Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 13, 2018 | Jun. 30, 2017 | |
Entity Registrant Name | Virtu Financial, Inc. | ||
Entity Central Index Key | 1,592,386 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 699.7 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Class A | |||
Entity Common Stock, Shares Outstanding | 91,512,582 | ||
Class C | |||
Entity Common Stock, Shares Outstanding | 17,066,564 | ||
Class D | |||
Entity Common Stock, Shares Outstanding | 79,610,490 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 532,887 | $ 181,415 |
Securities borrowed | 1,471,172 | 220,005 |
Receivables from broker dealers and clearing organizations | 972,018 | 448,728 |
Trading assets, at fair value: | ||
Financial instruments owned | 2,117,579 | 1,683,999 |
Financial instruments owned and pledged | 595,043 | 143,883 |
Property, equipment and capitalized software (net of accumulated depreciation of $375,656 and $113,184 as of December 31, 2017 and 2016, respectively) | 137,018 | 29,660 |
Goodwill | 844,883 | 715,379 |
Intangibles (net of accumulated amortization of $123,408 and $110,908 as of December 31, 2017 and December 31, 2016, respectively) | 111,224 | 992 |
Deferred tax asset | 125,760 | 193,859 |
Assets of business held for sale | 55,070 | |
Other assets ($98,364 and $36,480, at fair value, as of December 31, 2017 and 2016, respectively) | 357,352 | 74,470 |
Total Assets | 7,320,006 | 3,692,390 |
Liabilities | ||
Short term borrowings | 27,883 | 25,000 |
Securities loaned | 754,687 | 222,203 |
Securities sold under agreements to repurchase | 390,642 | |
Payables to broker dealers and clearing organizations | 716,205 | 695,978 |
Trading liabilities, at fair value: | ||
Financial instruments sold, not yet purchased | 2,384,598 | 1,349,155 |
Tax receivable agreement obligations | 147,040 | 231,404 |
Accounts payable and accrued expenses and other liabilities | 358,825 | 69,281 |
Long-term borrowings | 1,388,548 | 564,957 |
Total Liabilities | 6,168,428 | 3,157,978 |
Stockholders' Equity | ||
Treasury stock, at cost, 616,923 and 453,066 shares at December 31, 2017 and 2016, respectively | (11,041) | (8,358) |
Additional paid-in capital | 900,746 | 155,536 |
Accumulated deficit | (62,129) | (1,254) |
Accumulated other comprehensive income (loss) | 2,991 | (252) |
Total stockholders' equity | 830,569 | 145,673 |
Noncontrolling interest | 321,009 | 388,739 |
Total equity | 1,151,578 | 534,412 |
Total liabilities and equity | 7,320,006 | 3,692,390 |
Class D | ||
Stockholders' Equity | ||
Common stock value | 1 | 1 |
Class A | ||
Stockholders' Equity | ||
Common stock value | $ 1 |
Consolidated Statements of Fin3
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 21, 2015 |
Accumulated depreciation (in dollars) | $ 375,656 | $ 113,184 | |
Intangibles accumulated amortization (in dollars) | 123,408 | 110,908 | |
Fair value of other assets (in dollars) | $ 98,364 | $ 36,480 | |
Treasury stock shares | 616,923 | 453,066 | |
Class A | |||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 |
Common stock shares authorized | 1,000,000,000 | 1,000,000,000 | |
Common stock shares issued | 90,415,532 | 40,436,580 | |
Common stock shares outstanding | 89,798,609 | 39,983,514 | |
Class B | |||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |
Common stock shares authorized | 175,000,000 | 175,000,000 | |
Common stock shares issued | 0 | 0 | |
Common stock shares outstanding | 0 | 0 | |
Class C | |||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |
Common stock shares authorized | 90,000,000 | 90,000,000 | |
Common stock shares issued | 17,880,239 | 19,810,707 | |
Common stock shares outstanding | 17,880,239 | 19,810,707 | |
Class D | |||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |
Common stock shares authorized | 175,000,000 | 175,000,000 | |
Common stock shares issued | 79,610,490 | 79,610,490 | |
Common stock shares outstanding | 79,610,490 | 79,610,490 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Trading income, net | $ 766,027 | $ 665,465 | $ 757,455 |
Interest and dividends income | 50,407 | 26,419 | 28,136 |
Commissions, net and technology services | 116,503 | 10,352 | 10,622 |
Other, net | 95,045 | 36 | |
Total revenue | 1,027,982 | 702,272 | 796,213 |
Operating Expenses: | |||
Brokerage, exchange and clearance fees, net | 256,926 | 221,214 | 232,469 |
Communication and data processing | 131,506 | 71,001 | 68,647 |
Employee compensation and payroll taxes | 177,489 | 85,295 | 88,026 |
Payments for order flow | 27,727 | ||
Interest and dividends expense | 91,993 | 56,557 | 52,423 |
Operations and administrative | 65,137 | 23,039 | 25,991 |
Depreciation and amortization | 47,327 | 29,703 | 33,629 |
Amortization of purchased intangibles and acquired capitalized software | 15,447 | 211 | 211 |
Debt issue costs related to debt refinancing | 10,460 | 5,579 | |
Transaction advisory fees and expenses | 25,270 | ||
Reserve for legal matter | 657 | 5,440 | |
Charges related to share-based compensation at IPO | 772 | 1,755 | 44,194 |
Financing interest expense on long-term borrowings | 64,107 | 28,327 | 29,254 |
Total operating expenses | 914,818 | 522,681 | 580,284 |
Income (loss) before income taxes and noncontrolling interest | 113,164 | 179,591 | 215,929 |
Provision for (benefit from) income taxes | 94,266 | 21,251 | 18,439 |
Net income (loss) | 18,898 | 158,340 | 197,490 |
Noncontrolling interest | (15,959) | (125,360) | (176,603) |
Net income (loss) available for common stockholders | $ 2,939 | $ 32,980 | $ 20,887 |
Earnings (loss) per share | |||
Basic (in dollars per share) | $ 0.03 | $ 0.83 | $ 0.60 |
Diluted (in dollars per share) | $ 0.03 | $ 0.83 | $ 0.59 |
Weighted average common shares outstanding | |||
Basic (in shares) | 62,579,147 | 38,539,091 | 34,964,312 |
Diluted (in shares) | 62,579,147 | 38,539,091 | 35,339,585 |
Comprehensive income | |||
Net income (loss) | $ 18,898 | $ 158,340 | $ 197,490 |
Other comprehensive income (loss) | |||
Foreign currency translation adjustment, net of taxes | 9,117 | (1,165) | (4,255) |
Comprehensive income (loss) | 28,015 | 157,175 | 193,235 |
Less: Comprehensive income (loss) attributable to non-controlling interests | (21,833) | (124,546) | (172,249) |
Comprehensive income (loss) attributable to common stockholders | $ 6,182 | $ 32,629 | $ 20,986 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Common StockClass A | Common StockClass C | Common StockClass D | Treasury Stock | Additional Paid-in Capital | Capital UnitsClass A-1 | Capital UnitsClass A-2 | Retained Earnings (Accumulated Deficit). | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | Noncontrolling Interest | Class A | Class C | Class D | Total |
Balance at Dec. 31, 2014 | $ 19,648,000 | $ 287,705,000 | $ (91,383,000) | $ (3,705,000) | $ 212,265,000 | $ 212,265,000 | |||||||||
Balance (in shares) at Dec. 31, 2014 | 1,964,826 | 99,855,666 | |||||||||||||
Increase (decrease) in stockholder's/members' equity | |||||||||||||||
Share based compensation | $ 438,000 | 438,000 | 438,000 | ||||||||||||
Share based compensation (in shares) | 6,418 | ||||||||||||||
Repurchase of interests | $ (97,000) | (97,000) | (97,000) | ||||||||||||
Repurchase of interests (in shares) | (13,495) | ||||||||||||||
Dividends | (130,000,000) | (130,000,000) | (130,000,000) | ||||||||||||
Net income (loss) | 83,147,000 | 83,147,000 | 83,147,000 | ||||||||||||
Foreign exchange translation adjustment | (4,633,000) | (4,633,000) | (4,633,000) | ||||||||||||
Reorganization of equity structure | $ 36,746,041 | $ 1,000 | $ 63,261,000 | $ (19,648,000) | $ (288,046,000) | 138,236,000 | 8,338,000 | (97,858,000) | $ 392,291,000 | 294,433,000 | |||||
Reorganization of equity structure (in shares) | 18,763,664 | 79,610,490 | |||||||||||||
Reorganization of equity structure (in shares) | (1,964,826) | (99,848,589) | |||||||||||||
Balance at Apr. 15, 2015 | $ 1,000 | 63,261,000 | |||||||||||||
Balance at Apr. 15, 2015 | 63,262,000 | 392,291,000 | 455,553,000 | ||||||||||||
Balance (in shares) at Apr. 15, 2015 | 18,763,664 | 36,746,041 | 79,610,490 | ||||||||||||
Balance at Dec. 31, 2014 | $ 19,648,000 | $ 287,705,000 | (91,383,000) | (3,705,000) | 212,265,000 | 212,265,000 | |||||||||
Balance (in shares) at Dec. 31, 2014 | 1,964,826 | 99,855,666 | |||||||||||||
Increase (decrease) in stockholder's/members' equity | |||||||||||||||
Net income (loss) | 197,490,000 | ||||||||||||||
Foreign exchange translation adjustment | (4,255,000) | ||||||||||||||
Balance at Dec. 31, 2015 | $ 1,000 | 130,902,000 | 3,525,000 | 99,000 | 130,708,000 | 427,162,000 | 557,870,000 | ||||||||
Balance (in shares) at Dec. 31, 2015 | 38,379,858 | 20,976,598 | 79,610,490 | ||||||||||||
Treasury stock at Dec. 31, 2015 | $ (3,819,000) | (3,819,000) | (3,819,000) | ||||||||||||
Treasury stock (in shares) at Dec. 31, 2015 | (169,649) | ||||||||||||||
Balance at Apr. 15, 2015 | $ 1,000 | 63,261,000 | |||||||||||||
Balance at Apr. 15, 2015 | 63,262,000 | 392,291,000 | 455,553,000 | ||||||||||||
Balance (in shares) at Apr. 15, 2015 | 18,763,664 | 36,746,041 | 79,610,490 | ||||||||||||
Increase (decrease) in stockholder's/members' equity | |||||||||||||||
Share based compensation | 19,278,000 | 19,278,000 | 19,278,000 | ||||||||||||
Share based compensation (in shares) | 576,693 | ||||||||||||||
Repurchase of interests | $ (12,214,224) | (277,153,000) | (277,153,000) | (277,153,000) | |||||||||||
Repurchase of interests (in shares) | (3,470,724) | ||||||||||||||
Dividends | (17,362,000) | (17,362,000) | (17,362,000) | ||||||||||||
Net income (loss) | 20,887,000 | 20,887,000 | 93,456,000 | 114,343,000 | |||||||||||
Foreign exchange translation adjustment | 99,000 | 99,000 | 279,000 | 378,000 | |||||||||||
Issuance of Common Stock, net of offering costs | 327,366,000 | 327,366,000 | 327,366,000 | ||||||||||||
Issuance of Common Stock, net of offering costs (in shares) | 19,012,112 | (3,498,113) | |||||||||||||
Issuance of Common Stock in connection with secondary offering, net of offering costs | 7,782,000 | 7,782,000 | 7,782,000 | ||||||||||||
Issuance of common stock (in shares) | 3,498,113 | ||||||||||||||
Repurchase of units and corresponding number of common stock in connection with secondary offering | (8,805,000) | (8,805,000) | (8,805,000) | ||||||||||||
Share based compensation vested upon IPO | 44,908,000 | 44,908,000 | 44,908,000 | ||||||||||||
Adjustments for changes in proportionate ownership in Virtu Financial | (22,513,000) | (22,513,000) | 22,513,000 | ||||||||||||
Issuance of tax receivable agreements in connection with secondary offering | (23,041,000) | (23,041,000) | (23,041,000) | ||||||||||||
Repurchase of common stock | $ (57,106) | (1,368,000) | (1,368,000) | (1,368,000) | |||||||||||
Treasury stock purchases (in shares) | (169,649) | ||||||||||||||
Distribution from Virtu Financial to non-controlling interest | (81,377,000) | (81,377,000) | |||||||||||||
Issuance of tax receivable agreements in connection with secondary offering | (1,187,000) | (1,187,000) | (1,187,000) | ||||||||||||
Balance at Dec. 31, 2015 | $ 1,000 | 130,902,000 | 3,525,000 | 99,000 | 130,708,000 | 427,162,000 | 557,870,000 | ||||||||
Balance (in shares) at Dec. 31, 2015 | 38,379,858 | 20,976,598 | 79,610,490 | ||||||||||||
Treasury stock at Dec. 31, 2015 | $ (3,819,000) | (3,819,000) | (3,819,000) | ||||||||||||
Treasury stock (in shares) at Dec. 31, 2015 | (169,649) | ||||||||||||||
Increase (decrease) in stockholder's/members' equity | |||||||||||||||
Share based compensation | 24,893,000 | 24,893,000 | 24,893,000 | ||||||||||||
Share based compensation (in shares) | 953,054 | (58,070) | |||||||||||||
Dividends | (37,759,000) | (37,759,000) | (37,759,000) | ||||||||||||
Net income (loss) | 32,980,000 | 32,980,000 | 125,360,000 | 158,340,000 | |||||||||||
Foreign exchange translation adjustment | (351,000) | (351,000) | (814,000) | (1,165,000) | |||||||||||
Issuance of Common Stock in connection with secondary offering, net of offering costs | 16,677,000 | 16,677,000 | 16,677,000 | ||||||||||||
Issuance of common stock (in shares) | 1,103,668 | ||||||||||||||
Repurchase of units and corresponding number of common stock in connection with secondary offering | (17,383,000) | (17,383,000) | (17,383,000) | ||||||||||||
Repurchase of units and corresponding number of common stock in connection with secondary offering (in shares) | (1,103,668) | ||||||||||||||
Issuance of tax receivable agreements in connection with secondary offering | (545,000) | (545,000) | (545,000) | ||||||||||||
Repurchase of common stock | (98,000) | (98,000) | (98,000) | ||||||||||||
Repurchase of common stock (in shares) | (4,153) | ||||||||||||||
Treasury stock purchases | $ (4,539,000) | (4,539,000) | (4,539,000) | ||||||||||||
Treasury stock purchases (in shares) | (283,417) | ||||||||||||||
Distribution from Virtu Financial to non-controlling interest | (162,969,000) | (162,969,000) | |||||||||||||
Balance at Dec. 31, 2016 | 145,673,000 | ||||||||||||||
Balance at Dec. 31, 2016 | $ 1,000 | 155,536,000 | (1,254,000) | (252,000) | 145,673,000 | 388,739,000 | 534,412,000 | ||||||||
Balance (in shares) at Dec. 31, 2016 | 40,436,580 | 19,810,707 | 79,610,490 | 39,983,514 | 19,810,707 | 79,610,490 | |||||||||
Treasury stock at Dec. 31, 2016 | $ (8,358,000) | $ (8,358,000) | |||||||||||||
Treasury stock (in shares) at Dec. 31, 2016 | (453,066) | (453,066) | |||||||||||||
Increase (decrease) in stockholder's/members' equity | |||||||||||||||
Share based compensation | $ (34,019) | 16,846,000 | 16,846,000 | $ 16,846,000 | |||||||||||
Share based compensation (in shares) | 546,265 | ||||||||||||||
Repurchase of interests | (9,143,000) | (9,143,000) | (9,143,000) | ||||||||||||
Dividends | (63,814,000) | (63,814,000) | (63,814,000) | ||||||||||||
Net income (loss) | 2,939,000 | 2,939,000 | 15,959,000 | 18,898,000 | |||||||||||
Foreign exchange translation adjustment | 3,243,000 | 3,243,000 | 5,874,000 | 9,117,000 | |||||||||||
Issuance of Common Stock, net of offering costs | $ 1,000 | 735,973,000 | 735,974,000 | 735,974,000 | |||||||||||
Issuance of Common Stock, net of offering costs (in shares) | 48,076,924 | ||||||||||||||
Issuance of common stock (in shares) | 1,355,763 | ||||||||||||||
Repurchase of units and corresponding number of common stock in connection with secondary offering (in shares) | (1,355,763) | ||||||||||||||
Issuance of tax receivable agreements in connection with secondary offering | 1,534,000 | 1,534,000 | 1,534,000 | ||||||||||||
Repurchase of common stock (in shares) | (540,686) | ||||||||||||||
Treasury stock purchases | $ (2,683,000) | (2,683,000) | (2,683,000) | ||||||||||||
Treasury stock purchases (in shares) | (163,857) | ||||||||||||||
Distribution from Virtu Financial to non-controlling interest | (89,563,000) | (89,563,000) | |||||||||||||
Balance at Dec. 31, 2017 | $ 1,000 | $ 1,000 | $ 900,746,000 | $ (62,129,000) | $ 2,991,000 | $ 830,569,000 | $ 321,009,000 | 1,151,578,000 | |||||||
Balance (in shares) at Dec. 31, 2017 | 90,415,532 | 17,880,239 | 79,610,490 | ||||||||||||
Balance at Dec. 31, 2017 | 830,569,000 | ||||||||||||||
Balance at Dec. 31, 2017 | 1,151,578,000 | ||||||||||||||
Balance (in shares) at Dec. 31, 2017 | 89,798,609 | 17,880,239 | 79,610,490 | ||||||||||||
Treasury stock at Dec. 31, 2017 | $ (11,041,000) | $ (11,041,000) | |||||||||||||
Treasury stock (in shares) at Dec. 31, 2017 | (616,923) | (616,923) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net Income | $ 18,898 | $ 158,340 | $ 197,490 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 47,327 | 29,703 | 33,629 |
Amortization of purchased intangibles and acquired capitalized software | 15,447 | 211 | 211 |
Debt issue cost related to debt refinancing | 10,460 | 5,579 | |
Amortization of debt issuance costs and deferred financing fees | 5,822 | 1,690 | 1,755 |
Termination of office leases | 3,671 | 1,380 | |
Share based compensation | 26,259 | 22,866 | 61,878 |
Reserve for legal matter | 657 | 5,440 | |
Equipment writeoff | 1,216 | 428 | 559 |
Tax receivable agreement obligation reduction | (86,599) | ||
Deferred taxes | 102,973 | 13,313 | 3,985 |
Other | (4,577) | (1,070) | 219 |
Changes in operating assets and liabilities: | |||
Securities borrowed | 155,277 | 233,291 | 31,638 |
Securities purchased under agreements to resell | 16,894 | 14,981 | 16,482 |
Receivables from broker dealers and clearing organizations | 26,145 | 27,808 | (88,884) |
Trading assets, at fair value | 1,210,599 | (530,668) | 247,094 |
Other Assets | 44,494 | 772 | (5,796) |
Securities loaned | 366,295 | (302,400) | 26,741 |
Securities sold under agreements to repurchase | (450,964) | (2,006) | |
Payables to broker dealers and clearing organizations | (516,376) | 209,374 | (199,599) |
Trading liabilities, at fair value | (721,204) | 370,065 | (58,544) |
Accounts payable and accrued expenses and other liabilities | 17,860 | (14,684) | (13,392) |
Net cash provided by operating activities | 290,574 | 239,599 | 260,280 |
Cash flows from investing activities | |||
Development of capitalized software | (14,158) | (8,404) | (8,028) |
Acquisition of property and equipment | (18,932) | (11,859) | (16,271) |
Investment in SBI Japannext | (38,754) | ||
Acquisition of KCG Holdings, net of cash acquired, described in Note 3 | (799,632) | ||
Acquisition of Teza Technologies | (5,594) | ||
Proceeds from sale of DMM business | 300 | ||
Net cash used in investing activities | (838,016) | (59,017) | (24,299) |
Cash flows from financing activities | |||
Distribution to members | (130,000) | ||
Distribution from Virtu Financial to non-controlling interest | (89,563) | (162,969) | (81,377) |
Dividends | (63,814) | (37,759) | (17,362) |
Purchase of treasury stock | (2,683) | (4,539) | (3,819) |
Short-term borrowings, net | 7,000 | (20,000) | 45,000 |
Proceeds from long-term borrowings | 1,115,036 | 75,753 | |
Repayment of senior secured credit facility | (256,473) | (3,825) | (2,914) |
Repayment of KCG Notes | (480,987) | ||
Tax receivable agreement obligations | (7,045) | ||
Debt issuance costs | (56,505) | (5,094) | (976) |
Issuance of common stock, net of offering costs | 735,974 | 327,366 | |
Repurchase of Virtu Financial Units and corresponding number of Class A and C Common Stock | (277,153) | ||
Issuance of common stock, net of offering costs | 16,677 | 7,782 | |
Repurchase of Virtu Financial Units and corresponding number of Class A and C common stock in connection with IPO | (17,383) | (8,805) | |
Net cash provided by (used in) financing activities | 889,797 | (161,237) | (144,355) |
Effect of exchange rate changes on cash and cash equivalents | 9,117 | (1,165) | (4,255) |
Net decrease in Cash and cash equivalents | 351,472 | 18,180 | 87,371 |
Cash and cash equivalents beginning of period | 181,415 | 163,235 | 75,864 |
Cash and Cash Equivalents, at Carrying Value | 181,415 | 163,235 | 75,864 |
Supplementary disclosure of cash flow information | |||
Cash paid for interest | 112,982 | 54,872 | 63,230 |
Cash paid for taxes | 5,976 | 16,175 | 12,875 |
Non-cash investing activities | |||
Share based compensation of developers relating to software capitalized | 1,605 | 2,750 | 11,278 |
Non-cash financing activities | |||
Tax receivable agreement described in Note 6 | 1,534 | 545 | (21,854) |
Class A-2 | |||
Cash flows from financing activities | |||
Purchase of treasury stock | $ (11,143) | (2,000) | $ (2,097) |
Class C | |||
Cash flows from financing activities | |||
Purchase of treasury stock | $ (98) |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2017 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | Virtu Financial, Inc. and Subsidiaries Notes to Consolidated Financial Statements (dollars in thousands, except shares and per share amounts, unless otherwise noted) 1. Organization and Basis of Presentation Organization The accompanying consolidated financial statements include the accounts and operations of Virtu Financial, Inc. (“VFI” or, collectively with its wholly owned or controlled subsidiaries, the “Company”) beginning with its initial public offering (“IPO”) in April of 2015, along with the historical accounts and operations of Virtu Financial LLC (“Virtu Financial”) prior to the Company’s IPO. VFI is a Delaware corporation whose primary asset is its ownership interest in Virtu Financial, which it acquired pursuant to and subsequent to certain reorganization transactions (the “Reorganization Transactions”) consummated in connection with its IPO. As of December 31, 2017, VFI owned approximately 48.3% of the membership interests of Virtu Financial. VFI 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. The Company is a leading financial firm that leverages cutting edge technology to deliver liquidity to the global markets and innovative, transparent trading solutions to its clients. The Company has broad diversification, in combination with its proprietary technology platform and low-cost structure, which enables the Company to facilitate risk transfer between global capital markets participants by supplying competitive liquidity and execution services while at the same time earning attractive margins and returns. 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. On July 20, 2017 (the “Closing Date”), the Company completed the all-cash acquisition (the “Acquisition”) of KCG Holdings, Inc. (“KCG”). Pursuant to the terms of the Agreement and Plan of Merger, dated as of April 20, 2017 (the “Merger Agreement”), by and among the Company, Orchestra Merger Sub, Inc., a Delaware corporation and an indirect wholly-owned subsidiary of the Company (“Merger Sub”), and KCG Merger Sub merged with and into KCG (the “Merger”), with KCG surviving the Merger as a wholly owned subsidiary of the Company. The transaction will extend Virtu’s scaled operating model to KCG’s wholesale market making businesses and broaden the distribution of Virtu’s Execution Services to KCG’s extensive institutional client base. See Note 3 “Acquisition of KCG Holdings Inc.” for further details. Virtu Financial’s principal subsidiaries include Virtu Financial BD LLC (“VFBD”) and Virtu Americas LLC (“VAL”), which are self-clearing U.S. broker-dealers, Virtu Financial Capital Markets LLC (“VFCM”), a U.S. broker-dealer, which self-clears its proprietary transactions and introduces the accounts of its affiliates and non-affiliated broker-dealers on an agency basis to other clearing firms that clear and settle transactions in those accounts. 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, each of which are trading entities focused on asset classes in their respective geographic regions. On October 24, 2017, the Company announced it has entered into a definitive agreement to sell its fixed income trading venue, BondPoint, to Intercontinental Exchange (“ICE”). See Note 4 “Business Held for Sale” and Note 22 “Subsequent Events” for further details. Prior to the Acquisition of KCG, the Company was managed and operated as one business, under one reportable segment. As a result of the acquisition of KCG, beginning in the third quarter of 2017 the Company has three operating segments: (i) Market Making; (ii) Execution Services; and (iii) Corporate. See Note 19 “Geographic Information and Business Segments” for a further discussion of the Company’s segments. Basis of Consolidation and Form of Presentation These 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-K 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”). The consolidated financial statements of the Company include its equity interests in Virtu Financial, and its subsidiaries. The Company operates and controls all business and affairs of Virtu Financial and its operating subsidiaries indirectly through its equity interest in Virtu Financial. Certain reclassifications have been made to the prior periods’ consolidated financial statements in order to conform to the current period presentation. Such reclassifications are immaterial to both current and all previously issued financial statements taken as a whole and have no effect on previously reported consolidated net income available to common stockholders. The consolidated financial statements include the accounts of the Company and its majority and wholly owned subsidiaries. As sole managing member of Virtu Financial, the Company exerts control over the Group’s operations. The Company consolidates Virtu Financial and its subsidiaries’ financial statements and records the interests in Virtu Financial that the Company does not own as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation. As discussed in Note 3 “Acquisition of KCG Holdings Inc.”, the Company is accounting for the acquisition of KCG under the acquisition method of accounting. Under the acquisition method of accounting, the assets and liabilities of KCG, as of July 20, 2017, were recorded at their respective fair values and added to the carrying value of the Company's existing assets and liabilities. The reported financial condition, results of operations and cash flows of the Company for the periods following the Acquisition reflect KCG's and the Company's balances and reflect the impact of purchase accounting adjustments. As the Company is the accounting acquirer, the financial results for the year ended December 31, 2017 comprise the results of the Company for the entire applicable period and the results of KCG from Closing Date through December 31, 2017. All periods prior to the Closing Date comprise solely the results of the Company. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The Company's consolidated financial statements are prepared in conformity with U.S. GAAP, which require management to make estimates and assumptions regarding measurements including the fair value of trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, income tax, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. Earnings Per Share Earnings per share (“EPS”) is calculated on both a basic and diluted basis. Basic EPS excludes dilution and is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the 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. The Company grants restricted stock units (“RSUs”), which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. As a result, the unvested RSUs meet the definition of a participating security requiring the application of the two-class method. Under the two-class method, earnings available to common shareholders, including both distributed and undistributed earnings, are allocated to each class of common stock and participating securities according to dividends declared and participating rights in undistributed earnings, which may cause diluted EPS to be more dilutive than the calculation using the treasury stock method. Cash and Cash Equivalents Cash and cash equivalents include money market accounts, which are payable on demand, and short-term investments with an original maturity of less than 90 days. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. The Company manages this risk by selecting financial institutions deemed highly creditworthy to minimize the risk. 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, which comprises by cash and/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 cash collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the consolidated statements of financial condition. Interest received or paid by the Company for these transactions is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the consolidated statements of comprehensive income. Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company's policy that its custodian takes possession of the underlying collateral securities with a fair value approximately equal to the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. The Company has also entered into bilateral and tri-party term and overnight repurchase and other collateralized financing agreements which bear interest at negotiated rates. The Company receives cash and makes delivery of financial instruments to a custodian who monitors the market value of these instruments on a daily basis. The market value of the instruments delivered must be equal to or in excess of the principal amount loaned under the repurchase agreements plus the agreed upon margin requirement. The custodian may request additional collateral, if appropriate. Interest received or paid by the Company for these transactions is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the consolidated statements of comprehensive income. Receivables from/Payables to Broker-dealers and Clearing Organizations Amounts receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At December 31, 2017 and 2016, receivables from and payables to broker-dealers and clearing organizations primarily represented 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 presents its balances, including outstanding principal balances on all credit facilities, on a net by counterparty basis within receivables from and payable to broker-dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, a significant portion of the Company’s securities transactions, money balances, and security positions are transacted with several third-party 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 monitors the financial condition of such brokers and to minimize the risk of any losses from these counterparties. Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased Financial instruments owned and Financial instruments sold, not yet purchased relate to market making and trading activities, and include listed and other equity securities, listed equity options and fixed income securities. The Company records 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, in the consolidated statements of comprehensive income. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. 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. The Company categorizes its financial instruments into 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; or Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out of levels are recognized based on the beginning fair value of the period in which they occurred. Fair Value Option The fair value option election allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are recorded in other, net in the consolidated statements of comprehensive income. The decision to elect the fair value option is determined on an instrument by instrument basis must be applied to an entire instrument and is irrevocable once elected. Derivative Instruments Derivative instruments are used for trading purposes, including economic hedges of trading instruments, which are carried at fair value include futures, forward contracts, and options. Gains or losses on these derivative instruments are recognized currently within trading income, net in the consolidated statement of comprehensive income. 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 instruments are currencies, which are actively traded. The Company presents its derivatives balances on a net-by-counterparty basis when the criteria for offsetting are met. Property, Equipment and Occupancy Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisitions of MTH and KCG which were recorded at fair value on the respective date of acquisitions. Depreciation is provided using the straight-line method over estimated useful lives of the underlying assets. 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. Furniture, fixtures, and equipment are depreciated over three to seven years. Leasehold improvements are amortized over the lesser of the life of the improvement or the term of the lease. The Company recognizes rent expense under operating leases with fixed rent escalations, lease incentives and free rent periods on a straight-line basis over the lease term beginning on the date the Company takes possession of or controls the use of the space, including during free rent periods. Lease Loss Accrual The Company’s policy is to identify excess real estate capacity and where applicable, accrue for related future costs, net of projected sub-lease income upon the date the Company ceases to use the excess real estate, which is recorded under operating and administrative in the consolidated statements of comprehensive income. Such accrual is adjusted to the extent the actual terms of sub-leased property differ from the previous assumptions used in the calculation of the accrual. Capitalized 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. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software in the accompanying consolidated statements of financial condition and are amortized over a period of 1.5 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 the Company’s 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 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, 2017, 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 Company’s management believes to be an appropriate indicator of its fair value. Following the Acquisition, our impairment testing is performed for each reporting unit. 