million in debt financing for the acquisition.

Note 1917 – Segment Analysis

~~The~~During the three months ended September 30, 2020, the Company ~~reports~~completed its acquisition of Gain, which it views as a significant acquisition and which triggered a reassessment of the financial information reviewed by its executive management team, which is considered our Chief Operating Decision Maker, on a regular basis, and which is used to make resource allocation decisions. In light of this fundamental change and reassessment described above, the Company modified the operating segments it uses to evaluate its performance. Accordingly, its operating segments are now based primarily on ~~services provided~~the nature of the clients we serve (commercial, institutional, and retail), and a fourth operating segment, its global payments business. The Company manages its business in this manner due to ~~clients. The~~its large global footprint, in which it has more than 2,900 employees allowing it to serve clients in more than 180 countries.

Following the acquisition of Gain, the Company’s business activities are managed as operating segments and organized into reportable segments as follows:

All segment information has been revised to reflect the operating segment reorganization retroactive to October 1, 2019.

Commercial ~~Hedging~~ ~~(includes components Financial Agricultural (“Ag”) & Energy~~

~~Securities~~ ~~(includes components Equity Capital Markets, Debt Capital Markets~~The Company provides customized foreign exchange and ~~Asset Management)~~

treasury services to banks and commercial businesses as well as charities and non-governmental organizations and government organizations. The Company provides transparent pricing and offers payments services in more than 170 countries and 140 currencies, which it believes is more than any other payments solution provider.

~~Physical Commodities~~ ~~(includes components Precious Metals and Physical Ag & Energy)~~

~~Clearing and Execution Services~~ ~~(includes components Exchange-Traded Futures & Options, FX Prime Brokerage, Correspondent Clearing, Independent Wealth Management, and Derivative Voice Brokerage)~~

The total revenues reported combine gross revenues ~~for the~~from physical ~~commodities business~~contracts for subsidiaries that are not broker-dealers and net revenues for all other businesses. In order to reflect the way that the Company’s management views the results, the table below also reflects the segment contribution to ‘operating revenues’, which is shown on the face of the ~~condensed~~ consolidated income statements and which is calculated by deducting physical commodities cost of sales from total revenues.

Segment data includes the profitability measure of net contribution by segment. Net contribution is one of the key measures used by management to assess the performance of each segment and for decisions regarding the allocation of the Company’s resources. Net contribution is calculated as revenue less direct cost of sales, transaction-based clearing expenses, variable compensation, introducing broker commissions, and interest expense. Variable compensation paid to risk management consultants/traders generally represents a fixed percentage of revenues generated, and in some cases, revenues generated less transaction-based clearing expenses, base salaries and an overhead allocation.

Segment data also includes segment income which is calculated as net contribution less non-variable direct expenses of the segment. These non-variable direct expenses include trader base compensation and benefits, operational employee compensation and benefits, communication and data services, business development, professional fees, bad debt expense and other direct expenses.

Inter-segment revenues, expenses, receivables and payables are eliminated upon consolidation, except revenues and expenses related to foreign currency transactions undertaken on an arm’s length basis by the foreign exchange trading business for the securities business. The foreign exchange trading business competes for this business as it does any other business. If its rates are not competitive, the securities businesses buy or sell their foreign currency through other market participants.

~~On a recurring basis,~~Total revenues, operating revenues and net operating revenues shown as “Corporate Unallocated” primarily consist of interest income from its centralized corporate treasury function. In the normal course of operations, the Company ~~sweeps excess cash from certain U.S. operating segments to~~operates a centralized corporate treasury function in which it may sweep excess cash from certain subsidiaries, where permitted within regulatory limitations, in exchange for ana short-term interest bearing intercompany payable, or provide excess cash to subsidiaries in exchange for a short-term interest bearing intercompany receivable ~~asset.~~in lieu of the subsidiary borrowing on external credit facilities. The intercompany ~~receivable asset is~~receivables and payables are eliminated during ~~consolidation, and therefore~~consolidation; however, this practice may impact reported total assets between segments.

Net costs not allocated to operating segments include costs and expenses of certain shared services such as information technology, accounting and treasury, credit and risk, legal and compliance, and human resources and other activities.

