# JAG TRADING L.L.C. X-17A-5/A (2024-04-19) — Broker-dealer annual report
- Company: JAG TRADING L.L.C.
- Form: X-17A-5/A
- Filed: 2024-04-19
- Period: 2023-12-31
- Accession: 0001144633-24-000003
- CIK: 1144633
- File #: 8-53408
- Type: Broker-dealer
- Material weakness: No
- Auditor: Michael Coglianese CPA, P.C.
- Auditor location: Bloomingdale, IL
- Contact: Jacqueline Sloan
- Phone: 312-431-0014
- Email: jackie@jackiesloaninc.com
- Website: jackiesloaninc.com
- Signed by: Craig Bauer (Managing Member)
Original filing: https://www.sec.gov/Archives/edgar/data/1144633/000114463324000003/jagreportpublic1.pdf
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| | | | | | | | UNITED STATES | | | | | |
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| | | | | | | | | | | SECURITIES AND EXCHANGE COMMISSION | | |
| | | | | | | | Washington, D.C. 20549 | | | | | |
### ANNUAL REPORTS FORM X-17A-5 PART III
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sec file number
| Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | FACING PAGE | | | | |
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| Filing for the period beginning 01/01/2023 | | 12/31/2023
AND ENDING | | | |
| | MM/DD/YY | MM/DD/YY | | | |
| | A. REGISTRANT IDENTIFICATION | | | | |
| NAME OF FIRM: JAG Trading LLC | | | | | |
| TYPE OF REGISTRANT (check all applicable boxes):
· Broker-dealer
Check here if respondent is also an OTC derivatives dealer | I Security-based swap dealer | 1 Major security-based swap participant | | | |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | |
| 7125 Orchard Lane, Suite 300 | | | | | |
| | (No. and Street) | | | | |
| West Bloomfield | MI | | 48327 | | |
| (City) | (State) | | (Zip Code) | | |
| PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | |
| Jacqueline Sloan | 312-431-0014 | | Jackie@JackieSloanInc.com | | |
| (Name) | (Area Code - Telephone Number) | | (Email Address) | | |
| | B. ACCOUNTANT IDENTIFICATION | | | | |
| | | | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing" | | | | | |
| Michael Coglianese CPA, P.C. | | | | | |
| 125 East Lake Street | (Name - if individual, state last, first, and middle name)
Bloomingdale | | 60108 | | |
| (Address) | (City) | (State) | (Zip Code) | | |
| 10/20/2009 | | 3874 | | | |
| (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) | | |
| | FOR OFFICIAL USE ONLY | | | | |
| | | | | | |
displays a currently valid OMB control number.
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# A C L Comments of the Court of Court of Coath OR AFFIRMATION C
| financial report pertaining to the firm of JAG Trading LLC
12/31 | as of
g g 023 g23 g23 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 proprietary interest in apprecount classified solely | | | | | | | | |
| as that of a customer.
Stuart Robertson | | | | | | | | | |
| NOTARY PUBLIC - STATE OF MICHIGAN | | | | | | | | | |
| County of Oakland
My Commission Expires August 2, 2027 | Signaturer | | | | | | | | |
| Acting in the County of UGUAL | 11/100 | | | | | | | | |
| Stuary Daniffon - 03/14/2019 | Managing Member | | | | | | | | |
| | | | | | | | | | |
| Notary Public | | | | | | | | | |
| | | | | | | | | | |
| This filing** contains (check all applicable boxes): | | | | | | | | | |
| (a) Statement of financial condition. | | | | | | | | | |
| (b) Notes to consolidated statement of financial condition. | | | | | | | | | |
| | [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) Statement of cash flows. | | | | | | | | | |
| LJ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | | | | | | | | |
| [] (f) Statement of changes in liabilities subordinated to claims of creditors. | | | | | | | | | |
| [] (g) Notes to consolidated financial statements.
[] Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. | | | | | | | | | |
| [] { ) Computation of tangible net worth under 17 CFR 240.18a-2. | | | | | | | | | |
| | [] 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. | | | | | | | | | |
| Computation for Determination of PAB Requirements under Exhibit A to § 240,15c3-3. | | | | | | | | | |
| [] - (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3 | | | | | | | | | |
| | [1] 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. | | | | | | | | | |
| | __ o] Reconcliations, including appropriate explanations, of the FOCUS Report with computation of hel | | | | | | | | |
| | 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. | (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as sppicable | | | | | | | | |
| [r] Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. | | | | | | | | | |
| ] {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. | | | | | | | | | |
| | [ [u] Independent public accountant's report based on an examination of the financial statements under 17 | | | | | | | | |
| CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. | | | | | | | | | |
| | ا (y) 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. | | | | | | | | | |
| | l ndependent public accountant's report based on a review of the exemption report under 17 CFR 240.07a-5 or 17 | | | | | | | | |
| CFR 240.18a-7, as applicable. | | | | | | | | | |
| | [.] (x) Supplemental reports on applying agreed upon procedures, in accordance with 17 CFR 240.15c3-12, | | | | | | | | |
| as applicable. | □ (y) Report describing any material inadequacies 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).
LJ (2) Other | | | | | | | | | |
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## JAG Trading, LLC
(A Delaware Limited Liability Company) Financial Statements And Independent Audit Report December 31, 2023
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### JAG Trading, LLC (A Delaware Limited Liability Company) Index December 31, 2023
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| Report of Independent Registered Public Accounting Firm…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… | |
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| Financial Statements | |
| Statement of Financial Condition. | |
| Notes to Financial Statements | |
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Bloomingdale | Chicago
### Report of Independent Registered Public Accounting Firm
To the Sole Member of JAG Trading, LLC
### Opinion on the Financial Statement
We have audited the accompanying statement of financial condition of JAG Trading, LLC as of December 31, 2023, and the related notes (collectively referred to as the financial statement). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of JAG Trading, LLC as of December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
### Basis for Opinion
This financial statement is the responsibility of JAG Trading, LLC's management. Our responsibility is to express an opinion on JAG Trading, 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 are required to be independent with respect to JAG Trading, LLC 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 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 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.
We have served as JAG Trading, LLC's auditor since 2023.
Bloomingdale, IL April 10, 2024
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### JAG Trading, LLC (A Delaware Limited Liability Company) Statement of Financial Condition as of December 31, 2023
| Assets | |
|-------------------------------------------------------|------------------|
| Cash | ക
100,864 |
| Fixed Assets, net of depreciation | 102,628 |
| Securities owned: | |
| Marketable securities, at market value | 65,938,558 |
| Bonds | 205,622 |
| Options, at fair value | 1,109,998 |
| Total securities owned | 67,254,178 |
| Due from broker | 41,914,535 |
| Accrued interest and dividend receivable | 356,363 |
| Preferred stock | 10,000 |
| Total Assets | \$ 109,738,568 |
| | |
| Liabilities | |
| Securities sold short: | |
| Marketable securities sold short, at market value | ಕಿ
64,836,885 |
| Options sold short, at fair value | 3,968,237 |
| Total positions sold, net yet purchased at fair value | 68,805,122 |
| Accrued liabilities | 104.214 |
| Total Liabilities | 68,909,336 |
| Member equity | 40.829.232 |
| Total Liability and Member Equity | ಳ
109.738.568 |
The accompanying notes are an integral part of these financial statements
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#### NOTE 1 Organization
JAG Trading, L.L.C. (the "Company"), A Delaware limited liability company was formed on June 15, 2001. The business of the Company is to engage in the speculative trading of equities, index options thereon. for its own account on organized exchanges in the United States of America. The Company engages in proprietary trading activities. The Company is registered as a broker- dealer with the Securities and Exchange Commission ("SEC") and is a member of the Chicago Stock Exchange ("CHX").
Although the Company is not exempt from Rule 15c3-3, it does not transact business in securities with or for customers and it does not carry margin accounts, credit balances of securities for any person defined as a customer under Rule 17a-5(c)(4). The Company affects transactions only with other broker-dealers and carries its trading accounts with a registered clearing partner.
The financial statements are prepared on a basis consistent with accounting principles generally accepted in the United States of America. The following is summary of the Company's significant accounting policies.