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, they are 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. Exchange memberships acquired in connection with the Acquisition were recorded at their fair value on the date of acquisition. Exchange stock includes shares that entitle the Company to certain trading privileges. The Company’s exchange memberships and stock are included in intangibles in the consolidated statements of financial condition. Trading Income, net 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 consolidated statements of comprehensive income. Commissions, net and Technology Services Commissions, net, which primarily comprise commissions and commission equivalents earned on institutional client orders, are recorded on a trade date basis. Under a commission management program, the Company allows institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third parties. As the Company acts as an agent in these transactions, it records such expenses on a net basis within Commissions and technology services in the consolidated statements of comprehensive income. Technology services revenues consist of technology licensing fees and agency commission fees. Technology licensing fees are earned from third parties for licensing of the Company’s proprietary risk management and trading infrastructure technology and the 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. 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 an accrual basis. Brokerage, Exchange and Clearance Fees, Net Brokerage, exchange and clearance fees, net, comprise the costs of executing and clearing trades and are recorded on a trade date basis. Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying consolidated statements of comprehensive income. Payments for Order Flow Payments for order flow represent payments to broker-dealer clients, in the normal course of business, for directing their order flow in U.S. equities to the Company. Payments for order flow are recorded on a trade-date basis in the consolidated statements of comprehensive income. Income Taxes 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. The Company's subsidiaries are subject to income taxes in the respective jurisdictions (including foreign jurisdictions) in which they operate. Prior to the consummation of the Reorganization Transactions and the IPO, no provision for United States federal, state and local income tax was required, as 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. 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 only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authority, including resolution of the appeals or litigation processes, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Many factors are considered when evaluating and estimating the tax positions and tax benefits. Such estimates involve interpretations of regulations, rulings, case law, etc. and are inherently complex. The Company’s estimates may require periodic adjustments and may not accurately anticipate actual outcomes as resolution of income tax treatments in individual jurisdictions typically would not be known for several years after completion of any fiscal year. The 2017 Tax Act significantly changes how the U.S. taxes corporations. The 2017 Tax Act requires significant judgments to be made in interpretation of its provisions and significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the 2017 Tax Act will be applied or otherwise administered that is different from our interpretation. As we complete our analysis of the 2017 Tax Act, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded that may materially impact our provision for income taxes in the period in which the adjustments are made. Comprehensive Income and Foreign Currency Translation Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). 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 revenues and expenses 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 accumulated other comprehensive income, a separate component of stockholders’ equity. The Company's foreign subsidiaries generally use the U.S. dollar as their functional currency. The Company also has subsidiaries that utilize a functional currency other than the U.S. dollar, primarily comprising its Irish subsidiaries, which utilizes the Euro as the functional currency. The Company may seek to reduce the impact of fluctuations in foreign exchange rates on its net investment in certain non-U.S. operations through the use of foreign currency forward contracts. For foreign currency forward contracts designated as hedges, the Company assesses its risk management objectives and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair value of the forward contracts. For qualifying net investment hedges, any gains or losses, to the extent effective, are included in Accumulated other comprehensive income on the consolidated statements of financial condition and Cumulative translation adjustment, net of tax, on the consolidated statements of comprehensive income. The ineffective portion, if any, is recorded in Investment income and other, net on the consolidated statements of operations. Share-Based Compensation The fair value of awards issued for compensation prior to the Reorganization Transactions and the IPO was determined by management, with the assistance of an independent third party valuation firm, using a projected annual forfeiture rate, where applicable, on the date of grant. Share-based awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the VFI 2015 Management Incentive Plan (as amended, the “2015 Amended and Restated Management Incentive Plan”) were in the form of stock options, Class A common stock and RSUs. The fair value of the stock option grants is determined through the application of the Black-Scholes-Merton model. The fair value of the Class A common stock and RSUs are determined based on the volume weighted average price for the three days preceding the grant, and with respect to the RSUs, a projected annual forfeiture rate. The fair value of share-based awards granted to employees is expensed based on the vesting conditions and are recognized on a straight line basis over the vesting period. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the issuance of Class A common stock, the vesting of RSUs or the exercise of stock options. Variable Interest Entities A variable interest entity (“VIE”) is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company will be considered to have a controlling financial interest and will consolidate a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. In October 2016, the Company invested in a joint venture (“JV”) with nine other parties. One of the parties was KCG. Upon the Merger, KCG was required to relinquish their ownership in the JV. As of December 31, 2017, each of the remaining parties owns approximately 11% of the voting shares and 11% of the equity of this JV, which is building microwave communication networks in the U.S. and Asia, and which is considered to be a VIE. The Company and all of its JV partners each pay monthly fees for the funding of the construction of the microwave communication networks. When completed, this JV may sell excess bandwidth that is not utilized by its joint venture members to third parties. As a result of the Acquisition, the Company owns 50% of the voting shares and 50% of the equity of a JV which maintains microwave communication networks in the U.S. and Europe, and which is considered to be a VIE. The Company and its JV partner each pay monthly fees for the use of the microwave communication networks in connection with their respective trading activities, and the JV may sell excess bandwidth that is not utilized by the JV members to third parties. In each of the JVs, the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; therefore it does not have a controlling financial interest in the JV and does not consolidate the JVs. The Company records its interest in each JV under the equity method of accounting and records its investment in the JVs within Other assets and its amounts payable for communication services provided by the JV within Accrued expenses and other liabilities on the consolidated statements of financial condition. The Company records its pro-rata share of each JVs earnings or losses within Other, net and fees related to the use of communication services provided by the JVs within Communications and data processing on the consolidated statements of comprehensive income. The Company’s exposure to the obligations of these VIEs is generally limited to its interests in each respective JV, which is the carrying value of the equity investment in each JV. The following table presents the Company’s nonconsolidated VIE at December 31, 2017: Maximum Carrying Amount Exposure to (in thousands) Asset Liability loss VIE's assets Equity investment $ 18,799 $ — $ 18,799 $ 41,936 Recent Accounting Pronouncements Revenue - In May 2014, the FASB issued Accounting Standard Update (“ASU”) 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 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date . ASU 2015-14 defers the effective date of ASU 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. In December 2016, FASB issued ASU 2016-20 Technical Correction and Improvement (Topic 606): Revenue from Contracts with Customers , which amends the guidance in ASU 2014-09. The effective date and transition requirements for the ASU are the same as ASU 2014-09. The Company adopted the new revenue standard on January 1, 2018 by applying the modified retrospective method, which did not result in a transition adjustment. The new standard does not apply to revenue associated with financial instruments that are accounted for under other GAAP, and as a result, did not have an impact on the Company’s consolidated statements of comprehensive income, most closely associated with financial instrument, including Trading income, net, and Interest and dividends income. The new revenue standard primarily impacts the revenue recognition and accounting policy related to technology services. The Company’s technology services contracts include certain variable considerations which will be estimated and included in the transaction price only to the extent that it is probable when a significant reversal in the amount of the cumulative revenue recognized will occur in the future period. The new revenue standard requires enhanced disclosures, which the Company will include in the notes to the condensed consolidated financial statements beginning with the three months ended March 31, 2018. Financial Assets and Liabilities — In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . The ASU intends to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information and addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The new ASU affects all entities that hold financial assets or owe financial liabilities and is effective for annual reporting periods (including interim periods) beginning after December 15, 2017. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial statements, as it does not currently classify any equity securities as available for sale, and it does not apply the fair value option to its own debt issuances. Leases — In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . Under the new ASU, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. The liability will be equal to the present value of the future lease payments. The asset, referred to as a “right-of-use asset” will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases will be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. New quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater information regarding the extent of revenue and expense recognized and expected to be recognized from existing contracts. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. . The Company anticipates adopting this ASU on January 1, 2019. The Company is not anticipatin |
Acquisition of KCG Holdings, In
Acquisition of KCG Holdings, Inc. | 12 Months Ended |
Dec. 31, 2017 | |
Acquisition of KCG Holdings, Inc. | |
Acquisition of KCG Holdings, Inc. | 3. Acquisition of KCG Holdings, Inc. As of the Closing Date of the Acquisition, each of KCG’s issued and outstanding shares of Class A common stock, par value $0.01 per share were cancelled and extinguished and converted into the right to receive $20.00 in cash, without interest, less any applicable withholding taxes. On the Closing Date, and in connection with the financing of the Acquisition, as described in Note 10, “Borrowings”, the Company issued to Aranda Investments Pte. Ltd. (“Aranda”), an affiliate of Temasek Holdings (Private) Limited (“Temasek”), 6,346,155 shares of the Company’s Class A common stock, pursuant to the investment agreement with Aranda (as amended, the “Aranda Investment Agreement”) for an aggregate purchase price of approximately $99.0 million. On August 10, 2017, the Company issued an additional 1,666,666 shares of its Class A common stock for an aggregate purchase price of $26.0 million (collectively, the “Temasek Investment”). On the Closing Date, and in connection with the financing of the Acquisition, the Company issued to North Island Holdings I, LP (“NIH”) 39,725,979 shares of the Company’s Class A common stock for an aggregate purchase price of approximately $613.5 million. On August 10, 2017 the Company issued an additional 338,124 shares of its Class A common stock for an aggregate purchase price of $5.2 million (collectively, the “NIH Investment”). In connection with the Temasek Investment and NIH Investment, the Company incurred approximately $7.8 million in fees which were recorded as a reduction to additional paid-in capital. On July 21, 2017, the outstanding 6.875% Senior Secured Notes due 2020 issued by KCG were redeemed at a redemption price equal to 103.438% of the $465.0 million principal amount, plus accrued and unpaid interest. The redemption was pursuant to the indenture, dated as of March 13, 2015 (as amended, restated, supplemented or otherwise modified), by and among KCG, the subsidiary guarantors party thereto and The Bank of New York Mellon, as trustee and collateral agent. Accounting treatment of the Acquisition The Acquisition is accounted for as a purchase of KCG by the Company, pursuant to provisions of ASC 805, Business Combinations . Under the acquisition method of accounting, the assets and liabilities of KCG, as of July 20, 2017, were recorded at their respective fair values and added to the carrying value of the Company's existing assets and liabilities. These fair values were determined with the assistance of third party valuation professionals. The reported financial condition, results of operations and cash flows of the Company for the periods following the Acquisition reflect KCG’s and the Company's balances and reflect the impact of purchase accounting adjustments. As the Company is the accounting acquirer, the financial results for the year ended December 31, 2017 comprise the results of the Company for the entire applicable period and the results of KCG from Closing Date through December 31, 2017. All periods prior to 2017 comprise solely the results of the Company. Certain former KCG management employees were terminated upon the Acquisition, and as a result were paid an aggregate of $6.4 million pursuant to their existing employment contracts. This amount has been recognized as an expense by the Company and is included in Employee compensation and payroll taxes in the consolidated statements of comprehensive income for the year ending December 31, 2017. The Company also expects to make annual incentive compensation payments to former KCG employees who became employees of the Company following the Merger, and accrued related compensation expense of approximately $35.3 million during the year ended December 31, 2017, which is included in Employee compensation and payroll taxes in the consolidated statements of comprehensive income. Purchase price and goodwill The aggregate cash purchase price of $1.40 billion was determined as the sum of the fair value, at $20.00 per share, of KCG shares and warrants outstanding to former KCG stockholders at closing and the fair value of KCG employee stock based awards that were outstanding, and which vested at the Closing Date. The purchase price has been allocated to the assets acquired and liabilities assumed using their estimated fair values at the Closing Date of the Acquisition. Although the Company has substantially completed its analysis to record the allocation of the purchase price to the KCG acquired assets and liabilities, the allocation of the purchase price may be modified over the measurement period, which does not exceed twelve months from the Closing Date, as more information is obtained about the fair values of assets acquired and liabilities assumed. Adjustments to the provisional values during the measurement period will be recorded in the reporting period in which the adjustment amounts are determined. The Company has engaged third party specialists for the purchase price allocation. During the quarter ended December 31, 2017, the Company recorded adjustments to its initial fair value estimates in the Acquisition. Among the adjustments recorded, the fair value of acquired intangible assets and property, equipment and capitalized software were increased by $18.7 million and $2.2 million, respectively, and other assets, primarily income taxes receivable, decreased by $8.6 million. Cash and securities segregated under federal regulations of $3.0 million was reclassified into cash and equivalents, and payables to customers of $17.6 million were reclassified to accounts payable and accrued expenses and other liabilities. Deferred tax assets were adjusted to account for the effects of the aforementioned adjustments, and goodwill decreased by $14.7 million as a result of these adjustments. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the Closing Date: (in thousands) September 30, 2017 Measurement Period December 31, 2017 Cash and equivalents $ 592,993 $ 2,676 $ 595,669 Cash and securities segregated under federal regulations 3,000 (3,000) - Securities borrowed 1,406,444 - 1,406,444 Securities purchased under agreements to resell 16,894 - 16,894 Receivables from broker dealers and clearing organizations 553,031 (211) 552,820 Financial instruments owned, at fair value 2,095,339 - 2,095,339 Property, equipment and capitalized software 112,204 2,163 114,367 Intangibles 156,300 18,695 174,995 Deferred tax assets 22,928 980 23,908 Other assets 331,820 (8,636) 323,184 Total Assets $ 5,290,953 $ 12,667 $ 5,303,620 Securities loaned $ 166,189 - $ 166,189 Securities sold under agreements to repurchase 841,606 - 841,606 Payables to broker dealers and clearing organizations 536,653 - 536,653 Payables to customers 17,583 (17,583) - Financial instruments sold, not yet purchased, at fair value 1,756,647 - 1,756,647 Accounts payable and accrued expenses and other liabilities 239,004 15,524 254,528 Debt 480,987 - 480,987 Total Liabilities $ 4,038,669 $ (2,059) $ 4,036,610 Total identified assets acquired, net of assumed liabilities $ 1,252,284 $ 14,726 $ 1,267,010 Goodwill $ 143,012 $ (14,726) $ 128,286 Total Purchase Price $ 1,395,296 $ - $ 1,395,296 Amounts allocated to intangible assets, the amortization period and goodwill were as follows Amortization (in thousands) Amount Years Technology $ 67,700 1-6 years Customer relationships 94,000 13 - 17 years Trade names 1,000 10 years Favorable leases 5,895 2-15 years Exchange memberships 6,400 Indefinite Intangible assets $ 174,995 Goodwill 128,286 Total $ 303,281 Of the total Goodwill of $128.3 million, $96.2 million has been assigned to the Market Making segment and $32.1 million has been assigned to the Execution Services segment. Such goodwill is attributable to the expansion of products offerings and expected synergies of the combined workforce, products and technologies of the Company and KCG. Tax treatment of the Acquisition The Company believes that the Acquisition will be treated as a tax-free transaction to the Company that does not result in a step up in tax basis in the acquired assets and, therefore, KCG’s tax basis in its assets and liabilities generally carries over to the Company following the Acquisition. None of the goodwill is expected to be deductible for tax purposes. The Company recorded net deferred tax assets of $23.9 million with respect to recording KCG’s assets and liabilities under the purchase method of accounting as described above as well as recording the value of other tax attributes acquired as a result of the Acquisition, as described in Note 13 “Income Tax”. Pro forma results Included in the Company’s results for the year ended December 31, 2017 are results from the business acquired as a result of the Acquisition, from the Closing Date through December 31, 2017 as follows: (in thousands) Revenues $ 379,203 Income before income taxes and noncontrolling interest 14,340 The financial information in the table below summarizes the combined pro forma results of operations of the Company and KCG, based on adding the pre-tax historical results of KCG and the Company, and adjusting primarily for amortization of intangibles created in the Acquisition, debt raised in conjunction with the Acquisition and nonrecurring costs associated with the Acquisition, which comprise advisory and other professional fees incurred by the Company and KCG of $24.2 and $22.5 million, respectively. The pro forma data assumes all of KCG’s issued and outstanding shares of Class A common stock, par value $0.01 per share were cancelled and extinguished and converted into the right to receive $20.00 in cash, without interest, less any applicable withholding taxes on January 1, 2016 and does not include adjustments to reflect the Company's operating costs or expected differences in the way funds generated by the Company are invested. This pro forma financial information is based on estimates and assumptions that have been made solely for purposes of developing such pro forma information, including, without limitation, preliminary purchase accounting adjustments. The pro forma financial information does not reflect any synergies or operating cost reductions that may be achieved from the combined operations. The pro forma financial information combines the historical results for the Company and KCG for the years ended December 31, 2017 and 2016: For the Years Ended (in thousands, except per share amounts) 2017 2016 Revenue $ 1,528,588 $ 2,153,008 Net income (loss) (14,151) 443,101 Net income (loss) attributable to common stockholders (5,219) 163,407 |
Business Held for Sale
Business Held for Sale | 12 Months Ended |
Dec. 31, 2017 | |
Business Held for Sale | |
Business Held for Sale | 4. Business Held for Sale In October 2017, the Company entered into an Asset Purchase Agreement (the “BondPoint Agreement”) with ICE pursuant to which the Company has agreed to sell specified assets and to assign specified liabilities constituting its BondPoint division and fixed income venue (“BondPoint”). BondPoint is a provider of electronic fixed income trading solutions for the buy-side and sell-side offering access to centralized liquidity and automated trade execution services, and is included in the Company’s Execution Services segment, see Note 19 “Geographic Information and Business Segments”. The purchase price payable by ICE for BondPoint at the closing of the transaction is $400.0 million in cash subject to a customary adjustment for working capital of BondPoint. The consummation of the transaction is subject to the satisfaction of customary closing conditions and receipt of certain regulatory clearances, including from the Financial Industry Regulatory Authority, Inc. and the Municipal Securities Rulemaking Board and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The BondPoint Agreement contains customary representations, warranties, covenants and indemnification provisions. The parties have agreed to execute a transition services agreement simultaneously with the closing of the transaction. The transaction closed on January 2, 2018, which is further discussed in Note 22 “Subsequent Events”. The assets and liabilities of businesses held for sale as of December 31, 2017 are summarized as follows: (in thousand) Receivables from broker dealers and clearing organizations $ Intangibles Technology Customer relationships Trade names Capitalized software Other assets Total assets $ Payable to brokers, dealers and clearing organizations $ Accrued expenses and other liabilities Total liabilities $ The total assets and total liabilities are included in assets of business held for sale and accounts payables and accrued expenses and other liabilities, respectively, on the Company’s consolidated statement of financial condition. |
Earnings per Share
Earnings per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings per Share | |
Earnings per share | 5. Earnings per Share The below table contains a reconciliation of net income before noncontrolling interest to net income available for common stockholders: For the Year ended December 31 (in thousands) 2017 2016 2015 Income before income taxes and noncontrolling interest $ 113,164 $ 179,591 $ 215,929 Provision for income taxes 94,266 21,251 18,439 Net income 18,898 158,340 197,490 Net income allocable to members of Virtu Financial (for the period January 1, 2015 through April 15, 2015) — — (83,147) Noncontrolling interest (15,959) (125,360) (93,456) Net income available for common stockholders $ 2,939 $ 32,980 $ 20,887 The calculation of basic and diluted earnings per share is presented below: For the Year Ended December 31, (in thousands, except for share or per share data) 2017 2016 2015 Basic earnings per share: Net income available for common stockholders $ 2,939 $ 32,980 $ 20,887 Less: Dividends and undistributed earnings allocated to participating securities (1,326) (809) — Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities 1,613 32,171 20,887 Weighted average shares of common stock outstanding: Class A 62,579,147 38,539,091 34,964,312 Basic Earnings per share $ 0.03 $ 0.83 $ 0.60 For the Year Ended December 31, (in thousands, except for share or per share data) 2017 2016 2015 Diluted earnings per share: Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities $ 1,613 $ 32,171 $ 20,887 Weighted average shares of common stock outstanding: Class A Issued and outstanding 62,579,147 38,539,091 34,964,312 Issuable pursuant to 2015 Management Incentive Plan(1) — — 375,273 62,579,147 38,539,091 35,339,585 Diluted Earnings per share $ 0.03 $ 0.83 $ 0.59 (1) The dilutive impact of unexercised stock options excludes from the computation of EPS 1,740,630, 743,096 and 0 options for the years ended December 31, 2017, 2016 and 2015, respectively, because inclusion of the options would have been anti-dilutive. |
Tax Receivable Agreements
Tax Receivable Agreements | 12 Months Ended |
Dec. 31, 2017 | |
Tax Receivable Agreements | |
Tax Receivable Agreements | 6. Tax Receivable Agreements In connection with the IPO and the Reorganization Transactions, the Company entered into tax receivable agreements to make payments to certain Virtu Members, as defined in Note 15 “Capital Structure”, that are generally equal to 85% of the applicable cash tax savings, if any, that the Company actually realizes as a result of favorable tax attributes that were and will continue to be available to the Company as a result of the Reorganization Transactions, exchanges of membership interests for Class A common stock or Class B common stock and payments made under the tax receivable agreements. 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 was due 120 days after the filing of the Company’s tax return for the year ended December 31, 2015, which was due March 15, 2016, but the due date was extended until September 15, 2016. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these amounts. The Company made its first payment of $7.0 million in February 2017. As a result of (i) the purchase of equity interests in Virtu Financial from certain Virtu Members in connection with the Reorganization Transactions, (ii) the purchase of non-voting common interest units in Virtu Financial (the “Virtu Financial Units”) (along with the corresponding shares of Class C common stock) from certain of the Virtu Members in connection with the IPO, (iii) the purchase of Virtu Financial Units (along with the corresponding shares of Class C common stock) and the exchange of Virtu Financial Units (along with the corresponding shares of Class C common stock) for shares of Class A common stock in connection with the Secondary Offerings, the Company recorded a deferred tax asset of $220.8 million associated with the increase in tax basis that results from such events. Payments to certain Virtu Members in respect of the purchases were expected to range from approximately $0.3 million to $12.8 million per year over the next 15 years. The corresponding deduction to additional paid-in capital was approximately $19.9 million for the difference between the tax receivable agreements liability and the related deferred tax asset. In connection with the February 2017, May 2017, August 2017 and November 2017 employee exchanges (as described in Note 15 “Capital Structure”), the Company recorded an additional deferred tax asset of $10.8 million and payment liability pursuant to the tax receivable agreements of $9.3 million, with the $1.5 million difference recorded as an increase to additional paid-in capital. As a result of the reduction in the U.S. federal income tax rate as described below, the aforementioned deferred tax asset and related payment liability were subsequently reduced as described below. The amounts recorded as of December 31, 2017 are based on best estimates available at the respective dates and may be subject to change after the filing of the Company’s U.S. federal and state income tax returns for the years in which tax savings were realized. On December 22, 2017, the Tax Cuts and Jobs Act (“2017 Tax Act”) was signed into law. This act includes, among other items, a permanent reduction to the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018 as further described in Note 13 “Income Taxes”. As a result, at December 31, 2017, the Company recorded a reduction of its tax receivable agreement obligation of $86.6 million which is included in other, net in the consolidated statement of operations for the year ended December 31, 2017. As further described in Note 13 “Income Taxes”, the Company also recorded a reduction of its deferred tax assets, including deferred tax assets relating to the deferred tax assets described above. At December 31, 2017 and December 31, 2016, the Company’s remaining deferred tax assets were approximately $101.6 million and $185.7 million, respectively, and the Company’s payment liabilities pursuant to the tax receivable agreements were approximately $147.0 million and $231.4 million, respectively. For the tax receivable agreements 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 (i) no increase to the tax basis of the assets of Virtu Financial as a result of the purchase or exchange of Virtu Financial Units, (ii) no tax benefit from the tax basis in the intangible assets of Virtu Financial on the date of the IPO and (iii) no tax benefit as a result of the Net Operating Losses (“NOLs”) and other tax attributes of Virtu Financial. Subsequent adjustments of the tax receivable agreements obligations due to certain events (e.g., changes to the expected realization of NOLs or changes in tax rates) will be recognized within income before taxes and noncontrolling interests in the consolidated statements of comprehensive income. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets Prior to the Acquisition, the Company was managed and operated as one business, and accordingly, operated under one reportable segment. As a result of the acquisition of KCG, beginning in the third quarter of 2017 the Company has three operating segments: (i) Market Making; (ii) Execution Services; and (iii) Corporate. The Company allocated goodwill to the new reporting units using a relative fair value approach. In addition, the Company performed an assessment of potential goodwill impairment for all reporting units immediately prior to the reallocation and determined that no impairment was indicated. The following table presents the details of goodwill by segment: Market Execution (in thousands) Making Services Corporate Total Balance as of December 31, 2016 $ 657,985 $ 57,394 $ — $ 715,379 Additions 97,307 32,197 — 129,504 Balance as of December 31, 2017 $ 755,292 $ 89,591 $ — $ 844,883 On May 3, 2017, the Company completed the acquisition of certain legal entities that owned select strategic telecommunications assets from Teza Technologies. The total purchase price incurred was $5.6 million, of which $1.2 million was recorded as goodwill, and $2.0 million was recorded as intangible assets. This acquisition was accounted for as a business combination. As described in Note 3 “Acquisition of KCG Holdings, Inc.”, on July 20, 2017 the Company completed the acquisition of KCG. The aggregate cash purchase price of $1.40 billion has been allocated to the assets acquired and liabilities assumed using their estimated fair values at the Closing Date of the Acquisition. The Company has allocated $128.3 million and $175.0 million to goodwill and identified intangible assets, respectively. As of December 31, 2017 and December 31, 2016, the Company’s total amount of goodwill recorded was $844.9 million and $715.4 million, respectively. No goodwill impairment was recognized in the years ended December 31, 2017 and 2016. As described in Note 4 “Business Held for Sale”, the Company reclassified net assets related to the BondPoint Sale to Business held for sale on the consolidated statement of financial condition as of December 31, 2017. An aggregated net carrying amount of $50.8 million ( $53.7 million of gross carrying amount net of $2.9 million accumulated amortization from the period between the Closing Date of the Acquisition of KCG to December 31, 2017) was reclassified from intangible assets to Business held for sale. Acquired intangible assets consisted of the following as of December 31, 2017 and December 31, 2016: As of December 31, 2017 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ 110,000 $ 110,000 $ — 1.4 to 2.5 ETF issuer relationships 950 559 391 9 ETF buyer relationships 950 559 390 9 Leases 1,800 397 1,403 3 FCC licenses 200 19 181 7 Technology 60,000 9,644 50,356 to 6 Customer relationships 49,000 1,822 47,178 to 17 Favorable occupancy leases 5,895 408 5,487 7 Exchange memberships 5,838 — 5,838 Indefinite $ 234,633 $ 123,408 $ 111,224 As of December 31, 2016 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ 110,000 $ 110,000 $ — 1.4 to 2.5 ETF issuer relationships 950 454 496 9 ETF buyer relationships 950 454 496 9 $ 111,900 $ 110,908 $ 992 Amortization expense relating to finite-lived intangible assets was approximately $15.4 million, $0.2 million, and $0.2 million for the years ended December 31, 2017, 2016, and 2015, respectively. This is included in amortization of purchased intangibles and acquired capitalized software in the accompanying consolidated statements of comprehensive income. |
