# BETHESDA SECURITIES, LLC X-17A-5 (2025-02-24) — Broker-dealer annual report - Company: BETHESDA SECURITIES, LLC - Form: X-17A-5 - Filed: 2025-02-24 - Period: 2024-12-31 - Accession: 0001650209-25-000001 - CIK: 1650209 - File #: 8-69667 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: Tysons, VA - Contact: Brian Carroll - Phone: 2034290721 - Signed by: Brian Carroll (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1650209/000165020925000001/PUBLIC.pdf --- {0}------------------------------------------------ ## UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: Expires: Estimated average burden hours per response: SEC FILE NUMBER # ANNUAL REPORTS FORM X-17A-5 PART III | | Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | |--|-----------------------------------------------------------------------------------------------------------|--| | | | | | UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 | OMB APPROVAL
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Estimated average burden | |---------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------| | ANNUAL REPORTS | | | FORM X-17A-5 | | | PART III | | | FACING PAGE
Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | | FILING FOR THE PERIOD BEGINNING _____________________ AND ENDING ______________________ | | | MM/DD/YY | MM/DD/YY | | A.
REGISTRANT IDENTIFICATION | | | NAME OF FIRM: _______________________________________________________________________ | | | TYPE OF REGISTRANT (check all applicable boxes):
Broker-dealer
Security-based swap dealer
Check here if respondent is also an OTC derivatives dealer | Major security-based swap participant | | | | | | 355 Riverside Avenue, Suite 301 | |--|---------------------------------| | | | | | NAME OF FIRM: _______________________________________________________________________ | | | |---------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|---------------------------------------|--------------------------------------------| | TYPE OF REGISTRANT (check all applicable boxes):
Broker-dealer
Check here if respondent is also an OTC derivatives dealer | Security-based swap dealer | Major security-based swap participant | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | _____________________________________________________________________________________ | | | | | (No. and Street) | | | | | _____________________________________________________________________________________ | | | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | _____________________________________________________________________________________ | | | | (Name) | (Area Code – Telephone Number) | (Email Address) | | | | B.
ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | _____________________________________________________________________________________ | | | | | (Name – if individual, state last, first, and middle name) | | | | | _____________________________________________________________________________________ | | | | (Address) | (City) | (State) | (Zip Code) | | | _____________________________________________________________________________________ | | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) | | | FOR OFFICIAL USE ONLY | | | | | * Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public | | | | | | | | accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. 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 I, Brian Carroll, swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of Bethesda Securities, LLC, as of December 31, 2024, 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 be, had any proprietary interest in any account classified solely as that of a customer. Signature: Title: Chief Financial Officer ### Notary Public This filing\*\* contains (check all applicable boxes): 図 (a) Statement of financial condition. - 図 (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. - □ (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. □ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. □ (i) Computation of tangible net worth under 17 CFR 240.18a-2. □ (j) 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. □ (1) 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. □ (n) 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) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible net 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. 四 (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. □ (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. 図 (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. □ (v) 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. □ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. □ (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e or 17 CFR 240.17a-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). □ (z) Other: \*\* To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable.This report \*\* contains (check all applicable boxes) {2}------------------------------------------------ ## BETHESDA SECURITIES, LLC TABLE OF CONTENTS | | Page | |---------------------------------------------------------|------| | Report of Independent Registered Public Accounting Firm | | | Statement of Financial Condition | | | Notes to Statement of Financial Condition | | {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) Shape the future with confidence Ernst & Young LLP 1775 Tysons Blvd Tysons, VA 22102 Tel: +1 704 747 1000 Fax: +1 703 747 0100 ey.com ## Report of Independent Registered Public Accounting Firm To the Member and the Board of Managers of Bethesda Securities, LLC ### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Bethesda Securities, LLC (the Company) as of December 31, 2024 and the related notes (the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company at December 31, 2024, in conformity with U.S. generally accepted accounting principles. ### Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2015. February 24, 2025 {4}------------------------------------------------ ## BETHESDA SECURITIES, LLC STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024 (in millions) ## ASSETS | ASSETS: | | | |-------------------------------------------------------------|------|--------| | Cash | S | 5 | | Receivable from brokers, dealers and clearing organizations | | 461 | | Securities purchased under agreements to resell | | 27,397 | | Total assets | S | 27,863 | | LIABILITIES AND MEMBERS CAPITAL | | | | LIABILITIES: | | | | Securities sold under agreements to repurchase | es | 26,775 | | Payable to parent and affiliates | | 143 | | Accounts payable, accrued expenses and other liabilities | | 2 | | Total liabilities | | 26,920 | | MEMBER'S CAPITAL | | 943 | | Total liabilities and member's capital | ಲ್ಲಿ | 27,863 | | | | | See accompanying notes to statement of financial condition {5}------------------------------------------------ ## BETHESDA SECURITIES, LLC NOTES TO STATEMENT OF FINANCIAL CONDITION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2024 #### 1. Organization and Nature of Business Bethesda Securities, LLC (the "Company") is a Delaware limited liability company and a wholly-owned subsidiary of AGNC Investment Corp. (the "Parent"), a Delaware corporation that has elected to be taxed as a Real Estate Investment Trust ("REIT"). The Parent has no liability for the debts and other obligations of the Parent's interest in the Company is limited to the member's capital of the Company. The Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company self-clears its transactions and is a member of the Government Securities Division ("GSD") and the Mortgage Backed Securities Division ("MBSD") of the Fixed Income Clearing Corporation ("FICC") and is also a participant in The Depository Trust Company's principal business activity involves operating a matched-book of repurchase agreements and reverse repurchase agreements collateralized by U.S. Agency mortgage-backed securities ("MBS") and U.S. Treasury securities. The Company also provides clearing and custody services to the Parent. These are highly correlated and interrelated, forming a single reportable segment. The Chief Financial Officer, as the Chief Operating Decision Maker, evaluates the Company's performance and allocates resources based on consolidated results, with net income serving as the primary measure of profit or loss. #### 2. Significant Accounting Policies #### Basis of Presentation The Company's financial statements and related footnotes are presented in accounting principles generally accepted in the United States of America ("GAAP"). The Company has one reportable segment. #### Use of Estimates These financial statements were prepared in conformity with GAAP which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Statement of Financial Condition. Actual results could differ from those estimates. #### Cash and Cash Equivalents Cash consists of U.S. Dollars held at two large unaffiliated financial institutions. As of December 31, 2024 the Company's cash balance was \$5 million. At December 31, 2024 there were no cash equivalents. #### Securities Purchased and Sold Under Agreements to Resell and Repurchase Securities purchased under agreements to resell ("reverse repo") and securities sold under agreements to repurchase ("repo") are accounted for as collateralized financing transactions and are recorded at their contracted resale or repurchase amount plus accrued interest. Repo and reverse repo with the same maturity are presented net in the Statement of Financial Condition when the terms of the agreements meet the criteria to permit netting under GAAP. The Company's policy is to monitor the fair value of the underlying collateral daily versus the related receivable or payable balances. Should the fair value of the underlying securities decline or increase, additional collateral is requested or excess collateral is returned, as appropriate. Repo are transacted under master repurchase agreements that give the Company the right, in the event of default, to liquidate collateral held and to offset receivables and payables with the same counterparty. {6}------------------------------------------------ #### Receivable from Brokers, Dealers and Clearing Organizations and Payable to Brokers and Clearing Organizations Receivable from brokers, dealers and clearing organizations consists of cash deposited to support activities with clearing organizations and Payables to brokers, dealers and clearing organizations consists of fails to receive with brokers, and clearing organizations. The Company caries cash deposited with clearing organizations at cost, which approximates fair value. Amounts receivable from and payable to brokers, dealers and clearing organizations at December 31, 2024, consist of: | | Receivable | | | Payable | | |--------------------------------------|------------|-------|---|---------|--| | Deposits with clearing organizations | S | 461 S | | | | | Total | S | 461 | A | | | #### Accounts Payable, Accrued Expenses and Other Liabilities Accounts payable, accrued expenses and other liabilities primarily include accruals related to publications and data services, compensation and benefits, floor brokerage and clearance fees, and professional fees. #### 3. New Accounting Standards We consider the applicability and impact of all accounting standards updates ("ASUs") issued by the Financial Accounting Standards Board. No pending ASUs or ASUs adopted during the current year are expected to have a significant impact on the financial statements when adopted or did not have a significant impact on our financial statements upon adoption. #### 4. Related Party-Transactions The Company provides repo and reverse repo financing to its Parent company as part of its matched-book repo operation. Generally, reverse repo transactions with the Parent are collateralized by U.S. Agency MBS and repo by U.S. Treasury securities. The Company seeks to match fund transactions with the Parent by entering into repo and reverse repo transactions with third parties such as broker-dealers, banks and members of the GSD of the FICC. The Company also provides clearing and custody services to the Parent including TBA and MBS transactions eligible