# MONTEC SECURITIES LLC X-17A-5 (2023-02-27) — Broker-dealer annual report - Company: MONTEC SECURITIES LLC - Form: X-17A-5 - Filed: 2023-02-27 - Period: 2022-12-31 - Accession: 0001817776-23-000001 - CIK: 1817776 - File #: 8-70553 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: New York, NY - Contact: Charlene F Wilson - Phone: 6235334407 - Email: cwilson@montecsecurities.com - Website: montecsecurities.com - Signed by: Nick Crawford (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1817776/000181777623000001/Montecpublic2.pdf --- {0}------------------------------------------------ #### **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** # **ANNUAL REPORTS FORM X-17 A-5 PART** Ill | 0MB APPROVAL | |---------------------------| | 0MB Number: 3235-0123 | | Expires: Oct. 31, 2023 | | Estimated average burden | | hours per response:
12 | | | | | | SEC FILE NUMBER | | | |---------|--|-----------------|--|--| | 8-70553 | | | | | **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 01/01/22 | ---------- | AND ENDING 12/31/22 | ----------- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|-----------------------------------------|-----------------------------------------------| | | MM/DD/VY | | MM/DD/VY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF FIRM: Montee Securities LLC | | | | | TYPE OF REGISTRANT (check all applicable boxes):
0 Broker-dealer
□ Security-based swap dealer
D Check here if respondent is also an OTC derivatives dealer | | □ Major security-based swap participant | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | 510 Madison Avenue, 10th fllor | | | | | | (No. and Street) | | | | New York | NY | | 10022 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Charlene F. Wilson 623-533-4407 | | | cwilson@montecsecurities.com | | (Name) | (Area Code -Telephone Number) | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | Ernst & Young LLP | | | | | | (Name - if individual, state last, first, and middle name) | | | | One Manhattan West
, 401 9th Ave. New York | | NY | 10001 | | (Address) | (City) | (State) | (Zip Code) | | 10/20/2003 | | 42 | | | | | | I
[PCAOB Reg;wafo, N, mbec, ;f appHca ble) | | | 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)(l)(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 0MB control number.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, Nick Crawford | | | | swear (or affirm) that, to the best of my knowledge and belief, the | | | |------------------|--|--|--|---------------------------------------------------------------------|--|--| | | | | | | | | financial report pertaining to the firm of Montee Securities LLC as of December 31 2~ 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, has any proprietary interest in any account classified solely as that of a customer. CHRIS **BASTIAN** ![](_page_1_Picture_3.jpeg) | | ff}?
Signature~ | | |--------|--------------------|--| | | | | | Title: | Cec) | | #### **This filing\*\* contains (check all applicable boxes):** - ca (a) Statement of financial condition. - ca (b) Notes to consolidated statement of financial condition. - D (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 (d) Statement of cash flows. - D (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - D (f) Statement of changes in liabilities subordinated ·to claims of creditors. - D (g) Notes to consolidated financial statements. - D (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-l, as applicable. - □ (i) Computation of tangible net worth under 17 CFR 240.18a-2. - D (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (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. - D (I) Computation for Determination of PAS Requirements under Exhibit A to§ 240.15c3-3. - D (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - D (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. - D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible 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 differen~es exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - ca (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - ca (t) Independent public accountant's report based on an examination of the statement of financial condition. - D (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - D (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. - D (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. - D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or 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). D(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.* {2}------------------------------------------------ Statement of Financial Condition Montee Securities LLC December 31, 2022 With Report of Independent Registered Public Accounting Firm (SEC ID No. 8-70553) {3}------------------------------------------------ # **Montee Securities LLC Statement of Financial Condition Year ended December 31, 2022** #### Contents | | | | | | Facing page and Oath and Affirmation | |--|--|--|--|--|--------------------------------------| |--|--|--|--|--|--------------------------------------| | | Page | |---------------------------------------------------------|------| | Report of Independent Registered Public Accounting Firm | | | Statement of Financial Condition | 2 | | Notes to Statement of Financial Condition | 3-8 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) New York, NY 10001 ey.com Ernst & Young LLP Tel: +l 212 773 3000 One Manhattan West Fax: +l 212 773 6350 #### **Report of Independent Registered Public Accounting Firm** To the Member and Management of Montee Securities, LLC: #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Montee Securities LLC (the Company) as of December 31, 2022, 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, 2022, 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2021. February 24, 2023 {5}------------------------------------------------ # **Montee Securities LLC Statement of Financial Condition December 31, 2022** (in thousands) | ASSETS | | |--------------------------------------------------------------|-----------------| | Cash and cash equivalents | \$
