Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2015 | |
Document and Entity Information | |
Document Type | S-1/A |
Pre-Effective Amendment Number | 1 |
Amendment Flag | false |
Document Period End Date | Jun. 30, 2015 |
Entity Registrant Name | Virtu Financial, Inc. |
Entity Central Index Key | 1,592,386 |
Entity Filer Category | Non-accelerated Filer |
Current Fiscal Year End Date | --12-31 |
Statements of Financial Conditi
Statements of Financial Condition - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Assets | ||
Total assets | $ 3,319,458,000 | |
Liabilities | ||
Payable to affiliate | 400,000 | |
Total liabilities | 2,812,760,000 | |
Stockholder's equity (deficit) | ||
Retained Earnings (Accumulated deficit) | (91,383,000) | |
Total liabilities, redeemable membership interest and equity | 3,319,458,000 | |
Virtu Financial, Inc. | ||
Assets | ||
Cash | 545 | $ 100 |
Deferred tax benefit | 4,744 | 0 |
Total assets | 5,289 | 100 |
Liabilities | ||
Payable to affiliate | 14,000 | |
Total liabilities | 14,000 | |
Stockholder's equity (deficit) | ||
Retained Earnings (Accumulated deficit) | (8,811) | |
Additional paid-in capital | 100 | 100 |
Total stockholders' / members' equity | (8,711) | 100 |
Total liabilities, redeemable membership interest and equity | $ 5,289 | $ 100 |
Statements of Financial Condit3
Statements of Financial Condition (Parenthetical) - $ / shares | Dec. 31, 2014 | Dec. 31, 2013 |
Class A common stock | ||
Common stock, par value | $ 0.00001 | |
Common stock, authorized | 0 | |
Common stock shares issued | 0 | |
Common stock, outstanding | 0 | |
Virtu Financial, Inc. | Class A common stock | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, authorized | 1,000 | 1,000 |
Common stock shares issued | 100 | 100 |
Common stock, outstanding | 100 | 100 |
Statements of Comprehensive Inc
Statements of Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Virtu Financial, Inc. | |
Operating Expenses: | |
Operations and administrative | $ 13,555 |
Income (loss) before income taxes | (13,555) |
Provision (benefit) for income taxes | (4,744) |
Net income available for common stockholders | $ (8,811) |
Statements of Changes in Stockh
Statements of Changes in Stockholder's Equity/(Deficit) - USD ($) | Virtu Financial, Inc.Class A common stockCommon Stock | Virtu Financial, Inc.Additional paid-in Capital | Virtu Financial, Inc.Retained Earnings / (Accumulated Deficit) | Virtu Financial, Inc. | Class A common stock | Total |
Balance at the beginning of the period at Oct. 15, 2013 | $ 0 | $ 0 | $ 0 | $ 0 | ||
Balance at the beginning of the period (in shares) at Oct. 15, 2013 | 0 | |||||
Increase (decrease) in stockholder's/members' equity | ||||||
Capital contribution | 100 | 100 | ||||
Shares issued | 100 | |||||
Balance at the end of the period at Dec. 31, 2013 | 100 | 100 | ||||
Balance at the end of the period (in shares) at Dec. 31, 2013 | 100 | |||||
Increase (decrease) in stockholder's/members' equity | ||||||
Net income (loss) | (8,811) | (8,811) | ||||
Balance at the end of the period at Dec. 31, 2014 | $ 100 | $ (8,811) | $ (8,711) | |||
Balance at the end of the period (in shares) at Dec. 31, 2014 | 100 | |||||
Increase (decrease) in stockholder's/members' equity | ||||||
Net income (loss) | $ 474,000 | |||||
Balance at the end of the period at Jun. 30, 2015 | $ 116,161,000 | |||||
Balance at the end of the period (in shares) at Jun. 30, 2015 | 34,305,052 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2013 | Dec. 31, 2014 | |
Virtu Financial, Inc. | ||
Cash flows from operating activities | ||
Net income (loss) | $ (8,811) | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred tax benefit | (4,744) | |
Changes in operating assets and liabilities: | ||
Payable to affiliate | 14,000 | |
Net cash provided by operating activities | 445 | |
Cash flows from financing activities | ||
Capital contribution | $ 100 | |
Net increase in cash | 100 | 445 |
Cash, beginning of period | 100 | |
Cash, end of period | $ 100 | $ 545 |
Organization
Organization | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Organization | 1. Organization and Basis of Presentation Organization Virtu Financial, Inc. (“VFI” or, collectively with its wholly owned subsidiaries, the “Company”) is a Delaware holding company whose primary asset is its ownership of approximately 24.8% of the membership interests of Virtu Financial LLC (“Virtu Financial”). The Company was formed on October 16, 2013 for the purpose of completing certain reorganization transactions (the “Reorganization Transactions”), in order to carry on the business of Virtu Financial LLC (“Virtu Financial”) and to conduct a public offering. The Company is the sole managing member of Virtu Financial and operates and controls all of the businesses and affairs of Virtu Financial and, through Virtu Financial and its subsidiaries (the “Group”), continues to conduct the business now conducted by such subsidiaries. Virtu Financial was formed as a Delaware limited liability company on April 8, 2011 in connection with a corporate reorganization and acquisition of the outstanding equity interests of Madison Tyler Holdings, LLC (“MTH”), an electronic trading firm and market maker. In connection with the reorganization, the members of Virtu Financial’s predecessor entity, Virtu Financial Operating LLC (“VFO”), a Delaware limited liability company formed on March 19, 2008, exchanged their interests in VFO for interests in Virtu Financial and the members of MTH exchanged their interests in MTH for cash and/or interests in Virtu Financial. Virtu Financial’s principal subsidiaries include Virtu Financial BD LLC (“VFBD”), a self-clearing US broker-dealer, Virtu Financial Capital Markets LLC (“VFCM”), a self-clearing US broker-dealer and designated market maker on the New York Stock Exchange (“NYSE”) and the NYSE MKT (formerly NYSE Amex), Virtu Financial Global Markets LLC (“VFGM”), a US trading entity focused on futures and currencies, Virtu Financial Ireland Limited (“VFIL”), formed in Ireland, Virtu Financial Asia Pty Ltd (“VFAP”), formed in Australia, and Virtu Financial Singapore Pte. Ltd. (“VFSing”), formed in Singapore. The Company is a technology-enabled market maker and liquidity provider. The Company has developed a single, proprietary, multi-asset, multi-currency technology platform through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on numerous exchanges, markets and liquidity pools in numerous countries around the world. The Company is managed and operated as one business. Accordingly, the Company operates under one reportable segment. Basis of Presentation These condensed consolidated financial statements are presented in U.S. dollars and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10-Q and accounting standards generally accepted in the United States of America (“U.S. GAAP”) promulgated in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or the “Codification”). These condensed consolidated financial statements are unaudited and include all adjustments of a normal, recurring nature necessary to present fairly the financial condition as of June 30, 2015 and December 31, 2014, the results of operations and comprehensive income for the six months ended June 30, 2015 and 2014 and cash flows for the six months ended June 30, 2015 and 2014. The condensed consolidated financial statement information as of December 31, 2014 has been derived from the 2014 audited consolidated financial statements. The results of operations for interim periods are not necessarily indicative of results for the entire year. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s final prospectus filed with the SEC on April 16, 2015 (the “Prospectus”) for the offering of Class A common stock, par value $0.00001 per share (the “Class A common stock”). See Note 13 to the condensed consolidated financial statements for information regarding the Reorganization Transactions (as defined in Note 13) and the Company’s IPO. Principles of Consolidation, including Noncontrolling Interests The unaudited condensed consolidated financial statements include the accounts of VFI and its majority and wholly owned subsidiaries. As sole managing member of Virtu Financial, VFI exerts control over the Group’s operations. In accordance with ASC 810, Consolidation, the Company consolidates Virtu Financial and its subsidiaries’ consolidated financial statements and records the interests in Virtu Financial that VFI does not own as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation. | |
Virtu Financial, Inc. | ||
Organization | 1. Organization Virtu Financial, Inc. (the “Company”) was formed as a Delaware corporation on October 16, 2013. The Company’s fiscal year end is December 31. The Company was formed for the purpose of completing certain reorganization transactions, in order to carry on the business of Virtu Financial LLC and conducting a public offering. The Company will be the sole managing member of Virtu Financial LLC and will operate and control all of the businesses and affairs of Virtu Financial LLC and, through Virtu Financial LLC and its subsidiaries, continue to conduct the business now conducted by such subsidiaries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The Company's condensed consolidated financial statements are prepared in conformity with US GAAP, which require management to make estimates and assumptions regarding fair value measurements including trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. Earnings Per Share Earnings per share (“EPS”) is computed in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s share-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares. Cash and Cash Equivalents The Company considers cash equivalents as highly liquid investments with original maturities of less than three months when acquired. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. Securities Borrowed and Securities Loaned The Company conducts securities borrowing and lending activities with external counterparties. In connection with these transactions, the Company receives or posts collateral. These transactions are collateralized by cash or securities. In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received. Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the condensed consolidated statements of financial condition. For these transactions, the interest received or paid by the Company is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the condensed consolidated statements of comprehensive income. Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company's policy that its custodian takes possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the condensed consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. Receivables from/Payables to Broker ‑Dealers and Clearing Organizations Amounts receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At June 30, 2015 and December 31, 2014, receivables from and payables to broker-dealers and clearing organizations primarily represent amounts due for unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing organizations or exchanges and balances due from or due to prime brokers in relation to the Company’s trading. The Company also offsets the outstanding principal balances on all short term credit facilities against amounts receivable from and payable to broker-dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, substantially all of the Company’s securities transactions, money balances, and security positions are transacted with several brokers. The Company is subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Company’s management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties. Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased The Company carries financial instruments owned, including those pledged as collateral, and financial instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded net on a trade-date basis in trading income on the condensed consolidated statements of comprehensive income. Fair Value Measurements At June 30, 2015 and December 31, 2014, substantially all of Company’s financial assets and liabilities, except for long-term borrowings and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short-term in nature and were carried at amounts that approximate fair value. The Company’s assets and liabilities have been categorized based upon a fair value hierarchy in accordance with ASC 820 ‑10, Fair Value Measurements and Disclosures. ASC 820 ‑10 defines fair value 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. Fair value measurements are not adjusted for transaction costs. The recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market is prohibited. ASC 820 ‑10 requires a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). 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; Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the six months ended June 30, 2015 and 2014. Derivative Instruments Derivative instruments used for trading purposes, including economic hedges of trading instruments, are carried at fair value. Fair values for exchange-traded derivatives, principally futures, are based on quoted market prices. Fair values for over-the-counter derivative instruments, principally forward contracts, are based on the values of the underlying financial instruments within the contract. The underlying derivative instruments are currencies which are actively traded. Derivative instruments used for economic hedging purposes include futures, forward contracts, and options. Unrealized gains or losses on these derivative instruments are recognized currently in the condensed consolidated statements of comprehensive income as trading income, net. The Company does not apply hedge accounting as defined in ASC 815, Derivatives and Hedging ; accordingly all derivative instruments are recorded at fair value with changes in fair values reflected in earnings. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisition of MTH which were recorded at fair value on the date of acquisition. Depreciation is provided using the straight ‑line method over estimated useful lives of the underlying asset. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. The useful lives of furniture and fixtures are as follows: Furniture, fixtures and equipment to years Leasehold improvements years or length of lease term, whichever is shorter Capitalized Software The Company accounts for the costs of computer software developed or obtained for internal use in accordance with ASC 350-40, Internal ‑Use Software . The Company capitalizes costs of materials, consultants, and payroll and payroll related costs for employees incurred in developing internal-use software. Costs incurred during the preliminary project and post-implementation stages are charged to expense. Management’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The Company’s capitalized software development costs were approximately $5.5 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. The related amortization expense was approximately $5.2 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. Additionally, in connection with the compensation charge related to Class B and East MIP interests recognized upon the IPO (Note 13), the Company capitalized and amortized $9.5 million and $8.0 million of the costs, respectively, which were included within charges related to share-based compensation at IPO, net, in the condensed consolidated statements of comprehensive income. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software on the accompanying condensed consolidated statements of financial condition and are amortized over a period of 1.4 to 2.5 years, which represents the estimated useful lives of the underlying software. Goodwill 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 for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We operate in one operating segment, which is our only reporting unit. The goodwill impairment test is a two-step process. The first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the 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 equal to that excess. The primary valuation methods we use to estimate the fair value of our reporting unit are the income and market approaches. In applying the income approach, projected available cash flows and the terminal value are discounted to present value to derive an indication of fair value of the business enterprise. The market approach compares the reporting unit to selected reasonably similar publicly-traded companies. The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. There were no triggering events that would have caused the Company to assess goodwill for impairment during the six months ended June 30, 2015 and 2014, respectively. Intangible Assets The Company amortizes finite-lived intangible assets over their estimated useful lives. Finite-lived intangible assets are tested for impairment annually or when impairment indicators are present, and if impaired, written down to fair value. Exchange Memberships and Stock Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value, in accordance with ASC 940-340, Financial Services — Broker and Dealers. Exchange stock includes shares that entitles the Company to certain trading privileges. The shares are marked to market with the corresponding gain or loss recorded in the condensed consolidated statements of comprehensive income. The Company’s exchange memberships and stock are included in other assets on the condensed consolidated statements of financial condition. Trading Income Trading income is comprised 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 condensed consolidated statements of comprehensive income. Interest and Dividends Income/Interest and Dividends Expense Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of interest earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related lines of credit. Dividends on financial instruments owned including those pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex-dividend date and interest is recognized on the accrual basis. Technology Services Technology services revenues consist of fees paid by third parties for licensing of our proprietary risk management and trading infrastructure technology and provision of associated management and hosting services. These fees include both upfront and annual recurring fees. Revenue from technology services is recognized once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized ratably over the contractual service period. Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying condensed consolidated statements of comprehensive income. Income Taxes Virtu Financial is a limited liability company and is treated as a pass-through entity for United States federal, state, and local income tax purposes. Accordingly, no provision for United States federal, state, and local income tax was required prior to the consummation of the Reorganization Transactions and the IPO. Subsequent to consummation of the Reorganization Transactions and the IPO, the Company is subject to U.S. federal, state and local income taxes on its taxable income, which is proportional to the percentage of Virtu Financial owned by the Company. The Company’s subsidiaries are subject to income taxes in the respective jurisdictions in which they operate. Certain of the Company’s 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. The Company recognizes 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 condensed 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. The Company’s 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 Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of June 30, 2015 and December 31, 2014 or the results of operations for the six months ended June 30, 2015 and 2014. Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to Accounting Standards Update 2011-05, Comprehensive Income. Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). OCI is comprised of revenues, expenses, gains and losses that are reported in the comprehensive income section of the consolidated statements of comprehensive income, but are excluded from reported net income. The Company’s OCI is comprised of foreign currency translation adjustments. Assets and liabilities of operations having non-U.S. dollar functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in other comprehensive income, a separate component of members’ equity. Share-Based Compensation The Company accounts for share-based compensation transactions with employees under the provisions of ASC 718, Compensation: Stock Compensation. ASC 718 requires a share-based payment transaction with employees to be 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. With respect to equity awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the 2015 Management Incentive Plan, the fair value of the stock option grants are determined through the application of the Black-Scholes-Merton model. Similarly, the fair value of the restricted stock units is determined based on the IPO per share price or the market price at the time of grant. The fair value of share based awards granted to employees is expensed based on the vesting conditions. Recent Accounting Pronouncements Revenue — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 (fiscal year 2018 for the Company) and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 on its condensed consolidated financial statements. Repurchase Agreements — In June, 2014, the FASB released ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendment changes the accounting for repurchase financing transactions and for repurchase-to-maturity transactions to secured borrowing accounting. The accounting changes are effective for the Company beginning in the first quarter of 2015. The effect of the accounting changes on transactions outstanding as of the effective date are required to be presented as a cumulative effect adjustment to retained earnings as January 1, 2015. The Company currently does not enter into these types of repurchase transactions. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual tenor of the agreements, as well as a discussion of the potential risks associated with the agreements and the related collateral pledged, and how those risks are managed. Additional disclosures are required for repurchase agreements, securities lending transactions, sales with a total return swap, and other similar transfers of financial assets that are accounted for as a sale. Compensation — In June 2014, the Emerging Issues Task Force (the “EITF”) of the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendment requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 (fiscal year 2016 for the Company). Earlier adoption is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Going Concern — In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new standard will be effective in the first annual period ending after December 15, 2016 (fiscal year 2017 for the Company). Earlier adoption is permitted. The Company will implement this new standard on the required effective date. Hybrid Financial Instruments — In November 2014, the EITF of the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. The ASU requires that for hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. An entity should use judgment based on an evaluation of all the relevant terms and features, and should consider the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company) and interim periods within fiscal years beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Debt Issuance Costs — In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, rather than as a deferred charge asset. The ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company), and interim periods within those fiscal years. Early adoption of the amendment is permitted and the Company has elected to early adopt this ASU effective as of June 30, 2015. The new guidance has been applied on a retrospective basis, wherein the accompanying condensed consolidated statements of financial condition have been adjusted to reflect the period-specific effects of applying the new guidance. Refer to Note 8 for additional information regarding the impact of this guidance on the Company’s condensed consolidated financial statements. | |
Virtu Financial, Inc. | ||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. |
Related Party Transactions
Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Related Party Transactions | 17. Related Party Transactions As of June 30, 2015, and December 31, 2014, the Company had a payable of $0.4 million and $0.4 million to its affiliates, respectively. In the ordinary course of business, the Company purchases and leases computer equipment and maintenance and support from affiliates of Dell Inc. (“Dell”). Silver Lake and its affiliates have a significant ownership interest in Dell. During the six months ended June 30, 2015 and 2014, the Company paid $1.5 million and $0.4 million, respectively, to Dell for these purchases and leases. Similarly, in the ordinary course of business, the Company purchases market data and related services from Interactive Data Pricing and Reference Data, Inc. (“Interactive Data”). Silver Lake and its affiliates have a significant ownership interest in Interactive Data. During the six months ended June 30, 2015 and 2014, the Company paid $0.2 million and $0.2 million, respectively, to Interactive Data for these purchases. Finally, in the ordinary course of business, the Company purchases telecommunications services from Singapore Telecommunications Limited (“Singtel”). Singtel is a subsidiary of Temasek. During the six months ended June 30, 2015 and 2014, we paid $0.1 million and $0.1 million, respectively, to Singtel for these purchases. | |
Virtu Financial, Inc. | ||
Related Party Transactions | 3. Related ‑Party Transactions The Company may receive funding from affiliates in the ordinary course of business. As of December 31, 2014 and 2013, the Company had a payable of $14,000 and $0 to its affiliates, respectively. |
Income Taxes
Income Taxes | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Income Taxes | 11. Income Taxes Income tax expense for the six months ended June 30, 2015 and 2014 differs from the U.S. federal statutory rate primarily due to the taxation treatment of income attributable to noncontrolling interests in Virtu Financial. These noncontrolling interests are subject to U.S. taxation as partnerships. Accordingly, the income attributable to these noncontrolling interests is reported in the condensed consolidated statements of comprehensive income, but the related U.S. income tax expense attributable to these noncontrolling interests is not reported by the Company as it is the obligation of the individual partners. Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation. Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the IPO (Note 13), differences in the valuation of financial assets and liabilities, and for other temporary differences arising from the deductibility of compensation and depreciation expenses in different time periods for book and income tax return purposes. There are no expiration dates on the deferred tax assets. The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the realization of the deferred tax assets. A valuation allowance against deferred tax assets at the balance sheet date is not considered necessary because it is more likely than not the deferred tax asset will be fully realized. There are no unrecognized tax benefits as of June 30, 2015 and December 31, 2014. | |
Virtu Financial, Inc. | ||
Income Taxes | 4. Income Taxes The Company is subject to taxes at the U.S. federal statutory rate of 35% . For the year ended December 31, 2014 and for the period October 16, 2013 (Date of Inception) to December 31, 2013, the Company recognized income tax benefits of $4,744 and $0 , respectively, due to current losses. A deferred tax asset relating to the carryforward losses has been recognized in the amount of $4,744 and $0 as of December 31, 2014 and 2013, respectively. The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the realization of the deferred tax assets. A valuation allowance against deferred tax assets at the balance sheet date is not considered necessary, because it is more likely than not the deferred tax asset will be fully realized. |
Stockholder's Equity
Stockholder's Equity | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Stockholder's Equity | 13. Capital Structure Capital Structure prior to the Company’s Reorganization Completed on April 15, 2015 and IPO Completed on April 16, 2015: Virtu Financial had three classes of members’ interests: Class A-1 members’ interests; Class A-2 members’ interests; and Class B members’ interests. Class A-2 members’ interests included both Class A-2 capital interests and Class A-2 profits interests. Class A-1 Interests On July 8, 2011, 25,000,000 Class A-1 redeemable interests were issued to an affiliate of Silver Lake (“the Silver Lake Member”) and 1,964,826 Class A-1 interests were issued to an affiliate of Vincent Viola, which Class A-1 interests had an aggregate capital balance of approximately $270 million. On December 31, 2014, through a series of transactions, 5,376,603 and 12,242,173 of the Class A-1 redeemable interests previously held by the Silver Lake Member were transferred to Wilbur Investments LLC (the “Temasek Member”), an indirect wholly owned subsidiary of Temasek Holdings (Private) Limited, (“Temasek”), and an affiliate of Silver Lake and Temasek, 57.9% of which is indirectly owned by affiliates of Silver Lake Partners and 42.1% of which is indirectly owned by an affiliate of Temasek (the “SLT Member” and together with the Silver Lake Member and the Temasek Member, the “Investor Members”), respectively, with the Silver Lake Member retaining 7,381,224 Class A-1 redeemable interests. Class A-1 interests that the holder thereof has the right to call for redemption were held by three members: (i) the Silver Lake Member, (ii) the Temasek Member and (iii) the SLT Member. The Silver Lake Member had the right to appoint one member on Virtu Financial’s board of directors and the Temasek Member had the right to either appoint one member on Virtu Financial’s board of directors (subject to obtaining certain regulatory approvals) or elect that the other members of the board of directors designate one member of Virtu Financial’s board of directors in consultation with the Temasek Member. The Silver Lake Member and the Temasek Member also possessed approval rights with respect to certain board actions and corporate events. Additionally, as part of the transaction consideration, a contingent payment agreement was entered into among Temasek, Silver Lake Partners, the Employee Holdco and the Company whereby additional payments will be made from Temasek to Silver Lake Partners and the selling members of management in the aggregate maximum amount of $3.9 million if the value of the interests acquired exceeds 1.7 times the transaction price prior to December 31, 2018, or December 31, 2019, the date depending on whether certain liquidity events occur. There were no additional Class A-1 interests granted, forfeited , distributed or redeemed during the six months ended June 30, 2015 and 2014. Class A-2 Interests Class A-2 interests included both Class A-2 capital interests and Class A-2 profits interests. No Class A-2 capital interests were issued and outstanding as of June 30, 2015, and approximately 93,786,659 were issued and outstanding as of December 31, 2014. On December 31, 2014, through a series of transactions, 1,614,322 of the Class A-2 capital interests previously held by certain members of the Company’s management were transferred to the Temasek Member, and 214,433 new Class A-2 capital interests were issued to the Temasek Member, with the proceeds of such issuance being used to redeem the same number of Class A-2 profits interests held by Employee Holdco LLC (“Employee Holdco”). Class A-2 profits interests were issued to Employee Holdco, a holding company which held the interests on behalf of certain key employees or stakeholders. Employee Holdco issued Class A-2 profits interests of Employee Holdco to such employees and stakeholders which corresponded to the underlying Class A-2 profits interests held by Employee Holdco. There were no Class A-2 profits interests issued and outstanding as of June 30, 2015 and 6,069,007 Class A-2 profits interests issued and outstanding as of December 31, 2014. There were 6,418 and 0 Class A-2 profits interests issued during the six months ended June 30, 2015 and 2014, respectively. There were 13,495 and 6,795 Class A-2 profits interests redeemed during the six months ended June 30, 2015 and 2014, respectively. Holders of Class A-2 profits interests shared in distributions of available cash flow based on the ratio of interests held to the total number of Class A-1 and Class A-2 interests outstanding, and also shared on a pro rata basis in the proceeds of a liquidity event, subject to a valuation hurdle determined by Virtu Financial at the time of the grant based on a valuation performed by a third party valuation firm. Holders of the Class A-2 profits interests shared in the proceeds of a liquidity event above such valuation hurdle, and received a preference on such distributions above such valuation threshold until all holders of Class A-2 profits interests subject to such valuation threshold had been allocated capital proceeds equal to the deemed capital contribution attributable to such Class A-2 profits interests as determined by the Company at the time of the grant. Class B Interests Virtu Financial previously approved the Virtu Financial LLC Management Incentive Plan (the “MIP”). Participants of the MIP were entitled to receive either Class B interests of Virtu Financial or Class B interests of Employee Holdco, which holds directly the corresponding Class B interests in Virtu Financial. Upon a liquidity event, Class B interests under the MIP were entitled to share proportionately in distributions in excess of the applicable profits interest valuation hurdle, which was determined by Virtu Financial based on a valuation at the time of the grant performed by a third party valuation firm. Class B interests were non-voting interests which vested over a four year period and upon a sale, IPO or certain other capital transactions of Virtu Financial. Class B interests were subject to forfeiture and repurchase provisions upon certain termination events. There were no Class B interests outstanding as of June 30, 2015 and Class B interests representing a right to share in 12.915% of capital proceeds (on a fully diluted basis) were issued and outstanding as of December 31, 2014. No Class B interests were issued during the six months ended June 30, 2015 and 2014. Distribution and Liquidation Rights Holders of Class A-1 and Class A-2 interests shared in distributions of available cash flow based on the ratio of interests held to the total number of Class A-1 and Class A-2 interests outstanding. Holders of Class B interests were not entitled to share in such distributions. As of December 31, 2014, unless and until converted to Class A-2 members’ interests, upon occurrence of a capital transaction, Class A-1 interests were entitled to distributions of capital proceeds until Class A-1 members’ unrecovered capital balance (as defined) was reduced to zero . After distributions to Class A-1 members, capital proceeds would have been provided to Class A-2 capital members until Class A-2 capital members’ unrecovered capital balance (as defined) were reduced to zero . After distributions to Class A-1 and Class A-2 members, distributions of capital proceeds would have been provided to members in respect to their respective capital proceeds percentages (as defined), subject to the valuation hurdles and distribution preferences applicable to holders of Class A-2 profits interests. Holders of vested Class B interests would have shared in distributions of capital proceeds above the applicable valuation hurdle proportionately based on their capital proceeds percentages. In the event of any voluntary or involuntary liquidation, dissolution, winding up, merger or company sale, distributions would have been made, first, to Class A-1 members’ unrecovered capital balance (as defined) until they have been reduced to zero. Second, to Class A-2 capital members, in proportion to their unrecovered capital balance (as defined) until reduced to zero and then to members in respect to their capital proceeds percentages (as defined), subject to the valuation hurdles and distribution preferences applicable to holders of Class A-2 profits interests. Conversion Rights As of December 31, 2014, the Class A-1 interests were convertible into Class A-2 interests at any time at the option of the Class A-1 member on a one -for-one basis. The Class A-1 interests automatically converted upon a qualified IPO or qualified sale. Qualified IPO was defined as an initial public offering on the New York Stock Exchange or NASDAQ National Market in which the gross proceeds raised equal or exceed $100.0 million and the valuation of the Company implies a return to the Silver Lake Member equal to at least (after taking into account previous distributions) 1.75 times the invested amount. Qualified sale was defined as a sale of all or a majority of the assets of the Company or all or a majority of the limited liability company interests of the Company to a third party that is not an affiliate or other permitted transferee of any member as long as the sale (i) is for consideration consisting entirely of cash and/or marketable securities and would satisfy certain minimum return requirements applicable to Silver Lake Partners and Temasek or (ii) was approved by the Silver Lake Member or, in certain circumstances, the Temasek Member. Redemption Rights Unless and until conversion occurred, the Investor Members were entitled to a number of rights and benefits, including the right to call for redemption of their Class A-1 interests. Any time on or after November 24, 2016, the Silver Lake Member could have exercised such redemption right in order to cause the Company to purchase all of the Class A-1 interests owned directly or indirectly by affiliates of Silver Lake Partners. Any time on or after May 16, 2020, the Temasek Member could have exercised such redemption right in order to cause the Company to purchase all of the Class A-1 interests owned directly or indirectly by affiliates of Temasek. As of December 31, 2014, the redemption price for each unit of Class A-1 interests owned by the Investor Members was the greater of (i) a minimum purchase price and (ii) the fair market value of the Class A-1 interests on the date of redemption. The minimum purchase price with respect to the Class A-1 interests owned directly or indirectly by affiliates of Silver Lake Partners was equal to the purchase price paid by affiliates of Silver Lake Partners for such Class A-1 interests and the minimum purchase price with respect to the Class A-1 interests owned directly or indirectly by affiliates (as defined in the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial) of Temasek was equal to the purchase price paid by affiliates (as defined in the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial) of Temasek for such Class A-1 interests (in each case, less distributions received in respect of such Class A-1 interests). The Company could have redeemed the Class A-1 interests using redemption notes provided that all available cash flow and all capital proceeds were used to pay down the redemption note. In lieu of redemption, the Silver Lake Member or the Temasek Member could require the Company to purchase all of the equity securities of the affiliated entity or entities that directly or indirectly owned their Class A-1 interests on behalf of affiliates of Silver Lake Partners or Temasek, respectively, provided that any such entity had not conducted any business or operations since inception other than the direct or indirect ownership of the interests of the Company. The redeemable equity instrument is classified outside of permanent equity on the condensed consolidated statements of financial condition. East Management Incentive Plan On July 8, 2011, 2,625,000 Class A-2 capital interests were contributed by Class A-2 members to Virtu East MIP LLC (“East MIP”). East MIP issued Class A interests to the members who contributed the Class A-2 capital interests, and Class B interests (“East MIP Class B interests”) to certain key employees. East MIP Class B interests were non-voting interests which vested over the four year period ending July 8, 2015, but in any event no earlier than upon the occurrence of a sale, IPO or certain other capital transactions of Virtu Financial. Vested East MIP Class B interests were entitled to participate in distributions of the proceeds received in respect of the Class A-2 capital interests held by East MIP upon a sale or certain other capital transactions of Virtu Financial. East MIP Class B interests were subject to forfeiture and repurchase provisions upon certain termination events. Capital structure after the Company’s Reorganization Completed on April 15, 2015 and IPO Completed on April 16, 2015: Initial Public Offering On April 21, 2015, the Company completed its IPO of 19,012,112 shares of its Class A common stock, par value $0.00001 per share, including 2,479,840 shares of Class A common stock sold in connection with the full exercise of the option to purchase additional shares granted to the underwriters, at a price to the public of $19.00 per share. The shares began trading on NASDAQ on April 16, 2015 under the ticker symbol “VIRT.” As a result of the completion of the Reorganization Transactions and the IPO, VFI holds approximately 24.8% interest in Virtu Financial. Reorganization Transactions In connection with the IPO, a series of reorganization transactions was completed on April 15, 2015 (the “Reorganization Transactions”) among the Company, subsidiaries of Virtu Financial and equityholders of Virtu Financial which include the following persons (the “Virtu Pre-IPO Members”): • three affiliates of the founding member, (collectively the “Founder Pre-IPO Members”); • the Silver Lake Member; • the Temasek Member; • the SLT Member; • two entities, one of which was and the other of which is managed by the founding member, whose equityholders include certain members of the management of Virtu Financial, (the “Management Vehicles”); and • certain current and former members of the management of the Company. and Madison Tyler Holdings and their affiliates, (the “Management Members”). The Reorganization Transactions are further described in the Company’s Registration Statement filed on Form S-1 (File No. 333-194473) (as amended the “Registration Statement”). In the Reorganization Transactions: • the Company. became the sole managing member of Virtu Financial ; • in a series of transactions, one of the Management Vehicles liquidated, with its equity interests in Virtu Financial either being distributed to its members, including certain members of management, or contributed to the other Management Vehicle ( “Virtu Employee Holdco”) and certain employees of Virtu Financial based outside the United States were distributed equity interests in Virtu Financial held by Virtu Employee Holdco on behalf of such employees and such equity interests were contributed to a trust (the “Employee Trust”), whose trustee is one of Virtu Financial’s subsidiaries; • two of the Founder Pre-IPO Members liquidated and distributed their equity interests in Virtu Financial to their equityholders, one of whom is TJMT Holdings LLC, the third Founder Pre-IPO Member; • the SLT Member distributed its equity interests in Virtu Financial to its equityholders, which consist of investment funds and other entities affiliated with Silver Lake Partners and Temasek; following a series of transactions, the Company acquired equity interests in Virtu Financial as a result of certain mergers involving wholly owned subsidiaries of Virtu Financial, an affiliate of Silver Lake Partners and Temasek, and the Temasek Member (the “Mergers”), and in exchange the Company issued to an affiliate of Silver Lake Partners (the “Silver Lake Post-IPO Stockholder”) and an affiliate of Temasek (the “Temasek Post-IPO Stockholder”, collectively with the Silver Lake Post-IPO Stockholder, the “Investor Post-IPO Stockholders”) shares of Class A common stock and rights to receive payments under a tax receivable agreement described below. The number of shares of Class A common stock issued to the Investor Post-IPO Stockholders was based on the value of the Virtu Financial equity interests that we acquired, which was determined based on a hypothetical liquidation of Virtu Financial and the initial public offering price per share of the Company’s Class A common stock in the IPO; all of the existing equity interests in Virtu Financial were reclassified into non-voting common interest units (“Virtu Financial Units”). The number of Virtu Financial Units issued to each member of Virtu Financial was determined based on a hypothetical liquidation of Virtu Financial and the IPO price of $19 per share of the Company’s Class A common stock in our initial public offering. The Virtu Financial Units received by Virtu Employee Holdco, the Employee Trust and the Management Members have the same vesting restrictions as the equity interests which were reclassified. Vested Virtu Financial Units will be entitled to receive distributions, if any, from Virtu Financial. Subject to certain exceptions, unvested Virtu Financial Units are not entitled to receive such distributions (other than tax distributions). If any unvested Virtu Financial Units are forfeited, they will be cancelled by Virtu Financial for no consideration (and the Company will cancel the related shares of Class C common stock (described below) for no consideration); • the Company amended and restated its certificate of incorporation and issued four classes of common stock: Class A common stock, Class B common stock, Class C common stock and Class D common stock (“common stock”). The Class A common stock and Class C common stock each provide holders with one vote on all matters submitted to a vote of stockholders, and the Class B common stock and Class D common stock each provide holders with 10 votes on all matters submitted to a vote of stockholders. The holders of Class C common stock and Class D common stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of Class A common stock and Class B common stock. Shares of the Company’s common stock will generally vote together as a single class on all matters submitted to a vote of stockholders. The remaining members of Virtu Financial after giving effect to the Reorganization Transactions, other than the Company, (collectively as the “Virtu Post-IPO Members”), subscribed for and purchased shares of the Company’s common stock as follows, in each case at a purchase price of $0.00001 per share and in an amount equal to the number of Virtu Financial Units held by each such Virtu Post-IPO Member; • TJMT Holdings LLC (“Founder Post-IPO Member”), purchased 79,610,490 shares of the Company’s Class D common stock; and • affiliates of Silver Lake Partners (the “Silver Lake Post-IPO Members”), Virtu Employee Holdco, the Employee Trust, the Management Members and the other Virtu Post-IPO Members purchased 36,746,041 shares of the Company’s Class C common stock; and the Founder Post-IPO Member was granted the right to exchange its Virtu Financial Units, together with a corresponding number of shares of the Company’s Class D common stock, for shares of the Company's Class B common stock, and the other Virtu Post-IPO Members was granted the right to exchange their Virtu Financial Units, together with a corresponding number of shares of the Company's Class C common stock, for shares of the Company’s Class A common stock. Each share of VFI’s Class B common stock and Class D common stock is convertible at any time, at the option of the holder, into one share of Class A common stock or Class C common stock, respectively. Distributions in Connection with the IPO On June 12, 2015, Virtu Financial made a cash distribution of $5.0 million to certain of the holders of its outstanding equity interests prior to the consummation of the Reorganization Transactions (such holders, the “Virtu Financial Pre-IPO Members”) (funded from cash on hand). Additionally, Virtu Financial intends to make further cash distributions of up to $45.0 million to the Virtu Financial Pre-IPO Members. The Company expects that these further distributions will be funded from cash on hand and excess cash held as clearing deposits with broker dealers and clearing organizations. Use of Proceeds Upon consummation of the IPO, the total gross proceeds of the offering were approximately $361.2 million. Of the proceeds, approximately $25.2 million was used to pay underwriting discounts and commissions, approximately $277.2 million was used to purchase 3,470,724 shares of Class A common stock from the Silver Lake Post-IPO Stockholder and 12,214,224 Virtu Financial Units and corresponding shares of Class C common stock from certain of the Virtu Post-IPO Members, including 4,862,609 Virtu Financial Units and corresponding shares of Class C common stock from the Silver Lake Post-IPO Members and 7,351,615 Virtu Financial Units and corresponding shares of Class C common stock from certain employees. The remaining $58.8 million of net proceeds was contributed by the Company to Virtu Financial, the operating company, which will be used for working capital and general corporate purposes. Other offering costs incurred were approximately $8.6 million and were paid by Virtu Financial. 2015 Management Incentive Plan VFI’s Board of Directors and stockholders adopted the Virtu Financial 2015 Management Incentive Plan (the “2015 Management Incentive Plan”), which became effective upon consummation of the IPO. The 2015 Management Incentive Plan provides for the grant of stock options, restricted stock units, and other awards based on an aggregate of 12,000,000 shares of Class A common stock, subject to additional sublimits, including limits on the total option grant to any one participant in a single year and the total performance award to any one participant in a single year. In connection with the IPO, non-qualified stock options to purchase 9,228,000 shares were granted at the IPO per share price, each of which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the date of grant. In connection with and subsequent to the IPO, 25,647 restricted stock units were granted, each of which vest on the one year anniversary of date of grant and are settled in shares of Class A common stock. For the purpose of calculating equity-based compensation expense, the fair value of the stock option grants was determined through the application of the Black-Scholes-Merton model and will be recognized on a straight line basis over the vesting period. Similarly, the fair value of the restricted stock units was determined based on the IPO per share price and will be recognized on a straight line basis over the vesting period. | |
Virtu Financial, Inc. | ||
Stockholder's Equity | 5. Stockholder’s Equity VFH Parent LLC, a wholly owned subsidiary of Virtu Financial LLC, is the sole stockholder of the Company, and contributed $100 to the Company on October 17, 2013 to purchase 100 shares of Class A common stock. Holders of Class A common stock shall be entitled to one vote for each share of Class A common stock held on all matters submitted to stockholders for vote, consent or approval. |
Subsequent Events
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Subsequent Events | 18. Subsequent Events The Company has evaluated subsequent events for adjustment to or disclosure in its condensed consolidated financial statements through the date of the report, and has not identified any recordable or disclosable events, not otherwise reported in these condensed consolidated financial statements or the notes thereto, except for the following: Virtu Financial made profit distributions to its members, including the Company, in the amount of $10.0 million, on August 4, 2015. The Company’s Board of Directors declared a dividend of $0.24 per share of Class A common stock and Class B common stock that is payable on September 15, 2015 to holders of record as of September 1, 2015. | |
Virtu Financial, Inc. | ||
Subsequent Events | 6. Subsequent Events The Company has evaluated subsequent events through February 19, 2015, the date the financial statements were issued. The Company did not note any subsequent events requiring disclosure or adjustments to the financial statements. |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Related Party Transactions | |||
Payable to affiliate | $ 400,000 | $ 400,000 | |
Virtu Financial, Inc. | |||
Related Party Transactions | |||
Payable to affiliate | 14,000 | ||
Virtu Financial, Inc. | Affiliates | |||
Related Party Transactions | |||
Payable to affiliate | $ 14,000 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Income taxes | ||||
Income tax benefits | $ (4,725,000) | $ 350,000 | ||
Virtu Financial, Inc. | ||||
Income taxes | ||||
U.S. federal statutory rate (as a percent) | 35.00% | |||
Income tax benefits | $ 0 | $ 4,744 | ||
Deferred tax assets | $ 0 | $ 4,744 |
Stockholder's Equity (Details)
Stockholder's Equity (Details) | Apr. 21, 2015shares | Oct. 17, 2013USD ($)Voteshares | Jun. 30, 2015USD ($)shares | Dec. 31, 2013USD ($) |
Stockholder's Equity | ||||
Capital contribution | $ 327,366,000 | |||
Class A common stock | ||||
Stockholder's Equity | ||||
Shares issued | shares | 19,012,112 | 19,012,112 | ||
Virtu Financial, Inc. | ||||
Stockholder's Equity | ||||
Capital contribution | $ 100 | |||
Virtu Financial, Inc. | VFH | Class A common stock | ||||
Stockholder's Equity | ||||
Capital contribution | $ 100 | |||
Shares issued | shares | 100 | |||
Number of votes per share | Vote | 1 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and cash equivalents | $ 126,978 | $ 75,864 |
Securities borrowed | 667,970 | 484,934 |
Securities purchased under agreements to resell | 31,050 | 31,463 |
Receivables from broker dealers and clearing organizations | 691,163 | 387,652 |
Trading assets, at fair value: | ||
Financial instruments owned | 1,658,086 | 1,307,933 |
Financial instruments owned and pledged | 399,306 | 236,375 |
Property, equipment and capitalized software (net of accumulated depreciation of $107,605 and $84,579 as of June 30, 2015 and December 31, 2014, respectively) | 47,113 | 44,644 |
Goodwill | 715,379 | 715,379 |
Intangibles (net of accumulated amortization) | 1,308 | 1,414 |
Deferred tax asset | 163,423 | 977 |
Other assets ( $9,162 and $8,205, at fair value, as of June 30, 2015 and December 31, 2014, respectively) | 34,944 | 32,823 |
Total assets | 4,536,720 | 3,319,458 |
Liabilities | ||
Securities loaned | 876,782 | 497,862 |
Securities sold under agreements to repurchase | 246 | 2,006 |
Payables to broker dealers and clearing organizations | 568,459 | 686,203 |
Trading liabilities, at fair value: | ||
Financial instruments sold, not yet purchased | 1,785,628 | 1,037,634 |
Tax receivable agreement obligations | 184,679 | |
Accounts payable and accrued expenses and other liabilities | 120,950 | 93,331 |
Senior secured credit facility | 495,312 | 495,724 |
Total liabilities | 4,032,056 | 2,812,760 |
Stockholders' / Members' Equity | ||
Additional Paid in Capital | 115,274 | |
Retained Earnings (Accumulated deficit) | 474 | (91,383) |
Accumulated other comprehensive income (loss) | 412 | (3,705) |
Total stockholders' / members' equity | 116,161 | |
Members Equity | 212,265 | |
Non-controlling interest | 388,503 | |
Total equity | 504,664 | 212,265 |
Total liabilities, redeemable membership interest and equity | 4,536,720 | 3,319,458 |
Class D common stock | ||
Stockholders' / Members' Equity | ||
Common stock value | 1 | |
Total equity | $ 1 | |
Class A-1 | ||
Redeemable membership interest | ||
Redeemable membership interest | 294,433 | |
Stockholders' / Members' Equity | ||
Membership interests | 19,648 | |
Class A-2 | ||
Stockholders' / Members' Equity | ||
Membership interests | $ 287,705 |
Condensed Consolidated Statem17
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Apr. 21, 2015 | Apr. 16, 2015 | Apr. 15, 2015 | Dec. 31, 2014 |
Accumulated depreciation (in dollars) | $ 107,605 | $ 84,579 | |||
Other assets, fair value (in dollars) | $ 9,162 | $ 8,205 | |||
Common stock, par value (in dollars per share) | $ 0.00001 | ||||
Class A common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | $ 0.00001 | |
Common stock shares authorized | 1,000,000,000 | 0 | |||
Common stock shares issued | 34,305,052 | 0 | |||
Common stock shares outstanding | 34,305,052 | 0 | |||
Class B common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Common stock shares authorized | 175,000,000 | 0 | |||
Common stock shares issued | 0 | 0 | |||
Common stock shares outstanding | 0 | 0 | |||
Class C common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Common stock shares authorized | 90,000,000 | 0 | |||
Common stock shares issued | 24,531,817 | 0 | |||
Common stock shares outstanding | 24,531,817 | 0 | |||
Class D common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Common stock shares authorized | 175,000,000 | 0 | |||
Common stock shares issued | 79,610,490 | 0 | |||
Common stock shares outstanding | 76,610,490 | 0 | |||
Class A-1 | |||||
Membership interests, authorized | 0 | 1,964,826 | |||
Membership interests issued | 0 | 1,964,826 | |||
Membership interests outstanding | 0 | 1,964,826 | |||
Class A-2 | |||||
Membership interests, authorized | 0 | 101,381,332 | |||
Membership interests issued | 0 | 101,381,332 | |||
Membership interests outstanding | 0 | 99,855,666 |
Condensed Consolidated Statem18
Condensed Consolidated Statements of Comprehensive Income - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues: | ||
Trading income, net | $ 383,722,000 | $ 318,539,000 |
Interest and dividends income | 14,597,000 | 12,769,000 |
Technology services | 5,188,000 | 4,963,000 |
Total revenue | 403,507,000 | 336,271,000 |
Operating Expenses: | ||
Brokerage, exchange and clearance fees, net | 117,639,000 | 108,271,000 |
Communication and data processing | 35,492,000 | 33,312,000 |
Employee compensation and payroll taxes | 42,065,000 | 38,868,000 |
Interest and dividends expense | 26,407,000 | 22,710,000 |
Operations and administrative | 12,431,000 | 12,125,000 |
Depreciation and amortization | 17,849,000 | 13,962,000 |
Amortization of purchased intangibles and acquired capitalized software | 106,000 | 106,000 |
Acquisition related retention bonus | 2,487,000 | |
Termination of office leases | 2,729,000 | 849,000 |
Initial public offering fees and expenses | 8,901,000 | |
Charges related to share-based compensation at IPO | 44,194,000 | |
Financing interest expense on senior secured credit facility | 14,861,000 | 15,299,000 |
Total operating expenses | 313,773,000 | 256,890,000 |
Income before income taxes and non-controlling interest | 89,734,000 | 79,381,000 |
Provision for (benefit from) income taxes | 4,725,000 | (350,000) |
Net income | 85,009,000 | 79,731,000 |
Non-controlling interest | (84,535,000) | |
Net income available for common stockholders | $ 474,000 | |
Earnings per share | ||
Basic (in dollars per share) | $ 0.01 | |
Diluted (in dollars per share) | $ 0.01 | |
Weighted average common shares outstanding | ||
Basic (in shares) | 34,305,052 | |
Diluted (in shares) | 34,529,349 | |
Comprehensive income | ||
Net income | $ 85,009,000 | 79,731,000 |
Other comprehensive income (loss) | ||
Foreign exchange translation adjustment, net of taxes | (3,001,000) | (163,000) |
Comprehensive income | 82,008,000 | $ 79,568,000 |
Less: Comprehensive income attributable to noncontrolling interests | (81,122,000) | |
Comprehensive income attributable to common stockholders | $ 886,000 |
Condensed Consolidated Statem19
Condensed Consolidated Statements of Changes in Equity - USD ($) | Virtu Financial, LLCClass A-1 | Virtu Financial, LLCClass A-2 | Virtu Financial, LLCRetained Earnings / (Accumulated Deficit) | Virtu Financial, LLCAccumulated Other Comprehensive Income (Loss) | Virtu Financial, LLCAdditional paid-in Capital | Virtu Financial, LLCTotal Stockholders'/ Members' Equity | Virtu Financial, LLCNoncontrolling Interest | Virtu Financial, LLCClass A common stock | Virtu Financial, LLCClass C common stock | Virtu Financial, LLCClass D common stock | Virtu Financial, LLC | Retained Earnings / (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Additional paid-in Capital | Total Stockholders'/ Members' Equity | Noncontrolling Interest | Class A common stock | Class C common stock | Class D common stock | Total |
Balance at the end of the period at Dec. 31, 2014 | $ 19,648,000 | $ 287,705,000 | $ (91,383,000) | $ (3,705,000) | $ 212,265,000 | $ 212,265,000 | $ 212,265,000 | |||||||||||||
Balance at the end of the period (in units) at Dec. 31, 2014 | 1,964,826 | 99,855,666 | ||||||||||||||||||
Balance at the end of the period at Dec. 31, 2014 | 212,265,000 | |||||||||||||||||||
Balance for Redeemable Interest at the end of the period at Dec. 31, 2014 | $ 294,433,000 | |||||||||||||||||||
Balance (in shares) at Dec. 31, 2014 | 0 | 0 | 0 | |||||||||||||||||
Increase (decrease) in stockholder's/members' equity | ||||||||||||||||||||
Share based compensation | $ 438,000 | 438,000 | 438,000 | |||||||||||||||||
Share based compensation (in shares) | 6,418 | |||||||||||||||||||
Repurchase of Class A-2 interests | $ (97,000) | (97,000) | (97,000) | |||||||||||||||||
Repurchase of Class A-2 interests (in shares) | (13,495) | |||||||||||||||||||
Distribution to members | (130,000,000) | (130,000,000) | (130,000,000) | |||||||||||||||||
Net Income | 83,147,000 | 83,147,000 | 83,147,000 | |||||||||||||||||
Foreign exchange translation adjustment | (4,633,000) | (4,633,000) | (4,633,000) | |||||||||||||||||
Reorganization of equity structure | $ (19,648,000) | $ (288,046,000) | 138,236,000 | 8,338,000 | $ 63,261,000 | (97,858,000) | $ 392,291 | $ 1,000 | 294,433,000 | |||||||||||
Reorganization of equity structure (in shares) | 18,763,664 | 36,746,041 | 79,610,490 | |||||||||||||||||
Reorganization of equity structure (in shares) | (1,964,826) | (99,848,589) | ||||||||||||||||||
Reorganization of equity structure - Redeemable Interest | $ (294,433) | |||||||||||||||||||
Balance at the end of the period at Apr. 15, 2015 | 63,261,000 | 63,262,000 | 392,291 | $ 1,000 | 455,553,000 | |||||||||||||||
Balance at the beginning of the period at Dec. 31, 2014 | $ 19,648,000 | $ 287,705,000 | $ (91,383,000) | $ (3,705,000) | 212,265,000 | 212,265,000 | 212,265,000 | |||||||||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2014 | 1,964,826 | 99,855,666 | ||||||||||||||||||
Balance at the beginning of the period at Dec. 31, 2014 | 212,265,000 | |||||||||||||||||||
Balance (in shares) at Dec. 31, 2014 | 0 | 0 | 0 | |||||||||||||||||
Balance for Redeemable Interest at the beginning of the period at Dec. 31, 2014 | $ 294,433,000 | |||||||||||||||||||
Increase (decrease) in stockholder's/members' equity | ||||||||||||||||||||
Net Income | 85,009,000 | |||||||||||||||||||
Balance at the end of the period at Jun. 30, 2015 | 116,161,000 | |||||||||||||||||||
Balance at the end of the period at Jun. 30, 2015 | $ 474,000 | $ 412,000 | $ 115,274,000 | $ 116,161,000 | $ 388,503,000 | $ 1,000 | 504,664,000 | |||||||||||||
Balance at the end of the period (in shares) at Jun. 30, 2015 | 34,305,052 | 24,531,817 | 79,610,490 | |||||||||||||||||
Balance at the beginning of the period at Apr. 15, 2015 | $ 63,261,000 | $ 63,262,000 | $ 392,291 | $ 1,000 | $ 455,553,000 | |||||||||||||||
Balance (in shares) at Apr. 15, 2015 | 18,763,664 | 36,746,041 | 79,610,490 | |||||||||||||||||
Increase (decrease) in stockholder's/members' equity | ||||||||||||||||||||
Repurchase of Class A-2 interests | (277,153,000) | (277,153,000) | (277,153,000) | |||||||||||||||||
Repurchase of Class A-2 interests (in shares) | (3,470,724) | (12,214,224) | ||||||||||||||||||
Net Income | 474,000 | 474,000 | 1,388,000 | 1,862,000 | ||||||||||||||||
Foreign exchange translation adjustment | 412,000 | 412,000 | 1,220,000 | 1,632,000 | ||||||||||||||||
Issuance of Common Stock, net of offering costs | 327,366,000 | 327,366,000 | 327,366,000 | |||||||||||||||||
Issuance of Common Stock, net of offering costs (in shares) | 19,012,112 | |||||||||||||||||||
Share based compensation vested upon IPO | 45,677,000 | 45,677,000 | 45,677,000 | |||||||||||||||||
Adjustments for changes in proportionate ownership in Virtu Financial | (22,513,000) | (22,513,000) | 22,513,000 | |||||||||||||||||
Issuance of tax receivable agreements | (23,041,000) | (23,041,000) | (23,041,000) | |||||||||||||||||
Share based compensation | 1,677,000 | 1,677,000 | 1,677,000 | |||||||||||||||||
Distribution from Virtu Financial to non-controlling interest | (28,909,000) | (28,909,000) | ||||||||||||||||||
Balance at the end of the period at Jun. 30, 2015 | 116,161,000 | |||||||||||||||||||
Balance at the end of the period at Jun. 30, 2015 | $ 474,000 | $ 412,000 | $ 115,274,000 | $ 116,161,000 | $ 388,503,000 | $ 1,000 | $ 504,664,000 | |||||||||||||
Balance at the end of the period (in shares) at Jun. 30, 2015 | 34,305,052 | 24,531,817 | 79,610,490 |
Condensed Consolidated Statem20
Condensed Consolidated Statements of Cash Flows $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Cash flows from operating activities | |
Net income | $ 85,009 |
Adjustments to reconcile net income to net cash provided by operating activities: | |
Depreciation and amortization | 17,849 |
Amortization of purchased intangibles and acquired capitalized software | 106 |
Amortization of debt issuance costs and deferred financing fees | 823 |
Termination of office leases | 2,729 |
Share based compensation | 53,529 |
Other | 2,441 |
Changes in operating assets and liabilities: | |
Securities borrowed | (183,036) |
Securities purchased under agreements to resell | 413 |
Receivables from broker dealers and clearing organizations | (303,511) |
Trading assets, at fair value | (513,084) |
Other assets ($9,162 and $8,205, at fair value, as of June 30, 2015 and December 31, 2014, respectively) | (2,126) |
Securities loaned | 378,920 |
Securities sold under agreements to repurchase | (1,760) |
Payables to broker dealers and clearing organizations | (117,744) |
Trading liabilities, at fair value | 747,994 |
Accounts payable and accrued expenses and other liabilities | 14,369 |
Net cash provided by operating activities | 182,921 |
Cash flows from investing activities | |
Development of capitalized software | (4,207) |
Acquisition of property and equipment | (13,571) |
Net cash used in investing activities | (17,778) |
