OXPS » Topics » 5. Guarantees

These excerpts taken from the OXPS 10-K filed Mar 2, 2009.
Guarantees
 
The Company clears its non-Canadian customers’ futures transactions on an omnibus basis through a futures commission merchant. The Company introduces its Canadian securities customers’ accounts to a clearing broker who clears and carries all customer securities account activity. The Company clears its Canadian customers’ futures transactions on an omnibus basis through a separate futures commission merchant. The Company has agreed to indemnify its third-party clearing broker and both of its clearing futures commission merchants for losses that they may sustain for the customer accounts introduced to them by the Company.
 
The Company provides guarantees to its clearing organizations and exchanges under their standard membership agreements, which require members to guarantee the performance of other members. Under the


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optionsXpress Holdings, Inc.
 
Notes to Consolidated Financial Statements — (Continued)
 
agreements, if another member becomes unable to satisfy its obligations to the clearing organization or exchange, other members would be required to meet shortfalls. The Company’s liability under these arrangements is not quantifiable and may exceed the cash and securities it has posted as collateral. However, the Company believes that it is unlikely that it will have to make any material payments under these arrangements, and no material losses related to these guarantees have been recognized in the accompanying consolidated financial statements.
 
The Company guaranteed a SG$7,500 (approximately US$5,201 as of December 31, 2008) letter of credit issued to the Monetary Authority of Singapore in connection with its subsidiary, optionsXpress Singapore Pte. Ltd., becoming registered as a broker in Singapore. The Company pledged $4,957 of ARS investments, at fair value, to guarantee this letter of credit.
 
15.   Capitalization
 
Guarantees


 



The Company clears its non-Canadian customers’ futures
transactions on an omnibus basis through a futures commission
merchant. The Company introduces its Canadian securities
customers’ accounts to a clearing broker who clears and
carries all customer securities account activity. The Company
clears its Canadian customers’ futures transactions on an
omnibus basis through a separate futures commission merchant.
The Company has agreed to indemnify its third-party clearing
broker and both of its clearing futures commission merchants for
losses that they may sustain for the customer accounts
introduced to them by the Company.


 



The Company provides guarantees to its clearing organizations
and exchanges under their standard membership agreements, which
require members to guarantee the performance of other members.
Under the





F-21





Table of Contents





 




optionsXpress
Holdings, Inc.




 




Notes to
Consolidated Financial
Statements — (Continued)


 



agreements, if another member becomes unable to satisfy its
obligations to the clearing organization or exchange, other
members would be required to meet shortfalls. The Company’s
liability under these arrangements is not quantifiable and may
exceed the cash and securities it has posted as collateral.
However, the Company believes that it is unlikely that it will
have to make any material payments under these arrangements, and
no material losses related to these guarantees have been
recognized in the accompanying consolidated financial statements.


 



The Company guaranteed a SG$7,500 (approximately US$5,201 as of
December 31, 2008) letter of credit issued to the
Monetary Authority of Singapore in connection with its
subsidiary, optionsXpress Singapore Pte. Ltd., becoming
registered as a broker in Singapore. The Company pledged $4,957
of ARS investments, at fair value, to guarantee this letter of
credit.


 















15.  

Capitalization


 




These excerpts taken from the OXPS 10-K filed Feb 29, 2008.
Guarantees
 
The Company clears its non-Canadian customers’ futures transactions on an omnibus basis through a futures commission merchant. The Company introduces its Canadian securities customers’ accounts to a clearing broker who clears and carries all customer securities account activity. The Company clears its Canadian customers’ futures transactions on an omnibus basis through a separate futures commission merchant. The Company has agreed to indemnify its third-party clearing broker and both of its clearing futures commission merchants for losses that they may sustain for the customer accounts introduced to them by the Company.
 
The Company provides guarantees to its clearing organizations and exchanges under their standard membership agreements, which require members to guarantee the performance of other members. Under the agreements, if another member becomes unable to satisfy its obligations to the clearing organization or exchange, other members would be required to meet shortfalls. The Company’s liability under these arrangements is not quantifiable and may exceed the cash and securities it has posted as collateral. However, the Company believes that it is unlikely that it will have to make any material payments under these arrangements, and no liabilities related to these guarantees have been recognized in the accompanying consolidated financial statements.
 
