Portions of Part III of this Form 10-K are incorporated by reference from the Registrant’s definitive proxy statement (the ~~“2018~~“2021 Proxy Statement”) for its ~~2018~~2021 annual meeting of shareholders to be filed with the Securities and Exchange Commission no later than 120 days after the end of the Registrant’s fiscal year.

~~The Fourth Amended~~Virtu Financial (“VFH”), Impala Borrower LLC (the “Acquisition Borrower”), a subsidiary of the Company, the lenders party thereto and ~~Restated Credit Agreement~~Jeffries Finance LLC, as administrative agent (as amended on October 9, 2019 and as further amended from time to time, the ~~indenture governing the Notes contain,~~“Credit Agreement”) contains, and any other existing or future indebtedness of ours may contain, a number of covenants that impose significant operating and financial restrictions on us, including restrictions on our and our restricted subsidiaries’ ability to, among other things:

~~incur additional debt, guarantee indebtedness or issue certain preferred equity interests;~~

~~pay dividends on or make distributions in respect of, or repurchase or redeem, our equity interests or make other restricted payments;~~

~~prepay, redeem or repurchase certain debt;~~

•incur additional debt, guarantee indebtedness or issue certain preferred equity interests;

~~make loans or certain investments;~~

•pay dividends on or make distributions in respect of, or repurchase or redeem, our equity interests or make other restricted payments;

~~sell certain assets;~~

•prepay, redeem or repurchase certain debt;

~~create liens on our assets;~~

•make loans or certain investments;

~~consolidate, merge or sell or otherwise dispose of all or substantially all of our assets;~~

•sell certain assets;

~~enter into certain transactions with our affiliates;~~

•create liens on our assets;

~~enter into agreements restricting our subsidiaries’ ability to pay dividends; and~~

•consolidate, merge or sell or otherwise dispose of all or substantially all of our assets;

~~designate our subsidiaries as unrestricted subsidiaries.~~

•enter into certain transactions with our affiliates;

•enter into agreements restricting our subsidiaries’ ability to pay dividends; and

•designate our subsidiaries as unrestricted subsidiaries.

As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to successfully execute our strategy, engage in favorable business activities or finance future operations or capital needs. In addition, ~~our Fourth Amended and Restated~~the revolving credit facility under the Credit Agreement ~~requires us~~is subject to ~~maintain specified~~a springing financial ~~ratios and tests, including interest coverage and total leverage ratios,~~covenant which, if in effect, may require us to take action to reduce our debt or to act in a manner contrary to our business objectives.

We may be unable to remain in compliance with ~~the financial maintenance and other~~ covenants contained in the ~~Fourth Amended and Restated~~ Credit Agreement, and our obligation to comply with these covenants may adversely affect our ability to operate our business. A failure to comply with the covenants under the ~~Fourth Amended and Restated~~ Credit Agreement ~~the Notes~~ or any of our other future indebtedness could result in an event of default, which, if not cured or

waived, could have a material adverse effect on our business, financial condition, results of operations and cash flows. If any such event of default has occurred and is continuing, the lenders under our ~~Fourth Amended and Restated~~ Credit Agreement, among other things:

~~will not be required to lend any additional amounts to us;~~

~~could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable and terminate all commitments to extend further credit; or~~

~~could effectively prevent us from making debt service payments on the Notes;~~

•will not be required to lend any additional amounts to us; or

•could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable and terminate all commitments to extend further credit;

any of which could result in ~~an event of default under the Notes or cause~~ cross defaults under our other indebtedness. If we default on our indebtedness, our business, financial condition and results of operation could suffer a material adverse effect.

We pledge substantially all of our and our guarantor subsidiaries’ assets as collateral under the ~~Fourth Amended and Restated~~ Credit ~~Agreement and the Notes.~~Agreement. If we were unable to repay such indebtedness, the lenders under the ~~Fourth Amended and Restated~~ Credit Agreement ~~and, subject to certain intercreditor arrangements, the holders of the Notes,~~ could proceed to exercise remedies against the collateral granted to them to secure that indebtedness. If any of our outstanding indebtedness under the ~~Fourth Amended and Restated~~ Credit Agreement ~~the Notes~~ or our other indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full. We do not have sufficient working capital to satisfy our debt obligations in the event of an acceleration of all or a significant part of our outstanding indebtedness.

Despite our substantial indebtedness, we may still be able to incur significantly more debt, which could intensify the risks associated with our substantial indebtedness.

Borrowings under the ~~Fourth Amended and Restated~~ Credit Agreement, the Uncommitted Facility and the ~~Revolving Credit~~Committed Facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on certain of our variable rate indebtedness will increase even though the amount borrowed

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remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. We have entered into, and may enter into additional, interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk, may prove disadvantageous or may create additional risks. Rising interest rates could also limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing.

~~Regulatory and legal uncertainties could harm our business.~~

Securities and derivatives businesses are heavily regulated. Firms in the financial services industry have been subject to an increasingly regulated environment over recent years, and penalties and fines sought by regulatory authorities have increased considerably. In addition, following recent news media attention to electronic trading and market structure, the regulatory and enforcement environment has created uncertainty with respect to various types of transactions that historically had been entered into by financial services firms and that were generally believed to be permissible and appropriate. “High frequency” and other forms of low latency or electronic trading strategies continue to be the focus of extensive regulatory scrutiny by federal, state and foreign regulators and SROs, and such scrutiny is likely to continue. Our market making and trading activities are characterized by substantial volumes, an emphasis on technology and certain other characteristics that are also commonly associated with high frequency trading. Specifically, both the SEC and the CFTC have issued general concept releases on market structure requesting comment from market participants on topics including, among others, high frequency trading, co‑location, dark liquidity, pre‑ and post‑trade risk controls and system safeguards. The SEC has adopted rules that, among other results, have significantly limited the use of sponsored access by market participants to the U.S. equities exchanges, imposed large trader reporting requirements, restricted short sales in listed securities under certain conditions and required the planning and creation of a new comprehensive consolidated audit trail. The SEC has also approved by order a pilot proposal by the FINRA and the national securities exchanges establishing a “Limit Up‑Limit Down” mechanism to address market volatility.

In addition, certain market participants, SROs, government officials and regulators have requested that the U.S. Congress, the SEC, and the CFTC propose and adopt additional laws and rules, including rules relating to additional registration requirements, restrictions on co‑location, order‑to‑execution ratios, minimum quote life for orders, incremental messaging fees to be imposed by exchanges for “excessive” order placements and/or cancellations, further transaction taxes, tick sizes, changes to maker/taker rebates programs, and other market structure proposals. For example, the SEC adopted Regulation SCI, which imposes compliance and other costs on market centers that may have to pass such costs on to their users, including us, and could impact our future business plans of establishing a market center to avoid or reduce market center costs for certain of our transactions. Similarly, CAT imposes new reporting requirements and additional costs on U.S. broker-dealers. The Tick Pilot program, which is currently underway, includes a “trade at” component, requiring that certain of these transactions occur only on an exchange. If the trade at feature is adopted permanently for small capitalization securities without the trade at exemptions that currently exist, and it is not accompanied by a reduction in the fees paid to access liquidity on exchanges, the trade at requirement may increase the costs for certain of our transactions. Finally, the SEC has proposed amendments to regulations that would require our registered broker‑dealer that is not currently a FINRA member to become a member of FINRA, which, if adopted as proposed, would subject the broker‑dealer to FINRA’s rules and require payment of additional fees per trade that could adversely affect our profits given that we seek to make small profits on individual trades. Additionally, the CFTC has proposed the adoption of Regulation Automated Trading, which would, among other requirements, require registration by direct market participants, mandate the use of certain types of risk controls, and require the maintenance of a source code repository in accordance with certain specifications.

Any or all of these proposals or additional proposals may be adopted by the SEC, CFTC or other U.S. or foreign legislative or regulatory bodies, and recent news media attention to electronic trading and market structure could increase the likelihood of adoption. These potential market structure and regulatory changes could cause a change in the manner in which we make markets, impose additional costs and expenses on our business or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, the financial services industry is heavily regulated in many foreign countries, much like in the U.S. The varying compliance requirements of these different regulatory jurisdictions and other factors may limit our ability to conduct business or expand internationally. For example, MiFID, which was implemented in November 2007, has been

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replaced by MiFID II/Markets in Financial Investments Regulation (“MiFIR”), which was adopted by the European Parliament on April 15, 2014 and by the Council on May 13, 2014, entered into force on July 2, 2014, and became effective on January 3, 2018. Many MiFID II changes are likely to affect our business. For example, MiFID II requires certain types of firms, including us, to post firm quotes at competitive prices and will supplement current requirements with regard to investment firms’ risk controls related to the safe operation of electronic systems. MiFID II will also impose additional requirements on market structure, such as the introduction of a harmonized tick size regime, the introduction of new trading venues known as Organized Trading Facilities, and the promulgation of a new bilateral trading arrangement called the Systematic Internaliser regime, new open access provisions, market making requirements and various other pre‑ and post‑trade risk management requirements. Each of these and other proposals may impose technological and compliance costs on us. Any of these laws, rules or regulations, as well as changes in legislation or regulation and changes in market customs and practices could have a material adverse effect on our business, financial condition, results of operations and cash flows. These risks may be enhanced by recent scrutiny of electronic trading and market structure from regulators, lawmakers and the financial news media.

~~Non‑compliance with applicable laws or regulatory requirements could negatively impact our reputation, prospects, revenues and earnings.~~

Our subsidiaries are subject to regulations in the U.S., and our foreign subsidiaries are subject to regulations abroad, in each case covering all aspects of their business. Regulatory bodies that exercise or may exercise authority over us include, without limitation, in the U.S., the SEC, FINRA, the Chicago Stock Exchange, the Chicago Mercantile Exchange, the Intercontinental Exchange, the CFTC, the NFA and the various state securities regulators; in Ireland, the Central Bank of Ireland; in Switzerland, the Swiss Financial Market Supervisory Authority; in France, the Autorité des Marchés Financiers (“AMF”); in the United Kingdom, the FCA; in Hong Kong, the SFC; in Australia, the Australian Securities and Investment Commission; in Canada, the Investment Industry Regulatory Organization of Canada and various Canadian provincial securities commissions; in Singapore, the Monetary Authority of Singapore and the Singapore Exchange; and in Japan, the Financial Services Agency and the Japan Securities Dealers Association. Our mode of operation and profitability may be directly affected by additional legislation and changes in rules promulgated by various domestic and foreign government agencies and SROs that oversee our businesses, as well as by changes in the interpretation or enforcement of existing laws and rules, including the potential imposition of additional capital and margin requirements and/or transaction taxes. While we endeavor to timely deliver required annual filings in all jurisdictions, we cannot guarantee that we will meet every applicable filing deadline globally. Noncompliance with applicable laws or regulations could result in sanctions being levied against us, including fines, penalties, judgments, disgorgement, restitution and censures, suspension or expulsion from a certain jurisdiction, SRO or market or the revocation or limitation of licenses. Noncompliance with applicable laws or regulations could also negatively impact our reputation, prospects, revenues and earnings. In addition, changes in current laws or regulations or in governmental policies could negatively impact our operations, revenues and earnings.

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rules, capital requirements and other domestic and foreign securities rules and regulations. We and other broker‑dealers and trading firms have also been the subject of requests for information and documents from the SEC and other regulators. We have cooperated and complied with these requests for information and documents. Our business or reputation could be negatively impacted if it were determined that disciplinary or other enforcement actions were required. Additionally, in December 2015, the enforcement committee of the AMF fined our European subsidiary in the amount of €5.0 million (approximately $5.4 million) based on its conclusion that the subsidiary engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules. In May 2017, the fine was reduced to €3.0 million (approximately $3.5 million), subject to an incremental charge of €0.3 (approximately $0.4 million). The relevant trading activities were conducted on or around 2009, prior to our acquisition of that subsidiary from Madison Tyler Holdings, which acquisition was consummated in 2011. To continue to operate and to expand our services internationally, we will have to comply with the regulatory controls of each country in which we conduct or intend to conduct business, the requirements of which may not be clearly defined. The varying compliance requirements of these different regulatory jurisdictions, which are often unclear, may limit our ability to continue existing international operations and further expand internationally.

~~Failure to comply with applicable regulatory capital requirements could subject us to sanctions imposed by the SEC, FINRA and other SROs or regulatory bodies.~~

Certain of our subsidiaries are subject to regulatory capital rules of the SEC, FINRA, other SROs and foreign regulators. These rules, which specify minimum capital requirements for our regulated subsidiaries, are designed to measure the general financial integrity and liquidity of a broker‑dealer and require that at least a minimum part of its assets be kept in relatively liquid form. In general, net capital is defined as net worth (assets minus liabilities), plus qualifying subordinated borrowings, less certain mandatory deductions that result from, among other things, excluding assets that are not readily convertible into cash and from valuing conservatively certain other assets. Among these deductions are adjustments, commonly called haircuts, which reflect the possibility of a decline in the market value of an asset before disposition, and non‑allowable assets.

Failure to maintain the required minimum capital may subject our regulated subsidiaries to a fine, requirement to cease conducting business, suspension, revocation of registration or expulsion by the applicable regulatory authorities, reputational harm and ultimately could require the relevant entity’s liquidation. Events relating to capital adequacy could give rise to regulatory actions that could limit business expansion or require business reduction. SEC and SRO net capital rules prohibit payments of dividends, redemptions of stock, prepayments of subordinated indebtedness and the making of any unsecured advances or loans to a stockholder, employee or affiliate, in certain circumstances, including if such payment would reduce the firm’s net capital below required levels. Similar issues and risks arise in connection with the capital adequacy requirements of foreign regulators.

A change in the net capital rules, the imposition of new rules or any unusually large charges against net capital could limit our operations that require the intensive use of capital and also could restrict our ability to withdraw capital from our broker‑dealer subsidiaries. A significant operating loss or any unusually large charge against net capital could negatively impact our ability to expand or even maintain our present levels of business. Similar issues and risks arise in connection with the capital adequacy requirements of foreign regulators. Any of these results could have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~We are subject to risks relating to litigation and potential securities law liability.~~

We are exposed to substantial risks of liability under federal and state securities laws and other federal and state laws and court decisions, as well as rules and regulations promulgated by the SEC, the CFTC, state securities regulators, SROs and foreign regulatory agencies. These risks may be enhanced by recent scrutiny of electronic trading and market structure from regulators, lawmakers and the financial news media. We are also subject to the risk of litigation and claims that may be without merit. At present and from time to time, we, our past and present officers, directors and employees are and may be named in legal actions, regulatory investigations and proceedings, arbitrations and administrative claims and may be subject to claims alleging the violations of laws, rules and regulations, some of which may ultimately result in the payment of fines, awards, judgments and settlements. We could incur significant legal expenses in defending ourselves against and resolving lawsuits or claims even if we believe them to be meritless. An adverse resolution of any current or future lawsuits or claims against us could result in a negative perception of our

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~~Company and cause the market price of our common stock to decline or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.~~

Proposed legislation in the European Union, the U.S. and other jurisdictions that would impose taxes on certain financial transactions could have a material adverse effect on our business and financial results.

On September 28, 2011, the former president of the European Commission officially presented a plan to create a new financial transactions tax which in February 2013 was formally presented for consideration by the European Commission under an enhanced cooperation procedure among 11 European Union Member States (Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia) for the purposes of a financial transaction tax among those Member States (the “EU Financial Transaction Tax”). The EU Financial Transaction Tax was initially intended to be implemented within those 11 European Union Member States in January 2014. As of December 31, 2017 such tax has not yet been implemented within the European Union and no final political or legislative proposal has been presented for consideration. In 2016, Estonia, of the original members withdrew its support for the proposal. Similarly, in 2013, U.S. Representative Peter DeFazio and former Senator Thomas Harkin introduced proposed legislation, a bill entitled the “Wall Street Trading and Speculators Tax Act,” which would have, subject to certain exceptions, imposed an excise tax on the purchase of a security, including equities, bonds, debentures, other debt and interests in derivative financial instruments, if the purchase occurred or was cleared on a trading facility in the U.S. and the purchaser or seller is a U.S. person. More recently, U.S. Representative Chris Van Hollen presented an “action plan” that included a financial transaction fee. These proposed transaction taxes would apply to certain aspects of our business and transactions in which we are involved. Any such tax would increase our cost of doing business to the extent that (i) the tax is regularly applicable to transactions in the markets in which we operate, (ii) the tax does not include exceptions for market makers or market making activities that is broad enough to cover our activities or (iii) we are unable to widen our bid/ask spreads in the markets in which such a tax would be applicable to compensate for its imposition. Furthermore, the proposed taxes may reduce or negatively impact trading volume and transactions on which we are dependent for revenues. While it is difficult to assess the impact the proposed taxes could have on us, if either transaction tax is implemented or any similar tax is implemented in any other jurisdiction in which we operate, our business, financial condition, results of operations and cash flows could suffer a material adverse effect, and could be impacted to a greater degree than other market participants.

We depend on our technology, and our future results may be negatively impacted if we cannot remain technologically competitive.

We believe that our success in the past has largely been attributable to our technology, which has taken many years to develop. If technology equivalent to ours becomes more widely available for any reason, our operating results may be negatively impacted. Additionally, adoption or development of similar or more advanced technologies by our competitors may require that we devote substantial resources to the development of more advanced technology to remain competitive. Regulators and exchanges may also introduce risk control and other technological requirements on our business that could result in increased costs of compliance and divert our technological resources away from their primary strategy development and maintenance duties. The markets in which we compete are characterized by rapidly changing technology, evolving industry standards and changing trading systems, practices and techniques. The widespread adoption of new internet, networking or telecommunications technologies or other technological changes could require us to incur substantial expenditures to modify or adapt our services or infrastructure. We may not be able to anticipate or respond adequately or in a cost‑efficient and competitive manner to technological advancements (including advancements related to low‑latency technologies, execution and messaging speeds) or changing industry standards. If any of these risks materialize, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our reliance on our computer systems and software could expose us to material financial and reputational harm if any of our computer systems or software were subject to any material disruption or corruption.

We rely significantly on our computer systems and software to receive and properly process internal and external data and utilize such data to generate orders and other messages. A disruption or corruption of the proper functioning of our computer systems or software could cause us to make erroneous trades or result in other negative circumstances, which could result in material losses or reputational harm. We cannot guarantee that our efforts to maintain competitive computer systems and software will be successful. Our computer systems and software may fail or be subject to bugs or other errors, including human error, resulting in service

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interruptions or other unintended consequences. If any of these risks materialize, they could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We could be the target of a significant cyber-attack, threat or incident that impairs internal systems, results in adverse consequences to information our system process, store or transmit or causes reputation damages as a consequence.

Our business relies on technology and automation to perform significant functions within our firm. Because of our reliance on technology, we may be susceptible to various forms of cyber-attacks by third parties or insiders. Though we take steps to mitigate the various cyber threats and devote significant resources to maintain and update our systems and networks, we may be unable to anticipate attacks or to implement adequate preventative measures. Our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including denial‑of‑service attacks, viruses, malicious software, break‑ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain. Furthermore, we may have little or no oversight with respect to security measures employed by third-party service providers, which may ultimately prove to be ineffective at countering threats. Although we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or may not cover any losses. Breaches of our cybersecurity measures or those of our third-party service providers could result in any of the following: unauthorized access to our systems; unauthorized access to and misappropriation of information or data, including confidential or proprietary information about ourselves, third parties with whom we do business or our proprietary systems; viruses, worms, spyware or other malware being placed in our systems and intellectual property; deletion or modification of client information; or a denial‑of‑service or other interruptions to our business operations. While we have not suffered a material breach of our cybersecurity, any actual or perceived breach of our cybersecurity could damage our reputation, expose us to a risk of loss or litigation and possible liability, require us to expend significant capital and other resources to alleviate problems caused by such breaches and otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~Capacity constraints,~~

Our business may be harmed by computer and communication systems malfunctions, failures ~~malfunctions~~ and ~~delays could harm our business.~~

delays.

Our business activities are heavily dependent on the integrity and performance of the computer and communications systems supporting them. Our systems and operations are vulnerable to damage or interruption from human error, software bugs and errors, electronic and physical security breaches, natural disasters, economic or political developments, pandemics, weather events, power loss, utility or internet outages, computer viruses, intentional acts of vandalism, war, terrorism and other similar events. Extraordinary trading volumes or other events could cause our computer systems to operate in ways that we did not intend, at an unacceptably low speed or even fail. While we have invested significant amounts of capital to upgrade the capacity, reliability and scalability of our systems, there can be no assurance that our systems will always operate properly or be sufficient to handle such extraordinary trading volumes. Any disruption for any reason in the proper functioning or any corruption of our software or erroneous or corrupted data may cause us to make erroneous trades or suspend our services and could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Although our systems and infrastructure are generally designed to accommodate additional growth without redesign or replacement, we may need to make significant investments in additional hardware and software to accommodate growth. Failure to make necessary expansions and upgrades to our systems and infrastructure could not only limit our growth and business prospects but could also cause substantial losses and have a material adverse effect on our business, financial condition, results of operations and cash flows.

Since the timing and impact of disasters and disruptions are unpredictable, we may not be able to respond to actual events as they occur. Business disruptions can vary in their scope and significance and can affect one or more of our facilities. These disruptions may occur as a result of events that affect only our buildings or systems or those of such third parties, or as a result of events with a broader impact globally, regionally or in the cities where those buildings or systems are located, including, but not limited to, natural disasters, economic or political developments, pandemics, weather events, war, terrorism and other similar events.

Further, the severity of the disruption can also vary from minimal to severe. Although we have employed efforts to develop, implement and maintain reasonable disaster recovery and business continuity plans, we cannot guarantee that our systems will fully recover after a significant business disruption in a timely fashion or at all. Our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which we are located. This may include a disruption involving electrical, satellite, undersea cable or other communications, internet, transportation or other services facilities used by us, our employees or third parties with which we conduct business. If we are prevented from using any of our current trading operations, or if our business continuity operations do not work effectively, we may not have complete business continuity, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Failure or poor performance of third‑party software, infrastructure or systems on which we rely could adversely affect our business.

We depend on third parties to provide and maintain certain infrastructure that is critical to our business. For example, we rely on third parties to provide software, data center services and dedicated fiber optic, microwave, wireline and wireless communication infrastructure. This infrastructure may malfunction or fail due to events outside of our control, which could disrupt our operations and have a material adverse effect on our business, financial condition, results of operations and cash flows. Any failure to maintain and renew our relationships with these third parties on commercially favorable terms, or to enter into similar relationships in the future, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We also rely on certain third‑party software, third‑party computer systems and third‑party service providers, including clearing systems, exchange systems, alternate trading systems, order routing systems, internet service providers, communications facilities and other facilities. Any interruption in these third‑party services or software, deterioration in their performance, or other improper operation could interfere with our trading activities, cause losses due to erroneous or delayed responses, or otherwise be disruptive to our business. If our arrangements with any third party are terminated, we may not be able to find an alternative source of software or systems support on a timely basis or on commercially reasonable terms. This could also have a material adverse effect on our business, financial condition, results of operations and cash flows.

The use of open source software may expose us to additional risks.

We use software development tools covered by open source licenses and may incorporate such open source software into our proprietary software from time to time. “Open source software” refers to any code, shareware or other software that is made generally available to the public without requiring payment of fees or royalties and/or that may require disclosure or licensing of any software that incorporates such source code, shareware or other software. Given the nature of open source software, third parties might assert contractual or copyright and other intellectual property‑related claims against us based on our use of such tools and software programs or might seek to compel the disclosure of the source code of our software or other proprietary information. If any such claims materialize, we could be required to (i) seek licenses from third parties in order to continue to use such tools and software or to continue to operate certain elements of our technology, (ii) release certain proprietary software code comprising our modifications to such open source software, (iii) make our software available under the terms of an open source license, (iv) re‑engineer all, or a portion of, that software, any of which could materially and adversely affect our business, financial condition, results of operations and cash flows or (v) be required to pay significant damages as a result of substantiated unauthorized use. While we monitor the use of all open source software in our solutions, processes and technology and try to ensure that no open source software is used (i) in such a way as to require us to disclose the source code to the related solution when we do not wish to do so nor (ii) in connection with critical or fundamental elements of our software or technology, such use may have inadvertently occurred in deploying our proprietary solutions. If a third‑party software provider has incorporated certain types of open source software into software we license from such third party for our products and solutions, we could, under certain circumstances, be required to disclose the source code to our solutions. In addition to risks related to license requirements, usage of open software can lead to greater risks than use of third‑party commercial software because open source licensors generally do not provide warranties or controls on the origin of the software. Many of the risks associated with usage of open source software cannot be eliminated and could potentially have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may not be able to protect our intellectual property rights or may be prevented from using intellectual property necessary for our business.

We rely on federal and state law, trade secrets, trademarks, domain names, copyrights and contract law to protect our intellectual property and proprietary technology. It is possible that third parties may copy or otherwise obtain and use our intellectual property or proprietary technology without authorization or otherwise infringe on our rights. For example, while we have a policy of entering into confidentiality, intellectual property invention assignment and/or non‑competition and non‑solicitation agreements or restrictions with our employees, independent contractors and business partners, such agreements may not provide adequate protection or may be breached, or our proprietary technology may otherwise become available to or be independently developed by our competitors. The promulgation of

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laws or rules which require the maintenance of source code or other intellectual property in a repository subject to certain requirements and/or which enhance or facilitate access to such source code by regulatory authorities could inhibit our ability to protect against unauthorized dissemination or use of our intellectual property. Third parties have alleged and may in the future allege that we are infringing, misappropriating or otherwise violating their intellectual property rights. Third parties may initiate litigation against us without warning, or may send us letters or other communications that make allegations without initiating litigation. We may elect not to respond to these letters or other communications if we believe they are without merit, or we may attempt to resolve these disputes out of court by

negotiating a license, but in either case it is possible that such disputes will ultimately result in litigation. Any such claims could interfere with our ability to use technology or intellectual property that is material to the operation of our business. Such claims may be made by competitors seeking to obtain a competitive advantage or by other parties, such as entities that purchase intellectual property assets for the purpose of bringing infringement claims. We also periodically employ individuals who were previously employed by our competitors or potential competitors, and we may therefore be subject to claims that such employees have used or disclosed the alleged trade secrets or other proprietary information of their former employers.

At times we rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the validity and scope of the proprietary rights of others or defend against claims of infringement or invalidity. Any such litigation, whether successful or unsuccessful, could result in substantial costs and the diversion of resources and the attention of management. If unsuccessful, such litigation could result in the loss of important intellectual property rights, require us to pay substantial damages, subject us to injunctions that prevent us from using certain intellectual property, require us to make admissions that affect our reputation in the marketplace and require us to enter into license agreements that may not be available on favorable terms or at all. Finally, even if we prevail in any litigation, the remedy may not be commercially meaningful or fully compensate us for the harm we suffer or the costs we incur. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are exposed to risks associated with our international operations and expansion and failure to comply with laws and regulations applicable to our international operations may increase costs, reduce profits, limit growth or subject us to broader liability.

We are exposed to risks and uncertainties inherent in doing business in international markets, particularly in the heavily regulated broker‑dealer industry. Such risks and uncertainties include political, economic and financial instability, unexpected changes in regulatory requirements, tariffs and other trade barriers, exchange rate fluctuations, applicable currency controls, the imposition of restrictions on currency conversion or the transfer of funds, limitations on our ability to repatriate non‑U.S. earnings in a tax efficient manner and difficulties in staffing and managing foreign operations, including reliance on local experts. Such restrictions generally include those by imposed by the Foreign Corrupt Practices Act (the “FCPA”) and trade sanctions administered by the Office of Foreign Assets Control (“OFAC”). The FCPA is intended to prohibit bribery of foreign officials and requires companies whose securities are listed in the U.S. to keep books and records that accurately and fairly reflect those companies’ transactions and to devise and maintain an adequate system of internal accounting controls. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against designated foreign states, organizations and individuals. Though we have policies in place designed to comply with applicable OFAC sanctions, rules and regulations as well as the FCPA and equivalent laws and rules of other jurisdictions, if we fail to comply with these laws and regulations, we could be exposed to claims for damages, financial penalties, reputational harm, incarceration of employees and restrictions on our operations and cash flows.

In addition, the varying compliance requirements of these different regulatory jurisdictions and other factors may limit our ability to successfully conduct or expand our business internationally and may increase our costs of investment. Expansion into international locations involves substantial operational and execution risk. We may not be able to manage these costs or risks effectively.

~~The results of the United Kingdom’s referendum on withdrawal from the European Union may negatively impact the global economy, financial markets and our business.~~

In June 2016, the United Kingdom voted in an advisory referendum to leave the European Union (commonly referred to as “Brexit”). The outcome of the negotiations between the U.K. and the European Union in connection with

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the referendum and withdrawal is highly uncertain and may significantly affect the fiscal, monetary and regulatory landscape in the U.K., and could have a material impact on its economy and the future growth of its various industries, including the financial services industry, as well as global economic conditions and financial markets. We presently access the E.U. markets primarily through our Irish regulated subsidiary and we do not expect any impact on our access to E.U. markets as a result of Brexit. However, it is not possible at this point in time to predict fully the effects of an exit of the U.K. from the E.U., especially with respect to our activities in the U.K. or the potential impact of interacting with U.K. based market participants, and it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Fluctuations in currency exchange rates could negatively impact our earnings.

A significant portion of our international business is conducted in currencies other than the U.S. dollar, and changes in foreign exchange rates relative to the U.S. dollar can therefore affect the value of our non‑U.S. dollar net assets, revenues and expenses. Although we closely monitor potential exposures as a result of these fluctuations in currencies, and where cost‑justified we adopt strategies that are designed to reduce the impact of these fluctuations on our financial performance, including the financing of non‑U.S. dollar assets with borrowings in the same currency and the use of various hedging transactions related to net assets, revenues, expenses or cash flows, there can be no assurance that we will be successful in managing our foreign exchange risk. Our exposure to currency exchange rate fluctuations will grow if the relative contribution of our operations outside the U.S. increases. Any material fluctuations in currencies could have a material effect on our financial condition, results of operations and cash flows.

We may incur material losses on foreign exchange transactions entered into on behalf of clients and be exposed to material liquidity risk due to counterparty defaults or errors.

We enable clients to settle cross‑border equity transactions in their local currency through the use of foreign exchange contracts. These arrangements typically involve the delivery of securities or cash to a counterparty that is not processed through a central clearing facility in exchange for a simultaneous receipt of cash or securities. We may operate as either a principal or agent in these transactions. As a result, a default by one of our counterparties prior to the settlement of their obligation could materially impact our liquidity and have a material adverse effect on our financial condition and results of operations.

In addition, we are exposed to operational risk. Employee and technological errors in executing, recording or reporting foreign exchange transactions may result in material losses due to the large size of such transactions and the underlying market risk in correcting such errors.

We may experience risks associated with future growth or expansion of our operations or acquisitions, strategic investments or dispositions of businesses, and we may never realize the anticipated benefits of such activities.

As a part of our business strategy, we may make acquisitions or significant investments in and/or disposals of businesses. Any such future acquisitions, investments and/or dispositions would be accompanied by risks such as assessment of values for acquired businesses, intangible assets and technologies, difficulties in assimilating the operations and personnel of acquired companies or businesses, diversion of our management’s attention from ongoing business concerns, our potential inability to maximize our financial and strategic position through the successful incorporation or disposition of operations, maintenance of uniform standards, controls, procedures and policies and the impairment of existing relationships with employees, contractors, suppliers and customers as a result of the integration of new management personnel and cost‑saving initiatives. We cannot guarantee that we will be able to successfully integrate any company or business that we might acquire in the future, and our failure to do so could harm our current business.

In addition, we may not realize the anticipated benefits of any such transactions, and there may be other unanticipated or unidentified effects. While we would seek protection, for example, through warranties and indemnities in the case of acquisitions, significant liabilities may not be identified in due diligence or come to light after the expiration of warranty or indemnity periods. Additionally, while we would seek to limit our ongoing exposure, for example, through liability caps and

period limits on warranties and indemnities in the case of disposals, some warranties and indemnities may give rise to unexpected and significant liabilities. If we fail to realize any such anticipated benefits, or if we experience any such unanticipated or unidentified effects in connection with any future acquisitions, investments or dispositions, we could suffer a material adverse effect on our business, financial condition, results of operations and cash flows. Finally, strategic investments may involve additional risks associated with holding a minority or non-controlling position in an illiquid business or asset.

Our future efforts to sell shares of our common stock or raise additional capital may be ~~delayed or prohibited~~inhibited by regulations.

As certain of our subsidiaries are members of FINRA and other SROs, we are subject to certain regulations regarding changes in ownership or control and material changes in operations. For example, ~~FINRA’s NASD~~FINRA Rule 1017 generally provides that FINRA approval must be obtained in connection with certain change of ownership or control transactions, such as a transaction that results in a single entity or person owning 25% or more our equity. Similarly, ~~Virtu Financial~~VFIL, VIEL and VIUK, our regulated subsidiaries in Ireland ~~Limited, one of our Irish subsidiaries, is~~and the U.K., are subject to change in control regulations promulgated by the ~~Central Bank of Ireland,~~CBI and/or the FCA, and other registered or regulated foreign subsidiaries may be subject to similar regulations in

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applicable jurisdictions. As a result of these regulations, our future efforts to sell shares of our common stock or raise additional capital may be delayed or prohibited. We may be subject to similar restrictions in other jurisdictions in which we operate.

We are dependent on the continued service of certain key executives, the loss or diminished performance of whom could have a material adverse effect on our ~~business.~~

business, and our success depends in part on our ability to identify, recruit and retain skilled management and technical personnel.

Our performance is substantially dependent on the performance of our senior management, ~~Mr.~~including Douglas Cifu, our Chief Executive Officer, Joseph Molluso, our Co-President and ~~Mr. Molluso,~~Co-Chief Operating Officer, Brett Fairclough, our Co-President and Co-Chief Operating Officer and Sean Galvin, our Chief Financial Officer. In connection with and subsequent to the IPO, we have entered into employment and other related agreements with certain members of our senior management team that restrict their ability to compete with us should they decide to leave our Company. Even though we have entered into these agreements, we cannot be sure that any member of our senior management will remain with us or that they will not compete with us in the future. The loss of any member of our senior management team could impair our ability to execute our business plan and growth strategy and have a negative impact on our revenues, in addition to potentially causing employee morale problems and/or the loss of key employees. In particular, Mr. Cifu invests in other businesses and spends time on such matters, which could divert their attention from us. Our employment agreement with Mr. Cifu specifically permits his participation in and attention to certain other business activities, including but not necessarily limited to his role as the Vice Chairman and Alternate Governor of the Florida Panthers, a National Hockey League ~~franchise, and his role as a director of the Independent Bank Group, Inc., a regional bank holding company.~~franchise. We cannot guarantee that these or other permitted outside activities will not impact his performance as Chief Executive Officer.

Our success depends, in part, on our ability to identify, recruit and retain skilled management and technical personnel. If we fail to recruit and retain suitable candidates or if our relationship with our employees changes or deteriorates, it could have a material adverse effect on our business.