Cash flows from financing activities | |
Distribution to members through April 15, 2015 | (130,000) |
Distribution from Virtu Financial to non-controlling interest, after April 15, 2015 | (28,909) |
Repayment of senior secured credit facility | (364) |
Debt issuance costs | (871) |
Issuance of Common Stock, net of offering costs | 327,366 |
Repurchase of Virtu Financial Units and corresponding number of Class A and C Common Stock | (277,153) |
Net cash used in financing activities | (111,028) |
Effect of exchange rate changes on Cash and cash equivalents | (3,001) |
Net increase (decrease) in Cash and cash equivalents | 51,114 |
Cash and cash equivalents, beginning of period | 75,864 |
Cash and cash equivalents, end of period | 126,978 |
Supplementary disclosure of cash flow information | |
Cash paid for interest | 32,837 |
Cash paid for taxes | 2,006 |
Non-cash investing activities | |
Compensation to developers subject to capitalization of software (of which $10,565 and $903 were capitalized for the six months ended June 30, 2015 and 2014, respectively) | 23,927 |
Class A-2 | |
Cash flows from financing activities | |
Repurchase of membership interests | $ (1,097) |
Condensed Consolidated Statem21
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Statements of Cash Flows | |||
Fair value of other assets | $ 9,162 | $ 8,205 | |
Compensation to software developers capitalized | $ 10,565 | $ 903 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation Organization Virtu Financial, Inc. (“VFI” or, collectively with its wholly owned subsidiaries, the “Company”) is a Delaware holding company whose primary asset is its ownership of approximately 24.8% of the membership interests of Virtu Financial LLC (“Virtu Financial”). The Company was formed on October 16, 2013 for the purpose of completing certain reorganization transactions (the “Reorganization Transactions”), in order to carry on the business of Virtu Financial LLC (“Virtu Financial”) and to conduct a public offering. The Company is the sole managing member of Virtu Financial and operates and controls all of the businesses and affairs of Virtu Financial and, through Virtu Financial and its subsidiaries (the “Group”), continues to conduct the business now conducted by such subsidiaries. Virtu Financial was formed as a Delaware limited liability company on April 8, 2011 in connection with a corporate reorganization and acquisition of the outstanding equity interests of Madison Tyler Holdings, LLC (“MTH”), an electronic trading firm and market maker. In connection with the reorganization, the members of Virtu Financial’s predecessor entity, Virtu Financial Operating LLC (“VFO”), a Delaware limited liability company formed on March 19, 2008, exchanged their interests in VFO for interests in Virtu Financial and the members of MTH exchanged their interests in MTH for cash and/or interests in Virtu Financial. Virtu Financial’s principal subsidiaries include Virtu Financial BD LLC (“VFBD”), a self-clearing US broker-dealer, Virtu Financial Capital Markets LLC (“VFCM”), a self-clearing US broker-dealer and designated market maker on the New York Stock Exchange (“NYSE”) and the NYSE MKT (formerly NYSE Amex), Virtu Financial Global Markets LLC (“VFGM”), a US trading entity focused on futures and currencies, Virtu Financial Ireland Limited (“VFIL”), formed in Ireland, Virtu Financial Asia Pty Ltd (“VFAP”), formed in Australia, and Virtu Financial Singapore Pte. Ltd. (“VFSing”), formed in Singapore. The Company is a technology-enabled market maker and liquidity provider. The Company has developed a single, proprietary, multi-asset, multi-currency technology platform through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on numerous exchanges, markets and liquidity pools in numerous countries around the world. The Company is managed and operated as one business. Accordingly, the Company operates under one reportable segment. Basis of Presentation These condensed consolidated financial statements are presented in U.S. dollars and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10-Q and accounting standards generally accepted in the United States of America (“U.S. GAAP”) promulgated in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or the “Codification”). These condensed consolidated financial statements are unaudited and include all adjustments of a normal, recurring nature necessary to present fairly the financial condition as of June 30, 2015 and December 31, 2014, the results of operations and comprehensive income for the six months ended June 30, 2015 and 2014 and cash flows for the six months ended June 30, 2015 and 2014. The condensed consolidated financial statement information as of December 31, 2014 has been derived from the 2014 audited consolidated financial statements. The results of operations for interim periods are not necessarily indicative of results for the entire year. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s final prospectus filed with the SEC on April 16, 2015 (the “Prospectus”) for the offering of Class A common stock, par value $0.00001 per share (the “Class A common stock”). See Note 13 to the condensed consolidated financial statements for information regarding the Reorganization Transactions (as defined in Note 13) and the Company’s IPO. Principles of Consolidation, including Noncontrolling Interests The unaudited condensed consolidated financial statements include the accounts of VFI and its majority and wholly owned subsidiaries. As sole managing member of Virtu Financial, VFI exerts control over the Group’s operations. In accordance with ASC 810, Consolidation, the Company consolidates Virtu Financial and its subsidiaries’ consolidated financial statements and records the interests in Virtu Financial that VFI does not own as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The Company's condensed consolidated financial statements are prepared in conformity with US GAAP, which require management to make estimates and assumptions regarding fair value measurements including trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. Earnings Per Share Earnings per share (“EPS”) is computed in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s share-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares. Cash and Cash Equivalents The Company considers cash equivalents as highly liquid investments with original maturities of less than three months when acquired. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. Securities Borrowed and Securities Loaned The Company conducts securities borrowing and lending activities with external counterparties. In connection with these transactions, the Company receives or posts collateral. These transactions are collateralized by cash or securities. In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received. Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the condensed consolidated statements of financial condition. For these transactions, the interest received or paid by the Company is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the condensed consolidated statements of comprehensive income. Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company's policy that its custodian takes possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the condensed consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. Receivables from/Payables to Broker ‑Dealers and Clearing Organizations Amounts receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At June 30, 2015 and December 31, 2014, receivables from and payables to broker-dealers and clearing organizations primarily represent amounts due for unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing organizations or exchanges and balances due from or due to prime brokers in relation to the Company’s trading. The Company also offsets the outstanding principal balances on all short term credit facilities against amounts receivable from and payable to broker-dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, substantially all of the Company’s securities transactions, money balances, and security positions are transacted with several brokers. The Company is subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Company’s management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties. Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased The Company carries financial instruments owned, including those pledged as collateral, and financial instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded net on a trade-date basis in trading income on the condensed consolidated statements of comprehensive income. Fair Value Measurements At June 30, 2015 and December 31, 2014, substantially all of Company’s financial assets and liabilities, except for long-term borrowings and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short-term in nature and were carried at amounts that approximate fair value. The Company’s assets and liabilities have been categorized based upon a fair value hierarchy in accordance with ASC 820 ‑10, Fair Value Measurements and Disclosures. ASC 820 ‑10 defines fair value 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. Fair value measurements are not adjusted for transaction costs. The recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market is prohibited. ASC 820 ‑10 requires a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). 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; Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the six months ended June 30, 2015 and 2014. Derivative Instruments Derivative instruments used for trading purposes, including economic hedges of trading instruments, are carried at fair value. Fair values for exchange-traded derivatives, principally futures, are based on quoted market prices. Fair values for over-the-counter derivative instruments, principally forward contracts, are based on the values of the underlying financial instruments within the contract. The underlying derivative instruments are currencies which are actively traded. Derivative instruments used for economic hedging purposes include futures, forward contracts, and options. Unrealized gains or losses on these derivative instruments are recognized currently in the condensed consolidated statements of comprehensive income as trading income, net. The Company does not apply hedge accounting as defined in ASC 815, Derivatives and Hedging ; accordingly all derivative instruments are recorded at fair value with changes in fair values reflected in earnings. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisition of MTH which were recorded at fair value on the date of acquisition. Depreciation is provided using the straight ‑line method over estimated useful lives of the underlying asset. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. The useful lives of furniture and fixtures are as follows: Furniture, fixtures and equipment to years Leasehold improvements years or length of lease term, whichever is shorter Capitalized Software The Company accounts for the costs of computer software developed or obtained for internal use in accordance with ASC 350-40, Internal ‑Use Software . The Company capitalizes costs of materials, consultants, and payroll and payroll related costs for employees incurred in developing internal-use software. Costs incurred during the preliminary project and post-implementation stages are charged to expense. Management’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The Company’s capitalized software development costs were approximately $5.5 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. The related amortization expense was approximately $5.2 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. Additionally, in connection with the compensation charge related to Class B and East MIP interests recognized upon the IPO (Note 13), the Company capitalized and amortized $9.5 million and $8.0 million of the costs, respectively, which were included within charges related to share-based compensation at IPO, net, in the condensed consolidated statements of comprehensive income. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software on the accompanying condensed consolidated statements of financial condition and are amortized over a period of 1.4 to 2.5 years, which represents the estimated useful lives of the underlying software. Goodwill 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 for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We operate in one operating segment, which is our only reporting unit. The goodwill impairment test is a two-step process. The first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the 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 equal to that excess. The primary valuation methods we use to estimate the fair value of our reporting unit are the income and market approaches. In applying the income approach, projected available cash flows and the terminal value are discounted to present value to derive an indication of fair value of the business enterprise. The market approach compares the reporting unit to selected reasonably similar publicly-traded companies. The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. There were no triggering events that would have caused the Company to assess goodwill for impairment during the six months ended June 30, 2015 and 2014, respectively. Intangible Assets The Company amortizes finite-lived intangible assets over their estimated useful lives. Finite-lived intangible assets are tested for impairment annually or when impairment indicators are present, and if impaired, written down to fair value. Exchange Memberships and Stock Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value, in accordance with ASC 940-340, Financial Services — Broker and Dealers. Exchange stock includes shares that entitles the Company to certain trading privileges. The shares are marked to market with the corresponding gain or loss recorded in the condensed consolidated statements of comprehensive income. The Company’s exchange memberships and stock are included in other assets on the condensed consolidated statements of financial condition. Trading Income Trading income is comprised 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 condensed consolidated statements of comprehensive income. Interest and Dividends Income/Interest and Dividends Expense Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of interest earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related lines of credit. Dividends on financial instruments owned including those pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex-dividend date and interest is recognized on the accrual basis. Technology Services Technology services revenues consist of fees paid by third parties for licensing of our proprietary risk management and trading infrastructure technology and provision of associated management and hosting services. These fees include both upfront and annual recurring fees. Revenue from technology services is recognized once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized ratably over the contractual service period. Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying condensed consolidated statements of comprehensive income. Income Taxes Virtu Financial is a limited liability company and is treated as a pass-through entity for United States federal, state, and local income tax purposes. Accordingly, no provision for United States federal, state, and local income tax was required prior to the consummation of the Reorganization Transactions and the IPO. Subsequent to consummation of the Reorganization Transactions and the IPO, the Company is subject to U.S. federal, state and local income taxes on its taxable income, which is proportional to the percentage of Virtu Financial owned by the Company. The Company’s subsidiaries are subject to income taxes in the respective jurisdictions in which they operate. Certain of the Company’s 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. The Company recognizes 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 condensed 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. The Company’s 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 Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of June 30, 2015 and December 31, 2014 or the results of operations for the six months ended June 30, 2015 and 2014. Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to Accounting Standards Update 2011-05, Comprehensive Income. Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). OCI is comprised of revenues, expenses, gains and losses that are reported in the comprehensive income section of the consolidated statements of comprehensive income, but are excluded from reported net income. The Company’s OCI is comprised of foreign currency translation adjustments. Assets and liabilities of operations having non-U.S. dollar functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in other comprehensive income, a separate component of members’ equity. Share-Based Compensation The Company accounts for share-based compensation transactions with employees under the provisions of ASC 718, Compensation: Stock Compensation. ASC 718 requires a share-based payment transaction with employees to be 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. With respect to equity awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the 2015 Management Incentive Plan, the fair value of the stock option grants are determined through the application of the Black-Scholes-Merton model. Similarly, the fair value of the restricted stock units is determined based on the IPO per share price or the market price at the time of grant. The fair value of share based awards granted to employees is expensed based on the vesting conditions. Recent Accounting Pronouncements Revenue — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 (fiscal year 2018 for the Company) and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 on its condensed consolidated financial statements. Repurchase Agreements — In June, 2014, the FASB released ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendment changes the accounting for repurchase financing transactions and for repurchase-to-maturity transactions to secured borrowing accounting. The accounting changes are effective for the Company beginning in the first quarter of 2015. The effect of the accounting changes on transactions outstanding as of the effective date are required to be presented as a cumulative effect adjustment to retained earnings as January 1, 2015. The Company currently does not enter into these types of repurchase transactions. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual tenor of the agreements, as well as a discussion of the potential risks associated with the agreements and the related collateral pledged, and how those risks are managed. Additional disclosures are required for repurchase agreements, securities lending transactions, sales with a total return swap, and other similar transfers of financial assets that are accounted for as a sale. Compensation — In June 2014, the Emerging Issues Task Force (the “EITF”) of the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendment requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 (fiscal year 2016 for the Company). Earlier adoption is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Going Concern — In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new standard will be effective in the first annual period ending after December 15, 2016 (fiscal year 2017 for the Company). Earlier adoption is permitted. The Company will implement this new standard on the required effective date. Hybrid Financial Instruments — In November 2014, the EITF of the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. The ASU requires that for hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. An entity should use judgment based on an evaluation of all the relevant terms and features, and should consider the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company) and interim periods within fiscal years beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Debt Issuance Costs — In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, rather than as a deferred charge asset. The ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company), and interim periods within those fiscal years. Early adoption of the amendment is permitted and the Company has elected to early adopt this ASU effective as of June 30, 2015. The new guidance has been applied on a retrospective basis, wherein the accompanying condensed consolidated statements of financial condition have been adjusted to reflect the period-specific effects of applying the new guidance. Refer to Note 8 for additional information regarding the impact of this guidance on the Company’s condensed consolidated financial statements. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings per Share | |
Earnings per share | 3. Earnings per Share Historical earnings per share information is not applicable for reporting periods prior to the consummation of the IPO. Net income available for common stockholders of $0.5 million is the net income earned by VFI. on its approximate 24.8% interest in Virtu Financial for the period from April 16, 2015 through June 30, 2015, net of the provision for income taxes for the period. The below table contains a reconciliation of net income before noncontrolling interest to net income available for common stockholders: Six Months Ended (in thousands) June 30, 2015 Income before income taxes and noncontrolling interest $ Provision for (benefit from) income taxes Net income Net income allocable to members of Virtu Financial LLC (for the period January 1, 2015 through April 15, 2015) Noncontrolling interest subsequent to April 15, 2015 Net income available for common stockholders $ The calculation of basic and diluted earnings per share is described below: Basic earnings per share are calculated utilizing net income available for common stockholders from April 16, 2015 through June 30, 2015 divided by the weighted average number of shares of common stock outstanding during the same period: Period from April 16, 2015 through (in thousands, except for shares or per share amounts) June 30, 2015 Basic earnings per share: Net income available for common stockholders $ Weighted average shares of common stock outstanding: Class A Basic Earnings per share $ Diluted earnings per share are calculated utilizing net income available for common stockholders commencing on April 16, 2015, divided by the weighted average total number of shares of common stock outstanding during the period from April 16, 2015 through June 30, 2015 plus additional shares of common stock issued and issuable pursuant to the 2015 Management Incentive Plan (Note 13). Period from April 16, 2015 through (in thousands, except for shares or per share amounts) June 30, 2015 Diluted earnings per share: Net income available for common stockholders $ Weighted average shares of common stock outstanding: Class A Issued and outstanding Issuable pursuant to 2015 Management Incentive Plan Diluted Earnings per share $ |
Tax Receivable Agreements
Tax Receivable Agreements | 6 Months Ended |
Jun. 30, 2015 | |
Tax Receivable Agreements | |
Tax Receivable Agreements | 4. Tax Receivable Agreements In connection with the IPO, on April 15, 2015, the Company entered into Tax Receivable Agreements (“TRAs”) to make payments to the Virtu Post-IPO Members, as defined in Note 13, and the Investor Post-IPO Stockholders, as defined in Note 13, that are generally equal to 85% of the applicable cash tax savings, if any, realized as a result of favorable tax attributes that will be available to the Company as a result of the Reorganization Transactions, exchanges of Virtu Financial interests for Class A common stock or Class B common stock and payments made under the TRAs. As a result of the exchange of units of Virtu Financial, the Company recorded a deferred tax asset of $161.6 million associated with the increase in tax basis. We expect that future payments to the Virtu Post-IPO Members and the Investor Post-IPO Stockholders in respect of the purchases, the exchanges and the Mergers described in the Registration Statement and Note 15 of the condensed consolidated financial statements of Virtu Financial included herein will aggregate to approximately $184.7 million in the aggregate, ranging from approximately $7.9 million to $13.6 million per year over the next 15 years. Payments will generally occur only after the filing of the U.S. federal and state income tax returns and realized the cash tax savings from the favorable tax attributes. The first payment is due 120 days after the filing of the Company’s tax return for the year ended December 31, 2015, which is due March 15, 2016, but the due date can be extended until September 15, 2016. Future payments under the TRAs in respect of subsequent exchanges would be in addition to these amounts. The Company recorded a corresponding reduction to paid-in capital for the difference between the TRA liability and the related deferred tax asset. At June 30, 2015, the Company’s remaining deferred tax asset and the payment liability pursuant to the TRAs were approximately $158.9 million and $184.7 million, respectively. The amounts recorded as of June 30, 2015 approximates the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S. federal and state income tax returns for the year ended December 31, 2015. For the TRA discussed above, the cash savings realized by the Company are generally computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been no increase to the tax basis of the assets of Virtu Financial as a result of the purchase or exchange of Virtu Financial units, had there been no tax benefit from the tax basis in the intangible assets of Virtu Financial on the date of the IPO and had there been no tax benefit as a result of the Net Operating Losses (“NOLs”) and other tax attributes at Virtu Financial. Subsequent adjustments of the TRA obligations due to certain events (e.g., changes to the expected realization of NOLs or changes in tax rates) will be recognized within operating expenses in the condensed consolidated statement of comprehensive income. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets There were no changes in the carrying amount of goodwill for the six months ended June 30, 2015 and 2014. No goodwill impairment was recognized in the six months ended June 30, 2015 and 2014. Acquired intangible assets consisted of the following as of June 30, 2015 and December 31, 2014: As of June 30, 2015 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — 1.4 to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ As of December 31, 2014 (in thousands) Gross Carrying Accumulated Net Carrying Useful Lives Amount Amortization Amount (Years) Purchased technology $ $ $ — 1.4 to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ Amortization expense relating to finite-lived intangible assets was approximately $ 0.1 million and $ 0.1 million for the six months ended June 30, 2015 and 2014, respectively. This is included in amortization of purchased intangibles and acquired capitalized software in the accompanying condensed consolidated statements of comprehensive income. |
Receivables from_Payables to Br
Receivables from/Payables to Broker-Dealers and Clearing Organizations | 6 Months Ended |
Jun. 30, 2015 | |
Receivables from/Payables to Broker-Dealers and Clearing Organizations | |
Receivables from/Payables to Broker-Dealers and Clearing Organizations | 6. Receivables from/Payables to Broker-Dealers and Clearing Organizations The following is a summary of receivables from and payables to brokers-dealers and clearing organizations at June 30, 2015 and December 31, 2014: June 30, December 31, (in thousands) 2015 2014 Assets Due from prime brokers $ $ Deposits with clearing organizations Net equity with futures commission merchants Unsettled trades Securities failed to deliver Total receivables from broker-dealers and clearing organizations $ $ Liabilities Due to prime brokers $ $ Net equity with futures commission merchants Unsettled trades Securities failed to receive Total payables to broker-dealers and clearing organizations $ $ Included as a deduction from “Due from prime brokers” and “Net equity with futures commission merchants” is the outstanding principal balance on all of the Company’s short-term credit facilities of approximately $206.4 million and $183.0 million as of June 30, 2015 and December 31, 2014, respectively. The loan proceeds from the credit facilities are available only to meet the initial margin requirements associated with the Company’s ordinary course futures and other trading positions, which are held in the Company’s trading accounts with an affiliate of the respective financial institutions. The credit facilities are fully collateralized by the Company’s trading accounts and deposit accounts with these financial institutions. “Securities failed to deliver” and “Securities failed to receive” include amounts with a clearing organization and other broker-dealers. |
Collateralized Transactions
Collateralized Transactions | 6 Months Ended |
Jun. 30, 2015 | |
Collateralized Transactions | |
Collateralized Transactions | 7. Collateralized Transactions The Company is permitted to sell or repledge securities received as collateral and use these securities to secure repurchase agreements, enter into securities lending transactions or deliver these securities to counterparties or clearing organizations to cover short positions. At June 30, 2015 and December 31, 2014, substantially all of the securities received as collateral have been repledged. Amounts relating to collateralized transactions at June 30, 2015 and December 31, 2014 are summarized as follows: June 30, December 31, (In thousands) 2015 2014 Securities received as collateral: Securities borrowed $ $ Securities purchased under agreements to resell $ $ In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements. Financial instruments owned and pledged, where the counterparty has the right to repledge, at June 30, 2015 and December 31, 2014 consisted of the following: June 30, December 31, (In thousands) 2015 2014 Equities $ $ Exchange traded notes $ $ |
Borrowings
Borrowings | 6 Months Ended |
Jun. 30, 2015 | |
Borrowings | |
Borrowings | 8. Borrowings Broker-Dealer Credit Facilities The Company is a party to two secured credit facilities with the same financial institution to finance overnight securities positions purchased as part of its ordinary course broker-dealer market making activities. One of the facilities (the “Uncommitted Facility"), is provided on an uncommitted basis and is available for borrowings by the Company's broker-dealer subsidiaries up to a maximum amount of $100.0 million. In connection with this credit facility, the Company has entered into demand promissory notes dated February 20, 2013. The loans provided under the Uncommitted Facility are collateralized by the Company's broker-dealer trading and deposit accounts with the same financial institution and, bear interest at a rate set by the financial institution on a daily basis ( 1.13% at June 30, 2015 and 1.12% at December 31, 2014). The Uncommitted Facility has a 364 -day term. The Company is party to another facility (the "Committed Facility") with the same financial institution dated July 22, 2013 and subsequently amended on March 26, 2014, July 21, 2014 and April 24, 2015, which is provided on a committed basis and is available for borrowings by one of the Company's broker-dealer subsidiaries up to a maximum of the lesser of $75.0 million or an amount determined based on agreed advance rates for pledged securities. The Committed Facility is subject to certain financial covenants, including a minimum tangible net worth, a maximum total assets to equity ratio, and a minimum excess net capital, each as defined. The Committed Facility bears interest at a rate per annum at the Company's election equal to either an adjusted LIBOR rate or base rate , plus a margin of 1.25% per annum, and has a term of 364 days. As of June 30, 2015 and December 31, 2014, the Company did not have any outstanding principal balance on the Uncommitted Facility or the Committed Facility. Interest expense for the six months ended June 30, 2015 and 2014 was approximately $0.4 million and $0.2 million, respectively. Interest expense is included within interest and dividends expense in the accompanying condensed consolidated statements of comprehensive income. Short-Term Credit Facilities The Company maintains short term credit facilities with various prime brokers and other financial institutions from which it receives execution or clearing services. The proceeds of these facilities are used to meet margin requirements associated with the products traded by the Company in the ordinary course, and amounts borrowed are collateralized by the Company’s trading accounts with the applicable financial institution. The aggregate amount available for borrowing under these facilities was $476.0 million and $440.0 million, the outstanding principal was $228.9 million and $183.0 million, and borrowings bore interest at a weighted average interest rate of 2.30% and 1.80% per annum, as June 30, 2015 and December 31, 2014, respectively. Interest expense in relation to the facilities for the six months ended June 30, 2015 and June 30, 2014 was approximately $2.7 million and $1.6 million, respectively. Interest expense is recorded within interest and dividends expense in the accompanying condensed consolidated statements of comprehensive income. Senior Secured Credit Facility On July 8, 2011, Virtu Financial, its wholly owned subsidiary, VFH Parent LLC (“VFH”), and each of its unregulated domestic subsidiaries entered into the credit agreement (the “Credit Agreement”) among the Borrower, Virtu Financial, Credit Suisse AG, as administrative agent, and the other parties thereto. The credit facility funded a portion of the MTH acquisition with a term loan in the amount of $320.0 million to VFH. The credit facility was issued at a discount of 2.0% or $313.6 million, net of $6.4 million discount. The credit facility was initially subject to quarterly principal payments beginning on December 31, 2011 with the unpaid principal payable on maturity on July 8, 2016. Under the terms of the loan, VFH is subject to certain financial covenants, including a total net leverage ratio and an interest coverage ratio, as defined in the Credit Agreement. VFH is also subject to contingent principal payments based on excess cash flow, as defined in the Credit Agreement, and certain other triggering events. Borrowings are collateralized by substantially all the assets of the Company, other than the equity interests in and assets of its registered broker-dealer, regulated and foreign subsidiaries, but including 100% of the non-voting stock and 65% of the voting stock of Virtu Financial’s or its domestic subsidiaries’ direct foreign subsidiaries. The Credit Agreement was amended on February 5, 2013, May 1, 2013 and November 8, 2013. The amendments resulted in a decreased interest rate, changes in certain operating covenants, and an increase in principal amount outstanding by $150.0 million on May 1, 2013 and $106.7 million on November 8, 2013, respectively. Additionally, the amendments reduced the annual amortization obligation from 15% of the original principal amount to approximately 1% of the outstanding principal amount as of November 8, 2013, which was $510.0 million. The terms of the amended credit facility are otherwise substantially similar terms to the original credit facility, except as set forth below. Term loans outstanding under the Credit Agreement bear interest at a rate per annum at the Company's election equal to either (i) the greatest of (a) the prime rate in effect, (b) the federal funds effective rate (as defined in the Credit Agreement) plus 0.5% (c) the adjusted LIBOR rate (as defined in the Credit Agreement) for a Eurodollar borrowing with an interest period of one month plus 1% , and (d) 2.25% plus, in each case, 3.0% , or (ii) the greater of (x) the adjusted LIBOR rate for the interest period in effect and (y) 1.25% , plus 4.0% . Pursuant to the Amendment (as defined below), each incremental spread was reduced by 0.50% upon the consummation of the Company’s IPO. The rate at June 30, 2015 was 5.25% . Aggregate future required minimum principal payments based on the terms of this loan at June 30, 2015 were as follows: (in thousands) 2015 $ 2016 2017 2018 and thereafter Total maturities of long-term debt $ Net carrying amount of deferred financing fees capitalized in connection with the financing were approximately $4.5 million and $5.1 million, respectively, as of June 30, 2015 and December 31, 2014, which are included as a deduction to senior secured credit facility in the accompanying condensed consolidated statements of financial condition. The Company retrospectively adopted ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs , wherein the accompanying condensed consolidated statements of financial condition have been adjusted to reflect the period specific effects of applying the new guidance. After retrospectively applying the new guidance, the Company reclassified approximately $5.1 million in deferred financing fees as of December 31, 2014 previously included within other assets to senior secured credit facility in the accompanying condensed consolidated statements of financial condition. Amortization expense related to the deferred financing fees was approximately $0.6 million and $0.5 million for the six months ended June 30, 2015 and 2014, respectively. Amortization expense is included within financing interest expense on senior secured credit facility in the accompanying condensed consolidated statements of comprehensive income. Accretion related to the net carrying amount of debt discount of $1.7 million and $1.9 million, respectively, as of June 30, 2015 and December 31, 2014, and for the six months ended June 30, 2015 and 2014 were approximately $0.2 million and $0.2 million, respectively. The accretion is included within financing interest expense on senior secured credit facility in the accompanying condensed consolidated statements of comprehensive income. On April 15, 2015, the Company, Virtu Financial, and each unregulated domestic subsidiary of Virtu Financial, entered into an amendment agreement (the “Amendment”) to the Credit Agreement. The Amendment provided for a revolving credit facility with aggregate commitments by revolving lenders of $100.0 million, available upon the consummation of the IPO and the payment of relevant fees and expenses. The revolving credit facility is secured pari passu with the term loans outstanding under the Credit Agreement and is subject to the same financial covenants and negative covenants. Borrowings under the revolving facility bear interest, at our election, at either (i) the greatest of (a) the prime rate in effect, (b) the federal funds effective rate plus 0.5% (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1% and (d) 2.25% , plus, in each case, 2.0% , or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) 1.25% , plus, in each case, 3.0% . We will also pay a commitment fee of 0.50% per annum on the average daily unused portion of the facility. Deferred financing fees capitalized in connection with the revolving credit facility were approximately $0.9 million, which is included as a deduction to senior secured credit facility in the accompanying condensed consolidated statement of financial condition. The net carrying amounts for the deferred financing fees capitalized in connection with the revolving credit facility were approximately $0.8 million and $0 , respectively, as of June 30, 2015 and December 31, 2014, which are included as a deduction to senior secured credit facility in the accompanying condensed consolidated statements of financial condition. Amortization expenses related to the deferred financing fees in connection with the revolving credit facility were approximately $0.1 million and $0 , for the six months ended June 30, 2015 and 2014, respectively. |
Financial Assets and Liabilitie
Financial Assets and Liabilities | 6 Months Ended |
Jun. 30, 2015 | |
Financial Assets and Liabilities | |
Financial Assets and Liabilities | 9. Financial Assets and Liabilities At June 30, 2015 and December 31, 2014, substantially all of Company's financial assets and liabilities, except for the senior secured credit facility and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short-term in nature and were carried at amounts that approximate fair value. The Company determined that the carrying value of the Company's senior secured credit facility approximates fair value as of June 30, 2015 and December 31, 2014 based on the quoted over-the-counter market prices provided by the issuer of the senior secured credit facility, which was categorized as Level 2. The fair value of equities, U.S. government obligations and exchange traded notes is estimated using recently executed transactions and market price quotations in active markets and are categorized as Level 1 with the exception of inactively traded equities which are categorized as Level 2. Fair value of the Company's derivative contracts is based on the indicative prices obtained from the banks that are counterparties to these contracts, as well as management's own analyses. The indicative prices have been independently validated through the Company's risk management systems, which are designed to check prices with information independently obtained from exchanges and venues where such financial instruments are listed or to compare prices of similar instruments with similar maturities for listed financial futures in foreign exchange. At June 30, 2015 and December 31, 2014, the Company's derivative contracts and non-U.S. government obligations have been categorized as Level 2. Transfers in or out of levels are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the six months ended June 30, 2015 and 2014. Fair value measurements for those items measured on a recurring basis are summarized below as of June 30, 2015: June 30, 2015 Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Counter- Identical Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and Non-U.S. government obligations — — Exchange traded notes — — — Interest rate swaps — — — Currency forwards — — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and Non-U.S. government obligations — — — Exchange traded notes — — — Interest rate swaps — — — Currency forwards — — Options — — — $ $ $ — $ $ Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2014: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Counter- Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — Interest rate swaps — — — $ $ $ — $ $ The Company does not net securities borrowed and securities loaned, or securities purchased under agreements to resell and securities sold under agreements to repurchase. These financial instruments are presented on a gross basis in the condensed consolidated statements of financial condition. In the tables below, the amounts of financial instruments owned that are not offset in the condensed consolidated statements of financial condition, but could be netted against financial liabilities with specific counterparties under legally enforceable master netting agreements in the event of default, are presented to provide financial statement readers with the Company’s estimate of its net exposure to counterparties for these financial instruments. The following tables set forth the netting of certain financial assets and financial liabilities as of June 30, 2015 and December 31, 2014, pursuant to the requirements of ASU 2011-11 and ASU 2013-01. June 30, 2015 Net Amounts of Gross Amounts Not Gross Amounts Assets Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Assets Financial Condition Financial Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — — — Options — — Interest rate swaps — — — Total $ $ $ $ $ — $ Net Amounts of Gross Amounts Not Gross Amounts Liabilities Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — Total $ $ $ $ $ $ December 31, 2014 Gross Amounts Not Net Amounts of Offset in the Gross Amounts Assets Condensed Consolidated Offset in the Presented in the Statement of Gross Condensed Condensed Financial Condition Amounts of Consolidated Consolidated Cash Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Assets Financial Condition Financial Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — Options — — Total $ $ $ $ $ — $ Net Amounts of Gross Amounts Not Gross Amounts Liabilities Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — — Total $ $ $ $ $ $ Excluded from the fair value and offsetting tables above is net variation margin on long and short futures contracts in the amounts of $90.2 million and $46.4 million, which are included within receivables from broker-dealers and clearing organizations as of June 30, 2015 and December 31, 2014, respectively, and $89.8 million and $(3.6) million, which are included within payables to broker-dealers and clearing organizations as of June 30, 2015 and December 31, 2014, respectively. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments | |
Derivative Instruments | 10. Derivative Instruments The fair value of the Company's derivative instruments on a gross basis consisted of the following at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 (in thousands) Fair Fair Derivatives Assets Balance Sheet Classification Value Notional Value Notional Equities futures Receivables from broker dealers and clearing organizations $ $ $ $ Commodity futures Receivables from broker dealers and clearing organizations Currency futures Receivables from broker dealers and clearing organizations Treasury futures Receivables from broker dealers and clearing organizations Options Financial instruments owned Currency forwards Financial instruments owned Interest rate swaps Financial instruments owned — — Fair Fair Derivatives Liabilities Balance Sheet Classification Value Notional Value Notional Equities futures Payables to broker dealers and clearing organizations $ — $ — $ $ Commodity futures Payables to broker dealers and clearing organizations Currency futures Payables to broker dealers and clearing organizations Options Financial instruments sold, not yet purchased Treasury futures Payables to broker dealers and clearing organizations — — — — Custom equity based swap Payables to broker dealers and clearing organizations — — — — Currency forwards Financial instruments sold, not yet purchased Interest rate swaps Financial instruments sold, not yet purchased Amounts included in receivables from and payables to broker-dealers and clearing organizations represent variation margin on long and short futures contracts. The following table summarizes the gain from derivative instruments not designated as hedging instruments under ASC 815, which are recorded in trading income, net in the accompanying condensed consolidated statements of comprehensive income for the six months ended June 30, 2015 and 2014: For the Six Months Ended June 30, (in thousands) 2015 2014 Futures $ $ Currency forwards Options Interest rate swaps — $ $ |
Income Taxes32
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Income tax expense for the six months ended June 30, 2015 and 2014 differs from the U.S. federal statutory rate primarily due to the taxation treatment of income attributable to noncontrolling interests in Virtu Financial. These noncontrolling interests are subject to U.S. taxation as partnerships. Accordingly, the income attributable to these noncontrolling interests is reported in the condensed consolidated statements of comprehensive income, but the related U.S. income tax expense attributable to these noncontrolling interests is not reported by the Company as it is the obligation of the individual partners. Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation. Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the IPO (Note 13), differences in the valuation of financial assets and liabilities, and for other temporary differences arising from the deductibility of compensation and depreciation expenses in different time periods for book and income tax return purposes. There are no expiration dates on the deferred tax assets. The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the realization of the deferred tax assets. A valuation allowance against deferred tax assets at the balance sheet date is not considered necessary because it is more likely than not the deferred tax asset will be fully realized. There are no unrecognized tax benefits as of June 30, 2015 and December 31, 2014. |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 6 Months Ended |
Jun. 30, 2015 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | 12. Commitments, Contingencies and Guarantees Litigation The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company has also been, is currently, and may in the future be, the subject of one or more regulatory or self-regulatory organization enforcement actions, including but not limited to targeted and routine regulatory inquiries and investigations involving Regulation NMS, Regulation SHO, capital requirements and other domestic and foreign securities rules and regulations which may from time to time result in the imposition of penalties or fines. In addition, the Autorité des marchés financiers (“AMF”) has brought an enforcement action in connection with the trading activities of a subsidiary of MTH in certain French listed equity securities on or around 2009. The Company has also been the subject of requests for information and documents from the SEC and the State of New York Office of the Attorney General (“NYAG”). Certain of these matters may result in adverse judgments, settlements, fines, penalties, injunctions or other relief, and the Company’s business or reputation could be negatively impacted if it were determined that disciplinary or other enforcement actions were required. The ultimate effect on the Company from the pending proceedings and claims, if any, is presently unknown. Where available information indicates that it is probable a liability had been incurred at the date of the financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income. Based on information currently available, management believes that the resolution of any known matters will not result in any material adverse effect on the Company’s financial position, results of operations or cash flows. Indemnification Arrangements Consistent with standard business practices in the normal course of business, the Company has provided general indemnifications to its managers, officers, employees, and agents against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred by such persons under certain circumstances as more fully disclosed in its operating agreement. The overall maximum amount of the obligations (if any) cannot reasonably be estimated as it will depend on the facts and circumstances that give rise to any future claims. |
Capital Structure
Capital Structure | 6 Months Ended |
Jun. 30, 2015 | |
Stockholders' Equity | |
Capital Structure | 13. Capital Structure Capital Structure prior to the Company’s Reorganization Completed on April 15, 2015 and IPO Completed on April 16, 2015: Virtu Financial had three classes of members’ interests: Class A-1 members’ interests; Class A-2 members’ interests; and Class B members’ interests. Class A-2 members’ interests included both Class A-2 capital interests and Class A-2 profits interests. Class A-1 Interests On July 8, 2011, 25,000,000 Class A-1 redeemable interests were issued to an affiliate of Silver Lake (“the Silver Lake Member”) and 1,964,826 Class A-1 interests were issued to an affiliate of Vincent Viola, which Class A-1 interests had an aggregate capital balance of approximately $270 million. On December 31, 2014, through a series of transactions, 5,376,603 and 12,242,173 of the Class A-1 redeemable interests previously held by the Silver Lake Member were transferred to Wilbur Investments LLC (the “Temasek Member”), an indirect wholly owned subsidiary of Temasek Holdings (Private) Limited, (“Temasek”), and an affiliate of Silver Lake and Temasek, 57.9% of which is indirectly owned by affiliates of Silver Lake Partners and 42.1% of which is indirectly owned by an affiliate of Temasek (the “SLT Member” and together with the Silver Lake Member and the Temasek Member, the “Investor Members”), respectively, with the Silver Lake Member retaining 7,381,224 Class A-1 redeemable interests. Class A-1 interests that the holder thereof has the right to call for redemption were held by three members: (i) the Silver Lake Member, (ii) the Temasek Member and (iii) the SLT Member. The Silver Lake Member had the right to appoint one member on Virtu Financial’s board of directors and the Temasek Member had the right to either appoint one member on Virtu Financial’s board of directors (subject to obtaining certain regulatory approvals) or elect that the other members of the board of directors designate one member of Virtu Financial’s board of directors in consultation with the Temasek Member. The Silver Lake Member and the Temasek Member also possessed approval rights with respect to certain board actions and corporate events. Additionally, as part of the transaction consideration, a contingent payment agreement was entered into among Temasek, Silver Lake Partners, the Employee Holdco and the Company whereby additional payments will be made from Temasek to Silver Lake Partners and the selling members of management in the aggregate maximum amount of $3.9 million if the value of the interests acquired exceeds 1.7 times the transaction price prior to December 31, 2018, or December 31, 2019, the date depending on whether certain liquidity events occur. There were no additional Class A-1 interests granted, forfeited , distributed or redeemed during the six months ended June 30, 2015 and 2014. Class A-2 Interests Class A-2 interests included both Class A-2 capital interests and Class A-2 profits interests. No Class A-2 capital interests were issued and outstanding as of June 30, 2015, and approximately 93,786,659 were issued and outstanding as of December 31, 2014. On December 31, 2014, through a series of transactions, 1,614,322 of the Class A-2 capital interests previously held by certain members of the Company’s management were transferred to the Temasek Member, and 214,433 new Class A-2 capital interests were issued to the Temasek Member, with the proceeds of such issuance being used to redeem the same number of Class A-2 profits interests held by Employee Holdco LLC (“Employee Holdco”). Class A-2 profits interests were issued to Employee Holdco, a holding company which held the interests on behalf of certain key employees or stakeholders. Employee Holdco issued Class A-2 profits interests of Employee Holdco to such employees and stakeholders which corresponded to the underlying Class A-2 profits interests held by Employee Holdco. There were no Class A-2 profits interests issued and outstanding as of June 30, 2015 and 6,069,007 Class A-2 profits interests issued and outstanding as of December 31, 2014. There were 6,418 and 0 Class A-2 profits interests issued during the six months ended June 30, 2015 and 2014, respectively. There were 13,495 and 6,795 Class A-2 profits interests redeemed during the six months ended June 30, 2015 and 2014, respectively. Holders of Class A-2 profits interests shared in distributions of available cash flow based on the ratio of interests held to the total number of Class A-1 and Class A-2 interests outstanding, and also shared on a pro rata basis in the proceeds of a liquidity event, subject to a valuation hurdle determined by Virtu Financial at the time of the grant based on a valuation performed by a third party valuation firm. Holders of the Class A-2 profits interests shared in the proceeds of a liquidity event above such valuation hurdle, and received a preference on such distributions above such valuation threshold until all holders of Class A-2 profits interests subject to such valuation threshold had been allocated capital proceeds equal to the deemed capital contribution attributable to such Class A-2 profits interests as determined by the Company at the time of the grant. Class B Interests Virtu Financial previously approved the Virtu Financial LLC Management Incentive Plan (the “MIP”). Participants of the MIP were entitled to receive either Class B interests of Virtu Financial or Class B interests of Employee Holdco, which holds directly the corresponding Class B interests in Virtu Financial. Upon a liquidity event, Class B interests under the MIP were entitled to share proportionately in distributions in excess of the applicable profits interest valuation hurdle, which was determined by Virtu Financial based on a valuation at the time of the grant performed by a third party valuation firm. Class B interests were non-voting interests which vested over a four year period and upon a sale, IPO or certain other capital transactions of Virtu Financial. Class B interests were subject to forfeiture and repurchase provisions upon certain termination events. There were no Class B interests outstanding as of June 30, 2015 and Class B interests representing a right to share in 12.915% of capital proceeds (on a fully diluted basis) were issued and outstanding as of December 31, 2014. No Class B interests were issued during the six months ended June 30, 2015 and 2014. Distribution and Liquidation Rights Holders of Class A-1 and Class A-2 interests shared in distributions of available cash flow based on the ratio of interests held to the total number of Class A-1 and Class A-2 interests outstanding. Holders of Class B interests were not entitled to share in such distributions. As of December 31, 2014, unless and until converted to Class A-2 members’ interests, upon occurrence of a capital transaction, Class A-1 interests were entitled to distributions of capital proceeds until Class A-1 members’ unrecovered capital balance (as defined) was reduced to zero . After distributions to Class A-1 members, capital proceeds would have been provided to Class A-2 capital members until Class A-2 capital members’ unrecovered capital balance (as defined) were reduced to zero . After distributions to Class A-1 and Class A-2 members, distributions of capital proceeds would have been provided to members in respect to their respective capital proceeds percentages (as defined), subject to the valuation hurdles and distribution preferences applicable to holders of Class A-2 profits interests. Holders of vested Class B interests would have shared in distributions of capital proceeds above the applicable valuation hurdle proportionately based on their capital proceeds percentages. In the event of any voluntary or involuntary liquidation, dissolution, winding up, merger or company sale, distributions would have been made, first, to Class A-1 members’ unrecovered capital balance (as defined) until they have been reduced to zero. Second, to Class A-2 capital members, in proportion to their unrecovered capital balance (as defined) until reduced to zero and then to members in respect to their capital proceeds percentages (as defined), subject to the valuation hurdles and distribution preferences applicable to holders of Class A-2 profits interests. Conversion Rights As of December 31, 2014, the Class A-1 interests were convertible into Class A-2 interests at any time at the option of the Class A-1 member on a one -for-one basis. The Class A-1 interests automatically converted upon a qualified IPO or qualified sale. Qualified IPO was defined as an initial public offering on the New York Stock Exchange or NASDAQ National Market in which the gross proceeds raised equal or exceed $100.0 million and the valuation of the Company implies a return to the Silver Lake Member equal to at least (after taking into account previous distributions) 1.75 times the invested amount. Qualified sale was defined as a sale of all or a majority of the assets of the Company or all or a majority of the limited liability company interests of the Company to a third party that is not an affiliate or other permitted transferee of any member as long as the sale (i) is for consideration consisting entirely of cash and/or marketable securities and would satisfy certain minimum return requirements applicable to Silver Lake Partners and Temasek or (ii) was approved by the Silver Lake Member or, in certain circumstances, the Temasek Member. Redemption Rights Unless and until conversion occurred, the Investor Members were entitled to a number of rights and benefits, including the right to call for redemption of their Class A-1 interests. Any time on or after November 24, 2016, the Silver Lake Member could have exercised such redemption right in order to cause the Company to purchase all of the Class A-1 interests owned directly or indirectly by affiliates of Silver Lake Partners. Any time on or after May 16, 2020, the Temasek Member could have exercised such redemption right in order to cause the Company to purchase all of the Class A-1 interests owned directly or indirectly by affiliates of Temasek. As of December 31, 2014, the redemption price for each unit of Class A-1 interests owned by the Investor Members was the greater of (i) a minimum purchase price and (ii) the fair market value of the Class A-1 interests on the date of redemption. The minimum purchase price with respect to the Class A-1 interests owned directly or indirectly by affiliates of Silver Lake Partners was equal to the purchase price paid by affiliates of Silver Lake Partners for such Class A-1 interests and the minimum purchase price with respect to the Class A-1 interests owned directly or indirectly by affiliates (as defined in the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial) of Temasek was equal to the purchase price paid by affiliates (as defined in the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial) of Temasek for such Class A-1 interests (in each case, less distributions received in respect of such Class A-1 interests). The Company could have redeemed the Class A-1 interests using redemption notes provided that all available cash flow and all capital proceeds were used to pay down the redemption note. In lieu of redemption, the Silver Lake Member or the Temasek Member could require the Company to purchase all of the equity securities of the affiliated entity or entities that directly or indirectly owned their Class A-1 interests on behalf of affiliates of Silver Lake Partners or Temasek, respectively, provided that any such entity had not conducted any business or operations since inception other than the direct or indirect ownership of the interests of the Company. The redeemable equity instrument is classified outside of permanent equity on the condensed consolidated statements of financial condition. East Management Incentive Plan On July 8, 2011, 2,625,000 Class A-2 capital interests were contributed by Class A-2 members to Virtu East MIP LLC (“East MIP”). East MIP issued Class A interests to the members who contributed the Class A-2 capital interests, and Class B interests (“East MIP Class B interests”) to certain key employees. East MIP Class B interests were non-voting interests which vested over the four year period ending July 8, 2015, but in any event no earlier than upon the occurrence of a sale, IPO or certain other capital transactions of Virtu Financial. Vested East MIP Class B interests were entitled to participate in distributions of the proceeds received in respect of the Class A-2 capital interests held by East MIP upon a sale or certain other capital transactions of Virtu Financial. East MIP Class B interests were subject to forfeiture and repurchase provisions upon certain termination events. Capital structure after the Company’s Reorganization Completed on April 15, 2015 and IPO Completed on April 16, 2015: Initial Public Offering On April 21, 2015, the Company completed its IPO of 19,012,112 shares of its Class A common stock, par value $0.00001 per share, including 2,479,840 shares of Class A common stock sold in connection with the full exercise of the option to purchase additional shares granted to the underwriters, at a price to the public of $19.00 per share. The shares began trading on NASDAQ on April 16, 2015 under the ticker symbol “VIRT.” As a result of the completion of the Reorganization Transactions and the IPO, VFI holds approximately 24.8% interest in Virtu Financial. Reorganization Transactions In connection with the IPO, a series of reorganization transactions was completed on April 15, 2015 (the “Reorganization Transactions”) among the Company, subsidiaries of Virtu Financial and equityholders of Virtu Financial which include the following persons (the “Virtu Pre-IPO Members”): • three affiliates of the founding member, (collectively the “Founder Pre-IPO Members”); • the Silver Lake Member; • the Temasek Member; • the SLT Member; • two entities, one of which was and the other of which is managed by the founding member, whose equityholders include certain members of the management of Virtu Financial, (the “Management Vehicles”); and • certain current and former members of the management of the Company. and Madison Tyler Holdings and their affiliates, (the “Management Members”). The Reorganization Transactions are further described in the Company’s Registration Statement filed on Form S-1 (File No. 333-194473) (as amended the “Registration Statement”). In the Reorganization Transactions: • the Company. became the sole managing member of Virtu Financial ; • in a series of transactions, one of the Management Vehicles liquidated, with its equity interests in Virtu Financial either being distributed to its members, including certain members of management, or contributed to the other Management Vehicle ( “Virtu Employee Holdco”) and certain employees of Virtu Financial based outside the United States were distributed equity interests in Virtu Financial held by Virtu Employee Holdco on behalf of such employees and such equity interests were contributed to a trust (the “Employee Trust”), whose trustee is one of Virtu Financial’s subsidiaries; • two of the Founder Pre-IPO Members liquidated and distributed their equity interests in Virtu Financial to their equityholders, one of whom is TJMT Holdings LLC, the third Founder Pre-IPO Member; • the SLT Member distributed its equity interests in Virtu Financial to its equityholders, which consist of investment funds and other entities affiliated with Silver Lake Partners and Temasek; following a series of transactions, the Company acquired equity interests in Virtu Financial as a result of certain mergers involving wholly owned subsidiaries of Virtu Financial, an affiliate of Silver Lake Partners and Temasek, and the Temasek Member (the “Mergers”), and in exchange the Company issued to an affiliate of Silver Lake Partners (the “Silver Lake Post-IPO Stockholder”) and an affiliate of Temasek (the “Temasek Post-IPO Stockholder”, collectively with the Silver Lake Post-IPO Stockholder, the “Investor Post-IPO Stockholders”) shares of Class A common stock and rights to receive payments under a tax receivable agreement described below. The number of shares of Class A common stock issued to the Investor Post-IPO Stockholders was based on the value of the Virtu Financial equity interests that we acquired, which was determined based on a hypothetical liquidation of Virtu Financial and the initial public offering price per share of the Company’s Class A common stock in the IPO; all of the existing equity interests in Virtu Financial were reclassified into non-voting common interest units (“Virtu Financial Units”). The number of Virtu Financial Units issued to each member of Virtu Financial was determined based on a hypothetical liquidation of Virtu Financial and the IPO price of $19 per share of the Company’s Class A common stock in our initial public offering. The Virtu Financial Units received by Virtu Employee Holdco, the Employee Trust and the Management Members have the same vesting restrictions as the equity interests which were reclassified. Vested Virtu Financial Units will be entitled to receive distributions, if any, from Virtu Financial. Subject to certain exceptions, unvested Virtu Financial Units are not entitled to receive such distributions (other than tax distributions). If any unvested Virtu Financial Units are forfeited, they will be cancelled by Virtu Financial for no consideration (and the Company will cancel the related shares of Class C common stock (described below) for no consideration); • the Company amended and restated its certificate of incorporation and issued four classes of common stock: Class A common stock, Class B common stock, Class C common stock and Class D common stock (“common stock”). The Class A common stock and Class C common stock each provide holders with one vote on all matters submitted to a vote of stockholders, and the Class B common stock and Class D common stock each provide holders with 10 votes on all matters submitted to a vote of stockholders. The holders of Class C common stock and Class D common stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of Class A common stock and Class B common stock. Shares of the Company’s common stock will generally vote together as a single class on all matters submitted to a vote of stockholders. The remaining members of Virtu Financial after giving effect to the Reorganization Transactions, other than the Company, (collectively as the “Virtu Post-IPO Members”), subscribed for and purchased shares of the Company’s common stock as follows, in each case at a purchase price of $0.00001 per share and in an amount equal to the number of Virtu Financial Units held by each such Virtu Post-IPO Member; • TJMT Holdings LLC (“Founder Post-IPO Member”), purchased 79,610,490 shares of the Company’s Class D common stock; and • affiliates of Silver Lake Partners (the “Silver Lake Post-IPO Members”), Virtu Employee Holdco, the Employee Trust, the Management Members and the other Virtu Post-IPO Members purchased 36,746,041 shares of the Company’s Class C common stock; and the Founder Post-IPO Member was granted the right to exchange its Virtu Financial Units, together with a corresponding number of shares of the Company’s Class D common stock, for shares of the Company's Class B common stock, and the other Virtu Post-IPO Members was granted the right to exchange their Virtu Financial Units, together with a corresponding number of shares of the Company's Class C common stock, for shares of the Company’s Class A common stock. Each share of VFI’s Class B common stock and Class D common stock is convertible at any time, at the option of the holder, into one share of Class A common stock or Class C common stock, respectively. Distributions in Connection with the IPO On June 12, 2015, Virtu Financial made a cash distribution of $5.0 million to certain of the holders of its outstanding equity interests prior to the consummation of the Reorganization Transactions (such holders, the “Virtu Financial Pre-IPO Members”) (funded from cash on hand). Additionally, Virtu Financial intends to make further cash distributions of up to $45.0 million to the Virtu Financial Pre-IPO Members. The Company expects that these further distributions will be funded from cash on hand and excess cash held as clearing deposits with broker dealers and clearing organizations. Use of Proceeds Upon consummation of the IPO, the total gross proceeds of the offering were approximately $361.2 million. Of the proceeds, approximately $25.2 million was used to pay underwriting discounts and commissions, approximately $277.2 million was used to purchase 3,470,724 shares of Class A common stock from the Silver Lake Post-IPO Stockholder and 12,214,224 Virtu Financial Units and corresponding shares of Class C common stock from certain of the Virtu Post-IPO Members, including 4,862,609 Virtu Financial Units and corresponding shares of Class C common stock from the Silver Lake Post-IPO Members and 7,351,615 Virtu Financial Units and corresponding shares of Class C common stock from certain employees. The remaining $58.8 million of net proceeds was contributed by the Company to Virtu Financial, the operating company, which will be used for working capital and general corporate purposes. Other offering costs incurred were approximately $8.6 million and were paid by Virtu Financial. 2015 Management Incentive Plan VFI’s Board of Directors and stockholders adopted the Virtu Financial 2015 Management Incentive Plan (the “2015 Management Incentive Plan”), which became effective upon consummation of the IPO. The 2015 Management Incentive Plan provides for the grant of stock options, restricted stock units, and other awards based on an aggregate of 12,000,000 shares of Class A common stock, subject to additional sublimits, including limits on the total option grant to any one participant in a single year and the total performance award to any one participant in a single year. In connection with the IPO, non-qualified stock options to purchase 9,228,000 shares were granted at the IPO per share price, each of which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the date of grant. In connection with and subsequent to the IPO, 25,647 restricted stock units were granted, each of which vest on the one year anniversary of date of grant and are settled in shares of Class A common stock. For the purpose of calculating equity-based compensation expense, the fair value of the stock option grants was determined through the application of the Black-Scholes-Merton model and will be recognized on a straight line basis over the vesting period. Similarly, the fair value of the restricted stock units was determined based on the IPO per share price and will be recognized on a straight line basis over the vesting period. |
