Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 13, 2015 | |
Entity Registrant Name | Virtu Financial, Inc. | |
Entity Central Index Key | 1,592,386 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Class A common stock | ||
Entity Common Stock, Shares Outstanding | 34,305,052 | |
Class C common stock | ||
Entity Common Stock, Shares Outstanding | 24,531,817 | |
Class D common stock | ||
Entity Common Stock, Shares Outstanding | 79,610,490 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and cash equivalents | $ 161,538 | $ 75,864 |
Securities borrowed | 510,600 | 484,934 |
Securities purchased under agreements to resell | 31,463 | |
Receivables from broker dealers and clearing organizations | 560,716 | 387,652 |
Trading assets, at fair value: | ||
Financial instruments owned | 1,152,821 | 1,307,933 |
Financial instruments owned and pledged | 301,737 | 236,375 |
Property, equipment and capitalized software (net of accumulated depreciation of $92,174 and $84,579 as of September 30, 2015 and December 31, 2014, respectively) | 42,442 | 44,644 |
Goodwill | 715,379 | 715,379 |
Intangibles (net of accumulated amortization) | 1,255 | 1,414 |
Deferred tax asset | 160,782 | 977 |
Other assets ($9,210 and $8,205, at fair value, as of September 30, 2015 and December 31, 2014, respectively) | 34,676 | 32,823 |
Total assets | 3,641,946 | 3,319,458 |
Liabilities | ||
Short-term borrowings | 28,000 | |
Securities loaned | 741,728 | 497,862 |
Securities sold under agreements to repurchase | 9,000 | 2,006 |
Payables to broker dealers and clearing organizations | 328,054 | 686,203 |
Trading liabilities, at fair value: | ||
Financial instruments sold, not yet purchased | 1,198,881 | 1,037,634 |
Tax receivable agreement obligations | 184,679 | |
Accounts payable and accrued expenses and other liabilities | 128,278 | 93,331 |
Senior secured credit facility | 494,498 | 495,724 |
Total liabilities | 3,113,118 | 2,812,760 |
Stockholders' / Members' Equity | ||
Additional Paid in Capital | 118,303 | |
Retained Earnings (Accumulated deficit) | 12,780 | (91,383) |
Accumulated other comprehensive income (loss) | 1,310 | (3,705) |
Total stockholders' / members' equity | 132,394 | |
Total stockholders' / members' equity | 212,265 | |
Non-controlling interest | 396,434 | |
Total equity | 528,828 | 212,265 |
Total liabilities, redeemable membership interest and equity | 3,641,946 | 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 Stateme3
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accumulated depreciation (in dollars) | $ 92,174 | $ 84,579 |
Other assets, fair value (in dollars) | $ 9,210 | $ 8,205 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0 |
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 |
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 |
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 |
Common stock shares authorized | 175,000,000 | 0 |
Common stock shares issued | 79,610,490 | 0 |
Common stock shares outstanding | 79,610,490 | 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 Stateme4
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Trading income, net | $ 206,832 | $ 162,260 | $ 590,554 | $ 480,799 |
Interest and dividends income | 6,425 | 8,518 | 21,022 | 21,287 |
Technology services | 2,545 | 2,456 | 7,733 | 7,419 |
Total revenue | 215,802 | 173,234 | 619,309 | 509,505 |
Operating Expenses: | ||||
Brokerage, exchange and clearance fees, net | 61,814 | 55,861 | 179,453 | 164,132 |
Communication and data processing | 16,110 | 17,256 | 51,602 | 50,568 |
Employee compensation and payroll taxes | 24,736 | 24,768 | 66,801 | 63,636 |
Interest and dividends expense | 12,827 | 11,728 | 39,234 | 34,438 |
Operations and administrative | 4,857 | 4,392 | 17,288 | 16,517 |
Depreciation and amortization | 8,176 | 8,552 | 26,025 | 22,514 |
Amortization of purchased intangibles and acquired capitalized software | 53 | 53 | 159 | 159 |
Acquisition related retention bonus | 152 | 2,639 | ||
Termination of office leases | 2,729 | 849 | ||
Initial public offering fees and expenses | 60 | 8,961 | ||
Charges related to share-based compensation at IPO | 1,107 | 45,301 | ||
Financing interest expense on senior secured credit facility | 7,205 | 7,815 | 22,066 | 23,114 |
Total operating expenses | 136,885 | 130,637 | 450,658 | 387,527 |
Income before income taxes and noncontrolling interest | 78,917 | 42,597 | 168,651 | 121,978 |
Provision for income taxes | 9,378 | 1,179 | 14,103 | 829 |
Net income | 69,539 | 41,418 | 154,548 | 121,149 |
Noncontrolling interest | (57,233) | (141,768) | ||
Net income available for common stockholders | $ 12,306 | $ 12,780 | ||
Earnings per share | ||||
Basic (in dollars per share) | $ 0.36 | $ 0.37 | ||
Diluted (in dollars per share) | $ 0.35 | $ 0.37 | ||
Weighted average common shares outstanding | ||||
Basic (in shares) | 34,305,052 | 34,305,052 | ||
Diluted (in shares) | 34,738,733 | 34,641,497 | ||
Comprehensive income | ||||
Net income | $ 69,539 | 41,418 | $ 154,548 | 121,149 |
Other comprehensive income (loss) | ||||
Foreign exchange translation adjustment, net of taxes | 3,596 | (3,520) | 595 | (3,683) |
Comprehensive income | 73,135 | $ 37,898 | 155,143 | $ 117,466 |
Less: Comprehensive income attributable to non-controlling interests | (59,931) | (141,053) | ||
Comprehensive income attributable to common stockholders | $ 13,204 | $ 14,090 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Virtu FinancialClass A-1 | Virtu FinancialClass A-2 | Virtu FinancialRetained Earnings / (Accumulated Deficit) | Virtu FinancialAccumulated Other Comprehensive Income (Loss) | Virtu FinancialAdditional paid-in Capital | Virtu FinancialTotal Stockholders'/ Members' Equity | Virtu FinancialNoncontrolling Interest | Virtu FinancialClass A common stock | Virtu FinancialClass C common stock | Virtu FinancialClass D common stock | Virtu Financial | 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 Dec. 31, 2014 | $ 19,648 | $ 287,705 | $ (91,383) | $ (3,705) | $ 212,265 | $ 212,265 | $ 212,265 | |||||||||||||
Balance (in shares) at Dec. 31, 2014 | 1,964,826 | 99,855,666 | ||||||||||||||||||
Balance at Dec. 31, 2014 | 212,265 | |||||||||||||||||||
Balance (in shares) at Dec. 31, 2014 | 0 | 0 | 0 | |||||||||||||||||
Balance for Redeemable Interest at Dec. 31, 2014 | $ 294,433 | |||||||||||||||||||
Increase (decrease) in stockholder's/members' equity | ||||||||||||||||||||
Share based compensation | $ 438 | 438 | 438 | |||||||||||||||||
Share based compensation (in shares) | 6,418 | |||||||||||||||||||
Repurchase of Class A-2 interests | $ (97) | (97) | (97) | |||||||||||||||||
Repurchase of Class A-2 interests (in shares) | (13,495) | |||||||||||||||||||
Distribution to members | (130,000) | (130,000) | (130,000) | |||||||||||||||||
Net Income | 83,147 | 83,147 | 83,147 | |||||||||||||||||
Foreign exchange translation adjustment | (4,633) | (4,633) | (4,633) | |||||||||||||||||
Reorganization of equity structure | $ (19,648) | $ (288,046) | 138,236 | 8,338 | $ 63,261 | (97,858) | $ 392,291 | $ 1 | 294,433 | |||||||||||
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 Apr. 15, 2015 | 63,261 | 63,262 | 392,291 | $ 1 | 455,553 | |||||||||||||||
Balance at Dec. 31, 2014 | $ 19,648 | $ 287,705 | $ (91,383) | $ (3,705) | 212,265 | 212,265 | 212,265 | |||||||||||||
Balance (in shares) at Dec. 31, 2014 | 1,964,826 | 99,855,666 | ||||||||||||||||||
Balance at Dec. 31, 2014 | 212,265 | |||||||||||||||||||
Balance (in shares) at Dec. 31, 2014 | 0 | 0 | 0 | |||||||||||||||||
Balance for Redeemable Interest at Dec. 31, 2014 | $ 294,433 | |||||||||||||||||||
Increase (decrease) in stockholder's/members' equity | ||||||||||||||||||||
Net Income | 154,548 | |||||||||||||||||||
Balance at Sep. 30, 2015 | 132,394 | |||||||||||||||||||
Balance at Sep. 30, 2015 | $ 12,780 | $ 1,310 | $ 118,303 | $ 132,394 | $ 396,434 | $ 1 | 528,828 | |||||||||||||
Balance (in shares) at Sep. 30, 2015 | 34,305,052 | 24,531,817 | 79,610,490 | |||||||||||||||||
Balance at Apr. 15, 2015 | $ 63,261 | $ 63,262 | $ 392,291 | $ 1 | $ 455,553 | |||||||||||||||
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) | (277,153) | (277,153) | |||||||||||||||||
Repurchase of Class A-2 interests (in shares) | (3,470,724) | (12,214,224) | ||||||||||||||||||
Net Income | 12,780 | 12,780 | 58,621 | 71,401 | ||||||||||||||||
Foreign exchange translation adjustment | 1,310 | 1,310 | 3,918 | 5,228 | ||||||||||||||||
Issuance of Common Stock, net of offering costs | 327,366 | 327,366 | 327,366 | |||||||||||||||||
Issuance of Common Stock, net of offering costs (in shares) | 19,012,112 | |||||||||||||||||||
Share based compensation vested upon IPO | 45,677 | 45,677 | 45,677 | |||||||||||||||||
Adjustments for changes in proportionate ownership in Virtu Financial | (22,513) | (22,513) | 22,513 | |||||||||||||||||
Issuance of tax receivable agreements | (23,041) | (23,041) | (23,041) | |||||||||||||||||
Share based compensation | 4,706 | 4,706 | 4,706 | |||||||||||||||||
Distribution from Virtu Financial to non-controlling interest | (80,909) | (80,909) | ||||||||||||||||||
Balance at Sep. 30, 2015 | 132,394 | |||||||||||||||||||
Balance at Sep. 30, 2015 | $ 12,780 | $ 1,310 | $ 118,303 | $ 132,394 | $ 396,434 | $ 1 | $ 528,828 | |||||||||||||
Balance (in shares) at Sep. 30, 2015 | 34,305,052 | 24,531,817 | 79,610,490 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities | ||
Net income | $ 154,548 | $ 121,149 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 26,025 | 22,514 |
Amortization of purchased intangibles and acquired capitalized software | 159 | 159 |
Amortization of debt issuance costs and deferred financing fees | 1,287 | 1,062 |
Termination of office leases | 2,729 | 849 |
Share based compensation | 59,237 | 11,047 |
Other | 1,224 | (1,817) |
Changes in operating assets and liabilities: | ||
Securities borrowed | (25,666) | 200,462 |
Securities purchased under agreements to resell | 31,463 | 22,585 |
Receivables from broker dealers and clearing organizations | (173,064) | (186,477) |
Trading assets, at fair value | 89,750 | (181,623) |
Other assets ($9,210 and $8,205, at fair value, as of June 30, 2015 and December 31, 2014, respectively) | (1,109) | 4,619 |
Securities loaned | 243,866 | (300,713) |
Securities sold under agreements to repurchase | 6,994 | 1,040 |
Payables to broker dealers and clearing organizations | (358,149) | 48,931 |
Trading liabilities, at fair value | 161,247 | 365,646 |
Accounts payable and accrued expenses and other liabilities | 21,452 | 24,988 |
Net cash provided by operating activities | 241,993 | 154,421 |
Cash flows from investing activities | ||
Development of capitalized software | (6,190) | (5,882) |
Acquisition of property and equipment | (14,418) | (21,780) |
Net cash used in investing activities | (20,608) | (27,662) |
Cash flows from financing activities | ||
Distribution to members through April 15, 2015 | (130,000) | (125,652) |
Distribution from Virtu Financial to non-controlling interest, after April 15, 2015 | (80,909) | |
