10q10k10q10k.net

What changed in StoneX Group Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of StoneX Group Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+458 added−464 removedSource: 10-K (2024-11-29) vs 10-K (2023-11-24)

Top changes in StoneX Group Inc.'s 2024 10-K

458 paragraphs added · 464 removed · 337 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

85 edited+32 added−18 removed133 unchanged
Biggest changeStoneX Financial Ltd put in place a comprehensive Brexit contingency plan to mitigate the risks associated with Brexit. This included the transfer of assets, services and clients to StoneX Financial Ltd’s subsidiary (StoneX Financial GmbH) and sister company (StoneX Financial Europe S.A).
Biggest changeThis included the transfer of assets, services and clients to StoneX Financial Ltd’s subsidiary (StoneX Financial GmbH) and sister company (StoneX Financial Europe S.A.). Similarly, the group has executed a plan to mitigate the risks associated with Brexit for retail clients including the establishment of a licensed entity in Cyprus, StoneX Europe Ltd. U.K.
Global Payments We have built a scalable platform to provide end-to-end global payment solutions to banks and commercial businesses, as well as charities, NGOs and government organizations. We offer payments services in more than 140 currencies.
Payments We have built a scalable platform to provide end-to-end global payment solutions to banks and commercial businesses, as well as charities, NGOs and government organizations. We offer payments services in more than 140 currencies.
In addition, our independent wealth management business offers a comprehensive product suite to retail investors in the United States. Retail Forex and CFDs We are a provider of trading services and solutions in the global financial markets, including spot foreign exchange (“forex”) and CFDs. We offer CFDs on currencies, commodities, indices, individual equities, cryptocurrencies, bonds, options and interest rate products.
In addition, our independent wealth management business offers a comprehensive product suite to retail investors in the United States. Forex and CFDs We are a provider of trading services and solutions in the global financial markets, including spot foreign exchange (“forex”) and CFDs. We offer CFDs on currencies, commodities, indices, individual equities, cryptocurrencies, bonds, options and interest rate products.
FCMs, swaps dealers, physical commodity merchants and other intermediaries and service providers create value for commercial clients by managing risks across the clients’ operations, allowing them to focus on their core expertise. In addition, commercial clients often face financial risks such as interest rate and exchange rate volatility, which these intermediaries help to mitigate.
FCMs, swaps dealers, physical commodity merchants and other intermediaries and service providers create value for commercial clients by managing risks across the clients’ operations, allowing them to focus on their core expertise. In addition, commercial clients often face financial risks such as interest rate and foreign exchange rate volatility, which these intermediaries help to mitigate.
The global payments market has historically been dominated by large Organization for Economic Co-operation and Development (“OECD”) banks that provide G20 to non-G20 foreign exchange rates to clients. Such banks, however, are reliant on their correspondent banking network for foreign exchange rates, which often results in uncompetitive rates and a lack of transparency.
The payments market has historically been dominated by large Organization for Economic Co-operation and Development (“OECD”) banks that provide G20 to non-G20 foreign exchange rates to clients. Such banks, however, are reliant on their correspondent banking network for foreign exchange rates, which often results in uncompetitive rates and a lack of transparency.
We believe that the general lack of transparency in bank offerings in the global payments market with regard to fees and exchange rates, the banks’ often more expensive services, as well as the lack of systematic regulation, have opened opportunities for competitors in this market. As a result, the fast-growing space has attracted significant investor interest.
We believe that the general lack of transparency in bank offerings in the payments market with regard to fees and exchange rates, the banks’ often more expensive services, as well as the lack of systematic regulation, have opened opportunities for competitors in this market. As a result, the fast-growing space has attracted significant investor interest.
Notably, the Dodd-Frank Act requires the registration of swap dealers with the CFTC and provides framework for: • swap data reporting and record keeping on counterparties and data repositories; • centralized clearing for swaps, with limited exceptions for end-users; • the requirement to execute swaps on regulated swap execution facilities; • the imposition on swap dealers to exchange margin on uncleared swaps with counterparties; and • the requirement to comply with new capital rules.
Notably, the Dodd-Frank Act requires the registration of swap dealers with the CFTC and provides framework for: • swap data reporting and record keeping on counterparties and data repositories; • centralized clearing for swaps, with limited exceptions for end-users; • the requirement to execute swaps on regulated swap execution facilities; • the imposition on swap dealers to exchange margin on uncleared swaps with counterparties; and • the requirement to comply with capital rules.
Independent providers have entered the market, leveraging technology to lower client acquisition costs and providing an enhanced client experience through online platforms. In the global payments market, we believe we are one of those independent providers and disruptors offering significant value to our bank, corporate and NGO/charities clients, providing competitive and transparent payments solutions.
Independent providers have entered the market, leveraging technology to lower client acquisition costs and providing an enhanced client experience through online platforms. In the payments market, we believe we are one of those independent providers and disruptors offering significant value to our bank, corporate and NGO/charities clients, providing competitive and transparent payments solutions.
Our strategy is to utilize a centralized and disciplined process for capital allocation, risk management and cost control, while delegating the execution of strategic objectives and day-to-day management to experienced individuals. This requires high quality managers, a clear communication of performance objectives and strong financial and compliance controls.
Our strategy is to utilize a centralized and disciplined process for capital allocation, risk management and cost control, while delegating the execution of strategic objectives and day-to-day management to experienced individuals. This requires high quality managers, a clear communication of performance objectives and strong financial, operational and compliance controls.
Global Payments We provide customized payment, technology and treasury services to banks and commercial businesses as well as charities, NGOs and government organizations. We provide transparent pricing and offer local currency payments services in more than 180 countries and 140 currencies, which we believe is more than any other payments solutions provider.
Payments We provide customized payment, technology and treasury services to banks and commercial businesses as well as charities, NGOs and government organizations. We provide transparent pricing and offer local currency payments services in more than 180 countries and 140 currencies, which we believe is more than any other payments solutions provider.
Retail Forex Client Assets As a Retail Foreign Exchange dealer (“RFED”) registered with the CFTC and member of NFA, we maintain deposits from clients relating to their trading of OTC foreign exchange contracts whereby we act as counterparty to client trading activity making us subject to CFTC regulation 5.8, which specifies that such funds must be held in designated accounts at qualifying institutions in the United States or money center countries as defined by CFTC regulation 1.49.
Self-Directed/Retail Forex Client Assets As a retail foreign exchange dealer (“RFED”) registered with the CFTC and member of NFA, we maintain deposits from clients relating to their trading of OTC foreign exchange contracts whereby we act as counterparty to client trading activity making us subject to CFTC regulation 5.8, which specifies that such funds must be held in designated accounts at qualifying institutions in the United States or money center countries as defined by CFTC regulation 1.49.
Commercial entities face a variety of risks, including risks related to commodity input pricing, supply chain management and inventory financing, interest rate changes, exchange rate changes, and price and quantity volatility in their outputs.
Commercial entities face a variety of risks, including risks related to commodity input pricing, supply chain management and inventory financing, interest rate changes, foreign exchange rate changes, and price and quantity volatility in their outputs.
These issues are further exacerbated by a lack of uniform regulation in the business-to-business (“B2B”) global payments sector, with no coordinated regulatory framework, even among significant OECD countries.
These issues are further exacerbated by a lack of uniform regulation in the business-to-business (“B2B”) payments sector, with no coordinated regulatory framework, even among significant OECD countries.
These statutes, regulations and rules cover all aspects of our business, including: • maintaining specified minimum amounts of capital and limiting withdrawals of funds from our regulated operating subsidiaries; • the treatment of client assets, including custody, control, safekeeping and, in certain countries, segregation of our client funds and securities; • the methods by which clients can fund accounts with us; • sales and marketing activities, including our interaction with, and solicitation of, clients; • disclosures to clients, including those related to product risks, self-dealing and material conflicts of interest; • the collection, use, transfer and protection of client personal information; • anti-money laundering practices; • recordkeeping and reporting requirements; and • continuing education and licensing requirements for our employees, and supervision of the conduct of directors, officers and employees.
These statutes, regulations and rules cover all aspects of our business, including: • maintaining specified minimum amounts of capital and limiting withdrawals of funds from our regulated operating subsidiaries; • the treatment of client assets, including custody, control, safekeeping and, in certain countries, segregation of our client funds and securities; • the methods by which clients can fund accounts with us; 10 Table of Contents • sales and marketing activities, including our interaction with, and solicitation of, clients; • disclosures to clients, including those related to product risks, self-dealing and material conflicts of interest; • the collection, use, transfer and protection of client personal information; • anti-money laundering practices; • recordkeeping and reporting requirements; and • continuing education and licensing requirements for our employees, and supervision of the conduct of directors, officers and employees.
Through our comprehensive platform and our commitment to client service, we provide simple and fast execution, delivering funds in any of these countries quickly through our global network of approximately 375 correspondent banking relationships. 4 Table of Contents Advisory Services We provide value-added advisory services and high-touch trade execution across a variety of financial markets, including commodities, foreign currencies, interest rates, institutional asset management and independent wealth management.
Through our comprehensive platform and our commitment to client service, we provide simple and fast execution, delivering funds in any of these countries quickly through our global network of approximately 350 correspondent banking relationships. 4 Table of Contents Advisory Services We provide value-added advisory services and high-touch trade execution across a variety of financial markets, including commodities, foreign currencies, interest rates, institutional asset management and independent wealth management.
Over the last 14 years since the financial crisis, global banks have increased the minimum size of clients they are willing to serve, in part due to decreasing profit margins often driven by regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) in the United States and the revised Markets in Financial Instruments Directive (“MiFID II”) and accompanying regulation, Markets in Financial Instruments Regulation (“MiFIR”) in Europe.
Over the last 15 years since the financial crisis, global banks have increased the minimum size of clients they are willing to serve, in part due to decreasing profit margins often driven by regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) in the United States and the revised Markets in Financial Instruments Directive (“MiFID II”) and accompanying regulation, Markets in Financial Instruments Regulation (“MiFIR”) in Europe.
We strive to increase market share and attract new clients that are underserved by the global banks, capitalizing on our position as one of few publicly listed mid-sized financial services companies offering our clients access to global futures and options products through our well-capitalized independent FCM, structured OTC products through our swaps dealer as well as our physical commodity offerings.
We strive to increase market share and attract new clients that are underserved by the global banks, capitalizing on our position as one of few publicly listed mid-sized financial services companies offering our clients access to global futures and options products through our well-capitalized independent FCMs, structured OTC products through our swaps dealer as well as our physical commodity offerings.
Accordingly, under these rules, we are required to: 14 Table of Contents • report all derivative contracts and their lifecycle events (concluded, modified and terminated) to which we are a party to a trade repository either by ourselves or through a third party; • keep all records relating to concluding of derivative contracts and any subsequent modification for 5 years; • comply with the risk management requirements for OTC bilateral derivatives, including portfolio reconciliation, portfolio compression, record keeping, dispute resolution and margining; and • clear through central counterparties all OTC derivatives which will be subject to the mandatory clearing obligation.
Accordingly, under these rules, we are required to: • report all derivative contracts and their lifecycle events (concluded, modified and terminated) to which we are a party to a trade repository either by ourselves or through a third party; • keep all records relating to concluding of derivative contracts and any subsequent modification for 5 years; • comply with the risk management requirements for OTC bilateral derivatives, including portfolio reconciliation, portfolio compression, record keeping, dispute resolution and margining; and • clear through central counterparties all OTC derivatives which will be subject to the mandatory clearing obligation.
We utilize the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) network as well as direct application programming interfaces (“APIs”) to service almost 100 financial institutions globally and connect them to our approximately 375 correspondent banks around the world enabling them to make local currency payments in a cost effective and secure manner.
We utilize the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) network as well as direct application programming interfaces (“APIs”) to service almost 100 financial institutions globally and connect them to our approximately 350 correspondent banks around the world enabling them to make local currency payments in a cost effective and secure manner.
Retail We provide our retail clients around the world access to over 18,000 global financial markets, including spot foreign exchange and CFDs, which are investment products with returns linked to the performance of underlying assets, and both financial trading and physical investment in precious metals.
Self-Directed/Retail We provide our self-directed/retail clients around the world access to over 18,000 global financial markets, including spot foreign exchange and CFDs, which are investment products with returns linked to the performance of underlying assets, and both financial trading and physical investment in precious metals.
Operating Segments Our business activities are managed through four operating segments, including Commercial, Institutional, Retail, and Global Payments, as follows: Commercial The Commercial segment comprises the activities associated with the identification, management, hedging and monitoring of various commodity and financial risks faced by commercial entities in their business cycles, including risks related to interest rates, foreign exchange, agricultural commodities, energy and renewable fuels, industrial metals, precious metals, and other physical commodities.
Operating Segments Our business activities are managed through four operating segments, including Commercial, Institutional, Self-Directed/Retail, and Payments, as follows: Commercial The Commercial segment comprises the activities associated with the identification, management, hedging and monitoring of various commodity and financial risks faced by commercial entities in their business cycles, including risks related to interest rates, foreign exchange, agricultural commodities, energy and renewable fuels, industrial metals, precious metals, and other physical commodities.
Patent and Trademark Office (“USPTO”), including: StoneX, IRMP, FCStone, FC Stone, CommodityNetwork, CoffeeNetwork, GAIN Capital, FOREX.com, It’s Your World. Trade It., GAIN Capital Futures, and GAIN Futures. We have applications pending with the USPTO for StoneX One, StoneHedge and Global Payments Connect.
Patent and Trademark Office (“USPTO”), including: StoneX, StoneX One, StoneHedge, IRMP, FC Stone, CommodityNetwork, CoffeeNetwork, GAIN Capital, FOREX.com, It’s Your World. Trade It., GAIN Capital Futures, and GAIN Futures. We have applications pending with the USPTO for StoneX Bullion and Global Payments Connect.
Broker-dealers, FCMs, investment banks and other intermediaries create value for institutional clients by facilitating client access to various financial markets, including securities and derivatives exchanges, proprietary sources of liquidity, OTC markets, other institutions and international markets. Market intermediaries can act as market-makers or principal traders that facilitate client trading activity by matching orders internally.
Broker-dealers, FCMs, investment banks and other intermediaries create value for institutional clients by facilitating client access to various financial markets, including securities and derivatives exchanges, proprietary sources of liquidity, OTC markets, other institutions and international markets. Market intermediaries can act as market-makers or principal traders that 7 Table of Contents facilitate client trading activity by matching orders internally.
In connection with our retail business, we look to acquire new clients as cost-efficiently as possible, primarily through online marketing efforts such as advertising on third-party websites, search engine marketing and affiliate marketing.
In connection with our self-directed/retail business, we look to acquire new clients as cost-efficiently as possible, primarily through online marketing efforts such as advertising on third-party websites, search engine marketing and affiliate marketing.
We currently serve more than 54,000 commercial, institutional, and global payments clients, and over 400,000 retail accounts located in more than 180 countries. Our clients include commercial entities, regional, national and introducing broker-dealers, asset managers, insurance companies, brokers, institutional and individual investors, professional traders, commercial and investment banks as well as government and non-governmental organizations (“NGOs”).
We currently serve more than 54,000 commercial, institutional, and payments clients, and over 400,000 self-directed/retail accounts located in more than 180 countries. Our clients include commercial entities, regional, national and introducing broker-dealers, asset managers, insurance companies, brokers, institutional and individual investors, professional traders, commercial and investment banks as well as government and non-governmental organizations (“NGOs”).
Competitive Environment - Retail The market for our retail services is rapidly evolving and highly competitive. Our competitors vary by region in terms of regulatory status, breadth of product offering, size and geographic scope of operations.
Competitive Environment - Self-Directed/Retail The market for our self-directed/retail services is rapidly evolving and highly competitive. Our competitors vary by region in terms of regulatory status, breadth of product offering, size and geographic scope of operations.
With respect to our retail OTC business, the Dodd-Frank Act includes: • rules that require us to ensure that our clients residing in the United States have accounts open only with our U.S. registered NFA-member operating entity; and • rules that essentially require all retail transactions in any commodity product other than a retail foreign currency transaction that is traded on a leveraged basis to be executed on an exchange, rather than OTC.
With respect to our retail OTC business, the Dodd-Frank Act includes: 12 Table of Contents • rules that require us to ensure that our clients residing in the United States have accounts open only with our U.S. registered NFA-member operating entity; and • rules that essentially require all retail transactions in any commodity product other than a retail foreign currency transaction that is traded on a leveraged basis to be executed on an exchange, rather than OTC.
Clearing involves the matching of clients’ trades with the exchange, the collection and management of client margin deposits to support the transactions, and the accounting and reporting of the transactions to clients. As of September 30, 2023, our U.S.
Clearing involves the matching of clients’ trades with the exchange, the collection and management of client margin deposits to support the transactions, and the accounting and reporting of the transactions to clients. As of September 30, 2024, our U.S.
Physical Trading We act as a principal to support the needs of our clients in a variety of physical commodities, primarily precious metals, as well as across the commodity complex, including energy and renewable fuels, grains, oil seeds, cotton, coffee, cocoa, edible oils and feed products.
Physical Trading We act as a principal to support the needs of our clients in a variety of physical commodities, primarily precious metals, as well as across the commodity complex, including renewable fuels, grains, oil seeds, cotton, coffee, cocoa, fats and oils and feed products.