Share-based Compensation
Share-based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Share-based Compensation | |
Share-based Compensation | 14. Share-based Compensation During the six months ended June 30, 2015 and 2014, the Company recorded expense relating to Class A-2 profits interests granted in prior periods to certain employees, which vest immediately or over a period of up to four years, in each case subject to repurchase provisions upon certain termination events, as described above (Note 13). These awards are accounted for as equity awards and are measured at the date of grant. The Company accrued compensation expense of $8.7 million and $7.2 million for the six months ended June 30, 2015 and 2014, respectively, related to the Class A-2 profits interests and other equity interests expected to be granted as part of year-end compensation. As of June 30, 2015, total unrecognized share-based compensation expense related to unvested Class A-2 profits interests, which, as described above (Note 13), were reclassified into non-voting common interest units subject to the same vesting schedule as their corresponding Class A-2 profits interests in connection with the Reorganization Transactions, was $2.9 million, and this amount is expected to be recognized over a weighted average period of 2.1 years. Activity in the Class A-2 profits interests, which, as indicated, have been reclassified into non-voting common units pursuant to the Reorganization Transactions, is as follows: Weighted Weighted Average Number of Average Fair Remaining Interests Value Life Outstanding December 31, 2013 $ Interests granted — $ — — Interests repurchased $ — Outstanding June 30, 2014 $ Outstanding December 31, 2014 $ Interests granted $ Interests repurchased $ — Outstanding June 30, 2015 $ As indicated in Note 13, East MIP Class B interests are subject to time based vesting over four years and only fully vest upon the consummation of a qualifying capital transaction by the Company, including an IPO. Upon the consummation of the IPO, certain East MIP Class B interests became vested, resulting in a compensation expense of $11.8 million, which reflects the fair value of the outstanding time-vested East MIP Class B interests measured at the date of grant. Additional compensation expense in respect of East MIP Class B interests still subject to time vesting of $0.6 million was recognized ratably over the remainder of the period ended June 30, 2015, resulting in a total expense for the period of $12.4 million relating to the East MIP Class B interests which was included within charges related to share based compensation at IPO in the condensed consolidated statements of comprehensive income. As of December 31, 2014, a capital transaction was not probable, and therefore none of the East MIP Class B interests were vested and no compensation expense was recognized relating to these awards. During the six months ended June 30, 2015 and 2014, no employees have been granted Class B interests. As discussed in Note 13, Class B interests vest only upon the occurrence of both time-based vesting over a four year period and the consummation of a qualifying capital transaction by the Company. Upon the consummation of the IPO, certain Class B interests became vested, resulting in a compensation expense of $31.4 million, which reflects the fair value of the outstanding time-vested Class B Interests measured at the date of grant. Additional compensation expense in respect of Class B interests still subject to time vesting of $1.9 million was recognized ratably over the remainder of the period ended June 30, 2015, resulting in a total expense for the period of $33.3 million relating to the Class B interests which was included within charges related to share based compensation at IPO in the condensed consolidated statements of comprehensive income. As of December 31, a capital transaction was not probable, and therefore none of the Class B interests were vested and no compensation expense was recognized relating to previously awarded Class B interests. Additionally, in connection with the compensation charges related to Class B and East MIP interests mentioned above, the Company capitalized and amortized $9.5 million and $8.0 million, respectively, of the costs attributable to employees incurred in development of software for internal use, which were included within charges related to share based compensation at IPO, in the condensed consolidated statements of comprehensive income. During the three months ended June 30, 2015, pursuant to the 2015 Management Incentive Plan, the Company granted non-qualified stock options to purchase 9,228,000 shares at the IPO per share price, each of which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the date of grant, and 25,647 restricted stock units, which vest on the one year anniversary and are settled in shares of Class A common stock. For the purpose of calculating equity-based compensation expense, the fair value of the stock option grants was determined through the application of the Black-Scholes-Merton model with the following assumptions: Six Months Ended June 30, 2015 Expected life (in years) Weighted average risk free interest rate % Expected stock price volatility % Expected dividend yield % Weighted average fair value at grant date $ The Company recognized $1.4 million of compensation expense ratably over the period in relation to the stock options issued during the period, and $0.02 million of compensation expense ratably over the period in relation to the restricted stock units issued during the period. During the six months ended June 30, 2015, 14,000 stock options have been forfeited. |
Regulatory Requirement
Regulatory Requirement | 6 Months Ended |
Jun. 30, 2015 | |
Regulatory Requirement | |
Regulatory Requirement | 15. Regulatory Requirement As of June 30, 2015, two subsidiaries of the Company are subject to the SEC Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital of $1.0 million for each of the two broker-dealer subsidiaries. At June 30, 2015, the subsidiaries had net capital of approximately $39.4 million and $8.2 million, which was approximately $38.4 million and $7.2 million in excess of its required net capital of $1.0 million and $1.0 million, respectively. At December 31, 2014, the subsidiaries had net capital of approximately $59.8 million and $8.1 million, which was approximately $58.8 million and $7.1 million in excess of its required net capital of $1.0 million and $1.0 million, respectively. Pursuant to NYSE and NYSE MKT (formerly NYSE Amex) rules, the Company was required to maintain $3.4 million and $3.7 million of capital in connection with the operation of the Company's Designated Market Maker (“DMM”) business as of June 30, 2015 and December 31, 2014, respectively. The required amount is determined under the exchange rules as the greater of $1 million or 15% of the market value of 60 trading units for each symbol in which the Company is registered as the DMM. |
Geographic Information
Geographic Information | 6 Months Ended |
Jun. 30, 2015 | |
Geographic Information | |
Geographic Information | 16. Geographic Information The Company operates its business in the U.S. and internationally, primarily in Europe and Asia. Significant transactions and balances between geographic regions occur primarily as a result of certain of our subsidiaries incurring operating expenses such as employee compensation, communications and data processing and other overhead costs, for the purpose of providing execution, clearing and other support services to affiliates. Charges for transactions between regions are designed to approximate full costs. Intra-region income and expenses and related balances have been eliminated in the geographic information presented below to accurately reflect the external business conducted in each geographical region. The revenues are attributed to countries based on the locations of the subsidiaries. The following table presents total revenues by geographic area for the six months ended June 30, 2015 and 2014: For the Six Months Ended June 30, (in thousands) 2015 2014 Revenues: United States $ $ Australia — Ireland Singapore Total revenues $ $ |
Related Party Transactions38
Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Related Party Transactions | 17. Related Party Transactions As of June 30, 2015, and December 31, 2014, the Company had a payable of $0.4 million and $0.4 million to its affiliates, respectively. In the ordinary course of business, the Company purchases and leases computer equipment and maintenance and support from affiliates of Dell Inc. (“Dell”). Silver Lake and its affiliates have a significant ownership interest in Dell. During the six months ended June 30, 2015 and 2014, the Company paid $1.5 million and $0.4 million, respectively, to Dell for these purchases and leases. Similarly, in the ordinary course of business, the Company purchases market data and related services from Interactive Data Pricing and Reference Data, Inc. (“Interactive Data”). Silver Lake and its affiliates have a significant ownership interest in Interactive Data. During the six months ended June 30, 2015 and 2014, the Company paid $0.2 million and $0.2 million, respectively, to Interactive Data for these purchases. Finally, in the ordinary course of business, the Company purchases telecommunications services from Singapore Telecommunications Limited (“Singtel”). Singtel is a subsidiary of Temasek. During the six months ended June 30, 2015 and 2014, we paid $0.1 million and $0.1 million, respectively, to Singtel for these purchases. | |
Virtu Financial, Inc. | ||
Related Party Transactions | 3. Related ‑Party Transactions The Company may receive funding from affiliates in the ordinary course of business. As of December 31, 2014 and 2013, the Company had a payable of $14,000 and $0 to its affiliates, respectively. |
Subsequent Events39
Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events | |
Subsequent Events | 18. Subsequent Events The Company has evaluated subsequent events for adjustment to or disclosure in its condensed consolidated financial statements through the date of the report, and has not identified any recordable or disclosable events, not otherwise reported in these condensed consolidated financial statements or the notes thereto, except for the following: Virtu Financial made profit distributions to its members, including the Company, in the amount of $10.0 million, on August 4, 2015. The Company’s Board of Directors declared a dividend of $0.24 per share of Class A common stock and Class B common stock that is payable on September 15, 2015 to holders of record as of September 1, 2015. |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The Company's condensed consolidated financial statements are prepared in conformity with US GAAP, which require management to make estimates and assumptions regarding fair value measurements including trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. |
Earnings Per Share | Earnings Per Share Earnings per share (“EPS”) is computed in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s share-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash equivalents as highly liquid investments with original maturities of less than three months when acquired. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. |
Securities Borrowed and Securities Loaned | Securities Borrowed and Securities Loaned The Company conducts securities borrowing and lending activities with external counterparties. In connection with these transactions, the Company receives or posts collateral. These transactions are collateralized by cash or securities. In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received. Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the condensed consolidated statements of financial condition. For these transactions, the interest received or paid by the Company is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the condensed consolidated statements of comprehensive income. |
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase | Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company's policy that its custodian takes possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the condensed consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. |
Receivables from/Payables to Broker-dealers and Clearing Organizations | Receivables from/Payables to Broker ‑Dealers and Clearing Organizations Amounts receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At June 30, 2015 and December 31, 2014, receivables from and payables to broker-dealers and clearing organizations primarily represent amounts due for unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing organizations or exchanges and balances due from or due to prime brokers in relation to the Company’s trading. The Company also offsets the outstanding principal balances on all short term credit facilities against amounts receivable from and payable to broker-dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, substantially all of the Company’s securities transactions, money balances, and security positions are transacted with several brokers. The Company is subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Company’s management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties. |
Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased | Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased The Company carries financial instruments owned, including those pledged as collateral, and financial instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded net on a trade-date basis in trading income on the condensed consolidated statements of comprehensive income. |
Fair Value Measurements | Fair Value Measurements At June 30, 2015 and December 31, 2014, substantially all of Company’s financial assets and liabilities, except for long-term borrowings and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short-term in nature and were carried at amounts that approximate fair value. The Company’s assets and liabilities have been categorized based upon a fair value hierarchy in accordance with ASC 820 ‑10, Fair Value Measurements and Disclosures. ASC 820 ‑10 defines fair value 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. Fair value measurements are not adjusted for transaction costs. The recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market is prohibited. ASC 820 ‑10 requires a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). 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; Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the six months ended June 30, 2015 and 2014. |
Derivative Instruments | Derivative Instruments Derivative instruments used for trading purposes, including economic hedges of trading instruments, are carried at fair value. Fair values for exchange-traded derivatives, principally futures, are based on quoted market prices. Fair values for over-the-counter derivative instruments, principally forward contracts, are based on the values of the underlying financial instruments within the contract. The underlying derivative instruments are currencies which are actively traded. Derivative instruments used for economic hedging purposes include futures, forward contracts, and options. Unrealized gains or losses on these derivative instruments are recognized currently in the condensed consolidated statements of comprehensive income as trading income, net. The Company does not apply hedge accounting as defined in ASC 815, Derivatives and Hedging ; accordingly all derivative instruments are recorded at fair value with changes in fair values reflected in earnings. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisition of MTH which were recorded at fair value on the date of acquisition. Depreciation is provided using the straight ‑line method over estimated useful lives of the underlying asset. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. The useful lives of furniture and fixtures are as follows: Furniture, fixtures and equipment to years Leasehold improvements years or length of lease term, whichever is shorter |
Capitalized Software | Capitalized Software The Company accounts for the costs of computer software developed or obtained for internal use in accordance with ASC 350-40, Internal ‑Use Software . The Company capitalizes costs of materials, consultants, and payroll and payroll related costs for employees incurred in developing internal-use software. Costs incurred during the preliminary project and post-implementation stages are charged to expense. Management’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The Company’s capitalized software development costs were approximately $5.5 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. The related amortization expense was approximately $5.2 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. Additionally, in connection with the compensation charge related to Class B and East MIP interests recognized upon the IPO (Note 13), the Company capitalized and amortized $9.5 million and $8.0 million of the costs, respectively, which were included within charges related to share-based compensation at IPO, net, in the condensed consolidated statements of comprehensive income. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software on the accompanying condensed consolidated statements of financial condition and are amortized over a period of 1.4 to 2.5 years, which represents the estimated useful lives of the underlying software. |
Goodwill | Goodwill 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 for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We operate in one operating segment, which is our only reporting unit. The goodwill impairment test is a two-step process. The first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the 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 equal to that excess. The primary valuation methods we use to estimate the fair value of our reporting unit are the income and market approaches. In applying the income approach, projected available cash flows and the terminal value are discounted to present value to derive an indication of fair value of the business enterprise. The market approach compares the reporting unit to selected reasonably similar publicly-traded companies. The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. There were no triggering events that would have caused the Company to assess goodwill for impairment during the six months ended June 30, 2015 and 2014, respectively. |
Intangible Assets | Intangible Assets The Company amortizes finite-lived intangible assets over their estimated useful lives. Finite-lived intangible assets are tested for impairment annually or when impairment indicators are present, and if impaired, written down to fair value. |
Exchange Memberships and Stock | Exchange Memberships and Stock Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value, in accordance with ASC 940-340, Financial Services — Broker and Dealers. Exchange stock includes shares that entitles the Company to certain trading privileges. The shares are marked to market with the corresponding gain or loss recorded in the condensed consolidated statements of comprehensive income. The Company’s exchange memberships and stock are included in other assets on the condensed consolidated statements of financial condition. |
Trading Income | Trading Income Trading income is comprised 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 condensed consolidated statements of comprehensive income. |
Interest and Dividends Income/Interest and Dividends Expense | Interest and Dividends Income/Interest and Dividends Expense Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of interest earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related lines of credit. Dividends on financial instruments owned including those pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex-dividend date and interest is recognized on the accrual basis. |
Technology Services | Technology Services Technology services revenues consist of fees paid by third parties for licensing of our proprietary risk management and trading infrastructure technology and provision of associated management and hosting services. These fees include both upfront and annual recurring fees. Revenue from technology services is recognized once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized ratably over the contractual service period. |
Rebates | Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying condensed consolidated statements of comprehensive income. |
Income Taxes | Income Taxes Virtu Financial is a limited liability company and is treated as a pass-through entity for United States federal, state, and local income tax purposes. Accordingly, no provision for United States federal, state, and local income tax was required prior to the consummation of the Reorganization Transactions and the IPO. Subsequent to consummation of the Reorganization Transactions and the IPO, the Company is subject to U.S. federal, state and local income taxes on its taxable income, which is proportional to the percentage of Virtu Financial owned by the Company. The Company’s subsidiaries are subject to income taxes in the respective jurisdictions in which they operate. Certain of the Company’s 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. The Company recognizes 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 condensed 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. The Company’s 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 Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of June 30, 2015 and December 31, 2014 or the results of operations for the six months ended June 30, 2015 and 2014. |
Comprehensive Income and Foreign Currency Translation | Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to Accounting Standards Update 2011-05, Comprehensive Income. Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). OCI is comprised of revenues, expenses, gains and losses that are reported in the comprehensive income section of the consolidated statements of comprehensive income, but are excluded from reported net income. The Company’s OCI is comprised of foreign currency translation adjustments. Assets and liabilities of operations having non-U.S. dollar functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in other comprehensive income, a separate component of members’ equity. |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based compensation transactions with employees under the provisions of ASC 718, Compensation: Stock Compensation. ASC 718 requires a share-based payment transaction with employees to be 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. With respect to equity awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the 2015 Management Incentive Plan, the fair value of the stock option grants are determined through the application of the Black-Scholes-Merton model. Similarly, the fair value of the restricted stock units is determined based on the IPO per share price or the market price at the time of grant. The fair value of share based awards granted to employees is expensed based on the vesting conditions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 (fiscal year 2018 for the Company) and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 on its condensed consolidated financial statements. Repurchase Agreements — In June, 2014, the FASB released ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendment changes the accounting for repurchase financing transactions and for repurchase-to-maturity transactions to secured borrowing accounting. The accounting changes are effective for the Company beginning in the first quarter of 2015. The effect of the accounting changes on transactions outstanding as of the effective date are required to be presented as a cumulative effect adjustment to retained earnings as January 1, 2015. The Company currently does not enter into these types of repurchase transactions. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual tenor of the agreements, as well as a discussion of the potential risks associated with the agreements and the related collateral pledged, and how those risks are managed. Additional disclosures are required for repurchase agreements, securities lending transactions, sales with a total return swap, and other similar transfers of financial assets that are accounted for as a sale. Compensation — In June 2014, the Emerging Issues Task Force (the “EITF”) of the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendment requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 (fiscal year 2016 for the Company). Earlier adoption is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Going Concern — In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new standard will be effective in the first annual period ending after December 15, 2016 (fiscal year 2017 for the Company). Earlier adoption is permitted. The Company will implement this new standard on the required effective date. Hybrid Financial Instruments — In November 2014, the EITF of the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. The ASU requires that for hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. An entity should use judgment based on an evaluation of all the relevant terms and features, and should consider the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company) and interim periods within fiscal years beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Debt Issuance Costs — In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, rather than as a deferred charge asset. The ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company), and interim periods within those fiscal years. Early adoption of the amendment is permitted and the Company has elected to early adopt this ASU effective as of June 30, 2015. The new guidance has been applied on a retrospective basis, wherein the accompanying condensed consolidated statements of financial condition have been adjusted to reflect the period-specific effects of applying the new guidance. Refer to Note 8 for additional information regarding the impact of this guidance on the Company’s condensed consolidated financial statements. |
Summary of Significant Accoun41
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of useful lives of furniture and fixtures | Furniture, fixtures and equipment to years Leasehold improvements years or length of lease term, whichever is shorter |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings per Share | |
Schedule of reconciliation of net income before minority interest to net income available for common stockholders and the calculation of basic and diluted earnings per share | Six Months Ended (in thousands) June 30, 2015 Income before income taxes and noncontrolling interest $ Provision for (benefit from) income taxes Net income Net income allocable to members of Virtu Financial LLC (for the period January 1, 2015 through April 15, 2015) Noncontrolling interest subsequent to April 15, 2015 Net income available for common stockholders $ Period from April 16, 2015 through (in thousands, except for shares or per share amounts) June 30, 2015 Basic earnings per share: Net income available for common stockholders $ Weighted average shares of common stock outstanding: Class A Basic Earnings per share $ Period from April 16, 2015 through (in thousands, except for shares or per share amounts) June 30, 2015 Diluted earnings per share: Net income available for common stockholders $ Weighted average shares of common stock outstanding: Class A Issued and outstanding Issuable pursuant to 2015 Management Incentive Plan Diluted Earnings per share $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets | |
Schedule of acquired intangible assets | As of June 30, 2015 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — 1.4 to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ As of December 31, 2014 (in thousands) Gross Carrying Accumulated Net Carrying Useful Lives Amount Amortization Amount (Years) Purchased technology $ $ $ — 1.4 to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ |
Receivables from_Payables to 44
Receivables from/Payables to Broker-Dealers and Clearing Organizations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Receivables from/Payables to Broker-Dealers and Clearing Organizations | |
Summary of receivables from and payables to brokers-dealers and clearing organizations | June 30, December 31, (in thousands) 2015 2014 Assets Due from prime brokers $ $ Deposits with clearing organizations Net equity with futures commission merchants Unsettled trades Securities failed to deliver Total receivables from broker-dealers and clearing organizations $ $ Liabilities Due to prime brokers $ $ Net equity with futures commission merchants Unsettled trades Securities failed to receive Total payables to broker-dealers and clearing organizations $ $ |
Collateralized Transactions (Ta
Collateralized Transactions (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Collateralized Transactions | |
Schedule of amounts related to collateralized transactions | June 30, December 31, (In thousands) 2015 2014 Securities received as collateral: Securities borrowed $ $ Securities purchased under agreements to resell $ $ |
Schedule of financial instruments owned and pledged, where counterparty has right to repledge | June 30, December 31, (In thousands) 2015 2014 Equities $ $ Exchange traded notes $ $ |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Borrowings | |
Schedule of aggregate future required principal payments based on terms of loan | (in thousands) 2015 $ 2016 2017 2018 and thereafter Total maturities of long-term debt $ |
Financial Assets and Liabilit47
Financial Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Financial Assets and Liabilities | |
Summary of fair value measurements measured on a recurring basis | Fair value measurements for those items measured on a recurring basis are summarized below as of June 30, 2015: June 30, 2015 Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Counter- Identical Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and Non-U.S. government obligations — — Exchange traded notes — — — Interest rate swaps — — — Currency forwards — — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and Non-U.S. government obligations — — — Exchange traded notes — — — Interest rate swaps — — — Currency forwards — — Options — — — $ $ $ — $ $ Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2014: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Counter- Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — Interest rate swaps — — — $ $ $ — $ $ |
Schedule showing the netting of certain financial assets | June 30, 2015 Net Amounts of Gross Amounts Not Gross Amounts Assets Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Assets Financial Condition Financial Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — — — Options — — Interest rate swaps — — — Total $ $ $ $ $ — $ December 31, 2014 Gross Amounts Not Net Amounts of Offset in the Gross Amounts Assets Condensed Consolidated Offset in the Presented in the Statement of Gross Condensed Condensed Financial Condition Amounts of Consolidated Consolidated Cash Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Assets Financial Condition Financial Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — Options — — Total $ $ $ $ $ — $ |
Schedule showing the netting of certain financial liabilities | Net Amounts of Gross Amounts Not Gross Amounts Liabilities Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — Total $ $ $ $ $ $ Net Amounts of Gross Amounts Not Gross Amounts Liabilities Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — — Total $ $ $ $ $ $ |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments | |
Schedule of fair value of derivative instruments on a gross basis | June 30, 2015 December 31, 2014 (in thousands) Fair Fair Derivatives Assets Balance Sheet Classification Value Notional Value Notional Equities futures Receivables from broker dealers and clearing organizations $ $ $ $ Commodity futures Receivables from broker dealers and clearing organizations Currency futures Receivables from broker dealers and clearing organizations Treasury futures Receivables from broker dealers and clearing organizations Options Financial instruments owned Currency forwards Financial instruments owned Interest rate swaps Financial instruments owned — — Fair Fair Derivatives Liabilities Balance Sheet Classification Value Notional Value Notional Equities futures Payables to broker dealers and clearing organizations $ — $ — $ $ Commodity futures Payables to broker dealers and clearing organizations Currency futures Payables to broker dealers and clearing organizations Options Financial instruments sold, not yet purchased Treasury futures Payables to broker dealers and clearing organizations — — — — Custom equity based swap Payables to broker dealers and clearing organizations — — — — Currency forwards Financial instruments sold, not yet purchased Interest rate swaps Financial instruments sold, not yet purchased |
Schedule of gain impact that derivative instruments not designated as hedging instruments had on results of operations | For the Six Months Ended June 30, (in thousands) 2015 2014 Futures $ $ Currency forwards Options Interest rate swaps — $ $ |
Share-based Compensation (Table
Share-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Schedule of weighted-average assumptions used in estimating the grant date fair values | Six Months Ended June 30, 2015 Expected life (in years) Weighted average risk free interest rate % Expected stock price volatility % Expected dividend yield % Weighted average fair value at grant date $ |
Class A-2 profits interests | |
Schedule of activity in the Class A-2 profits interests | Weighted Weighted Average Number of Average Fair Remaining Interests Value Life Outstanding December 31, 2013 $ Interests granted — $ — — Interests repurchased $ — Outstanding June 30, 2014 $ Outstanding December 31, 2014 $ Interests granted $ Interests repurchased $ — Outstanding June 30, 2015 $ |
Geographic Information (Tables)
Geographic Information (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Geographic Information | ||
Schedule of total revenues by geographic area | For the Six Months Ended June 30, (in thousands) 2015 2014 Revenues: United States $ $ Australia — Ireland Singapore Total revenues $ $ | For the Years Ended, December 31, 2014 2013 2012 Revenues: United States $ $ $ Australia Ireland Singapore United Kingdom — Total revenues $ $ $ |
Organization and Basis of Pre51
Organization and Basis of Presentation (Details) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015segmentitem$ / shares | Dec. 31, 2014segment$ / shares | Apr. 21, 2015$ / shares | Apr. 16, 2015$ / shares | Apr. 15, 2015$ / shares | |
Number of businesses Company is managed and operated as | item | 1 | ||||
Number of reportable segments | segment | 1 | 1 | |||
Common stock, par value | $ 0.00001 | ||||
Virtu Financial, LLC | |||||
Ownership interest (as a percent) | 24.80% | ||||
Class A common stock | |||||
Common stock, par value | $ 0.00001 | $ 0.00001 | $ 0.00001 | $ 0.00001 |
Summary of Significant Accoun52
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Property and Equipment and Capitalized Software | ||
Capitalized software development costs | $ 5.5 | $ 5 |
Amortization expense for capitalized software | $ 5.2 | 5 |
Securities Borrowed and Securities Loaned | ||
Minimum initial collateral advanced or received expressed as a percentage of fair value of the underlying securities borrowed or loaned | 102.00% | |
Fair Value Measurements | ||
Transfers of financial instruments between levels | $ 0 | 0 |
Class B interests | ||
Property and Equipment and Capitalized Software | ||
Amortization expense for capitalized software | 8 | |
Class B interests | East MIP | ||
Property and Equipment and Capitalized Software | ||
Capitalized software development costs | $ 9.5 | |
Amortization expense for capitalized software | $ 8 | |
Furniture, fixtures and equipment | Minimum | ||
Property and Equipment and Capitalized Software | ||
Estimated useful lives | 3 years | |
Furniture, fixtures and equipment | Maximum | ||
Property and Equipment and Capitalized Software | ||
Estimated useful lives | 7 years | |
Leasehold improvements | ||
Property and Equipment and Capitalized Software | ||
Estimated useful lives | 7 years | |
Capitalized software | Minimum | ||
Property and Equipment and Capitalized Software | ||
Estimated useful lives | 1 year 4 months 24 days | |
Capitalized software | Maximum | ||
Property and Equipment and Capitalized Software | ||
Estimated useful lives | 2 years 6 months |
Summary of Significant Accoun53
Summary of Significant Accounting Policies (Details 2) $ in Millions | 6 Months Ended | |
Jun. 30, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Goodwill | ||
Number of operating segments | 1 | |
Income Taxes | ||
Uncertain tax positions | $ | $ 0 | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 4 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Apr. 15, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | |
Reconciliation of net income before minority interest to net income available for common stockholders | ||||
Income before income taxes and non-controlling interest | $ 89,734,000 | $ 79,381,000 | ||
Provision for (benefit from) income taxes | 4,725,000 | (350,000) | ||
Net income | $ 1,862,000 | 85,009,000 | $ 79,731,000 | |
Non-controlling interest subsequent to April 15, 2015 | (1,388,000) | 84,535,000 | ||
Net income available for common stockholders | $ 474,000 | $ 474,000 | ||
Virtu Financial, LLC | ||||
Ownership interest (as a percent) | 24.80% | 24.80% | ||
Reconciliation of net income before minority interest to net income available for common stockholders | ||||
Net income allocable to members of Virtu Financial LLC (for the period January 1, 2015 through April 15, 2015) | $ (83,147,000) |
Earnings Per Share (Details 2)
Earnings Per Share (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2015 | Jun. 30, 2015 | |
Basic earnings per share | ||
Net income available for common stockholders | $ 474 | $ 474 |
Weighted average shares of common stock outstanding | ||
Outstanding | 34,305,052 | |
Basic Earnings per share | $ 0.01 | |
Class A common stock | ||
Weighted average shares of common stock outstanding | ||
Outstanding | 34,305,052 | |
Basic Earnings per share | $ 0.01 |
Earnings Per Share (Details 3)
Earnings Per Share (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2015 | Jun. 30, 2015 | |
Diluted earnings per share | ||
Net income available for common stockholders | $ 474 | $ 474 |
Weighted average shares of common stock outstanding | ||
Issued and Outstanding | 34,305,052 | |
Weighted Average Number of Shares Outstanding, Diluted, Total | 34,529,349 | 34,529,349 |
Diluted Earnings per share | $ 0.01 | $ 0.01 |
Class A common stock | ||
Weighted average shares of common stock outstanding | ||
Issued and Outstanding | 34,305,052 | |
2015 Management Incentive Plan | Class A common stock | ||
Weighted average shares of common stock outstanding | ||
Issuable pursuant to 2015 Management Incentive Plan | 224,297 |
Tax Receivable Agreement (Detai
Tax Receivable Agreement (Details) $ in Thousands | Apr. 15, 2015USD ($) | Jun. 30, 2015USD ($) |
Tax Receivable Agreements | ||
Payment on applicable cash tax savings (as a percent) | 85 | |
Deferred tax assets related to exchange of units | $ 161,600 | |
Minimum tax receivable agreement obligation over the agreed period | 7,900 | |
Maximum tax receivable agreement obligation over the agreed period | $ 13,600 | |
Period over which the obligations are to be settled | 15 years | |
Deferred tax assets | $ 158,900 | |
Tax receivable agreement obligations | $ 184,679 |
Goodwill and Intangible Asset58
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Goodwill and Intangible Assets | ||
Changes in carrying amount of goodwill | $ 0 | $ 0 |
Goodwill impairment | $ 0 | $ 0 |
Goodwill and Intangible Asset59
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Acquired intangible assets | |||
Gross Carrying Amount | $ 111,900 | $ 111,900 | |
Accumulated Amortization | 110,592 | 110,486 | |
Net Carrying Amount | 1,308 | 1,414 | |
Amortization expense relating to finite-lived intangible assets | 106 | $ 106 | |
Purchased technology | |||
Acquired intangible assets | |||
Gross Carrying Amount | 110,000 | 110,000 | |
Accumulated Amortization | $ 110,000 | $ 110,000 | |
Purchased technology | Minimum | |||
Acquired intangible assets | |||
Useful Lives | 1 year 4 months 24 days | 1 year 4 months 24 days | |
Purchased technology | Maximum | |||
Acquired intangible assets | |||
Useful Lives | 2 years 6 months | 2 years 6 months | |
ETF issuer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 950 | $ 950 | |
Accumulated Amortization | 296 | 243 | |
Net Carrying Amount | $ 654 | $ 707 | |
Useful Lives | 9 years | 9 years | |
ETF buyer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 950 | $ 950 | |
Accumulated Amortization | 296 | 243 | |
Net Carrying Amount | $ 654 | $ 707 | |
Useful Lives | 9 years | 9 years |
Receivables from_Payables to 60
Receivables from/Payables to Broker-Dealers and Clearing Organizations (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Due from prime brokers | $ 265,075 | $ 67,556 |
Deposits with clearing organizations | 33,790 | 29,595 |
Net equity with futures commission merchants | 168,897 | 155,060 |
Unsettled trades | 49,764 | 55,929 |
Securities failed to deliver | 173,637 | 79,512 |
Total receivables from broker-dealers and clearing organizations | 691,163 | 387,652 |
Liabilities | ||
Due to prime brokers | 25,436 | 313,623 |
Net equity with futures commission merchants | 52,614 | 60,973 |
Unsettled trades | 474,013 | 311,322 |
Securities failed to receive | 16,396 | 285 |
Total payables to broker-dealers and clearing organizations | 568,459 | 686,203 |
Outstanding principal balance | $ 206,400 | $ 183,000 |
Collateralized Transactions (De
Collateralized Transactions (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 399,306 | $ 236,375 |
Securities received as collateral: | ||
Securities borrowed | 652,620 | 470,553 |
Securities purchased under agreements to resell | 31,038 | 31,472 |
Total amounts related to collateralized transactions | 683,658 | 502,025 |
Equity securities | ||
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | 376,583 | 219,159 |
Exchange traded notes | ||
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 22,723 | $ 17,216 |
Borrowings (Details)
Borrowings (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015USD ($)facility | Jun. 30, 2014USD ($) | Dec. 31, 2014 | |
Credit Facilities | |||
Interest expense | $ 14,861 | $ 15,299 | |
Broker-Dealer Credit Facilities | |||
Credit Facilities | |||
Number of secured credit facilities | facility | 2 | ||
Broker-Dealer Credit Facility on an uncommitted basis | |||
Credit Facilities | |||
Maximum borrowing capacity | $ 100,000 | ||
Interest rate (as a percent) | 1.13% | 1.12% | |
Credit facility term | 364 days | ||
Interest expense | $ 400 | $ 200 | |
Broker-Dealer Credit Facility on committed basis | |||
Credit Facilities | |||
Credit facility term | 364 days | ||
Broker-Dealer Credit Facility on committed basis | LIBOR rate | |||
Credit Facilities | |||
Interest rate margin (as a percent) | 1.25% |
Borrowings (Details 2)
Borrowings (Details 2) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Short-Term Credit Facilities | |||
Interest expense | $ 14,861 | $ 15,299 | |
Short-Term Credit Facilities | |||
Short-Term Credit Facilities | |||
Available for borrowing capacity | 476,000 | $ 440,000 | |
Outstanding principal balance | $ 228,900 | $ 183,000 | |
Weighted average interest rate | 2.30% | 1.80% | |
Interest expense | $ 2,700 | $ 1,600 |
Borrowings (Details 3)
Borrowings (Details 3) - USD ($) | Apr. 15, 2015 | Nov. 08, 2013 | May. 01, 2013 | Jul. 08, 2011 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 |
Aggregate future required minimum principal payments based on the terms of loan | |||||||
Reclassification of deferred financing fees | $ 5,100,000 | ||||||
Senior Secured Credit Facility | |||||||
Credit Facilities | |||||||
Face amount | $ 320,000,000 | ||||||
Discount (as a percent) | 2.00% | ||||||
Issued amount | $ 313,600,000 | ||||||
Discount | $ 6,400,000 | $ 1,700,000 | $ 1,900,000 | ||||
Percentage of the non-voting stock of the entity's domestic subsidiaries' direct foreign subsidiaries collateralized | 100.00% | ||||||
Percentage of the voting stock of the entity's domestic subsidiaries' direct foreign subsidiaries as collateral | 65.00% | ||||||
Increase in principal amount outstanding | $ 106,700,000 | $ 150,000,000 | |||||
Annual amortization obligation as a percentage of original principal amount | 15.00% | ||||||
Annual amortization obligation as a percentage of outstanding principal amount | 1.00% | ||||||
Outstanding principal amount | $ 510,000,000 | ||||||
Reduction in incremental spread upon consummation of qualifying initial public offering (as a percent) | 0.50% | ||||||
Interest rate (as a percent) | 5.25% | ||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||
2,015 | $ 2,550,000 | ||||||
2,016 | 5,100,000 | ||||||
2,017 | 5,100,000 | ||||||
2018 and thereafter | 489,600,000 | ||||||
Total maturities of long-term debt | $ 510,000,000 | ||||||
Net carrying amount of deferred financing fees capitalized | 4,500,000 | 5,100,000 | |||||
Amortization expense related to the deferred financing fees | 600,000 | $ 500,000 | |||||
Accretion related to the net carrying amount of debt discount | $ 200,000 | 200,000 | |||||
Senior Secured Credit Facility | First option | |||||||
Credit Facilities | |||||||
Fixed interest rate base (as a percent) | 2.25% | ||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.00% | ||||||
Senior Secured Credit Facility | First option | Federal funds effective rate | |||||||
Credit Facilities | |||||||
Interest rate added to variable rate (as a percent) | 0.50% | ||||||
Senior Secured Credit Facility | First option | Adjusted LIBOR rate for the interest period | |||||||
Credit Facilities | |||||||
Interest rate added to variable rate (as a percent) | 1.00% | ||||||
Senior Secured Credit Facility | Second option | |||||||
Credit Facilities | |||||||
Fixed interest rate base (as a percent) | 1.25% | ||||||
Additional interest margin added to fixed and variable rates (as a percent) | 4.00% | ||||||
Revolving credit facility | |||||||
Credit Facilities | |||||||
Maximum borrowing capacity | $ 100,000,000 | ||||||
Commitment fee (as a percent) | 0.50% | ||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||
Net carrying amount of deferred financing fees capitalized | $ 800,000 | $ 0 | |||||
Amortization expense related to the deferred financing fees | $ 100,000 | $ 0 | |||||
Revolving credit facility | Federal funds effective rate | |||||||
Credit Facilities | |||||||
Interest rate added to variable rate (as a percent) | 0.50% | ||||||
Revolving credit facility | Adjusted LIBOR rate for the interest period | |||||||
Credit Facilities | |||||||
Interest rate added to variable rate (as a percent) | 1.00% | ||||||
Revolving credit facility | First option | |||||||
Credit Facilities | |||||||
Fixed interest rate base (as a percent) | 2.25% | ||||||
Additional interest margin added to fixed and variable rates (as a percent) | 2.00% | ||||||
Revolving credit facility | Second option | |||||||
Credit Facilities | |||||||
Fixed interest rate base (as a percent) | 1.25% | ||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.00% |
Financial Assets and Liabilit65
Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Fair value measurements measured on a recurring basis | ||||
Transfers of financial assets between levels | $ 0 | $ 0 | ||
Assets | ||||
Financial instruments owned, at fair value | 1,658,086 | $ 1,307,933 | ||
Financial instruments owned, pledged as collateral | 399,306 | 236,375 | ||
Other assets: exchange stock | 9,162 | 8,205 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,785,628 | 1,037,634 | ||
Equity securities | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 376,583 | 219,159 | ||
Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 22,723 | 17,216 | ||
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,612,848 | 1,282,216 | $ 1,343,105 | |
Financial instruments owned, pledged as collateral | 399,306 | 236,375 | 415,179 | |
Other assets: exchange stock | 9,162 | 8,205 | 7,318 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,771,117 | 973,456 | 1,272,491 | |
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,562,612 | 1,216,532 | 1,307,528 | |
Financial instruments owned, pledged as collateral | 376,583 | 219,159 | 379,276 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,668,114 | 859,836 | 1,042,385 | |
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U S And Non-U S Government Obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 5,172 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 34,033 | 21,107 | ||
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, at fair value | 45,064 | 65,684 | 21,817 | |
Financial instruments owned, pledged as collateral | 22,723 | 17,216 | 33,938 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 68,970 | 92,513 | 31,642 | |
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Exchange stock | ||||
Assets | ||||
Other assets: exchange stock | 9,162 | 8,205 | 7,318 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Financial instruments owned, at fair value | 406,744 | 1,655,346 | 208,199 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 376,017 | 1,693,807 | 168,991 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | 361,506 | 1,629,637 | 179,650 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 373,870 | 1,645,820 | 163,070 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 190 | 321 | 948 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 214 | 79 | 2,038 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate swaps | ||||
Assets | ||||
Financial instruments owned, at fair value | 424 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 434 | 12 | ||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 35,360 | 17,166 | 27,601 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,499 | 47,896 | 3,883 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | U S And Non-U S Government Obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 9,264 | 8,222 | ||
Fair value measurements measured on a recurring basis | Counterparty Netting | ||||
Assets | ||||
Financial instruments owned, at fair value | (361,506) | (1,629,629) | (163,070) | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | (361,506) | (1,629,629) | (163,070) | |
Fair value measurements measured on a recurring basis | Counterparty Netting | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | (361,506) | (1,629,629) | (163,070) | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | (361,506) | (1,629,629) | (163,070) | |
Fair value measurements measured on a recurring basis | Total Fair Value | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,658,086 | 1,307,933 | 1,388,234 | |
Financial instruments owned, pledged as collateral | 399,306 | 236,375 | 415,179 | |
Other assets: exchange stock | 9,162 | 8,205 | 7,318 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,785,628 | 1,037,634 | 1,278,412 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | 8 | 16,580 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 12,364 | 16,191 | ||
Fair value measurements measured on a recurring basis | Total Fair Value | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 190 | 321 | 948 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 214 | 79 | 2,038 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Interest rate swaps | ||||
Assets | ||||
Financial instruments owned, at fair value | 424 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 434 | 12 | ||
Fair value measurements measured on a recurring basis | Total Fair Value | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,597,972 | 1,233,698 | 1,335,129 | |
Financial instruments owned, pledged as collateral | 376,583 | 219,159 | 379,276 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,669,613 | 907,732 | 1,046,268 | |
Fair value measurements measured on a recurring basis | Total Fair Value | U S And Non-U S Government Obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 14,436 | 8,222 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 34,033 | 21,107 | ||
Fair value measurements measured on a recurring basis | Total Fair Value | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, at fair value | 45,064 | 65,684 | 21,817 | |
Financial instruments owned, pledged as collateral | 22,723 | 17,216 | 33,938 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 68,970 | 92,513 | 31,642 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Exchange stock | ||||
Assets | ||||
Other assets: exchange stock | $ 9,162 | $ 8,205 | $ 7,318 |
Financial Assets and Liabilit66
Financial Assets and Liabilities (Details 2) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Securities borrowed | ||
Gross Amounts of Recognized Assets | $ 667,970 | $ 484,934 |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 667,970 | 484,934 |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | (660,393) | (477,559) |
Net Amount | 7,577 | 7,375 |
Securities purchased under agreements to resell | ||
Gross Amounts of Recognized Assets | 31,050 | 31,463 |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 31,050 | 31,463 |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | (31,050) | (31,463) |
Total | ||
Gross Amounts of Recognized Assets | 1,061,140 | 2,146,355 |
Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition | (361,506) | (1,629,629) |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 699,634 | 516,726 |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | (692,047) | (509,098) |
Net Amount | 7,587 | 7,628 |
Currency forwards | ||
Trading assets, at fair value | ||
Gross Amounts of Recognized Assets | 361,506 | 1,629,637 |
Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition | (361,506) | (1,629,629) |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 8 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Net Amount | 8 | |
Options | ||
Trading assets, at fair value | ||
Gross Amounts of Recognized Assets | 190 | 321 |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 190 | 321 |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | (180) | (76) |
Net Amount | 10 | $ 245 |
Interest rate swaps | ||
Trading assets, at fair value | ||
Gross Amounts of Recognized Assets | 424 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 424 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | $ (424) |
Financial Assets and Liabilit67
Financial Assets and Liabilities (Details 3) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Securities loaned | ||
Gross Amounts of Recognized Liabilities | $ 876,782 | $ 497,862 |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 876,782 | 497,862 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (874,615) | (490,768) |
Cash collateral received | (757) | (2,812) |
Net Amount | 1,410 | 4,282 |
Securities sold under agreements to repurchase | ||
Gross Amounts of Recognized Liabilities | 246 | 2,006 |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 246 | 2,006 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (246) | (2,006) |
Total | ||
Gross Amounts of Recognized Liabilities | 1,251,546 | 2,145,779 |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (361,506) | (1,629,629) |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 890,040 | 516,150 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (875,499) | (492,853) |
Cash collateral received | (13,131) | (19,015) |
Net Amount | 1,410 | 4,282 |
Receivables from broker dealers and clearing organizations | ||
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Net variation margin on long and short futures contracts | 90,200 | 46,400 |
Payables to broker dealers and clearing organizations | ||
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Net variation margin on long and short futures contracts | 89,800 | (3,600) |
Currency forwards | ||
Trading liabilities, at fair value: | ||
Gross Amounts of Recognized Assets | 373,870 | 1,645,820 |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (361,506) | (1,629,629) |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 12,364 | 16,191 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Cash collateral received | (12,364) | (16,191) |
Options | ||
Trading liabilities, at fair value: | ||
Gross Amounts of Recognized Assets | 214 | 79 |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 214 | 79 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (214) | (79) |
Interest rate swaps | ||
Trading liabilities, at fair value: | ||
Gross Amounts of Recognized Assets | 434 | 12 |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 434 | 12 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (424) | |
Cash collateral received | $ (10) | $ (12) |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Equities futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | $ (10,046) | $ 241 |
Derivatives Assets, Notional | 1,441,389 | 561,029 |
Equities futures | Payables to broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | (268) | |
Derivatives Liabilities, Notional | 122,948 | |
Commodity futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 86,901 | 42,489 |
Derivatives Assets, Notional | 6,668,358 | 28,823,081 |
Commodity futures | Payables to broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | 90,322 | (295) |
Derivatives Liabilities, Notional | 22,614,981 | 15,727 |
Currency futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 13,333 | 3,180 |
Derivatives Assets, Notional | 2,600,729 | 2,916,222 |
Currency futures | Payables to broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | (519) | (3,077) |
Derivatives Liabilities, Notional | 2,131,257 | 2,123,341 |
Treasury futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | (15) | 504 |
Derivatives Assets, Notional | 523,513 | 857,363 |
Options | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 190 | 321 |
Derivatives Liabilities, Fair Value | 214 | 79 |
Options | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 190 | 321 |
Derivatives Assets, Notional | 17,153 | 39,802 |
Options | Financial instruments sold, not yet purchased | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | 214 | 79 |
Derivatives Liabilities, Notional | 17,909 | 12,913 |
Currency forwards | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 361,506 | 1,629,637 |
Derivatives Liabilities, Fair Value | 373,870 | 1,645,820 |
Currency forwards | Financial instruments owned | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 361,506 | 1,629,637 |
Derivatives Assets, Notional | 22,576,627 | 127,021,198 |
Currency forwards | Financial instruments sold, not yet purchased | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | 373,870 | 1,645,820 |
Derivatives Liabilities, Notional | 24,557,934 | 125,152,639 |
Interest rate swaps | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 424 | |
Derivatives Liabilities, Fair Value | 434 | 12 |
Interest rate swaps | Financial instruments owned | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 424 | |
Derivatives Assets, Notional | 82,010 | |
Interest rate swaps | Financial instruments sold, not yet purchased | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | 434 | 12 |
Derivatives Liabilities, Notional | $ 82,010 | $ 164,020 |
Derivative Instruments (Detai69