#### NOTE 2 Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
In the normal course of business, as part of its trading strategy, the Company enters into transactions in exchange equity stocks and equity debt securities, including options thereon. These derivative financial contracts are used to adjust the risk and return of their trading strategy. Proprietary trading of principal transactions together with related revenues and expenses are recorded on trade date.
Foreign currency transactions: The Company's functional currency is the U.S. dollar; however, it transacts business in currencies other than the U.S. dollar. Assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect at the statement of financial condition. Income and expense items denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect during the period. Gains and losses resulting from the transactions denominated in foreign currencies to U.S. dollars are reported in income currently.
Securities and derivatives transactions: Securities and derivative transactions and related revenues and expenses are recorded at fair value on a trade-date basis as if they had settled. Realized gains and change in unrealized gains and losses are reflected in trading principal transactions in the statement of operations. Related trading expenses are recorded on a trade-date hasis as transactions occur
The Company recognizes interest paid and earned on the accrual basis and dividend income is recognized on the exdividend date. The Company accounts for its financing activities on an accrual basis.
Due from and due to broker dealer: Receivables and payables relating to trades pending settlement are netted in receivables from and payables to clearing brokers in the statement of financial condition, netted by clearing broker. The Company may obtain short-term financing against its positions. Additionally, when the requirements are net, the Company offsets certain amounts recognized for cash collateral receivables against fair value amounts recognized for net derivative positions held at the same clearing broker.
Income Taxes: A Limited Liability Company does not pay federal income taxes. The Company is treated for Federal and State income taxes as if it was a partnership their income under the Sub Chapter K provision of the
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#### NOTE 2 Significant Accounting Policies (continued)
Internal Revenue Code of 1986. The member is reporting their pro rata share of the profits or losses on their tax returns. The Company reports their income for taxes on a calendar year basis.
The Company applies the provision of FASB ASC 740, Income Taxes, which provides guidance for how uncertain tax positions should be recognized, measured, present and disclosed in the financial statements. FASB ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's financial statements to determine whether the tax positions are more-than-likely-than-not of being sustained by the applicable tax authority. The managing member has concluded there is no tax expense to be recorded by the Company for the year ended December 31, 2023. This determination will always be subject to ongoing reevaluation as facts and circumstances may require. The Company's past three tax years remain subject to income tax audits.
Depreciation: Depreciation is provided on a double declining MACRS lives for all depreciable assets. The estimated useful lives are three years for computers and related software. The Company writes off immediately all computer equipment.
#### NOTE 3 Clearing Agreements
The Company has a joint back office (JBO) clearing agreement with Wedbush Securities. The agreement allows IBO participants to receive favorable margin treatment as compared to a regular customer. As part of the agreement the Company has invested 10,000 in a preferred interest in Wedbush Securities. The Company's interest in Wedbush Securities is reflected as a preferred stock on the balance sheet. Under the Chicago Stock Exchange, (CHX) the Company is required to maintain a minimum net liquidly trading value of \$ 1 million in Wedbush Securities and is exclusive of the preferred stock value of \$10,000.
#### NOTE 4 Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transacion 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 FASB ASC 820, are used to measure.
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 a liability the Company has the ability to access.
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 about the assumptions that market participants would use in pricing the asset or liability.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair measurement. The Company's assessment of significance of a particular input to the fair value measure in its entirety requires judgment and considers factors specific to the investment.
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#### NOTE 4 Fair Value Measurements (continued)
The following describes the valuation techniques used by the Company to measure different financial instruments at fair value and includes the level within the fair value hierarchy in which the financial instrument is categorized.
