# EDGAR Filing Document

**Accession Number:** 0001023990
**File Stem:** 0001023990-23-000002
**Filing Date:** 2023-3
**Character Count:** 25010
**Document Hash:** 0147918c30587a1d4ac4891e93346688
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001023990-23-000002.hdr.sgml**: 20230301

**ACCESSION NUMBER**: 0001023990-23-000002

**CONFORMED SUBMISSION TYPE**: X-17A-5

**PUBLIC DOCUMENT COUNT**: 2

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230301

**DATE AS OF CHANGE**: 20230301

**EFFECTIVENESS DATE**: 20230301

**PERIOD START**: 20220101

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** COMMERZ MARKETS LLC
- **CENTRAL INDEX KEY:** 0001023990
- **IRS NUMBER:** 133894311
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** X-17A-5
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 008-49647
- **FILM NUMBER:** 23692703

**BUSINESS ADDRESS:**
- **STREET 1:** 225 LIBERTY STREET
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10281
- **BUSINESS PHONE:** 212-895-1655

**MAIL ADDRESS:**
- **STREET 1:** 225 LIBERTY STREET
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10281

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DRESDNER KLEINWORT SECURITIES LLC
- **DATE OF NAME CHANGE:** 20060919

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DRESDNER KLEINWORT WASSERSTEIN SECURITIES LLC
- **DATE OF NAME CHANGE:** 20020403

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DRESDNER KLEINWORT WASSERSTEIN SECURITIES LLC           /BD
- **DATE OF NAME CHANGE:** 20020403

### Attached PDF Documents

**Attachment 1:** `CMLLC2022Public.pdf`

# **Commerz Markets LLC**  
(A wholly owned subsidiary of Commerzbank AG)  
**Notes to Statement of Financial Condition**  
**December 31, 2022**---

The Company meets a portion of its short-term financing requirements through borrowings and repurchase agreements with affiliates. The Company has an uncollateralized and uncommitted line of credit totaling €2.5 billion (equivalent to $2.7 billion as of December 31, 2022) with Commerzbank AG Grand Cayman Branch for which it pays no fees (Note 4). In addition, the Company has subordinated borrowings with an affiliate (Note 13).

The Company has been provided with a letter of comfort from the Parent whereby the Parent will ensure that the Company is able to meet its contractual liabilities, except in the case of political risks. The term political risk refers to complications the Company may face as a result of political decisions, political and/or regulatory instability, embargos or other changes due to non-market factors.

The Company's related party assets and liabilities at December 31, 2022 are as follows:

*(dollars in thousands)*

# **Assets**

| Cash | $1,141 |
| --- | --- |
| Securities purchased under agreements to resell | 2,642,605 |
| Receivable from customers | 48 |
| Accrued interest and dividends receivable | 6,783 |
| Accounts receivable and other assets | 875 |

# **Liabilities**

| Securities sold under agreements to repurchase | 547,749 |
| --- | --- |
| Payable to customers | 319 |
| Accrued interest and dividends payable | 2,339 |
| Accounts payable, accrued expenses and other liabilities | 2,150 |

# **4. Short-Term Bank Loan**

At December 31, 2022, the Company has an uncollateralized and uncommitted line of credit totaling €2.5 billion (equivalent to $2.7 billion as of December 31, 2022 with Commerzbank AG Grand Cayman Branch). Under this arrangement, the Company had no outstanding uncollateralized borrowing at December 31, 2022.

# **5. Fair Value of Assets and Liabilities**

In accordance with ASC 820 *Fair Value Measurement*, the Company groups its financial assets and financial liabilities measured at fair value into three levels based on markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

At December 31, 2022, Level 1 securities consist of U.S. government securities that are traded by broker or dealers in active over-the-counter markets.

At December 31, 2022, there were no Level 2 securities.

At December 31, 2022, Level 3 security consist of an equity investment in a clearing organization that is not traded in the public market (Note 11).