Information for the reportable segments is shown in accordance with the Segment Reporting Topic of the ASC as ~~follows~~follows:


	Three Months Ended December 31,
(in millions)	2020		2019
Total revenues:
Commercial	$	8,865.5	$	11,006.3
Institutional	165.5		132.4
Retail	192.2		76.3
Global Payments	34.4		31.4
Corporate Unallocated	(3.5)		5.2
Eliminations	(3.6)		(6.6)
Total	$	9,250.5	$	11,245.0
Operating revenues:
Commercial	$	105.6	$	93.2
Institutional	165.5		132.4
Retail	81.7		21.2
Global Payments	34.4		31.4
Corporate Unallocated	(3.5)		5.2
Eliminations	(3.6)		(6.6)
Total	$	380.1	$	276.8
Net operating revenues (loss):
Commercial	$	82.6	$	73.7
Institutional	105.3		64.8
Retail	52.1		4.9
Global Payments	32.7		29.8
Corporate Unallocated	(16.6)		(2.7)
Total	$	256.1	$	170.5
Net contribution:
(Revenues less cost of sales of physical commodities, transaction-based clearing expenses, variable compensation, introducing broker commissions and interest expense)
Commercial	$	56.8	$	51.5
Institutional	67.1		46.0
Retail	48.6		4.5
Global Payments	26.1		23.8
Total	$	198.6	$	125.8
Segment income:
(Net contribution less non-variable direct segment costs)
Commercial	$	32.1	$	28.7
Institutional	44.8		25.3
Retail	17.9		2.9
Global Payments	20.4		18.9
Total	$	115.2	$	75.8
Reconciliation of segment income to income before tax:
Segment income	$	115.2	$	75.8
Net costs not allocated to operating segments	(88.3)		(54.2)
Other gain	0		0.1
Income before tax	$	26.9	$	21.7

(in millions)	As of December 31, 2020		As of September 30, 2020
Total assets:
Commercial	$	3,203.8	$	2,753.6
Institutional	8,706.1		8,740.8
Retail	1,242.4		1,245.9
Global Payments	236.5		315.9
Corporate Unallocated	586.0		418.7
Total	$	13,974.8	$	13,474.9

Three Months Ended March 31, Six Months Ended March 31,
(in millions) 2020 2019 2020 2019
Total revenues:
Commercial Hedging $ 101.7
$ 80.6
$ 171.4
$ 140.4
Global Payments 29.4
27.4
60.8
57.1
Securities 117.9
72.6
199.0
141.6
Physical Commodities 20,023.5
6,940.9
31,011.8
13,242.7
Clearing and Execution Services 96.5
73.6
172.4
168.8
Corporate Unallocated 4.0
4.1
9.2
7.0
Eliminations (6.7 ) (7.0 ) (13.3 ) (13.2 )
Total $ 20,366.3
$ 7,192.2
$ 31,611.3
$ 13,744.4
Operating revenues:
Commercial Hedging $ 101.7
$ 80.6
$ 171.4
$ 140.4
Global Payments 29.4
27.4
60.8
57.1
Securities 117.9
72.6
199.0
141.6
Physical Commodities 24.0
19.8
44.1
34.1
Clearing and Execution Services 96.5
73.6
172.4
168.8
Corporate Unallocated 4.0
4.1
9.2
7.0
Eliminations (6.7 ) (7.0 ) (13.3 ) (13.2 )
Total $ 366.8
$ 271.1
$ 643.6
$ 535.8
Net operating revenues (loss):
Commercial Hedging $ 84.2
$ 65.8
$ 138.6
$ 111.1
Global Payments 28.0
25.8
57.8
54.2
Securities 78.1
32.0
121.2
64.1
Physical Commodities 19.5
15.1
35.4
25.5
Clearing and Execution Services 37.1
31.0
67.1
68.5
Corporate Unallocated (3.5 ) (4.5 ) (6.2 ) (9.2 )
Total $ 243.4
$ 165.2
$ 413.9
$ 314.2
Net contribution:
(Revenues less cost of sales of physical commodities, transaction-based clearing expenses, variable compensation, introducing broker commissions and interest expense)
Commercial Hedging $ 59.1
$ 49.3
$ 97.9
$ 79.9
Global Payments 22.6
21.0
46.4
44.1
Securities 50.5
20.1
77.9
41.9
Physical Commodities 13.8
11.5
25.1
18.6
Clearing and Execution Services 28.9
23.4
53.4
53.1
Total $ 174.9
$ 125.3
$ 300.7
$ 237.6
Segment income:
(Net contribution less non-variable direct segment costs)
Commercial Hedging $ 35.8
$ 30.2
$ 57.3
$ 43.5
Global Payments 17.2
15.8
36.1
34.4
Securities 38.4
11.8
55.1
27.8
Physical Commodities 9.6
7.8
17.2
13.7
Clearing and Execution Services 16.3
11.6
27.4
29.3
Total $ 117.3
$ 77.2
$ 193.1
$ 148.7
Reconciliation of segment income to income before tax:
Segment income $ 117.3
$ 77.2
$ 193.1
$ 148.7
Net costs not allocated to operating segments 61.2
51.7
115.4
98.8
Other gain —
5.4
0.1
5.4
Income before tax $ 56.1
$ 30.9
$ 77.8
$ 55.3