Repayment of short term borrowings | (28,000) | 20,800 |
Repayment of senior secured credit facility | (1,639) | (3,825) |
Debt issuance costs | (874) | |
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 | (136,306) | (150,959) |
Effect of exchange rate changes on Cash and cash equivalents | 595 | (3,683) |
Net increase (decrease) in Cash and cash equivalents | 85,674 | (27,883) |
Cash and cash equivalents, beginning of period | 75,864 | 66,010 |
Cash and cash equivalents, end of period | 161,538 | 38,127 |
Supplementary disclosure of cash flow information | ||
Cash paid for interest | 47,642 | 46,084 |
Cash paid for taxes | 7,366 | 3,819 |
Non-cash investing activities | ||
Compensation to developers subject to capitalization of software (of which $11,240 and $1,311 were capitalized for the nine months ended September 31, 2015 and 2014, respectively) | 25,420 | 3,823 |
Class A-2 | ||
Cash flows from financing activities | ||
Repurchase of membership interests | $ (1,097) | $ (682) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Condensed Consolidated Statements of Cash Flows | |||
Fair value of other assets | $ 9,210 | $ 8,205 | |
Compensation to software developers capitalized | $ 11,240 | $ 1,311 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 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 U.S. broker-dealer, Virtu Financial Capital Markets LLC (“VFCM”), a self-clearing U.S. 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 U.S. 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 September 30, 2015 and December 31, 2014 , the results of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014 and cash flows for the nine months ended September 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 Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 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 September 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, net, on the condensed consolidated statements of comprehensive income. Fair Value Measurements At September 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 three and nine months ended September 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 , and accordingly unrealized gains or losses on these derivative instruments are recognized currently in the condensed consolidated statement of comprehensive income as trading income, net. 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 7 years Leasehold improvements 7 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 $2.6 million and $2.2 million for the three months ended September 30, 2015 and 2014 , respectively, and $8.1 million and $7.3 million for the nine months ended September 30, 2015 and 2014 , respectively. The related amortization expense was approximately $2.4 million and $2.8 million for the three months ended September 30, 2015 and 2014 , respectively, and $7.6 million and $7.8 million for the nine months ended September 30, 2015 and 2014 , respectively. Additionally, in connection with charges related to share based compensation recognized upon the IPO (Note 13), the Company capitalized and amortized costs for employees in developing internal-use software, which were included within charges related to share based compensation at IPO in the condensed consolidated statements of comprehensive income. The Company capitalized charges related to share based compensation at IPO of approximately $0.1 million and $9.6 million for the three months ended and nine months ended September 30, 2015, respectively. The related amortization expense was approximately $0.5 million and $8.5 million for the three months ended and nine months ended September 30, 2015, respectively. 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. The Company operates as 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 Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. In the impairment test as of July 1, 2015, the primary valuation method used to estimate the fair value of the Company’s reporting unit was the market capitalization approach based on the market price of its Class A Common Stock, which the management believes to be an appropriate indicator of its fair value. In the impairment test as of July 1, 2014, the primary valuation methods used to estimate the fair value of the Company’s reporting unit were the income and market approaches. In applying the income approach, projected available cash flows and the terminal value were discounted to present value to derive an indication of fair value of the business enterprise. The market approach compared the reporting unit to selected reasonably similar publicly-traded companies. Based on the results of the annual impairment tests performed, no goodwill impairment was recognized during the three and nine months ended September 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 (including foreign jurisdictions) in which they operate. 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. The deferred tax assets are recognized in full and then reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be recognized. 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 September 30, 2015 and December 31, 2014 or the results of operations for the three and nine months ended September 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. Share-based compensation transactions with employees are measured based on the fair value of equity instruments issued. The fair value of awards issued for compensation prior to the Reorganization Transactions and the IPO was determined by management, with the assistance of an independent third party valuation firm, using a projected annual forfeiture rate, where applicable, on the date of grant. With respect to equity awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the Virtu Financial 2015 Management Incentive Plan (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 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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU No. 2015-14 defers the effective date of ASU No. 2014-09 by one year for public companies. ASU 2015-14 applies to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 and ASU 2015-14 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 were 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 is required to be presented as a cumulative effect adjustment to retained earnings as of January 1, 2015. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual maturity of the agreements, as well as a discussion on the potential risks associated with the agreements and the related collateral pledged, as well as 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. Refer to Note 9 for additional information regarding the impact of ASU 2014-11 on the Company’s condensed consolidated financial statements. 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 March 31 , 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. In August 2015, the FASB issued ASU 2015-15, Interest – Presentation and Subsequent Measurement of Debit Issuance Costs Associated with Line-of-Credit Arrangement. The ASU stated that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company reports debt issuance cost related to line-of-credit as a direct deduction from the carrying amount of debt liability. Refer to Note 8 for additional information regarding the impact of ASU 2015-03 and ASU 2015-15 on the Company’s condensed consolidated financial statements. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 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 Reorganization Transactions and the IPO. Net income available for common stockholders is based on the Company’s approximate 24.8% interest in Virtu Financial. The net income earned by VFI, net of the provision for income taxes for the period, is $12.3 million and $12.8 million, for the three months and nine months ended September 30, 2015, respectively. The below table contains a reconciliation of net income before noncontrolling interest to net income available for common stockholders: Three Months Ended Nine Months Ended (in thousands) September 30, 2015 September 30, 2015 Income before income taxes and noncontrolling interest $ $ Provision for 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 the three months and nine months ended September 30, 2015 divided by the weighted average number of shares of common stock outstanding during the same period: Three Months Ended Nine Months Ended (in thousands, except for share or per share data) September 30, 2015 September 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 three months and nine months ended, September 30, 2015 plus additional shares of common stock issued and issuable pursuant to the 2015 Management Incentive Plan (Note 13). Three Months Ended Nine Months Ended (in thousands, except for share or per share data) September 30, 2015 September 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 | 9 Months Ended |
Sep. 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. Payments will occur only after the filing of the U.S. federal and state income tax returns and realization of 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. 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. 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 Note 13 aggregated to approximately $184.7 million, ranging from approximately $7.9 million to $13.6 million per year over the next 15 years. The Company recorded a corresponding reduction to paid-in capital for the difference between the TRA liability and the related deferred tax asset. At September 30, 2015 , the Company’s remaining deferred tax asset and the payment liability pursuant to the TRAs were approximately $155.6 million and $184.7 million, respectively. The amounts recorded as of September 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 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 | 9 Months Ended |
Sep. 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 three and nine months ended September 30, 2015 and 2014 . No goodwill impairment was recognized in the three and nine months ended September 30, 2015 and 2014 . Acquired intangible assets consisted of the following as of September 30, 2015 and December 31, 2014 : As of September 30, 2015 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ As of December 31, 2014 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ Amortization expense relating to finite-lived intangible assets was approximately $0.05 million and $0.05 million for the three months ended September 30, 2015 and 2014 , respectively, and approximately $0.16 million and $0.16 million for the nine months ended September 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 | 9 Months Ended |
Sep. 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 September 30, 2015 and December 31, 2014 : September 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 $245.0 million and $183.0 million as of September 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 | 9 Months Ended |
