# CUTLER GROUP, LP X-17A-5/A (2022-03-14) — Broker-dealer annual report

- Company: CUTLER GROUP, LP
- Form: X-17A-5/A
- Filed: 2022-03-14
- Period: 2021-12-31
- Accession: 0000861673-22-000002
- CIK: 861673
- File #: 8-42415
- Type: Broker-dealer
- Material weakness: No
- Auditor: Ryan & Juraska
- Auditor location: Chicago, IL
- Contact: Doug Patterson
- Phone: 4152933956
- Signed by: Nader Sharabati (CFO / FINOP)

Original filing: https://www.sec.gov/Archives/edgar/data/861673/000086167322000002/3CUTLER.AFS.CONF.2021.pdf

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FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES PURSUANT TO SEC RULE 17a-5(d)

> December 31, 2021 CONFIDENTIAL

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# OATH OR AFFIRMATION

I, Nader Sharabati, swear (or affirm), that, to the best of my knowledge and belief, the financial report pertaining to the firm of Cutler Group, L.P., as of December 31, 2021, is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivallent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer.

OUD SAPPRASERT O'BRIEN Notary Public - California San Francisco County Commission # 2384567 Signature Comm. Expires Dec 23, 2025 Chief Financial Officer Title DIDIN

#### This filing\*\* contains (check all applicable boxes):

- [x] (a) Statement of financial condition.
- [ ] (b) Notes to consolidated statement of financial condition.

Notary Public

- [x] (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X).
- [x] (d) Statement of cash flows.
- [x] (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
- [ ] (f) Statement of changes in liabilities subordinated to claims of creditors.
- [x] (g) Notes to consolidated financial statements.
- [x] (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable.
- [ ] (i) Computation of tangible net worth under 17 CFR 240.18a-2.
- [x] (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.
- [ ] (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable.
- [ ] (l) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3.
- [x] (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
- [ ] (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable.
- [x] (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist.
- [ ] (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- [x] (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
- [ ] (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- [x] (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- [ ] (t) Independent public accountant's report based on an examination of the statement of financial condition.
- [x] (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable.
- [ ] (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- [x] (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- [ ] (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e or 17 CFR 240.17a-12, as applicable.
- [ ] (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k).
- [ ] (z) Other:

<sup>\*\*</sup> To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable.

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#### UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

#### OMB APPROVAI OMB Number: 3235-0123 Fxnires: October 31, 2023 Estimated average burden hours per response .......................12.00

SEC FILE NUMBER

8-42415

| ANNUAL REPORT |
|---------------|
| FORM X-17A-5  |
| PART III      |

FACING PAGE

Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934

REPORT FOR THE PERIOD BEGINNING 01/01/21 MM/DD/YY MM/DD/YY

#### A. REGISTRANT IDENTIFICATION

NAME OF FIRM:

CUTLER GROUP, L.P.

TYPE OF REGISTRANT (check all applicable boxes):

| [X] Broker-dealer | _ Security-based swap dealer.                              | Major security-based swap participant |
|-------------------|------------------------------------------------------------|---------------------------------------|
|                   | Check here if respondent is also an OTC derivatives dealer |                                       |

ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)

| 101 Montgomery Street, Suite 700 |            |            |  |
|----------------------------------|------------|------------|--|
| (No. and Street)                 |            |            |  |
| San Francisco                    | California | 94104      |  |
| (City)                           | (State)    | (Zip Code) |  |

#### PERSON TO CONTACT WITH REAGARD TO THIS FILING

|  |  |  | Nader Sharabati |  |  |
|--|--|--|-----------------|--|--|
|  |  |  |                 |  |  |

#### (415) 293-3960

(Area Code - Telephone No)

#### B. ACCOUNTANT IDENTIFICATION

INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this Filing\*

#### Ryan & Juraska, LLP, Certified Public Accountants

(Name - if individual, state last, first, middle name)

| Chicago                                          | llinois               | 60604                                      |  |
|--------------------------------------------------|-----------------------|--------------------------------------------|--|
| (City)                                           | (State)               | (Zip Code)                                 |  |
|                                                  | 3407                  |                                            |  |
| (Date of Registration with PCAOB)(if applicable) |                       |                                            |  |
|                                                  |                       |                                            |  |
|                                                  |                       |                                            |  |
|                                                  | FOR OFFICIAL USE ONLY | (PCAOB Registration Number, if applicable) |  |

\* Claims for exemption from the requirement that the annual report be covered by the opinion of an independent must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See 17CFR 240.17a-5(e.

Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

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![](_page_3_Picture_0.jpeg)

RYAN & JURASKA LLP Certified Public Accountants

141 West Jackson Boulevard Chicago, Illinois 60604

Tel: 312.922.0062 Fax: 312.922.0672

### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Cutler Group, L.P.

#### Opinion on the Financial Statements

We have audited the accompanying statement of financial condition of Cutter Group, L.P. (the "Partnership") as of December 31, 2021, the related statements of operations, changes in partners' capital. and cash flows for the year then ended and the related notes and supplemental schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of Cutler Group, L.P. as of December 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

#### Basis for Opinion

These financial statements are the responsibility of Cutler Group, L.P.'s management. Our responsibility is to express an opinion on the Partnership's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Cutler Group, L.P. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We have served as the Partnership's auditor since 2001.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

#### Auditor's Report on Supplemental Information

The Supplemental Schedules (the "supplemental information") have been subjected to audit procedures performed in conjunction with the audit of Cutler Group L.P.'s financial statements. The supplemental information is the responsibility of Cutler Group L.P.'s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, the Supplemental Schedules are fairly stated, in all material respects, in relation to the financial statements as a whole.

Chicago, Illinois February 25, 2022

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#### Statement of Financial Condition

December 31, 2021

#### Assets

| Cash<br>Receivable from broker-dealer<br>Securities owned, at fair value<br>Furniture and equipment, at cost (net of accumulated depreciation<br>of \$12,030,098)<br>Other assets | ಿ    | 28,712,028<br>2,588,265<br>2,419,620,615<br>1,028,071<br>1,323,995 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------|--------------------------------------------------------------------|
|                                                                                                                                                                                   | ಕಾ   | 2,453,272,974                                                      |
| Liabilities and Partners' Capital                                                                                                                                                 |      |                                                                    |
|                                                                                                                                                                                   |      |                                                                    |
| Liabilities<br>Securities sold, not yet purchased, at fair value<br>Payable to broker-dealer<br>Lease liability<br>Accounts payable and accrued expenses                          | ಲ್ಲಿ | 1,759,593,446<br>473,647,076<br>606,784<br>28,144,043              |
|                                                                                                                                                                                   |      | 2,261,991,349                                                      |
| Partners' capital<br>General partner                                                                                                                                              |      | 25,464,566                                                         |
| Limited partners                                                                                                                                                                  |      | 165,817,059                                                        |
|                                                                                                                                                                                   |      | 191,281,625                                                        |
|                                                                                                                                                                                   | ಕ್ಕಿ | 2,453,272,974                                                      |
|                                                                                                                                                                                   |      |                                                                    |

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# Statement of Operations

Year Ended December 31, 2021

| Revenues                                       |      |             |
|------------------------------------------------|------|-------------|
| Trading gains                                  | ಿಕಾ  | 184,952,764 |
| Interest and dividends                         |      | 3,521,580   |
| Other                                          |      | 248,707     |
|                                                |      | 188,723,051 |
|                                                |      |             |
| Expenses                                       |      |             |
| Employee compensation and benefits             |      | 38,318,605  |
| Exchange dues and charges                      |      | 29,466,211  |
| Interest                                       |      | 11,922,177  |
| Communications, quotations and market research |      | 8,735,335   |
| Commissions, execution and clearance fees      |      | 7,780,717   |
| Trader permit fees                             |      | 3,120,467   |
| Depreciation                                   |      | 652,233     |
| Equipment and software licenses                |      | 565,120     |
| Оссирапсу                                      |      | 511,184     |
| Professional fees                              |      | 354,602     |
| Other operating expenses                       |      | 404,452     |
|                                                |      | 101,831,103 |
|                                                |      |             |
| Net income                                     | ಕ್ಕಾ | 86,891,948  |
|                                                |      |             |

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# Statement of Changes in Partners' Capital