Our future success depends, in part, upon our continued ability to identify, attract, hire and retain highly qualified personnel, including skilled technical, management, product and technology, trading, sales and marketing personnel, all of whom are in high demand and are often subject to competing offers. Competition for qualified personnel in the financial services industry is intense and we cannot assure you that we will be able to hire or retain a sufficient number of qualified personnel to meet our requirements, or that we will be able to do so at salary, benefit and other compensation costs that are acceptable to us or that would allow us to achieve operating results consistent with our historical results. A loss of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees in the future, could have a material adverse effect on our business.

We ~~could lose significant sources~~may incur losses as a result of ~~revenues if we were to lose access to an important exchange~~unforeseen or catastrophic events, including the emergence of another pandemic, terrorist attacks, extreme weather events or other ~~trading venue.~~

~~Changes in applicable laws, regulations~~natural disasters.

The occurrence of unforeseen or ~~rules promulgated by exchanges could conceivably prevent us from providing liquidity to an exchange~~catastrophic events, including the emergence of a pandemic, such as the Ebola or Zika viruses, COVID-19, or other ~~trading venue where we provide liquidity today. Though~~widespread health emergency (or concerns over the possibility of such an emergency), terrorist attacks, extreme terrestrial or solar weather events or other natural disasters, could create economic and financial disruptions, and could lead to operational difficulties (including travel limitations) that could impair our ~~revenues are diversified across exchanges and other trading venues, asset classes and geographies, the loss of access~~ability to ~~one or more significant exchanges and other trading venues for any reason could have a material adverse effect on~~manage our ~~business, financial condition, results of operations and cash flows.~~

businesses.

Risks Related to ~~the Acquisition of KCG~~

our Historical Acquisitions

Significant costs and significant indebtedness were incurred in connection with the consummation of our historical acquisitions and significant costs have been and will be incurred in connection with the ~~Acquisition~~integration of KCG and ~~the integration of KCG~~ITG into our business, including legal, accounting, financial advisory and other costs.

We expect to incur and have incurred significant costs in connection with integrating the operations, products and personnel of KCG and ITG into our ~~business.~~business, in addition to costs related directly to completing the Acquisition of KCG and ITG Acquisition. These costs may include:

~~employee retention, redeployment, relocation or severance;~~

~~integration of information systems;~~

•employee retention, redeployment, relocation or severance;

•integration of information systems;

~~Table~~•combination of ~~Contents~~

corporate and administrative functions; and

~~combination of corporate and administrative functions; and~~

•potential or pending litigation or other proceedings ~~related to the Acquisition of KCG.~~

~~The costs~~ related to the Acquisition of KCG and the ITG Acquisition.

The costs related to our historical acquisitions could be higher than currently estimated, depending on how difficult it will be to integrate our business with that of KCG and ITG, and the expected cost reductions and synergies may not be achieved.

In addition, we ~~expect to~~may incur ~~a number~~additional of non-recurring costs associated with combining the operations of KCG and ITG with ours, which cannot be estimated accurately at this time. While we ~~expected to and~~have incurred a significant amount of transaction fees and other costs related to the consummation of ~~the Acquisition of KCG,~~our historical acquisitions, additional unanticipated costs may ~~yet~~ be incurred. Any expected elimination of duplicative costs, as well as the expected realization of other cost reductions, efficiencies and synergies related to the integration of our operations with those of KCG and ITG, that may offset incremental transaction and transaction-related costs over time, may not be achieved as projected, or at all.

In addition, we incurred $1,650.0 million of new indebtedness in connection with the Acquisition of KCG, $526 million of which we have prepaid as of March 13, 2018. The debt we have incurred in connection with the Acquisition of KCG may limit our financial

Integrating KCG's and operating flexibility, and we may incur additional debt, which could increase the risks associated with our substantial indebtedness. Our substantial indebtedness may have material consequences for our business, prospects, results of operations, financial condition and/or cash flows.

~~Integrating KCG’s~~ITG’s business into our business may divert management’s attention away from operations, and we may also encounter significant difficulties in integrating ~~the two~~these businesses.

The Acquisition of KCG and the ITG Acquisition involves the integration of ~~two~~multiple companies that have previously operated independently. The success of ~~the Acquisition of KCG~~these acquisitions and their anticipated financial and operational benefits, including increased revenues, synergies and cost reductions, will depend in part on our ability to successfully combine and integrate ~~KCG’s business~~KCG and ITG’s businesses into ours, and there can be no assurance regarding when or the extent to which we will be able to realize these increased revenues, synergies, cost reductions or other benefits. These benefits may not be achieved within the anticipated time frame, or at all.

Successful integration of ~~KCG’s~~KCG and ITG’s operations, products and personnel may place a significant burden on management and other internal resources. The diversion of management’s attention, and any difficulties encountered in the transition and integration process, could harm our business, prospects, results of operations, financial condition and/or cash flows.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, and competitive responses. The difficulties of combining the operations of the companies include, among others:

~~difficulties in achieving anticipated cost reductions, synergies, business opportunities and growth prospects from the combination;~~

~~difficulties in the integration of operations and systems;~~

~~conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;~~

•difficulties in achieving anticipated cost reductions, synergies, business opportunities and growth prospects from the combination;

~~difficulties in the assimilation of employees and the integration of the companies’ different organizational structures;~~

•difficulties in the integration of operations and systems;

~~difficulties in managing the expanded operations of a larger and more complex company with increased international operations;~~

•difficulties in conforming standards, controls, procedures and accounting and other policies and compensation structures between the two companies;

•difficulties in the assimilation of employees and the integration of the companies’ different organizational structure;

•difficulties in managing the expanded operations of a larger and more complex company with increased international operations;

~~Table~~•challenges in integrating the business culture of ~~Contents~~

each company;

~~challenges in integrating the business culture of each company;~~

•challenges in attracting and retaining key personnel; and

~~challenges in attracting and retaining key personnel; and~~

•difficulties in replacing numerous systems, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll, data privacy and security and regulatory compliance, many of which may be dissimilar.

difficulties in replacing numerous systems, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll, data privacy and security and regulatory compliance, many of which may be dissimilar.

These factors could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact our business, prospects, results of operations, financial condition and/or cash flows.

We may not realize the anticipated synergies, ~~net~~ cost reductions and growth opportunities from ~~the Acquisition of KCG.~~

our historical acquisitions.

The benefits that we expect to achieve as a result of the Acquisition of KCG and ITG Acquisition will depend, in part, on the ability of the combined company to realize anticipated growth opportunities, net cost reductions and synergies. Our success in realizing these growth opportunities, ~~net~~ cost reductions and synergies, and the timing of this realization, depends on the successful integration of our historical business and operations and the historical business and operations of ~~KCG.~~both KCG and ITG. Even if we are able to integrate ~~the~~these businesses and operations ofsuccessfully, the ~~Company and KCG successfully, this~~ integration may not result in the realization of the full benefits of the growth opportunities, ~~net~~ cost reductions and synergies that we currently expect from this integration within the anticipated time frame or at all. For example, we may be unable to eliminate duplicative costs. Moreover, we may incur substantial expenses in connection with the integration of our business and ~~KCG’s business.~~KCG's and ITG’s businesses. While we anticipate that certain expenses will be incurred, such expenses are difficult to estimate accurately and may exceed current estimates. Accordingly, the benefits from ~~the Acquisition of KCG~~our historical acquisitions may be offset by costs or delays incurred in integrating the businesses. WeThe projected net cost reductions and synergies described in our press release and supplemental materials announcing each of the Acquisition of KCG and ITG Acquisition are based on a number of assumptions relating to our business, KCG's business and ~~KCG’s~~ITG’s business. Those assumptions may be inaccurate, and, as a result, our projected ~~net~~ cost reductions and synergies may be inaccurate, and our business, prospects, results of operations, financial condition and/or cash flows could be materially and adversely affected.

~~The~~

In connection with our historical acquisitions, the Company will be subject to business uncertainties and potential liabilities that could materially and adversely affect our business.

Uncertainty about the effect of the Acquisition of KCG and ITG Acquisition on employees, customers and suppliers may have both a material and adverse effect on both the ~~Company.~~Company and ITG. These uncertainties may impair both the ~~Companies’~~Company's ability to attract, retain and motivate key personnel for a period of time after the close of these acquisitions, and could cause customers, suppliers and others who deal with the Company to seek to ~~end, suspend or~~ change existing business relationships. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with us after these acquisitions, or if customers, suppliers or others seek to ~~end, suspend or~~ change their dealings with us as a result of ~~the Acquisition of KCG,~~these acquisitions, our business could be materially and adversely impacted.

In connection with the Acquisition of KCG and ITG Acquisition, we ~~have~~ assumed potential liabilities, indemnification obligations, and other risks relating to ~~KCG’s business.~~

~~In connection with the Acquisition of KCG, we have assumed~~KCG's and ITG’s business, including but not limited to those liabilities and risks arising from or related to pending, threatened or potential litigation or regulatory ~~litigation and other liabilities relating to KCG’s business.~~matters. For example, legacy KCG isand ITG entities are currently the subject of various regulatory reviews and investigations by federal, state and foreign regulators and SROs, including the SEC ~~FINRA~~ and ~~the FCA.~~FINRA. In some instances, these matters may ~~rise to~~ultimately result in a disciplinary action and/or a civil or administrative action, penalties, fines, judgments, censures and settlements. To the extent we have not identified such liabilities or miscalculated their potential financial impact, these liabilities could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.

Legal and Regulatory Risks

Regulatory and legal uncertainties could harm our business.

Securities and derivatives businesses are heavily regulated. Firms in the financial services industry have been subject to an increasingly regulated environment over recent years, and penalties and fines sought by regulatory authorities have increased considerably. In addition, following recent news congressional, regulatory and news media attention to U.S. equities market structure, the regulatory and enforcement environment has created uncertainty with respect to various types of transactions that historically had been entered into by financial services firms and that were generally believed to be permissible and appropriate. The retail trading environment in the U.S., relationships between broker-dealers and market making firms, short selling and “high frequency” and other forms of low latency or electronic trading strategies continue to be the focus of extensive regulatory scrutiny by federal, state and foreign regulators and SROs, and such scrutiny is likely to continue. Our market making and trading activities are characterized by substantial volumes, an emphasis on technology and certain other characteristics that are also commonly associated with high frequency trading and we engage in direct-to-client market making services across multiple asset classes primarily to sell-side clients including global, national and regional broker-dealers and banks and in the context of our market making and trading activities, we are party to various remuneration and rebate arrangements, including payment for order flow, profit-sharing relationships, and exchange fee and rebate structures.

respect of consolidated audit trail imposes new reporting requirements and additional costs on U.S. broker-dealers. Regulators may propose other market structure changes, particularly considering the continued media, congressional and regulatory scrutiny of high frequency trading, alternative trading systems, market fragmentation, colocation, access to market data feeds, and remuneration arrangements such as payment for order flow, profit-sharing relationships, and exchange fee and rebate structures.

Any or all of these proposals or additional proposals may be adopted by the SEC, CFTC or other U.S. or foreign legislative or regulatory bodies, and news media attention to electronic trading and market structure could increase the likelihood of adoption. These potential market structure and regulatory changes could cause a change in the manner in which we make markets, lmit, restrict or otherwise adversely affect our ability to interact with certain order flow, impose additional costs and expenses on our business or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, the financial services industry is heavily regulated in many foreign countries. The varying compliance requirements of these different regulatory jurisdictions and other factors may limit our ability to conduct business or expand internationally. For example, MiFID, which was implemented in November 2007, has been replaced by MiFID II/Markets in Financial Investments Regulation (“MiFIR”), which was adopted by the European Parliament on April 15, 2014 and by the Council on May 13, 2014, entered into force on July 2, 2014, and became effective on January 3, 2018. MiFID II requires certain types of firms, including VFIL, to post firm quotes at competitive prices and supplements previous requirements with regard to investment firms’ risk controls related to the safe operation of electronic systems. MiFID II also imposes additional requirements on market structure, such as the introduction of a harmonized tick size regime, the introduction of new trading venues known as Organized Trading Facilities, and the promulgation of a new bilateral trading arrangement called the Systematic Internaliser regime, new open access provisions, market making requirements and various other pre‑ and post‑trade risk management requirements. The MiFID II regime is currently under review, with European Union authorities considering making further changes to the regime. Various consultation papers have been published on different aspects of the MiFID II regime, including, on February 4, 2020, an ESMA Consultation Paper entitled “MiFID II/MiFIR Review Report on the Transparency Regime for Equity and Equity-like Instruments, the Double Volume Cap Mechanism and the Trading Obligations for Shares”, on February 17, 2020, a European Commission public consultation on the review of the MiFIDII/MiFIR regulatory framework and on December 18, 2020 an ESMA Consultation Paper entitled “MiFID II/MiFIR review report on Algorithmic Trading”. Each of these and other proposals may impose technological and compliance costs on us. Any of these laws, rules or regulations, as well as changes in legislation or regulation and changes in market customs and practices could have a material adverse effect on our business, financial condition, results of operations and cash flows. These risks may be enhanced by recent scrutiny of electronic trading and market structure from regulators, lawmakers and the financial news media.

In addition, we maintain borrowing facilities with banks, prime brokers and Futures Commission Merchants (“FCMs”), and we obtain uncommitted margin financing from our prime brokers and FCMs, which are in many cases affiliated with banks. In response to the 2008 financial crisis, the Basel Committee on Banking Supervision issued a new, more stringent capital and liquidity framework known as Basel III, which national banking regulators have been implementing in the various jurisdictions in which our lenders may be incorporated. In the E.U., on December 25, 2019, a Regulation on the prudential requirements for Investment Firms (“IFR”) and a Directive on the prudential supervision of investments firms (“IFD”) entered into force. The IFR and IFD introduce new prudential requirements for investment firms, classifying them into different categories depending on the firm’s asset size and types of activity. The main provisions of the IFR and IFD are due to apply from the end of June 2021. As these rules are implemented and in certain cases impose more stringent capital and liquidity requirements, certain of our lenders may revise the terms of our borrowing facilities or margin financing arrangements, reduce the amount of financing they provide, or cease providing us financing, each of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Non‑compliance with applicable laws or regulatory requirements could subject us to sanctions and could negatively impact our reputation, prospects, revenues and earnings.

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foreign government agencies and SROs that oversee our businesses, as well as by changes in the interpretation or enforcement of ~~Contents~~

existing laws and rules, including the potential imposition of additional capital and margin requirements and/or transaction taxes. While we endeavor to deliver required annual filings in all jurisdictions in a timely manner, we cannot guarantee that we will meet every applicable filing deadline globally. Noncompliance with applicable laws or regulations could result in sanctions being levied against us, including fines, penalties, judgments, disgorgement, restitution and censures, suspension or expulsion from a certain jurisdiction, SRO or market or the revocation or limitation of licenses. Noncompliance with applicable laws or regulations could also negatively impact our reputation, prospects, revenues and earnings. In addition, changes in current laws or regulations or in governmental policies could negatively impact our operations, revenues and earnings.

Domestic and foreign stock exchanges, other SROs and state and foreign securities commissions can censure, fine, impose undertakings, issue cease‑and‑desist orders and suspend or expel a broker‑dealer or other market participant or any of its officers or employees. Our ability to comply with all applicable laws and rules is largely dependent on our internal systems to ensure compliance, as well as our ability to attract and retain qualified compliance personnel. We could be subject to disciplinary or other actions in the future due to claimed noncompliance, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. We have been, are currently, and may in the future be, the subject of one or more regulatory or SRO enforcement actions, including but not limited to targeted and routine regulatory inquiries and investigations involving Regulation NMS, Regulation SHO, Regulation SCI, market access rules, capital requirements and other domestic and foreign securities rules and regulations. We and other broker-dealers and trading firms have also been the subject of requests for information and documents from the SEC and other regulators. We have cooperated and complied with these requests for information and documents. Our business or reputation could be negatively impacted if it were determined that disciplinary or other enforcement actions were required. To continue to operate and to expand our services internationally, we will have to comply with the regulatory controls of each country in which we conduct or intend to conduct business, the requirements of which may not be clearly defined. The varying compliance requirements of these different regulatory jurisdictions, which are often unclear, may limit our ability to continue existing international operations and further expand internationally.

We are subject to risks relating to litigation and potential securities law liability.

alleging the violations of laws, rules and regulations, some of which may ultimately result in the payment of fines, awards, judgments and settlements. We could incur significant legal expenses in defending ourselves against and resolving lawsuits or claims even if we believe them to be meritless. An adverse resolution of any current or future lawsuits or claims against us could result in a negative perception of our Company and cause the market price of our common stock to decline or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.

In 2013, U.S. Representative Peter DeFazio and former Senator Thomas Harkin introduced proposed legislation, a bill entitled the “Wall Street Trading and Speculators Tax Act,” which would have, subject to certain exceptions, imposed an excise tax on the purchase of a security, including equities, bonds, debentures, other debt and interests in derivative financial instruments, if the purchase occurred or was cleared on a trading facility in the U.S. and the purchaser or seller is a U.S. person. More recently, in late 2018 and 2019 U.S. legislators, including U.S. Senators Kirsten Gillibrand and Brian Schatz, have announced proposals or plans that include a financial transaction fee. President Biden's win in the 2020 U.S. Presidential election and the Democratic majorities in Congress may lead to additional proposals or plans. At the state level, the state of New Jersey has considered a bill in the state legislature providing for a financial transaction tax on trades processed on any server located in New Jersey, with other states, including New York, discussing similar measures. Discussions in New York have included a proposed bill which would reestablish a stock transfer tax by repealing a rebate previously implemented and applied to such tax since 1981.

These proposed transaction taxes would apply to certain aspects of our business and transactions in which we are involved. Any such tax would increase our cost of doing business to the extent that (i) the tax is regularly applicable to transactions in the markets in which we operate, (ii) the tax does not include exceptions for market makers or market making activities that is broad enough to cover our activities or (iii) we are unable to widen our bid/ask spreads in the markets in which such a tax would be applicable to compensate for its imposition. Furthermore, the proposed taxes may reduce or negatively impact trading volume and transactions on which we are dependent for revenues. While it is difficult to assess the impact the proposed taxes could have on us, if either transaction tax is implemented or any similar tax is implemented in any other jurisdiction in which we operate, our business, financial condition, results of operations and cash flows could suffer a material adverse effect, and could be impacted to a greater degree than other market participants.

designated foreign states, organizations and individuals. Though we have policies in place designed to comply with applicable OFAC sanctions, rules and regulations as well as the FCPA and equivalent laws and rules of other jurisdictions, if we fail to comply with these laws and regulations, we could be exposed to claims for damages, financial penalties, reputational harm, incarceration of employees and restrictions on our operations and cash flows.

Brexit may negatively impact the global economy, financial markets and our business.

In June 2016, UK voters approved a referendum to withdraw the UK's membership from the EU, which is commonly referred to as “Brexit”. In March 2017, the UK government initiated the exit process under Article 50 of the Treaty of the European Union, commencing a period of up to two years for the UK and the other EU member states to negotiate the terms of the withdrawal, such period ending on March 29, 2019 unless extended. Following extensions to that period, a Withdrawal Agreement and Political Declaration were reached between the U.K. and the E.U. On January 23, 2020, the European Union (Withdrawal Agreement) Act 2020 received Royal Assent in the U.K., and on January 31, 2020 the U.K. left the E.U. Pursuant to the terms of the Withdrawal Agreement. The U.K. and E.U. then entered into a transition period during which rules on trade, travel, and business for the U.K. and E.U. continued to apply. The transition period came to an end as of January 1, 2021, at which point U.K. investment firms which had previously used passporting permissions under MiFID II to provide services to clients in the E.U., ceased to subject to the E.U.'s MiFID II regime. Virtu accesses the E.U. markets primarily through our Irish regulated subsidiaries via MiFID II passporting permissions and accesses the U.K. market primarily via a combination of U.K. based subsidiaries and branch offices. The U.K. branch offices currently utilize the U.K. FCA’s temporary permission regime and may continue to do so in the future. The U.K. subsidiary is an investment firm authorized and regulated by the FCA with permission to operate a U.K. MTF. Poor future relations between the U.K. and E.U., however, could adversely affect European or worldwide political, fiscal, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets. Disruptions and uncertainty caused by these events may also cause our clients to closely monitor their costs and reduce their spending budget on our services. Any of these effects of the U.K.’s departure from the E.U., and others we cannot anticipate or that may evolve over time, could adversely affect our business, results of operations and financial condition.

Risks Related to Our Organization and Structure

We are a holding company and our principal asset is our ~~48.3%~~64.1% of equity interest in Virtu Financial, and we are accordingly dependent upon distributions from Virtu Financial to pay dividends, if any, taxes and other expenses.

We are a holding company and our principal asset is our direct and indirect ownership of ~~48.3%~~64.1% of the Virtu Financial Units as of December 31, ~~2017.~~2020. We have no independent means of generating revenue. As the sole managing member of Virtu Financial, we cause Virtu Financial to make distributions to its equityholders, including the Founder Post-IPO Member, Virtu Employee Holdco, certain current and former members of management of the Company and their affiliates (the “Management Members”) and us, in amounts sufficient to fund dividends to our stockholders in accordance with our dividend policy and, as further described below, to cover all applicable taxes payable by us and any payments we are obligated to make under the tax receivable agreements we entered into as part of the Reorganization Transactions, but we are limited in our ability to cause Virtu Financial to make these and other distributions to us (including for purposes of paying corporate and other overhead expenses and dividends) under our ~~Fourth Amended and Restated~~ Credit Agreement governing our ~~term loan facility (the “Term~~First Lien Term Loan ~~Facility”), and the indenture pursuant to which we have issued senior secured second lien notes (the “Notes”)~~Facility (as defined below). In addition, certain laws and regulations may result in restrictions on Virtu Financial’s ability to make distributions to its equityholders (including us), or the ability of its subsidiaries to make distributions to it. These include:

~~the SEC Net Capital Rule (Rule 15c3‑1), which requires each of Virtu Financial’s registered broker‑dealer subsidiaries to maintain specified levels of net capital;~~

FINRA Rule 4110, which imposes a requirement of prior FINRA approval for any distribution by Virtu Financial’s FINRA member registered broker‑dealer subsidiary in excess of 10% of its excess net capital; and

~~the requirement for prior approval from the Central Bank of Ireland before Virtu Financial’s regulated Irish subsidiary completes any distribution or dividend.~~

•the SEC Uniform Net Capital Rule (Rule 15c3‑1), which requires Virtu Financial’s registered broker‑dealer subsidiary to maintain specified levels of net capital;

•FINRA Rule 4110, which imposes a requirement of prior FINRA approval for any distribution by Virtu Financial’s FINRA member registered broker‑dealer subsidiary in excess of 10% of its excess net capital; and

•the requirement for prior approval from the CBI before Virtu Financial’s regulated Irish subsidiary completes any distribution or dividend.

To the extent that we need funds and Virtu Financial is restricted from making such distributions to us, under applicable law or regulation, as a result of covenants in our ~~Fourth Amended and Restated~~ Credit Agreement, ~~the indenture governing our Notes or otherwise,~~ we may not be able to obtain such funds on terms acceptable to us or at all and as a result could suffer a material adverse effect on our liquidity and financial condition.

Under the Third Amended and Restated Limited Liability Company Agreement of Virtu Financial (as amended, the “Amended and Restated Virtu Financial LLC Agreement”), Virtu Financial from time to time makes pro rata distributions in cash to its equityholders, including the Founder Post‑IPO Member, the trust that holds equity interests in Virtu Financial on behalf of certain employees of ours based outside the United States, which we refer to as the “Employee Trust”, Virtu Employee Holdco and us, in amounts sufficient to cover the taxes on their allocable share of the taxable income of Virtu Financial. As a result of (i) potential differences in the amount of net taxable income allocable to us and to Virtu Financial’s other equityholders, (ii) the lower tax rate applicable to corporations than individuals and (iii) the favorable tax benefits that we anticipate from (a) the exchange of Virtu Financial Units and corresponding shares of Class C ~~common stock~~Common Stock or Class D ~~common stock,~~Common Stock, (b) payments under the tax receivable agreements and (c) future deductions attributable to the prior acquisition of interests in Virtu Financial by certain affiliates of Silver Lake Partners and Temasek, we expect that these tax distributions will be in amounts that exceed our tax liabilities. Our ~~board~~Board of ~~directors~~Directors will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses, the payment of obligations under the tax receivable agreements, the payment of other expenses or the repurchase of shares of common stock or Virtu Financial Units. We will have no obligation to distribute such cash (or other available cash) to our shareholders. No adjustments to the exchange ratio for Virtu Financial Units and corresponding shares of common stock will be made as a result of any cash distribution by us or any retention of cash by us, and in any event the ratio will remain one‑to‑one.

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We are controlled by the Founder Post‑IPO Member, whose interests in our business may be different than yours, and certain statutory provisions afforded to stockholders are not applicable to us.

The Founder Post‑IPO Member controls approximately ~~88%~~81.9% of the combined voting power of our common stock as a result of its ownership of our Class C and Class D ~~common stock,~~Common Stock, each share of which is entitled to 1 vote and 10 votes, respectively, on all matters submitted to a vote of our stockholders.

The Founder Post‑IPO Member has the ability to substantially control our Company, including the ability to control any action requiring the general approval of our stockholders, including the election of our ~~board~~Board of ~~directors,~~Directors, the adoption of amendments to our certificate of incorporation and by‑laws and the approval of any merger or sale of substantially all of our assets. This concentration of ownership and voting power may also delay, defer or even prevent an acquisition by a third party or other change of control of our Company and may make some transactions more difficult or impossible without the support of the Founder Post‑IPO Member, even if such events are in the best interests of minority stockholders. This concentration of voting power with the Founder Post‑IPO Member may have a negative impact on the price of our Class A ~~common stock.~~Common Stock. In addition, because shares of our Class B ~~common stock~~Common Stock and Class D ~~common stock~~Common Stock each have 10 votes per share on matters submitted to a vote of our stockholders, the Founder Post‑IPO Member is able to control our Company as long as it owns at least 25% of our issued and outstanding common ~~stock.~~

Stock.

The Founder Post-IPO Member’s interests may not be fully aligned with yours, which could lead to actions that are not in your best interest. Because the Founder Post-IPO Member holds part of its economic interest in our business through Virtu Financial, rather than through the public company, it may have conflicting interests with holders of shares of our Class A ~~common stock.~~Common Stock. For example, the Founder Post-IPO Member may have a different tax position from us, which could influence its decisions regarding whether and when we should dispose of assets or incur new or refinance existing indebtedness, especially in light of the existence of the tax receivable agreements that we entered into in connection with the IPO, and whether and when we should undergo certain changes of control within the meaning of the tax receivable agreements or terminate the tax receivable agreements. In addition, the structuring of future transactions may take into consideration these tax or other considerations even where no similar benefit would accrue to us. See “Item 1A. Risk Factors —- Risks Related to Our Organizational Structure —- We are required to pay the Virtu Post IPO Members and the Investor ~~Post IPO~~Post-IPO Stockholders for certain tax benefits we may claim, and the amounts we may pay could be significant.” In addition, pursuant to an exchange agreement, the holders of Virtu Financial Units and shares of our Class C ~~common stock~~Common Stock or Class D ~~common stock~~Common Stock are not required to participate in a proposed sale of our Company that is tax‑free for our stockholders unless the transaction is also tax‑free for such holders of Virtu Financial Units and shares of our Class C ~~common stock~~Common Stock or Class D ~~common stock.~~Common Stock. This requirement could limit structural alternatives available to us in any such proposed transaction and could have the effect of discouraging transactions that might benefit you as a holder of shares of our Class A ~~common stock.~~Common Stock. In addition, the Founder Post-IPO Member’s significant ownership in us and resulting ability to effectively control us may discourage someone from making a significant equity investment in us, or could discourage transactions involving a change in control, including transactions in which you as a holder of shares of our Class A ~~common stock~~Common Stock might otherwise receive a premium for your shares over the then‑current market price.

We have opted out of Section 203 of the General Corporation Law of the State of Delaware (the “Delaware General Corporation Law”), which prohibits a publicly held Delaware corporation from engaging in a business combination transaction

with an interested stockholder for a period of three years after the interested stockholder became such unless the transaction fits within an applicable exemption, such as board approval of the business combination or the transaction which resulted in such stockholder becoming an interested stockholder. Therefore, the Founder Post‑IPO Member is able to transfer control of us to a third party by transferring its shares of our common stock (subject to certain restrictions and limitations), which would not require the approval of our ~~board~~Board of ~~directors~~Directors or our other stockholders.

Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the doctrine of “corporate opportunity” does not apply against the Founder Post-IPO Member, Mr. Viola, Temasek, any of our non‑employee directors or any of their respective affiliates in a manner that would prohibit them from investing in competing businesses or doing business with our clients or customers. In addition, subject to the restrictions on competitive activities described below, Mr. Cifu is permitted to become engaged in, or provide services to, any other business or activity in which Mr. Viola is currently engaged or permitted to become engaged, to the extent that Mr. Cifu’s level of participation in such businesses or activities is consistent with his current participation in such

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businesses and activities. The Amended and Restated Virtu Financial LLC Agreement provides that Mr. Viola, in addition to our other executive officers and our employees that are Virtu Post-IPO Members, including Mr. Cifu, may not directly or indirectly engage in certain competitive activities until the third anniversary of the date on which such person ceases to be an officer, director or employee of ours. Temasek and our non‑employee directors are not subject to any such restriction. To the extent that the Founder Post-IPO Member, Mr. Viola, Temasek, our non‑employee directors or any of their respective affiliates invests in other businesses, they may have differing interests than our other stockholders. Messrs. Viola and Cifu also have business relationships outside of our business.

We may be unable to remain in compliance with the ~~financial maintenance and other~~ covenants contained in our ~~Fourth Amended and Restated~~ Credit Agreement ~~and the indenture governing our Notes~~ and our obligation to comply with these covenants may adversely affect our ability to operate our business.

The covenants in our ~~Fourth Amended and Restated~~ Credit Agreement ~~and indenture governing our Notes~~ may negatively impact our ability to finance future operations or capital needs or to engage in other business activities. Our ~~Fourth Amended and Restated~~ Credit Agreement~~and~~the indenture governing our Notes requires us to maintain specified financial ratios and tests, including interest coverage and total leverage ratios, which may require us to take action to reduce our debt or to act in a manner contrary to our business objectives. Our Fourth Amended and Restated Credit Agreement and the indenture governing our Notes also restrictrestricts our ability to, among other things, incur additional indebtedness, dispose of assets, guarantee debt obligations, repay other indebtedness, pay dividends, pledge assets, make investments, including in certain of our operating subsidiaries, make acquisitions or consummate mergers or consolidations and engage in certain transactions with subsidiaries and affiliates.

A failure to comply with the restrictions contained in our ~~Fourth Amended and Restated~~ Credit Agreement ~~and indenture governing our Notes~~ could lead to an event of default, which could result in an acceleration of our indebtedness. Our future operating results may not be sufficient to enable compliance with the covenants in our ~~Fourth Amended and Restated~~ Credit Agreement ~~or indenture governing our Notes~~ or to remedy such a default. In addition, in the event of an acceleration, we may not have or be able to obtain sufficient funds to refinance our indebtedness or to make any accelerated payments. Even if we were able to obtain new financing, we would not be able to guarantee that the new financing would be on commercially reasonable terms. If we default on our indebtedness, our business, financial condition and results of operation could suffer a material adverse effect.

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~~Our reported financial results depend on management’s selection of accounting methods and certain assumptions and estimates.~~

Our accounting policies and assumptions are fundamental to our reported financial condition, and results of operations and cash flows. Our management must exercise judgment in selecting and applying many of these accounting policies and methods to comply with generally accepted accounting principles and reflect management’s judgment of the most appropriate manner to report our financial condition, results of operations and cash flows. In some cases, management must select the accounting policy or method to apply from multiple alternatives, any of which may be reasonable under the circumstances, yet each may result in the reporting of materially different results than would have been reported under a different alternative.

Certain accounting policies are critical to presenting our reported financial condition and results. They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses.

Additionally, from time to time, the Financial Accounting Standards Board and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements. These changes are beyond our control, can be difficult to predict and could materially impact how we report our financial condition, results of operations and cash flows. Changes in these standards are continuously occurring, and given the current economic environment, more drastic changes may occur. The implementation of such changes could have a material adverse effect on our business, financial condition and results of operation.

We are exempt from certain corporate governance requirements since we are a “controlled company” within the meaning of the NASDAQ rules, and as a result our stockholders do not have the protections afforded by these corporate governance requirements.

The Founder Post‑IPO Member controls more than 50% of our combined voting power. As a result, we are considered a “controlled company” for purposes of the NASDAQ rules and corporate governance standards, and therefore we are permitted and may elect not to or may have elected not to, comply with certain NASDAQ corporate governance requirements, including those that would otherwise require our ~~board~~Board of ~~directors~~Directors to have a majority of independent directors and require that we either establish a Compensation and Nominating and Corporate Governance Committees, each comprised entirely of independent directors, or otherwise ensure that the compensation of our executive officers and nominees for directors are determined or recommended to the ~~board~~Board of ~~directors~~Directors by the independent members of the ~~board~~Board of ~~directors.~~Directors. Accordingly, holders of our Class A ~~common stock~~Common Stock do not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ rules and corporate governance standards, and the ability of our independent directors to influence our business policies and affairs may be reduced.

We are required to pay the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders for certain tax benefits we may claim, and the amounts we may pay could be significant.

In connection with the Reorganization Transactions, we acquired equity interests in Virtu Financial from an affiliate of Silver Lake Partners (which, following a secondary offering completed in November 2015, ~~(the “November 2015 Secondary Offering”),~~ no longer holds any equity interest in us) and ~~the an affiliate of~~ the Temasek Pre-IPO Member in the Mergers. In addition, we used a portion of the net proceeds from our IPO and our Secondary Offerings (as defined below) to purchase Virtu Financial Units and corresponding shares of Class C ~~common stock~~Common

Stock from certain Virtu Post-IPO Members, including affiliates of ~~the~~ Silver Lake Partners (the “Silver Lake Post-IPO Members”), the Founder Post-IPO Member, and certain employees. These acquisitions of interests in Virtu Financial, along with certain subsequent exchanges of interests in Virtu Financial by current and former employees, resulted in tax basis adjustments to the assets of Virtu Financial that were allocated to us and our subsidiaries. Future acquisitions of interests in Virtu Financial are expected to produce favorable tax attributes. In addition, future exchanges by the Virtu Post-IPO Members of Virtu Financial Units and corresponding shares of Class C ~~common stock~~Common Stock or Class D ~~common stock,~~Common Stock, as the case may be, for shares of our Class A ~~common stock~~Common Stock or Class B ~~common stock,~~Common Stock, respectively, are expected to produce favorable tax attributes. These tax attributes would not be available to us in the absence of such transactions. Both the existing and anticipated tax basis adjustments are expected to reduce the amount of tax that we would otherwise be required to pay in the future.

