# MINT BROKERS X-17A-5 (2020-03-04) — Broker-dealer annual report - Company: MINT BROKERS - Form: X-17A-5 - Filed: 2020-03-04 - Period: 2019-12-31 - Accession: 0001088943-20-000011 - CIK: 719188 - File #: 8-29616 - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: New York, NY - Contact: Pascal Karam - Phone: 212-294-7772 - Signed by: Steven Bisgay (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/719188/000108894320000011/MintBS.pdf --- {0}------------------------------------------------ ![](_page_0_Picture_0.jpeg) STATEMENT OF FINANCIAL CONDITION Mint Brokers December 31, 2019 With Report oflndependent Registered Public Accounting Firm {1}------------------------------------------------ | | | | 0MB APPROVAL | |---------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|----------------------------|------------------------------------------------------------------------------------------------------------| | | UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 | | 0MB Number: 3235-0123
Expires: August 31, 2020
Estimated average burden
hours per response 12.00 | | ANNUAL AUDITED REPORT
FORM X-17A-5
PART III | | SEC FILE NUMBER
8-29616 | | | | FACING PAGE | | | | | Information Required of Brokers and Dealers Pursuant to Section 17 of the
Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | | | | REPORT FOR THE PERIOD BEGINNING | 01/01/19
MM/DD/YY | AND ENDING | 12/31/19
MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BROKER - DEALER: | | | | | MINT BROKERS | | | OFFICIAL USE ONLY | | | | | FIRM ID. NO. | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | 110 East 59th Street | | | | | | (No. and Street) | | | | New York
(City) | New York
(State) | | 10022
(Zip Code) | | | | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | Steven Bisgay | | | (212) 294-7849
(Area Code -Telephone No.) | | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report* | | | | | Ernst & Young LLP | | | | | | (Name -if individual, state last, first, middle name) | | | | | | | | | | | | | | 5 Times Square
(Address) | New York
(City) | New York
(State) | 10036-6530
(Zip Code) | | | | | | | CHECK ONE: | | | | | | | | | | X
Certified Public Accountant | | | | | Public Accountant | Accountant not resident in United States or any of its possessions. | | | | | FOR OFFICIAL USE ONLY | | | *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent pub lic accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See section 240.17a-5(e)(2).SEC 1410 (06-02)* {2}------------------------------------------------ #### **AFFIRMATION** I, Steven Bisgay, affirm that, to the best of my knowledge and belief, the accompanying statement of financial condition pertaining to Mint Brokers (the "Partnership"), as of December 31, 2019, is true and correct. I further affirm that neither the Partnership nor any partner, principal officer or director has any proprietary interest in any account classified solely as that of a customer. StevenBisgay Chief Financial Officer Notary Public CHANTAL M BARRALIS Notary Public, State of Mew York Registration #01 BA6364242 I Qualified In New York County Commission Expires Sept 11, 202 I {3}------------------------------------------------ This report contains ( check all applicable boxes): - 0 Facing Page - 0 Report of Independent Registered Public Accounting Firm. - 0 Statement of Financial Condition. - D Statement of Operations. - D Statement of Cash Flows. - D Statement of Changes in Partners' Capital. - D Statement of Changes in Subordinated Borrowings. - 0 Notes to Statement of Financial Condition. - D Computation of Net Capital Pursuant to Rule 15c3-l. - D Computation for Determination of the Reserve Requirements under Exhibit A of SEC Rule 15c3-3 and Information Relating to the Possession or Control Requirements under SEC Rule 15c3-3. - D Computation ofCFTC Minimum Net Capital Requirement - D Schedule of Segregation Requirements and Funds in Segregation for Customers Trading on U.S. Commodity Exchanges. - D Schedule of Segregation Requirements and Funds in Segregation for Customers' Dealer Options Accounts - D Statement of Cleared Swaps Customer Segregation Requirements and Funds in Cleared Swaps Customer Accounts Under 4D(F) of the Commodity Exchange Act - D Statement of Secured Amounts and Funds Held in Separate Accounts for Foreign Futures and Foreign Options Customers Pursuant To Commission Regulation 30.7. - D A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. - 0 An Oath or Affirmation. - DA copy of the SIPC Supplemental Report. - D A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit - D Supplementary Report oflndependent Registered Public Accounting Firm on Internal Control Required by CFTC Regulation 1.16. {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) **Ti?l :+1212773�00 ST�ssqwre R:lx:+12127736350 1<¥.tw'itlrk, r•N10036-615:U ey.com** #### Report of Independent Registered Public Accounting Firm To the Partners and Ma nag em ent of Mint Brokers #### 0 pinion on the Financial Statement We have audited the accompany ng statement of financial cond�ion of Mint Brokers (the "Partnership") as of D ece mbe r 31 , 2019 and the related