(in millions) As of March 31, 2020 As of September 30, 2019
Total assets:
Commercial Hedging $ 2,309.7
$ 2,041.0

Global Payments 298.0
278.3

Securities 5,109.4
5,219.1

Physical Commodities 458.1
357.8

Clearing and Execution Services 2,448.9
1,892.1

Corporate Unallocated 246.8
147.8

Total $ 10,870.9
$ 9,936.1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Throughout this document, unless the context otherwise requires, the terms “Company”, “we”, “us” and “our” refer to ~~INTL FCStone~~StoneX Group Inc. and its consolidated subsidiaries. StoneX Group Inc. was formerly INTL FCStone Inc. ~~is a Delaware corporation.~~

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the control of ~~INTL FCStone Inc. and its subsidiaries,~~the Company, including adverse changes in economic, political and market conditions, losses from our market-making and trading activities arising from counterparty failures and changes in market conditions, the possible loss of key personnel, the impact of increasing competition, the impact of changes in government regulation, the possibility of liabilities arising from violations of foreign, U.S. federal and U.S. state securities laws, the impact of changes in technology in the securities and commodities trading industries and the potential impact of the ~~COVID-19~~coronavirus (“COVID-19”) pandemic on our business, operations, results of operations, financial condition, workforce or the operations or decisions of our customers, suppliers or business customers. Although we believe that our forward-looking statements are based upon reasonable assumptions regarding our business and future market conditions, there can be no assurances that our actual results will not differ materially from any results expressed or implied by our forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or ~~otherwise.~~otherwise, except as required by law. We caution readers that any forward-looking statements are not guarantees of future performance.

We ~~are~~operate a global ~~brokerage and~~ financial services ~~firm~~network that connects companies, organizations, traders and investors to the global market ecosystem through a unique blend of digital platforms, end-to-end clearing and execution services, high touch service and deep expertise. We strive to be the one trusted partner to our clients, providing ~~execution, risk management~~our network, product and ~~advisory services, market intelligence and clearing post-trade services across asset classes and markets around the world. We provide these~~ services to ~~a diverse group of more than 30,000 commercial~~allow them to pursue trading opportunities, manage their market risks, make investments and ~~institutional clients and over 125,000 retail clients located in more than 130 countries. We help our clients to~~ access market liquidity, maximize profits and manage risk. Our operating revenues are derived primarily from financial products and advisory services intended to fulfill our clients’ commercial needs and provide bottom-line benefits toimprove their ~~businesses.~~business performance. Our businesses are supported by our global infrastructure of regulated operating subsidiaries, our advanced technology platform and our team of more than ~~2,100~~2,900 employees as of ~~March~~December 31, 2020. We believe our client-first approach differentiates us from large banking institutions, engenders trust and has enabled us to establish leadership positions in a number of complex fields in financial markets around the world. For additional information, see Overview of Business and Strategy within Item 1. Business section of this Annual Report on Form 10-K.

We report our operating segments based primarily on ~~services provided to clients. Our business activities are managed as~~the nature of the client we serve (commercial, institutional, and retail), and a fourth operating segments and organized into five reportable segments, including Commercial Hedging and Physical Commodities, which are commercial client focused; Clearing and Execution Services (“CES”) and Securities, which are institutional client focused; and Global Payments.segment, our global payments business. See Segment Information for a listing of business activities performed within our ~~operating segment components.~~reportable segments.

Current Results of Operations

Impact on Current Balance Sheet and Liquidity

Impact on ~~Customers~~Clients

Business Continuity ~~plans~~Plans

We deployed business continuity plans to ensure operational flexibility through any environment, including the ability to work remotely. We continue to serve our customers while maintaining social distancing and other safety protocols to keep our employees and customers safe.

The full extent to which the COVID-19 pandemic will impact our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and the mitigation efforts by government entities, as well as our own immediate and continuing COVID-19 operational response. We have taken, and will continue to take, active and decisive steps in this time of uncertainty and remain committed to the safety of our employees, while also continuing to serve our customers.

~~Recent Volatility in Crude Oil Markets~~

On April 20, 2020, the price of the main U.S. oil benchmark declined sharply, entering negative territory for the first time ever as the significant decline in global demand for crude oil stressed the global storage capacity for this commodity. Volatility in global markets, such as crude oil noted above, can cause client account deficits to occur from time to time. Currently, we do not believe that this market event has an impact on our ability to comply with our ongoing liquidity, capital, and regulatory requirements.

