# TRC MARKETS LLC X-17A-5 (2021-02-24) — Broker-dealer annual report - Company: TRC MARKETS LLC - Form: X-17A-5 - Filed: 2021-02-24 - Period: 2020-12-31 - Accession: 0001467283-21-000003 - CIK: 1605726 - File #: 8-69454 - Material weakness: No - Auditor: EisnerAmper LLC - Auditor location: New York, NY - Contact: Michael Ellman - Phone: 9179231286 - Signed by: Marci Wessels (Principal Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1605726/000146728321000003/trcm2020financials.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: August 31 , 2020 Estimated average burden hours per response .. ... . 12.00 SEC FILE NUMBER 8-69454 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** | 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 01/01/2020 | | AND ENDING 12/31/2020 | ~~~~~~~~~~- | | | | |---------------------------------------------------------------------------|---------------------------------------------------------------------|-----------------------|--------------------------------------------------|--|--|--| | | | MMIDD/YY | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | | NAME oF BROKER-DEALER: TRC Markets LLC | | | OFFICIAL USE ONLY | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM 1.D. NO. | | | | | 0 Johnnie Dodds Blvd, Suite 300
71 | | | | | | | | | (No. and Street) | | | | | | | Mt. Pleasant | SC | | 29464 | | | | | (City) | (State) | | (Zip Code) | | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | | | Marci Wessels. Principal Financial Officer | | | (212) 219-0069
(Area Code - Telephone Number) | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report* | | | | | | | | EisnerAmper LLC | | | | | | | | | (Name - if individual, state last, first, middle name) | | | | | | | 733 Third Avenue | New York | NY | 10017 | | | | | (Address) | (City) | (State) | (Zip Code) | | | | | CHECK ONE: | | | | | | | | I./ I
c ertified Public Accountant | | | | | | | | Public Accountant | | | | | | | | B | 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 public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240. l 7a-5(e)(2)* > Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | TRC Markets LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
, as | |-------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------| | of December 31 | ___
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20 | | classified solely as that of a customer, except as follows: | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | | | | | | | | | | Principal Financial Officer
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Title | - **0** (a) Facing Page. - - (c) Statement oflncomc (Loss). - (d) Statement of Changes in Financial Condition. - ~ (b) Statement of Financial Condition. *(* e) Statement of Changes i11 Stockholders' Equity or Partners' or Sole Proprietors' Capital. - - (g) Computation of Net Capital. - (h) Computation for Determination of Reserve Requirements Pursuant to Ruic 15c3-3. - (i) Information Relating to the Possession or Control Requirements Under Ruic 15c3-3. - ~ *(t)* Statement of Chai1ges in Liabilities Subordinated to Claims of Creditors. (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Ruic 15c3- 1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule l 5c3-3. - **0** (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation. - 0 (1) An Oath or Affirmation. - 0 (m) A copy of the SIPC Supplemental Report. - **D** (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. *\*\*For conditions of co11fide11tial treatment o\_f'certain porlio11s of this .filing, see section 240.J 7a-5(e){3).* {2}------------------------------------------------ # **TRC MARKETS LLC** FINANCIAL STATEMENT AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2020 {3}------------------------------------------------ # **TRC MARKETS LLC** # CONTENTS | Report of Independent Registered Public Accounting Firm | 1 | |---------------------------------------------------------|-----| | Financial Statement | | | Statement of Financial Condition | 2 | | Notes to Financial Statement | 3-6 | {4}------------------------------------------------ # **EISNERAMPER** EisnerAmper LLP # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** The Member of TRC Markets LLC #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of TRC Markets LLC (the "Company") as of December 31, 2020 and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31 , 2020, 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 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 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 2015. EISNERAMPER LLP New York, New York February 23, 2021 {5}------------------------------------------------ # **TRC MARKETS LLC** # STATEMENT OF FINANCIAL CONDITION December 31, 2020 #### ASSETS | Cash
Receivable from clearing broker
Receivable from affiliate
Rebate receivable
Other assets | \$
8,639,675
6,466,799
977,596
8,270,181
37,848 | |-----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------| | Total assets | \$
24,392,099 | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities
Accounts payable and accrued expenses
Due to Tower Research Capital LLC (Note 5) | \$
289,606
812,294 | | Total liabilities | 1, 101,900 | | Member's equity | 23,290,199 | | Total liabilities and member's equity | \$
24,392,099 | {6}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENT #### 1. Nature of business and summary of significant accounting policies #### Nature of Business TRC Markets LLC (the "Company") is a limited liability company and a wholly-owned subsidiary of Tower Research Capital LLC (the "Parent"). The Company's operations consist primarily of agency execution in, but not limited to, exchange-traded funds ("ETFs") and equities in the United States. The Company is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and is a member of various securities exchanges, as well as Financial Industry Regulatory Authority ("FINRA"), which is its designated examining authority ("DEA") as of December 31 , 2020. The Company is exempt from preparing a Customer Reserve computation pursuant to SEC Rule 15C3-3(k)(2)(ii). #### Basis of Presentation The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). #### Fair Value - Definition and Hierarchy In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches. A fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and blockage discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. {7}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENT #### 1. Nature of business and summary of significant accounting policies (continued) #### Revenue Recognition #### Brokerage Commissions The Revenue from Contracts with Customers ("ASC Topic 606") guidance requires that an entity 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 guidance requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when the entity satisfies a performance obligation. The Company executes securities transactions on behalf of its customer. Each time the customer enters into a buy or sell transaction, the company charges a commission. Commissions and related clearing expenses are recorded on the trade date. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchases is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. #### Exchange Rebates, net Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement of liquidity from the order flow in the market place related to the trading of an affiliate. These rebates are received or paid for the execution of trades by an affiliate and are recorded on a trade date basis. During 2020, the Company incurred \$3, 118,560 of exchange fees and recorded \$161, 901,837 of exchange rebates. Rebate receivables are carried at amortized cost, net an allowance for credit losses. At December 31 , 2020 the Company had \$8,270, 181 of rebate receivables on the Statement of Financial Condition. The Company has no allowance for credit losses for the rebate receivable as of and for the year ended December 31, 2020. #### Brokerage, Exchange and Clearance Fees Brokerage, exchange and clearance fees comprise the costs of executing and clearing trades and are recorded on a trade date basis. #### Income Taxes The Company is a single member limited liability company. As such, it is a disregarded entity for tax purposes and is not subject to pay any taxes on income. As the Company's activity is not subject to taxes using currently enacted tax laws and rates, no provision for tax is provided, in accordance with GAAP. At December 31 , 2020, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will always be subject to ongoing reevaluation as facts and circumstances may require. #### Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the amounts disclosed in the financial statement. Actual results could differ from those estimates. {8}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENT #### Allowance for Credit Loss Effective January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. Under the accounting update, the Company has the ability to determine there are no expected credit losses in certain circumstances. The Company identified rebate receivables and receivable from clearing broker as impacted by the new guidance. The Company believes there is no impact to opening member's equity upon adoption of ASC 326. The Company has no allowance for credit losses for the rebate receivable and receivable from clearing broker as of and for year ended December 31 , 2020. The credit risk is that any financial institution with which it conducts business is unable to fulfill contractual obligations. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. #### 2. Net capital requirement The Company, as a member of FINRA, is subject to the Securities and Exchange Commission Uniform Net Capital Rule 15c3-1 . This rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn or cash dividends paid if the following aggregate indebtedness to net capital ratio would exceed 10 to 1. At December 31 , 2020, the Company's net capital was \$14,004,574, which was \$13,904,574 in excess of its minimum net capital requirement of \$100,000. #### 3. Concentrations of credit risk The Company maintains its cash balances in financial institutions in excess of federally insured limits. The Company does not consider itself to be at risk with respect to its cash balances. #### 4. Fair value hierarchy GMP requires disclosure of the estimated fair value of certain financial instruments, and the methods and significant assumptions used to estimate their fair values. Financial instruments within the scope of these disclosure requirements are included in the following table. Certain financial instruments that are not carried at fair value on the Statement of Financial Condition are carried at amounts that approximate fair value due to their short-term nature and generally negligible credit risk. These instruments include cash, receivable from clearing broker, receivable from affiliate, rebate receivable, other assets, and Due to Tower Research Capital LLC. The following table presents the carrying values and estimated fair values at December 31 , 2020, of financial assets and liabilities, excluding financial instruments that are carried at fair value on a recurring basis, and information is provided on their classification within the fair value hierarchy. {9}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT | | | ins Value
Car | | Level 1 | | Level
2 | | Level
3 | Total Estimated
Fair Value | | |---------------------------------|----|------------------------------------------|--|-----------------|--|------------|----|------------|-------------------------------|------------| | ASSETS | | | | | | | | | | | | Cash | \$ | 8,639,675 | | \$ 8,639,675 \$ | | - | \$ | | \$ | 8,639,675 | | Rebate receivable | | 8,270,181 | | | | 8,270,181 | | | | 8,270,181 | | Receivable from clearing broker | | 6,466,799 | | | | 6,466,799 | | | | 6,466,799 | | Receivable from affiliate | | 977,596 | | | | 977,596 | | | | 977,596 | | Other assets | | 37,848 | | | | 37,848 | | | | 37,848 | | TOTALS | | \$ 24,392,099 \$ 8,639,674 \$ 15,752,424 | | | | | \$ | | \$ | 24,392,099 | ### LIABILITIES Due to Tower Research Capital | LLC | \$
812,294 | \$
-
\$ | 812,294 | \$ | \$
812,294 | |--------|---------------|---------------|---------|----|---------------| | TOTALS | \$
812,294 | \$
-
\$ | 812,294 | \$ | \$
812,294 | ### 5. Related party transactions The Company has an expense sharing agreement with the Parent. Pursuant to this expense sharing agreement, the Company pays the Parent rent for office space and equipment, as well as office and administrative support services. For the year ended December 31 , 2020, the total fees charged by the Parent were \$5,688,678, which is reflected on the Statement of Operations. As of December 31, 2020, \$812,294 is due to the Parent related to these expenses, which is included in Due to Tower Research Capital LLC on the Statement of Financial Condition. The Company enters into securities transactions such as trade executions for its affiliated customer, Spire X Trading LLC. At December 31, 2020, the total receivable from affiliate was \$977,596. Spire X Trading LLC accounted for 100% of the commission fees revenue for the year ended December 31 , 2020. Commissions calculations may have differed if such transactions were executed with unrelated parties. ### 6. Receivable from clearing broker The amounts receivable and payable from brokers arise in the ordinary course of business. At December 31 , 2020, the receivable from clearing broker in the Statement of Financial Condition consists of cash from one broker. The Company has also agreed to maintain a minimum net liquidating balance of \$100,000 with the broker. The amount held at the broker at December 31, 2020 is \$6,466,799. The Company had a clearing agreement with ABN AMRO Clearing Chicago LLC, (the "Clearing Broker"). The Clearing Broker clears the Company's security transactions. The Company has no allowance for credit losses for the receivable from clearing broker as of and for the year ended December 31, 2020. #### 7. Commitments, contingencies, and guarantees At December 31, 2020, the Company does not have any material commitments or contingencies that could result in a loss or future obligation. ### 8. Subsequent events The Company made \$17,000,000 in distributions to its Parent through February 23, 2021. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.