# Year Ended December 31, 2021

|                              |       | General<br>Partner |   | Limited<br>Partners |   | Total        |
|------------------------------|-------|--------------------|---|---------------------|---|--------------|
| Balance at January 1, 2021   | સ્ત્ર | 14,745,779         | ക | 136,796,530         | ക | 151,542,309  |
| Contributions                |       |                    |   | 18,575,779          |   | 18,575,779   |
| Withdrawals                  |       | (14,745,779)       |   | (50,982,632)        |   | (65,728,411) |
| Net income                   |       | 25,464,566         |   | 61,427,382          |   | 86,891,948   |
| Balance at December 31, 2021 | સ્ત્ર | 25.464.566         | ਵ | 165,817,059 \$      |   | 191.281.625  |

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#### Statement of Cash Flows

Year Ended December 31, 2021

| Cash flows from operating activities                                                 |      |               |
|--------------------------------------------------------------------------------------|------|---------------|
| Net income                                                                           | ક્તિ | 86,891,948    |
| Adjustments to reconcile net income to net cash<br>provided by operating activities: |      |               |
| Depreciation                                                                         |      | 652,233       |
| (Increase) decrease in operating assets:                                             |      |               |
| Receivable from broker-dealer                                                        |      | (1,199,158)   |
| Securities owned, at fair value                                                      |      | (308,762,078) |
| Other assets                                                                         |      | 462,351       |
| Increase (Decrease) in operating liabilities:                                        |      |               |
| Payable to broker-dealer                                                             |      | 244,705,958   |
| Securities sold, not yet purchased, at fair value                                    |      | 34,601,531    |
| Lease liability                                                                      |      | (463,329)     |
| Accounts payable and accrued expenses                                                |      | 12,158,922    |
| Net cash provided by operating activities                                            |      | 69,048,378    |
| Cash flows from investing activities                                                 |      |               |
| Purchases of equipment                                                               |      | (1,205,564)   |
| Net cash used in investing activities                                                |      | (1,205,564)   |
| Cash flows from financing activities                                                 |      |               |
| Limited partners' contributions                                                      |      | 18,575,779    |
| Limited partners' withdrawals                                                        |      | (50,982,632)  |
| General Partner withdrawals                                                          |      | (14,745,779)  |
| Net cash used in financing activities                                                |      | (47,152,632)  |
| Net increase in cash                                                                 |      | 20,690,182    |
| Cash at beginning of year                                                            |      | 8,021,846     |
| Cash at end of year                                                                  | ક્તિ | 28,712,028    |

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{9}------------------------------------------------

Notes to Financial Statements, Continued December 31, 2021

#### 2.

#### Accounting for Leases

In February 2016, the FASB amended the guidance on accounting for leases. The new guidance required lessees to recognize right-of-use (ROU) asset and lease liabilities for the rights and obligations created by all qualifying leases. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee remains substantially unchanged and depends on classification as a finance or operating lease. At adoption the Partnership recognized lease liabilities of \$1,540,629 representing the discount value of the remaining fixed lease payments. Changes in lease liabilities are based on current period interest and cash payments. The Partnership also recognized ROU assets of \$1,540,629 at adoption, which represents the measurement of the lease liabilities, payments and direct costs.

#### Financial Instruments-Credit Losses

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). The new guidance broadens the information that an entity must consider in developing its estimated credit losses expected to occur over the remaining life of assets measured either collectively or individually to include historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred credit loss model with the current expected credit losses model. The amendment was effective for fiscal years beginning after December 15, 2019. The adoption of this standard did not have a material impact on the Partnership's Financial Statements.

#### Income Taxes

No provision has been made for federal income taxes, as the taxable income of the partnership is included in the respective income tax returns of the partners.

In accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"), the Partnership is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, based on the technical merits of the position. Generally, the Partnership is no longer subject to income tax examinations by major taxing authorities for the years before 2018. Based on its analysis, there were no tax positions identified by management which did not meet the "more likely than not" standard as of and for the year ended December 31, 2021.

#### 3. Partnership Agreement

#### Profit and Loss Allocations

All profits and losses are allocated quarterly, after allocations to the Self-Backed Traders (see Note 5), subject to the following:

a. "Designated Net Profits" and "General Net Profits", as defined in the Partnership's Agreement of Limited Partnership, shall first be allocated to limited partners in proportion to their respective ownership percentages as of the first day of each calendar quarter to remove unrecouped "Designated Net Losses" and "General Net Losses", as defined in the Partnership's Agreement of Limited Partnership, for such limited partners.