Receivables from_Payables to Br
Receivables from/Payables to Broker-Dealers and Clearing Organizations | 12 Months Ended |
Dec. 31, 2017 | |
Receivables from/Payables to Broker-Dealers and Clearing Organizations | |
Receivables from/Payables to Broker-Dealers and Clearing Organizations | 8. Receivables from/Payables to Broker-Dealers and Clearing Organizations The following is a summary of receivables from and payables to brokers-dealers and clearing organizations at December 31, 2017 and December 31, 2016: (in thousands) 2017 2016 Assets Due from prime brokers $ 219,573 $ 91,476 Deposits with clearing organizations 112,847 21,995 Net equity with futures commission merchants 203,711 213,030 Unsettled trades with clearing organization 173,778 44,312 Securities failed to deliver 248,088 77,915 Commissions and fees 14,021 — Total receivables from broker-dealers and clearing organizations $ 972,018 $ 448,728 Liabilities Due to prime brokers $ 197,439 $ 227,335 Net equity with futures commission merchants 44,526 38,838 Unsettled trades with clearing organization 420,029 429,800 Securities failed to receive 51,143 5 Commissions and fees 3,068 — Total payables to broker-dealers and clearing organizations $ 716,205 $ 695,978 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 (described in Note 9 “Collateralized Transactions”) of approximately $205.7 million and $309.1 million as of December 31, 2017 and 2016, 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 | 12 Months Ended |
Dec. 31, 2017 | |
Collateralized Transactions | |
Collateralized Transactions | 9. Collateralized Transactions The Company is permitted to sell or repledge securities received as collateral and use these securities to secure repurchase agreements, enter into securities lending transactions or deliver these securities to counterparties or clearing organizations to cover short positions. At December 31, 2017 and December 31, 2016, substantially all of the securities received as collateral have been repledged. The fair value of the collateralized transactions at December 31, 2017 and December 31, 2016 are summarized as follows: (in thousands) 2017 2016 Securities received as collateral: Securities borrowed $ 1,415,793 $ 213,203 $ 1,415,793 $ 213,203 In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements. Financial instruments owned and pledged, where the counterparty has the right to repledge, at December 31, 2017 and December 31, 2016 consisted of the following: (in thousands) 2017 2016 Equities $ 586,251 $ 128,202 U.S. and Non-U.S. government obligations 99 — Exchange traded notes 8,693 15,681 $ 595,043 $ 143,883 |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2017 | |
Borrowings | |
Borrowings | 10. Borrowings Broker-Dealer Credit Facilities The Company is a party to two secured credit facilities with a financial institution to finance overnight securities positions purchased as part of its ordinary course broker-dealer market making activities. One of the facilities (the “Uncommitted Facility”), is provided on an uncommitted basis collateralized by one of the Company’s broker-dealer subsidiaries trading and deposit account with the financial institution. On November 3, 2017, the Company entered the second credit facility (“Revolving Credit Facility”) with the same financial institution for an aggregated borrowing limit of $500.0 million. The Revolving Credit Facility consists two borrowing bases: Borrowing Base A Loan is to be used to finance the purchase and settlement of securities; Borrowing Base B Loan is to be used to fund margin deposit with the NSCC. Each of the three broker-dealers has a sublimit under Borrowing Base A Loan, from $25.0 million to $500.0 million, which bears interest at the adjusted LIBOR or base rate plus 1.25% per annum. Two out of the three broker-dealers have sublimit under Borrowing Base B Loan, from $40.0 million to $100.0 million, which bears interest at the adjusted LIBOR or base rate plus 2.50% per annum. A commitment fee of 0.50% per annum on the average daily unused portion of this facility is payable quarterly in arrears. The following summarizes the Company’s broker-dealer credit facilities carrying value, net of unamortized debt issuance costs, where applicable: At December 31, 2017 Financing Outstanding Deferred Debt Outstanding (in thousands) Interest Rate Available Principal Issuance Cost Borrowings, net Broker-dealer credit facilities: Uncommitted facility 2.42% $ $ $ — $ Revolving credit facility 2.81% 500,000 7,000 (4,117) $ $ $ $ At December 31, 2016 Financing Borrowing Deferred Debt Outstanding (in thousands) Interest Rate Available Outstanding Issuance Cost Borrowings, net Broker-dealer credit facilities: Uncommitted facility 1.66% $ $ $ — $ 25,000 Committed facility (1) n/a — — — $ $ $ — $ 25,000 The following summarizes interest expense for the broker-dealer facilities. Interest expense is included within interest and dividends expense in the accompanying consolidated statements of comprehensive income. For the Years Ended December 31, (in thousands) 2017 2016 2015 Broker-dealer credit facilities: Uncommitted facility $ $ $ Committed facility (1) 33 41 Revolving credit facility 19 — — $ $ $ (1) Facility was terminated in July 2017. 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. At December 31, 2017 Weighted Average Financing Borrowing Interest Rate Available Outstanding Short-Term Credit Facilities: Short-term credit facilities (2) 3.86% $ $ $ $ At December 31, 2016 Weighted Average Financing Borrowing Interest Rate Available Outstanding Short-Term Credit Facilities: Short-term credit facilities (2) 3.12% $ $ $ $ (2) Outstanding borrowings were included with receivable from broker-dealers and clearing organization within the consolidated statements of financial condition. Interest expense in relation to the facilities for the years ended December 31, 2017, 2016 and 2015 was approximately $6.6 million, $6.3 million, and $5.5 million, respectively. Long-Term Borrowings The following summarizes the Company’s long-term borrowings, net of unamortized discount and debt issuance costs, where applicable: At December, 2017 Maturity Interest Outstanding Deferred Debt Outstanding (in thousands) Date Rate Principal Discount Issuance Cost Borrowings, net Long-term borrowings: Fourth Amended and Restate Credit Agreement December 2021 5.13% $ 900,000 $ (999) $ (18,504) $ 880,497 Senior secured Second Lien Notes June 2022 6.75% 500,000 — (22,961) 477,039 SBI bonds January 2020 5.00% 31,059 — (47) 31,012 $ $ $ $ At December 31, 2016 Maturity Interest Outstanding Deferred Debt Outstanding (in thousands) Date Rate Principal Discount Issuance Cost Borrowings, net Long-term borrowings: Senior secured credit facility December 2021 4.25% $ 540,000 $ (956) $ (3,941) $ 535,103 Revolving credit facility (3) 5.50% — — — — SBI bonds January 2020 5.00% 29,925 — (71) 29,854 $ $ $ $ (3) Prior to the Fourth Amended Restated Credit Agreement described below, the Company entered into a revolving credit facility with the lenders for an aggregated commitment of $100.0 million. This facility was terminated in July 2017 as a result of refinancing. Fourth Amended and Restated Credit Agreement On June 30, 2017, Virtu Financial and VFH Parent LLC (“VFH”) entered into a fourth amended and restated credit agreement (the “Fourth Amended and Restated Credit Agreement”) for an aggregate $1.15 billion of first lien secured term loans (the “Term Loan Facility”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, sole lead arranger and bookrunner, which amended and restated in its entirety the existing Credit Agreement. For the year ended December 31, 2017, $250.0 million of prepayments were made under the Fourth Amended and Restated Credit Agreement. In connection with the debt refinancing and the debt prepayment, the Company accelerated approximately $10.5 million unamortized financing costs incurred that were scheduled to be amortized over the term of the loan, including original issue discount and underwriting and legal fees, which is included within debt issue cost related to debt refinancing in the consolidated statements of comprehensive income. The Fourth Amended and Restated Credit Agreement contains certain customary covenant and certain customary events of default, including relating to a change of control. If an event of default occurs and is continuing, the lenders under the Fourth Amended and Restated Credit Agreement will be entitled to take various actions, including the acceleration of amounts outstanding under the Fourth Amended and Restated Credit Agreement and all actions permitted to be taken by a secured creditor in respect of the collateral securing the obligations under the Fourth Amended and Restated Credit Agreement. Senior Secured Second Lien Notes On June 16, 2017, the Escrow Issuer and Orchestra Co-Issuer, Inc. (the “Co-Issuer”) completed the offering of $500.0 million aggregate principal amount of 6.750% Senior Secured Second Lien Notes due 2022 (the “Notes”). The Notes were issued under an Indenture, dated June 16, 2017 (the “Indenture”), among the Escrow Issuer, the Co-Issuer and U.S. Bank National Associations, as trustee and collateral agent. On July 20, 2017, VFH assumed all of the obligations of the Escrow Issuer under the Indenture and the Notes. The Notes are guaranteed by Virtu Financial and each of Virtu Financial’s wholly-owned domestic restricted subsidiaries that guarantees the Fourth Amended and Restated Credit Agreement. The Indenture imposes certain limitations on the Company, and contains certain customary events of default, including, among others, payment defaults related to the failure to pay principal or interest on Notes, covenant defaults, final maturity default or cross-acceleration with respect to material indebtedness and certain bankruptcy events. The gross proceeds from the Notes were deposited into a segregated escrow account with an escrow agent. The proceeds were released from escrow as of the Closing Date and were used to finance, in part, the Acquisition, and to repay certain indebtedness of the Company and KCG. (See Note 3 “Acquisition of KCG Holdings, Inc.” for further details). SBI Bonds On July 25, 2016, VFH issued Japanese Yen Bonds (collectively the “SBI Bonds”) in the aggregate principal amount of ¥3.5 billion ($33.1 million at issuance date) to SBI Life Insurance Co., Ltd. and SBI Insurance Co., Ltd. The proceeds from the SBI Bonds were used to partially fund the investment in SBI (as described in Note 11 “Financial assets and liabilities”). The SBI Bonds are guaranteed by Virtu Financial. The SBI Bonds are subject to fluctuations on the Japanese Yen currency rates relative to the Company’s reporting currency (U.S. Dollar) with the changes reflected in other, net in the consolidated statements of comprehensive income. The principal balance was ¥3.5 billion ($31.0 million) as of December 31, 2017 and ¥3.5 billion ($29.9 million) as of December 31, 2016. The Company recorded a gain of $1.1 million and a loss of $3.2 million due to the change in currency rates during the years ended December 31, 2017 and 2016, respectively. Aggregate future required minimum principal payments based on the terms of the long-term borrowings at December 31, 2017 were as follows: (in thousands) 2018 $ — 2019 — 2020 31,059 2021 and thereafter 1,400,000 Total principal of long-term borrowings $ 1,431,059 |
Financial Assets and Liabilitie
Financial Assets and Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Financial Assets and Liabilities | |
Financial Assets and Liabilities | 11. Financial Assets and Liabilities Financial Instruments Measured at Fair Value The fair value of equities, options, on the run 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 and certain financial instruments noted in the preceding paragraph, which are categorized as Level 2. The Company’s corporate bonds, derivative contracts and other U.S. and non-U.S. government obligations have been categorized as Level 2. Fair value of the Company’s derivative contracts is based on the indicative prices obtained from broadly distributed bank and broker dealers, 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. As of March 31, 2017, the Company began pricing certain financial instruments held for trading at fair value based on theoretical prices which can differ from quoted market prices. The theoretical prices reflect price adjustments primarily caused by the fact that the Company continuously prices its financial instruments based on all available information. This information includes prices for identical and near-identical positions, as well as the prices for securities underlying the Company’s positions, on other exchanges that are open after the exchange on which the financial instruments is traded closes. The Company validates that all price adjustments can be substantiated with market inputs and checks the theoretical prices independently. Consequently, such financial instruments are classified as Level 2. The Company concluded that this is a change in accounting estimate and no retrospective adjustments were necessary. Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2017: December 31, 2017 Quoted Prices Significant in Active Other Significant Counterparty Markets for Observable Unobservable and Cash Identical Assets Inputs Inputs Collateral Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ 758,596 $ 1,167,995 $ — $ — $ 1,926,591 U.S. and Non-U.S. government obligations 5,968 16,815 — — 22,783 Corporate Bonds — 60,975 — — 60,975 Exchange traded notes 13,576 68,819 — — 82,395 Currency forwards — 2,045,487 — (2,027,697) 17,790 Options 7,045 — — — 7,045 — (2,027,697) Financial instruments owned, pledged as collateral: Equity securities $ 410,670 $ 175,581 $ — $ — $ 586,251 U.S. and Non-U.S. government obligations 99 — — — 99 Exchange traded notes 82 8,611 — — 8,693 — — Other Assets Equity investment $ — $ — $ 40,588 $ — $ 40,588 Exchange stock 1,952 — — — 1,952 Other (1) — 55,824 — — 55,824 40,588 — Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ 847,816 $ 1,355,616 $ — $ — $ 2,203,432 U.S. and Non-U.S. government obligations 18,940 12,481 — — 31,421 Corporate Bonds — 81,118 — — 81,118 Exchange traded notes 1,514 54,248 — — 55,762 Currency forwards — 2,032,017 — (2,024,991) 7,026 Options 5,839 — — — 5,839 $ $ $ — $ (2,024,991) $ (1) Other primarily consists of a $55.8 million receivable from Bats related to the sale of KCG Hotspot. Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2016: December 31, 2016 Quoted Prices in Active Significant Markets for Other Significant Counterparty Identical Observable Unobservable and Cash Assets Inputs Inputs Collateral Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ 1,597,049 $ 31,988 $ — $ — $ 1,629,037 Non-U.S. government obligations — 10,765 — — 10,765 Exchange traded notes 37,034 — — — 37,034 Currency forwards — 1,147,261 — (1,140,239) 7,022 Options — 141 — — 141 $ 1,634,083 $ 1,190,155 $ — $ (1,140,239) $ 1,683,999 Financial instruments owned, pledged as collateral: Equity securities $ 128,202 $ — $ — $ — $ 128,202 Exchange traded notes 15,681 — — — 15,681 $ 143,883 $ — $ — $ — $ 143,883 Other Assets Equity investment $ — $ — $ 36,031 $ — $ 36,031 Exchange stock 449 — — — 449 $ 449 $ — $ 36,031 $ — $ 36,480 Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ 1,323,693 $ 6,638 $ — $ — $ 1,330,331 Exchange traded notes 18,744 — — — 18,744 Currency forwards — 1,009,038 — (1,009,038) — Options — 80 — — 80 $ 1,342,437 $ 1,015,756 $ — $ (1,009,038) $ 1,349,155 On July 27, 2016, the Company purchased an additional minority investment (29.4%) in SBI Japannext Co., Ltd (“SBI Japannext”), a proprietary trading system based in Tokyo for $38.8 million in cash (“SBI Investment”), which increased the Company’s total minority investment in SBI Japannext to 29.9%.The Company elected the fair value option to account for this equity investment because it believes that fair value is the most relevant measurement attribute for this investment, as well as to reduce operational and accounting complexity. This investment has been categorized as Level 3, and the valuation process involved for Level 3 measurements is completed on a quarterly basis. The Company employs two valuation methodologies when determining the fair value of investments categorized as Level 3, market comparable analysis and discounted cash flow analysis. The market comparable analysis considers key financial inputs, recent public and private transactions and other available measures. The discounted cash flow analysis incorporates significant assumptions and judgments and the estimates of key inputs used in this methodology include the discount rate for the investment and assumed inputs used to calculate terminal values, such as price/earnings multiples. Upon completion of the valuations conducted using these methodologies, a weighting is ascribed to each method and to the ultimate fair value recorded for a particular investment. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected holding period. As of December 31, 2017, the fair value of SBI Investment was determined using the discounted cash flow method, an income approach, with the discount rate of 15.0% applied to the cash flow forecasts. The Company also used a market approach based on 14x average price/earnings multiples of comparable companies to corroborate the income approach. The fair value of the SBI Investment at December 31, 2017 was determined by taking the weighted average of enterprise valuations based on discounted cash flow on projected income from the next five years, the implied enterprise valuations on comparable companies, and the implied enterprise valuations on comparable transactions. The fair value measurement is highly sensitive to significant changes in the unobservable inputs and significant increases (decreases) in discount rate or decreases (increases) in price/earnings multiples would result in a significantly lower (higher) fair value measurement. Changes in the fair value of the SBI Investment are reflected in other, net in the consolidated statements of comprehensive income. There were no transfers of financial instruments between levels during the years ended December 31, 2017 and 2016. Receivable from Bats Global Markets, Inc. (“Bats”) In March 2015, KCG sold KCG Hotspot, an institutional spot foreign exchange electronic communications networks (“ECN”), to Bats, which is now a subsidiary of CBOE Holdings, Inc. KCG and Bats agreed to share certain tax benefits, which as of December 31, 2017 comprise a $50.0 million payment and an annual payment of up to $6.6 million, both of which are due in April 2018. The $6.8 million annual payment is contingent on Bats (and CBOE) generating sufficient taxable net income to receive the tax benefits. The Company has elected the fair value option related to the receivable from Bats and considers the receivable to be a Level 2 asset in the fair value hierarchy as the fair value is derived from observable significant inputs such as contractual cash flows and market discount rates. The remaining additional potential payments of $56.8 million are recorded at a fair value of $55.8 million in other assets on the consolidated statements of financial condition as of December 31, 2017. Financial Instruments Not Measured at Fair Value The table below presents the carrying value, fair value and fair value hierarchy category of certain financial instruments that are not measured at fair value on the consolidated statement of financial condition. The table below excludes non-financial assets and liabilities. The carrying value of financial instruments not measured at fair value categorized in the fair value hierarchy as Level 1 and Level 2 approximates fair value due to the relatively short-term nature of the underlying assets. The fair value of the Company’s long-term borrowings is categorized as Level 2 in the fair value hierarchy, which is based on quoted prices from the market. Financial assets and liabilities not measured at fair value as of December 31, 2017: December 31, 2017 Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs Carrying Value Fair Value (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents $ 532,887 $ 532,887 $ 532,887 $ — $ — Securities borrowed $ 1,471,172 $ 1,471,172 $ — $ 1,471,172 $ — Receivables from broker dealers and clearing organizations 36,513 — Total Assets $ $ $ $ $ — Liabilities Short-term borrowings $ 27,883 $ 27,883 $ — $ 27,883 $ — Long-term borrowings $ 1,388,548 $ 1,465,489 $ — $ 1,465,489 $ — Securities loaned $ 754,687 $ 754,687 $ — $ 754,687 $ — Securities sold under agreements to repurchase $ 390,642 $ 390,642 $ — $ 390,642 $ — Payables to broker dealer and clearing organizations 2,925 — Total Liabilities $ 3,277,965 $ 3,354,906 $ 2,925 $ 3,351,981 $ — F inancial assets and liabilities not measured at fair value as of December 31, 2016: December 31, 2016 Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs Carrying Value Fair Value (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents $ 181,415 $ 181,415 $ 181,415 $ — $ — Securities borrowed $ 220,005 $ 220,005 $ — $ 220,005 $ — Receivables from broker dealers and clearing organizations — — Total Assets $ $ $ $ $ Liabilities Short-term borrowings $ 25,000 $ 25,000 $ — $ 25,000 $ — Long-term borrowings $ 564,957 $ 564,957 $ — $ 564,957 $ — Securities loaned $ 222,203 $ 222,203 $ — $ 222,203 $ — Payables to broker dealer and clearing organizations — — Total Liabilities $ 1,508,138 $ 1,508,138 $ — $ 1,508,138 $ — The following presents the changes in Level 3 financial instruments measured at fair value on a recurring basis: Year Ended December 31, 2017 Change in Net Unrealized Gains / (Losses) on Investments Balance at Total Realized Net Transfers Balance at still held at December 31, and Unrealized into (out of) December 31 December 31 (in thousands) 2016 Purchases Gains / (Losses) Level 3 Settlement 2017 2017 Assets Other assets: Equity investment $ 36,031 $ — $ 4,557 $ — $ — $ 40,588 $ 4,557 Other — 3,000 — — (3,000) — — Total $ 36,031 $ 3,000 $ 4,557 $ — $ (3,000) $ 40,588 $ 4,557 Year Ended December 31, 2016 Change in Net Unrealized Gains / (Losses) on Investments Balance at Total Realized Net Transfers Balance at still held at December 31, and Unrealized into (out of) December 31 December 31 (in thousands) 2015 Purchases Gains / (Losses) Level 3 2016 2016 Assets Other assets: Equity investment $ — $ 38,754 $ (3,117) $ 394 $ 36,031 $ (3,117) Total $ — $ 38,754 $ (3,117) $ 394 $ 36,031 $ (3,117) Offsetting of Financial Assets and Liabilities The Company does not net securities borrowed and securities loaned, or securities purchased under agreements to resell and securities sold under agreements to repurchase. These financial instruments are presented on a gross basis in the consolidated statements of financial condition. In the tables below, the amounts of financial instruments owned that are not offset in the consolidated statements of financial condition, but could be netted against financial liabilities with specific counterparties under legally enforceable master netting agreements in the event of default, 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 gross and net presentation of certain financial assets and financial liabilities as of December 31, 2017 and 2016. December 31, 2017 Net Amounts of Gross Amounts Assets Presented Offset in the in the Gross Amounts Not Offset In the 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 $ 1,471,172 $ — $ 1,471,172 $ (1,418,672) $ (13,318) $ 39,182 Trading assets, at fair value: Currency forwards 2,045,487 (2,027,697) 17,790 — — 17,790 Options 7,045 — 7,045 (45) — 7,000 Total $ 3,523,704 $ (2,027,697) $ 1,496,007 $ (1,418,717) $ (13,318) $ 63,972 Net Amounts of Gross Amounts Liabilities Presented Offset in the in the Gross Amounts Not Offset In the Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral Liabilities Financial Condition Financial Condition Instruments Pledged Net Amount Offsetting of Financial Liabilities: Securities loaned $ 754,687 $ — $ 754,687 $ (737,731) $ (10,776) $ 6,180 Securities sold under agreements to repurchase 390,642 — 390,642 (390,642) — — Trading liabilities, at fair value: Currency forwards 2,032,017 (2,024,991) 7,026 — 7,026 Options 5,839 — 5,839 (56) — 5,783 Total $ 3,183,185 $ (2,024,991) $ 1,158,194 $ (1,128,429) $ (10,776) $ 18,989 December 31, 2016 Net Amounts of Gross Amounts Assets Presented Offset in the in the Gross Amounts Not Offset In the 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 $ 220,005 $ — $ 220,005 $ (216,778) $ (248) $ 2,979 Trading assets, at fair value: Currency forwards 1,147,261 (1,140,239) 7,022 — — 7,022 Options 141 — 141 (80) (13) 48 Total $ 1,367,407 $ (1,140,239) $ 227,168 $ (216,858) $ (261) $ 10,049 Net Amounts of Liabilities Gross Amounts Presented Gross Amounts Not Offset In the Offset in the in the 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 $ 222,203 $ — $ 222,203 $ (221,792) $ — $ 411 Trading liabilities, at fair value: Currency forwards 1,009,038 (1,009,038) — — — — Options 80 — 80 (80) — — Total $ 1,231,321 $ (1,009,038) $ 222,283 $ (221,872) $ — $ 411 The following table presents gross obligations for securities lending transactions by remaining contractual maturity and the class of collateral pledged. December 31, 2017 Remaining Contractual Maturity Overnight and Less than 30 - 60 61 - 90 (in thousands) Continuous 30 days days Days Total Repurchase agreements: Equity securities $ — $ 100,000 $ 90,000 $ 200,000 $ 390,000 U.S. and Non-U.S. government obligations 642 — — — 642 Total $ 642 $ 100,000 $ 90,000 $ 200,000 $ 390,642 Securities lending transactions: Equity securities $ 754,687 $ — $ — $ — $ 754,687 Total $ 754,687 $ — $ — $ — $ 754,687 December 31, 2016 Remaining Contractual Maturity Overnight and Less than 30 - 60 61 - 90 (in thousands) Continuous 30 days days Days Total Repurchase agreements: Equity securities $ 222,203 $ — $ — $ — $ 222,203 Total $ 222,203 $ — $ — $ — $ 222,203 |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments | |
Derivative Instruments | 12. Derivative Instruments The fair value of the Company’s derivative instruments on a gross basis consisted of the following at December 31, 2017 and December 31, 2016: (in thousands) December 31, 2017 December 31, 2016 Derivatives Assets Financial Statements Location Fair Value Notional Fair Value Notional Derivative instruments not designated as hedging instruments: Equities futures Receivables from broker dealers and clearing organizations $ (505) $ 1,985,770 $ 2,403 $ 1,461,286 Commodity futures Receivables from broker dealers and clearing organizations 971 21,231,001 13,964 3,918,778 Currency futures Receivables from broker dealers and clearing organizations 26,548 3,994,412 1,591 3,264,093 Fixed income futures Receivables from broker dealers and clearing organizations 73 44,395 31 5,730 Options Financial instruments owned 7,045 141 6,844 Currency forwards Financial instruments owned 2,045,487 1,147,261 94,192,414 Derivatives Liabilities Financial Statements Location Fair Value Notional Fair Value Notional Derivative instruments not designated as hedging instruments: Equities futures Payables to broker dealers and clearing organizations $ (575) $ 142,658 $ (43) $ 62,417 Commodity futures Payables to broker dealers and clearing organizations (1,602) 130,042 2,842 22,616,170 Currency futures Payables to broker dealers and clearing organizations (13,947) 7,756,958 (6,282) 1,137,908 Fixed income futures Payables to broker dealers and clearing organizations (1) 2,584 — — Options Financial instruments sold, not yet purchased 5,839 681,147 80 4,486 Currency forwards Financial instruments sold, not yet purchased 2,032,017 123,993,234 1,009,038 85,874,684 Derivative instruments designated as hedging instruments: Currency forwards Financial instruments sold, not yet purchased (514) 16,115 — — Amounts included in receivables from and payables to broker-dealers and clearing organizations represent net variation margin on long and short futures contracts. The following table summarizes the net gain from derivative instruments not designated as hedging instruments under ASC 815, which are recorded in trading income, net, and from those designated as hedging instrument under ASC 815, which are recorded in accumulated other comprehensive income in the accompanying consolidated statements of comprehensive income for the years ended December 31, 2017, 2016, and 2015. December 31, (in thousands) Financial Statements Location 2017 2016 2015 Derivative instruments not designated as hedging instruments: Futures Trading income, net $ 290,609 $ 559,626 $ 1,180,483 Currency forwards Trading income, net 2,603 1,915 (16,431) Options Trading income, net (7,166) (410) (1,784) Others Trading income, net — (6) 4 $ 286,046 $ 561,125 $ 1,162,272 Derivative instruments designated as hedging instruments: Foreign exchange - forward contract Accumulated other comprehensive income $ (642) $ — $ — |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | 13. Income Taxes Income before income taxes and noncontrolling interest is as follows for the years ended December 31, 2017, 2016 and 2015: December 31, 2017 2016 2015 (in thousands) U.S. operations $ 70,484 $ 138,950 $ 154,947 Non-U.S. operations 42,680 40,641 60,982 $ 113,164 $ 179,591 $ 215,929 The provision for income taxes consists of the following for the years ended December 31, 2017, 2016 and 2015. For the years ended December 31, (in thousands) 2017 2016 2015 Current provision (benefit) Federal $ (9,991) $ 2,690 $ 7,584 State and Local 65 38 108 Foreign 1,219 5,210 6,762 Deferred provision (benefit) Federal 106,415 13,547 3,345 State and Local (3,380) 194 48 Foreign (62) (428) 592 Provision for income taxes $ 94,266 $ 21,251 $ 18,439 The Tax Cuts and Jobs Act (“2017 Tax Act”) was signed into law on December 22, 2017. The 2017 Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21%, and eliminating certain deductions. The Company has not completed its determination of the accounting implications of the 2017 Tax Act on its tax accruals. However, the Company has reasonably estimated the effects of the 2017 Tax Act and recorded provisional amounts in our financial statements as of December 31, 2017. The Company recorded a provisional deferred tax expense for the impact of the 2017 Tax Act of approximately $90.6 million, which is primarily composed of the remeasurement of federal net deferred tax assets as a result of the permanent reduction in the U.S. statutory corporate tax rate to 21% from 35%. The Company expects to complete its analysis of the 2017 Tax Act by the third quarter of 2018, which is within the one-year measurement period prescribed by SEC Staff Accounting Bulletin No. 118. As the Company completes its analysis, collects and prepares necessary data, and interprets any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, it may make adjustments to the provisional amounts. Those adjustments may materially impact the Company’s provision for income taxes in the period in which the adjustments are made. As discussed in Note 6 “Tax Receivable Agreements” the Company revalued its tax receivable agreement obligation as a result of this decrease in the U.S. corporate income tax rate and recorded a gain of $86.6 million, which is reported in Other, net on the consolidated statements of operations for the year ended December 31, 2017. This gain does not impact the Company’s provision for income taxes. The reconciliation of the tax provision at the U.S. Federal Statutory Rate to the provision for income taxes for the years ended December 31, 2017, 2016 and 2015 is as follows: December 31, 2017 2016 2015 (in thousands, except percentages) Tax provision at the U.S. federal statutory rate 35.0 % 35.0 % 35.0 % Less: rate attributable to noncontrolling interest (19.1) (24.4) (27.8) State and local taxes, net of federal benefit (1.9) 1.3 1.4 Impact of 2017 Tax Act on deferred tax assets 80.1 — — Impact of 2017 Tax Act on tax receivable agreement obligation (12.9) — — Non-deductible expenses, net 1.9 — — Other, net 0.2 — — Provision for income taxes 83.3 % 11.9 % 8.6 % The components of the deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows: December 31, (in thousands) 2017 2016 Deferred income tax assets Tax Receivable Agreement $ 101,594 $ 185,677 Share-based compensation 5,213 5,664 Intangibles 14,547 — Fixed assets and other 13,425 2,518 Tax credits and net operating loss carryforwards 50,867 — Less: Valuation allowance on net operating loss carryforwards and tax credits (43,544) — Total deferred income tax assets $ 142,102 $ 193,859 Deferred income tax liabilities Intangibles 16,342 — Fixed assets — 84 Total deferred income tax liabilities $ 16,342 $ 84 Subsequent to consummation of the Reorganization Transactions and the IPO, the Company is subject to U.S. federal, state and local income tax at the rate applicable to corporations less the rate attributable to the noncontrolling interest in Virtu Financial. These noncontrolling interests are subject to U.S. taxation as partnerships. Accordingly, for years ended December 31, 2017, 2016 and 2015, the income attributable to these noncontrolling interests is reported in the 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. Included in other assets on the consolidated statements of financial condition at December 31, 2017 and 2016 are current income tax receivables of $115.2 million and $5.8 million, respectively. The balance at December 31, 2017 primarily comprises the income tax benefit of KCG net operating losses that were generated prior to the Acquisition of KCG and that are eligible to be carried back by the Company. Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the IPO (Note 6 “Tax Receivable Agreements” and Note 15 “Capital Structure”) and the Acquisition of KCG (Note 3 “Acquisition of KCG Holdings, Inc”), differences in the valuation of financial assets and liabilities, and in connection with 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 Company’s deferred tax asset at December 31, 2017 includes an alternative minimum tax credit carryforward of $0.6 million, which can be either be refunded or applied against future income tax liability pursuant to the 2017 Tax Act. 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. As a result of the Acquisition of KCG, the Company has non-U.S. net operating losses of $231.8 million at December 31, 2017 and has recorded a related deferred tax asset of $43.5 million. A full valuation allowance was also recorded against this deferred tax asset at December 31, 2017 as it is more likely than not that this deferred tax asset will not be realized. No valuation allowance against the remaining deferred taxes was recorded as of December 31, 2017 and 2016 because it is more likely than not that these deferred tax assets will be fully realized. The Company is subject to taxation in U.S. federal, state, local and foreign jurisdictions. As of December 31, 2017, the Company’s tax years for 2013 through 2016 and 2010 through 2017 are subject to examination by U.S. and non-U.S. tax authorities, respectively. As a result of the Acquisition of KCG, the Company has assumed any KCG tax exposures. KCG is currently subject to U.S. Federal income tax examinations for 2013 through 2017, and to non-U.S. income tax examinations for the tax years 2007 through 2016. In addition, the Company is subject to state and local income tax examinations in various jurisdictions for the tax years 2007 through 2016. The final outcome of these examinations is not yet determinable. However, the Company anticipates that adjustments to the unrecognized tax benefits, if any, will not result in a material change to the financial condition, results of operations and cash flows. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income or loss before income taxes and noncontrolling interest. Penalties, if any, are recorded in operations and administrative expense and interest received or paid is recorded in other, net or operations and administrative expense in the consolidated statement of comprehensive income The Company had $7.3 million of unrecognized tax benefits as of December 31, 2017, all of which would affect the Company’s effective tax rate if recognized. The Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of December 31, 2016. The following table reconciles the beginning and ending amount of unrecognized tax benefits: December 31, (in thousands) 2017 Balance at December 31, 2016 $ — Increase from Acquisition of KCG 7,232 Decreases based on tax positions related to prior period — Increase based on tax positions related to current period 68 Balance at December 31, 2017 $ 7,300 |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 12 Months Ended |
Dec. 31, 2017 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | 14. Commitments, Contingencies and Guarantees At December 31, 2017, minimum rental commitments under non-cancellable leases are approximately as follows: Minimum Rental Commitments Year Ending December 31 Capital Operating 2018 18,829 33,331 2019 17,759 30,712 2020 6,942 29,238 2021 — 21,017 2022 — 18,063 Thereafter — 127,723 Total minimum lease payments $ 43,530 $ 260,084 Total operating lease expense, net of amortization expense related to landlord incentives, for the years ended December 31, 2017, 2016 and 2015 was approximately $13.1 million, $2.4 million, and $5.3 million, respectively. Occupancy lease expense for the years ended December 31, 2017, 2016 and 2015 of $12.9 million, $1.3 million and $3.9 million, respectively, is included within operations and administrative expenses in the consolidated statements of comprehensive income. Communication equipment lease expense for the years ended December 31, 2017, 2016 and 2015 of $ 0.2 million, $1.1 million and $1.4 million, respectively, is included within communication and data processing in the accompanying consolidated statements of comprehensive income. Legal Proceedings In the ordinary course of business, the nature of the Company’s business subjects it to claims, lawsuits, regulatory examinations or investigations and other proceedings. The Company and its subsidiaries are subject to several of these matters at the present time. Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, particularly in regulatory examinations or investigations or other proceedings in which substantial or indeterminate damages or fines are sought, or where such matters are in the early stages, the Company cannot estimate losses or ranges of losses for such matters where there is only a reasonable possibility that a loss may be incurred. In addition, there are numerous factors that result in a greater degree of complexity in class-action lawsuits as compared to other types of litigation. There can be no assurance that these matters will not have a material adverse effect on the Company’s results of operations in any future period, and a material judgment, fine or sanction could have a material adverse impact on the Company’s financial condition, results of operations and cash flows. However, it is the opinion of management, after consultation with legal counsel that, based on information currently available, the ultimate outcome of these matters will not have a material adverse impact on the business, financial condition or operating results of the Company although they might be material to the operating results for any particular reporting period. The Company carries directors’ and officers’ liability insurance coverage for potential claims, including securities actions, against the Company and its respective directors and officers. In connection with the Acquisition of KCG, a previously filed complaint, which was initially captioned Greenway v. KCG Holdings, Inc., et al., Case No. 2017-0421-JTL and filed on behalf of a putative class in Delaware Chancery Court, was recaptioned Chester County Employees’ Retirement Fund v. KCG Holdings, Inc., et al. , amended and refiled on February 14, 2018 to include claims for the alleged breach of fiduciary duties against former KCG board members, claims against each of Virtu and Jefferies for allegedly aiding and abetting the KCG board members’ alleged breaches of fiduciary duty and a claim against Virtu and Jefferies for alleged civil conspiracy. No amount of damages is stated in the amended complaint, which Virtu intends to defend vigorously. Other Legal and Regulatory Matters The Company owns subsidiaries including regulated entities that are subject to extensive oversight under federal, state and applicable international laws as well as self-regulatory organization ("SRO") rules. Changes in market structure and the need to remain competitive require constant changes to the Company's systems, order routing and order handling procedures. The Company makes these changes while continuously endeavoring to comply with many complex laws and rules. Compliance, surveillance and trading issues common in the securities industry are monitored by, reported to, and/or reviewed in the ordinary course of business by the Company's regulators in the U.S. and abroad. As a major order flow execution destination, the Company is named from time to time in, or is asked to respond to a number of regulatory matters brought by U.S. regulators, foreign regulators, SROs, as well as actions brought by private plaintiffs, which arise from its business activities. There has recently been an increased focus by regulators on Anti-Money Laundering and sanctions compliance by broker-dealers and similar entities, as well as an enhanced interest on suspicious activity reporting and transactions involving microcap securities. In addition, there has been an increased focus by Congress, federal and state regulators, SROs and the media on market structure issues, and in particular, high frequency trading, best execution, internalization, ATS manner of operations, market fragmentation and complexity, colocation, cybersecurity, access to market data feeds and remuneration arrangements, such as payment for order flow and exchange fee structures. The Company has received information requests from various authorities, including the SEC, requesting, among other items, information regarding these market structure matters, to which the Company has responded or is in the process of responding. The Company is currently the subject of various regulatory reviews and investigations by federal, state and foreign regulators and SROs, including the SEC and the Financial Industry Regulatory Authority. In some instances, these matters may rise to a disciplinary action and/or a civil or administrative action. For example, the Autorité des Marchés Financiers ("AMF") fined the Company’s European subsidiary in the amount of €5.0 million (approximately $5.4 million) based on its allegations that the subsidiary of a predecessor entity engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules. The fine was subsequently reduced in 2017 to €3.3 million (approximately $3.9 million). The Company had fully reserved for the monetary penalty as of December 31, 2017 and anticipates paying the fine during the year ended December 31, 2018. Indemnification Arrangements Consistent with standard business practices in the normal course of business, the Company has provided general indemnifications to its managers, officers, directors, 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 | 12 Months Ended |
Dec. 31, 2017 | |
Capital Structure | |
Capital Structure | 15. Capital Structure The Company has four classes of authorized common stock. The Class A common stock and the Class C common stock have one vote per share. The Class B common stock and the Class D common stock have 10 votes per share. Shares of the Company’s common stock generally vote together as a single class on all matters submitted to a vote of the Company’s stockholders. Initial Public Offering and Reorganization Transactions Prior to the IPO, the Company’s business was conducted through Virtu Financial and its subsidiaries. In a series of transactions that occurred in connection with the IPO, (i) the Company became the sole managing member of Virtu Financial and acquired Virtu Financial Units, (ii) certain direct or indirect equityholders of Virtu Financial acquired shares of the Company’s Class A common stock and (iii) certain direct or indirect equityholders of Virtu Financial had their interests reclassified into Virtu Financial Units and acquired shares of the Company’s Class C common stock or, in the case of the TJMT Holdings LLC only, shares of the Company’s Class D common stock (collectively, the “Virtu Members”). 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” and the offering was closed on April 21, 2015. In connection with the Reorganization Transactions, the Company sold 16,532,272 shares of Class A common stock. The Company used its net proceeds from its IPO to purchase shares of Class A common stock from an affiliate of Silver Lake Partners, purchase Virtu Financial Units and corresponding shares of Class C common stock from certain Virtu Members, and for working capital and general corporate purposes. Amended and Restated 2015 Management Incentive Plan The Company’s board of directors and stockholders adopted the 2015 Management Incentive Plan, which became effective upon consummation of the IPO, and was subsequently amended and restated following receipt of approval from the Company’s stockholders on June 30, 2017. The Amended and Restated 2015 Management Incentive Plan provides for the grant of stock options, restricted stock units, and other awards based on an aggregate of 16,000,000 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. Secondary Offerings In September 2016, the Company completed a public offering (the “September 2016 Secondary Offering,” collectively with the November 2015 Secondary Offering, the “Secondary Offerings”) of 1,103,668 shares of the Company’s Class A common stock. The Company sold 1,103,668 shares of Class A common stock at a price to the public of $15.75 per share. The Company used the net proceeds from the September 2016 Secondary Offering to purchase Virtu Financial Units (together with corresponding shares of Class C common stock) from certain employees at a net price equal to the price paid by the underwriters for shares of its Class A common stock, which was the price at which the shares were offered to the public less underwriting discounts and commissions of $0.10 per share. Acquisition of KCG On the Closing Date and in connection with the financing of the Acquisition, the Company issued 6,346,155 shares of the Company’s Class A common stock to Aranda for an aggregate purchase price of approximately $99.0 million and 39,725,979 shares of the Company Class A Common Stock to NIH for an aggregate purchase price of approximately $613.5 million. On August 10, 2017, the Company issued an additional 1,666,666 shares of its Class A Common Stock for an aggregate purchase price of $26.0 million and an additional 338,124 shares of its Class A Common Stock for an aggregate purchase price of $5.2 million. See Note 3 for further details. Employee Exchanges In February, May, August and November 2017, pursuant to the exchange agreement by and among the Company, Virtu Financial and holders of Virtu Financial common units, certain current and former employees elected to exchange 683,762, 307,544, 155,009, and 209,448 units, respectively, in Virtu Financial held on their behalf by Virtu Financial Employee Holdco LLC (“Employee Holdco”) on a one-for-one basis for shares of Class A common stock. As a result of the completion of the IPO, the Reorganization Transactions, the Secondary Offerings, employee exchange, and the share issuance in connection with the Acquisition, the Company holds approximately 48.3% interest in Virtu Financial at December 31, 2017. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation | |
Share-based Compensation | 16. Share-based Compensation Share-based compensation prior to the Company’s Reorganization completed on April 15, 2015 and IPO commenced on April 16, 2015: Class A-2 profits interests were issued to Employee Holdco LLC, a holding company that holds the interests on behalf of certain key employees or stakeholders. During the years ended December 31, 2017, 2016 and 2015, the Company recorded expense relating to non-voting common interest units, which 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 common interest units are subject to the same vesting requirements as the prior Class A-2 profits interests, which were either fully vested upon issuance or vested over a period of up to four years, and in each case are subject to repurchase provisions upon certain termination events. These awards were accounted for as equity awards and were measured at fair value at the date of grant. The Company recognized compensation expense related to the vesting of non-voting common interest units (formerly Class A-2 profits interests) of $0.7 million, $1.3 million and $1.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and 2016, total unrecognized share-based compensation expense related to unvested non-voting common interest units (formerly Class A-2 profits interests), was $0.1 million and $0.8 million, respectively; and this amount is expected to be recognized over a weighted average period of 0.1 years and 0.8 years, respectively. 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. Additionally, Class B interests were issued to Employee Holdco on behalf of certain key employees and stakeholders on July 8, 2011, and on subsequent dates. East MIP Class B interests and Class B interests were each 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. In connection with the Reorganization Transactions, East MIP was liquidated and a portion of the Class A-2 capital interests held by East MIP were contributed to Virtu Employee Holdco on behalf of holders of East MIP Class B Interests (or, in the case of certain employees located outside the United States, contributed to a trust whose trustee is one of the Company’s subsidiaries), which Class A-2 capital interests were subsequently reclassified into non-voting common interest units. The Company recognized compensation expense in respect of non-voting common interest units (formerly Class B interests) vested of $0.7 million, $1.1 million and $44.9 million for the years ended December 31, 2017, 2016 and 2015, respectively. The compensation expense related to non-voting common interest units (formerly Class B interests) was included within charges related to share based compensation at IPO in the consolidated statements of comprehensive income. As of December 31, 2017 and 2016, total unrecognized share-based compensation expense related to unvested non-voting common interest units (formerly Class B interests) was $0.1 million and $0.8 million, respectively; and this amount is expected to be recognized over a weighted average period of 0.1 years and 1.0 years, respectively. Additionally, in connection with the compensation charges related to non-voting common interest units (formerly Class B interests) mentioned above, the Company capitalized $0.04 million, $0.09 million and $9.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. The amortization costs related to these capitalized compensation charges and previously capitalized compensation charges related to East MIP Class B interests and Class B interests were approximately $0.07 million, $0.7 million and $8.5 million for the years ended December 31, 2017, 2016 and 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 consolidated statements of comprehensive income. The fair value of the Class A-2 profit, Class B and East MIP Class B interest was estimated by the Company using an option pricing methodology based on expected volatility, risk-free rates and expected life. Expected volatility is calculated based on companies in the same peer group as the Company. In connection with the Reorganization Transactions, all Class A-2 profits interests, Class B and East MIP Class B interests were reclassified into non-voting common interest units. As of December 31, 2017 and 2016, there were 12,301,067 and 14,231,535 non-voting common interest units outstanding, respectively, and 1,930,468, 1,162,891 and 57,106 non-voting common interest units and corresponding Class C common stock were exchanged into Class A common stock, forfeited or repurchased during the years ended December 31, 2017, 2016 and 2015, respectively. Share-based compensation after the Company’s Reorganization completed on April 15, 2015 and IPO completed on April 16, 2015: Pursuant to 2015 Management Incentive Plan as described in Note 15 “Capital Structure”, and in connection with the IPO, non-qualified stock options to purchase shares of Class A common stock were granted, each of which vests in equal annual installments over a period of the four years from grant date and expires not later than 10 years from the date of grant. The following table summarizes activity related to stock options for the year ended December 31, 2017 and 2016: Options Outstanding Options Exercisable Weighted Average Weighted Average Weighted Average Number of Exercise Price Remaining Number of Exercise Price Options Per Share Contractual Life Options Per Share At December 31, 2014 — $ — — — $ — Granted 9,228,000 19.00 10.00 — — Exercised — — — — — Forfeited or expired (234,000) — — — — At December 31, 2015 8,994,000 $ 19.00 9.29 — $ — Granted — — — — — Exercised — — — — — Forfeited or expired (760,000) — — — — At December 31, 2016 8,234,000 $ 19.00 8.29 2,058,500 $ 19.00 Granted — — — — — Exercised — — — — — Forfeited or expired (496,000) — — — — At December 31, 2017 7,738,000 $ 19.00 7.29 3,869,000 $ 19.00 The expected life has been determined based on an average of vesting and contractual period. The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was determined based on historical volatilities of comparable companies. The expected dividend yield was determined based on estimated future dividend payments divided by the IPO stock price. The Company recognized $5.2 million, $5.6 million and $4.7 million of compensation expense in relation to the stock options issued and outstanding for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and 2016, total unrecognized share-based compensation expense related to unvested stock options was $7.5 million and $14.2 million, respectively, and these amounts are to be recognized over a weighted average period of 1.3 years and 2.3 years, respectively. Class A common stock and Restricted Stock Units Pursuant to the 2015 Management Incentive Plan as described in Note 15, “Capital Structure”, subsequent to the IPO, shares of immediately vested Class A common stock and restricted stock units were granted, the latter which vest over a period of up to 4 years. The fair value of the Class A common stock and RSUs was determined based on a volume weighted average price and is being recognized on a straight line basis over the vesting period. For the years ended December 31, 2017, 2016 and 2015, there were 19,719, 656,019 and 576,693 shares of immediately vested Class A common stock granted as part of year-end compensation, and the Company recorded compensation expense of $0.3 million, $10.6 million and $13.2 million, respectively. In addition, the Company accrued compensation expense of $11.0 million for the year ended December 31, 2017 related to immediately vested Class A common stock expected to be awarded in early 2018 as part of year-end incentive compensation for the 2017 performance year, which is included in employee compensation and payroll taxes on the Consolidated Statements of Comprehensive Income and accounts payable and accrued expenses and other liabilities on the Consolidated Statements of Financial Condition. The following table summarizes activity related to the RSUs: Weighted Number of Average Fair Shares Value At December 31, 2014 — $ — Granted 984,466 22.32 Forfeited — — Vested — — At December 31, 2015 984,466 $ 22.32 Granted 1,019,148 16.06 Forfeited (133,138) 22.51 Vested (297,035) 16.48 At December 31, 2016 1,573,441 $ 18.28 Granted 64,402 18.09 Forfeited (258,250) 18.40 Vested (526,546) 18.75 At December 31, 2017 853,047 $ 17.94 The Company recognized $9.9 million, $6.3 million and $0.5 million of compensation expense in relation to the restricted stock units for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and 2016, total unrecognized share-based compensation expense related to unvested RSUs was $14.3 million and $28.5 million, respectively, and this amount is to be recognized over a weighted average period of 1.5 years and 2.6 years, respectively. |
Property, Equipment and Capital
Property, Equipment and Capitalized Software | 12 Months Ended |
Dec. 31, 2017 | |
Property, Equipment and Capitalized Software | |
Property, Equipment and Capitalized Software | 17. Property, Equipment and Capitalized Software Property, equipment and capitalized software consisted of the following at December 31, 2017 and 2016: (in thousands) 2017 2016 Capitalized software costs $ 94,915 $ 77,591 Leasehold improvements 93,624 3,636 Furniture and equipment 324,135 61,540 Land — 77 512,674 142,844 Less: Accumulated depreciation and amortization (375,656) (113,184) Total property, equipment and capitalized software, net $ 137,018 $ 29,660 Depreciation expense for property and equipment for the years ended December 31, 2017, 2016, and 2015 was approximately $36.8 million, $19.6 million and $24.0 million, respectively, and is included within depreciation and amortization expense in the accompanying consolidated statements of comprehensive income. The Company’s capitalized software development costs excluding the compensation charges recognized in relation to the IPO disclosed below were approximately $15.7 million, $11.1 million, and $10.1 million for years ended December 31, 2017, 2016 and 2015, respectively. The related amortization expense was approximately $10.1 million, $10.1 million, and $9.6 million for the years ended December 31, 2017, 2016, and 2015, respectively, and is included within depreciation and amortization expense in the accompanying consolidated statements of comprehensive income. Additionally, in connection with the compensation charges related to non-voting interest units (formerly Class B interests) recognized upon the IPO (Note 16 “Share-based Compensation”), the Company capitalized approximately $0.04 million, $0.09 million and $9.2 million for the years ended December 31, 2017, 2016 and 2015 respectively. The amortization costs related to these capitalized compensation charges and previously capitalized compensation charges related to East MIP Class B interests and Class B interests were approximately $0.07 million, $0.7 million and $8.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Regulatory Requirement
Regulatory Requirement | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Requirement | |
Regulatory Requirement | 18. Regulatory Requirement As of December 31, 2017 and 2016, broker-dealer 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 three broker-dealer subsidiaries. Pursuant to NYSE and NYSE MKT (formerly NYSE Amex) rules, Virtu Financial Capital Markets LLC was also required to maintain $4.1 million and $1.9 million of capital in connection with the operation of its DMM business as of December 31, 2017 and December 31, 2016, 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 broker-dealer subsidiary is registered as the DMM. The regulatory capital and regulatory capital requirements of these subsidiaries as of December 31, 2017 was as follows: Regulatory Regulatory Capital Excess Regulatory (in thousands) Capital Requirement Capital Virtu Americas LLC $ 379,875 $ 1,000 $ 378,875 Virtu Financial BD LLC 40,683 1,000 39,683 Virtu Financial Capital Markets LLC 8,308 5,114 3,194 The regulatory capital and regulatory capital requirements of these subsidiaries as of December 31, 2016 was as follows: Regulatory Regulatory Capital Excess Regulatory (in thousands) Capital Requirement Capital Virtu Financial BD LLC 74,467 1,000 73,467 Virtu Financial Capital Markets LLC 10,830 2,886 7,944 |
Geographic Information and Busi
Geographic Information and Business Segments | 12 Months Ended |
Dec. 31, 2017 | |
Geographic Information and Business Segments | |
Geographic Information and Business Segments | 19. Geographic Information and Business Segments 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 Company’s subsidiaries incurring operating expenses such as employee compensation, communications and data processing and other overhead costs, for the purpose of providing execution, clearing and other support services to affiliates. Charges for transactions between regions are designed to approximate full costs. Intra-region income and expenses and related balances have been eliminated in the geographic information presented below to accurately reflect the external business conducted in each geographical region. The revenues are attributed to countries based on the locations of the subsidiaries. The following table presents total revenues by geographic area for the years ended December 31, 2017, 2016, and 2015 : December 31, (in thousands) 2017 2016 2015 Revenues: United States $ 791,044 $ 455,418 $ 537,310 Ireland 97,637 139,642 166,739 United Kingdom 21,143 — — Singapore 113,891 106,813 91,816 Sweden 3,986 — — Others 281 399 348 Total revenues $ 1,027,982 $ 702,272 $ 796,213 Prior to the Acquisition, the Company was managed and operated as one business, and, accordingly, operated under one reportable segment. As a result of the acquisition of KCG, beginning in the third quarter of 2017 the Company has three operating segments: (i) Market Making; (ii) Execution Services; and (iii) Corporate. The Market Making segment principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, banks and institutions. The Company engages in principal trading in the Market Making segment direct to clients as well as in a supplemental capacity on exchanges, ECNs and alternative trading systems ATSs. The Company is an active participant on all major global equity and futures exchanges and also trades on substantially all domestic electronic options exchanges. As a complement to electronic market making, the cash trading business handles specialized orders and also transacts on the OTC Bulletin Board marketplaces operated by the OTC Markets Group Inc. and the AIM. The Execution Services segment comprises agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker dealers as well as technology services revenues. The Company earns commissions and commission equivalents as an agent on behalf of clients as well as between principals to transactions; in addition, the Company will commit capital on behalf of clients as needed. Agency-based, execution-only trading in the segment is done primarily through a variety of access points including: (i) algorithmic trading and order routing in global equities and options; (ii) institutional sales traders executing program, block and riskless principal trades in global equities and ETFs; (iii) a fixed income ECN that also offers trading applications; and (iv) an ATS for U.S. equities. Technology licensing fees are earned from third parties for licensing of the Company’s proprietary risk management and trading infrastructure technology and the provision of associated management and hosting services. The Corporate segment contains the Company's investments, principally in strategic trading-related opportunities and maintains corporate overhead expenses and all other income and expenses that are not attributable to the Company's other segments. Management evaluates the performance of its segments on a pre-tax basis. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. The Company’s total revenues and income before income taxes and noncontrolling interest (“Pre-tax earnings”) by segment are summarized in the following table: Market Execution Corporate Consolidated (in thousands) Making Services (1) Total 2017: Total revenue $ 836,707 $ 99,135 $ 92,140 $ 1,027,982 Income before income taxes and noncontrolling interest 74,633 (12,519) 51,050 113,164 2016: Total revenue $ 691,884 $ 10,352 $ 36 $ 702,272 Income (loss) before income taxes and noncontrolling interest 176,145 4,403 (957) 179,591 2015: Total revenue $ 785,591 $ 10,622 $ - $ 796,213 Income before income taxes and noncontrolling interest 211,443 4,486 - 215,929 (1) Amounts shown in the Corporate segment include eliminations of income statement and balance sheet items included in the Company's other segments. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions | |
