RELATED PARTY TRANSACTIONS |
12 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS During the years ended March 31, 2023, 2022 and 2021, the Company engaged in various related party transactions, a substantial amount of which were conducted with Freedom Securities Trading Inc. (formerly known as FST Belize Services, Inc.) (“FST Belize”), a Belize company which is wholly owned personally by the Company’s chief executive officer, chairman and majority shareholder, Timur Turlov, and is not part of the FRHC group of companies. FST Belize has its own brokerage customers, which include individuals and market-maker institutions and conducts business with the Company through a client omnibus account at Freedom EU.
Fee and commission income earned from related parties is comprised primarily of brokerage commissions principally FST Belize. Fee and commission income earned from FST Belize principally consists of fees and commissions paid by FST Belize to Freedom EU to execute trades requested by brokerage customers of FST Belize, as well as commissions paid by FST Belize for order flow, which is net compensation received from firms to which our broker-dealer subsidiaries send equity and options orders, and fees for outstanding short sale positions. During the years ended March 31, 2023, 2022 and 2021, the Company earned fee and commission income from related parties in the amounts of $199,235, $291,163 and $184,725, respectively. Fee and commission income generated from FST Belize accounted for approximately 99% of the Company's total related party fee and commission income for the year ended March 31, 2023, as compared to approximately 94% and 36% of the Company's total related party fee and commission income for the years ended March 31, 2022 and 2021.
Interest income earned from related parties is comprised entirely of interest income from FST Belize, principally interest income from margin lending. During the years ended March 31, 2023, 2022 and 2021, the Company earned interest income from related parties in the amounts of $23,191, $10,191 and $2,250, respectively. Interest income generated from FST Belize accounted for approximately 100% of the Company's total related party interest income for the year ended March 31, 2023, as compared to approximately 100% and 97% of the Company's total related party interest income for the years ended March 31, 2022 and 2021.
During the years ended March 31, 2023, 2022 and 2021, the Company paid fee and commission expense for brokerage services to Wisdompoint Capital LTD and FST Belize in the amount of $2,988, $16,307 and $20,291, respectively.
Margin lending, brokerage and other receivables from related parties result principally from borrowings made under margin loans by related parties, principally FST Belize. As of March 31, 2023 and March 31, 2022, the Company had margin lending receivables with related parties totaling $294,985 and $107,649, respectively. 98% and 95% of these balances were due from FST Belize. Margin lending receivables from FST Belize principally represent margin loans granted by Freedom EU to FST Belize. As of March 31, 2023, and March 31, 2022, the Company had bank commission receivables and receivables from brokerage clients from related parties totaling $626 and $244, respectively.
As of March 31, 2023, and March 31, 2022, the Company had margin lending payables to related parties, totaling $3,239 and $38,889, respectively. 100% of these balances were due to Wisdompoint Capital LTD, as of March 31, 2023 and March 31, 2022, respectively. Wisdompoint Capital LTD (formerly Tradernet Limited) is a Cyprus company related to Freedom EU through common management. Wisdompoint Capital LTD provides brokerage services to the Company.
As of March 31, 2022, the Company had amounts due to Timur Turlov related to the purchase price for the acquisition by the Company from Timur Turlov of two insurance companies, Freedom Life and Freedom Insurance, totaling $21,477. During the year ended March 31,2023 the amount is fully repaid.
As of March 31, 2023 the Company had the prepayment on acquisition of Internet Tourism LLP and Aviata LLP, companies outside of the FRHC group where Timur Turlov has significant influence acquired after the reporting date, in the amount of $16,089.
As of March 31, 2023, and March 31, 2022, the Company had customer liabilities to related parties totaling $130,210 and $325,904, respectively. As of March 31, 2023, and March 31, 2022, 18% and 75%, respectively, of these balances were deposits from FST Belize held by Freedom EU related to brokerage services provided by Freedom EU to FST Belize, whereas 36% and 17%, respectively, were from Fresh Start Trading, a company outside of the FRHC group which is primarily owned by Denis Matafonov, and 25% and 6%, respectively, from Wisdompoint Capital LTD..
As of March 31, 2023, and March 31, 2022, the Company had restricted customer cash deposited in current and brokerage accounts with related parties in the amounts of $114,885 and $222,651. As of March 31, 2023, and March 31, 2022, 40% and 78%, respectively, of these balances were from FST Belize, 60% and 22%, respectively, were from Wisdompoint Capital LTD.
As of March 31, 2023, and March 31, 2022 the Company had loans issued which includes uncollateralized bank customer loans purchased from a related party, microfinance organization Freedom Finance Credit (“FFIN Credit”) a company outside of the FRHC group which is controlled by Timur Turlov, in the amount of $121,177 and $35,293, respectively.
As of March 31, 2023, and March 31, 2022 the Company had cash and cash equivalents held in brokerage accounts of related parties totaling $35,549 and $22,787 respectively. 100% of these balances were due to Wisdompoint Capital LTD.
In July 2021 the Company sold 23.88% of its outstanding equity interest in Freedom UA for $415 to Askar Tashtitov, the Company’s president, reducing the Company's direct ownership interest in Freedom UA to approximately 9%.
Margin lending, brokerage and related banking services were provided to related parties pursuant to standard client account agreements and at standard market rates.
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