n oles (the "fi nancia I statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial pos t on of the Partnership at December 31, 2019, in conform ty w th U.S. generally acce pied accounting princi pies. #### Basis for Opinion This financial statement is the respons bil ty of the Partnership's management. Our responsibility is to express an opinion on the Partnership'sfinancial statement based on our aud t. We are a pub l i c accounting firm registered w th the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be i nde pendent w th respect to the Partnership in accordance w th the U.S. fed era I se cu r tie s laws and the applicable rules and regulations of the Secur t es and Exchange C ommi ss i on and the PCAOB. We conducted our aud t in accordance w th the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain re aso nab le assurance ab out whether the financial statement is free of mate r al misstatement, whether due to error or fraud. Our aud t included performing pro ce du res to assess the r sks of material misstatement of the financial statement, whether due to error or fraud, and p erfo rmin g procedures that respond to those risks. Such pro ce du res included examining, on a le st bas s, ev id en ce regarding the amounts and d sclosures in the financial statement. 0 ur aud t also included evaluating the account ng pr nciples used and sign ficant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We have served as the Partnership's aud tor s nce 2008. *�.;,n-LLP* February 28, 2020 {5}------------------------------------------------ ## Statement of Financial Condition ## December 31, 2019 #### *(In Thousands)* | Assets | | |-------------------------------------------------------------------|-------------| | Cash and cash equivalents | \$
2,084 | | Other assets | 27 | | Total assets | \$
2,111 | | Liabilities, Subordinated Borrowings and Partners' Capital | | | Payables to related parties | \$
67 | | Total liabilities | 67 | | Commitments and contingencies (Note 2)
Subordinated borrowings | 1,000 | | Partners' capital
Limited partner
General partner | 1,034
10 | | Total partners' capital | 1,044 | | Total liabilities, subordinated borrowings and partners' capital | \$
2,111 | | | | *See notes to the statement of financial condition* {6}------------------------------------------------ ## Notes to Statement of Financial Condition ## December 31, 2019 *(In Thousands)* ### **1. General and Summary of Significant Accounting Policies** **Description of Business** - Mint Brokers (the "Partnership") is a registered broker-dealer with the Securities and Exchange Commission ("SEC") and a futures commissions merchant ("FCM") registered with the Commodity Futures Trading Commission ("CFTC"). The Partnership is a general partnership organized under the laws of the State of New York, with operations solely in the State of New York. The Partnership is owned by Mint Brokers Holdings I, L.L.C., the Limited Partner (99%) and Mint Brokers Holdings II, L.L.C., the General Partner (1 %), both of which are indirectly owned by BGC Partners, Inc. ( collectively with its subsidiaries "BGC"), which is a subsidiary of Cantor Fitzgerald, L.P. ( collectively with its affiliates "Cantor"). **Basis of Presentation** - The statement financial condition are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). **Use of Estimates** - Management makes estimates and assumptions that affect the reported amounts of the assets and liabilities, and the disclosure of contingent assets and liabilities. Management believes that the estimates utilized in preparing the statement of financial condition are reasonable. Estimates, by their nature, are based on judgment and available information. As such, actual results could differ materially from the estimates included in these statement of financial condition. **Revenue Recognition** - The Partnership derives its revenues primarily through fees from related parties and interest income. *Fees from Related Parties* - Fees from related parties consist of commissions for introducing customers to an affiliate. The Partnership earns a fee on each trade executed for a customer introduced to the affiliate by the Partnership. Revenue is recognized at a point in time on the trade date. Net cash settlements between affiliates are generally performed on a monthly basis. *Interest Income* - The Company receives interest on cash held on deposit. **Cash and Cash Equivalents** - The Partnership considers all highly liquid investments with maturity dates of 90 days or less at the date of acquisition to be cash equivalents. {7}------------------------------------------------ ## Notes to Statement of Financial Condition (continued) ## December 31, 2019 ### *(In Thousands)* ### **1. General and Summary of Significant Accounting Policies** *(continued)* **Income Taxes** - Income taxes are accounted for under U.S. GAAP Accounting Standard Codification ("ASC") Topic 740, *Income Taxes* using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the statement of financial condition carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent that it is more likely than not that deferred