During the week ended November 16, 2018, balances in approximately 300 accounts of the futures commission merchant (“FCM”) division of our wholly owned subsidiary, INTL FCStone Financial Inc. (“INTL FCStone Financial”), declined below required maintenance margin levels, primarily as a result of significant and unexpected price fluctuations in the natural gas markets. All positions in these accounts, which were managed by OptionSellers.com Inc. (“OptionSellers”), an independent Commodity Trading Advisor (“CTA”), were liquidated in accordance with the INTL FCStone Financial’s client agreements and obligations under market regulation standards.

A CTA is registered with the U.S. Commodity Futures Trading Commission (“CFTC”) and a member of, and subject to audit by, the National Futures Association (“NFA”). OptionSellers is registered under a CFTC Rule 4.7 exemption for “qualified eligible persons,” which requires the account holders authorizing OptionSellers to act as their CTA to meet or exceed certain minimum financial requirements. OptionSellers, in its role as a CTA, had been granted by each of its clients full discretionary authority to manage the trading in the client accounts, while INTL FCStone Financial acted solely as the clearing firm in its role as the FCM.

INTL FCStone Financial’s client agreements hold account holders liable for all losses in their accounts and obligate the account holders to reimburse INTL FCStone Financial for any account deficits in their accounts. As of March 31, 2020, the aggregate receivable from these client accounts, net of collections and other allowable deductions, was $29.0 million, with no individual account receivable exceeding $1.4 million. INTL FCStone Financial continues to pursue collection of these receivables and intends both to enforce and to defend its rights aggressively, and to claim interest and costs of collection where applicable.

We have completed an assessment of the collectability of these accounts and have concluded that we do not have a sufficient basis to record an allowance against these uncollected balances. Our assessment has included the consideration of the status of numerous arbitration proceedings we have initiated against clients to recover deficit balances in their accounts. We believe we have a valid claim against these clients, based on the express language of the client contracts and legal precedent, and intend to pursue collection of these claims vigorously. As we move through the collection and arbitration processes and additional information becomes available, we will continue to consider the need for an allowance against the carrying value of these uncollected balances.

Additionally, we have been named in arbitrations brought by clients seeking damages relating to the trading losses in these accounts. We believe that such cases are without merit and intend to defend them vigorously. The ultimate outcome of these arbitrations cannot be presently determined, however we believe the likelihood of a material adverse outcome is remote.

Depending on future collections and arbitration proceedings, any provisions for bad debts and actual losses ultimately may or may not be material to our financial results. Currently, we do not believe that any potential losses related to this matter would impact our ability to comply with our ongoing liquidity, capital, and regulatory requirements.

The ~~second~~first quarter of fiscal ~~2020~~2021 was a period in which we benefited from our expanded product offering and enhanced trading platforms as equity and fixed income markets continued to experience heightened volatility and customer flows. In addition, we saw ~~significant~~increased levels of customer activity in listed derivatives, in particular agricultural commodities, while foreign currency volatility trended lower and short term interest rates continued to be at significantly lower levels following the Federal Open Market Committee (“FOMC”) actions in ~~nearly all of the global markets our clients transact~~fiscal 2020. While this reduction in ~~related to the economic effect of COVID-19, which~~short term interest rates has resulted in a ~~record $366.8 million of operating revenues~~significant decline in interest income for the Company, we have been successful in continuing to grow our client balances, as average client equity increased 52% to $3.4 billion and average money-market/FDIC sweep balances increased 35% to $1.3 billion in first quarter of fiscal 2021 as ~~we added $95.7 million, or 35%,~~ compared to the prior year.

~~The~~We continue to integrate the acquisition of Gain Capital Holdings, Inc. (“Gain”), which closed in the fourth quarter of fiscal 2020. This acquisition significantly expands our retail distribution channel, adding over 130,000 new retail clients, that we had previously established with the acquisition of Sterne Agee’s independent wealth management business as well as the acquisitions of Coininvest and European Precious Metals. This acquisition broadens our product offering and adds a global digital platform which we aim to expand across our asset classes. As part of this acquisition, we issued $350.0 million of Senior Secured Notes which was our first issuance into the institutional debt markets and we believe adds diversification to our capital structure.

Operating revenues increased $103.3 million, to $380.1 million in the three months ended December 31, 2020, with all segments recording increases in operating revenues, led by our Retail segment, principally related to the acquisition of Gain, which added $60.5 million compared to the prior year period. In addition, our Institutional and Commercial segments added $33.1 million and $12.4 million, respectively, when compared to the prior year period, while Global Payments added $3.0 million.

