# TMC BONDS L.L.C. X-17A-5 (2020-02-28) — Broker-dealer annual report - Company: TMC BONDS L.L.C. - Form: X-17A-5 - Filed: 2020-02-28 - Period: 2019-12-31 - Accession: 0001126497-20-000005 - CIK: 1126497 - File #: 8-52951 - Material weakness: No - Auditor: Wagner, Ferber, Fine & Ackerman PLLC - Auditor location: Floral Park, NY - Contact: Nathan Bell - Phone: 7708570340 - Website: wtfacpa.com - Signed by: Stuart R. Henderson (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1126497/000112649720000005/TMCBonds.pdf --- {0}------------------------------------------------ T]NITEDSTATES SECI'RIIIESAND EXCIIANGE COMMISSION Washington, D.C. 20549 OMB Number: 3235{123 Expires: August31,2020 Estimated average burden hou6 Derreaoonsa.. . ... 12.0O ## ANNUAL AUDITED REPORT FORM X-l7A-s PART III | E-52951 | | |---------|--| FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | | Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | | | |--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|----------------------|--------------------------------| | REpoRr FoR rHE pERroD BEGTNNTNG01/0112019 | | AND ENDrNG12l31l201g | | | | MM/DD/YY | | MITUDD/YY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BRoKER.DEALER: TMC BONdS L.L.C. | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | 850 3rd Avenue , New York, New York | | | | | | (No. and Street) | | | | | | 10022 | | | (cily) | (State) | (zie Code) | | | NAME AND TELtsPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Stuarl R. HEnderson 64i6-2374313 | | | | | | | | (Area Code - Telephone Numb€r) | | | B. ACCOT]NTAI{T IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | Wagner, Ferber, Fine & Ackerman PLLC | | | | | | (Nnfre - ifindividual, state last,firsl, iddle nar e) | | | | 66 South Tyson Avenue | FloralPark | New York | 11001 | | (Address) | (city) | (Srate) | (Zip Cod€) | | CHECKONE: | | | | | Certifrea f utlic Accountant | | | | | I
Public Accountant | | | | | | Accountant not resident in United States or any ofits possessions. | | | | | | | | | | | | | | | | | | | | | | | tClaims for exemptionfrom the requirement that the annual ruport be covered by the opinion ofan independent public accoun anl must be supported by a statement oflacts and circumstances telied on as the basis lor lhe exemption. See Section 240.17a-5(e)Q) > Pol€nllal per3onr who are to rospond to the collectlon ol lnformatlon contalned ln thlslorm are not requlredto retpond unle\$th€lorm dlsplays a curr€nlly valld OMBcontrol numbsr. {1}------------------------------------------------ #### OATH OR AFFIRMATION | Stuart R. Henderson | , swear (or affirm) that, to the best of | | |---------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--| | TMC Bonds L.L.C. | my knowledge and beliefthe accompanying financial statement atrd supporting schedules pertaining to the firm of
,&s | | | of December 31, | 2019
. are true and correct. I further swear (or affirm) that | | | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | classified solely as that ofa customer, except as follows: | | | | | | | | | | | | | | | | | | | | | | | | uormv e0Hl,Hi?\$Drslew vonx | | | | | Chief Financial Officer | | | .our,38#.l\$Hffff ffian'." | | | | | | | | | | | | | | | | is report ** contains (check all applicable boxes):
Th
(a) Facing Page. | | | | @
(b) Statement of Financial Condition.
E] | | | | tr | (c) Statement oflncome (Loss) or, ifthere is other comprehensive income in the period(s) presented, I Statement | | | of Comprehensive Income (as defined in \$210.1-02 of Regulation S-X).
(d) Statement of Changes in Financial Condition. | | | | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | | (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
H | | | | (g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule l5c3-3. | | | | (i) Information Relating to the Possession or Control Requirements Under Rule l5c3-3.
H | | | | tr | O A Reconciliation, including appropriate explanation ofthe Computation ofNet Capital Under Rule l5c3-1 and the | | | | Computation for Determination ofthe Reserve Requirements Under Exhibit A of Rule l5c3-3.