Sep. 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 September 30, 2015 and December 31, 2014, substantially all of the securities received as collateral have been repledged. Amounts relating to collateralized transactions at September 30, 2015 and December 31, 2014 are summarized as follows: September 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 September 30, 2015 and December 31, 2014 consisted of the following: September 30, December 31, (in thousands) 2015 2014 Equities $ $ Exchange traded notes $ $ |
Borrowings
Borrowings | 9 Months Ended |
Sep. 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 ( 1.05% at September 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 September 30, 2015 and December 31, 2014 , the Company had $28.0 million and $0 outstanding principal balance on the Uncommitted Facility or the Committed Facility, respectively. Interest expense for the three months ended September 30, 2015 and 2014 was approximately $0.3 million and $0.1 million, and for the nine months ended September 30, 2015 and 2014 was approximately $0.6 million and $0.3 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 $477.0 million and $440.0 million, the outstanding principal was $245.0 million and $183.0 million, and borrowings bore interest at a weighted average interest rate of 2.23% and 1.80% per annum, as September 30, 2015 and December 31, 2014 , respectively. Interest expense in relation to the facilities for the three months ended September 30, 2015 and 2014 was approximately $1.2 million and $0.9 million, respectively. Interest expense in relation to the facilities for the nine months ended September 30, 2015 and 2014 was approximately $3.9 million and $2.5 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” or, the “Borrower”), 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 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 September 30, 2015 was 5.25% . Aggregate future required minimum principal payments based on the terms of this loan at September 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 $4.3 million and $5.1 million, respectively, as of September 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 $0.3 million and $0.3 million for the three months ended September 30, 2015 and 2014 , respectively, and for the nine months ended September 30, 2015 and 2014 was approximately $0.9 million and $0.8 million, 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 $1.6 million and $1.9 million, respectively, as of September 30, 2015 and December 31, 2014 , was approximately $0.1 million and $0.1 million for the three months ended September 30, 2015 and 2014 , and for the nine months ended September 30, 2015 and 2014 were approximately $0.3 million and $0.3 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% . The Company will also pay a commitment fee of 0.50% per annum on the average daily unused portion of the facility. As of September 30, 2015, the Company did not have any outstanding principal balance on the revolving credit facility. Interest expense in relation to the facilities for the three months and nine months ended September 30, 2015 was $0.2 million and $0.2 million, respectively. The net carrying amounts for the deferred financing fees capitalized in connection with the revolving credit facility were approximately $0.7 million as of September 30, 2015 , which was 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. 2 million and $0 .1 million for the three months and nine months ended September 30, 2015, respectively. |
Financial Assets and Liabilitie
Financial Assets and Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Financial Assets and Liabilities | |
Financial Assets and Liabilities | 9. Financial Assets and Liabilities At September 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 September 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 September 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 nine months ended September 30, 2015 and 2014 . Fair value measurements for those items measured on a recurring basis are summarized below as of September 30, 2015 : September 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 September 30, 2015 and December 31, 2014 , pursuant to the requirements of ASU 2011-11 and ASU 2013-01. September 30, 2015 Net Amounts of Gross Amounts Assets Presented Offset in the in the Gross Amounts Not Offset In the Condensed Condensed Condensed Consolidated Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral (in thousands) Assets Financial Condition Financial Condition Instruments Received Net 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 Assets Presented Offset in the in the Gross Amounts Not Offset In the Condensed Condensed Condensed Consolidated Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral Assets Financial Condition Financial Condition Instruments Received Net 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 Net Amounts of Gross Amounts Assets Presented Offset in the in the Gross Amounts Not Offset In the Condensed Condensed Condensed Consolidated Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral (in thousands) Assets Financial Condition Financial Condition Instruments Received Net 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 Liabilities Gross Amounts Presented Offset in the in the Gross Amounts Not Offset In the Condensed Condensed Condensed Consolidated Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Net 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 $(44.9) million and $46.4 million, which are included within receivables from broker-dealers and clearing organizations as of September 30, 2015 and December 31, 2014 , respectively, and $(72.7) million and $(3.6) million, which are included within payables to broker-dealers and clearing organizations as of September 30, 2015 and December 31, 2014 , respectively. The following table presents gross obligations for repurchase agreements and securities lending transactions by remaining contractual maturity and the class of collateral pledged. September 30, 2015 Remaining Contractual Maturity Overnight and Less than 30 - 90 Over 90 (in thousands) Continuous 30 days days Days Total Repurchase agreements: U.S. and Non-U.S. government obligations $ $ — $ — $ — $ Total $ $ — $ — $ — $ Securities lending transactions: Equity securities $ $ — $ — $ — $ Total $ $ — $ — $ — $ |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 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 September 30, 2015 and December 31, 2014 : (in thousands) September 30, 2015 December 31, 2014 Derivatives Assets Balance Sheet Classification Fair Value Notional Fair 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 — — Derivatives Liabilities Balance Sheet Classification Fair Value Notional Fair 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 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 three and nine months ended September 30, 2015 and 2014 . For the Three Months Ended For the Nine Months Ended September 30, September 30, (in thousands) 2015 2014 2015 2014 Futures $ $ $ $ Currency forwards Options Interest rate swaps — — $ $ $ $ |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Income tax expense for the three and nine months ended September 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 September 30, 2015 and December 31, 2014 . |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 9 Months Ended |
Sep. 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 AMF board referred the matter to the AMF enforcement committee, which conducted a hearing on November 4, 2015 at which the board sought a penalty of at least €5,000,000 based on its allegations that the subsidiary of MTH engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules. The enforcement committee’s decision is pending, and it could impose administrative sanctions or monetary penalties on the Company. At this time, it is not possible to estimate the effect or possible range of loss relating to this matter. 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. Subject to the foregoing, based on information currently available, management believes it is not probable that the resolution of any known matters will result in a material adverse effect on the Company’s financial position, results of operations or cash flows although they might be material for any particular reporting period. 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 | 9 Months Ended |
Sep. 30, 2015 | |
Capital Structure | |
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 three and nine months ended September 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 September 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 September 30, 2015 and 6,069,007 Class A-2 profits interests issued and outstanding as of December 31, 2014 . There were no Class A-2 profits interests issued during the three months ended September 30, 2015 and 2014 and 6,418 and 0 Class A-2 profits interests were issued during the nine months ended September 30, 2015 and 2014 , respectively. There were no Class A-2 profits interests redeemed during the three months ended September 30, 2015 and 2014 and 13,495 and 6,795 Class A-2 profits interests were redeemed during the nine months ended September 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 September 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 three and nine months ended September 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 this 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 and September 14, 2015, Virtu Financial made cash distributions totaling $10.0 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 $40.0 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 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 the grant date and expires no later than 10 years from the date of grant. As of September 30, 2015, there were 9,104,000 shares remain outstanding. In connection with and subsequent to the IPO, 119,412 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, or in the case of subsequent grants, at the closing price per share on the date of grant, and will be recognized on a straight line basis over the vesting period. |
Share-based Compensation
Share-based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Share-based Compensation | |
