XML 27 R16.htm IDEA: XBRL DOCUMENT v3.19.2
Collateralized Transactions
 6 Months Ended
May 31, 2019
Collateralized Transactions [Abstract]  
Collateralized Transactions Collateralized Transactions
Jefferies Group enters into secured borrowing and lending arrangements to obtain collateral necessary to effect settlement, finance inventory positions, meet customer needs or re-lend as part of dealer operations. Jefferies Group monitors the fair value of the securities loaned and borrowed on a daily basis as compared with the related payable or receivable, and requests additional collateral or returns excess collateral, as appropriate. Jefferies Group pledges financial instruments as collateral under repurchase agreements, securities lending agreements and other secured arrangements, including clearing arrangements. Jefferies Group's agreements with counterparties generally contain contractual provisions allowing the counterparty the right to sell or repledge the collateral. Pledged securities owned that can be sold or repledged by the counterparty are included in Financial instruments owned, at fair value and noted parenthetically as Securities pledged in our Consolidated Statements of Financial Condition.
The following tables set forth the carrying value of securities lending arrangements and repurchase agreements by class of collateral pledged and remaining contractual maturity (in thousands):
Collateral Pledged
 
Securities Lending Arrangements
 
Repurchase Agreements
 
Total
May 31, 2019
 
 
 
 
 
 
Corporate equity securities
 
$
2,006,944

 
$
391,858

 
$
2,398,802

Corporate debt securities
 
252,023

 
1,826,868

 
2,078,891

Mortgage- and asset-backed securities
 
—

 
2,077,535

 
2,077,535

U.S. government and federal agency securities
 
68,838

 
12,234,328

 
12,303,166

Municipal securities
 
—

 
612,747

 
612,747

Sovereign obligations
 
—

 
3,184,103

 
3,184,103

Loans and other receivables
 
—

 
765,751

 
765,751

Total
 
$
2,327,805

 
$
21,093,190

 
$
23,420,995

 
 
 
 
 
 
 
November 30, 2018
 
 
 
 
 
 
Corporate equity securities
 
$
1,505,218

 
$
487,124

 
$
1,992,342

Corporate debt securities
 
333,221

 
1,853,309

 
2,186,530

Mortgage- and asset-backed securities
 
249

 
2,820,543

 
2,820,792

U.S. government and federal agency securities
 
—

 
8,181,947

 
8,181,947

Municipal securities
 
—

 
604,274

 
604,274

Sovereign obligations
 
—

 
2,945,521

 
2,945,521

Loans and other receivables
 
—

 
300,768

 
300,768

Total
 
$
1,838,688

 
$
17,193,486

 
$
19,032,174

 
 
Contractual Maturity
 
 
Overnight and Continuous
 
Up to 30 Days
 
30 to 90 Days
 
Greater than 90 Days
 
Total
May 31, 2019
 
 
 
 
 
 
 
 
 
 
Securities lending arrangements
 
$
1,382,312

 
$
—

 
$
644,948

 
$
300,545

 
$
2,327,805

Repurchase agreements
 
8,754,902

 
3,154,270

 
4,402,247

 
4,781,771

 
21,093,190

Total
 
$
10,137,214

 
$
3,154,270

 
$
5,047,195

 
$
5,082,316

 
$
23,420,995

 
 
 
 
 
 
 
 
 
 
 
November 30, 2018
 
 
 
 
 
 
 
 
 
 
Securities lending arrangements
 
$
807,347

 
$
—

 
$
560,417

 
$
470,924

 
$
1,838,688

Repurchase agreements
 
7,849,052

 
1,915,325

 
6,042,951

 
1,386,158

 
17,193,486

Total
 
$
8,656,399

 
$
1,915,325

 
$
6,603,368

 
$
1,857,082

 
$
19,032,174



Jefferies Group receives securities as collateral under resale agreements, securities borrowing transactions and customer margin loans. Jefferies Group also receives securities as collateral in connection with securities-for-securities transactions in which it is the lender of securities. In many instances, Jefferies Group is permitted by contract to rehypothecate the securities received as collateral. These securities may be used to secure repurchase agreements, enter into securities lending transactions, satisfy margin requirements on derivative transactions or cover short positions. At May 31, 2019 and November 30, 2018, the approximate fair value of securities received as collateral by Jefferies Group that may be sold or repledged was $29.4 billion and $23.1 billion, respectively. At May 31, 2019 and November 30, 2018, a substantial portion of the securities received by Jefferies Group have been sold or repledged.