FCM held $6.1 billion in required client segregated assets, which makes us one the largest non-bank FCMs in the U.S., as measured by required client segregated assets. We seek to leverage our capabilities and capacity in clearing to financial institutions, institutional trading firms, professional traders and introducing brokers as well as offering facilities management or outsourcing solutions to other FCMs.
FCM held $5.7 billion in required client segregated assets, which makes us one the largest non-bank FCMs in the U.S., as measured by required client segregated assets. We seek to leverage our capabilities and capacity in clearing to financial institutions, institutional trading firms, professional traders and introducing brokers as well as offering facilities management or outsourcing solutions to other FCMs.
In addition, CFTC regulations require filing of a daily retail forex obligation calculation which compares the assets held for clients with qualifying institutions (“retail forex assets”) to the firm’s total obligation to retail forex clients, also known as net liquidating value (“retail forex 12 Table of Contents liabilities”).
In addition, CFTC regulations require filing of a daily retail forex obligation calculation which compares the assets held for clients with qualifying institutions (“retail forex assets”) to the firm’s total obligation to retail forex clients, also known as net liquidating value (“retail forex liabilities”).
As such, in its relations with its advisory clients, SA Stone Investment Advisers Inc. is subject to the fiduciary and other obligations imposed on investment advisers under the Investment Advisers Act of 1940 and the rules and regulations promulgated thereunder, as well as various state securities laws.
As such, in its relations with its advisory clients, StoneX Advisers Inc. is subject to the fiduciary and other obligations imposed on investment advisers under the Investment Advisers Act of 1940 and the rules and regulations promulgated thereunder, as well as various state securities laws.
In the retail forex and CFD industry, we compete with both regulated firms focused on forex and CFDs, as well as with global multi-asset trading firms.
In the self-directed/retail forex and CFD industry, we compete with both regulated firms focused on forex and CFDs, as well as with global multi-asset trading firms.
We also have registered trademarks covering our City Index brand name and logo in a variety of jurisdictions, including Australia, the U.K., the E.U., Singapore and China. We also have pursued trademark protection through the Madrid Protocol covering our StoneX brand name in a variety of jurisdictions.
We also have registered trademarks covering our City Index brand name and logo in a variety of jurisdictions, including Australia, the U.K., the E.U., Singapore and China. We also have pursued trademark 18 Table of Contents protection through the Madrid Protocol covering our StoneX brand name in a variety of jurisdictions.
Exchange Memberships Through our various operating subsidiaries, we are member of a number of exchanges, including the Chicago Mercantile Exchange, the Chicago Board of Trade, the New York Mercantile Exchange, COMEX, InterContinental Exchange, Inc., the Minneapolis Grain Exchange, the London Metal Exchange, ICE Europe Ltd, Eurex Exchange, Dubai Mercantile Exchange, Euronext Amsterdam, Euronext Paris, European Energy Exchange, B3 S.A., Bitnomial Exchange LLC, Norexco ASA, the Rosario Futures Exchange, ICE Futures Abu Dhabi, Small Exchange, Inc., Nodal Exchange and the Singapore Exchange.
Exchange Memberships Through our various operating subsidiaries, we are member of a number of exchanges, including the Chicago Mercantile Exchange, the Chicago Board of Trade, the New York Mercantile Exchange, COMEX, InterContinental Exchange, Inc., the Minneapolis Grain Exchange, the London Metal Exchange, ICE Europe Ltd, Eurex Exchange, Dubai Mercantile Exchange, Euronext Amsterdam, Euronext Paris, European Energy Exchange, B3 S.A., Bitnomial Exchange LLC, Norexco ASA, the Rosario Futures Exchange, ICE Futures Abu Dhabi, India International Bullion Exchange, Australian Securities Exchange, the Montreal Exchange, Small Exchange, Inc., Nodal Exchange and the Singapore Exchange.
In addition, we have developed a proprietary pricing engine that aggregates quotes from 8 Table of Contents our liquidity sources to ensure that our prices accurately reflect current market price levels and allow us to provide our clients with fast, accurate trade execution.
In addition, we have developed a proprietary pricing engine that aggregates quotes from our liquidity sources to ensure that our prices accurately reflect current market price levels and allow us to provide our clients with fast, accurate trade execution.
Retail Precious Metals Our physical retail precious metals business is principally conducted within Coininvest GmbH. Through our website Stonexbullion.com, we offer clients the ability to purchase physical gold and other precious metals, in multiple forms, including coins and bars, in denominations of their choice, to add to their investment portfolios.
Self-Directed/Retail Precious Metals Our physical self-directed/retail precious metals business is principally conducted within StoneX Bullion GmbH. Through our website Stonexbullion.com, we offer clients the ability to purchase physical gold and other precious metals, in multiple forms, including coins and bars, in denominations of their choice, to add to their investment portfolios.
We believe we are one of the leading mid-market clearers in the securities industry, with approximately 100 correspondent clearing relationships with over $23 billion in assets under management or administration as of September 30, 2023.
We believe we are one of the leading mid-market clearers in the securities industry, with approximately 100 correspondent clearing relationships with over $31 billion in assets under management or administration as of September 30, 2024.
We focus on the following factors in order to implement and develop our human capital strategy: • Employee Compensation and Incentives • Evaluation of Employee Performance, Training and Talent Development • Employee Health and Welfare • Diversity and Inclusion Employee Compensation and Incentives Ensuring that our employees are well-compensated and have the appropriate incentives in place to meet and exceed their potential is a central part of our human capital strategy.
We focus on the following factors in order to implement and develop our talent strategy: • Employee Compensation and Incentives • Evaluation of Employee Performance, Training and Talent Development • Employee Health, Safety and Wellness • Diversity Employee Compensation and Incentives Ensuring that our employees are well-compensated and have the appropriate incentives in place to meet and exceed their potential is a central part of our talent strategy.
Net Capital Requirements Many of our subsidiaries are regulated and subject to minimum and/or net capital requirements. All of our subsidiaries are in compliance with their capital regulatory requirements as of September 30, 2023. Additional information on our subsidiaries subject to significant net capital and minimum net capital requirements can be found in Note 21 to the Consolidated Financial Statements.
All of our subsidiaries are in compliance with their capital regulatory requirements as of September 30, 2024. Additional information on our subsidiaries subject to significant net capital and minimum net capital requirements can be found in Note 21 to the Consolidated Financial Statements.
Acquisitions during Fiscal Year 2023 Incomm S.A.S. In February 2023, one of the Company’s subsidiaries, StoneX Commodity Solutions LLC acquired all of the outstanding shares of Incomm S.A.S. (“Incomm”), which is based in Colombia.
In February 2023, one of the Company’s subsidiaries, StoneX Commodity Solutions LLC acquired all of the outstanding shares of Incomm S.A.S. (“Incomm”), which is based in Colombia.
Our businesses are supported by our global infrastructure of regulated operating subsidiaries, our advanced technology platforms and our team of more than 4,000 employees as of September 30, 2023.
Our businesses are supported by our global infrastructure of regulated operating subsidiaries, our advanced technology platforms and our team of more than 4,500 employees as of September 30, 2024.
One of our subsidiaries is one of the largest non-bank futures commission merchant (“FCM”) in the United States (“U.S.”) as measured by its $6.1 billion in required client segregated assets as of September 30, 2023 and our United Kingdom (“U.K.”) subsidiary is one of only eight Category One ring dealing members of the London Metals Exchange (the “LME”).
One of our subsidiaries is one of the largest non-bank futures commission merchant (“FCM”) in the United States (“U.S.”) as measured by its $5.7 billion in required client segregated assets as of September 30, 2024 and our United Kingdom (“U.K.”) subsidiary is one of only seven Category One ring dealing members of the London Metals Exchange (the “LME”).
In October 2022, our wholly owned subsidiary, StoneX (Netherlands) B.V., acquired CDI-Societe Cotonniere De Distribution S.A (“CDI”), based in Switzerland. CDI operates a global cotton merchant business with a strong network of producers in Brazil and West Africa as well as buyers throughout Asia.
In October 2022, our wholly owned subsidiary, StoneX (Netherlands) B.V., acquired CDI-Societe Cotonniere De Distribution S.A (“CDI”), based in Switzerland. CDI operates a global cotton merchant business with a strong network of producers in Brazil and West Africa as well as buyers throughout Asia. Regulation Overview Our business and the industries in which we operate are highly regulated.
In Europe, our regulated subsidiaries are subject to E.U. regulation. Across the U.K. and E.U., the respective transpositions of the Market Abuse Regulation, and the General Data Protection Regulation, also apply. Applicable regulations also impose regulatory capital, as well as conduct of business, governance, and other requirements on these entities.
Across the U.K. and E.U., the respective transpositions of the Market Abuse Regulation, and the General Data Protection Regulation, also apply. Applicable regulations also impose regulatory capital, as well as conduct of business, governance, and other requirements on these entities.
Client Money Rules We are subject to the FCA’s Client Money rules, under which we are required to: • maintain adequate segregation of client funds; • maintain adequate records in order to identify appropriate client details; • have adequate organizational arrangements in place to minimize the risk that client money may be paid for by the account of a client whose money has not yet been received by us; • undertake daily internal and external client money reconciliations within an appropriate risk and control framework; and • appoint an individual who is responsible for CASS oversight.
CFD’s referencing cryptocurrencies The FCA has adopted rules to ban the sale of CFDs referencing cryptocurrencies to retail consumers, which became effective in January 2021. 13 Table of Contents Client Money Rules We are subject to the FCA’s Client Money rules, under which we are required to: • maintain adequate segregation of client funds; • maintain adequate records in order to identify appropriate client details; • have adequate organizational arrangements in place to minimize the risk that client money may be paid for by the account of a client whose money has not yet been received by us; • undertake daily internal and external client money reconciliations within an appropriate risk and control framework; and • appoint an individual who is responsible for CASS oversight.
(“SA Stone”), member FINRA/SIPC, together with its affiliated SEC-registered investment advisor, SA Stone Investment Advisors Inc., provides an integrated platform of technology, comprehensive wealth management and investment services to registered representatives, investment advisor representatives and registered investment advisors nationwide. The firm supports more than 400 independent professionals with best-in-class service and products.
Independent Wealth Management Our independent broker/dealer, StoneX Securities Inc., member FINRA/SIPC, together with its affiliated SEC-registered investment advisor, StoneX Advisors Inc., provides an integrated platform of technology, comprehensive wealth management and investment services to registered representatives, investment advisor representatives and registered investment advisors nationwide. The firm supports more than 375 independent professionals with best-in-class service and products.
For this assessment, we are required to collect information about our existing and potential clients’ knowledge and experience with regard to specific products and services, including: • the types of services, transactions and financial instruments with which the retail client is familiar; • the nature, volume, and frequency of the retail client’s transactions in financial instruments and the period over which they have been carried out; and • the level of education, and profession or relevant former profession of the retail client or potential retail client.
For this assessment, we are required to collect information about our existing and potential clients’ knowledge and experience with regard to specific products and services, including: • the types of services, transactions and financial instruments with which the retail client is familiar; • the nature, volume, and frequency of the retail client’s transactions in financial instruments and the period over which they have been carried out; and • the level of education, and profession or relevant former profession of the retail client or potential retail client. 14 Table of Contents We are required to offer to a retail client or transact for them only those products that are deemed appropriate for their knowledge, experience and other circumstances.
Increasingly, this volume growth comes from transactions to emerging economies, benefiting those few providers such as us who have a strong competitive position in those emerging economies and an extensive correspondent bank network that would be difficult to replicate.
Volume growth in the payments market has been steady, driving revenue growth for cross-border payments providers. Increasingly, this volume growth comes from transactions to emerging economies, benefiting those few providers such as us who have a strong competitive position in those emerging economies and an extensive correspondent bank network that would be difficult to replicate.
We must comply with a wide range of requirements imposed by the SEC, state securities commissions, the Municipal Securities Rulemaking Board (“MSRB”) and the Financial Industry Regulatory Authority 11 Table of Contents (“FINRA”). These regulatory bodies safeguard the integrity of the financial markets and protect the interests of investors in these markets.
We must comply with a wide range of requirements imposed by the SEC, state securities commissions, the Municipal Securities Rulemaking Board (“MSRB”) and the Financial Industry Regulatory Authority (“FINRA”). These regulatory bodies safeguard the integrity of the financial markets and protect the interests of investors in these markets. They also impose minimum capital requirements on regulated entities.
We have also taken advantage of opportunities to consolidate sub-scale competitors into our Commercial businesses. 6 Table of Contents Institutional We provide institutional clients with a complete suite of equity trading services to help them find liquidity with best execution, consistent liquidity across a robust array of fixed income products, competitive and efficient clearing and execution in all major futures and securities exchanges globally, as well as prime brokerage in equities and major foreign currency pairs and swap transactions.
Institutional We provide institutional clients with a complete suite of equity trading services to help them find liquidity with best execution, consistent liquidity across a robust array of fixed income products, competitive and efficient clearing and execution in all major futures and securities exchanges globally, as well as prime brokerage in equities and major foreign currency pairs and swap transactions.
Through our web and mobile sites, including StoneX.com, StoneXOne.com, FOREX.com, and Cityindex.com we seek to attract and onboard new clients generated from digital marketing and brand advertising initiatives.
Through our mobile platforms and intranet websites, including StoneX.com, FOREX.com, and StoneXBullion.com we seek to attract and onboard new clients generated from digital marketing and brand advertising initiatives.
A Beneficial Ownership Form or an acceptable equivalent is also required. These requirements are applied to customers which meet the CDD Rule Criteria. European and United Kingdom Regulation The Financial Conduct Authority (“FCA”), the regulator of investment firms in the U.K., regulates our U.K. subsidiary as a Markets in Financial Instruments Directive (“MiFID”) investment firm under U.K. law.
These requirements are applied to customers which meet the CDD Rule Criteria. European and United Kingdom Regulation The Financial Conduct Authority (“FCA”), the regulator of investment firms in the U.K., regulates our U.K. subsidiary as a Markets in Financial Instruments Directive (“MiFID”) investment firm under U.K. law. In Europe, our regulated subsidiaries are subject to E.U. regulation.
We provide financing to commercial commodity-related companies against physical inventories. 5 Table of Contents We generally mitigate the price risk associated with commodities held in inventory through the use of derivatives. We do not elect hedge accounting under accounting principles generally accepted in the United States of America (“U.S. GAAP”) in accounting for this price risk mitigation.
We generally mitigate the price risk associated with commodities held in inventory through the use of derivatives. We do not elect hedge accounting under accounting principles generally accepted in the United States of America (“U.S. GAAP”) in accounting for this price risk mitigation.
We continually analyze and monitor gender and ethnicity across our employee population and report regularly into Executive Committee and the Board. Foreign Operations We operate in a number of foreign jurisdictions, including Canada, Ireland, the U.K., Cyprus, Luxembourg, Germany, Argentina, Brazil, Colombia, Uruguay, Paraguay, Mexico, Nigeria, Dubai, China, India, Hong Kong, Australia, Singapore, Japan, Cayman Islands, Bermuda and Poland.
Foreign Operations We operate in a number of foreign jurisdictions, including Canada, Ireland, the U.K., Cyprus, Luxembourg, Germany, Argentina, Brazil, Colombia, Uruguay, Paraguay, Mexico, Nigeria, Dubai, China, India, Hong Kong, Australia, Singapore, Switzerland, Japan, Cayman Islands, Bermuda and Poland.
Securities We provide value-added solutions that facilitate cross-border trading in equity securities and believe our clients value our ability to manage complex transactions, including foreign exchange, utilizing our local understanding of market convention, liquidity and settlement protocols around the world.
These instruments include agency mortgage-backed, commercial mortgage-backed, asset-backed and municipal securities, as well as structured credit. 6 Table of Contents Securities We provide value-added solutions that facilitate cross-border trading in equity securities and believe our clients value our ability to manage complex transactions, including foreign exchange, utilizing our local understanding of market convention, liquidity and settlement protocols around the world.
We also work with introducing brokers in order to expand our client base. We work with a variety of different types of introducing brokers, ranging from small, specialized firms that specifically identify and solicit clients interested in forex and CFD trading, to larger, more established financial services firms. Independent Wealth Management Our independent broker/dealer, SA Stone Wealth Management Inc.
We work with a variety of different types of introducing brokers, ranging from small, specialized firms that specifically identify and solicit clients interested in forex and CFD trading, to larger, more established financial services firms.
Our entrepreneurial culture ties pay to performance in a variety of ways, including incentive compensation, merit-based bonus programs and variable compensation. We grant options and restricted stock to our employees and also encourage our employees to acquire an ownership stake in our business by sponsoring restricted stock plans for directors, officers and employees.
Our entrepreneurial culture aligns pay with performance through various programs, including incentive-based compensation and performance-driven rewards. We grant options and restricted stock to our employees and also encourage our employees to acquire an ownership stake in our business by sponsoring restricted stock plans for directors, officers and employees.
The foregoing regulators are members of the International Organization of Securities Commissions which promotes adherence to internationally recognized standards for securities regulation encompassing the key objectives of protecting investors, ensuring that markets are fair, efficient, and transparent, and reducing systematic risk.
The Monetary Authority of Singapore, Hong Kong Securities and Futures Commission, Australian Securities and Investments Commission, and Japan Financial Services Agency are members of the International Organization of Securities Commissions which promotes adherence to internationally recognized standards for securities regulation encompassing the key objectives of protecting investors, ensuring that markets are fair, efficient, and transparent, and reducing systematic risk.