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We entered into three tax receivable agreements with the Virtu Post-IPO Members and the Investor Post-IPO Stockholders (one with the Founder Post-IPO Member, the Employee Trust, Virtu Employee Holdco and other post IPO investors, other than affiliates of Silver Lake Partners and affiliates of Temasek, another with the Investor Post-IPO Stockholders and the other with the Silver Lake Post-IPO Members) that provide for the payment by us to the Virtu Post-IPO Members and the Investor Post-IPO Stockholders (or their transferees of Virtu Financial Units or other assignees) of 85% of the amount of actual cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of (i) any increase in tax basis in Virtu Financial’s assets resulting from (a) the acquisition of equity interests in Virtu Financial from an ~~affiliates~~affiliate of Silver Lake Partners and Temasek, and the Temasek Pre-IPO Member in the Reorganization Transactions (which represents the unamortized portion of the increase in tax basis in Virtu Financial’s assets resulting from a prior acquisition of interests in Virtu Financial by an ~~affiliates~~affiliate of Silver Lake Partners and Temasek, and the Temasek Pre-IPO Member), (b) the purchases of Virtu Financial Units (along with the corresponding shares of our Class C ~~common stock~~Common Stock or Class D ~~common stock,~~Common Stock, as applicable) from certain of the Virtu Post-IPO Members using a portion of the net proceeds from the IPO or in any ~~future~~subsequent offering (including, without limitation, the Secondary Offerings), (c) exchanges by the Virtu Post-IPO Members of Virtu Financial Units (along with the corresponding shares of our Class C ~~common stock~~Common Stock or Class D ~~common stock,~~Common Stock, as applicable) for shares of our Class A ~~common stock~~Common Stock or Class B ~~common stock,~~Common Stock, as applicable, or (d) payments under the tax receivable agreements, (ii) any net operating losses available to us as a result of the Mergers and (iii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreements.

The actual increase in tax basis, as well as the amount and timing of any payments under these tax receivable agreements, will vary depending upon a number of factors, including the timing of exchanges by the Virtu Post‑IPO Members, the price of our Class A ~~common stock~~Common Stock at the time of the exchange, the extent to which such exchanges are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable and the portion of our payments under the tax receivable agreements constituting imputed interest.

The payments we are required to make under the tax receivable agreements, which represent 85% of the amount of actual cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize, could be substantial. We expect that, as a result of the amount of the increases in the tax basis of the tangible and intangible assets of Virtu Financial, assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize in full the potential tax benefits described above, future payments to the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders in respect of the purchases, the exchanges and the Mergers in connection with the IPO, ~~and~~ the purchases and exchanges completed in connection with our subsequent public ~~offering~~offerings, the Secondary Offerings, and exchanges by employees and other Virtu Post-IPO Members will ~~aggregate to approximately $147.0 million and~~ range from approximately ~~$0.3~~$0.9 million to ~~$12.8~~$21.7 million per year over the next 15 years. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these amounts. The payments under the tax receivable agreements are not conditioned upon the Virtu Post‑IPO Members’ or the Investor Post‑IPO Stockholders’ continued ownership of us.

In addition, although we are not aware of any issue that would cause the Internal Revenue Service (the “IRS”) to challenge the tax basis increases or other benefits arising under the tax receivable agreements, the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders (or their transferees or other assignees) will not reimburse us for any payments previously made if such tax basis increases or other tax benefits are subsequently disallowed, except that any excess payments made to the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders will be netted against future payments otherwise to be made under the tax receivable agreements, if any, after our determination of such excess. As a result, in such circumstances we could make payments to the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders under the tax receivable agreements that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact our liquidity.

In addition, the tax receivable agreements provide that, upon certain mergers, asset sales or other forms of business combination, or certain other changes of control, our or our successor’s obligations with respect to tax benefits would be based on certain assumptions, including that we or our successor would have sufficient taxable income to fully utilize the increased

tax deductions and tax basis and other benefits covered by the tax receivable agreements. As a result, upon a change of control, we could be required to make payments under a tax receivable agreement that are greater than the specified percentage of our actual cash tax savings, which could negatively impact our liquidity.

In addition, the tax receivable agreements provide that in the case of a change in control of the Company, the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders have the option to terminate the applicable tax

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receivable agreement, and we are required to make a payment to such electing party in an amount equal to the present value of future payments (calculated using a discount rate equal to the lesser of 6.5% or LIBOR plus 100 basis points, which may differ from our, or a potential acquirer’s, then‑current cost of capital) under the tax receivable agreement, which payment would be based on certain assumptions, including those relating to our future taxable income. In these situations, our obligations under the tax receivable agreements could have a substantial negative impact on our, or a potential acquirer’s, liquidity and could have the effect of delaying, deferring, modifying or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. These provisions of the tax receivable agreements may result in situations where the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders have interests that differ from or are in addition to those of our other shareholders. In addition, we could be required to make payments under the tax receivable agreements that are substantial and in excess of our, or a potential acquirer’s, actual cash savings in income tax.

Finally, because we are a holding company with no operations of our own, our ability to make payments under the tax receivable agreements are dependent on the ability of our subsidiaries to make distributions to us. Our ~~Fourth Amended and Restated~~ Credit Agreement restricts the ability of our subsidiaries to make distributions to us, which could affect our ability to make payments under the tax receivable agreements. To the extent that we are unable to make payments under the tax receivable agreements for any reason, such payments will be deferred and will accrue interest until paid, which could negatively impact our results of operations and cash flows and could also affect our liquidity in periods in which such payments are made.

Risks Related to Our Class A Common Stock

Substantial future sales of shares of our Class A common stock in the public market could cause our stock price to fall.

As of December 31, ~~2017,~~2020, we had ~~89,798,609~~122,012,180 shares of Class A ~~common stock~~Common Stock outstanding, excluding ~~14,540,911~~6,539,431 shares of Class A ~~common stock~~Common Stock issuable pursuant to the Amended and Restated 2015 Management Incentive Plan (as defined below) and ~~97,490,729~~70,318,679 shares of Class A ~~common stock~~Common Stock issuable upon potential exchanges and/or conversions. Of these shares, the ~~29,404,003~~89,236,636 shares sold in the IPO and the Secondary Offerings are freely tradable without further restriction under the Securities Act. The remaining ~~158,738,382~~106,887,307 shares of Class A ~~common stock~~Common Stock outstanding as of December 31, ~~2017~~2020 (including shares issuable upon exchange and/or conversion) are “restricted securities,” as that term is defined under Rule 144 of the Securities Act. The holders of these remaining ~~158,738,382~~106,887,307 shares of our Class A ~~common stock,~~Common Stock, including shares issuable upon exchange or conversion as described above, are entitled to dispose of their shares pursuant to (i) the applicable holding period, volume and other restrictions of Rule 144 or (ii) another exemption from registration under the Securities Act. Additional sales of a substantial number of our shares of Class A ~~common stock~~Common Stock in the public market, or the perception that sales could occur, could have a material adverse effect on the price of our Class A ~~common stock.~~

Common Stock.

We have filed a registration statement under the Securities Act registering ~~16,000,000~~21,000,000 shares of our Class A ~~common stock~~Common Stock reserved for issuance under our ~~2015~~ Amended and Restated 2015 Management Incentive Plan, ~~14,540,911~~6,539,431 of which are issuable, and we entered into the Registration Rights Agreement (as defined below) pursuant to which we granted demand and piggyback registration rights to the Founder Post-IPO Member, Temasek, the North Island Stockholder and piggyback registration rights to certain of the other Virtu Post-IPO Members.

Failure to establish and maintain effective internal control over financial reporting could have a material adverse effect on our business, financial condition, results of operations and cash flows, and stock price.

Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial reports and is important in helping to prevent financial fraud. If we are unable to maintain adequate internal controls over financial reporting, our business and operating results could be harmed. ~~We have begun to develop~~Effective December 31, 2018, we are no longer an “emerging growth company”, and ~~implement a plan to test our~~therefore under applicable SEC rules we must maintain internal controls over financial reporting to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the related rules of the SEC, which require, among other things, our management to assess annually the effectiveness of our internal control over financial reporting and ~~if we are no longer an emerging growth company under the Jumpstart Our Business Startups Act (the “JOBS Act”),~~ our independent registered public accounting firm to issue a report on the effectiveness of internal control over financial reporting with our Annual Report on Form 10-K. The internal control assessment required by Section 404 of Sarbanes-Oxley may divert internal resources

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and we may experience higher operating expenses, higher independent auditor and consulting fees during the implementation of these changes. ~~During the course of this documentation and testing, we may identify deficiencies that we are unable to remediate before the reporting date.~~ Any material weaknesses or any failure to implement required

new or improved controls or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations or result in material misstatements in our consolidated financial statements. If our management or our independent registered public accounting firm were to conclude in their reports that our internal control over financial reporting was not effective, investors could lose confidence in our reported financial information, and the trading price of our Class A ~~common stock~~Common Stock could drop significantly. Failure to comply with Section 404 of Sarbanes-Oxley could potentially subject us to sanctions or investigations by the SEC, FINRA or other regulatory authorities, as well as ~~increasing~~increase the risk of liability arising from litigation based on securities law.

We intend to pay regular dividends to our stockholders, but our ability to do so may be limited by our holding company structure, contractual restrictions and regulatory requirements.

We intend to pay cash dividends on a quarterly basis. See Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.” However, we are a holding company, with our principal asset being our direct and indirect equity interests in Virtu Financial, and we will have no independent means of generating revenue. Accordingly, as the sole managing member of Virtu Financial, we intend to cause, and will rely on, Virtu Financial to make distributions to its equityholders, including the Founder Post-IPO Member, the Employee Trust, Virtu Employee Holdco and us, to fund our dividends. When Virtu Financial makes such distributions, the other equityholders of Virtu Financial will be entitled to receive equivalent distributions pro rata based on their economic interests in Virtu Financial. In order for Virtu Financial to make distributions, it may need to receive distributions from its subsidiaries. Certain of these subsidiaries are or may in the future be subject to regulatory capital requirements that limit the size or frequency of distributions. See “Item 1A. Risk Factors —- Risks Related to Our Business —- Failure to comply with applicable regulatory capital requirements could subject us to sanctions imposed by the SEC, FINRA and other SROs or regulatory bodies.” If Virtu Financial is unable to cause these subsidiaries to make distributions, we may not receive adequate distributions from Virtu Financial in order to fund our dividends.

Our ~~board~~Board of ~~directors~~Directors will periodically review the cash generated from our business and the capital expenditures required to finance our global growth plans and determine whether to modify the amount of regular dividends and/or declare periodic special dividends to our stockholders. Our ~~board~~Board of ~~directors~~Directors will take into account general economic and business conditions, including our financial condition, results of operations and cash flows, capital requirements, contractual restrictions, including restrictions contained in our ~~Fourth Amended and Restated~~ Credit Agreement, business prospects and other factors that our ~~board~~Board of ~~directors~~Directors considers relevant. There can be no assurance that our ~~board~~Board of ~~directors~~Directors will not reduce the amount of regular cash dividends or cause us to cease paying dividends altogether. In addition, our ~~Fourth Amended and Restated~~ Credit Agreement ~~and the indenture governing our Notes~~ limits the amount of distributions our subsidiaries, including Virtu Financial, can make to us and the purposes for which distributions could be made. Accordingly, we may not be able to pay dividends even if our ~~board~~Board of ~~directors~~Directors would otherwise deem it appropriate. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —- Liquidity and Capital Resources.”

Provisions in our charter documents and certain rules imposed by regulatory authorities may delay or prevent our acquisition by a third party.

Our amended and restated certificate of incorporation and by-laws contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of our ~~board~~Board of ~~directors.~~Directors. These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that stockholders may consider favorable, include the following, some of which may only become effective when the Founder Post-IPO Member or any of its affiliates or permitted transferees no longer beneficially own shares representing 25% of our issued and outstanding common stock (the “Triggering Event”):

~~the 10 vote per share feature of our Class B common stock and Class D common stock;~~

~~the division of our board of directors into three classes and the election of each class for three-year terms;~~

•the 10 vote per share feature of our Class B Common Stock and Class D Common Stock;

•the division of our Board of Directors into three classes and the election of each class for three-year terms;

•the sole ability of the Board of Directors to fill a vacancy created by the expansion of the Board of Directors;

•advance notice requirements for stockholder proposals and director nominations;

•after the Triggering Event, provisions limiting stockholders' ability to call special meetings of stockholders, to require special meetings of stockholders to be called and to take action by written consent;

•after the Triggering Event, in certain cases, the approval of holders of at least 75% of the shares entitled to vote generally on the making, alteration, amendment or repeal of our certificate of incorporation or by-laws will be required to adopt, amend or repeal our by-laws, or amend or repeal certain provisions of our certificate of incorporation;

•after the Triggering Event, the required approval of holders of at least 75% of the shares entitled to vote at an election of the directors to remove directors, which removal may only be for cause; and

•the ability of our Board of Directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our Board of Directors.

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~~the sole ability of the board of directors to fill a vacancy created by the expansion of the board of directors;~~

~~advance notice requirements for stockholder proposals and director nominations;~~

after the Triggering Event, provisions limiting stockholders ability to call special meetings of stockholders, to require special meetings of stockholders to be called and to take action by written consent;

after the Triggering Event, in certain cases, the approval of holders of at least 75% of the shares entitled to vote generally on the making, alteration, amendment or repeal of our certificate of incorporation or by-laws will be required to adopt, amend or repeal our by-laws, or amend or repeal certain provisions of our certificate of incorporation;

after the Triggering Event, the required approval of holders of at least 75% of the shares entitled to vote at an election of the directors to remove directors, which removal may only be for cause; and

the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors.

These provisions of our amended and restated certificate of incorporation and by-laws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our Class A ~~common stock~~Common Stock in the future, which could reduce the market price of our Class A ~~common stock.~~

Common Stock.

In addition, a third party attempting to acquire us or a substantial position in our Class A ~~common stock~~Common Stock may be delayed or ultimately prevented from doing so by change in ownership or control regulations to which certain of our regulated subsidiaries are subject. ~~FINRA’s NASD~~FINRA Rule 1017 generally provides that FINRA approval must be obtained in connection with any transaction resulting in a single person or entity owning, directly or indirectly, 25% or more of a member firm’s equity and would include a change in control of a parent company. Similarly, ~~Virtu Financial Ireland Limited is~~VFIL, VIEL and VIUK are subject to change in control regulations promulgated by the ~~Central Bank of Ireland.~~CBI and/or the FCA. We may also be subject to similar restrictions in other jurisdictions in which we operate. These regulations could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our Class A ~~common stock~~Common Stock in the future, which could reduce the market price of our Class A ~~common stock.~~

Common Stock.

General Risks

Our stock price may be volatile.

The market price of our Class A ~~common stock~~Common Stock is subject to significant fluctuations in response to, among other factors, variations in our operating results and market conditions specific to our business. Furthermore, in recent years the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industry. The changes frequently appear to occur without regard to the operating performance of the affected companies. As such, the price of our Class A ~~common stock~~Common Stock could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce the price of our Class A ~~common stock~~Common Stock and materially affect the value of your investment.

We ~~will~~ incur increased costs as a result of being a public company.

~~We completed the IPO in April 2015, and therefore we have a limited history operating as a public company.~~

As a public company, we incur significant levels of legal, accounting and other ~~expenses that we did not incur as a privately-owned company.~~expenses. Sarbanes-Oxley and related rules of the SEC, together with the listing requirements of NASDAQ, impose significant requirements relating to disclosure controls and procedures and internal control over financial reporting. We have incurred increased costs as a result of compliance with these public company requirements, which require additional resources and make some activities more time consuming than they have been in the past when we were privately owned. We may experience higher than anticipated operating expenses as well as higher independent auditor and consulting fees during the implementation of these changes and thereafter and we may need to hire additional qualified personnel in order to continue to satisfy these public company requirements. We are required to expend considerable time and resources complying with public company regulations. In addition, these laws and regulations may

~~Table of Contents~~

make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, these laws and regulations could make it more difficult for us to attract and retain qualified persons to serve on our ~~board~~Board of ~~directors~~Directors or as executive officers and may divert management’s attention. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Class A ~~common stock,~~Common Stock, fines, sanctions and other regulatory action.

~~Our reliance on exemptions from certain disclosure requirements under the JOBS Act may deter trading in our Class A common stock.~~

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and have relied and intend to continue to rely, on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

provide an auditor attestation and report with respect to management’s assessment of the effectiveness of our internal controls over financial reporting pursuant to section 404(b) of the Sarbanes-Oxley Act;

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); and

submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency,” and disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer's compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to take advantage of the benefits of this extended transition period.

We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1.07 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1.07 billion in non-convertible debt during the preceding three-year period.

Until such time, however, we cannot predict if investors will find our Class A common stock less attractive because we may rely on these exemptions. If some investors find our Class A common stock less attractive, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

If securities or industry analysts cease to publish research or publish inaccurate or unfavorable research about us or our business, or publish projections for our business that exceed our actual results, ourOur stock price and trading volume could ~~decline.~~

decline as a result of inaccurate or unfavorable research, or the cessation of research cover, about our business published by securities or industry analysts.

The trading market for our Class A ~~common stock~~Common Stock may be affected by the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades our Class A ~~common stock~~Common Stock or publishes inaccurate or unfavorable research about our business, our stock price could decline. In addition, the analysts’ projections may have little or no relationship to the results we actually achieve and could cause our stock price to decline if we fail to meet their projections. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our stock price or trading volume could decline.

Our reported financial results depend on management’s selection of accounting methods and certain assumptions and estimates.

~~Table of Contents~~

ITEM 1B. UNRESOLVED STAFF COMMENTS

~~Not applicable.~~

None.

ITEM 2. PROPERTIES

Our headquarters are located in leased office space at ~~300 Vesey Street,~~One Liberty Plaza, 165 Broadway, New York, NY ~~10282.~~10006. We also lease space for our offices in the U.S., Canada, Europe, Asia and ~~Asia.~~Australia. We ~~consider~~are in the ~~current arrangements~~process of terminating or subleasing office space that we no longer need, subsequent to ~~be adequate for our present needs.~~

the consolidations in staff and technology following the Acquisition of KCG and ITG Acquisition.

ITEM 3. LEGAL PROCEEDINGS

The information required by this item is set forth in the ~~“Litigation”~~“Legal Proceedings” section in Note ~~13 “Commitments,~~16 "Commitments, Contingencies and ~~Guarantees”~~Guarantees" to the Company’s ~~Consolidated Financial Statements~~consolidated financial statements included in Part II Item 8 “Financial Statements and Supplementary Data”, which is incorporated by reference herein.

ITEM 4. MINE SAFETY DISCLOSURES

~~Not applicable.~~

None.

PART II

~~Table of Contents~~

~~PART II~~

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market ~~Prices~~

Information

The ~~following table shows~~Class A Common Stock trade on NASDAQ under the ~~high and low sale price and dividends paid per share~~ticker symbol “VIRT”. There is no established public trading market for ~~the periods indicated for the Company’s common stock, as reported by NASDAQ.~~

Class B Common Stock, Class C Common Stock or Class D Common Stock.

Year Ended December 31, 2016

Sale Price

Dividend per Share

High

Low

of common stock
First Quarter

$
23.90

$
19.76

$
0.24
Second Quarter

$
22.16

$
17.19

$
0.24
Third Quarter

$
18.00

$
14.97

$
0.24
Fourth Quarter

$
16.20

$
12.55

$
0.24

Year Ended December 31, 2017

Sale Price

Dividend per Share

High

Low

of common stock
First Quarter

$
19.07

$
15.78

$
0.24
Second Quarter

$
18.30

$
14.60

$
0.24
Third Quarter

$
18.15

$
14.60

$
0.24
Fourth Quarter

$
18.50

$
13.10

$
0.24
Holders

~~Holders~~

Based on information made available to us by the transfer agent, as of ~~March 13, 2018,~~February 19, 2020, there are ~~fifty-five~~thirty-six stockholders of record of our Class A ~~common stock,~~Common Stock, one of which was Cede & Co., a nominee for The Depository Trust ~~Company.~~Company, zero stockholders of record of our Class B Common Stock, six stockholders of record of our Class C Common Stock and one stockholder of record of our Class D Common Stock. All of our Class A ~~common stock~~Common Stock held by brokerage firms, banks and other financial institutions as nominees for beneficial owners is considered to be held of record by Cede & Co., who is considered to be one stockholder of record. A substantially greater number of holders of our Class A ~~common stock~~Common Stock are “street name” or beneficial holders, whose shares of Class A ~~common stock~~Common Stock are held of record by banks, brokers and other financial institutions. Because such shares of Class A ~~common stock~~Common Stock are held on behalf of stockholders, and not by the stockholders directly, and because a stockholder can have multiple positions with different brokerage firms, banks and other financial institutions, we are unable to determine the total number of stockholders we have.

Dividend and Capital Return Policy

Our ~~board~~Board of ~~directors~~Directors has adopted a policy of returning excess cash to our stockholders. ~~Subject to the sole discretion~~The Board of ~~our board~~Directors declared and we paid quarterly cash dividends of ~~directors and the considerations discussed below, we intend to pay dividends that will annually equal, in the aggregate, at least 70% of our net income.~~

~~The Company paid cash dividends~~$0.24 during the years ended December 31, ~~2017~~2020, 2019 and ~~2016 as represented in the previous table.~~2018. The Company intends to continue paying regular quarterly dividends to holders of our Class A Common Stock and Class B ~~common stockholders~~Common Stock and to holders of ~~Restricted Stock Units,~~RSUs (as defined below); however, the payment of dividends will be subject to general economic and business conditions, including the Company’s financial condition, results of operations and cash flows, capital requirements, contractual restrictions, including restrictions contained in our ~~Fourth Amended and Restated~~ Credit Agreement, regulatory restrictions, business prospects and other factors that the Company’s ~~board~~Board of ~~directors~~Directors considers relevant. The terms of the ~~Fourth Amended and Restated~~ Credit Agreement ~~and the indenture governing our Notes~~ contain a number of covenants, including a restriction on our and our restricted subsidiaries’ ability

~~Table of Contents~~

to pay dividends on, or make distributions in respect of, our equity interests. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operation –~~Operations - Liquidity and Capital Resources –- Long-Term Borrowings”.

Stock Performance

The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act ~~of 1933, as amended,~~ or the Exchange Act except to the extent we specifically incorporate it by reference into such filing. Our stock price performance shown in the graph below is not indicative of future stock price performance.

The stock performance graph below compares the performance of an investment in our Class A ~~common stock,~~Common Stock, from ~~April 16,~~December 31, 2015 ~~the date of the IPO,~~ through December 31, ~~2017,~~2020, with the S&P 500 Index and the NYSE ARCA Securities Broker/Dealer Index. The graph assumes $100 was invested in our Class A ~~common stock,~~Common Stock, the S&P 500 Index and the NYSE ~~ARCA~~Arca Securities

Broker/Dealer Index. It assumes that dividends were reinvested on the date of payment without payment of any commissions or consideration of income taxes.

Period Ending

Index

4/16/2015

6/30/2015

12/31/2015

6/30/2016

12/31/2016

6/30/2017

12/31/2017

Virtu Financial Inc.

100.00

123.58

121.75

105.88

93.82

103.82

107.65

S&P 500

100.00

98.37

98.52

102.30

110.30

120.60

134.38

NYSE ARCA Securities Broker/Dealer

100.00

103.10

93.33

78.82

107.58

118.12

139.00

~~Table of Contents~~

~~Unregistered Sale of Securities~~

On July 20, 2017, the Company completed the all-cash acquisition of KCG Holdings, Inc. In connection with the Acquisition, the Company issued 8,012,821 shares of the Company’s Class A stock to an affiliate of Temasek for an aggregate purchase price of approximately $125.0 million,
Index 12/31/2015 6/30/2016 12/30/2016 6/30/2017 12/29/2017 6/29/2018 12/31/2018 6/28/2019 12/31/2019 06/30/2020 12/31/2020
Virtu Financial Inc. 100.00 81.50 74.58 84.93 90.63 133.59 132.28 114.12 86.16 130.17 141.67
S&P 500 100.00 102.69 109.54 118.57 130.81 133.00 122.65 143.93 158.07 151.68 183.77
NYSE Arca Securities Broker/Dealer 100.00 84.46 115.27 126.57 148.94 152.98 133.27 150.02 163.05 152.65 212.02

Stock and 40,064,103 shares of the Company’s Class A stock to NIH for an aggregate purchase price of approximately $618.7 million, in each case in accordance with terms of an investment agreement in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (collectively, the “July 2017 Private Placement”). As a result of the completion of the IPO, the Reorganization Transactions, the Secondary Offerings, the July 2017 Private Placement, and certain other permitted exchanges by current and former employees of Virtu Financial common units for shares of the Company’s Class A common stock, the Company holds an approximately 48.3% interest in Virtu Financial at December 31, 2017.

Common Units Repurchases

Pursuant to the exchange agreement (the “Exchange Agreement”) entered into on April 15, 2015 by and among the Company, Virtu Financial and holders of ~~non-voting common interest units in~~ Virtu Financial ~~(the “Virtu~~

~~Financial Units”),~~Units, Virtu Financial Units (along with the corresponding shares of our Class C ~~common stock~~Common Stock or Class D ~~common stock,~~Common Stock, as applicable) may be exchanged at any time for shares of our Class A ~~common stock~~Common Stock or Class B ~~common stock,~~Common Stock, as applicable, on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. ~~Pursuant~~

In February 2018, the Company's Board of Directors authorized a share repurchase program of up to $50.0 million in Class A Common Stock and Virtu Financial Units by March 31, 2019. On July 27, 2018, the Company's Board of Directors authorized the expansion of the Company's share repurchase program, increasing the total authorized amount by $50.0 million to $100.0 million and extending the duration of the program through September 30, 2019. From the inception of the program in February 2018 to the expiration of the program on September 30, 2019, the Company repurchased approximately 2.6 million shares of Class A Common Stock and Virtu Financial Units for approximately $65.9 million.

On November 6, 2020, the Company's Board of Directors authorized a new share repurchase program of up to $100.0 million in Class A common stock and Virtu Financial Units by December 31, 2021. The Company may repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means. Repurchases may also be made under Rule 10b5-1 plans. The timing and amount of repurchase transactions will be determined by the Company's management based on its evaluation of market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice. There are no assurances that any further repurchases will actually occur. From the inception of the program through December 31, 2020, the Company has repurchased approximately 1.4 million shares of Class A Common Stock and Virtu Financial Units for approximately $33.9 million. The Company has approximately $66.1 million of remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

The following table contains information about the Company’s purchases of its Class A Common Stock and Class C Common Stock during the three months ended December 31, 2020:


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs





























October 1, 2020 - October 31, 2020
Class A Common Stock / Virtu Financial Units repurchases	22,166	$	23.04	N/A


November 1, 2020 - November 30, 2020
Class A Common Stock / Virtu Financial Units repurchases	383,563	22.83		378,256


December 1, 2020 - December 31, 2020
Class A Common Stock / Virtu Financial Units repurchases	1,167,415	24.00		1,058,070
Class C Common Stock/ Virtu Financial Units repurchases	—	—		—

Total Common Stock / Virtu Financial Unit repurchases	1,573,144	$	23.70	1,436,326	$	66,081,593

(1) Includes the repurchase of 136,818 shares from employees in order to satisfy statutory tax withholding requirements upon the net settlement of equity awards for the three months ended December 31, 2020

During the year ended December 31, 2020, pursuant to the Exchange Agreement, ~~on November 13, 2017,~~ certain current and former employees elected to exchange ~~209,448~~2,660,239 units in Virtu Financial ~~Units (along with the corresponding shares of our Class C common stock)~~ held directly or on their behalf by Virtu Employee Holdco LLC (“Employee Holdco”) on a one-for-one basis for shares of ~~our~~ Class A ~~common stock.~~Common Stock. The shares of our Class A ~~common stock~~Common Stock were issued in reliance on the registration exemption contained in Section 4(a)(2) of the Securities Act, on the basis that the transaction did not involve a public offering. No underwriters were involved in the transaction.

Equity Compensation Plan Information

The following table provides information about shares of common stock available for future awards under all of the Company’s equity compensation plans as of December 31, ~~2017:~~

2020:



	Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans		Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)
Equity compensation plans approved by security holders	2015 Management Incentive Plan	8,591,047	$	18.89	5,949,864	Equity compensation plans approved by security holders	Amended and Restated 2015 Management Incentive Plan	2,324,152	$	19.00	6,539,431
Equity compensation plans not approved by security holders	None	—		—	—	Equity compensation plans not approved by security holders	None	3,000,000	22.98		—
Total		8,591,047	$	18.89	5,949,864	Total		5,324,152	$	21.24	6,539,431

ITEM 6. SELECTED FINANCIAL DATA

~~SELECTED CONSOLIDATED FINANCIAL DATA~~

The following table sets forth selected historical consolidated financial data for the periods beginning on and after January 1, 2013. We were formed on October 16, 2013 and, prior to the consummation of the Reorganization Transactions and the IPO, did not conduct any activities other than those incident to our formation and the IPO. Our consolidated financial statements reflect, for all the periods prior to April 16, 2015 (the period prior to completion of the Reorganization Transactions), the operations of Virtu Financial and its consolidated subsidiaries, and for all periods on or after April 16, 2015, the operations of the Company and its consolidated subsidiaries (including Virtu Financial). On July 20, 2017 we acquired KCG, which is accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the assets and liabilities of KCG, as of July 20, 2017, were recorded at their respective fair values and added to the carrying value of our existing assets and liabilities. Our reported financial condition, results

Not applicable.

~~Table of Contents~~

of operations and cash flows for the periods following the Acquisition reflect KCG's and our balances and reflect the impact of purchase accounting adjustments. As we are the accounting acquirer, the financial results for 2017 comprise our results for the entire applicable period and the results of KCG from the Closing Date through December 31, 2017. All periods prior to the Closing Date comprise solely our results. The consolidated statements of comprehensive income data for the years ended December 31, 2017, 2016 and 2015 and the consolidated statements of financial condition data as of December 31, 2017 and 2016 have been derived from our consolidated financial statements included elsewhere in this Form 10-K.

~~Table of Contents~~

The following selected historical financial and other data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our respective consolidated financial statements and related notes thereto included elsewhere in this Form 10-K.

Years Ended December 31,

(In thousands, except share and per share data)

2017

2016

2015

2014

2013

Consolidated Statements of Comprehensive Income Data:
















Revenues:

Trading income, net

$
766,027

$
665,465

$
757,455

$
685,150

$
623,733

Interest and dividends income

50,407

26,419

28,136

27,923

31,090

Commissions, net and technology services(1)

116,503

10,352

10,622

9,980

9,682

Other, net(2)

95,045

36

—

—

—

Total revenues

1,027,982

702,272

796,213

723,053

664,505

Operating Expenses:

Brokerage, exchange and clearance fees, net

256,926

221,214

232,469

230,965

195,146

Communication and data processing

131,506

71,001

68,647

68,847

64,689

Employee compensation and payroll taxes

177,489

85,295

88,026

84,531

78,353

Payments for order flow(3)

27,727

—

—

—

—

Interest and dividends expense

91,993

56,557

52,423

47,083

45,196

Operations and administrative

65,137

23,039

25,991

21,923

27,215

Depreciation and amortization

47,327

29,703

33,629

30,441

23,922

Amortization of purchased intangibles and acquired capitalized software

15,447

211

211

211

1,011

Acquisition related retention bonus

—

—

—

2,639

6,705

Debt issue cost related to debt refinancing(4)

10,460

5,579

—

—

10,022

Initial public offering fees and expenses(5)

—

—

—

8,961

—

Transaction advisory fees and expenses(6)

25,270

—

—

3,000

—

Reserve for legal matters(7)

657

—

5,440

—

—

Charges related to share based compensation at IPO(8)

772

1,755

44,194

—

—

Financing interest expense on long-term borrowings

64,107

28,327

29,254

30,894

24,646

Total operating expenses

914,818

522,681

580,284

529,495

476,905

Income before income taxes

113,164

179,591

215,929

193,558

187,600

Provision for income taxes(9)

94,266

21,251

18,439

3,501

5,397

Net income

$
18,898

$
158,340

197,490

$
190,057

$
182,203

Noncontrolling interest

(15,959)

(125,360)

(176,603)

Net income available for common stockholders

$
2,939

$
32,980

20,887

Earnings per share

Basic

$
0.03

$
0.83

$
0.60

Diluted

$
0.03

$
0.83

$
0.59

Weighted average common shares outstanding

Basic

62,579,147

38,539,091

34,964,312

Diluted

62,579,147

38,539,091

35,339,585

Net income

$
18,898

$
158,340

$
197,490

$
190,057

$
182,203

Other comprehensive income

Foreign exchange translation adjustment

9,117

(1,165)

(4,255)

(5,032)

1,382

Comprehensive income

28,015

157,175

193,235

$
185,025

$
183,585

Less: Comprehensive income attributable to noncontrolling interest

(21,833)

(124,546)

(172,249)

Comprehensive income attributable to common stockholders

$
6,182

$
32,629

20,986

~~Table of Contents~~

As of December 31,

2017

2016

2015

2014

2013

Consolidated Statements of Financial Condition Data:

Cash and cash equivalents

$
532,887

$
181,415

$
163,235

$
75,864

$
66,010

Total assets

7,320,006

3,692,390

3,391,930

3,319,458

3,963,570

Senior secured credit facility

1,388,548

564,957

493,589

495,724

500,827

Total liabilities

6,168,428

3,157,978

2,834,060

2,812,760

3,510,282

Class A-1 redeemable interest(10)

—

—

—

294,433

250,000

Total Virtu Financial Inc. stockholders' equity

830,569

145,673

130,708

212,265

203,288

Noncontrolling interest

321,009

388,739

427,162

—

—

Total equity

1,151,578

534,412

557,870

506,698

453,288

~~(1)~~

In connection with the Acquisition of KCG, we recognized significant revenue increase in commissions, net and technology services for the year ended December 31, 2017. Commissions and fees are primarily affected by changes in our equity, fixed income and futures transaction volumes with institutional clients, client relationships; changes in commission rates; client experience on the various platforms; level of volume based fees from providing liquidity to other trading venues; and the level of soft dollar and commission recapture activity.

~~(2)~~

~~As a result of the 2017~~ Tax Cuts and Jobs Act (“2017 Tax Act”), we recognized a gain of $86.6 million on the reduction of tax receivable agreement obligation during the year ended December 31, 2017. See Note 5, “Tax Receivable Agreements” ~~in Part II Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.~~

~~(3)~~

~~Payments for order flow are a result of the Acquisition of KGC, and primarily represent payments to broker dealer clients, in the normal course of business, for directing their order flow to us.~~

~~(4)~~

Virtu Financial entered into a $320.0 million senior secured credit facility in 2011, and it went through multiple rounds of refinancing during the years ended December 31, 2013 and 2016. In 2017, in connection with the Acquisition of KCG, the existing senior secured credit facility was terminated, and Virtu Financial entered into the Fourth Amended and Restated Credit Agreement of $1,150.0 million, and issued senior secured second lien notes of $500.0 million. During the refinancing and termination of the existing credit facility, a portion of certain financing costs that were scheduled to be amortized over the term of the loan, including original issue discount and underwriting and legal fees, were accelerated and recognized at the closing of the transactions.

~~(5)~~

Initial public offering fees and expenses reflect costs directly attributable to our initial public offering process, which was postponed in April 2014. We accounted for such costs in accordance with ASC 340‑10, ~~Other Assets and Deferred Costs.~~ ASC 340 states that costs directly attributable to a successfully completed offering of equity securities may be deferred and charged against the gross proceeds of the offering as a reduction of additional paid‑in capital, but for an offering postponed for a period greater than 90 days, the offering costs must be charged as an expense in the period the offering process was postponed.

~~(6)~~

Transaction advisory fees reflect professional fees incurred by us in connection with the Temasek Transaction and Acquisition of KCG, which were consummated on December 31, 2014 and July 20, 2017, respectively.