Equity securities, equity options are recorded at fair value based on quoted market prices, which are generally the exchange settlement prices. These financial instruments are classified as level 1 in the fair value hierarchy. The following table presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2023.
| | | | Fair Value Measurements Using | | | | | |
|--------------------------------------|-------|------------|-----------------------------------------------------------------------|------------|------------------------------------------------------|--|--------------------------------------------------|--|
| Assets | Total | | Quoted Prices in
Active Markets for
Identical Assets
Level 1 | | Significant Other
Observable
Inputs
Level 2 | | Significant
Unobservable
Inputs
Level 3 | |
| Securities owned | | | | | | | | |
| Marketable securities | ಲ್ಲಾ | 65,938,558 | ಲ್ಲಾ | 65,938,558 | ನಿ | | S | |
| Bonds | | 205,622 | | 205,622 | | | | |
| Options, at fair value | | 1,109,998 | | 1,109,998 | | | | |
| | ಕ | 67,254,178 | S | 67,254,178 | ಳ | | | |
| Liabilities | | | | | | | | |
| Securities sold short | | | | | | | | |
| Marketable securities sold short | S | 64,836,885 | S | 64,836,885 | S | | S | |
| Options sold short, at fair value | | 3,968,237 | | 3,968,237 | | | | |
| Futures contracts- open trade equity | S | 68,805,122 | ಕೆ | 68,805,122 | ર્ભ્ત્ર | | સ્ક્ર | |
| | | | | | | | | |
The Company assesses the levels of the investment at each measurement date, and transfers between levels are recognized on the actual date of the event or circumstances that cause the transfer in accordance with the Company's accounting policy.
The following describes the valuation techniques used by the Company to measure different financial instruments at fair value and includes the level within the fair value hierarchy in which the financial instrument is categorized.
### Valuation Techniques
Investments in Securities and Securities Sold Short
The Partnership values investments in securities sold short that are freely tradable and are listed on a national securities exchange or reported on the NASDAQ national market at their last sales price as of the last business day of the year.
Many cash and over-the-counter ("OTC") contracts have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that the marketplace participants are willing to pay for an asset. Ask prices represent the lowest price that the marketplace participants are willing to accept for an asset. For securities whose inputs are based on bid-ask prices, the Partnership's valuation policies do not require that fair value always be a predetermined point in the bid-ask range. The Partnership's policy for securities traded in the OTC markets and listed securities for which no sale was reported on that date are valued at their last reported "bid" price if held long, and last reported "asked" price if sold short.
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#### NOTE 4 Fair Value Measurements (continued)
To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy. Securities traded on inactive markets or valued by reference to similar instruments are generally categorized in Level 2 of the fair value hierarchy.
### Corporate Bonds
The fair value of corporate bonds is estimated using recently executed transactions, market price quotations (where observable), bond spreads or credit default swap spread data used are for the same maturity as the bond. If the spread data does not reference the issuer, then data that references a comparable issuer is used. When observable price quotations are not available, fair value is determined based on cash flow models with yield curves, bond or single name credit default swap spreads and recovery rates based on collateral values as key inputs. Corporate bonds are generally categorized in Level 2 of the fair value hierarchy. In instances where significant inputs are unobservable, they are categorized in Level 3 of the hierarchy.
### Options Contracts
Options contracts traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the highest quoted bid and lowest quoted asked prices on such exchange or board of trade as of the close of trading on the valuation date.
#### NOTE 5 Net Capital Requirements
The Company is subject to the SEC Uniform Net Capital Rule (5c3-1) which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined shall not exceed 15 to 1 (and the rule of the applicable exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1). Under this rule, the Company is required to maintain "minimum net capital" equivalent to \$100,000 or 6 2/3% of "aggregate indebtedness," whichever is greater, as these terms are defined. At December 31, 2023, the Company had net capital of \$17,772,133 which was \$17,672,133 in excess of its required net capital and its aggregate indebtedness to net capital ratio was .59 to 1.
#### Principal risks associated with financial instruments NOTE 6
In the normal course of business, the Company has investments and enters into various financial transactions where the risk of potential loss due to market risk, credit risks can equal or exceed the related amounts recorded. The success of any investment activity is influenced by general economic conditions that may affect the level and volatility of equity prices, credit spreads, interest rates and timing of investor participation in the markets for both equity and interest rate sensitive investments. Unexpected volatility or illiquidity in the markets in which the Company directly or indirectly holds positions could impair its ability to carry out its business and could cause losses to be incurred. See below for a detailed description of selected principal risks.
Market risk represents the potential loss that can be caused by increases in the fair value of investments. The Company's exposure to market risk is directly influenced by a number of factors, including volatility and liquidity of the markets in which the financial instruments are traded.