{k) e n""oo"iliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | [
consolidation. | | | | @ (l) en oattr or Affirmation. | | | | Ll (m) A copy ofthe SIPC Supplemental Report. | | | | | El iof a *fi"r, aescribing any material inadeluacies found to exist or found to have existed since the date ofthe previous audit. | | | *' For conditions of confidential treatment of certain Portions of this fili.ng, see section 240.17a-5 (e)(3). | | | | | | | {2}------------------------------------------------ TMC BONDS, LLC FINANCIAL STATEMENT DECEMBER 31,2019 {3}------------------------------------------------ ### TMC BONDS, LLC FINANCIAL STATEMENT DECEMBER 3I, 2OI9 #### TABLE OF CONTENTS | Page No, | | |----------|--| |----------|--| | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 3 | | |-----------------------------------------------------------|---------| | FINANCIAL STATEilIENT | | | Statement of Financial Condition
4 | | | NOTES TO FINANGIAL STATEilIENT | 5 - '12 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) Ccrtlfied Public Accountants & Busiflcss Advisors www.wtfacpa.com 66 South Tyson Awnue Floral Park, NY 11001 (s16) 328-3800 F8x (516) 1E6-4695 #### REPORT OF INDEPENDEilT REG]STERED PUBLIG ACCOUNTTNG FIRI' To the Board of DirectoB and Shareholders of lMC Bonds, LLC #### Oplnlon on the Fanancial Siatements We have audited the accompanying statement of financial condition of TMC Bonds, LLC as of December'31, 2019, and the related notes (collectively referred to as the financial stiatement). ln our opinion, the financial statement presents fairly, in all material respec-ts, the financial position of TMC Bonds, LLC as of December 31, 2019, in conformity with accounting principles generally accepted in the United States of America- #### Basls for Oplnlo This financial statement is the responsibility of TMC Bonds, LLC'S management. Our responsibility is to oxpress an opinion on TMC Bonds, LLC'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 ars r€quired to be independent with r€spect to TMG Bonds, LLC in accordance with . the U.S. federal securilies laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conduded our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assuranoe about whether the financial statement is free of material misstatement, whether due to enor or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to enor or ftaud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidonce regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accrunting principles used and significant estimates made by management, as w€ll as evaluating the overall presentation of the financial statem€nt. We believe that our audit provides a roasonable basis for our opinion. We have served as TMC Bonds, LLC'S auditor since 2002. qur&Jrl\* bhlilt\*htil. Floral Park, New York February 28,2020 3 {5}------------------------------------------------ #### TMC BONDS, LLC STATETSENT OF FINANCIAL CONDITION DECETTIBER 3'I, 2O'I9 #### ASSETS | Assets | | |----------------------------------------------------------------|---------------| | Cash and cash eguivalents | \$ 45,300,506 | | Receivables- broker and dealers, net of allowance for doubtful | | | accounts of \$50,026 | 6,381,532 | | Property and equipment, net | 2,300,995 | | Goodwill | 41,938 | | Receivables from Affiliates,net | 1,393,874 | | Other assets | 7,031,083 | | | | | | | Total assets #### LIABILITIES AND TETBER'S EQUITY | Liabilities | | |------------------------------------------|---------------| | Due to brokers and dealers | \$
205,898 | | Accounts payable and accrued liabilities | 10,316,713 | | Lease Obligations-Long-Term | 6,034,212 | | Total liabilities | 16,ss6,823 | | Commitments and Contingencies | | | Membe/s equity | 45,893,106 | | Total liabilities and membe/s equity | 9_62A4spn_ | The accompanying notes are an integral part of this financial statement. \$ 62,,149,928 {6}------------------------------------------------ ## TMC BONDS, LLC NOTES TO FINANCIAL STATEMENT DECEMBER 31, 2019 #### NOTE1 . NATURE OF OPERATIONS TMC Bonds L.L.C., (the "Company'), was formed on June 8, 2000, became a U.S. registered broker-dealer with the Securities and Exchange Commission and is a member of the Financial lndustry Regulatory Authority lnc. (FINRA). ln August 2012, the Company formally changed its name to TMC Bonds L.L.C. The firm is also a member of the Municipal Securities Rulemaking Board, as well as the Securities lnvestor Protection Corporation. TMC Bonds is a Delaware limited liability company ('L.L.C.) whose sole member is TheDebtCenter, L.L.C. ('Parenf). On May 29, 2018, lntercontinental Exchange lnc. ('lCE') a public company listed on the NYSE announced that they entered into an agreement to acquire the Parent. On July 23, 2018 ICE completed its acquisition of the Parent. The Company operates a trading platform for the purpose of matching buyers and sellers in the fixed income securities market. The Company acts as principal in these transactions, simultaneously executing purchases and sales with each counterparty, providing complete anonymity to both the buyer and seller. The Company clears all transactions through Pershing LLC on a fully disclosed basis. #### NOTE2. SUilITARY OF SIGNIFICANT ACCOUNTING POLICIES ## B\*is of Accounting The Company's financial statements have been prepared in conformi\$ with accounting principles generally accepted in the United States of America, which involve the application of accrual accounting; accordingly, the financial statements reflect al material receivable, payables, and other liabilities. ## Cash and c\*h equivalenb