Share-based Compensation | 14. Share-based Compensation During the three and nine months ended September 30, 2015 and 2014 , the Company recorded expense relating to non-voting members’ interests, which as described above (Note 13), were originally granted as Class A-2 profits interests and were reclassified into non-voting common interest units in connection with the Reorganization Transactions. The non-voting members’ interests are subject to the same vesting requirements as the prior Class A-2 profits interests, which vested immediately or over a period of up to four years, and in each case are 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 $3.0 million and $4.2 million for the three months ended September 30, 2015 and 2014 , respectively, and $11.7 million and $11.4 million for the nine months ended September 30, 2015 and 2014 , respectively, related to the non-voting members’ interests (formerly Class A-2 profits interests) and other equity interests expected to be granted as part of year-end compensation. As of September 30, 2015 , total unrecognized share-based compensation expense related to unvested non-voting members’ interests (formerly Class A-2 profits interests), was $2.5 million, and this amount is expected to be recognized over a weighted average period of 1.8 years. Activity in the non-voting members’ interests (formerly Class A-2 profits interests) is as follows: Weighted Weighted Average Number of Average Fair Remaining Interests Value Life Outstanding December 31, 2013 $ Interests granted — $ — — Interests repurchased $ — Outstanding September 30, 2014 $ Outstanding December 31, 2014 $ Interests granted $ Interests repurchased $ — Outstanding September 30, 2015 $ As indicated in Note 13, East MIP Class B interests were subject to time based vesting over four years and only fully vested 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 reflected 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 for the three months and nine months ended September 30, 2015, was $0.1 million and $0.7 million, respectively. The total expense for the three months ended and nine months ended September 30, 2015 period of $1 1.9 million and $12.5 million, respectively. The compensation expense related to East MIP Class B interests was included within charges related to share based compensation at IPO in the condensed consolidated statements of comprehensive incomes. As of December 31, 2014 , a capital transaction was not considered probable, and therefore none of the East MIP Class B interests were vested, and no compensation expense was recognized relating to these awards in 2014. As of September 30, 2015, there was no unrecognized share based compensation expense related to East MIP Class B interests. During the three and nine months ended September 30, 2015 and 2014 , no employees were 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 reflected 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 for the three months and nine months ended September 30, 2015, was $0.7 million and $2.6 million, respectively. The total expense recognized for the three months and nine months ended September 30, 2015, was $32.1 million and $34.0 million. The expense related to the Class B interests 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 considered probable, and therefore none of the Class B interests were vested and no compensation expense was recognized relating to previously awarded Class B interests in 2014. As of September 30, 2015, total unrecognized share-based compensation expense related to unvested Class B interests was $2.7 million, and this amount is expected to be recognized over a weighted average period of 1.0 years. Additionally, in connection with the compensation charges related to Class B and East MIP interests mentioned above, the Company capitalized $0.1 million and $9.6 million for the three months and nine months ended September 30, 2015, respectively. The related amortization costs were approximately $0.5 million and $8.5 million for the three months and nine months ended September 30, 2015, respectively. The costs attributable to employees incurred in development of software for internal use were included within charges related to share based compensation at IPO in the condensed consolidated statements of comprehensive income. As described above (Note 13), during the nine months ended September 30, 2015 , pursuant to the 2015 Management Incentive Plan, non-qualified stock options to purchase 124,000 shares of Class A Common Stock at the IPO per share price were forfeited, and option to purchase 9,104,000 shares remained outstanding, 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. 93,765 restricted stock units, were granted during the three months ended September 30, 2015, and 119,412 restricted stock units were outstanding as of September 30, 2015, which vest on the one year anniversary and are settled in shares of Class A common stock. For the purpose of calculating share 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: Nine Months Ended September 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 $1.7 million and $3.0 million of compensation expense in relation to the stock options issued and outstanding for the three months and nine months ended September, 30, 2015, respectively. The Company recognized $0. 3 million and $0.3 million of compensation expense in relation to the restricted stock units issued for the three months and nine months ended September 30, 2015, respectively. As of September 30, 2015, total unrecognized share-based compensation expense related to unvested stock options and unvested restricted stock units was $23.5 million and $2.2 million, respectively, and these amounts are to be recognized over a weighted average period of 3.6 years and 3.5 years, respectively. |
Regulatory Requirement
Regulatory Requirement | 9 Months Ended |
Sep. 30, 2015 | |
Regulatory Requirement | |
Regulatory Requirement | 15. Regulatory Requirement As of September 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 September 30, 2015, the subsidiaries had net capital of approximately $63.4 million and $9.1 million, which was approximately $62.4 million and $8.1 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 $2.9 million and $3.7 million of capital in connection with the operation of the Company's Designated Market Maker (“DMM”) business as of September 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 | 9 Months Ended |
Sep. 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 three and nine months ended September 30, 2015 and 2014 : For the Three Months Ended For the Nine Months Ended September 30, September 30, (in thousands) 2015 2014 2015 2014 Revenues: United States $ $ $ $ Ireland Singapore Total revenues $ $ $ $ |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions | |
Related Party Transactions | 17. Related Party Transactions As of September 30, 2015 , and December 31, 2014 , the Company had a payable of $0.3 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 three months ended September 30, 2015 and 2014 , the Company paid $1. 1 million and $0.3 million, respectively, and during the nine months ended September 30, 2015 and 2014 , the Company paid $2.5 million and $0.7 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”) and SunGard Securities Finance LLC (“SunGard”). Silver Lake and its affiliates have a significant ownership interest in Interactive Data and SunGard. During the three months ended September 30, 2015 and 2014 , the Company paid $0.1 million and $0.1 million, respectively, and during the nine months ended September 30, 2015 and 2014 , the Company paid $0.3 million and $0.3 million, respectively, to Interactive Data for these purchases. During the three months ended September 30, 2015 and 2014, the Company paid $0.1 million and $0.1 million, respectively, and during the nine months ended September 30, 2015 and 2014, the Company paid $0.2 million and $0.1 million, respectively, to Sungard for these purchases. Finally, in the ordinary course of business, the Company purchases telecommunications services from Singapore Telecommunications Limited (“Singtel”). Temasek and its affiliates have a significant ownership interest in Singtel. During the three months ended September 30, 2015 and 2014 , the Company paid $0.03 million and $0.04 million, respectively, and during the nine months ended September 30, 2015 and 2014 , the Company paid $0.1 million and $0. 2 million, respectively, to Singtel for these purchases. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 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: The Company’s Board of Directors declared a dividend of twenty-four cents ($0.24) per share of Class A common stock and Class B common stock payable on December 15, 2015 to holders of record as of the close of business on December 1, 2015. On November 12, 2015, the Company announced the pricing of the public offering of 6,473,371 shares of its Class A common stock by the Company and certain selling stockholders affiliated with Silver Lake Partners. The selling stockholders are selling 6,075,837 shares of Class A common stock and the Company is offering 397,534 shares of its Class A common stock at a price to the public of $22.15 per share. The selling stockholders will receive all of the net proceeds from the sale of shares of Class A common stock by them in the offering. The Company intends to use its net proceeds from the offering to purchase common units in Virtu Financial (and paired shares of Class C common stock) from one of its non-executive employees at a net price equal to the price paid by the underwriters for shares of its Class A common stock. The offering is further described in the Company’s R egistration S tatement filed on Form S-1 (File No. 333-207874) (the “Secondary Registration Statement”) filed with, and declared effective by, the Securities and Exchange Commission. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 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 September 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, net, on the condensed consolidated statements of comprehensive income. |
Fair Value Measurements | Fair Value Measurements At September 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 three and nine months ended September 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 , and accordingly unrealized gains or losses on these derivative instruments are recognized currently in the condensed consolidated statement of comprehensive income as trading income, net. |