tax assets will not be recognized, a valuation allowance would be established to offset their benefit. ASC Topic 740, *Income Taxes,* clarifies the accounting for income taxes by prescribing a "more likely than not" recognition threshold that a tax position is required to meet before being recognized in the statement of financial condition. In addition, the guidance clarifies the measurement of uncertain tax positions, classification of interest and penalties, and requires additional disclosures on tax reserves. **New Accounting Pronouncements** - In June 016, the FASB issued ASU No. 2016-13, *Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments,* which requires financial assets that are measured at amortized cost to be presented, net of an allowance for credit losses, at the amount expected to be collected over their estimated life. Expected credit losses for newly recognized financial assets, as well as changes to credit losses during the period, are recognized in earnings. For certain purchased financial assets with deterioration in credit quality since origination ("PCD assets"), the initial allowance for expected credit losses will be recorded as an increase to the purchase price. Expected credit losses, including losses on off-balancesheet exposures such as lending commitments, will be measured based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. The new standard became effective for the Partnership beginning January 1, 2020, under a modified retrospective approach, and early adoption is pe1mitted. In April 2019, the F ASB issued ASU No. 2019-04, *Codification Improvements to Topic 3 26, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.* The amendments to ASU No. 2016-13 clarify the scope of the credit losses standard and address guidance related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other issues. In addition, in May 2019, the FASB issued ASU No. 2019-05, *Financial Instruments Credit Losses (Topic 326): Targeted Transition Relief* The amendments in this ASU allow entities, upon adoption of ASU No. 2016-13, to irrevocably elect the fair value option {8}------------------------------------------------ ## Notes to *S*tate*m*ent of Financial Condition (continued) ## Dece*m*ber 31, 2019 #### *(In Thousands)* #### **1. General and Summary of Significant Accounting Policies** *(continued)* for financial instruments that were previously carried at amortized cost and are eligible for the fair value option under ASC 825-10, *Financial Instruments: Overall.* In November 2019, the FASB issued ASU No. 2019-11, *Codification Improvements to Topic 326, Financial Instruments-Credit Losses.* The amendments in this ASU require entities to include certain expected recoveries of the amortized cost basis previously written off, or expected to be written off, in the allowance for credit losses for PCD assets; provide transition relief related to troubled debt restructurings; allow entities to exclude accrued interest amounts from certain required disclosures; and clarify the requirements for applying the collateral maintenance practical expedient. The amendments in ASUs No. 2019-04, 2019-05 and 2019-11 are required to be adopted concurrently with the guidance in ASU No. 2016- 1*3*. The Partnership adopted the standards on their required effective date beginning January 1, 2020. The adoption of this guidance did not have a material impact on the Partnership's statement of financial condition. In December 2019, the FASB issued ASU No. 2019-12, *I***n***come Taxes (Topic 740): Simplifyi***n***g t***h***e Accou***n***ti***n***g for I***n***come Taxes.* The ASU is part of the FASB's simplification initiative; and it is expected to reduce cost and complexity related to accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, *I***n***come Taxes* related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period if applicable, the allocation of consolidated income tax expense to separate financial statements of entities not subject to tax and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The new standard will become effective for the Pamership beginning January 1, 2021 and, with certain exceptions, will be applied prospectively. Early adoption is permitted. Management is currently evaluating the impact of the new guidance on the Partnership's statement if financial condition. {9}------------------------------------------------ # Notes to Statement of Financial Condition (continued) # December 31, 2019 *(In Thousands)* ### **2. Commitments, Contingencies and Guarantees** **Legal Matters** - In the ordinary course of business, various legal actions are brought and may be pending against the Partnership. The Partnership is also involved, from time to time, in other reviews, investigations and proceedings by governmental and self-regulatory agencies (both formal and informal) regarding the Partnership's business. Any of such actions may result in judgments, settlements, fines, penalties, injunctions or other relief. As of December 31, 2019, no such claims or actions have been brought against the Partnership. Legal reserves are established in accordance with F