In addition, we selectively pursue small- to medium-sized acquisitions, focusing primarily on targets that satisfy specified criteria, including client-centric organizations that may help us expand into new asset classes, client segments and geographies where we currently have a small or limited market presence. We believe we are well positioned to capitalize on key trends impacting the financial services sector.
In addition, we selectively pursue small- to medium-sized acquisitions, focusing primarily on targets that satisfy specified criteria, including client-centric organizations that enable us to increase market share in existing products, or which help us expand into new asset classes, client segments and geographies where we currently have a small or limited market presence.
Employee Health and Welfare We believe that doing our part to maintain the health and welfare of our employees is a critical element for achieving commercial success.
Employee Health, Safety and Wellness We believe that doing our part to maintain the health and welfare of our employees is a critical element for achieving commercial success. As such, we have established a comprehensive wellness program to support the “whole” person.
They also impose minimum capital requirements on regulated entities. In connection with our wealth management business, one of our subsidiaries, SA Stone Investment Advisors Inc., is registered with, and subject to oversight by, the SEC as an investment adviser.
In connection with our wealth management business, one of our subsidiaries, StoneX Advisors Inc., is registered with, and subject to oversight by, the SEC as an investment adviser.
It requires covered financial institutions to establish and maintain written policies and procedures that are reasonably designed to: • identify and verify the identity of customer; • identify and verify the identity of the beneficial owners of companies opening accounts; • understand the nature and purpose of customer relationships to develop customer risk profiles; and • conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information. 13 Table of Contents With respect to the requirement to obtain beneficial ownership information, financial institutions will have to identify and verify the identity of any individual who owns 25 percent or more of a legal entity, and an individual who controls the legal entity.
It requires covered financial institutions to establish and maintain written policies and procedures that are reasonably designed to: • identify and verify the identity of customer; • identify and verify the identity of the beneficial owners of companies opening accounts; • understand the nature and purpose of customer relationships to develop customer risk profiles; and • conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
We provide our clients with the full range of OTC products, including 24-hour a day execution of spot, forwards and options, as well as non-deliverable forwards in both liquid and exotic currencies. 7 Table of Contents Competitive Environment - Institutional Segment The industry in which we provide services within our Institutional segment comprises activities associated with the trading of, and investment in, various financial assets, including equity and debt securities, commodities, foreign currencies, interest rates, and derivatives, both exchange-traded and OTC.
Competitive Environment - Institutional Segment The industry in which we provide services within our Institutional segment comprises activities associated with the trading of, and investment in, various financial assets, including equity and debt securities, commodities, foreign currencies, interest rates, and derivatives, both exchange-traded and OTC.
The client assets (“CASS”) rules in the FCA regulations include those that govern the handling of client money and other assets which, under certain circumstances must be segregated from the firm’s own assets. CFD’s referencing cryptocurrencies The FCA has adopted rules to ban the sale of CFDs referencing cryptocurrencies to retail consumers, which became effective in January 2021.
The client assets (“CASS”) rules in the FCA regulations include those that govern the handling of client money and other assets which, under certain circumstances must be segregated from the firm’s own assets.
These exchanges impose their own requirements on a variety of matters, in some cases addressing capital adequacy, protection of client assets, record-keeping and reporting. 16 Table of Contents Failure to comply with our exchange membership requirements could result in a variety of consequences, including, but not limited to fines and revocation of memberships, which would limit on our ability to carry on our business with these exchanges.
Failure to comply with our exchange membership requirements could result in a variety of consequences, including, but not limited to fines and revocation of memberships, which would limit on our ability to carry on our business with these exchanges.
We primarily act as a principal in buying and selling foreign currencies on a spot basis and derive revenue from the difference between the purchase and sale prices. 9 Table of Contents We believe our clients value our ability to provide exchange rates that are significantly more competitive than those offered by large international banks, a competitive advantage that stems from our years of foreign exchange expertise focused on smaller, less liquid currencies.
We believe our clients value our ability to provide exchange rates that are significantly more competitive than those offered by large international banks, a competitive advantage that stems from our years of foreign exchange expertise focused on smaller, less liquid currencies.
Competitive Environment - Global Payments Increasing globalization and growth of international trade, as well as the need of corporations, institutions and individuals to move money across borders efficiently, have driven growing activity in the global payments industry.
Competitive Environment - Payments Increasing globalization and growth of international trade, as well as the need of corporations, institutions and individuals to move money across borders efficiently, have driven growing activity in the payments industry. As the world becomes increasingly interconnected, corporations require the ability to cost-effectively exchange foreign currencies and to send and receive payments from clients and suppliers.
Human Capital Management We believe that our success is determined in large part by the quality and dedication of our people and by the empowerment of our employees to serve and engage our clients globally.
Human Capital Management We believe that our long-term success depends in large part on the quality and dedication of our people, as well as on empowering our employees to serve and engage our clients worldwide.
Our experienced in-house marketing team creates highly targeted online campaigns tailored to experienced traders, as well as marketing programs and materials designed to support and educate newer traders. We use sophisticated tracking and measurement techniques to monitor the results of individual campaigns and continually work to optimize our overall marketing results.
Our experienced in-house marketing team creates highly targeted online campaigns tailored to experienced traders, as well as marketing programs and materials designed to support and educate newer traders.
In addition, we act as a principal to facilitate financing, structured pricing and logistics services to clients across the commodity complex, including energy and renewable fuels, grains, oil seeds, cotton, coffee, cocoa, edible oils and feed products.
In addition, we act as a principal to facilitate physical commodity trading and provide marketing, procurement, logistics and price management services to clients across the commodity complex, including renewable fuels, grains, oil seeds, cotton, 5 Table of Contents coffee, cocoa, sugar, fats and oils and feed products. We selectively provide financing to commercial companies against physical inventories.
The new requirements are largely based on existing guidance issued by the Organisation for Cooperation and Development (“OECD”) which StoneX Financial Ltd already applies, as part of its policies and procedures.
The CMR requires importers to conduct due diligence on their gold, tantalum, tin, and tungsten supply chains to identify minerals that may have originated from conflict zones. The new requirements are largely based on existing guidance issued by the Organisation for Cooperation and Development (“OECD”) which StoneX Financial Ltd already applies, as part of its policies and procedures.
In addition, we originate, structure and place debt instruments in the domestic and international capital markets. These instruments include agency mortgage-backed, commercial mortgage-backed, asset-backed and municipal securities, as well as structured credit.
In addition, we originate, structure and place debt instruments in the domestic and international capital markets.
Intellectual Property We rely on a combination of trademark, copyright, trade secret and unfair competition laws in the United States and other jurisdictions to protect our proprietary technology, intellectual property rights and our brands (e.g., StoneX, IRMP, FOREX.com, GAIN Capital, and City Index).
We established wholly owned subsidiaries in the Netherlands, Cayman Islands and Bermuda but do not have offices or employees in those countries. Intellectual Property We rely on a combination of trademark, copyright, trade secret and unfair competition laws in the United States and other jurisdictions to protect our proprietary technology, intellectual property rights and our brands.
In Singapore, StoneX Financial Pte. Ltd. is regulated by the Monetary Authority of Singapore for dealing in capital market products and as a major payments institution. In addition, also in Singapore, StoneX APAC Pte.
In Singapore, StoneX Financial Pte. Ltd. is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licensee (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payments Institution (for cross-border money transfer service).
Payments Services Regulations 2017 The Payments Services Regulations 2017 (“PSRs”) implemented the second Payments Services Directive (“PSD II”) in the U.K. The most significant development contained in the PSD II is the requirement for payment services firms to introduce strong customer authentication (“SCA”) on the payment platforms which was required to be fully implemented by March 2022.
Payments Services Regulations 2017 The Payments Services Regulations 2017 (“PSRs”) implemented the second Payments Services Directive (“PSD II”) in the U.K, which contained the requirement for payment services firms to introduce strong customer authentication (“SCA”) on the payment platforms. StoneX Financial Ltd put in place a comprehensive Brexit contingency plan to mitigate the risks associated with Brexit.
Even banks require lower cost implementation of foreign exchange transactions, as they are otherwise dependent on correspondent banks, which may subject such transactions to expensive and opaque pricing. Volume growth in the global payments market has been steady, driving revenue growth for cross-border payments providers.
NGOs also demand cross-border payment services as they attempt to bring funding, goods and services to their target geographies and recipients at the lowest possible cost. Even banks require lower cost implementation of foreign exchange transactions, as they are otherwise dependent on correspondent banks, which may subject such transactions to expensive and opaque pricing.
Evaluation of Employee Performance, Training and Talent Development We commit to our employees by encouraging their growth and professional development through performance management, training and talent development, including: • Performance evaluations . Employee performance is evaluated annually through written self-assessments which are reviewed in discussions with supervisors and managers.
Employee performance is evaluated annually through written self-assessments which are reviewed in discussions with supervisors and managers.
StoneX Payment Services Ltd. is registered as a money services business with the Financial Crimes Enforcement Network (“FinCEN”), and has over thirty state money transmitter licenses in the U.S., is also registered with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) and holds a money transmitter license in Canada.
In connection with our foreign-currency exchange risk management and payment solutions services business, one of our subsidiaries, StoneX Payment Services LTD., is registered as a money services business with the Financial Crimes Enforcement Network (“FinCEN”) and has 41 state money transmitter licenses and 8 license exemptions in the United States.
Ltd. is licensed as an Approved International Commodity Trading Company and is regulated as a Dealer under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of AML/CFT. In Hong Kong, StoneX Financial (HK) Limited is regulated by the Hong Kong Securities and Futures Commission for Dealing in Futures Contracts and Securities.
In addition, in Singapore, StoneX APAC Pte. Ltd. is regulated as a Dealer under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism, and is authorized to act as a Spot Commodity Broker under the Commodity Trading Act 1992.

… 55 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

47 edited+5 added−10 removed157 unchanged
Biggest changeWe could incur material losses pursuant to OTC derivative transactions because of inadequacies in or failures of our internal systems and controls for monitoring and quantifying the risk and contractual obligations associated with OTC derivative transactions and related transactions or for detecting human error, systems failure or management failure. 20 Table of Contents OTC derivative transactions may generally be modified or terminated only by mutual consent of the parties to any such transaction (other than in certain limited default and other specified situations (e.g., market disruption events)) and subject to agreement on individually negotiated terms.
Biggest changeOTC derivative transactions may generally be modified or terminated only by mutual consent of the parties to any such transaction (other than in certain limited default and other specified situations (e.g., market disruption events)) and subject to agreement on individually negotiated terms.
Although we collect margin or other deposits from our clients for these positions, significant adverse price movements can occur which will require us to post margin or other deposits on short notice, whether or not we are able to collect additional margin or credit support from our clients.
Although we collect margin or other deposits from our clients for these positions, significant adverse price movements can occur which will require us to post margin or other deposits on short notice, whether or not we are able to collect additional margin or credit support from our clients.
Economic and financial market conditions, including conditions impacted by public health emergencies, such as the recent COVID-19 pandemic, and geopolitical events such as terrorism, the Israel-Hamas war and escalating tensions in the Middle East, the ongoing war between Ukraine and Russia and related sanctions imposed by the U.S.
Economic and financial market conditions, including conditions impacted by public health emergencies, such as the COVID-19 pandemic, and geopolitical events such as terrorism, the Israel-Hamas war and escalating tensions in the Middle East, the ongoing war between Ukraine and Russia and related sanctions imposed by the U.S.
Our financial position and results of operations may be adversely affected by unfavorable economic and financial market conditions as well as catastrophic events and crises such as the recent COVID-19 pandemic, wars and geopolitical tensions.
Our financial position and results of operations may be adversely affected by unfavorable economic and financial market conditions as well as catastrophic events and crises such as the COVID-19 pandemic, wars and geopolitical tensions.
These new regulations, as well as changes to existing rules, could result in material increases in operating costs and impact the manner in which our products and services can be offered to our clients.
These regulations, as well as changes to existing rules, could result in material increases in operating costs and impact the manner in which our products and services can be offered to our clients.
The level of our indebtedness could have material adverse effects on our business, financial condition and results of operations, including: • requiring that an increasing portion of our cash flow from operations be used for the payment of interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, capital expenditures, acquisitions, investments and general corporate requirements; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, investments and general corporate requirements: • limiting our flexibility in planning for, or reacting to, changes in the economy, the markets, regulatory requirements, our operations or business; • increasing the risk of a future downgrade of our credit ratings, which could increase future debt costs; and restricting our ability to borrow additional funds or refinance existing debt as needed or take advantage of business opportunities as they arise.
The level of our indebtedness could have material adverse effects on our business, financial condition and results of operations, including: 25 Table of Contents • requiring that an increasing portion of our cash flow from operations be used for the payment of interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, capital expenditures, acquisitions, investments and general corporate requirements; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, investments and general corporate requirements: • limiting our flexibility in planning for, or reacting to, changes in the economy, the markets, regulatory requirements, our operations or business; • increasing the risk of a future downgrade of our credit ratings, which could increase future debt costs; and restricting our ability to borrow additional funds or refinance existing debt as needed or take advantage of business opportunities as they arise.
These risks include: • failure by our clients and counterparties to fulfill contractual obligations and honor commitments to us; • failure by clients to deposit additional collateral for their margin loans during periods of significant price declines; • failure by our clients to meet their margin obligations; • failure by our hedge counterparties to meet their obligations to us; • failure by our clearing brokers and banks to adequately discharge their obligations on a timely basis or remain solvent; and • default by clearing members in the clearing houses in the U.S. and abroad of which we are members which could cause us to absorb shortfalls pro rata with other clearing members.
These risks include: • failure by our clients and counterparties to fulfill contractual obligations and honor commitments to us; • failure by clients to deposit additional collateral for their margin loans during periods of significant price declines; 21 Table of Contents • failure by our clients to meet their margin obligations; • failure by our hedge counterparties to meet their obligations to us; • failure by our clearing brokers and banks to adequately discharge their obligations on a timely basis or remain solvent; and • default by clearing members in the clearing houses in the U.S. and abroad of which we are members which could cause us to absorb shortfalls pro rata with other clearing members.
If one of our vendors experiences a cyberbreach of its own systems or has data that it holds misappropriated, we could be exposed to a number of additional risks, including: a. heightened risk that we will not be able to comply with applicable regulatory requirements; b. increased risk that external parties will be able to execute fraudulent transactions using our systems; c. losses from fraudulent transactions, as well as potential liability for losses suffered by our clients; d. increased operational costs to remediate the consequences of the external party’s security breach; and e. reputational harm arising from the perception that our systems may not be secure.
If one of our vendors experiences a cyberbreach of its own systems or has data that it holds misappropriated, we could be exposed to a number of additional risks, including: • heightened risk that we will not be able to comply with applicable regulatory requirements; • increased risk that external parties will be able to execute fraudulent transactions using our systems; • losses from fraudulent transactions, as well as potential liability for losses suffered by our clients; • increased operational costs to remediate the consequences of the external party’s security breach; and • reputational harm arising from the perception that our systems may not be secure.
Our risk management policies and procedures may not prevent us from experiencing a material adverse effect on our financial condition and results of operations and cash flows. 22 Table of Contents Technology and Cybersecurity Risks Our revenues, operational costs, regulatory compliance and client satisfaction could be adversely affected by the failure of a vendor or other third party to continue providing services to us.
Our risk management policies and procedures may not prevent us from experiencing a material adverse effect on our financial condition and results of operations and cash flows. Technology and Cybersecurity Risks Our revenues, operational costs, regulatory compliance and client satisfaction could be adversely affected by the failure of a vendor or other third party to continue providing services to us.
Our revenues and operating results may fluctuate significantly because of the following factors: • market conditions, such as price levels and volatility in the commodities, securities and foreign exchange markets in which we operate; • changes in the volume of our market-making and trading activities; • changes in the value of our financial instruments, currency and commodities positions and our ability to manage related risks; and 18 Table of Contents • the level and volatility of interest rates.
Our revenues and operating results may fluctuate significantly because of the following factors: • market conditions, such as price levels and volatility in the commodities, securities and foreign exchange markets in which we operate; • changes in the volume of our market-making and trading activities; • changes in the value of our financial instruments, currency and commodities positions and our ability to manage related risks; and • the level and volatility of interest rates.
If we are unable to execute our disaster recovery and business continuity plans, or if our plans prove insufficient for a particular situation or take longer than expected to implement in a crisis situation, our business, financial condition and results of 23 Table of Contents operations could be materially adversely affected, and our business interruption insurance may not adequately compensate us for losses that may occur.
If we are unable to execute our disaster recovery and business continuity plans, or if our plans prove insufficient for a particular situation or take longer than expected to implement in a crisis situation, our business, financial condition and results of operations could be materially adversely affected, and our business interruption insurance may not adequately compensate us for losses that may occur.
If our credit facilities are unavailable or are insufficient to 25 Table of Contents support future levels of business activity, our business, financial condition and results of operations may be materially adversely affected. In addition, in such circumstances, we may need to raise additional debt or equity financing on terms that are unattractive or dilutive to our current shareholders.
If our credit facilities are unavailable or are insufficient to support future levels of business activity, our business, financial condition and results of operations may be materially adversely affected. In addition, in such circumstances, we may need to raise additional debt or equity financing on terms that are unattractive or dilutive to our current shareholders.
Cybersecurity failures may be caused by employee error or malfeasance, system errors or vulnerabilities, including vulnerabilities of our vendors, suppliers, and their products. We have been subject to cybersecurity attacks in the past, including breaches of our information technology systems, and may experience them in the future, potentially with more frequency or sophistication.
