INTL FCStone 2014 Annual Report Download - page 89

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INTL FCSTONE INC. Form 10K 73
PART II
ITEM 8 Financial Statements and Supplementary Data
Cash equivalents, securities, commodities warehouse receipts,
derivative financial instruments and contingent liabilities are
carried at fair value, on a recurring basis, and are classified
and disclosed into three levels in the fair value hierarchy. e
Company did not have any fair value adjustments for assets or
liabilities measured at fair value on a non-recurring basis during
the years ended September 30, 2014 and 2013. e three levels
of the fair value hierarchy under the Fair Value Measurement
Topic of the ASC are:
Level 1 - Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted
assets or liabilities. Level 1 consists of financial assets and liabilities
whose fair values are estimated using quoted market prices.
Included in Level 1 are money market funds, certificates of
deposit, commodities warehouse receipts, common stock and
American Depositary Receipts (“ADRs”), some U.S. and foreign
obligations, equity investments in exchange firms, some mutual
funds, as well as futures and options on futures contracts traded
on national exchanges, exchange-cleared swaps and options which
are valued using exchange closing prices, and OTC swaps and
options contracts using quoted prices from national exchanges
in which the Company executes transactions for customer and
proprietary accounts;
Level 2 - Quoted prices for identical or similar assets or liabilities
in markets that are less active, that is, markets in which there
are few transactions for the asset or liability that are observable
for substantially the full term. Included in Level 2 are those
financial assets and liabilities for which fair values are estimated
using models or other valuation methodologies. ese models
are primarily industry-standard models that consider various
observable inputs, including time value, yield curve, volatility
factors, observable current market and contractual prices for
the underlying financial instruments, as well as other relevant
economic measures. Included in Level 2 are U.S. and foreign
government obligations, mortgage-backed securities, some
common stock and ADRs, corporate and municipal bonds,
some mutual funds, investments in managed funds and OTC
forwards, swaps, and options; and
Level 3 - Prices or valuation techniques that require inputs that are
both significant to the fair value measurement and unobservable
(i.e., supported by little or no market activity). Level 3 comprises
financial assets and liabilities whose fair value is estimated based
on internally developed models or methodologies utilizing
significant inputs that are not readily observable from objective
sources. Included in Level 3 are common stock and ADRs, some
corporate and municipal bonds, some other investments and
contingent liabilities.