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 7 years Leasehold improvements 7 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 $2.6 million and $2.2 million for the three months ended September 30, 2015 and 2014 , respectively, and $8.1 million and $7.3 million for the nine months ended September 30, 2015 and 2014 , respectively. The related amortization expense was approximately $2.4 million and $2.8 million for the three months ended September 30, 2015 and 2014 , respectively, and $7.6 million and $7.8 million for the nine months ended September 30, 2015 and 2014 , respectively. Additionally, in connection with charges related to share based compensation recognized upon the IPO (Note 13), the Company capitalized and amortized costs for employees in developing internal-use software, which were included within charges related to share based compensation at IPO in the condensed consolidated statements of comprehensive income. The Company capitalized charges related to share based compensation at IPO of approximately $0.1 million and $9.6 million for the three months ended and nine months ended September 30, 2015, respectively. The related amortization expense was approximately $0.5 million and $8.5 million for the three months ended and nine months ended September 30, 2015, respectively. 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. The Company operates as 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 Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. In the impairment test as of July 1, 2015, the primary valuation method used to estimate the fair value of the Company’s reporting unit was the market capitalization approach based on the market price of its Class A Common Stock, which the management believes to be an appropriate indicator of its fair value. In the impairment test as of July 1, 2014, the primary valuation methods used to estimate the fair value of the Company’s reporting unit were the income and market approaches. In applying the income approach, projected available cash flows and the terminal value were discounted to present value to derive an indication of fair value of the business enterprise. The market approach compared the reporting unit to selected reasonably similar publicly-traded companies. Based on the results of the annual impairment tests performed, no goodwill impairment was recognized during the three and nine months ended September 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 (including foreign jurisdictions) in which they operate. 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. The deferred tax assets are recognized in full and then reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be recognized. 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 September 30, 2015 and December 31, 2014 or the results of operations for the three and nine months ended September 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. Share-based compensation transactions with employees are measured based on the fair value of equity instruments issued. The fair value of awards issued for compensation prior to the Reorganization Transactions and the IPO was determined by management, with the assistance of an independent third party valuation firm, using a projected annual forfeiture rate, where applicable, on the date of grant. With respect to equity awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the Virtu Financial 2015 Management Incentive Plan (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 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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU No. 2015-14 defers the effective date of ASU No. 2014-09 by one year for public companies. ASU 2015-14 applies to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 and ASU 2015-14 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 were 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 is required to be presented as a cumulative effect adjustment to retained earnings as of January 1, 2015. The amendment also requires additional disclosures for repurchase agreements and securities lending transactions regarding the class of collateral pledged and the remaining contractual maturity of the agreements, as well as a discussion on the potential risks associated with the agreements and the related collateral pledged, as well as 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. Refer to Note 9 for additional information regarding the impact of ASU 2014-11 on the Company’s condensed consolidated financial statements. 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 March 31 , 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. In August 2015, the FASB issued ASU 2015-15, Interest – Presentation and Subsequent Measurement of Debit Issuance Costs Associated with Line-of-Credit Arrangement. The ASU stated that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company reports debt issuance cost related to line-of-credit as a direct deduction from the carrying amount of debt liability. Refer to Note 8 for additional information regarding the impact of ASU 2015-03 and ASU 2015-15 on the Company’s condensed consolidated financial statements. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of useful lives of furniture and fixtures | Furniture, fixtures and equipment 3 to 7 years Leasehold improvements 7 years or length of lease term, whichever is shorter |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings per Share | |
Schedule of reconciliation of net income before noncontrolling interest to net income available for common stockholders | Three Months Ended Nine Months Ended (in thousands) September 30, 2015 September 30, 2015 Income before income taxes and noncontrolling interest $ $ Provision for 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 $ $ |
Schedule of basic earnings per share | Three Months Ended Nine Months Ended (in thousands, except for share or per share data) September 30, 2015 September 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 $ $ |
Schedule of diluted earnings per share | Three Months Ended Nine Months Ended (in thousands, except for share or per share data) September 30, 2015 September 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) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets | |
Schedule of acquired intangible assets | As of September 30, 2015 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ As of December 31, 2014 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ $ $ — to 2.5 ETF issuer relationships 9 ETF buyer relationships 9 $ $ $ |
Receivables from_Payables to 30
Receivables from/Payables to Broker-Dealers and Clearing Organizations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Receivables from/Payables to Broker-Dealers and Clearing Organizations | |
Summary of receivables from and payables to brokers-dealers and clearing organizations | September 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) | 9 Months Ended |
Sep. 30, 2015 | |
Collateralized Transactions | |
Schedule of amounts related to collateralized transactions | September 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 | September 30, December 31, (in thousands) 2015 2014 Equities $ $ Exchange traded notes $ $ |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 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 Liabilit33
Financial Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 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 September 30, 2015 : September 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 — — — $ $ $ — $ $ |
Summary of netting of certain financial assets and financial liabilities | September 30, 2015 Net Amounts of Gross Amounts Assets Presented Offset in the in the Gross Amounts Not Offset In the Condensed Condensed Condensed Consolidated Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral (in thousands) Assets Financial Condition Financial Condition Instruments Received Net 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 Assets Presented Offset in the in the Gross Amounts Not Offset In the Condensed Condensed Condensed Consolidated Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral Assets Financial Condition Financial Condition Instruments Received Net 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 Net Amounts of Gross Amounts Assets Presented Offset in the in the Gross Amounts Not Offset In the Condensed Condensed Condensed Consolidated Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral (in thousands) Assets Financial Condition Financial Condition Instruments Received Net 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 Liabilities Gross Amounts Presented Offset in the in the Gross Amounts Not Offset In the Condensed Condensed Condensed Consolidated Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral (in thousands) Liabilities Financial Condition Financial Condition Instruments Pledged Net 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 $ $ $ $ $ $ |
Summary of gross obligations for repurchase agreement and securities borrowed transactions by remaining contractual maturity and class of collateral pledged | September 30, 2015 Remaining Contractual Maturity Overnight and Less than 30 - 90 Over 90 (in thousands) Continuous 30 days days Days Total Repurchase agreements: U.S. and Non-U.S. government obligations $ $ — $ — $ — $ Total $ $ — $ — $ — $ Securities lending transactions: Equity securities $ $ — $ — $ — $ Total $ $ — $ — $ — $ |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments | |
Schedule of fair value of derivative instruments on a gross basis | (in thousands) September 30, 2015 December 31, 2014 Derivatives Assets Balance Sheet Classification Fair Value Notional Fair 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 — — Derivatives Liabilities Balance Sheet Classification Fair Value Notional Fair 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 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 Three Months Ended For the Nine Months Ended September 30, September 30, (in thousands) 2015 2014 2015 2014 Futures $ $ $ $ Currency forwards Options Interest rate swaps — — $ $ $ $ |
Share-based Compensation (Table
Share-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of weighted-average assumptions used in estimating the grant date fair values | Nine Months Ended September 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 September 30, 2014 $ Outstanding December 31, 2014 $ Interests granted $ Interests repurchased $ — Outstanding September 30, 2015 $ |
Geographic Information (Tables)
Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Geographic Information | |
Schedule of total revenues by geographic area | For the Three Months Ended For the Nine Months Ended September 30, September 30, (in thousands) 2015 2014 2015 2014 Revenues: United States $ $ $ $ Ireland Singapore Total revenues $ $ $ $ |
Organization and Basis of Pre37
Organization and Basis of Presentation (Details) | 9 Months Ended | ||||
Sep. 30, 2015segmentitem$ / shares | Apr. 21, 2015$ / shares | Apr. 16, 2015$ / shares | Apr. 15, 2015$ / shares | Dec. 31, 2014$ / shares | |
Number of businesses Company is managed and operated as | item | 1 | ||||
Number of reportable segments | segment | 1 | ||||
Common stock, par value (in dollars per share) | $ 0.00001 | ||||
Virtu Financial | |||||
Ownership interest (as a percent) | 24.80% | ||||
Class A common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | $ 0 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Property and Equipment and Capitalized Software | ||||
Capitalized software development costs | $ 2.6 | $ 2.2 | $ 8.1 | $ 7.3 |
Amortization expense for capitalized software | 2.4 | 2.8 | $ 7.6 | 7.8 |
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 | $ 0 | 0 |
Class B interests | East MIP | ||||
Property and Equipment and Capitalized Software | ||||
Capitalized software development costs | 0.1 | 9.6 | $ 9.6 | |
Amortization expense for capitalized software | $ 0.5 | $ 8.5 | ||
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 Accoun39
Summary of Significant Accounting Policies (Details 2) $ in Millions | 9 Months Ended | |