24,903 | | Receivable from brokers or dealers and clearing organization | 35,094 | | Securities purchased under agreement to resell | 3,386,110 | | Interest receivable | 832 | | Fixed assets | 6 | | Due from Parent | 7 | | Prepaid expenses | 50 | | TOTAL ASSETS | \$
3,447,002 | | LIABILITIES & MEMBER'S EQUITY
Liabilities | | | Securities sold under agreement to repurchase | \$
3,345,819 | | Payables to brokers or dealers and clearing organization | 1,972 | | Accounts Payable and accrued expenses | 1,232 | | Total Liabilities | 3,349,023 | | | | | Member's Equity | 97,979 | | TOTAL LIABILITIES & MEMBER'S EQUITY | \$
3,447,002 | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ #### **Montee Securities LLC Notes to Statement of Financial Condition December 31, 2022 Amounts in US Dollar thousands** ### **1. Organization** Montee Securities LLC (the "Company") is a Limited Liability Company under the laws of Delaware, formed on May 26, 2020. The Company is a registered brokerdealer under the Securities Exchange Act of 1934 (the "SEA"), is a member of the Financial Industry Regulatory Authority ("FINRA") and is a member of the Securities Investor Protection Corporation ("SIPC"). The Company is a wholly owned subsidiary of Montee Securities Funding LLC ("Parent"). The Parent is a wholly owned subsidiary of Capula Global Relative Value Master Fund Limited, ("Ultimate Parent"). The Company engages in trading securities, including U.S. government securities and in repurchase/reverse repurchase transactions for its affiliates. The Company began trading in April 2022. The Company clears all trades through Bank of New York Mellon. ### 2. **Significant Accounting Policies** #### **Basis of Financial Statement Presentation** The financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") which require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. #### **Cash and Cash Equivalents** Cash and cash equivalents are comprised of highly liquid investments, including deposits in banks with original maturities of three months or less. The Company had no cash equivalents at December 31, 2022. The Company maintains its cash with major financial institutions, which at times may exceed the Federal Depository Insurance Corporation ("FDIC") limit of \$250. The Company has not experienced any losses in such accounts. #### **Receivables from/Payables to brokers or dealers and clearing organizations** Receivables from/Payables to brokers or dealers and clearing organizations represent amounts due in connection with the Company's normal transactions involving trading of securities in the U.S. The Company's trades and contracts are cleared through a clearing organization and settled daily between the clearing {7}------------------------------------------------ organization and the Company. The Company's exposure is limited to the unsettled amounts owed to the Company. # **Securities purchased under agreements to resell and Securities sold under agreement to repurchase** Securities purchased under agreements to resell ("resale agreements") and Securities sold under agreement to repurchase ("repurchase agreements") are accounted for as secured financings. Resale agreements and repurchase agreements are collateralized by U.S. government obligations which are recorded at contract price, plus accrued interest. The Company takes possession of securities obtained as collateral for resale agreements at the time such agreements are made. The market value of the underlying collateral is generally valued or monitored daily and additional collateral is obtained or refunded as appropriate. Resale agreements are collateralized by securities with a market value in excess of the obligation under the contract which may result in unsecured credit exposure in the event the counterparty to a transaction is unable to fulfill its contractual obligation in a timely manner. Due to the highly liquid nature of the underlying collateral and the short-term maturity of these agreements, in the majority of cases contractual amounts approximate fair value. The Company offsets resale agreements and repurchase agreements when the criteria under ASC 210-20-45-10 are met. The counterparty to all resale agreements is the Ultimate Parent. #### **Fair Value of Financial Instruments** The Company's financial instruments are measured and reported on a fair value basis. ASC 820, Fair Value Measurement, defines fair value and establishes a framework for measuring fair value, as well as a fair value hierarchy based on inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable market data, when available, and to minimize the use of unobservable inputs when measuring the value. The Company's financial instruments are measured and reported on a fair value basis. Financial assets and liabilities are classified based on inputs used to establish fair value as follows: {8}------------------------------------------------ Level 1: Valuations are based on quoted prices (unadjusted) of identical assets or liabilities in the principal markets in which they are traded; Level 2: Valuations are derived from market observable inputs or from quoted prices from markets that are less liquid for identical assets or liabilities; Level 3: Valuation techniques utilize inputs that are unobservable and significant to the fair value measurement. The Company estimates that the fair value of financial instruments recognized on the statement of financial condition approximates their carrying value, as these financial instruments are short term in nature. Other assets and liabilities with short and intermediate-term maturities and defined settlement amounts, including receivables, payables and accrued expenses are reported at their contractual amounts, which approximate fair value. ### **Income Taxes** The Company is a Limited Liability Company which is wholly-owned by the Parent who is a taxpayer and, accordingly, the Company is a "disregarded entity" for tax purposes. No provision for income taxes is provided in the Company's financial statements. # **Depreciation** Computer software is depreciated over its estimated useful life (3 years) using the straight-line method . # 3. **Related-Party Transactions** The Company entered