Credit risk represents the potential loss that would occur if counterparties fail to perform pursuant to the terms of their obligations. In addition to its investments, the Company is subject to credit risk to the extent a custodian with whom its conducts business is unable to fulfill contractual obligations.
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#### NOTE 6 Principal risks associated with financial instruments (continued)
Liquidity risk is the risk that the Company will not be able to raise fulfill its commitments, including inability to sell investments quickly or at close to fair value.
Equity risk is the risk that the market value of the financial instruments may decline due to general market conditions, such as political or macroeconomic factors. Additionally, the financial instruments may decline in value to specific factors affecting a related industry or industries.
Interest rate risk is the risk that the value of financial instruments may fluctuate as a result of changes in market interest rates.
Currency risk is the risk that the value of the financial instruments (denominated in or subject to exposure of foreign currencies) may fluctuate as a result of changes in foreign exchange rates. The Company is subject to the risk that those foreign currencies may decline in value relative to the base currency of the funds.
#### NOTE 7 Derivative Contracts
In the normal course of business, the Company utilizes derivative contracts in connection with its trading activities. Investments in derivative contracts are subject to additional risks that can result in a loss of all or part of an investment. The Company's derivative activities are classified by the following primary underlying risks: interest rate, credit, foreign currency exchange rate, commodity price, and equity price risks. In addition to its primary underlying risks, the Company is also subject to additional counterparty risk due to inability of its counterparties to meet the terms of their contracts.
Since the derivatives held or sold by the Company are for speculative trading purposes, the derivative instruments are not designated as hedging instruments under the provisions of ASC 815 and related pronouncements. Accordingly, all realized gains and losses, as well as any change in net unrealized gains or losses on open positions from the preceding period, are recognized as part of the Company's trading principal transactions revenue on the statement of income.
### Futures contracts
The Company is subject to equity and commodity price risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Company may use futures contracts to gain exposure to, or hedge against, changes in the value of equities and commodities, interest rates or foreign currencies. A futures contract represents a commitment for the future purchase or sale of an asset at a specified date.
The purchase and sale of futures contracts requires margin deposits with a Futures Commission Merchant ("FCM") equal to a certain percentage of the contract amount. Subsequent payments (variation margin) are made or received by the Company each day, depending on the daily fluctuations in the value of the contract. The Company recognizes a gain or loss equal to the daily variation margin. Futures contracts may reduce the Company's exposure to counterparty risk since futures contracts are exchange-traded: and the exchange's clearinghouse, as the counterparty to all exchange-traded futures, guarantees the futures against default.
The Commodity Exchange Act requires an FCM to segregate all customer transactions and assets from the FCM's proprietary activities. A customer's cash and other equity deposited with an FCM are considered commingled with all other customer Companys subject to the FCM's segregation requirements. In the event of an FCM's insolvency, recovery may be limited to the Company's pro rata share of segregated customer Companys available. It is possible that the recovery amount could be less than the total of cash and other equity deposited.
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#### NOTE 7 Derivative Contracts (continued)
### Options
The Company is subject to equity and commodity price risk, and foreign currency exchange rate risk in the normal course of pursing its investment objectives. The Company may enter into options to speculate on the price movements of the financial instrument, commodity, or currency underlying the option, or for use as an economic hedge against certain equity positions held in the Company's portfolio holdings. Option contracts purchased give the Company the right, but not the obligation, to buy or sell within a limited time, a financial instrument, commodity or currency at a contracted price that may also be settled in cash, based on differentials between specified indices or prices.
Options written obligate the Company to buy or sell within a limited time, a financial instrument, commodity or currency at a contracted price that may also be settled in cash, based on differentials between specified indices or prices. When the Company writes an option, an amount equal to the premium received by the Company is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Options written by the Company may expose the Company to market risk of an unfavorable change in the financial instrument underlying the written option.
For some OTC options, the Company may be exposed to counterparty risk from the potential that a seller of an option contract does not sell or purchase the under the terms of the terms of the option contract. The maximum risk of loss from counterparty risk to the Company is the contracts and the premiums paid to purchase its open option contracts. In these instances, the Company considers the intermediary counterparty to its options transactions in evaluating potential credit risk.