~~(7)~~

In December 2015, the enforcement committee of the AMF fined the Company’s European subsidiary in the amount of €5.0 million (approximately $5.4 million) based on its allegations that the subsidiary of Madison Tyler Holdings, LLC engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules. In accordance with the foregoing, we accrued an estimated loss in relation to the fine imposed by the AMF. In May 2017, the fine was reduced to €3.0 million (approximately $3.5 million), subject to an incremental charge of €0.3 million (approximately $0.4 million).

~~Table of Contents~~

~~(8)~~

Represents non‑cash compensation expenses in respect of the outstanding time vested Class B interests of Virtu Financial and East MIP Class B interests recognized at the consummation of the IPO and through the year ended December 31, 2015, net of $9.2 million and $8.5 million in capitalization and amortization, respectively, of the costs attributable to employees incurred in development of software for internal use. We continued to capitalize and amortize the costs related to development on the software for internal use for the years ended December 31, 2017 and 2016.

~~(9)~~

As a result of the 2017 Tax Act, the U.S. statutory corporate tax rate has been lowered from 35% to 21% and certain deductions have been eliminated. We have reasonably estimated the effect of the 2017 Tax Act, and recorded a provisional deferred tax expense for the impact of the 2017 Tax Act of approximately $90.6 million. See Note 13, “Income Taxes” in Part II Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

~~(10)~~

The Class A‑1 interests of Virtu Financial were convertible by the holders at any time into an equivalent number of Class A‑2 capital interests of Virtu Financial and, in a sale or other specified capital transaction, holders were entitled to receive distributions up to specified preference amounts before holders of Class A‑2 capital interests of Virtu Financial were entitled to receive distributions. In connection with the Reorganization Transactions, all of the existing equity interests in Virtu Financial were reclassified into Virtu Financial Units. See Note 15, “Capital Structure” within our consolidated financial statements.

~~Table of Contents~~

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis covers the years ended December 31, ~~2017, 2016,~~2020,2019 and ~~2015~~2018 and should be read in conjunction with the audited consolidated financial statements ~~for the years ended December 31, 2017, 2016~~of Virtu Financial, Inc. (the “Company”). This management's discussion and ~~2015. This discussion~~analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Unless otherwise stated, all amounts are presented in thousands of dollars.

Forward-Looking Statements

This ~~annual report~~Annual Report on Form 10-K contains forward-looking statements. You should not place undue reliance on forward-looking statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project” or, in each case, their negative, or other variations or comparable terminology and expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this ~~annual report~~Annual Report on Form 10-K, you should understand that ~~these~~forward-looking statements are not guarantees of performance or results and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this ~~annual report~~Annual Report on Form 10-K. By their nature, forward-looking statements involve known and unknown risks and uncertainties, including those described under the heading “Risk Factors” in this Annual Report on Form 10-K, because they relate to events and depend on circumstances that may or may not occur in the future. Although we believe that the forward-looking statements contained in this ~~annual report~~Annual Report on Form 10-K are based on reasonable assumptions, you should be aware that many factors, including those described under the heading “Risk Factors” in this ~~annual report~~Annual Report on Form 10-K, could affect our actual financial results or results of operations and cash flows, and could cause actual results to differ materially from those in such forward-looking statements, including but not limited to:

~~reduced levels of overall trading activity;~~

~~dependence upon trading counterparties and clearing houses performing their obligations to us;~~

•the continuing impacts of COVID-19 and the governmental and other responses thereto, including but not limited to the risk of employees and executives contracting COVID-19 and the deployment of our business continuity plan pursuant to which a significant number of our employees currently work remotely and our return to office plan, each of which may increase operational risk, as well as increases in market, counterparty and other forms of operational risk;

~~failures of our customized trading platform;~~

•volatility in levels of overall trading activity;

~~risks inherent to the electronic market making business and trading generally;~~

•dependence upon trading counterparties and clearing houses performing their obligations to us;

~~increased competition in market making activities and execution services;~~

•failures of our customized trading platform;

~~dependence on continued access to sources of liquidity;~~

•risks inherent to the electronic market making business and trading generally;

~~risks associated with self‑clearing and other operational elements of our business;~~

•increased competition in market making activities and execution services;

~~compliance with laws and regulations, including those specific to our industry;~~

•dependence on continued access to sources of liquidity;

~~obligation to comply with applicable regulatory capital requirements;~~

•risks associated with self-clearing and other operational elements of our business, including but limited to risks related to funding and liquidity;

~~litigation or other legal and regulatory‑based liabilities;~~

•obligations to comply with applicable regulatory capital requirements;

~~proposed legislation that would impose taxes on certain financial transactions in the European Union, the U.S. and other jurisdictions;~~

•litigation or other legal and regulatory-based liabilities;

~~obligation to comply with laws and regulations applicable to our international operations;~~

•changes in laws, rules or regulations, including proposed legislation that would impose taxes on certain financial transactions in the European Union, the U.S. (and certain states therein) and other jurisdictions and other potential changes which could increase our corporate or other tax obligations in one or more jurisdictions;

~~enhanced media and regulatory scrutiny and its impact upon public perception of us or of companies in our industry;~~

•obligations to comply with laws and regulations applicable to our operations in the U.S. and abroad;

~~need to maintain and continue developing proprietary technologies;~~

•enhanced media and regulatory scrutiny and its impact upon public perception of us or of companies in our industry;

•need to maintain and continue developing proprietary technologies;

•the effect of the Acquisition of KCG and ITG Acquisition (as defined below) on ongoing business operations generally, including our ability to achieve cost-saving synergies related to these historical acquisitions, and the assumption of potential liabilities and risks relating to these historical acquisitions, and the significant costs and significant indebtedness that we have incurred in connection therewith;

•capacity constraints, system failures, and delays;

~~Table~~•dependence on third-party infrastructure or systems;

•use of ~~Contents~~

open source software;

~~failure to maintain system security or otherwise maintain confidential and proprietary information;~~

•failure to protect or enforce our intellectual property rights in our proprietary technology;

~~the effect of the Acquisition of KCG on existing business relationships, operating results, and ongoing business operations generally;~~

•failure to protect confidential and proprietary information;

~~the significant costs and significant indebtedness that we incurred in connection with the Acquisition of KCG, and the integration of KCG into our business;~~

•failure to protect our systems from internal or external cyber threats that could result in damage to our computer systems, business interruption, loss of data or other consequences;

~~the risk that we may encounter significant difficulties or delays in integrating the two businesses and the anticipated benefits, costs savings and synergies or capital release may not be achieved;~~

•risks associated with international operations and expansion, including failed acquisitions or dispositions;

~~the assumption of potential liabilities relating to KCG’s business;~~

•the effects of and changes in economic conditions (such as volatility in the financial markets, inflation, monetary conditions and foreign currency and exchange rate fluctuations, foreign currency controls and/or government mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets), political conditions (such as military actions and terrorist activities), and other global events such as fires, natural disasters, pandemics or extreme weather;

~~capacity constraints, system failures, and delays;~~

•risks associated with potential growth and associated corporate actions;

~~dependence on third party infrastructure or systems;~~

•inability to access, or delay in accessing the capital markets to sell shares or raise additional capital;

~~use of open source software;~~

•loss of key executives and failure to recruit and retain qualified personnel; and

~~failure to protect or enforce our intellectual property rights in our proprietary technology;~~

•risks associated with losing access to a significant exchange or other trading venue.

~~risks associated with international operations and expansion, including failed acquisitions or dispositions;~~

the effects of and changes in economic conditions (such as volatility in the financial markets, inflation, monetary conditions and foreign currency and exchange rate fluctuations, foreign currency controls and/or government mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets) and political conditions (such as military actions and terrorist activities);

~~risks associated with potential growth and associated corporate actions;~~

~~inability to, or delay, in accessing the capital markets to sell shares or raise additional capital;~~

~~loss of key executives and failure to recruit and retain qualified personnel; and~~

~~risks associated with losing access to a significant exchange or other trading venue.~~

Our forward-looking statements made herein are made only as of the date of this ~~report.~~Annual Report on Form 10-K. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this ~~annual report~~Annual Report on Form 10-K.

Basis of Preparation

Our ~~audited~~ consolidated financial statements for the ~~year~~years ended December 31, ~~2017~~2020 and 2019 reflect our operations and those of our consolidated subsidiaries. As discussed in Note 1 ~~“Organization~~"Organization and Basis of ~~Presentation”~~Presentation" and in Note 3 ~~“Acquisition of KCG Holdings Inc.”~~"ITG Acquisition" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, we ~~are accounting~~have accounted for the ITG Acquisition ~~of KCG~~ under the acquisition method of accounting. Under the acquisition method of accounting, the assets and liabilities of ~~KCG,~~ITG, as of ~~the~~March 1, 2019 (the "ITG Closing ~~Date,~~Date"), were recorded at their respective fair values and added to the carrying value of our existing assets and liabilities. Our reported financial condition, results of operations and cash flows for the periods following the ~~Acquisition~~ITG Closing Date reflect ~~KCG's~~ITG's and our balances, and reflect the impact of purchase accounting adjustments, including revised amortization and depreciation expense for acquired assets. ~~As we are the accounting acquirer, the~~The financial results for the year ended December 31, ~~2017~~2019 comprise our results for the entire applicable period and the results of ~~KCG~~ITG from the ITG Closing Date through December 31, ~~2017.~~2019. All periods prior to the ITG Closing Date comprise ~~solely~~ our ~~results.~~

results without the results of ITG.

The following ~~tables reconcile~~table reconciles Net Income to arrive at Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted ~~EPS.~~

2017

2016

2015

(in thousands, except share and per share data)

Reconciliation of Net Income to Normalized Adjusted Net Income

Net income

$
18,898

$
158,340

$
197,490

Provision for income taxes

94,266

21,251

18,439

Income before income taxes

113,164

179,591

215,929

Amortization of purchased intangibles and acquired capitalized software

15,447

211

211

Financing interest expense related to KCG transaction

4,626

—

—

Debt issue cost related to debt refinancing

10,460

5,579

—

Severance

14,911

1,252

1,064

Reserve for legal matters

657

—

5,440

Transaction advisory fees and expenses

25,270

994

—

Termination of office leases

3,671

(319)

2,729

Equipment write-off

2,849

428

1,719

Acquisition related retention bonus

23,050

—

—

Trading related settlement income

(628)

(2,975)

—

Other, net

(95,045)

(36)

—

Share based compensation

21,825

18,222

15,202

Charges related to share based compensation at IPO, 2015 Management Incentive Plan

5,225

5,606

4,710

Charges related to share based compensation awards at IPO

740

1,755

44,194

Normalized Adjusted Net Income before income taxes

146,222

210,308

291,198

Normalized provision for income taxes (1)

54,102

74,659

103,375

Normalized Adjusted Net Income

$
92,120

$
135,649

$
187,823

Weighted Average Adjusted shares outstanding (2)

161,464,923

139,685,124

138,772,354

Normalized Adjusted EPS

$
0.57

$
0.97

$
1.35

EPS for the years ended December 31, 2020, 2019 and 2018:


	Years Ended December 31,
(in thousands, except share and per share data)		2020		2019		2018
Reconciliation of Net Income to Normalized Adjusted Net Income
Net income (loss)		$	1,120,913	$	(103,705)	$	620,192
Provision for (benefit from) income taxes		261,924		(12,277)		76,171
Income (loss) before income taxes		1,382,837		(115,982)		696,363

Amortization of purchased intangibles and acquired capitalized software		74,254		70,595		26,123

Debt issue cost related to debt refinancing, prepayment, and commitment fees		28,879		41,132		11,727

Severance		10,286		102,768		10,974
Transaction advisory fees and expenses		2,941		26,117		11,487
Termination of office leases		9,608		66,452		23,357


Gain on sale of business		(58,652)		—		(335,210)



Other		(16,418)		2,651		7,342
Share based compensation		59,838		50,627		29,065
Charges related to share based compensation at IPO, 2015 Management Incentive Plan		—		—		5,781
Charges related to share based compensation awards at IPO		—		—		24
Normalized Adjusted Net Income before income taxes		1,493,573		244,360		487,033
Normalized provision for income taxes (1)		358,458		58,646		112,018
Normalized Adjusted Net Income		$	1,135,115	$	185,714	$	375,015

Weighted Average Adjusted shares outstanding (2)		196,929,673		193,153,745		190,886,342

Normalized Adjusted EPS		$	5.76	$	0.96	$	1.96

	~~(1)~~

(1)Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 24% for 2020, 24% for 2019 and 23% for 2018.

(2)Assumes that (1) holders of all vested and unvested non-vesting Virtu Financial Units (together with corresponding shares of the Company's Class C common stock, par value $0.00001 per share (the “Class C Common Stock”)) have exercised their right to exchange such Virtu Financial Units for shares of Class A Common Stock on a one-for-one basis, (2) holders of all Virtu Financial Units (together with corresponding shares of the Company's Class D common stock, par value $0.00001 per share (the “Class D Common Stock”)) have exercised their right to exchange such Virtu Financial Units for shares of the Company's Class B common stock, par value $0.00001 per share (the “Class B Common Stock”) on a one-for-one basis, and subsequently exercised their right to convert the shares of Class B Common Stock into shares of Class A Common Stock on a one-for-one basis. Includes additional shares from dilutive impact of options, restricted stock units and restricted stock awards outstanding under the Amended and Restated 2015 Management Incentive Plan and the Amended and Restated ITG 2007 Equity Plan during the years ended December 31, 2020, 2019 and 2018 as well as warrants issued in connection with the Founder Member Loan during the year ended December 31, 2020.

The following tables reconcile Trading income, net to Adjusted Net Trading Income by segment for the years ended December 31, 2020, 2019 and 2018:

~~Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 35.5% to 37%.~~

~~(2)~~

Assumes that (1) holders of all vested and unvested Virtu Financial Units (together with corresponding shares of Class C common stock), have exercised their right to exchange such Virtu Financial Units for shares of Class A common stock on a one-for-one basis, (2) holders of all Virtu Financial Units (together with corresponding shares of Class D common stock), have exercised their right to exchange such Virtu Financial Units for shares of Class B common stock on a one-for-one basis, and subsequently exercised their right to convert the shares of Class B common stock into shares of Class A common stock on a one-for-one basis. Includes additional shares from dilutive impact of options and restricted stock units outstanding under the 2015 Management Incentive Plan during the years ended December 31, 2017, 2016 and 2015.


	Year Ended December 31, 2020
(in thousands)	Market Making		Execution Services		Corporate		Total
Trading income, net	$	2,455,182	$	38,066	$	—	$	2,493,248
Commissions, net and technology services	52,453		548,057		—		600,510
Interest and dividends income	61,485		634		—		62,119
Brokerage, exchange, clearance fees and payments for order flow, net	(662,994)		(95,849)		—		(758,843)
Interest and dividends expense	(123,715)		(1,934)		—		(125,649)
Adjusted Net Trading Income	$	1,782,411	$	488,974	$	—	$	2,271,385


	Year Ended December 31, 2019
(in thousands)	Market Making		Execution Services		Corporate		Total
Trading income, net	$	908,328	$	3,988	$	—	$	912,316
Commissions, net and technology services	23,526		475,018		—		498,544
Interest and dividends income	96,197		12,581		—		108,778
Brokerage, exchange, clearance fees and payments for order flow, net	(277,668)		(109,220)		—		(386,888)
Interest and dividends expense	(145,782)		(12,257)		—		(158,039)
Adjusted Net Trading Income	$	604,601	$	370,110	$	—	$	974,711


	Year Ended December 31, 2018
	Market Making		Execution Services		Corporate		Total
Trading income, net	$	1,265,866	$	816	$	—	$	1,266,682
Commissions, net and technology services	28,813		155,526		—		184,339
Interest and dividends income	86,741		705		62		87,508
Brokerage, exchange, clearance fees and payments for order flow, net	(317,365)		(59,059)		—		(376,424)
Interest and dividends expense	(140,120)		(1,694)		—		(141,814)
Adjusted Net Trading Income	$	923,935	$	96,294	$	62	$	1,020,291

The following tables reconcile our Market Making segment Trading income, net to Adjusted Net Trading Income by category for the years ended December 31, 2020, 2019 and 2018:


	Year Ended December 31, 2020
(in thousands)	Global Equities		Global FICC, Options and Other		Unallocated		Total Market Making
Trading income, net	$	2,182,234	$	272,948	$	—	$	2,455,182
Commissions, net and technology services	52,453		—		—		52,453
Brokerage, exchange, clearance fees and payments for order flow, net	(631,354)		(31,640)		—		(662,994)
Interest and dividends, net	(54,557)		(7,673)		—		(62,230)
Adjusted Net Trading Income	$	1,548,776	$	233,635	$	—	$	1,782,411


	Year Ended December 31, 2019
(in thousands)	Global Equities		Global FICC, Options and Other		Unallocated		Total Market Making
Trading income, net	$	730,215	$	178,639	$	(526)	$	908,328
Commissions, net and technology services	23,554		(28)		—		23,526
Brokerage, exchange, clearance fees and payments for order flow, net	(238,590)		(39,648)		570		(277,668)
Interest and dividends, net	(39,335)		(10,090)		(160)		(49,585)
Adjusted Net Trading Income	$	475,844	$	128,873	$	(116)	$	604,601


	Year Ended December 31, 2018
	Global Equities		Global FICC, Options and Other		Unallocated		Total Market Making
Trading income, net	$	1,013,728	$	250,521	$	1,617	$	1,265,866
Commissions, net and technology services	28,583		230		—		28,813
Brokerage, exchange, clearance fees and payments for order flow, net	(257,061)		(56,633)		(3,671)		(317,365)
Interest and dividends, net	(40,548)		(11,326)		(1,505)		(53,379)
Adjusted Net Trading Income	$	744,702	$	182,792	$	(3,559)	$	923,935

The following table shows our ~~Trading Income, Net, average daily Trading Income, Net,~~ Adjusted Net Trading Income, average daily Adjusted Net Trading Income and percentage of Adjusted Net Trading Income by asset class for the years ended December 31, ~~2017, 2016,~~2020, 2019 and ~~2015.~~

(in thousands, except percentages)

2017

2016

2015
Adjusted Net Trading Income by Category:

Total

Average Daily

%

Total

Average Daily

%

Total

Average Daily

%
Market Making:

Americas Equities

$
275,714

$
1,098

49.6
%

$
124,246

$
493

29.2
%

$
135,662

$
538

26.5
ROW Equities

92,232

367

16.6
%

94,436

375

22.2
%

103,478

410

20.2
Global FICC, Options and Other

127,749

509

23.0
%

195,036

775

46.0
%

255,129

1,013

49.9
Unallocated (1)

(6,243)

(25)

(1.2)
%

395

2

0.2
%

6,430

26

0.9
Total market making

$
489,452

$
1,949

88

$
414,113

$
1,645

97.6

$
500,699

$
1,987

97.5

Execution Services

67,345

268

12.1
%

10,352

41

2.4
%

10,622

42.15

2.5

Corporate

(506)

(2)

(0.1)
%

-

-

-

-

-

-

Adjusted Net Trading Income

$
556,291

$
2,215

100.0
%

$
424,465

$
1,686

100.0
%

$
511,321

$
2,029

100.0
2018:


(in thousands, except %)	2020						2019						2018
Adjusted Net Trading Income by Category:	Total		Average Daily		%		Total		Average Daily		%		Total		Average Daily		%
Market Making:
Global Equities	$	1,548,776	$	6,122	68.2	%	$	475,844	$	1,881	48.8	%	$	744,702	$	2,967	73.0	%
Global FICC, Options and Other	233,635		923		10.3	%	128,873		509		13.2	%	182,792		$	728	17.9	%
Unallocated(1)	—		—		—	%	(116)		—		—	%	(3,559)		$	(14)	(0.3)	%
Total Market Making	$	1,782,411	$	7,045	78.5	%	$	604,601	$	2,390	62.0	%	$	923,935	$	3,681	90.6	%

Execution Services	488,974		1,933		21.5	%	370,110		1,463		38.0	%	96,294		384		9.4	%

Corporate	—		—		—	%	—		—		—	%	62		—		—	%

Adjusted Net Trading Income	$	2,271,385	$	8,978	100.0	%	$	974,711	$	3,853	100.0	%	$	1,020,291	$	4,065	100.0	%

(1)Under our methodology for recording “trading income, net” in our ~~consolidated statements~~Consolidated Statements of ~~comprehensive income~~Comprehensive Income from Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, we recognize revenues based on the exit price of assets and

~~Table of Contents~~

liabilities in accordance with applicable U.S. GAAP rules, and when we calculate Adjusted Net Trading Income for corresponding reporting periods, we start with trading income, net, so calculated. By contrast, when we calculate Adjusted Net Trading Income by category, we do so on a daily basis, and as a result prices used in recognizing revenues may differ. Because we provide liquidity on a global basis, across asset classes and time zones, the timing of any particular Adjusted Net Trading Income calculation may defer or accelerate the amount in a particular category from one day to another, and, at the end of a reporting period, from one reporting period to another. The purpose of the Unallocated category is to ensure that Adjusted Net Trading Income by category sums to total Adjusted Net Trading Income, which can be reconciled to Trading Income, ~~Net,~~net, calculated in accordance with U.S. GAAP. We do not allocate any resulting differences based on the timing of revenue recognition.

Year Ended December 31, ~~2017~~2020 Compared to Year Ended December 31, ~~2016~~

2019

Total Revenues

Our total revenues increased ~~$325.7~~$1,721.8 million, or ~~46.4%~~113.5%, to ~~$1,028.0~~$3,239.3 million for the year ended December 31, ~~2017,~~2020, compared to ~~$702.3~~$1,517.5 million for the year ended December 31, ~~2016.~~2019. This increase was primarily attributable to an increase in ~~trading~~Trading income, net, of ~~$100.5~~$1,580.9 million, ~~$101.1 million increase~~which was driven by higher market volatility and trading volumes during 2020 compared to 2019, from the impacts of COVID-19 and the governmental and other responses thereto. In addition, 2020 included the results of ITG for the full first quarter of 2020 compared to the results of ITG from the ITG Closing Date through December 31, 2019 in ~~commissions,~~the prior year.

Though our total revenues increased during the period, Commissions, net and technology services ~~$24.0 million~~within the Execution Services segment did not have the same relative increase in ~~interest and dividend income, and $95.0 million increase in other, net. These increases were primarily attributable~~part because we selectively limited our client trading business during certain periods throughout 2020 due to the ~~Acquisition of KCG, as well as the gain on the reduction of our tax receivable agreement obligation as a result of the 2017 Tax Act~~extraordinary volume and volatility during the ~~year ended December 31, 2017.~~

period and the operational challenges caused directly or indirectly by COVID-19, including working remotely and increases in short term liquidity requirements.

The following table shows the total revenues by ~~operating~~ segment for the years ended December 31, ~~2017~~2020 and ~~2016.~~

2019.

(in thousands, except for percentage)

2017

2016

% Change

Market Making

Trading income, net

$
769,556

$
665,465

15.6%

Interest and dividends income

51,822

26,419

96.2%

Commissions, net and technology services

13,689

-

NM

Other, net

1,640

-

NM

Total revenues from Market Making

$
836,707

$
691,884

20.9%

Execution Services

Trading income, net

$
(5,394)

$
-

NM

Interest and dividends income

619

-

NM

Commissions, net and technology services

102,814

10,352

893.2%

Other, net

1,096

-

NM

Total revenues from Execution Services

$
99,135

$
10,352

857.6%

Corporate

Trading income, net

$
1,865

$
-

NM

Interest and dividends income

(2,034)

-

NM

Commissions, net and technology services

-

-

NM

Other, net

92,309

36

NM

Total revenues from Corporate

$
92,140

$
36

NM

Consolidated

Trading income, net

$
766,027

$
665,465

15.1%

Interest and dividends income

50,407

26,419

90.8%

Commissions, net and technology services

116,503

10,352

1025.4%

Other, net

95,045

36

NM

Total revenues

$
1,027,982

$
702,272

46.4%


	Years Ended December 31,
(in thousands, except for percentage)	2020		2019		% Change
Market Making
Trading income, net	$	2,455,182	$	908,328	170.3%
Interest and dividends income	61,485		96,197		(36.1)%
Commissions, net and technology services	52,453		23,526		123.0%
Other, net	24,222		43		NM
Total revenues from Market Making	2,593,342		1,028,094		152.2%

Execution Services
Trading income, net	38,066		3,988		854.5
Interest and dividends income	634		12,581		(95.0)%
Commissions, net and technology services	548,057		475,018		15.4%
Other, net	63,386		149		NM
Total revenues from Execution Services	650,143		491,736		32.2%

Corporate



Other, net	(4,154)		(2,338)		77.7%
Total revenues from Corporate	(4,154)		(2,338)		77.7%

Consolidated
Trading income, net	2,493,248		912,316		173.3%
Interest and dividends income	62,119		108,778		(42.9)%
Commissions, net and technology services	600,510		498,544		20.5%
Other, net	83,454		(2,146)		NM
Total revenues	$	3,239,331	$	1,517,492	113.5%

Trading ~~Income, Net.~~ income, net. Trading income, net iswas primarily earned by our Market Making segment. Trading income, net, increased ~~$100.5~~$1,580.9 million, or ~~15.1%~~173.3%, to ~~$766.0~~$2,493.2 million for the year ended December 31, ~~2017,~~2020, compared to ~~$665.5~~$912.3 million for the year ended December 31, ~~2016.~~2019. The increase was primarily ~~attributable~~driven by the higher market volatility and trading volumes across global markets and major asset categories during the year ended December 31, 2020 compared to the ~~Acquisition~~same period in the prior year. Average daily realized volatility of ~~KCG.~~the S&P 500 Index increased 145.4% compared to the prior period, while average daily U.S. equity consolidated volumes increased 55.4%. Rather than analyzing trading income, net, in isolation, we ~~generally~~ evaluate it in the broader context of our Adjusted Net Trading Income, together with ~~interest~~Interest and dividends income, ~~interest~~Interest and dividends expense, Commissions, net and ~~brokerage,~~technology services and Brokerage, exchange, ~~and~~ clearance fees and payments for order flow, net, each of which are described below.

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Interest and ~~Dividends Income.~~dividends income. Interest and dividends income iswas primarily earned by our Market Making segment. Interest and dividends income ~~increased $24.0~~decreased $46.7 million, or ~~90.9%~~42.9%, to ~~$50.4~~$62.1 million for the year ended December 31, ~~2017,~~2020, compared to ~~$26.4~~$108.8 million for the year ended December 31, ~~2016.~~2019. This ~~increase~~decrease was primarily attributable to lower interest income earned on cash collateral posted as part of securities borrowed transactions driven by lower interest rates and lower balances compared to the ~~Acquisition of KCG.~~prior period. As indicated above, rather than analyzing interest and dividends income in isolation, we ~~generally~~ evaluate it in the broader context of our Adjusted Net Trading Income.

Commissions, ~~Net~~net and ~~Technology Services.~~technology services. Commissions, net and technology services revenues ~~are~~were primarily earned by our Execution Services segment. ~~Technology~~Commissions, net and technology services ~~revenue~~revenues increased ~~$106.1~~$102.0 million, or ~~1,020.2%~~20.5%, to ~~$116.5~~$600.5 million for the year ended December 31, ~~2017,~~2020, compared to ~~$10.4~~$498.5 million for the year ended December 31, ~~2016.~~2019. The increase was primarily ~~due~~attributable to the results of ITG for the full year 2020 compared to the results of ITG from the ITG Closing Date through December 31, 2019. The ITG Acquisition ~~of KCG, as well as agency fee~~brought recurring connectivity revenues ~~arising~~generated from ~~new customers we on-boarded.~~

workflow technology and subscription revenues from analytics services to Commissions, net and technology services.

Other, ~~Net.~~ ~~Other, net revenues are primarily earned by our Corporate segment.~~net. Other, net increased ~~$95.0~~$85.6 million to $83.5 million for the year ended December 31, ~~2017,~~2020, compared to ~~$36 thousand~~$(2.1) million for the year ended December 31, ~~2016.~~2019. The increase was primarily due to a $58.7 million gain recognized on the sale of MATCHNow (see Note 5 "Sale of MATCHNow" of Part II Item 8 “Financial Statements and Supplementary Data” of

this Annual Report on Form 10-K). In addition, we recognized a $17.4 million gain on ~~reduction of our tax receivable agreement obligation as a result of~~ the ~~2017 Tax Act.~~

~~As discussed~~minority investment in JNX (see Note ~~6. “Tax Receivable Agreements”~~12 "Financial Assets and Liabilities" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K ~~and Provision~~ for ~~Income Taxes above we recognized a $86.6 million gain~~details on the ~~reduction of our tax receivable agreement obligation which is recorded in Other, net for the year ended December 31, 2017.~~

~~The increase in other, net was also attributable to the $3.3 million gain recognized from fair value adjustment in our minority interest in SBI Japannext for the year ended December 31, 2017.~~

JNX Investment).

Adjusted Net Trading Income

Adjusted Net Trading Income increased ~~$131.8~~$1,296.7 million, or ~~31.0%~~133.0%, to ~~$556.3~~$2,271.4 million for the year ended December 31, ~~2017,~~2020, compared to ~~$424.5~~$974.7 million for the year ended December 31, ~~2016.~~2019. This increase was primarily attributable to ~~the Acquisition of KCG, which resulted in a significant increase in Americas Equities of $151.5 million, or 122%, from the Market Making segment,~~higher Trading income, net, driven by higher market volatility and ~~a significant increase of $56.9 million, or 569%, from Execution Services for~~trading volumes across major asset categories during the year ended December 31, ~~2017. The overall increase was partially offset by a decrease~~2020 compared to the prior period. Average daily realized volatility of ~~$2.2~~the S&P 500 Index and average daily CVIX realized volatility increased 145.4% and 86.5%, respectively, compared to the prior period, while average daily U.S. equity consolidated volumes increased 55.4%. There were increases in Trading income, net in Global Equities of $1,072.9 million, ~~or 2%, to $92.2 million in ROW equities~~ and ~~a decrease of $67.3 million, or 35%, to $127.7 million~~ in Global FICC, Options and Other ~~categories in~~of $104.8 million, from the Market Making segment. ~~The number~~There was also an increase of ~~trading days~~$118.9 million, or 32.1%, in the Execution Services segment primarily driven by the increase in Commissions, net and technology services that was primarily attributable to the results of ITG for the full year ~~ended~~of 2020 compared to the results of ITG from the ITG Closing Date through December 31, ~~2017 and 2016 were both 252.~~

~~Operating Expenses~~

~~Our operating expenses~~2019. Adjusted Net Trading Income per day increased ~~$392.1~~$5.1 million, ~~or75.0%~~or 133.0%, to ~~$914.8~~$9.0 million for the year ended December 31, ~~2017,~~2020, compared to ~~$522.7~~$3.9 million for the year ended December 31, ~~2016.~~2019. The number of trading days was 253 for both the year ended December 31, 2020 and 2019, respectively. Adjusted Net Trading Income is a non-GAAP measure. For a full description of Adjusted Net Trading Income and a reconciliation of Adjusted Net Trading Income to trading income, net, see “Non-GAAP Financial Measures and Other Items” in this “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations”.

Operating Expenses

Our operating expenses increased $223.0 million, or 13.7%, to $1,856.5 million for the year ended December 31, 2020, compared to $1,633.5 million for the year ended December 31, 2019. The increase in operating expenses was primarily ~~attributable~~due to ~~the Acquisition~~higher trading related expenses as a result of ~~KCG, which caused~~the increases in all expense areas except for charges related to share based compensation at IPO. There was an increase in brokerage, exchange, and clearance fees, net of $30.7 million, communication of data processing of $60.5 million, employee compensation and payroll taxes of $92.2 million, interest and dividends expense of $35.4 million, operations and administrative expense of $42.1 million, depreciation and amortization expense of $17.6 million, amortization of purchased intangible and acquired capital software of $15.2 million, debt issue cost related to debt refinancing of $4.9 million, transaction advisory fees and expenses of $25.3 million, reserve for legal matters of $0.7 million, and in financing interest expense on our long-term borrowings of $35.8 million. Additionally we incurred $27.7 million in payments for order flow, which was a new expense forvolumes traded during the year ended December 31, ~~2017.~~

~~Brokerage, Exchange and Clearance Fees, Net.~~ 2020 compared to the prior period. Additionally, the results of ITG for the full year of 2020 compared to the results of ITG from the ITG Closing Date through December 31, 2019 caused an overall increase in expenses in multiple expense categories as described in more detail below.

Brokerage, exchange, ~~and~~ clearance fees and payments for order flow, net. Brokerage, exchange, clearance fees and payments for order flow, net, increased ~~$35.7~~$372.0 million, ~~or16.1%~~or 96.1%, to ~~$256.9~~$758.8 million for the year ended December 31, ~~2017,~~2020, compared to ~~$221.2~~$386.9 million for the year ended December 31, ~~2016.~~2019. This increase was primarily attributable to ~~the~~an increase in payments for order flow and increases in ~~market volume~~volumes we traded in ~~Americas~~Global Equities instruments and other asset categories. The increase in ~~which we make markets as a result~~payments for order flow was primarily attributable to the increase in volumes from our broker-dealer clients eligible for payments for order flow, driven by high participation of retail investors in the ~~Acquisition of KCG. As indicated above, rather than~~

~~Table of Contents~~

~~analyzing brokerage, exchange and clearance fees, net, in isolation, we generally~~market during the year compared to the prior year. We evaluate itthis category, representing direct costs associated with transacting our business, in the broader context of our Adjusted Net Trading Income.

Communication and ~~Data Processing.~~ data processing. Communication and data processing expense increased ~~$60.5~~$4.4 million, or ~~85.2%~~2.1%, to ~~$131.5~~$213.8 million for the year ended December 31, ~~2017,~~2020, compared to ~~$71.0~~$209.4 million for the year ended December 31, ~~2016.~~2019. This increase was primarily ~~due~~attributable to the ~~Acquisition~~results of ~~KCG, which brought on~~ITG for the full year of 2020 compared to the results of ITG from the ITG Closing Date through December 31, 2019, as well as additional ~~connections, co-location connectivity, market data~~telecommunication and ~~other subscriptions~~networking services from activating our back-up facilities and enabling the majority of our employees to ~~us.~~work from home. The increase was partially offset by ~~the~~ reductions in connectivity connections as a result of an on-going effort to consolidate various communication and data processing subscriptions.

Employee ~~Compensation~~compensation and ~~Payroll Taxes.~~ payroll taxes. Employee compensation and payroll taxes increased ~~$92.2~~$9.8 million, or ~~108.1%~~2.6%, to ~~$177.5~~$393.5 million for the year ended December 31, ~~2017,~~2020, compared to ~~$85.3~~$383.7 million for the year ended December 31, ~~2016.~~2019. The increase in compensation levels was primarily attributable to ~~the $23.0 million in Acquisition related retention bonus and the increase in headcount as a result of the Acquisition of KCG. Incentive~~increased incentive compensation, which is recorded at management’s discretion and is generally accrued in connection with the overall level of profitability.

~~Payments~~ Furthermore, we incurred additional compensation expense as a result of one-time cash bonuses awarded to certain employees to mitigate the effects of the COVID-19 pandemic. We have capitalized and therefore excluded employee compensation and benefits related to software development of $37.0 million and $32.5 million for ~~order flow.~~ ~~Payments for order flow were $27.7~~the years ended December 31, 2020 and 2019, respectively.