Derivative Instruments (Details 2) - Not designated as hedging instruments - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Gain impact of derivative instruments not designated as hedging instruments | ||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | $ 619,805 | $ 136,696 |
Futures | ||
Gain impact of derivative instruments not designated as hedging instruments | ||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | 640,873 | 82,058 |
Currency forwards | ||
Gain impact of derivative instruments not designated as hedging instruments | ||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | (20,697) | 53,833 |
Options | ||
Gain impact of derivative instruments not designated as hedging instruments | ||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | (373) | $ 805 |
Interest rate swaps | ||
Gain impact of derivative instruments not designated as hedging instruments | ||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | $ 2 |
Income Taxes (Details)70
Income Taxes (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Income Taxes | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Capital Structure (Details)
Capital Structure (Details) $ in Thousands | Dec. 31, 2014USD ($)shares | Jul. 08, 2011USD ($)itemshares | Jun. 30, 2015USD ($)shares | Jun. 30, 2014shares | Dec. 31, 2014USD ($)shares | Jul. 08, 2015 | Apr. 15, 2015USD ($)item |
Class A-1 | |||||||
Membership interests issued (in shares) | 1,964,826 | 0 | 1,964,826 | ||||
Aggregate capital balance | $ | $ 19,648 | $ 19,648 | |||||
Membership interests outstanding (in shares) | 1,964,826 | 0 | 1,964,826 | ||||
Virtu Financial, LLC | |||||||
Number of classes of members interests issued | item | 3 | ||||||
Virtu Financial, LLC | Temasek | |||||||
Maximum amount of payments to be made if value of interest acquired exceeds certain limit of transaction price | $ | $ 3,900 | ||||||
Ratio of interest acquired over transaction price | 1.7 | ||||||
Virtu Financial, LLC | Class A-1 | |||||||
Number of members that haves the right to call for redemption | item | 3 | ||||||
Members interests granted (in shares) | 0 | 0 | |||||
Members interests forfeited (in shares) | 0 | 0 | |||||
Members interests distributed (in shares) | 0 | 0 | |||||
Members interests redeemed (in shares) | 0 | 0 | |||||
Amount of unrecovered capital for entitlement of distributions of capital proceeds | $ | $ 0 | $ 0 | $ 0 | ||||
Conversion ratio to convert from Class A-1 to Class A-2 | 1 | 1 | |||||
Virtu Financial, LLC | Class A-1 | Minimum | |||||||
Threshold of gross proceeds raised from an initial public offering for a qualified IPO | $ | $ 100,000 | ||||||
Number of times the invested amount to determine the valuation of the entity | 1.75 | ||||||
Virtu Financial, LLC | Class A-1 | Silver Lake Member | |||||||
Redeemable interests issued (in shares) | 25,000,000 | ||||||
Redeemable interests held (in shares) | 7,381,224 | 7,381,224 | |||||
Percentage of indirect ownership interest held in the entity | 57.90% | ||||||
Number of members can be appointed in Entity's board | item | 1 | ||||||
Virtu Financial, LLC | Class A-1 | Affiliate of Vincent Viola | |||||||
Membership interests issued (in shares) | 1,964,826 | ||||||
Aggregate capital balance | $ | $ 270,000 | ||||||
Virtu Financial, LLC | Class A-1 | Temasek Member | |||||||
Redeemable interests transferred from one member to another member (in shares) | 5,376,603 | ||||||
Number of members can be appointed in Entity's board | item | 1 | ||||||
Number of members can be appointed in Entity's board by other members in consultation with Temasek member | item | 1 | ||||||
Virtu Financial, LLC | Class A-1 | SLT Member | |||||||
Redeemable interests transferred from one member to another member (in shares) | 12,242,173 | ||||||
Percentage of indirect ownership interest held in the entity | 42.10% | ||||||
Virtu Financial, LLC | Class A-2 capital interests | |||||||
Membership interests issued (in shares) | 93,786,659 | 0 | 93,786,659 | ||||
Membership interests outstanding (in shares) | 93,786,659 | 0 | 93,786,659 | ||||
Amount of unrecovered capital for entitlement of distributions of capital proceeds | $ | $ 0 | $ 0 | $ 0 | ||||
Virtu Financial, LLC | Class A-2 capital interests | East MIP | |||||||
Contribution of capital interests to incentive plan (in shares) | 2,625,000 | ||||||
Virtu Financial, LLC | Class A-2 capital interests | Temasek Member | |||||||
Membership interests issued (in shares) | 214,433 | 214,433 | |||||
Member's interests transferred from one entity to another entity (in shares) | 1,614,322 | ||||||
Virtu Financial, LLC | Class A-2 profits interests | Employee Holdco | |||||||
Membership interests issued (in shares) | 6,069,007 | 0 | 6,069,007 | ||||
Members interests issued during the period (in shares) | 6,418 | 0 | |||||
Members interests redeemed (in shares) | 13,495 | 6,795 | |||||
Membership interests outstanding (in shares) | 6,069,007 | 0 | 6,069,007 | ||||
Virtu Financial, LLC | Class B interests | |||||||
Membership interests issued (in shares) | 0 | 0 | |||||
Membership interests outstanding (in shares) | 0 | ||||||
Non-voting interests vesting period | 4 years | ||||||
Percentage of capital proceeds issued | 12.915% | 12.915% | |||||
Percentage of capital proceeds outstanding | 12.915% | 12.915% | |||||
Virtu Financial, LLC | Class B interests | East MIP | |||||||
Non-voting interests vesting period | 4 years |
Capital Structure (Details 2)
Capital Structure (Details 2) $ / shares in Units, $ in Millions | Jun. 12, 2015USD ($) | Apr. 21, 2015USD ($)$ / sharesshares | Apr. 15, 2015item$ / sharesshares | Jun. 30, 2015$ / sharesshares | Apr. 16, 2015$ / shares | Dec. 31, 2014$ / sharesshares |
Common stock, par value | $ / shares | $ 0.00001 | |||||
Number of affiliates of the founder member | item | 3 | |||||
Number of entities | item | 2 | |||||
Number of entities managed by the founding member | item | 1 | |||||
Number of founding members liquidating and distributing equity interests | item | 2 | |||||
Number of classes of common stock | item | 4 | |||||
Payments of Dividends | $ | $ 5 | |||||
Underwriting discount and commissions | $ | $ 25.2 | |||||
Net proceeds from IPO contributed to VF | $ | 58.8 | |||||
Maximum | ||||||
Remaining dividends payable | $ | $ 45 | |||||
Virtu Financial, LLC | ||||||
Ownership interest (as a percent) | 24.80% | |||||
Virtu Financial, LLC | ||||||
Other offering costs | $ | 8.6 | |||||
Silver Lake Post-IPO | ||||||
Payments to purchase shares of common stock and common units | $ | $ 277.2 | |||||
Non-qualified stock options | 2015 Management Incentive Plan | ||||||
Grants (in shares) | 9,228,000 | |||||
Vesting period | 4 years | |||||
Expiration period | 10 years | |||||
Class A common stock | ||||||
Shares issued | 19,012,112 | 19,012,112 | ||||
Common stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||
Common stock sold in connection with full exercise of the option to purchase additional shares granted to underwriters (in shares) | 2,479,840 | |||||
Common stock sold in connection with full exercise of the option to purchase additional shares granted to underwriters, at a price to public (in dollars per share) | $ / shares | $ 19 | |||||
Sale of VFI's common stock | 34,305,052 | 0 | ||||
Gross proceeds from offering | $ | $ 361.2 | |||||
Class A common stock | 2015 Management Incentive Plan | ||||||
Number of shares of stock authorized | 12,000,000 | |||||
Class A common stock | Silver Lake Post-IPO | ||||||
Purchase of common stock (in shares) | 3,470,724 | |||||
Class A common stock | Restricted stock units | 2015 Management Incentive Plan | ||||||
Vesting period | 1 year | |||||
Granted (in shares) | 25,647 | |||||
Class B common stock | ||||||
Common stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||
Sale of VFI's common stock | 0 | 0 | ||||
Class A common stock and Class C common stock | ||||||
Number of votes provided to holders on all matters | item | 1 | |||||
Conversion of VFI's common stock | 1 | |||||
Class B common stock and Class D common stock | ||||||
Number of votes provided to holders on all matters | item | 10 | |||||
Class D common stock | ||||||
Common stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||
Sale of VFI's common stock | 79,610,490 | 0 | ||||
Class D common stock | TJMT Holdings LLC | ||||||
Purchase of common stock (in shares) | 79,610,490 | |||||
Class C common stock | ||||||
Common stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||
Sale of VFI's common stock | 24,531,817 | 0 | ||||
Class C common stock | Virtu Employee Holdco, Employee Trust, Management Members and other Virtu Post IPO Members | ||||||
Purchase of common stock (in shares) | 36,746,041 | |||||
Class C common stock | Silver Lake Post-IPO | ||||||
Purchase of common stock (in shares) | 4,862,609 | |||||
Class C common stock | Virtu Post-IPO | ||||||
Purchase of common stock (in shares) | 12,214,224 | |||||
Class C common stock | Certain employees | ||||||
Purchase of common stock (in shares) | 7,351,615 |
Share-based Compensation (Detai
Share-based Compensation (Details) $ / shares in Units, $ in Thousands | Apr. 21, 2015shares | Jun. 30, 2015USD ($)employee$ / sharesshares | Jun. 30, 2014USD ($)employee$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013$ / sharesshares |
Share-based Compensation | |||||
Capitalized software development costs | $ 5,500 | $ 5,000 | |||
Amortization expense for capitalized software | $ 5,200 | $ 5,000 | |||
Class A-2 profits interests | |||||
Share-based Compensation | |||||
Vesting period | 4 years | 4 years | |||
Expense recognized | $ 8,700 | $ 7,200 | |||
Unrecognized share-based compensation expense | $ 2,900 | ||||
Weighted average period for compensation expense expected to be recognized | 2 years 1 month 6 days | ||||
Number of Profits Interests | |||||
Outstanding at the beginning of the period (in shares) | shares | 6,069,007 | 4,434,452 | 4,434,452 | ||
Granted (in shares) | shares | 6,418 | ||||
Interests repurchased (in shares) | shares | (13,495) | (6,796) | |||
Outstanding at the end of the period (in shares) | shares | 6,061,930 | 4,427,656 | 6,069,007 | 4,434,452 | |
Weighted Average Fair Value | |||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 7.05 | $ 6.82 | $ 6.82 | ||
Interests granted (in dollars per share) | $ / shares | 7.52 | ||||
Interests repurchased (in dollars per share) | $ / shares | 7.17 | 6.46 | |||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 7.05 | $ 6.82 | $ 7.05 | $ 6.82 | |
Weighted Average Remaining Life, outstanding at the beginning of the period | |||||
Weighted Average Remaining Life | 2 years 26 days | 2 years 10 months 24 days | 2 years 6 months 15 days | 3 years 4 months 24 days | |
Interests granted (in years) | 3 years | ||||
Class B interests | |||||
Share-based Compensation | |||||
Number of employees | employee | 0 | 0 | |||
One time expense recognized | $ 31,400 | ||||
Additional expense recognized | 1,900 | ||||
Expense recognized | $ 33,300 | $ 0 | |||
Amortization expense for capitalized software | $ 8,000 | ||||
Class B interests | Time based vesting | |||||
Share-based Compensation | |||||
Vesting period | 4 years | 4 years | |||
Class B interests | East MIP | |||||
Share-based Compensation | |||||
One time expense recognized | $ 11,800 | ||||
Additional expense recognized | 600 | ||||
Expense recognized | 12,400 | $ 0 | |||
Capitalized software development costs | $ 9,500 | ||||
Amortization expense for capitalized software | $ 8,000 | ||||
Class B interests | East MIP | Time based vesting | |||||
Share-based Compensation | |||||
Vesting period | 4 years | 4 years | |||
Number of interests vested | shares | 0 | 0 | |||
Non-qualified stock options | 2015 Management Incentive Plan | |||||
Share-based Compensation | |||||
Vesting period | 4 years | ||||
Expiration period | 10 years | ||||
Expense recognized | $ 1,400 | ||||
Options forfeited (in shares) | shares | 14,000 | ||||
Granted (in shares) | shares | 9,228,000 | ||||
Weighted-average assumptions used in estimating grant date fair values | |||||
Expected life (in years) | 6 years 3 months | ||||
Weighted average risk free interest rate (as a percent) | 1.90% | ||||
Expected stock price volatility (as a percent) | 30.00% | ||||
Expected dividend yield (as a percent) | 5.05% | ||||
Weighted Average Fair Value | |||||
Interests granted (in dollars per share) | $ / shares | $ 2.95 | ||||
Restricted stock units | 2015 Management Incentive Plan | |||||
Share-based Compensation | |||||
Expense recognized | $ 20 | ||||
Restricted stock units | Class A common stock | 2015 Management Incentive Plan | |||||
Share-based Compensation | |||||
Vesting period | 1 year | ||||
Number of Profits Interests | |||||
Granted (in shares) | shares | 25,647 |
Regulatory Requirement (Details
Regulatory Requirement (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Regulatory Requirement | ||
Number of broker-dealer subsidiaries | item | 2 | |
Broker Dealer Subsidiary One | ||
Regulatory Requirement | ||
Minimum net capital required to be maintained by broker-dealer subsidiaries | $ 1 | $ 1 |
Net capital | 39.4 | 59.8 |
Excess net capital over the required net capital | 38.4 | 58.8 |
Broker Dealer Subsidiary Two | ||
Regulatory Requirement | ||
Minimum net capital required to be maintained by broker-dealer subsidiaries | 1 | 1 |
Net capital | 8.2 | 8.1 |
Excess net capital over the required net capital | 7.2 | 7.1 |
VFCM | ||
Regulatory Requirement | ||
Minimum capital required to be maintained in connection with the operation of the Company's DMM business | 3.4 | $ 3.7 |
Required amount under exchange rules | $ 1 | |
Required amount under exchange rules as percentage of market value | 15.00% | |
Number of trading units whose market value is considered to calculate required net capital under exchange act | item | 60 |
Geographic Information (Details
Geographic Information (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Total revenues by geographic area | |||||
Revenues | $ 403,507 | $ 336,271 | $ 723,053 | $ 664,505 | $ 615,628 |
United States | |||||
Total revenues by geographic area | |||||
Revenues | 268,403 | 224,491 | 509,105 | 432,900 | 452,282 |
Australia | |||||
Total revenues by geographic area | |||||
Revenues | 23 | 86 | 87 | 44,240 | |
Ireland. | |||||
Total revenues by geographic area | |||||
Revenues | 92,117 | 77,234 | 141,793 | 129,662 | 91,450 |
Singapore | |||||
Total revenues by geographic area | |||||
Revenues | $ 42,964 | $ 34,546 | $ 72,069 | $ 98,917 | $ 25,908 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Related Party Transactions | |||
Payable to affiliates | $ 0.4 | $ 0.4 | |
Dell | |||
Related Party Transactions | |||
Payments for purchases | 1.5 | $ 0.4 | |
Interactive data | |||
Related Party Transactions | |||
Payments for purchases | 0.2 | 0.2 | |
Singtel | |||
Related Party Transactions | |||
Payments for purchases | $ 0.1 | $ 0.1 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Aug. 14, 2015 | Aug. 04, 2015 | Jun. 12, 2015 |
Subsequent events | |||
Distributions made | $ 5,000,000 | ||
Subsequent Events. | Virtu Financial, LLC | |||
Subsequent events | |||
Distributions made | $ 10 | ||
Subsequent Events. | Class A common stock | |||
Subsequent events | |||
Dividends declared (in dollars per share) | $ 0.24 | ||
Subsequent Events. | Class B common stock | |||
Subsequent events | |||
Dividends declared (in dollars per share) | $ 0.24 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Dec. 31, 2014 | Dec. 31, 2013 |
Assets | ||
Cash and cash equivalents | $ 75,864 | $ 66,010 |
Securities borrowed | 484,934 | |
Securities purchased under agreements to resell | 31,463 | |
Receivables from broker dealers and clearing organizations | 387,652 | |
Trading assets, at fair value: | ||
Financial instruments owned | 1,307,933 | |
Financial instruments owned and pledged | 236,375 | |
Property, equipment and capitalized software (net of accumulated depreciation) | 44,644 | |
Goodwill | 715,379 | |
Intangibles (net of accumulated amortization) | 1,414 | |
Other assets ($8,205 and $7,318, at fair value, as of December 31, 2014 and 2013, respectively) | 32,823 | |
Total assets | 3,319,458 | |
Liabilities | ||
Securities loaned | 497,862 | |
Securities sold under agreements to repurchase | 2,006 | |
Payables to broker dealers and clearing organizations | 686,203 | |
Trading liabilities, at fair value: | ||
Financial instruments sold, not yet purchased | 1,037,634 | |
Accounts payable and accrued expenses and other liabilities | 93,331 | |
Senior secured credit facility | 495,724 | |
Total liabilities | 2,812,760 | |
Members' Equity | ||
Accumulated deficit | (91,383) | |
Accumulated other comprehensive income (loss) | (3,705) | |
Total members' equity | 212,265 | |
Total liabilities, redeemable membership interest and equity | 3,319,458 | |
Virtu Financial, LLC and subsidiaries | ||
Assets | ||
Cash and cash equivalents | 75,864 | 66,010 |
Securities borrowed | 484,934 | 708,103 |
Securities purchased under agreements to resell | 31,463 | 162,608 |
Receivables from broker dealers and clearing organizations | 387,652 | 427,741 |
Trading assets, at fair value: | ||
Financial instruments owned | 1,307,933 | 1,388,234 |
Financial instruments owned and pledged | 236,375 | 415,179 |
Property, equipment and capitalized software (net of accumulated depreciation) | 44,644 | 37,585 |
Goodwill | 715,379 | 715,379 |
Intangibles (net of accumulated amortization) | 1,414 | 1,626 |
Other assets ($8,205 and $7,318, at fair value, as of December 31, 2014 and 2013, respectively) | 38,903 | 41,105 |
Total assets | 3,324,561 | 3,963,570 |
Liabilities | ||
Short-term borrowings | 72,800 | |
Securities loaned | 497,862 | 1,029,312 |
Securities sold under agreements to repurchase | 2,006 | 10,883 |
Payables to broker dealers and clearing organizations | 686,203 | 530,229 |
Trading liabilities, at fair value: | ||
Financial instruments sold, not yet purchased | 1,037,634 | 1,278,412 |
Accounts payable and accrued expenses and other liabilities | 93,331 | 80,921 |
Senior secured credit facility | 500,827 | 507,725 |
Total liabilities | 2,817,863 | 3,510,282 |
Redeemable membership interest | ||
Redeemable membership interest | 294,433 | 250,000 |
Members' Equity | ||
Accumulated deficit | (91,383) | (74,027) |
Accumulated other comprehensive income (loss) | (3,705) | 1,327 |
Total members' equity | 212,265 | 203,288 |
Total liabilities, redeemable membership interest and equity | 3,324,561 | 3,963,570 |
Class A-1 | ||
Redeemable membership interest | ||
Redeemable membership interest | 294,433 | |
Members' Equity | ||
Membership interests | 19,648 | |
Class A-1 | Virtu Financial, LLC and subsidiaries | ||
Members' Equity | ||
Membership interests | 19,648 | 19,648 |
Class A-2 | ||
Members' Equity | ||
Membership interests | 287,705 | |
Class A-2 | Virtu Financial, LLC and subsidiaries | ||
Members' Equity | ||
Membership interests | $ 287,705 | $ 256,340 |
Consolidated Statements of Fi79
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Other assets, fair value (in dollars) | $ 9,162 | $ 8,205 | |
Class A-1 | |||
Membership interests, authorized | 0 | 1,964,826 | |
Membership interests issued | 0 | 1,964,826 | |
Membership interests outstanding | 0 | 1,964,826 | |
Class A-2 | |||
Membership interests, authorized | 0 | 101,381,332 | |
Membership interests issued | 0 | 101,381,332 | |
Membership interests outstanding | 0 | 99,855,666 | |
Virtu Financial, LLC and subsidiaries | |||
Other assets, fair value (in dollars) | $ 8,205 | $ 7,318 | |
Virtu Financial, LLC and subsidiaries | Class A-1 | |||
Membership interests, authorized | 1,964,826 | 1,964,826 | |
Membership interests issued | 1,964,826 | 1,964,826 | |
Membership interests outstanding | 1,964,826 | 1,964,826 | |
Virtu Financial, LLC and subsidiaries | Class A-2 | |||
Membership interests, authorized | 101,381,332 | 100,627,010 | |
Membership interests issued | 101,381,332 | 100,627,010 | |
Membership interests outstanding | 99,855,666 | 99,459,345 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Revenues: | |||
Total revenue | $ 723,053,000 | $ 664,505,000 | $ 615,628,000 |
Virtu Financial, LLC and subsidiaries | |||
Revenues: | |||
Trading income, net | 685,150,000 | 623,733,000 | 581,476,000 |
Interest and dividends income | 27,923,000 | 31,090,000 | 34,152,000 |
Technology services | 9,980,000 | 9,682,000 | |
Total revenue | 723,053,000 | 664,505,000 | 615,628,000 |
Operating Expenses: | |||
Brokerage, exchange and clearance fees, net | 230,965,000 | 195,146,000 | 200,587,000 |
Communication and data processing | 68,847,000 | 64,689,000 | 55,384,000 |
Employee compensation and payroll taxes | 84,531,000 | 78,353,000 | 63,836,000 |
Interest and dividends expense | 47,083,000 | 45,196,000 | 48,735,000 |
Operations and administrative | 21,923,000 | 27,215,000 | 27,826,000 |
Depreciation and amortization | 30,441,000 | 23,922,000 | 17,975,000 |
Amortization of purchased intangibles and acquired capitalized software | 211,000 | 1,011,000 | 71,654,000 |
Acquisition cost | 69,000 | ||
Acquisition related retention bonus | 2,639,000 | 6,705,000 | 6,151,000 |
Impairment on intangible assets | 0 | 0 | 1,489,000 |
Termination of office leases | 6,134,000 | ||
Debt issue cost related to debt refinancing | 10,022,000 | ||
Initial public offering fees and expenses | 8,961,000 | ||
Transaction advisory fees and expenses | 3,000,000 | ||
Financing interest expense on senior secured credit facility | 30,894,000 | 24,646,000 | 26,460,000 |
Total operating expenses | 529,495,000 | 476,905,000 | 526,300,000 |
Income before income taxes | 193,558,000 | 187,600,000 | 89,328,000 |
Provision for (benefit from) income taxes | 3,501,000 | 5,397,000 | 1,768,000 |
Net income available for common stockholders | 190,057,000 | 182,203,000 | 87,560,000 |
Other comprehensive income (loss) | |||
Foreign exchange translation adjustment | (5,032,000) | 1,382,000 | 548,000 |
Comprehensive income attributable to common stockholders | $ 185,025,000 | $ 183,585,000 | $ 88,108,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Members' Equity - USD ($) $ in Thousands | Class A-1Member Units | Class A-1 | Class A-2Member Units | Class A-2 | Class A-1 redeemable interest | Retained Earnings / (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Total Stockholders'/ Members' Equity | Total |
Balance at the beginning of the period (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2011 | $ 19,648 | $ 480,615 | $ (21,499) | $ (603) | $ 478,161 | ||||
Balance at the beginning of the period (in shares) (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2011 | 1,964,826 | 95,671,694 | |||||||
Increase (decrease) in members' equity | |||||||||
Share based compensation | Virtu Financial, LLC and subsidiaries | $ 8,726 | 8,726 | |||||||
Share based compensation (in shares) | Virtu Financial, LLC and subsidiaries | 1,705,704 | ||||||||
Repurchase of Class A-2 interests | Virtu Financial, LLC and subsidiaries | $ (352) | (352) | |||||||
Repurchase of Class A-2 interests (in shares) | Virtu Financial, LLC and subsidiaries | (53,548) | ||||||||
Distribution to members | Virtu Financial, LLC and subsidiaries | (134,408) | (134,408) | |||||||
Foreign exchange translation adjustment | Virtu Financial, LLC and subsidiaries | 548 | 548 | $ 548 | ||||||
Net Income | Virtu Financial, LLC and subsidiaries | $ 87,560 | 87,560 | 87,560 | ||||||
Balance at the end of the period (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2012 | $ 19,648 | $ 488,989 | (55) | 440,235 | |||||
Balance at the end of the period (in units) (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2012 | 1,964,826 | 97,323,850 | (68,347,000) | ||||||
Balance for Redeemable Interest at the beginning of the period (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2011 | $ 250,000 | ||||||||
Balance for Redeemable Interest at the end of the period (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2012 | 250,000 | ||||||||
Increase (decrease) in members' equity | |||||||||
Share based compensation | Virtu Financial, LLC and subsidiaries | $ 13,441 | 13,441 | |||||||
Share based compensation (in shares) | Virtu Financial, LLC and subsidiaries | 2,223,814 | ||||||||
Repurchase of Class A-2 interests | Virtu Financial, LLC and subsidiaries | $ (573) | (573) | |||||||
Repurchase of Class A-2 interests (in shares) | Virtu Financial, LLC and subsidiaries | (88,319) | ||||||||
Distribution to members | Virtu Financial, LLC and subsidiaries | $ (245,517) | $ (187,883) | (433,400) | ||||||
Foreign exchange translation adjustment | Virtu Financial, LLC and subsidiaries | 1,382 | 1,382 | 1,382 | ||||||
Net Income | Virtu Financial, LLC and subsidiaries | 182,203 | 182,203 | 182,203 | ||||||
Balance at the end of the period (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2013 | $ 19,648 | $ 256,340 | (74,027) | 1,327 | 203,288 | 203,288 | |||
Balance at the end of the period (in units) (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2013 | 1,964,826 | 1,964,826 | 99,459,345 | 99,459,345 | |||||
Balance for Redeemable Interest at the end of the period (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2013 | 250,000 | 250,000 | |||||||
Increase (decrease) in members' equity | |||||||||
Share based compensation | Virtu Financial, LLC and subsidiaries | $ 15,953 | 15,953 | |||||||
Share based compensation (in shares) | Virtu Financial, LLC and subsidiaries | 1,992,556 | ||||||||
Repurchase of Class A-2 interests | Virtu Financial, LLC and subsidiaries | $ (2,295) | (4,621) | (6,916) | ||||||
Repurchase of Class A-2 interests (in shares) | Virtu Financial, LLC and subsidiaries | (1,596,235) | ||||||||
Temasek transaction described in Note 13 | Virtu Financial, LLC and subsidiaries | $ 17,707 | 44,433 | (62,140) | (44,433) | |||||
Distribution to members | Virtu Financial, LLC and subsidiaries | (140,652) | (140,652) | |||||||
Foreign exchange translation adjustment | Virtu Financial, LLC and subsidiaries | (5,032) | (5,032) | (5,032) | ||||||
Net Income | Virtu Financial, LLC and subsidiaries | 190,057 | 190,057 | 190,057 | ||||||
Balance at the end of the period (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2014 | $ 19,648 | $ 287,705 | (91,383) | $ (3,705) | 212,265 | 212,265 | |||
Balance at the end of the period at Dec. 31, 2014 | 212,265 | ||||||||
Balance at the end of the period (in units) (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2014 | 1,964,826 | 1,964,826 | 99,855,666 | 99,855,666 | |||||
Balance at the end of the period (in units) at Dec. 31, 2014 | 1,964,826 | 99,855,666 | |||||||
Increase in redeemable interest | |||||||||
Temasek transaction described in Note 13 | Virtu Financial, LLC and subsidiaries | $ 17,707 | 44,433 | $ (62,140) | $ (44,433) | |||||
Balance for Redeemable Interest at the end of the period (Virtu Financial, LLC and subsidiaries) at Dec. 31, 2014 | $ 294,433 | 294,433 | |||||||
Balance for Redeemable Interest at the end of the period at Dec. 31, 2014 | $ 294,433 | ||||||||
Increase (decrease) in members' equity | |||||||||
Net Income | $ 85,009 | ||||||||
Balance at the end of the period (in units) at Jun. 30, 2015 | 0 | 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from financing activities | |||
Cash and cash equivalents, beginning of period | $ 66,010,000 | ||
Cash and cash equivalents, end of period | 75,864,000 | $ 66,010,000 | |
Virtu Financial, LLC and subsidiaries | |||
Cash flows from operating activities | |||
Net income | 190,057,000 | 182,203,000 | $ 87,560,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 30,441,000 | 23,922,000 | 17,975,000 |
Amortization of purchased intangibles and acquired capitalized software | 211,000 | 1,011,000 | 71,654,000 |
Impairment of intangible assets | 0 | 0 | 1,489,000 |
Debt issue cost related to debt refinancing | 10,022,000 | ||
Amortization of debt issuance costs and deferred financing fees | 1,334,000 | 3,861,000 | 4,278,000 |
Lease abandonment | 3,255,000 | ||
Share based compensation | 14,234,000 | 13,441,000 | 8,398,000 |
Equipment writeoff | 378,000 | 1,968,000 | 109,000 |
Other | (2,204,000) | 240,000 | (427,000) |
Changes in operating assets and liabilities: | |||
Securities borrowed | 223,169,000 | (278,784,000) | 137,790,000 |
Securities purchased under agreements to resell | 131,145,000 | (92,526,000) | (66,497,000) |
Receivables from broker dealers and clearing organizations | 40,089,000 | (61,598,000) | 199,935,000 |
Trading assets, at fair value | 259,105,000 | (290,848,000) | (119,721,000) |
Other Assets ($8,205 and $7,138, at the fair value, as of December 31, 2014 and 2013, respectively) | 2,751,000 | (665,000) | (1,957,000) |
Securities loaned | (531,450,000) | 291,984,000 | 2,767,000 |
Securities sold under agreements to repurchase | (8,877,000) | (4,051,000) | 14,934,000 |
Payables to broker dealers and clearing organizations | 155,974,000 | 277,721,000 | (214,455,000) |
Trading liabilities, at fair value | (240,778,000) | 180,952,000 | 9,880,000 |
Accounts payable and accrued expenses and other liabilities | 7,120,000 | 508,000 | 3,479,000 |
Net cash provided by operating activities | 272,699,000 | 259,361,000 | 160,446,000 |
Cash flows from investing activities | |||
Development of capitalized software | (8,039,000) | (10,085,000) | (11,224,000) |
Acquisition of property and equipment | (28,120,000) | (21,931,000) | (15,832,000) |
Acquisition of business, net of cash acquired | (1,300,000) | ||
Net cash used in investing activities | (36,159,000) | (32,016,000) | (28,356,000) |
Cash flows from financing activities | |||
Member distributions | (140,652,000) | (433,400,000) | (134,408,000) |
Proceeds from short term borrowings | 54,000,000 | ||
Repayment of short term borrowings | (72,800,000) | (7,200,000) | |
Proceeds from senior secured credit facility | 253,792,000 | ||
Repayment of senior secured credit facility | (7,286,000) | (6,717,000) | (48,000,000) |
Debt issuance costs | (8,597,000) | ||
Net cash used in financing activities | (221,654,000) | (202,695,000) | (128,760,000) |
Effect of exchange rate changes on Cash and cash equivalents | (5,032,000) | 1,382,000 | 548,000 |
Net increase (decrease) in Cash and cash equivalents | 9,854,000 | 26,032,000 | 3,878,000 |
Cash and cash equivalents, beginning of period | 66,010,000 | 39,978,000 | 36,100,000 |
Cash and cash equivalents, end of period | 75,864,000 | 66,010,000 | 39,978,000 |
Supplementary disclosure of cash flow information | |||
Cash paid for interest | 61,293,000 | 44,848,000 | 52,106,000 |
Cash paid for taxes | 3,764,000 | 4,559,000 | 11,214,000 |
Non-cash investing activities | |||
Compensation to developers subject to capitalization of software (of which $10,565 and $903 were capitalized for the six months ended June 30, 2015 and 2014, respectively) | 5,112,000 | 4,459,000 | 3,147,000 |
Non-cash financing activities | |||
Issuance of Class A-2 interests from business combination described in Note 3 | 328,000 | ||
Discount on issuance of senior secured credit facility | 2,925,000 | ||
Repurchase of Class A-2 interests | (6,000,000) | ||
Virtu Financial, LLC and subsidiaries | Class A-2 | |||
Cash flows from financing activities | |||
Repurchase of Class A-2 interests | (916,000) | $ (573,000) | $ (352,000) |
Virtu Financial, LLC and subsidiaries | Class A-2 | Temasek Member | |||
Cash flows from financing activities | |||
Proceeds from issuance of interests | 3,048,000 | ||
Repurchase of membership interests | $ (3,048,000) |
Consolidated Statements of Ca83
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Fair value of other assets | $ 8,205 | ||
Virtu Financial, LLC and subsidiaries | |||
Fair value of other assets | 8,205 | $ 7,138 | |
Compensation to software developers capitalized | $ 1,719 | $ 1,633 | $ 1,828 |
Organization and Basis of Pre84
Organization and Basis of Presentation | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation Organization Virtu Financial, Inc. (“VFI” or, collectively with its wholly owned subsidiaries, the “Company”) is a Delaware holding company whose primary asset is its ownership of approximately 24.8% of the membership interests of Virtu Financial LLC (“Virtu Financial”). The Company was formed on October 16, 2013 for the purpose of completing certain reorganization transactions (the “Reorganization Transactions”), in order to carry on the business of Virtu Financial LLC (“Virtu Financial”) and to conduct a public offering. The Company is the sole managing member of Virtu Financial and operates and controls all of the businesses and affairs of Virtu Financial and, through Virtu Financial and its subsidiaries (the “Group”), continues to conduct the business now conducted by such subsidiaries. Virtu Financial was formed as a Delaware limited liability company on April 8, 2011 in connection with a corporate reorganization and acquisition of the outstanding equity interests of Madison Tyler Holdings, LLC (“MTH”), an electronic trading firm and market maker. In connection with the reorganization, the members of Virtu Financial’s predecessor entity, Virtu Financial Operating LLC (“VFO”), a Delaware limited liability company formed on March 19, 2008, exchanged their interests in VFO for interests in Virtu Financial and the members of MTH exchanged their interests in MTH for cash and/or interests in Virtu Financial. Virtu Financial’s principal subsidiaries include Virtu Financial BD LLC (“VFBD”), a self-clearing US broker-dealer, Virtu Financial Capital Markets LLC (“VFCM”), a self-clearing US broker-dealer and designated market maker on the New York Stock Exchange (“NYSE”) and the NYSE MKT (formerly NYSE Amex), Virtu Financial Global Markets LLC (“VFGM”), a US trading entity focused on futures and currencies, Virtu Financial Ireland Limited (“VFIL”), formed in Ireland, Virtu Financial Asia Pty Ltd (“VFAP”), formed in Australia, and Virtu Financial Singapore Pte. Ltd. (“VFSing”), formed in Singapore. The Company is a technology-enabled market maker and liquidity provider. The Company has developed a single, proprietary, multi-asset, multi-currency technology platform through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on numerous exchanges, markets and liquidity pools in numerous countries around the world. The Company is managed and operated as one business. Accordingly, the Company operates under one reportable segment. Basis of Presentation These condensed consolidated financial statements are presented in U.S. dollars and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10-Q and accounting standards generally accepted in the United States of America (“U.S. GAAP”) promulgated in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or the “Codification”). These condensed consolidated financial statements are unaudited and include all adjustments of a normal, recurring nature necessary to present fairly the financial condition as of June 30, 2015 and December 31, 2014, the results of operations and comprehensive income for the six months ended June 30, 2015 and 2014 and cash flows for the six months ended June 30, 2015 and 2014. The condensed consolidated financial statement information as of December 31, 2014 has been derived from the 2014 audited consolidated financial statements. The results of operations for interim periods are not necessarily indicative of results for the entire year. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s final prospectus filed with the SEC on April 16, 2015 (the “Prospectus”) for the offering of Class A common stock, par value $0.00001 per share (the “Class A common stock”). See Note 13 to the condensed consolidated financial statements for information regarding the Reorganization Transactions (as defined in Note 13) and the Company’s IPO. Principles of Consolidation, including Noncontrolling Interests The unaudited condensed consolidated financial statements include the accounts of VFI and its majority and wholly owned subsidiaries. As sole managing member of Virtu Financial, VFI exerts control over the Group’s operations. In accordance with ASC 810, Consolidation, the Company consolidates Virtu Financial and its subsidiaries’ consolidated financial statements and records the interests in Virtu Financial that VFI does not own as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation. | |
Virtu Financial, LLC and subsidiaries | ||
Organization and Basis of Presentation | 1. Organization and Basis of Presentation Organization Virtu Financial LLC (“VF” or, collectively with its wholly owned subsidiaries, the “Company”) was formed as a Delaware limited liability company on April 8, 2011 in connection with a corporate reorganization and acquisition of the outstanding equity interests of Madison Tyler Holdings, LLC (“MTH”), an electronic trading firm and market maker. In connection with the reorganization, the members of VF’s predecessor entity, Virtu Financial Operating LLC (“VFO”), a Delaware limited liability company formed on March 19, 2008, exchanged their interests in VFO for interests in VF and the members of MTH exchanged their interests in MTH for cash and/or interests in VF. VF’s principal subsidiaries include Virtu Financial BD LLC (“VFBD”), a self ‑clearing US broker ‑dealer, Virtu Financial Capital Markets LLC (“VFCM”), a self ‑clearing US broker ‑dealer and designated market maker on the New York Stock Exchange (“NYSE”) and the NYSE MKT (formerly NYSE Amex) and other proprietary trading firms, including Virtu Financial Global Markets LLC (“VFGM”), Virtu Financial Europe Limited (“VFE”), Virtu Financial Ireland Limited (“VFIL”), incorporated in Ireland, Virtu Financial Asia Pty Ltd. (“VFAP”), incorporated in Australia, and Virtu Financial Singapore Pte. Ltd. (“VFSing”), incorporated in Singapore. VFCM became a designated market maker (“DMM”) in connection with its acquisition of certain assets of Cohen Capital Group LLC (“CCG”) on December 9, 2011. The Company is a technology ‑enabled market maker and liquidity provider. The Company has developed a single, proprietary, multi ‑asset, multi ‑currency technology platform through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on numerous exchanges, markets and liquidity pools in numerous countries around the world. The Company is managed and operated as one business. Accordingly, the Company operates under one reportable segment. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Basic and diluted earnings per share are not presented since the ownership structure of the Company does not include a common unit of ownership. Principles of Consolidation The consolidated financial statements include the accounts of VF and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Summary of Significant Accoun85
Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The Company's condensed consolidated financial statements are prepared in conformity with US GAAP, which require management to make estimates and assumptions regarding fair value measurements including trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. Earnings Per Share Earnings per share (“EPS”) is computed in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s share-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares. Cash and Cash Equivalents The Company considers cash equivalents as highly liquid investments with original maturities of less than three months when acquired. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. Securities Borrowed and Securities Loaned The Company conducts securities borrowing and lending activities with external counterparties. In connection with these transactions, the Company receives or posts collateral. These transactions are collateralized by cash or securities. In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received. Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the condensed consolidated statements of financial condition. For these transactions, the interest received or paid by the Company is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the condensed consolidated statements of comprehensive income. Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company's policy that its custodian takes possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the condensed consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. Receivables from/Payables to Broker ‑Dealers and Clearing Organizations Amounts receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At June 30, 2015 and December 31, 2014, receivables from and payables to broker-dealers and clearing organizations primarily represent amounts due for unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing organizations or exchanges and balances due from or due to prime brokers in relation to the Company’s trading. The Company also offsets the outstanding principal balances on all short term credit facilities against amounts receivable from and payable to broker-dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, substantially all of the Company’s securities transactions, money balances, and security positions are transacted with several brokers. The Company is subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Company’s management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties. Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased The Company carries financial instruments owned, including those pledged as collateral, and financial instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded net on a trade-date basis in trading income on the condensed consolidated statements of comprehensive income. Fair Value Measurements At June 30, 2015 and December 31, 2014, substantially all of Company’s financial assets and liabilities, except for long-term borrowings and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short-term in nature and were carried at amounts that approximate fair value. The Company’s assets and liabilities have been categorized based upon a fair value hierarchy in accordance with ASC 820 ‑10, Fair Value Measurements and Disclosures. ASC 820 ‑10 defines fair value 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. Fair value measurements are not adjusted for transaction costs. The recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market is prohibited. ASC 820 ‑10 requires a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). 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; Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the six months ended June 30, 2015 and 2014. Derivative Instruments Derivative instruments used for trading purposes, including economic hedges of trading instruments, are carried at fair value. Fair values for exchange-traded derivatives, principally futures, are based on quoted market prices. Fair values for over-the-counter derivative instruments, principally forward contracts, are based on the values of the underlying financial instruments within the contract. The underlying derivative instruments are currencies which are actively traded. Derivative instruments used for economic hedging purposes include futures, forward contracts, and options. Unrealized gains or losses on these derivative instruments are recognized currently in the condensed consolidated statements of comprehensive income as trading income, net. The Company does not apply hedge accounting as defined in ASC 815, Derivatives and Hedging ; accordingly all derivative instruments are recorded at fair value with changes in fair values reflected in earnings. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisition of MTH which were recorded at fair value on the date of acquisition. Depreciation is provided using the straight ‑line method over estimated useful lives of the underlying asset. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. The useful lives of furniture and fixtures are as follows: Furniture, fixtures and equipment to years Leasehold improvements years or length of lease term, whichever is shorter Capitalized Software The Company accounts for the costs of computer software developed or obtained for internal use in accordance with ASC 350-40, Internal ‑Use Software . The Company capitalizes costs of materials, consultants, and payroll and payroll related costs for employees incurred in developing internal-use software. Costs incurred during the preliminary project and post-implementation stages are charged to expense. Management’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The Company’s capitalized software development costs were approximately $5.5 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. The related amortization expense was approximately $5.2 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. Additionally, in connection with the compensation charge related to Class B and East MIP interests recognized upon the IPO (Note 13), the Company capitalized and amortized $9.5 million and $8.0 million of the costs, respectively, which were included within charges related to share-based compensation at IPO, net, in the condensed consolidated statements of comprehensive income. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software on the accompanying condensed consolidated statements of financial condition and are amortized over a period of 1.4 to 2.5 years, which represents the estimated useful lives of the underlying software. Goodwill 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 for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We operate in one operating segment, which is our only reporting unit. The goodwill impairment test is a two-step process. The first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the 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 equal to that excess. The primary valuation methods we use to estimate the fair value of our reporting unit are the income and market approaches. In applying the income approach, projected available cash flows and the terminal value are discounted to present value to derive an indication of fair value of the business enterprise. The market approach compares the reporting unit to selected reasonably similar publicly-traded companies. The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. There were no triggering events that would have caused the Company to assess goodwill for impairment during the six months ended June 30, 2015 and 2014, respectively. Intangible Assets The Company amortizes finite-lived intangible assets over their estimated useful lives. Finite-lived intangible assets are tested for impairment annually or when impairment indicators are present, and if impaired, written down to fair value. Exchange Memberships and Stock Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value, in accordance with ASC 940-340, Financial Services — Broker and Dealers. Exchange stock includes shares that entitles the Company to certain trading privileges. The shares are marked to market with the corresponding gain or loss recorded in the condensed consolidated statements of comprehensive income. The Company’s exchange memberships and stock are included in other assets on the condensed consolidated statements of financial condition. Trading Income Trading income is comprised 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 condensed consolidated statements of comprehensive income. Interest and Dividends Income/Interest and Dividends Expense Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of interest earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related lines of credit. Dividends on financial instruments owned including those pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex-dividend date and interest is recognized on the accrual basis. Technology Services Technology services revenues consist of fees paid by third parties for licensing of our proprietary risk management and trading infrastructure technology and provision of associated management and hosting services. These fees include both upfront and annual recurring fees. Revenue from technology services is recognized once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized ratably over the contractual service period. Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying condensed consolidated statements of comprehensive income. Income Taxes Virtu Financial is a limited liability company and is treated as a pass-through entity for United States federal, state, and local income tax purposes. Accordingly, no provision for United States federal, state, and local income tax was required prior to the consummation of the Reorganization Transactions and the IPO. Subsequent to consummation of the Reorganization Transactions and the IPO, the Company is subject to U.S. federal, state and local income taxes on its taxable income, which is proportional to the percentage of Virtu Financial owned by the Company. The Company’s subsidiaries are subject to income taxes in the respective jurisdictions in which they operate. Certain of the Company’s 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. The Company recognizes 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 condensed 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. The Company’s 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 Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of June 30, 2015 and December 31, 2014 or the results of operations for the six months ended June 30, 2015 and 2014. Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to Accounting Standards Update 2011-05, Comprehensive Income. Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). OCI is comprised of revenues, expenses, gains and losses that are reported in the comprehensive income section of the consolidated statements of comprehensive income, but are excluded from reported net income. The Company’s OCI is comprised of foreign currency translation adjustments. Assets and liabilities of operations having non-U.S. dollar functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in other comprehensive income, a separate component of members’ equity. Share-Based Compensation The Company accounts for share-based compensation transactions with employees under the provisions of ASC 718, Compensation: Stock Compensation. ASC 718 requires a share-based payment transaction with employees to be 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. With respect to equity awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the 2015 Management Incentive Plan, the fair value of the stock option grants are determined through the application of the Black-Scholes-Merton model. Similarly, the fair value of the restricted stock units is determined based on the IPO per share price or the market price at the time of grant. The fair value of share based awards granted to employees is expensed based on the vesting conditions. Recent Accounting Pronouncements Revenue — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 (fiscal year 2018 for the Company) and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 on its condensed consolidated financial statements. Repurchase Agreements — In June, 2014, the FASB released ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendment changes the accounting for repurchase financing transactions and for repurchase-to-maturity transactions to secured borrowing accounting. The accounting changes are effective for the Company beginning in the first quarter of 2015. The effect of the accounting changes on transactions outstanding as of the effective date are required to be presented as a cumulative effect adjustment to retained earnings as January 1, 2015. The Company currently does not enter into these types of repurchase transactions. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual tenor of the agreements, as well as a discussion of the potential risks associated with the agreements and the related collateral pledged, and how those risks are managed. Additional disclosures are required for repurchase agreements, securities lending transactions, sales with a total return swap, and other similar transfers of financial assets that are accounted for as a sale. Compensation — In June 2014, the Emerging Issues Task Force (the “EITF”) of the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendment requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 (fiscal year 2016 for the Company). Earlier adoption is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Going Concern — In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new standard will be effective in the first annual period ending after December 15, 2016 (fiscal year 2017 for the Company). Earlier adoption is permitted. The Company will implement this new standard on the required effective date. Hybrid Financial Instruments — In November 2014, the EITF of the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. The ASU requires that for hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. An entity should use judgment based on an evaluation of all the relevant terms and features, and should consider the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company) and interim periods within fiscal years beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Debt Issuance Costs — In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, rather than as a deferred charge asset. The ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company), and interim periods within those fiscal years. Early adoption of the amendment is permitted and the Company has elected to early adopt this ASU effective as of June 30, 2015. The new guidance has been applied on a retrospective basis, wherein the accompanying condensed consolidated statements of financial condition have been adjusted to reflect the period-specific effects of applying the new guidance. Refer to Note 8 for additional information regarding the impact of this guidance on the Company’s condensed consolidated financial statements. | |
Virtu Financial, LLC and subsidiaries | ||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions regarding fair value measurements including trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. Cash and Cash Equivalents The Company considers cash equivalents as highly liquid investments with original maturities of less than three months when acquired. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. Securities Borrowed and Securities Loaned The Company conducts securities borrowing and lending activities with external counterparties. In connection with these transactions, the Company receives or posts collateral. These transactions are collateralized by cash or securities. In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received. Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the consolidated statements of financial condition. For these transactions, the interest received or paid by the Company is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the consolidated statements of comprehensive income. Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company’s policy that its custodian takes possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. Receivables from/Payables to Broker ‑Dealers and Clearing Organizations Amounts receivable from broker ‑dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At December 31, 2014 and 2013, receivables from and payables to broker ‑dealers and clearing organizations primarily represent amounts due for unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing organizations or exchanges and balances due from or due to prime brokers in relation to the Company’s trading. The Company also offsets the outstanding principal balances on all short term credit facilities against amounts receivable from and payable to broker ‑dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, substantially all of the Company’s securities transactions, money balances, and security positions are transacted with several brokers. The Company is subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Company’s management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties. Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased The Company carries financial instruments owned, including those pledged as collateral, and financial instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded net on a trade ‑date basis in trading income on the consolidated statements of comprehensive income. Fair Value Measurements At December 31, 2014 and 2013, substantially all of Company’s financial assets and liabilities, except for long ‑term borrowings and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short ‑term in nature and were carried at amounts that approximate fair value. The Company’s assets and liabilities have been categorized based upon a fair value hierarchy in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 ‑10, Fair Value Measurements and Disclosures . ASC 820 ‑10 defines fair value 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. Fair value measurements are not adjusted for transaction costs. The recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market is prohibited. ASC 820 ‑10 requires a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). 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; Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the years ended December 31, 2014 and 2013. Derivative Instruments Derivative instruments used for trading purposes, including economic hedges of trading instruments, are carried at fair value. Fair values for exchange ‑traded derivatives, principally futures, are based on quoted market prices. Fair values for over ‑the ‑counter derivative instruments, principally forward contracts, are based on the values of the underlying financial instruments within the contract. The underlying derivative instruments are currencies which are actively traded. Derivative instruments used for economic hedging purposes include futures, forward contracts, and options. Unrealized gains or losses on these derivative instruments are recognized currently in the consolidated statements of comprehensive income as trading income, net. The Company does not apply hedge accounting as defined in FASB ASC 815, Derivatives and Hedging ; accordingly all derivative instruments are recorded at fair value with changes in fair values reflected in earnings. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisition of MTH which were recorded at fair value on the date of acquisition. Depreciation is provided using the straight ‑line method over estimated useful lives of the underlying asset. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. The useful lives of furniture and fixtures are as follows: Furniture, fixtures and equipment 3 to years Leasehold improvements years or length of lease term, whichever is shorter Capitalized Software The Company accounts for the costs of computer software developed or obtained for internal use in accordance with ASC 350 ‑40, Internal ‑Use Software . The Company capitalizes costs of materials, consultants and payroll and payroll related costs for employees incurred in developing internal ‑use software. Costs incurred during the preliminary project and post ‑implementation stages are charged to expense. Management’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The Company’s capitalized software development costs were approximately $9.8 million, $10.1 million and $11.2 million for the years ended December 31, 2014, 2013 and 2012, respectively, with related amortization expense of approximately $10.4 million, $11.0 million and $9.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software on the accompanying consolidated statements of financial condition and are amortized over a period of 1.4 to 2.5 years, which represents the estimated useful lives of the underlying software. Goodwill 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 for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We operate in one operating segment, which is our only reporting unit. The goodwill impairment test is a two ‑step process. The first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the 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 equal to that excess. The primary valuation methods we use to estimate the fair value of our reporting unit are the income and market approaches. In applying the income approach, projected available cash flows and the terminal value are discounted to present value to derive an indication of fair value of the business enterprise. The market approach compares the reporting unit to selected reasonably similar publicly ‑traded companies. The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. Based on the results of the annual impairment tests performed, no goodwill impairment was recognized during the years ended December 31, 2014, 2013 and 2012, respectively. Intangible Assets The Company amortizes finite ‑lived intangible assets over their estimated useful lives. Finite ‑lived intangible assets are tested for impairment annually or when impairment indicators are present, and if impaired, written down to fair value. As a result of the acquisition of certain assets from CCG, the Company previously recorded an identifiable intangible asset, the rights for CCG to act as a DMM on the NYSE and the NYSE MKT (formerly NYSE Amex) (the “DMM” rights). The Company determined that the DMM rights were fully impaired as of December 31, 2012 and has written down the $1.5 million of remaining value of these assets to zero on its consolidated statements of comprehensive income for the year ended December 31, 2012. The Company has no indefinite ‑lived intangibles. Exchange Memberships and Stock Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value, in accordance with ASC 940 ‑340, Financial Services — Broker and Dealers . Exchange stock includes shares that the Company is required to hold in order to maintain certain trading privileges. The shares are marked to market with the corresponding gain or loss recorded in the consolidated statements of comprehensive income. During the years ended December 31, 2014, 2013 and 2012, respectively, the Company recorded an impairment charge of $0 , $0.6 million and $0.4 million on its membership seats which is recorded in operations and administrative expenses on the consolidated statements of comprehensive income. The Company’s exchange memberships and stock are included in other assets on the consolidated statements of financial condition. Trading Income Trading income consists of trading gains and losses that are recorded on a trade date basis and reported on a net basis. Trading income is comprised 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. Interest and Dividends Income/Interest and Dividends Expense Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of interest earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related lines of credit. Dividends on financial instruments owned including those pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex ‑dividend date and interest is recognized on the accrual basis. Technology Services Technology services revenues consist of fees paid by third parties for licensing of our proprietary risk management and trading infrastructure technology and provision of associated management and hosting services. These fees include both upfront and annual recurring fees. Revenue from technology services is recognized once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized ratably over the contractual service period. Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying consolidated statements of comprehensive income. Initial Public Offering Fees and Expenses Initial public offering fees and expenses reflect costs directly attributable to the Company’s initial public offering process, which was postponed in April 2014. The Company 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. Transaction Advisory Fees and Expenses Transaction advisory fees and expenses reflect professional fees incurred by the Company in connection with the Temasek Transaction, which was consummated on December 31, 2014, as described in Note 13. Income Taxes The Company is a limited liability company and is treated as a pass ‑through entity for United States federal, state, and local income tax purposes. Accordingly, no provision for income taxes is required. Certain of the Company’s 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. The Company recognizes 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. The Company’s 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 Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of December 31, 2014 and 2013 or the results of operations for the years ended December 31, 2014, 2013 and 2012. Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the consolidated statements of comprehensive income pursuant to Accounting Standards Update (“ASU”) 2011 ‑05, Comprehensive Income . Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). OCI is comprised of revenues, expenses, gains and losses that are reported in the comprehensive income section of the consolidated statements of comprehensive income, but are excluded from reported net income. The Company’s OCI is comprised of foreign currency translation adjustments. Assets and liabilities of operations having non ‑U.S. dollar functional currencies are translated at year ‑end exchange rates, and income statement accounts are translated at weighted average exchange rates for the year. Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in other comprehensive income, a separate component of members’ equity. Share ‑Based Compensation The Company accounts for share ‑based compensation transactions with employees under the provisions of ASC 718, Compensation: Stock Compensation . ASC 718 requires a share ‑based payment transaction with employees to be measured based on the fair value of equity instruments issued. The fair value of awards issued for compensation is 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. The fair value of share based awards granted to employees is expensed based on the vesting conditions. Recent Accounting Pronouncements Balance Sheet (Topic 210) — In December 2011, the FASB issued ASU 2011 ‑11, Disclosures about Offsetting Assets and Liabilities . The amended standard requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. In January 2013, the FASB issued ASU 2013 ‑01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarified that the scope of ASU 2011 ‑11 is limited to include derivatives accounted for in accordance with Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset or subject to an enforceable master netting arrangement or similar agreement. The Company has adopted the provisions of ASU 2011 ‑11 and the adoption did not have a material impact on the consolidated financial statements of the Company other than additional disclosures. Comprehensive Income — In February 2013, the FASB issued ASU 2013 ‑02, Comprehensive Income. The amendment created new disclosure requirements requiring entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. The Company has retrospectively adopted the provision of ASU 2013 ‑02 on January 1, 2013 and the adoption did not have a material impact on the consolidated financial statements of the Company other than additional disclosures. Income Taxes — In July 2013, the FASB issued an ASU to clarify the financial statement presentation of an unrecognized tax benefit when a NOL carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a NOL carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. The ASU was effective for reporting periods beginning after December 15, 2013. The adoption of this ASU did not have an impact on the Company’s Consolidated Financial Statements. Revenue — In May 2014, the FASB issued ASU No. 2014 ‑09, Revenue from Contracts with Customers. ASU 2014 ‑09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014 ‑09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014 ‑09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016, and for nonpublic entities for annual reporting periods beginning after December 15, 2017 (fiscal year 2018 for the Company) and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014 ‑09. The Company is currently evaluating the potential effects of the adoption of ASU 2014 ‑09 on its Consolidated Financial Statements. Repurchase Agreements — In June, 2014, the FASB released ASU No. 2014 ‑11, Repurchase ‑to ‑Maturity Transactions, Repurchase Financings, and Disclosures . The amendment changes the accounting for repurchase financing transactions and for repurchase ‑to ‑maturity transactions to secured borrowing accounting. The accounting changes are effective for the Company beginning in the first quarter of 2015. The effect of the accounting changes on transactions outstanding as of the effective date are required to be presented as a cumulative effect adjustment to retained earnings as of January 1, 2015. The Company is currently evaluating the impact of the new amendment but believes the effect on the consolidated statements of financial condition and comprehensive income will be immaterial, as the Company currently does not enter into these types of repurchase transactions. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual tenor of the agreements, as well as a discussion of the potential risks associated with the agreements and the related collateral pledged, and how those risks are managed. Additional disclosures are required for repurchase agreements, securities lending transactions, sales with a total return swap and other similar transfers of financial assets that are accounted for as a sale. The new disclosures are required to be presented beginning in the second quarter of 2015. Compensation — In June 2014, the Emerging Issues Task Force (the “EITF”) of the FASB issued ASU 2014 ‑12, Accounting for Share ‑Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period . The amendment requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. Going Concern — In August 2014, the FASB issued ASU 2014 ‑15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new standard will be effective in the first annual period ending after December 15, 2016. Earlier adoption is permitted. The Company will implement this new standard on the required effective date. Hybrid Financial Instruments — In November 2014, the EITF of the FASB issued ASU 2014 ‑16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity . The ASU requires that for hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. An entity should use judgment based on an evaluation of all the relevant terms and features, and should consider the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company) and interim periods within fiscal years beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2014 | |