#### NOTE 8 Due from Broker-Dealers
Receivable from broker-dealers at December 31, 2023, consist of the following:
Broker-dealer
The amount receivable from broker-dealers is collectible cash primarily from trading of stock and stock options. The cash balance receives interest at less than the broker call rate. The Company clears all transactions through another broker dealer pursuant to their clearing agreement. At December 31, 2023, substantially all assets of the Company are deposited with the clearing broker. Payables to clearing broker relate to the proprietary transactions cleared through such clearing brokers, which amounts are collateralized by securities and derivative financial instruments held by the Company.
#### NOTE 9 Indemnifications
In the normal course of its business, the Company indemnifies certain service providers, such as clearing brokers, against specified potential losses in connection with their acting as an agent of, or providing services to, the Company. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications.
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#### NOTE 10 Concentrations of Credit Risk
The Company is engaged in various trading and brokerage activities in which counterparties primarily include brokerdealers, banks, and other financial institutions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk.
The Company invests in exchange-traded stocks for speculative purposes. These contracts are marked to market daily and involve elements of market and credit risk. The Company's contracts are all exchange-traded, whereas the Chicago Stock Exchange ("CHX") acts as the counterparty of the specific transactions and, therefore, bear the risk of delivery to and from the counterparty.
The risk of default depends on the creditworthiness of the Chicago Stock Exchange ("CHX"), who guarantees the transactions. Management does not consider this credit risk to be significant.
#### NOTE 11 Guarantees
FASB ASC 460, Guarantees, requires the Company to disclose information about its obligations under certain guarantee arrangements. FASB 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 an underlying (security or commodity price, an index) related to an asset. liability or equity of a guaranteed party. FASB ASC 460 also defines guarantees as contracts that contingently require the guarantor 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 that the Company may enter into meet the accounting definition of a guarantee under FASB ASC 460. The Company records all derivative contracts at fair value. For this reason, the Company does not monitor its risk exposure to derivative contracts based on derivative notional amounts; rather the Company manages its risk exposure on a fair value basis. Aggregate market risk limits have been established, and market risk measures are routinely monitored against these limits. The Company also manages its exposure to these derivative contracts through a variety of risk mitigation strategies.
### Exchange Member Guarantees
The Company is a member of the Chicago Stock Exchange which trades and clears their securities. Associated with its membership, the Company may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the exchange. While the rules governing different exchange memberships vary, in general the Company's guarantee obligations would arise only if the exchange had previously exhausted its resources. In addition, any such guarantee obligation would be apportioned among the other nondefaulting members of the exchange. Any potential contingent liability under these membership agreements cannot be estimated. The Company has not recorded any contingent liability in the consolidated financial statements for these agreements and believes that any potential requirement to make payments under these agreements is remote.
#### NOTE 12 Lease commitments
The Company recognizes and measures its lease in accordance with FASB ASC 842, Leases. The Company has elected to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement, and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease cost associated with its short-term leases on a straight-line basis over the lease term. Because the Company is not reasonably certain to exercise the renewal options, the optional periods are not included in determining the lease term, and associated payments under the renewal options are excluded from lease payments. The Company's office space lease requires it to make variable payments for the Company's proportionate share of the building's property taxes, insurance, and common area maintenance. These variable lease payments are not included in lease payments used to determine lease liability and are recognized as variable.
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#### NOTE 13 Preferred Stock
The Company owns preferred in their broker dealer, Wedbush Securities. There are no calls or puts against the preferred stock and it can be redeemed by JAG Trading, LLC for its \$10,000. The stock isummarketable and is carried at cost, which is its approximate fair value.
#### NOTE 14 Commitments and Contingencies
The Company had no commitments, no contingent liabilities and had not been named as a defendant in any lawsuit at December 31, 2023, or during the period then ended.
#### NOTE 15 Subsequent events
These financial statements were approved by management and available for issuance on the date of the Independent Registered Public Accounting Firm report. Subsequent events have been evaluated through this date. There were no subsequent events requiring disclosures and or adjustments.
#### NOTE 16 Rights and obligations
The Company has no obligations for returns or refunds and offers no warranties or guarantees.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.