Interest and dividends expense. Interest and dividends expense decreased $32.4 million, or 20.5%, to $125.6 million for the year ended December 31, ~~2017, and were attributable~~2020, compared to the Acquisition of KCG. Payments for order flow primarily represent payments to broker-dealer clients, in the normal course of business, for directing to us their order flow primarily in U.S. equities. Payments for order flow also fluctuate based on U.S. equity share and option volumes, our profitability and the mix of market orders, limit orders, and customer mix.

~~Interest and Dividends Expense.~~ ~~Interest and dividends expense increased $35.4 million, or 62.5%, to $92.0~~$158.0 million for the year ended December 31, ~~2017, compared to $56.6 million for the year ended December 31, 2016.~~2019. This ~~increase~~decrease was primarily attributable to ~~higher~~lower interest expense incurred on cash collateral received as part of securities lending ~~transactions resulting from the Acquisition of KCG.~~transactions. As

indicated above, rather than analyzing interest and dividends expense in isolation, we generally evaluate it in the broader context of our Adjusted Net Trading Income.

Operations and ~~Administrative.~~ administrative. Operations and administrative expense ~~increased $42.1~~decreased $9.1 million, or ~~183.0%~~8.8%, to ~~$65.1~~$94.6 million for the year ended December 31, ~~2017,~~2020, compared to ~~$23.0~~$103.6 million for the year ended December 31, ~~2016. This increase~~2019. The decrease was primarily attributable to decreases in travel and entertainment due to the ~~increases in legal and other professional fees resulting from~~on-going effects of the ~~Acquisition of KCG. The increase was partially offset by~~COVID-19 pandemic as well the ~~cancellation of various legal~~on-going efforts to consolidate office premises and professional ~~expenses as a result of an on-going effort to consolidate professional services.~~

services after the ITG Acquisition.

Depreciation and ~~Amortization.~~ amortization. Depreciation and amortization increased ~~$17.6~~$1.1 million, or ~~59.3%~~1.7%, to ~~$47.3~~$66.7 million for the year ended December 31, ~~2017,~~2020, compared to ~~$29.7~~$65.6 million for the year ended December 31, ~~2016.~~2019. This increase was primarily attributable to depreciation and amortization of additional assets resulting from the ~~Acquisition~~ITG acquisition for the full year of ~~KCG~~2020 compared to the prior period which excluded depreciation and ~~an increase~~amortization on ITG assets prior to the ITG Closing Date, partially offset by certain assets being fully depreciated in ~~capital expenditures on telecommunication, networking and other assets.~~

2020.

Amortization of ~~Purchased Intangibles~~purchased intangibles and ~~Acquired Capitalized Software.~~ acquired capitalized software. Amortization of purchased intangibles and acquired capitalized software increased ~~$15.2~~$3.7 million, or 5.2%, to ~~$15.4~~$74.3 million for the year ended December 31, ~~2017,~~2020, compared to ~~$0.2~~$70.6 million for the year ended December 31, ~~2016. The~~2019. This increase was ~~primarily~~ due to ~~additional~~the amortization of intangible assets ~~recognized as part of purchase price accounting~~acquired in connection with the ITG Acquisition for the ~~Teza acquisition and~~full year of 2020 compared to amortization from the ~~Acquisition of KCG for $2.0 million and $175.0 million, respectively, as of~~ITG Closing Date through December 31, ~~2017. We recognized an aggregated~~2019 in the prior year.

Termination of ~~$15.2~~office leases. Termination of office leases was $9.6 million ~~in amortization expenses related to the Teza acquisition and the Acquisition of KCG~~ for the year ended December 31, ~~2017.~~

~~Debt issue cost related~~2020, compared to ~~Debt refinancing.~~ $66.5 million for the year ended December 31, 2019. Expense from termination of office leases was due to the impairment of operating lease right-of-use assets and leasehold improvements and fixed assets incurred in 2019 and 2020 for certain abandoned office space as part of the efforts to integrate and consolidate office space in connection with the ITG Acquisition.

Debt issue costs related to debt refinancing, ~~increased $4.9~~prepayment and commitment fees. Expense from debt issue costs related to debt refinancing, prepayment and commitment fees decreased $12.3 million, or ~~87.5%~~29.8%, to ~~$10.5~~$28.9 million for the year ended December 31, ~~2017,~~2020, compared to ~~$5.6~~$41.1 million for the year ended December 31, ~~2016.~~2019. The ~~increase~~amount for the year ended December 31, 2019 was primarily ~~attributable~~driven by costs incurred related to the ~~recognition~~termination of ~~an approximately $5.5~~the Previous Term Loan Facility (as defined below) in the first quarter of 2019, and costs incurred related to Amendment No. 1 to the Credit Agreement (as defined below) in the fourth quarter of 2019 that provided for $525.0 million ~~in acceleration~~ of incremental term loans. The amount for the year ended December 31, 2020 mainly reflects amortization of debt issue costs ~~associated with~~related to the ~~$250 million voluntary prepayment made towards our senior secured first lien term loan, as discussed in~~Founder Member Loan Facility (see Note ~~10 “Borrowings”~~11 "Borrowings" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form ~~10-K.~~

10-K), which expired as of September 20, 2020, in addition to debt issue costs that were accelerated as a result of $288.5 million in prepayments made during the year ended December 31, 2020.

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~~Transaction Advisory Fees and Expenses.~~Transaction advisory fees and ~~expense was $25.3~~expenses. Transaction advisory fees and expenses decreased $23.2 million, or 88.7%, to $2.9 million for the year ended December 31, ~~2017. We had no such expense for the year ended December 31, 2016. This expense primarily represents the non-recurring legal and professional fees incurred in connection with the Acquisition of KCG.~~

~~Reserve for Legal Matters.~~ ~~Reserve for legal matters increased $0.7~~2020, compared to $26.1 million for the year ended December 31, ~~2017. We had no such expenses for the year ended December 31, 2016.~~2019. The ~~increase~~decrease was primarily ~~due~~attributable to ~~accruals~~the ITG Acquisition, for ~~other legal reserves~~which we incurred significant transaction advisory fees during 2019. The decrease was partially offset by one-time transaction costs incurred as a result of the ~~Acquisition~~sale of ~~KCG.~~

~~Charges related to share based compensation at IPO.~~ ~~Charges related to share based compensation at IPO~~MATCHNow.

Financing interest expense on long term borrowings. Financing interest expense on long-term borrowings decreased ~~$1.0~~$34.1 million, or ~~55.6%~~28.0%, to ~~$0.8~~$87.7 million for the year ended December 31, ~~2017,~~2020, compared to ~~$1.8~~$121.9 million for the year ended December 31, ~~2016. The~~2019. This decrease was primarily attributable to the fact that certain Class B and East MIP Class B interests became fully vested, and as well as to the increase in forfeitures for the year ended December 31, 2017, comparing to the year ended December 31, 2016.

~~Financing Interest Expense on Long-Term Borrowings.~~ Financing interest expense on long-term borrowings increased $35.8 million, or 126.5%, to $64.1 million, compared to $28.3 million for the year ended December 31, 2016. This increase was primarily attributable to the increasea decrease in outstanding principal as a result ~~from the refinancing~~ of the ~~senior secured first lien term loan~~First Lien Term Loan Facility and the ~~offering of the Notes,~~Incremental Term Loans in addition to lower interest rates as discussed in Note ~~10 “Borrowings”~~11 "Borrowings" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Provision for ~~Income Taxes~~

~~Following the consummation of the Reorganization Transactions, we~~(benefit from) income taxes

We incur corporate tax at the U.S. federal income tax rate on our taxable income, as adjusted for noncontrolling interest in Virtu Financial. Our income tax expense reflects such U.S. federal income tax as well as taxes payable by certain of our non-U.S. subsidiaries. Our provision for income taxes ~~increased $73.0 million, to $94.3~~was $261.9 million for the year ended December 31, ~~2017,~~2020, compared to ~~$21.3~~a benefit from income taxes of $12.3 million for the year ended December 31, ~~2016.~~2019. The ~~increase~~change was primarily ~~attributable~~due to ~~impact of~~ the 2017 Tax Act on our net deferred tax assets, which decreased in value as a result of the lower U.S. corporate income tax rate effective January 1, 2018. This increase was offset in part by the effect of lower income before income taxes ~~in 2017 compared to 2016,~~ and the tax impact of the 2017 Tax Act on our tax receivable agreement obligations. See Note 13 “Income Taxes” of Part II Item 8 “Financial Statements and Supplementary Data” of this Form 10-K Item for additional information.

On February 8, 2017, the Company issued an earnings release announcing its unaudited financial results for the quarter and year ended December 31, 2017, and furnished a copy of the release as Exhibit 99.1 to the Company’s current report on Form 8-K filed on the same date. The consolidated statements of comprehensive incomenoncontrolling interest for the year ended December 31, ~~2017 in this Annual Report on Form 10-K revised~~2020, compared to a loss before taxes during the amount reported as “Net income available for common stockholders” and “Basic and Diluted Earnings per share” of $17.3 million and $0.26, respectively, to $2.9 million and $0.03, respectively (See Item 8, “Financial Statements and Supplementary Data”). The reason for the revision is a change in the Company’s estimated provision for income tax due to the decrease in deferred tax assets as a result of the 2017 Tax Act that was passed on December 22, 2017.

prior year period.

Year Ended December 31, ~~2016~~2019 Compared to Year Ended December 31, ~~2015~~

~~Total Revenues~~

~~Our total revenues decreased $93.9 million, or 11.8%, to $702.3 million~~2018

For discussion around our results of operations for the year ended December 31, ~~2016, compared to $796.2 million~~2018 and for a comparison of our results of operations for the year ended December 31, ~~2015. This decrease was primarily attributable to a decrease in trading income, net, of $92.0 million,~~2019 and ~~a decrease in interest and dividend income of $1.7 million.~~

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~~The following table shows the total revenues by operating segment for the years ended December 31, 2016 and 2015.~~

(in thousands, except for percentage)

2016

2015

% Change

Market Making

Trading income, net

$
665,465

$
757,455

-12.1%

Interest and dividends income

26,419

28,136

-6.1%

Commissions, net and technology services

-

-

NM

Other, net

-

-

NM

Total revenues from Market Making

$
691,884

$
785,591

-11.9%

Execution Services

Trading income, net

$
-

$
-

NM

Interest and dividends income

-

-

NM

Commissions, net and technology services

10,352

10,622

-2.5%

Other, net

-

-

NM

Total revenues from Execution Services

$
10,352

$
10,622

-2.5%

Corporate

Trading income, net

$
-

$
-

NM

Interest and dividends income

-

-

NM

Commissions, net and technology services

-

-

NM

Other, net

36

-

NM

Total revenues from Corporate

$
36

$
-

NM

Consolidated

Trading income, net

$
665,465

$
757,455

-12.1%

Interest and dividends income

26,419

28,136

-6.1%

Commissions, net and technology services

10,352

10,622

-2.5%

Other, net

36

-

NM

Total revenues

$
702,272

$
796,213

-11.8%

~~Trading Income, Net.~~ ~~Trading income, net, decreased $92.0 million, or 12.1%, to $665.5 million for the~~ year ended December 31, ~~2016, compared to $757.5 million~~2018, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for ~~the~~fiscal year ended December 31, 2015. The decrease was primarily attributable to the less favorable conditions in the Americas Equities, Global Currencies, Global Commodities and EMEA Equities categories as a result of overall lower market volume and volatility within those categories during the year ended December 31, 2016. Rather than analyzing trading income, net, in isolation, we generally evaluate it in the broader context of our Adjusted Net Trading Income, together with interest and dividends income, interest and dividends expense and brokerage, exchange and clearance fees, net, each of which are described below.

~~Interest and Dividends Income.~~ Interest and dividends income decreased $1.7 million, or 6.0%, to $26.4 million for the year ended December 31, 2016, compared to $28.1 million for the year ended December 31, 2015. This decrease was primarily attributable to lower interest income earned on cash collateral posted as part of securities borrowed transactions. As indicated above, rather than analyzing interest and dividends income in isolation, we generally evaluate it in the broader context of our Adjusted Net Trading Income.

~~Commissions, Net and Technology Services.~~ Commissions, net and technology services revenues include technology licensing fees and agency commission fees. Technology licensing fees typically include an initial component earned at the inception of a new contract and a recurring fee that may include both a fixed and variable component, and are recognized ratably over the term of the contract and therefore do not change significantly period over period unless there are new counterparties. Agency commission fees are positively correlated to the volume of the trades executed by our broker dealer subsidiary. Commissions, net and technology services revenue decreased $0.2 million, or 1.9%, to $10.4 million for the year ended December 31, 2016, compared to $10.6 million for the year ended December 31, 2015. The slight decrease in the commissions, net and technology services revenue was mainly due to the upfront fee on one of the arrangements that was fully recognized over the initial three-year term by the second quarter of 2016. The decrease was partially offset by the new technology services contract executed with a new counterparty related to US Treasuries Dealer to Dealer market making on electronic trading venues in July 2016, as well as the agency commission fees generated from agency execution services started in April 2016.

~~Table of Contents~~

~~Other, net.~~ Other, net was incurred as a result of the foreign currency revaluations on the Japanese Yen based minority investment and the SBI Bonds, which were $(3.1) million and $3.2 million, respectively, for the year ended December 31, 2016. There were no such revenues (losses) for the year ended December 31, 2015.

~~Adjusted Net Trading Income~~

Adjusted Net Trading Income decreased $86.8 million, or 17.0%, to $424.5 million for the year ended December 31, 2016, compared to $511.3 million for the year ended December 31, 2015. This decrease compared to the prior period reflects decreases in Adjusted Net Trading Income from Americas Equities trading of $11.4 million, $14.1 million from EMEA equities $11.4 million from global commodities, $44.8 million from global currencies, and options, fixed income and other securities of $3.9 million. These decreases in Adjusted Net Trading Income were partially offset by an increase in Adjusted Net Trading Income from trading, $5.0 million from APAC equities compared to the prior period. Adjusted Net Trading Income per day decreased $0.3 million, or 17.3%, to $1.65 million for the year ended December 31, 2016, compared to $2.0 million for the year ended December 31, 2015. The number of trading days for the year ended December 31, 2016 and 2015 were both 252.

~~Operating Expenses~~

Our operating expenses decreased $57.6 million, or 9.9%, to $522.7 million for the year ended December 31, 2016, compared to $580.3 million for the year ended December 31, 2015. This decrease was primarily due to decreases in brokerage, exchange, and clearance fees of $11.3 million, employee compensation and payroll taxes of $2.7 million, operations and administrative expense of $3.0 million, depreciation and amortization expense of $3.9 million, reserve for legal matters of $5.4 million, and charges related to share based compensation at IPO of $42.4 million, and $1.0 million decrease in financing interest expense on our long-term borrowings. These decreases in operating expenses were partially offset by increases in communication and data processing expense of $2.4 million, interest and dividends expense of $4.2 million, and increase in debt issue cost related to refinancing of $5.6 million. There was no change for the year ended December 31, 2016 compared to the year ended December 31, 2015 for amortization of purchased intangible and acquired capitalized software.

~~Brokerage, Exchange and Clearance Fees, Net.~~ Brokerage exchange and clearance fees, net, decreased $11.3 million, or 4.9%, to $221.2 million for the year ended December 31, 2016, compared to $232.5 million for the year ended December 31, 2015. This decrease was primarily attributable to the decreases in market volume and volatility traded in Americas Equities and EMEA Equities instruments in which we make markets. As indicated above, rather than analyzing brokerage, exchange and clearance fees, net, in isolation, we generally evaluate it in the broader context of our Adjusted Net Trading Income.

~~Communication and Data Processing.~~ Communication and data processing expense increased $2.4 million, or 3.5%, to $71.0 million for the year ended December 31, 2016, compared to $68.6 million for the year ended December 31, 2015. This increase was primarily due to commencement of new connectivity connections, as well as increases in market data fees. The increase was partially offset by reductions in discontinued connectivity connections.

~~Employee Compensation and Payroll Taxes.~~ Employee compensation and payroll taxes decreased $2.7 million, or 3.1%, to $85.3 million for the year ended December 31, 2016, compared to $88.0 million for the year ended December 31, 2015. The decrease in compensation levels was attributable to the decrease in incentive compensation accrual during the year ended December 31, 2016. Incentive compensation is recorded at management’s discretion and is generally accrued in connection2019, filed with the ~~overall level of profitability.~~

~~Interest and Dividends Expense.~~ Interest and dividends expense increased $4.2 million, or 8.0%, to $56.6 million for the year ended December 31, 2016, compared to $52.4 million for the year ended December 31, 2015. This increase was primarily attributable to higher interest expense incurredSEC on cash collateral received as part of securities lending transactions. As indicated above, rather than analyzing interest and dividends expense in isolation, we generally evaluate it in the broader context of our Adjusted Net Trading Income.

February 28, 2020.

~~Table of Contents~~

~~Operations and Administrative.~~ Operations and administrative expense decreased $3.0 million, or 11.5%, to $23.0 million for the year ended December 31, 2016, compared to $26.0 million for the year ended December 31, 2015. This decrease was primarily due to an accelerated expense recognition of approximately $2.7 million from future lease payments of one of our office locations that was abandoned during the year ended December 31, 2015. We had no such expense during year ended December 31, 2016.

~~Depreciation and Amortization.~~ Depreciation and amortization decreased $3.9 million, or 11.6%, to $29.7 million for the year ended December 31, 2016, compared to $33.6 million for the year ended December 31, 2015. This decrease was primarily attributable to the decrease in capital expenditures on telecommunication, networking and other assets.

~~Amortization of Purchased Intangibles and Acquired Capitalized Software.~~ Amortization of purchased intangibles and acquired capitalized software did not change, from $0.2 million for the year ended December 31, 2016, compared to $0.2 million for the year ended December 31, 2015.

~~Debt issue cost related to Debt refinancing.~~ Expense from debt issue costs related to debt refinancing was $5.6 million for the year ended December 31, 2016. These costs reflect nonrecurring expense incurred as a result of refinancing of our senior secured credit facility under long-term borrowings in October 2016. We had no such expense in the year ended December 31, 2015.

~~Reserve for Legal Matters.~~ In December 2015, the enforcement committee of the AMF fined our European subsidiary in the amount of €5.0 million (approximately $5.4 million) based on its allegations that the subsidiary of MTH engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules. In accordance with the foregoing, though we are currently pursuing our rights of appeal, we have accrued an estimated loss of €5.0 million (approximately $5.4 million) in relation to the fine imposed by the AMF. We had no such expense for the year ended December 31, 2016.

~~Charges related to share based compensation at IPO.~~ At the consummation of the IPO in April 2015, we began recognizing non-cash compensation expenses in respect to vesting of Class B and East MIP Class B interests. For the year ended December 31, 2015, we recognized compensation expenses of the approximately $44.2 million, which includes a one-time charge upon IPO with respect the outstanding time vested Class B and East MIP Class B interests, net of $9.2 million and $8.5 million in capitalization and amortization of capitalized costs attributable to employees incurred in development of software for internal use, respectively. For the year ended December 31, 2016, the expense was $1.1 million, which reflects monthly charges on the periodic vesting of awards over a specified service period, net of approximately $0.1 million and $0.7 million of capitalization and amortization, respectively. For the year ended December 31, 2015, the expense was $3.5 million, which reflects monthly charges on the periodic vesting of awards over a specified service period, net of approximately $1.1 million and $1.7 million of capitalization and amortization, respectively.

~~Financing Interest Expense on Long-Term Borrowings.~~ Financing interest expense on long-term borrowings decreased $1.0 million, or 3.4%, to $28.3 million, compared to $29.3 million for the year ended December 31, 2015. This decrease was due to the 0.50% incremental spread reduction after the amendment of our existing senior secured credit facility upon the consummation of the IPO on April 21, 2015, which was partially offset by the increase in financing interest expense due to the increase in the amount of the senior secured credit facility, as discussed in Note 8 to the notes of the consolidated financial statements.

~~Provision for Income Taxes~~

Following the consummation of the Reorganization Transactions, we incur corporate tax at the U.S. federal income tax rate on our taxable income, as adjusted for noncontrolling interest in Virtu Financial. Our income tax expense reflects such U.S. federal income tax as well as taxes payable by certain of our non-U.S. subsidiaries. Provision for income taxes increased $2.9 million, to $21.3 million for the year ended December 31, 2016, compared to $18.4 million for the year ended December 31, 2015. The increase was primarily attributable to the consummation of Reorganization Transactions.

~~Table of Contents~~

Prior to the Reorganization Transactions, as a limited liability company treated as a partnership for U.S. federal income tax purposes, most of our income has not been subject to corporate tax, but instead our members have been taxed on their proportionate share of our net income.

Liquidity and Capital Resources

General

As of December 31, ~~2017,~~2020, we had ~~$532.9~~$889.6 million in ~~cash~~Cash and cash equivalents. ~~These balances are~~This balance is maintained primarily to support operating activities ~~and~~ for capital expenditures and for short-term access to liquidity, and for other general corporate purposes. As of December 31, ~~2017,~~2020, we had borrowings under our ~~short-term~~prime brokerage credit facilities of approximately ~~$205.7~~$134.7 million, ~~borrowing~~borrowings under our broker dealer facilities of ~~$32.0~~$36.4 million, short-term bank overdrafts of $28.7 million, and long-term debt outstanding in an aggregate principal amount of approximately ~~$1431.1~~$1,670.4 million. ~~As of December 31, 2017, our regulatory capital requirements for domestic U.S. subsidiaries were $7.1 million, in aggregate.~~

The majority of our trading assets consist of exchange-listed marketable securities, which are marked-to-market daily, and collateralized receivables from broker-dealers and clearing organizations arising from proprietary securities transactions. Collateralized receivables consist primarily of securities borrowed, receivables from clearing houses for settlement of securities transactions and, to a lesser extent, securities purchased under agreements to resell. We actively manage our liquidity, and we maintain significant borrowing facilities through the securities lending markets and with banks and prime brokers. We have continually received the benefit of uncommitted margin financing from our prime brokers globally. These margin facilities are secured by securities in accounts held at the prime ~~broker.~~brokers. For purposes of providing additional liquidity, we maintain a committed credit facility and an uncommitted credit facility ~~with two of~~for our ~~wholly owned~~wholly-owned broker-dealer ~~subsidiaries. Additionally, we also maintain a revolving credit facility with three of our wholly owned broker-dealer subsidiaries,~~subsidiary, as discussed in Note ~~10 “Borrowing”~~11 "Borrowings" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form ~~10-K herein.~~

10-K.

As a result of the substantially elevated volume and volatility environment during the year attributable largely to the COVID-19 pandemic and governmental and other responses thereto, our trading activities both in our market making segment and in our execution services segment increased materially relative to the prior year. This increase in our activity and our customers’ activity together with the extraordinary volatility during certain periods within the year has driven our short-term liquidity needs significantly higher as compared to prior periods, though these levels declined meaningfully during the year relative to their peaks in the first quarter of 2020. In order to manage these increased daily funding obligations, we have taken steps to increase available short-term liquidity and to reduce our short term funding requirements. Increases to our available short-term liquidity included entering into the Founder Member Loan Facility (as defined below, and which expired in the third quarter of 2020), the Demand Loan (as defined below, which was fully repaid during the second quarter of 2020) and certain changes to the Committed Broker Dealer Facility, each of which are described in further detail below as well as in Note 11 "Borrowings" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Steps taken to reduce our short-term funding requirements have included arranging for select clients trades to be cleared by another large financial institution, reducing limits on daily client trading activity on a client-by-client basis and selectively reducing our market making activities in certain asset classes or products.

Based on our current level of operations and following the steps taken as detailed above, we believe our cash flows from operations, available cash and cash equivalents, and available borrowings under our broker-dealer credit facilities will be adequate to meet our future liquidity needs for more than the next twelve months. We anticipate that our primary upcoming cash and liquidity needs will be increased margin requirements from increased trading activities in markets where we currently provide liquidity and in new markets into which we plan to expand. We manage and monitor our margin and liquidity needs on a real-time basis and can adjust our requirements both intra-day and inter-day, as required.

We do not believe that the impacts of COVID-19 or the governmental and other responses thereto to date have adversely impacted our long-term financial condition or long-term capital requirements.

We expect our principal sources of future liquidity to come from cash flows provided by operating activities and financing activities. Certain of our cash balances are insured by the Federal Deposit Insurance Corporation, generally up to $250,000 per account but without a cap under certain conditions. From time to time these cash balances may exceed insured limits, but we select financial institutions deemed highly ~~creditworthy~~credit worthy to minimize risk. We consider highly liquid investments with original maturities of less than three months, when acquired, to be cash equivalents.

Tax Receivable Agreements

Generally, we are required under the tax receivable agreements entered into in connection with our IPO to make payments to certain direct or indirect ~~equityholders~~equity holders of Virtu Financial that are generally equal to 85% of the applicable cash tax savings, if any, that we ~~actually~~ realize as a result of favorable tax attributes that ~~will be~~are available to us as a result of the Reorganization Transactions, for exchanges of membership interests for Class A ~~common stock~~Common Stock or Class B ~~common stock~~Common Stock and payments made under the tax receivable agreements. We will retain the remaining 15% of ~~these~~any such cash tax savings. We expect that future payments to certain direct or indirect ~~equityholders~~equity holders of Virtu Financial described in Note ~~16 “Tax~~7 "Tax Receivable ~~Agreements”~~Agreements" to the consolidated financial statements included ~~herein~~in Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K are expected to ~~aggregate to approximately $147.0 million, ranging~~range from approximately ~~$0.3~~$0.9 million to ~~$12.8~~$21.7 million per year over the next 15 years. Such payments will occur only after we have filed our U.S. federal and state income tax returns and realized the cash tax savings from the favorable tax attributes. ~~The first payment was due September 15, 2016, and we~~We made our first payment of $7.0 million in February ~~2017.~~2017, our second payment of $12.4 million in September 2018, and our third payment of $13.3 million in March 2020. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these amounts. We currently expect to fund these payments from realized cash tax savings from the ~~cash flow from operations generated by our subsidiaries as well as from excess~~favorable tax ~~distributions that we receive from our subsidiaries.~~

attributes.

~~Table of Contents~~

Under the tax receivable agreements, as a result of certain types of transactions and other factors, including a transaction resulting in a change of control, we may also be required to make payments to certain direct or indirect ~~equityholders~~equity holders of Virtu Financial in amounts equal to the present value of future payments we are obligated to make under the tax receivable agreements. IfWe would expect any acceleration of these payments to be funded from the realized favorable tax attributes. However, if the payments under the tax receivable agreements are accelerated, we may be required to raise additional debt or equity to fund such payments. To the extent that we are unable to make payments under the tax receivable agreements for any reason (including because our ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement ~~or the indenture governing our Notes~~ restricts the ability of our subsidiaries to make distributions to us) such payments will be deferred and will accrue interest until paid.

Regulatory Capital Requirements

~~Certain of our~~

Our principal ~~operating subsidiaries are~~U.S. subsidiary is subject to separate regulation and capital requirements in the United States and other jurisdictions. Virtu ~~Financial BD LLC, Virtu Financial Capital Markets LLC and Virtu~~ Americas LLC ~~which become our subsidiary following the Acquisition of KCG, are~~is a registered U.S. ~~broker-dealers,~~broker-dealer, and ~~their~~its primary regulators include the SEC ~~the Chicago Stock Exchange~~ and FINRA. ~~Virtu Financial Ireland Limited is a registered investment firm under the Market in Financial Instruments Directive, and its primary regulator is the Central Bank of Ireland.~~

The SEC and FINRA impose rules that require notification when regulatory capital falls below certain pre-defined criteria. These rules also dictate the ratio of debt-to-equity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. If a firm fails to maintain the required regulatory capital, it may be subject to suspension or revocation of registration by the applicable regulatory agency, and suspension or expulsion by these regulators could ultimately lead to the firm’s liquidation. Additionally, certain applicable rules impose requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to and/or approval from the SEC ~~the Chicago Stock Exchange~~ and FINRA for certain capital withdrawals. Virtu ~~Financial Capital Markets~~Americas LLC is also subject to rules set forth by NYSE ~~MKT (formerly NYSE Amex)~~ and is required to maintain a certain level of capital in connection with the operation of its ~~DMM~~designated market maker business.

Our Canadian subsidiaries, Virtu ITG Canada Corp. and Virtu Financial ~~Ireland Limited is~~Canada ULC, are subject to regulatory capital requirements and periodic requirements to report their regulatory capital and submit other regulatory reports set forth by the IIIROC. VFIL and VIEL are regulated by the ~~Central Bank of Ireland~~CBI as an Investment ~~Firm~~Firms and in accordance with European Union law isare required to maintain a minimum amount of regulatory capital based upon ~~its~~their positions, financial conditions, and other factors. In addition to periodic requirements to report ~~its~~their regulatory capital and submit other regulatory reports, ~~Virtu Financial Ireland Limited is~~VFIL and VIEL are required to obtain consent prior to receiving capital contributions or making capital distributions from ~~its~~their regulatory capital. Failure to comply with ~~its~~their regulatory capital requirements could result in regulatory sanction or revocation of ~~its~~their regulatory license. ~~KCG Europe Limited, as an FCA-regulated investment firm~~VIUK is ~~also~~regulated by the FCA in the United Kingdom and is subject to similar prudential capital requirements.

Virtu ITG Australia Limited, Virtu ITG Hong Kong Limited, and Virtu ITG Singapore Pte Limited are also subject to local regulatory capital requirements and are regulated by the ASX, the SFC, and the MAS, respectively.

See Note ~~18 “Regulatory Requirement”~~22 "Regulatory Requirement" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a discussion of regulatory capital requirements of our regulated subsidiaries.

Broker Dealer Credit Facilities, Short-Term Bank Loans, and Prime Brokerage Credit Facilities

~~Table of Contents~~

~~Long-Term Borrowings~~

We maintain various broker-dealer facilities and short-term credit facilities as part of our daily trading operations. See Note ~~10 “Borrowings”~~11 "Borrowings" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for details on ~~the Company’s~~our various credit facilities. As of December 31, ~~2017,~~2020, the outstanding principal balance on our broker-dealer facilities was ~~$32.0~~$36.4 million and the outstanding aggregate short-term credit facilities with various prime brokers and other financial institutions from which the Company receives execution or clearing services was approximately ~~$205.7~~$134.7 million, which was netted within ~~receivables~~Receivables from ~~broker dealers~~broker-dealers and clearing organizations on the ~~“Consolidated Statement~~Consolidated Statements of Financial ~~Condition”~~Condition of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form ~~10-K..~~

~~Fourth Amended~~10-K.

On March 10, 2020, a broker-dealer subsidiary of the Company entered into a short term loan arrangement with Jefferies Financial Group, Inc., as lender, for a $20 million demand loan (the "Demand Loan") repayable no later than ninety (90) days after the date of borrowing. The Demand Loan bore interest at a rate of 10% per annum, increased by 2.0% with respect to any principal amounts not paid when due and ~~Restated~~ payable. The Demand Loan was repaid in full as of April 17, 2020.

On March 20, 2020, a broker-dealer subsidiary of the Company entered into a loan agreement (the “Founder Member Loan Facility”) with TJMT Holdings LLC (the “Founder Member”), as lender and administrative agent, providing for unsecured term loans from time to time (the “Founder Member Loans”) in an aggregate original principal amount not to exceed $300 million. The Founder Member Loans were available to be borrowed in one or more borrowings on or after March 20, 2020 and prior to September 20, 2020, though no borrowings were made during such period, which is now expired. The Founder Member is an affiliate of Mr. Vincent Viola, the Company’s founder and Chairman Emeritus. Upon the execution of and in consideration for the Lender’s commitments under the Loan Agreement, the Company delivered to the Founder Member a warrant to purchase shares of the Company’s Class A Common Stock, as described below.

On March 20, 2020, in connection with and in consideration of the Founder Member’s commitments under the Founder Member Loan Facility, the Company delivered to the Founder Member a warrant (the “Warrant”) to purchase shares of the Company’s Class A Common Stock. Pursuant to the Warrant, the Founder Member may purchase up to 3,000,000 shares of Class A Common Stock. If at any time during the term of the Founder Member Facility, the Founder Member Loans equal to or greater than $100 million had remained outstanding for a certain period of time specified in the Warrant, the number of shares would have increased to 10,000,000. The exercise price per share of the Class A Common Stock issuable pursuant to the Warrant is $22.98, and the Warrant may be exercised to purchase up to 3,000,000 shares of the Company's Class A Common Stock on or after May 22, 2020 up to and including January 15, 2022. The Warrant and Class A Common Stock issuable pursuant to the Warrant were offered, and will be issued and sold, in reliance on the exemption from the registration requirements of the Securities Act, set forth under Section 4(a)(2) of the Securities Act relating to sales by an issuer not involving any public offering.

Credit Agreement

In connection with the ITG Acquisition, ~~of KCG, we~~Virtu Financial, VFH and the Acquisition Borrower entered into the Fourth Amended and Restated Credit Agreement, which amended and restated in its entirety the existing Credit Agreement. The Fourth Amended and Restated Credit Agreement, provided for a $540.0 million first lien secured term loan, drawn in its entirety on June 30, 2017, and continued VFH’s existing $100.0 million first lien senior secured revolving credit facility. Also on June 30, 2017, the Escrow Issuer entered into the Escrow Credit Agreement, with the lenders party thereto, ~~and JPMorgan Chase Bank, N.A.,~~Jefferies Finance LLC, as administrative agent ~~which~~and Jefferies Finance LLC and RBC Capital Markets, as joint lead arrangers and joint bookrunners.

The Credit Agreement provided ~~for~~(i) a ~~$610.0 million~~senior secured first lien term loan (the “First Lien Term Loan Facility”) in an aggregate principal amount of $1,500 million, drawn in its entirety on the ~~proceeds~~ITG Closing Date, of which ~~were deposited into escrow pending~~approximately $404.5 million was borrowed by VFH to repay all amounts outstanding under the ~~closing of~~Previous Term Loan Facility (as defined below) and the ~~Acquisition.~~

~~Upon the closing of~~remaining approximately $1,095 million was borrowed by the Acquisition Borrower to finance the ~~proceeds~~consideration and fees and expenses paid in connection with the ITG Acquisition, and (ii) a $50.0 million senior secured first lien revolving facility to VFH (the “First Lien Revolving Facility”), with a $5.0 million letter of credit sub-facility and a $5.0 million swing-line sub-facility. After the ~~Escrow Term Loan were released to fund in part the Acquisition consideration,~~ITG Closing Date, VFH assumed the obligations of the ~~Escrow Issuer~~Acquisition Borrower in respect of the ~~Escrow Term Loan were automatically assumed by~~acquisition term loans.

