# MTS MARKETS INTERNATIONAL, INC. X-17A-5 (2022-03-10) — Broker-dealer annual report

- Company: MTS MARKETS INTERNATIONAL, INC.
- Form: X-17A-5
- Filed: 2022-03-10
- Period: 2021-12-31
- Accession: 0001044991-22-000002
- CIK: 1044991
- File #: 8-50451
- Type: Broker-dealer
- Material weakness: No
- Auditor: Mazars USA LLP
- Auditor location: Woodbury, NY
- Contact: Phyllis Chin
- Phone: 2127514422
- Website: mazars.us
- Signed by: David Parker (Head of MTS Markets International, Inc.)

Original filing: https://www.sec.gov/Archives/edgar/data/1044991/000104499122000002/mmishort.pdf

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# MTS Markets International, Inc.

Statement of Financial Condition December 31, 2021

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| T9GKJOc4JoNLKHGKNOM`NKU8b?3:YTNcGVVPNRGWPJY                                                                                |                            |                                                | T8b?3:4JoNLKHGKNOM1^lWJHQNcGVVPNRGWPJY |
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#### OATH **OR AFFIRMATION**

I, David Parker, swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of MTS Markets International, Inc., as of December 31, 2021, is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer.

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

- ~ (a) Statement of financial condition.
- ~ (b) Notes to consolidated statement of financial condition.
- D (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).
- D (d) Statement of cash flows.
- D (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
- D (f) Statement of changes in liabilities subordinated to claims of creditors.
- D (g) Notes to consolidated financial statements.
- D (h) Computation of net capital under 17 CFR 240.1Sc3-1 or 17 CFR 240.lSa-l , as applicable.
- D (i) Computation of tangible net worth under 17 CFR 240.lSa-2.
- D (j) Computation for determination of customer reserve requirements pursuant to Exhibit **A** to 17 CFR 240.1Sc3-3.
- D (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.1Sc3-3 or Exhibit **A** to 17 CFR 240.lSa-4, as applicable.
- 0 (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3.
- D (m) Information relating to possession or control requirements for customers under 17 CFR 240.1Sc3-3.
- D (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.lSa-4, as applicable.
- D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 17 CFR 240.lSa-l, or 17 CFR 240.lSa-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.lSa-4, as applicable, if material differences exist, or a statement that no material differences exist.
- 0 (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- ~ (q) Oath or affirmation in accordance with 17 CFR 240.17a-S, 17 CFR 240.17a-12, or 17 CFR 240.lSa-7, as applicable.
- 0 (r) Compliance report in accordance with 17 CFR 240.l 7a-S or 17 CFR 240.18a-7, as applicable.
- D (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.lSa-7, as applicable.
- IZI (t) Independent public accountant's report based on an examination of the statement of financial condition.
- 0 (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-S, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable.
- D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-S or 17 CFR 240.18a-7, as applicable.
- D (w) Independent public accountant's report based on **a** review of the exemption report under 17 CFR 240.17a-S or 17 CFR 240.18a-7, as applicable.
- D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.1Sc3-le or 17 CFR 240.17a-12, as applicable.
- D (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).
- D (z) Other:

<sup>0</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.

Signature: )>~

Title: Head of MTS Markets International, Inc.

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# MTS Markets International, Inc. Index December 31, 2021

|                                                         | Page(s) |
|---------------------------------------------------------|---------|
| Report of Independent Registered Public Accounting Firm |         |
| Financial Statement                                     |         |
| Statement of Financial Condition                        |         |
| Notes to the Financial Statement                        |         |

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# mazairs

Mazars USA LLP 60 Crossways Park Drive West Suite 301 Woodbury, New York 11797

Tel: 516.488.1200 www.mazars.us

# Report of Independent Registered Public Accounting Firm

To the Executive Committee of MTS Markets International, Inc.

### Opinion on the Financial Statement

We have audited the accompanying statement of financial condition of MTS Markets International, Inc., (the "Company"), as of December 31, 2021, and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial statement presents fairly, in all material respects, the financial position of the Company, as of December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

### Basis for Opinion

This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement 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 the Company in accordance with the U.S. federal securities laws and the applicable rules and requlations of the Securities and Exchange Commission and the PCAOB.

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 statement is 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 statement, 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 statement. 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 statement. We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company's auditor since 2014.