into an administrative services agreement with Capula Investment US LP ("CIUS") from which it receives the benefit of certain facilities and services paid for by CIUS. The Company is allocated certain overhead expenses including human resource services, information technology services, legal and administrative support services based on time spent. Rent and utilities are payable based upon a set percentage representing a pro-rata share of the office space occupied by the Company. During the period, the Company incurred expenses of \$235 to CIUS for allocated expenses pursuant to the expense sharing agreement. These allocated expenses are generally settled on a quarterly basis. At December 31, 2022, there was an outstanding payable to CIUS of \$45. {9}------------------------------------------------ The Company received a capital contribution of \$94,000 during the year from the Parent. # 4. **Regulatory Requirements** The Company, a registered broker-dealer, is subject to the Net Capital Rule 15c3- 1 under the SEA (the "Rule"), which requires the maintenance of a minimum net capital. The Company utilizes the alternative method available under the Rule and is required to have net capital equal to the greater of \$250,000 or 2 percent of aggregate debit items computed in accordance with the Formula for Determination of Reserve Requirements for Brokers and Dealers. At December 31 , 2022, the Company had a net capital of \$97,430 which was \$97,180 in excess of its required net capital of \$250. The Company does not claim an exemption under SEA Rule 15c3-3, rather the Company relies on Footnote 74 to SEC Release 34-70073. The Company does not (1) directly or indirectly receive, hold or otherwise owe funds or securities for or to customers, (2) does not and will not carry accounts of or for customers and (3) does not and will not carry PAB accounts. # 5. **Collateralized Agreements** At December 31 , 2022, the resale agreements and repurchase agreements are collateralized by U.S. treasury securities. The securities obtained by the Company under resale agreements have been transferred to others in connection with the Company's financing activities. All resale agreements and repurchase agreements at December 31 , 2022 have an overnight contractual maturity. Refer to Note 6 for the gross amount of each prior to netting on the statement of financial condition . # 6. **Offsetting of Financial Assets and Liabilities** Below is a summary table of resale agreements and repurchase agreements including the amounts in the statement of financial condition , subject to netting agreements. All resale agreements and repurchase agreements, are subject to enforceable master netting agreement that give the Company the right, in the event of default, to liquidate collateral held and offset receivables and payables with the same counterparty. {10}------------------------------------------------ | of
Type
financial
asset/liability | Gross Amount of
Recognized
Assets/Liabilities | Gross
Amount
Offset
in
the
of
Statement
Financial Condition | Net
amount
of
assets/I ia bi I ities
presented
in
the
Statement
of
Financial Condition | |--------------------------------------------------------------------|-----------------------------------------------------|----------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------| | Securities
purchased
under
agreement
to
resell, net | \$4,461,898 | \$1,075,788 | \$3,386,110 | | Securities
sold
under
agreement
to
repurchase, net | \$4,421,607 | \$1,075,788 | \$3,345,819 | ### 7. **Receivables from/Payables to Broker or Dealers and Clearing Organizations** At December 31 , 2022, amount Receivable from and Payable to brokers or dealers and clearing organizations consisted of the following: | Deposit with clearing organization | \$35,000 | | | | |----------------------------------------------------------------------------------------|----------|--|--|--| | Receivables from clearing organization | 94 | | | | | Total Receivables from brokers or dealers and clearing
organizations | \$35.094 | | | | | Payable to clearing organization | | | | | | Total
Payable
to
brokers
or
dealers
and
clearing
organizations | \$1,972 | | | | The deposit with clearing organization is all with Fixed Income Clearing Corporation ("FICC''). #### 8. **Fair Value Measurements** Fair Value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820, Fair Value Measurement, establishes a fair value hierarchy, which requires an entity to maximize the use of {11}------------------------------------------------ observable inputs and minimize the use of unobservable inputs when measuring fair value. The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Cash, Receivables from brokers or dealers and clearing organizations, Money Market Fund, Securities purchased under agreement to resell, Interest Receivable, Securities sold under agreement to repurchase, Payable to brokers or dealers and clearing organizations are all recorded at contractual amounts, which approximate fair value. These financial instruments are generally short term in nature and bear interest rates that approximate market rates and are classified as Level 1 . ### 9. **Off-Balance Sheet and Credit Risk** The Company's financing and securities settlement activities requires the Company to pledge securities as collateral in support of secured financing sources. In the event the counterparty is unable to meet its contractual obligation to return securities pledged as collateral, the Company may be exposed to the risk of acquiring the securities at prevailing market price in order to satisfy its obligations. The Company controls this risk by monitoring the fair value of securities pledged on a daily basis. #### 10. **Commitments and Contingencies** As of December 31 , 2022 the Company had no commitments or contingencies that required disclosure. #### 11. **Subsequent Events** The Company has evaluated subsequent events through the date the financial statements were available to be issued . There are no material events that would require adjustments to, or disclosure in, the Company's financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.