Virtu Financial, LLC and subsidiaries | |
Acquisitions | 3. Acquisitions On September 14, 2012, the Company acquired the European Exchange ‑traded funds (“ETF”) Market Making assets of Nyenburgh Holding B.V., (“Nyenburgh”) which include market making relationships with European ETF issuers and trading relationships with over ‑the ‑counter counterparties. The total purchase of $2.3 million was comprised of $1.9 million in cash and an equity award to a shareholder of Nyenburgh with a fair value of $0.4 million. The total purchase price was allocated to intangible assets of $1.9 million and goodwill of $0.4 million. |
Goodwill and Intangible Asset87
Goodwill and Intangible Assets | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets There were no changes in the carrying amount of goodwill for the six months ended June 30, 2015 and 2014. No goodwill impairment was recognized in the six months ended June 30, 2015 and 2014. Acquired intangible assets consisted of the following as of June 30, 2015 and December 31, 2014: As of June 30, 2015 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — 1.4 to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ As of December 31, 2014 (in thousands) Gross Carrying Accumulated Net Carrying Useful Lives Amount Amortization Amount (Years) Purchased technology $ $ $ — 1.4 to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ Amortization expense relating to finite-lived intangible assets was approximately $ 0.1 million and $ 0.1 million for the six months ended June 30, 2015 and 2014, respectively. This is included in amortization of purchased intangibles and acquired capitalized software in the accompanying condensed consolidated statements of comprehensive income. | |
Virtu Financial, LLC and subsidiaries | ||
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets The carrying amount of goodwill was $715.4 million as of December 31, 2014 and 2013, respectively. No goodwill impairment was recognized in the years ended December 31, 2014, 2013 and 2012. Acquired intangible assets consisted of the following as of December 31, 2014 and 2013: As of December 31, 2014 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — to ETF issuer relationships ETF buyer relationships $ $ $ As of December 31, 2013 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — to ETF issuer relationships ETF buyer relationships $ $ $ Amortization expense relating to finite ‑lived intangible assets was approximately $0.2 million, $1.0 million and $71.1 million for the years ended December 31, 2014, 2013 and 2012, respectively, and is included in amortization of purchased intangibles and acquired capitalized software in the accompanying consolidated statements of comprehensive income. As discussed in Note 2, the Company tested its intangible assets for impairment as of December 31, 2012 and determined the DMM rights to be fully impaired and have written down such assets to zero on its consolidated statements of comprehensive income for the year ended December 31, 2012. The Company had no impairment on its intangible assets for the years ended December 31, 2014 or 2013. |
Receivables from_Payables to 88
Receivables from/Payables to Broker-Dealers and Clearing Organizations | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Receivables from/Payables to Broker-Dealers and Clearing Organizations | 6. Receivables from/Payables to Broker-Dealers and Clearing Organizations The following is a summary of receivables from and payables to brokers-dealers and clearing organizations at June 30, 2015 and December 31, 2014: June 30, December 31, (in thousands) 2015 2014 Assets Due from prime brokers $ $ Deposits with clearing organizations Net equity with futures commission merchants Unsettled trades Securities failed to deliver Total receivables from broker-dealers and clearing organizations $ $ Liabilities Due to prime brokers $ $ Net equity with futures commission merchants Unsettled trades Securities failed to receive Total payables to broker-dealers and clearing organizations $ $ Included as a deduction from “Due from prime brokers” and “Net equity with futures commission merchants” is the outstanding principal balance on all of the Company’s short-term credit facilities of approximately $206.4 million and $183.0 million as of June 30, 2015 and December 31, 2014, respectively. The loan proceeds from the credit facilities are available only to meet the initial margin requirements associated with the Company’s ordinary course futures and other trading positions, which are held in the Company’s trading accounts with an affiliate of the respective financial institutions. The credit facilities are fully collateralized by the Company’s trading accounts and deposit accounts with these financial institutions. “Securities failed to deliver” and “Securities failed to receive” include amounts with a clearing organization and other broker-dealers. | |
Virtu Financial, LLC and subsidiaries | ||
Receivables from/Payables to Broker-Dealers and Clearing Organizations | 5. Receivables from/Payables to Broker ‑Dealers and Clearing Organizations The following is a summary of receivables from and payables to brokers ‑dealers and clearing organizations at December 31, 2014 and 2013: December 31, (in thousands) 2014 2013 Assets Due from prime brokers $ $ Deposits with clearing organizations Net equity with futures commission merchants Unsettled trades Securities failed to deliver Total receivables from broker-dealers and clearing organizations $ $ Liabilities Due to prime brokers $ $ Net equity with futures commission merchants Unsettled trades Securities failed to receive Total payables to broker-dealers and clearing organizations $ $ Included in “Due from prime brokers” and “Net equity with futures commission merchants” is the outstanding principal balance on all of the Company’s short ‑term credit facilities in the amount of $182.9 million and $241.1 million as of December 31, 2014 and 2013, respectively. The loan proceeds from the credit facilities are available only to meet the initial margin requirements associated with the Company’s ordinary course futures and other trading positions, which are held in the Company’s trading accounts with an affiliate of the respective financial institutions. The credit facilities are fully collateralized and offset against the Company’s trading accounts and deposit accounts with these financial institutions. “Securities failed to deliver” and “Securities failed to receive” include amounts with a clearing organization and other broker ‑dealers. |
Collateralized Transactions89
Collateralized Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Collateralized Transactions | 7. Collateralized Transactions The Company is permitted to sell or repledge securities received as collateral and use these securities to secure repurchase agreements, enter into securities lending transactions or deliver these securities to counterparties or clearing organizations to cover short positions. At June 30, 2015 and December 31, 2014, substantially all of the securities received as collateral have been repledged. Amounts relating to collateralized transactions at June 30, 2015 and December 31, 2014 are summarized as follows: June 30, December 31, (In thousands) 2015 2014 Securities received as collateral: Securities borrowed $ $ Securities purchased under agreements to resell $ $ In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements. Financial instruments owned and pledged, where the counterparty has the right to repledge, at June 30, 2015 and December 31, 2014 consisted of the following: June 30, December 31, (In thousands) 2015 2014 Equities $ $ Exchange traded notes $ $ | |
Virtu Financial, LLC and subsidiaries | ||
Collateralized Transactions | 6. Collateralized Transactions The Company is permitted to sell or repledge securities received as collateral and use these securities to secure repurchase agreements, enter into securities lending transactions or deliver these securities to counterparties or clearing organizations to cover short positions. At December 31, 2014 and 2013, substantially all of the securities received as collateral have been repledged. Amounts relating to collateralized transactions at December 31, 2014 and 2013 are summarized as follows: December 31, (in thousands) 2014 2013 Securities received as collateral: Securities borrowed $ $ Securities purchased under agreements to resell $ $ In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements. Financial instruments owned and pledged, where the counterparty has the right to repledge, at December 31, 2014 and 2013 consisted of the following: December 31, (in thousands) 2014 2013 Equities $ $ Exchange traded notes U.S. government obligations — $ $ |
Property, Equipment and Capital
Property, Equipment and Capitalized Software | 12 Months Ended |
Dec. 31, 2014 | |
Virtu Financial, LLC and subsidiaries | |
Property, Equipment and Capitalized Software | 7. Property, Equipment and Capitalized Software Property, equipment and capitalized software consisted of the following at December 31, 2014 and 2013: December 31, (in thousands) 2014 2013 Capitalized software costs $ $ Leasehold improvements Furniture and equipment Land — Less: Accumulated depreciation and amortization Total property, equipment and capitalized software, net $ $ Depreciation expense for property and equipment for the years ended December 31, 2014, 2013 and 2012 was approximately $20.0 million, $12.9 million and $8.6 million, respectively, and is included within depreciation and amortization expense in the accompanying consolidated statements of comprehensive income. Amortization expense for capitalized software for years ended December 31, 2014, 2013 and 2012 was approximately $10.4 million, $11.0 million and $9.4 million, respectively, and is included within depreciation and amortization expense in the accompanying consolidated statements of comprehensive income. |
Borrowings91
Borrowings | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Borrowings | 8. Borrowings Broker-Dealer Credit Facilities The Company is a party to two secured credit facilities with the same financial institution to finance overnight securities positions purchased as part of its ordinary course broker-dealer market making activities. One of the facilities (the “Uncommitted Facility"), is provided on an uncommitted basis and is available for borrowings by the Company's broker-dealer subsidiaries up to a maximum amount of $100.0 million. In connection with this credit facility, the Company has entered into demand promissory notes dated February 20, 2013. The loans provided under the Uncommitted Facility are collateralized by the Company's broker-dealer trading and deposit accounts with the same financial institution and, bear interest at a rate set by the financial institution on a daily basis ( 1.13% at June 30, 2015 and 1.12% at December 31, 2014). The Uncommitted Facility has a 364 -day term. The Company is party to another facility (the "Committed Facility") with the same financial institution dated July 22, 2013 and subsequently amended on March 26, 2014, July 21, 2014 and April 24, 2015, which is provided on a committed basis and is available for borrowings by one of the Company's broker-dealer subsidiaries up to a maximum of the lesser of $75.0 million or an amount determined based on agreed advance rates for pledged securities. The Committed Facility is subject to certain financial covenants, including a minimum tangible net worth, a maximum total assets to equity ratio, and a minimum excess net capital, each as defined. The Committed Facility bears interest at a rate per annum at the Company's election equal to either an adjusted LIBOR rate or base rate , plus a margin of 1.25% per annum, and has a term of 364 days. As of June 30, 2015 and December 31, 2014, the Company did not have any outstanding principal balance on the Uncommitted Facility or the Committed Facility. Interest expense for the six months ended June 30, 2015 and 2014 was approximately $0.4 million and $0.2 million, respectively. Interest expense is included within interest and dividends expense in the accompanying condensed consolidated statements of comprehensive income. Short-Term Credit Facilities The Company maintains short term credit facilities with various prime brokers and other financial institutions from which it receives execution or clearing services. The proceeds of these facilities are used to meet margin requirements associated with the products traded by the Company in the ordinary course, and amounts borrowed are collateralized by the Company’s trading accounts with the applicable financial institution. The aggregate amount available for borrowing under these facilities was $476.0 million and $440.0 million, the outstanding principal was $228.9 million and $183.0 million, and borrowings bore interest at a weighted average interest rate of 2.30% and 1.80% per annum, as June 30, 2015 and December 31, 2014, respectively. Interest expense in relation to the facilities for the six months ended June 30, 2015 and June 30, 2014 was approximately $2.7 million and $1.6 million, respectively. Interest expense is recorded within interest and dividends expense in the accompanying condensed consolidated statements of comprehensive income. Senior Secured Credit Facility On July 8, 2011, Virtu Financial, its wholly owned subsidiary, VFH Parent LLC (“VFH”), and each of its unregulated domestic subsidiaries entered into the credit agreement (the “Credit Agreement”) among the Borrower, Virtu Financial, Credit Suisse AG, as administrative agent, and the other parties thereto. The credit facility funded a portion of the MTH acquisition with a term loan in the amount of $320.0 million to VFH. The credit facility was issued at a discount of 2.0% or $313.6 million, net of $6.4 million discount. The credit facility was initially subject to quarterly principal payments beginning on December 31, 2011 with the unpaid principal payable on maturity on July 8, 2016. Under the terms of the loan, VFH is subject to certain financial covenants, including a total net leverage ratio and an interest coverage ratio, as defined in the Credit Agreement. VFH is also subject to contingent principal payments based on excess cash flow, as defined in the Credit Agreement, and certain other triggering events. Borrowings are collateralized by substantially all the assets of the Company, other than the equity interests in and assets of its registered broker-dealer, regulated and foreign subsidiaries, but including 100% of the non-voting stock and 65% of the voting stock of Virtu Financial’s or its domestic subsidiaries’ direct foreign subsidiaries. The Credit Agreement was amended on February 5, 2013, May 1, 2013 and November 8, 2013. The amendments resulted in a decreased interest rate, changes in certain operating covenants, and an increase in principal amount outstanding by $150.0 million on May 1, 2013 and $106.7 million on November 8, 2013, respectively. Additionally, the amendments reduced the annual amortization obligation from 15% of the original principal amount to approximately 1% of the outstanding principal amount as of November 8, 2013, which was $510.0 million. The terms of the amended credit facility are otherwise substantially similar terms to the original credit facility, except as set forth below. Term loans outstanding under the Credit Agreement bear interest at a rate per annum at the Company's election equal to either (i) the greatest of (a) the prime rate in effect, (b) the federal funds effective rate (as defined in the Credit Agreement) plus 0.5% (c) the adjusted LIBOR rate (as defined in the Credit Agreement) for a Eurodollar borrowing with an interest period of one month plus 1% , and (d) 2.25% plus, in each case, 3.0% , or (ii) the greater of (x) the adjusted LIBOR rate for the interest period in effect and (y) 1.25% , plus 4.0% . Pursuant to the Amendment (as defined below), each incremental spread was reduced by 0.50% upon the consummation of the Company’s IPO. The rate at June 30, 2015 was 5.25% . Aggregate future required minimum principal payments based on the terms of this loan at June 30, 2015 were as follows: (in thousands) 2015 $ 2016 2017 2018 and thereafter Total maturities of long-term debt $ Net carrying amount of deferred financing fees capitalized in connection with the financing were approximately $4.5 million and $5.1 million, respectively, as of June 30, 2015 and December 31, 2014, which are included as a deduction to senior secured credit facility in the accompanying condensed consolidated statements of financial condition. The Company retrospectively adopted ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs , wherein the accompanying condensed consolidated statements of financial condition have been adjusted to reflect the period specific effects of applying the new guidance. After retrospectively applying the new guidance, the Company reclassified approximately $5.1 million in deferred financing fees as of December 31, 2014 previously included within other assets to senior secured credit facility in the accompanying condensed consolidated statements of financial condition. Amortization expense related to the deferred financing fees was approximately $0.6 million and $0.5 million for the six months ended June 30, 2015 and 2014, respectively. Amortization expense is included within financing interest expense on senior secured credit facility in the accompanying condensed consolidated statements of comprehensive income. Accretion related to the net carrying amount of debt discount of $1.7 million and $1.9 million, respectively, as of June 30, 2015 and December 31, 2014, and for the six months ended June 30, 2015 and 2014 were approximately $0.2 million and $0.2 million, respectively. The accretion is included within financing interest expense on senior secured credit facility in the accompanying condensed consolidated statements of comprehensive income. On April 15, 2015, the Company, Virtu Financial, and each unregulated domestic subsidiary of Virtu Financial, entered into an amendment agreement (the “Amendment”) to the Credit Agreement. The Amendment provided for a revolving credit facility with aggregate commitments by revolving lenders of $100.0 million, available upon the consummation of the IPO and the payment of relevant fees and expenses. The revolving credit facility is secured pari passu with the term loans outstanding under the Credit Agreement and is subject to the same financial covenants and negative covenants. Borrowings under the revolving facility bear interest, at our election, at either (i) the greatest of (a) the prime rate in effect, (b) the federal funds effective rate plus 0.5% (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1% and (d) 2.25% , plus, in each case, 2.0% , or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) 1.25% , plus, in each case, 3.0% . We will also pay a commitment fee of 0.50% per annum on the average daily unused portion of the facility. Deferred financing fees capitalized in connection with the revolving credit facility were approximately $0.9 million, which is included as a deduction to senior secured credit facility in the accompanying condensed consolidated statement of financial condition. The net carrying amounts for the deferred financing fees capitalized in connection with the revolving credit facility were approximately $0.8 million and $0 , respectively, as of June 30, 2015 and December 31, 2014, which are included as a deduction to senior secured credit facility in the accompanying condensed consolidated statements of financial condition. Amortization expenses related to the deferred financing fees in connection with the revolving credit facility were approximately $0.1 million and $0 , for the six months ended June 30, 2015 and 2014, respectively. | |
Virtu Financial, LLC and subsidiaries | ||
Borrowings | 8. Borrowings Broker ‑Dealer Credit Facilities The Company is a party to multiple credit facilities with a financial institution to finance overnight securities positions purchased as part of its ordinary course broker ‑dealer market making activities. One of the facilities is provided on an uncommitted basis and is available for borrowings by the Company’s broker ‑dealer subsidiaries up to a maximum amount of $100.0 million. In connection with this credit facility, the Company entered into a demand promissory note dated August 8, 2012. The loans provided under the facility are collateralized by the Company’s broker ‑dealer trading and deposit accounts with the same financial institution and, in the case of the uncommitted facilities, bears interest at a rate set by the financial institution on a daily basis (1.12% at December 31, 2014 and 1.04% at December 31, 2013). The Company subsequently entered into another facility with the same financial institution dated July 22, 2013 which is provided on a committed basis and is available for borrowings by one of the Company’s broker ‑dealer subsidiaries up to a maximum of the lesser of $50.0 million or an amount determined based on agreed advance rates for pledged securities. The committed facility bears interest at a rate per annum at the Company’s election equal to either an adjusted LIBOR rate or base rate , plus a margin of 1.25% per annum. As of December 31, 2014 and 2013, the outstanding principal balance on the uncommitted facility was $0 and $72.8 million, respectively, which in each case was recorded within short ‑term borrowings in the accompanying consolidated statements of financial condition. As of December 31, 2014 and 2013, the Company did not have any outstanding principal balance on the committed facility. Interest expense for the years ended December 31, 2014 and 2013 was approximately $0.5 million and $0.3 million, respectively, and is included within interest and dividends expense in the accompanying consolidated statements of comprehensive income. The Company was a party to a broker ‑dealer credit facility with a financial institution to finance overnight securities positions purchased as part of its ordinary course broker ‑dealer market making activities. In connection with this credit facility, the Company entered into a demand promissory note dated March 20, 2009. The promissory note was payable on demand with the outstanding balance being swept into a separate broker ‑dealer day loan credit facility with the same financial institution. The loan was collateralized by the Company’s broker ‑dealer trading and deposit accounts with the same financial institution and bore interest at rate set by the financial institution on a daily basis. Any balance that was not paid upon demand bore interest at the higher of the rate in effect for such loan plus 2% or the prime rate plus 2% . The credit facility was terminated as of October 5, 2012. Interest expense for the year ended December 31, 2012 was approximately $0.3 million, and is included within interest and dividends expense in the accompanying consolidated statements of comprehensive income. Short ‑Term Credit Facilities The Company entered into a credit facility with a financial institution on April 26, 2010, amended on December 10, 2010 and July 1, 2011. The loan proceeds of the credit facility are available only for meeting the initial margin requirements associated with the Company’s ordinary course futures trading positions held in its trading account with an affiliate of the financial institution, and the amount available for borrowing is the lesser of $35.0 million or 80% of the initial margin requirement. These borrowings are collateralized by the Company’s trading accounts and deposit accounts with the financial institution and its brokerage affiliate. The loan is payable on demand and interest on daily unpaid principal balances bears interest at rate per annum quoted by the financial institution each day ( 2.05% at December 31, 2014 and 1.68% at December 31, 2013). Any balance that is not paid upon demand bears interest at the higher of the rate in effect for such loan plus 2% or the prime rate plus 2% . As of December 31, 2014 and 2013, the outstanding principal balance on the line was approximately $26.7 million and $13.3 million, respectively, which was recorded within receivables from broker ‑dealers and clearing organizations in the accompanying consolidated statements of financial condition. Interest expense for the years ended December 31, 2014, 2013 and 2012 was approximately $0.5 million, $0.5 million and $0.6 million, respectively, and recorded within interest and dividends expense in the accompanying consolidated statements of comprehensive income. The Company entered into a $200.0 million credit facility with a financial institution on June 29, 2011 which was increased to $300.0 million on February 17, 2012. The loan proceeds of the credit facility are available only for meeting margin requirements associated with the products traded by the Company in the ordinary course using the financial institution’s affiliate as its prime broker. The credit facility is collateralized by the Company’s trading accounts for these products with the financial institution’s affiliate and bears interest at 1.00% per annum in excess of the federal funds target rate of 0.25% . The credit facility is subject to certain financial covenants, including minimum account balances and loan ratios, as defined. The outstanding principal balance on the line of credit was approximately $124.3 million and $206.1 million as of December 31, 2014 and 2013, respectively, and recorded within receivables from broker ‑dealers and clearing organizations in the accompanying consolidated statements of financial condition. Interest expense for the years ended December 31, 2014, 2013 and 2012 was approximately $2.1 million, $2.2 million and $2.2 million, respectively, and recorded within interest and dividends expense in the accompanying consolidated statements of comprehensive income. The Company entered into a credit facility with a financial institution on August 8, 2011 with approximately $10.0 million available for borrowing. The loan proceeds of the credit facility are available only to finance the Company’s ordinary course securities positions held in its trading account with the financial institution’s affiliate. The credit facility is collateralized by the securities held in such account and bears interest at the rate published by Bank of Mexico on business day immediately preceding the date on which the calculation is made. There were no outstanding balances as of December 31, 2014 and 2013. Interest expense for the years ended December 31, 2014, 2013 and 2012 was approximately $0.1 million, $0.05 million and $0 , respectively, and recorded within interest and dividends expense in the accompanying consolidated statements of comprehensive income. The Company entered into a credit facility with a financial institution on March 6, 2013 whereby the loan proceeds of the credit facility are available only for meeting the initial margin requirements associated with the Company’s ordinary course futures trading positions held in its trading account with an affiliate of the financial institution, and the amount available for borrowing is the lesser of $40.0 million or 80% of the initial margin requirement. These borrowings are collateralized by the Company’s trading accounts and deposit accounts with the financial institution and its brokerage affiliate. The loan is payable on demand and interest on daily unpaid principal balances bears interest at 2.00% per annum in excess of the interest period average of daily opening federal funds target rate ( 2.12% at December 31, 2014 and 2.08% at December 31, 2013, respectively). As of December 31, 2014 and 2013, the outstanding principal balance on the line was approximately $31.9 million and $21.2 million, respectively, which was recorded within receivables from broker ‑dealers and clearing organizations in the accompanying consolidated statements of financial condition. Interest expense for the years ended December 31, 2014 and 2013 was approximately $0.5 million and $0.4 million, respectively and recorded within interest and dividends expense in the accompanying consolidated statements of comprehensive income. The Company entered into a $20.0 million credit facility with a financial institution on June 24, 2014, amended on December 1, 2014. The loan proceeds of the credit facility are available only for meeting margin requirements associated with the products traded by the Company in the ordinary course using the financial institution’s affiliate as its prime broker. The credit facility is collateralized by the Company’s trading accounts for these products with the financial institution’s affiliate and bears interest at 1.10% per annum in excess of USD LIBOR. The credit facility is subject to certain financial covenants, including minimum account balances and loan ratios, as defined. The outstanding principal balance on the line of credit was $0.1 million as of December 31, 2014 and recorded within receivables from broker ‑dealers and clearing organizations in the accompanying consolidated statements of financial condition. Interest expense for the year ended December 31, 2014 was approximately $0.02 million and recorded within interest and dividends expense in the accompanying consolidated statements of comprehensive income. The Company entered into a $3.0 million credit facility with a financial institution on August 6, 2014, which was increased to $5.0 million on October 17, 2014. The loan proceeds of the credit facility are available only to finance the Company’s ordinary course securities positions held in its trading account with the financial institution’s affiliate. The credit facility is collateralized by the Company’s trading accounts for these products with the financial institution’s affiliate and bears interest at 9% per annum, subject to change by the financial institution from time to time with at least ten business days’ notice. There were no outstanding balances as of December 31, 2014. Interest expense for the year ended December 31, 2014 was approximately $0.1 million and recorded within interest and dividends expense in the accompanying consolidated statements of comprehensive income. Senior Secured Credit Facility On July 8, 2011, the Company funded a portion of the MTH acquisition with a term loan provided by a syndicate of financial institutions in the amount of $320.0 million to the Company’s wholly owned subsidiary, VFH Parent LLC (“VFH”). The credit facility was issued at a discount of 2.0% of $313.6 million, net of $6.4 million discount. The credit facility was initially subject to quarterly principal payments beginning on December 31, 2011 with the unpaid principal payable on maturity on July 8, 2016. Under the terms of the loan, VFH is subject to certain financial covenants, including a total net leverage ratio and an interest coverage ratio, as defined in the credit agreement. VFH is also subject to contingent principal payments based on excess cash flow, as defined in the credit agreement, and certain other triggering events. Borrowings are collateralized by substantially all the assets of the Company, other than the equity interests in and assets of its registered broker ‑dealer and foreign subsidiaries, but including 100% of the non ‑voting stock and 65% of the voting stock of the Company’s or its domestic subsidiaries’ direct foreign subsidiaries. The credit facility was amended on February 5, 2013, May 1, 2013 and November 8, 2013. The amendments resulted in a decreased interest rate, changes in certain operating covenants, and an increase in principal amount outstanding by $150.0 million on May 1, 2013 and $106.7 million on November 8, 2013, respectively. Additionally, the amendments reduced the annual amortization obligation from 15% of the original principal amount to approximately 1% of the outstanding principal amount as of November 8, 2013, which was $510.0 million. The terms of the amended credit facility are otherwise substantially similar terms to the original credit facility, except as set forth below. The credit facility bears interest at a rate per annum at the Company’s election equal to either (i) the greatest of (a) the prime rate in effect, (b) the federal funds effective rate (as defined in the credit agreement) plus 0.5% (c) the adjusted LIBOR rate (as defined in the credit agreement) for a Eurodollar borrowing with an interest period of one month plus 1% , and (d) 2.25% plus, in each case , 3.5% , or (ii) the greater of (x) the adjusted LIBOR rate for the interest period in effect and (y) 1.25% , plus 4.5% . Pursuant to the amendment, each incremental spread will be reduced by 0.50% upon the consummation of a qualifying initial public offering. The rate at December 31, 2014 was 5.75% . As a result of the amendments in 2013, the Company recognized a loss of $5.5 million on extinguishment of a portion of its unamortized debt issue costs and debt discount for the year ended December 31, 2013, which is included within debt issue cost related to debt refinancing on the accompanying consolidated statements of comprehensive income. Aggregate future required principal payments based on the terms of this loan at December 31, 2014 were as follows: (in thousands) 2015 $ 2016 2017 2018 and thereafter Total maturities of long-term debt $ Net carrying amount of deferred financing fees capitalized in connection with the financing were approximately $5.1 million and $6.0 million, respectively, as of December 31, 2014 and 2013, which are included within other assets in the accompanying consolidated statements of financial condition. Amortization expense related to the deferred financing fees was approximately $1.0 million, $1.6 million and $2.6 million for the years ended December 31, 2014, 2013 and 2012, respectively, and are included within financing interest expense on senior secured credit facility in the accompanying consolidated statements of comprehensive income. Accretion related to the net carrying amount of debt discount of $1.9 million and $2.3 million, respectively, as of December 31, 2014 and 2013, was approximately $0.4 million, $0.7 million and $1.7 million for the years ended December 31, 2014, 2013 and 2012, and is included within financing interest expense on senior secured credit facility in the accompanying consolidated statements of comprehensive income. |
Financial Assets and Liabilit92
Financial Assets and Liabilities | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Financial Assets and Liabilities | 9. Financial Assets and Liabilities At June 30, 2015 and December 31, 2014, substantially all of Company's financial assets and liabilities, except for the senior secured credit facility and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short-term in nature and were carried at amounts that approximate fair value. The Company determined that the carrying value of the Company's senior secured credit facility approximates fair value as of June 30, 2015 and December 31, 2014 based on the quoted over-the-counter market prices provided by the issuer of the senior secured credit facility, which was categorized as Level 2. The fair value of equities, U.S. government obligations and exchange traded notes is estimated using recently executed transactions and market price quotations in active markets and are categorized as Level 1 with the exception of inactively traded equities which are categorized as Level 2. Fair value of the Company's derivative contracts is based on the indicative prices obtained from the banks that are counterparties to these contracts, as well as management's own analyses. The indicative prices have been independently validated through the Company's risk management systems, which are designed to check prices with information independently obtained from exchanges and venues where such financial instruments are listed or to compare prices of similar instruments with similar maturities for listed financial futures in foreign exchange. At June 30, 2015 and December 31, 2014, the Company's derivative contracts and non-U.S. government obligations have been categorized as Level 2. Transfers in or out of levels are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the six months ended June 30, 2015 and 2014. Fair value measurements for those items measured on a recurring basis are summarized below as of June 30, 2015: June 30, 2015 Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Counter- Identical Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and Non-U.S. government obligations — — Exchange traded notes — — — Interest rate swaps — — — Currency forwards — — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and Non-U.S. government obligations — — — Exchange traded notes — — — Interest rate swaps — — — Currency forwards — — Options — — — $ $ $ — $ $ Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2014: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Counter- Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — Interest rate swaps — — — $ $ $ — $ $ The Company does not net securities borrowed and securities loaned, or securities purchased under agreements to resell and securities sold under agreements to repurchase. These financial instruments are presented on a gross basis in the condensed consolidated statements of financial condition. In the tables below, the amounts of financial instruments owned that are not offset in the condensed consolidated statements of financial condition, but could be netted against financial liabilities with specific counterparties under legally enforceable master netting agreements in the event of default, are presented to provide financial statement readers with the Company’s estimate of its net exposure to counterparties for these financial instruments. The following tables set forth the netting of certain financial assets and financial liabilities as of June 30, 2015 and December 31, 2014, pursuant to the requirements of ASU 2011-11 and ASU 2013-01. June 30, 2015 Net Amounts of Gross Amounts Not Gross Amounts Assets Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Assets Financial Condition Financial Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — — — Options — — Interest rate swaps — — — Total $ $ $ $ $ — $ Net Amounts of Gross Amounts Not Gross Amounts Liabilities Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — Total $ $ $ $ $ $ December 31, 2014 Gross Amounts Not Net Amounts of Offset in the Gross Amounts Assets Condensed Consolidated Offset in the Presented in the Statement of Gross Condensed Condensed Financial Condition Amounts of Consolidated Consolidated Cash Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Assets Financial Condition Financial Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — Options — — Total $ $ $ $ $ — $ Net Amounts of Gross Amounts Not Gross Amounts Liabilities Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — — Total $ $ $ $ $ $ Excluded from the fair value and offsetting tables above is net variation margin on long and short futures contracts in the amounts of $90.2 million and $46.4 million, which are included within receivables from broker-dealers and clearing organizations as of June 30, 2015 and December 31, 2014, respectively, and $89.8 million and $(3.6) million, which are included within payables to broker-dealers and clearing organizations as of June 30, 2015 and December 31, 2014, respectively. | |
Virtu Financial, LLC and subsidiaries | ||
Financial Assets and Liabilities | 9. Financial Assets and Liabilities At December 31, 2014 and 2013, substantially all of the Company’s financial assets and liabilities, except for the senior secured credit facility and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short ‑term in nature and were carried at amounts that approximate fair value. The Company determined that the carrying value of the Company’s senior secured credit facility approximates fair value as of December 31, 2014 and 2013 based on the quoted over ‑the ‑counter market prices provided by the issuer of the senior secured credit facility, which was categorized as Level 2. The fair value of equities, U.S. government obligations and exchange traded notes is estimated using recently executed transactions and market price quotations in active markets and are categorized as Level 1 with the exception of inactively traded equities which are categorized as Level 2. Fair value of the Company’s derivative contracts is based on the indicative prices obtained from the banks that are counterparties to these contracts, as well as management’s own analyses. The indicative prices have been independently validated through the Company’s risk management systems, which are designed to check prices with information independently obtained from exchanges and venues where such financial instruments are listed or to compare prices of similar instruments with similar maturities for listed financial futures in foreign exchange. At December 31, 2014 and 2013, the Company’s derivative contracts have been categorized as Level 2. Transfers in or out of levels are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the years ended December 31, 2014 and 2013. Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2014: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Counter- Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — Interest rate swaps — — — $ $ $ — $ $ Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2013: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Counter- Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ U.S. government obligations — — — Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — — Options — — — $ $ $ — $ $ The Company adopted the guidance in ASU 2013 ‑01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities for periods beginning after January 1, 2013. This authoritative guidance requires companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned, or securities purchased under agreements to resell and securities sold under agreements to repurchase. These securities are presented on a gross basis in the consolidated statements of financial condition. In the tables below, the amounts of financial instruments owned that are not offset in the consolidated statements of financial condition, but could be netted against financial liabilities with specific counterparties under legally enforceable master netting agreements in the event of default, including derivatives with clearing houses (options contracts) or over the counter currency forward contract counterparties, are presented to provide financial statement readers with the Company’s estimate of its net exposure to counterparties for these financial instruments. The following tables set forth the netting of certain financial assets and financial liabilities as of December 31, 2014 and 2013, pursuant to the requirements of ASU 2011 ‑11 and ASU 2013 ‑01. December 31, 2014 Gross Amounts Not Net Amounts of Offset in the Gross Amounts Assets Presented Consolidated Offset in the in the Statement of Gross Consolidated Consolidated Financial Condition Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Net Assets Condition Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — Options — — Total $ $ $ $ $ — $ Net Amounts of Gross Amounts Not Liabilities Offset in the Gross Amounts Presented Consolidated Offset in the in the Statement of Gross Consolidated Consolidated Financial Condition Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Net Liabilities Condition Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — — Total $ $ $ $ $ $ December 31, 2013 Gross Amounts Not Net Amounts of Offset in the Gross Amounts Assets Presented Consolidated Offset in the in the Statement of Gross Consolidated Consolidated Financial Condition Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Net Assets Condition Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ $ $ — $ Securities purchased under agreements to resell — Trading assets, at fair value: Currency forwards — — Options — — Total $ $ $ $ $ $ Net Amounts of Gross Amounts Not Liabilities Offset in the Gross Amounts Presented Consolidated Offset in the in the Statement of Gross Consolidated Consolidated Financial Condition Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Net Liabilities Condition Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ — $ $ $ — $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — — — Options — — Total $ $ $ $ $ $ Excluded from the fair value and offsetting tables above is net unsettled fair value on long and short futures contracts in the amounts of $46.4 million and $(27.3) million, which are included within receivables from broker ‑dealers and clearing organizations as of December 31, 2014 and 2013, respectively, and $(3.6) million and $(3.4) million, which are included within payables to broker ‑dealers and clearing organizations as of December 31, 2014 and 2013, respectively. |
Derivative Instruments93
Derivative Instruments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Derivative Instruments | 10. Derivative Instruments The fair value of the Company's derivative instruments on a gross basis consisted of the following at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 (in thousands) Fair Fair Derivatives Assets Balance Sheet Classification Value Notional Value Notional Equities futures Receivables from broker dealers and clearing organizations $ $ $ $ Commodity futures Receivables from broker dealers and clearing organizations Currency futures Receivables from broker dealers and clearing organizations Treasury futures Receivables from broker dealers and clearing organizations Options Financial instruments owned Currency forwards Financial instruments owned Interest rate swaps Financial instruments owned — — Fair Fair Derivatives Liabilities Balance Sheet Classification Value Notional Value Notional Equities futures Payables to broker dealers and clearing organizations $ — $ — $ $ Commodity futures Payables to broker dealers and clearing organizations Currency futures Payables to broker dealers and clearing organizations Options Financial instruments sold, not yet purchased Treasury futures Payables to broker dealers and clearing organizations — — — — Custom equity based swap Payables to broker dealers and clearing organizations — — — — Currency forwards Financial instruments sold, not yet purchased Interest rate swaps Financial instruments sold, not yet purchased Amounts included in receivables from and payables to broker-dealers and clearing organizations represent variation margin on long and short futures contracts. The following table summarizes the gain from derivative instruments not designated as hedging instruments under ASC 815, which are recorded in trading income, net in the accompanying condensed consolidated statements of comprehensive income for the six months ended June 30, 2015 and 2014: For the Six Months Ended June 30, (in thousands) 2015 2014 Futures $ $ Currency forwards Options Interest rate swaps — $ $ | |
Virtu Financial, LLC and subsidiaries | ||
Derivative Instruments | 10. Derivative Instruments The fair value of the Company’s derivative instruments on a gross basis consisted of the following at December 31, 2014 and 2013: 2014 2013 (in thousands) Fair Fair Derivatives Assets Balance Sheet Classification Value Notional Value Notional Equities futures Receivables from broker-dealers and clearing organizations $ $ $ $ Commodity futures Receivables from broker-dealers and clearing organizations Currency futures Receivables from broker-dealers and clearing organizations Treasury futures Receivables from broker-dealers and clearing organizations Options Financial instruments owned Currency forwards Financial instruments owned Fair Fair Derivatives Liabilities Balance Sheet Classification Value Notional Value Notional Equities futures Payables to broker-dealers and clearing organizations $ $122,948 $ $769,929 Commodity futures Payables to broker-dealers and clearing organizations Currency futures Payables to broker-dealers and clearing organizations Treasury futures Payables to broker-dealers and clearing organizations — — Custom equity based swap Payables to broker-dealers and clearing organizations — — Options Financial instruments sold, not yet purchased Currency forwards Financial instruments sold, not yet purchased Interest rate swap Financial instruments sold, not yet purchased — — Amounts included in receivables from and payables to broker ‑dealers and clearing organizations represent variation margin on long and short futures contracts. The following table summarizes the gain or loss on derivative instruments not designated as hedging instruments under ASC 815, which are recorded in trading income, net in the accompanying consolidated statements of comprehensive income for the years ended December 31, 2014, 2013 and 2012: For the Years Ended December 31, (in thousands) 2014 2013 2012 Futures $ $ $ Currency forwards Options Interest rate swaps — — $ $ $ |
Income Taxes94
Income Taxes | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Income Taxes | 11. Income Taxes Income tax expense for the six months ended June 30, 2015 and 2014 differs from the U.S. federal statutory rate primarily due to the taxation treatment of income attributable to noncontrolling interests in Virtu Financial. These noncontrolling interests are subject to U.S. taxation as partnerships. Accordingly, the income attributable to these noncontrolling interests is reported in the condensed consolidated statements of comprehensive income, but the related U.S. income tax expense attributable to these noncontrolling interests is not reported by the Company as it is the obligation of the individual partners. Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation. Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the IPO (Note 13), differences in the valuation of financial assets and liabilities, and for other temporary differences arising from the deductibility of compensation and depreciation expenses in different time periods for book and income tax return purposes. There are no expiration dates on the deferred tax assets. The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the realization of the deferred tax assets. A valuation allowance against deferred tax assets at the balance sheet date is not considered necessary because it is more likely than not the deferred tax asset will be fully realized. There are no unrecognized tax benefits as of June 30, 2015 and December 31, 2014. | |
Virtu Financial, LLC and subsidiaries | ||
Income Taxes | 11. Income Taxes Net income (loss) before income taxes is as follows for the years ended December 31, 2014, 2013 and 2012: December 31, 2014 2013 2012 (in thousands) U.S. operations $ $ $ Non-U.S. operations $ $ $ The provision for income taxes consists of the following for the years ended December 31, 2014, 2013 and 2012: December 31, (in thousands) 2014 2013 2012 Current provision Non-U.S. $ $ $ Deferred provision (benefit) Non-U.S. Provision for income taxes $ $ $ The reconciliation of the tax provision at the U.S. Federal Statutory Rate to the provision for income taxes for the years ended December 31, 2014, 2013 and 2012 is as follows: December 31, 2014 2013 2012 (in thousands, except percentages) Tax provision at the U.S. federal statutory rate $ — — $ — — $ — — Foreign taxes % % % Provision for income taxes $ % $ % $ % The components of the deferred tax assets and liabilities as of December 31, 2014 and 2013 are as follows: December 31, (in thousands) 2014 2013 Deferred income tax assets Other $ $ Share-based compensation $ Fixed assets $ — Tax credits and net operating loss carryforwards — Total deferred income tax assets $ $ Deferred income tax liabilities Fixed assets $ — $ Total deferred income tax liabilities $ — $ A deferred tax asset relating to the Ireland carryforward losses has been recognized in the amount of $0 and $0.7 million as of December 31, 2014 and 2013, respectively, and is included within other assets in the accompanying consolidated statements of financial condition. There are no expiration dates on the deferred tax assets. The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the realization of the deferred tax assets. A valuation allowance against deferred tax assets at the balance sheet date is not considered necessary, because it is more likely than not the deferred tax asset will be fully realized. Tax authorities in Ireland have initiated an income tax audit of the Company’s 2012 research and development credit. The Ireland subsidiary’s returns are generally subject to review by the tax authority for certain purposes for 5 years from the end of the accounting period. The Company does not believe any adjustments that may arise from the examinations will be significant. There are no unrecognized tax benefits as of December 31, 2014 and 2013. |
Commitments, Contingencies an95
Commitments, Contingencies and Guarantees | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Commitments, Contingencies and Guarantees | 12. Commitments, Contingencies and Guarantees Litigation The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company has also been, is currently, and may in the future be, the subject of one or more regulatory or self-regulatory organization enforcement actions, including but not limited to targeted and routine regulatory inquiries and investigations involving Regulation NMS, Regulation SHO, capital requirements and other domestic and foreign securities rules and regulations which may from time to time result in the imposition of penalties or fines. In addition, the Autorité des marchés financiers (“AMF”) has brought an enforcement action in connection with the trading activities of a subsidiary of MTH in certain French listed equity securities on or around 2009. The Company has also been the subject of requests for information and documents from the SEC and the State of New York Office of the Attorney General (“NYAG”). Certain of these matters may result in adverse judgments, settlements, fines, penalties, injunctions or other relief, and the Company’s business or reputation could be negatively impacted if it were determined that disciplinary or other enforcement actions were required. The ultimate effect on the Company from the pending proceedings and claims, if any, is presently unknown. Where available information indicates that it is probable a liability had been incurred at the date of the financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income. Based on information currently available, management believes that the resolution of any known matters will not result in any material adverse effect on the Company’s financial position, results of operations or cash flows. Indemnification Arrangements Consistent with standard business practices in the normal course of business, the Company has provided general indemnifications to its managers, officers, employees, and agents against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred by such persons under certain circumstances as more fully disclosed in its operating agreement. The overall maximum amount of the obligations (if any) cannot reasonably be estimated as it will depend on the facts and circumstances that give rise to any future claims. | |
Virtu Financial, LLC and subsidiaries | ||
Commitments, Contingencies and Guarantees | 12. Commitments, Contingencies and Guarantees Leases The Company leases office space and office and communication equipment under various operating lease agreements, which expire at various dates through April 2020. Certain lease agreements are non ‑cancellable with aggregate minimum lease payment requirements and contain certain escalation clauses. The total future minimum payment under non ‑cancellable operating leases is approximately $20.6 million as of December 31, 2014. The Company also leases communication equipment under various capital lease agreements, which expire at various dates through December 2017. Certain lease agreements are non ‑cancellable with aggregate minimum lease payment requirements and contain certain escalation clauses. The total future minimum payment under non ‑cancellable capital leases is approximately $16.5 million as of December 31, 2014. At December 31, 2014, minimum rental commitments under non ‑cancellable leases are approximately as follows: Minimum Rental Commitments Year Ending December 31 Capital Operating 2015 $ $ 2016 2017 2018 — 2019 — Thereafter — Total minimum lease payments Total operating lease expense, net of amortization expense related to landlord incentives, for the years ended December 31, 2014, 2013 and 2012 was approximately $3.5 million, $4.3 million, and $14.5 million, respectively. Occupancy lease expense for the years ended December 31, 2014, 2013 and 2012 of $1.7 million, $1.9 million and $3.0 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, 2014, 2013 and 2012 of $1.8 million, $2.4 million and $11.5 million, respectively, is included within communication and data processing in the accompanying consolidated statements of comprehensive income. Employee Retention Plan In connection with the July 8, 2011 acquisition of MTH, the Company established an employee retention plan. Under the plan, approximately $21.5 million was paid to employees in five installments from July 8, 2011 through July 8, 2014. The Company recognized approximately $2.6 million, $6.7 million and $6.1 million, respectively, in compensation expense related to the plan, for the years ended December 31, 2014, 2013 and 2012, in acquisition related retention bonus in the accompanying consolidated statements of comprehensive income. Consulting Agreements In connection with the December 9, 2011 acquisition of CCG, on September 30, 2011, the Company entered into a consulting agreement with CCG’s founder and managing member to provide advisory services to the Company for the DMM business. The Company paid a consulting fee of $0.5 million per year during the three year term, payable on a quarterly basis starting on the three ‑month anniversary of the date of the agreement. For the years ended December 31, 2014, 2013 and 2012, the Company paid approximately $0.4 million, $0.5 million and $0.5 million, respectively, for the services received which is recorded in operations and administrative expenses in the accompanying consolidated statements of comprehensive income. The Company also has engaged other consultants to provide services in relation to tax, regulatory and public affairs. The Company paid these consultants, on an aggregate basis, $0.3 million, $0.4 million and $0.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. Litigation The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company has also been, is currently, and may in the future be, the subject of one or more regulatory or self ‑regulatory organization enforcement actions, including but not limited to targeted and routine regulatory inquiries and investigations involving Regulation NMS, Regulation SHO, capital requirements and other domestic and foreign securities rules and regulations. In addition, the Autorité des marchés financiers is examining the trading activities of a subsidiary of MTH in certain French listed equity securities on or around 2009. The Company has also been the subject of requests for information and documents from the SEC and the State of New York Office of the Attorney General (“NYAG”). The ultimate effect on the Company from certain of these matters may result in adverse judgments, settlements, fines, penalties, injunctions or other relief, and the Company’s business or reputation could be negatively impacted if it were determined that disciplinary or other enforcement actions were required. The ultimate effect on the Company from the pending proceedings and claims, if any, is presently unknown. Where available information indicates that it is probable a liability had been incurred at the date of the financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income. Based on information currently available, management believes that the resolution of any known matters will not result in any material adverse effect on the Company’s financial position, results of operations or cash flows. Indemnification Arrangements Consistent with standard business practices in the normal course of business, the Company has provided general indemnifications to its managers, officers, employees, and agents against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred by such persons under certain circumstances as more fully disclosed in its operating agreement. The overall maximum amount of the obligations (if any) cannot reasonably be estimated as it will depend on the facts and circumstances that give rise to any future claims. |
Temasek Transaction
Temasek Transaction | 12 Months Ended |
Dec. 31, 2014 | |
Virtu Financial, LLC and subsidiaries | |
Temasek Transaction | 13. Temasek Transaction On December 31, 2014, through a series of transactions, Temasek Holdings (Private) Limited, (“Temasek”), acting through two indirect wholly owned subsidiaries, acquired direct or indirect ownership of 10,535,891 Class A ‑1 interests and 1,828,755 Class A ‑2 capital interests in Virtu Financial (the “Temasek Transaction”) for approximately $149.8 million and $26.0 million, respectively. Such investment was made as follows: · Temasek, acting through its indirect wholly owned subsidiary, Wilbur Investments LLC (the “Temasek Member”), acquired 5,376,603 Class A ‑1 redeemable interests with a carrying value of approximately $53.8 million for approximately $76.4 million from investment funds and other entities affiliated with Silver Lake Partners; · Temasek, acting through the Temasek Member, acquired 1,828,755 Class A ‑2 capital interests through a combination of (1) the purchase of 1,614,322 Class A ‑2 capital interests with a carrying value of approximately $6.9 million for approximately $23.0 million directly from a member of management who held Class A ‑2 capital interests in Virtu Financial and (2) the purchase of newly issued 214,433 Class A ‑2 capital interests for approximately $3.0 million from Virtu Financial, which used the proceeds of such purchase to redeem 214,433 Class A ‑2 profits interests in Virtu Financial with a carrying value of approximately $1.4 million held by Virtu Employee Holdco LLC (“Employee Holdco”), which in turn used such proceeds to redeem Class A ‑2 profits interests of Employee Holdco that corresponded to such redeemed Class A ‑2 profits interests in Virtu Financial and that were held by certain members of management; · Temasek, acting through one of its indirect wholly owned subsidiaries, acquired a 42.1% interest in an affiliate of Silver Lake Partners, which indirectly held 12,242,173 Class A ‑1 interests. As a result, Temasek acquired an indirect interest in 5,159,288 Class A ‑1 interests with a carrying value of approximately $51.6 million for approximately $73.4 million. Following the Temasek Transaction, affiliates of Silver Lake Partners retained direct or indirect ownership of 14,464,109 Class A ‑1 interests. Additionally, as part of the transaction consideration, a contingent payment agreement was entered into among Temasek, Silver Lake Partners, the Employee Holdco and the Company whereby additional payments will be made from Temasek to Silver Lake Partners and the selling members of management in the aggregate maximum amount of $3.9 million if the value of the interests acquired exceeds 1.7 times the transaction price prior to December 31, 2018, or December 31, 2019, the date depending on whether certain liquidity events occur. The Company accounted for the Temasek transaction as a series of equity transactions to which the Company was a party whereby (i) the terms of the Class A ‑1 redeemable interests were changed to extend the time period before the put option could be exercised from just under 2 years to 5.5 years from the date of the transaction, and the repurchase price was increased to the greater of fair value or the purchase price from the greater of fair value or the purchase price paid by Silver Lake; (ii) new Class A ‑2 capital interests were issued with which the proceeds were used to redeem Class A ‑2 profits interests; and (iii) the contingent payment feature represents contingent consideration for the arm’s length equity transactions entered into. Any excess of the transaction price over the carrying value was recorded as an addition to the respective capital balances and a deduction to accumulated deficit. The excess of the transaction price over the carrying value was approximately $44.4 million for the Class A ‑1 redeemable membership interests and recorded as an addition to Class A ‑1 redeemable membership interest and a deduction to accumulated deficit in the accompanying consolidated statements of financial condition. The excess of the transaction price over the carrying value was approximately $17.7 million for the Class A ‑2 interests and recorded as an addition to Class A ‑2 and a deduction to accumulated deficit in the accompanying consolidated statements of financial condition. In connection with the transaction, the Company incurred approximately $3.0 million of professional fees which are recorded in transaction advisory fees and expenses in the consolidated statements of comprehensive income. |