Cybersecurity failures may be caused by employee error or malfeasance, system errors or vulnerabilities, including vulnerabilities of our vendors, suppliers, and their products. We have been subject to cybersecurity attacks in the past, 24 Table of Contents including breaches of our information technology systems, and may experience them in the future, potentially with more frequency or sophistication.
Sudden sharp changes in the fair value of securities, commodities and other assets can result in a number of adverse consequences for our business, including illiquid markets, fair value losses arising from positions held by us, and the failure of buyers and sellers of securities, commodities and other assets to fulfill their settlement obligations.
Sudden sharp changes in the fair value of securities, commodities and other assets can result in a number of adverse consequences for our business, including illiquid markets, fair value losses arising from positions held by us, 20 Table of Contents and the failure of buyers and sellers of securities, commodities and other assets to fulfill their settlement obligations.
If we face material delays in introducing new services, products and enhancements, our clients may forego the use of our platforms and use those of our competitors. 24 Table of Contents Further, the adoption of new internet, networking, cloud, telecommunications or blockchain technologies may require us to devote substantial resources to modify and adapt our services.
If we face material delays in introducing new services, products and enhancements, our clients may forego the use of our platforms and use those of our competitors. Further, the adoption of new internet, networking, cloud, telecommunications or blockchain technologies may require us to devote substantial resources to modify and adapt our services.
Moreover, acquisitions 29 Table of Contents could lead to increases in amortization expenses, impairments of goodwill and purchased long-lived assets or restructuring charges, any of which could materially harm our financial condition or results. Acquisitions give rise to unforeseen issues.
Moreover, acquisitions could lead to increases in amortization expenses, impairments of goodwill and purchased long-lived assets or restructuring charges, any of which could materially harm our financial condition or results. Acquisitions give rise to unforeseen issues.
Factors that are particularly likely to affect price volatility and price levels of commodities include supply and demand of commodities, weather conditions affecting certain commodities, national and international economic and geopolitical conditions, including the war in Ukraine and the Israel-Hamas war, the perceived stability of commodities and financial markets, the level and volatility of interest rates and inflation and the financial strength of market participants.
Factors that are particularly likely to affect price volatility and price levels of commodities include supply and demand of commodities, weather conditions affecting certain commodities, national and international economic and geopolitical conditions, including the war in Ukraine, the Israel-Hamas war and rising tensions in the Middle East, the perceived stability of commodities and financial markets, the level and volatility of interest rates and inflation and the financial strength of market participants.
A portion of our trading volume is attributable to clients in jurisdictions in 27 Table of Contents which we or our white label partners are not currently licensed or authorized by the local government or applicable self-regulatory organization.
A portion of our trading volume is attributable to clients in jurisdictions in which we or our white label partners are not currently licensed or authorized by the local government or applicable self-regulatory organization.
In addition, the issuance of preferred stock may have the effect of delaying or preventing a change of control, because the rights given to the holders of a series of preferred stock may prohibit a merger, reorganization, sale, liquidation or other extraordinary corporate transaction.
In addition, the issuance of preferred stock may 30 Table of Contents have the effect of delaying or preventing a change of control, because the rights given to the holders of a series of preferred stock may prohibit a merger, reorganization, sale, liquidation or other extraordinary corporate transaction.
Our regulated subsidiaries are subject to a number of requirements to maintain specific levels of net capital. Failure to maintain the required net capital may subject our 26 Table of Contents subsidiaries to suspension or revocation of their license or registration or expulsion from regulatory bodies.
Our regulated subsidiaries are subject to a number of requirements to maintain specific levels of net capital. Failure to maintain the required net capital may subject our subsidiaries to suspension or revocation of their license or registration or expulsion from regulatory bodies.
To the extent any of our competitors offers more attractive compensation terms to one or more of our introducing brokers, we could lose the brokers’ services or be required to increase the 21 Table of Contents compensation we pay to retain the brokers.
To the extent any of our competitors offers more attractive compensation terms to one or more of our introducing brokers, we could lose the brokers’ services or be required to increase the compensation we pay to retain the brokers.
The indenture governing our 8.625% Senior Secured Notes due 2025 and the agreements governing our above-mentioned committed credit facilities impose significant operating and financial restrictions and limit our ability and that of our restricted subsidiaries to incur and guarantee additional indebtedness, pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock and prepay, redeem or repurchase certain debt, among other restrictions.
The indenture governing our 7.875% Senior Secured Notes due 2031 and the agreements governing our above-mentioned committed credit facilities impose significant operating and financial restrictions and limit our ability and that of our restricted subsidiaries to incur and guarantee additional indebtedness, pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock and prepay, redeem or repurchase certain debt, among other restrictions.
In the event of a significant COVID-19 resurgence, any failure to effectively manage these increased operational and cybersecurity demands and risks may materially adversely affect our results of operations and the ability to conduct our business. For a further discussion of cybersecurity risks, see Technology and Cybersecurity Risks below.
In the event of a significant COVID-19 resurgence or other public health emergency, any failure to effectively manage these increased operational and cybersecurity demands and risks may materially adversely affect our results of operations and the ability to conduct our business. For a further discussion of cybersecurity risks, see Technology and Cybersecurity Risks below.
In addition, the recent COVID-19 pandemic led to increased operational and cybersecurity risks and may again do so in the future. These risks have included, among others, increased demand on our information technology resources and systems and the increased risk of phishing and other cybersecurity attacks.
In addition, the COVID-19 pandemic led to increased operational and cybersecurity risks and the pandemic, or other public health emergencies, may again do so in the future. These risks have included, among others, increased demand on our information technology resources and systems and the increased risk of phishing and other cybersecurity attacks.
As of September 30, 2023, $341.0 million of our borrowings are subject to variable interest rates and as such in periods of rising interest rates, our cost of funds will increase, which could reduce our net income. Committed credit facilities currently available to us might not be renewed.
As of September 30, 2024, $338.8 million of our borrowings are subject to variable interest rates and as such, in periods of rising interest rates, our cost of funds will increase, which could reduce our net income. Committed credit facilities currently available to us might not be renewed.
Our significant level of indebtedness could adversely affect our business, financial condition and results of operations. As of September 30, 2023, our total consolidated indebtedness was $683.1 million, and we may increase our indebtedness in the future as we continue to expand our business.
Our significant level of indebtedness could adversely affect our business, financial condition and results of operations. As of September 30, 2024, our total consolidated indebtedness was $881.9 million, and we may increase our indebtedness in the future as we continue to expand our business.
As of September 30, 2023, we had five committed credit facilities under which we could borrow up to $1,200.0 million, consisting of: • a $500.0 million facility for general working capital requirements, committed until April 21, 2026; • a $190.0 million facility for short-term funding of margin to commodity exchanges, committed until October 29, 2024; • a $400.0 million committed facility for financing commodity financing arrangements and commodity repurchase agreements, committed until July 28, 2024; • a $100.0 million facility for short-term funding of margin to commodity exchanges, committed until October 12, 2024; and • a $10.0 million facility for general working capital requirements, committed until September 6, 2024; It is possible that these facilities might not be renewed at the end of their commitment periods and that we will be unable to replace them with other facilities on terms favorable to us or at all.
As of September 30, 2024, we had five committed credit facilities under which we could borrow up to $1,205.0 million, consisting of: • a $500.0 million facility for general working capital requirements, committed until April 21, 2026; • a $250.0 million facility for short-term funding of margin to commodity exchanges, committed until October 28, 2025; • a $325.0 million committed facility for financing commodity financing arrangements and commodity repurchase agreements, committed until July 29, 2025; • a $115.0 million facility for short-term funding of margin to commodity exchanges, committed until October 9, 2025; and • a $15.0 million facility for general working capital requirements, committed until September 5, 2025; It is possible that these facilities might not be renewed at the end of their commitment periods and that we will be unable to replace them with other facilities on terms favorable to us or at all.
Additional states, as well as foreign jurisdictions, have enacted or are proposing similar data protection regimes, resulting in a rapidly evolving landscape governing how we collect, use, transfers and protect personal data.
Additional states, as well as foreign jurisdictions, have enacted or are proposing similar data protection regimes, resulting in a rapidly evolving landscape governing how we collect, use, transfers and protect personal data. These laws and regulations are inconsistent across jurisdictions and are subject to evolving interpretations.
To the extent that our business, financial condition, liquidity or results of operations are adversely affected by catastrophic events and crises, including public health emergencies such as the recent COVID-19 pandemic and conflicts such as the wars in Ukraine and Israel, these events may also have the effect of heightening many of the other risks described herein and in any future Quarterly Reports on Form 10-Q or other filings we make with the SEC. 19 Table of Contents Business Risks We face risks associated with our market-making and trading activities.
To the extent that our business, financial condition, liquidity or results of operations are adversely affected by catastrophic events and crises, including public health emergencies such as the COVID-19 pandemic and conflicts such as the wars in Ukraine and Israel, these events may also have the effect of heightening many of the other risks described herein and in any future filings we make with the SEC.
Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risk, which could harm our business. Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk, including risks that are unidentified or unanticipated.
Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk, including risks that are unidentified or unanticipated.
In addition, some market observers have asserted that historical material price fluctuations in many cryptocurrency markets, such as that for Bitcoin, may indicate the propensity for cryptocurrency markets to “bubble,” and if markets for any cryptocurrencies linked to our products suffer severe fluctuations, our clients could experience significant losses and we could lose their business.
In addition, some market observers have asserted that historical material price fluctuations in many cryptocurrency markets, such as that for Bitcoin, may indicate the propensity for cryptocurrency markets to “bubble,” and if markets for any cryptocurrencies linked to our products suffer severe fluctuations, our clients could experience significant losses and we could lose their business. 22 Table of Contents The manner in which we account for certain of our precious metals and energy commodities inventory may increase the volatility of our reported earnings.
For example, on January 31, 2023, we were notified by ION Group, one of our vendors which provides back office trade processing services relating to certain of our listed derivatives businesses, that it had experienced a cybersecurity incident, which rendered certain of its services inaccessible to us and its other clients.
These actions could potentially diminish customer satisfaction and confidence in us, materially adversely affecting our results of operations. 23 Table of Contents For example, on January 31, 2023, we were notified by ION Group, one of our vendors which provides back office trade processing services relating to certain of our listed derivatives businesses, that it had experienced a cybersecurity incident, which rendered certain of its services inaccessible to us and its other clients.
A significant portion of our operating revenues are generated through our market making and trading activities.
Business Risks We face risks associated with our market-making and trading activities. A significant portion of our operating revenues are generated through our market making and trading activities.
As a result of the broad scope of our highly regulated business activities and our large and diverse client population, we are a party to a significant number of lawsuits and regulatory investigations and proceedings, which are costly and time consuming to defend or address and expose us to risk of loss and fines and penalties.
As a result of the broad scope of our highly regulated business activities and our large and diverse client population, we are subject to various proceedings, lawsuits, disputes and claims arising in the ordinary course of our business, including governmental and regulatory investigations and proceedings, which can be costly and time consuming to defend or address and expose us to risk of loss and fines and penalties.
A large proportion of our historical growth has been achieved through acquisitions of complementary businesses, technologies or services. Our operating revenues grew from $1,106.1 million in fiscal 2019 to $2,914.1 million in fiscal 2023 principally as a result of several acquisitions.
Organizational Risks Our growth has depended significantly on acquisitions. A large proportion of our historical growth has been achieved through acquisitions of complementary businesses, technologies or services. Our operating revenues grew from $1,308.3 million in fiscal 2020 to $3,436.2 million in fiscal 2024 principally as a result of several acquisitions.
In such jurisdictions in which we are not licensed or authorized, we may be subject to a variety of restrictions regarding the manner in which we conduct our business or serve clients, including restrictions on: • our sales and marketing activities; • the use of a website specifically targeted to potential clients in a particular country; • our ability to have a physical presence in a particular country; or • the types of services we may offer clients physically present in each country.
In such jurisdictions in which we are not licensed or authorized, we may be subject to a variety of restrictions regarding the manner in which we conduct our business or serve clients, including restrictions on: • our sales and marketing activities; • the use of a website specifically targeted to potential clients in a particular country; • our ability to have a physical presence in a particular country; or • the types of services we may offer clients physically present in each country. 28 Table of Contents These restrictions may have a material adverse effect on our results of operations and financial condition and/or may limit our ability to grow or continue to operate our business in any such jurisdiction or may result in increased overhead costs or degradation in our services in that jurisdiction.
In addition, current and potential competitors have established or may establish cooperative relationships or may consolidate to enhance their services and products. New competitors or alliances among competitors may emerge and they may acquire significant market share.
In addition, current and potential competitors have established or may establish cooperative relationships or may consolidate to enhance their services and products.
The manner in which we account for certain of our precious metals and energy commodities inventory may increase the volatility of our reported earnings. Our net income is subject to volatility due to the manner in which we report our precious metals and energy commodities inventory held by subsidiaries that are not broker-dealers.
Our net income is subject to volatility due to the manner in which we report our precious metals and energy commodities inventory held by subsidiaries that are not broker-dealers. Our precious metals and energy inventory held in subsidiaries which are not broker-dealers is stated at the lower of cost or net realizable value.
Any failure to comply with the CCPA, GDPR or other applicable data protection regulations could subject us to risk of regulatory investigation, penalties, civil litigation and reputational harm, and could have a material adverse effect on our business, financial condition and results of operation.
Any inability, or perceived inability, to adequately address privacy and data protection concerns, even if unfounded, and any failure to comply with the CCPA, GDPR 27 Table of Contents or other applicable data protection regulations, policies, industry standards, contractual obligations, or other legal obligations, could subject us to risk of regulatory investigation, penalties, business disruption, civil litigation and reputational harm, and could have a material adverse effect on our business, financial condition and results of operation.
We have generated significant interest-related revenue in both the current and prior periods and a decline in short-term interest rates or a decline in the amount of client funds on deposit may have a material adverse effect on our profitability in the future.
We have generated significant interest-related revenue in both the current and prior periods and a decline in short-term interest rates or a decline in the amount of client funds on deposit may have a material adverse effect on our profitability in the future. 19 Table of Contents Short-term interest rates are highly sensitive to factors that are beyond our control and we can provide no assurance as to whether short-term interest rates will decline in the future.
Our precious metals and energy inventory held in subsidiaries which are not broker-dealers is stated at the lower of cost or net realizable value. We generally mitigate the price risk associated with our commodities inventory through the use of derivatives. We do not elect hedge accounting under U.S. GAAP for this price risk mitigation.
We generally mitigate the price risk associated with our commodities inventory through the use of derivatives. We do not elect hedge accounting under U.S. GAAP for this price risk mitigation. In such situations, any unrealized gains in our precious metals and energy inventory in our non-broker-dealer subsidiaries are not recognized under U.S.
We cannot assure you that we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not have a material adverse effect on our business, results of operation and financial condition. Organizational Risks Our growth has depended significantly on acquisitions.
New competitors or alliances among competitors may emerge and they may acquire significant market share. 29 Table of Contents We cannot assure you that we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not have a material adverse effect on our business, results of operation and financial condition.
Our primary competitors in this industry include both large, diversified financial institutions and commodity-oriented businesses, smaller firms that focus on specific products or regional markets and independent FCMs. A number of our competitors have significantly greater financial, technical, marketing and other resources than we have.
The commodity risk management industry is very competitive and we expect competition to continue to intensify in the future. Our primary competitors in this industry include both large, diversified financial institutions and commodity-oriented businesses, smaller firms that focus on specific products or regional markets and independent FCMs.
In such situations, any unrealized gains in our precious metals and energy inventory in our non-broker-dealer subsidiaries are not recognized under U.S. GAAP, but unrealized gains and losses in related derivative positions are recognized under U.S. GAAP. As a result, our reported earnings from these business segments are subject to greater volatility than the earnings from our other business segments.
GAAP, but unrealized gains and losses in related derivative positions are recognized under U.S. GAAP. As a result, our reported earnings from these business segments are subject to greater volatility than the earnings from our other business segments. Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risk, which could harm our business.
Failure to comply with any of these laws, rules or regulations could result in material adverse effects on or business, results of operations and financial condition, including as a result of regulatory investigations and enforcement proceedings, civil litigation, fines and/or other settlement payments.
These regulations govern a broad and diverse range of our activities, including, without limitation, risk management, disclosures to clients, reporting requirements, client identification and anti-money laundering requirements, safeguarding client assets and personal information and the conduct of our directors, officers and employees. 26 Table of Contents Failure to comply with any of these laws, rules or regulations could result in material adverse effects on or business, results of operations and financial condition, including as a result of regulatory investigations and enforcement proceedings, civil litigation, fines and/or other settlement payments.
The market for these services, particularly market-making services through electronic platforms, is rapidly evolving and intensely competitive. We expect competition to continue and increase in the future. We compete primarily with wholesale, national and regional broker-dealers and FCMs, as well as electronic communications networks and retail brokers. We compete primarily on the basis of our expertise and quality of service.
We compete primarily with wholesale, national and regional broker-dealers and FCMs, as well as electronic communications networks and retail brokers. We compete primarily on the basis of our expertise and quality of service. We also derive a significant portion of our revenues from commodities risk management services.
We also derive a significant portion of our revenues from commodities risk management services. The commodity risk management industry is very competitive and we expect competition to continue to intensify in the future.
Competition Risk We are subject to intense competition. We derive a significant portion of our revenues from market-making and trading activities involving securities, commodities and foreign exchange. The market for these services, particularly market-making services through electronic platforms, is rapidly evolving and intensely competitive. We expect competition to continue and increase in the future.