Sep. 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 ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Apr. 15, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of net income before minority interest to net income available for common stockholders | ||||||
Income before income taxes and non-controlling interest | $ 78,917 | $ 42,597 | $ 168,651 | $ 121,978 | ||
Provision for income taxes | 9,378 | 1,179 | 14,103 | 829 | ||
Net income | 69,539 | $ 41,418 | $ 71,401 | 154,548 | $ 121,149 | |
Noncontrolling interest subsequent to April 15, 2015 | (57,233) | $ (58,621) | (141,768) | |||
Net income available for common stockholders | $ 12,306 | $ 12,780 | ||||
Virtu Financial | ||||||
Ownership interest (as a percent) | 24.80% | 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) |
Earnings Per Share (Details 2)
Earnings Per Share (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Basic earnings per share | ||
Net income available for common stockholders | $ 12,306 | $ 12,780 |
Weighted average shares of common stock outstanding | ||
Outstanding | 34,305,052 | 34,305,052 |
Basic Earnings per share | $ 0.36 | $ 0.37 |
Class A common stock | ||
Weighted average shares of common stock outstanding | ||
Outstanding | 34,305,052 | 34,305,052 |
Basic Earnings per share | $ 0.36 | $ 0.37 |
Earnings Per Share (Details 3)
Earnings Per Share (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Diluted earnings per share | ||
Net income available for common stockholders | $ 12,306 | $ 12,780 |
Weighted average shares of common stock outstanding | ||
Issued and outstanding | 34,305,052 | 34,305,052 |
Weighted average number of shares of common stock outstanding | 34,738,733 | 34,641,497 |
Diluted Earnings per share | $ 0.35 | $ 0.37 |
Class A common stock | ||
Weighted average shares of common stock outstanding | ||
Issued and outstanding | 34,305,052 | 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 | 433,681 | 336,445 |
Tax Receivable Agreement (Detai
Tax Receivable Agreement (Details) $ in Thousands | Apr. 15, 2015USD ($) | Sep. 30, 2015USD ($) |
Tax Receivable Agreements | ||
Payment on applicable cash tax savings (as a percent) | 85 | |
First payment due after filing of company's tax return | 120 days | |
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 | $ 155,600 | |
Tax receivable agreement obligations | $ 184,679 |
Goodwill and Intangible Asset44
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Goodwill and Intangible Assets | ||||
Changes in carrying amount of goodwill | $ 0 | $ 0 | $ 0 | $ 0 |
Goodwill impairment | $ 0 | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asset45
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Acquired intangible assets | |||||
Gross Carrying Amount | $ 111,900 | $ 111,900 | $ 111,900 | ||
Accumulated Amortization | 110,645 | 110,645 | 110,486 | ||
Net Carrying Amount | 1,255 | 1,255 | 1,414 | ||
Amortization expense relating to finite-lived intangible assets | 53 | $ 53 | 159 | $ 159 | |
Purchased technology | |||||
Acquired intangible assets | |||||
Gross Carrying Amount | 110,000 | 110,000 | 110,000 | ||
Accumulated Amortization | 110,000 | $ 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 | $ 950 | ||
Accumulated Amortization | 322 | 322 | 243 | ||
Net Carrying Amount | 628 | $ 628 | $ 707 | ||
Useful Lives | 9 years | 9 years | |||
ETF buyer relationships | |||||
Acquired intangible assets | |||||
Gross Carrying Amount | 950 | $ 950 | $ 950 | ||
Accumulated Amortization | 323 | 323 | 243 | ||
Net Carrying Amount | $ 627 | $ 627 | $ 707 | ||
Useful Lives | 9 years | 9 years |
Receivables from_Payables to 46
Receivables from/Payables to Broker-Dealers and Clearing Organizations (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Due from prime brokers | $ 172,579 | $ 67,556 |
Deposits with clearing organizations | 39,966 | 29,595 |
Net equity with futures commission merchants | 189,353 | 155,060 |
Unsettled trades | 20,458 | 55,929 |
Securities failed to deliver | 138,360 | 79,512 |
Total receivables from broker-dealers and clearing organizations | 560,716 | 387,652 |
Liabilities | ||
Due to prime brokers | 76,497 | 313,623 |
Net equity with futures commission merchants | 211,425 | 60,973 |
Unsettled trades | 32,364 | 311,322 |
Securities failed to receive | 7,768 | 285 |
Total payables to broker-dealers and clearing organizations | 328,054 | 686,203 |
Outstanding principal balance | $ 245,000 | $ 183,000 |
Collateralized Transactions (De
Collateralized Transactions (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 301,737 | $ 236,375 |
Securities received as collateral: | ||
Securities borrowed | 503,037 | 470,553 |
Securities purchased under agreements to resell | 31,472 | |
Total amounts related to collateralized transactions | 503,037 | 502,025 |
Equity securities | ||
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | 259,829 | 219,159 |
Exchange traded notes | ||
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 41,908 | $ 17,216 |
Borrowings (Details)
Borrowings (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Dec. 31, 2014 | Jul. 22, 2013USD ($) | |
Credit Facilities | ||||||
Interest expense | $ 7,205 | $ 7,815 | $ 22,066 | $ 23,114 | ||
Broker-Dealer Credit Facilities | ||||||
Credit Facilities | ||||||
Number of secured credit facilities | item | 2 | 2 | ||||
Broker-Dealer Credit Facility on an uncommitted basis | ||||||
Credit Facilities | ||||||
Maximum borrowing capacity | $ 100,000 | $ 100,000 | ||||
Interest rate (as a percent) | 1.05% | 1.05% | 1.12% | |||
Credit facility term | 364 days | |||||
Interest expense | $ 300 | $ 100 | $ 600 | $ 300 | ||
Broker-Dealer Credit Facility on committed basis | ||||||
Credit Facilities | ||||||
Maximum borrowing capacity | $ 75,000 | |||||
Credit facility term | 364 days | |||||
Broker-Dealer Credit Facility on committed basis | LIBOR rate | ||||||
Credit Facilities | ||||||
Interest rate margin (as a percent) | 1.25% | |||||
Broker-Dealer Credit Facility on committed basis | Base rate | ||||||
Credit Facilities | ||||||
Interest rate margin (as a percent) | 1.25% |
Borrowings (Details 2)
Borrowings (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Short-Term Credit Facilities | |||||
Interest expense | $ 7,205 | $ 7,815 | $ 22,066 | $ 23,114 | |
Short-Term Credit Facilities | |||||
Short-Term Credit Facilities | |||||
Maximum borrowing capacity | 477,000 | 477,000 | $ 440,000 | ||
Outstanding principal balance | $ 245,000 | $ 245,000 | $ 183,000 | ||
Weighted average interest rate | 2.23% | 2.23% | 1.80% | ||
Interest expense | $ 1,200 | $ 900 | $ 3,900 | $ 2,500 |
Borrowings (Details 3)
Borrowings (Details 3) - USD ($) | Apr. 15, 2015 | Nov. 08, 2013 | May. 01, 2013 | Jul. 08, 2011 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Credit Facilities | |||||||||
Interest expense | $ 7,205,000 | $ 7,815,000 | $ 22,066,000 | $ 23,114,000 | |||||
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 | 1,600,000 | $ 1,600,000 | $ 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 | $ 501,075,000 | $ 501,075,000 | ||||||
Reduction in incremental spread upon consummation of qualifying initial public offering (as a percent) | 0.50% | ||||||||
Interest rate (as a percent) | 5.25% | 5.25% | |||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||
2,015 | $ 1,275,000 | $ 1,275,000 | |||||||
2,016 | 5,100,000 | 5,100,000 | |||||||
2,017 | 5,100,000 | 5,100,000 | |||||||
2018 and thereafter | 489,600,000 | 489,600,000 | |||||||
Total maturities of long-term debt | $ 510,000,000 | 501,075,000 | 501,075,000 | ||||||
Net carrying amount of deferred financing fees capitalized | 4,300,000 | 4,300,000 | 5,100,000 | ||||||
Amortization expense related to the deferred financing fees | 300,000 | 300,000 | 900,000 | 800,000 | |||||
Accretion related to the net carrying amount of debt discount | 100,000 | $ 100,000 | $ 300,000 | $ 300,000 | |||||
Senior Secured Credit Facility | Prime rate | |||||||||
Credit Facilities | |||||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.00% | ||||||||
Senior Secured Credit Facility | Federal funds effective rate | |||||||||
Credit Facilities | |||||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.00% | ||||||||
Senior Secured Credit Facility | Eurodollar | |||||||||
Credit Facilities | |||||||||
Additional interest margin added to fixed and variable rates (as a percent) | 3.00% | ||||||||
Senior Secured Credit Facility | First option | |||||||||
Credit Facilities | |||||||||
Fixed interest rate base (as a percent) | 2.25% | ||||||||
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 | Eurodollar | |||||||||
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% | ||||||||
Senior Secured Credit Facility | LIBOR rate | |||||||||
Credit Facilities | |||||||||
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% | ||||||||
Outstanding principal balance | 0 | $ 0 | |||||||
Interest expense | 200,000 | 200,000 | |||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||
Net carrying amount of deferred financing fees capitalized | $ 700,000 | ||||||||
Amortization expense related to the deferred financing fees | $ 200,000 | $ 100,000 | |||||||
Revolving credit facility | Federal funds effective rate | |||||||||
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) | 3.00% | ||||||||
Revolving credit facility | Eurodollar | |||||||||
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 Liabilit51
Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Fair value measurements measured on a recurring basis | |||
Transfers of financial assets between levels | $ 0 | $ 0 | |
Assets | |||
Financial instruments owned, at fair value | 1,152,821 | $ 1,307,933 | |
Financial instruments owned, pledged as collateral | 301,737 | 236,375 | |
Other assets: exchange stock | 9,210 | 8,205 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 1,198,881 | 1,037,634 | |
Equity securities | |||
Assets | |||
Financial instruments owned, pledged as collateral | 259,829 | 219,159 | |
Exchange traded notes | |||
Assets | |||
Financial instruments owned, pledged as collateral | 41,908 | 17,216 | |
Fair value measurements measured on a recurring basis | Total Fair Value | |||
Assets | |||
Financial instruments owned, at fair value | 1,152,821 | 1,307,933 | |
Financial instruments owned, pledged as collateral | 301,737 | 236,375 | |
Other assets: exchange stock | 9,210 | 8,205 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 1,198,881 | 1,037,634 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Currency forwards | |||
Assets | |||
Financial instruments owned, at fair value | 826 | 8 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 63,061 | 16,191 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Options | |||
Assets | |||
Financial instruments owned, at fair value | 1,201 | 321 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 1,223 | 79 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Interest rate swaps | |||
Assets | |||
Financial instruments owned, at fair value | 453 | ||
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 461 | 12 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Equity securities | |||
Assets | |||