The company considerc all short-term investments with an original maturity of three months or less to be cash equivalents. {7}------------------------------------------------ ### TMC BONDS, LLC NOTES TO FINANCIAL STATEMENT DECEIUIBER 31, 2019 #### NOTE2 - SUiIilARY OF SUIIilARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ### Prop\*ty and Equipment" Net Property and equipment are stated at cost, less accumulated depreciation and amortization. The costs of additions and improvements are capitalized and expenditures for repairs and maintenance are expensed as incuned. Fully depreciated assets are retained in property and depreciation accounts until they are removed from service. When assets are retired or othemise disposed of, their costs and related accumulated depreciation and amortization are removed from the accounts and the resulting gains or losses are included in operations. Depreciation of property and equipment is accounted for on the straighlline method over the estimated useful lives of the assets. Amortization of leasehold improvements is calculated by the straight-line method over the shorter of the term of the related lease or the useful lives of the improvements. ### lmpairment ol Long-Lived Asseb ln accordance with FASB ASC 360, longJived assets, including property and equipment and intangible assets subject to amortization are reviewed for impairment and written down to fair value whenever events or changes in circumstances indicate the carrying amount may not be recoverable through future undiscounted cash flows. An impairment loss is measured as the amount by which the carrying amount of a long{ived asset exceeds its fair value. Management b€lieves no impairment adjustment is needed for the year ended December 3't, 2019. #### Revanue Recognition Commission income is recognized on a trade date basis as security transactions occur and consists of contractual commission percentages and/or the marginal difference between matching the price of buying and selling the security. Other income includes subscription fees for the usage of the company's web based trading platform. Estimated losses resulting from uncollectible accounts are recorded as the provision for doubtful accounts which is included in Other Expenses. Related clearing expenses are also recognized on a trade date basis as security transactions occur. Effective January 1,201.8, the Company adopted the new guidance of ASC Topic 606, revenue from contracls with customers (l'opic 606), which will supersede the revenue recognition requirements in ASC Topic 605, Revenue Recognition. Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services' The new guidance requires the Company to apply the following steps: (1) identify the {8}------------------------------------------------ ## TMC BONDS, LLC NOTES TO FINANCIAL STATEMENT DECEMBER 31,2019 #### Revenue Recognition (continued) contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation. The Company will be required to adopt Topic 606 either on a fill retrospective basis to each prior reporting period presented or on a modified retrospective basis Wth the cumulative effect of initially applying the new guidance recognized at the date of the initial application. The Company has assessed the impacl of adoption on its material revenue streams, evaluated the new disclosure requirements, and identified and implemented appropriate changes to its business processes, systems and controls to support recognition and disclosure under the new guidance. #### lncome Taxes The Company and its Parent became single member LLCs upon ICE's acquisition. They are treated as disregarded entities for income tax purposes and therefore are treated as divisions of lCE. As such, the Company is not subject to entity-level federal, state or local income tax taxation. All items of income, expense, gain and loss of the Company are included in the consolidated tax returns of lCE. ln December 2019, the Financial Accounting Standards Board, or FASB, issued ASU No. 2019-12, Simplitying the Accounting for lncome laxes, or ASU 2019-12, which specified that an entity is not required to allocate the consolidated amount of cunent and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements. ASU 2019-12 is effeciive for fiscal years beginning after December '15, 2020 with early adoption permitted. The Company decided to early adopt the guidance in ASU2019-12 and did not allocate the consolidated amount of current and defened tax expense of ICE to the Company. Therefore, no income tax provision is reported in the financial statements and no disclosure on income tax provision in the accompanying footnotes #### Use of Estimates The preparation of financial statements in conformity with accounting principles gener.rlly accepted in the United States of America requires management to make estimates and assumptions that affec't the reported amounts of assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. ### Subsequent Evenb Management has evaluated subsequent events or transactions through February 28, 2020, the date which the financial statements were available to be issued. {9}------------------------------------------------ ## TMC BONDS, LLC NOTES TO FINANCIAL STATEMENT DECEMBER 31,20I9 # NOTE3 - PROPERTYANDEQUIPTENT Major classes of property and equipment consist of the following: | | Estimated
useful life - | | |----------------------------------------------------|----------------------------|-------------| | | years | | | Fumiture and fixtures | 7 | \$46,2,024 | | Machineryandequipment | 5 | 176,133 | | Leasehold improvements | Term of lease | 1,771,321 | | Computerequipment | 3 | 1,2'15,852 | | | | 3,625,330 | | Less: Accumulated depreciation
