# QUANTITATIVE BROKERS, LLC X-17A-5 (2019-03-01) — Broker-dealer annual report - Company: QUANTITATIVE BROKERS, LLC - Form: X-17A-5 - Filed: 2019-03-01 - Period: 2018-12-31 - Accession: 0001592953-19-000001 - CIK: 1592953 - File #: 8-69396 - Material weakness: No - Auditor: Michael Coglianese CPA, P.C. - Auditor location: Bloomingdale, IL - Contact: Beatrice Derian - Phone: 6462931811 - Signed by: John Allen (COO) Original filing: https://www.sec.gov/Archives/edgar/data/1592953/000159295319000001/Public.pdf --- {0}------------------------------------------------ UNITEDSTATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB 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 | |-----------------| | | | | | 8-69396 | FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | | and ending 12/31/2018
REPORT FOR THE PERIOD BEGINNING 01/01/2018 | | | | |-----------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--------------|--------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER DEALER: Quantitative Brokers, LLC and Subsidiaries OFFICIAL USE ONLY | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
489 5th Avenue, 23 Fl | | FIRM LD. NO. | | | | | (No. and Street) | | | | | New York | NY | | 10017 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Beatrice Derian (646) 293-1811 | | | | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Michael Coglianese CPA, P.C. | | | | | | | (Name - if individual, state last, first; middle name) | | | | | 125 E Lake Street, Ste 303 Bloomingdale | | - | 60108 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | 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 public accountant nust be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e){?} > 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. SEC 1410 (06-02) {1}------------------------------------------------ #### OATH OR AFFIRMATION | J John Allen | swear new man a swear {or affirm) that, to the best of | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Quantitative Brokers, LLC and Subsidianes | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | of December 31 | a career and correct. I further swear (or affim) that | | classified solely as that of a customer, except as follows: | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | | Signature
CALL PROPERTY | | Notary Public
This report ** contains (check all applicable boxes):
(a) Facing Page.
(b) Statement of Financial Condition:
(c) Statement of Income (Loss).
(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,
(g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
consolidation.
(1) An Oath or Affirmation. | Title
LEGRAND MOISE
Notary Public - State of New York
MO. 01MO6372060
Qualified in Nassau County
My Commission Expires Mar 12, 2022
(i) A Reconcillation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
(k) A Reconciliation between the audited Statements of Financial, Condition with respect to methods of | | (m) A copy of the SIPC Supplemental Report. | (1) A report describing any material inadequacies found to have existed since the date of the previous audit. | \*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e){3). {2}------------------------------------------------ CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORT December 31, 2018 {3}------------------------------------------------ ### **CONTENTS** | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|-------| | Financial Statements | | | Consolidated Statement of Financial Condition | 2 | | Notes to Consolidated Financial Statements | 3 - 8 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### **Report of Independent Registered Public Accounting Firm** To the Members and Board of Directors of Quantitative Brokers, LLC #### **Opinion on the Financial Statement** We have audited the accompanying consolidated statement of financial condition of Quantitative Brokers, LLC as of December 31, 2018, 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 Quantitative Brokers, LLC as of December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** This financial statement is the responsibility of Quantitative Brokers, LLC's management. Our responsibility is to express an opinion on Quantitative Brokers, 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 Quantitative Brokers, 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 Quantitative Brokers, LLC's auditor since 2013. Bloomingdale, IL February 28, 2019 {5}------------------------------------------------ CONSOLIDATED STATEMENT OF FINANCIAL CONDITION #### **December 31, 2018** #### **Assets** | Cash
Accounts receivable
Property and equipment, net
Security Deposits
Prepaid Expenses & Other assets | \$
5,268,860
1,660,294
879,154
67,888
337,471 | |--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------| | Total assets | \$
8,213,667 | | Liabilities and members' equity | | | Liabilities | | | Accounts payable | \$
256,799 | | Taxes payable | 32,861 | | Other accrued expenses and liabilities (including payroll liabilities) | 2,421,574 | | Total liabilities | 2,711,233 | | Members' equity | | | Members' equity | 5,502,433 | | Total members' equity | 5,502,433 | | Total liabilities and members' equity | \$