{10}------------------------------------------------

Notes to Financial Statements, Continued December 31, 2021

#### 3. Partnership Agreement, continued

- b. Class B Limited Partners, as defined in the Partnership's Agreement of Limited Partnership, are allocated all remaining Designated Net Profits and Designated Net Losses in proportion to their respective Class B percentage interest. After the allocation to the Class B Limited Partners, the remaining Designated Net Profits and Designated Net Losses are allocated in the same manner as General Net Gains and General Net Losses.
- c. The remaining General Net Profits and General Net Losses are then allocated to the General Partner, Class A Limited Partners, and Class B Limited Partners as defined in the Partnership's Agreement of Limited Partnership.

#### 4. Distributions and Withdrawals

The Partnership is not required to make distributions, but may do so at the discretion of the General Partner. A limited partner may request a withdrawal of his or her entire capital account, or any portion thereof, as of the end of any calendar quarter, by giving 30 days prior written notice to the General Partner; provided that the limited partner maintained his or her investment for a minimum one year period. The General Partner may accept withdrawal requests of shorter notice at its discretion.

#### 5.

The Partnership has a Joint Back Office ("JBO") clearing agreements with Merrill Lynch Professional Clearing Corp. ("ML-PRO") and Goldman Sachs & Co. LLC ("GS"). These agreements allows JBO participants to receive favorable margin treatment as compared to the full customer margin requirements of Regulation T. As part of these agreements, the Partnership has invested \$20,000 and \$10,000 in the preferred shares of ML-PRO and GS, respectively. The Partnership's investments in ML-PRO and GS are reflected in other assets in the statement of financial condition. Under the Financial Industry Regulatory Authority, these agreements requires that the Partnership maintain a minimum net liquidating equity of \$1 million with ML-PRO, exclusive of its preferred stock investment.

The Partnership has entered into trading agreements with certain of its traders (the "Self-Backed Traders"). Under these agreements, the Self-Backed Traders have agreed to contribute capital to fund their trading activities. The Self-Backed Traders receive a percentage of the "net revenues" (trading gains less expenses) of their respective trading accounts, as defined in the trading agreements. Such allocations are credited to the respective limited partner capital accounts of the Self-Backed Traders. The Self-Backed Traders' profit allocations are deducted from total partnership income before determining the net profit or loss to be allocated to the partners on a pro rata basis.

{11}------------------------------------------------

Notes to Financial Statements, Continued December 31, 2021

#### ଏ Financial Instruments

ASC 815 "Derivatives and Hedging" requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit risk-related contingent features in derivative agreements. The disclosure requirements of ASC 815 distinguish between derivatives which are accounted for as "hedges" and those that do not qualify for such accounting. Although the Partnership may sometimes use derivatives, the Partnership reflects derivatives at fair value and recognizes changes in fair value through the Statement of Operations, and as such do not qualify for ASC 815 hedge accounting treatment.

In the normal course of business the Partnership enters into transactions in derivative financial instruments that include equity and index options contracts and futures contracts, as part of the Partnership's overall trading strategy. All derivative instruments are held for trading purposes. All positions are reported in the accompanying statement of financial condition at fair value and gains and losses from derivative financial instruments are reflected in trading gains in the statement of operations.

Futures contracts provide for the delayed delivery/receipt of the underlying instrument. As a writer of options contracts, the Partnership receives a premium in exchange for giving the counterparty the right to buy or sell the underlying instrument at a future date at a contracted price. The contractual or notional amounts related to these financial instruments reflect the volume and activity and do not reflect the amounts at risk. Futures contracts are executed on an exchange, and cash settlement is made on a daily basis for market movements. Accordingly, futures contracts generally do not have credit risk. Market risk is substantially dependent upon the value of the underlying instruments and is affected by market forces such as volatility and changes in interest and foreign exchange rates.

Options contracts grant the purchaser, for the payment of a premium, the right to either purchase from or sell to the writer a specified financial instrument under agreed terms. As a writer of options contracts, the Partnership receives a premium in exchange for bearing the risk of unfavorable changes in the financial instruments underlying the options.

Securities sold, not yet purchased and short options represent obligations of the Partnership to deliver the specified security and, thereby, create a liability to repurchase the security in the market at prevailing prices. Accordingly, these transactions result in risk as the Partnership's satisfaction of the obligations may exceed the amount recognized in the statement of financial condition.

