Revenue from Contracts with Clients (Notes)

9 Months Ended

Jun. 30, 2020

Revenue from Contract with Clients [Abstract]

Revenue from Contract with Customer [Text Block]

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 1.4% and 1.5% of the Company’s total revenues for the three months ended June 30, 2020 and 2019, respectively. The Company’s revenues from contracts with clients subject to Topic 606 represent approximately 0.9% and 1.6% of the Company’s total revenues for the nine months ended June 30, 2020 and 2019, respectively.

The Company’s revenues from contracts with clients subject to Topic 606 represent approximately 35.8% and 41.7% of the Company’s operating revenues for the three months ended June 30, 2020 and 2019, respectively. The Company’ revenues from contracts with clients subject to Topic 606 represent approximately 37.6% and 41.6% of the Company’s operating revenues for the nine months ended June 30, 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 nine months ended June 30, 2020 and 2019 (in millions):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Revenues from contracts with clients:
Commission and clearing fees:
Sales-based:
Exchange-traded futures and options	$	36.4	$	40.4	$	108.9	$	110.7
OTC derivative brokerage	4.0		7.7		16.2		23.9
Equities and fixed income	5.2		4.3		16.6		11.1
Mutual funds	1.1		1.6		4.0		6.1
Insurance and annuity products	1.7		2.1		6.2		5.1
Other	0.3		0.3		1.1		1.0
Total sales-based commission	48.7		56.4		153.0		157.9
Trailing:
Mutual funds	3.1		3.1		9.7		9.3
Insurance and annuity products	3.6		3.6		11.3		10.7
Total trailing commission	6.7		6.7		21.0		20.0
Clearing fees	33.3		30.3		104.4		89.7
Trade conversion fees	1.8		1.3		7.5		6.2
Other	5.6		2.8		14.0		8.3
Total commission and clearing fees:	96.1		97.5		299.9		282.1
Consulting, management, and account fees:
Underwriting fees	—		0.2		0.4		0.7
Asset management fees	7.0		7.2		23.2		19.4
Advisory and consulting fees	5.7		5.1		17.0		14.8
Sweep program fees	1.0		4.2		8.6		12.1
Client account fees	2.8		2.6		8.9		7.8
Other	2.9		1.4		5.2		4.1
Total consulting, management, and account fees	19.4		20.7		63.3		58.9
Total revenues from contracts with clients	$	115.5	$	118.2	$	363.2	$	341.0
Method of revenue recognition:
Point-in-time	$	95.1	$	95.0	$	293.4	$	274.7
Time elapsed	20.4		23.2		69.8		66.3
Total revenues from contracts with clients	115.5		118.2		363.2		341.0
Other sources of revenues
Physical precious metals trading	7,621.2		7,327.8		37,973.9		19,944.2
Physical agricultural and energy product trading	323.3		271.5		965.5		880.4
Principal gains, net	161.0		102.3		442.0		305.4
Interest income	22.4		53.2		110.1		146.4
Total revenues	$	8,243.4	$	7,873.0	$	39,854.7	$	21,617.4
Primary geographic region:
United States	$	554.2	$	474.8	$	1,652.1	$	1,458.4
Europe	114.1		77.8		375.7		184.9
South America	14.6		15.3		46.1		39.2
Middle East and Asia	7,558.5		7,303.8		37,777.3		19,929.7
Other	2.0		1.3		3.5		5.2
Total revenues	$	8,243.4	$	7,873.0	$	39,854.7	$	21,617.4

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.