Overall segment income increased $39.4 million, or 52%, versus the three months ended December 31, 2019. This growth in ~~operating revenues~~segment income was led by our ~~Securities~~Institutional segment, which added ~~$45.3~~$19.5 million, or 77% versus the ~~prior year, while Clearing~~three months ended December 31, 2019. This growth was driven by a 63% increase in net operating revenues, most notably in securities products where we experienced continued heightened volatility and ~~Execution Services~~customer activity in equity and ~~Commercial Hedging added $22.9~~fixed income markets. This was partially offset by a $9.2 million decline in interest and ~~$21.1~~fee income earned on average client equity and FDIC sweep balances.

Segment income in our Retail segment increased $15.0 million ~~respectively. Physical Commodities added $4.2 million and~~ or 517% versus the three months ended December 31, 2019, primarily as a result of the acquisition of Gain as well as strong performance in retail precious metals, which benefited from increased customer demand for physical precious metals.

Global Payments ~~added $2.0~~segment income increased $1.5 million, ~~in operating revenues~~or 8% versus the three months ended December 31, 2019, as average daily volumes increased 6% and the rate per million increased 3% compared to the prior year.

Finally, segment income in our Commercial segment, increased ~~$40.1~~$3.4 million, or ~~52% compared to the prior year to $117.3 million in the second quarter. Securities segment income increased $26.6 million or 225%,~~12% versus the prior year, as Equity Capital Markets saw volumes increase 134% and Debt Capital Markets saw spreads widen 59%, adding $17.0 million and $9.6 million in segment income, respectively compared to the prior year.

Commercial Hedging segment income increased 19%, to $35.8 million, primarily as a result of increases in both exchange-traded, up 22% and over-the-counter (“OTC”) transactional revenues, up 46% as compared to the prior year. These gains were tempered by a $2.3 million decline in interest income due to the decline in short term rates and a $3.2 million increase in bad debt expense.

CES segment income increased 41%, or $4.7 million versus the prior year primarily as a result of $2.7 million and $2.1 million increases in our Exchange-Traded Futures & Options and FX Prime Brokerage businesses, respectively. Independent Wealth Management added $0.8 million in segment income, while Correspondent Clearing and Derivative Voice Brokerage saw $0.7 million and $0.2 million declines in segment income as compared to the prior year period. Declines in short terms interest rates weighed modestly on segment results in these business, driving declines in interest income of $2.4 million as well as a $0.6 million decline in fee income related to money market/FDIC sweep balances compared to the prior year period.

~~Global Payments segment income increased $1.4 million or 9% compared to the prior year,~~three months ended December 31, 2019, primarily as a result of the ~~increase~~growth in listed derivative and physical contracts operating revenues, which ~~was~~were partially offset by ~~higher~~a $3.3 million decline in interest income earned on client balances in our listed and OTC derivative businesses and a $0.9 million increase in fixed compensation and benefits.

~~Physical Commodities~~Operating revenues in our Corporate Unallocated segment ~~income~~include a $3.7 million unrealized loss on derivative positions utilized to mitigate our exposure to the British Pound in Gain’s U.K. domiciled subsidiaries, while the underlying fluctuations in the net asset value of these subsidiaries are recorded in Accumulated Other Comprehensive Income as the subsidiaries have a functional currency of British Pounds. Please see the Operating Revenues section for more information on these positions.

Interest expense related to corporate funding purposes increased ~~$1.8~~$7.8 million to ~~$9.6~~$10.5 million in the ~~second quarter versus~~three months ended December 31, 2020 compared to $2.7 million in the ~~prior year. This was~~three months ended December 31, 2019, primarily ~~driven~~due to incremental interest related to the issuance of senior secured notes during June 2020, partially offset by ~~a $0.8 million increase in Precious Metals segment income as well as a $1.0 million increase in segment income in~~lower short-term interest rates on our ~~Physical Ag & Energy business.~~senior secured syndicated loan facility.

On the expense side, we continue to focus on maintaining our variable cost model and limiting the growth of our non-variable

~~For~~businesses acquired after December 2019, most notably the ~~second~~Gain acquisition in the fourth quarter of fiscal ~~2020, we recorded~~2020.