Risk arises from the potential inability of counterparties to perform under the terms of the contracts (credit risk) and from changes in the values of the underlying financial instruments (market risk). The Partnership is subject to credit risk to the extent that any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Partnership attempts to minimize its exposure to credit risk by monitoring brokers with which it conducts investment activities. In management's opinion, market risk is substantially diminished when all financial instruments are aggregated.

{12}------------------------------------------------

#### Notes to Financial Statements, Continued December 31, 2021

#### 7. Fair Value Measurements and Disclosures

ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by ASC 820, are used to measure fair value.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

- · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities the Partnership has the ability to access at the measurement date.
- · Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
- · Level 3 are unobservable inputs for the asset or liability and rely on management's own assumptions that market participants would use in pricing the asset or liability. The unobservable inputs should be developed based on the best information available in the circumstances and may include the Partnership's own data.

The availability of observable inputs can vary from security and is affected by a wide variety of factors, including, for example, the type of security, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of the fair value is requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

The inputs used to measure fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

A description of the valuation techniques applied to the Partnership's major categories of assets and liabilities measured at fair value on a recurring basis follows:

· State Municipal Obligations. State Municipal Obligations are valued using quoted market prices. Valuation adjustments are not applied. Accordingly, State Municipal Obligations are generally categorized in level 1 of the fair value hierarchy.

{13}------------------------------------------------

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{14}------------------------------------------------

#### Notes to Financial Statements, Continued December 31, 2021

#### Credit Concentration 8.

At December 31, 2021, a significant credit concentration consisted of approximately \$187.2 million, representing the fair value of the Partnership's trading accounts carried by its clearing broker, Bank of America Securities Inc. Management does not consider any credit risk associated with this net receivable to be significant.

At December 31, 2021, the Partnership had a cash balance at one bank in excess of FDIC limits. Management believes the Partnership is not exposed to any significant credit risk on cash.

#### Employee Benefit Plan 9.

The Partnership has established a 401(k) plan for qualified employees. The Partnership can elect to match employees' contributions and make further discretionary contributions to the plan, subject to certain limitations as set forth in the plan agreement. Employee contributions made to the plan during the year ended December 31, 2021 totaled approximately \$814,000. The Partnership elected to make contributions to the year ended December 31, 2021 that totaled approximately \$464,000.

#### 10. Commitments

The Partnership recognizes leases in accordance with Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 842, leases and recognize a right of use asset and lease liability in the statement of financial condition. The Partnership has recorded a right of use asset and lease liability based on the presents value of the future payments calculated with a 1.54% discount rate. The Partnership conducts its operations in leased office facilities and annual rentals are charged to current operations. Rent expense for the year ended December 31, 2021 totaled approximately \$511,000.

The minimum annual rental commitments under non-cancelable operating leases are as follows as of December 31, 2021:

| Year Ending<br>December 31. |      | Amount   |
|-----------------------------|------|----------|
| 2022                        | ಕ್ಕಾ | 487.000  |
| 2023                        |      | 164.000  |
|                             |      | 651,000  |
| Imputed Interest            |      | (44,000) |
| Lease liability             | ਉ    | 607,000  |

The current value of ROU asset is approximately \$607,000 and reflected in other assets in the Statement of Financial Condition.

{15}------------------------------------------------

Notes to Financial Statements, Continued December 31, 2021

#### 11. Guarantees

ASC 460, Guarantees, requires the Partnership to disclose information about its obligations under certain guarantee arrangements. ASC 460, defines guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in underlying (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement, as well as indirect guarantees of the indebtedness of others.

#### Derivative Contracts

Certain derivative contracts meet the accounting definition of a guarantee, including certain options written, contingent forward contracts and credit default swaps. Although the Partnership's derivative arrangements do not specifically identify whether the derivative counterparty retains the underlying asset, liability or equity, the Partnership has disclosed information regarding all derivative contracts that could meet the accounting definition of a guarantee.

The maximum potential payout for certain derivative contracts, such as written foreign currency options, cannot be estimated, as increases in foreign exchange rates in the future could possibly be unlimited. In certain situations, collateral may be held by the Partnership for those contracts that meet the definition of a guarantee. Generally, the Partnership sets collateral requirements by counterparty so that the collateral covers various transactions and products and is not allocated specifically to individual contracts. Also, the Partnership may recover amounts related to the underlying asset delivered to the Partnership under the derivative contract.