Financial instruments owned, at fair value | 1,092,873 | 1,233,698 | |
Financial instruments owned, pledged as collateral | 259,829 | 219,159 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 1,120,449 | 907,732 | |
Fair value measurements measured on a recurring basis | Total Fair Value | US and non-US government obligations | |||
Assets | |||
Financial instruments owned, at fair value | 8,894 | 8,222 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 2,000 | 21,107 | |
Fair value measurements measured on a recurring basis | Total Fair Value | Exchange traded notes | |||
Assets | |||
Financial instruments owned, at fair value | 48,574 | 65,684 | |
Financial instruments owned, pledged as collateral | 41,908 | 17,216 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 11,687 | ||
Fair value measurements measured on a recurring basis | Total Fair Value | Exchange stock | |||
Assets | |||
Other assets: exchange stock | 9,210 | 8,205 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 92,513 | ||
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 | 1,090,465 | 1,282,216 | |
Financial instruments owned, pledged as collateral | 301,737 | 236,375 | |
Other assets: exchange stock | 9,210 | 8,205 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 1,125,079 | 973,456 | |
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 | 1,041,891 | 1,216,532 | |
Financial instruments owned, pledged as collateral | 259,829 | 219,159 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 1,111,392 | 859,836 | |
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | US and non-US government obligations | |||
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 2,000 | 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 | 48,574 | 65,684 | |
Financial instruments owned, pledged as collateral | 41,908 | 17,216 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 11,687 | ||
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 | 9,210 | 8,205 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 92,513 | ||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | |||
Assets | |||
Financial instruments owned, at fair value | 255,802 | 1,655,346 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 267,248 | 1,693,807 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Currency forwards | |||
Assets | |||
Financial instruments owned, at fair value | 194,272 | 1,629,637 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 256,507 | 1,645,820 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Options | |||
Assets | |||
Financial instruments owned, at fair value | 1,201 | 321 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 1,223 | 79 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate swaps | |||
Assets | |||
Financial instruments owned, at fair value | 453 | ||
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 461 | 12 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Equity securities | |||
Assets | |||
Financial instruments owned, at fair value | 50,982 | 17,166 | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | 9,057 | 47,896 | |
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | US and non-US government obligations | |||
Assets | |||
Financial instruments owned, at fair value | 8,894 | 8,222 | |
Fair value measurements measured on a recurring basis | Counterparty Netting | |||
Assets | |||
Financial instruments owned, at fair value | (193,446) | (1,629,629) | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | (193,446) | (1,629,629) | |
Fair value measurements measured on a recurring basis | Counterparty Netting | Currency forwards | |||
Assets | |||
Financial instruments owned, at fair value | (193,446) | (1,629,629) | |
Liabilities | |||
Financial instruments sold, not yet purchased, at fair value | $ (193,446) | $ (1,629,629) |
Financial Assets and Liabilit52
Financial Assets and Liabilities (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Securities borrowed | ||
Gross Amounts of Recognized Assets | $ 510,600 | $ 484,934 |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 510,600 | 484,934 |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | (508,017) | (477,559) |
Net Amount | 2,583 | 7,375 |
Securities purchased under agreements to resell | ||
Gross Amounts of Recognized Assets | 31,463 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 31,463 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | (31,463) | |
Total | ||
Gross Amounts of Recognized Assets | 706,526 | 2,146,355 |
Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition | (193,446) | (1,629,629) |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 513,080 | 516,726 |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | (509,671) | (509,098) |
Cash collateral received | (826) | |
Net Amount | 2,583 | 7,628 |
Currency forwards | ||
Trading assets, at fair value | ||
Gross Amounts of Recognized Assets | 194,272 | 1,629,637 |
Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition | (193,446) | (1,629,629) |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 826 | 8 |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Cash collateral received | (826) | |
Net Amount | 8 | |
Options | ||
Trading assets, at fair value | ||
Gross Amounts of Recognized Assets | 1,201 | 321 |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 1,201 | 321 |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | (1,201) | (76) |
Net Amount | $ 245 | |
Interest rate swaps | ||
Trading assets, at fair value | ||
Gross Amounts of Recognized Assets | 453 | |
Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition | 453 | |
Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition | ||
Financial instruments | $ (453) |
Financial Assets and Liabilit53
Financial Assets and Liabilities (Details 3) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Securities loaned | ||
Gross Amounts of Recognized Liabilities | $ 741,728 | $ 497,862 |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 741,728 | 497,862 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (734,358) | (490,768) |
Cash collateral received | (2,812) | |
Net Amount | 7,370 | 4,282 |
Securities sold under agreements to repurchase | ||
Gross Amounts of Recognized Liabilities | 9,000 | 2,006 |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 9,000 | 2,006 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (9,000) | (2,006) |
Total | ||
Gross Amounts of Recognized Liabilities | 1,008,919 | 2,145,779 |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (193,446) | (1,629,629) |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 815,473 | 516,150 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (745,034) | (492,853) |
Cash collateral received | (62,447) | (19,015) |
Net Amount | 7,992 | 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 | (44,900) | 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 | (72,700) | (3,600) |
Currency forwards | ||
Trading liabilities, at fair value: | ||
Gross Amounts of Recognized Assets | 256,507 | 1,645,820 |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (193,446) | (1,629,629) |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 63,061 | 16,191 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Cash collateral received | (62,439) | (16,191) |
Net Amount | 622 | |
Options | ||
Trading liabilities, at fair value: | ||
Gross Amounts of Recognized Assets | 1,223 | 79 |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 1,223 | 79 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (1,223) | (79) |
Interest rate swaps | ||
Trading liabilities, at fair value: | ||
Gross Amounts of Recognized Assets | 461 | 12 |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 461 | 12 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (453) | |
Cash collateral received | $ (8) | $ (12) |
Financial Assets and Liabilit54
Financial Assets and Liabilities (Details 4) $ in Thousands | Sep. 30, 2015USD ($) |
Fair value measurements measured on a recurring basis | |
Remaining contractual maturity for repurchase agreements | $ 9,000 |
Remaining contractual maturity for securities lending transactions | 741,728 |
Overnight and Continuous | |
Fair value measurements measured on a recurring basis | |
Remaining contractual maturity for repurchase agreements | 9,000 |
Remaining contractual maturity for securities lending transactions | 741,728 |
US and non-US government obligations | |
Fair value measurements measured on a recurring basis | |
Remaining contractual maturity for repurchase agreements | 9,000 |
US and non-US government obligations | Overnight and Continuous | |
Fair value measurements measured on a recurring basis | |
Remaining contractual maturity for repurchase agreements | 9,000 |
Equity securities | |
Fair value measurements measured on a recurring basis | |
Remaining contractual maturity for securities lending transactions | 741,728 |
Equity securities | Overnight and Continuous | |
Fair value measurements measured on a recurring basis | |
Remaining contractual maturity for securities lending transactions | $ 741,728 |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 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 | $ 1,875 | $ 241 |
Derivatives Assets, Notional | 933,948 | 561,029 |
Equities futures | Payables to broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | 32 | (268) |
Derivatives Liabilities, Notional | 46,084 | 122,948 |
Commodity futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | (71,433) | 42,489 |
Derivatives Assets, Notional | 5,170,009 | 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 | (76,847) | (295) |
Derivatives Liabilities, Notional | 14,809,230 | 15,727 |
Currency futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 24,683 | 3,180 |
Derivatives Assets, Notional | 2,375,193 | 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 | 4,073 | (3,077) |
Derivatives Liabilities, Notional | 1,364,351 | 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 | (28) | 504 |
Derivatives Assets, Notional | 731,114 | 857,363 |
Options | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 1,201 | 321 |
Derivatives Liabilities, Fair Value | 1,223 | 79 |
Options | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 1,201 | 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 | 1,223 | 79 |
Derivatives Liabilities, Notional | 17,909 | 12,913 |
Currency forwards | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 194,272 | 1,629,637 |
Derivatives Liabilities, Fair Value | 256,507 | 1,645,820 |
Currency forwards | Financial instruments owned | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 194,272 | 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 | 256,507 | 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 | 453 | |
Derivatives Liabilities, Fair Value | 461 | 12 |
Interest rate swaps | Financial instruments owned | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 453 | |
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 | 461 | 12 |
Derivatives Liabilities, Notional | $ 82,010 | $ 164,020 |
Derivative Instruments (Detai56