The Company guaranteed a SG$7,500 (approximately US$5,188 as of December 31, 2007) letter of credit issued to the Monetary Authority of Singapore in connection with its subsidiary, optionsXpress Singapore Pte. Ltd., becoming registered as a broker in Singapore. The Company pledged $5,188 of short-term investments to guarantee this letter of credit.
 
14.   Capitalization
 
Guarantees


 



The Company clears its non-Canadian customers’ futures
transactions on an omnibus basis through a futures commission
merchant. The Company introduces its Canadian securities
customers’ accounts to a clearing broker who clears and
carries all customer securities account activity. The Company
clears its Canadian customers’ futures transactions on an
omnibus basis through a separate futures commission merchant.
The Company has agreed to indemnify its third-party clearing
broker and both of its clearing futures commission merchants for
losses that they may sustain for the customer accounts
introduced to them by the Company.


 



The Company provides guarantees to its clearing organizations
and exchanges under their standard membership agreements, which
require members to guarantee the performance of other members.
Under the agreements, if another member becomes unable to
satisfy its obligations to the clearing organization or
exchange, other members would be required to meet shortfalls.
The Company’s liability under these arrangements is not
quantifiable and may exceed the cash and securities it has
posted as collateral. However, the Company believes that it is
unlikely that it will have to make any material payments under
these arrangements, and no liabilities related to these
guarantees have been recognized in the accompanying consolidated
financial statements.


 



The Company guaranteed a SG$7,500 (approximately US$5,188 as of
December 31, 2007) letter of credit issued to the
Monetary Authority of Singapore in connection with its
subsidiary, optionsXpress Singapore Pte. Ltd., becoming
registered as a broker in Singapore. The Company pledged $5,188
of short-term investments to guarantee this letter of credit.


 















14.  

Capitalization


 




This excerpt taken from the OXPS 10-K filed Mar 1, 2007.
Guarantees
 
In margin transactions, the Company may be obligated for credit that it has extended to its customers. The Company introduces its Canadian customers’ accounts to the clearing broker who clears and carries all customer account activity. The Company clears its futures transactions on an omnibus basis with a futures clearing merchant. The Company has agreed to indemnify its Canadian clearing broker and its futures clearing merchant for losses that they may sustain for the customer accounts introduced to them by the Company.
 
In accordance with applicable margin lending practices, customer balances are typically collateralized by customer securities and supported by other types of recourse. Compliance with the various guidelines is monitored daily and, pursuant to such guidelines, customers may be required to deposit additional collateral, or reduce positions, when necessary. As of December 31, 2006, the Company had $127,073 in credit extended to its customers. The Company is also exposed to risk from the leverage extended to its customers from short sale transactions. The margin and leverage requirements that the Company imposes on its customer accounts meet or exceed those required by Regulation T of the Board of Governors of the Federal Reserve. The amount of this risk is not quantifiable since the risk is dependent upon analysis of a potential significant and undeterminable rise or fall in stock prices. As a result, the Company is exposed to significant off-balance sheet credit risk in the event customer collateral is not sufficient to fully cover losses that customers may incur. In the event customers fail to satisfy their obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customers’ obligations. The Company believes that it is unlikely that it will have to make any material payments under these arrangements, and no liabilities related to these guarantees and indemnifications have been recognized in the accompanying consolidated financial statements.
 
The Company borrows securities temporarily from other broker-dealers in connection with its broker-dealer business. The Company deposits cash as collateral for the securities borrowed. Decreases in securities prices may cause the market value of the securities borrowed to fall below the amount of cash deposited as collateral. In the event the counterparty to these transactions does not return the cash deposited, the Company may be exposed to the risk of selling the securities at prevailing market prices. The Company seeks to manage this risk by requiring credit approvals for counterparties, by monitoring the collateral values on a daily basis, and by requiring additional collateral as needed.
 
The Company provides guarantees to its clearing organizations and exchanges under their standard membership agreements, which require members to guarantee the performance of other members. Under the agreements, if another member becomes unable to satisfy its obligations to the clearing organization or exchange, other members would be required to meet shortfalls. The Company’s liability under these arrangements is not quantifiable and may exceed the cash and securities it has posted as collateral. However, the Company believes that it is unlikely that it will have to make any material payments under these arrangements, and no liabilities related to these guarantees have been recognized in the accompanying consolidated financial statements.
 
The Company guaranteed a SG$7,500 (approximately US$4,889 as of December 31, 2006) letter of credit issued to the Monetary Authority of Singapore in connection with it subsidiary, optionsXpress Singapore Pte. Ltd., becoming registered as a broker in Singapore.
 