Related Party Transactions | 20. Related Party Transactions The Company incurs expenses and maintains balances with its affiliates in the ordinary course of business. As of December 31, 2017, and December 31, 2016, the Company had a receivable of $0.08 million and a payable of $0.2 million to its affiliates, respectively. The Company conducts securities lending transactions with Industrial and Commercial Bank of China (“ICBC”), which is partially owned by Temasek Holdings (Private) Limited and its affiliates. As of December 31, 2017, the Company had a securities borrowed contract of $23.1 million and a securities loaned contract of $1.1 million with ICBC. The Company did not have outstanding securities with ICBC as of December 31, 2016. The Company purchases network connections services from affiliates of Level 3 Communications (“Level 3”). Temasek Holdings (Private) Limited and its affiliates have a significant ownership interest in Level 3. During the years ended December 31, 2017, 2016 and 2015 the Company paid $2.5 million, $2.4 million, and $4.3 million, respectively, to Level 3 for these services. The Company purchases and leases computer equipment and maintenance and support from affiliates of Dell Inc. (“Dell”). Temasek Holdings (Private) Limited and its affiliates have a significant ownership interest in Dell. During the years ended December 31, 2017. 2016 and 2015, the Company paid $2.5 million, $2.7 million and $3.6 million, respectively, to Dell for these purchases and leases. The Company purchases telecommunications services from Singapore Telecommunications Limited (“Singtel”). Temasek and its affiliates have a significant ownership interest in Singtel. During the years ended December 31, 2017, 2016, and 2015, the Company paid $0. 1 million, $0.2 million, and $0.1 million, respectively, to Singtel for these purchases. The Company employed the son of the Company’s Founder and Executive Chairman, as a trader during the year ended December 31, 2015, This employee was paid approximately $0.8 million of employee compensation during year ended December 31, 2015, and granted 60,000 stock options with respect to shares of the Company’s Class A common stock under the 2015 Management Incentive Plan. The Company had no such expense during the years ended December 31, 2017 and 2016. The Company has engaged a member of the Board of Directors to provide leadership consulting services. The Company has paid approximately $4 thousand, $0.03 million and $0. 1 million for such engagement for the years ended December 31, 2017, 2016, and 2015, respectively. Additionally, the Company entered into sublease arrangements with affiliates of the Company’s Founder and Executive Chairman for office space no longer used by the Company. For the years ended December 31, 2017, 2016 and 2015, the Company received $0.06 million, $0.04 million and $0.1 million, respectively, pursuant to these arrangements. The Company has held a minority interest in SBI since 2016 (See Note 11, “Financial Assets and Liabilities”). The Company pays exchange fees to SBI for the trading activities conducted on its proprietary trading system. The Company paid $6.0 million and $2.2 million for the year ended December 31, 2017 and for the period since the completion of the minority interest investment to December 31, 2016, respectively. The Company makes payments to two JVs (See Note 2, “Summary of Significant Accounting Policies”) to fund the construction of the microwave communication networks, and to purchase microwave communication networks, which are recorded within communications and data processing on the consolidated statements of comprehensive income. The Company made payments of $8.3 million and $0.6 million to the JVs for the years ended December 31, 2017 and 2016, respectively. The Company made no such payments for the year ended December 31, 2015. |
Parent Company
Parent Company | 12 Months Ended |
Dec. 31, 2017 | |
Parent Company | |
Parent Company | 21. Parent Company VFI is the sole managing member of Virtu Financial, which guarantees the indebtedness of its direct subsidiary under the senior secured facility and senior secured second lien notes (Note 10 “Borrowings”). VFI is limited to its ability to receive distributions (including for purposes of paying corporate and other overhead expenses and dividends) from Virtu Financial under its Fourth Amended and Restated Credit Agreement and senior secured second lien notes. The following financial statements (the “Parent Company Only Financial Statements”) should be read in conjunction with the consolidated financial statements of the Company and the foregoing. The condensed statements of financial condition as of December 31, 2017 and 2016 reflect the condensed financial condition of VFI. The condensed statements of comprehensive income and of cash flows for the year ended December 31, 2015 reflect the condensed operating results and cash flows of Virtu Financial prior to April 15, 2015 and reflect the condensed operating results and cash flows of VFI from April 16, 2015 through December 31, 2015. Virtu Financial, Inc. (Parent Company Only) Condensed Statements of Financial Condition As of December 31, December 31, December 31, (In thousands except interest data) 2017 2016 Assets Cash $ 60,193 $ 17,149 Deferred tax asset 124,631 192,961 Investment in subsidiary 1,549,162 165,204 Other assets 10,731 1,892 Total assets $ 1,744,717 $ 377,206 Liabilities, redeemable membership interest and equity Liabilities Payable to affiliate $ 767,101 $ 129 Accounts payable and accrued expenses and other liabilities 7 — Tax receivable agreement obligations 147,040 231,404 Total liabilities $ 914,148 $ 231,533 Virtu Financial Inc. Stockholders' equity Class A-1 — Authorized and Issued — 0 and 0 interests, Outstanding — 0 and 0 interests, at December 31, 2017 and 2016, respectively — — Class A-2 — Authorized and Issued — 0 and 0 interests, Outstanding — 0 and 0 interests, at December 31, 2017 and 2016, respectively — — Class A common stock (par value $0.00001), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 90,415,532 and 40,436,580 shares, Outstanding — 89,798,609 and 39,983,514 shares at December 31, 2017 and 2016, respectively 1 — Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at December 31, 2017 and 2016, respectively — — Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued — 17,880,239 and 19,810,707 shares, Outstanding — 17,880,239 and 19,810,707, at December 31, 2017 and 2016, respectively — — Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 79,610,490 and 79,610,490 shares at December 31, 2017 and 2016, respectively 1 1 Treasury stock, at cost, 616,923 and 453,066 shares at December 31, 2017 and 2016, respectively (11,041) (8,358) Additional paid-in capital 900,746 155,536 Accumulated deficit (62,129) (1,254) Accumulated other comprehensive income (loss) 2,991 (252) Total Virtu Financial Inc. stockholders' equity $ 830,569 $ 145,673 Total liabilities and stockholders' equity $ 1,744,717 $ 377,206 Virtu Financial, Inc. (Parent Company Only) Condensed Statements of Comprehensive Income For the Years Ended December 31, (in thousands) 2017 2016 2015 Revenues: Service fee revenue $ — $ — $ 445 Other Income 86,599 — — 86,599 — 445 Operating Expenses: Operations and administrative 181 198 447 Income (loss) before equity in income of subsidiary 86,418 (198) (2) Equity in income of subsidiary, net of tax (83,479) 33,178 104,036 Net income $ 2,939 $ 32,980 $ 104,034 Net income attributable to common stockholders 2,939 32,980 20,887 Other comprehensive income (loss): Foreign currency translation adjustment, net of taxes 3,243 (351) (4,534) Comprehensive income $ 6,182 $ 32,629 $ 16,353 Virtu Financial, Inc. (Parent Company Only) Condensed Statements of Cash Flows For the Years Ended December 31, (in thousands) 2017 2016 2015 Cash flows from operating activities Net income $ 2,939 $ 32,980 $ 104,034 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of subsidiary, net of tax (513,601) 157,975 (18,237) Tax receivable agreement obligation reduction (86,599) — — Deferred taxes 102,973 13,197 3,392 Other (8,500) — — Changes in operating assets and liabilities: (8,832) (4,012) 5,900 Net cash provided by (used in) operating activities (511,620) 200,140 95,089 Cash flows from investing activities Acquisition of KCG Holdings, net of cash acquired, described in Note 3 (23,908) — — Investments in subsidiaries, equity basis 16,846 24,893 64,624 Net cash provided by (used in) investing activities (7,062) 24,893 64,624 Cash flows from financing activities Distribution to members — — (130,000) Distribution from Virtu Financial to non-controlling interest (89,563) (162,969) (81,377) Dividends (63,814) (37,759) (17,362) Payments on repurchase of non-voting common interest (11,143) (2,000) (2,097) Repurchase of Class C common stock — (98) — Purchase of treasury stock (2,683) (4,539) (3,819) Tax receivable agreement obligations (7,045) — — Issuance of common stock, net of offering costs 735,974 — 327,366 Repurchase of Virtu Financial Units and — — (277,153) Issuance of common stock in connection with secondary offering, net of offering costs — 16,677 7,782 Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering — (17,383) (8,805) Net cash provided by (used in) financing activities $ 561,726 $ (208,071) $ (185,465) Net increase (decrease) in Cash $ 43,044 $ 16,962 $ (25,752) Cash, beginning of period 17,149 187 25,939 Cash, end of period $ 60,193 $ 17,149 $ 187 Supplemental disclosure of cash flow information: Taxes paid $ 133 $ 8,813 $ 5,615 Non-cash financing activities Tax receivable agreement described in Note 6 1,534 - (21,854) Secondary offerings described in Note 15 - 1,350 - |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events. | |
Subsequent Events | 22. Subsequent Events The Company has evaluated subsequent events for adjustment to or disclosure in its consolidated financial statements through the date of this report, and has not identified any recordable or disclosable events, not otherwise reported in these consolidated financial statements or the notes thereto, except for the following: On January 2, 2018, the Company completed the sale of its BondPoint business to ICE for total gross proceeds of $400 million. The Company used the after-tax net proceeds to prepay $250.0 million of principal under its Fourth Amended and Restated Credit Agreement. Concurrently with the closing of the sale of BondPoint, on January 8, 2018, the Company entered into a refinancing transaction to reprice its senior secured term loan at LIBOR plus 3.25%, along with additional principal repayment of $26.0 million. Following the refinancing the transaction, the total principal outstanding under the senior secured facility is $624 million. The following table contains information about the Company’s purchases of its Class A common stock during the period from January 1, 2018 to the date of this report (in thousands, except average price paid per share): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs January 1, 2018 - January 31, 2018 Common stock repurchases — — — — February 1, 2018 - February 28, 2018 Common stock repurchases 375,000 $ 29.27 375,000 39,023,750 March 1, 2018 - March 13, 2018 Common stock repurchases — — — 39,023,750 Total Common stock repurchases 375,000 29.27 375,000 39,023,750 (1) On February 8, 2018, the Company’s board of directors authorized a new share repurchase program of up to $50.0 million in Class A common stock and common units by March 31, 2019. The Company may repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means. Repurchases may also be made under Rule 10b5-1 plans. The timing and amount of repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice. There are no assurances that any further repurchases will actually occur. On February 8, 2018, the Company’s board of directors declared a dividend of $0.24 per share of Class A common stock and Class B common stock and per Restricted Stock Unit that will be paid on March 15, 2018 to holders of record as of March 1, 2018. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The Company's consolidated financial statements are prepared in conformity with U.S. GAAP, which require management to make estimates and assumptions regarding measurements including the fair value of trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, income tax, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates. |
Earnings Per Share | Earnings Per Share Earnings per share (“EPS”) is calculated on both a basic and diluted basis. Basic EPS excludes dilution and is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the 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. The Company grants restricted stock units (“RSUs”), which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. As a result, the unvested RSUs meet the definition of a participating security requiring the application of the two-class method. Under the two-class method, earnings available to common shareholders, including both distributed and undistributed earnings, are allocated to each class of common stock and participating securities according to dividends declared and participating rights in undistributed earnings, which may cause diluted EPS to be more dilutive than the calculation using the treasury stock method. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include money market accounts, which are payable on demand, and short-term investments with an original maturity of less than 90 days. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits. The Company manages this risk by selecting financial institutions deemed highly creditworthy to minimize the risk. |
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, which comprises by cash and/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 cash collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the consolidated statements of financial condition. Interest received or paid by the Company for these transactions is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the consolidated statements of comprehensive income. |
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase | Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company's policy that its custodian takes possession of the underlying collateral securities with a fair value approximately equal to the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. The Company has also entered into bilateral and tri-party term and overnight repurchase and other collateralized financing agreements which bear interest at negotiated rates. The Company receives cash and makes delivery of financial instruments to a custodian who monitors the market value of these instruments on a daily basis. The market value of the instruments delivered must be equal to or in excess of the principal amount loaned under the repurchase agreements plus the agreed upon margin requirement. The custodian may request additional collateral, if appropriate. Interest received or paid by the Company for these transactions is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the consolidated statements of comprehensive income. |
Receivables from/Payables to Broker-dealers and Clearing Organizations | Receivables from/Payables to Broker-dealers and Clearing Organizations Amounts receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased. At December 31, 2017 and 2016, receivables from and payables to broker-dealers and clearing organizations primarily represented 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 presents its balances, including outstanding principal balances on all credit facilities, on a net by counterparty basis within receivables from and payable to broker-dealers and clearing organizations when the criteria for offsetting are met. In the normal course of business, a significant portion of the Company’s securities transactions, money balances, and security positions are transacted with several third-party 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 monitors the financial condition of such brokers and to minimize the risk of 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 Financial instruments owned and Financial instruments sold, not yet purchased relate to market making and trading activities, and include listed and other equity securities, listed equity options and fixed income securities. The Company records 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, in the consolidated statements of comprehensive income. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. 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. The Company categorizes its financial instruments into 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; or Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Transfers in or out of levels are recognized based on the beginning fair value of the period in which they occurred. |
Fair Value Option | Fair Value Option The fair value option election allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are recorded in other, net in the consolidated statements of comprehensive income. The decision to elect the fair value option is determined on an instrument by instrument basis must be applied to an entire instrument and is irrevocable once elected. |
Derivative Instruments | Derivative Instruments Derivative instruments are used for trading purposes, including economic hedges of trading instruments, which are carried at fair value include futures, forward contracts, and options. Gains or losses on these derivative instruments are recognized currently within trading income, net in the consolidated statement of comprehensive income. 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 instruments are currencies, which are actively traded. The Company presents its derivatives balances on a net-by-counterparty basis when the criteria for offsetting are met. |
Property, Equipment and Occupancy | Property, Equipment and Occupancy Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisitions of MTH and KCG which were recorded at fair value on the respective date of acquisitions. Depreciation is provided using the straight-line method over estimated useful lives of the underlying assets. 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. Furniture, fixtures, and equipment are depreciated over three to seven years. Leasehold improvements are amortized over the lesser of the life of the improvement or the term of the lease. The Company recognizes rent expense under operating leases with fixed rent escalations, lease incentives and free rent periods on a straight-line basis over the lease term beginning on the date the Company takes possession of or controls the use of the space, including during free rent periods. |
Lease Loss Accrual | Lease Loss Accrual The Company’s policy is to identify excess real estate capacity and where applicable, accrue for related future costs, net of projected sub-lease income upon the date the Company ceases to use the excess real estate, which is recorded under operating and administrative in the consolidated statements of comprehensive income. Such accrual is adjusted to the extent the actual terms of sub-leased property differ from the previous assumptions used in the calculation of the accrual. |
Capitalized Software | Capitalized 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. Capitalized software development costs and related accumulated amortization are included in property, equipment and capitalized software in the accompanying consolidated statements of financial condition and are amortized over a period of 1.5 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 the Company’s 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 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, 2017, 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 Company’s management believes to be an appropriate indicator of its fair value. Following the Acquisition, our impairment testing is performed for each reporting unit. |
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, they are 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. Exchange memberships acquired in connection with the Acquisition were recorded at their fair value on the date of acquisition. Exchange stock includes shares that entitle the Company to certain trading privileges. The Company’s exchange memberships and stock are included in intangibles in the consolidated statements of financial condition. |
Trading Income, net | Trading Income, net 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 consolidated statements of comprehensive income. |
Commissions, net and Technology Services | Commissions, net and Technology Services Commissions, net, which primarily comprise commissions and commission equivalents earned on institutional client orders, are recorded on a trade date basis. Under a commission management program, the Company allows institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third parties. As the Company acts as an agent in these transactions, it records such expenses on a net basis within Commissions and technology services in the consolidated statements of comprehensive income. Technology services revenues consist of technology licensing fees and agency commission fees. Technology licensing fees are earned from third parties for licensing of the Company’s proprietary risk management and trading infrastructure technology and the 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. |
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 an accrual basis. |
Brokerage, Exchange and Clearance Fees, Net | Brokerage, Exchange and Clearance Fees, Net Brokerage, exchange and clearance fees, net, comprise the costs of executing and clearing trades and are recorded on a trade date basis. Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying consolidated statements of comprehensive income. |
Payments for Order Flow | Payments for Order Flow Payments for order flow represent payments to broker-dealer clients, in the normal course of business, for directing their order flow in U.S. equities to the Company. Payments for order flow are recorded on a trade-date basis in the consolidated statements of comprehensive income. |
Income Taxes | Income Taxes 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. The Company's subsidiaries are subject to income taxes in the respective jurisdictions (including foreign jurisdictions) in which they operate. Prior to the consummation of the Reorganization Transactions and the IPO, no provision for United States federal, state and local income tax was required, as 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. 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 only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authority, including resolution of the appeals or litigation processes, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Many factors are considered when evaluating and estimating the tax positions and tax benefits. Such estimates involve interpretations of regulations, rulings, case law, etc. and are inherently complex. The Company’s estimates may require periodic adjustments and may not accurately anticipate actual outcomes as resolution of income tax treatments in individual jurisdictions typically would not be known for several years after completion of any fiscal year. The 2017 Tax Act significantly changes how the U.S. taxes corporations. The 2017 Tax Act requires significant judgments to be made in interpretation of its provisions and significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the 2017 Tax Act will be applied or otherwise administered that is different from our interpretation. As we complete our analysis of the 2017 Tax Act, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded that may materially impact our provision for income taxes in the period in which the adjustments are made. |
Comprehensive Income (Loss) and Foreign Currency Translation | Comprehensive Income and Foreign Currency Translation Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). 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 revenues and expenses 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 accumulated other comprehensive income, a separate component of stockholders’ equity. The Company's foreign subsidiaries generally use the U.S. dollar as their functional currency. The Company also has subsidiaries that utilize a functional currency other than the U.S. dollar, primarily comprising its Irish subsidiaries, which utilizes the Euro as the functional currency. The Company may seek to reduce the impact of fluctuations in foreign exchange rates on its net investment in certain non-U.S. operations through the use of foreign currency forward contracts. For foreign currency forward contracts designated as hedges, the Company assesses its risk management objectives and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair value of the forward contracts. For qualifying net investment hedges, any gains or losses, to the extent effective, are included in Accumulated other comprehensive income on the consolidated statements of financial condition and Cumulative translation adjustment, net of tax, on the consolidated statements of comprehensive income. The ineffective portion, if any, is recorded in Investment income and other, net on the consolidated statements of operations. |
Share-Based Compensation | Share-Based Compensation The fair value of awards issued for compensation prior to the Reorganization Transactions and the IPO was determined by management, with the assistance of an independent third party valuation firm, using a projected annual forfeiture rate, where applicable, on the date of grant. Share-based awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the VFI 2015 Management Incentive Plan (as amended, the “2015 Amended and Restated Management Incentive Plan”) were in the form of stock options, Class A common stock and RSUs. The fair value of the stock option grants is determined through the application of the Black-Scholes-Merton model. The fair value of the Class A common stock and RSUs are determined based on the volume weighted average price for the three days preceding the grant, and with respect to the RSUs, a projected annual forfeiture rate. The fair value of share-based awards granted to employees is expensed based on the vesting conditions and are recognized on a straight line basis over the vesting period. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the issuance of Class A common stock, the vesting of RSUs or the exercise of stock options. |
Variable Interest Entity | Variable Interest Entities A variable interest entity (“VIE”) is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company will be considered to have a controlling financial interest and will consolidate a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. In October 2016, the Company invested in a joint venture (“JV”) with nine other parties. One of the parties was KCG. Upon the Merger, KCG was required to relinquish their ownership in the JV. As of December 31, 2017, each of the remaining parties owns approximately 11% of the voting shares and 11% of the equity of this JV, which is building microwave communication networks in the U.S. and Asia, and which is considered to be a VIE. The Company and all of its JV partners each pay monthly fees for the funding of the construction of the microwave communication networks. When completed, this JV may sell excess bandwidth that is not utilized by its joint venture members to third parties. As a result of the Acquisition, the Company owns 50% of the voting shares and 50% of the equity of a JV which maintains microwave communication networks in the U.S. and Europe, and which is considered to be a VIE. The Company and its JV partner each pay monthly fees for the use of the microwave communication networks in connection with their respective trading activities, and the JV may sell excess bandwidth that is not utilized by the JV members to third parties. In each of the JVs, the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; therefore it does not have a controlling financial interest in the JV and does not consolidate the JVs. The Company records its interest in each JV under the equity method of accounting and records its investment in the JVs within Other assets and its amounts payable for communication services provided by the JV within Accrued expenses and other liabilities on the consolidated statements of financial condition. The Company records its pro-rata share of each JVs earnings or losses within Other, net and fees related to the use of communication services provided by the JVs within Communications and data processing on the consolidated statements of comprehensive income. The Company’s exposure to the obligations of these VIEs is generally limited to its interests in each respective JV, which is the carrying value of the equity investment in each JV. The following table presents the Company’s nonconsolidated VIE at December 31, 2017: Maximum Carrying Amount Exposure to (in thousands) Asset Liability loss VIE's assets Equity investment $ 18,799 $ — $ 18,799 $ 41,936 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue - In May 2014, the FASB issued Accounting Standard Update (“ASU”) 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 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date . ASU 2015-14 defers the effective date of ASU 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. In December 2016, FASB issued ASU 2016-20 Technical Correction and Improvement (Topic 606): Revenue from Contracts with Customers , which amends the guidance in ASU 2014-09. The effective date and transition requirements for the ASU are the same as ASU 2014-09. The Company adopted the new revenue standard on January 1, 2018 by applying the modified retrospective method, which did not result in a transition adjustment. The new standard does not apply to revenue associated with financial instruments that are accounted for under other GAAP, and as a result, did not have an impact on the Company’s consolidated statements of comprehensive income, most closely associated with financial instrument, including Trading income, net, and Interest and dividends income. The new revenue standard primarily impacts the revenue recognition and accounting policy related to technology services. The Company’s technology services contracts include certain variable considerations which will be estimated and included in the transaction price only to the extent that it is probable when a significant reversal in the amount of the cumulative revenue recognized will occur in the future period. The new revenue standard requires enhanced disclosures, which the Company will include in the notes to the condensed consolidated financial statements beginning with the three months ended March 31, 2018. Financial Assets and Liabilities — In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . The ASU intends to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information and addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The new ASU affects all entities that hold financial assets or owe financial liabilities and is effective for annual reporting periods (including interim periods) beginning after December 15, 2017. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial statements, as it does not currently classify any equity securities as available for sale, and it does not apply the fair value option to its own debt issuances. Leases — In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . Under the new ASU, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. The liability will be equal to the present value of the future lease payments. The asset, referred to as a “right-of-use asset” will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases will be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. New quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater information regarding the extent of revenue and expense recognized and expected to be recognized from existing contracts. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. . The Company anticipates adopting this ASU on January 1, 2019. The Company is not anticipating recognizing lease assets and lease liabilities for leases with a term of twelve months or less. As of December 31, 2017, the Company has not yet identified any significant changes in the timing of operating leases recognition when considering this ASU, but the Company’s implementation efforts are ongoing and such assessments may change prior to the January 1, 2019, anticipated implementation date. Upon adoption of this ASU, the Company expects to report increased assets and liabilities on its consolidated statement of financial condition as a result of recognizing right-of-use assets and lease liabilities related to certain equipment under noncancelable operating lease agreements, which currently are not reflected in its consolidated statement of financial condition. Statement of Cash Flows – In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The ASU intended to reduce diversity in practice how certain transactions are classified in the statement of cash flows by mandating classification of certain activities. The ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company has adopted this ASU, and it does not have a material impact on its consolidated financial statements. Income Taxes – In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 749): Intra-Entity Transfers of Assets Other Than Inventory . The ASU requires the reporting entity to recognize the tax expense from the sale of an asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of the transactions are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The ASU is effective for annual periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the potential effects of adoption of ASU 2016-16 on the Company’s consolidated financial statements. Restricted cash – In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flow (Topic 230): Restricted Cash, which is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalent in the statements. The statement requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. This ASU is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. The Company elected to early adopt this ASU effective June 30, 2017. Accounting Changes – In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Correction (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323), which amends SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC update). The SEC staff view is that a registrant should evaluate the impact of new accounting standards that have not yet been adopted to determine the appropriate financial disclosures on the potential material effects, especially on new standards on revenue recognition, leases, and financial instruments – credit losses. If a registrant cannot reasonably estimate the impact that adoption of the ASUs, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact. Additional qualitative disclosures should include a description of the effect of the accounting policies expected to be applied compared to current accounting policies. Furthermore, the registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The Company adopted this ASU on January 1, 2017, and appropriate disclosures have been included in this Note for each recently issued accounting standard. Goodwill - In January, 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment . To simplify the subsequent measurement of goodwill, this ASU eliminated Step 2 from the goodwill impairment test. (In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This ASU is effective for public entities in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this ASU to have a material impact on the its consolidated financial statements. Business Combinations - In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, to amend the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for reporting periods beginning after December 15, 2017. The impact of this ASU will depend on the nature of the Company’s activities after adoption. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Summary of nonconsolidated VIE | The following table presents the Company’s nonconsolidated VIE at December 31, 2017: Maximum Carrying Amount Exposure to (in thousands) Asset Liability loss VIE's assets Equity investment $ 18,799 $ — $ 18,799 $ 41,936 |