ASB guidance on *Accounting for Contingencies,* when a material legal liability is both probable and reasonably estimable. Once established, legal reserves are adjusted when additional information becomes available or when an event occurs requiring a change. **Risk and Uncertainties** - Revenues for the Partnership are transaction based. As a result, the Partnership's revenues could vary based on the transaction volume of global financial markets. Additionally, the Partnership's financing is sensitive to interest rate fluctuations which could have an impact on the Partnership's overall profitability. ## **3. Related Party Transactions** Cantor and other affiliates provide the Partnership with administrative services, clearing and settlement services, and other support for which they charge the Partnership based on the cost of providing such services. Such support includes allocations for utilization of fixed assets, accounting, treasury, operations, human resources, legal and technology services. For the year ended December 31, 2019, the Partnership was charged by Cantor for such services and the uncollected balances are included in Payables to related parties in the Partnership's statement of financial condition .. The Partnership has a subordinated borrowing with an affiliate. See Note 8 - Subordinated Borrowings for further detail related to this transaction. #### **4. Income Taxes** The Partnership recorded no net provision for income taxes due to the establishment of valuation allowance against the benefit for net taxable losses for the year ended December 31, 2019. As of December 31, 2019, the Partnership recorded a net deferred tax asset of \$215 which consists {10}------------------------------------------------ # Notes to Statement of Financial Condition (continued) # December 31, 2019 *(In Thousands)* ### **4. Income Taxes** *(continued)* primarily of net operating loss carryforwards. Deferred tax assets are available for offset against future profits, if and when they arise. The Partnership believes it is more-likely-than-not that the deferred tax asset will not be realized. Accordingly, as of December 31, 2019, the Partnership provided a full valuation allowance of \$215 against the net deferred tax asset. The Partnership analyzed its tax positions with respect to applicable income tax issues for open tax years (in each respective jurisdiction) and determined that no material tax liabilities existed as of December 31, 2019. The Partnership has been included in BGCP's U.S. federal, state and local tax returns. BGCP is presently under UBT examination for the 2008 through 2010 years. BGCP's U.S. federal and state and non-UBT local tax returns are no longer subject to examination by tax authorities prior to 2016 and 2013, respectively. ### **4. Income Taxes** *(continued)* The Partnership is treated as a disregarded entity for U.S. tax purposes, as it is ultimately controlled by BGC Partners, L.P. ("BGCP"), which is owned directly by BGC. BGCP is taxed as a U.S. partnership, files federal, state and local partnership returns and is subject to the Unincorporated Business Tax ("UBT") in New York City for which it records an income tax provision. Pursuant to a tax-sharing policy, BGCP arranges for the payment of New York City UBT on behalf of its wholly owned and controlled entities. The Partnership reimburses payment or receives a credit for future earnings from BGCP based upon its proportionate share of BGCP's UBT liabilities. ### **5. Regulatory Requirements** As a registered broker-dealer, the Partnership is subject to the SEC's Uniform Net Capital Rule ("Rule 15c3-l "). The Partnership has elected to compute its net capital using the basic method, which requires that minimum net capital, be the greater of \$250 or 6 2/3% of aggregate indebtedness. As a registered FCM, the Partnership is subject to Regulation 1.17 of the CFTC, which requires the Partnership to maintain minimum adjusted net capital equal to the greater of 8% of the customer and non-customer risk maintenance margin requirement or \$1,000. At December 31, 2019, the Partnership had net capital of \$1,978, which was \$978 in excess of its required net capital. {11}------------------------------------------------ # Notes to Statement of Financial Condition (continued) # December 31, 2019 *(In Thousands)* #### **6. Revenues from Contracts with Customers** See Note 1 - General and Summary of Significant Accounting Policies for detailed information on the recognition of the Partnership's revenue from contracts with customers. **Contract Balances** - The timing of the Partnership's revenue recognition may differ from the timing of payment by its customers. The Partnership records a receivable when revenue is recognized prior to payment and the Partnership has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Partnership records deferred revenue until the performance obligations are satisfied. #### 7. **Off-Balance Sheet Risk** The Partnership did not have receivables related to revenue from contracts with customers and any deferred revenue at December 31, 2019. #### *Credit Risk* Credit risk arises from