On October 9, 2019 (the “Amendment No. 1 Closing Date”), VFH ~~Parent,~~entered into an amendment (“Amendment No. 1”), which amended the ~~Escrow Term Loan was deemed to be outstanding under the Fourth Amended and Restated~~ Credit Agreement dated as of March 1, 2019, by and among VFH, Virtu Financial, the ~~Escrow Credit Agreement~~lenders party thereto, and Jefferies Finance, LLC, as administrative agent and collateral agent, to, among other things, provide for $525.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”), and amend the related ~~credit documents automatically terminated~~collateral agreement. On the Amendment No. 1 Closing Date, VFH borrowed the Incremental Term Loans and ~~were superseded by~~used the ~~provisions~~proceeds together with available cash to redeem all of the ~~Fourth Amended and Restated Credit Agreement. In addition, the first lien senior secured revolving credit facility under the Fourth Amended and Restated Credit Agreement terminated.~~

~~Under the Fourth Amended and Restated Credit Agreement, the $1,150.0~~$500.0 million aggregate principal amount of the outstanding 6.750% Senior Secured Second Lien Notes (as defined below) due 2022 issued by VFH and Orchestra Co Issuer, Inc., a Delaware corporation and indirect subsidiary of the Company (together with VFH, the “Issuers”), and paid related fees and expenses. The

terms, conditions and covenants applicable to the Incremental Term Loans are the same as the terms, conditions and covenants applicable to the existing term loans under the Credit Agreement, including a maturity date of March 1, 2026.

On March 2, 2020 (the “Amendment No. 2 Closing Date”), VFH entered into a second amendment (“Amendment No. 2”), which further amended the Credit Agreement (as amended by Amendment No. 1 and Amendment No. 2, the “Amended Credit Agreement”) to, among other things, reduce the interest rate spread over adjusted LIBOR or the alternate base rate by 0.50% per annum and eliminated any stepdown in the spread based on VFH's first lien ~~senior secured~~leverage ratio. The term ~~loans, including~~loan borrowings and revolver borrowings under the ~~Escrow Term Loan,~~Amended Credit Agreement bear interest at a per annum rate equal to, at the Company's election, either (i) the greatest of (a) the prime rate in effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1.00% and (d) 1.00%, plus, in each case, 2.00%, or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) 0%, plus, in each case, 3.00%. In addition, a commitment fee accrues at a rate of 0.50% per annum on the average daily unused amount of the First Lien Revolving Facility, with stepdowns to 0.375% and 0.25% per annum based on VFH’s first lien leverage ratio, and is payable quarterly in arrears.

Under the Amended Credit Agreement, the term loans will mature on ~~December 30, 2021 and will require scheduled~~March 1, 2026. The term loans amortize in annual ~~amortization payments on each of the first four anniversaries of the closing of the Acquisition in an amount~~installments equal to ~~the sum of 7.5%~~1.0% of the original aggregate principal amount of the term ~~loan issued~~loans. The revolving commitments will terminate on March 1, 2022.

The First Lien Revolving Facility under the ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement ~~and 7.5%~~is subject to a springing net first lien leverage ratio which may spring into effect as of the last day of a fiscal quarter if usage of the aggregate revolving commitments exceeds a specified level as of such date. VFH is also subject to contingent principal ~~amount of the Escrow Term Loan outstanding~~prepayments based on ~~the closing date of the Acquisition.~~

~~All obligations~~excess cash flow and certain other triggering events. Borrowings under the ~~Term Loan Facility~~Credit Agreement are ~~unconditionally~~ guaranteed by Virtu Financial and ~~the Company’s existing direct and indirect wholly-owned~~VFH’s material non-regulated domestic restricted subsidiaries ~~(including, KCG~~ and its wholly-owned domestic restricted subsidiaries), subject to certain exceptions, including exceptions for our broker dealer subsidiaries and certain immaterial subsidiaries. The Term Loan Facility and related guarantees are secured by ~~first-priority perfected liens, subject to certain exceptions, on~~ substantially all of ~~VFH’s and~~ the ~~guarantors’ existing and future~~ assets ~~including substantially all material personal property and a pledge of the capital stock of VFH, the guarantors (other than Virtu Financial) and the direct domestic subsidiaries~~ of VFH and the guarantors, ~~and 100% of the non-voting capital stock and up~~in each case, subject to ~~65.0% of the voting capital stock of foreign subsidiaries that are directly owned by VFH or any of the guarantors.~~

~~Amounts outstanding under the Fourth~~certain exceptions.

The Amended ~~and Restated Credit Agreement bear interest as~~

~~follows:~~

in the case of the term loans, at VFH’s option, at either (a) the greatest of (i) the prime rate in effect, (ii) the NYFRB rate plus 0.50%, (iii) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1.00%, and (iv) 2.00% plus, in each case, 2.75% per annum; or (b) the greater of (i) an adjusted LIBOR rate for the interest period in effect and (ii) 1.00% plus, in each case, 3.75% per annum; and

in the case of revolving loans, at VFH’s option, at either (a) the greatest of (i) the prime rate in effect, (ii) the NYFRB rate plus 0.50%, (iii) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1.00%, and (iv) 1.00% plus, in each case, 2.00% per annum; or (b) the greater of (i) an adjusted LIBOR rate for the interest period in effect and (ii) zero plus, in each case, 3.00% per annum.

~~Table of Contents~~

~~Under the Fourth Amended and Restated Credit Agreement, we must comply on a quarterly basis with:~~

a maximum total net leverage ratio of 5.00 to 1.0 with a step-down to (i) 4.25 to 1.0 from and after the fiscal quarter ending March 31, 2019, (ii) 3.50 to 1.0 from and after the fiscal quarter ending March 31, 2020 and (iii) 3.25 to 1.0 from the fiscal quarter ending March 31, 2021 and thereafter; and

~~a minimum interest coverage ratio of 2.75 to 1.0, stepping up to 3.00 to 1.0 from and after the fiscal quarter ending March 31, 2019.~~

~~The Fourth Amended and Restated~~ Credit Agreement contains certain customary ~~affirmative covenants. The negative~~ covenants ~~in the Fourth Amended~~ and Restated Credit Agreement include, among other things, limitations on our ability to do the following, subject to certain exceptions: (i) incur additional debt; (ii) create liens on certain assets; (iii) make certain loans or investments (including acquisitions); (iv) pay dividends on or make distributions in respect of our capital stock or make other restricted junior payments; (v) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; (vi) sell or otherwise dispose of assets, including equity interests in our subsidiaries; (vii) enter into certain transactions with our affiliates; (viii) enter into swaps, forwards and similar agreements; (ix) enter into sale-leaseback transactions; (x) restrict liens and subsidiary dividends; (xi) change our fiscal year; and (xii) modify the terms of certain debt agreements.

~~The Fourth Amended and Restated Credit Agreement contains certain customary~~ events of default, including relating to a change of control. If an event of default occurs and is continuing, the lenders under the ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement will be entitled to take various actions, including the acceleration of amounts outstanding under the ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement and all actions permitted to be taken by a secured creditor in respect of the collateral securing the obligations under the Amended Credit Agreement.

In October 2019, we entered into a five-year $525.0 million floating-to-fixed interest rate swap agreement. In January 2020, we entered into a five-year $1,000.0 million floating-to-fixed interest rate swap agreement. These two interest rate swaps meet the criteria to be considered and were designated as qualifying cash flow hedges under ASC 815 in the first quarter of 2020, and they effectively fix interest payment obligations on $1,000.0 million and $525.0 million of principal under the First Lien Term Loan Facility at rates of 4.4% and 4.3% through January 2025 and September 2024, respectively, based on the interest rates set forth in the Amended Credit Agreement.

To finance the Acquisition of KCG, on June 30, 2017, Virtu Financial and VFH previously entered into the Fourth Amended and Restated Credit ~~Agreement.~~

A portion of certain financing costs incurred in connection with the original credit facility that were scheduled to be amortized over the term of the loan, including original issue discount and underwriting and legal fees, were accelerated atAgreement which, upon the closing of the ~~refinancing.~~

Acquisition of KCG, provided for an aggregate $1.15 billion of first lien secured term loans (the “Previous Term Loan Facility”). As described above, the Previous Term Loan Facility was fully terminated following its repayment in full with the proceeds of the First Lien Term Loan Facility.

We were in compliance with all applicable covenants under the ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement as of December 31, ~~2017.~~

~~As of March 13, 2018, we have made total prepayments in the amount of $526.0 million under the Fourth Amended and Restated Credit Agreement.~~

~~Senior Secured Second Lien Notes~~

On June 16, 2017, the Escrow Issuer and the Co-Issuer completed the offering of $500 million aggregate principal amount of 6.750% Senior Secured Second Lien Notes due 2022 (the “Notes”). The Notes were issued under an Indenture, dated as of June 16, 2017 (the “Indenture”), among the Escrow Issuer, the Co-Issuer and U.S. Bank National Association, as the trustee and collateral agent. The Notes mature on June 15, 2022. Interest on the Notes accrues at 6.750% per annum, payable every six months through maturity on each June 15 and December 15, beginning on December 15, 2017.

On July 20, 2017, VFH assumed all of the obligations of the Escrow Issuer under the Indenture and the Notes. The Notes are guaranteed by Virtu Financial and each of Virtu Financial’s wholly-owned domestic restricted subsidiaries that guarantee the Fourth Amended and Restated Credit Agreement, including KCG and certain of its subsidiaries and the Escrow Issuer. We refer to VFH and the Co-Issuer together as, the “Issuers.”

The Notes and the related guarantees are secured by second-priority perfected liens on substantially all of the Issuers’ and guarantors’ existing and future assets, subject to certain exceptions, including all material personal property, a pledge of the capital stock of the Issuers, the guarantors (other than Virtu Financial) and the direct subsidiaries of the Issuers and the guarantors and 100% of the non-voting capital stock and up to 65.0% of the voting capital stock of any now-owned or later-acquired foreign subsidiaries that are directly owned by the Issuers or any of the guarantors, which assets will also secure obligations under the Fourth Amended and Restated Credit Agreement on a first-priority basis.

2020.

~~Table of Contents~~

The Indenture imposes certain limitations on our ability to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) pay dividends, make certain investments and make repayments on indebtedness that is subordinated in right of payment to the Notes and make other “restricted payments”; (iii) create liens on their assets to secure debt; (iv) enter into transactions with affiliates; (v) merge, consolidate or amalgamate with another company; (vi) transfer and sell assets; and (vii) permit restrictions on the payment of dividends by Virtu Financial’s subsidiaries. The Indenture also contains customary events of default, including, among others, payment defaults related to the failure to pay principal or interest on Notes, covenant defaults, final maturity default or cross-acceleration with respect to material indebtedness and certain bankruptcy events.

Prior to June 15, 2019, we may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, if any, to (but not including) the date of redemption, plus an applicable “make whole” premium (calculated based upon the yield of certain U.S. treasury securities plus 0.50%).

Prior to June 15, 2019, we may redeem up to 35% of the aggregate principal amount of the Notes at a redemption price equal to 106.750% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of redemption with the net cash proceeds from certain equity offerings.

On or after June 15, 2019, we may redeem some or all of the Notes, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest to (but not including) the date of redemption, if redeemed during the 12-month period beginning on June 15 of the years indicated below:

Period

Percentage

2019

103.375%

2020

101.688%

2021 and thereafter

100.000%

Upon the occurrence of specified change of control events as defined in the indenture governing the Notes, we must offer to repurchase the Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to (but excluding) the purchase date.

~~We were in compliance with all applicable covenants under the indenture governing our Notes as of December 31, 2017.~~

Cash Flows

Our main sources of liquidity are cash flow from the operations of our subsidiaries, our ~~broker‑dealer~~broker-dealer credit facilities (as described above), margin financing provided by our prime brokers and cash on hand.

The table below summarizes our primary sources and uses of cash for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015.~~

Years Ended December 31,

(in thousands)

2017

2016

2015

Net cash provided by (used in):

Operating activities

$
290,574

$
239,599

$
260,280

Investing activities

(838,016)

(59,017)

(24,299)

Financing activities

889,797

(161,237)

(144,355)

Effect of exchange rate changes on cash and cash equivalents

9,117

(1,165)

(4,255)

Net increase in cash, cash equivalents, and restricted cash

$
351,472

$
18,180

$
87,371

2018.


	Years Ended December 31,
Net cash provided by (used in):	2020		2019		2018
Operating activities	$	1,060,884	$	168,771	$	714,595
Investing activities	(2,559)		(899,643)		329,174
Financing activities	(839,918)		769,580		(835,482)
Effect of exchange rate changes on cash and cash equivalents	15,318		(1,475)		(5,127)
Net increase in cash and cash equivalents	$	233,725	$	37,233	$	203,160

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Operating Activities

Net cash provided by operating activities was ~~$290.6~~$1,060.9 million for the year ended December 31, ~~2017,~~2020, compared to ~~$239.6~~net cash provided by operating activities of $168.8 million for the year ended December 31, ~~2016.~~2019. The increase ~~of $51.0 million~~ in net cash provided by operating activities was primarily attributable to increases in trading income, net for the ~~Acquisition of KCG, which significantly increased our trading capital.~~

year ended December 31, 2020 compared to the prior period.

Investing Activities

Net cash ~~provided by operating~~used in investing activities was ~~$239.6~~$2.6 million for the year ended December 31, ~~2016,~~2020, compared to ~~$260.3~~net cash used in investing activities of $899.6 million for the year ended December 31, ~~2015.~~2019. The decrease ~~of $20.7 million~~ in ~~net cash provided by operating activities was primarily attributable to $39.2 million decrease in net income due to decreases in volume and volatility.~~

~~Investing Activities~~

~~Net~~ cash used in investing activities ~~was $838.0 million~~ for the year ended December 31, ~~2017, compared to $59.0 million for the year ended December 31, 2016. The increase of $779.0 million~~2020 was primarily attributable to the ~~net~~$835.6 million cash used for the ITG Acquisition on the ITG Closing Date during the same period of ~~KCG, see~~2019 (see Note 3 ~~“Acquisition of KCG Holdings, Inc.”~~"ITG Acquisition" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form ~~10-K.~~

10-K), partially offset by $60.6 million cash provided by the sale of MATCHNow in the third quarter of 2020 (see Note 5 "Sale of MATCHNow" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K).

Financing Activities

Net cash used in ~~investing~~financing activities was ~~$59.0~~$839.9 million for the year ended December 31, ~~2016, compared to $24.3~~2020, while net cash provided by financing activities was $769.6 million for the year ended December 31, ~~2015.~~2019. The ~~increase of $34.7 million was primarily attributable to the minority interest investment~~cash used in ~~SBI, a Proprietary Trading System based in Tokyo, for approximately $38.8 million.~~

~~Financing Activities~~

~~Net cash provided by~~ financing activities ~~was $889.8 million~~ for the year ended December 31, ~~2017 and net cash used in financing activities of $161.2 million for the year ended December 31, 2016. The increase of $1,051.0 million~~2020 was primarily attributable to ~~the $735~~$288.5 million ~~cash provided from issuance~~in prepayments on our long-term borrowings and by distributions made to noncontrolling interests of common stock as part of the Acquisition of KCG, as well as the refinancing of the first lien senior secured credit facility of $1,150 million and the issuance of senior secured second lien notes of $500.0 million during the year ended December 31, 2017.$363.9 million. The ~~increase in Net~~ cash provided by financing activities of $769.6 million during the same period of 2019 primarily reflects net proceeds from long-term borrowings associated with our entering into the Credit Agreement on the ITG Closing Date, as described above.

Share Repurchase Program

On February 8, 2018, the Company’s Board of Directors authorized a share repurchase program of up to $50.0 million

in Class A Common Stock and Virtu Financial Units, which was ~~partially offset~~expanded to $100.0 million on July 27, 2018. The Company repurchased approximately 2.6 million shares of Class A Common Stock and Virtu Financial Units for approximately $65.9 million under this program, which expired on September 30, 2019.

On November 6, 2020, the Company's Board of Directors authorized a new share repurchase program of up to $100.0 million in Class A common stock and Virtu Financial Units by December 31, 2021. From the inception of the program through December 31, 2020, the Company repurchased approximately 1.4 million shares of Class A Common Stock and Virtu Financial Units for approximately $33.9 million. As of December 31, 2020, the Company has approximately of $66.1 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

Secondary Offerings

In May 2018, the Company and certain selling stockholders completed a public offering (the “May 2018 Secondary Offering”) of 17,250,000 shares of Class A Common Stock by the ~~$250.0 million voluntary prepayment on our Term Loan Facility,~~Company and ~~the repayment~~certain selling stockholders at a purchase price per share of ~~certain indebtedness of KCG for $481.0 million.~~

Net cash used in financing activities was $161.2 million for the year ended December 31, 2016 and $144.4 million for the year ended December 31, 2015. The increase of $16.8 million was primarily attributable$27.16 (the offering price to the ~~$50.2 million~~public of $28.00 per share minus the underwriters’ discount), which included the exercise in full by the underwriters of their option to purchase additional shares in the May 2018 Secondary Offering. The Company sold 10,518,750 shares of Class A Common Stock in the offering, the net ~~cash provided as a result~~proceeds of which were used to purchase an equivalent number of Virtu Financial Units and corresponding shares of Class D Common Stock from TJMT Holdings LLC pursuant to that certain Member Purchase Agreement, entered into on May 15, 2018 by and between the Company and TJMT Holdings LLC. The selling stockholders sold 6,731,250 shares of Class A Common Stock in the May 2018 Secondary Offering, including 2,081,250 shares of Class A Common Stock issued by the Company upon the exercise of vested stock options.

In connection with the May 2018 Secondary Offering, the Company, TJMT Holdings LLC, the North Island Stockholder, Havelock Fund Investments Pte. Ltd. (“Havelock”) and Aranda entered into that certain Amendment No. 1 to the Amended and Restated Registration Rights Agreement dated April 20, 2017, by and among the Company, TJMT Holdings LLC, the North Island Stockholder, Havelock, Aranda and certain direct or indirect equity holders of the ~~completion~~Company (the “Amended and Restated Registration Rights Agreement”) to add Mr. Vincent Viola and Mr. Michael Viola, directors of the ~~IPO~~Company, and to confirm that certain other persons (including the ~~Reorganization Transactions during~~Company’s CEO) remain parties to the ~~year ended December 31, 2015,~~Amended and ~~we had no such events during~~Restated Registration Rights Agreement.

In May 2019, the ~~year ended December 31, 2016. The increase was partially offset~~Company completed a public offering (the “May 2019 Secondary Offering”) of 9,000,000 shares of Class A Common Stock at a purchase price per share paid by ~~a decrease~~the underwriters of ~~$28.0 million in distributions~~$22.00, the net proceeds of which were used to purchase an equivalent number of Virtu Financial Units and ~~dividends during~~corresponding shares of Class D Common Stock from TJMT Holdings LLC pursuant to that certain Member Purchase Agreement, entered into on May 14, 2019 by and between the ~~year ended December 31, 2016.~~

Company and TJMT Holdings LLC.

Contractual Obligations

The following table reflects our contractual obligations as of December 31, ~~2017.~~2020. Amounts we pay in future periods may vary from those reflected in the table.

Payments due by periods

Less than

More than
(in thousands)

Total

1 year

1-3 years

3-5 years

5 years
Long-term debt obligations(1)

1,431,059

—

31,059

1,400,000

—
Capital leases

43,530

18,829

24,701

—

—
Operating leases

260,084

33,331

59,950

39,080

127,723
Total contractual obligations
$
1,734,673

$
52,160

$
115,710

$
1,439,080

$
127,723


	Payments due by periods
(in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt obligations (1)	$	1,670,410	$	—	$	33,898	$	1,636,512	$	—
Capital leases	12,247		6,774		5,473		—		—
Operating leases	384,951		74,590		132,600		62,888		114,873
Total contractual obligations	$	2,067,608	$	81,364	$	171,971	$	1,699,400	$	114,873

~~(1)~~

~~Consists of principal payments under the note, Term Loan Facility and the SBI bonds. Does not include interest payments, commitment fees or utilization fees.~~

(1)Balances consist of principal payments under the First Lien Term Loan Facility and the SBI bonds, which do not include unamortized discount, unamortized commitment fees or utilization fees, and interest accrued.

The contractual obligation table above excludes contractual amounts owed under the tax receivable agreement as the ultimate amount and timing of the amounts due are not presently known. As of December 31, ~~2017,~~2020, a total of ~~$147.0~~$271.2 million has been recorded ~~in amount~~for amounts due pursuant to tax receivable ~~agreement~~agreements in the consolidated financial

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statements representing management’s best estimate of the amounts currently expected to be owed under the tax receivable agreement, as savings are realized as a result of favorable tax attributes.

Off-Balance Sheet Arrangements

~~We do~~

As of December 31, 2020, we did not ~~invest in~~have any off-balance sheet ~~vehicles~~arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, that ~~provide~~have or are reasonably likely to have current or future effects on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources ~~market or credit risk support, or engage in any activities~~ that ~~expose us~~are material to ~~any liability that is not reflected in our consolidated financial statements except for those described under “Contractual Obligations” above.~~

investors.

Inflation

We believe inflation has not had a material effect on our financial condition as of December 31, 2020, and December 31, 2019, or on our results of operations orand cash flows for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015.~~

2018.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP 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 consolidated financial statements, as well as the reported amounts of revenue and expenses during the applicable reporting period. Critical accounting policies are those that are the most important portrayal of our financial condition, results of operations and cash flows, and that require our most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. While our significant accounting policies are described in more detail in the notes to our consolidated financial statements, our most critical accounting policies are discussed below. In applying such policies, we must use some amounts that are based upon our informed judgments and best estimates. Estimates, by their nature, are based upon judgments and available information. The estimates that we make are based upon historical factors, current circumstances and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Valuation of Financial Instruments

Due to the nature of our operations, substantially all of our financial instrument assets, comprised of financial instruments owned, securities purchased under agreements to resell, and receivables from brokers, dealers and clearing organizations are carried at fair value based on published market prices and are marked to market daily, or are assets which are short-term in nature and are reflected at amounts approximating fair value. Similarly, all of our financial instrument liabilities that arise from financial instruments sold but not yet purchased, securities sold under agreements to repurchase, securities loaned, and payables to brokers, dealers and clearing organizations are short-term in nature and are reported at quoted market prices or at amounts approximating fair value.

Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories based on inputs:

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 — Quoted prices in markets that are not active and financial instruments for which all significant inputs are observable, either directly or indirectly; or

Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable

The fair values for substantially all of our financial instruments owned and financial instruments sold but not yet purchased are based on observable prices and inputs and are classified in levels 1 and 2 of the fair value hierarchy. Instruments categorized within level 3 of the fair value hierarchy are those which require one or more significant inputs

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that are not observable. Estimating the fair value of level 3 financial instruments requires judgments to be made. See Note ~~11 “Financial~~12 "Financial Assets and ~~Liabilities”~~Liabilities" of ~~the~~ Part II Item 8 “Financial Statements and ~~Supplemental~~Supplementary Data” of this Annual Report on ~~the~~ Form 10-K for further information about fair value measurements.

Revenue Recognition

Trading Income, Net

Trading income, net, consists of trading gains and losses that are recorded on a trade date basis and reported on a net basis. Trading income, net, is comprised of changes in fair value of financial instruments owned and financial instruments sold, not yet purchased assets and liabilities (i.e., unrealized gains and losses) and realized gains and losses on equities, fixed income securities, currencies and commodities.

Interest and Dividends Income/Interest and Dividends Expense

Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of income earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related short-term lending facilities. Dividends are recorded on the ex-dividend date, and interest is recognized on an accrual basis.

Commissions, net and Technology Services

Commissions, net, which primarily comprise commissions and commission equivalents earned on institutional client orders, are recorded on a trade date ~~basis.~~basis, which is the point at which the performance obligation to the customer is satisfied. Under a commission management program, we allow institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third parties. As we act as an agent in these transactions, we record such expenses on a net basis within Commissions, net and technology services in the ~~consolidated statements~~Consolidated Statements of ~~comprehensive income.~~

~~Technology services~~Comprehensive Income.

Workflow technology revenues consist of ~~fees~~order and trade execution management and order routing services we provide through our front-end workflow solutions and network capabilities.

We provide trade order routing from our execution management system (“EMS”) to our execution services offerings, with each trade order routed through the EMS representing a separate performance obligation that is satisfied at a point in time. A portion of the commissions earned on the trade is then allocated to Workflow Technology based on the stand-alone selling price paid by ~~third parties~~third-party brokers for ~~licensing~~order routing. The remaining commission is allocated to commissions, net using a residual allocation approach. Commissions earned are fixed and revenue is recognized on the trade date.

We participate in commission share arrangements, where trade orders are routed to third-party brokers from our EMS and our order management system (“OMS”). Commission share revenues from third-party brokers are generally fixed and revenue is recognized at a point in time on the trade date.

We also provide OMS and related software products and connectivity services to customers and recognize license fee revenues and monthly connectivity fees. License fee revenues, generated for the use of our ~~proprietary risk management~~OMS and other software products, are fixed and recognized at the point in time at which the customer is able to use and benefit from the license. Connectivity revenue is variable in nature, based on the number of live connections, and is recognized over time on a monthly basis using a time-based measure of progress.

Analytics revenues are earned from providing customers with analytics products and services, including trading ~~infrastructure technology~~ and ~~provision~~portfolio analytics tools. We provide analytics products and services to customers and recognize subscription fees, which are fixed for the contract term, based on when the products and services are delivered. Analytics services can be delivered either over time (when customers are provided with distinct ongoing access to analytics data) or at a point in time (when reports are only delivered to the customer on a periodic basis). Over time performance obligations are recognized using a time-based measure of ~~associated management~~progress on a monthly basis, since the analytics products and ~~hosting~~services are continually provided to the client. Point in time performance obligations are recognized when the analytics reports are delivered to the client.

Analytics products and services can also be paid for through variable bundled arrangements with trade execution services. Customers agree to pay for analytics products and services with commissions generated from trade execution services, and commissions are allocated to the analytics performance obligation(s) using:

(i)the commission value for each customer for the products and services it receives, which is priced using the value for similar stand-alone subscription arrangements; and

(ii)a calculated ratio of the commission value for the products and services relative to the total amount of commissions generated from the customer.

For these bundled commission arrangements, the allocated commissions to each analytics performance obligation are then recognized as revenue when the analytics product is delivered, either over time or at a point in time. These fees include both upfront and annual recurring fees. Income from existing arrangements for technology services is recorded as a services contract in accordance with SEC Topic 13 (Staff Accounting Bulletin No. 104), SEC Topic 13.A.3 (f), with revenue being recognized once persuasive evidence of an arrangement exists, delivery has occurred,allocated commissions may be deferred if the ~~fee is fixed or determinable, and collectability is probable.~~

allocated amount exceeds the amount recognizable based on delivery.

Share-Based Compensation

We account for share-based compensation transactions with employees under the provisions of ~~ASC~~the Financial Accounting Standards Board's Accounting Standards Codification (“ASC”) 718, Compensation: Stock Compensation. Share-based compensation transactions with employees are measured based on the fair value of equity instruments issued.

The fair value of awards issued for compensation prior to the Reorganization Transactions and the IPO was determined by management, with the assistance of an independent third party valuation firm, using a projected annual forfeiture rate, where applicable, on the date of grant.

Share-based awards issued for compensation in connection with or subsequent to the Reorganization Transactions and the IPO pursuant to our Amended and Restated 2015 Management Incentive Plan, ~~(the “2015 Management Incentive Plan”)~~and assumed pursuant to the Amended and Restated ITG 2007 Equity Plan, were in the form of stock options, Class A ~~common~~Common Stock, restricted stock awards ("RSAs") and restricted stock ~~units.~~units ("RSUs"). The fair value of the stock option grants is determined through the application of the Black-Scholes-Merton model. The fair value of the Class A ~~common stock~~Common Stock and ~~restricted stock units~~RSUs is determined based on the volume weighted average price for the three days preceding the ~~grant, and with~~grant. With respect to the ~~restricted stock units, a projected annual forfeiture rate.~~RSUs, we account for forfeitures as they occur. The fair value of RSAs is determined based on the closing price as of the date of grant. The fair value of share-based awards granted to employees is expensed based on the vesting conditions and is recognized on a ~~straight line~~straight-line basis over the vesting period, or, in the case of RSAs subject to performance conditions, from the date that achievement becomes probable through the remainder of the vesting period. We record as treasury stock shares repurchased from employees for the purpose of settling tax liabilities incurred upon the issuance of common stock, the vesting of ~~restricted stock units~~RSUs or the exercise of stock options.

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Income Taxes ~~and Tax Receivable Agreement Obligations~~

We conduct our business globally through a number of separate legal entities. Consequently, our effective tax rate is dependent upon the geographic distribution of our earnings or losses and the tax laws and regulations of each legal jurisdiction in which we operate.

Certain of our wholly owned subsidiaries are subject to income taxes in foreign jurisdictions. The provision for income tax is comprised of current tax and deferred tax. Current tax represents the tax on current year tax returns, using tax rates enacted at the balance sheet date. A deferred tax asset is recognized only to the extent that it is probable that future taxable income will be available against which the asset can be utilized.

We are currently subject to audit in various jurisdictions, and these jurisdictions may assess additional income tax liabilities against us. Developments in an audit, litigation, or the relevant laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods. We recognize the tax benefit from an uncertain tax position in accordance with ASC 740, Income Taxes, only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authority, including resolution of the appeals or litigation processes, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Many factors are considered when evaluating and estimating the tax positions and tax benefits. Such estimates involve interpretations of regulations, rulings, case law, etc. and are inherently complex. Our estimates may require periodic adjustments and may not accurately anticipate actual outcomes as resolution of income tax treatments in individual jurisdictions typically would not be known for several years after completion of any fiscal year.

~~The 2017~~

Tax ~~Act significantly changes how~~Receivable Agreements

We are required under the ~~U.S. taxes corporations. The 2017 Tax Act requires significant judgments~~tax receivable agreements entered into in connection with our IPO to make payments to certain direct or indirect equity holders of Virtu Financial that are generally equal to 85% of the applicable cash tax savings, if any, that we realize as a result of favorable tax attributes that are available to us as a result of the Reorganization Transactions, for exchanges of membership interests for Class A Common Stock or Class B Common Stock and payments made under the tax receivable agreements. An exchange of membership interests by the Virtu Members for Class A common stock or Class B common stock (an “Exchange”) during the year will give rise to favorable tax attributes that may generate cash tax savings specific to the Exchange, to be ~~made in interpretation~~realized over a specific period of ~~its provisions and significant estimates in calculations, and~~time (generally 15 years). At each Exchange, we estimate the preparation and analysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the 2017 Tax Act will be applied or otherwise administered that is different from our interpretation. As we complete our analysis of the 2017 Tax Act, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded that may materially impact our provision for income taxes in the period in which the adjustments are made.

~~Our~~cumulative tax receivable agreement obligations to be reported on the consolidated financial statements. The tax attributes are ~~closely tied~~computed as the difference between our basis in the partnership interest (“outside basis”) as compared to our ~~U.S. income tax returns, and may be affected by the aforementioned factors that impact our provision for income taxes and actual tax returns, including the impact~~share of the ~~2017 Tax Act.~~

adjusted tax basis of partnership property (“inside basis”), at the time of each Exchange. The computation of inside basis requires judgments in estimating the components included in the inside basis as of the date of the Exchange (such as, cash received on hypothetical sale of assets, allocation of gain/loss at the time of the Exchange taking into account complex partnership tax rules). In addition, we estimate the period of time that may generate cash tax savings of such tax attributes and the realizability of the tax attributes.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the underlying net tangible and intangible assets of our acquisitions. Goodwill is not amortized but is ~~tested~~assessed for impairment on an annual basis and between annual ~~tests~~assessments whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is ~~tested~~assessed at the reporting unit level, which is defined as an operating segment or one level below the operating segment.

~~The goodwill~~

When assessing impairment, ~~test~~an entity may perform an initial qualitative assessment, under which it assesses qualitative factors to determine whether it is ~~a two-step process. The first step is used to identify potential impairment and compares~~more likely than not that the fair value of a reporting unit ~~with~~is less than its carrying amount, including goodwill. IfIn evaluating whether it is more likely than not that the ~~carrying amount~~fair value of a reporting unit ~~exceeds~~is less than its carrying amount, an entity shall assess relevant events and circumstances, including the following:

•general economic conditions;

•limitations on accessing capital;

•fluctuations in foreign exchange rates or other developments in equity and credit markets;

•industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for an entity’s products or services, or a regulatory or political development;

•cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;

•overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;

•other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, contemplation of bankruptcy, or litigation.

If, after assessing the totality of such events or circumstances, an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then no further goodwill impairment testing is necessary.

If further testing is necessary, the fair value of the reporting unit is compared to its carrying value; if the fair value of the reporting unit is less than its carrying value, a goodwill impairment loss is recorded, equal to the excess of the reporting unit’s carrying amount over its fair value (not to exceed the ~~second step of the~~total goodwill impairment test must be performed. The second step is used to measure the amount of impairment loss, if any, and compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss must be recognized in an amount equalallocated to that ~~excess.~~

reporting unit).

We ~~test~~assess goodwill for impairment on an annual basis onas of July 11st and on an interim basis when certain events or circumstances exist. In the impairment ~~test~~assessment as of July 1, ~~2017, the primary valuation method used to estimate the fair value of the our reporting unit was the market capitalization approach based on the market price of its Class A common~~

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~~stock, which the management believes to be an appropriate indicator of its fair value. Following the Acquisition, the impairment testing is~~2020, we performed a qualitative assessment as described above for each ~~segment~~reporting unit.

No impairment of goodwill was identified.

Valuation of intangible assets involves the use of significant estimates and assumptions with respect to the timing and amounts of revenue growth rates, customer attrition rates, future tax rates, royalty rates, contributory asset charges, discount rate and the resulting cash flows.We amortize finite-lived intangible assets over their estimated useful lives. We test finite-lived intangible assets for impairment ~~annually or~~ when impairment indicators are present, and if impaired, they are written down to fair value.

Recent Accounting Pronouncements

For a discussion of recently issued accounting developments and their impact or potential impact on our consolidated financial statements, see Note 2 ~~“Summary~~"Summary of Significant Accounting ~~Policies”~~Policies" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to various market risks in the ordinary course of business. The risks primarily relate to changes in the value of financial instruments due to factors such as market prices, interest rates, and currency rates.

Our ~~on exchange~~on-exchange market making activities are not dependent on the direction of any particular market and are designed to minimize capital at risk at any given time by limiting the notional size of our positions. Our ~~on exchange~~on-exchange market making strategies involve continuously quoting two-sided markets in various financial instruments with the intention of profiting by capturing the spread between the bid and offer price. If another market participant executes against the strategy’s bid or offer by crossing the spread, the strategy will ~~instantaneously~~ attempt to lock in a return by either exiting the position or hedging in one or more different correlated instruments that represent economically equivalent value to the primary instrument. Such primary or hedging instruments include but are not limited to securities and derivatives such as: common shares, exchange traded products, American Depositary Receipts (“ADRs”), options, bonds, futures, spot currencies and commodities. Substantially all of the financial instruments we trade are liquid and can be liquidated within a short time frame at low ~~costs.~~

~~The~~cost.

Our customer market making activities ~~where we interact with customers,~~ involve the taking onof position risks. The risks at any point in time are limited by the notional size of positions as well as other factors. The overall portfolio risks are quantified using internal risk models and monitored by the ~~CRO,~~Company's Chief Risk Officer, the independent risk group and senior management.

We use various proprietary risk management tools in managing our market risk on a continuous basis (including intraday). In order to minimize the likelihood of unintended activities by our market making strategies, if our risk management system detects a trading strategy generating revenues outside of our preset limits, it will freeze, or “lockdown”, that strategy and alert risk management personnel and management.