Acquisition of KCG Holdings, 31
Acquisition of KCG Holdings, Inc. (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Acquisition of KCG Holdings, Inc. | |
Summary of the estimated fair values of the assets acquired and liabilities assumed | (in thousands) September 30, 2017 Measurement Period December 31, 2017 Cash and equivalents $ 592,993 $ 2,676 $ 595,669 Cash and securities segregated under federal regulations 3,000 (3,000) - Securities borrowed 1,406,444 - 1,406,444 Securities purchased under agreements to resell 16,894 - 16,894 Receivables from broker dealers and clearing organizations 553,031 (211) 552,820 Financial instruments owned, at fair value 2,095,339 - 2,095,339 Property, equipment and capitalized software 112,204 2,163 114,367 Intangibles 156,300 18,695 174,995 Deferred tax assets 22,928 980 23,908 Other assets 331,820 (8,636) 323,184 Total Assets $ 5,290,953 $ 12,667 $ 5,303,620 Securities loaned $ 166,189 - $ 166,189 Securities sold under agreements to repurchase 841,606 - 841,606 Payables to broker dealers and clearing organizations 536,653 - 536,653 Payables to customers 17,583 (17,583) - Financial instruments sold, not yet purchased, at fair value 1,756,647 - 1,756,647 Accounts payable and accrued expenses and other liabilities 239,004 15,524 254,528 Debt 480,987 - 480,987 Total Liabilities $ 4,038,669 $ (2,059) $ 4,036,610 Total identified assets acquired, net of assumed liabilities $ 1,252,284 $ 14,726 $ 1,267,010 Goodwill $ 143,012 $ (14,726) $ 128,286 Total Purchase Price $ 1,395,296 $ - $ 1,395,296 |
Schedule of Preliminary allocation of intangible assets, amortization period and goodwill | Amortization (in thousands) Amount Years Technology $ 67,700 1-6 years Customer relationships 94,000 13 - 17 years Trade names 1,000 10 years Favorable leases 5,895 2-15 years Exchange memberships 6,400 Indefinite Intangible assets $ 174,995 Goodwill 128,286 Total $ 303,281 |
Schedule of Proforma Pro forma results | (in thousands) Revenues $ 379,203 Income before income taxes and noncontrolling interest 14,340 |
Schedule of Proforma Financial Information with Combined Historical Results | For the Years Ended (in thousands, except per share amounts) 2017 2016 Revenue $ 1,528,588 $ 2,153,008 Net income (loss) (14,151) 443,101 Net income (loss) attributable to common stockholders (5,219) 163,407 |
Business Held for Sale (Tables)
Business Held for Sale (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Held for Sale | |
Summary of assets and liabilities of businesses held for sale | The assets and liabilities of businesses held for sale as of December 31, 2017 are summarized as follows: (in thousand) Receivables from broker dealers and clearing organizations $ Intangibles Technology Customer relationships Trade names Capitalized software Other assets Total assets $ Payable to brokers, dealers and clearing organizations $ Accrued expenses and other liabilities Total liabilities $ |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings per Share | |
Schedule of reconciliation of net income before noncontrolling interest to net income available for common stockholders | For the Year ended December 31 (in thousands) 2017 2016 2015 Income before income taxes and noncontrolling interest $ 113,164 $ 179,591 $ 215,929 Provision for income taxes 94,266 21,251 18,439 Net income 18,898 158,340 197,490 Net income allocable to members of Virtu Financial (for the period January 1, 2015 through April 15, 2015) — — (83,147) Noncontrolling interest (15,959) (125,360) (93,456) Net income available for common stockholders $ 2,939 $ 32,980 $ 20,887 |
Schedule of basic earnings per share | For the Year Ended December 31, (in thousands, except for share or per share data) 2017 2016 2015 Basic earnings per share: Net income available for common stockholders $ 2,939 $ 32,980 $ 20,887 Less: Dividends and undistributed earnings allocated to participating securities (1,326) (809) — Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities 1,613 32,171 20,887 Weighted average shares of common stock outstanding: Class A 62,579,147 38,539,091 34,964,312 Basic Earnings per share $ 0.03 $ 0.83 $ 0.60 |
Schedule of diluted earnings per share | For the Year Ended December 31, (in thousands, except for share or per share data) 2017 2016 2015 Diluted earnings per share: Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities $ 1,613 $ 32,171 $ 20,887 Weighted average shares of common stock outstanding: Class A Issued and outstanding 62,579,147 38,539,091 34,964,312 Issuable pursuant to 2015 Management Incentive Plan(1) — — 375,273 62,579,147 38,539,091 35,339,585 Diluted Earnings per share $ 0.03 $ 0.83 $ 0.59 The dilutive impact of unexercised stock options excludes from the computation of EPS 1,740,630, 743,096 and 0 options for the years ended December 31, 2017, 2016 and 2015, respectively, because inclusion of the options would have been anti-dilutive. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets | |
Schedule of goodwill by segment | Market Execution (in thousands) Making Services Corporate Total Balance as of December 31, 2016 $ 657,985 $ 57,394 $ — $ 715,379 Additions 97,307 32,197 — 129,504 Balance as of December 31, 2017 $ 755,292 $ 89,591 $ — $ 844,883 |
Schedule of acquired intangible assets | As of December 31, 2017 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ 110,000 $ 110,000 $ — 1.4 to 2.5 ETF issuer relationships 950 559 391 9 ETF buyer relationships 950 559 390 9 Leases 1,800 397 1,403 3 FCC licenses 200 19 181 7 Technology 60,000 9,644 50,356 to 6 Customer relationships 49,000 1,822 47,178 to 17 Favorable occupancy leases 5,895 408 5,487 7 Exchange memberships 5,838 — 5,838 Indefinite $ 234,633 $ 123,408 $ 111,224 As of December 31, 2016 Gross Carrying Accumulated Net Carrying Useful Lives (in thousands) Amount Amortization Amount (Years) Purchased technology $ 110,000 $ 110,000 $ — 1.4 to 2.5 ETF issuer relationships 950 454 496 9 ETF buyer relationships 950 454 496 9 $ 111,900 $ 110,908 $ 992 |
Receivables from_Payables to 35
Receivables from/Payables to Broker-Dealers and Clearing Organizations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Receivables from/Payables to Broker-Dealers and Clearing Organizations | |
Summary of receivables from and payables to brokers-dealers and clearing organizations | (in thousands) 2017 2016 Assets Due from prime brokers $ 219,573 $ 91,476 Deposits with clearing organizations 112,847 21,995 Net equity with futures commission merchants 203,711 213,030 Unsettled trades with clearing organization 173,778 44,312 Securities failed to deliver 248,088 77,915 Commissions and fees 14,021 — Total receivables from broker-dealers and clearing organizations $ 972,018 $ 448,728 Liabilities Due to prime brokers $ 197,439 $ 227,335 Net equity with futures commission merchants 44,526 38,838 Unsettled trades with clearing organization 420,029 429,800 Securities failed to receive 51,143 5 Commissions and fees 3,068 — Total payables to broker-dealers and clearing organizations $ 716,205 $ 695,978 |
Collateralized Transactions (Ta
Collateralized Transactions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Collateralized Transactions | |
Summary of the fair value of collateralized transactions | (in thousands) 2017 2016 Securities received as collateral: Securities borrowed $ 1,415,793 $ 213,203 $ 1,415,793 $ 213,203 |
Schedule of financial instruments owned and pledged, where counterparty has right to repledge | (in thousands) 2017 2016 Equities $ 586,251 $ 128,202 U.S. and Non-U.S. government obligations 99 — Exchange traded notes 8,693 15,681 $ 595,043 $ 143,883 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Outstanding borrowings and financing capacity or unused available capacity under the Company’s borrowing arrangements | At December 31, 2017 Financing Outstanding Deferred Debt Outstanding (in thousands) Interest Rate Available Principal Issuance Cost Borrowings, net Broker-dealer credit facilities: Uncommitted facility 2.42% $ $ $ — $ Revolving credit facility 2.81% 500,000 7,000 (4,117) $ $ $ $ At December 31, 2016 Financing Borrowing Deferred Debt Outstanding (in thousands) Interest Rate Available Outstanding Issuance Cost Borrowings, net Broker-dealer credit facilities: Uncommitted facility 1.66% $ $ $ — $ 25,000 Committed facility (1) n/a — — — $ $ $ — $ 25,000 |
Schedule of interest expense on debt | For the Years Ended December 31, (in thousands) 2017 2016 2015 Broker-dealer credit facilities: Uncommitted facility $ $ $ Committed facility (1) 33 41 Revolving credit facility 19 — — $ $ $ (1) Facility was terminated in July 2017. |
Senior Secured Credit Facility | |
Schedule of aggregate future required principal payments based on terms of loan | (in thousands) 2018 $ — 2019 — 2020 31,059 2021 and thereafter 1,400,000 Total principal of long-term borrowings $ 1,431,059 |
Schedule of reconciliation of the senior secured credit facility | At December, 2017 Maturity Interest Outstanding Deferred Debt Outstanding (in thousands) Date Rate Principal Discount Issuance Cost Borrowings, net Long-term borrowings: Fourth Amended and Restate Credit Agreement December 2021 5.13% $ 900,000 $ (999) $ (18,504) $ 880,497 Senior secured Second Lien Notes June 2022 6.75% 500,000 — (22,961) 477,039 SBI bonds January 2020 5.00% 31,059 — (47) 31,012 $ $ $ $ At December 31, 2016 Maturity Interest Outstanding Deferred Debt Outstanding (in thousands) Date Rate Principal Discount Issuance Cost Borrowings, net Long-term borrowings: Senior secured credit facility December 2021 4.25% $ 540,000 $ (956) $ (3,941) $ 535,103 Revolving credit facility (3) 5.50% — — — — SBI bonds January 2020 5.00% 29,925 — (71) 29,854 $ $ $ $ (3) Prior to the Fourth Amended Restated Credit Agreement described below, the Company entered into a revolving credit facility with the lenders for an aggregated commitment of $100.0 million. This facility was terminated in July 2017 as a result of refinancing. |
Short-Term Credit Facilities | |
Schedule of reconciliation of the senior secured credit facility | At December 31, 2017 Weighted Average Financing Borrowing Interest Rate Available Outstanding Short-Term Credit Facilities: Short-term credit facilities (2) 3.86% $ $ $ $ At December 31, 2016 Weighted Average Financing Borrowing Interest Rate Available Outstanding Short-Term Credit Facilities: Short-term credit facilities (2) 3.12% $ $ $ $ (2) Outstanding borrowings were included with receivable from broker-dealers and clearing organization within the consolidated statements of financial condition. |
Financial Assets and Liabilit38
Financial Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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 December 31, 2017: December 31, 2017 Quoted Prices Significant in Active Other Significant Counterparty Markets for Observable Unobservable and Cash Identical Assets Inputs Inputs Collateral Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ 758,596 $ 1,167,995 $ — $ — $ 1,926,591 U.S. and Non-U.S. government obligations 5,968 16,815 — — 22,783 Corporate Bonds — 60,975 — — 60,975 Exchange traded notes 13,576 68,819 — — 82,395 Currency forwards — 2,045,487 — (2,027,697) 17,790 Options 7,045 — — — 7,045 — (2,027,697) Financial instruments owned, pledged as collateral: Equity securities $ 410,670 $ 175,581 $ — $ — $ 586,251 U.S. and Non-U.S. government obligations 99 — — — 99 Exchange traded notes 82 8,611 — — 8,693 — — Other Assets Equity investment $ — $ — $ 40,588 $ — $ 40,588 Exchange stock 1,952 — — — 1,952 Other (1) — 55,824 — — 55,824 40,588 — Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ 847,816 $ 1,355,616 $ — $ — $ 2,203,432 U.S. and Non-U.S. government obligations 18,940 12,481 — — 31,421 Corporate Bonds — 81,118 — — 81,118 Exchange traded notes 1,514 54,248 — — 55,762 Currency forwards — 2,032,017 — (2,024,991) 7,026 Options 5,839 — — — 5,839 $ $ $ — $ (2,024,991) $ (1) Other primarily consists of a $55.8 million receivable from Bats related to the sale of KCG Hotspot. Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2016: December 31, 2016 Quoted Prices in Active Significant Markets for Other Significant Counterparty Identical Observable Unobservable and Cash Assets Inputs Inputs Collateral Total Fair (in thousands) (Level 1) (Level 2) (Level 3) Netting Value Assets Financial instruments owned, at fair value: Equity securities $ 1,597,049 $ 31,988 $ — $ — $ 1,629,037 Non-U.S. government obligations — 10,765 — — 10,765 Exchange traded notes 37,034 — — — 37,034 Currency forwards — 1,147,261 — (1,140,239) 7,022 Options — 141 — — 141 $ 1,634,083 $ 1,190,155 $ — $ (1,140,239) $ 1,683,999 Financial instruments owned, pledged as collateral: Equity securities $ 128,202 $ — $ — $ — $ 128,202 Exchange traded notes 15,681 — — — 15,681 $ 143,883 $ — $ — $ — $ 143,883 Other Assets Equity investment $ — $ — $ 36,031 $ — $ 36,031 Exchange stock 449 — — — 449 $ 449 $ — $ 36,031 $ — $ 36,480 Liabilities Financial instruments sold, not yet purchased, at fair value: Equity securities $ 1,323,693 $ 6,638 $ — $ — $ 1,330,331 Exchange traded notes 18,744 — — — 18,744 Currency forwards — 1,009,038 — (1,009,038) — Options — 80 — — 80 $ 1,342,437 $ 1,015,756 $ — $ (1,009,038) $ 1,349,155 |
Summary of fair value measurements not measured on a recurring basis | Financial assets and liabilities not measured at fair value as of December 31, 2017: December 31, 2017 Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs Carrying Value Fair Value (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents $ 532,887 $ 532,887 $ 532,887 $ — $ — Securities borrowed $ 1,471,172 $ 1,471,172 $ — $ 1,471,172 $ — Receivables from broker dealers and clearing organizations 36,513 — Total Assets $ $ $ $ $ — Liabilities Short-term borrowings $ 27,883 $ 27,883 $ — $ 27,883 $ — Long-term borrowings $ 1,388,548 $ 1,465,489 $ — $ 1,465,489 $ — Securities loaned $ 754,687 $ 754,687 $ — $ 754,687 $ — Securities sold under agreements to repurchase $ 390,642 $ 390,642 $ — $ 390,642 $ — Payables to broker dealer and clearing organizations 2,925 — Total Liabilities $ 3,277,965 $ 3,354,906 $ 2,925 $ 3,351,981 $ — F inancial assets and liabilities not measured at fair value as of December 31, 2016: December 31, 2016 Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs Carrying Value Fair Value (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents $ 181,415 $ 181,415 $ 181,415 $ — $ — Securities borrowed $ 220,005 $ 220,005 $ — $ 220,005 $ — Receivables from broker dealers and clearing organizations — — Total Assets $ $ $ $ $ Liabilities Short-term borrowings $ 25,000 $ 25,000 $ — $ 25,000 $ — Long-term borrowings $ 564,957 $ 564,957 $ — $ 564,957 $ — Securities loaned $ 222,203 $ 222,203 $ — $ 222,203 $ — Payables to broker dealer and clearing organizations — — Total Liabilities $ 1,508,138 $ 1,508,138 $ — $ 1,508,138 $ — |
Summary of changes in Level 3 financial instruments measured at fair value on a recurring basis | Year Ended December 31, 2017 Change in Net Unrealized Gains / (Losses) on Investments Balance at Total Realized Net Transfers Balance at still held at December 31, and Unrealized into (out of) December 31 December 31 (in thousands) 2016 Purchases Gains / (Losses) Level 3 Settlement 2017 2017 Assets Other assets: Equity investment $ 36,031 $ — $ 4,557 $ — $ — $ 40,588 $ 4,557 Other — 3,000 — — (3,000) — — Total $ 36,031 $ 3,000 $ 4,557 $ — $ (3,000) $ 40,588 $ 4,557 Year Ended December 31, 2016 Change in Net Unrealized Gains / (Losses) on Investments Balance at Total Realized Net Transfers Balance at still held at December 31, and Unrealized into (out of) December 31 December 31 (in thousands) 2015 Purchases Gains / (Losses) Level 3 2016 2016 Assets Other assets: Equity investment $ — $ 38,754 $ (3,117) $ 394 $ 36,031 $ (3,117) Total $ — $ 38,754 $ (3,117) $ 394 $ 36,031 $ (3,117) |
Summary of netting of certain financial assets and financial liabilities | December 31, 2017 Net Amounts of Gross Amounts Assets Presented Offset in the in the Gross Amounts Not Offset In the 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 $ 1,471,172 $ — $ 1,471,172 $ (1,418,672) $ (13,318) $ 39,182 Trading assets, at fair value: Currency forwards 2,045,487 (2,027,697) 17,790 — — 17,790 Options 7,045 — 7,045 (45) — 7,000 Total $ 3,523,704 $ (2,027,697) $ 1,496,007 $ (1,418,717) $ (13,318) $ 63,972 Net Amounts of Gross Amounts Liabilities Presented Offset in the in the Gross Amounts Not Offset In the Gross Amounts Consolidated Consolidated Statement of Financial Condition of Recognized Statement of Statement of Financial Cash Collateral Liabilities Financial Condition Financial Condition Instruments Pledged Net Amount Offsetting of Financial Liabilities: Securities loaned $ 754,687 $ — $ 754,687 $ (737,731) $ (10,776) $ 6,180 Securities sold under agreements to repurchase 390,642 — 390,642 (390,642) — — Trading liabilities, at fair value: Currency forwards 2,032,017 (2,024,991) 7,026 — 7,026 Options 5,839 — 5,839 (56) — 5,783 Total $ 3,183,185 $ (2,024,991) $ 1,158,194 $ (1,128,429) $ (10,776) $ 18,989 December 31, 2016 Net Amounts of Gross Amounts Assets Presented Offset in the in the Gross Amounts Not Offset In the 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 $ 220,005 $ — $ 220,005 $ (216,778) $ (248) $ 2,979 Trading assets, at fair value: Currency forwards 1,147,261 (1,140,239) 7,022 — — 7,022 Options 141 — 141 (80) (13) 48 Total $ 1,367,407 $ (1,140,239) $ 227,168 $ (216,858) $ (261) $ 10,049 Net Amounts of Liabilities Gross Amounts Presented Gross Amounts Not Offset In the Offset in the in the 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 $ 222,203 $ — $ 222,203 $ (221,792) $ — $ 411 Trading liabilities, at fair value: Currency forwards 1,009,038 (1,009,038) — — — — Options 80 — 80 (80) — — Total $ 1,231,321 $ (1,009,038) $ 222,283 $ (221,872) $ — $ 411 |
Summary of gross obligations for repurchase agreement and securities borrowed transactions by remaining contractual maturity and class of collateral pledged | December 31, 2017 Remaining Contractual Maturity Overnight and Less than 30 - 60 61 - 90 (in thousands) Continuous 30 days days Days Total Repurchase agreements: Equity securities $ — $ 100,000 $ 90,000 $ 200,000 $ 390,000 U.S. and Non-U.S. government obligations 642 — — — 642 Total $ 642 $ 100,000 $ 90,000 $ 200,000 $ 390,642 Securities lending transactions: Equity securities $ 754,687 $ — $ — $ — $ 754,687 Total $ 754,687 $ — $ — $ — $ 754,687 December 31, 2016 Remaining Contractual Maturity Overnight and Less than 30 - 60 61 - 90 (in thousands) Continuous 30 days days Days Total Repurchase agreements: Equity securities $ 222,203 $ — $ — $ — $ 222,203 Total $ 222,203 $ — $ — $ — $ 222,203 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments | |
Schedule of fair value of derivative instruments on a gross basis | (in thousands) December 31, 2017 December 31, 2016 Derivatives Assets Financial Statements Location Fair Value Notional Fair Value Notional Derivative instruments not designated as hedging instruments: Equities futures Receivables from broker dealers and clearing organizations $ (505) $ 1,985,770 $ 2,403 $ 1,461,286 Commodity futures Receivables from broker dealers and clearing organizations 971 21,231,001 13,964 3,918,778 Currency futures Receivables from broker dealers and clearing organizations 26,548 3,994,412 1,591 3,264,093 Fixed income futures Receivables from broker dealers and clearing organizations 73 44,395 31 5,730 Options Financial instruments owned 7,045 141 6,844 Currency forwards Financial instruments owned 2,045,487 1,147,261 94,192,414 Derivatives Liabilities Financial Statements Location Fair Value Notional Fair Value Notional Derivative instruments not designated as hedging instruments: Equities futures Payables to broker dealers and clearing organizations $ (575) $ 142,658 $ (43) $ 62,417 Commodity futures Payables to broker dealers and clearing organizations (1,602) 130,042 2,842 22,616,170 Currency futures Payables to broker dealers and clearing organizations (13,947) 7,756,958 (6,282) 1,137,908 Fixed income futures Payables to broker dealers and clearing organizations (1) 2,584 — — Options Financial instruments sold, not yet purchased 5,839 681,147 80 4,486 Currency forwards Financial instruments sold, not yet purchased 2,032,017 123,993,234 1,009,038 85,874,684 Derivative instruments designated as hedging instruments: Currency forwards Financial instruments sold, not yet purchased (514) 16,115 — — |
Schedule of net gain from derivative instruments not designated as hedging instruments | December 31, (in thousands) Financial Statements Location 2017 2016 2015 Derivative instruments not designated as hedging instruments: Futures Trading income, net $ 290,609 $ 559,626 $ 1,180,483 Currency forwards Trading income, net 2,603 1,915 (16,431) Options Trading income, net (7,166) (410) (1,784) Others Trading income, net — (6) 4 $ 286,046 $ 561,125 $ 1,162,272 Derivative instruments designated as hedging instruments: Foreign exchange - forward contract Accumulated other comprehensive income $ (642) $ — $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Summary of income before income taxes | December 31, 2017 2016 2015 (in thousands) U.S. operations $ 70,484 $ 138,950 $ 154,947 Non-U.S. operations 42,680 40,641 60,982 $ 113,164 $ 179,591 $ 215,929 |
Summary of provision for income taxes | For the years ended December 31, (in thousands) 2017 2016 2015 Current provision (benefit) Federal $ (9,991) $ 2,690 $ 7,584 State and Local 65 38 108 Foreign 1,219 5,210 6,762 Deferred provision (benefit) Federal 106,415 13,547 3,345 State and Local (3,380) 194 48 Foreign (62) (428) 592 Provision for income taxes $ 94,266 $ 21,251 $ 18,439 |
Schedule of reconciliation of the tax provision at U.S. Federal Statutory Rate to the provision for income taxes | December 31, 2017 2016 2015 (in thousands, except percentages) Tax provision at the U.S. federal statutory rate 35.0 % 35.0 % 35.0 % Less: rate attributable to noncontrolling interest (19.1) (24.4) (27.8) State and local taxes, net of federal benefit (1.9) 1.3 1.4 Impact of 2017 Tax Act on deferred tax assets 80.1 — — Impact of 2017 Tax Act on tax receivable agreement obligation (12.9) — — Non-deductible expenses, net 1.9 — — Other, net 0.2 — — Provision for income taxes 83.3 % 11.9 % 8.6 % |
Schedule of components of deferred tax assets and liabilities | December 31, (in thousands) 2017 2016 Deferred income tax assets Tax Receivable Agreement $ 101,594 $ 185,677 Share-based compensation 5,213 5,664 Intangibles 14,547 — Fixed assets and other 13,425 2,518 Tax credits and net operating loss carryforwards 50,867 — Less: Valuation allowance on net operating loss carryforwards and tax credits (43,544) — Total deferred income tax assets $ 142,102 $ 193,859 Deferred income tax liabilities Intangibles 16,342 — Fixed assets — 84 Total deferred income tax liabilities $ 16,342 $ 84 |
Summary of reconciliation of the beginning and ending amount of unrecognized tax benefits | December 31, (in thousands) 2017 Balance at December 31, 2016 $ — Increase from Acquisition of KCG 7,232 Decreases based on tax positions related to prior period — Increase based on tax positions related to current period 68 Balance at December 31, 2017 $ 7,300 |
Commitments, Contingencies an41
Commitments, Contingencies and Guarantees (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments, Contingencies and Guarantees | |
Schedule of minimum rental commitments under non-cancellable leases | Minimum Rental Commitments Year Ending December 31 Capital Operating 2018 18,829 33,331 2019 17,759 30,712 2020 6,942 29,238 2021 — 21,017 2022 — 18,063 Thereafter — 127,723 Total minimum lease payments $ 43,530 $ 260,084 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Non-qualified stock options | |
Schedule of activity | Options Outstanding Options Exercisable Weighted Average Weighted Average Weighted Average Number of Exercise Price Remaining Number of Exercise Price Options Per Share Contractual Life Options Per Share At December 31, 2014 — $ — — — $ — Granted 9,228,000 19.00 10.00 — — Exercised — — — — — Forfeited or expired (234,000) — — — — At December 31, 2015 8,994,000 $ 19.00 9.29 — $ — Granted — — — — — Exercised — — — — — Forfeited or expired (760,000) — — — — At December 31, 2016 8,234,000 $ 19.00 8.29 2,058,500 $ 19.00 Granted — — — — — Exercised — — — — — Forfeited or expired (496,000) — — — — At December 31, 2017 7,738,000 $ 19.00 7.29 3,869,000 $ 19.00 |
Restricted stock units | |
Schedule of activity related to restricted stock units | Weighted Number of Average Fair Shares Value At December 31, 2014 — $ — Granted 984,466 22.32 Forfeited — — Vested — — At December 31, 2015 984,466 $ 22.32 Granted 1,019,148 16.06 Forfeited (133,138) 22.51 Vested (297,035) 16.48 At December 31, 2016 1,573,441 $ 18.28 Granted 64,402 18.09 Forfeited (258,250) 18.40 Vested (526,546) 18.75 At December 31, 2017 853,047 $ 17.94 |
Property, Equipment and Capit43
Property, Equipment and Capitalized Software (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Equipment and Capitalized Software | |
Schedule of property, equipment and capitalized software | (in thousands) 2017 2016 Capitalized software costs $ 94,915 $ 77,591 Leasehold improvements 93,624 3,636 Furniture and equipment 324,135 61,540 Land — 77 512,674 142,844 Less: Accumulated depreciation and amortization (375,656) (113,184) Total property, equipment and capitalized software, net $ 137,018 $ 29,660 |
Regulatory Requirement (Tables)
Regulatory Requirement (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Requirement | |
Schedule of regulatory capital and regulatory capital requirements | The regulatory capital and regulatory capital requirements of these subsidiaries as of December 31, 2017 was as follows: Regulatory Regulatory Capital Excess Regulatory (in thousands) Capital Requirement Capital Virtu Americas LLC $ 379,875 $ 1,000 $ 378,875 Virtu Financial BD LLC 40,683 1,000 39,683 Virtu Financial Capital Markets LLC 8,308 5,114 3,194 The regulatory capital and regulatory capital requirements of these subsidiaries as of December 31, 2016 was as follows: Regulatory Regulatory Capital Excess Regulatory (in thousands) Capital Requirement Capital Virtu Financial BD LLC 74,467 1,000 73,467 Virtu Financial Capital Markets LLC 10,830 2,886 7,944 |
Geographic Information and Bu45
Geographic Information and Business Segments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Geographic Information and Business Segments | |
Schedule of total revenues by geographic area | December 31, (in thousands) 2017 2016 2015 Revenues: United States $ 791,044 $ 455,418 $ 537,310 Ireland 97,637 139,642 166,739 United Kingdom 21,143 — — Singapore 113,891 106,813 91,816 Sweden 3,986 — — Others 281 399 348 Total revenues $ 1,027,982 $ 702,272 $ 796,213 |
Schedule of revenues, income (loss) before income taxes (“Pre-tax earnings”) and total assets by segment | Market Execution Corporate Consolidated (in thousands) Making Services (1) Total 2017: Total revenue $ 836,707 $ 99,135 $ 92,140 $ 1,027,982 Income before income taxes and noncontrolling interest 74,633 (12,519) 51,050 113,164 2016: Total revenue $ 691,884 $ 10,352 $ 36 $ 702,272 Income (loss) before income taxes and noncontrolling interest 176,145 4,403 (957) 179,591 2015: Total revenue $ 785,591 $ 10,622 $ - $ 796,213 Income before income taxes and noncontrolling interest 211,443 4,486 - 215,929 (1) Amounts shown in the Corporate segment include eliminations of income statement and balance sheet items included in the Company's other segments. |
Parent Company (Tables)
Parent Company (Tables) - VFH | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Statements of Financial Condition | As of December 31, December 31, December 31, (In thousands except interest data) 2017 2016 Assets Cash $ 60,193 $ 17,149 Deferred tax asset 124,631 192,961 Investment in subsidiary 1,549,162 165,204 Other assets 10,731 1,892 Total assets $ 1,744,717 $ 377,206 Liabilities, redeemable membership interest and equity Liabilities Payable to affiliate $ 767,101 $ 129 Accounts payable and accrued expenses and other liabilities 7 — Tax receivable agreement obligations 147,040 231,404 Total liabilities $ 914,148 $ 231,533 Virtu Financial Inc. Stockholders' equity Class A-1 — Authorized and Issued — 0 and 0 interests, Outstanding — 0 and 0 interests, at December 31, 2017 and 2016, respectively — — Class A-2 — Authorized and Issued — 0 and 0 interests, Outstanding — 0 and 0 interests, at December 31, 2017 and 2016, respectively — — Class A common stock (par value $0.00001), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 90,415,532 and 40,436,580 shares, Outstanding — 89,798,609 and 39,983,514 shares at December 31, 2017 and 2016, respectively 1 — Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at December 31, 2017 and 2016, respectively — — Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued — 17,880,239 and 19,810,707 shares, Outstanding — 17,880,239 and 19,810,707, at December 31, 2017 and 2016, respectively — — Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 79,610,490 and 79,610,490 shares at December 31, 2017 and 2016, respectively 1 1 Treasury stock, at cost, 616,923 and 453,066 shares at December 31, 2017 and 2016, respectively (11,041) (8,358) Additional paid-in capital 900,746 155,536 Accumulated deficit (62,129) (1,254) Accumulated other comprehensive income (loss) 2,991 (252) Total Virtu Financial Inc. stockholders' equity $ 830,569 $ 145,673 Total liabilities and stockholders' equity $ 1,744,717 $ 377,206 |
Condensed Statements of Comprehensive Income | For the Years Ended December 31, (in thousands) 2017 2016 2015 Revenues: Service fee revenue $ — $ — $ 445 Other Income 86,599 — — 86,599 — 445 Operating Expenses: Operations and administrative 181 198 447 Income (loss) before equity in income of subsidiary 86,418 (198) (2) Equity in income of subsidiary, net of tax (83,479) 33,178 104,036 Net income $ 2,939 $ 32,980 $ 104,034 Net income attributable to common stockholders 2,939 32,980 20,887 Other comprehensive income (loss): Foreign currency translation adjustment, net of taxes 3,243 (351) (4,534) Comprehensive income $ 6,182 $ 32,629 $ 16,353 |