(in millions, except par value and share amounts)	March 31, 2020			September 30, 2019
ASSETS
Cash and cash equivalents	$	519.5		$	471.3
Cash, securities and other assets segregated under federal and other regulations (including $8.1 and $306 at fair value at March 31, 2020 and September 30, 2019, respectively)	1,176.1			1,049.9
Collateralized transactions:
Securities purchased under agreements to resell	1,260.0			1,424.5
Securities borrowed	1,063.8			1,423.2
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net (including $378.7 and $626.9 at fair value at March 31, 2020 and September 30, 2019, respectively)	3,359.5			2,540.5
Receivable from clients, net	481.1			422.3
Notes receivable, net	3.9			2.9
Income taxes receivable	1.5			5.2
Financial instruments owned, at fair value (includes securities pledged as collateral that can be sold or repledged of $743.6 and $478.8 at March 31, 2020 and September 30, 2019, respectively)	2,525.7			2,175.2
Physical commodities inventory, net (including $194.1 and $151.9 at fair value at March 31, 2020 and September 30, 2019, respectively)	255.2			229.3
Deferred income taxes, net	14.0			18.0
Property and equipment, net	43.0			43.9
Operating right of use assets	31.6			—
Goodwill and intangible assets, net	73.1			67.9
Other assets	62.9			62.0
Total assets	$	10,870.9		$	9,936.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and other accrued liabilities (including $1.8 million at fair value at March 31, 2020 and September 30, 2019, respectively)	$	184.8		$	157.5
Operating lease liabilities	34.2			—
Payables to:
Clients	4,531.5			3,589.5
Broker-dealers, clearing organizations and counterparties (including $95.8 and $5.6 at fair value at March 31, 2020 and September 30, 2019, respectively)	429.2			266.2
Lenders under loans	275.0			202.3
Senior secured term loan, net	184.3			167.6
Income taxes payable	10.6			10.4
Collateralized transactions:
Securities sold under agreements to repurchase	2,800.3			2,773.7
Securities loaned	1,068.8			1,459.9
Financial instruments sold, not yet purchased, at fair value	703.6			714.8
Total liabilities	10,222.3			9,341.9
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; no shares issued or outstanding	—			—
Common stock, $0.01 par value. Authorized 30,000,000 shares; 21,638,425 issued and 19,216,468 outstanding at March 31, 2020 and 21,297,317 issued and 19,075,360 outstanding at September 30, 2019	0.2			0.2
Common stock in treasury, at cost - 2,421,957 shares at March 31, 2020 and 2,221,957 shares at September 30, 2019	(57.6		)	(50.1		)
Additional paid-in-capital	285.8			276.8
Retained earnings	458.4			402.1
Accumulated other comprehensive loss	(38.2		)	(34.8		)
Total equity	648.6			594.2
Total liabilities and stockholders' equity	$	10,870.9		$	9,936.1



	Three Months Ended March 31,				Six Months Ended March 31,
(in millions, except share and per share amounts)	2020		2019		2020		2019
Revenues:
Sales of physical commodities	$	20,016.9	$	6,929.5	$	30,994.9	$	13,225.3
Principal gains, net	168.5		110.3		281.0		203.1
Commission and clearing fees	116.6		85.1		203.8		184.6
Consulting, management, and account fees	22.6		19.1		43.9		38.2
Interest income	41.7		48.2		87.7		93.2
Total revenues	20,366.3		7,192.2		31,611.3		13,744.4
Cost of sales of physical commodities	19,999.5		6,921.1		30,967.7		13,208.6
Operating revenues	366.8		271.1		643.6		535.8
Transaction-based clearing expenses	63.8		42.7		110.1		92.8
Introducing broker commissions	29.6		24.8		55.8		57.4
Interest expense	30.0		38.4		63.8		71.4
Net operating revenues	243.4		165.2		413.9		314.2
Compensation and other expenses:
Compensation and benefits	136.7		97.9		240.7		187.0
Trading systems and market information	11.2		9.5		21.6		18.7
Occupancy and equipment rental	4.9		5.0		9.9		9.4
Professional fees	4.7		5.0		10.7		10.3
Travel and business development	3.2		4.0		7.7		7.8
Non-trading technology and support	5.9		5.0		11.9		9.2
Depreciation and amortization	4.2		3.2		8.1		6.1
Communications	1.5		2.0		3.1		3.3
Bad debts	4.4		0.7		4.4		1.0
Recovery of bad debt on physical coal	—		—		—		(2.4		)
Other	10.6		7.4		18.1		13.9
Total compensation and other expenses	187.3		139.7		336.2		264.3
Other gain	—		5.4		0.1		5.4
Income before tax	56.1		30.9		77.8		55.3
Income tax expense	16.8		7.5		22.2		13.7
Net income	$	39.3	$	23.4	$	55.6	$	41.6
Earnings per share:
Basic	$	2.03	$	1.23	$	2.88	$	2.19
Diluted	$	2.00	$	1.21	$	2.84	$	2.15
Weighted-average number of common shares outstanding:
Basic	18,872,937		18,753,490		18,811,268		18,706,104
Diluted	19,189,953		19,004,793		19,132,497		18,999,889