Removed
Short-term interest rates are highly sensitive to factors that are beyond our control and we can provide no assurance as to whether short-term interest rates will decline in the future.
Added
We could incur material losses pursuant to OTC derivative transactions because of inadequacies in or failures of our internal systems and controls for monitoring and quantifying the risk and contractual obligations associated with OTC derivative transactions and related transactions or for detecting human error, systems failure or management failure.
Removed
These actions could potentially diminish customer satisfaction and confidence in us, materially adversely affecting our results of operations.
Added
Actions that have been filed against us, and that may be filed against us in the future, include tort claims, contractual disputes, employment matters and workers’ compensation claims. The timing and final resolutions to these types of matters is often uncertain.
Removed
These regulations govern a broad and diverse range of our activities, including, without limitation, risk management, disclosures to clients, reporting requirements, client identification and anti-money laundering requirements, safeguarding client assets and personal information and the conduct of our directors, officers and employees.
Added
Additionally, the possible outcomes or resolutions to these matters could include adverse judgments or settlements, either of which could require substantial payments, adversely affecting our liquidity.
Removed
These restrictions may have a material adverse effect on our results of operations and financial condition and/or may limit our ability to grow or continue to operate our business in any such jurisdiction or may result in increased overhead costs or degradation in our services in that jurisdiction.
Added
Government officials, regulators, privacy advocates and class action attorneys are increasingly scrutinizing how companies collect, process, use, store, share, transmit and destroy personal data. We must continually monitor the development and adoption of, and commit substantial time and resources to comply with, new and emerging laws and regulations and/ or expanded interpretations of existing laws.
Removed
The U.K.’s withdrawal from the European Union could have an adverse effect on our business and financial results.
Added
A number of our competitors have significantly greater financial, technical, marketing and other resources than we have.
Removed
On January 31, 2020, the U.K. withdrew from membership in the E.U., which exit, referred to as Brexit, has caused disruptions to, and created uncertainty surrounding, our business in the U.K. and E.U., including the elimination of our historical right to serve clients in the E.U. from the U.K. on a passport basis and changes to U.K. and E.U. immigration policy, limiting our access to and ability to compete for and hire, skilled employees in both the U.K. and the E.U.
Removed
Brexit could also impact our existing and future relationships with suppliers and employees in the U.K. and E.U. by disrupting the free movement of goods, services, and people between the U.K., the E.U., and elsewhere. As a result, Brexit could have an adverse effect on our future business, financial results and operations.
Removed
The long-term impact of the U.K.’s revised agreement with the E.U. and others is unclear. Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate.
Removed
Further, uncertainty around these and related issues could lead to adverse effects on the economy of the U.K. and the other economies in which we operate.
Removed
There can be no assurance that any or all of these events will not have a material adverse effect on our business, financial results and operations. 28 Table of Contents Competition Risk We are subject to intense competition. We derive a significant portion of our revenues from market-making and trading activities involving securities, commodities and foreign exchange.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeItem 2. Properties We have offices, operations and data centers located around the world. Our corporate headquarters is located at 230 Park Avenue, New York, New York. We have significant operations located in London, Chicago, and Kansas City, along with many other locations globally.
Biggest changeItem 2. Properties We have offices, operations and data centers located around the world. Our corporate headquarters is located at 230 Park Avenue, New York, New York. We have significant operations located in London, Chicago, Birmingham and Kansas City, along with many other locations globally.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings For information regarding certain legal proceedings to which we are currently a party, see Note 13, “Commitments and Contingencies - Legal and Regulatory Proceedings” in the notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 30 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings For information regarding certain legal proceedings to which we are currently a party, see Note 13, “Commitments and Contingencies - Legal and Regulatory Proceedings” in the notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−0 removed2 unchanged
Biggest changeOur common stock repurchase program activity for the three months ended September 30, 2023 was as follows: 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 July 1, 2023 to July 31, 2023 219 $ 91.15 — 1,000,000 August 1, 2023 to August 31, 2023 — — — 1,000,000 September 1, 2023 to September 30, 2023 — — — 1,000,000 Total 219 $ 91.15 — (1) Includes 219 shares repurchased to satisfy withholding tax obligations due upon the vesting of stock-based awards.
Biggest changeOur common stock repurchase program activity for the three months ended September 30, 2024 was as follows: 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 July 1, 2024 to July 31, 2024 453 $ 81.55 — 1,500,000 August 1, 2024 to August 31, 2024 — — — 1,500,000 September 1, 2024 to September 30, 2024 131 77.66 — 1,500,000 Total 584 $ 80.68 — (1) The 2022 Omnibus Incentive Compensation Plan allows for “withhold to cover” as a tax payment method for vesting of restricted stock awards.
Securities Authorized for Issuance under Equity Compensation Plans Information relating to compensation plans under which our equity securities are authorized for issuance is set forth in Part III, Item 12 of this Annual Report on Form 10-K. 31 Table of Contents Stock Performance Graph The following graph compares the cumulative total return on the Company’s common stock for the most recent five years with the cumulative return on the S&P 500 Index and the NYSE/Arca Securities Broker/Dealer Index, assuming an initial investment of $100 on September 30, 2018, with all dividends reinvested.
Securities Authorized for Issuance under Equity Compensation Plans Information relating to compensation plans under which our equity securities are authorized for issuance is set forth in Part III, Item 12 of this Annual Report on Form 10-K. 33 Table of Contents Stock Performance Graph The following graph compares the cumulative total return on the Company’s common stock for the most recent five years with the cumulative return on the S&P 500 Index and the NYSE/Arca Securities Broker/Dealer Index, assuming an initial investment of $100 on September 30, 2018, with all dividends reinvested.
Our credit agreements currently prohibit the payment of cash dividends by us. Recent Sales of Unregistered Securities We did not have any sales of unregistered equity securities for the fiscal years ended September 30, 2023, 2022 and 2021.
Our credit agreements currently prohibit the payment of cash dividends by us. Recent Sales of Unregistered Securities We did not have any sales of unregistered equity securities for the fiscal years ended September 30, 2024, 2023 and 2022.
This authorization replaced the previous authorization to purchase up to 1.0 million shares during fiscal 2023. The repurchases are subject to the discretion of the senior management team to implement our stock repurchase plan, and subject to market conditions and as permitted by securities laws and other legal, regulatory and contractual requirements and covenants.
This authorization replaced the previous authorization to purchase up to 1.5 million shares during fiscal 2024. The repurchases are subject to the discretion of the senior management team to implement our stock repurchase plan, and subject to market conditions and as permitted by securities laws and other legal, regulatory and contractual requirements and covenants.
The stock price performance is not intended to forecast or be indicative of future performance. Item 6. Reserved 32 Table of Contents
The stock price performance is not intended to forecast or be indicative of future performance. Item 6. Reserved 34 Table of Contents
Holders of Record As of September 30, 2023, there were 553 registered holders of record of our common stock. This figure excludes the beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.
Holders of Record As of September 30, 2024, there were 615 registered holders of record of our common stock. This figure excludes the beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.
Issuer Purchases of Equity Securities On August 30, 2023, our Board of Directors authorized the repurchase of up to 1.0 million shares of our outstanding common stock from time to time in open market purchases and private transactions, commencing on October 1, 2023 and ending on September 30, 2024.
Issuer Purchases of Equity Securities On August 28, 2024, our Board of Directors authorized the repurchase of up to 1.5 million shares of our outstanding common stock from time to time in open market purchases and private transactions, commencing on October 1, 2024 and ending on September 30, 2025.
Added
Pursuant to the “withhold to cover” method, we withheld from certain employees shares noted in the table above to cover tax withholding related to the vesting of their awards.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

190 edited+83 added−99 removed88 unchanged
Biggest changeThe tables below present the financial performance, a disaggregation of operating revenues, and select operating data and metrics used by management in evaluating the performance of the Commercial segment, for the periods indicated. 46 Table of Contents Year Ended September 30, (in millions) 2023 % Change 2022 % Change 2021 Revenues: Sales of physical commodities $ 57,559.9 (9)% $ 63,162.7 60% $ 39,420.3 Principal gains, net 331.5 (3)% 343.0 40% 245.5 Commission and clearing fees 178.0 5% 168.8 (5)% 178.3 Consulting, management and account fees 25.7 17% 21.9 11% 19.7 Interest income 154.1 229% 46.8 132% 20.2 Total revenues 58,249.2 (9)% 63,743.2 60% 39,884.0 Cost of sales of physical commodities 57,386.5 (9)% 63,051.1 60% 39,349.2 Operating revenues 862.7 25% 692.1 29% 534.8 Transaction-based clearing expenses 60.7 9% 55.9 4% 54.0 Introducing broker commissions 40.1 27% 31.5 (9)% 34.7 Interest expense 40.6 123% 18.2 40% 13.0 Net operating revenues 721.3 23% 586.5 35% 433.1 Variable direct compensation and benefits 176.4 3% 171.2 28% 133.4 Net contribution 544.9 31% 415.3 39% 299.7 Fixed compensation and benefits 61.1 23% 49.8 —% 49.9 Other fixed expenses 77.4 18% 65.6 34% 49.1 Bad debts, net of recoveries 15.7 35% 11.6 36% 8.5 Total non-variable direct expenses 154.2 21% 127.0 18% 107.5 Segment income $ 390.7 36% $ 288.3 50% $ 192.2 Year Ended September 30, 2023 % Change 2022 % Change 2021 Operating Revenues (in millions): Listed derivatives $ 230.5 (4)% $ 240.5 8% $ 223.5 OTC derivatives 232.2 11% 208.3 45% 143.4 Physical contracts 232.9 29% 180.4 36% 132.2 Interest / fees earned on client balances 142.2 244% 41.3 183% 14.6 Other 24.9 15% 21.6 2% 21.1 $ 862.7 25% $ 692.1 29% $ 534.8 Select data (all $ amounts are U.S. dollar equivalent): Listed derivatives (contracts, 000’s) 34,430 14% 30,323 (2)% 30,904 Listed derivatives, average rate per contract (1) $ 6.37 (16)% $ 7.54 9% $ 6.92 Average client equity - listed derivatives (millions) $ 1,927 (10)% $ 2,149 30% $ 1,648 Over-the-counter (“OTC”) derivatives (contracts, 000’s) 3,553 20% 2,968 16% 2,557 OTC derivatives, average rate per contract $ 65.78 (7)% $ 70.49 27% $ 55.70 (1) Give up fees, related to contract execution for clients of other FCMs, as well as cash and voice brokerage are excluded from the calculation of listed derivatives, average rate per contract.
Biggest changeYear Ended September 30, 2024 % Change 2023 % Change 2022 Operating Revenues (in millions): Listed derivatives $ 262.3 14% $ 230.5 (4)% $ 240.5 OTC derivatives 209.9 (10)% 232.2 11% 208.3 Physical contracts 212.5 (9)% 232.9 29% 180.4 Interest / fees earned on client balances 160.2 13% 142.2 244% 41.3 Other 27.0 8% 24.9 15% 21.6 $ 871.9 1% $ 862.7 25% $ 692.1 Select data (all $ amounts are U.S. dollar equivalent): Listed derivatives (contracts, 000’s) 39,906 16% 34,430 14% 30,323 Listed derivatives, average rate per contract (1) $ 6.33 (1)% $ 6.37 (16)% $ 7.54 Average client equity - listed derivatives (millions) $ 1,715 (11)% $ 1,927 (10)% $ 2,149 Over-the-counter (“OTC”) derivatives (contracts, 000’s) 3,538 —% 3,553 20% 2,968 OTC derivatives, average rate per contract $ 59.62 (9)% $ 65.78 (7)% $ 70.49 (1) Give up fees, related to contract execution for clients of other FCMs, as well as cash and voice brokerage are excluded from the calculation of listed derivatives, average rate per contract.
(2) Interest expense associated with our fixed income activities is deducted from operating revenues in the calculation of Securities RPM, while interest income related to securities lending is excluded.
(2) Interest expense associated with our fixed income activities is deducted from operating revenues in the calculation of Securities RPM, while interest income related to securities lending is excluded.
Gain Capital Group, LLC is registered as both a futures commission merchant and registered foreign exchange dealer, subject to minimum capital requirements under Section 4(f)(b) of the Commodity Exchange Act, Part 1.17 of the rules and regulations of the CFTC and NFA Financial Requirements, Sections 1 and 11.
GAIN Capital Group, LLC as both a futures commission merchant and registered foreign exchange dealer, is subject to minimum capital requirements under Section 4(f)(b) of the Commodity Exchange Act, Part 1.17 of the rules and regulations of the CFTC and NFA Financial Requirements, Sections 1 and 11.
Off Balance Sheet Arrangements We are party to certain financial instruments with off-balance sheet risk in the normal course of business as a registered securities broker-dealer, futures commission merchant, U.K. based financial services firm, provisionally registered swap dealer and from our market-making and proprietary trading in the foreign exchange and commodities and debt securities markets.
Off Balance Sheet Arrangements We are party to certain financial instruments with off-balance sheet risk in the normal course of business as a registered securities broker-dealer, futures commission merchant, U.K. based financial services firm, registered swap dealer and from our market-making and proprietary trading in the foreign exchange and commodities and debt securities markets.
Item 7. 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 StoneX Group Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Throughout this discussion, unless the context otherwise requires, the terms “Company”, “we”, “us” and “our” refer to StoneX Group Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.
Today, we provide an institutional-grade financial services ecosystem, connecting our clients to 40 derivatives exchanges, 180 foreign exchange markets, most global securities exchanges and over 18,000 over-the-counter markets via our networks of highly integrated digital platforms and experienced professionals.
Today, we provide an institutional-grade financial services ecosystem, connecting our clients to over 40 derivatives exchanges, 180 foreign exchange markets, most global securities exchanges and over 18,000 over-the-counter (“OTC”) markets via our networks of highly integrated digital platforms and experienced professionals.
Employee benefits and other compensation, excluding share-based compensation, increased principally related to higher severance, payroll taxes, benefits, and retirement costs. During the fiscal year ended September 30, 2023, severance costs were $14.9 million, principally related to a reorganization within the Global Payments business. During the fiscal year ended September 30, 2022, severance costs were $2.6 million.
Employee benefits and other compensation, excluding share-based compensation, increased principally related to higher severance, payroll taxes, benefits, and retirement costs. During the fiscal year ended September 30, 2023, severance costs were $14.9 million, principally related to a reorganization within the Payments business. During the fiscal year ended September 30, 2022, severance costs were $2.6 million.
During the fiscal year ended September 30, 2023, bad debt expense, net of recovery was $16.5 million, principally related to bad debt expense of $15.1 million of client receivables in the Physical Ag & Energy business, $2.3 million of client trading account deficits in our Retail FX segment, and $0.6 million in client trading account deficits in our Financial Ag & Energy business, partially offset by net recoveries of $1.4 million of client trading account deficits in our Exchange-traded Futures & Options business.
During the fiscal year ended September 30, 2023, bad debt expense, net of recovery was $16.5 million, principally related to bad debt expense of $15.1 million of client receivables in the Physical Ag & Energy business, $2.3 million of client trading account deficits in our Self-Directed/Retail FX segment, and $0.6 million in client trading account deficits in our Financial Ag & Energy business, partially offset by net recoveries of $1.4 million of client trading account deficits in our Exchange-traded Futures & Options business.
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, including our executive management team. 39 Table of Contents The table below presents net operating revenues disaggregated across the key products we provide to our clients used by management in evaluating our performance, for the periods indicated.
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, including our executive management team. 41 Table of Contents The table below presents net operating revenues disaggregated across the key products we provide to our clients used by management in evaluating our performance, for the periods indicated.
The results of the fiscal year ended September 30, 2022 included a nonrecurring gain related to proceeds received of $6.4 million resulting from a foreign exchange antitrust class action settlement in our Retail segment. Provision for Taxes: Our effective income tax rate was 26% and 25% for fiscal years ended September 30, 2023 and 2022, respectively.
The results of the fiscal year ended September 30, 2022 included a nonrecurring gain related to proceeds received of $6.4 million resulting from a foreign exchange antitrust class action settlement in the Self-Directed/Retail segment. Provision for Taxes: Our effective income tax rate was 26% and 25% for fiscal years ended September 30, 2023 and 2022, respectively.
Trading systems and market information costs increased $7.8 million, principally due to higher market information costs in the Debt Capital Markets, Retail Forex, and Financial Ag & Energy businesses. Non-trading technology and support increased $9.2 million, principally due to higher non-trading software maintenance and support costs related to various IT systems primarily within our Core IT and other overhead departments.
Trading systems and market information costs increased $7.8 million, principally due to higher market information costs in the Debt Capital Markets, Self-Directed/Retail Forex, and Financial Ag & Energy businesses. Non-trading technology and support increased $9.2 million, principally due to higher non-trading software maintenance and support costs related to various IT systems primarily within our Core IT and other overhead departments.
Gain on Acquisition and Other Gains, net: The results of the fiscal year ended September 30, 2023 include a nonrecurring gain of $23.5 million related to the CDI acquisition, as well as a nonrecurring gain related to proceeds received of $2.1 million resulting from an institutional-based foreign exchange antitrust class action settlement.
Gain on Acquisition and Other Gains, net: The results of the fiscal year ended September 30, 2023 included a nonrecurring gain of $23.5 million related to the CDI acquisition, as well as a nonrecurring gain related to proceeds received of $2.1 million resulting from an institutional-based foreign exchange antitrust class action settlement.