potential non-perfo1mance by counterparties. The Partnership has established policies and procedures to manage the exposure to credit risk. The Partnership maintains a thorough credit approval process to limit exposure to counterparty risk and employs stringent monitoring to control the counterparty risk for the matched principal businesses. The Partnership's account opening and counterparty approval process includes verification of key customer identification, anti-money laundering verification checks and a credit review of financial and operating data. The credit review process includes establishing an internal rating and any other information deemed necessary to make an informed credit decision, which may include financials, correspondence, due diligence calls and a visit to the entity's premises, as necessary. ### *Principal Transaction Risk* The Partnership may execute matched principal transactions in which it acts as a "middleman" by serving as counterparty to both a buyer and a seller in matching back-to-back trades. These transactions are then settled through a recognized settlement system or third-party clearing organization. Settlement typically occurs within one to three business days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. The Partnership generally avoids settlement of principal transactions on a free-ofpayment basis or by physical delivery of the underlying instrument. However, free-of-payment transactions may occur on a very limited basis. {12}------------------------------------------------ ## Notes to Statement of Financial Condition (continued) ### December 31, 2019 *(In Thousands)* #### 7. **Off-Balance Sheet Risk** *(continued)* #### *Market Risk* Market risk refers to the risk that a change in the level of one or more market prices, rates, indices or other factors will result in losses for a specified position. The Partnership may allow certain of its desks to enter into unmatched principal transactions in the ordinary course of business and hold long and short inventory positions. These transactions are primarily for the purpose of facilitating clients' execution needs, adding liquidity to a market or attracting additional order flow. As a result, the Partnership may have market risk exposure on these transactions. The Partnership's exposure varies based on the size of its overall positions, the risk characteristics of the instruments held and the amount of time the positions are held before they are disposed of. All positions held longer than intra-day are marked-to-market. The Partnership's attempts to mitigate its market risk on these positions by strict risk limits, extremely limited holding periods and hedging. However, there is no assurance that these procedures and limits will be effective at limiting unanticipated losses in the future. Adverse movements in the securities positions or a downturn or disruption in the markets for these positions could result in a substantial loss. In addition, principal gains and losses resulting from these positions could on occasion have a disproportionate effect, positive or negative, on the Prutnership's financial condition for any particular reporting period. #### *Operational Risk* In providing its array of products and services, the Partnership may be exposed to operational risk. Operational risk may result from, but is not limited to, errors related to transaction processing, breaches of internal control systems and compliance requirements, fraud by employees or persons outside the Partnership or business interruption due to systems failures or other events. Operational risk may also include breaches of the Partnership's technology and information systems resulting from unauthorized access to confidential information or from internal or external threats, such as cyber attacks. Operational risk also includes potential legal or regulatory actions that could arise as a result of noncompliance with applicable laws and/or regulatory requirements. In the case of an operational event, the Partnership could suffer a financial loss as well as reputational damage. {13}------------------------------------------------ # Notes to Statement of Financial Condition (continued) # December 31, 2019 *(In Thousands)* #### **8. Subordinated Borrowings** The Patinership has a subordinated borrowing with BGC Partners, L.P. of \$1,000 as of December 31, 2019. The agreement provides for borrowings up to \$3,000. The rate of interest on the borrowing is 7.8%. The scheduled maturity date on the borrowing is October 30, 2021. This borrowing is subordinated to the claims of general creditors, approved by FINRA and other regulators, and is included in the Partnership's calculation of net capital and the capital requirements under FINRA Rule 4120. #### **9. Subsequent Events** The Partnership has evaluated subsequent events through the date the statement of financial condition were issued. There have been no material subsequent events that would require recognition in this statement of financial condition or disclosure in the notes to the statement of financial condition. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.