	March 31,
(in millions)	2020		2019
Cash and cash equivalents	$	519.5	$	274.4
Cash segregated under federal and other regulations⁽¹⁾	1,168.0		723.3
Cash segregated and deposited with or pledged to exchange-clearing organizations and other futures commission merchants (“FCMs”)⁽²⁾	1,896.7		993.9
Securities segregated and pledged to exchange-clearing organizations⁽²⁾	106.2		118.8
Total cash, segregated cash, cash equivalents, and segregated cash equivalents shown in the condensed consolidated statements of cash flows	$	3,690.4	$	2,110.4



	Three months ended March 31, 2020
(in millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net			Total
Balances as of December 31, 2019	$	0.2	$	(50.5	)	$	280.9	$	419.1	$	(34.8	)	$	614.9
Net income								39.3					39.3
Other comprehensive loss										(3.4		)	(3.4		)
Exercise of stock options						2.5							2.5
Share-based compensation						2.4							2.4
Repurchase of stock			(7.1		)								(7.1		)
Balances as of March 31, 2020	$	0.2	$	(57.6	)	$	285.8	$	458.4	$	(38.2	)	$	648.6



	Six Months Ended March 31, 2019
(in millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net			Total
Balances as of September 30, 2018	$	0.2	$	(46.3	)	$	267.5	$	317.0	$	(33.1	)	$	505.3
Net income								41.6					41.6
Other comprehensive gain										0.3			0.3
Exercise of stock options						0.8							0.8
Share-based compensation						3.8							3.8
Balances as of March 31, 2019	$	0.2	$	(46.3	)	$	272.1	$	358.6	$	(32.8	)	$	551.8



	Six Months Ended March 31, 2020
(in millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net			Total
Balances as of September 30, 2019	$	0.2	$	(50.1	)	$	276.8	$	402.1	$	(34.8	)	$	594.2
ASU 2018-02 cumulative transition adjustment								0.7		(0.7		)	—
Adjusted Balances as of September 30, 2019	0.2		(50.1		)	276.8		402.8		(35.5		)	594.2
Net income								55.6					55.6
Other comprehensive loss										(2.7		)	(2.7		)
Exercise of stock options						4.0							4.0
Share-based compensation						5.0							5.0
Repurchase of stock			(7.5		)								(7.5		)
Balances as of March 31, 2020	$	0.2	$	(57.6	)	$	285.8	$	458.4	$	(38.2	)	$	648.6



Remainder of 2020	$	6.0
2021	10.3
2022	7.7
2023	6.1
2024	4.3
After 2024	3.5
Total lease payments⁽²⁾	37.9
Less: interest	3.7
Present value of lease liabilities	$	34.2



(in millions)
Fiscal 2020 (remaining six months)	$	2.0
Fiscal 2021	4.0
Fiscal 2022	2.7
Fiscal 2023	2.5
Fiscal 2024 and thereafter	4.9
Total intangible assets subject to amortization	$	16.1



(in millions)				As of March 31, 2020
Subsidiary	Regulatory Authority	Jurisdiction	Requirement Type	Actual		Minimum Requirement
INTL FCStone Financial Inc.	SEC and CFTC	United States	Net capital	$	175.7	$	108.3
INTL FCStone Financial Inc.	CFTC	United States	Segregated funds	$	2,543.6	$	2,485.9
INTL FCStone Financial Inc.	CFTC	United States	Secured funds	$	162.5	$	150.0
INTL FCStone Financial Inc. (1)	SEC	United States	Customer reserve	$	33.1	$	66.1
INTL FCStone Ltd	Financial Conduct Authority ("FCA")	United Kingdom	Net capital	$	270.3	$	140.0
INTL FCStone Ltd	FCA	United Kingdom	Segregated funds	$	437.8	$	430.1
INTL FCStone Pte. Ltd.	Monetary Authority of Singapore ("MAS")	Singapore	Segregated funds	$	208.2	$	202.6


All $ amounts are U.S. dollar or U.S. dollar equivalents	Three Months Ended December 31,
	2020		% Change	2019
Operating Revenues (in millions):
Listed derivatives	$	95.0	32%	$	72.2
OTC derivatives	24.2		7%	22.7
Securities	126.6		40%	90.3
FX / Contract For Difference (“CFD”) contracts	59.8		1,200%	4.6
Global payments	33.6		10%	30.6
Physical contracts	23.8		18%	20.1
Interest / fees earned on client balances	5.3		(71)%	18.0
Other	18.9		(4)%	19.7
Corporate Unallocated	(3.5)		(167)%	5.2
Eliminations	(3.6)		(45)%	(6.6)
	$	380.1	37%	$	276.8

