Regulatory Requirements and Subsidiary Dividend Restrictions

12 Months Ended

Sep. 30, 2021

Capital and Other Regulatory Requirements [Abstract]

Regulatory Requirements and Subsidiary Dividend Restrictions

Regulatory Requirements and Subsidiary Dividend Restrictions

The Company’s subsidiary StoneX Financial Inc. is registered as a broker dealer and member of the Financial Industry Regulatory Authority (“FINRA”) subject to the SEC Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital. StoneX Financial Inc. is also a futures commission merchant registered with the CFTC and subject to the net capital requirements of the CFTC Regulation 1.17. Under the more restrictive of these rules, StoneX Financial Inc. is required to maintain “adjusted net capital”, equivalent to the greater of $1.5 million or 8% of client and non-client risk maintenance margin requirements on all positions, as defined in such rules, regulations, and requirements. Adjusted net capital and the related net capital requirement may fluctuate on a daily basis. StoneX Financial Inc., along with certain regulated affiliates, including Gain Capital Group, LLC and others, has a restriction on dividends. For StoneX Financial Inc.the withdrawing excess capital cannot reduce excess capital, subsequent to haircuts and charges, to an amount less than 120% of the greatest minimum requirement.

The Company’s subsidiary, Gain Capital Group, LLC, is subject to regulation by the CFTC and NFA and is required to maintain specific levels of regulatory capital. As a futures commission merchant and retail foreign exchange dealer, Gain Capital Group, LLC is required to maintain adjusted net capital of the greater of $1.0 million or 8% of customer and non-customer risk maintenance margin, or $20.0 million plus 5.0% of the amount of retail customer liabilities over $10.0 million, plus 10% of all liabilities owed to eligible contract participant counterparties acting as a dealer that are not an affiliate.

StoneX Financial Inc. as a registered securities carrying broker dealer is also subject to Rule 15c3-3 of the Securities Exchange Act of 1934 (“Rule 15c3-3”), which requires the Company to maintain separate accounts for the benefit of securities clients and proprietary accounts of broker dealers (“PABs”). These client protection rules require the Company to maintain special reserve bank accounts (“SRBAs”) for the exclusive benefit of securities clients and PABs. As of September 30, 2021, StoneX Financial Inc. prepared reserve computations for the client accounts and PAB accounts in accordance with the customer reserve computation guidelines set forth in Rule 15c3-3. Based upon these computations, excess of total debits over credits was $7.4 million as of September 30, 2021. The Company held less than $1 thousand in customer SRBAs as of September 30, 2021, and withdrew the amount on October 4, 2021. Based upon these computations, the excess of total PAB credits over total PAB debits was $10.5 million as of September 30, 2021. In the computation, the Company was able to consider the excess debits in the customer reserve formula discussed above, resulting in a PAB reserve requirement of $3.1 million as of September 30, 2021. The Company held less than $1 thousand in the PAB SRBA as of September 30, 2021, and made additional deposits of $8.9 million on October 4, 2021 to meet the PAB segregation and segregated deposit timing requirements of Rule 15c3-3.

Pursuant to the requirements of the Commodity Exchange Act, funds deposited by clients of StoneX Financial Inc. and Gain Capital Group, LLC supporting trading of futures and options on futures on a U.S. commodities exchange must be carried in separate accounts which are designated as segregated client accounts. Pursuant to the requirements of the CFTC, funds

deposited by clients of StoneX Financial Inc. and Gain Capital Group, LLC related to trading futures and options on futures traded on, or subject to the rules of a foreign board of trade, must be carried in separate accounts in, which are designated as secured clients’ accounts. As of September 30, 2021, StoneX Financial Inc. had client segregated and client secured funds of $4,429.8 million and $216.5 million, respectively, compared to a minimum regulatory requirement of $4,364.5 million and $203.1 million, respectively. As of September 30, 2021, Gain Capital Group, LLC had client segregated and client secured funds of $270.7 million and $4.0 million, respectively, compared to a minimum regulatory requirement of $255.6 million and $2.1 million, respectively.

The Company’s subsidiary StoneX Financial Ltd. is regulated by the Financial Conduct Authority (“FCA”), the regulator of the financial services industry in the U.K. The regulations impose regulatory capital, as well as conduct of business, governance, and other requirements. The conduct of business rules include those that govern the treatment of client money and other assets which, under certain circumstances, for certain classes of client, must be segregated from the firm’s own assets. As of September 30, 2021, StoneX Financial Ltd. had client segregated funds of $1,071.8 million, compared to a minimum regulatory requirement of $1,040.6 million.

StoneX Financial Pte. Ltd. is regulated by the Monetary Authority of Singapore (“MAS”) and operates as an approved holder of a Capital Market Services License. StoneX Financial Pte. Ltd. is subject to the requirements of MAS and pursuant to the Securities and Futures Act. The regulations include those that govern the treatment of client money and other assets which under certain circumstances must be segregated from the firm’s own assets. As of September 30, 2021, StoneX Financial Pte. Ltd. had client segregated funds of $413.7 million compared to a minimum regulatory requirement of $395.3 million.

The following table details the Company’s subsidiaries with a minimum regulatory net capital requirement in excess of $10.0 million as well as the actual regulatory capital of the subsidiary as of September 30, 2021 (in millions):

Subsidiary	Regulatory Authority	Actual		Minimum Requirement
StoneX Financial Inc.	SEC and CFTC	$	311.2	$	198.9
StoneX Financial Ltd.	FCA	$	368.5	$	218.4
Gain Capital Group, LLC	CFTC	$	49.4	$	30.1
StoneX Financial Pte. Ltd.	MAS	$	45.4	$	15.9

Certain other subsidiaries of the Company, each with a minimum requirement less than $10.0 million, are also subject to net capital requirements promulgated by authorities in the countries in which they operate. As of September 30, 2021, all of the Company’s subsidiaries were in compliance with their local regulatory requirements.

Swap dealers are subject to a comprehensive regulatory regime with new obligations for the swaps activities for which they are registered, including adherence to risk management policies, supervisory procedures, trade record and real time reporting requirements, as well as rules for minimum capital requirements which became effective October 6, 2021. Our subsidiary, StoneX Markets LLC, is a CFTC provisionally registered swap dealer, and under these capital rules, StoneX Markets LLC is subject to a minimum regulatory capital requirement of $100.0 million.