Woodbury, NY March 7, 2022

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# MTS Markets International, Inc. Statement of Financial Condition As of December 31, 2021

| Assets                                          |     |               |
|-------------------------------------------------|-----|---------------|
| Cash                                            | ക   | 2,296,388     |
| Receivable from clearing broker                 |     | 1,249,866     |
| Due from affiliates                             |     | 14,897        |
| Commissions receivable                          |     | 196,170       |
| Prepaid expenses and other current assets       |     | 335,907       |
| Property and equipment, net                     |     | 617,272       |
| Capitalized software                            |     | 1,563,292     |
| Right of use asset                              |     | 364,646       |
| Security deposit                                |     | 128,461       |
| Intangible assets, net                          |     | 900,000       |
| Total assets                                    | ಕಾ  | 7,666,899     |
|                                                 |     |               |
| Liabilities and Stockholder's Equity            |     |               |
| I iabilities                                    |     |               |
| Due to affiliates                               | ക്ക | 36,902        |
| Accounts payable and accrued expenses           |     | 761,949       |
| Lease liability                                 |     | 375,468       |
| Total liabilities                               |     | 1,174,319     |
|                                                 |     |               |
| Stockholder's equity                            |     |               |
| Common stock \$0.01 par value; 1,000 authorized |     |               |
| issued and outstanding shares                   |     | 10            |
| Additional paid in capital                      |     | 112,255,180   |
| Accumulated deficit                             |     | (105,762,610) |
| Total stockholder's equity                      |     | 6,492,580     |
| Total liabilities and stockholder's equity      | ക   | 7,666,899     |

The accompanying notes are an integral part of this financial statement.

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#### 1. Description of Business

MTS Markets International, Inc. (the "Company"), was incorporated in the State of Delaware on April 27, 1999. The Company is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA").

The Company is wholly owned by MTS S.p.A. (the "Parent"), which in turn is majority owned by . Borsa Italiana S.p.A. ("Borsa Italiana"), a subsidiary of the London Stock Exchange Group plc ("LSEG"). On January 28, 2021 LSEG completed an acquisition of Refinitiv. As a condition of the acquisition, the European regulators required LSEG to divest itself of Borsa Italiana and its subsidiaries. On April 29, 2021 Euronext N.V. ("Euronext") acquired Borsa Italiana and its subsidiaries, which includes the Company.

The Company offers corporate bonds through its BondsPro proprietary trading platform and also through the Company's registered representatives. The Company does not carry accounts for customers or perform custodial functions related to securities. The Company acts on a riskless principal basis in securities transactions that are cleared through a non-affiliated clearing firm.

### 2. Summary of Significant Accounting Policies

#### Basis of presentation

The Company's financial statement has been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

The following is a summary of the significant accounting policies followed by the Company.

#### Cash and cash equivalents

The Company considers all unrestricted deposits and highly liquid investments, which are readily convertible to cash, with original maturities of three months or less at acquisition, to be cash equivalents. There were no cash equivalents at December 31, 2021.

### Revenue

The Company recognizes revenue from customers arising from the transfer of goods and services in accordance with ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". The Company executes transactions between its clients and liquidity providers. It acts as an intermediary in these transactions by serving as a trading counterparty to both the buyer and the seller in matching back-to-back trades, which are then settled primarily through its clearing broker. Securities transactions and the related revenues and expenses are recorded on a trade-date basis. The Company believes that the performance obligation is satisfied on the trade date as that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. Such revenue and expenses are reflected within riskless principal trading and execution, respectively, in the statement of operations.

The opening and closing receivables balances for Riskless principal trading was:

|                                 |         |  | December 31, 2021 - December 31, 2020 |  |
|---------------------------------|---------|--|---------------------------------------|--|
| Receivable from clearing broker | 749.866 |  | 801.959                               |  |
| Commissions receivable          | 166.425 |  | 127.599                               |  |
|                                 | 916.291 |  | 929.558                               |  |

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### 2.

#### Revenue (continued)

The Company buys and sells securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commissions and related clearing expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer.

The opening and closing receivables balances for Commission and fee income was:

|                        |  |        | December 31, 2021 December 31, 2020 |       |
|------------------------|--|--------|-------------------------------------|-------|
| Commissions receivable |  | 29.745 |                                     | 4 496 |

The Company recognizes other income pursuant to a service agreement with its Parent, whereby the Company provides support services which include both direct and indirect costs consisting of human resources and rent. The Parent will pay cost plus a 9% markup for such services. The Company also recognized other income pursuant to an agreement with LSEG which represents bonus awards for the period January 1, 2021 to April 28, 2021.The Company believes the performance obligations for providing these services is satisfied over time because the services are provided and consumed over time. Such fees are estimated each month and payment is due upon presentation of an invoice.

The opening and closing receivables balances for Other income was:

|                     |   |         | December 31, 2021 - December 31, 2020 |  |
|---------------------|---|---------|---------------------------------------|--|
| Due from affiliates | ಕ | 14.897  |                                       |  |
| Due from LSEG       |   | 98.125  |                                       |  |
|                     |   | 113.022 |                                       |  |

As of December 31, 2021, the amount due from LSEG, a former affiliate, is included in Prepaid expenses and other current assets on the statement of financial condition.

