Derivatives and Hedging

12 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging

14. DERIVATIVES AND HEDGING

The disclosures below detail Legg Mason’s derivatives and hedging activities excluding the derivatives and hedging activities of CIVs. See Note 17, Variable Interest Entities and Consolidation of Investment Vehicles, for information related to the derivatives and hedging of CIVs.

Legg Mason uses currency forwards to economically hedge the risk of movements in exchange rates, primarily between the U.S. dollar, British pound, Japanese yen, Australian dollar, euro, Singapore dollar, Chinese yuan, Indonesian rupiah, Malaysian ringgit, Philippine peso, Thai baht and South Korean won. In the Consolidated Balance Sheets, Legg Mason nets the fair value of certain foreign currency forwards or futures contracts executed with the same counterparty where Legg Mason has both the legal right and intent to settle the contracts on a net basis, resulting in net Other assets of $1,249 and $1,158 as of March 31, 2014 and 2013, respectively. Legg Mason has not designated any derivatives as hedging instruments for accounting purposes during the periods ended March 31, 2014 and 2013.

Legg Mason also uses market hedges on certain seed capital investments by entering into futures contracts to sell index funds that benchmark the hedged seed capital investments. Open futures contracts required cash collateral of $12,985 and $7,131 as of March 31, 2014 and 2013, respectively.  

The following table presents the fair values as of March 31, 2014 and 2013, of derivative instruments not designated for accounting purposes as hedging instruments, classified as Other assets and Other liabilities:

	2014				2013
	Assets		Liabilities		Assets		Liabilities
Currency forward contracts	$	3,271	$	825	$	1,496	$	101
Futures and forward contracts	313		1,510		443		680
Total	$	3,584	$	2,335	$	1,939	$	781

The following table presents gains (losses) recognized on derivative instruments for the years ended March 31, 2014, 2013 and 2012. As described above, the currency, futures and forward contracts included below are economic hedges of interest rate and market risk of certain operating and investing activities of Legg Mason. Gains and losses on these derivatives substantially offset gains and losses of the hedged items.

		2014					2013					2012
	Income Statement Classification	Gains		Losses			Gains		Losses			Gains		Losses
Currency forward contracts for:
Operating activities	Other expense	$	7,098	$	(2,617	)	$	3,650	$	(1,858	)	$	5,604	$	(3,159	)
Seed capital investments	Other non-operating income (expense)	56		(1,719		)	1,090		(380		)	431		(351		)
Futures and forward contracts for seed capital investments	Other non-operating income (expense)	2,471		(19,403		)	1,914		(5,597		)	5,684		(4,560		)
Total		$	9,625	$	(23,739	)	$	6,654	$	(7,835	)	$	11,719	$	(8,070	)