7

# **Commerz Markets LLC**  
 **(A wholly owned subsidiary of Commerzbank AG)**  
 **Notes to Statement of Financial Condition**  
 **December 31, 2022**

The fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 is as follows:

*(dollars in thousands)*

| Description | Fair Value Measurements at Reporting Date Using |  |  |  |
| --- | --- | --- | --- | --- |
|  | Quoted Prices in Active Markets For Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total |
| Assets |  |  |  |  |
| Securities purchased under agreements to resell segregated under federal and other regulations | $16,950 | $ - | $ - | $16,950 |
| Financial instruments owned, at fair value | - | - | 1,205 | 1,205 |

The fair value hierarchy for assets and liabilities not carried at fair value as of December 31, 2022 is as follows:

*(dollars in thousands)*

| Description | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 |
| --- | --- | --- | --- | --- | --- |
| Assets |  |  |  |  |  |
| Cash | $6,127 | $6,127 | $6,127 | $ - | $ - |
| Securities purchased under agreements to resell | 3,225,421 | 3,225,421 | - | 3,225,421 | - |
| Deposits with clearing organizations | 26,634 | 26,634 | - | 26,634 | - |
| Receivable from broker-dealers and clearing organizations | 1,981 | 1,981 | - | 1,981 | - |
| Receivable from customers | 48 | 48 | - | 48 | - |
| Liabilities |  |  |  |  |  |
| Securities sold under agreements to repurchase | $3,057,503 | $3,057,503 | $ - | $3,057,503 | $ - |
| Payable to broker-dealers and clearing organizations | 64 | 64 | - | 64 | - |
| Payable to customers | 319 | 319 | - | 319 | - |

The fair values of other financial assets and liabilities not carried at fair value are considered to be approximate to their carrying amounts because they have limited counterparty credit risk and are short-term, replaceable on demand, or bear interest at market rates. There were no transfers between levels of the fair value hierarchy during the year.

8

# **Commerz Markets LLC**  
 **(A wholly owned subsidiary of Commerzbank AG)**  
 **Notes to Statement of Financial Condition**  
 **December 31, 2022**

# **6. Securities Finance**

The Company enters into reverse repurchase agreements and repurchase agreements to facilitate and accommodate customers' financing needs. The Company manages credit exposure arising from such transactions by entering into master netting agreements and collateral agreements with counterparties that provide the Company the right to net a counterparty's rights and obligations under such agreement and liquidate and setoff collateral against the net amount owed by the counterparty in case of a default, insolvency, or bankruptcy.

The following table presents information about the offsetting of these instruments and related collateral amounts as of December 31, 2022:

(dollars in thousands)

|  | Gross Amounts | Amounts Offset in the Statement of Financial Condition | Net Amounts Presented in the Statement of Financial Condition | Financial Collateral Not Offset in the Statement of Financial Condition | Net Exposure |
| --- | --- | --- | --- | --- | --- |
| Assets |  |  |  |  |  |
| Securities purchased under agreements to resell | $3,409,102 | $(183,681) | $3,225,421 | $(3,258,994) | $ - |
| Liabilities |  |  |  |  |  |
| Securities sold under agreements to repurchase | $3,241,184 | $(183,681) | $3,057,503 | $(3,143,158) | $85,655 |

The following table presents information about the disaggregation of the gross obligation and remaining contractual tenor for repurchase agreements as of December 31, 2022:

(dollars in thousands)

|  | Overnight and Continuous | Up to 30 days | Greater than 90 days | Total |
| --- | --- | --- | --- | --- |
| Securities sold under agreements to repurchase |  |  |  |  |
| U.S. government obligations | $1,742,371 | $1,263,796 | $ - | $3,006,167 |
| Corporate debt securities | 44,409 | 151,466 | 39,142 | 235,017 |
| Total borrowings | $1,786,780 | $1,415,262 | $39,142 | $3,241,184 |

There were no significant changes in the fair value of the collateral pledged arising from default risk due to the short-term nature of the repurchase agreements.

9

# **Commerz Markets LLC**  
(A wholly owned subsidiary of Commerzbank AG)  
**Notes to Statement of Financial Condition**  
**December 31, 2022**---

# **7. Deposits with Clearing Organizations**

Deposits with clearing organizations include cash deposited with clearing organizations to meet their margin requirements.

# **8. Receivable From and Payable to Broker-Dealers and Clearing Organizations**

At December 31, 2022, receivable from and payable to broker-dealers and clearing organizations consists of the following:

*(dollars in thousands)*

| Receivable from broker-dealers and clearing organizations |  |
| --- | --- |
| Securities failed to deliver | $123 |
| Clearing organizations | 1,858 |
|  | $1,981 |
| Payable to broker-dealers and clearing organizations |  |
| Securities failed to receive | $48 |
| Clearing organizations | 16 |
|  | $64 |

# **9. Receivable From and Payable to Customers and Noncustomers**

Receivables from and payables to customers and noncustomers include receivables from securities failed to deliver and payables on securities failed to receive transactions, amounts due on margin and cash transactions.