Derivative Instruments (Details 2) - Not designated as hedging instruments - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 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 | $ 172,649 | $ (12,241) | $ 802,893 | $ 125,329 |
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 | 274,510 | (93,125) | 915,383 | (11,067) |
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 | (100,752) | 80,633 | (111,010) | 135,340 |
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 | (1,111) | $ 251 | (1,484) | $ 1,056 |
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 | $ 4 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Income Taxes | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Commitments, Contingencies an58
Commitments, Contingencies and Guarantees (Details) | Nov. 04, 2015EUR (€) |
Unfavorable Regulatory Action | Pending Litigation | |
Commitments, Contingencies and Guarantees | |
Minimum penalty sought | € 5,000,000 |
Capital Structure (Details)
Capital Structure (Details) $ in Thousands | Dec. 31, 2014USD ($)shares | Jul. 08, 2011USD ($)itemshares | Sep. 30, 2015USD ($)shares | Sep. 30, 2014shares | Sep. 30, 2015USD ($)shares | Sep. 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 | 0 | 1,964,826 | |||||
Aggregate capital balance | $ | $ 19,648 | $ 19,648 | |||||||
Membership interests outstanding (in shares) | 1,964,826 | 0 | 0 | 1,964,826 | |||||
Virtu Financial | |||||||||
Number of classes of members interests issued | item | 3 | ||||||||
Virtu Financial | 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 | Class A-1 | |||||||||
Number of members that haves the right to call for redemption | item | 3 | ||||||||
Members interests granted (in shares) | 0 | 0 | 0 | 0 | |||||
Members interests forfeited (in shares) | 0 | 0 | 0 | 0 | |||||
Members interests distributed (in shares) | 0 | 0 | 0 | 0 | |||||
Members interests redeemed (in shares) | 0 | 0 | 0 | 0 | |||||
Amount of unrecovered capital for entitlement of distributions of capital proceeds | $ | $ 0 | $ 0 | $ 0 | $ 0 | |||||
Conversion ratio to convert from Class A-1 to Class A-2 | 1 | ||||||||
Virtu Financial | 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 | 1.75 | |||||||
Virtu Financial | 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 | Class A-1 | Affiliate of Vincent Viola | |||||||||
Membership interests issued (in shares) | 1,964,826 | ||||||||
Aggregate capital balance | $ | $ 270,000 | ||||||||
Virtu Financial | 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 | 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 | Class A-2 capital interests | |||||||||
Membership interests issued (in shares) | 93,786,659 | 0 | 0 | 93,786,659 | |||||
Membership interests outstanding (in shares) | 93,786,659 | 0 | 0 | 93,786,659 | |||||
Amount of unrecovered capital for entitlement of distributions of capital proceeds | $ | $ 0 | $ 0 | $ 0 | $ 0 | |||||
Virtu Financial | Class A-2 capital interests | East MIP | |||||||||
Contribution of capital interests to incentive plan (in shares) | 2,625,000 | ||||||||
Virtu Financial | 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 | Class A-2 profits interests | Employee Holdco | |||||||||
Membership interests issued (in shares) | 6,069,007 | 0 | 0 | 6,069,007 | |||||
Members interests issued during the period (in shares) | 0 | 0 | 6,418 | 0 | |||||
Members interests redeemed (in shares) | 0 | 0 | 13,495 | 6,795 | |||||
Membership interests outstanding (in shares) | 6,069,007 | 0 | 0 | 6,069,007 | |||||
Virtu Financial | Class B interests | |||||||||
Membership interests issued (in shares) | 0 | 0 | 0 | 0 | |||||
Membership interests outstanding (in shares) | 0 | 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 | 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 | Sep. 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 | $ | $ 10 | |||||
Underwriting discount and commissions | $ | $ 25.2 | |||||
Net proceeds from IPO contributed to VF | $ | 58.8 | |||||
Maximum | ||||||
Remaining dividends payable | $ | $ 40 | |||||
2015 Management Incentive Plan | ||||||
Options outstanding (in shares) | 9,104,000 | |||||
Virtu Financial | ||||||
Ownership interest (as a percent) | 24.80% | |||||
Virtu Financial | ||||||
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 | |||||
Options outstanding (in shares) | 9,104,000 | |||||
Expiration period | 10 years | |||||
Class A common stock | ||||||
Number of shares of stock issued | 19,012,112 | 19,012,112 | ||||
Common stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | $ 0 | ||
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) | 119,412 | |||||
Class B common stock | ||||||
Common stock, par value | $ / shares | $ 0.00001 | $ 0 | ||||
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 | ||||
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 | ||||
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 Millions | Apr. 21, 2015shares | Sep. 30, 2015USD ($)employee$ / sharesshares | Sep. 30, 2014USD ($)employee$ / sharesshares | Jun. 30, 2015$ / sharesshares | Sep. 30, 2015USD ($)employee$ / sharesshares | Sep. 30, 2014USD ($)employee$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013$ / sharesshares |
Share-based Compensation. | ||||||||
Capitalized software development costs | $ 2.6 | $ 2.2 | $ 8.1 | $ 7.3 | ||||
Amortization expense for capitalized software | $ 2.4 | 2.8 | $ 7.6 | 7.8 | ||||
2015 Management Incentive Plan | ||||||||
Share-based Compensation. | ||||||||
Options forfeited (in shares) | shares | 124,000 | |||||||
Options outstanding (in shares) | shares | 9,104,000 | 9,104,000 | ||||||
Class A-2 profits interests | ||||||||
Share-based Compensation. | ||||||||
Expense recognized | $ 3 | $ 4.2 | $ 11.7 | $ 11.4 | ||||
Unrecognized share-based compensation expense | $ 2.5 | $ 2.5 | ||||||
Weighted average period for compensation expense expected to be recognized | 1 year 9 months 18 days | |||||||
Number of Profits Interests | ||||||||
Outstanding at the beginning of the period (in shares) | shares | 6,069,007 | 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 | 6,061,930 | 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 | $ 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 | $ 7.05 | $ 6.82 | ||
Weighted Average Remaining Life, outstanding at the beginning of the period | ||||||||
Weighted Average Remaining Life | 1 year 9 months 26 days | 2 years 7 months 24 days | 2 years 6 months 15 days | 3 years 4 months 24 days | ||||
Interests granted (in years) | 3 years | |||||||
Class A-2 profits interests | Maximum | ||||||||
Share-based Compensation. | ||||||||
Vesting period | 4 years | 4 years | 4 years | 4 years | ||||
Class B interests | ||||||||
Share-based Compensation. | ||||||||
Number of employees | employee | 0 | 0 | 0 | 0 | ||||
One time expense recognized | $ 31.4 | |||||||
Additional expense recognized | $ 0.7 | 2.6 | ||||||
Expense recognized | 32.1 | 34 | $ 0 | |||||
Unrecognized share-based compensation expense | $ 2.7 | $ 2.7 | ||||||
Weighted average period for compensation expense expected to be recognized | 1 year | |||||||
Class B interests | Time based vesting | ||||||||
Share-based Compensation. | ||||||||
Vesting period | 4 years | 4 years | 4 years | 4 years | ||||
Class B interests | East MIP | ||||||||
Share-based Compensation. | ||||||||
One time expense recognized | $ 11.8 | |||||||
Additional expense recognized | $ 0.1 | 0.7 | ||||||
Expense recognized | 11.9 | 12.5 | $ 0 | |||||
Unrecognized share-based compensation expense | 0 | 0 | ||||||
Capitalized software development costs | 0.1 | 9.6 | $ 9.6 | |||||
Amortization expense for capitalized software | 0.5 | $ 8.5 | ||||||
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 | 1.7 | $ 3 | ||||||
Unrecognized share-based compensation expense | $ 23.5 | $ 23.5 | ||||||
Weighted average period for compensation expense expected to be recognized | 3 years 7 months 6 days | |||||||
Options outstanding (in shares) | shares | 9,104,000 | 9,104,000 | ||||||
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 | $ 0.3 | $ 0.3 | ||||||
Unrecognized share-based compensation expense | $ 2.2 | $ 2.2 | ||||||
Weighted average period for compensation expense expected to be recognized | 3 years 6 months | |||||||
Restricted stock units | 2015 Management Incentive Plan | Time based vesting | ||||||||
Share-based Compensation. | ||||||||
Options outstanding (in shares) | shares | 119,412 | 119,412 | ||||||
Granted (in shares) | shares | 93,765 | |||||||
Restricted stock units | Class A common stock | 2015 Management Incentive Plan | ||||||||
Share-based Compensation. | ||||||||
Vesting period | 1 year |
Regulatory Requirement (Details
Regulatory Requirement (Details) $ in Millions | 9 Months Ended | |
Sep. 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 | 63.4 | 59.8 |
Excess net capital over the required net capital | 62.4 | 58.8 |
Broker Dealer Subsidiary Two | ||
Regulatory Requirement | ||
Minimum net capital required to be maintained by broker-dealer subsidiaries | 1 | 1 |
Net capital | 9.1 | 8.1 |
Excess net capital over the required net capital | 8.1 | 7.1 |
VFCM | ||
Regulatory Requirement | ||
Minimum capital required to be maintained in connection with the operation of the Company's DMM business | 2.9 | $ 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 | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Total revenues by geographic area | ||||
Revenues | $ 215,802 | $ 173,234 | $ 619,309 | $ 509,505 |
United States | ||||
Total revenues by geographic area | ||||
Revenues | 147,347 | 120,713 | 415,750 | 345,204 |
Ireland | ||||
Total revenues by geographic area | ||||
Revenues | 41,094 | 36,471 | 133,211 | 113,705 |
Singapore | ||||
Total revenues by geographic area | ||||
Revenues | $ 27,361 | $ 16,050 | $ 70,348 | $ 50,596 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Related Party Transactions | |||||
Payable to affiliates | $ 300 | $ 300 | $ 400 | ||
Dell | |||||
Related Party Transactions | |||||
Payments for purchases | 1,100 | $ 300 | 2,500 | $ 700 | |
Interactive data | |||||
Related Party Transactions | |||||
Payments for purchases | 100 | 100 | 300 | 300 | |
Sungard | |||||
Related Party Transactions | |||||
Payments for purchases | 100 | 100 | 200 | 100 | |
Singtel | |||||
Related Party Transactions | |||||
Payments for purchases | $ 30 | $ 40 | $ 100 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events. | Nov. 13, 2015$ / shares | Nov. 12, 2015employee$ / sharesshares |
Subsequent events | ||
Number of non-executive employees | employee | 1 | |
Class A common stock | ||
Subsequent events | ||
Dividends declared (in dollars per share) | $ / shares | $ 0.24 | |
Common stock offered for sale (in shares) | 397,534 | |
Price of stock (in dollars per share) | $ / shares | $ 22.15 | |
Silver Lake Post-IPO | Class A common stock | ||
Subsequent events | ||
Common stock offered for sale (in shares) | 6,075,837 | |
Virtu Financial Inc And Silver Lake Partners | Class A common stock | ||
Subsequent events | ||
Common stock offered for sale (in shares) | 6,473,371 |