12.   Capitalization
 
This excerpt taken from the OXPS 10-Q filed Aug 12, 2005.

5. Guarantees

 

Under the terms of the clearing agreements with Goldman Sachs Equity & Clearing (GSEC) and Legent Clearing Corp., the Company introduces its customers’ accounts to GSEC and Legent who, as the clearing brokers, clear and carry all customer account activity. As such, the Company is required to guarantee the performance of its customers in meeting their contractual obligations. The Company has agreed to indemnify the clearing brokers for losses that they may sustain for the customer accounts introduced by the Company. In accordance with applicable margin lending practices and in conjunction with the clearing brokers, customer balances are typically collateralized by customer securities or supported by other types of recourse provisions. Compliance with the various guidelines are monitored daily and, pursuant to such guidelines, customers may be required to deposit additional collateral, or reduce positions, when necessary.

 

As of June 30, 2005 and 2004, the Company had $97,514 and $60,285 in credit extended to its customers through its clearing brokers, respectively. The amount of risk to which the Company is exposed from the leverage extended to its customers and specifically from short sale transactions by its customers is not quantifiable since the risk would be dependent upon analysis of a potential significant and undeterminable rise or fall in stock prices. The account level margin and leverage requirements meet or exceed those required by Regulation T of the Board of Governors of the Federal Reserve. The Company believes that it is unlikely that it will have to make any significant payments under these arrangements, and no liabilities related to these guarantees and indemnifications have been recognized in the accompanying condensed consolidated financial statements.

 

This excerpt taken from the OXPS 10-Q filed May 3, 2005.

5. Guarantees

 

Under the terms of the clearing agreements with Goldman Sachs Equity & Clearing (GSEC) and Legent Clearing Corp., the Company introduces its customers’ accounts to GSEC and Legent who, as the clearing brokers, clear and carry all customer account activity. As such, the Company is required to guarantee the performance of its customers in meeting their contractual obligations. The Company has agreed to indemnify the clearing brokers for losses that they may sustain for the customer accounts introduced by the Company. In accordance with applicable margin lending practices and in conjunction with the clearing brokers, customer balances are typically collateralized by customer securities or supported by other types of recourse provisions. Compliance with the various guidelines are monitored daily and, pursuant to such guidelines, customers may be required to deposit additional collateral, or reduce positions, when necessary.

 

As of March 31, 2005 and 2004, the Company had $90,170 and $61,831 in credit extended to its customers through its clearing brokers, respectively. The amount of risk to which the Company is exposed from the leverage extended to its customers and specifically from short sale transactions by its customers is not quantifiable since the risk would be dependent upon analysis of a potential significant and undeterminable rise or fall in stock prices. The account level margin and leverage requirements meet or exceed those required by Regulation T of the Board of Governors of the Federal Reserve. The Company believes that it is unlikely that it will have to make any significant payments under these arrangements, and no liabilities related to these guarantees and indemnifications have been recognized in the accompanying condensed consolidated financial statements.

 

This excerpt taken from the OXPS 10-K filed Mar 23, 2005.

Guarantees

 

Under the terms of the clearing agreements with GSEC and Legent, the Company introduces its customers’ accounts to GSEC and Legent who, as the clearing brokers, clear and carry all customer account activity. As such, the Company is required to guarantee the performance of its customers in meeting their contractual obligations. The Company has agreed to indemnify the clearing brokers for losses that they may sustain for the customer accounts introduced by the Company. In accordance with applicable margin lending practices and in conjunction with the clearing brokers, customer balances are typically collateralized by customer securities or supported by other types of recourse provisions. Compliance with the various guidelines are monitored daily and, pursuant to such guidelines, customers may be required to deposit additional collateral, or reduce positions, when necessary.

 

As of December 31, 2004, the Company had $77,974 in credit extended to its customers through its clearing brokers. The amount of risk to which the Company is exposed from the leverage extended to its customers and specifically from short sale transactions by its customers is not quantifiable since the risk would be dependent upon analysis of a potential significant and undeterminable rise or fall in stock prices. The account level margin and leverage requirements meet or exceed those required by Regulation T of the Board of Governors of the Federal Reserve. The Company believes that it is unlikely that it will have to make any significant payments under these arrangements, and no liabilities related to these guarantees and indemnifications have been recognized in the accompanying consolidated financial statements.

 

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