The Partnership records all derivative contracts at fair value. Aggregate market risk limits have been established, and market risk measures are routinely monitored against these limits. The Partnership also manages its exposure to these derivative contracts through a variety of risk mitigation strategies, including, but not limited to, entering into offsetting economic hedge positions. The Partnership believes that the notional amounts of the derivative contracts generally overstate its exposure.

#### 12. Contingency

In the normal course of business, the Partnership is subject to legal actions that involve claims for monetary relief. The Partnership's legal counsel has indicated that it cannot evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss. In the opinion of management, based on consultation with legal counsel, these actions will not result in any material or adverse effect on the financial position of the Partnership.

{16}------------------------------------------------

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{17}------------------------------------------------

SUPPLEMENTAL SCHEDULES

{18}------------------------------------------------

Computation of Net Capital for Broker and Dealers pursuant to Rule 15c3-1

December 31, 2021

| Computation of net capital |  |  |
|----------------------------|--|--|
|----------------------------|--|--|

| Total partners' capital                                                                                                                                                               |       |                      | ಕ್ಕಾ | 191,281,625  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|----------------------|------|--------------|
| Deduct partners' capital not allowable for net capital                                                                                                                                |       |                      |      | (14,937,989) |
| Total partners' capital qualified for net capital                                                                                                                                     |       |                      |      | 176,343,636  |
| Deductions and/or charges:<br>Nonallowable assets:<br>Furniture and equipment, net<br>Other assets<br>Commodity futures contracts and spot commodities<br>proprietary capital charges | ക     | 1,028,071<br>717,211 |      | (1,745,282)  |
| Net capital before haircuts on securities positions                                                                                                                                   |       |                      |      | 174,598,354  |
| Haircuts on securities:<br>Trading and investment securities:<br>Debt securities<br>Other securities<br>Undue concentration                                                           | સ્ત્ર | 452                  |      | (452)        |
| Net capital                                                                                                                                                                           |       |                      | ಿಕ   | 174,597,902  |
| Computation of basic capital requirement                                                                                                                                              |       |                      |      |              |
| Minimum net capital required (greater of \$1,000,000 or 6 %%<br>of aggregate indebtedness)                                                                                            |       |                      |      | 1,876,270    |
| Net capital in excess of net capital requirement                                                                                                                                      |       |                      | ಿ    | 172,721,632  |
| Computation of aggregate indebtedness                                                                                                                                                 |       |                      |      |              |
| Aggregate indebtedness                                                                                                                                                                |       |                      | ಿ    | 28,144,043   |
| Ratio of aggregate indebtedness to net capital                                                                                                                                        |       |                      | 0/0  | 16.12        |

There are no material differences between the above computation and the Company's corresponding unaudited Form FOCUS Part II filing as of December 31, 2021.

{19}------------------------------------------------

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{20}------------------------------------------------

![](_page_20_Picture_0.jpeg)

RYAN & JURASKA LLP Certified Public Accountants

141 West Jackson Boulevard Chicago, Illinois 60604

Tel: 312.922.0062 Fax: 312.922.0672

#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Cutler Group, L.P.

We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) Cutler Group, L.P. (the "Partnership") did not claim an exemption under paragraph (k) of 17 C.F.R. §240.15c3-3, and (2) the Partnership is filing this Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Partnership limits its business activities exclusively to proprietary trading and the Partnership did not directly or indirectly receive, hold, or otherwise or securities for or to customers, did not carry accounts of or for customers; and did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year ended December 31, 2021 without exception.

The Partnership's management is responsible for compliance with the exemption and its statements.

Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Partnership's compliance with the exemptions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based upon the Partnership's business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5, and related SEC Staff Frequently Asked Questions.

Chicago, Illinois February 25, 2022 

{21}------------------------------------------------

CUTLER GROUP, L.P. The Exemption Report December 31, 2021

Cutler Group, L.P., (the "Partnership") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Partnership states the following:

- 1) The Partnership does not claim an exemption under paragraph (k) of 17 C.F.R. § 240. 15c3-3.
- 2) The Partnership is filing this Exemption Report relying on footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Partnership limits its business activities exclusively to proprietary trading and the Partnership (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year ended December 31, 2021 without exception.

I, Nader Sharabati, affirm that to the best of my knowledge and belief, this Exemption Report is correct and true.

Cutler Group, L.P.

Nader Sharabati Chief Financial Officer

February 25, 2022


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