In addition, our independent wealth management business offers a comprehensive product suite to retail investors in the United States. The tables below present the financial performance, a disaggregation of operating revenues, and select operating data and metrics used by management in evaluating the performance of the Retail segment, for the periods indicated.
In addition, our independent wealth management business offers a comprehensive product suite to retail investors in the United States. The tables below present the financial performance, a disaggregation of operating revenues, and select operating data and metrics used by management in evaluating the performance of the Self-Directed/Retail segment, for the periods indicated.
These unmatched transactions are intended to be short-term in nature and are conducted to facilitate the most effective transaction for our client. Additionally, we hold options and futures on options contracts resulting from market-making and proprietary trading activities in these product lines.
These unmatched transactions are intended to be short-term in nature and are conducted to facilitate the most effective transaction for our client. Additionally, we hold futures and options on futures contracts resulting from market-making and principal trading activities in these product lines.
Other Capital Considerations Our activities are subject to various significant governmental regulations and capital adequacy requirements, both in the U.S. and in the international jurisdictions in which we operate. Our subsidiaries are in compliance with all of their capital regulatory requirements as of September 30, 2023.
Other Capital Considerations Our activities are subject to various significant governmental regulations and capital adequacy requirements, both in the U.S. and in the international jurisdictions in which we operate. Our subsidiaries are in compliance with all of their capital regulatory requirements as of September 30, 2024.
Interest expense Year Ended September 30, 2023 2022 $ Change % Change Interest expense attributable to: Trading activities: Institutional dealer in fixed income securities $ 556.7 $ 62.3 $ 494.4 794 % Securities borrowing 39.4 23.0 16.4 71 % Client balances on deposit 148.9 17.4 131.5 756 % Short-term financing facilities of subsidiaries and other direct interest of operating segments 57.2 32.8 24.4 74 % 802.2 135.5 666.7 492 % Corporate funding 57.5 44.7 12.8 29 % Total interest expense $ 859.7 $ 180.2 $ 679.5 377 % The increase in interest expense attributable to trading activities was principally due to the significant increase in short-term interest rates, an increase in ADV in our fixed income business, and an increase in client balances on which we pay interest.
Interest expense Year Ended September 30, 2023 2022 $ Change % Change Interest expense attributable to: Trading activities: Institutional dealer in fixed income securities $ 556.7 $ 62.3 $ 494.4 794 % Securities borrowing 39.4 23.0 16.4 71 % Client balances on deposit 148.9 17.4 131.5 756 % Short-term financing facilities of subsidiaries and other direct interest of operating segments 57.2 32.8 24.4 74 % 802.2 135.5 666.7 492 % Corporate funding 57.5 44.7 12.8 29 % Total interest expense $ 859.7 $ 180.2 $ 679.5 377 % The increase in interest expense attributable to trading activities was principally due to the significant increase in short-term interest rates, increased ADV in the fixed income business, and increased client balances on which we paid interest.
We comply with the minimum funding requirements, and accordingly contributed $0.1 million to our defined benefit pension plans during the year ended September 30, 2023. During the year ending September 30, 2024, we anticipate making future benefit payments of $2.1 million related to the defined benefit plans.
We comply with the minimum funding requirements, and accordingly contributed $0.1 million to our defined benefit pension plans during the year ended September 30, 2024. During the year ending September 30, 2025, we anticipate making future benefit payments of $2.0 million related to the defined benefit plans.
We will incur losses if the fair value of the Financial instruments sold, not yet purchased , increases subsequent to September 30, 2023, which might be partially or wholly offset by gains in the value of assets held as of September 30, 2023.
We will incur losses if the fair value of the Financial instruments sold, not yet purchased , increases subsequent to September 30, 2024, which might be partially or wholly offset by gains in the value of assets held as of September 30, 2024.
We did not repurchase any of our outstanding common stock during the years ended September 30, 2023 and September 30, 2022. In the broker-dealer and related trading industries, companies report trading activities in the operating section of the statement of cash flows.
We did not repurchase any of our outstanding common stock during the years ended September 30, 2024 and September 30, 2023. In the broker-dealer and related trading industries, companies report trading activities in the operating section of the statement of cash flows.
Compensation and Benefits: Year Ended September 30, (in millions) 2023 2022 $ Change % Change Compensation and benefits: Variable compensation and benefits Front office $ 407.3 $ 410.4 $ (3.1) (1) % Administrative, executive, and centralized and local operations 75.9 67.7 8.2 12 % Total variable compensation and benefits 483.2 478.1 5.1 1 % Variable compensation and benefits as a percentage of net operating revenues 30 % 32 % Fixed compensation and benefits: Non-variable salaries 266.8 225.8 41.0 18 % Employee benefits and other compensation, excluding share-based compensation 90.6 73.1 17.5 24 % Share-based compensation 28.0 17.8 10.2 57 % Total fixed compensation and benefits 385.4 316.7 68.7 22 % Total compensation and benefits $ 868.6 $ 794.8 $ 73.8 9 % Total compensation and benefits as a percentage of operating revenues 30 % 38 % Number of employees, end of period 4,137 3,615 522 14 % Non-variable salaries increased principally due to the increase in headcount resulting from expanding capabilities among our business lines and the CDI acquisition, as well as the growth in our operational and overhead departments supporting our business growth, as well as the impact of annual merit increases.
Compensation and Benefits: Year Ended September 30, (in millions) 2023 2022 $ Change % Change Compensation and benefits: Variable compensation and benefits Front office $ 407.3 $ 410.4 $ (3.1) (1) % Administrative, executive, and centralized and local operations 75.9 67.7 8.2 12 % Total variable compensation and benefits 483.2 478.1 5.1 1 % Variable compensation and benefits as a percentage of net operating revenues 30 % 32 % Fixed compensation and benefits: Non-variable salaries 266.8 225.8 41.0 18 % Employee benefits and other compensation 75.7 70.5 5.2 7 % Share-based compensation 28.0 17.8 10.2 57 % Severance 14.9 2.6 12.3 473 % Total fixed compensation and benefits 385.4 316.7 68.7 22 % Total compensation and benefits $ 868.6 $ 794.8 $ 73.8 9 % Total compensation and benefits as a percentage of operating revenues 30 % 38 % Number of employees, end of period 4,137 3,615 522 14 % Non-variable salaries increased principally due to the increased headcount resulting from expanding capabilities among our business lines and the CDI acquisition, as well as the growth in our operational and overhead departments supporting our business growth, as well as the impact of annual merit increases.
Additionally, the increase in non-variable compensation is partially a result of hiring among our compliance and IT departments, principally due to company growth, and within the accounting department, principally due to the CDI acquisition.
Additionally, the increase in non-variable compensation was partially a result of hiring among our compliance and IT departments, principally due to company growth, and within the accounting department, principally due to the CDI acquisition.
We control the risks associated with these transactions by requiring clients to maintain margin deposits in compliance with both 61 Table of Contents clearing organization requirements and internal guidelines. We monitor required margin levels daily and, therefore, may require clients to deposit additional collateral or reduce positions when necessary. We also establish contract limits for clients, which are monitored daily.
We control the risks associated with these transactions by requiring clients to maintain margin deposits in compliance with both clearing organization requirements and internal guidelines. We monitor required margin levels daily and, therefore, may require clients to deposit additional collateral or reduce positions when necessary. We also establish contract limits for clients, which are monitored daily.
StoneX Financial Inc. is subject to minimum capital requirements under Section 4(f)(b) of the Commodity Exchange Act, Part 1.17 of the rules and regulations of the CFTC and the SEC Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 1934.
StoneX Financial Inc. is subject to minimum capital requirements under Section 4(f)(b) of the Commodity Exchange Act, Part 1.17 of the rules and regulations of the CFTC and the SEC Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 58 Table of Contents 1934.
Accordingly, no contingent liability for these arrangements has been recorded in the Consolidated Balance Sheets as of September 30, 2023 and 2022. 62 Table of Contents Effects of Inflation Increases in our expenses, such as compensation and benefits, transaction-based clearing expenses, occupancy and equipment rental, may result from inflation, which may not be readily recoverable from increasing the prices of our services.
Accordingly, no contingent liability for these arrangements has been recorded in the Consolidated Balance Sheets as of September 30, 2024 and 2023. Effects of Inflation Increases in our expenses, such as compensation and benefits, transaction-based clearing expenses, occupancy and equipment rental, may result from inflation, which may not be readily recoverable from increasing the prices of our services.
During the fiscal year ended September 30, 2022, bad debt expense, net of recoveries was $15.8 million, principally related to client trading account deficits 41 Table of Contents in our Commercial, Institutional, Retail, and Global Payments segments of $11.6 million, $1.8 million, $2.3 million, and $0.1 million, respectively.
During the fiscal year ended September 30, 2022, bad debt expense, net of recoveries was $15.8 million, principally related to client 45 Table of Contents trading account deficits in our Commercial, Institutional, Self-Directed/Retail, and Payments segments of $11.6 million, $1.8 million, $2.3 million, and $0.1 million, respectively.
Uncommitted Credit Facilities We have access to certain uncommitted financing agreements that support our ordinary course securities and commodities inventories. The agreements are subject to certain borrowing terms and conditions. As of September 30, 2023 and September 30, 2022, the Company had $55.5 million and $0.0 million total borrowings outstanding under these uncommitted credit facilities, respectively.
Uncommitted Credit Facilities We have access to certain uncommitted financing agreements that support our ordinary course securities and commodities inventories. The agreements are subject to certain borrowing terms and conditions. As of September 30, 2024 and September 30, 2023, the Company had $104.9 million and $55.5 million total borrowings outstanding under these uncommitted credit facilities, respectively.
The effective income tax rate for the fiscal year ended September 30, 2022 and 2021 was higher than the U.S. federal statutory rate of 21% due to U.S. state and local taxes, changes in valuation allowances, U.K. bank tax, U.S. permanent differences, and the amount of foreign earnings taxed at higher tax rates.
The effective income tax rate for the fiscal year ended September 30, 2024 and 2023 was higher than the U.S. federal statutory rate of 21% due to U.S. state and local taxes, changes in valuation allowances, U.K. bank tax, U.S. permanent differences, GILTI, and the amount of foreign earnings taxed at higher tax rates.
Failure to comply with any such covenants could result in the debt becoming payable on demand. As of September 30, 2023, we and our subsidiaries are in compliance with all of our financial covenants under the outstanding facilities.
Failure to comply with any such covenants could result in the debt becoming payable on demand. As of September 30, 2024, we and our subsidiaries were in compliance with all of our financial covenants under the outstanding facilities.
Our facility agreements contain certain financial covenants relating to financial measures on a consolidated basis, as well as on a stand-alone subsidiary basis, in certain cases, 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.
Our facility agreements contain certain financial covenants relating to financial measures on a consolidated basis, as well as on a stand-alone basis for certain subsidiaries, 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.
Operating revenues derived from listed derivatives declined $4.0 million, or 2%, to $186.0 million in the fiscal year ended September 30, 2023 compared to $190.0 million in the fiscal year ended September 30, 2022, principally driven by a 3% decline in listed derivative contract volumes as the average rate per contract was flat compared to the fiscal year ended September 30, 2022.
Operating revenues derived from listed derivatives declined $4.0 million, principally driven by a 3% decline in listed derivative contract volumes as the average rate per contract was flat compared to the fiscal year ended September 30, 2022.
We continuously review our overall credit and capital needs to ensure that our capital base, both stockholders’ equity and debt, as well as available credit facilities can appropriately support the anticipated financing needs of our operating subsidiaries.
We continuously review our overall credit and capital needs to determine whether our capital base, both stockholders’ equity and debt, as well as available credit facilities can appropriately support the anticipated financing needs of our operating subsidiaries.
We record these obligations in the consolidated financial statements as of September 30, 2023 and 2022, at fair value of the related financial instruments, totaling $3,085.6 million and $2,469.6 million, respectively.
We record these obligations in the consolidated financial statements as of September 30, 2024 and 2023, at fair value of the related financial instruments, totaling $2,853.3 million and $3,085.6 million, respectively.
As with exchange-traded transactions, our OTC transactions require that we meet initial and variation margin payments on behalf of our clients before we receive related required payments from our clients.
As with exchange-traded transactions, our OTC transactions require 59 Table of Contents that we meet initial and variation margin payments on behalf of our clients before we receive related required payments from them.
Our businesses are supported by our global infrastructure of regulated operating subsidiaries, our advanced technology platforms and our team of more than 4,000 employees as of September 30, 2023.
Our businesses are supported by our global infrastructure of regulated operating subsidiaries, our advanced technology platforms and our team of more than 4,500 employees as of September 30, 2024.
Management believes that the margin deposits held are adequate to minimize the risk of material loss that could be created by positions held at that time. Additionally, we monitor collateral fair value on a daily basis and adjust collateral levels in the event of excess market exposure.
Management believes that the margin deposits held as of September 30, 63 Table of Contents 2024 are adequate to minimize the risk of material loss that could be created by positions held at that time. Additionally, we monitor collateral fair value on a daily basis and adjust collateral levels in the event of excess market exposure.
On a limited basis, we provide credit thresholds to certain clients, based on internal evaluations and monitoring of client creditworthiness. In addition, with OTC transactions, we are at risk that a counterparty will fail to meet its obligations to us when due.
For certain clients, we provide credit thresholds, based on internal evaluations and monitoring of the client’s creditworthiness. In addition, with OTC transactions, we are at risk that a counterparty will fail to meet its obligations to us when due.
In accordance with required disclosure as part of our first-lien senior secured syndicated revolving loan facility, during the trailing twelve months ended September 30, 2023, interest expense directly attributable to trading activities includes $556.7 million in connection with trading activities conducted as an institutional dealer in fixed income securities, and $39.4 million in connection with securities lending activities.
In accordance with required disclosure as part of our first-lien senior secured syndicated revolving loan facility, during the trailing twelve months ended September 30, 2024, interest expense directly attributable to trading activities includes $852.4 million in connection with trading activities conducted as an institutional dealer in fixed income securities, and $64.3 million in connection with securities lending activities.
Operating revenues during the year ended September 30, 2022 were favorably impacted by realized gains of $1.7 million on the sale of physical inventories carried at the lower of cost or net realizable value, for which losses on related derivative positions were recognized in prior periods.
Precious metals related operating revenues during the fiscal year ended September 30, 2023 were favorably impacted by realized gains of $1.4 million on the sale of physical inventories carried at the lower of cost or net realizable value, for which losses on related derivative positions were recognized in prior periods.
The totals of $3,085.6 million and $2,469.6 million include a net liability of $288.3 million and $384.0 million for derivatives, based on their fair value as of September 30, 2023 and 2022, respectively. We do not anticipate non-performance by counterparties in the above situations.
The totals of $2,853.3 million and $3,085.6 million include a net liability of $265.0 million and $288.3 million for derivatives, based on their fair value as of September 30, 2024 and 2023, respectively. We do not anticipate significant non-performance by counterparties in the above situations.
We repatriated $35.5 million and $29.7 million for the fiscal years ended September 30, 2023 and 2022, respectively, of earnings previously taxed in the U.S. resulting in no significant incremental taxes. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries.
We repatriated $100.0 million and $35.5 million for the fiscal year ended September 30, 2024 and 2023, respectively, of earnings previously taxed in the U.S. resulting in no significant incremental taxes. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries.
Year Ended September 30, (in millions) 2023 % of Total 2022 % of Total 2021 % of Total Variable compensation and benefits $ 483.2 28% $ 478.1 29% $ 377.7 26% Transaction-based clearing expenses 271.8 15% 291.2 17% 271.7 19% Introducing broker commissions 161.6 9% 160.1 10% 160.5 11% Total variable expenses 916.6 52% 929.4 56% 809.9 56% Fixed compensation and benefits 385.4 22% 316.7 19% 301.4 21% Other fixed expenses 438.3 25% 394.5 24% 309.8 22% Bad debts, net of recoveries 16.5 1% 15.8 1% 10.4 1% Total non-variable expenses 840.2 48% 727.0 44% 621.6 44% Total non-interest expenses $ 1,756.8 100% $ 1,656.4 100% $ 1,431.5 100% Our variable expenses include variable compensation paid to traders and risk management consultants, bonuses paid to operational, administrative, and executive employees, transaction-based clearing expenses and introducing broker commissions.
Year Ended September 30, (in millions) 2024 % of Total 2023 % of Total 2022 % of Total Variable compensation and benefits $ 506.5 26% $ 483.2 28% $ 478.1 29% Transaction-based clearing expenses 319.3 17% 271.8 15% 291.2 17% Introducing broker commissions 166.2 9% 161.6 9% 160.1 10% Total variable expenses 992.0 52% 916.6 52% 929.4 56% Fixed compensation and benefits 435.9 23% 385.4 22% 316.7 19% Other fixed expenses 478.9 25% 438.3 25% 394.5 24% Bad debts, net of recoveries 0.6 —% 16.5 1% 15.8 1% Total non-variable expenses 915.4 48% 840.2 48% 727.0 44% Total non-interest expenses $ 1,907.4 100% $ 1,756.8 100% $ 1,656.4 100% Our variable expenses include variable compensation paid to traders and risk management consultants, bonuses paid to operational, administrative, and executive employees, transaction-based clearing expenses and introducing broker commissions.