Market risk was elevated during the period, largely as a result of the COVID-19 pandemic and the governmental and other responses thereto.

For working capital purposes, we invest in money market funds and maintain interest and non-interest bearing balances at banks and in our trading accounts with clearing brokers, which are classified as Cash and cash equivalents and Receivables from broker-dealers and clearing organizations, respectively, on the Consolidated Statements of Financial Condition. These financial instruments do not have maturity dates; the balances are short term, which helps to mitigate our market risks. We also invest our working capital in short-term U.S. government securities, which are included in Financial instruments owned on the Consolidated Statements of Financial Condition. Our cash and cash equivalents held in foreign currencies are subject to the exposure of foreign currency fluctuations. These balances are monitored daily and are hedged or reduced when appropriate and therefore not material to our overall cash position.

In the normal course of business, we maintain inventories of exchange-listed and other equity securities, and to a lesser extent, fixed income securities and listed equity options. The fair value of these financial instruments at December 31, 2020 and December 31, 2019 was $3.1 billion and $2.8 billion, respectively, in long positions and $2.9 billion and $2.5 billion, respectively, in short positions. We also enter into futures contracts, which are recorded on our Consolidated Statements of Financial Condition within Receivable from brokers, dealers and clearing organizations or Payable to brokers, dealers and clearing organizations as applicable.

We calculate daily the potential losses that might arise from a series of different stress events. These include both single factor and multi factor shocks to asset prices based off both historical events and hypothetical scenarios. The stress calculations include a full recalculation of any option positions, non-linear positions and leverage. Senior management and the independent risk group carefully monitor the highest stress scenarios to help mitigate the risk of exposure to extreme events.

The purchase and sale of futures contracts requires margin deposits with a Futures Commission Merchant (“FCM”). The Commodity Exchange Act requires an FCM to segregate all customer transactions and assets from the FCM’s proprietary activities. A customer’s cash and other equity deposited with an FCM are considered commingled with all other customer funds subject to the FCM’s segregation requirements. In the event of an FCM’s insolvency, recovery may be limited to the Company’s pro rata share of segregated customer funds available. It is possible that the recovery amount could be less than the total cash and other equity deposited.

Interest Rate Risk, Derivative Instruments

In the normal course of business, we utilize derivative financial instruments in connection with our proprietary trading activities. We ~~do not designate~~carry our derivative financial instruments as hedging instruments under Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (ASC) 815 Derivatives and Hedging, other than derivatives used to reduce the impact of fluctuations in foreign exchange rates on its net investment in certain non-U.S. operations as discussed in Note 12 “Derivative Instruments” of Part II Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. Instead, we carry ourtrading derivative instruments at fair value with gains and losses included in ~~trading~~Trading income, net, in the accompanying ~~consolidated statements~~Consolidated Statements of ~~comprehensive income (loss).~~Comprehensive Income. Fair value of derivatives that are freely tradable and listed on a national exchange is determined at their last sale price as of the last business day of the period. Since gains and losses are included in earnings, we have elected not to separately disclose gains and losses on derivative instruments, but instead to disclose gains and losses within trading revenue for both derivative and non-derivative instruments.

We also use derivative instruments for risk management purposes, including cash flow hedges used to manage interest rate risk on long-term borrowings and net investment hedges used to manage foreign exchange risk. We have entered into floating-to-fixed interest rate swap agreements in order to manage interest rate risk associated with our long-term debt obligations. Additionally, we may seek to reduce the impact of fluctuations in foreign exchange rates on our net investment in certain non-U.S. operations through the use of foreign currency forward contracts. For interest rate swap agreements and foreign currency forward contracts designated as hedges, we assess our risk management objectives and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair value of the interest rate swaps or forward contracts. For instruments that meet the criteria to be considered hedging instruments under ASC 815, any gains or losses, to the extent effective, are included in Accumulated other comprehensive income on the Consolidated Statements of Financial Condition and Other comprehensive income on the Consolidated Statements of Comprehensive Income. The ineffective portion, if any, is recorded in Other, net on the Consolidated Statements of Comprehensive Income.

Futures Contracts. As part of our proprietary market making trading strategies, we use futures contracts to gain exposure to changes in values of various indices, commodities, interest rates or foreign currencies. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date. Upon entering into a futures contract, we are required to pledge to the broker an amount of cash, U.S. government securities or other assets equal to a certain percentage of the contract amount. Subsequent payments, known as variation margin, are made or received by us each day, depending on the daily fluctuations in the fair values of the underlying securities. We recognize a gain or loss equal to the daily variation margin.

Due from ~~Broker Dealers~~Broker-Dealers and Clearing Organizations. Management periodically evaluates our counterparty credit exposures to various brokers and clearing organizations with a view to limiting potential losses resulting from counterparty insolvency.

Foreign Currency Risk

~~Table of Contents~~

As a result of our international market making and execution services activities and accumulated earnings in our foreign subsidiaries, our income and net worth are subject to fluctuation in foreign exchange rates. While we generate revenues in several currencies, athe majority of our operating expenses are denominated in U.S. dollars. Therefore, depreciation in these other currencies against the U.S. dollar would negatively impact revenue upon translation to the U.S. dollar. The impact of any translation of our foreign denominated earnings to the U.S. dollar is mitigated, however, through the impact of daily hedging practices that are employed by the company.

Approximately 20.7% and 25.3% of our total revenues for the years ended December 31, 2020 and 2019, respectively, were denominated in non-U.S. Dollar currencies. We estimate that a hypothetical 10% adverse change in the value of the U.S. dollar relative to our foreign denominated earnings would have resulted in decreases in total revenues of $67.0 million and $38.4 million for the years ended December 31, 2020 and 2019, respectively.

Assets and liabilities of subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars at period-end exchange rates. Income, expense and cash flow items are translated at average exchange rates prevailing during the period. The resulting currency translation adjustments are recorded as foreign exchange translation adjustment in our ~~consolidated statements~~Consolidated Statements of ~~comprehensive income (loss)~~Comprehensive Income and ~~changes~~Consolidated Statements of Changes in ~~equity.~~Equity. Our primary currency translation exposures historically relate to net investments in subsidiaries having functional currencies denominated in the ~~Euro.~~

~~Market Risk~~

~~Our on exchange market making activities are not dependent on the direction of any particular market~~Euro, Pound Sterling, and are designed to minimize capital at risk at any given time by limiting the notional size of our positions. Our on exchange market making strategies involve continuously quoting two-sided markets in various financial instruments with the intention of profiting by capturing the spread between the bid and offer price. If another market participant executes against the strategy’s bid or offer by crossing the spread, the strategy will instantaneously attempt to lock in a return by either exiting the position or hedging in one or more different correlated instruments that represent economically equivalent value to the primary instrument. Such primary or hedging instruments include but are not limited to securities and derivatives such as: common shares, exchange traded products, American Depositary Receipts (“ADRs”), options, bonds, futures, spot currencies and commodities. Substantially all of the financial instruments we trade are liquid and can be liquidated within a short time frame at low costs.

The market making activities, where we interact with customers, involve taking on position risks. The risks at any point in time are limited by the notional size of positions as well as other factors. The overall portfolio risks are quantified using internal risk models and monitored by the CRO, the independent risk group and senior management.

For working capital purposes, we invest in money market funds and maintain interest and non-interest bearing balances at banks and in our trading accounts with clearing brokers, which are classified as Cash and cash equivalents and Receivable from brokers, dealers and clearing organizations, respectively, on the consolidated statements of financial condition. These financial instruments do not have maturity dates; the balances are short term, which helps to mitigate our market risks. We also invest our working capital in short-term U.S. government securities, which are included in Financial instruments owned on the consolidated statements of financial condition. Our cash and cash equivalents held in foreign currencies are subject to the exposure of foreign currency fluctuations. These balances are monitored daily and are hedged or reduced when appropriate and therefore not material to our overall cash position.

In the normal course of business, we maintain inventories of exchange-listed and other equity securities, and to a lesser extent, fixed income securities and listed equity options. The fair value of these financial instruments at December 31, 2017 and December 31, 2016 was $2.7 billion and $1.8 billion, respectively, in long positions and $2.4 billion and $1.4 billion, respectively, in short positions. We also enter into futures contracts, which are recorded on our consolidated statements of financial condition within Receivable from brokers, dealers and clearing organizations or Payable to brokers, dealers and clearing organizations as applicable.

Canadian dollar.

~~Table of Contents~~

stress calculations include a full recalculation of any option positions, non-linear positions and leverage. Senior management and the independent risk function carefully monitor the highest stress scenarios to ensure that the Company is not unduly exposed to any extreme events.

The potential change in fair value is estimated to be a gain of $6.5 million using a hypothetical 10% increase in equity prices as of December 31, 2017, and an estimated loss of $9.5 million using a hypothetical 10% decrease in equity prices at December 31, 2017. These estimates take into account the offsetting effect of such hypothetical price movements on the fair value of short positions against long positions, the effect on the fair value of options, futures, nonlinear positions and leverage as well as assumed correlations with non-equity asset classes, such as fixed income, commodities and foreign exchange. The Company relies on internally developed systems in order to model and calculate stress risks to a variety of different scenarios.

Financial Instruments with Off Balance Sheet Risk

We enter into various transactions involving derivatives and other off-balance sheet financial instruments. These financial instruments include futures, forward contracts, swaps, and exchange-traded options. These derivative financial instruments are used to conduct trading activities and manage market risks and are, therefore, subject to varying degrees of market and credit risk. Derivative transactions are entered into for trading purposes or to economically hedge other positions or transactions.

Futures and forward contracts provide for delayed delivery of the underlying instrument. In situations where we write listed options, we receive a premium in exchange for giving the buyer the right to buy or sell the security at a future date at a contracted price. The contractual or notional amounts related to these financial instruments reflect the volume and activity and do not necessarily reflect the amounts at risk. Futures contracts are executed on an exchange, and cash settlement is made on a daily basis for market movements, typically with a central clearing house as the counterparty. Accordingly, futures contracts generally do not have credit risk. The credit risk for forward contracts, options, and swaps is limited to the unrealized market valuation gains recorded in the ~~statements~~Consolidated Statements of ~~financial condition.~~Financial Condition. Market risk is substantially dependent upon the value of the underlying financial instruments and is affected by market forces, such as volatility and changes in interest and foreign exchange rates.

~~Table of Contents~~

ITEM 8. FINANCIAL STATEMENTS ~~AND SUPPLEMENTARY DATA~~

Index to Consolidated Financial Statements


			PAGE NUMBER

Report of Independent Registered Public Accounting Firm		79 82

Consolidated Statements of Financial Condition ~~as of December 31, 2017 and 2016~~		81 83

Consolidated Statements of Comprehensive Income ~~for the years ended December 31, 2017, 2016, and 2015~~(Loss)		83 84

Consolidated Statements of Changes in Equity ~~for the years ended December 31, 2017, 2016, and 2015~~		84 85

Consolidated Statements of Cash Flows ~~for the years ended December 31, 2017, 2016, and 2015~~		86 86

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Notes to Consolidated Financial Statements		88 88

~~Supplemental Financial Information~~	~~134~~

~~Consolidated Quarterly Results of Operations (unaudited)~~	~~134~~

~~Table of Contents~~

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To theBoard of Directors and Stockholders of Virtu Financial, Inc.:

~~Opinion~~

Opinions on the Financial Statements

and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of Virtu Financial, Inc. and ~~Subsidiaries~~its subsidiaries (the ~~‘‘Company’’~~“Company”) as of December 31, ~~2017~~2020 and ~~2016,~~2019, and the related consolidated statements of comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended December 31, ~~2017 and~~2020, including the related notes (collectively referred to as the ~~"financial statements"~~“consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2020 and ~~2016,~~2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2017,~~2020 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.

Basis for ~~Opinion~~

~~These~~Opinions

The Company's management is responsible for these consolidated financial statements, ~~are the responsibility~~for maintaining effective internal control over financial reporting, and for its assessment of the ~~Company’s management.~~effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express ~~an opinion~~opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the ~~audit~~audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding offraud, and whether effective internal control over financial reporting ~~but not for the purpose of expressing an opinion on the effectiveness~~was maintained in all material respects.

Our audits of the ~~Company’s internal control over~~consolidated financial ~~reporting. Accordingly, we express no such opinion.~~

~~Our audits~~statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, 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 consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to theconsolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion

on the consolidatedfinancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Trading Income, net (“Trading Income”)

As described in Note2 to the consolidated financial statements, $2.493 billion of the Company’s Trading Income for the year ended December 31, 2020 is composed of changes in the fair value of trading assets and liabilities (i.e., unrealized gains and losses) and realized gains and losses on trading assets and liabilities. Trading gains and losses on financial instruments owned and financial instruments sold, not yet purchased, are recorded on the trade date and reported on a net basis in the Consolidated Statements of Comprehensive Income.

The principal considerations for our determination that performing procedures relating to Trading Income is a critical audit matter are the significant audit effort in performing procedures and evaluating audit evidence related to the transactions which comprise the trading income.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s calculation of Trading Income, including controls over the completeness, accuracy, existence, and valuation of trading assets and trading liabilities. These procedures alsoincluded, among others, testing of the inputs used by management in their trading income calculations and independently recalculating trading income. The procedures performed over testing of the inputs include (i) confirming a sample of trading assets, trading liabilities and cash (collectively the “equity value”) within each trading portfolio at the balance sheet date with external third parties; (ii) developing independent prices for a sample of trading assets and liabilities at the balance sheet date and comparing management’s prices to the independently developed prices (iii) testing a sample of purchases and sales throughout the year by agreeing the quantity and price to third-party documentation, and (iv) testing the equity value of a sample of trading portfolios throughout the year by comparing the amounts to third party clearing statements.

/s/ ~~Deloitte & Touche~~PricewaterhouseCoopers LLP

New York, NY

~~March 13, 2018~~

New York

February 25, 2021

We have served as the Company’s auditor since ~~2011.~~

2018.

Table of Contents

Virtu Financial, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

Additional

Retained

Accumulated

Total

Class A

Class C

Class D

Paid-in

Earnings

Other

Virtu Financial Inc.

Non-

(in thousands, except

Common Stock

Common Stock

Common Stock

Treasury Stock

Capital

Class A-1

Class A-2

(Accumulated

Comprehensive

Stockholders'

Controlling

Total

share and interest data)

Shares

Amounts

Shares

Amounts

Shares

Amounts

Shares

Amounts

Amounts

Interests

Amounts

Interests

Amounts

Deficit)

Income (Loss)

Equity

Interest

Equity

Balance at December 31, 2014

—

$
—

—

$
—

—

$
—

—

$
—

$
—

1,964,826

$
19,648

99,855,666

$
287,705

$
(91,383)

$
(3,705)

$
212,265

$
—

$
212,265

Share based compensation through April 15, 2015

—

—

—

—

—

—

—

—

—

—

—

6,418

438

—

—

438

—

438

Repurchase of Class A-2 interests

—

—

—

—

—

—

—

—

—

—

—

(13,495)

(97)

—

—

(97)

—

(97)

Distribution to members through April 15, 2015

—

—

—

—

—

—

—

—

—

—

—

—

—

(130,000)

—

(130,000)

—

(130,000)

Comprehensive income through April 15, 2015:

Net income

—

—

—

—

—

—

—

—

—

—

—

—

—

83,147

—

83,147

—

83,147

Foreign exchange translation adjustment

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(4,633)

(4,633)

—

(4,633)

Reorganization of equity structure

18,763,664

—

36,746,041

—

79,610,490

1

—

—

63,261

(1,964,826)

(19,648)

(99,848,589)

(288,046)

138,236

8,338

(97,858)

392,291

294,433

Balance post-reorganization

18,763,664

—

36,746,041

—

79,610,490

1

—

—

63,261

—

—

—

—

—

—

63,262

392,291

455,553

Issuance of Common Stock, net of offering costs

19,012,112

—

—

—

—

—

—

—

327,366

—

—

—

—

—

—

327,366

—

327,366

Repurchase of Virtu Financial Units and Corresponding number of Class A and C Common Stock

(3,470,724)

—

(12,214,224)

—

—

—

—

—

(277,153)

—

—

—

—

—

—

(277,153)

—

(277,153)

Share based compensation vested upon the IPO

—

—

—

—

—

—

—

—

44,908

—

—

—

—

—

—

44,908

—

44,908

Adjustments for changes in proportionate ownership in Virtu Financial

—

—

—

—

—

—

—

—

(22,513)

—

—

—

—

—

—

(22,513)

22,513

—

Issuance of tax receivable agreements

—

—

—

—

—

—

—

—

(23,041)

—

—

—

—

—

—

(23,041)

—

(23,041)

Share based compensation after April 15, 2015

576,693

—

—

—

—

—

—

—

19,278

—

—

—

—

—

—

19,278

—

19,278

Repurchase of Class C common stock

—

—

(57,106)

—

—

—

—

—

(1,368)

—

—

—

—

—

—

(1,368)

—

(1,368)

Treasury stock purchases

—

—

—

—

—

—

(169,649)

(3,819)

—

—

—

—

—

—

—

(3,819)

—

(3,819)

Comprehensive income, after April 15, 2015:

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Net income

—

—

—

—

—

—

—

—

—

—

—

—

—

20,887

—

20,887

93,456

114,343

Foreign exchange translation adjustment

—

—

—

—

—

—

—

—

—

—

—

—

—

—

99

99

279

378

Distribution from Virtu Financial to non-controlling interest, after April 15, 2015

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(81,377)

(81,377)

Dividends to Class A shareholders

—

—

—

—

—

—

—

—

—

—

—

—

—

(17,362)

—

(17,362)

—

(17,362)

Issuance of common stock in connection with secondary offering, net of offering costs

3,498,113

—

—

—

—

—

—

—

7,782

—

—

—

—

—

—

7,782

—

7,782

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering

—

—

(3,498,113)

—

—

—

—

—

(8,805)

—

—

—

—

—

—

(8,805)

—

(8,805)

Issuance of tax receivable agreements in connection with secondary offering

—

—

—

—

—

—

—

—

1,187

—

—

—

—

—

—

1,187

—

1,187

Balance at December 31, 2015

38,379,858

$
—

20,976,598

$
—

79,610,490

$
1

(169,649)

$
(3,819)

$
130,902

—

$
—

—

$
—

$
3,525

$
99

$
130,708

$
427,162

$
557,870

Share based compensation

953,054

—

(58,070)

—

—

—

—

—

24,893

—

—

—

—

—

—

24,893

—

24,893

Repurchase of Class C common stock

—

—

(4,153)

—

—

—

—

—

(98)

—

—

—

—

—

—

(98)

—

(98)

Treasury stock purchases

—

—

—

—

—

—

(283,417)

(4,539)

—

—

—

—

—

—

—

(4,539)

—

(4,539)

Net income

—

—

—

—

—

—

—

—

—

—

—

—

—

32,980

—

32,980

125,360

158,340

Foreign exchange translation adjustment

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(351)

(351)

(814)

(1,165)

Distribution from Virtu Financial to non-controlling interest

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(162,969)

(162,969)

Dividends

—

—

—

—

—

—

—

—

—

—

—

—

—

(37,759)

—

(37,759)

—

(37,759)

Issuance of common stock in connection with secondary offering, net of offering costs

1,103,668

—

—

—

—

—

—

—

16,677

—

—

—

—

—

—

16,677

—

16,677

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering

—

—

(1,103,668)

—

—

—

—

—

(17,383)

—

—

—

—

—

—

(17,383)

—

(17,383)

Issuance of tax receivable agreements in connection with secondary offering

—

—

—

—

—

—

—

—

545

—

—

—

—

—

—

545

—

545

Balance at December 31, 2016

40,436,580

$
—

19,810,707

$
—

79,610,490

$
1

(453,066)

$
(8,358)

$
155,536

—

$
—

—

$
—

$
(1,254)

$
(252)

$
145,673

$
388,739

$
534,412

Share based compensation

546,265

—

(34,019)

—

—

—

—

—

16,846

—

—

—

—

—

—

16,846

—

16,846

Repurchase of Class C common stock

—

—

(540,686)

—

—

—

—

—

(9,143)

—

—

—

—

—

—

(9,143)

—

(9,143)

Treasury stock purchases

—

—

—

—

—

—

(163,857)

(2,683)

—

—

—

—

—

—

—

(2,683)

—

(2,683)

Net income

—

—

—

—

—

—

—

—

—

—

—

—

—

2,939

—

2,939

15,959

18,898

Foreign exchange translation adjustment

—

—

—

—

—

—

—

—

—

—

—

—

—

—

3,243

3,243

5,874

9,117

Distribution from Virtu Financial to non-controlling interest

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(89,563)

(89,563)

Dividends

—

—

—

—

—

—

—

—

—

—

—

—

—

(63,814)

—

(63,814)

—

(63,814)

Issuance of Class A common stock

48,076,924

1

—

—

—

—

—

—

735,973

—

—

—

—

—

—

735,974

—

735,974

Issuance of common stock in connection with employee exchanges

1,355,763

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges

—

—

(1,355,763)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Issuance of tax receivable agreements in connection with employee exchange

—

—

—

—

—

—

—

—

1,534

—

—

—

—

—

—

1,534

—

1,534

Balance at December 31, 2017

90,415,532

1

17,880,239

—

79,610,490

1

(616,923)

(11,041)

900,746

—

—

—

—

(62,129)

2,991

830,569

321,009

1,151,578

Years Ended December 31, 2020, 2019 and 2018

~~The total assets and total liabilities are included in assets of business held for sale and accounts payables and accrued expenses and other liabilities, respectively,~~

~~Financial~~The table below summarizes financial assets and liabilities not ~~measured at fair value as of December 31, 2017:~~

December 31, 2017

Quoted Prices

Significant

in Active

Other

Significant

Markets for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Carrying Value

Fair Value

(Level 1)

(Level 2)

(Level 3)
Assets

Cash and cash equivalents

$
532,887

$
532,887

$
532,887

$
—

$
—

Securities borrowed

$
1,471,172

$
1,471,172

$
—

$
1,471,172

$
—

Receivables from broker dealers and clearing organizations

972,018

972,018

36,513

935,505

—

Total Assets

$
2,976,077

$
2,976,077

$
569,400

$
2,406,677

$
—

Liabilities

Short-term borrowings

$
27,883

$
27,883

$
—

$
27,883

$
—

Long-term borrowings

$
1,388,548

$
1,465,489

$
—

$
1,465,489

$
—

Securities loaned

$
754,687

$
754,687

$
—

$
754,687

$
—

Securities sold under agreements to repurchase

$
390,642

$
390,642

$
—

$
390,642

$
—

Payables to broker dealer and clearing organizations

716,205

716,205

2,925

713,280

—

Total Liabilities

$
3,277,965

$
3,354,906

$
2,925

$
3,351,981

$
—

F~~inancial assets and liabilities not measured at fair value as of December 31, 2016:~~

December 31, 2016

Quoted Prices

Significant

in Active

Other

Significant

Markets for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Carrying Value

Fair Value

(Level 1)

(Level 2)

(Level 3)

Assets

Cash and cash equivalents

$
181,415

$
181,415

$
181,415

$
—

$
—

Securities borrowed

$
220,005

$
220,005

$
—

$
220,005

$
—

Receivables from broker dealers and clearing organizations

448,728

972,018

—

972,018

—

Total Assets

$
850,148

$
1,373,438

$
181,415

$
1,192,023

$
0

Liabilities

Short-term borrowings

$
25,000

$
25,000

$
—

$
25,000

$
—

Long-term borrowings

$
564,957

$
564,957

$
—

$
564,957

$
—

Securities loaned

$
222,203

$
222,203

$
—

$
222,203

$
—

Payables to broker dealer and clearing organizations

695,978

695,978

—

695,978

—

Total Liabilities

$
1,508,138

$
1,508,138

$
—

$
1,508,138

$
—

~~Subsequent to consummation of the Reorganization Transactions and the IPO, the~~

Total operating lease expense, net of amortization expense related to landlord incentives, for the years ended December 31, 2017, 2016 and 2015 was approximately $13.1 million, $2.4 million, and $5.3 million, respectively. Occupancy lease expense for the years ended December 31, 2017, 2016 and 2015 of $12.9 million, $1.3 million and $3.9 million, respectively, is included within operations and administrative expenses in the consolidated statements of comprehensive income. Communication equipment lease expense for the years ended December 31, 2017, 2016 and 2015 of $~~0.2~~ ~~million, $1.1 million and $1.4 million, respectively, is included within communication and data processing in the accompanying consolidated statements of comprehensive income.~~

~~The consolidated financial statement required to be filed in the Form 10-K are listed in Part II, Item 8 hereof.~~

~~See “Index to Consolidated Financial Statements” in this Form 10-K listed in Part II, Item 8 hereof.~~

~~Delaware~~	~~32-0420206~~
Delaware		32-0420206
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Class of Stock						Shares Outstanding as of February 25, 2021
Class A common stock, par value $0.00001 per share						122,186,196
Class C common stock, par value $0.00001 per share						10,135,182
Class D common stock, par value $0.00001 per share						60,091,740

~~Class of Stock~~		Shares Outstanding as of March 13, 2018
~~Class A common stock, par value $0.00001 per share~~		~~91,512,582~~
~~Class C common stock, par value $0.00001 per share~~		~~17,066,564~~
~~Class D common stock, par value $0.00001 per share~~		~~79,610,49~~0


	~~Percentage of~~
	~~Adjusted Net Trading~~
	~~Income(1)~~
~~Asset~~	~~(Year Ended~~
~~Classes~~	~~December 31, 2017)~~		~~Selected Venues in Which We Make Markets~~
~~Americas Equities~~	50	%	~~BATS, BM&F Bovespa, CHX, CME, MexDer, NASDAQ, NYSE, NYSE Arca, NYSE American, TSX, major private liquidity pools~~
~~Rest Of World (“ROW”) Equities~~	17	%	Amsterdam, Aquis, ASX, BATS Europe, Bolsa de Madrid, Borsa Italiana, Brussels, EUREX, Euronext -Paris, ICE Futures Europe, Johannesburg Stock Exchange, Lisbon, LSE, OSE, SBI Japannext, SGX, SIX Swiss Exchange, TOCOM, TSE
~~Global Fixed Income, Currencies, Commodities ("FICC"), Options and Other~~	23	%	~~BOX, BrokerTec, CME, Currenex, EBS, eSpeed, Hotspot, ICE, ICE Futures Europe, LMAX, NASDAQ Energy Exchange, NYSE Arca Options, PHLX, Reuters/Fxall, SGX, TOCOM~~


~~Asset Classes~~		~~Selected Venues in Which We Make Markets~~
~~Americas Equities~~		~~BATS, BM&F Bovespa, CHX, CME, MexDer, NASDAQ, NYSE, NYSE Arca, NYSE American, TSX, major private liquidity pools~~
~~Rest of World Equities~~		Amsterdam, Aquis, ASX, BATS Europe, Bolsa de Madrid, Borsa Italiana, Brussels, EUREX, Euronext -Paris, ICE Futures Europe, Johannesburg Stock Exchange, Lisbon, LSE, OSE, SBI Japannext, SGX, SIX Swiss Exchange, TOCOM, TSE
~~Global FICC, Options, and Other~~		~~BOX, BrokerTec, CME, Currenex, EBS, eSpeed, Hotspot, ICE, ICE Futures Europe, LMAX, NASDAQ Energy Exchange, NYSE Arca Options, PHLX, Reuters/Fxall, SGX, TOCOM~~

300 Vesey Street New York, New York 10282	~~10282~~
One Liberty Plaza
165 Broadway			10006
New York,		New York
(Address of principal executive offices)			(Zip Code)


		Year Ended December 31, 2016
		Sale Price				Dividend per Share
		High		Low		of common stock
First Quarter	$	23.90	$	19.76	$	0.24
Second Quarter	$	22.16	$	17.19	$	0.24
Third Quarter	$	18.00	$	14.97	$	0.24
Fourth Quarter	$	16.20	$	12.55	$	0.24


		Year Ended December 31, 2017
		Sale Price				Dividend per Share
		High		Low		of common stock
First Quarter	$	19.07	$	15.78	$	0.24
Second Quarter	$	18.30	$	14.60	$	0.24
Third Quarter	$	18.15	$	14.60	$	0.24
Fourth Quarter	$	18.50	$	13.10	$	0.24


	Period Ending
Index	4/16/2015	6/30/2015	12/31/2015	6/30/2016	12/31/2016	6/30/2017	12/31/2017
Virtu Financial Inc.	100.00	123.58	121.75	105.88	93.82	103.82	107.65
S&P 500	100.00	98.37	98.52	102.30	110.30	120.60	134.38
NYSE ARCA Securities Broker/Dealer	100.00	103.10	93.33	78.82	107.58	118.12	139.00


	Years Ended December 31,
(In thousands, except share and per share data)	2017		2016		2015		2014		2013
Consolidated Statements of Comprehensive Income Data:
Revenues:
Trading income, net	$	766,027	$	665,465	$	757,455	$	685,150	$	623,733
Interest and dividends income		50,407		26,419		28,136		27,923		31,090
Commissions, net and technology services(1)		116,503		10,352		10,622		9,980		9,682
Other, net(2)		95,045		36		—		—		—
Total revenues		1,027,982		702,272		796,213		723,053		664,505

Operating Expenses:
Brokerage, exchange and clearance fees, net		256,926		221,214		232,469		230,965		195,146
Communication and data processing		131,506		71,001		68,647		68,847		64,689
Employee compensation and payroll taxes		177,489		85,295		88,026		84,531		78,353
Payments for order flow(3)		27,727		—		—		—		—
Interest and dividends expense		91,993		56,557		52,423		47,083		45,196
Operations and administrative		65,137		23,039		25,991		21,923		27,215
Depreciation and amortization		47,327		29,703		33,629		30,441		23,922
Amortization of purchased intangibles and acquired capitalized software		15,447		211		211		211		1,011
Acquisition related retention bonus		—		—		—		2,639		6,705
Debt issue cost related to debt refinancing(4)		10,460		5,579		—		—		10,022
Initial public offering fees and expenses(5)		—		—		—		8,961		—
Transaction advisory fees and expenses(6)		25,270		—		—		3,000		—
Reserve for legal matters(7)		657		—		5,440		—		—
Charges related to share based compensation at IPO(8)		772		1,755		44,194		—		—
Financing interest expense on long-term borrowings		64,107		28,327		29,254		30,894		24,646
Total operating expenses		914,818		522,681		580,284		529,495		476,905
Income before income taxes		113,164		179,591		215,929		193,558		187,600

Provision for income taxes(9)		94,266		21,251		18,439		3,501		5,397

Net income	$	18,898	$	158,340		197,490	$	190,057	$	182,203
Noncontrolling interest		(15,959)		(125,360)		(176,603)
Net income available for common stockholders	$	2,939	$	32,980		20,887

Earnings per share
Basic	$	0.03	$	0.83	$	0.60
Diluted	$	0.03	$	0.83	$	0.59

Weighted average common shares outstanding
Basic		62,579,147		38,539,091		34,964,312
Diluted		62,579,147		38,539,091		35,339,585

Net income	$	18,898	$	158,340	$	197,490	$	190,057	$	182,203
Other comprehensive income
Foreign exchange translation adjustment		9,117		(1,165)		(4,255)		(5,032)		1,382
Comprehensive income		28,015		157,175		193,235	$	185,025	$	183,585
Less: Comprehensive income attributable to noncontrolling interest		(21,833)		(124,546)		(172,249)
Comprehensive income attributable to common stockholders	$	6,182	$	32,629		20,986


	As of December 31,
	2017		2016		2015		2014		2013
Consolidated Statements of Financial Condition Data:
Cash and cash equivalents	$	532,887	$	181,415	$	163,235	$	75,864	$	66,010
Total assets		7,320,006		3,692,390		3,391,930		3,319,458		3,963,570
Senior secured credit facility		1,388,548		564,957		493,589		495,724		500,827
Total liabilities		6,168,428		3,157,978		2,834,060		2,812,760		3,510,282
Class A-1 redeemable interest(10)		—		—		—		294,433		250,000
Total Virtu Financial Inc. stockholders' equity		830,569		145,673		130,708		212,265		203,288
Noncontrolling interest		321,009		388,739		427,162		—		—
Total equity		1,151,578		534,412		557,870		506,698		453,288


	For the Year Ended
	December 31,
	2017			2016			2015
Reconciliation of Trading income, net to Adjusted Net Trading Income
Trading income, net	$	766,027		$	665,465		$	757,455
Interest and dividends income		50,407			26,419			28,136
Commissions, net and technology services		116,503			10,352			10,622
Brokerage, exchange and clearance fees, net		(256,926)			(221,214)			(232,469)
Payments for order flow		(27,727)			—			—
Interest and dividends expense		(91,993)			(56,557)			(52,423)
Adjusted Net Trading Income	$	556,291		$	424,465		$	511,321

Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Net Income	$	18,898		$	158,340		$	197,490
Financing interest expense on long-term borrowings		64,107			28,327			29,254
Debt issue cost related to debt refinancing		10,460			5,579			—
Depreciation and amortization		47,327			29,703			33,629
Amortization of purchased intangibles and acquired capitalized software		15,447			211			211
Provision for Income Taxes		94,266			21,251			18,439
EBITDA	$	250,505		$	243,411		$	279,023

Severance		14,911			1,252			1,065
Reserve for legal matters		657			—			5,440
Transaction advisory fees and expenses		25,270			994			—
Termination of office leases		3,671			(319)			2,729
Acquisition related retention bonus		23,050			—			—
Trading related settlement income		(628)			(2,975)			—
Other, net		(95,045)			(36)			—
Equipment write-off		1,216			428			—
Share based compensation		21,825			18,222			15,202
Charges related to share based compensation at IPO, 2015 Management Incentive Plan		5,225			5,606			4,710
Charges related to share based compensation awards at IPO		740			1,755			44,194
Adjusted EBITDA	$	251,397		$	268,338		$	352,363

Selected Operating Margins
Net Income Margin (1)		3.4	%		37.3	%		38.6	%
EBITDA Margin (2)		45.0	%		57.3	%		54.6	%
Adjusted EBITDA Margin (3)		45.2	%		63.2	%		68.9	%


(in thousands, except percentages)	2017						2016						2015
Adjusted Net Trading Income by Category:		Total		Average Daily	%			Total		Average Daily	%			Total		Average Daily	%
Market Making:
Americas Equities	$	275,714	$	1,098	49.6	%	$	124,246	$	493	29.2	%	$	135,662	$	538	26.5
ROW Equities		92,232		367	16.6	%		94,436		375	22.2	%		103,478		410	20.2
Global FICC, Options and Other		127,749		509	23.0	%		195,036		775	46.0	%		255,129		1,013	49.9
Unallocated (1)		(6,243)		(25)	(1.2)	%		395		2	0.2	%		6,430		26	0.9
Total market making	$	489,452	$	1,949	88		$	414,113	$	1,645	97.6		$	500,699	$	1,987	97.5

Execution Services		67,345		268	12.1	%		10,352		41	2.4	%		10,622		42.15	2.5

Corporate		(506)		(2)	(0.1)	%		-		-	-			-		-	-

Adjusted Net Trading Income	$	556,291	$	2,215	100.0	%	$	424,465	$	1,686	100.0	%	$	511,321	$	2,029	100.0


Period			Percentage
2019			103.375%
2020			101.688%
2021 and thereafter			100.000%