Capital Structure97
Capital Structure | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Capital Structure | 13. Capital Structure Capital Structure prior to the Company’s Reorganization Completed on April 15, 2015 and IPO Completed on April 16, 2015: Virtu Financial had three classes of members’ interests: Class A-1 members’ interests; Class A-2 members’ interests; and Class B members’ interests. Class A-2 members’ interests included both Class A-2 capital interests and Class A-2 profits interests. Class A-1 Interests On July 8, 2011, 25,000,000 Class A-1 redeemable interests were issued to an affiliate of Silver Lake (“the Silver Lake Member”) and 1,964,826 Class A-1 interests were issued to an affiliate of Vincent Viola, which Class A-1 interests had an aggregate capital balance of approximately $270 million. On December 31, 2014, through a series of transactions, 5,376,603 and 12,242,173 of the Class A-1 redeemable interests previously held by the Silver Lake Member were transferred to Wilbur Investments LLC (the “Temasek Member”), an indirect wholly owned subsidiary of Temasek Holdings (Private) Limited, (“Temasek”), and an affiliate of Silver Lake and Temasek, 57.9% of which is indirectly owned by affiliates of Silver Lake Partners and 42.1% of which is indirectly owned by an affiliate of Temasek (the “SLT Member” and together with the Silver Lake Member and the Temasek Member, the “Investor Members”), respectively, with the Silver Lake Member retaining 7,381,224 Class A-1 redeemable interests. Class A-1 interests that the holder thereof has the right to call for redemption were held by three members: (i) the Silver Lake Member, (ii) the Temasek Member and (iii) the SLT Member. The Silver Lake Member had the right to appoint one member on Virtu Financial’s board of directors and the Temasek Member had the right to either appoint one member on Virtu Financial’s board of directors (subject to obtaining certain regulatory approvals) or elect that the other members of the board of directors designate one member of Virtu Financial’s board of directors in consultation with the Temasek Member. The Silver Lake Member and the Temasek Member also possessed approval rights with respect to certain board actions and corporate events. Additionally, as part of the transaction consideration, a contingent payment agreement was entered into among Temasek, Silver Lake Partners, the Employee Holdco and the Company whereby additional payments will be made from Temasek to Silver Lake Partners and the selling members of management in the aggregate maximum amount of $3.9 million if the value of the interests acquired exceeds 1.7 times the transaction price prior to December 31, 2018, or December 31, 2019, the date depending on whether certain liquidity events occur. There were no additional Class A-1 interests granted, forfeited , distributed or redeemed during the six months ended June 30, 2015 and 2014. Class A-2 Interests Class A-2 interests included both Class A-2 capital interests and Class A-2 profits interests. No Class A-2 capital interests were issued and outstanding as of June 30, 2015, and approximately 93,786,659 were issued and outstanding as of December 31, 2014. On December 31, 2014, through a series of transactions, 1,614,322 of the Class A-2 capital interests previously held by certain members of the Company’s management were transferred to the Temasek Member, and 214,433 new Class A-2 capital interests were issued to the Temasek Member, with the proceeds of such issuance being used to redeem the same number of Class A-2 profits interests held by Employee Holdco LLC (“Employee Holdco”). Class A-2 profits interests were issued to Employee Holdco, a holding company which held the interests on behalf of certain key employees or stakeholders. Employee Holdco issued Class A-2 profits interests of Employee Holdco to such employees and stakeholders which corresponded to the underlying Class A-2 profits interests held by Employee Holdco. There were no Class A-2 profits interests issued and outstanding as of June 30, 2015 and 6,069,007 Class A-2 profits interests issued and outstanding as of December 31, 2014. There were 6,418 and 0 Class A-2 profits interests issued during the six months ended June 30, 2015 and 2014, respectively. There were 13,495 and 6,795 Class A-2 profits interests redeemed during the six months ended June 30, 2015 and 2014, respectively. Holders of Class A-2 profits interests shared in distributions of available cash flow based on the ratio of interests held to the total number of Class A-1 and Class A-2 interests outstanding, and also shared on a pro rata basis in the proceeds of a liquidity event, subject to a valuation hurdle determined by Virtu Financial at the time of the grant based on a valuation performed by a third party valuation firm. Holders of the Class A-2 profits interests shared in the proceeds of a liquidity event above such valuation hurdle, and received a preference on such distributions above such valuation threshold until all holders of Class A-2 profits interests subject to such valuation threshold had been allocated capital proceeds equal to the deemed capital contribution attributable to such Class A-2 profits interests as determined by the Company at the time of the grant. Class B Interests Virtu Financial previously approved the Virtu Financial LLC Management Incentive Plan (the “MIP”). Participants of the MIP were entitled to receive either Class B interests of Virtu Financial or Class B interests of Employee Holdco, which holds directly the corresponding Class B interests in Virtu Financial. Upon a liquidity event, Class B interests under the MIP were entitled to share proportionately in distributions in excess of the applicable profits interest valuation hurdle, which was determined by Virtu Financial based on a valuation at the time of the grant performed by a third party valuation firm. Class B interests were non-voting interests which vested over a four year period and upon a sale, IPO or certain other capital transactions of Virtu Financial. Class B interests were subject to forfeiture and repurchase provisions upon certain termination events. There were no Class B interests outstanding as of June 30, 2015 and Class B interests representing a right to share in 12.915% of capital proceeds (on a fully diluted basis) were issued and outstanding as of December 31, 2014. No Class B interests were issued during the six months ended June 30, 2015 and 2014. Distribution and Liquidation Rights Holders of Class A-1 and Class A-2 interests shared in distributions of available cash flow based on the ratio of interests held to the total number of Class A-1 and Class A-2 interests outstanding. Holders of Class B interests were not entitled to share in such distributions. As of December 31, 2014, unless and until converted to Class A-2 members’ interests, upon occurrence of a capital transaction, Class A-1 interests were entitled to distributions of capital proceeds until Class A-1 members’ unrecovered capital balance (as defined) was reduced to zero . After distributions to Class A-1 members, capital proceeds would have been provided to Class A-2 capital members until Class A-2 capital members’ unrecovered capital balance (as defined) were reduced to zero . After distributions to Class A-1 and Class A-2 members, distributions of capital proceeds would have been provided to members in respect to their respective capital proceeds percentages (as defined), subject to the valuation hurdles and distribution preferences applicable to holders of Class A-2 profits interests. Holders of vested Class B interests would have shared in distributions of capital proceeds above the applicable valuation hurdle proportionately based on their capital proceeds percentages. In the event of any voluntary or involuntary liquidation, dissolution, winding up, merger or company sale, distributions would have been made, first, to Class A-1 members’ unrecovered capital balance (as defined) until they have been reduced to zero. Second, to Class A-2 capital members, in proportion to their unrecovered capital balance (as defined) until reduced to zero and then to members in respect to their capital proceeds percentages (as defined), subject to the valuation hurdles and distribution preferences applicable to holders of Class A-2 profits interests. Conversion Rights As of December 31, 2014, the Class A-1 interests were convertible into Class A-2 interests at any time at the option of the Class A-1 member on a one -for-one basis. The Class A-1 interests automatically converted upon a qualified IPO or qualified sale. Qualified IPO was defined as an initial public offering on the New York Stock Exchange or NASDAQ National Market in which the gross proceeds raised equal or exceed $100.0 million and the valuation of the Company implies a return to the Silver Lake Member equal to at least (after taking into account previous distributions) 1.75 times the invested amount. Qualified sale was defined as a sale of all or a majority of the assets of the Company or all or a majority of the limited liability company interests of the Company to a third party that is not an affiliate or other permitted transferee of any member as long as the sale (i) is for consideration consisting entirely of cash and/or marketable securities and would satisfy certain minimum return requirements applicable to Silver Lake Partners and Temasek or (ii) was approved by the Silver Lake Member or, in certain circumstances, the Temasek Member. Redemption Rights Unless and until conversion occurred, the Investor Members were entitled to a number of rights and benefits, including the right to call for redemption of their Class A-1 interests. Any time on or after November 24, 2016, the Silver Lake Member could have exercised such redemption right in order to cause the Company to purchase all of the Class A-1 interests owned directly or indirectly by affiliates of Silver Lake Partners. Any time on or after May 16, 2020, the Temasek Member could have exercised such redemption right in order to cause the Company to purchase all of the Class A-1 interests owned directly or indirectly by affiliates of Temasek. As of December 31, 2014, the redemption price for each unit of Class A-1 interests owned by the Investor Members was the greater of (i) a minimum purchase price and (ii) the fair market value of the Class A-1 interests on the date of redemption. The minimum purchase price with respect to the Class A-1 interests owned directly or indirectly by affiliates of Silver Lake Partners was equal to the purchase price paid by affiliates of Silver Lake Partners for such Class A-1 interests and the minimum purchase price with respect to the Class A-1 interests owned directly or indirectly by affiliates (as defined in the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial) of Temasek was equal to the purchase price paid by affiliates (as defined in the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial) of Temasek for such Class A-1 interests (in each case, less distributions received in respect of such Class A-1 interests). The Company could have redeemed the Class A-1 interests using redemption notes provided that all available cash flow and all capital proceeds were used to pay down the redemption note. In lieu of redemption, the Silver Lake Member or the Temasek Member could require the Company to purchase all of the equity securities of the affiliated entity or entities that directly or indirectly owned their Class A-1 interests on behalf of affiliates of Silver Lake Partners or Temasek, respectively, provided that any such entity had not conducted any business or operations since inception other than the direct or indirect ownership of the interests of the Company. The redeemable equity instrument is classified outside of permanent equity on the condensed consolidated statements of financial condition. East Management Incentive Plan On July 8, 2011, 2,625,000 Class A-2 capital interests were contributed by Class A-2 members to Virtu East MIP LLC (“East MIP”). East MIP issued Class A interests to the members who contributed the Class A-2 capital interests, and Class B interests (“East MIP Class B interests”) to certain key employees. East MIP Class B interests were non-voting interests which vested over the four year period ending July 8, 2015, but in any event no earlier than upon the occurrence of a sale, IPO or certain other capital transactions of Virtu Financial. Vested East MIP Class B interests were entitled to participate in distributions of the proceeds received in respect of the Class A-2 capital interests held by East MIP upon a sale or certain other capital transactions of Virtu Financial. East MIP Class B interests were subject to forfeiture and repurchase provisions upon certain termination events. Capital structure after the Company’s Reorganization Completed on April 15, 2015 and IPO Completed on April 16, 2015: Initial Public Offering On April 21, 2015, the Company completed its IPO of 19,012,112 shares of its Class A common stock, par value $0.00001 per share, including 2,479,840 shares of Class A common stock sold in connection with the full exercise of the option to purchase additional shares granted to the underwriters, at a price to the public of $19.00 per share. The shares began trading on NASDAQ on April 16, 2015 under the ticker symbol “VIRT.” As a result of the completion of the Reorganization Transactions and the IPO, VFI holds approximately 24.8% interest in Virtu Financial. Reorganization Transactions In connection with the IPO, a series of reorganization transactions was completed on April 15, 2015 (the “Reorganization Transactions”) among the Company, subsidiaries of Virtu Financial and equityholders of Virtu Financial which include the following persons (the “Virtu Pre-IPO Members”): • three affiliates of the founding member, (collectively the “Founder Pre-IPO Members”); • the Silver Lake Member; • the Temasek Member; • the SLT Member; • two entities, one of which was and the other of which is managed by the founding member, whose equityholders include certain members of the management of Virtu Financial, (the “Management Vehicles”); and • certain current and former members of the management of the Company. and Madison Tyler Holdings and their affiliates, (the “Management Members”). The Reorganization Transactions are further described in the Company’s Registration Statement filed on Form S-1 (File No. 333-194473) (as amended the “Registration Statement”). In the Reorganization Transactions: • the Company. became the sole managing member of Virtu Financial ; • in a series of transactions, one of the Management Vehicles liquidated, with its equity interests in Virtu Financial either being distributed to its members, including certain members of management, or contributed to the other Management Vehicle ( “Virtu Employee Holdco”) and certain employees of Virtu Financial based outside the United States were distributed equity interests in Virtu Financial held by Virtu Employee Holdco on behalf of such employees and such equity interests were contributed to a trust (the “Employee Trust”), whose trustee is one of Virtu Financial’s subsidiaries; • two of the Founder Pre-IPO Members liquidated and distributed their equity interests in Virtu Financial to their equityholders, one of whom is TJMT Holdings LLC, the third Founder Pre-IPO Member; • the SLT Member distributed its equity interests in Virtu Financial to its equityholders, which consist of investment funds and other entities affiliated with Silver Lake Partners and Temasek; following a series of transactions, the Company acquired equity interests in Virtu Financial as a result of certain mergers involving wholly owned subsidiaries of Virtu Financial, an affiliate of Silver Lake Partners and Temasek, and the Temasek Member (the “Mergers”), and in exchange the Company issued to an affiliate of Silver Lake Partners (the “Silver Lake Post-IPO Stockholder”) and an affiliate of Temasek (the “Temasek Post-IPO Stockholder”, collectively with the Silver Lake Post-IPO Stockholder, the “Investor Post-IPO Stockholders”) shares of Class A common stock and rights to receive payments under a tax receivable agreement described below. The number of shares of Class A common stock issued to the Investor Post-IPO Stockholders was based on the value of the Virtu Financial equity interests that we acquired, which was determined based on a hypothetical liquidation of Virtu Financial and the initial public offering price per share of the Company’s Class A common stock in the IPO; all of the existing equity interests in Virtu Financial were reclassified into non-voting common interest units (“Virtu Financial Units”). The number of Virtu Financial Units issued to each member of Virtu Financial was determined based on a hypothetical liquidation of Virtu Financial and the IPO price of $19 per share of the Company’s Class A common stock in our initial public offering. The Virtu Financial Units received by Virtu Employee Holdco, the Employee Trust and the Management Members have the same vesting restrictions as the equity interests which were reclassified. Vested Virtu Financial Units will be entitled to receive distributions, if any, from Virtu Financial. Subject to certain exceptions, unvested Virtu Financial Units are not entitled to receive such distributions (other than tax distributions). If any unvested Virtu Financial Units are forfeited, they will be cancelled by Virtu Financial for no consideration (and the Company will cancel the related shares of Class C common stock (described below) for no consideration); • the Company amended and restated its certificate of incorporation and issued four classes of common stock: Class A common stock, Class B common stock, Class C common stock and Class D common stock (“common stock”). The Class A common stock and Class C common stock each provide holders with one vote on all matters submitted to a vote of stockholders, and the Class B common stock and Class D common stock each provide holders with 10 votes on all matters submitted to a vote of stockholders. The holders of Class C common stock and Class D common stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of Class A common stock and Class B common stock. Shares of the Company’s common stock will generally vote together as a single class on all matters submitted to a vote of stockholders. The remaining members of Virtu Financial after giving effect to the Reorganization Transactions, other than the Company, (collectively as the “Virtu Post-IPO Members”), subscribed for and purchased shares of the Company’s common stock as follows, in each case at a purchase price of $0.00001 per share and in an amount equal to the number of Virtu Financial Units held by each such Virtu Post-IPO Member; • TJMT Holdings LLC (“Founder Post-IPO Member”), purchased 79,610,490 shares of the Company’s Class D common stock; and • affiliates of Silver Lake Partners (the “Silver Lake Post-IPO Members”), Virtu Employee Holdco, the Employee Trust, the Management Members and the other Virtu Post-IPO Members purchased 36,746,041 shares of the Company’s Class C common stock; and the Founder Post-IPO Member was granted the right to exchange its Virtu Financial Units, together with a corresponding number of shares of the Company’s Class D common stock, for shares of the Company's Class B common stock, and the other Virtu Post-IPO Members was granted the right to exchange their Virtu Financial Units, together with a corresponding number of shares of the Company's Class C common stock, for shares of the Company’s Class A common stock. Each share of VFI’s Class B common stock and Class D common stock is convertible at any time, at the option of the holder, into one share of Class A common stock or Class C common stock, respectively. Distributions in Connection with the IPO On June 12, 2015, Virtu Financial made a cash distribution of $5.0 million to certain of the holders of its outstanding equity interests prior to the consummation of the Reorganization Transactions (such holders, the “Virtu Financial Pre-IPO Members”) (funded from cash on hand). Additionally, Virtu Financial intends to make further cash distributions of up to $45.0 million to the Virtu Financial Pre-IPO Members. The Company expects that these further distributions will be funded from cash on hand and excess cash held as clearing deposits with broker dealers and clearing organizations. Use of Proceeds Upon consummation of the IPO, the total gross proceeds of the offering were approximately $361.2 million. Of the proceeds, approximately $25.2 million was used to pay underwriting discounts and commissions, approximately $277.2 million was used to purchase 3,470,724 shares of Class A common stock from the Silver Lake Post-IPO Stockholder and 12,214,224 Virtu Financial Units and corresponding shares of Class C common stock from certain of the Virtu Post-IPO Members, including 4,862,609 Virtu Financial Units and corresponding shares of Class C common stock from the Silver Lake Post-IPO Members and 7,351,615 Virtu Financial Units and corresponding shares of Class C common stock from certain employees. The remaining $58.8 million of net proceeds was contributed by the Company to Virtu Financial, the operating company, which will be used for working capital and general corporate purposes. Other offering costs incurred were approximately $8.6 million and were paid by Virtu Financial. 2015 Management Incentive Plan VFI’s Board of Directors and stockholders adopted the Virtu Financial 2015 Management Incentive Plan (the “2015 Management Incentive Plan”), which became effective upon consummation of the IPO. The 2015 Management Incentive Plan provides for the grant of stock options, restricted stock units, and other awards based on an aggregate of 12,000,000 shares of Class A common stock, subject to additional sublimits, including limits on the total option grant to any one participant in a single year and the total performance award to any one participant in a single year. In connection with the IPO, non-qualified stock options to purchase 9,228,000 shares were granted at the IPO per share price, each of which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the date of grant. In connection with and subsequent to the IPO, 25,647 restricted stock units were granted, each of which vest on the one year anniversary of date of grant and are settled in shares of Class A common stock. For the purpose of calculating equity-based compensation expense, the fair value of the stock option grants was determined through the application of the Black-Scholes-Merton model and will be recognized on a straight line basis over the vesting period. Similarly, the fair value of the restricted stock units was determined based on the IPO per share price and will be recognized on a straight line basis over the vesting period. | |
Virtu Financial, LLC and subsidiaries | ||
Capital Structure | 14. Capital Structure The Company has issued three classes of interests: Class A ‑1 interests; Class A ‑2 interests; and Class B interests. Class A ‑2 interests include both Class A ‑2 capital interests and Class A ‑2 profits interests. Class A ‑1 Interests On July 8, 2011, 25,000,000 Class A ‑1 redeemable interests were issued to the Silver Lake Member and 1,964,826 Class A ‑1 interests were issued to an affiliate of Vincent Viola, which Class A ‑1 interests had an aggregate capital balance of approximately $270 million. As described in Note 13, on December 31, 2014, through a series of transactions, 5,376,603 and 12,242,173 of the Class A ‑1 redeemable interests previously held by the Silver Lake Member were transferred to the Temasek Member and the SLT Member, respectively, with the Silver Lake Member retaining 7,381,224 Class A ‑1 redeemable interests. Class A ‑1 interests that the holder thereof has the right to call for redemption are held by three members: (i) an affiliate of Silver Lake (the “Silver Lake Member”), (ii) the Temasek Member and (iii) an affiliate of Silver Lake and Temasek, 57.9% of which is indirectly owned by affiliates of Silver Lake Partners and 42.1% of which is indirectly owned by an affiliate of Temasek (the “SLT Member” and, together with the Silver Lake Member and the Temasek Member, the “Investor Members”). The Silver Lake Member has the right to appoint one member on the Company’s board of directors and the Temasek Member has the right to either appoint one member on the Company’s board of directors (subject to obtaining certain regulatory approvals) or elect that the other members of the board of directors will designate one member of the Company’s board of directors in consultation with the Temasek Member. The Silver Lake Member and the Temasek Member also possess approval rights with respect to certain board actions and corporate events. There were no additional Class A ‑1 interests granted, forfeited , distributed or redeemed during the years ended December 31, 2014, 2013 and 2012. Class A ‑2 Interests Class A ‑2 interests include both Class A ‑2 capital interests and Class A ‑2 profits interests. Approximately 93,786,659 and 95,024,893 Class A ‑2 capital interests are issued and outstanding as of December 31, 2014 and December 31, 2013, respectively. On December 31, 2014, through a series of transactions, 1,614,322 of the Class A ‑2 capital interests previously held by certain members of the Company’s management were transferred to the Temasek Member, and 214,433 new Class A ‑2 capital interests were issued to the Temasek Member, with the proceeds of such issuance being used to redeem the same number of Class A ‑2 profits interests held by Employee Holdco LLC (“Employee Holdco”). On November 4, 2014, the Company repurchased 1,452,667 Class A ‑2 capital interests from a member of the Company’s management with an original carrying value of approximately $1.4 million for $6.0 million. The excess of repurchase price over the carrying value of approximately $4.6 million was recorded as a reduction in accumulated deficit and the carrying value of approximately $1.4 million was recorded as a reduction in Class A ‑2 capital interests in the accompanying consolidated statements of financial condition. Class A ‑2 profits interests are issued to Employee Holdco, a holding company which holds the interests on behalf of certain key employees or stakeholders. Employee Holdco issues Class A ‑2 profits interests of Employee Holdco to such employees and stakeholders which correspond to the underlying Class A ‑2 profits interests held by Employee Holdco. There were 6,069,007 and 4,434,452 Class A ‑2 profits interests issued and outstanding as of December 31, 2014 and 2013, respectively. Approximately 1,992,556 , 2,223,814 and 1,705,704 Class A ‑2 profits interests were issued during the years ended December 31, 2014, 2013 and 2012, respectively. Holders of Class A ‑2 profits interests share in distributions of available cash flow based on the ratio of interests held to the total number of Class A ‑1 and Class A ‑2 interests outstanding, and also share on a pro rata basis in the proceeds of a liquidity event, subject to a valuation hurdle determined by the Company at the time of the grant based on a valuation performed by a third party valuation firm. Holders of the Class A ‑2 profits interests share in the proceeds of a liquidity event above such valuation hurdle, and receive a preference on such distributions above such valuation threshold until all holders of Class A ‑2 profits interests subject to such valuation threshold have been allocated capital proceeds equal to the deemed capital contribution attributable to such Class A ‑2 profits interests as determined by the Company at the time of the grant. Class B Interests The Company previously approved the Virtu Financial LLC Management Incentive Plan (the “MIP”). Participants of the MIP are entitled to receive either Class B Interests of VF or Class B interests of Employee Holdco, which holds directly the corresponding Class B interests in the Company. Upon a liquidity event, Class B interests under the MIP are entitled to share proportionately in distributions in excess of the applicable profits interest valuation hurdle, which is determined by the Company based on a valuation at the time of the grant performed by a third party valuation firm. Class B interests are non ‑voting interests which vest over a four year period and upon a sale, initial public offering or certain other capital transactions of VF. Class B interests are subject to forfeiture and repurchase provisions upon certain termination events. Class B interests representing a right to share in 12.915% and 13.715% of capital proceeds (on a fully diluted basis) were issued and outstanding as of December 31, 2014 and 2013. Class B interests representing 0%, 2.65% and 0.90% were issued during the years ended December 31, 2014, 2013 and 2012, respectively. Distribution and Liquidation Rights Holders of Class A ‑1 and Class A ‑2 interests share in distributions of available cash flow based on the ratio of interests held to the total number of Class A ‑1 and Class A ‑2 interests outstanding. Holders of Class B interests are not entitled to share in such distributions. As of December 31, 2014 and 2013, unless and until converted to Class A ‑2 interests, upon occurrence of a capital transaction, Class A ‑1 interests are entitled to distributions of capital proceeds until Class A ‑1 members’ unrecovered capital balance (as defined) has been reduced to zero . After distributions to Class A ‑1 members, capital proceeds are provided to Class A ‑2 capital members until Class A ‑2 capital members’ unrecovered capital balance (as defined) have been reduced to zero . After distributions to Class A ‑1 and Class A ‑2 members, distributions of capital proceeds are provided to members in respect to their respective capital proceeds percentages (as defined), subject to the valuation hurdles and distribution preferences applicable to holders of Class A ‑2 profits interests. Holders of vested Class B interests share in distributions of capital proceeds above the applicable valuation hurdle proportionately based on their capital proceeds percentages. In the event of any voluntary or involuntary liquidation, dissolution, winding up, merger or company sale, distributions are made, first, to Class A ‑1 members’ unrecovered capital balance (as defined) until they have been reduced to zero . Second, to Class A ‑2 capital members, in proportion to their unrecovered capital balance (as defined) until reduced to zero and then to members in respect to their capital proceeds percentages (as defined), subject to the valuation hurdles and distribution preferences applicable to holders of Class A ‑2 profits interests. Conversion Rights As of December 31, 2014 and 2013, the Class A ‑1 interests were convertible into Class A ‑2 interests at any time at the option of the Class A ‑1 member on a one ‑for ‑one basis. The Class A ‑1 interests were automatically converted upon a qualified IPO or qualified sale. Qualified IPO is defined as an initial public offering on the New York Stock Exchange or NASDAQ National Market in which the gross proceeds raised equal or exceed $250.0 million and the valuation of the Company implies a return to the Silver Lake Member equal to at least (after taking into account previous distributions) 1.75 times the invested amount. Qualified sale is defined as a sale of all or a majority of the assets of the Company or all or a majority of the limited liability company interests of the Company to a third party that is not an affiliate or other permitted transferee of any member as long as the sale (i) is for consideration consisting entirely of cash and/or marketable securities and would satisfy certain minimum return requirements applicable to Silver Lake Partners and Temasek or (ii) was approved by the Silver Lake Member or, in certain circumstances, the Temasek Member. Redemption Rights Unless and until conversion occurs, the Investor Members are entitled to a number of rights and benefits, including the right to call for redemption of their Class A ‑1 interests. Any time on or after November 24, 2016, the Silver Lake Member may exercise such redemption right in order to cause the Company to purchase all of the Class A ‑1 interests owned directly or indirectly by affiliates of Silver Lake Partners. Any time on or after May 16, 2020, the Temasek Member may exercise such redemption right in order to cause the Company to purchase all of the Class A ‑1 interests owned directly or indirectly by affiliates of Temasek. As of December 31, 2014 and 2013, the redemption price for each unit of Class A ‑1 interests owned by the Investor Members is the greater of (i) a minimum purchase price and (ii) the fair market value of the Class A ‑1 interests on the date of redemption. The minimum purchase price with respect to the Class A ‑1 interests owned directly or indirectly by affiliates of Silver Lake Partners is equal to the purchase price paid by affiliates of Silver Lake Partners for such Class A ‑1 interests and the minimum purchase price with respect to the Class A ‑1 interests owned directly or indirectly by affiliates (as defined in the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial) of Temasek is equal to the purchase price paid by affiliates (as defined in the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial) of Temasek for such Class A ‑1 interests (in each case, less distributions received in respect of such Class A ‑1 interests). The Company may redeem the Class A ‑1 interests using redemption notes provided that all available cash flow and all capital proceeds are used to pay down the redemption note. For so long as any redemption note is outstanding, holders of any such redemption note whose outstanding principal balance exceeds 50% of the aggregate principal amount of the redemption note shall retain any approval and consent rights as if all Class A ‑1 interests subject to such redemption continued to be owned. In lieu of redemption, the Silver Lake Member or the Temasek Member can require the Company to purchase all of the equity securities of the affiliated entity or entities that directly or indirectly own their Class A ‑1 interests on behalf of affiliates of Silver Lake Partners or Temasek, respectively, provided that any such entity has not conducted any business or operations since inception other than the direct or indirect ownership of the interests of the Company. The redeemable equity instrument is classified outside of permanent equity on the statements of financial condition. In the event of termination of the employment of an employee on whose behalf Employee Holdco holds vested Class A ‑2 profits interests or Class B interests, the Company shall have the right but not the obligation to repurchase the applicable interests held by Employee Holdco, which would make a corresponding repurchase of the interests held by the terminated employee. The repurchase price payable by the Company in the event that it exercises its repurchase right with respect to Class A ‑2 profits interests is based on the value of the award at the date of issuance. In the event of a repurchase by the Company of Class B interests held by Employee Holdco on behalf of a terminated employee, the Company shall pay a call price determined by the manager, not to exceed the fair market value of such interests. East Management Incentive Plan On July 8, 2011, 2,625,000 Class A ‑2 capital interests were contributed by Class A ‑2 members to Virtu East MIP LLC (“East MIP”). East MIP issued Class A interests to the members who contributed the Class A ‑2 capital interests, and Class B interests (“East MIP Class B Interests”) to certain key employees. East MIP Class B Interests are non ‑voting interests which vest over the four year period ending July 8, 2015, but in any event no earlier than upon the occurrence of a sale, initial public offering or certain other capital transactions of VF. Vested East MIP Class B Interests are entitled to participate in distributions of the proceeds received in respect of the Class A ‑2 capital interests held by East MIP upon a sale or certain other capital transactions of VF. East MIP Class B Interests are subject to forfeiture and repurchase provisions upon certain termination events. The Company has not recognized compensation expense under this plan for the years ended December 31, 2014, 2013 and 2012. |
Share-based Compensation98
Share-based Compensation | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Share-based Compensation | 14. Share-based Compensation During the six months ended June 30, 2015 and 2014, the Company recorded expense relating to Class A-2 profits interests granted in prior periods to certain employees, which vest immediately or over a period of up to four years, in each case subject to repurchase provisions upon certain termination events, as described above (Note 13). These awards are accounted for as equity awards and are measured at the date of grant. The Company accrued compensation expense of $8.7 million and $7.2 million for the six months ended June 30, 2015 and 2014, respectively, related to the Class A-2 profits interests and other equity interests expected to be granted as part of year-end compensation. As of June 30, 2015, total unrecognized share-based compensation expense related to unvested Class A-2 profits interests, which, as described above (Note 13), were reclassified into non-voting common interest units subject to the same vesting schedule as their corresponding Class A-2 profits interests in connection with the Reorganization Transactions, was $2.9 million, and this amount is expected to be recognized over a weighted average period of 2.1 years. Activity in the Class A-2 profits interests, which, as indicated, have been reclassified into non-voting common units pursuant to the Reorganization Transactions, is as follows: Weighted Weighted Average Number of Average Fair Remaining Interests Value Life Outstanding December 31, 2013 $ Interests granted — $ — — Interests repurchased $ — Outstanding June 30, 2014 $ Outstanding December 31, 2014 $ Interests granted $ Interests repurchased $ — Outstanding June 30, 2015 $ As indicated in Note 13, East MIP Class B interests are subject to time based vesting over four years and only fully vest upon the consummation of a qualifying capital transaction by the Company, including an IPO. Upon the consummation of the IPO, certain East MIP Class B interests became vested, resulting in a compensation expense of $11.8 million, which reflects the fair value of the outstanding time-vested East MIP Class B interests measured at the date of grant. Additional compensation expense in respect of East MIP Class B interests still subject to time vesting of $0.6 million was recognized ratably over the remainder of the period ended June 30, 2015, resulting in a total expense for the period of $12.4 million relating to the East MIP Class B interests which was included within charges related to share based compensation at IPO in the condensed consolidated statements of comprehensive income. As of December 31, 2014, a capital transaction was not probable, and therefore none of the East MIP Class B interests were vested and no compensation expense was recognized relating to these awards. During the six months ended June 30, 2015 and 2014, no employees have been granted Class B interests. As discussed in Note 13, Class B interests vest only upon the occurrence of both time-based vesting over a four year period and the consummation of a qualifying capital transaction by the Company. Upon the consummation of the IPO, certain Class B interests became vested, resulting in a compensation expense of $31.4 million, which reflects the fair value of the outstanding time-vested Class B Interests measured at the date of grant. Additional compensation expense in respect of Class B interests still subject to time vesting of $1.9 million was recognized ratably over the remainder of the period ended June 30, 2015, resulting in a total expense for the period of $33.3 million relating to the Class B interests which was included within charges related to share based compensation at IPO in the condensed consolidated statements of comprehensive income. As of December 31, a capital transaction was not probable, and therefore none of the Class B interests were vested and no compensation expense was recognized relating to previously awarded Class B interests. Additionally, in connection with the compensation charges related to Class B and East MIP interests mentioned above, the Company capitalized and amortized $9.5 million and $8.0 million, respectively, of the costs attributable to employees incurred in development of software for internal use, which were included within charges related to share based compensation at IPO, in the condensed consolidated statements of comprehensive income. During the three months ended June 30, 2015, pursuant to the 2015 Management Incentive Plan, the Company granted non-qualified stock options to purchase 9,228,000 shares at the IPO per share price, each of which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the date of grant, and 25,647 restricted stock units, which vest on the one year anniversary and are settled in shares of Class A common stock. For the purpose of calculating equity-based compensation expense, the fair value of the stock option grants was determined through the application of the Black-Scholes-Merton model with the following assumptions: Six Months Ended June 30, 2015 Expected life (in years) Weighted average risk free interest rate % Expected stock price volatility % Expected dividend yield % Weighted average fair value at grant date $ The Company recognized $1.4 million of compensation expense ratably over the period in relation to the stock options issued during the period, and $0.02 million of compensation expense ratably over the period in relation to the restricted stock units issued during the period. During the six months ended June 30, 2015, 14,000 stock options have been forfeited. | |
Virtu Financial, LLC and subsidiaries | ||
Share-based Compensation | 15. Share ‑based Compensation During the years ended December 31, 2014, 2013 and 2012, the Company granted Class A ‑2 profits interests to certain employees, which vest immediately or over a period of up to four years, in each case subject to repurchase provisions upon certain termination events, as described above (Note 14). These awards are accounted for as equity awards and are measured at the date of grant. For the years ended December 31, 2014, 2013 and 2012, the Company recorded $16.0 million, $13.4 million and $8.4 million in expense recognized relating to these awards, and other vesting awards granted in prior periods still subject to vesting. As of December 31, 2014, total unrecognized share ‑based compensation expense related to these Class A ‑2 profits interests that have not vested was $3.6 million and this amount is expected to be recognized over a weighted average period of 2.5 years. The fair value of the Class A ‑2 profits interests was estimated by the Company using an option pricing methodology based on expected volatility, risk ‑free rates and expected life. Expected volatility is calculated based on companies in the same peer group as the Company. The weighted ‑average assumptions used by the Company in estimating the grant date fair values of the Class A ‑2 profits interests as of December 31, 2014, 2013 and 2012 are summarized below: As of December 31, 2014 2013 2012 Expected life (in years) Expected stock price volatility % % % Expected dividend yield — — — Risk-free interest rate % % % Activity in the Class A ‑2 profits interests is as follows: Weighted Weighted Average # of Profits Average Fair Remaining Interests Value Life Outstanding December 31, 2012 $ Interests granted $ — Interests repurchased $ — Outstanding December 31, 2013 $ Interests granted $ — Interests repurchased $ — Outstanding December 31, 2014 $ As indicated in Note 14, East MIP Class B Interests are subject to time based vesting over four years and only fully vest upon the consummation of a qualifying capital transaction by the Company, including an initial public offering. As of December 31, 2014 and 2013, respectively, a capital transaction was not probable, and therefore none of the East MIP Class B interests were vested and no compensation expense was recognized relating to these awards. Upon the occurrence of a qualifying capital transaction, including the completion of an initial public offering, the Company expects to recognize compensation expense in an amount equal to the fair value of outstanding time ‑vested East MIP Class B Interests as of the date of the transaction, with the fair value of the unvested East MIP Class B Interests recognized as a compensation expense ratably over the remaining vesting period. During the years ended December 31, 2013 and 2012, certain employees have been granted Class B interests. As discussed in Note 14, Class B interests vest only upon the occurrence of both time ‑based vesting over a four year period and the consummation of a qualifying capital transaction by the Company. No Class B interests were granted during the year ended December 31, 2014. As of December 31, 2014 and 2013, respectively, a capital transaction was not probable, and therefore none of the Class B interests were vested and no compensation expense was recognized relating to previously awarded Class B interests. Upon the occurrence of a qualifying capital transaction, including the completion of an initial public offering, the Company expects to recognize compensation expense in an amount equal to the fair value of outstanding time ‑vested Class B interests as of the date of the transaction, with the fair value of the unvested Class B interests recognized as compensation expense ratably over the remaining vesting period. |
Regulatory Requirement99
Regulatory Requirement | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Regulatory Requirement | 15. Regulatory Requirement As of June 30, 2015, two subsidiaries of the Company are subject to the SEC Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital of $1.0 million for each of the two broker-dealer subsidiaries. At June 30, 2015, the subsidiaries had net capital of approximately $39.4 million and $8.2 million, which was approximately $38.4 million and $7.2 million in excess of its required net capital of $1.0 million and $1.0 million, respectively. At December 31, 2014, the subsidiaries had net capital of approximately $59.8 million and $8.1 million, which was approximately $58.8 million and $7.1 million in excess of its required net capital of $1.0 million and $1.0 million, respectively. Pursuant to NYSE and NYSE MKT (formerly NYSE Amex) rules, the Company was required to maintain $3.4 million and $3.7 million of capital in connection with the operation of the Company's Designated Market Maker (“DMM”) business as of June 30, 2015 and December 31, 2014, respectively. The required amount is determined under the exchange rules as the greater of $1 million or 15% of the market value of 60 trading units for each symbol in which the Company is registered as the DMM. | |
Virtu Financial, LLC and subsidiaries | ||
Regulatory Requirement | 16. Regulatory Requirement As of December 31, 2014, two subsidiaries of the Company are subject to the Securities Exchange Commission (“SEC”) Uniform Net Capital Rule 15c3 ‑1 which requires the maintenance of minimum net capital of $1.0 million for each of the two broker ‑dealer subsidiaries. At December 31, 2014, the subsidiaries had net capital of approximately $59.8 million and $8.1 million, which was approximately $58.8 million and $7.1 million in excess of its required net capital of $1.0 million and $1.0 million, respectively. At December 31, 2013, the subsidiaries had net capital of approximately $49.7 million and $8.0 million, which was approximately $48.7 million and $7.0 million in excess of its required net capital of $1.0 million and $1.0 million, respectively. Pursuant to NYSE and NYSE MKT (formerly NYSE Amex) rules, the Company is also required to maintain $3.7 million and $4.7 million of capital in connection with the operation of the Company’s DMM business as of December 31, 2014 and 2013, respectively. The required amount is determined under the exchange rules as the greater of $1 million or 15% of the market value of 60 trading units for each symbol in which the Company is registered as the DMM. |
Financial Instruments with Off
Financial Instruments with Off Balance Sheet Risk and Concentration of Risk | 12 Months Ended |
Dec. 31, 2014 | |
Virtu Financial, LLC and subsidiaries | |
Financial Instruments with Off Balance Sheet Risk and Concentration of Risk | 17. Financial Instruments with Off Balance Sheet Risk and Concentration of Risk The Company maintains U.S. checking accounts with balances frequently in excess of $250,000 . The Federal Deposit Insurance Corporation (“FDIC”) insures combined accounts up to $250,000 . Credit Risk Credit risk represents the maximum potential loss that the Company would incur if the counterparties failed to perform pursuant to the terms of their agreements with the Company. The Company regularly transacts business with major U.S. and foreign financial institutions. The Company is subject to credit risk to the extent that the brokers may be unable to fulfill their obligations either to return the Company’s securities or repay amounts owed. In the normal course of its securities activities, the Company may be required to pledge securities as collateral, whereby the prime brokers have the right, under the terms of the prime brokerage agreements, to sell or repledge the securities of the Company. The Company manages credit risk by limiting the total amount of arrangements outstanding, both by individual counterparty and in the aggregate, by monitoring the size and maturity structure of its portfolio and by applying uniform credit standards for all activities associated with credit risk. 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. Currency Risk Though predominantly invested in U.S. dollar ‑denominated financial instruments, the Company may invest in securities or maintain cash denominated in currencies other than the U.S. dollar. The Company is exposed to risks that the exchange rate of the U.S. dollar relative to other currencies may change in a manner that has an adverse effect on the reported value of the Company’s assets and liabilities denominated in currencies other than the U.S. dollar. Market Risk The Company is exposed to market risks that arise from equity price risk, foreign currency exchange rate fluctuations and changes in commodity prices. Management has established procedures to actively monitor and minimize market and credit risks. In addition, the Company has sold securities that it does not currently own and will, therefore, be obligated to purchase such securities at a future date. The Company has recorded these obligations in the consolidated financial statements at fair values of the related securities and will incur a loss if the fair value of the securities increases subsequent to the period end. Off Balance Sheet Financial Instruments The Company enters into various transactions involving derivative instruments and other off balance sheet financial instruments, including futures. 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 contracts provide for delayed delivery of the underlying instrument. The contractual or notional amounts related to these financial instruments reflect the volume and activity and do not reflect the amounts at risk. Futures contracts are executed on an exchange, and cash settlement is made on a daily basis for market movements. Accordingly, futures contracts generally do not have credit risk. Market risk is substantially dependent upon the value of the underlying derivative instruments and is affected by market forces, such as volatility and changes in interest and foreign exchange rates. |
Geographic Information101
Geographic Information | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Geographic Information | 16. Geographic Information The Company operates its business in the U.S. and internationally, primarily in Europe and Asia. Significant transactions and balances between geographic regions occur primarily as a result of certain of our subsidiaries incurring operating expenses such as employee compensation, communications and data processing and other overhead costs, for the purpose of providing execution, clearing and other support services to affiliates. Charges for transactions between regions are designed to approximate full costs. Intra-region income and expenses and related balances have been eliminated in the geographic information presented below to accurately reflect the external business conducted in each geographical region. The revenues are attributed to countries based on the locations of the subsidiaries. The following table presents total revenues by geographic area for the six months ended June 30, 2015 and 2014: For the Six Months Ended June 30, (in thousands) 2015 2014 Revenues: United States $ $ Australia — Ireland Singapore Total revenues $ $ | |
Virtu Financial, LLC and subsidiaries | ||
Geographic Information | 18. Geographic Information The Company operates its business in the U.S. and internationally, primarily in Europe and Asia. Significant transactions and balances between geographic regions occur primarily as a result of certain of our subsidiaries incurring operating expenses such as employee compensation, communications and data processing and other overhead costs, for the purpose of providing execution, clearing and other support services to affiliates. Charges for transactions between regions are designed to approximate full costs. Intra ‑region income and expenses and related balances have been eliminated in the geographic information presented below to accurately reflect the external business conducted in each geographical region. The revenues are attributed to countries based on the locations of the subsidiaries. The following table presents total revenues by geographic area for the years ended December 31, 2014, 2013 and 2012: For the Years Ended, December 31, 2014 2013 2012 Revenues: United States $ $ $ Australia Ireland Singapore United Kingdom — Total revenues $ $ $ |
Parent Company
Parent Company | 12 Months Ended |
Dec. 31, 2014 | |
Virtu Financial, LLC and subsidiaries | |
Parent Company | 19. Parent Company Guarantees. The Company guarantees the indebtedness of its direct subsidiary under the senior secured credit facility (Note 8). The outstanding principal balance of the term loan under the senior secured credit facility totaled $502.7 million and $510.0 million at December 31, 2014 and 2013, respectively. Transactions with Affiliates Dividends received from VFH for the three years ended December 31, 2014, 2013 and 2012 were $165.7 million, $429.1 million and $129.0 million, respectively. Virtu Financial LLC (Parent Company Only) Statements of Financial Condition December 31, December 31, (In thousands, except interest data) 2014 2013 Assets Cash and cash equivalents $ $ Receivable from subsidiaries Investments in subsidiaries, equity basis Other assets Total assets $ $ Liabilities, redeemable interest and members’ equity Liabilities Payable to subsidiaries $ $ Accounts payable and accrued expenses and other liabilities Total liabilities $ $ Class A-1 redeemable interest Members’ equity Class A-1 — Authorized and Issued — 1,964,826 and 1,964,826 interests, Outstanding — 1,964,826 and 1,964,826 interests, at December 31, 2014 and 2013, respectively Additional paid-in capital Class A-2 — Authorized and Issued — 101,381,332 and 100,627,010 interests, Outstanding — 99,855,666 and 99,459,345 interests at December 31, 2014 and 2013, respectively Accumulated deficit Accumulated other comprehensive income (loss) Total members’ equity $ $ Total liabilities, redeemable interest and members’ equity $ $ Virtu Financial LLC (Parent Company Only) Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012 For the Years Ended December 31, (In thousands) 2014 2013 2012 Revenues: Service fee revenue $ $ $ Expenses: Operations and administrative Total expenses Income (loss) before equity in income of subsidiaries — — Equity in income of subsidiaries, net of tax Net Income $ $ $ Other Comprehensive Income, net of taxes: Translation adjustment Comprehensive income $ $ $ Virtu Financial LLC (Parent Company Only) Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012 For the Years Ended December 31, (In thousands) 2014 2013 2012 Cash flows from operating activities Net Income $ $ $ Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of subsidiaries Changes in operating assets and liabilities: Net cash provided by operating activities Cash flows from investing activities Investments in subsidiaries, equity basis Net cash provided by investing activities Cash flows from financing activities Proceeds from issuance of Class A-2 interests in connection with the Temasek transaction described in Note 13 — — Repurchase of Class A-2 interests in connection with the Temasek transaction described in Note 13 — — Repurchase of Class A-2 interests Member distributions Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and equivalents, beginning of period Cash and equivalents, end of period $ $ $ Non-cash financing activities Temasek transaction described in Note 13 — — — Repurchase of Class A-2 interests — — |
Subsequent Events103
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Subsequent Events | 18. Subsequent Events The Company has evaluated subsequent events for adjustment to or disclosure in its condensed consolidated financial statements through the date of the report, and has not identified any recordable or disclosable events, not otherwise reported in these condensed consolidated financial statements or the notes thereto, except for the following: Virtu Financial made profit distributions to its members, including the Company, in the amount of $10.0 million, on August 4, 2015. The Company’s Board of Directors declared a dividend of $0.24 per share of Class A common stock and Class B common stock that is payable on September 15, 2015 to holders of record as of September 1, 2015. | |
Virtu Financial, LLC and subsidiaries | ||
Subsequent Events | 20. Subsequent Events The Company has evaluated subsequent events through February 19, 2015, the date the consolidated financial statements were issued. The Company did not note any subsequent events requiring disclosure to the consolidated financial statements except for the following. The Company made tax and profit distributions to its members in the amount of $48.8 million and $21.2 million, respectively, from January 1, 2015 to February 19, 2015. The Company has entered into a new office lease agreement with a commencement date of January 16, 2015 and a minimum commitment of $7.6 million that is included in the table in Note 12. As a result, the Company plans to vacate its current office space, which is under a non ‑cancellable lease agreement ending on February 28, 2019. The Company is in the process of determining the impact of the cease ‑use of the current premise but estimates that it could recognize a maximum loss of approximately $3.0 million from future lease payments and a write ‑off of leasehold improvements if it cannot successfully find a sub ‑lessee. |
Summary of Significant Accou104
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Use of Estimates | Use of Estimates The Company's condensed consolidated financial statements are prepared in conformity with US GAAP, which require management to make estimates and assumptions regarding fair value measurements including trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash equivalents as highly liquid investments with original maturities of less than three months when acquired. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. | |
Securities Borrowed and Securities Loaned | Securities Borrowed and Securities Loaned The Company conducts securities borrowing and lending activities with external counterparties. In connection with these transactions, the Company receives or posts collateral. These transactions are collateralized by cash or securities. In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received. Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the condensed consolidated statements of financial condition. For these transactions, the interest received or paid by the Company is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the condensed consolidated statements of comprehensive income. | |
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase | Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company's policy that its custodian takes possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the condensed consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. | |
Receivables from/Payables to Broker-dealers and Clearing Organizations | Receivables from/Payables to Broker ‑Dealers and Clearing Organizations Amounts receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At June 30, 2015 and December 31, 2014, receivables from and payables to broker-dealers and clearing organizations primarily represent amounts due for unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing organizations or exchanges and balances due from or due to prime brokers in relation to the Company’s trading. The Company also offsets the outstanding principal balances on all short term credit facilities against amounts receivable from and payable to broker-dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, substantially all of the Company’s securities transactions, money balances, and security positions are transacted with several brokers. The Company is subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Company’s management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties. | |
Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased | Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased The Company carries financial instruments owned, including those pledged as collateral, and financial instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded net on a trade-date basis in trading income on the condensed consolidated statements of comprehensive income. | |
Fair Value Measurements | Fair Value Measurements At June 30, 2015 and December 31, 2014, substantially all of Company’s financial assets and liabilities, except for long-term borrowings and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short-term in nature and were carried at amounts that approximate fair value. The Company’s assets and liabilities have been categorized based upon a fair value hierarchy in accordance with ASC 820 ‑10, Fair Value Measurements and Disclosures. ASC 820 ‑10 defines fair value 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. Fair value measurements are not adjusted for transaction costs. The recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market is prohibited. ASC 820 ‑10 requires a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). 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; Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the six months ended June 30, 2015 and 2014. | |
Derivative Instruments | Derivative Instruments Derivative instruments used for trading purposes, including economic hedges of trading instruments, are carried at fair value. Fair values for exchange-traded derivatives, principally futures, are based on quoted market prices. Fair values for over-the-counter derivative instruments, principally forward contracts, are based on the values of the underlying financial instruments within the contract. The underlying derivative instruments are currencies which are actively traded. Derivative instruments used for economic hedging purposes include futures, forward contracts, and options. Unrealized gains or losses on these derivative instruments are recognized currently in the condensed consolidated statements of comprehensive income as trading income, net. The Company does not apply hedge accounting as defined in ASC 815, Derivatives and Hedging ; accordingly all derivative instruments are recorded at fair value with changes in fair values reflected in earnings. | |
Property and Equipment | Property and Equipment Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisition of MTH which were recorded at fair value on the date of acquisition. Depreciation is provided using the straight ‑line method over estimated useful lives of the underlying asset. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. The useful lives of furniture and fixtures are as follows: Furniture, fixtures and equipment to years Leasehold improvements years or length of lease term, whichever is shorter | |