Offsetting of Securities Financing Agreements

To manage its exposure to credit risk associated with securities financing transactions, Jefferies Group may enter into master netting agreements and collateral arrangements with counterparties. Generally, transactions are executed under standard industry agreements, including, but not limited to, master securities lending agreements (securities lending transactions) and master repurchase agreements (repurchase transactions).

The following table provides information regarding repurchase agreements and securities borrowing and lending arrangements that are recognized in the Consolidated Statements of Financial Condition and (1) the extent to which, under enforceable master netting arrangements, such balances are presented net in the Consolidated Statements of Financial Condition as appropriate under
GAAP and (2) the extent to which other rights of setoff associated with these arrangements exist and could have an effect on our consolidated financial position.
(In thousands)
Gross
Amounts
 
Netting in Consolidated Statements of Financial Condition
 
Net Amounts in Consolidated Statements of Financial Condition
 
Additional Amounts Available for Setoff (1)
 
Available Collateral (2)
 
Net Amount (3)
Assets at May 31, 2019
 
 
 
 
 
 
 
 
 
 
 
Securities borrowing arrangements
$
7,713,886

 
$
—

 
$
7,713,886

 
$
(570,248
)
 
$
(1,585,821
)
 
$
5,557,817

Reverse repurchase agreements
16,259,065

 
(12,231,733
)
 
4,027,332

 
(526,433
)
 
(3,452,962
)
 
47,937

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities at May 31, 2019
 

 
 

 
 

 
 

 
 

 
 

Securities lending arrangements
$
2,327,805

 
$
—

 
$
2,327,805

 
$
(570,248
)
 
$
(1,694,029
)
 
$
63,528

Repurchase agreements
21,093,190

 
(12,231,733
)
 
8,861,457

 
(526,433
)
 
(7,103,993
)
 
1,231,031

 
 
 
 
 
 
 
 
 
 
 
 
Assets at November 30, 2018
 

 
 

 
 

 
 

 
 

 
 

Securities borrowing arrangements
$
6,538,212

 
$
—

 
$
6,538,212

 
$
(468,778
)
 
$
(1,193,986
)
 
$
4,875,448

Reverse repurchase agreements
11,336,175

 
(8,550,417
)
 
2,785,758

 
(609,225
)
 
(2,126,730
)
 
49,803

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities at November 30, 2018
 

 
 

 
 

 
 

 
 

 
 

Securities lending arrangements
$
1,838,688

 
$
—

 
$
1,838,688

 
$
(468,778
)
 
$
(1,343,704
)
 
$
26,206

Repurchase agreements
17,193,486

 
(8,550,417
)
 
8,643,069

 
(609,225
)
 
(7,070,967
)
 
962,877


(1)
Under master netting agreements with its counterparties, Jefferies Group has the legal right of offset with a counterparty, which incorporates all of the counterparty’s outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by a counterparty in the event of a counterparty’s default, but which are not netted in the Consolidated Statement of Financial Condition because other netting provisions of GAAP are not met. 
(2)
Includes securities received or paid under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty’s rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements.
(3)
At May 31, 2019, amounts include $5,469.0 million of securities borrowing arrangements, for which Jefferies Group has received securities collateral of $5,273.8 million, and $1,119.3 million of repurchase agreements, for which Jefferies Group has pledged securities collateral of $1,147.8 million, which are subject to master netting agreements, but Jefferies Group has not determined the agreements to be legally enforceable. At November 30, 2018, amounts include $4,825.7 million of securities borrowing arrangements, for which Jefferies Group has received securities collateral of $4,711.7 million, and $931.7 million of repurchase agreements, for which Jefferies Group has pledged securities collateral of $963.6 million, which are subject to master netting agreements, but Jefferies Group has not determined the agreements to be legally enforceable.

Cash and Securities Segregated and on Deposit for Regulatory Purposes or Deposited with Clearing and Depository Organizations

Cash and securities deposited with clearing and depository organizations and segregated in accordance with regulatory regulations totaled $543.4 million and $708.0 million at May 31, 2019 and November 30, 2018, respectively. Segregated cash and securities consist of deposits in accordance with Rule 15c3-3 of the Securities Exchange Act of 1934, which subjects Jefferies LLC as a broker-dealer carrying customer accounts to requirements related to maintaining cash or qualified securities in segregated special reserve bank accounts for the exclusive benefit of its customers.