eTrade 2012 Annual Report Download - page 130
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(3) The Company’s transfers in and out of Level 3 are as of the beginning of the reporting period on a quarterly basis.
(4) Non-agency CMOs transferred in to Level 3 due to a lack of observable market data, resulting from a decrease in market activity for the
securities.
(5) Non-agency CMOs transferred out of Level 3 because observable market data became available for those securities.
Available-for-sale Securities
Trading
Securities
Agency
Mortgage-backed
Securities and
CMOs
Non-agency
CMOs
Corporate
Investments
Opening balance, January 1, 2010 $1,491 $ 17,972 $ 234,629 $ 173
Net losses recognized in earnings(1) (938) — (35,799) —
Net gains (losses) recognized in other comprehensive loss(2) — — 80,695 (9)
Purchases, sales, and other settlements and issuances, net 77 — (32,520) (119)
Transfers in to Level 3(3)(4) — — 139,088 —
Transfers out of Level 3(3)(5) — (17,972) (190,873) (45)
Closing balance, December 31, 2010 $ 630 $ — $ 195,220 $ —
(1) The majority of net losses recognized in earnings were related to instruments held at December 31, 2010 and are reported in the net
impairment line item.
(2) The majority of net gains (losses) recognized in other comprehensive loss are reported in the net change from available-for-sale securities
line item.
(3) The Company’s transfers in and out of Level 3 are as of the beginning of the reporting period on a quarterly basis.
(4) Non-agency CMOs transferred in to Level 3 due to a lack of observable market data, resulting from a decrease in market activity for the
securities.
(5) Non-agency CMOs transferred out of Level 3 because observable market data became available for those securities.
The Company’s transfers of certain non-agency CMOs in and out of Level 3 are generally driven by
changes in price transparency for the securities. Financial instruments for which actively quoted prices or pricing
parameters are available will have a higher degree of price transparency than financial instruments that are thinly
traded or not quoted. As of December 31, 2012, less than 1% of the Company’s total assets and none of its total
liabilities represented instruments measured at fair value on a recurring basis categorized as Level 3.
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