for netting through the MBSD. The Company requires the Parent to support its MBSD clearing activity. The Company has entered into a services and cost allocation agreement ("SCA") with the Parent and the manager of the Parent, AGNC Mortgage Management, LLC (the "Manager"). Under the SCA the Manager incurs expenses related to certain shared services including information technology software and infrastructure, accounts payroll processing, as well as other general overhead expenses. The Company reimburses the Manager for a share of these expenses quarterly under the SCA. As of December 31, 2024, payable to affiliates in the table below primarily represents cash margin posted from the Parent relating to obligations arising from clearing services and to a lesser extent payables associated with the SCA. Related party transactions are comprised of the following: {7}------------------------------------------------ | | Gross | Netting | Net | | |---|-----------|------------|--------|--| | | | | | | | ക | 31,335 \$ | (3,938) \$ | 27,397 | | | | | | | | | | | | | | | | 3.949 | (3,938) | 11 | | | | 143 | | 143 | | | | | | | | #### 5. Securities Purchased and Sold Under Agreements to Resell and Repurchase The Company enters into repo and reverse repo transactions with its Parent company and other institutional investors including but not limited to members of the GSD of the FICC. These agreements have been collateralized with U.S. Treasury securities and U.S. agency MBS securities. As of December 31, 2024, the Company has accepted securities with gross market values of \$36,070 million under reverse repo agreements. The Company has the right to sell or repledge all of the securities it has received under reverse repo agreements and substantially all were repledged as of December 31, 2024. These repledged securities have been used in the normal course of business. As of December 31, 2024, the Company has pledged securities with gross market values of \$34,794 million under repo agreements to counterparties that have the right to repledge these securities. The following table summarizes by collateral type the remaining maturity of the Company's repo and reverse repo transactions as of December 31, 2024. | | < 1 Month | > 1 to < 3
Months | > 3 to < 6
Months | > 6 to < 9
Months | > 9 to < 12
Months | Total | |-------------------------------------------------|-----------|----------------------|----------------------|----------------------|-----------------------|--------| | Securities purchased under agreements to resell | | | | | | | | U.S. Treasury Securities | 3.859 | | | | | 3,859 | | U.S. Agency MBS | 31,335 | | | | | 31,335 | | Total | 35,194 | | | | | 35,194 | | | | | | | | | | Securities sold under agreements to repurchase | | | | | | | | U.S. Treasury Securities | 3,949 | | | | | 3,949 | | U.S. Agency MBS | 30,623 | | | | | 30,623 | | Total | 34,572 | | | | | 34,572 | Reverse repo and repo subject to a master netting agreement with the same maturity are presented net on the Statement of Financial Condition when permitted under ASC 210-20-45-11, Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements. The following table presents information about the offsetting of repo and reverse repo as of December 31, 2024. | Assets | | Gross Balance | Amounts netted on
the Statement of
Financial
Condition | Net Balance | |-------------------------------------------------|---|---------------|-----------------------------------------------------------------|-------------| | Securities purchased under agreements to resell | S | 35.194 | (7,797) | 27,397 | | Liabilities | | | | | | Securities sold under agreements to repurchase | S | 34.572 | (7,797) | 26,775 | {8}------------------------------------------------ #### 6. Fair Value Measurement ASC 820 Fair Value Measurement defines fair value and establishes a three level fair value hierarchy based upon the inputs used to the valuation technique. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy gives the highest prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure an asset or liability fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement for the asset or liability. Financial assets and liabilities recorded at fair value on the Statement of Financial Condition or disclosed in the related notes are categorized based on the valuation techniques as follows: - · Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access on measurement date. - · Level 2 Inputs (other than quoted prices included within Level 1) that are observable for the asset or liability, either directly or indirectly. - · Level 3 Inputs are unobservable for the asset or liability and significant to the overall fair value. The Company does not have any recurring fair value measurements are carried on the financial statements at amounts that approximate fair value generally due to their short term nature and their recorded value is estimated using "Level 2" inputs. These instruments include cash, securities purchased and sold under agreements to resell and repurchase, forward commitments to purchase securities under agreements to resell, and repurchase and receivables from brokers, dealers and clearing organizations #### 7. Commitments, Contingencies and Guarantees Representations and Warranties - In the normal course of business, the Company enters that contain representations and warranties and which provide general indemnifications. The Company's potential exposure under the arrangements would involve potential future claims that may be made against the Company that have not yet occurred. However, the Company expects the risk of loss to be remote based on currently available information. Litigation - In the normal course of business, the Company may be named in various claims and legal actions. As of December 31, 2024, the Company was not involved in any claims or litigation and therefore has made no a loss contingency. Clearing Corporation Guarantee - In the normal course of business, the Company provides guarantees to securities clearinghouses. These guarantees are required under the