Condensed Statements of Cash Flows | For the Years Ended December 31, (in thousands) 2017 2016 2015 Cash flows from operating activities Net income $ 2,939 $ 32,980 $ 104,034 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of subsidiary, net of tax (513,601) 157,975 (18,237) Tax receivable agreement obligation reduction (86,599) — — Deferred taxes 102,973 13,197 3,392 Other (8,500) — — Changes in operating assets and liabilities: (8,832) (4,012) 5,900 Net cash provided by (used in) operating activities (511,620) 200,140 95,089 Cash flows from investing activities Acquisition of KCG Holdings, net of cash acquired, described in Note 3 (23,908) — — Investments in subsidiaries, equity basis 16,846 24,893 64,624 Net cash provided by (used in) investing activities (7,062) 24,893 64,624 Cash flows from financing activities Distribution to members — — (130,000) Distribution from Virtu Financial to non-controlling interest (89,563) (162,969) (81,377) Dividends (63,814) (37,759) (17,362) Payments on repurchase of non-voting common interest (11,143) (2,000) (2,097) Repurchase of Class C common stock — (98) — Purchase of treasury stock (2,683) (4,539) (3,819) Tax receivable agreement obligations (7,045) — — Issuance of common stock, net of offering costs 735,974 — 327,366 Repurchase of Virtu Financial Units and — — (277,153) Issuance of common stock in connection with secondary offering, net of offering costs — 16,677 7,782 Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering — (17,383) (8,805) Net cash provided by (used in) financing activities $ 561,726 $ (208,071) $ (185,465) Net increase (decrease) in Cash $ 43,044 $ 16,962 $ (25,752) Cash, beginning of period 17,149 187 25,939 Cash, end of period $ 60,193 $ 17,149 $ 187 Supplemental disclosure of cash flow information: Taxes paid $ 133 $ 8,813 $ 5,615 Non-cash financing activities Tax receivable agreement described in Note 6 1,534 - (21,854) Secondary offerings described in Note 15 - 1,350 - |
Subsequent Events (Tables)
Subsequent Events (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events. | |
Summary of purchases of its Class A common stock | The following table contains information about the Company’s purchases of its Class A common stock during the period from January 1, 2018 to the date of this report (in thousands, except average price paid per share): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs January 1, 2018 - January 31, 2018 Common stock repurchases — — — — February 1, 2018 - February 28, 2018 Common stock repurchases 375,000 $ 29.27 375,000 39,023,750 March 1, 2018 - March 13, 2018 Common stock repurchases — — — 39,023,750 Total Common stock repurchases 375,000 29.27 375,000 39,023,750 (1) On February 8, 2018, the Company’s board of directors authorized a new share repurchase program of up to $50.0 million in Class A common stock and common units by March 31, 2019. The Company may repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means. Repurchases may also be made under Rule 10b5-1 plans. The timing and amount of repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice. There are no assurances that any further repurchases will actually occur. |
Organization and Basis of Pre48
Organization and Basis of Presentation (Details) | Oct. 24, 2017segment | Jul. 19, 2017item | Sep. 30, 2017segment | Jun. 30, 2017itemsegment | Dec. 31, 2017 | Jul. 27, 2016 |
Ownership interest (as a percent) | 29.40% | |||||
Number of businesses Company is managed and operated as | item | 1 | 1 | ||||
Number of reportable segments | 1 | 1 | ||||
Number of operating segments | segment | 3 | 3 | ||||
Virtu Financial | ||||||
Ownership interest (as a percent) | 48.30% |
Summary of Significant Accoun49
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property and Equipment and Capitalized Software | |||
Capitalized software development costs, excluding charges recognized in relation to the IPO | $ 15,700 | $ 11,100 | $ 10,100 |
Amortization expense for capitalized software, excluding charges recognized in relation to the IPO | $ 10,100 | 10,100 | 9,600 |
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% | ||
Class B interests | |||
Property and Equipment and Capitalized Software | |||
Capitalized software development costs recognized upon the IPO | $ 40 | 90 | 9,200 |
Class B interests | East MIP | |||
Property and Equipment and Capitalized Software | |||
Amortization expense for capitalized software recognized upon the IPO | $ 70 | $ 700 | $ 8,500 |
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 | ||
Capitalized software | Minimum | |||
Property and Equipment and Capitalized Software | |||
Estimated useful lives | 1 year 6 months | ||
Capitalized software | Maximum | |||
Property and Equipment and Capitalized Software | |||
Estimated useful lives | 2 years 6 months |
Summary of Significant Accoun50
Summary of Significant Accounting Policies - Goodwill, Income Taxes and VIE (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Jul. 20, 2017USD ($) | Jul. 27, 2016 | |
Goodwill | ||||
Goodwill impairment | $ 0 | $ 0 | ||
Income Taxes | ||||
Unrecognized tax benefits | 7,300 | 0 | ||
Deferred tax asset | 125,760 | $ 193,859 | ||
Variable Interest Entity | ||||
Ownership interest (as a percent) | 29.40% | |||
Carrying amount asset | 18,799 | |||
Maximum exposure to loss | 18,799 | |||
VIE's assets | $ 41,936 | |||
Share-Based Compensation | ||||
Number of days prior to the grant that common stock and restricted stock units fair value is determined based on | 3 days | |||
JV building microwave communication networks in US and Asia | ||||
Variable Interest Entity | ||||
Number of other investors in JV | item | 9 | |||
Ownership of voting shares of JV held be each investor (as a percent) | 11.00% | |||
Ownership of equity of JV held be each investor (as a percent) | 11.00% | |||
JV building microwave communication networks in US and Europe | ||||
Variable Interest Entity | ||||
Ownership of voting shares (as a percent) | 50.00% | |||
Ownership interest (as a percent) | 50.00% | |||
KCG | ||||
Income Taxes | ||||
Deferred tax asset | $ 43,500 | $ 23,900 |
Acquisition of KCG Holdings, 51
Acquisition of KCG Holdings, Inc. (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 10, 2017 | Jul. 21, 2017 | Jul. 20, 2017 | Apr. 21, 2015 | Apr. 15, 2015 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 16, 2017 |
Business Acquisition [Line Items] | ||||||||||
Aggregate purchase price | $ 327,366 | $ 735,974 | ||||||||
Employee compensation expense | 6,400 | |||||||||
Annual incentive compensation payments | $ 35,300 | |||||||||
Temasek Investment | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Stock issuance fees | $ 7,800 | |||||||||
Senior Secured Second Lien Notes | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Face amount | $ 500,000 | |||||||||
Interest rate (as a percent) | 6.75% | |||||||||
Senior Secured Notes Due 2020 | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Face amount | $ 465,000 | |||||||||
Interest rate (as a percent) | 6.875% | |||||||||
Redemption price as a percentage of the principal amount | 103.438% | |||||||||
Class A | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Common stock, par value | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||||||
Number of shares of stock issued | 19,012,112 | 16,532,272 | ||||||||
Employee compensation expense | $ 300 | $ 10,600 | $ 13,200 | |||||||
Class A | NIH Investment Agreement | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of shares of stock issued | 338,124 | |||||||||
Aggregate purchase price | $ 5,200 | |||||||||
VFH | Class A | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Common stock, par value | $ 0.00001 | |||||||||
KCG | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Common stock, par value | $ 0.01 | |||||||||
Right to receive cash | 20 | |||||||||
Fair value ( in dollars per share) | $ 20 | |||||||||
KCG | NIH Investment Agreement | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of shares of stock issued | 39,725,979 | |||||||||
Aggregate purchase price | $ 613,500 | |||||||||
KCG | Class A | Aranda | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of shares of stock issued | 6,346,155 | |||||||||
Aggregate purchase price | $ 99,000 | |||||||||
KCG | Class A | Temasek Investment | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of shares of stock issued | 1,666,666 | |||||||||
Aggregate purchase price | $ 26,000 | |||||||||
KCG | Class A | NIH Investment Agreement | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of shares of stock issued | 338,124 | |||||||||
Aggregate purchase price | $ 5,200 |
Acquisition of KCG Holdings, 52
Acquisition of KCG Holdings, Inc. - Estimated fair values of the assets acquired and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 | Jul. 20, 2017 | Dec. 31, 2016 |
Acquisition of KCG Holdings, Inc. | ||||
Goodwill | $ 844,883 | $ 715,379 | ||
KCG | ||||
Acquisition of KCG Holdings, Inc. | ||||
Cash and equivalents | 595,669 | |||
Securities borrowed | 1,406,444 | |||
Securities purchased under agreements to resell | 16,894 | |||
Receivables from broker dealers and clearing organizations | 552,820 | |||
Financial instruments owned, at fair value | 2,095,339 | |||
Property, equipment and capitalized software (net) | 114,367 | |||
Intangibles | 174,995 | |||
Deferred taxes | 23,908 | |||
Other assets | 323,184 | |||
Total Assets | 5,303,620 | |||
Securities loaned | 166,189 | |||
Securities sold under agreements to repurchase | 841,606 | |||
Payables to broker dealers and clearing organizations | 536,653 | |||
Financial instruments sold, not yet purchased, at fair value | 1,756,647 | |||
Accounts payable and accrued expenses and other liabilities | 254,528 | |||
Debt | 480,987 | |||
Total Liabilities | 4,036,610 | |||
Total identified assets acquired, net of assumed liabilities | 1,267,010 | |||
Goodwill | 128,286 | $ 128,286 | ||
Total Purchase Price | 1,395,296 | |||
As previously reported | KCG | ||||
Acquisition of KCG Holdings, Inc. | ||||
Cash and equivalents | $ 592,993 | |||
Cash and securities segregated under federal regs | 3,000 | |||
Securities borrowed | 1,406,444 | |||
Securities purchased under agreements to resell | 16,894 | |||
Receivables from broker dealers and clearing organizations | 553,031 | |||
Financial instruments owned, at fair value | 2,095,339 | |||
Property, equipment and capitalized software (net) | 112,204 | |||
Intangibles | 156,300 | |||
Deferred taxes | 22,928 | |||
Other assets | 331,820 | |||
Total Assets | 5,290,953 | |||
Securities loaned | 166,189 | |||
Securities sold under agreements to repurchase | 841,606 | |||
Payables to broker dealers and clearing organizations | 536,653 | |||
Payables to customers | 17,583 | |||
Financial instruments sold, not yet purchased, at fair value | 1,756,647 | |||
Accounts payable and accrued expenses and other liabilities | 239,004 | |||
Debt | 480,987 | |||
Total Liabilities | 4,038,669 | |||
Total identified assets acquired, net of assumed liabilities | 1,252,284 | |||
Goodwill | 143,012 | |||
Total Purchase Price | $ 1,395,296 | |||
Changes | KCG | ||||
Acquisition of KCG Holdings, Inc. | ||||
Cash and equivalents | 2,676 | |||
Cash and securities segregated under federal regs | (3,000) | |||
Receivables from broker dealers and clearing organizations | (211) | |||
Property, equipment and capitalized software (net) | 2,163 | |||
Intangibles | 18,695 | |||
Deferred taxes | 980 | |||
Other assets | (8,636) | |||
Total Assets | 12,667 | |||
Payables to customers | (17,583) | |||
Accounts payable and accrued expenses and other liabilities | 15,524 | |||
Total Liabilities | (2,059) | |||
Total identified assets acquired, net of assumed liabilities | 14,726 | |||
Goodwill | $ (14,726) |
Acquisition of KCG Holdings, 53
Acquisition of KCG Holdings, Inc. - Intangible assets (Details) - USD ($) $ in Thousands | Jul. 20, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | $ 111,224 | $ 992 | |
Goodwill | 844,883 | 715,379 | |
Deferred tax asset | 125,760 | 193,859 | |
Customer relationships | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | 47,178 | ||
Favorable leases | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | 5,487 | ||
VFH | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Deferred tax asset | 124,631 | 192,961 | |
KCG | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | $ 174,995 | 50,800 | |
Goodwill | 128,286 | 128,286 | |
Total | 303,281 | ||
Goodwill deductible for tax purposes | 0 | ||
Deferred tax asset | 23,900 | 43,500 | |
KCG | Technology | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | 67,700 | ||
KCG | Customer relationships | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | 94,000 | ||
KCG | Trade names | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | $ 1,000 | ||
Amortization Years | 10 years | ||
KCG | Favorable leases | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | $ 5,895 | ||
KCG | Exchange memberships | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Intangible assets | $ 6,400 | ||
Minimum | KCG | Technology | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Amortization Years | 1 year | ||
Minimum | KCG | Customer relationships | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Amortization Years | 13 years | ||
Minimum | KCG | Favorable leases | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Amortization Years | 2 years | ||
Maximum | KCG | Technology | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Amortization Years | 6 years | ||
Maximum | KCG | Customer relationships | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Amortization Years | 17 years | ||
Maximum | KCG | Favorable leases | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Amortization Years | 15 years | ||
Market Making | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Goodwill | $ 96,200 | 755,292 | 657,985 |
Execution Services | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Goodwill | $ 89,591 | $ 57,394 | |
Technology and Execution Services | |||
Amounts preliminarily allocated to intangible assets, the amortization period and goodwill | |||
Goodwill | $ 32,100 |
Acquisition of KCG Holdings, 54
Acquisition of KCG Holdings, Inc. - Pro forma results (Details) - USD ($) $ in Thousands | 4 Months Ended | 5 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 15, 2015 | Dec. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Business Acquisition, Pro Forma Information [Abstract] | ||||||
Revenues | $ 1,027,982 | $ 702,272 | $ 796,213 | |||
Net income (loss) | $ 83,147 | $ 114,343 | 18,898 | 158,340 | 197,490 | |
Net income (loss) attributable to common stockholders | 2,939 | 32,980 | 20,887 | |||
Pro Forma | ||||||
Business Acquisition, Pro Forma Information [Abstract] | ||||||
Revenues | 1,528,588 | 2,153,008 | ||||
Net income (loss) | (14,151) | 443,101 | ||||
Net income (loss) attributable to common stockholders | (5,219) | 163,407 | ||||
VFH | ||||||
Business Acquisition, Pro Forma Information [Abstract] | ||||||
Revenues | 86,599 | 445 | ||||
Net income (loss) | 2,939 | 32,980 | 104,034 | |||
Net income (loss) attributable to common stockholders | $ 2,939 | $ 32,980 | $ 20,887 | |||
Advisory and other professional fees | $ 24,200 | |||||
KCG | ||||||
Business Acquisition, Pro Forma Information [Abstract] | ||||||
Revenues | 379,203 | |||||
Income (loss) before income taxes | 14,340 | |||||
Advisory and other professional fees | $ 22,500 |
Business Held for Sale (Details
Business Held for Sale (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Oct. 31, 2017 |
Assets and liabilities of businesses held for sale | ||
Total assets | $ 55,070 | |
Held for Sale | ||
Assets and liabilities of businesses held for sale | ||
Receivables from broker dealers and clearing organizations | 3,383 | |
Capitalized software | 518 | |
Other assets | 413 | |
Total assets | 55,070 | |
Payable to brokers, dealers and clearing organizations | 50 | |
Accrued expenses and other liabilities | 678 | |
Total liabilities | 728 | |
Technology | Held for Sale | ||
Assets and liabilities of businesses held for sale | ||
Intangibles | 5,982 | |
Customer relationships | Held for Sale | ||
Assets and liabilities of businesses held for sale | ||
Intangibles | 43,819 | |
Trade names | Held for Sale | ||
Assets and liabilities of businesses held for sale | ||
Intangibles | $ 955 | |
BondPoint | ICE | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Purchase price payable | $ 400,000 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation (Details) - USD ($) $ in Thousands | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 15, 2015 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of net income before minority interest to net income available for common stockholders | |||||
Income before income taxes and non-controlling interest | $ 113,164 | $ 179,591 | $ 215,929 | ||
Provision for (benefit from) income taxes | 94,266 | 21,251 | 18,439 | ||
Net income (loss) | $ 83,147 | $ 114,343 | 18,898 | 158,340 | 197,490 |
Net income allocable to members of Virtu Financial (for the period January 1, 2015 through April 15, 2015) | $ (83,147) | ||||
Noncontrolling interest | $ (93,456) | (15,959) | (125,360) | (176,603) | |
Net income available for common stockholders | $ 2,939 | $ 32,980 | $ 20,887 |
Earnings Per Share - Basic (Det
Earnings Per Share - Basic (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jul. 27, 2016 | |
Basic earnings per share | ||||
Net income available for common stockholders | $ 2,939 | $ 32,980 | $ 20,887 | |
Less: Dividends and undistributed earnings allocated to participating securities | (1,326) | (809) | ||
Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities | $ 1,613 | $ 32,171 | $ 20,887 | |
Weighted average shares of common stock outstanding | ||||
Outstanding | 62,579,147 | 38,539,091 | 34,964,312 | |
Ownership interest (as a percent) | 29.40% | |||
Basic Earnings per share | $ 0.03 | $ 0.83 | $ 0.60 | |
Class A | ||||
Weighted average shares of common stock outstanding | ||||
Outstanding | 62,579,147 | 38,539,091 | 34,964,312 | |
Basic Earnings per share | $ 0.03 | $ 0.83 | $ 0.60 | |
Virtu Financial | ||||
Weighted average shares of common stock outstanding | ||||
Ownership interest (as a percent) | 48.30% |
Earnings Per Share - Diluted (D
Earnings Per Share - Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Diluted earnings per share | |||
Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities | $ 1,613 | $ 32,171 | $ 20,887 |
Weighted average shares of common stock outstanding | |||
Issued and outstanding | 62,579,147 | 38,539,091 | 34,964,312 |
Weighted average number of shares of common stock outstanding | 62,579,147 | 38,539,091 | 35,339,585 |
Diluted Earnings per share | $ 0.03 | $ 0.83 | $ 0.59 |
Anti-dilutive shares excluded from computation of EPS | 1,740,630 | 743,096 | 0 |
Class A | |||
Weighted average shares of common stock outstanding | |||
Issued and outstanding | 62,579,147 | 38,539,091 | 34,964,312 |
2015 Management Incentive Plan | Class A | |||
Weighted average shares of common stock outstanding | |||
Issuable pursuant to 2015 Management Incentive Plan | 375,273 |
Tax Receivable Agreements (Deta
Tax Receivable Agreements (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Apr. 15, 2015 | Feb. 28, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Aug. 31, 2017 |
Payment on applicable cash tax savings (as a percent) | 85.00% | |||||||
First payment due after filing of company's tax return | 120 days | |||||||
First payment made | $ 7,000 | |||||||
Deferred tax assets related to exchange of units | $ 220,800 | |||||||
Minimum tax receivable agreement obligation over the agreed period | 300 | |||||||
Maximum tax receivable agreement obligation over the agreed period | $ 12,800 | |||||||
Period over which the obligations are to be settled | 15 years | |||||||
Reduction of paid-in capital for the difference between TRA liability and related deferred tax asset. | $ 19,900 | |||||||
Deferred tax asset recorded in connection with a stock offering | $ 10,800 | |||||||
Amount of payment liability pursuant to tax receivable agreements | 9,300 | |||||||
Increase in additional paid-in capital related to tax receivable agreements | $ 1,500 | |||||||
U.S. federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | |||||
Reduction to additional paid-in capital as a result of differences between estimate and tax returns | $ 86,600 | |||||||
Deferred tax assets | 101,600 | $ 185,700 | ||||||
Tax receivable agreement obligations | $ 147,040 | $ 231,404 | ||||||
Forecast | ||||||||
U.S. federal statutory rate (as a percent) | 21.00% | 21.00% |
Goodwill and Intangible Asset60
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | Oct. 24, 2017segment | Jul. 19, 2017item | May 03, 2017USD ($) | Sep. 30, 2017segment | Jun. 30, 2017USD ($)itemsegment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($) | Jul. 20, 2017USD ($) | May 03, 2017USD ($) | Dec. 31, 2016USD ($) |
Changes in goodwill | |||||||||||
Number of businesses Company is managed and operated as | item | 1 | 1 | |||||||||
Number of reportable segments | 1 | 1 | |||||||||
Number of operating segments | segment | 3 | 3 | |||||||||
Balance at the beginning of the period | $ 715,379 | $ 715,379 | |||||||||
Additions | 129,504 | ||||||||||
Balance at the end of the period | 844,883 | $ 715,379 | |||||||||
Purchase price | 5,594 | ||||||||||
Goodwill | 715,379 | 715,379 | 715,379 | $ 844,883 | $ 715,379 | ||||||
Goodwill impairment | 0 | 0 | |||||||||
Gross Carrying Amount | 111,900 | ||||||||||
Accumulated Amortization | 123,408 | 110,908 | |||||||||
Intangible assets | 111,224 | 992 | |||||||||
Teza Technologies strategic telecommunications assets | |||||||||||
Changes in goodwill | |||||||||||
Balance at the end of the period | $ 1,200 | ||||||||||
Purchase price | 5,600 | ||||||||||
Goodwill | $ 1,200 | $ 1,200 | |||||||||
Intangibles | $ 2,000 | ||||||||||
KCG | |||||||||||
Changes in goodwill | |||||||||||
Balance at the end of the period | 128,286 | ||||||||||
Goodwill | 128,286 | 128,286 | $ 128,286 | ||||||||
Intangibles | 174,995 | ||||||||||
Gross Carrying Amount | 53,700 | ||||||||||
Accumulated Amortization | 2,900 | ||||||||||
Intangible assets | 50,800 | 174,995 | |||||||||
Market Making | |||||||||||
Changes in goodwill | |||||||||||
Balance at the beginning of the period | 657,985 | 657,985 | |||||||||
Additions | 97,307 | ||||||||||
Balance at the end of the period | 755,292 | 657,985 | |||||||||
Goodwill | 657,985 | 657,985 | 657,985 | 755,292 | $ 96,200 | 657,985 | |||||
Execution Services | |||||||||||
Changes in goodwill | |||||||||||
Balance at the beginning of the period | 57,394 | 57,394 | |||||||||
Additions | 32,197 | ||||||||||
Balance at the end of the period | 89,591 | 57,394 | |||||||||
Goodwill | $ 57,394 | $ 57,394 | $ 57,394 | $ 89,591 | $ 57,394 |
Goodwill and Intangible Asset61
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Acquired intangible assets | |||
Gross Carrying Amount | $ 111,900 | ||
Accumulated Amortization | $ 123,408 | 110,908 | |
Net Carrying Amount | 111,224 | 992 | |
Gross Carrying Amount | 234,633 | ||
Net Carrying Amount | 111,224 | ||
Amortization expense relating to finite-lived intangible assets | 15,447 | 211 | $ 211 |
Exchange memberships | |||
Acquired intangible assets | |||
Indefinite-lived intangibles | 5,838 | ||
Purchased technology | |||
Acquired intangible assets | |||
Gross Carrying Amount | 110,000 | 110,000 | |
Accumulated Amortization | $ 110,000 | $ 110,000 | |
Purchased technology | Minimum | |||
Acquired intangible assets | |||
Useful Lives | 1 year 4 months 24 days | 1 year 4 months 24 days | |
Purchased technology | Maximum | |||
Acquired intangible assets | |||
Useful Lives | 2 years 6 months | 2 years 6 months | |
ETF issuer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 950 | $ 950 | |
Accumulated Amortization | 559 | 454 | |
Net Carrying Amount | $ 391 | $ 496 | |
Useful Lives | 9 years | 9 years | |
ETF buyer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 950 | $ 950 | |
Accumulated Amortization | 559 | 454 | |
Net Carrying Amount | $ 390 | $ 496 | |
Useful Lives | 9 years | 9 years | |
Leases | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 1,800 | ||
Accumulated Amortization | 397 | ||
Net Carrying Amount | $ 1,403 | ||
Useful Lives | 3 years | ||
FCC licenses | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 200 | ||
Accumulated Amortization | 19 | ||
Net Carrying Amount | $ 181 | ||
Useful Lives | 7 years | ||
Technology | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 60,000 | ||
Accumulated Amortization | 9,644 | ||
Net Carrying Amount | $ 50,356 | ||
Technology | Minimum | |||
Acquired intangible assets | |||
Useful Lives | 1 year | ||
Technology | Maximum | |||
Acquired intangible assets | |||
Useful Lives | 6 years | ||
Customer relationships | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 49,000 | ||
Accumulated Amortization | 1,822 | ||
Net Carrying Amount | $ 47,178 | ||
Customer relationships | Minimum | |||
Acquired intangible assets | |||
Useful Lives | 12 years | ||
Customer relationships | Maximum | |||
Acquired intangible assets | |||
Useful Lives | 17 years | ||
Favorable leases | |||
Acquired intangible assets | |||
Gross Carrying Amount | $ 5,895 | ||
Accumulated Amortization | 408 | ||
Net Carrying Amount | $ 5,487 | ||
Useful Lives | 7 years |
Receivables from_Payables to 62
Receivables from/Payables to Broker-Dealers and Clearing Organizations (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Due from prime brokers | $ 219,573 | $ 91,476 |
Deposits with clearing organizations | 112,847 | 21,995 |
Net equity with futures commission merchants | 203,711 | 213,030 |
Unsettled trades with clearing organization | 173,778 | 44,312 |
Securities failed to deliver | 248,088 | 77,915 |
Commissions and fees | 14,021 | |
Total receivables from broker-dealers and clearing organizations | 972,018 | 448,728 |
Liabilities | ||
Due to prime brokers | 197,439 | 227,335 |
Net equity with futures commission merchants | 44,526 | 38,838 |
Unsettled trades with clearing organization | 420,029 | 429,800 |
Securities failed to receive | 51,143 | 5 |
Commissions and fees | 3,068 | |
Total payables to broker-dealers and clearing organizations | 716,205 | 695,978 |
Outstanding principal balance | $ 205,700 | $ 309,100 |
Collateralized Transactions (De
Collateralized Transactions (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 595,043 | $ 143,883 |
Securities received as collateral: | ||
Securities borrowed | 1,415,793 | 213,203 |
Total amounts related to collateralized transactions | 1,415,793 | 213,203 |
Equity securities | ||
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | 586,251 | 128,202 |
US and non-US government obligations | ||
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | 99 | |
Exchange traded notes | ||
Financial instruments owned and pledged | ||
Financial instruments owned and pledged, where counterparty has right to repledge | $ 8,693 | $ 15,681 |
Borrowings - Broker-Dealer Cred
Borrowings - Broker-Dealer Credit Facilities (Details) | 12 Months Ended | ||||||
Dec. 31, 2017USD ($)subsidiary | Dec. 31, 2016USD ($)subsidiary | Dec. 31, 2015USD ($) | Dec. 31, 2017item | Dec. 31, 2017 | Dec. 31, 2017USD ($) | Nov. 03, 2017USD ($)item | |
Long-Term Borrowings | |||||||
Borrowing Outstanding | $ 1,431,059,000 | ||||||
Borrowing Outstanding, net | $ 564,957,000 | 1,388,548,000 | |||||
Number of broker-dealer subsidiaries | 3 | 3 | 3 | ||||
Interest expense | $ 64,107,000 | $ 28,327,000 | $ 29,254,000 | ||||
LIBOR rate | |||||||
Long-Term Borrowings | |||||||
Interest rate margin (as a percent) | 1.25% | ||||||
Broker-Dealer Credit Facilities | |||||||
Long-Term Borrowings | |||||||
Financing Available | 200,000,000 | 650,000,000 | $ 500 | ||||
Number of borrowing bases | item | 2 | ||||||
Borrowing Outstanding | 25,000,000 | 32,000,000 | |||||
Deferred Debt Issuance Cost | (4,117,000) | ||||||
Borrowing Outstanding, net | 25,000,000 | 27,883,000 | |||||
Number of secured credit facilities | item | 2 | ||||||
Number of broker-dealer subsidiaries the committed facility is available to | item | 2 | ||||||
Maximum borrowing capacity | 25,000,000 | ||||||
Commitment fee (as a percent) | 0.50% | ||||||
Interest expense | $ 1,719,000 | 1,232,000 | 918,000 | ||||
Broker-Dealer Credit Facilities | LIBOR rate | |||||||
Long-Term Borrowings | |||||||
Interest rate margin (as a percent) | 2.50% | ||||||
Broker-Dealer Credit Facility on an uncommitted basis | |||||||
Long-Term Borrowings | |||||||
Financing Available | 125,000,000 | 150,000,000 | |||||
Borrowing Outstanding | 25,000,000 | 25,000,000 | |||||
Borrowing Outstanding, net | $ 25,000,000 | 25,000,000 | |||||
Number of secured credit facilities | item | 1 | ||||||
Interest rate (as a percent) | 1.66% | 2.42% | |||||
Interest expense | $ 1,667,000 | $ 1,191,000 | 903,000 | ||||
Broker-Dealer Credit Facility on committed basis | |||||||
Long-Term Borrowings | |||||||
Financing Available | 75,000,000 | ||||||
Number of secured credit facilities | item | 1 | ||||||
Interest expense | 33,000 | 41,000 | 15,000 | ||||
Short-Term Credit Facilities | |||||||
Long-Term Borrowings | |||||||
Financing Available | 493,000,000 | 543,000,000 | |||||
Borrowing Outstanding | 309,086,000 | 205,677,000 | |||||
Interest expense | 6,600,000 | 6,300,000 | $ 5,500,000 | ||||
Revolving credit facility | |||||||
Long-Term Borrowings | |||||||
Financing Available | 500,000,000 | ||||||
Borrowing Outstanding | 7,000,000 | ||||||
Deferred Debt Issuance Cost | (4,117,000) | ||||||
Borrowing Outstanding, net | 2,883,000 | ||||||
Interest rate (as a percent) | 2.81% | ||||||
Interest expense | $ 19,000 | ||||||
SBI Bonds | |||||||
Long-Term Borrowings | |||||||
Borrowing Outstanding | 29,925,000 | 31,059,000 | |||||
Deferred Debt Issuance Cost | (71,000) | (47,000) | |||||
Borrowing Outstanding, net | $ 29,854,000 | 31,012,000 | |||||
Maximum | Broker-Dealer Credit Facilities | |||||||
Long-Term Borrowings | |||||||
Maximum borrowing capacity | 100,000,000 | ||||||
Minimum | Broker-Dealer Credit Facilities | |||||||
Long-Term Borrowings | |||||||
Maximum borrowing capacity | $ 40,000,000 |
Borrowings - Short-Term Credit
Borrowings - Short-Term Credit Facilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Short-Term Credit Facilities | |||
Borrowing Outstanding | $ 1,431,059 | ||
Interest expense | $ 64,107 | $ 28,327 | $ 29,254 |
Short-Term Credit Facilities | |||
Short-Term Credit Facilities | |||
Weighted average interest rate | 3.86% | 3.12% | |
Financing Available | $ 543,000 | $ 493,000 | |
Borrowing Outstanding | 205,677 | 309,086 | |
Interest expense | 6,600 | $ 6,300 | $ 5,500 |
Revolving credit facility | |||
Short-Term Credit Facilities | |||
Financing Available | 500,000 | ||
Borrowing Outstanding | 7,000 | ||
Interest expense | $ 19 |
Borrowings - Long-Term Borrowin
Borrowings - Long-Term Borrowings (Details) $ in Thousands, ¥ in Billions | 12 Months Ended | ||||||||||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017JPY (¥) | Dec. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 16, 2017USD ($) | Dec. 31, 2016JPY (¥) | Dec. 31, 2016USD ($) | Jul. 25, 2016JPY (¥) | Jun. 25, 2016USD ($) | |
Long-Term Borrowings | |||||||||||
Repayments of long-term debt | $ 256,473 | $ 3,825 | $ 2,914 | ||||||||
Discount | $ 1,438 | $ 1,350 | |||||||||
Debt Issue Cost Related To Debt Refinancing | 10,460 | 5,579 | |||||||||
Outstanding principal amount | 1,431,059 | ||||||||||
Interest expense | $ 64,107 | 28,327 | 29,254 | ||||||||
Reconciliation of senior secured credit facility | |||||||||||
Outstanding principal | 1,431,059 | ||||||||||
Discount | (1,438) | (1,350) | |||||||||
Long term borrowings | 1,388,548 | $ 564,957 | |||||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||||
2,020 | 31,059 | ||||||||||
2021 and thereafter | 1,400,000 | ||||||||||
Total principal of long-term borrowings | 1,431,059 | ||||||||||
LIBOR rate | |||||||||||
Long-Term Borrowings | |||||||||||
Interest rate added to variable rate (as a percent) | 1.25% | ||||||||||
Revolving credit facility | |||||||||||
Long-Term Borrowings | |||||||||||
Interest rate (as a percent) | 5.50% | 5.50% | |||||||||
Outstanding principal amount | 7,000 | ||||||||||
Interest expense | $ 19 | ||||||||||
Deferred financing fees | 4,117 | ||||||||||
Reconciliation of senior secured credit facility | |||||||||||
Interest rate (as a percent) | 5.50% | 5.50% | |||||||||
Outstanding principal | 7,000 | ||||||||||
Net deferred financing fees | (4,117) | ||||||||||
Long term borrowings | 2,883 | ||||||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||||
Total principal of long-term borrowings | $ 7,000 | ||||||||||
Broker-Dealer Credit Facility on committed basis | |||||||||||
Long-Term Borrowings | |||||||||||
Interest expense | 33 | 41 | $ 15 | ||||||||
Senior Secured Second Lien Notes | |||||||||||
Long-Term Borrowings | |||||||||||
Face amount | $ 500,000 | ||||||||||
Interest rate (as a percent) | 6.75% | ||||||||||
Reconciliation of senior secured credit facility | |||||||||||
Interest rate (as a percent) | 6.75% | ||||||||||
Senior Secured Credit Facility | |||||||||||