		Payments due by periods
				Less than						More than
(in thousands)		Total		1 year		1-3 years		3-5 years		5 years
Long-term debt obligations(1)		1,431,059		—		31,059		1,400,000		—
Capital leases		43,530		18,829		24,701		—		—
Operating leases		260,084		33,331		59,950		39,080		127,723
Total contractual obligations	$	1,734,673	$	52,160	$	115,710	$	1,439,080	$	127,723


	As of December 31,
(in thousands, except share and interest data)	2017		2016

(in thousands, except share data)					(in thousands, except share data)	December 31, 2020		December 31, 2019
Assets					Assets
Cash and cash equivalents	$	532,887	$	181,415	Cash and cash equivalents	$	889,559	$	732,164
Cash restricted or segregated under regulations and other					Cash restricted or segregated under regulations and other	117,446		41,116
Securities borrowed		1,471,172		220,005	Securities borrowed	1,425,016		1,928,763
Receivables from broker dealers and clearing organizations		972,018		448,728
Securities purchased under agreements to resell					Securities purchased under agreements to resell	22,866		143,032
Receivables from broker-dealers and clearing organizations					Receivables from broker-dealers and clearing organizations	1,684,006		1,318,584
Trading assets, at fair value:					Trading assets, at fair value:
Financial instruments owned		2,117,579		1,683,999	Financial instruments owned	2,369,192		2,068,734
Financial instruments owned and pledged		595,043		143,883	Financial instruments owned and pledged	746,539		696,956
Property, equipment and capitalized software (net of accumulated depreciation of $375,656 and $113,184 as of December 31, 2017 and 2016, respectively)		137,018		29,660
Receivables from customers					Receivables from customers	214,478		103,531
Property, equipment and capitalized software (net of accumulated depreciation of $455,961 and $457,229 as of December 31, 2020 and December 31, 2019, respectively)					Property, equipment and capitalized software (net of accumulated depreciation of $455,961 and $457,229 as of December 31, 2020 and December 31, 2019, respectively)	113,590		116,089
Operating lease right-of-use assets					Operating lease right-of-use assets	268,864		314,526
Goodwill		844,883		715,379	Goodwill	1,148,926		1,148,926
Intangibles (net of accumulated amortization of $123,408 and $110,908 as of December 31, 2017 and December 31, 2016, respectively)		111,224		992
Intangibles (net of accumulated amortization of $183,494 and $219,239 as of December 31, 2020 and December 31, 2019, respectively)					Intangibles (net of accumulated amortization of $183,494 and $219,239 as of December 31, 2020 and December 31, 2019, respectively)	454,499		529,638
Deferred tax assets		125,760		193,859	Deferred tax assets	193,070		214,671
Assets of business held for sale		55,070		—
Other assets ($98,364 and $36,480, at fair value, as of December 31, 2017 and 2016, respectively)		357,352		74,470

Other assets ($68,316 and $48,966, at fair value, as of December 31, 2020 and December 31, 2019, respectively)					Other assets ($68,316 and $48,966, at fair value, as of December 31, 2020 and December 31, 2019, respectively)	317,747		252,640
Total assets	$	7,320,006	$	3,692,390	Total assets	$	9,965,798	$	9,609,370

Liabilities and equity					Liabilities and equity
Liabilities					Liabilities
Short-term borrowings	$	27,883	$	25,000	Short-term borrowings	$	64,686	$	73,486
Securities loaned		754,687		222,203	Securities loaned	948,256		1,600,099
Securities sold under agreements to repurchase		390,642		—	Securities sold under agreements to repurchase	461,235		340,742
Payables to broker dealers and clearing organizations		716,205		695,978
Payables to broker-dealers and clearing organizations					Payables to broker-dealers and clearing organizations	876,446		826,750
Payables to customers					Payables to customers	118,826		89,719
Trading liabilities, at fair value:					Trading liabilities, at fair value:
Financial instruments sold, not yet purchased		2,384,598		1,349,155	Financial instruments sold, not yet purchased	2,923,708		2,497,958
Tax receivable agreement obligations		147,040		231,404	Tax receivable agreement obligations	271,165		269,282
Accounts payable and accrued expenses and other liabilities		358,825		69,281

Accounts payable, accrued expenses and other liabilities					Accounts payable, accrued expenses and other liabilities	491,818		399,168
Operating lease liabilities					Operating lease liabilities	315,340		365,364
Long-term borrowings		1,388,548		564,957	Long-term borrowings	1,639,280		1,917,866
Total liabilities	$	6,168,428	$	3,157,978	Total liabilities	8,110,760		8,380,434

Commitments and Contingencies (Note 16)					Commitments and Contingencies (Note 16)	0		0

Virtu Financial Inc. Stockholders' equity					Virtu Financial Inc. Stockholders' equity
Class A common stock (par value $0.00001), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 90,415,532 and 40,436,580 shares, Outstanding — 89,798,609 and 39,983,514 shares at December 31, 2017 and 2016, respectively		1		—
Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at December 31, 2017 and 2016, respectively		—		—
Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued — 17,880,239 and 19,810,707 shares, Outstanding — 17,880,239 and 19,810,707, at December 31, 2017 and 2016, respectively		—		—
Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 79,610,490 and 79,610,490 shares at December 31, 2017 and 2016, respectively		1		1
Treasury stock, at cost, 616,923 and 453,066 shares at December 31, 2017 and 2016, respectively		(11,041)		(8,358)
Class A common stock (par value $0.00001), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 125,627,277 and 120,435,912 shares, Outstanding — 122,012,180 and 118,257,141 shares at December 31, 2020 and December 31, 2019, respectively					Class A common stock (par value $0.00001), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 125,627,277 and 120,435,912 shares, Outstanding — 122,012,180 and 118,257,141 shares at December 31, 2020 and December 31, 2019, respectively	1		1
Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at December 31, 2020 and December 31, 2019, respectively					Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at December 31, 2020 and December 31, 2019, respectively	0		0
Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued and Outstanding — 10,226,939 and 12,887,178 shares at December 31, 2020 and December 31, 2019, respectively					Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued and Outstanding — 10,226,939 and 12,887,178 shares at December 31, 2020 and December 31, 2019, respectively	0		0
Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 60,091,740 and 60,091,740 shares at December 31, 2020 and December 31, 2019, respectively					Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 60,091,740 and 60,091,740 shares at December 31, 2020 and December 31, 2019, respectively	1		1
Treasury stock, at cost, 3,615,097 and 2,178,771 shares at December 31, 2020 and December 31, 2019, respectively					Treasury stock, at cost, 3,615,097 and 2,178,771 shares at December 31, 2020 and December 31, 2019, respectively	(88,923)		(55,005)
Additional paid-in capital		900,746		155,536	Additional paid-in capital	1,160,567		1,077,398
Accumulated deficit		(62,129)		(1,254)
Retained earnings (accumulated deficit)					Retained earnings (accumulated deficit)	422,381		(90,374)
Accumulated other comprehensive income (loss)		2,991		(252)	Accumulated other comprehensive income (loss)	(25,487)		(647)
Total Virtu Financial Inc. stockholders' equity	$	830,569	$	145,673	Total Virtu Financial Inc. stockholders' equity	1,468,540		931,374
Noncontrolling interest		321,009		388,739
Total equity	$	1,151,578	$	534,412

Total liabilities and equity	$	7,320,006	$	3,692,390


	For the Years Ended
	December 31,							Years Ended December 31,
(in thousands, except share and per share data)	2017		2016		2015		(in thousands, except share and per share data)		2020		2019		2018
Revenues:							Revenues:
Trading income, net	$	766,027	$	665,465	$	757,455	Trading income, net		$	2,493,248	$	912,316	$	1,266,682
Interest and dividends income		50,407		26,419		28,136	Interest and dividends income		62,119		108,778		87,508
Commissions, net and technology services		116,503		10,352		10,622	Commissions, net and technology services		600,510		498,544		184,339
Other, net		95,045		36		—	Other, net		83,454		(2,146)		340,189
Total revenue		1,027,982		702,272		796,213	Total revenue		3,239,331		1,517,492		1,878,718

Operating Expenses:							Operating Expenses:
Brokerage, exchange and clearance fees, net		256,926		221,214		232,469
Brokerage, exchange, clearance fees and payments for order flow, net							Brokerage, exchange, clearance fees and payments for order flow, net		758,843		386,888		376,424
Communication and data processing		131,506		71,001		68,647	Communication and data processing		213,750		209,393		176,120
Employee compensation and payroll taxes		177,489		85,295		88,026	Employee compensation and payroll taxes		393,536		383,713		215,556
Payments for order flow		27,727		—		—

Interest and dividends expense		91,993		56,557		52,423	Interest and dividends expense		125,649		158,039		141,814
Operations and administrative		65,137		23,039		25,991	Operations and administrative		94,558		103,642		66,769
Depreciation and amortization		47,327		29,703		33,629	Depreciation and amortization		66,741		65,644		61,154
Amortization of purchased intangibles and acquired capitalized software		15,447		211		211	Amortization of purchased intangibles and acquired capitalized software		74,254		70,595		26,123
Debt issue cost related to debt refinancing		10,460		5,579		—
Termination of office leases							Termination of office leases		9,608		66,452		23,357
Debt issue cost related to debt refinancing, prepayment and commitment fees							Debt issue cost related to debt refinancing, prepayment and commitment fees		28,879		41,132		11,727
Transaction advisory fees and expenses		25,270		—		—	Transaction advisory fees and expenses		2,941		26,117		11,487
Reserve for legal matters		657		—		5,440

Charges related to share based compensation at IPO		772		1,755		44,194	Charges related to share based compensation at IPO		0		0		24
Financing interest expense on long-term borrowings		64,107		28,327		29,254	Financing interest expense on long-term borrowings		87,735		121,859		71,800
Total operating expenses		914,818		522,681		580,284	Total operating expenses		1,856,494		1,633,474		1,182,355
Income before income taxes and noncontrolling interest		113,164		179,591		215,929
Provision for income taxes		94,266		21,251		18,439
Net income		18,898		158,340		197,490
Income (loss) before income taxes and noncontrolling interest							Income (loss) before income taxes and noncontrolling interest		1,382,837		(115,982)		696,363
Provision for (benefit from) income taxes							Provision for (benefit from) income taxes		261,924		(12,277)		76,171
Net income (loss)							Net income (loss)		1,120,913		(103,705)		620,192
Noncontrolling interest		(15,959)		(125,360)		(176,603)	Noncontrolling interest		(471,716)		45,110		(330,751)

Net income available for common stockholders	$	2,939	$	32,980		20,887
Net income (loss) available for common stockholders							Net income (loss) available for common stockholders		$	649,197	$	(58,595)	$	289,441

Earnings per share
Earnings (loss) per share							Earnings (loss) per share
Basic	$	0.03		0.83		0.60	Basic		$	5.19	$	(0.53)	$	2.82
Diluted	$	0.03		0.83		0.59	Diluted		$	5.16	$	(0.53)	$	2.78

Weighted average common shares outstanding							Weighted average common shares outstanding
Basic		62,579,147		38,539,091		34,964,312	Basic		121,692,443		113,918,103		100,875,793
Diluted		62,579,147		38,539,091		35,339,585	Diluted		122,332,190		113,918,103		102,089,139

Net income	$	18,898	$	158,340	$	197,490
Other comprehensive income
Net income (loss)							Net income (loss)		$	1,120,913	$	(103,705)	$	620,192
Other comprehensive income (loss)							Other comprehensive income (loss)
Foreign exchange translation adjustment, net of taxes		9,117		(1,165)		(4,255)	Foreign exchange translation adjustment, net of taxes		15,318		(1,475)		(5,127)
Comprehensive income		28,015		157,175	$	193,235
Less: Comprehensive income attributable to noncontrolling interest		(21,833)		(124,546)		(172,249)
Comprehensive income attributable to common stockholders	$	6,182	$	32,629		20,986
Net change in unrealized cash flow hedges gain (loss), net of taxes							Net change in unrealized cash flow hedges gain (loss), net of taxes		(59,019)		0		0
Comprehensive income (loss)							Comprehensive income (loss)		1,077,212		(105,180)		615,065
Less: Comprehensive (income) loss attributable to noncontrolling interest							Less: Comprehensive (income) loss attributable to noncontrolling interest		(452,855)		45,668		(328,697)
Comprehensive income (loss) attributable to common stockholders							Comprehensive income (loss) attributable to common stockholders		$	624,357	$	(59,512)	$	286,368


													Additional								Retained		Accumulated		Total
	Class A			Class C			Class D						Paid-in								Earnings		Other		Virtu Financial Inc.		Non-
(in thousands, except	Common Stock			Common Stock			Common Stock			Treasury Stock			Capital		Class A-1			Class A-2			(Accumulated		Comprehensive		Stockholders'		Controlling		Total
share and interest data)	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		Amounts		Interests	Amounts		Interests	Amounts		Deficit)		Income (Loss)		Equity		Interest		Equity
Balance at December 31, 2014	—	$	—	—	$	—	—	$	—	—	$	—	$	—	1,964,826	$	19,648	99,855,666	$	287,705	$	(91,383)	$	(3,705)	$	212,265	$	—	$	212,265
Share based compensation through April 15, 2015	—		—	—		—	—		—	—		—		—	—		—	6,418		438		—		—		438		—		438
Repurchase of Class A-2 interests	—		—	—		—	—		—	—		—		—	—		—	(13,495)		(97)		—		—		(97)		—		(97)
Distribution to members through April 15, 2015	—		—	—		—	—		—	—		—		—	—		—	—		—		(130,000)		—		(130,000)		—		(130,000)
Comprehensive income through April 15, 2015:
Net income	—		—	—		—	—		—	—		—		—	—		—	—		—		83,147		—		83,147		—		83,147
Foreign exchange translation adjustment	—		—	—		—	—		—	—		—		—	—		—	—		—		—		(4,633)		(4,633)		—		(4,633)
Reorganization of equity structure	18,763,664		—	36,746,041		—	79,610,490		1	—		—		63,261	(1,964,826)		(19,648)	(99,848,589)		(288,046)		138,236		8,338		(97,858)		392,291		294,433
Balance post-reorganization	18,763,664		—	36,746,041		—	79,610,490		1	—		—		63,261	—		—	—		—		—		—		63,262		392,291		455,553
Issuance of Common Stock, net of offering costs	19,012,112		—	—		—	—		—	—		—		327,366	—		—	—		—		—		—		327,366		—		327,366
Repurchase of Virtu Financial Units and Corresponding number of Class A and C Common Stock	(3,470,724)		—	(12,214,224)		—	—		—	—		—		(277,153)	—		—	—		—		—		—		(277,153)		—		(277,153)
Share based compensation vested upon the IPO	—		—	—		—	—		—	—		—		44,908	—		—	—		—		—		—		44,908		—		44,908
Adjustments for changes in proportionate ownership in Virtu Financial	—		—	—		—	—		—	—		—		(22,513)	—		—	—		—		—		—		(22,513)		22,513		—
Issuance of tax receivable agreements	—		—	—		—	—		—	—		—		(23,041)	—		—	—		—		—		—		(23,041)		—		(23,041)
Share based compensation after April 15, 2015	576,693		—	—		—	—		—	—		—		19,278	—		—	—		—		—		—		19,278		—		19,278
Repurchase of Class C common stock	—		—	(57,106)		—	—		—	—		—		(1,368)	—		—	—		—		—		—		(1,368)		—		(1,368)
Treasury stock purchases	—		—	—		—	—		—	(169,649)		(3,819)		—	—		—	—		—		—		—		(3,819)		—		(3,819)
Comprehensive income, after April 15, 2015:	—		—	—		—	—		—	—		—		—	—		—	—		—		—		—		—		—		—
Net income	—		—	—		—	—		—	—		—		—	—		—	—		—		20,887		—		20,887		93,456		114,343
Foreign exchange translation adjustment	—		—	—		—	—		—	—		—		—	—		—	—		—		—		99		99		279		378
Distribution from Virtu Financial to non-controlling interest, after April 15, 2015	—		—	—		—	—		—	—		—		—	—		—	—		—		—		—		—		(81,377)		(81,377)
Dividends to Class A shareholders	—		—	—		—	—		—	—		—		—	—		—	—		—		(17,362)		—		(17,362)		—		(17,362)
Issuance of common stock in connection with secondary offering, net of offering costs	3,498,113		—	—		—	—		—	—		—		7,782	—		—	—		—		—		—		7,782		—		7,782
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering	—		—	(3,498,113)		—	—		—	—		—		(8,805)	—		—	—		—		—		—		(8,805)		—		(8,805)
Issuance of tax receivable agreements in connection with secondary offering	—		—	—		—	—		—	—		—		1,187	—		—	—		—		—		—		1,187		—		1,187
Balance at December 31, 2015	38,379,858	$	—	20,976,598	$	—	79,610,490	$	1	(169,649)	$	(3,819)	$	130,902	—	$	—	—	$	—	$	3,525	$	99	$	130,708	$	427,162	$	557,870
Share based compensation	953,054		—	(58,070)		—	—		—	—		—		24,893	—		—	—		—		—		—		24,893		—		24,893
Repurchase of Class C common stock	—		—	(4,153)		—	—		—	—		—		(98)	—		—	—		—		—		—		(98)		—		(98)
Treasury stock purchases	—		—	—		—	—		—	(283,417)		(4,539)		—	—		—	—		—		—		—		(4,539)		—		(4,539)
Net income	—		—	—		—	—		—	—		—		—	—		—	—		—		32,980		—		32,980		125,360		158,340
Foreign exchange translation adjustment	—		—	—		—	—		—	—		—		—	—		—	—		—		—		(351)		(351)		(814)		(1,165)
Distribution from Virtu Financial to non-controlling interest	—		—	—		—	—		—	—		—		—	—		—	—		—		—		—		—		(162,969)		(162,969)
Dividends	—		—	—		—	—		—	—		—		—	—		—	—		—		(37,759)		—		(37,759)		—		(37,759)
Issuance of common stock in connection with secondary offering, net of offering costs	1,103,668		—	—		—	—		—	—		—		16,677	—		—	—		—		—		—		16,677		—		16,677
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering	—		—	(1,103,668)		—	—		—	—		—		(17,383)	—		—	—		—		—		—		(17,383)		—		(17,383)
Issuance of tax receivable agreements in connection with secondary offering	—		—	—		—	—		—	—		—		545	—		—	—		—		—		—		545		—		545
Balance at December 31, 2016	40,436,580	$	—	19,810,707	$	—	79,610,490	$	1	(453,066)	$	(8,358)	$	155,536	—	$	—	—	$	—	$	(1,254)	$	(252)	$	145,673	$	388,739	$	534,412
Share based compensation	546,265		—	(34,019)		—	—		—	—		—		16,846	—		—	—		—		—		—		16,846		—		16,846
Repurchase of Class C common stock	—		—	(540,686)		—	—		—	—		—		(9,143)	—		—	—		—		—		—		(9,143)		—		(9,143)
Treasury stock purchases	—		—	—		—	—		—	(163,857)		(2,683)		—	—		—	—		—		—		—		(2,683)		—		(2,683)
Net income	—		—	—		—	—		—	—		—		—	—		—	—		—		2,939		—		2,939		15,959		18,898
Foreign exchange translation adjustment	—		—	—		—	—		—	—		—		—	—		—	—		—		—		3,243		3,243		5,874		9,117
Distribution from Virtu Financial to non-controlling interest	—		—	—		—	—		—	—		—		—	—		—	—		—		—		—		—		(89,563)		(89,563)
Dividends	—		—	—		—	—		—	—		—		—	—		—	—		—		(63,814)		—		(63,814)		—		(63,814)
Issuance of Class A common stock	48,076,924		1	—		—	—		—	—		—		735,973	—		—	—		—		—		—		735,974		—		735,974
Issuance of common stock in connection with employee exchanges	1,355,763		—	—		—	—		—	—		—		—	—		—	—		—		—		—		—		—		—
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges	—		—	(1,355,763)		—	—		—	—		—		—	—		—	—		—		—		—		—		—		—
Issuance of tax receivable agreements in connection with employee exchange	—		—	—		—	—		—	—		—		1,534	—		—	—		—		—		—		1,534		—		1,534
Balance at December 31, 2017	90,415,532		1	17,880,239		—	79,610,490		1	(616,923)		(11,041)		900,746	—		—	—		—		(62,129)		2,991		830,569		321,009		1,151,578


	Class A Common Stock			Class C Common Stock			Class D Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Virtu Financial Inc. Stockholders' Equity		Non-Controlling Interest		Total Equity
(in thousands, except share and interest data)	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		Amounts























Balance at December 31, 2017	90,415,532	$	1	17,880,239	$	0	79,610,490	$	1	(616,923)	$	(11,041)	$	900,746	$	(62,129)	$	2,991	$	830,569	$	321,009	$	1,151,578
Share based compensation	1,027,861	—		—	—		—	—		—	—		34,909		—		—		34,909		—		34,909
Repurchase of Class C common stock	—	—		(210,891)	—		—	—		—	—		—		(8,216)		—		(8,216)		—		(8,216)
Treasury stock purchases	(1,007,230)	—		—	—		—	—		(1,561,848)	(43,964)		—		(22,254)		—		(66,218)		—		(66,218)
Stock option exercised	4,080,673	—		—	—		—	—		—	—		76,754		—		—		76,754		—		76,754
Net Income (loss)	—	—		—	—		—	—		—	—		—		289,441		—		289,441		330,751		620,192
Foreign exchange translation adjustment	—	—		—	—		—	—		—	—		—		—		(3,073)		(3,073)		(2,054)		(5,127)
Distribution from Virtu Financial to non-controlling interest	—	—		—	—		—	—		—	—		—		—		—		—		(206,903)		(206,903)
Dividends	—	—		—	—		—	—		—	—		—		(100,329)		—		(100,329)		—		(100,329)
Issuance of Class A common stock	—	—		—	—		—	—		—	—		—		—		—		—		—		—
Issuance of common stock in connection with employee exchanges	3,919,462	—		—	—		—	—		—	—		—		—		—		—		—		—
Issuance of common stock in connection with secondary offering, net of offering costs	10,518,750	—		—	—		(10,518,750)	—		—	—		(950)		—		—		(950)		—		(950)
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges	—	—		(3,919,462)	—		—	—		—	—		—		—		—		—		—		—
Issuance of tax receivable agreements in connection with employee exchange	—	—		—	—		—	—		—	—		(991)		—		—		(991)		—		(991)
Balance at December 31, 2018	108,955,048	$	1	13,749,886	$	0	69,091,740	$	1	(2,178,771)	$	(55,005)	$	1,010,468	$	96,513	$	(82)	$	1,051,896	$	442,803	$	1,494,699
Share based compensation	2,226,676	—		—	—		—	—		—	—		72,381		—		—		72,381		—		72,381
Repurchase of Class C common stock	—	—		(9,541)	—		—	—		—	—		(196)		—		—		(196)		—		(196)
Treasury stock purchases	(720,323)	—		—	—		—	—		0	0		—		(15,878)		—		(15,878)		—		(15,878)
Stock option exercised	121,344	—		—	—		—	—		—	—		931		—		—		931		—		931
Net Income (loss)	—	—		—	—		—	—		—	—		—		(58,595)		—		(58,595)		(45,110)		(103,705)
Foreign exchange translation adjustment	—	—		—	—		—	—		—	—		—		—		(565)		(565)		(910)		(1,475)
Distribution from Virtu Financial to non-controlling interest	—	—		—	—		—	—		—	—		—		—		—		—		(99,221)		(99,221)
Dividends	—	—		—	—		—	—		—	—		—		(112,414)		—		(112,414)		—		(112,414)
Issuance of Class A common stock	—	—		—	—		—	—		—	—		—		—		—		—		—		—
Issuance of common stock in connection with employee exchanges	853,167	—		—	—		—	—		—	—		—		—		—		—		—		—
Issuance of Common Stock in connection with secondary offering, net of offering costs	9,000,000	—		—	—		(9,000,000)	—		—	—		(375)		—		—		(375)		—		(375)
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges	—	—		(853,167)	—		—	—		—	—		—		—		—		—		—		—
Issuance of tax receivable agreements in connection with employee exchange	—	—		—	—		—	—		—	—		(5,811)		—		—		(5,811)		—		(5,811)
Balance at December 31, 2019	120,435,912	$	1	12,887,178	$	0	60,091,740	$	1	(2,178,771)	$	(55,005)	$	1,077,398	$	(90,374)	$	(647)	$	931,374	$	297,562	$	1,228,936
Share based compensation	2,489,483	—		—	—		—	—		—	—		56,629		—		—		56,629		—		56,629
Repurchase of Class C common stock	—	—		0	—		—	—		—	—		0		—		—		0		—		0
Treasury stock purchases	(867,984)	—		—	—		—	—		(1,436,326)	(33,918)		—		(15,946)		—		(49,864)		—		(49,864)
Stock option exercised	909,627	—		—	—		—	—		—	—		16,440		—		—		16,440		—		16,440
Warrants issued	—	—		—	—		—	—		—	—		11,488		—		—		11,488		—		11,488


	For the Years ended December 31,
(in thousands)	2017		2016		2015
Cash flows from operating activities
Net Income	$	18,898	$	158,340	$	197,490

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		47,327		29,703		33,629
Amortization of purchased intangibles and acquired capitalized software		15,447		211		211
Debt issue cost related to debt refinancing		10,460		5,579		—
Amortization of debt issuance costs and deferred financing fees		5,822		1,690		1,755
Termination of office leases		3,671		—		1,380
Share based compensation		26,259		22,866		61,878
Reserve for legal matters		657		—		5,440
Equipment writeoff		1,216		428		559
Tax receivable agreement obligation reduction		(86,599)		—		—
Deferred taxes		102,973		13,313		3,985
Other		(4,577)		(1,070)		219
Changes in operating assets and liabilities:
Securities borrowed		155,277		233,291		31,638
Securities purchased under agreements to resell		16,894		14,981		16,482
Receivables from broker dealers and clearing organizations		26,145		27,808		(88,884)
Trading assets, at fair value		1,210,599		(530,668)		247,094
Other Assets		44,494		772		(5,796)
Securities loaned		366,295		(302,400)		26,741
Securities sold under agreements to repurchase		(450,964)		—		(2,006)
Payables to broker dealers and clearing organizations		(516,376)		209,374		(199,599)
Trading liabilities, at fair value		(721,204)		370,065		(58,544)
Accounts payable and accrued expenses and other liabilities		17,860		(14,684)		(13,392)
Net cash provided by operating activities		290,574		239,599		260,280

Cash flows from investing activities
Development of capitalized software		(14,158)		(8,404)		(8,028)
Acquisition of property and equipment		(18,932)		(11,859)		(16,271)
Investment in SBI Japannext		—		(38,754)		—
Acquisition of KCG Holdings, net of cash acquired, described in Note 3		(799,632)		—		—
Acquisition of Teza Technologies		(5,594)		—		—
Proceeds from sale of DMM business		300		—		—
Net cash used in investing activities		(838,016)		(59,017)		(24,299)

Cash flows from financing activities
Distribution to members		—		—		(130,000)
Distribution from Virtu Financial to non-controlling interest		(89,563)		(162,969)		(81,377)
Dividends		(63,814)		(37,759)		(17,362)
Repurchase of Class A-2 interests		(11,143)		(2,000)		(2,097)
Repurchase of Class C common stock		—		(98)		—
Purchase of treasury stock		(2,683)		(4,539)		(3,819)
Short-term borrowings, net		7,000		(20,000)		45,000
Proceeds from long-term borrowings		1,115,036		75,753		—
Repayment of senior secured credit facility		(256,473)		(3,825)		(2,914)
Repayment of KCG Notes		(480,987)		—		—
Tax receivable agreement obligations		(7,045)		—		—
Debt issuance costs		(56,505)		(5,094)		(976)
Issuance of common stock, net of offering costs		735,974		—		327,366
Repurchase of Virtu Financial Units and corresponding number of Class A and C common stock in connection with secondary offering		—		—		(277,153)
Issuance of common stock in connection with secondary offering, net of offering costs		—		16,677		7,782
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering		—		(17,383)		(8,805)
Net cash provided by (used in) financing activities		889,797		(161,237)		(144,355)

Effect of exchange rate changes on cash and cash equivalents		9,117		(1,165)		(4,255)

Net increase in cash and cash equivalents		351,472		18,180		87,371
Cash and cash equivalents beginning of period		181,415		163,235		75,864
Cash and cash equivalents, end of period	$	532,887	$	181,415	$	163,235

Supplementary disclosure of cash flow information
Cash paid for interest	$	112,982	$	54,872	$	63,230
Cash paid for taxes		5,976		16,175		12,875

Non-cash investing activities

Share based compensation to developers relating to capitalized software		1,605		2,750		11,278
See Note 3 for a description of non-cash investing activities relating to the acquisition of KCG
Non-cash financing activities
Tax receivable agreement described in Note 6	$	1,534	$	545	$	(21,854)
Discount on issuance of senior secured credit facility		1,438		1,350		—
Secondary offerings described in Note 15		—		—		—


						Maximum
	Carrying Amount					Exposure to
(in thousands)	Asset		Liability			loss		VIE's assets
Equity investment	$	18,799	$	—	$	18,799	$	41,936


	Carrying Amount				Maximum Exposure to Loss		VIEs' assets
(in thousands)	Asset		Liability
Equity investment	$	28,969	$	0	$	28,969	$	175,547


(in thousands)		September 30, 2017		Measurement Period		December 31, 2017
Cash and equivalents	$	592,993	$	2,676	$	595,669
Cash and securities segregated under federal regulations		3,000		(3,000)		-
Securities borrowed		1,406,444		-		1,406,444
Securities purchased under agreements to resell		16,894		-		16,894
Receivables from broker dealers and clearing organizations		553,031		(211)		552,820
Financial instruments owned, at fair value		2,095,339		-		2,095,339
Property, equipment and capitalized software		112,204		2,163		114,367
Intangibles		156,300		18,695		174,995
Deferred tax assets		22,928		980		23,908
Other assets		331,820		(8,636)		323,184
Total Assets	$	5,290,953	$	12,667	$	5,303,620

Securities loaned	$	166,189		-	$	166,189
Securities sold under agreements to repurchase		841,606		-		841,606
Payables to broker dealers and clearing organizations		536,653		-		536,653
Payables to customers		17,583		(17,583)		-
Financial instruments sold, not yet purchased, at fair value		1,756,647		-		1,756,647
Accounts payable and accrued expenses and other liabilities		239,004		15,524		254,528
Debt		480,987		-		480,987
Total Liabilities	$	4,038,669	$	(2,059)	$	4,036,610

Total identified assets acquired, net of assumed liabilities	$	1,252,284	$	14,726	$	1,267,010

Goodwill	$	143,012	$	(14,726)	$	128,286

Total Purchase Price	$	1,395,296	$	-	$	1,395,296


(in thousands)	Adjusted Purchase Price
Cash and equivalents	$	197,072
Cash and securities segregated under federal regulations	14,232
Securities borrowed	13,182

Receivables from broker dealers and clearing organizations	328,112
Financial instruments owned, at fair value	523
Receivables from customers	122,697
Property, equipment and capitalized software (net)	46,408
Intangibles	517,200
Deferred tax assets	17,605
Operating lease right-of-use assets	100,285
Other assets	31,652
Total Assets	1,388,968

Short-term borrowings	18,651
Securities loaned	17,663
Payables to broker dealers and clearing organizations	152,043
Payables to customers	116,419
Financial instruments sold, not yet purchased, at fair value	11
Accounts payable and accrued expenses and other liabilities	178,893
Operating lease liabilities	99,693
Deferred tax liabilities	71,053
Total Liabilities	654,426

Total identified assets acquired, net of assumed liabilities	734,542

Goodwill	312,343

Total Purchase Price	$	1,046,885


			Amortization
(in thousands)		Amount	Years	(in thousands)	Amount		Amortization Years
Technology	$	67,700	1-6 years	Technology	$	76,000	5
Customer relationships		94,000	13 - 17 years	Customer relationships	437,600		10
Trade names		1,000	10 years	Trade names	3,600		3
Favorable leases		5,895	2-15 years
Exchange memberships		6,400	Indefinite
Intangible assets	$	174,995		Intangible assets	517,200
Goodwill		128,286		Goodwill	312,343
Total	$	303,281		Total	$	829,543



(in thousands)
Revenues	$	379,203
Income before income taxes and noncontrolling interest		14,340


(in thousands)
Revenues	$	347,859
Income (loss) before income taxes	$	(64,917)


	For the Years Ended
(in thousands, except per share amounts)		2017		2016
Revenue	$	1,528,588	$	2,153,008

Net income (loss)		(14,151)		443,101

Net income (loss) attributable to common stockholders		(5,219)		163,407


(in ~~thousand)~~ thousands)
Total sale proceeds received	$	400,192
Business assets and liabilities held for sale as of December 31, 2017:
Receivables from broker dealers and clearing organizations	$ 3,383		~~3,383~~
Intangibles and other assets	51,687
~~Technology~~ Liabilities	(728)		~~5,982~~
~~Customer relationships~~				~~43,819~~
~~Trade names~~ Total carrying value of BondPoint as of December 31, 2017:	54,342		~~955~~
~~Capitalized software~~ Goodwill adjustment allocated to BondPoint	8,300		~~518~~
~~Other assets~~ Gain on sale of BondPoint	337,550		~~413~~
~~Total assets~~ Transaction costs	$ 8,568		~~55,070~~
Gain on sale of BondPoint, net of transaction costs	$	328,982


~~Payable to brokers, dealers and clearing organizations~~ (in thousands)	$			50
~~Accrued expenses and other liabilities~~ Total sale proceeds received	$	~~678~~60,592
Total ~~liabilities~~ carrying value of MATCHNow as of MATCHNow Closing Date	$ (1,940)		~~728~~
Gain on sale of MATCHNow	58,652
Transaction costs	(2,453)
Gain on sale of MATCHNow, net of transaction costs	$	56,199


	For the Year ended December 31
(in thousands)	2017		2016		2015
Income before income taxes and noncontrolling interest	$	113,164	$	179,591	$	215,929
Provision for income taxes		94,266		21,251		18,439
Net income		18,898		158,340		197,490

Net income allocable to members of Virtu Financial (for the period January 1, 2015 through April 15, 2015)		—		—		(83,147)

Noncontrolling interest		(15,959)		(125,360)		(93,456)

Net income available for common stockholders	$	2,939	$	32,980	$	20,887


	For the Year Ended December 31,
(in thousands, except for share or per share data)	2017		2016		2015
Basic earnings per share:
Net income available for common stockholders	$	2,939	$	32,980	$	20,887

Less: Dividends and undistributed earnings allocated to participating securities		(1,326)		(809)		—
Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities		1,613		32,171		20,887

Weighted average shares of common stock outstanding:
Class A		62,579,147		38,539,091		34,964,312

Basic Earnings per share	$	0.03	$	0.83	$	0.60

	~~(1)~~
The dilutive impact of unexercised stock options excludes from the computation of EPS 1,740,630, 743,096 and 0 options for the years ended December 31, 2017, 2016 and 2015, respectively, because inclusion of the options would have been anti-dilutive.


	Market		Execution
(in thousands)	Making		Services		Corporate		Total
Balance as of December 31, 2016	$	657,985	$	57,394	$	—	$	715,379
Additions		97,307		32,197		—		129,504
Balance as of December 31, 2017	$	755,292	$	89,591	$	—	$	844,883