standard membership agreements, such that if another member becomes unable to satisfy its obligations, other members would be required to meet shortfalls. To mitigate these performance risks, the clearinghouses require members to deposit collateral. The Company's liability under these arrangements is not quantifiable and could exceed the collateral amounts it has posted. The Company has not recorded any contingent liability to the Statement of Financial Condition for these guarantees and believes that any potential requirement to make payments under these arrangements is remote. As a member of the FICC, the Company is also subject to the FICC Capped Contingency Liquidity Facility ("CCLF"). The CCLF could be triggered by the FICC if the default of a member left the clearing corporation with insufficient cash to meet its obligations to non-defaulting members, after exhausting all other liquidity resources. If invoked, the CCLF would require members to enter into a liquidity repo with the FICC up to a capped amount based on a member's tiered proportional share of daily liquidity needs. The liquidity repo would be returned with interest to the FICC cash position is sufficient. Management believes the possibility of a CCLF event is remote but nonetheless monitors this exposure and incorporates into daily liquidity management. {9}------------------------------------------------ Commitments - As of December 31, 2024, the Commitments to purchase securities under agreements to resell in the amount of \$2,627 million the terms of these commitments had a weighted average number of days until start date of 2 days and a weighted average rate of 4.50%. The Company also had forward commitments to sell securities under agreements to repurchase in the amount of \$16,900 million the terms of these commitments had a weighted average number of days until start date of 2 days and a weighted average rate of 4.61%. #### 8. Risk The Company has established risk management policies and procedures to identify, assess, monitor and manage the risks involved in its daily activities. The Company assesses both market risk and believes prudent risk management is a critical part of its overall success and profitability. Credit Risk - In the normal course of business, the Company enters into repo agreements collateralized by U.S. Agency MBS and U.S. Treasury securities. These agreements give rise to risk of loss associated with counterparty nonperformance under the contractual terms of the agreement. These terms include making payments and the posting of collateral and/or margin. Counterparties to repo and reverse repo agreements include the Parent company, third party brokerdealers, banks and clearing organizations. Where applicable, to mitigate credit risk, the Company reviews counterparty financial statements, establishes credit limits, and monitors the collateral underlying these agreements and requests additional collateral as appropriate. Furthermore, in the event of counterparty default the Company has the right to liquidate collateral held and to offset receivables and payables with the same counterparty. Market Risk - Market risk refers to the risk of loss associated with changes in market prices, credit spreads or other market factors. The level of market risk is also influenced by volatility and liquidity in the markets. Generally, the market risks the Company is exposed to include interest rate risk from gaps in maturity dates between repo and market risk on the collateral underlying reverse repo transactions in the event of counterparty default. The Company seeks to manage these risks by monitoring markets, establishing risk limits, and marking collateral to market each day. Concentrations of Credit Risk - The Company has a concentration of credit risk to financial institutions including the Parent company (a REIT), broker-dealers, banks, and industry clearing organizations. The largest concentration of credit risk is with the Parent company which is generally counterparty to one side of each matched repo and reverse repo transaction. On these matched transactions the Company seeks to generate revenue by earning a spread on the interest rate charged on the reverse repo transaction versus the interest rate paid on the reportration risk with the Parent, the Company monitors credit limits in light of changing market conditions and is over collateralized versus the loan amount on all reverse repurchase agreements. In the event of a Parent company would be exposed to the risks associated with liquidating or obtaining the collateral underlying reverse repo and repo transactions in excess of the netted amount of over collateralization received on those transactions. A significant concentration of credit risk also exists with the FICC, an industry clearing organization that becomes the central counterparty to eligible transactions executed with other FICC members in the repo, reverse repo, TBA and U.S. Agency MBS market. The Company also has a concentration of indirect exposure to the U.S. Government Agencies as the issuer or guarantor of the collateral underlying the Company's reverse repo agreements. The Company would only be exposed to this indirect concentration in the event of a counterparty default. #### 9. Regulatory Requirements The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital. The Company has elected to compute its alternative method permitted by the rule, which requires minimum net capital equal to the greater of \$250 thousand or 2% of aggregate debit items arising from customer transactions as defined. As of December 31, 2024, the Company had net capital of \$943 million which exceeded its minimum requirement of \$250 thousand by approximately \$943 million. The Company is also subject to SEC Rule 15c3-3 and may be required to deposit cash or acceptable collateral into a Special Reserve Account for the exclusive benefit of customers. As of December 31, 2024, the customer reserve computation did not require any deposit to the aforementioned account. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.