Capitalized Software | Capitalized Software The Company accounts for the costs of computer software developed or obtained for internal use in accordance with ASC 350-40, Internal ‑Use Software . The Company capitalizes costs of materials, consultants, and payroll and payroll related costs for employees incurred in developing internal-use software. Costs incurred during the preliminary project and post-implementation stages are charged to expense. Management’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The Company’s capitalized software development costs were approximately $5.5 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. The related amortization expense was approximately $5.2 million and $5.0 million for the six months ended June 30, 2015 and 2014, respectively. Additionally, in connection with the compensation charge related to Class B and East MIP interests recognized upon the IPO (Note 13), the Company capitalized and amortized $9.5 million and $8.0 million of the costs, respectively, which were included within charges related to share-based compensation at IPO, net, in the condensed consolidated statements of comprehensive income. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software on the accompanying condensed consolidated statements of financial condition and are amortized over a period of 1.4 to 2.5 years, which represents the estimated useful lives of the underlying software. | |
Goodwill | Goodwill 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 for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We operate in one operating segment, which is our only reporting unit. The goodwill impairment test is a two-step process. The first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the 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 equal to that excess. The primary valuation methods we use to estimate the fair value of our reporting unit are the income and market approaches. In applying the income approach, projected available cash flows and the terminal value are discounted to present value to derive an indication of fair value of the business enterprise. The market approach compares the reporting unit to selected reasonably similar publicly-traded companies. The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. There were no triggering events that would have caused the Company to assess goodwill for impairment during the six months ended June 30, 2015 and 2014, respectively. | |
Intangible Assets | Intangible Assets The Company amortizes finite-lived intangible assets over their estimated useful lives. Finite-lived intangible assets are tested for impairment annually or when impairment indicators are present, and if impaired, written down to fair value. | |
Exchange Memberships and Stock | Exchange Memberships and Stock Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value, in accordance with ASC 940-340, Financial Services — Broker and Dealers. Exchange stock includes shares that entitles the Company to certain trading privileges. The shares are marked to market with the corresponding gain or loss recorded in the condensed consolidated statements of comprehensive income. The Company’s exchange memberships and stock are included in other assets on the condensed consolidated statements of financial condition. | |
Trading Income | Trading Income Trading income is comprised 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 condensed consolidated statements of comprehensive income. | |
Interest and Dividends Income/Interest and Dividends Expense | Interest and Dividends Income/Interest and Dividends Expense Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of interest earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related lines of credit. Dividends on financial instruments owned including those pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex-dividend date and interest is recognized on the accrual basis. | |
Technology Services | Technology Services Technology services revenues consist of fees paid by third parties for licensing of our proprietary risk management and trading infrastructure technology and provision of associated management and hosting services. These fees include both upfront and annual recurring fees. Revenue from technology services is recognized once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized ratably over the contractual service period. | |
Rebates | Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying condensed consolidated statements of comprehensive income. | |
Income Taxes | Income Taxes Virtu Financial is a limited liability company and is treated as a pass-through entity for United States federal, state, and local income tax purposes. Accordingly, no provision for United States federal, state, and local income tax was required prior to the consummation of the Reorganization Transactions and the IPO. Subsequent to consummation of the Reorganization Transactions and the IPO, the Company is subject to U.S. federal, state and local income taxes on its taxable income, which is proportional to the percentage of Virtu Financial owned by the Company. The Company’s subsidiaries are subject to income taxes in the respective jurisdictions in which they operate. Certain of the Company’s 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. The Company recognizes 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 condensed 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. The Company’s 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 Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of June 30, 2015 and December 31, 2014 or the results of operations for the six months ended June 30, 2015 and 2014. | |
Comprehensive Income and Foreign Currency Translation | Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to Accounting Standards Update 2011-05, Comprehensive Income. Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). OCI is comprised of revenues, expenses, gains and losses that are reported in the comprehensive income section of the consolidated statements of comprehensive income, but are excluded from reported net income. The Company’s OCI is comprised of foreign currency translation adjustments. Assets and liabilities of operations having non-U.S. dollar functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in other comprehensive income, a separate component of members’ equity. | |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based compensation transactions with employees under the provisions of ASC 718, Compensation: Stock Compensation. ASC 718 requires a share-based payment transaction with employees to be 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. With respect to equity awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the 2015 Management Incentive Plan, the fair value of the stock option grants are determined through the application of the Black-Scholes-Merton model. Similarly, the fair value of the restricted stock units is determined based on the IPO per share price or the market price at the time of grant. The fair value of share based awards granted to employees is expensed based on the vesting conditions. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 (fiscal year 2018 for the Company) and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 on its condensed consolidated financial statements. Repurchase Agreements — In June, 2014, the FASB released ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendment changes the accounting for repurchase financing transactions and for repurchase-to-maturity transactions to secured borrowing accounting. The accounting changes are effective for the Company beginning in the first quarter of 2015. The effect of the accounting changes on transactions outstanding as of the effective date are required to be presented as a cumulative effect adjustment to retained earnings as January 1, 2015. The Company currently does not enter into these types of repurchase transactions. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual tenor of the agreements, as well as a discussion of the potential risks associated with the agreements and the related collateral pledged, and how those risks are managed. Additional disclosures are required for repurchase agreements, securities lending transactions, sales with a total return swap, and other similar transfers of financial assets that are accounted for as a sale. Compensation — In June 2014, the Emerging Issues Task Force (the “EITF”) of the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendment requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 (fiscal year 2016 for the Company). Earlier adoption is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Going Concern — In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new standard will be effective in the first annual period ending after December 15, 2016 (fiscal year 2017 for the Company). Earlier adoption is permitted. The Company will implement this new standard on the required effective date. Hybrid Financial Instruments — In November 2014, the EITF of the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. The ASU requires that for hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. An entity should use judgment based on an evaluation of all the relevant terms and features, and should consider the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company) and interim periods within fiscal years beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Debt Issuance Costs — In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, rather than as a deferred charge asset. The ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company), and interim periods within those fiscal years. Early adoption of the amendment is permitted and the Company has elected to early adopt this ASU effective as of June 30, 2015. The new guidance has been applied on a retrospective basis, wherein the accompanying condensed consolidated statements of financial condition have been adjusted to reflect the period-specific effects of applying the new guidance. Refer to Note 8 for additional information regarding the impact of this guidance on the Company’s condensed consolidated financial statements. | |
Virtu Financial, LLC and subsidiaries | ||
Use of Estimates | Use of Estimates The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions regarding fair value measurements including trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash equivalents as highly liquid investments with original maturities of less than three months when acquired. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. | |
Securities Borrowed and Securities Loaned | Securities Borrowed and Securities Loaned The Company conducts securities borrowing and lending activities with external counterparties. In connection with these transactions, the Company receives or posts collateral. These transactions are collateralized by cash or securities. In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received. Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the consolidated statements of financial condition. For these transactions, the interest received or paid by the Company is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the consolidated statements of comprehensive income. | |
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase | Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company’s policy that its custodian takes possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. | |
Receivables from/Payables to Broker-dealers and Clearing Organizations | Receivables from/Payables to Broker ‑Dealers and Clearing Organizations Amounts receivable from broker ‑dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At December 31, 2014 and 2013, receivables from and payables to broker ‑dealers and clearing organizations primarily represent amounts due for unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing organizations or exchanges and balances due from or due to prime brokers in relation to the Company’s trading. The Company also offsets the outstanding principal balances on all short term credit facilities against amounts receivable from and payable to broker ‑dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, substantially all of the Company’s securities transactions, money balances, and security positions are transacted with several brokers. The Company is subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Company’s management monitors the financial condition of such brokers and does not anticipate any losses from these counterparties. | |
Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased | Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased The Company carries financial instruments owned, including those pledged as collateral, and financial instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded net on a trade ‑date basis in trading income on the consolidated statements of comprehensive income. | |
Fair Value Measurements | Fair Value Measurements At December 31, 2014 and 2013, substantially all of Company’s financial assets and liabilities, except for long ‑term borrowings and certain exchange memberships, were carried at fair value based on published market prices and are marked to market daily or were short ‑term in nature and were carried at amounts that approximate fair value. The Company’s assets and liabilities have been categorized based upon a fair value hierarchy in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 ‑10, Fair Value Measurements and Disclosures . ASC 820 ‑10 defines fair value 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. Fair value measurements are not adjusted for transaction costs. The recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market is prohibited. ASC 820 ‑10 requires a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). 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; Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out are recognized based on the beginning fair value of the period in which they occurred. There were no transfers of financial instruments between levels during the years ended December 31, 2014 and 2013. | |
Derivative Instruments | Derivative Instruments Derivative instruments used for trading purposes, including economic hedges of trading instruments, are carried at fair value. Fair values for exchange ‑traded derivatives, principally futures, are based on quoted market prices. Fair values for over ‑the ‑counter derivative instruments, principally forward contracts, are based on the values of the underlying financial instruments within the contract. The underlying derivative instruments are currencies which are actively traded. Derivative instruments used for economic hedging purposes include futures, forward contracts, and options. Unrealized gains or losses on these derivative instruments are recognized currently in the consolidated statements of comprehensive income as trading income, net. The Company does not apply hedge accounting as defined in FASB ASC 815, Derivatives and Hedging ; accordingly all derivative instruments are recorded at fair value with changes in fair values reflected in earnings. | |
Property and Equipment | Property and Equipment Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisition of MTH which were recorded at fair value on the date of acquisition. Depreciation is provided using the straight ‑line method over estimated useful lives of the underlying asset. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. The useful lives of furniture and fixtures are as follows: Furniture, fixtures and equipment 3 to years Leasehold improvements years or length of lease term, whichever is shorter | |
Capitalized Software | Capitalized Software The Company accounts for the costs of computer software developed or obtained for internal use in accordance with ASC 350 ‑40, Internal ‑Use Software . The Company capitalizes costs of materials, consultants and payroll and payroll related costs for employees incurred in developing internal ‑use software. Costs incurred during the preliminary project and post ‑implementation stages are charged to expense. Management’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The Company’s capitalized software development costs were approximately $9.8 million, $10.1 million and $11.2 million for the years ended December 31, 2014, 2013 and 2012, respectively, with related amortization expense of approximately $10.4 million, $11.0 million and $9.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software on the accompanying consolidated statements of financial condition and are amortized over a period of 1.4 to 2.5 years, which represents the estimated useful lives of the underlying software. | |
Goodwill | Goodwill 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 for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We operate in one operating segment, which is our only reporting unit. The goodwill impairment test is a two ‑step process. The first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the 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 equal to that excess. The primary valuation methods we use to estimate the fair value of our reporting unit are the income and market approaches. In applying the income approach, projected available cash flows and the terminal value are discounted to present value to derive an indication of fair value of the business enterprise. The market approach compares the reporting unit to selected reasonably similar publicly ‑traded companies. The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. Based on the results of the annual impairment tests performed, no goodwill impairment was recognized during the years ended December 31, 2014, 2013 and 2012, respectively. | |
Intangible Assets | Intangible Assets The Company amortizes finite ‑lived intangible assets over their estimated useful lives. Finite ‑lived intangible assets are tested for impairment annually or when impairment indicators are present, and if impaired, written down to fair value. As a result of the acquisition of certain assets from CCG, the Company previously recorded an identifiable intangible asset, the rights for CCG to act as a DMM on the NYSE and the NYSE MKT (formerly NYSE Amex) (the “DMM” rights). The Company determined that the DMM rights were fully impaired as of December 31, 2012 and has written down the $1.5 million of remaining value of these assets to zero on its consolidated statements of comprehensive income for the year ended December 31, 2012. The Company has no indefinite ‑lived intangibles. | |
Exchange Memberships and Stock | Exchange Memberships and Stock Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value, in accordance with ASC 940 ‑340, Financial Services — Broker and Dealers . Exchange stock includes shares that the Company is required to hold in order to maintain certain trading privileges. The shares are marked to market with the corresponding gain or loss recorded in the consolidated statements of comprehensive income. During the years ended December 31, 2014, 2013 and 2012, respectively, the Company recorded an impairment charge of $0 , $0.6 million and $0.4 million on its membership seats which is recorded in operations and administrative expenses on the consolidated statements of comprehensive income. The Company’s exchange memberships and stock are included in other assets on the consolidated statements of financial condition. | |
Trading Income | Trading Income Trading income consists of trading gains and losses that are recorded on a trade date basis and reported on a net basis. Trading income is comprised 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. | |
Interest and Dividends Income/Interest and Dividends Expense | Interest and Dividends Income/Interest and Dividends Expense Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of interest earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related lines of credit. Dividends on financial instruments owned including those pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex ‑dividend date and interest is recognized on the accrual basis. | |
Technology Services | Technology Services Technology services revenues consist of fees paid by third parties for licensing of our proprietary risk management and trading infrastructure technology and provision of associated management and hosting services. These fees include both upfront and annual recurring fees. Revenue from technology services is recognized once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized ratably over the contractual service period. | |
Rebates | Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying consolidated statements of comprehensive income. | |
Initial Public Offering Fees and Expenses | Initial Public Offering Fees and Expenses Initial public offering fees and expenses reflect costs directly attributable to the Company’s initial public offering process, which was postponed in April 2014. The Company 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. | |
Transaction Advisory Fees and Expenses | Transaction Advisory Fees and Expenses Transaction advisory fees and expenses reflect professional fees incurred by the Company in connection with the Temasek Transaction, which was consummated on December 31, 2014, as described in Note 13. | |
Income Taxes | Income Taxes The Company is a limited liability company and is treated as a pass ‑through entity for United States federal, state, and local income tax purposes. Accordingly, no provision for income taxes is required. Certain of the Company’s 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. The Company recognizes 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. The Company’s 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 Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of December 31, 2014 and 2013 or the results of operations for the years ended December 31, 2014, 2013 and 2012. | |
Comprehensive Income and Foreign Currency Translation | Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the consolidated statements of comprehensive income pursuant to Accounting Standards Update (“ASU”) 2011 ‑05, Comprehensive Income . Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). OCI is comprised of revenues, expenses, gains and losses that are reported in the comprehensive income section of the consolidated statements of comprehensive income, but are excluded from reported net income. The Company’s OCI is comprised of foreign currency translation adjustments. Assets and liabilities of operations having non ‑U.S. dollar functional currencies are translated at year ‑end exchange rates, and income statement accounts are translated at weighted average exchange rates for the year. Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in other comprehensive income, a separate component of members’ equity. | |
Share-Based Compensation | Share ‑Based Compensation The Company accounts for share ‑based compensation transactions with employees under the provisions of ASC 718, Compensation: Stock Compensation . ASC 718 requires a share ‑based payment transaction with employees to be measured based on the fair value of equity instruments issued. The fair value of awards issued for compensation is 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. The fair value of share based awards granted to employees is expensed based on the vesting conditions. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Balance Sheet (Topic 210) — In December 2011, the FASB issued ASU 2011 ‑11, Disclosures about Offsetting Assets and Liabilities . The amended standard requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. In January 2013, the FASB issued ASU 2013 ‑01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarified that the scope of ASU 2011 ‑11 is limited to include derivatives accounted for in accordance with Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset or subject to an enforceable master netting arrangement or similar agreement. The Company has adopted the provisions of ASU 2011 ‑11 and the adoption did not have a material impact on the consolidated financial statements of the Company other than additional disclosures. Comprehensive Income — In February 2013, the FASB issued ASU 2013 ‑02, Comprehensive Income. The amendment created new disclosure requirements requiring entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. The Company has retrospectively adopted the provision of ASU 2013 ‑02 on January 1, 2013 and the adoption did not have a material impact on the consolidated financial statements of the Company other than additional disclosures. Income Taxes — In July 2013, the FASB issued an ASU to clarify the financial statement presentation of an unrecognized tax benefit when a NOL carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a NOL carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. The ASU was effective for reporting periods beginning after December 15, 2013. The adoption of this ASU did not have an impact on the Company’s Consolidated Financial Statements. Revenue — In May 2014, the FASB issued ASU No. 2014 ‑09, Revenue from Contracts with Customers. ASU 2014 ‑09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014 ‑09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014 ‑09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016, and for nonpublic entities for annual reporting periods beginning after December 15, 2017 (fiscal year 2018 for the Company) and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014 ‑09. The Company is currently evaluating the potential effects of the adoption of ASU 2014 ‑09 on its Consolidated Financial Statements. Repurchase Agreements — In June, 2014, the FASB released ASU No. 2014 ‑11, Repurchase ‑to ‑Maturity Transactions, Repurchase Financings, and Disclosures . The amendment changes the accounting for repurchase financing transactions and for repurchase ‑to ‑maturity transactions to secured borrowing accounting. The accounting changes are effective for the Company beginning in the first quarter of 2015. The effect of the accounting changes on transactions outstanding as of the effective date are required to be presented as a cumulative effect adjustment to retained earnings as of January 1, 2015. The Company is currently evaluating the impact of the new amendment but believes the effect on the consolidated statements of financial condition and comprehensive income will be immaterial, as the Company currently does not enter into these types of repurchase transactions. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual tenor of the agreements, as well as a discussion of the potential risks associated with the agreements and the related collateral pledged, and how those risks are managed. Additional disclosures are required for repurchase agreements, securities lending transactions, sales with a total return swap and other similar transfers of financial assets that are accounted for as a sale. The new disclosures are required to be presented beginning in the second quarter of 2015. Compensation — In June 2014, the Emerging Issues Task Force (the “EITF”) of the FASB issued ASU 2014 ‑12, Accounting for Share ‑Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period . The amendment requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. Going Concern — In August 2014, the FASB issued ASU 2014 ‑15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new standard will be effective in the first annual period ending after December 15, 2016. Earlier adoption is permitted. The Company will implement this new standard on the required effective date. Hybrid Financial Instruments — In November 2014, the EITF of the FASB issued ASU 2014 ‑16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity . The ASU requires that for hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. An entity should use judgment based on an evaluation of all the relevant terms and features, and should consider the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015 (fiscal year 2016 for the Company) and interim periods within fiscal years beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. |
Summary of Significant Accou105
Summary of Significant Accounting Policies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Schedule of useful lives of furniture and fixtures | Furniture, fixtures and equipment to years Leasehold improvements years or length of lease term, whichever is shorter | |
Virtu Financial, LLC and subsidiaries | ||
Schedule of useful lives of furniture and fixtures | Furniture, fixtures and equipment 3 to years Leasehold improvements years or length of lease term, whichever is shorter |
Goodwill and Intangible Asse106
Goodwill and Intangible Assets (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Schedule of acquired intangible assets | As of June 30, 2015 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — 1.4 to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ As of December 31, 2014 (in thousands) Gross Carrying Accumulated Net Carrying Useful Lives Amount Amortization Amount (Years) Purchased technology $ $ $ — 1.4 to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ | |
Virtu Financial, LLC and subsidiaries | ||
Schedule of acquired intangible assets | As of December 31, 2014 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — to ETF issuer relationships ETF buyer relationships $ $ $ As of December 31, 2013 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — to ETF issuer relationships ETF buyer relationships $ $ $ |
Receivables from_Payables to107
Receivables from/Payables to Broker-Dealers and Clearing Organizations (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Summary of receivables from and payables to brokers-dealers and clearing organizations | June 30, December 31, (in thousands) 2015 2014 Assets Due from prime brokers $ $ Deposits with clearing organizations Net equity with futures commission merchants Unsettled trades Securities failed to deliver Total receivables from broker-dealers and clearing organizations $ $ Liabilities Due to prime brokers $ $ Net equity with futures commission merchants Unsettled trades Securities failed to receive Total payables to broker-dealers and clearing organizations $ $ | |
Virtu Financial, LLC and subsidiaries | ||
Summary of receivables from and payables to brokers-dealers and clearing organizations | December 31, (in thousands) 2014 2013 Assets Due from prime brokers $ $ Deposits with clearing organizations Net equity with futures commission merchants Unsettled trades Securities failed to deliver Total receivables from broker-dealers and clearing organizations $ $ Liabilities Due to prime brokers $ $ Net equity with futures commission merchants Unsettled trades Securities failed to receive Total payables to broker-dealers and clearing organizations $ $ |
Collateralized Transactions 108
Collateralized Transactions (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Schedule of amounts related to collateralized transactions | June 30, December 31, (In thousands) 2015 2014 Securities received as collateral: Securities borrowed $ $ Securities purchased under agreements to resell $ $ | |
Schedule of financial instruments owned and pledged, where counterparty has right to repledge | June 30, December 31, (In thousands) 2015 2014 Equities $ $ Exchange traded notes $ $ | |
Virtu Financial, LLC and subsidiaries | ||
Schedule of amounts related to collateralized transactions | December 31, (in thousands) 2014 2013 Securities received as collateral: Securities borrowed $ $ Securities purchased under agreements to resell $ $ | |
Schedule of financial instruments owned and pledged, where counterparty has right to repledge | December 31, (in thousands) 2014 2013 Equities $ $ Exchange traded notes U.S. government obligations — $ $ |
Property, Equipment and Capi109
Property, Equipment and Capitalized Software (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Virtu Financial, LLC and subsidiaries | |
Schedule of property, equipment and capitalized software | December 31, (in thousands) 2014 2013 Capitalized software costs $ $ Leasehold improvements Furniture and equipment Land — Less: Accumulated depreciation and amortization Total property, equipment and capitalized software, net $ $ |
Borrowings (Tables)110
Borrowings (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Schedule of aggregate future required principal payments based on terms of loan | (in thousands) 2015 $ 2016 2017 2018 and thereafter Total maturities of long-term debt $ | |
Virtu Financial, LLC and subsidiaries | ||
Schedule of aggregate future required principal payments based on terms of loan | (in thousands) 2015 $ 2016 2017 2018 and thereafter Total maturities of long-term debt $ |
Financial Assets and Liabili111
Financial Assets and Liabilities (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Summary of fair value measurements measured on a recurring basis | Fair value measurements for those items measured on a recurring basis are summarized below as of June 30, 2015: June 30, 2015 Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Counter- Identical Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and Non-U.S. government obligations — — Exchange traded notes — — — Interest rate swaps — — — Currency forwards — — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and Non-U.S. government obligations — — — Exchange traded notes — — — Interest rate swaps — — — Currency forwards — — Options — — — $ $ $ — $ $ Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2014: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Counter- Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — Interest rate swaps — — — $ $ $ — $ $ | |
Schedule showing the netting of certain financial assets | June 30, 2015 Net Amounts of Gross Amounts Not Gross Amounts Assets Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Assets Financial Condition Financial Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — — — Options — — Interest rate swaps — — — Total $ $ $ $ $ — $ December 31, 2014 Gross Amounts Not Net Amounts of Offset in the Gross Amounts Assets Condensed Consolidated Offset in the Presented in the Statement of Gross Condensed Condensed Financial Condition Amounts of Consolidated Consolidated Cash Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Assets Financial Condition Financial Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — Options — — Total $ $ $ $ $ — $ | |
Schedule showing the netting of certain financial liabilities | Net Amounts of Gross Amounts Not Gross Amounts Liabilities Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — Total $ $ $ $ $ $ Net Amounts of Gross Amounts Not Gross Amounts Liabilities Offset In the Offset in the Presented in the Condensed Consolidated Gross Condensed Condensed Statement of Amounts of Consolidated Consolidated Financial Condition Recognized Statement of Statement of Financial Cash Collateral Net (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — — Total $ $ $ $ $ $ | |
Virtu Financial, LLC and subsidiaries | ||
Summary of fair value measurements measured on a recurring basis | Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2014: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Counter- Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. and non-U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — Interest rate swaps — — — $ $ $ — $ $ Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2013: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Counter- Assets Inputs Inputs Party Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ $ $ — $ — $ U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — Options — — — $ $ $ — $ $ Financial instruments owned, pledged as collateral: Equity securities $ $ — $ — $ — $ U.S. government obligations — — — Exchange traded notes — — — $ $ — $ — $ — $ Other Assets Exchange stock $ $ — $ — $ — $ $ $ — $ — $ — $ Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ $ $ — $ — $ U.S. government obligations — — — Exchange traded notes — — — Currency forwards — — — Options — — — $ $ $ — $ $ | |
Schedule showing the netting of certain financial assets | December 31, 2014 Gross Amounts Not Net Amounts of Offset in the Gross Amounts Assets Presented Consolidated Offset in the in the Statement of Gross Consolidated Consolidated Financial Condition Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Net Assets Condition Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ — $ $ $ — $ Securities purchased under agreements to resell — — — Trading assets, at fair value: Currency forwards — — Options — — Total $ $ $ $ $ — $ December 31, 2013 Gross Amounts Not Net Amounts of Offset in the Gross Amounts Assets Presented Consolidated Offset in the in the Statement of Gross Consolidated Consolidated Financial Condition Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Net Assets Condition Condition Instruments Received Amount Offsetting of Financial Assets: Securities borrowed $ $ $ $ — $ Securities purchased under agreements to resell — Trading assets, at fair value: Currency forwards — — Options — — Total $ $ $ $ $ $ | |
Schedule showing the netting of certain financial liabilities | Net Amounts of Gross Amounts Not Liabilities Offset in the Gross Amounts Presented Consolidated Offset in the in the Statement of Gross Consolidated Consolidated Financial Condition Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Net Liabilities Condition Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ — $ $ $ $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — Options — — — Interest rate swaps — — — Total $ $ $ $ $ $ Net Amounts of Gross Amounts Not Liabilities Offset in the Gross Amounts Presented Consolidated Offset in the in the Statement of Gross Consolidated Consolidated Financial Condition Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Net Liabilities Condition Condition Instruments Pledged Amount Offsetting of Financial Liabilities: Securities loaned $ — $ $ $ — $ Securities sold under agreements to repurchase — — — Trading liabilities, at fair value: Currency forwards — — — — Options — — Total $ $ $ $ $ $ |
Derivative Instruments (Tabl112
Derivative Instruments (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Schedule of fair value of derivative instruments on a gross basis | June 30, 2015 December 31, 2014 (in thousands) Fair Fair Derivatives Assets Balance Sheet Classification Value Notional Value Notional Equities futures Receivables from broker dealers and clearing organizations $ $ $ $ Commodity futures Receivables from broker dealers and clearing organizations Currency futures Receivables from broker dealers and clearing organizations Treasury futures Receivables from broker dealers and clearing organizations Options Financial instruments owned Currency forwards Financial instruments owned Interest rate swaps Financial instruments owned — — Fair Fair Derivatives Liabilities Balance Sheet Classification Value Notional Value Notional Equities futures Payables to broker dealers and clearing organizations $ — $ — $ $ Commodity futures Payables to broker dealers and clearing organizations Currency futures Payables to broker dealers and clearing organizations Options Financial instruments sold, not yet purchased Treasury futures Payables to broker dealers and clearing organizations — — — — Custom equity based swap Payables to broker dealers and clearing organizations — — — — Currency forwards Financial instruments sold, not yet purchased Interest rate swaps Financial instruments sold, not yet purchased | |
Schedule of gain impact that derivative instruments not designated as hedging instruments had on results of operations | For the Six Months Ended June 30, (in thousands) 2015 2014 Futures $ $ Currency forwards Options Interest rate swaps — $ $ | |
Virtu Financial, LLC and subsidiaries | ||
Schedule of fair value of derivative instruments on a gross basis | 2014 2013 (in thousands) Fair Fair Derivatives Assets Balance Sheet Classification Value Notional Value Notional Equities futures Receivables from broker-dealers and clearing organizations $ $ $ $ Commodity futures Receivables from broker-dealers and clearing organizations Currency futures Receivables from broker-dealers and clearing organizations Treasury futures Receivables from broker-dealers and clearing organizations Options Financial instruments owned Currency forwards Financial instruments owned Fair Fair Derivatives Liabilities Balance Sheet Classification Value Notional Value Notional Equities futures Payables to broker-dealers and clearing organizations $ $122,948 $ $769,929 Commodity futures Payables to broker-dealers and clearing organizations Currency futures Payables to broker-dealers and clearing organizations Treasury futures Payables to broker-dealers and clearing organizations — — Custom equity based swap Payables to broker-dealers and clearing organizations — — Options Financial instruments sold, not yet purchased Currency forwards Financial instruments sold, not yet purchased Interest rate swap Financial instruments sold, not yet purchased — — | |
Schedule of gain impact that derivative instruments not designated as hedging instruments had on results of operations | For the Years Ended December 31, (in thousands) 2014 2013 2012 Futures $ $ $ Currency forwards Options Interest rate swaps — — $ $ $ |
Income Taxes (Tables)
Income Taxes (Tables) - Virtu Financial, LLC and subsidiaries | 12 Months Ended |
Dec. 31, 2014 | |
Summary of net income (loss) before income taxes | December 31, 2014 2013 2012 (in thousands) U.S. operations $ $ $ Non-U.S. operations $ $ $ |
Summary of provision for income taxes | December 31, (in thousands) 2014 2013 2012 Current provision Non-U.S. $ $ $ Deferred provision (benefit) Non-U.S. Provision for income taxes $ $ $ |
Schedule of reconciliation of the tax provision at U.S. Federal Statutory Rate to the provision for income taxes | December 31, 2014 2013 2012 (in thousands, except percentages) Tax provision at the U.S. federal statutory rate $ — — $ — — $ — — Foreign taxes % % % Provision for income taxes $ % $ % $ % |
Schedule of components of deferred tax assets and liabilities | December 31, (in thousands) 2014 2013 Deferred income tax assets Other $ $ Share-based compensation $ Fixed assets $ — Tax credits and net operating loss carryforwards — Total deferred income tax assets $ $ Deferred income tax liabilities Fixed assets $ — $ Total deferred income tax liabilities $ — $ |
Commitments, Contingencies a114
Commitments, Contingencies and Guarantees (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Virtu Financial, LLC and subsidiaries | |
Schedule of minimum rental commitments under non-cancellable leases | Minimum Rental Commitments Year Ending December 31 Capital Operating 2015 $ $ 2016 2017 2018 — 2019 — Thereafter — Total minimum lease payments |
Share-based Compensation (Ta115
Share-based Compensation (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Schedule of weighted-average assumptions used in estimating the grant date fair values | Six Months Ended June 30, 2015 Expected life (in years) Weighted average risk free interest rate % Expected stock price volatility % Expected dividend yield % Weighted average fair value at grant date $ | |
Class A-2 profits interests | ||
Schedule of activity in the Class A-2 profits interests | Weighted Weighted Average Number of Average Fair Remaining Interests Value Life Outstanding December 31, 2013 $ Interests granted — $ — — Interests repurchased $ — Outstanding June 30, 2014 $ Outstanding December 31, 2014 $ Interests granted $ Interests repurchased $ — Outstanding June 30, 2015 $ | |
Virtu Financial, LLC and subsidiaries | Class A-2 profits interests | ||
Schedule of activity in the Class A-2 profits interests | Weighted Weighted Average # of Profits Average Fair Remaining Interests Value Life Outstanding December 31, 2012 $ Interests granted $ — Interests repurchased $ — Outstanding December 31, 2013 $ Interests granted $ — Interests repurchased $ — Outstanding December 31, 2014 $ | |
Schedule of weighted-average assumptions used in estimating the grant date fair values | As of December 31, 2014 2013 2012 Expected life (in years) Expected stock price volatility % % % Expected dividend yield — — — Risk-free interest rate % % % |
Geographic Information (Tabl116
Geographic Information (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Geographic Information | ||
Schedule of total revenues by geographic area | For the Six Months Ended June 30, (in thousands) 2015 2014 Revenues: United States $ $ Australia — Ireland Singapore Total revenues $ $ | For the Years Ended, December 31, 2014 2013 2012 Revenues: United States $ $ $ Australia Ireland Singapore United Kingdom — Total revenues $ $ $ |
Parent Company (Tables)
Parent Company (Tables) - Virtu Financial, LLC and subsidiaries | 12 Months Ended |
Dec. 31, 2014 | |
Condensed Statements of Financial Condition | December 31, December 31, (In thousands, except interest data) 2014 2013 Assets Cash and cash equivalents $ $ Receivable from subsidiaries Investments in subsidiaries, equity basis Other assets Total assets $ $ Liabilities, redeemable interest and members’ equity Liabilities Payable to subsidiaries $ $ Accounts payable and accrued expenses and other liabilities Total liabilities $ $ Class A-1 redeemable interest Members’ equity Class A-1 — Authorized and Issued — 1,964,826 and 1,964,826 interests, Outstanding — 1,964,826 and 1,964,826 interests, at December 31, 2014 and 2013, respectively Additional paid-in capital Class A-2 — Authorized and Issued — 101,381,332 and 100,627,010 interests, Outstanding — 99,855,666 and 99,459,345 interests at December 31, 2014 and 2013, respectively Accumulated deficit Accumulated other comprehensive income (loss) Total members’ equity $ $ Total liabilities, redeemable interest and members’ equity $ $ |
Condensed Statements of Comprehensive Income | For the Years Ended December 31, (In thousands) 2014 2013 2012 Revenues: Service fee revenue $ $ $ Expenses: Operations and administrative Total expenses Income (loss) before equity in income of subsidiaries — — Equity in income of subsidiaries, net of tax Net Income $ $ $ Other Comprehensive Income, net of taxes: Translation adjustment Comprehensive income $ $ $ |
Condensed Statements of Cash Flows | For the Years Ended December 31, (In thousands) 2014 2013 2012 Cash flows from operating activities Net Income $ $ $ Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of subsidiaries Changes in operating assets and liabilities: Net cash provided by operating activities Cash flows from investing activities Investments in subsidiaries, equity basis Net cash provided by investing activities Cash flows from financing activities Proceeds from issuance of Class A-2 interests in connection with the Temasek transaction described in Note 13 — — Repurchase of Class A-2 interests in connection with the Temasek transaction described in Note 13 — — Repurchase of Class A-2 interests Member distributions Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and equivalents, beginning of period Cash and equivalents, end of period $ $ $ Non-cash financing activities Temasek transaction described in Note 13 — — — Repurchase of Class A-2 interests — — |
Organization and Basis of Pr118
Organization and Basis of Presentation (Details) - segment | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Number of reportable segments | 1 | 1 |
Virtu Financial, LLC and subsidiaries | ||
Number of reportable segments | 1 |
Summary of Significant Accou119
Summary of Significant Accounting Policies - Securities Borrowed and Securities Loaned Annual (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Securities Borrowed and Securities Loaned | ||
Minimum initial collateral advanced or received expressed as a percentage of fair value of the underlying securities borrowed or loaned | 102.00% | |
Virtu Financial, LLC and subsidiaries | ||
Securities Borrowed and Securities Loaned | ||
Minimum initial collateral advanced or received expressed as a percentage of fair value of the underlying securities borrowed or loaned | 102.00% |
Summary of Significant Accou120
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair Value Measurements | ||||
Transfers of financial instruments between levels | $ 0 | $ 0 | ||
Virtu Financial, LLC and subsidiaries | ||||
Fair Value Measurements | ||||
Transfers of financial instruments between levels | $ 0 | $ 0 |
Summary of Significant Accou121
Summary of Significant Accounting Policies - Property and Equipment and Capitalized Software (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Capitalized Software | |||||
Capitalized software development costs | $ 5.5 | $ 5 | |||
Amortization expense for capitalized software | $ 5.2 | $ 5 | |||
Leasehold improvements | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 7 years | ||||
Minimum | Furniture, fixtures and equipment | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 3 years | ||||
Minimum | Capitalized software | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 1 year 4 months 24 days | ||||
Maximum | Furniture, fixtures and equipment | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 7 years | ||||
Maximum | Capitalized software | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 2 years 6 months | ||||
Virtu Financial, LLC and subsidiaries | |||||
Capitalized Software | |||||
Capitalized software development costs | $ 9.8 | $ 10.1 | $ 11.2 | ||
Amortization expense for capitalized software | $ 10.4 | $ 11 | $ 9.4 | ||
Virtu Financial, LLC and subsidiaries | Minimum | Furniture, fixtures and equipment | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 3 years | ||||
Virtu Financial, LLC and subsidiaries | Minimum | Capitalized software | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 1 year 4 months 24 days | ||||
Virtu Financial, LLC and subsidiaries | Maximum | Furniture, fixtures and equipment | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 7 years | ||||
Virtu Financial, LLC and subsidiaries | Maximum | Leasehold improvements | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 7 years | ||||
Virtu Financial, LLC and subsidiaries | Maximum | Capitalized software | |||||
Property and Equipment and Capitalized Software | |||||
Estimated useful lives | 2 years 6 months |
Summary of Significant Accou122
Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015USD ($)segment | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($)segment | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | |
Goodwill | |||||
Number of reportable segments | segment | 1 | 1 | |||
Goodwill impairment | $ 0 | $ 0 | |||
Intangible Assets | |||||
Finite-lived asset, net | $ 1,308,000 | $ 1,414,000 | |||
Virtu Financial, LLC and subsidiaries | |||||
Goodwill | |||||
Number of reportable segments | segment | 1 | ||||
Goodwill impairment | $ 0 | $ 0 | $ 0 | ||
Intangible Assets | |||||
Write-off of finite-lived intangible assets | 0 | 0 | 1,489,000 | ||
Finite-lived asset, net | 1,414,000 | $ 1,626,000 | |||
Indefinite-lived intangibles | $ 0 | ||||
Virtu Financial, LLC and subsidiaries | The "DMM" rights | |||||
Intangible Assets | |||||
Write-off of finite-lived intangible assets | 1,500,000 | ||||
Finite-lived asset, net | $ 0 |
Summary of Significant Accou123
Summary of Significant Accounting Policies - Exchange Memberships and Stock (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Virtu Financial, LLC and subsidiaries | Operations and administrative expense | Exchange stock | |||
Exchange Memberships and Stock | |||
Impairment charge | $ 0 | $ 0.6 | $ 0.4 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Sep. 14, 2012 | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Purchase price allocation | ||||
Goodwill | $ 715,379 | $ 715,379 | ||
Virtu Financial, LLC and subsidiaries | ||||
Purchase price allocation | ||||
Goodwill | $ 715,379 | $ 715,379 | ||
Virtu Financial, LLC and subsidiaries | European Exchange traded funds ("ETF") Market Making assets | ||||
Business Acquisition [Line Items] | ||||
Total consideration | $ 2,300 | |||
Cash consideration | 1,900 | |||
Consideration paid as equity award | 400 | |||
Purchase price allocation | ||||
Intangible assets | 1,900 | |||
Goodwill | $ 400 |
Goodwill and Intangible Asse125
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Goodwill | |||||
Goodwill | $ 715,379 | $ 715,379 | |||
Goodwill impairment | $ 0 | $ 0 | |||
Virtu Financial, LLC and subsidiaries | |||||
Goodwill | |||||
Goodwill | 715,379 | $ 715,379 | |||
Goodwill impairment | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asse126
Goodwill and Intangible Assets - Acquired intangible assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Acquired intangible assets | |||
Gross Carrying Amount | $ 111,900 | $ 111,900 | |
Accumulated Amortization | 110,592 | 110,486 | |
Net Carrying Amount | 1,308 | 1,414 | |
Purchased technology | |||
Acquired intangible assets | |||
Gross Carrying Amount | 110,000 | 110,000 | |
Accumulated Amortization | $ 110,000 | $ 110,000 | |
Purchased technology | Minimum | |||
Acquired intangible assets | |||
Useful Lives | 1 year 4 months 24 days | 1 year 4 months 24 days | |
Purchased technology | Maximum | |||
Acquired intangible assets | |||
Useful Lives | 2 years 6 months | 2 years 6 months | |
ETF issuer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 950 | $ 950 | |
Accumulated Amortization | 296 | 243 | |
Net Carrying Amount | $ 654 | $ 707 | |
Useful Lives | 9 years | 9 years | |
ETF buyer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 950 | $ 950 | |
Accumulated Amortization | 296 | 243 | |
Net Carrying Amount | $ 654 | $ 707 | |
Useful Lives | 9 years | 9 years | |
Virtu Financial, LLC and subsidiaries | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 111,900 | $ 111,900 | |
Accumulated Amortization | 110,486 | 110,274 | |
Net Carrying Amount | 1,414 | 1,626 | |
Virtu Financial, LLC and subsidiaries | Purchased technology | |||
Acquired intangible assets | |||
Gross Carrying Amount | 110,000 | 110,000 | |
Accumulated Amortization | $ 110,000 | $ 110,000 | |
Virtu Financial, LLC and subsidiaries | Purchased technology | Minimum | |||
Acquired intangible assets | |||
Useful Lives | 1 year 4 months 24 days | 1 year 4 months 24 days | |
Virtu Financial, LLC and subsidiaries | Purchased technology | Maximum | |||
Acquired intangible assets | |||
Useful Lives | 2 years 6 months | 2 years 6 months | |
Virtu Financial, LLC and subsidiaries | ETF issuer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 950 | $ 950 | |
Accumulated Amortization | 243 | 137 | |
Net Carrying Amount | $ 707 | $ 813 | |
Useful Lives | 9 years | 9 years | |
Virtu Financial, LLC and subsidiaries | ETF buyer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 950 | $ 950 | |
Accumulated Amortization | 243 | 137 | |
Net Carrying Amount | $ 707 | $ 813 | |
Useful Lives | 9 years | 9 years |
Goodwill and Intangible Asse127
Goodwill and Intangible Assets - Amortization and Impairment (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Acquired intangible assets | |||||
Amortization expense relating to finite-lived intangible assets | $ 106,000 | $ 106,000 | |||
Finite-lived asset, net | $ 1,308,000 | $ 1,414,000 | |||
Virtu Financial, LLC and subsidiaries | |||||
Acquired intangible assets | |||||
Amortization expense relating to finite-lived intangible assets | 211,000 | $ 1,011,000 | $ 71,654,000 | ||
Finite-lived asset, net | 1,414,000 | 1,626,000 | |||
Impairment on intangible assets | $ 0 | $ 0 | 1,489,000 | ||
Virtu Financial, LLC and subsidiaries | The "DMM" rights | |||||
Acquired intangible assets | |||||
Finite-lived asset, net | 0 | ||||
Impairment on intangible assets | $ 1,500,000 |
Receivables from_Payables to128
Receivables from/Payables to Broker-Dealers and Clearing Organizations (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Assets | |||
Due from prime brokers | $ 265,075 | $ 67,556 | |
Deposits with clearing organizations | 33,790 | 29,595 | |
Net equity with futures commission merchants | 168,897 | 155,060 | |
Unsettled trades | 49,764 | 55,929 | |
Securities failed to deliver | 173,637 | 79,512 | |
Total receivables from broker-dealers and clearing organizations | 691,163 | 387,652 | |
Liabilities | |||
Due to prime brokers | 25,436 | 313,623 | |
Net equity with futures commission merchants | 52,614 | 60,973 | |
Unsettled trades | 474,013 | 311,322 | |
Securities failed to receive | 16,396 | 285 | |
Total payables to broker-dealers and clearing organizations | 568,459 | 686,203 | |
Outstanding principal balance | $ 206,400 | 183,000 | |
Virtu Financial, LLC and subsidiaries | |||
Assets | |||
Due from prime brokers | 67,556 | $ 75,866 | |
Deposits with clearing organizations | 29,595 | 37,692 | |
Net equity with futures commission merchants | 155,060 | 112,807 | |
Unsettled trades | 55,929 | 94,967 | |
Securities failed to deliver | 79,512 | 106,409 | |
Total receivables from broker-dealers and clearing organizations | 387,652 | 427,741 | |
Liabilities | |||
Due to prime brokers | 313,623 | 247,485 | |
Net equity with futures commission merchants | 60,973 | 151,035 | |
Unsettled trades | 311,322 | 131,491 | |
Securities failed to receive | 285 | 218 | |
Total payables to broker-dealers and clearing organizations | 686,203 | 530,229 | |
Outstanding principal balance | $ 182,900 | $ 241,100 |
Collateralized Transactions 129
Collateralized Transactions (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Securities received as collateral: | |||
Securities borrowed | $ 652,620 | $ 470,553 | |
Securities purchased under agreements to resell | 31,038 | 31,472 | |
Total amounts related to collateralized transactions | 683,658 | 502,025 | |
Financial instruments owned and pledged, where the counterparty has the right to repledge | |||
Financial instruments owned and pledged, where counterparty has right to repledge | 399,306 | 236,375 | |
Equity securities | |||
Financial instruments owned and pledged, where the counterparty has the right to repledge | |||
Financial instruments owned and pledged, where counterparty has right to repledge | 376,583 | 219,159 | |
Exchange traded notes | |||
Financial instruments owned and pledged, where the counterparty has the right to repledge | |||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 22,723 | 17,216 | |
Virtu Financial, LLC and subsidiaries | |||
Securities received as collateral: | |||
Securities borrowed | 470,553 | $ 690,450 | |
Securities purchased under agreements to resell | 31,472 | 162,956 | |
Total amounts related to collateralized transactions | 502,025 | 853,406 | |
Financial instruments owned and pledged, where the counterparty has the right to repledge | |||
Financial instruments owned and pledged, where counterparty has right to repledge | 236,375 | 415,179 | |
Virtu Financial, LLC and subsidiaries | Equity securities | |||
Financial instruments owned and pledged, where the counterparty has the right to repledge | |||
Financial instruments owned and pledged, where counterparty has right to repledge | 219,159 | 379,276 | |
Virtu Financial, LLC and subsidiaries | Exchange traded notes | |||
Financial instruments owned and pledged, where the counterparty has the right to repledge | |||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 17,216 | 33,938 | |
Virtu Financial, LLC and subsidiaries | U.S. government obligations | |||
Financial instruments owned and pledged, where the counterparty has the right to repledge | |||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 1,965 |
Property, Equipment and Capi130
Property, Equipment and Capitalized Software (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Property, Equipment and Capitalized Software | |||
Less: Accumulated depreciation and amortization | $ (107,605) | $ (84,579) | |
Total property, equipment and capitalized software, net | $ 47,113 | 44,644 | |
Virtu Financial, LLC and subsidiaries | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | 129,223 | $ 94,982 | |
Less: Accumulated depreciation and amortization | (84,579) | (57,397) | |
Total property, equipment and capitalized software, net | 44,644 | 37,585 | |
Virtu Financial, LLC and subsidiaries | Capitalized software | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | 47,484 | 37,962 | |
Virtu Financial, LLC and subsidiaries | Leasehold improvements | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | 8,799 | 10,226 | |
Virtu Financial, LLC and subsidiaries | Furniture, fixtures and equipment | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | 72,863 | $ 46,794 | |
Virtu Financial, LLC and subsidiaries | Land | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | $ 77 |
Property, Equipment and Capi131
Property, Equipment and Capitalized Software - Depreciation and Amortization (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Equipment and Capitalized Software | |||||
Amortization expense for capitalized software | $ 5.2 | $ 5 | |||
Virtu Financial, LLC and subsidiaries | |||||
Property, Equipment and Capitalized Software | |||||
Amortization expense for capitalized software | $ 10.4 | $ 11 | $ 9.4 | ||
Virtu Financial, LLC and subsidiaries | Depreciation and Amortization | |||||
Property, Equipment and Capitalized Software | |||||
Depreciation expense | 20 | 12.9 | 8.6 | ||
Amortization expense for capitalized software | $ 10.4 | $ 11 | $ 9.4 |
Borrowings - Broker-Dealer Cred
Borrowings - Broker-Dealer Credit Facilities (Details) - USD ($) $ in Thousands | Jul. 22, 2015 | Jul. 22, 2013 | Oct. 05, 2012 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Credit Facilities | ||||||||
Interest expense | $ 14,861 | $ 15,299 | ||||||
Broker-Dealer Credit Facility on an uncommitted basis | ||||||||
Credit Facilities | ||||||||
Maximum borrowing capacity | $ 100,000 | |||||||
Interest rate (as a percent) | 1.13% | 1.12% | ||||||
Interest expense | $ 400 | $ 200 | ||||||
Broker-Dealer Credit Facility on committed basis | LIBOR rate | ||||||||
Credit Facilities | ||||||||
Interest rate margin (as a percent) | 1.25% | |||||||
Virtu Financial, LLC and subsidiaries | ||||||||
Credit Facilities | ||||||||
Interest expense | $ 30,894 | $ 24,646 | $ 26,460 | |||||
Virtu Financial, LLC and subsidiaries | Broker-Dealer Credit Facilities | ||||||||
Credit Facilities | ||||||||
Interest expense | 500 | $ 300 | ||||||
Virtu Financial, LLC and subsidiaries | Broker-Dealer Credit Facility on an uncommitted basis | ||||||||
Credit Facilities | ||||||||
Maximum borrowing capacity | $ 100,000 | |||||||
Interest rate (as a percent) | 1.12% | 1.04% | ||||||
Outstanding principal balance | $ 0 | $ 72,800 | ||||||
Virtu Financial, LLC and subsidiaries | Broker-Dealer Credit Facility on committed basis | ||||||||
Credit Facilities | ||||||||
Maximum borrowing capacity | $ 75,000 | |||||||
Outstanding principal balance | $ 0 | $ 0 | ||||||
Virtu Financial, LLC and subsidiaries | Broker-Dealer Credit Facility on committed basis | Minimum | ||||||||
Credit Facilities | ||||||||
Maximum borrowing capacity | $ 50,000 | |||||||
Virtu Financial, LLC and subsidiaries | Broker-Dealer Credit Facility on committed basis | LIBOR rate | ||||||||
Credit Facilities | ||||||||
Interest rate margin (as a percent) | 1.25% | |||||||
Virtu Financial, LLC and subsidiaries | Broker-Dealer Credit Facility on committed basis | Base rate | ||||||||
Credit Facilities | ||||||||
Interest rate margin (as a percent) | 1.25% | |||||||
Virtu Financial, LLC and subsidiaries | Broker-dealer Demand promissory notes dated March 20, 2009 | ||||||||
Credit Facilities | ||||||||
Interest expense | $ 300 | |||||||
Virtu Financial, LLC and subsidiaries | Broker-dealer Demand promissory notes dated March 20, 2009 | Base rate | ||||||||
Credit Facilities | ||||||||
Interest rate margin (as a percent) | 2.00% | |||||||
Virtu Financial, LLC and subsidiaries | Broker-dealer Demand promissory notes dated March 20, 2009 | Prime rate | ||||||||
Credit Facilities | ||||||||
Interest rate margin (as a percent) | 2.00% |
Borrowings - Short-Term Credit
Borrowings - Short-Term Credit Facilities (Details) - USD ($) | Oct. 17, 2014 | Jun. 24, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 06, 2014 | Mar. 06, 2013 | Feb. 17, 2012 | Aug. 08, 2011 | Jun. 29, 2011 |
Short-Term Credit Facilities | ||||||||||||
Interest expense | $ 14,861,000 | $ 15,299,000 | ||||||||||
Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Interest expense | $ 30,894,000 | $ 24,646,000 | $ 26,460,000 | |||||||||
Short-Term Credit Facilities | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Outstanding principal balance | 228,900,000 | $ 183,000,000 | ||||||||||
Interest expense | $ 2,700,000 | $ 1,600,000 | ||||||||||
Short-term credit facility April 2010 | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Interest rate at end of period (as a percent) | 2.05% | |||||||||||
Interest rate (as a percent) | 1.68% | |||||||||||
Outstanding principal balance | $ 26,700,000 | $ 13,300,000 | ||||||||||
Interest expense | $ 500,000 | $ 500,000 | 600,000 | |||||||||
Short-term credit facility April 2010 | Base rate | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Interest rate margin (as a percent) | 2.00% | 2.00% | ||||||||||
Short-term credit facility April 2010 | Prime rate | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Interest rate margin (as a percent) | 2.00% | 2.00% | ||||||||||
Short-term credit facility June 2011 | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Available for borrowing capacity | $ 300,000,000 | $ 200,000,000 | ||||||||||
Outstanding principal balance | $ 124,300,000 | $ 206,100,000 | ||||||||||
Interest expense | $ 2,100,000 | $ 2,200,000 | 2,200,000 | |||||||||
Short-term credit facility June 2011 | Federal funds rate | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Interest rate margin (as a percent) | 1.00% | 1.00% | ||||||||||
Target rate (as a percent) | 0.25% | 0.25% | ||||||||||
Short-term credit facility August 2011 | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Available for borrowing capacity | $ 10,000,000 | |||||||||||
Outstanding principal balance | $ 0 | $ 0 | ||||||||||
Interest expense | 100,000 | 50,000 | $ 0 | |||||||||
Short-term credit facility March 2013 | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Outstanding principal balance | 31,900,000 | 21,200,000 | ||||||||||
Interest expense | $ 500,000 | $ 400,000 | ||||||||||
Short-term credit facility March 2013 | Federal funds rate | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Interest rate at end of period (as a percent) | 2.12% | 2.08% | ||||||||||
Interest rate margin (as a percent) | 2.00% | 2.00% | ||||||||||
Short term credit facility June 2014 | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Available for borrowing capacity | $ 20,000,000 | |||||||||||
Outstanding principal balance | $ 100,000 | |||||||||||
Interest expense | 20,000 | |||||||||||
Short term credit facility June 2014 | LIBOR rate | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Interest rate margin (as a percent) | 1.10% | |||||||||||
