Quarterly report pursuant to Section 13 or 15(d)

Trading Securities

v3.19.2
Trading Securities
 3 Months Ended
Jun. 30, 2019
Debt Securities, Trading, and Equity Securities, FV-NI [Abstract]  
Trading Securities

As of June 30, 2019 and March 31, 2019, trading securities consisted of:

 

   

June 30,

2019

    

March 31,

2019

  
             
Equity securities   $ 98,353     $ 105,017  
Debt securities     62,668       62,691  
Mutual investment funds     -       241  
Total trading securities   $ 161,021     $ 167,949  

 

The Company recognized no other than temporary impairment in accumulated other comprehensive income.

 

The fair value of assets and liabilities is determined using observable market data based on recent trading activity. Where observable market data is unavailable due to a lack of trading activity, the Company utilizes internally developed models to estimate fair value and independent third parties to validate assumptions, when appropriate. Estimating fair value requires significant management judgment, including benchmarking to similar instruments with observable market data and applying appropriate discounts that reflect differences between the securities that the Company is valuing and the selected benchmark. Depending on the type of securities owned by the Company, other valuation methodologies may be required.

 

Measurement of fair value is classified within a hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

The valuation hierarchy contains three levels:

 

● Level 1 - Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

 

● Level 2 - Valuation inputs are quoted market prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets, and other observable inputs directly or indirectly related to the asset or liability being measured.

 

● Level 3 - Valuation inputs are unobservable and significant to the fair value measurement.

  

The following tables present trading securities assets in the condensed consolidated financial statements at fair value on a recurring basis as of June 30, 2019 and March 31, 2019:

 

          Fair Value Measurements at  
          June 30, 2019 using  
          Quoted Prices in Active Markets for Identical Assets     Significant Other Observable Inputs     Significant Unobservable Inputs  
    June 30, 2019     (Level 1)     (Level 2)     (Level 3)  
                         
Equity securities   $ 98,353     $ 98,353     $ -     $ -  
Debt securities     62,668       62,668       -       -  
Total trading securities   $ 161,021     $ 161,021     $ -     $ -  

 

          Fair Value Measurements at  
          March 31, 2019 using  
          Quoted Prices in Active Markets for Identical Assets     Significant Other Observable Inputs     Significant Unobservable Inputs  
   

 

March 31, 2019

     (Level 1)     (Level 2)     (Level 3)  
                         
Equity securities   $ 105,017     $ 105,017     $ -     $ -  
Debt securities     62,691       62,187       -       504  
Mutual investment funds     241       241       -       -  
Total trading securities   $ 167,949     $ 167,445     $ -     $ 504  

 

The table below presents the Valuation Techniques and Significant Level 3 Inputs used in the valuation as of March 31, 2019. The table is not intended to be all inclusive, but instead captures the significant unobservable inputs relevant to determination of fair value.

 

Type Valuation Technique

FV as of March 31,

2019

 Significant Unobservable Inputs %
         
Corporate bonds DCF $ 504 Discount rate 11.3%

 

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three months ended June 30, 2019:

 

    Amount  
Balance as of March 31, 2019   $ 504  
         
Sale of investments that use Level 3 inputs     (497 )
Foreign currency translation     (7 )
         
Balance as of June 30, 2019   $ -  

  

As of June 30, 2019 and March 31, 2019, approximately $56,780 and $60,000, respectively, worth of the Company’s proprietary trading account was invested in the securities of a single company. This represents approximately 35% and 36%, respectively, of the Company’s proprietary portfolio.