# **10. Revenue from Contracts with Customers**

The Company has determined that all of its performance obligations have been satisfied and there were no contracts with remaining performance obligations outstanding at December 31, 2022.

# **11. Trading Activities**

The Company’s trading activities are both customer-driven and market-making in nature. Its activities include domestic and international brokerage.

At December 31, 2022, financial instruments owned represent a shareholding in a clearing organization:

10

# **Commerz Markets LLC**  
 **(A wholly owned subsidiary of Commerzbank AG)**  
 **Notes to Statement of Financial Condition**  
 **December 31, 2022**---

| (dollars in thousands) | Financial Instruments Owned |
| --- | --- |
| Equities | $1,205 |

Financial instruments sold, not yet purchased, represent obligations of the Company to deliver the financial instruments at contracted prices. These transactions may result in off-balance sheet market risk, as the Company's eventual obligation to satisfy these sales could exceed the amount recognized in the statement of financial condition.

# **12. Employee Compensation and Benefits**

The Company participates in the Branch's employee retirement plans, the retirement saving account and the 401 (k) plan. Substantially all employees of the Company participate in the retirement saving account and the 401 (k) plan. Employee contributions to the 401 (k) plan are matched up to a specified limit. The Company also has defined benefit pension plans. These defined benefit pension plans are no longer offered to employees but have an impact to the Company's statement of financial condition due to valuation results.

The Company also participates in the Commerzbank AG Share Awards ('Share Awards'). Share Awards are granted to eligible employees in lieu of cash when the cash amount of individual bonus exceeds a certain threshold. A Share Award is an unfunded promise to pay in cash an amount equal to a certain number of shares of Commerzbank AG shares, provided the stipulated requirements have been met. Eligible employees will also receive dividend and subscription rights in cash equivalents to the extent dividends are paid and subscription rights are granted to common stock shareholders of Commerzbank AG shares during the vesting period. Since the arrangement is settled in cash, it is classified as a liability award.

Details of the outstanding Share Awards, are as follows:

| Date of Grant | Term | Price at Grant Date | Shares Granted | Unvested Shares at December 31, 2021 | Vested Shares | Adjusted/ Forfeited Shares | Unvested Shares at December 31, 2022 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| March 2019 | Long | 7.45 | 9,661 | 9,661 | (9,661) | - | - |
| March 2020 | Long | 6.11 | 16,515 | 16,515 | - | - | 16,515 |
| March 2022 | Long | 8.46 | 14,030 | - | - | - | 14,030 |
| March 2022 | Short | 8.46 | 21,043 | - | - | - | 21,043 |

Payment for short-term Shares Awards are payable thirteen months after the date of grant based on average closing price on all trading days in the month of March. Payment for long-term Share Awards granted in 2019 are payable three years and seven months after the date of grant based on average closing price on all trading days in the month of September. Payment for long-term Share Awards

11

# **Commerz Markets LLC**  
(A wholly owned subsidiary of Commerzbank AG)  
**Notes to Statement of Financial Condition**  
**December 31, 2022**---

granted in 2020 and 2022 are payable four years and seven months after the date of grant based on average closing price on all trading days in the month of September.

The compensation expense for Share Awards is recorded ratably over the service period and adjusted accordingly to changes in the Share Award's fair value. For the year ended December 31, 2022, accrued compensation relating to the Share Awards was $0.3 million at December 31, 2022. As of December 31, 2022, $0.2 million of unrecognized compensation costs relating to the Share Awards remain to be amortized over the service periods.

In addition to the above plans, the Company participates in short-term and long-term cash-based bonus programs for employees which are granted in the month of March. Payment for short-term cash-based bonus are payable in the same month as of the grant date. Payment for long-term cash bonus granted prior to 2020 are payable three years and seven months after the date of grant. Payment for long-term cash bonus granted in 2020 and 2022 are payable three years and eight months after the date.