Short term credit facility August 2014 | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Available for borrowing capacity | $ 5,000,000 | $ 3,000,000 | ||||||||||
Interest rate (as a percent) | 9.00% | |||||||||||
Outstanding principal balance | 0 | |||||||||||
Interest expense | 100,000 | |||||||||||
Minimum number of business days' notice by financial institution to change interest rate | 10 days | |||||||||||
Minimum | Short-term credit facility April 2010 | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Available for borrowing capacity | $ 35,000,000 | $ 35,000,000 | ||||||||||
Maximum borrowing capacity as a percentage of initial margin requirement | 80.00% | 80.00% | ||||||||||
Minimum | Short-term credit facility March 2013 | Virtu Financial, LLC and subsidiaries | ||||||||||||
Short-Term Credit Facilities | ||||||||||||
Available for borrowing capacity | $ 40,000,000 | |||||||||||
Maximum borrowing capacity as a percentage of initial margin requirement | 80.00% |
Borrowings - Senior Secured Cre
Borrowings - Senior Secured Credit Facility (Details) - USD ($) | Nov. 08, 2013 | May. 01, 2013 | Jul. 08, 2011 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Senior Secured Credit Facility | ||||||||
Credit Facilities | ||||||||
Face amount | $ 320,000,000 | |||||||
Discount (as a percent) | 2.00% | |||||||
Issued amount | $ 313,600,000 | |||||||
Discount | $ 6,400,000 | $ 1,700,000 | $ 1,900,000 | |||||
Percentage of the non-voting stock of the entity's domestic subsidiaries' direct foreign subsidiaries collateralized | 100.00% | |||||||
Percentage of the voting stock of the entity's domestic subsidiaries' direct foreign subsidiaries as collateral | 65.00% | |||||||
Annual amortization obligation as a percentage of original principal amount | 15.00% | |||||||
Annual amortization obligation as a percentage of outstanding principal amount | 1.00% | |||||||
Reduction in incremental spread upon consummation of qualifying initial public offering (as a percent) | 0.50% | |||||||
Interest rate (as a percent) | 5.25% | |||||||
Outstanding principal amount | $ 510,000,000 | |||||||
Increase in principal amount outstanding | 106,700,000 | $ 150,000,000 | ||||||
Aggregate future required minimum principal payments based on the terms of loan | ||||||||
2,015 | $ 2,550,000 | |||||||
2,016 | 5,100,000 | |||||||
2,017 | 5,100,000 | |||||||
2018 and thereafter | 489,600,000 | |||||||
Total maturities of long-term debt | 510,000,000 | |||||||
Net carrying amount of deferred financing fees capitalized | 4,500,000 | 5,100,000 | ||||||
Amortization expense related to the deferred financing fees | 600,000 | $ 500,000 | ||||||
Accretion related to the net carrying amount of debt discount | $ 200,000 | $ 200,000 | ||||||
Senior Secured Credit Facility | First option | ||||||||
Credit Facilities | ||||||||
Fixed interest rate base (as a percent) | 2.25% | |||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.00% | |||||||
Senior Secured Credit Facility | First option | Federal funds effective rate | ||||||||
Credit Facilities | ||||||||
Interest rate added to variable rate (as a percent) | 0.50% | |||||||
Senior Secured Credit Facility | First option | Adjusted LIBOR rate for the interest period | ||||||||
Credit Facilities | ||||||||
Interest rate added to variable rate (as a percent) | 1.00% | |||||||
Senior Secured Credit Facility | Second option | ||||||||
Credit Facilities | ||||||||
Fixed interest rate base (as a percent) | 1.25% | |||||||
Additional interest margin added to fixed and variable rates (as a percent) | 4.00% | |||||||
Virtu Financial, LLC and subsidiaries | ||||||||
Credit Facilities | ||||||||
Discount | $ 2,925,000 | |||||||
Outstanding principal amount | 502,714,000 | |||||||
Aggregate future required minimum principal payments based on the terms of loan | ||||||||
2,015 | 2,914,000 | |||||||
2,016 | 5,100,000 | |||||||
2,017 | 5,100,000 | |||||||
2018 and thereafter | 489,600,000 | |||||||
Total maturities of long-term debt | 502,714,000 | |||||||
Virtu Financial, LLC and subsidiaries | Senior Secured Credit Facility | ||||||||
Credit Facilities | ||||||||
Face amount | $ 320,000,000 | |||||||
Discount (as a percent) | 2.00% | |||||||
Issued amount | $ 313,600,000 | |||||||
Discount | $ 6,400,000 | $ 1,900,000 | 2,300,000 | |||||
Percentage of the non-voting stock of the entity's domestic subsidiaries' direct foreign subsidiaries collateralized | 100.00% | |||||||
Percentage of the voting stock of the entity's domestic subsidiaries' direct foreign subsidiaries as collateral | 65.00% | |||||||
Increase in principal amount | $ 106,700,000 | $ 150,000,000 | ||||||
Annual amortization obligation as a percentage of original principal amount | 15.00% | |||||||
Annual amortization obligation as a percentage of outstanding principal amount | 1.00% | |||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.50% | |||||||
Reduction in incremental spread upon consummation of qualifying initial public offering (as a percent) | 0.50% | |||||||
Interest rate (as a percent) | 5.75% | |||||||
Loss on extinguishment of a portion of unamortized debt issuance costs and debt discount | 5,500,000 | |||||||
Aggregate future required minimum principal payments based on the terms of loan | ||||||||
Net carrying amount of deferred financing fees capitalized | $ 5,100,000 | 6,000,000 | ||||||
Amortization expense related to the deferred financing fees | 1,000,000 | 1,600,000 | $ 2,600,000 | |||||
Accretion related to the net carrying amount of debt discount | $ 400,000 | $ 700,000 | $ 1,700,000 | |||||
Virtu Financial, LLC and subsidiaries | Senior Secured Credit Facility | First option | ||||||||
Credit Facilities | ||||||||
Fixed interest rate base (as a percent) | 1.25% | |||||||
Additional interest margin added to fixed and variable rates (as a percent) | 4.50% | |||||||
Prime rate | Virtu Financial, LLC and subsidiaries | Senior Secured Credit Facility | ||||||||
Credit Facilities | ||||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.50% | |||||||
Federal funds rate | Virtu Financial, LLC and subsidiaries | Senior Secured Credit Facility | ||||||||
Credit Facilities | ||||||||
Interest rate added to variable rate (as a percent) | 0.50% | |||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.50% | |||||||
Eurodollar | Virtu Financial, LLC and subsidiaries | Senior Secured Credit Facility | ||||||||
Credit Facilities | ||||||||
Interest rate added to variable rate (as a percent) | 1.00% | |||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.50% | |||||||
LIBOR rate | Virtu Financial, LLC and subsidiaries | Senior Secured Credit Facility | ||||||||
Credit Facilities | ||||||||
Additional interest margin added to fixed and variable rates (as a percent) | 4.50% | |||||||
Minimum | Virtu Financial, LLC and subsidiaries | Senior Secured Credit Facility | ||||||||
Credit Facilities | ||||||||
Fixed interest rate base (as a percent) | 2.25% |
Financial Assets and Liabili135
Financial Assets and Liabilities - Recurring (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Fair value measurements measured on a recurring basis | ||||
Transfers of financial assets between levels | $ 0 | $ 0 | ||
Assets | ||||
Financial instruments owned, at fair value | 1,658,086 | $ 1,307,933 | ||
Financial instruments owned, pledged as collateral | 399,306 | 236,375 | ||
Other assets: exchange stock | 9,162 | 8,205 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,785,628 | 1,037,634 | ||
Equity securities | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 376,583 | 219,159 | ||
Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 22,723 | 17,216 | ||
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,612,848 | 1,282,216 | $ 1,343,105 | |
Financial instruments owned, pledged as collateral | 399,306 | 236,375 | 415,179 | |
Other assets: exchange stock | 9,162 | 8,205 | 7,318 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,771,117 | 973,456 | 1,272,491 | |
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,562,612 | 1,216,532 | 1,307,528 | |
Financial instruments owned, pledged as collateral | 376,583 | 219,159 | 379,276 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,668,114 | 859,836 | 1,042,385 | |
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 13,760 | |||
Financial instruments owned, pledged as collateral | 1,965 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 198,464 | |||
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U S And Non-U S Government Obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 5,172 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 34,033 | 21,107 | ||
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, at fair value | 45,064 | 65,684 | 21,817 | |
Financial instruments owned, pledged as collateral | 22,723 | 17,216 | 33,938 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 68,970 | 92,513 | 31,642 | |
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Exchange stock | ||||
Assets | ||||
Other assets: exchange stock | 9,162 | 8,205 | 7,318 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Financial instruments owned, at fair value | 406,744 | 1,655,346 | 208,199 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 376,017 | 1,693,807 | 168,991 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | 361,506 | 1,629,637 | 179,650 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 373,870 | 1,645,820 | 163,070 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 190 | 321 | 948 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 214 | 79 | 2,038 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate swaps | ||||
Assets | ||||
Financial instruments owned, at fair value | 424 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 434 | 12 | ||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 35,360 | 17,166 | 27,601 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,499 | 47,896 | 3,883 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | U S And Non-U S Government Obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 9,264 | 8,222 | ||
Fair value measurements measured on a recurring basis | Counterparty Netting | ||||
Assets | ||||
Financial instruments owned, at fair value | (361,506) | (1,629,629) | (163,070) | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | (361,506) | (1,629,629) | (163,070) | |
Fair value measurements measured on a recurring basis | Counterparty Netting | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | (361,506) | (1,629,629) | (163,070) | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | (361,506) | (1,629,629) | (163,070) | |
Fair value measurements measured on a recurring basis | Total Fair Value | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,658,086 | 1,307,933 | 1,388,234 | |
Financial instruments owned, pledged as collateral | 399,306 | 236,375 | 415,179 | |
Other assets: exchange stock | 9,162 | 8,205 | 7,318 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,785,628 | 1,037,634 | 1,278,412 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | 8 | 16,580 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 12,364 | 16,191 | ||
Fair value measurements measured on a recurring basis | Total Fair Value | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 190 | 321 | 948 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 214 | 79 | 2,038 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Interest rate swaps | ||||
Assets | ||||
Financial instruments owned, at fair value | 424 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 434 | 12 | ||
Fair value measurements measured on a recurring basis | Total Fair Value | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,597,972 | 1,233,698 | 1,335,129 | |
Financial instruments owned, pledged as collateral | 376,583 | 219,159 | 379,276 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,669,613 | 907,732 | 1,046,268 | |
Fair value measurements measured on a recurring basis | Total Fair Value | U.S. government obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 13,760 | |||
Financial instruments owned, pledged as collateral | 1,965 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 198,464 | |||
Fair value measurements measured on a recurring basis | Total Fair Value | U S And Non-U S Government Obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 14,436 | 8,222 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 34,033 | 21,107 | ||
Fair value measurements measured on a recurring basis | Total Fair Value | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, at fair value | 45,064 | 65,684 | 21,817 | |
Financial instruments owned, pledged as collateral | 22,723 | 17,216 | 33,938 | |
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 68,970 | 92,513 | 31,642 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Exchange stock | ||||
Assets | ||||
Other assets: exchange stock | $ 9,162 | 8,205 | 7,318 | |
Virtu Financial, LLC and subsidiaries | ||||
Fair value measurements measured on a recurring basis | ||||
Transfers of financial assets between levels | 0 | 0 | ||
Assets | ||||
Financial instruments owned, at fair value | 1,307,933 | 1,388,234 | ||
Financial instruments owned, pledged as collateral | 236,375 | 415,179 | ||
Other assets: exchange stock | 8,205 | 7,318 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,037,634 | 1,278,412 | ||
Virtu Financial, LLC and subsidiaries | Equity securities | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 219,159 | 379,276 | ||
Virtu Financial, LLC and subsidiaries | U.S. government obligations | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 1,965 | |||
Virtu Financial, LLC and subsidiaries | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 17,216 | $ 33,938 | ||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,282,216 | |||
Financial instruments owned, pledged as collateral | 236,375 | |||
Other assets: exchange stock | 8,205 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 973,455 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,216,532 | |||
Financial instruments owned, pledged as collateral | 219,159 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 859,835 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U S And Non-U S Government Obligations | ||||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 21,107 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, at fair value | 65,684 | |||
Financial instruments owned, pledged as collateral | 17,216 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 92,513 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Exchange stock | ||||
Assets | ||||
Other assets: exchange stock | 8,205 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,655,346 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,693,807 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,629,637 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,645,820 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 321 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 79 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate swaps | ||||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 12 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 17,166 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 47,896 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | U S And Non-U S Government Obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 8,222 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Counterparty Netting | ||||
Assets | ||||
Financial instruments owned, at fair value | (1,629,629) | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | (1,629,629) | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Counterparty Netting | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | (1,629,629) | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | (1,629,629) | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Total Fair Value | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,307,933 | |||
Financial instruments owned, pledged as collateral | 236,375 | |||
Other assets: exchange stock | 8,205 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,037,633 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Total Fair Value | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | 8 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 16,191 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Total Fair Value | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 321 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 79 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Total Fair Value | Interest rate swaps | ||||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 12 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Total Fair Value | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,233,698 | |||
Financial instruments owned, pledged as collateral | 219,159 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 907,731 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Total Fair Value | U S And Non-U S Government Obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 8,222 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 21,107 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Total Fair Value | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, at fair value | 65,684 | |||
Financial instruments owned, pledged as collateral | 17,216 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 92,513 | |||
Virtu Financial, LLC and subsidiaries | Fair value measurements measured on a recurring basis | Total Fair Value | Exchange stock | ||||
Assets | ||||
Other assets: exchange stock | $ 8,205 |
Financial Assets and Liabili136
Financial Assets and Liabilities - Offsetting Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Securities borrowed | |||
Gross Amounts of Recognized Assets | $ 667,970 | $ 484,934 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 667,970 | 484,934 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | (660,393) | (477,559) | |
Net Amount | 7,577 | 7,375 | |
Securities purchased under agreements to resell | |||
Gross Amounts of Recognized Assets | 31,050 | 31,463 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 31,050 | 31,463 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | (31,050) | (31,463) | |
Total | |||
Gross Amounts of Recognized Assets | 1,061,140 | 2,146,355 | |
Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition | (361,506) | (1,629,629) | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 699,634 | 516,726 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | (692,047) | (509,098) | |
Net Amount | 7,587 | 7,628 | |
Currency forwards | |||
Trading assets, at fair value | |||
Gross Amounts of Recognized Assets | 361,506 | 1,629,637 | |
Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition | (361,506) | (1,629,629) | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 8 | ||
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Net Amount | 8 | ||
Options | |||
Trading assets, at fair value | |||
Gross Amounts of Recognized Assets | 190 | 321 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 190 | 321 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | (180) | (76) | |
Net Amount | 10 | 245 | |
Interest rate swaps | |||
Trading assets, at fair value | |||
Gross Amounts of Recognized Assets | 424 | ||
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 424 | ||
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | $ (424) | ||
Virtu Financial, LLC and subsidiaries | |||
Securities borrowed | |||
Gross Amounts of Recognized Assets | 484,934 | $ 708,103 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 484,934 | 708,103 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | (477,559) | (700,246) | |
Net Amount | 7,375 | 7,857 | |
Securities purchased under agreements to resell | |||
Gross Amounts of Recognized Assets | 31,463 | 162,608 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 31,463 | 162,608 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | (31,463) | (162,608) | |
Total | |||
Gross Amounts of Recognized Assets | 2,146,355 | 1,051,309 | |
Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition | (1,629,629) | (163,070) | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 516,726 | 888,239 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | (509,098) | (863,802) | |
Cash collateral received | (16,580) | ||
Net Amount | 7,628 | 7,857 | |
Virtu Financial, LLC and subsidiaries | Currency forwards | |||
Trading assets, at fair value | |||
Gross Amounts of Recognized Assets | 1,629,637 | 179,650 | |
Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition | (1,629,629) | (163,070) | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 8 | 16,580 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Cash collateral received | (16,580) | ||
Net Amount | 8 | ||
Virtu Financial, LLC and subsidiaries | Options | |||
Trading assets, at fair value | |||
Gross Amounts of Recognized Assets | 321 | 948 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 321 | 948 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | |||
Financial instruments | (76) | $ (948) | |
Net Amount | $ 245 |
Financial Assets and Liabili137
Financial Assets and Liabilities - Offsetting Liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Securities loaned | |||
Gross Amounts of Recognized Liabilities | $ 876,782 | $ 497,862 | |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 876,782 | 497,862 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (874,615) | (490,768) | |
Cash collateral received | (757) | (2,812) | |
Net Amount | 1,410 | 4,282 | |
Securities sold under agreements to repurchase | |||
Gross Amounts of Recognized Liabilities | 246 | 2,006 | |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 246 | 2,006 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (246) | (2,006) | |
Total | |||
Gross Amounts of Recognized Liabilities | 1,251,546 | 2,145,779 | |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (361,506) | (1,629,629) | |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 890,040 | 516,150 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (875,499) | (492,853) | |
Cash collateral received | (13,131) | (19,015) | |
Net Amount | 1,410 | 4,282 | |
Receivables from broker dealers and clearing organizations | |||
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Net variation margin on long and short futures contracts | 90,200 | 46,400 | |
Payables to broker dealers and clearing organizations | |||
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Net variation margin on long and short futures contracts | 89,800 | (3,600) | |
Currency forwards | |||
Trading liabilities, at fair value: | |||
Gross Amounts of Recognized Assets | 373,870 | 1,645,820 | |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (361,506) | (1,629,629) | |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 12,364 | 16,191 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Cash collateral received | (12,364) | (16,191) | |
Options | |||
Trading liabilities, at fair value: | |||
Gross Amounts of Recognized Assets | 214 | 79 | |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 214 | 79 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (214) | (79) | |
Interest rate swaps | |||
Trading liabilities, at fair value: | |||
Gross Amounts of Recognized Assets | 434 | 12 | |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 434 | 12 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (424) | ||
Cash collateral received | $ (10) | (12) | |
Virtu Financial, LLC and subsidiaries | |||
Securities loaned | |||
Gross Amounts of Recognized Liabilities | 497,862 | $ 1,029,312 | |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 497,862 | 1,029,312 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (490,768) | (1,029,215) | |
Cash collateral received | (2,812) | ||
Net Amount | 4,282 | 97 | |
Securities sold under agreements to repurchase | |||
Gross Amounts of Recognized Liabilities | 2,006 | 10,883 | |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 2,006 | 10,883 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (2,006) | (10,883) | |
Total | |||
Gross Amounts of Recognized Liabilities | 2,145,779 | 1,205,303 | |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (1,629,629) | (163,070) | |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 516,150 | 1,042,233 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (492,853) | (1,042,125) | |
Cash collateral received | (19,015) | (11) | |
Net Amount | 4,282 | 97 | |
Virtu Financial, LLC and subsidiaries | Receivables from broker dealers and clearing organizations | |||
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Net variation margin on long and short futures contracts | 46,400 | (27,300) | |
Virtu Financial, LLC and subsidiaries | Payables to broker dealers and clearing organizations | |||
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Net variation margin on long and short futures contracts | (3,600) | (3,400) | |
Virtu Financial, LLC and subsidiaries | Currency forwards | |||
Trading liabilities, at fair value: | |||
Gross Amounts of Recognized Assets | 1,645,820 | 163,070 | |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (1,629,629) | (163,070) | |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 16,191 | ||
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Cash collateral received | (16,191) | ||
Virtu Financial, LLC and subsidiaries | Options | |||
Trading liabilities, at fair value: | |||
Gross Amounts of Recognized Assets | 79 | 2,038 | |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 79 | 2,038 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Financial instruments | (79) | (2,027) | |
Cash collateral received | $ (11) | ||
Virtu Financial, LLC and subsidiaries | Interest rate swaps | |||
Trading liabilities, at fair value: | |||
Gross Amounts of Recognized Assets | 12 | ||
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 12 | ||
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | |||
Cash collateral received | $ (12) |
Derivative Instruments - Fair V
Derivative Instruments - Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Equities futures | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | $ (10,046) | $ 241 | |
Derivatives Assets, Notional | 1,441,389 | 561,029 | |
Equities futures | Payables to broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | (268) | ||
Derivatives Liabilities, Notional | 122,948 | ||
Commodity futures | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 86,901 | 42,489 | |
Derivatives Assets, Notional | 6,668,358 | 28,823,081 | |
Commodity futures | Payables to broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 90,322 | (295) | |
Derivatives Liabilities, Notional | 22,614,981 | 15,727 | |
Currency futures | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 13,333 | 3,180 | |
Derivatives Assets, Notional | 2,600,729 | 2,916,222 | |
Currency futures | Payables to broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | (519) | (3,077) | |
Derivatives Liabilities, Notional | 2,131,257 | 2,123,341 | |
Treasury futures | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | (15) | 504 | |
Derivatives Assets, Notional | 523,513 | 857,363 | |
Options | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 190 | 321 | |
Derivatives Liabilities, Fair Value | 214 | 79 | |
Options | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 190 | 321 | |
Derivatives Assets, Notional | 17,153 | 39,802 | |
Options | Financial instruments sold, not yet purchased | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 214 | 79 | |
Derivatives Liabilities, Notional | 17,909 | 12,913 | |
Currency forwards | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 361,506 | 1,629,637 | |
Derivatives Liabilities, Fair Value | 373,870 | 1,645,820 | |
Currency forwards | Financial instruments owned | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 361,506 | 1,629,637 | |
Derivatives Assets, Notional | 22,576,627 | 127,021,198 | |
Currency forwards | Financial instruments sold, not yet purchased | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 373,870 | 1,645,820 | |
Derivatives Liabilities, Notional | 24,557,934 | 125,152,639 | |
Interest rate swaps | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 424 | ||
Derivatives Liabilities, Fair Value | 434 | 12 | |
Interest rate swaps | Financial instruments owned | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 424 | ||
Derivatives Assets, Notional | 82,010 | ||
Interest rate swaps | Financial instruments sold, not yet purchased | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 434 | 12 | |
Derivatives Liabilities, Notional | $ 82,010 | 164,020 | |
Virtu Financial, LLC and subsidiaries | Equities futures | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 241 | $ (2,719) | |
Derivatives Assets, Notional | 561,029 | 232,352 | |
Virtu Financial, LLC and subsidiaries | Equities futures | Payables to broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | (268) | (3,024) | |
Derivatives Liabilities, Notional | 122,948 | 769,929 | |
Virtu Financial, LLC and subsidiaries | Commodity futures | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 42,489 | (29,642) | |
Derivatives Assets, Notional | 28,823,081 | 38,681,821 | |
Virtu Financial, LLC and subsidiaries | Commodity futures | Payables to broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | (295) | (61) | |
Derivatives Liabilities, Notional | 15,727 | 30,789 | |
Virtu Financial, LLC and subsidiaries | Currency futures | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 3,180 | 5,028 | |
Derivatives Assets, Notional | 2,916,222 | 2,281,524 | |
Virtu Financial, LLC and subsidiaries | Currency futures | Payables to broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | (3,077) | (381) | |
Derivatives Liabilities, Notional | 2,123,341 | 959,125 | |
Virtu Financial, LLC and subsidiaries | Treasury futures | Receivables from broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 504 | 4 | |
Derivatives Assets, Notional | 857,363 | 203,966 | |
Virtu Financial, LLC and subsidiaries | Treasury futures | Payables to broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 79 | ||
Derivatives Liabilities, Notional | 825,011 | ||
Virtu Financial, LLC and subsidiaries | Custom equity based swap | Payables to broker dealers and clearing organizations | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 2 | ||
Derivatives Liabilities, Notional | 15,877 | ||
Virtu Financial, LLC and subsidiaries | Options | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 321 | 948 | |
Derivatives Liabilities, Fair Value | 79 | 2,038 | |
Virtu Financial, LLC and subsidiaries | Options | Financial instruments owned | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 321 | 948 | |
Derivatives Assets, Notional | 39,802 | 105,353 | |
Virtu Financial, LLC and subsidiaries | Options | Financial instruments sold, not yet purchased | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 79 | 2,038 | |
Derivatives Liabilities, Notional | 12,913 | 92,868 | |
Virtu Financial, LLC and subsidiaries | Currency forwards | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 1,629,637 | 179,650 | |
Derivatives Liabilities, Fair Value | 1,645,820 | 163,070 | |
Virtu Financial, LLC and subsidiaries | Currency forwards | Financial instruments owned | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Assets, Fair Value | 1,629,637 | 179,650 | |
Derivatives Assets, Notional | 127,021,198 | 59,513,182 | |
Virtu Financial, LLC and subsidiaries | Currency forwards | Financial instruments sold, not yet purchased | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 1,645,820 | 163,070 | |
Derivatives Liabilities, Notional | 125,152,639 | $ 60,746,555 | |
Virtu Financial, LLC and subsidiaries | Interest rate swaps | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 12 | ||
Virtu Financial, LLC and subsidiaries | Interest rate swaps | Financial instruments sold, not yet purchased | |||
Fair value of derivative instruments on a gross basis | |||
Derivatives Liabilities, Fair Value | 12 | ||
Derivatives Liabilities, Notional | $ 164,020 |
Derivative Instruments - Not De
Derivative Instruments - Not Designated as Hedging Instruments (Details) - Not designated as hedging instruments - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | $ 619,805 | $ 136,696 | |||
Futures | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | 640,873 | 82,058 | |||
Currency forwards | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | (20,697) | 53,833 | |||
Options | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | (373) | $ 805 | |||
Interest rate swaps | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | $ 2 | ||||
Virtu Financial, LLC and subsidiaries | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | $ (112,018) | $ 191,909 | $ 285,773 | ||
Virtu Financial, LLC and subsidiaries | Futures | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | (78,234) | 191,046 | 291,087 | ||
Virtu Financial, LLC and subsidiaries | Currency forwards | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | (32,785) | (1,817) | (5,002) | ||
Virtu Financial, LLC and subsidiaries | Options | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | (987) | $ 2,680 | $ (312) | ||
Virtu Financial, LLC and subsidiaries | Interest rate swaps | |||||
Gain impact of derivative instruments not designated as hedging instruments | |||||
Gain impact that derivative instruments not designated as hedging instruments had on results of operations | $ (12) |
Income Taxes - Net Income (Loss
Income Taxes - Net Income (Loss) By Jurisdiction (Details) - Virtu Financial, LLC and subsidiaries - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Net income (loss) before income taxes | |||
U.S. operations | $ 158,487 | $ 136,744 | $ 82,330 |
Non-U.S. operations | 35,071 | 50,856 | 6,998 |
Income before income taxes | $ 193,558 | $ 187,600 | $ 89,328 |
Income Taxes - Provision (Detai
Income Taxes - Provision (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2015 | |
Deferred benefit | ||||
Unrecognized tax benefits | $ 0 | $ 0 | ||
Virtu Financial, LLC and subsidiaries | ||||
Current provision | ||||
Non-US current provision | 4,263,000 | $ 3,660,000 | $ 2,292,000 | |
Deferred benefit | ||||
Non-US deferred benefit | (762,000) | 1,737,000 | (524,000) | |
Provision (benefit) for income taxes | 3,501,000 | 5,397,000 | $ 1,768,000 | |
Unrecognized tax benefits | $ 0 | $ 0 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2013 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Reconciliation of tax provision | ||||||
Provision (benefit) for income taxes | $ 4,725,000 | $ (350,000) | ||||
Virtu Financial, Inc. | ||||||
Reconciliation of tax provision | ||||||
Provision (benefit) for income taxes | $ 0 | $ (4,744) | ||||
Reconciliation of the tax provision at the U.S. Federal Statutory Rate to the provision for income taxes as percent | ||||||
Tax provision at the U.S. federal statutory rate (as a percent) | 35.00% | |||||
Virtu Financial, LLC and subsidiaries | ||||||
Reconciliation of tax provision | ||||||
Foreign taxes | $ 3,501,000 | $ 5,397,000 | $ 1,768,000 | |||
Provision (benefit) for income taxes | $ 3,501,000 | $ 5,397,000 | $ 1,768,000 | |||
Reconciliation of the tax provision at the U.S. Federal Statutory Rate to the provision for income taxes as percent | ||||||
Foreign taxes (as a percent) | 1.80% | 2.90% | 2.00% | |||
Provision (benefit) for income taxes (as a percent) | 1.80% | 2.90% | 2.00% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - Virtu Financial, LLC and subsidiaries - USD ($) $ in Thousands | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred income tax assets | ||
Other | $ 12 | $ 171 |
Share-based compensation | 947 | 106 |
Fixed assets | 18 | |
Tax credits and net operating loss carryforwards | 724 | |
Total deferred income tax assets | $ 977 | 1,001 |
Deferred income tax liabilities | ||
Fixed assets | 872 | |
Total deferred income tax liabilities | $ 872 |
Income Taxes - Other informatio
Income Taxes - Other information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Jun. 30, 2015 | Dec. 31, 2013 | |
Other information | |||
Unrecognized tax benefits | $ 0 | $ 0 | |
Virtu Financial, LLC and subsidiaries | |||
Other information | |||
Unrecognized tax benefits | $ 0 | $ 0 | |
Virtu Financial, LLC and subsidiaries | Ireland | Tax Year 2012 | |||
Other information | |||
Number of years subject to review by tax authority | 5 years | ||
Virtu Financial, LLC and subsidiaries | Ireland | Other Assets. | |||
Other information | |||
Deferred tax assets relating to carryforward losses recognized | $ 0 | $ 700,000 |
Commitments, Contingencies a145
Commitments, Contingencies and Guarantees - Leases (Details) - Virtu Financial, LLC and subsidiaries - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Minimum Rental Commitments, Capital | |||
2,015 | $ 11,135 | ||
2,016 | 5,313 | ||
2,017 | 98 | ||
Total minimum lease payments | 16,546 | ||
Minimum Rental Commitments, Operating | |||
2,015 | 7,488 | ||
2,016 | 3,763 | ||
2,017 | 3,291 | ||
2,018 | 2,640 | ||
2,019 | 1,508 | ||
Thereafter | 1,944 | ||
Total minimum lease payments | 20,634 | ||
Operating lease expense, net of amortization expense related to landlord incentives | 3,500 | $ 4,300 | $ 14,500 |
Occupancy lease expense | 1,700 | 1,900 | 3,000 |
Communication equipment lease expense | $ 1,800 | $ 2,400 | $ 11,500 |
Commitments, Contingencies a146
Commitments, Contingencies and Guarantees - Employee Retention Plan (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | 36 Months Ended | ||
Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | Jul. 08, 2014USD ($)item | |
Employee Retention Plan | |||||
Employee Retention Plan Compensation Expense | $ 2,487 | ||||
Virtu Financial, LLC and subsidiaries | |||||
Employee Retention Plan | |||||
Amount which has been paid or will be paid to employees | $ 21,500 | ||||
Number of installments in which amount has been paid or will be paid to employees | item | 5 | ||||
Employee Retention Plan Compensation Expense | $ 2,639 | $ 6,705 | $ 6,151 | ||
Consulting Agreements | |||||
Consulting fee per year for advisory services related to designated market maker business | $ 500 | $ 500 | $ 500 | ||
Period for which consulting fee is payable for advisory services related to the designated market maker business | 3 years | 3 years | 3 years | ||
Consulting fees paid for advisory services related to designated market maker business | $ 400 | $ 500 | $ 500 | ||
Consulting fees paid for advisory services related to tax, regulatory and public affairs | $ 300 | $ 400 | $ 100 |
Commitments, Contingencies a147
Commitments, Contingencies and Guarantees - Consulting Agreements (Details) - Virtu Financial, LLC and subsidiaries $ in Millions | 12 Months Ended | 36 Months Ended | ||
Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | Jul. 08, 2014USD ($)item | |
Employee Retention Plan | ||||
Amount which has been paid or will be paid to employees | $ 21.5 | |||
Number of installments in which amount has been paid or will be paid to employees | item | 5 | |||
Consulting Agreements | ||||
Consulting fee per year for advisory services related to designated market maker business | $ 0.5 | $ 0.5 | $ 0.5 | |
Period for which consulting fee is payable for advisory services related to the designated market maker business | 3 years | 3 years | 3 years | |
Consulting fees paid for advisory services related to designated market maker business | $ 0.4 | $ 0.5 | $ 0.5 | |
Consulting fees paid for advisory services related to tax, regulatory and public affairs | $ 0.3 | $ 0.4 | $ 0.1 |
Temasek Transaction (Details)
Temasek Transaction (Details) $ in Millions | Dec. 31, 2014USD ($)subsidiaryshares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013shares | Dec. 31, 2012shares | Jun. 30, 2015shares |
Class A-1 | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 1,964,826 | 1,964,826 | 0 | ||
Membership interests outstanding (in shares) | 1,964,826 | 1,964,826 | 0 | ||
Class A-2 | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 101,381,332 | 101,381,332 | 0 | ||
Membership interests outstanding (in shares) | 99,855,666 | 99,855,666 | 0 | ||
Virtu Financial, LLC and subsidiaries | Temasek | |||||
Temasek Transaction | |||||
Number of indirect wholly owned subsidiaries | subsidiary | 2 | ||||
Professional fees recorded in transaction advisory fees and expenses | $ | $ 3 | ||||
Virtu Financial, LLC and subsidiaries | Temasek | Silver Lake Member | |||||
Temasek Transaction | |||||
Number of indirect wholly owned subsidiaries | subsidiary | 1 | ||||
Ownership Interest held | 42.10% | 42.10% | |||
Maximum amount of payments to be made if the value of interest acquired exceeds 1.7 times of transaction price | $ | $ 3.9 | $ 3.9 | |||
Threshold limit of interest acquired over transaction price for payments to be made | 1.7 | 1.7 | |||
Virtu Financial, LLC and subsidiaries | Class A-1 | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 1,964,826 | 1,964,826 | 1,964,826 | ||
Membership interests outstanding (in shares) | 1,964,826 | 1,964,826 | 1,964,826 | ||
Virtu Financial, LLC and subsidiaries | Class A-1 | Temasek | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 10,535,891 | 10,535,891 | |||
Transaction value for purchase of shares | $ | $ 149.8 | ||||
Transaction price over the carrying value | $ | $ 44.4 | $ 44.4 | |||
Virtu Financial, LLC and subsidiaries | Class A-1 | Temasek | Minimum | |||||
Temasek Transaction | |||||
Term of redeemable non controlling interest before change | 2 years | ||||
Virtu Financial, LLC and subsidiaries | Class A-1 | Temasek | Maximum | |||||
Temasek Transaction | |||||
Term of redeemable non controlling interest before change | 5 years 6 months | ||||
Virtu Financial, LLC and subsidiaries | Class A-1 | Temasek | Silver Lake Member | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 5,159,288 | 5,159,288 | |||
Shares held | 12,242,173 | 12,242,173 | |||
Carrying amount of shares | $ | $ 51.6 | $ 51.6 | |||
Transaction value for purchase of shares | $ | $ 73.4 | ||||
Virtu Financial, LLC and subsidiaries | Class A-1 | Silver Lake Member | |||||
Temasek Transaction | |||||
Shares held | 14,464,109 | 14,464,109 | |||
Virtu Financial, LLC and subsidiaries | Class A-1 | Temasek Member | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 5,376,603 | 5,376,603 | |||
Carrying amount of shares | $ | $ 53.8 | $ 53.8 | |||
Transaction value for purchase of shares | $ | $ 76.4 | ||||
Virtu Financial, LLC and subsidiaries | Class A-2 | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 101,381,332 | 101,381,332 | 100,627,010 | ||
Membership interests outstanding (in shares) | 99,855,666 | 99,855,666 | 99,459,345 | ||
Virtu Financial, LLC and subsidiaries | Class A-2 | Temasek | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 1,828,755 | 1,828,755 | |||
Transaction value for purchase of shares | $ | $ 26 | ||||
Transaction price over the carrying value | $ | $ 17.7 | $ 17.7 | |||
Virtu Financial, LLC and subsidiaries | Class A-2 | Temasek Member | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 1,828,755 | 1,828,755 | |||
Members interests issued during the period (in shares) | 214,433 | ||||
Transaction value for purchase of shares | $ | $ 3 | ||||
Virtu Financial, LLC and subsidiaries | Class A-2 | Temasek Member | Member of management | |||||
Temasek Transaction | |||||
Members interests issued during the period (in shares) | 1,614,322 | ||||
Carrying amount of shares | $ | $ 6.9 | $ 6.9 | |||
Transaction value for purchase of shares | $ | $ 23 | ||||
Virtu Financial, LLC and subsidiaries | Class A-2 profits interests | |||||
Temasek Transaction | |||||
Membership interests issued (in shares) | 6,069,007 | 6,069,007 | 4,434,452 | ||
Members interests issued during the period (in shares) | 1,992,556 | 2,223,814 | 1,705,704 | ||
Membership interests outstanding (in shares) | 6,069,007 | 6,069,007 | 4,434,452 | ||
Virtu Financial, LLC and subsidiaries | Class A-2 profits interests | Employee Holdco | |||||
Temasek Transaction | |||||
Redemption of shares (in shares) | 214,433 | ||||
Redemption of shares | $ | $ 1.4 |
Capital Structure - Interests (
Capital Structure - Interests (Details) | Dec. 31, 2014USD ($)itemshares | Nov. 04, 2014USD ($)shares | Dec. 31, 2014USD ($)itemshares | Dec. 31, 2013USD ($)shares | Dec. 31, 2012shares | Jun. 30, 2015shares | Jul. 08, 2011USD ($)itemshares |
Class A-1 | |||||||
Class of Stock [Line Items] | |||||||
Membership interests issued (in shares) | 1,964,826 | 1,964,826 | 0 | ||||
Aggregate capital balance | $ | $ 19,648,000 | $ 19,648,000 | |||||
Membership interests outstanding (in shares) | 1,964,826 | 1,964,826 | 0 | ||||
Virtu Financial, LLC and subsidiaries | |||||||
Class of Stock [Line Items] | |||||||
Number of classes of members interests issued | item | 3 | 3 | |||||
Virtu Financial, LLC and subsidiaries | Class A-1 | |||||||
Class of Stock [Line Items] | |||||||
Membership interests issued (in shares) | 1,964,826 | 1,964,826 | 1,964,826 | ||||
Aggregate capital balance | $ | $ 19,648,000 | $ 19,648,000 | $ 19,648,000 | ||||
Number of members that haves the right to call for redemption | item | 3 | ||||||
Members interests granted (in shares) | 0 | 0 | 0 | ||||
Members interests forfeited (in shares) | 0 | 0 | 0 | ||||
Members interests distributed (in shares) | 0 | 0 | 0 | ||||
Members interests redeemed (in shares) | 0 | 0 | 0 | ||||
Membership interests outstanding (in shares) | 1,964,826 | 1,964,826 | 1,964,826 | ||||
Amount of unrecovered capital for entitlement of distributions of capital proceeds | $ | $ 0 | $ 0 | $ 0 | ||||
Virtu Financial, LLC and subsidiaries | Class A-1 | Silver Lake Member | |||||||
Class of Stock [Line Items] | |||||||
Redeemable interests issued (in shares) | 25,000,000 | ||||||
Redeemable interests held (in shares) | 7,381,224 | 7,381,224 | |||||
Percentage of indirect ownership interest held in the entity | 57.90% | ||||||
Number of members can be appointed in Entity's board | item | 1 | ||||||
Virtu Financial, LLC and subsidiaries | Class A-1 | Affiliate of Vincent Viola | |||||||
Class of Stock [Line Items] | |||||||
Membership interests issued (in shares) | 1,964,826 | ||||||
Aggregate capital balance | $ | $ 270,000,000 | ||||||
Virtu Financial, LLC and subsidiaries | Class A-1 | Temasek Member | |||||||
Class of Stock [Line Items] | |||||||
Redeemable interests transferred from one member to another member (in shares) | 5,376,603 | ||||||
Number of members can be appointed in Entity's board | item | 1 | ||||||
Number of members can be appointed in Entity's board by other members in consultation with Temasek member | item | 1 | ||||||
Virtu Financial, LLC and subsidiaries | Class A-1 | SLT Member | |||||||
Class of Stock [Line Items] | |||||||
Redeemable interests transferred from one member to another member (in shares) | 12,242,173 | ||||||
Percentage of indirect ownership interest held in the entity | 42.10% | ||||||
Virtu Financial, LLC and subsidiaries | Class A-2 capital interests | |||||||
Class of Stock [Line Items] | |||||||
Membership interests issued (in shares) | 93,786,659 | 93,786,659 | 95,024,893 | ||||
Membership interests outstanding (in shares) | 93,786,659 | 93,786,659 | 95,024,893 | ||||
Repurchase of capital interests (in shares) | 1,452,667 | ||||||
Carrying value of repurchased capital interests | $ | $ 1,400,000 | ||||||
Repurchase price of repurchased capital interests | $ | 6,000,000 | ||||||
Reduction in accumulated deficit due to excess of repurchase price over carrying value | $ | $ 4,600,000 | ||||||
Amount of unrecovered capital for entitlement of distributions of capital proceeds | $ | $ 0 | $ 0 | $ 0 | ||||
Virtu Financial, LLC and subsidiaries | Class A-2 capital interests | Temasek Member | |||||||
Class of Stock [Line Items] | |||||||
Membership interests issued (in shares) | 214,433 | 214,433 | |||||
Member's interests transferred from one entity to another entity (in shares) | 1,614,322 | ||||||
Virtu Financial, LLC and subsidiaries | Class A-2 profits interests | |||||||
Class of Stock [Line Items] | |||||||
Membership interests issued (in shares) | 6,069,007 | 6,069,007 | 4,434,452 | ||||
Members interests issued during the period (in shares) | 1,992,556 | 2,223,814 | 1,705,704 | ||||
Membership interests outstanding (in shares) | 6,069,007 | 6,069,007 | 4,434,452 | ||||
Virtu Financial, LLC and subsidiaries | Class B interests | |||||||
Class of Stock [Line Items] | |||||||
Non-voting interests vesting period | 4 years | ||||||
Percentage of capital proceeds issued | 12.915% | 12.915% | 13.715% | ||||
Percentage of capital proceeds outstanding | 12.915% | 12.915% | 13.715% |
Capital Structure - Conversion
Capital Structure - Conversion Rights (Details) - Class A-1 - Virtu Financial, LLC and subsidiaries $ in Millions | 12 Months Ended | |
Dec. 31, 2014USD ($) | Dec. 31, 2013 | |
Capital Structure | ||
Conversion ratio to convert from Class A-1 to Class A-2 | 1 | 1 |
Minimum | ||
Capital Structure | ||
Threshold of gross proceeds raised from an initial public offering for a qualified IPO | $ 250 | |
Number of times the invested amount to determine the valuation of the entity | 1.75 |
Capital Structure - East Manage
Capital Structure - East Management Incentive Plan (Details) - Virtu Financial, LLC and subsidiaries - shares | Jul. 08, 2011 | Dec. 31, 2014 |
Class A-2 capital interests | East MIP | ||
Capital Structure | ||
Contribution of capital interests to incentive plan (in shares) | 2,625,000 | |
Class B interests | ||
Capital Structure | ||
Non-voting interests vesting period | 4 years | |
Class B interests | East MIP | ||
Capital Structure | ||
Non-voting interests vesting period | 4 years |
Share-based Compensation - Awar
Share-based Compensation - Award information and Compensation Expense (Details) - Class A-2 profits interests - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation | |||||
Vesting period | 4 years | 4 years | |||
Expense recognized | $ 8.7 | $ 7.2 | |||
Unrecognized share-based compensation expense | $ 2.9 | ||||
Weighted average period for compensation expense expected to be recognized | 2 years 1 month 6 days | ||||
Virtu Financial, LLC and subsidiaries | |||||
Share-based Compensation | |||||
Vesting period | 4 years | 4 years | 4 years | ||
Expense recognized | $ 16 | $ 13.4 | $ 8.4 | ||
Unrecognized share-based compensation expense | $ 3.6 | ||||
Weighted average period for compensation expense expected to be recognized | 2 years 6 months |
Share-based Compensation - Fair
Share-based Compensation - Fair Value Assumptions (Details) - Class A-2 profits interests - Virtu Financial, LLC and subsidiaries | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Weighted-average assumptions used in estimating grant date fair values | |||
Expected life (in years) | 6 months | 6 months | 1 year 6 months |
Weighted average risk free interest rate (as a percent) | 0.12% | 0.10% | 0.20% |
Expected stock price volatility (as a percent) | 25.00% | 25.00% | 30.00% |
Share-based Compensation - Acti
Share-based Compensation - Activity (Details) - Class A-2 profits interests - $ / shares | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Number of Profits Interests | |||||
Outstanding at the beginning of the period (in shares) | 6,069,007 | 4,434,452 | 4,434,452 | ||
Granted (in shares) | 6,418 | ||||
Interests repurchased (in shares) | (13,495) | (6,796) | |||
Outstanding at the end of the period (in shares) | 6,061,930 | 4,427,656 | 6,069,007 | 4,434,452 | |
Weighted Average Fair Value | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 7.05 | $ 6.82 | $ 6.82 | ||
Interests granted (in dollars per share) | 7.52 | ||||
Interests repurchased (in dollars per share) | 7.17 | 6.46 | |||
Outstanding at the end of the period (in dollars per share) | $ 7.05 | $ 6.82 | $ 7.05 | $ 6.82 | |
Weighted Average Remaining Life, outstanding at the beginning of the period | |||||
Weighted Average Remaining Life | 2 years 26 days | 2 years 10 months 24 days | 2 years 6 months 15 days | 3 years 4 months 24 days | |
Interests granted (in years) | 3 years | ||||
Virtu Financial, LLC and subsidiaries | |||||
Number of Profits Interests | |||||
Outstanding at the beginning of the period (in shares) | 6,069,007 | 4,434,452 | 4,434,452 | 2,298,957 | |
Granted (in shares) | 1,992,556 | 2,223,814 | |||
Interests repurchased (in shares) | (358,001) | (88,319) | |||
Outstanding at the end of the period (in shares) | 6,069,007 | 4,434,452 | 2,298,957 | ||
Weighted Average Fair Value | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 7.05 | $ 6.82 | $ 6.82 | $ 6.40 | |
Interests granted (in dollars per share) | 7.52 | 7.19 | |||
Interests repurchased (in dollars per share) | 6.51 | 6.57 | |||
Outstanding at the end of the period (in dollars per share) | $ 7.05 | $ 6.82 | $ 6.40 | ||
Weighted Average Remaining Life, outstanding at the beginning of the period | |||||
Weighted Average Remaining Life | 2 years 6 months 15 days | 3 years 4 months 24 days | 8 months 12 days |
Share-based Compensation - Clas
Share-based Compensation - Class B interests (Details) - Class B interests - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation | |||||
Expense recognized | $ 33,300,000 | $ 0 | |||
Time based vesting | |||||
Share-based Compensation | |||||
Vesting period | 4 years | 4 years | |||
East MIP | |||||
Share-based Compensation | |||||
Expense recognized | $ 12,400,000 | $ 0 | |||
East MIP | Time based vesting | |||||
Share-based Compensation | |||||
Vesting period | 4 years | 4 years | |||
Number of interests vested | 0 | 0 | |||
Virtu Financial, LLC and subsidiaries | Time based vesting | |||||
Share-based Compensation | |||||
Vesting period | 4 years | 4 years | 4 years | ||
Number of interests vested | 0 | 0 | |||
Expense recognized | $ 0 | $ 0 | |||
Members interests granted (in shares) | 0 | ||||
Virtu Financial, LLC and subsidiaries | East MIP | Time based vesting | |||||
Share-based Compensation | |||||
Vesting period | 4 years | ||||
Number of interests vested | 0 | 0 | |||
Expense recognized | $ 0 | $ 0 |
Regulatory Requirement (Deta156
Regulatory Requirement (Details) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015USD ($)item | Dec. 31, 2013USD ($)item | Dec. 31, 2014USD ($)item | |
Regulatory Requirement | |||
Number of broker-dealer subsidiaries | item | 2 | ||
Broker Dealer Subsidiary One | |||
Regulatory Requirement | |||
Minimum net capital required to be maintained by broker-dealer subsidiaries | $ 1 | $ 1 | |
Net capital | 39.4 | 59.8 | |
Excess net capital over the required net capital | 38.4 | 58.8 | |
Broker Dealer Subsidiary Two | |||
Regulatory Requirement | |||
Minimum net capital required to be maintained by broker-dealer subsidiaries | 1 | 1 | |
Net capital | 8.2 | 8.1 | |
Excess net capital over the required net capital | 7.2 | 7.1 | |
VFCM | |||
Regulatory Requirement | |||
Minimum capital required to be maintained in connection with the operation of the Company's DMM business | 3.4 | $ 3.7 | |
Required amount under exchange rules | $ 1 | ||
Required amount under exchange rules as percentage of market value | 15.00% | ||
Number of trading units whose market value is considered to calculate required net capital under exchange act | item | 60 | ||
Virtu Financial, LLC and subsidiaries | |||
Regulatory Requirement | |||
Number of broker-dealer subsidiaries | item | 2 | ||
Minimum net capital required to be maintained by broker-dealer subsidiaries | $ 1 | ||
Minimum capital required to be maintained in connection with the operation of the Company's DMM business | $ 4.7 | 3.7 | |
Required amount under exchange rules | $ 1 | ||
Required amount under exchange rules as percentage of market value | 15.00% | ||
Number of trading units whose market value is considered to calculate required net capital under exchange act | item | 60 | ||
Virtu Financial, LLC and subsidiaries | Broker Dealer Subsidiary One | |||
Regulatory Requirement | |||
Minimum net capital required to be maintained by broker-dealer subsidiaries | $ 1 | 1 | |
Net capital | 49.7 | 59.8 | |
Excess net capital over the required net capital | 48.7 | 58.8 | |
Virtu Financial, LLC and subsidiaries | Broker Dealer Subsidiary Two | |||
Regulatory Requirement | |||
Minimum net capital required to be maintained by broker-dealer subsidiaries | 1 | 1 | |
Net capital | 8 | 8.1 | |
Excess net capital over the required net capital | $ 7 | $ 7.1 |
Financial Instruments with O157
Financial Instruments with Off Balance Sheet Risk and Concentration of Risk (Details) - Virtu Financial, LLC and subsidiaries | Dec. 31, 2014USD ($) |
Minimum balance in U.S. checking accounts maintained frequently | $ 250,000 |
Amount of Federal Deposit Insurance Corporation (FDIC) insuring combined accounts | $ 250,000 |
Geographic Information - Revenu
Geographic Information - Revenues (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Total revenues by geographic area | |||||
Revenues | $ 403,507 | $ 336,271 | $ 723,053 | $ 664,505 | $ 615,628 |
United States | |||||
Total revenues by geographic area | |||||
Revenues | 268,403 | 224,491 | 509,105 | 432,900 | 452,282 |
Australia | |||||
Total revenues by geographic area | |||||
Revenues | 23 | 86 | 87 | 44,240 | |
Ireland. | |||||
Total revenues by geographic area | |||||
Revenues | 92,117 | 77,234 | 141,793 | 129,662 | 91,450 |
Singapore | |||||
Total revenues by geographic area | |||||
Revenues | $ 42,964 | $ 34,546 | 72,069 | 98,917 | 25,908 |
United Kingdom | |||||
Total revenues by geographic area | |||||
Revenues | 2,939 | 1,748 | |||
Virtu Financial, LLC and subsidiaries | |||||
Total revenues by geographic area | |||||
Revenues | $ 723,053 | $ 664,505 | $ 615,628 |
Parent Company - Guarantees (De
Parent Company - Guarantees (Details) - USD ($) $ in Millions | Dec. 31, 2014 | Dec. 31, 2013 |
Virtu Financial, LLC and subsidiaries | Senior Secured Credit Facility | ||
Guarantees | ||
Outstanding principal balance | $ 502.7 | $ 510 |
Parent Company - Transactions w
Parent Company - Transactions with Affiliates (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Virtu Financial, LLC and subsidiaries | VFH | |||
Transactions with Affiliates | |||
Dividends received | $ 165.7 | $ 429.1 | $ 129 |
Parent Company - Statements of
Parent Company - Statements of Financial Condition (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Assets | ||||||
Cash and cash equivalents | $ 126,978 | $ 75,864 | $ 50,729 | $ 66,010 | ||
Other assets | 34,944 | 32,823 | ||||
Total assets | 4,536,720 | 3,319,458 | ||||
Liabilities | ||||||
Accounts payable and accrued expenses and other liabilities | 120,950 | 93,331 | ||||
Total liabilities | 4,032,056 | 2,812,760 | ||||
Members' equity | ||||||
Additional paid-in capital | 115,274 | |||||
Accumulated deficit | 474 | (91,383) | ||||
Accumulated other comprehensive income (loss) | 412 | (3,705) | ||||
Total members' equity | 212,265 | |||||
Total liabilities, redeemable membership interest and equity | $ 4,536,720 | 3,319,458 | ||||
Virtu Financial, LLC | ||||||
Members' equity | ||||||
Total members' equity | 212,265 | |||||
Virtu Financial, LLC and subsidiaries | ||||||
Assets | ||||||
Cash and cash equivalents | 75,864 | 66,010 | $ 39,978 | $ 36,100 | ||
Other assets | 38,903 | 41,105 | ||||
Total assets | 3,324,561 | 3,963,570 | ||||
Liabilities | ||||||
Accounts payable and accrued expenses and other liabilities | 93,331 | 80,921 | ||||
Total liabilities | 2,817,863 | 3,510,282 | ||||
Redeemable membership interest | 294,433 | 250,000 | ||||
Members' equity | ||||||
Accumulated deficit | (91,383) | (74,027) | ||||
Accumulated other comprehensive income (loss) | (3,705) | 1,327 | ||||
Total members' equity | 212,265 | 203,288 | ||||
Total liabilities, redeemable membership interest and equity | 3,324,561 | 3,963,570 | ||||
Virtu Financial, LLC and subsidiaries | Virtu Financial, LLC | ||||||
Assets | ||||||
Cash and cash equivalents | 25,939 | 22 | $ 26 | $ 228 | ||
Receivable from subsidiaries | 12,865 | 22,021 | ||||
Investment in subsidiaries, equity basis | 768,423 | 748,986 | ||||
Other assets | 29 | 2,629 | ||||
Total assets | 807,256 | 773,658 | ||||
Liabilities | ||||||
Payable to subsidiaries | 291,444 | 318,127 | ||||
Accounts payable and accrued expenses and other liabilities | 9,114 | 2,243 | ||||
Total liabilities | 300,558 | 320,370 | ||||
Members' equity | ||||||
Accumulated deficit | (91,383) | (74,027) | ||||
Accumulated other comprehensive income (loss) | (3,705) | 1,327 | ||||
Total members' equity | 212,265 | 203,288 | ||||
Total liabilities, redeemable membership interest and equity | 807,256 | 773,658 | ||||
Virtu Financial, LLC and subsidiaries | Virtu Financial, LLC | Class A-1 redeemable interest | ||||||
Liabilities | ||||||
Redeemable membership interest | 294,433 | 250,000 | ||||
Virtu Financial, LLC and subsidiaries | Virtu Financial, LLC | Class A-1 | ||||||
Members' equity | ||||||
Membership interests | $ 19,648 | $ 19,648 | ||||
Common Unit Authorized | 1,964,826 | 1,964,826 | ||||
Common Unit, Issued | 1,964,826 | 1,964,826 | ||||
Common Unit, Outstanding | 1,964,826 | 1,964,826 | ||||
Virtu Financial, LLC and subsidiaries | Virtu Financial, LLC | Class A-2 | ||||||
Members' equity | ||||||
Membership interests | $ 287,705 | $ 256,340 | ||||
Common Unit Authorized | 101,381,332 | 101,381,332 | ||||
Common Unit, Issued | 100,627,010 | 100,627,010 | ||||
Common Unit, Outstanding | 99,855,666 | 99,459,345 |
Parent Company - Statements 162
Parent Company - Statements of Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Expenses | ||||||
Operations and administrative | $ 12,431 | $ 12,125 | ||||
Income (loss) before income taxes | 89,734 | $ 79,381 | ||||
Net income available for common stockholders | $ 474 | 474 | ||||
Other Comprehensive Income, net of taxes: | ||||||
Comprehensive income attributable to common stockholders | $ 886 | |||||
Virtu Financial, LLC and subsidiaries | ||||||
Expenses | ||||||
Operations and administrative | $ 21,923 | $ 27,215 | $ 27,826 | |||
Net income available for common stockholders | 190,057 | 182,203 | 87,560 | |||
Other Comprehensive Income, net of taxes: | ||||||
Translation adjustment | (5,032) | 1,382 | 548 | |||
Comprehensive income attributable to common stockholders | 185,025 | 183,585 | 88,108 | |||
Virtu Financial, LLC and subsidiaries | Virtu Financial, LLC | ||||||
Revenues: | ||||||
Service fee revenue | 13,492 | 2,089 | 5,154 | |||
Expenses | ||||||
Operations and administrative | 13,492 | 2,089 | 5,428 | |||
Total expenses | 13,492 | 2,089 | 5,428 | |||
Income (loss) before income taxes | (274) | |||||
Equity income of subsidiaries, net of tax | 190,057 | 182,203 | 87,834 | |||
Net income available for common stockholders | 190,057 | 182,203 | 87,560 | |||
Other Comprehensive Income, net of taxes: | ||||||
Translation adjustment | (5,032) | 1,382 | 548 | |||
Comprehensive income attributable to common stockholders | $ 185,025 | $ 183,585 | $ 88,108 |
Parent Company - Statements 163
Parent Company - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities | ||||||
Net Income | $ 474 | $ 474 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Net cash provided by operating activities | 182,921 | $ 105,636 | ||||
Cash flows from investing activities | ||||||
Net cash used in investing activities | (17,778) | (14,708) | ||||
Cash flows from financing activities | ||||||
Proceeds from issuance of interests | 327,366 | |||||
Member distributions | (130,000) | (90,652) | ||||
Net cash used in financing activities | (111,028) | (106,046) | ||||
Net increase (decrease) in Cash and cash equivalents | 51,114 | (15,281) | ||||
Cash and cash equivalents, beginning of period | 75,864 | 66,010 | $ 66,010 | |||
Cash and cash equivalents, end of period | $ 126,978 | 126,978 | 50,729 | 75,864 | $ 66,010 | |
Virtu Financial, LLC and subsidiaries | ||||||
Cash flows from operating activities | ||||||
Net Income | 190,057 | 182,203 | $ 87,560 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Net cash provided by operating activities | 272,699 | 259,361 | 160,446 | |||
Cash flows from investing activities | ||||||
Net cash used in investing activities | (36,159) | (32,016) | (28,356) | |||
Cash flows from financing activities | ||||||
Member distributions | (140,652) | (433,400) | (134,408) | |||
Net cash used in financing activities | (221,654) | (202,695) | (128,760) | |||
Net increase (decrease) in Cash and cash equivalents | 9,854 | 26,032 | 3,878 | |||
Cash and cash equivalents, beginning of period | 75,864 | 66,010 | 66,010 | 39,978 | 36,100 | |
Cash and cash equivalents, end of period | 75,864 | 66,010 | 39,978 | |||
Non-cash financing activities | ||||||
Repurchase of Class A-2 interests | 6,000 | |||||
Virtu Financial, LLC and subsidiaries | Virtu Financial, LLC | ||||||
Cash flows from operating activities | ||||||
Net Income | 190,057 | 182,203 | 87,560 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Equity in income of subsidiaries and investment, net of dividends received | (24,469) | 244,854 | 41,198 | |||
Changes in operating assets and liabilities | (14,056) | (6,529) | (2,926) | |||
Net cash provided by operating activities | 151,532 | 420,528 | 125,832 | |||
Cash flows from investing activities | ||||||
Investment in subsidiaries, equity basis | 15,953 | 13,441 | 8,726 | |||
Net cash used in investing activities | 15,953 | 13,441 | 8,726 | |||
Cash flows from financing activities | ||||||
Member distributions | (140,652) | (433,400) | (134,408) | |||
Net cash used in financing activities | (141,568) | (433,973) | (134,760) | |||
Net increase (decrease) in Cash and cash equivalents | 25,917 | (4) | (202) | |||
Cash and cash equivalents, beginning of period | $ 25,939 | $ 22 | 22 | 26 | 228 | |
Cash and cash equivalents, end of period | 25,939 | 22 | 26 | |||
Non-cash financing activities | ||||||
Repurchase of Class A-2 interests | (6,000) | |||||
Virtu Financial, LLC and subsidiaries | Class A-2 | Virtu Financial, LLC | ||||||
Cash flows from financing activities | ||||||
Proceeds from issuance of interests | (3,048) | |||||
Repurchase of membership interests | 3,048 | |||||
Repurchase of Class A-2 interests | $ (916) | $ (573) | $ (352) |
Subsequent Events - Distributio
Subsequent Events - Distributions (Details) - USD ($) $ in Millions | Jun. 12, 2015 | Feb. 19, 2015 | Jan. 01, 2015 |
Subsequent events | |||
Payments of Dividends | $ 5 | ||
Subsequent Events. | Virtu Financial, LLC and subsidiaries | |||
Subsequent events | |||
Payments of Dividends | $ 21.2 | $ 48.8 |
Subsequent Events - Leasehold T
Subsequent Events - Leasehold Terminations (Details) - Virtu Financial, LLC and subsidiaries - USD ($) $ in Thousands | Jan. 16, 2015 | Dec. 31, 2012 | Dec. 31, 2014 |
Subsequent events | |||
Total minimum lease payments | $ 16,546 | ||
Lease abandonment | $ 3,255 | ||
Subsequent Events. | |||
Subsequent events | |||
Lease abandonment | $ (3,000) | ||
Minimum | Subsequent Events. | |||
Subsequent events | |||
Total minimum lease payments | $ 7,600 |