Volumes and Other Select Data (all $ amounts are U.S. dollar or U.S. dollar equivalents):
Listed derivatives (contracts, 000’s)	45,284		33%	34,061
Listed derivatives, average rate per contract (1)	$	2.01	4%	$	1.94
Average client equity - listed derivatives (millions)	$	3,426	52%	$	2,257
Over-the-counter (“OTC”) derivatives (contracts, 000’s)	495		1%	489
OTC derivatives, average rate per contract	$	48.06	4%	$	46.01
Securities average daily volume (“ADV”) (millions)	$	2,175	74%	$	1,252
Securities rate per million (“RPM”) (2)	$	739	(15)%	$	865
Average money market / FDIC sweep client balances (millions)	$	1,325	35%	$	982
FX / CFD contracts ADV (millions) (3)	$	10,695	835%	$	1,144
FX / CFD contracts RPM	$	90	34%	$	67
Global Payments ADV (millions)	$	53	6%	$	50
Global Payments RPM	$	9,950	3%	$	9,655


(1)			Give-up fees as well as cash and voice brokerage revenues are excluded from the calculation of listed derivatives, average rate per contract.
(2)			Interest income related to securities lending is excluded from the calculation of Securities RPM.
(3)			The ADV for the three months ended December 31, 2020 is reflective of the ADV post-acquisition of Gain, acquired effective August 1, 2020, which is shown in our Retail segment, along with our pre-existing FX activities, which is shown in our Institutional segment.



	Exchange-traded
	Three Months Ended March 31,					Six Months Ended March 31,
	2020		% Change	2019		2020		% Change	2019
Transactional revenues (in millions):
Agricultural	$	24.0	25%	$	19.2	$	43.3	17%	$	37.1
Energy and renewable fuels	2.5		25%	2.0		4.5		13%	4.0
LME metals	18.8		25%	15.1		31.6		15%	27.5
Other	2.3		(12)%	2.6		4.5		(24)%	5.9
	$	47.6	22%	$	38.9	$	83.9	13%	$	74.5
Selected data:
Futures and options (contracts, 000’s)	8,709.9		37%	6,363.8		15,818.8		21%	13,090.6
Average rate per contract	$	5.39	(10)%	$	5.99	$	5.22	(6)%	$	5.58
Average client equity - futures and options (millions)	$	943.6	3%	$	918.3	$	923.7	(4)%	$	960.9


(1)			Give-up fee revenues are excluded from the calculation of listed derivatives, average rate per contract.
(2)			Interest income related to securities lending is excluded from the calculation of Securities RPM.



	Precious Metals
	Three Months Ended March 31,					Six Months Ended March 31,
	2020		% Change	2019		2020		% Change	2019
Total revenues	$	19,699.5	195%	$	6,670.9	$	30,361.3	140%	$	12,631.8
Cost of sales of physical commodities	19,684.8		196%	6,659.0		30,334.2		141%	12,612.2
Operating revenues	$	14.7	24%	$	11.9	$	27.1	38%	$	19.6
Selected data:
Gold equivalent ounces traded (000’s)	121,618.2		56%	77,721.1		228,833.7		32%	172,940.7
Average revenue per ounce traded	$	0.12	(20)%	$	0.15	$	0.12	9%	$	0.11



	Physical Ag & Energy
	Three Months Ended March 31,					Six Months Ended March 31,
	2020		% Change	2019		2020		% Change	2019
Total revenues	$	324.0	20%	$	270.0	$	650.5	6%	$	610.9
Cost of sales of physical commodities	314.7		20%	262.1		633.5		6%	596.4
Operating revenues	$	9.3	18%	$	7.9	$	17.0	17%	$	14.5



Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares Remaining to be Purchased Under the Program
January 1, 2020 to January 31, 2020	—	$	—	—	1,390,092
February 1, 2020 to February 29, 2020	26,743	44.92		26,743	1,363,349
March 1, 2020 to March 31, 2020	163,349	36.12		163,349	1,200,000
Total	190,092	$	37.36	190,092



~~31.1~~Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares Remaining to be Purchased Under the Program
October 1, 2020 to October 31, 2020	—	$	—	—	—
November 1, 2020 to November 30, 2020	—	—		—	—
December 1, 2020 to December 31, 2020	—	—		—	1,000,000
Total	—	$	—	—


31.1						Certification of Chief Executive Officer, pursuant to Rule 13a—14(a).

31.2						Certification of Chief Financial Officer, pursuant to Rule 13a—14(a).

32.1						Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)