8,213,667 | {6}------------------------------------------------ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS #### **1. Nature of operations and summary of significant accounting policies** #### *Consolidation* The consolidated financial statements include the accounts of "Quantitative Brokers, LLC" and its wholly owned subsidiaries, "Quantitative Brokers UK Limited" ("QB UK") and "Quantitative Brokers Software India Private Limited" ("QB India") and Quantitative Brokers Australia Pty Ltd. ("QB Australia"). All significant intercompany accounts and transactions have been eliminated in consolidation. #### *Nature of Operations* Quantitative Brokers, LLC (the "Company") was formed as a limited liability company under the laws of the State of Delaware. Effective February 25, 2010, the Company was registered with the Commodity Futures Trading Commission ("CFTC") and became a member of the National Futures Association ("NFA"). On December 1, 2014, Quantitative Brokers LLC became registered with the Securities and Exchange Commission ("SEC") as a broker dealer and a member of the Financial Industry Regulatory Authority ("FINRA"). The principal operations of the Company are located in New York City. The Company conducts business as an Introducing Broker ("IB"). The Company does not clear any transactions nor accept any money or property to margin or secure any trades or contracts that result or may result there from. The Company conducts algorithmic trade execution for the accounts of institutional customers who are involved in fixed income and commodity futures, as well as US government securities transactions. The Company's customers are located primarily in North America, the United Kingdom and Europe. Quantitative Brokers UK Limited, is based in the United Kingdom as a Sales/support office for non-US clients. Quantitative Brokers Software India Private Limited, is based in India as a Development office. Quantitative Brokers Australia Pty Ltd, is based in Australia as a Sales/support office for non-US clients. #### *Government and Other Regulation* The Company's business is subject to significant regulation by governmental agencies and self-regulatory organizations. Such regulation includes, among other things, periodic examinations by these regulatory bodies to determine whether the Company is conducting and reporting its operations in accordance with the applicable requirements of these organizations. #### *Basis of Presentation* The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") as detailed in the Financial Accounting Standards Board's Accounting Standards Codification ("ASC"). #### *Translation of Foreign Currency* Assets and liabilities denominated in foreign currencies are translated into United States dollar amounts at the yearend exchange rates. Transactions denominated in foreign currencies, including purchases and sales of investments, and income and expenses, are translated into United States dollar amounts on the transaction date. Adjustments arising from foreign currency transactions are reflected in the statement of operations. {7}------------------------------------------------ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS #### **1. Nature of operations and summary of significant accounting policies (continued)** #### *Income Taxes* The Company does not record a provision for Federal and State income taxes because the members report their share of the Company's income or loss on their income tax returns. The financial statements reflect the Company's transactions without adjustment, if any, required for Federal and State income tax purposes. The Company records a provision for New York City Unincorporated Business Tax. The financial statements include a benefit of approximately \$51,500 for 2018. The Company's wholly owned subsidiary is subject to United Kingdom corporate income tax. The financial statements include a provision of approximately \$28,500 for 2018. The Company's wholly owned subsidiary is subject to India corporate income tax. The financial statements include a provision of approximately \$4,000 for 2018. The Company is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces ending partners' capital. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2018. However, the Company's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. The Company files an income tax return in the U.S. federal jurisdiction and may file income tax returns in various U.S. states and foreign jurisdictions. Generally, the Company is no longer subject to income tax examinations by major taxing authorities for years before 2015. #### *Revenue Recognition* Revenue from contracts with customers is composed of execution services. Such fees are recognized at the point in time when the Company's performance under the terms of the contractual arrangement is completed, which is typically at the closing of the transaction. Reimbursed expenses related to these transactions are recorded as revenue and are included in reimbursed expenses. The Company never receives amounts in advance of the execution services. At December 31, 2018, there were no advances to the Company. #### *Recently Adopted Accounting Guidance* Effective January 1, 2018, the Company adopted ASU 2014-09, which provides guidance on the recognition of revenues from contracts and requires gross presentation on certain contract costs. This change was applied prospectively from January 1, 2018 and there was no impact on our previously presented results. The adoption of the new revenue standard resulted in no change to beginning member's equity. {8}------------------------------------------------ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS #### *Use of Estimates* The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company's management to make estimates and assumptions that affect the amounts disclosed in the financial statements. Actual results could differ from those estimates. #### *Fixed Assets* Furniture and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straightline basis over the estimated useful lives of the assets. #### **2. Net capital requirement** The Company is subject to the Securities and Exchange Commission's uniform net capital rule (Rule 15c3-1) which requires the Company to maintain a minimum net capital equal to or greater than \$5,000 or 62/3 % of aggregate indebtedness, and a ratio of aggregate indebtedness