The Company's bonus programs as defined in the Commerzbank Incentive Plan (CIP-US Plan provisions) are aligned with the remuneration system of the Parent.

# **13. Subordinated Borrowings**

The Company has a revolving subordinated credit agreement for $450 million with Commerzbank AG Grand Cayman Branch with a scheduled maturity date of April 15, 2026. The subordinated credit agreement provides for interest on outstanding borrowings to be determined as of the date of the borrowings, which should be the market interest rate plus 60 basis points. As of December 31, 2022, the Company has no outstanding subordinated borrowings against this credit agreement.

The revolving subordinated credit agreement has been approved by FINRA for use by the Company in computing its net capital under the Uniform Net Capital Rule (Rule 15c3-1) of the SEC. The borrowings may not be repaid if such repayment would cause the Company to fail to maintain minimum regulatory capital.

# **14. Commitments and Contingencies**

There are certain legal, regulatory and arbitration matters pending against the Company arising out of its normal business operations. Management believes that no such action could reasonably be expected to have a material adverse effect on the Company's financial position.

An affiliate has entered into long-term lease agreements to rent office space, a portion of which is made available to the Company as part of a service agreement.

In the normal course of business, the Company enters into underwriting transactions. At December 31, 2022, there was no open contractual commitment relating to underwriting transactions.

At December 31, 2022, the Company has a commitment to enter into reverse repurchase agreements with Fixed Income Clearing Corporation under the term of their Capped Contingency Liquidity Facility for $43 million.

12

# **Commerz Markets LLC**  
(A wholly owned subsidiary of Commerzbank AG)  
**Notes to Statement of Financial Condition**  
**December 31, 2022**---

At December 31, 2022, the Company has commitments to purchase U.S. government securities under reverse repurchase agreements with notional amounts of $0.2 billion. The Company also has commitments to sell U.S. government securities under repurchase agreements with notional amount of $0.7 billion.

# **15. Off-Balance Sheet Risk, Concentration of Credit Risk, and Certain Other Risks and Uncertainties**

# **Credit Risk**

The Company's trading activities expose it to credit risk. This risk arises from the possibility that the counterparty to a transaction might fail to perform according to its contractual commitment, and the collateral in the transaction would be insufficient to cover the commitment.

The majority of the Company's transactions, and consequently its credit exposure, are with other broker-dealers, banks and financial institutions. The risk of default depends on the creditworthiness of the counterparty. The Company seeks to control credit risk by following an established credit approval process, monitoring credit limits, and requiring adequate collateral levels.

In the event of a default by a counterparty, the Company would look to collateral available under the transaction. Reverse repurchase agreements and securities borrowing arrangements can result in exposure in the event of counterparty nonperformance. To mitigate this risk, and in accordance with industry practice, the Company takes possession of collateral under reverse repurchase and securities borrowed transactions. The fair value of collateral is monitored daily in relation to the related receivable (including accrued interest), and additional collateral is obtained when necessary to adequately collateralize the receivable.

The Company's customer activities also expose it to credit risk. These activities involve the execution, settlement and financing of customer securities transactions, primarily for institutional customers. These transactions may be on a cash, margin, or delivery versus payment basis. The Company requires customers to maintain collateral in compliance with regulatory and internal guidelines. In the event of customer nonperformance, the Company may suffer a loss if the fair value of the securities in the transaction is not sufficient to satisfy the contractual amount of the transaction. This risk exists for all customer transactions during the settlement period and for margin customers thereafter.

In the normal course of business the Company enters into contracts that contain a variety of representations and warranties, and which provide general indemnifications. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet been made.

# **Market Risk**

Market risk is the potential loss the Company may incur as a result of changes in the market value of a particular instrument. All financial instruments, including derivatives and short sales, are subject to market risk. The Company's exposure to market risk is determined by a number of factors, including the size, duration, composition and diversification of positions held, the absolute and relative levels of interest rates, and foreign currency exchange rates, as well as market volatility and illiquidity. A significant factor influencing the overall level of market risk to which the Company is exposed is its use of hedging techniques to mitigate such risk. The Company manages market risk by setting risk limits and monitoring the effectiveness of its hedging policies and strategies.