and amortization | | 1,324,335 | | Net property and equipment | | \$2,300,995 | The depreciation and amortization expense for the year ended December 31, 2019 aggregated \$899,297. # NOTE 4 . FAIR VALUE iITEASURETIENTS The carrying amounts of the Company's financial instruments, which include cash and cash equivalents, accounts receivable, deposits, accounts payable and accrued expenses, approximate their fair values at December 31,2019 due to the short-term nature of these instruments. # NOTE 5 - NET CAPITAL REQUIREIIENTS As a registered broker dealer and member of the Financial lndustry Regulatory Authority, lnc., (FINRA), the Company is subjec{ to the Securities and Exchanges Commissions Uniform Net Capital Rule which requires that the Company maintain minimum net capital, as defined, of 6 2l3o/o ol aggregate indebtedness, as defined, or \$250,000, whichever is greater. At December 31, 2019, the Company had net capital of \$38,067,279 which exceeded the requirements by \$37,379,637' {10}------------------------------------------------ ## TMC BONDS, LLC NOTES TO FINANCIAL STATEMENT DECEMBER 31, 2OI9 # NOTE 6 - CONCENTRATIONS OF CREDIT RISK The Company is engaged in various trading and brokerage ac'tivities in which counterparties primarily include broker-dealers, banks and other financial institutions. ln the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of defautt depends on the credit worthiness of the counter-party or issuer of the instruments. lt is the Company's policy to review, as necessary, the credit standing of each counterparty. Financial instruments that potentially subject the Company to Concentrations of Credit Risk include unsecured cash. At December 31, 2019, the Company had cash deposits with four banks that were in excess of federally insured amounts by approximately \$44,513,000. #### NOTE 7 . RELATED PARTIES The Company maintains services agreements with three affiliates- lntercontinental Exchange, Creditex Group, lnc, and Creditex Securities Corporation referred to collectively as 'the Agreements." These Agreements provide for the sharing of expenses related to administrative, management and brokerage services which include (but are not limited to) accounting, human resources, information technology and occupancy related costs. At December 31, 2019, the Company was owed \$1.39 million from ICE and its subsidiaries. Payment of this related party balance by the Company is due at least annually under the Agreements and no interest is charged on the balance. #### - COTTITTf,ENTS AND CONTINGENT LIABILITIES NOTE 8 #### I-eases On January 1, 2019, we adopted ASU 20'16-02, Leases, or ASU 2016-02. This standard requires recognition of both assets and liabilities arising from finance and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 requires lessees to recognize a right-of-use asset representing a right to use the underlying asset over the lease term, and a corresponding lease liability on the balance sheet. Our operating leases primarily relate to our leased office space and data center facilities, and we do not have any leases classified as finance leases. We adopted ASU 2016-02 using the modified retrospective transition method and did not restate prior periods. Using the modified retrospective approach, we applied the provisions of ASU 2016-02 beginning in the period of adoption, and elected the package of practical expedients available to us. There was no impact to the opening {11}------------------------------------------------ ### TMC BONDS, LLC NOTES TO FINANCIAL STATEMENT DECEMBER 31, 2019 # NOTE I - COililllTlUlENTS AND CONTINGENT LIABILITIES (continued) balance of retained eamings as a result of a cumulative-effect adjustment on the adoption date. We elected the practical expedient to not reassess lease classifications, but alternatively to carry foruard our historical classifications. ln addition, we elected the practical expedient of not separating lease and non-lease components as our lease arrangements are not highly dependent on other underlying assets. Our implementation of the amended lease guidance was subject to the same intemal controls over financial reporting that we apply to our consolidated financial statements. Upon adoption of ASU 2016-02, we recorded \$8,388,345 in operating lease liabilities, of which \$1,221,8U was recorded as other cunent liabilities and \$7,166,46'l was recorded as non-current operating lease liabilities. We also recorded \$8,388,345 in operating lease right-of-use assets. Our adoption did not have an impact on our income statement. The Company has entered into obligations under two operating leases that will expire at various dates from 2020 through 2025. One of these agreements require the Company to obtain a letter of credit in lieu of a cash security deposit. The letter of credit is for \$549,131 and is collateralized by bank deposits. For the second lease, the Company has made a cash security deposit of \$6,206. At December 3'l 2019, our operating lease liabilities net of prepaid rent of \$114,334 were \$7,052,038, of which \$1,017,826 was recorded as other accounts payable and accrued liabilities and \$6,034,2'12 was recorded as other non-current liabilities in the accompanying statement of financial condition. At December 31, 2019, our lease right of use assets were \$7,053,907 and were recorded as other assets in the accompanying statement of fi nancial condition. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.