to net capital not exceeding 8 to 1, both as defined. The Company is also subject to the net capital requirements under Regulation 1.17 of the Commodity Exchange Act. Under these provisions, the Company is required to maintain minimum net capital as defined of the higher of \$45,000 or \$3,000 per Associated Person or \$6,000 per branch office. At December 31, 2018 the Company has 14 APs and 1 branch office, including the home office. At December 31, 2018, the Company had a net capital requirement of approximately \$80,000 and the Company's adjusted net capital under SEA Rule 15c3-1 and Regulation 1.17 was approximately \$4,300,000, which exceeded the requirement by approximately \$4,200,000. Quantitative Brokers, LLC's consolidated subsidiary, QB UK, has total assets of \$840,000 and member's equity of \$413,000. Assets after consolidation are \$378,000 (total assets of QB UK less the intercompany receivable from Quantitative Brokers, LLC). Quantitative Brokers, LLC's consolidated subsidiary, QB India, has total assets of \$229,000 and member's equity of \$155,000. Assets after consolidation are \$125,500 (total assets of QB India less the intercompany receivable from Quantitative Brokers, LLC). Quantitative Brokers, LLC's consolidated subsidiary, QB Australia, has total assets of \$35,500 and member's equity of \$16,000. Assets after consolidation are \$25,000 (total assets of QB Australia less the intercompany receivable from Quantitative Brokers, LLC). The accounts of Quantitative Brokers, LLC's consolidated subsidiary are not included in Quantitative Brokers, LLC's computation of net capital as the assets of the consolidated subsidiaries are not readily available for protection of Quantitative Brokers, LLC's counterparties and other creditors, and the liabilities of the consolidated subsidiary are not guaranteed by Quantitative Brokers, LLC. {9}------------------------------------------------ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS #### **3. Operating Lease Commitment** The Company leases its office facilities under a non-cancelable operating lease expiring June 29, 2019. The lease calls for minimum lease payments and established increases based on operating expenses. Following is a schedule of future minimum lease payments for each calendar year under this operating lease as of December 31, 2018: | Year | Amount | |-------|---------------| | 2019 | 157,216 | | Total | \$
157,216 | The lease requires the Company to maintain a security deposit of approximately \$50,000 #### **3. Operating Lease Commitment (continued)** The Company also leases offices in London UK under a non-cancelable operating lease expiring on December 31, 2019. The lease calls for minimum lease payments based on operating expenses. Following is a schedule of future minimum lease payments for each calendar year under this operating lease as of December 31, 2018: | Year | Amount | |------|----------| | 2019 | 86,044 | | | \$86,044 | The lease requires the company to maintain a security deposit of approximately \$6,000. The Company also leases offices in Chennai India under a non-cancelable operating lease expiring on May 14, 2020. The lease calls for minimum lease payments based on operating expenses. Following is a schedule of future minimum lease payments for each calendar year under this operating lease as of December 31, 2018: | Year | Amount | |------|----------| | 2019 | 18,964 | | 2020 | 7,111 | | | \$26,075 | The lease requires the company to maintain a security deposit of approximately \$12,000. {10}------------------------------------------------ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Company also leases offices in Sydney Australia under a non-cancelable operating lease expiring on October 31, 2020. The lease calls for minimum lease payments based on operating expenses. Following is a schedule of future minimum lease payments for each calendar year under this operating lease as of December 31, 2018: | Year | Amount | |------|----------| | 2019 | 51,322 | | 2020 | 42,768 | | | \$94,090 | The lease requires the company to maintain a security deposit of approximately \$8,000. Total rental expense charged to operations for the year ended December 31, 2018 was approximately \$453,000. ### **4. Fixed Assets** Furniture and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straightline basis over the estimated useful lives of the assets. Furniture and equipment at December 31, 2018 consists of following: | Appliances | 10,276 | |-------------------------------|-----------| | Computer Equipment | 501,347 | | Furniture | 100,694 | | Software | 901,349 | | | 1,513,666 | | Less Accumulated Depreciation | -634,512 | | | 879,154 | Depreciation expense for the year ended December 31, 2018 was approximately \$285,000. #### **5. Off balance sheet risk and concentration of credit** In the normal course of business, the Company maintains its cash balances in financial institutions, which at times may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties. {11}------------------------------------------------ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS #### **6. 401(k) Plan** The Company provides a qualified 401(k) plan covering substantially all full-time employees who have met certain age and length of service requirements. Eligible employees may elect to contribute a percentage of their salary up to a specified maximum. The Company recorded voluntary contributions for 2018 of approximately \$127,000. #### **7. Subsequent events** These financial statements were approved by management and available for issuance on February 27, 2019. Subsequent events have been evaluated through this date. There were no subsequent events requiring disclosures and or adjustments. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.