### Income taxes

The Company accounts for income taxes in accordance with ASC 740. The Company follows an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed as the difference between the financial statement and tax bases of assets and liabilities based on presently enacted tax laws and rates. Valuation allowances are established to reduce deferred tax assets when it is deemed more likely than not that such assets will not be realized.

The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company's financial statement only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities.

{8}------------------------------------------------

### 2.

#### Income taxes (continued)

When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statement as appropriate. Interest and penalties related to unrecognized tax benefits are recorded in the income tax provision.

U.S. GAAP provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statement. The guidance requires the evaluation of tax positions taken or expected to be taken to determine whether the tax positions are "more likely-thannot" of being sustained by the applicable tax authority. The Company recognizes the effect of income tax positions if those positions are more likely than not of being sustained.

The Company is no longer subject to federal, state or local tax examinations by taxing authorities for years prior to 2018.

The Company was party to a tax sharing agreement with a LSEG affiliate and required to file unitary combined returns for New York State and New York City pursuant to New York State and City tax law. The agreement terminated upon Euronext's acquisition. The Company will file returns on a standalone basis going forward.

### Property and equipment

Property and equipment is recorded at cost, net of accumulated depreciation, which is calculated on a straight-line basis over estimated useful lives of three to five years. Leasehold improvements are recorded at cost, net of accumulated amortization, which is calculated on a straight-line basis over the lesser of the economic useful life of the improvement or the lease. The Company periodically reviews property and equipment to determine that the carrying values are not impaired.

### Goodwill

The Company had recorded goodwill as a result of a business combination to the extent the purchase price of the completed acquisition exceeded the fair value of the net identifiable assets of the acquired company. The Company tests goodwill for impairment on at least an annual basis and recorded a full impairment charge of approximately \$7.8 million for the year ended December 31, 2021.

### Long-lived assets and intangible assets

The Company reviews its long-lived assets and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Acquired intangible assets with finite lives, which consist of customer relationships and tradename, are amortized on a straight-line basis over estimated useful lives of 2 to 13 years. The acquired intangible assets associated with the license and domain name have indefinite lives and are not subject to amortization. The Company reviews intangible assets with indefinite lives on at least an annual basis to determine that the carrying values are not impaired. The Company recorded a full impairment charge on net customer relationships value of approximately \$2.7 million for the year ended December 31, 2021.

The impairment charges reflects the reassessment of the Company through a sale process that exteriorized no value for goodwill and customer relationships. As a result, a decision was taken to impair these assets to reflect the appropriate value of the Company as evidenced by the results of this sale exercise.

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| a(*.UU,.S,U@.4@U@*-                            | 5 Zm]7[ln<br>                   |

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

#### Risks and Uncertainties 9.

### Credit Risk

The Company executes transactions between its clients and liquidity providers. It acts as an intermediary in these transactions by serving as a trading counterparty to both the buyer and the seller in matching back-to-back trades, which are then settled through its clearing brokerage firm. The Company is exposed to risks resulting from non-performance by its counterparties. These parties may default on their obligations to the Company due to bankruptcy, lack of liquidity, operational failure or other reasons. Adverse movements in the prices of securities that are the subject of these transactions can increase its risk. Where the unmatched position or failure to deliver is prolonged, there may also be regulatory capital charges required to be taken by the Company.

As of December 31, 2021, the Company maintained its cash balance with a financial institution. The cash balance in excess of the Federal Deposit Insurance Company insurance limits amounted to \$2,046,388. The Company has not experienced any losses in such account and believes it is not subject to any significant credit risk.

### COVID-19

COVID-19 continues to disrupt economic markets and the economic impact, duration and spread of the COVID-19 virus is uncertain at this time. The impact on financial markets and the overall economy, all of which are highly uncertain, cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period the Company's results may be affected. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.

#### 10. Net Capital Requirements

As a registered broker-dealer, the Company is subject to the SEC Uniform Net Capital Rule 15c3-1 (the "Rule") of the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital. In accordance with the Rule, the Company is required to maintain minimum net capital, as defined, equal to the greater of \$100,000 or 6.667% of aggregate indebtedness. At December 31, 2021, net capital of \$2,736,581, exceeded the required net capital minimum of \$100,000 by \$2,636,581. Aggregate indebtedness at December 31, 2020 totaled \$809,673. The ratio of aggregate indebtedness to net capital was 0.30 to 1.

The Company is exempt from SEC Rule 15c3-3 under sub-paragraph k(2)(ii) because all customer transactions are cleared through another broker dealer on a fully disclosed basis.

### 11. Subsequent Events

On March 1, 2022, the Parent and an unrelated party entered into definitive agreements related to the sale and acquisition of 100% of the share capital and voting rights in the Company. The transaction is subject to regulatory approval.


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.