13

# **Commerz Markets LLC**
**(A wholly owned subsidiary of Commerzbank AG)**
**Notes to Statement of Financial Condition**
**December 31, 2022**

Market risk also covers the liquidity risk, where the main tasks range from identifying, measuring, monitoring and reporting on economic liquidity risks with conceptual challenges regarding liquidity risk management. The impact of entity-specific and market-related events with regard to the Company's liquidity position is analyzed by determining a wide range of applied stress scenarios on the basis of the internal liquidity risk model.

# **Operational Risk**

As a major intermediary in the financial markets, the Company is directly exposed to market risk and credit risk, which arise in the normal course of its business activities. Less direct, but of critical importance, are risks pertaining to operational and back-office support. This is particularly the case in a rapidly changing and increasingly global environment with increasing transaction volumes and an expansion in the number and complexity of products in the marketplace. Such risks include but are not limited to:

- Operational/Settlement Risk - the risk of financial and opportunity loss and legal liability attributable to operational problems such as inaccurate pricing of transactions, untimely trade execution, clearance and/or settlement, or the inability to process large volumes of transactions.
- Technological Risk - the risk of loss attributable to technological limitations and hardware failure that constrain the Company's ability to gather, process and communicate information efficiently and securely, without interruption, with customers, and in the markets where the Company participates. In addition, the Company must continue to address the technological implications that will result from regulatory and market changes.
- Legal/Documentation Risk - the risk of loss attributable to deficiencies in the documentation of transactions (such as trade confirmations) and customer relationships (such as master netting agreements), or errors that result in noncompliance with applicable legal and regulatory requirements.
- Financial Control Risk - the risk of loss attributable to limitations in financial systems and controls; strong financial systems and controls ensure that assets are safeguarded, that transactions are executed in accordance with management's authorization, and that financial information utilized by management and communicated to external parties, creditors and regulators is free of material errors.

# **16. Regulatory Requirements**

As a registered broker and dealer in securities, the Company is subject to the rules and regulations of the SEC. In connection with the SEC's Customer Protection Rule (Rule 15c3-3), $17.0 million of U.S. government securities have been segregated in a special reserve bank account for the exclusive benefit of customers at December 31, 2022.

The Company is also subject to the SEC's Uniform Net Capital Rule (Rule 15c3-1). The Company has elected to compute its net capital under the "alternative method" permitted by the rule. Under the alternative method, net capital (as defined) must exceed the greater of $1 million or 2% of aggregate debit balances arising from customer transactions (as defined by Rule 15c3-3). The Company had $0.1 million aggregate debit balances arising from customer transactions at December 31, 2022. At December 31, 2022, the Company's net capital was $183.0 million and was $182.0 million in excess of its required capital of $1 million.

14

# **Commerz Markets LLC**  
(A wholly owned subsidiary of Commerzbank AG)  
**Notes to Statement of Financial Condition**  
**December 31, 2022**---

# **17. Subsequent Events**

The Company has performed an evaluation of subsequent events through February 28, 2023, which is the date the statement of financial condition were issued. There have been no other subsequent events that would require recognition or disclosure in the statement of financial condition as of December 31, 2022, or for the year then ended.

15

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM X-17A-5

### ANNUAL AUDITED REPORT

### Filer Information

**Filer CIK:** 0001023990

**Filer CCC:** XXXXXXXX

**Is this a LIVE or TEST filing?:** LIVE

**Would you like a Return Copy?:** No

### Submission Information

**Report Period Begin Date:** 01-01-2022

**Report Period End Date:** 12-31-2022

**Type of Registrant:** Broker-dealer

**Any material weaknesses identified?:** No

### Registrant Identification

**Name of Broker-Dealer:** COMMERZ MARKETS LLC

**Business Address:** 225 LIBERTY STREET, NEW YORK, NY, 10281

**Contact Person:** Yoko Hubley

**Contact Phone:** 212-266-7525

### Independent Public Accountant Identification

**Accountant Name:** RSM US LLP

**Accountant Address:** 151 West 43nd Street, New York, NY, 10036

**Accountant Type:** Certified Public Accountant

### OATH OR AFFIRMATION

I, **Yoko Hubley**, swear (or affirm) that, to the best of my knowledge and belief, the accompanying financial statements and supporting schedules pertaining to the firm of **COMMERZ MARKETS LLC**, as of **12-31-2022**, are true and correct.

**Signature:** Yoko Hubley

**Title:** Chief Financial Officer

**Notarized:** Yes