Higher costs in our Physical Ag & Energy business, related to incremental expense from the CDI acquisition, effective October 31, 2022, Financial Ag & Energy, Asset Management and Global Payments businesses were partially offset by decreased expenses in our Independent Wealth Management and Retail Forex businesses, principally due to lower trading volumes and revenues.
Higher costs in the Physical Ag & Energy business, related to incremental expense from the CDI acquisition, Financial Ag & Energy, Asset Management and Payments businesses were partially offset by decreased expenses in the Independent Wealth Management and Self-Directed/Retail Forex businesses, principally due to lower trading volumes and revenues.
We seek to make our non-interest expenses variable to the greatest extent possible, and to keep our fixed costs as low as possible. During the fiscal year ended September 30, 2023, non-variable expenses, excluding bad debts, net of recoveries, increased $112.5 million, or 16%, compared to the fiscal year ended September 30, 2022.
We seek to make our non-interest expenses variable to the greatest extent possible, and to keep our fixed costs as low as possible. During the fiscal year ended September 30, 2024, non-variable expenses, excluding bad debts, net of recoveries, increased $91.1 million, or 11%, compared to the fiscal year ended September 30, 2023.
As a result of the increase in short-term interest rates and the increase in the ADV, interest expense increased $644.1 million, to $758.3 million in the fiscal year ended September 30, 2023 compared to $114.2 million the fiscal year ended September 30, 2022, with interest expense directly associated with serving as an institutional dealer in fixed income securities increasing $494.4 million, interest paid to clients increasing $117.7 million and interest expense directly attributable to securities lending activities increasing $16.4 million compared to the prior year period.
As a result of the increase in short-term interest rates and the increase in the ADV, interest expense increased $644.1 million, with interest expense directly associated with serving as an institutional dealer in fixed income securities increasing $494.4 million, interest paid to clients increasing $117.7 million and interest expense directly attributable to securities lending activities increasing $16.4 million compared to the prior year period.
The gain on acquisition of $3.3 million in the year ended September 30, 2021 was not taxable and reduced the effective income tax rate 0.5%. Variable vs. Fixed Expenses The table below presents our variable expenses and non-variable expenses as a percentage of total non-interest expenses for the periods indicted.
The gain on acquisition of $23.5 million in the fiscal year ended September 30, 2023 was not taxable and reduced the effective income tax rate by 1.4%. Variable vs. Fixed Expenses The table below presents our variable expenses and non-variable expenses as a percentage of total non-interest expenses for the periods indicted.
Interest and fee income earned on client balances increased $1.1 million, or 58%, to $3.0 million primarily as a result of an increase in short-term interest rates. Variable expenses, excluding interest, as a percentage of operating revenues were 34% in the fiscal year ended September 30, 2023 compared to 34% in the fiscal year ended September 30, 2022.
Interest and fee income earned on client balances increased $1.1 million, primarily as a result of an increase in short-term interest rates. Variable expenses, excluding interest, as a percentage of operating revenues were 34% in the both the fiscal years ended September 30, 2023 and 2022.
We must pay initial and variation margin to the exchanges, on a net basis, before we receive the required payments from our clients. Accordingly, we are responsible for our clients’ obligations with respect to these transactions, which exposes us to significant credit risk.
As a clearing broker, we act on behalf of our clients for all trades consummated on exchanges. We must pay initial and variation margin to the exchanges, on a net basis, before we receive the required payments from our clients. Accordingly, we are responsible for our clients’ obligations with respect to these transactions, which exposes us to significant credit risk.
Finally, interest and fee income earned on client balances, which is associated with our listed derivative business, as well as our correspondent clearing businesses, increased $193.4 million, to $239.5 million in the fiscal year ended September 30, 2023 compared to $46.1 million in the fiscal year ended September 30, 2022, principally driven by a significant increase in short-term interest rates, as well as a 47% increase in average client equity compared to the prior year period, which was partially offset by a 25% decline in average money market / FDIC sweep client balances.
Finally, interest and fee income earned on client balances, which is associated with our listed derivative business, as well as our correspondent clearing businesses, increased $193.4 million, principally driven by a significant increase in short-term interest rates, as well as a 47% increase in average client equity compared to the prior year period, which was partially offset by a 25% decline in average MM/FDIC sweep client balances.
Judgment and Uncertainties Judgment is required in determining the consolidated income taxes and in evaluating tax positions, including evaluating income tax uncertainties. As a result, the company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. We do not currently have any uncertain tax positions.
Judgment and Uncertainties Judgment is required in determining the consolidated income taxes and in evaluating tax positions, including evaluating income tax uncertainties. As a result, the company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. We currently have an immaterial amount of unrecognized tax benefits.
We report our operating segments based primarily on the nature of the clients we serve (commercial, institutional, and retail), and a fourth operating segment, our global payments business. This structure allows us to efficiently serve clients in more than 180 countries and manage our large global footprint.
We report our operating segments based primarily on the nature of the clients we serve (commercial, institutional, and self-directed/retail), and a fourth operating segment, our payments business. This structure allows us to efficiently serve clients in more than 180 countries and manage our large global footprint. See Segment Information for a listing of business activities performed within our reportable segments.
Transaction-based clearing expenses represent variable expenses paid to executing brokers, exchanges, clearing organizations and banks in relation to our transactional volumes. Introducing broker commissions include commission paid to non-employee third parties that have introduced clients to us.
Net operating revenue is calculated as operating revenue less 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 our transactional volumes. Introducing broker commissions include commission paid to non-employee third parties that have introduced clients to us.
Diluted earnings per share were $11.18 for the fiscal year ended September 30, 2023 compared to $10.01 in the fiscal year ended September 30, 2022. 34 Table of Contents Selected Summary Financial Information Results of Operations Our total revenues, as reported, combine gross revenues for the physical commodities business and net revenues for all other businesses.
Diluted earnings per share were $7.96 for the fiscal year ended September 30, 2024 compared to $7.45 in the fiscal year ended September 30, 2023. 36 Table of Contents Selected Summary Financial Information Results of Operations Our total revenues, as reported, combine gross revenues for the physical commodities business and net revenues for all other businesses.
In addition, StoneX Financial Inc. is registered as a futures commission merchant with the CFTC and NFA, and a member of various commodities and futures exchanges in the U.S. and abroad.
Regulatory StoneX Financial Inc. is registered as a broker-dealer with the SEC and is a member of both FINRA and MSRB. In addition, StoneX Financial Inc. is registered as a futures commission merchant with the CFTC and NFA, and a member of various commodities and futures exchanges in the U.S. and abroad.
Investing activities also include $6.1 million in cash payments for the acquisition of businesses during the fiscal year ended September 30, 2023 compared to $0.2 million during the fiscal year ended September 30, 2022 and $2.4 million during the 60 Table of Contents fiscal year ended September 30, 2021.
Investing activities also include $2.3 million in cash payments for the acquisition of assets and businesses during the fiscal year ended September 30, 2024 compared to $6.1 million during the fiscal year ended September 30, 2023 and $0.2 million during the fiscal year ended September 30, 2022.
For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements. Year Ended September 30, 2023 Compared to Year Ended September 30, 2022 Operating revenues increased $170.6 million, or 25%, to $862.7 million in the fiscal year ended September 30, 2023 compared to $692.1 million in the fiscal year ended September 30, 2022.
For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements. Year Ended September 30, 2024 Compared to Year Ended September 30, 2023 Operating revenues increased $9.2 million, or 1%, to $871.9 million in the fiscal year ended September 30, 2024 compared to $862.7 million in the fiscal year ended September 30, 2023.
During the year ended September 30, 2022, non-variable expenses, excluding bad debts, net of recoveries, increased $100.0 million, or 16%, compared to the year ended September 30, 2021. Segment Information Our operating segments are based principally on the nature of the clients we serve (commercial, institutional, and retail), and a fourth operating segment, our global payments business.
During the fiscal year ended September 30, 2023, non-variable expenses, excluding bad debts, net of recoveries, increased $112.5 million, or 16%, compared to the fiscal year ended September 30, 2022. 46 Table of Contents Segment Information Our operating segments are based principally on the nature of the clients we serve (commercial, institutional, and self-directed/retail), and a fourth operating segment, our payments business.
As of September 30, 2023, we had total equity of $1,379.1 million, outstanding loans under revolving credit and other facilities of $341.0 million and $342.1 million outstanding on our senior secured notes, net of deferred financing costs. A substantial portion of our assets are liquid.
As of September 30, 2024, we had total equity of $1,709.1 million, outstanding loans under revolving credit and other facilities of $338.8 million and $543.1 million outstanding on our senior secured notes, net of deferred financing costs. A substantial portion of our assets are liquid.
Net cash of $23.7 million was used in operating activities, including movements typical of our operations, with large changes coming from financial instruments owned, payable to broker dealers, funds with broker dealers and clearing organizations, as well as securities purchased and securities sold.
Net cash of $506.9 million was provided by operating activities, including movements typical of our operations, with large changes coming from financial instruments owned, payable to broker dealers, funds with broker dealers and clearing organizations, securities borrowed and loaned, as well as securities purchased and securities sold.
Unpriced contract commitments have been estimated using September 30, 2023 fair values. The purchase commitments for less than one year will be partially offset by corresponding sales commitments of $5,689.0 million . Total contractual obligations exclude defined benefit pension obligations.
Unpriced contract commitments have been estimated using September 30, 2024 market values. The purchase commitments for less than one year will be partially offset by corresponding sales commitments of $56,275.9 million . Total contractual obligations exclude defined benefit pension obligations.
Interest and fee income earned on client balances, which is associated with our listed and OTC derivative businesses, as well as our correspondent clearing and independent wealth management businesses, increased $295.4 million, or 331%, to $384.7 million in the fiscal year ended September 30, 2023 compared to $89.3 million in the fiscal year ended September 30, 2022, principally as a result of the impact of the significant increase in short-term interest rates, as well as a 25% increase in average client equity, which was partially offset by a 25% decline in average money market/FDIC sweep client balances.
Interest and fee income earned on client balances, which is associated with our listed and OTC derivative businesses, as well as our Correspondent Clearing and Independent Wealth Management businesses, increased $47.4 million, principally as a result of the impact of the increase in the short-term interest rates realized, which was partially offset by declines in average client equity and average money-market/FDIC sweep client balances of 13% and 24%, respectively, as compared to the fiscal year ended September 30, 2023.
The increase in variable and non-variable compensation is partially related to the move of certain client engagement teams out of discrete business lines and into shared services, and replacing compensation expense in those discrete business lines with a non-variable charge.
Year Ended September 30, 2023 Compared to Year Ended September 30, 2022 The increase in variable and non-variable compensation was partially related to the move of certain client engagement teams out of discrete business lines and into shared services, and replacing compensation expense in those discrete business lines with a non-variable charge.
For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements. 49 Table of Contents Year Ended September 30, 2023 Compared to Year Ended September 30, 2022 Operating revenues increased $681.8 million, or 82%, to $1,513.6 million in the fiscal year ended September 30, 2023 compared to $831.8 million in the fiscal year ended September 30, 2022.
For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements. 51 Table of Contents Year Ended September 30, 2024 Compared to Year Ended September 30, 2023 Operating revenues increased $448.5 million, or 30%, to $1,962.1 million in the fiscal year ended September 30, 2024 compared to $1,513.6 million in the fiscal year ended September 30, 2023.
As a result, we may be unable to access our operating subsidiaries’ funds when we need them. In our physical commodities trading, commercial hedging OTC, securities and foreign exchange trading activities, we may be required upon to meet margin calls with our various trading counterparties based upon the underlying open transactions we have in place with those counterparties.
In our securities, commercial hedging OTC, foreign exchange and physical commodities trading activities, we may be required upon to meet margin calls with our various trading counterparties based upon the underlying open transactions we have in place with those counterparties.
Year Ended September 30, (in millions) 2023 % Change 2022 % Change 2021 Compensation and benefits: Variable compensation and benefits $ 483.2 1% $ 478.1 27% $ 377.7 Fixed compensation and benefits 385.4 22% 316.7 5% 301.4 868.6 9% 794.8 17% 679.1 Other expenses: Trading systems and market information 74.0 12% 66.2 13% 58.8 Professional fees 57.0 5% 54.3 33% 40.9 Non-trading technology and support 61.6 18% 52.4 14% 46.0 Occupancy and equipment rental 40.4 12% 36.1 6% 34.2 Selling and marketing 54.0 (2)% 55.3 66% 33.3 Travel and business development 24.8 47% 16.9 276% 4.5 Communications 9.1 10% 8.3 (11)% 9.3 Depreciation and amortization 51.0 15% 44.4 22% 36.5 Bad debts, net of recoveries 16.5 4% 15.8 52% 10.4 Other 66.4 10% 60.6 31% 46.3 454.8 11% 410.3 28% 320.2 Total compensation and other expenses $ 1,323.4 10% $ 1,205.1 21% $ 999.3 40 Table of Contents Year Ended September 30, 2023 Compared to Year Ended September 30, 2022 Compensation and Other Expenses: Compensation and other expenses increased $118.3 million, or 10%, to $1,323.4 million in the fiscal year ended September 30, 2023 compared to $1,205.1 million in the fiscal year ended September 30, 2022.
Year Ended September 30, (in millions) 2024 % Change 2023 % Change 2022 Compensation and benefits: Variable compensation and benefits $ 506.5 5% $ 483.2 1% $ 478.1 Fixed compensation and benefits 435.9 13% 385.4 22% 316.7 942.4 8% 868.6 9% 794.8 Other expenses: Trading systems and market information 79.1 7% 74.0 12% 66.2 Professional fees 69.7 22% 57.0 5% 54.3 Non-trading technology and support 73.4 19% 61.6 18% 52.4 Occupancy and equipment rental 49.0 21% 40.4 12% 36.1 Selling and marketing 52.6 (3)% 54.0 (2)% 55.3 Travel and business development 28.4 15% 24.8 47% 16.9 Communications 8.5 (7)% 9.1 10% 8.3 Depreciation and amortization 53.1 4% 51.0 15% 44.4 Bad debts, net of recoveries 0.6 (96)% 16.5 4% 15.8 Other 65.1 (2)% 66.4 10% 60.6 479.5 5% 454.8 11% 410.3 Total compensation and other expenses $ 1,421.9 7% $ 1,323.4 10% $ 1,205.1 42 Table of Contents Year Ended September 30, 2024 Compared to Year Ended September 30, 2023 Compensation and Other Expenses: Compensation and other expenses increased $98.5 million, or 7%, to $1,421.9 million in the fiscal year ended September 30, 2024 compared to $1,323.4 million in the fiscal year ended September 30, 2023.
This decline was principally driven by a 16% decline in the average rate per contract as the prior year period experienced wider spreads in LME markets related to the Russian invasion of Ukraine and the resulting effect on base metal commodity prices.
Operating revenues derived from listed derivatives declined $10.0 million, principally driven by a 16% decline in the average rate per contract as the prior year period experienced wider spreads in LME markets related to the Russian invasion of Ukraine and the resulting effect on base metal commodity prices.
This facility is intended to provide short-term funding of margin to commodity exchanges as necessary. • An unsecured revolving credit facility committed until September 6, 2024, under which $10.0 million is available to our wholly owned subsidiary, StoneX Financial Pte. Ltd. for general working capital requirements .
This facility is intended to provide short-term funding. • An unsecured revolving credit facility committed until September 5, 2025, under which $15.0 million is available to our wholly owned subsidiary, StoneX Financial Pte. Ltd. for general working capital requirements .
Our total assets as of September 30, 2023 and 2022, were $21.9 billion and $19.9 billion, respectively. Our operating activities generate or utilize cash as a result of net income or loss earned or incurred during each period and fluctuations in our assets and liabilities.
Our total assets as of September 30, 2024 and 2023, were $27,466.3 million and $21,938.7 million, respectively. Our operating activities generate or utilize cash as a result of net income or loss earned or incurred during each period and fluctuations in our assets and liabilities.
We record fee and interest income on the accrual basis and dividend income is recognized on the ex-dividend date. A substantial amount of our revenues derive from Commission and clearing fees . These revenue types involve less complexity than Principal gains, net would, as, generally, we are an agent in the underlying transactions.
A substantial amount of our revenues derive from Commission and clearing fees . These revenue types involve less complexity than Principal gains, net would, as, generally, we are an agent in the underlying transactions.
Share-based compensation, which contains stock option and restricted stock expense, increased principally due to higher employee participation in the Company’s restricted stock plan, as well as from $3.3 million in accelerated share-based compensation for employee departures related to retirements and certain business reorganizations during the fiscal year ended September 30, 2023.
Partially offsetting the increases was an increase in employee-elected deferred incentive, which is exchanged for restricted stock. Share-based compensation increased principally due to higher employee participation in the Company’s restricted stock plan, as well as from $3.3 million in accelerated share-based compensation for employee departures related to retirements and certain business reorganizations during the fiscal year ended September 30, 2023.
As of September 30, 2023, approximately 97% of our assets consisted of cash; securities purchased under agreements to resell; securities borrowed; deposits with and receivables from exchange-clearing organizations, broker-dealers, clearing organizations and counterparties; client receivables; marketable financial instruments and investments; and physical commodities inventory.
As of September 30, 2024, approximately 97% of our assets consisted of cash and cash equivalents; securities purchased under agreements to resell; securities borrowed; deposits with and receivables from broker-dealers, clearing organizations and counterparties; receivables from clients; financial instruments owned, at fair value; and physical commodities inventory.
Subsequent transfer of these cash deposits to counterparties or exchanges to margin their open positions will be reflected as an operating use of cash to the extent the transfer occurs in a different period than the cash deposit was received.
Additionally, within our OTC and foreign exchange operations, cash deposits received from clients are reflected as cash provided from operations. Subsequent transfer of these cash deposits to counterparties or exchanges to margin their open positions will be reflected as an operating use of cash to the extent the transfer occurs in a different period than the cash deposit was received.
Year Ended September 30, 2023 % Change 2022 % Change 2021 Operating Revenues (in millions): Securities $ 90.4 (7)% $ 97.0 (1)% $ 97.6 FX / CFD contracts 222.5 (28)% 310.9 38% 225.9 Physical contracts 12.0 (14)% 13.9 (32)% 20.4 Interest / fees earned on client balances 3.0 58% 1.9 58% 1.2 Other 5.1 70% 3.0 3% 2.9 $ 333.0 (22)% $ 426.7 23% $ 348.0 Select data (all $ amounts are U.S. dollar equivalents): FX / CFD contracts ADV (millions) $ 7,622 (18)% $ 9,290 3% $ 8,989 FX / CFD contracts RPM $ 115 (11)% $ 129 32% $ 98 For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements.
Year Ended September 30, 2024 % Change 2023 % Change 2022 Operating Revenues (in millions): Securities $ 100.6 11% $ 90.4 (7)% $ 97.0 FX/CFD contracts 281.5 27% 222.5 (28)% 310.9 Physical contracts 5.4 (55)% 12.0 (14)% 13.9 Interest / fees earned on client balances 2.7 (10)% 3.0 58% 1.9 Other 4.8 (6)% 5.1 70% 3.0 $ 395.0 19% $ 333.0 (22)% $ 426.7 Select data (all $ amounts are U.S. dollar equivalents): FX/CFD contracts ADV (millions) $ 6,986 (8)% $ 7,622 (18)% $ 9,290 FX/CFD contracts RPM $ 157 37% $ 115 (11)% $ 129 For information about the assets of this segment, see Note 22 to the Consolidated Financial Statements. 54 Table of Contents Year Ended September 30, 2024 Compared to Year Ended September 30, 2023 Operating revenues increased $62.0 million, or 19%, to $395.0 million in the fiscal year ended September 30, 2024 compared to $333.0 million in the fiscal year ended September 30, 2023.
Year Ended September 30, 2023 % Change 2022 % Change 2021 Net Operating Revenues (in millions): Listed derivatives $ 195.5 (7)% $ 209.4 20% $ 173.8 OTC derivatives 232.1 11% 208.3 45% 143.4 Securities 325.6 (11)% 364.9 2% 357.8 FX / CFD contracts 224.2 (23)% 291.9 51% 193.2 Global Payments 199.2 26% 158.4 25% 126.4 Physical contracts 202.7 17% 173.2 27% 136.2 Interest, net / fees earned on client balances 237.0 239% 70.0 206% 22.9 Other 67.6 14% 59.3 16% 51.1 Corporate Unallocated (62.9) 6% (59.5) 9% (54.8) $ 1,621.0 10% $ 1,475.9 28% $ 1,150.0 Compensation and Other Expenses The following table presents a summary of expenses, other than interest and transactional expenses.
Year Ended September 30, 2024 % Change 2023 % Change 2022 Net Operating Revenues (in millions): Listed derivatives $ 216.0 10% $ 195.5 (7)% $ 209.4 OTC derivatives 209.8 (10)% 232.1 11% 208.3 Securities 370.1 14% 325.6 (11)% 364.9 FX/CFD contracts 282.2 26% 224.2 (23)% 291.9 Payments 195.1 (2)% 199.2 26% 158.4 Physical contracts 174.0 (14)% 202.7 17% 173.2 Interest, net / fees earned on client balances 306.8 29% 237.0 239% 70.0 Other 77.9 15% 67.6 14% 59.3 Corporate (64.7) 3% (62.9) 6% (59.5) $ 1,767.2 9% $ 1,621.0 10% $ 1,475.9 Compensation and Other Expenses The following table presents a summary of expenses, other than interest and transactional expenses.
Financial Overview Year Ended September 30, (in millions) 2023 % Change 2022 % Change 2021 Revenues: Sales of physical commodities $ 58,131.2 (9)% $ 64,052.6 56% $ 40,961.6 Principal gains, net 1,079.9 (6)% 1,145.2 28% 892.0 Commission and clearing fees 498.4 (2)% 507.9 4% 487.2 Consulting, management, and account fees 159.0 43% 111.3 22% 91.0 Interest income 987.6 351% 219.0 114% 102.4 Total revenues 60,856.1 (8)% 66,036.0 55% 42,534.2 Cost of sales of physical commodities 57,942.0 (9)% 63,928.6 56% 40,861.1 Operating revenues 2,914.1 38% 2,107.4 26% 1,673.1 Transaction-based clearing expenses 271.8 (7)% 291.2 7% 271.7 Introducing broker commissions 161.6 1% 160.1 —% 160.5 Interest expense 802.2 492% 135.5 173% 49.6 Interest expense on corporate funding 57.5 29% 44.7 8% 41.3 Net operating revenues 1,621.0 10% 1,475.9 28% 1,150.0 Compensation and benefits 868.6 9% 794.8 17% 679.1 Bad debts, net of recoveries 16.5 4% 15.8 52% 10.4 Other expenses 438.3 11% 394.5 27% 309.8 Total compensation and other expenses 1,323.4 10% 1,205.1 21% 999.3 Gain on acquisitions and other gains, net 25.4 297% 6.4 88% 3.4 Income before tax 323.0 17% 277.2 80% 154.1 Income tax expense 84.5 21% 70.1 85% 37.8 Net income $ 238.5 15% $ 207.1 78% $ 116.3 Return on average stockholders’ equity 19.5% 21.0% 13.9% 35 Table of Contents The tables below present operating revenues disaggregated across the key products we provide to our clients and select operating data and metrics used by management in evaluating our performance, for the periods indicated.
Financial Overview Year Ended September 30, (in millions) 2024 % Change 2023 % Change 2022 Revenues: Sales of physical commodities $ 96,586.2 66% $ 58,131.2 (9)% $ 64,052.6 Principal gains, net 1,189.6 10% 1,079.9 (6)% 1,145.2 Commission and clearing fees 548.0 10% 498.4 (2)% 507.9 Consulting, management, and account fees 167.2 5% 159.0 43% 111.3 Interest income 1,396.8 41% 987.6 351% 219.0 Total revenues 99,887.8 64% 60,856.1 (8)% 66,036.0 Cost of sales of physical commodities 96,451.6 66% 57,942.0 (9)% 63,928.6 Operating revenues 3,436.2 18% 2,914.1 38% 2,107.4 Transaction-based clearing expenses 319.3 17% 271.8 (7)% 291.2 Introducing broker commissions 166.2 3% 161.6 1% 160.1 Interest expense 1,115.7 39% 802.2 492% 135.5 Interest expense on corporate funding 67.8 18% 57.5 29% 44.7 Net operating revenues 1,767.2 9% 1,621.0 10% 1,475.9 Compensation and benefits 942.4 8% 868.6 9% 794.8 Bad debts, net of recoveries 0.6 (96)% 16.5 4% 15.8 Other expenses 478.9 9% 438.3 11% 394.5 Total compensation and other expenses 1,421.9 7% 1,323.4 10% 1,205.1 Gain on acquisition and other gains, net 8.8 (65)% 25.4 297% 6.4 Income before tax 354.1 10% 323.0 17% 277.2 Income tax expense 93.3 10% 84.5 21% 70.1 Net income $ 260.8 9% $ 238.5 15% $ 207.1 Return on average stockholders’ equity 16.9% 19.5% 21.0% 37 Table of Contents The tables below present operating revenues disaggregated across the key products we provide to our clients and select operating data and metrics used by management in evaluating our performance, for the periods indicated.
Therefore, understanding these policies is important to understanding our reported and potential future results of operations and financial position. Valuation of Financial Instruments and Foreign Currencies Description Substantially all financial instruments are reflected in the consolidated financial statements at fair value, or amounts that approximate fair value due to their short-term nature or level of collateralization.
Valuation of Financial Instruments and Foreign Currencies Description Substantially all financial instruments are reflected in the consolidated financial statements at fair value, or amounts that approximate fair value due to their short-term nature or level of collateralization.
These increases were partially offset by a $3.3 million positive variance in bad debts, net of recoveries compared to the fiscal year ended September 30, 2022. Segment income was also favorably impacted by a nonrecurring gain related to proceeds received of $2.1 million resulting from an institutional-based foreign exchange antitrust class action settlement.
These increases were partially offset by a $1.8 million decline in non-trading technology and support as compared to the fiscal year ended September 30, 2023. Segment income in the fiscal year ended September 30, 2023, was favorably impacted by a nonrecurring gain related to proceeds received of $2.1 million resulting from an institutional-based foreign exchange antitrust class action settlement.
Year Ended September 30, 2023 % Change 2022 % Change 2021 Operating Revenues (in millions): Listed derivatives $ 416.5 (3)% $ 430.5 11% $ 387.6 Over-the-counter (“OTC”) derivatives 232.2 11% 208.3 45% 143.4 Securities 1,064.0 74% 610.4 14% 533.6 FX / Contracts for difference (“CFD”) contracts 261.9 (23)% 339.3 40% 242.0 Global payments 208.3 24% 167.8 25% 133.8 Physical contracts 244.9 26% 194.3 27% 152.6 Interest / fees earned on client balances 384.7 331% 89.3 243% 26.0 Other 109.4 32% 82.7 19% 69.5 Corporate Unallocated 31.7 306% 7.8 359% 1.7 Eliminations (39.5) 72% (23.0) 35% (17.1) $ 2,914.1 38% $ 2,107.4 26% $ 1,673.1 Year Ended September 30, 2023 % Change 2022 % Change 2021 Volumes and Other Select Data (all $ amounts are U.S. dollar or U.S. dollar equivalents): Listed derivatives (contracts, 000’s) 160,292 —% 160,609 10% 146,101 Listed derivatives, average rate per contract (1) $ 2.44 (4)% $ 2.53 (1)% $ 2.55 Average client equity - listed derivatives (millions) $ 7,137 25% $ 5,696 48% $ 3,842 OTC derivatives (contracts, 000’s) 3,553 20% 2,968 16% 2,557 OTC derivatives, average rate per contract $ 65.78 (7)% $ 70.49 27% $ 55.70 Securities average daily volume (“ADV”) (millions) $ 5,257 52% $ 3,459 25% $ 2,776 Securities rate per million (“RPM”) (2) $ 301 (40)% $ 503 (15)% $ 593 Average money market / FDIC sweep client balances (millions) $ 1,338 (25)% $ 1,784 21% $ 1,471 FX / CFD contracts ADV (millions) $ 11,943 (10)% $ 13,273 25% $ 10,636 FX / CFD contracts RPM $ 87 (12)% $ 99 11% $ 89 Global Payments ADV (millions) $ 67 8% $ 62 15% $ 54 Global Payments RPM $ 12,367 14% $ 10,880 10% $ 9,921 (1) Give up fees, related to contract execution for clients of other FCMs, as well as cash and voice brokerage revenues are excluded from the calculation of listed derivatives, average rate per contract.
Year Ended September 30, 2024 % Change 2023 % Change 2022 Operating Revenues (in millions): Listed derivatives $ 469.6 13% $ 416.5 (3)% $ 430.5 OTC derivatives 209.9 (10)% 232.2 11% 208.3 Securities 1,442.7 36% 1,064.0 74% 610.4 FX/CFD contracts 316.1 21% 261.9 (23)% 339.3 Payments 205.1 (2)% 208.3 24% 167.8 Physical contracts 217.9 (11)% 244.9 26% 194.3 Interest/fees earned on client balances 432.1 12% 384.7 331% 89.3 Other 145.2 33% 109.4 32% 82.7 Corporate 46.9 48% 31.7 306% 7.8 Eliminations (49.3) 25% (39.5) 72% (23.0) $ 3,436.2 18% $ 2,914.1 38% $ 2,107.4 Year Ended September 30, 2024 % Change 2023 % Change 2022 Volumes and Other Select Data (all $ amounts are U.S. dollar or U.S. dollar equivalents): Listed derivatives (contracts, 000’s) 214,811 34% 160,292 —% 160,609 Listed derivatives, average RPC (1) $ 2.09 (14)% $ 2.44 (4)% $ 2.53 Average client equity - listed derivatives (millions) $ 6,206 (13)% $ 7,137 25% $ 5,696 OTC derivatives (contracts, 000’s) 3,538 —% 3,553 20% 2,968 OTC derivatives, average RPC $ 59.62 (9)% $ 65.78 (7)% $ 70.49 Securities average daily volume (“ADV”) (millions) $ 7,156 36% $ 5,257 52% $ 3,459 Securities RPM (2) $ 256 (15)% $ 301 (40)% $ 503 Average MM/FDIC sweep client balances (millions) $ 1,017 (24)% $ 1,338 (25)% $ 1,784 FX/CFD contracts ADV (millions) $ 10,813 (9)% $ 11,943 (10)% $ 13,273 FX/CFD contracts RPM $ 115 32% $ 87 (12)% $ 99 Payments ADV (millions) $ 69 3% $ 67 8% $ 62 Payments RPM $ 11,693 (5)% $ 12,367 14% $ 10,880 (1) Give up fees, related to contract execution for clients of other FCMs, as well as cash and voice brokerage revenues are excluded from the calculation of listed derivatives, average rate per contract.
Operating revenues derived from physical transactions increased $52.5 million, or 29%, to $232.9 million in the fiscal year ended September 30, 2023 compared to $180.4 million in the fiscal year ended September 30, 2022, principally due to the CDI acquisition, effective October 31, 2022, as well as increased client activity in agricultural and energy commodities.
Operating revenues derived from physical transactions increased $52.5 million, principally due to the CDI acquisition, effective October 31, 2022, as well as increased client activity in agricultural and energy commodities.
This increase was principally 47 Table of Contents driven by a 20% increase in OTC volumes, most notably in agricultural and soft commodities, which was partially offset by a 7% decline in the average rate per contract compared to the prior year.
Operating revenues derived from OTC transactions increased $23.9 million, principally driven by a 20% increase in OTC volumes, most notably in agricultural and soft commodities, which was partially offset by a 7% decline in the average rate per contract compared to the prior year.
Operating revenues from physical contracts increased $50.6 million, or 26%, to $244.9 million in the fiscal year ended September 30, 2023 compared to $194.3 million in the fiscal year ended September 30, 2022, principally due to increased client activity in agricultural and energy commodities, including the CDI acquisition effective October 31, 2022.
Operating revenues from physical contracts increased $50.6 million, principally due to increased client activity in agricultural and energy commodities, including the CDI acquisition, effective October 31, 2022.

… 292 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed17 unchanged
Biggest changeAs of September 30, 2023, $341.0 million of outstanding principal debt was variable-rate debt. We are subject to earnings and liquidity risks for changes in the interest rate on this debt. As of September 30, 2023, $347.9 million of outstanding principal debt was fixed-rate long-term debt.
Biggest changeAs of September 30, 2024, $338.8 million of outstanding principal debt was variable-rate debt. We are subject to earnings and liquidity risks for changes in the interest rate on this debt. As of September 30, 2024, $550.0 million of outstanding principal debt was fixed-rate long-term debt.
A key component of our approach to managing market risk is that we do not initiate market positions for our own account in anticipation of future movements in the relative prices of products we offer. 65 Table of Contents Management believes that the volatility of revenues is a key indicator of the effectiveness of its risk management techniques.
A key component of our approach to managing market risk is that we do not initiate market positions for our own account in anticipation of future movements in the relative prices of products we offer. 67 Table of Contents Management believes that the volatility of revenues is a key indicator of the effectiveness of its risk management techniques.
The graph below summarizes volatility of our daily revenue, determined on a marked-to-market basis, during the year ended September 30, 2023. In our Securities market-making and trading activities, we maintain inventories of equity and debt securities. In our Commercial segment, our positions include physical commodities inventories, precious metals on lease, forwards, futures and options on futures, and OTC derivatives.
The graph below summarizes volatility of our daily revenue, determined on a marked-to-market basis, during the year ended September 30, 2024. In our Institutional market-making and trading activities, we maintain inventories of equity and debt securities. In our Commercial segment, our positions include physical commodities inventories, precious metals on lease, forwards, futures and options on futures, and OTC derivatives.
We are exposed to market risk in connection with our retail trading activities. Because we act as counterparty to our retail clients’ transactions, we are exposed to risk on each trade that the value of our position will decline.
We are exposed to market risk in connection with our self-directed/retail trading activities. Because we act as counterparty to our self-directed/retail clients’ transactions, we are exposed to risk on each trade that the value of our position will decline.
We estimate that as of September 30, 2023, an immediate 25 basis point decrease in short-term interest rates would result in approximately $4.2 million less in annual net income. 66 Table of Contents We manage interest expense using a combination of variable and fixed rate debt. The debt instruments are carried at their unpaid principal balance which approximates fair value.
We estimate that as of September 30, 2024, an immediate 25 basis point decrease in short-term interest rates would result in approximately $5.8 million less in annual net income. 68 Table of Contents We manage interest expense using a combination of variable and fixed rate debt. The debt instruments are carried at their unpaid principal balance which approximates fair value.
These hedging transactions may not be successful. 67 Table of Contents
These hedging transactions may not be successful. 69 Table of Contents

Other SNEX 10-K year-over-year comparisons