Long-Term Borrowings | |||||||||||
Interest rate (as a percent) | 4.25% | 4.25% | |||||||||
Discount | $ 956 | ||||||||||
Outstanding principal amount | 540,000 | ||||||||||
Deferred financing fees | $ 3,941 | ||||||||||
Reconciliation of senior secured credit facility | |||||||||||
Interest rate (as a percent) | 4.25% | 4.25% | |||||||||
Outstanding principal | $ 540,000 | ||||||||||
Discount | (956) | ||||||||||
Net deferred financing fees | (3,941) | ||||||||||
Long term borrowings | 535,103 | ||||||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||||
Total principal of long-term borrowings | 540,000 | ||||||||||
Senior Secured Credit Facility Fourth Amendment | |||||||||||
Long-Term Borrowings | |||||||||||
Interest rate (as a percent) | 5.13% | 5.13% | |||||||||
Repayments of long-term debt | 250,000 | ||||||||||
Discount | $ 999 | ||||||||||
Accelerated unamortized financing costs | 10,500 | ||||||||||
Outstanding principal amount | 900,000 | $ 1,150 | |||||||||
Deferred financing fees | $ 18,504 | ||||||||||
Reconciliation of senior secured credit facility | |||||||||||
Interest rate (as a percent) | 5.13% | 5.13% | |||||||||
Outstanding principal | $ 900,000 | 1,150 | |||||||||
Discount | (999) | ||||||||||
Net deferred financing fees | (18,504) | ||||||||||
Long term borrowings | 880,497 | ||||||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||||
Total principal of long-term borrowings | $ 900,000 | 1,150 | |||||||||
Senior Secured Credit Facility Fourth Amendment | Senior Secured Second Lien Notes | |||||||||||
Long-Term Borrowings | |||||||||||
Interest rate (as a percent) | 6.75% | 6.75% | |||||||||
Outstanding principal amount | $ 500,000 | ||||||||||
Deferred financing fees | $ 22,961 | ||||||||||
Reconciliation of senior secured credit facility | |||||||||||
Interest rate (as a percent) | 6.75% | 6.75% | |||||||||
Outstanding principal | $ 500,000 | ||||||||||
Net deferred financing fees | (22,961) | ||||||||||
Long term borrowings | 477,039 | ||||||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||||
Total principal of long-term borrowings | 500,000 | ||||||||||
Total Long-term borrowings | |||||||||||
Long-Term Borrowings | |||||||||||
Discount | 999 | 956 | |||||||||
Outstanding principal amount | 1,431,059 | 569,925 | |||||||||
Deferred financing fees | 41,512 | 4,012 | |||||||||
Reconciliation of senior secured credit facility | |||||||||||
Outstanding principal | 1,431,059 | 569,925 | |||||||||
Discount | (999) | (956) | |||||||||
Net deferred financing fees | (41,512) | (4,012) | |||||||||
Long term borrowings | 1,388,548 | 564,957 | |||||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||||
Total principal of long-term borrowings | $ 1,431,059 | $ 569,925 | |||||||||
SBI Bonds | |||||||||||
Long-Term Borrowings | |||||||||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | 5.00% | |||||||
Outstanding principal amount | $ 31,059 | $ 29,925 | |||||||||
Deferred financing fees | $ 47 | $ 71 | |||||||||
Reconciliation of senior secured credit facility | |||||||||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | 5.00% | |||||||
Outstanding principal | $ 31,059 | $ 29,925 | |||||||||
Net deferred financing fees | (47) | (71) | |||||||||
Long term borrowings | 31,012 | 29,854 | |||||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||||
Total principal of long-term borrowings | 31,059 | 29,925 | |||||||||
VFH | Senior Secured Credit Facility | |||||||||||
Long-Term Borrowings | |||||||||||
Face amount | $ 100,000 | ||||||||||
VFH | SBI Bonds | |||||||||||
Long-Term Borrowings | |||||||||||
Face amount | ¥ 3.5 | $ 33,100 | |||||||||
Loss due to change in currency rates | $ 1,100 | $ 3,200 | |||||||||
Outstanding principal amount | ¥ 3.5 | 31,000 | ¥ 3.5 | 29,900 | |||||||
Reconciliation of senior secured credit facility | |||||||||||
Outstanding principal | 3.5 | 31,000 | 3.5 | 29,900 | |||||||
Aggregate future required minimum principal payments based on the terms of loan | |||||||||||
Total principal of long-term borrowings | ¥ 3.5 | $ 31,000 | ¥ 3.5 | $ 29,900 |
Financial Assets and Liabilit67
Financial Assets and Liabilities - Level 3 financial instruments (Details) $ in Thousands | Jul. 27, 2017USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Jul. 27, 2016 |
Fair value measurements measured on a recurring basis | ||||
Transfers of financial assets between levels | $ 0 | $ 0 | ||
Assets | ||||
Financial instruments owned, at fair value | 2,117,579 | 1,683,999 | ||
Financial instruments owned, pledged as collateral | 595,043 | 143,883 | ||
Other assets | 98,364 | 36,480 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 2,384,598 | 1,349,155 | ||
Equity method investment | ||||
Ownership interest (as a percent) | 29.40% | |||
Payment for minority interest | 38,754 | |||
Payment receivable | 50,000 | |||
Annual payment receivable | 6,800 | |||
Remaining additional potential payments | 56,800 | |||
Fair value of remaining additional potential payments | 55,800 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning Balance | $ 36,031 | |||
Purchases | 38,754 | |||
Total Realized and Unrealized Gains / (Losses) | (3,117) | |||
Net Transfers into (out of) Level 3 | 394 | |||
Ending Balance | 36,031 | |||
Change in Net Unrealized Gains / (Losses) On Investments Held | (3,117) | |||
SBI | ||||
Equity method investment | ||||
Ownership interest (as a percent) | 29.90% | |||
Payment for minority interest | $ 38,800 | |||
Discount rate applied to cash flow forecasts to determine initial fair value of equity method investment. | 15.00% | |||
Market approach average price/earnings multiples of comparable companies to corroborate the income approach | item | 14 | |||
Time period of projected income to determine fair value of equity method investment | 5 years | |||
Maximum | ||||
Equity method investment | ||||
Annual payment receivable | $ 6,600 | |||
Equity securities | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 586,251 | 128,202 | ||
US and non-US government obligations | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 99 | |||
Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, pledged as collateral | 8,693 | 15,681 | ||
Equity investment | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning Balance | 36,031 | |||
Purchases | 38,754 | |||
Total Realized and Unrealized Gains / (Losses) | (3,117) | |||
Net Transfers into (out of) Level 3 | 394 | |||
Ending Balance | 36,031 | |||
Change in Net Unrealized Gains / (Losses) On Investments Held | (3,117) | |||
Other | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Purchases | 3,000 | |||
Settlement | (3,000) | |||
Fair value measurements measured on a recurring basis | ||||
Assets | ||||
Financial instruments owned, at fair value, counterparty and cash collateral netting | (2,027,697) | (1,140,239) | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value, counterparty and cash collateral netting | (2,024,991) | (1,009,038) | ||
Fair value measurements measured on a recurring basis | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value, counterparty and cash collateral netting | (2,027,697) | (1,140,239) | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value, counterparty and cash collateral netting | (2,024,991) | |||
Fair value measurements measured on a recurring basis | Options | ||||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value, counterparty and cash collateral netting | (1,009,038) | |||
Fair value measurements measured on a recurring basis | Fair Value | ||||
Assets | ||||
Financial instruments owned, at fair value | 2,117,579 | 1,683,999 | ||
Financial instruments owned, pledged as collateral | 595,043 | 143,883 | ||
Other assets | 98,364 | 36,480 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 2,384,598 | 1,349,155 | ||
Fair value measurements measured on a recurring basis | Fair Value | Interest rate swaps | ||||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 80 | |||
Fair value measurements measured on a recurring basis | Fair Value | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | 17,790 | 7,022 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 7,026 | |||
Fair value measurements measured on a recurring basis | Fair Value | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 7,045 | 141 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 5,839 | |||
Fair value measurements measured on a recurring basis | Fair Value | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,926,591 | 1,629,037 | ||
Financial instruments owned, pledged as collateral | 586,251 | 128,202 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 2,203,432 | 1,330,331 | ||
Fair value measurements measured on a recurring basis | Fair Value | US and non-US government obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 22,783 | 10,765 | ||
Financial instruments owned, pledged as collateral | 99 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 31,421 | |||
Fair value measurements measured on a recurring basis | Fair Value | Corporate Bonds | ||||
Assets | ||||
Financial instruments owned, at fair value | 60,975 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 81,118 | |||
Fair value measurements measured on a recurring basis | Fair Value | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, at fair value | 82,395 | 37,034 | ||
Financial instruments owned, pledged as collateral | 8,693 | 15,681 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 55,762 | |||
Fair value measurements measured on a recurring basis | Fair Value | Exchange stock | ||||
Assets | ||||
Other assets | 1,952 | 449 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 18,744 | |||
Fair value measurements measured on a recurring basis | Fair Value | Equity investment | ||||
Assets | ||||
Other assets | 40,588 | 36,031 | ||
Fair value measurements measured on a recurring basis | Fair Value | Other | ||||
Assets | ||||
Other assets | 55,824 | |||
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 | 785,185 | 1,634,083 | ||
Financial instruments owned, pledged as collateral | 410,851 | 143,883 | ||
Other assets | 1,952 | 449 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 874,109 | 1,342,437 | ||
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 7,045 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 5,839 | |||
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 | 758,596 | 1,597,049 | ||
Financial instruments owned, pledged as collateral | 410,670 | 128,202 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 847,816 | 1,323,693 | ||
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | US and non-US government obligations | ||||
Assets | ||||
Financial instruments owned, at fair value | 5,968 | |||
Financial instruments owned, pledged as collateral | 99 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 18,940 | |||
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 | 13,576 | 37,034 | ||
Financial instruments owned, pledged as collateral | 82 | 15,681 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,514 | |||
Fair value measurements measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Exchange stock | ||||
Assets | ||||
Other assets | 1,952 | 449 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 18,744 | |||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Financial instruments owned, at fair value | 3,360,091 | 1,190,155 | ||
Financial instruments owned, pledged as collateral | 184,192 | |||
Other assets | 55,824 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 3,535,480 | 1,015,756 | ||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate swaps | ||||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 80 | |||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Currency forwards | ||||
Assets | ||||
Financial instruments owned, at fair value | 2,045,487 | 1,147,261 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 2,032,017 | |||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Options | ||||
Assets | ||||
Financial instruments owned, at fair value | 141 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,009,038 | |||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Equity securities | ||||
Assets | ||||
Financial instruments owned, at fair value | 1,167,995 | 31,988 | ||
Financial instruments owned, pledged as collateral | 175,581 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 1,355,616 | 6,638 | ||
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 | 16,815 | 10,765 | ||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 12,481 | |||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Corporate Bonds | ||||
Assets | ||||
Financial instruments owned, at fair value | 60,975 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 81,118 | |||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Exchange traded notes | ||||
Assets | ||||
Financial instruments owned, at fair value | 68,819 | |||
Financial instruments owned, pledged as collateral | 8,611 | |||
Liabilities | ||||
Financial instruments sold, not yet purchased, at fair value | 54,248 | |||
Fair value measurements measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Other | ||||
Assets | ||||
Other assets | 55,824 | |||
Fair value measurements measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Other assets | 40,588 | 36,031 | ||
Fair value measurements measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Equity investment | ||||
Assets | ||||
Other assets | 40,588 | 36,031 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning Balance | 36,031 | |||
Purchases | 3,000 | |||
Total Realized and Unrealized Gains / (Losses) | 4,557 | |||
Settlement | (3,000) | |||
Ending Balance | 40,588 | $ 36,031 | ||
Change in Net Unrealized Gains / (Losses) On Investments Held | $ 4,557 |
Financial Assets and Liabilit68
Financial Assets and Liabilities - Not measured at fair value (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Financial Instruments Not Measured at Fair Value | ||||
Cash and cash equivalents | $ 532,887 | $ 181,415 | $ 163,235 | $ 75,864 |
Securities borrowed | 1,471,172 | 220,005 | ||
Receivables from broker dealers and clearing organizations: | ||||
Due from prime brokers | 219,573 | 91,476 | ||
Unsettled trades with clearing organization | 112,847 | 21,995 | ||
Securities failed to deliver | 248,088 | 77,915 | ||
Commissions and fees | 14,021 | |||
Total receivables from broker-dealers and clearing organizations | 972,018 | 448,728 | ||
Total Assets | 7,320,006 | 3,692,390 | ||
Short term borrowings | 27,883 | 25,000 | ||
Long-term borrowings | 1,388,548 | 564,957 | ||
Securities loaned | 754,687 | 222,203 | ||
Securities sold under agreements to repurchase | 390,642 | |||
Payables to broker dealer and clearing organizations | ||||
Due to prime brokers | 197,439 | 227,335 | ||
Securities failed to receive | 51,143 | 5 | ||
Commissions and fees | 3,068 | |||
Total payables to broker-dealers and clearing organizations | 716,205 | 695,978 | ||
Total Liabilities | 6,168,428 | 3,157,978 | ||
Carrying Value | ||||
Financial Instruments Not Measured at Fair Value | ||||
Cash and cash equivalents | 532,887 | 181,415 | ||
Securities borrowed | 1,471,172 | 220,005 | ||
Receivables from broker dealers and clearing organizations: | ||||
Total receivables from broker-dealers and clearing organizations | 972,018 | 448,728 | ||
Total Assets | 2,976,077 | 850,148 | ||
Short term borrowings | 27,883 | 25,000 | ||
Long-term borrowings | 1,388,548 | 564,957 | ||
Securities loaned | 754,687 | 222,203 | ||
Securities sold under agreements to repurchase | 390,642 | |||
Payables to broker dealer and clearing organizations | ||||
Total payables to broker-dealers and clearing organizations | 716,205 | 695,978 | ||
Total Liabilities | 3,277,965 | 1,508,138 | ||
Fair value measurements not measured on a recurring basis | Fair Value | ||||
Financial Instruments Not Measured at Fair Value | ||||
Cash and cash equivalents | 532,887 | 181,415 | ||
Securities borrowed | 1,471,172 | 220,005 | ||
Receivables from broker dealers and clearing organizations: | ||||
Total receivables from broker-dealers and clearing organizations | 972,018 | 972,018 | ||
Total Assets | 2,976,077 | 1,373,438 | ||
Short term borrowings | 27,883 | 25,000 | ||
Long-term borrowings | 1,465,489 | 564,957 | ||
Securities loaned | 754,687 | 222,203 | ||
Securities sold under agreements to repurchase | 390,642 | |||
Payables to broker dealer and clearing organizations | ||||
Total payables to broker-dealers and clearing organizations | 716,205 | 695,978 | ||
Total Liabilities | 3,354,906 | 1,508,138 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value measurements not measured on a recurring basis | Fair Value | ||||
Financial Instruments Not Measured at Fair Value | ||||
Cash and cash equivalents | 532,887 | 181,415 | ||
Receivables from broker dealers and clearing organizations: | ||||
Total receivables from broker-dealers and clearing organizations | 36,513 | |||
Total Assets | 569,400 | 181,415 | ||
Payables to broker dealer and clearing organizations | ||||
Total payables to broker-dealers and clearing organizations | 2,925 | |||
Total Liabilities | 2,925 | |||
Significant Other Observable Inputs (Level 2) | Fair value measurements not measured on a recurring basis | Fair Value | ||||
Financial Instruments Not Measured at Fair Value | ||||
Securities borrowed | 1,471,172 | 220,005 | ||
Receivables from broker dealers and clearing organizations: | ||||
Total receivables from broker-dealers and clearing organizations | 935,505 | 972,018 | ||
Total Assets | 2,406,677 | 1,192,023 | ||
Short term borrowings | 27,883 | 25,000 | ||
Long-term borrowings | 1,465,489 | 564,957 | ||
Securities loaned | 754,687 | 222,203 | ||
Securities sold under agreements to repurchase | 390,642 | |||
Payables to broker dealer and clearing organizations | ||||
Total payables to broker-dealers and clearing organizations | 713,280 | 695,978 | ||
Total Liabilities | $ 3,351,981 | 1,508,138 | ||
Significant Unobservable Inputs (Level 3) | Fair value measurements not measured on a recurring basis | Fair Value | ||||
Receivables from broker dealers and clearing organizations: | ||||
Total Assets | $ 0 |
Financial Assets and Liabilit69
Financial Assets and Liabilities - Netting of Certain Financial Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Securities borrowed | ||
Gross Amounts of Recognized Assets | $ 1,471,172 | $ 220,005 |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 1,471,172 | 220,005 |
Gross Amounts Not Offset in the Statement of Financial Condition | ||
Financial instruments | (1,418,672) | (216,778) |
Cash collateral received | (13,318) | (248) |
Net Amount | 39,182 | 2,979 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Securities Loaned, Collateral, Right to Reclaim Cash | 10,776 | |
Total | ||
Gross Amounts of Recognized Assets | 3,523,704 | 1,367,407 |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (2,027,697) | (1,140,239) |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 1,496,007 | 227,168 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (1,418,717) | (216,858) |
Cash collateral received | (13,318) | (261) |
Net Amount | 63,972 | 10,049 |
Currency forwards | ||
Trading assets, at fair value | ||
Gross Amounts of Recognized Assets | 2,045,487 | 1,147,261 |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (2,027,697) | (1,140,239) |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 17,790 | 7,022 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Net Amount | 17,790 | 7,022 |
Options | ||
Trading assets, at fair value | ||
Gross Amounts of Recognized Assets | 7,045 | 141 |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 7,045 | 141 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (45) | (80) |
Cash collateral received | (13) | |
Net Amount | $ 7,000 | $ 48 |
Financial Assets and Liabilit70
Financial Assets and Liabilities - Netting of Certain Financial Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Securities loaned | ||
Gross Amounts of Recognized Liabilities | $ 754,687 | $ 222,203 |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 754,687 | 222,203 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (737,731) | (221,792) |
Cash collateral received | (10,776) | |
Net Amount | 6,180 | 411 |
Securities sold under agreements to repurchase | ||
Gross Amounts of Recognized Liabilities | 390,642 | |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 390,642 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (390,642) | |
Total | ||
Gross Amounts of Recognized Liabilities | 3,183,185 | 1,231,321 |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (2,024,991) | (1,009,038) |
Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition | 1,158,194 | 222,283 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (1,128,429) | (221,872) |
Cash collateral received | (10,776) | |
Net Amount | 18,989 | 411 |
Currency forwards | ||
Trading liabilities, at fair value: | ||
Gross Amounts of Recognized Liabilities | 2,032,017 | 1,009,038 |
Gross Amounts Offset in the Consolidated Statement of Financial Condition | (2,024,991) | (1,009,038) |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 7,026 | |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Net Amount | 7,026 | |
Options | ||
Trading liabilities, at fair value: | ||
Gross Amounts of Recognized Liabilities | 5,839 | 80 |
Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition | 5,839 | 80 |
Gross Amounts Not Offset in the Consolidated Statement of Financial Condition | ||
Financial instruments | (56) | $ (80) |
Net Amount | $ 5,783 |
Financial Assets and Liabilit71
Financial Assets and Liabilities - Gross Obligations For Securities Lending Transactions (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | $ 390,642 | $ 222,203 |
Remaining contractual maturity for securities lending transactions | 754,687 | |
Overnight and Continuous | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 642 | $ 222,203 |
Remaining contractual maturity for securities lending transactions | 754,687 | |
Less than 30 Days | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 100,000 | |
30 To 60 Days | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 90,000 | |
61 To 90 Days | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 200,000 | |
Equity securities | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 390,000 | |
Remaining contractual maturity for securities lending transactions | 754,687 | |
Equity securities | Overnight and Continuous | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for securities lending transactions | 754,687 | |
Equity securities | Less than 30 Days | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 100,000 | |
Equity securities | 30 To 60 Days | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 90,000 | |
Equity securities | 61 To 90 Days | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 200,000 | |
US and non-US government obligations | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | 642 | |
US and non-US government obligations | Overnight and Continuous | ||
Fair value measurements measured on a recurring basis | ||
Remaining contractual maturity for repurchase agreements | $ 642 |
Derivative Instruments - Fair V
Derivative Instruments - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Equities futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | $ (505) | $ 2,403 |
Derivatives Assets, Notional | 1,985,770 | 1,461,286 |
Equities futures | Payables to broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | (575) | (43) |
Derivatives Liabilities, Notional | 142,658 | 62,417 |
Commodity futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 971 | 13,964 |
Derivatives Assets, Notional | 21,231,001 | 3,918,778 |
Commodity futures | Payables to broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | (1,602) | 2,842 |
Derivatives Liabilities, Notional | 130,042 | 22,616,170 |
Currency futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 26,548 | 1,591 |
Derivatives Assets, Notional | 3,994,412 | 3,264,093 |
Currency futures | Not designated as hedging instruments | Payables to broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | (13,947) | (6,282) |
Derivatives Liabilities, Notional | 7,756,958 | 1,137,908 |
Fixed Income futures | Not designated as hedging instruments | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | (1) | |
Derivatives Liabilities, Notional | 2,584 | |
Currency forwards | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 2,045,487 | 1,147,261 |
Derivatives Liabilities, Fair Value | 2,032,017 | 1,009,038 |
Currency forwards | Financial instruments owned | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 2,045,487 | 1,147,261 |
Derivatives Assets, Notional | 124,000,221 | 94,192,414 |
Currency forwards | Not designated as hedging instruments | Financial instruments sold, not yet purchased | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | 2,032,017 | 1,009,038 |
Derivatives Liabilities, Notional | 123,993,234 | 85,874,684 |
Currency forwards | Derivative instruments designed as hedging instruments: | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | (514) | |
Derivatives Liabilities, Notional | 16,115 | |
Options | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 7,045 | 141 |
Derivatives Liabilities, Fair Value | 5,839 | 80 |
Options | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 7,045 | 141 |
Derivatives Assets, Notional | 682,369 | 6,844 |
Options | Not designated as hedging instruments | Financial instruments sold, not yet purchased | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Liabilities, Fair Value | 5,839 | 80 |
Derivatives Liabilities, Notional | 681,147 | 4,486 |
Treasury futures | Receivables from broker dealers and clearing organizations | ||
Fair value of derivative instruments on a gross basis | ||
Derivatives Assets, Fair Value | 73 | 31 |
Derivatives Assets, Notional | $ 44,395 | $ 5,730 |
Derivative Instruments - Gain F
Derivative Instruments - Gain From Derivative Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Not designated as hedging instruments | |||
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 | $ 286,046 | $ 561,125 | $ 1,162,272 |
Derivative instruments designed as hedging instruments: | |||
Gain impact of derivative instruments not designated as hedging instruments | |||
Net gain from derivative instruments, which are recorded in accumulated other comprehensive income | (642) | ||
Futures | Not designated as hedging instruments | |||
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 | 290,609 | 559,626 | 1,180,483 |
Currency forwards | Not designated as hedging instruments | |||
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 | 2,603 | 1,915 | (16,431) |
Options | Not designated as hedging instruments | |||
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 | $ (7,166) | (410) | (1,784) |
Others | Not designated as hedging instruments | |||
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 | $ (6) | $ 4 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jul. 20, 2017 | |
Income taxes | ||||
Provision for (benefit from) income taxes | $ 94,266 | $ 21,251 | $ 18,439 | |
Effective tax rate (as a percent) | 83.30% | 11.90% | 8.60% | |
Current income taxes receivable | $ 115,200 | $ 5,800 | ||
Alternative minimum tax credit carryforward | 600 | |||
Deferred tax asset | 125,760 | 193,859 | ||
Unrecognized tax benefits | 7,300 | 0 | ||
VFH | ||||
Income taxes | ||||
Deferred tax asset | 124,631 | $ 192,961 | ||
KCG | ||||
Income taxes | ||||
Deferred tax asset | 43,500 | $ 23,900 | ||
KCG | Non-US | ||||
Income taxes | ||||
Net operating loss | $ 231,800 |
Income Taxes (Details)75
Income Taxes (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Net income (loss) before income taxes | |||||
U.S. operations | $ 70,484 | $ 138,950 | $ 154,947 | ||
Non-U.S. operations | 42,680 | 40,641 | 60,982 | ||
Income before income taxes and non-controlling interest | 113,164 | 179,591 | 215,929 | ||
Current provision | |||||
U.S. current provision | (9,991) | 2,690 | 7,584 | ||
State and Local provision | 65 | 38 | 108 | ||
Non-U.S. current provision | 1,219 | 5,210 | 6,762 | ||
Deferred benefit | |||||
U.S. deferred provision (benefit) | 106,415 | 13,547 | 3,345 | ||
State and Local provision (benefit) | (3,380) | 194 | 48 | ||
Non-US deferred provision (benefit) | (62) | (428) | 592 | ||
Provision (benefit) for income taxes | 94,266 | $ 21,251 | $ 18,439 | ||
Reconciliation of tax provision | |||||
Provisional deferred tax expense | 90,600 | ||||
Gain from tax receivable agreement | $ 86,600 | ||||
Tax provision at the U.S. federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | ||
Less: rate attributable to noncontrolling interest | (19.10%) | (24.40%) | (27.80%) | ||
State, local and foreign taxes, net of federal benefit (as a percent) | (1.90%) | 1.30% | 1.40% | ||
Impact of 2017 Tax Act on deferred tax assets | 80.10% | ||||
Impact of 2017 Tax Act on tax receivable agreement obligation | (12.90%) | ||||
Non-deductible expenses, net | 1.90% | ||||
Other, net | 0.20% | ||||
Provision for income taxes (as a percent) | 83.30% | 11.90% | 8.60% | ||
Deferred income tax assets | |||||
Tax Receivable Agreement | $ 101,594 | $ 185,677 | |||
Share-based compensation | 5,213 | 5,664 | |||
Intangibles | 14,547 | ||||
Fixed assets and other | 13,425 | 2,518 | |||
Tax credits and net operating loss carryforwards | 50,867 | ||||
Less: Valuation allowance on net operating loss carryforwards and tax credits | (43,544) | ||||
Total deferred income tax assets | 142,102 | 193,859 | |||
Deferred income tax liabilities | |||||
Intangibles | 16,342 | ||||
Fixed assets | 84 | ||||
Total deferred income tax liabilities | 16,342 | 84 | |||
Unrecognized tax benefits | $ 7,300 | $ 0 | |||
Forecast | |||||
Reconciliation of tax provision | |||||
Tax provision at the U.S. federal statutory rate (as a percent) | 21.00% | 21.00% |
Income Taxes - Provision for in
Income Taxes - Provision for income taxes (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Unrecognized Tax Benefits, Beginning Balance | $ 0 |
Increase based on tax positions related to prior period | 7,232 |
Increase based on tax positions related to current period | 68 |
Unrecognized Tax Benefits, Ending Balance | $ 7,300 |
Commitments, Contingencies an77
Commitments, Contingencies and Guarantees - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Minimum Rental Commitments, Capital | |||
2,018 | $ 18,829 | ||
2,019 | 17,759 | ||
2,020 | 6,942 | ||
Total minimum lease payments | 43,530 | ||
Minimum Rental Commitments, Operating | |||
2,018 | 33,331 | ||
2,019 | 30,712 | ||
2,020 | 29,238 | ||
2,021 | 21,017 | ||
2,022 | 18,063 | ||
Thereafter | 127,723 | ||
Total minimum lease payments | 260,084 | ||
Operating lease expense, net of amortization expense related to landlord incentives | 13,100 | $ 2,400 | $ 5,300 |
Occupancy lease expense | 12,900 | 1,300 | 3,900 |
Communication equipment lease expense | $ 200 | $ 1,100 | $ 1,400 |
Commitments, Contingencies an78
Commitments, Contingencies and Guarantees - Employee Retention Plan and Litigation (Details) € in Millions, $ in Millions | Dec. 31, 2017EUR (€) | Dec. 31, 2017USD ($) | Dec. 31, 2015EUR (€) | Dec. 31, 2015USD ($) |
Litigation | ||||
Amount of fine | € 3.3 | $ 3.9 | € 5 | $ 5.4 |
Capital Structure (Details)
Capital Structure (Details) $ / shares in Units, $ in Thousands | Aug. 10, 2017USD ($)shares | Jul. 20, 2017USD ($)$ / sharesshares | Apr. 21, 2015$ / sharesshares | Apr. 15, 2015shares | Nov. 30, 2017shares | Aug. 31, 2017shares | May 31, 2017shares | Feb. 28, 2017shares | Sep. 30, 2016$ / sharesshares | Dec. 31, 2015USD ($) | Dec. 31, 2017USD ($)Voteitem$ / shares | Dec. 31, 2016$ / shares | Jul. 27, 2016 |
Aggregate purchase price | $ | $ 327,366 | $ 735,974 | |||||||||||
Ownership interest (as a percent) | 29.40% | ||||||||||||
Number of classes of common stock | item | 4 | ||||||||||||
Virtu Financial | |||||||||||||
Ownership interest (as a percent) | 48.30% | ||||||||||||
VFH | |||||||||||||
Issuance of common stock in connection with employee exchanges (in shares) | shares | 209,448 | 155,009 | 307,544 | 683,762 | |||||||||
Common stock exchange ratio | 1 | ||||||||||||
Class A | |||||||||||||
Number of shares of stock issued | shares | 19,012,112 | 16,532,272 | |||||||||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||||||||
Common stock sold in connection with full exercise of the option to purchase additional shares granted to underwriters (in shares) | 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) | $ 19 | ||||||||||||
Common stock offered for sale (in shares) | shares | 1,103,668 | ||||||||||||
Price of stock (in dollars per share) | $ 15.75 | ||||||||||||
Commission deducted from the price at which shares were offered to the public (in dollars per share) | $ 0.10 | ||||||||||||
Class A | 2015 Management Incentive Plan | |||||||||||||
Number of shares of stock authorized | shares | 16,000,000 | ||||||||||||
Class A | VFH | |||||||||||||
Common stock, par value (in dollars per share) | 0.00001 | ||||||||||||
Class B | |||||||||||||
Common stock, par value (in dollars per share) | 0.00001 | 0.00001 | |||||||||||
Class B | VFH | |||||||||||||
Common stock, par value (in dollars per share) | 0.00001 | ||||||||||||
Class C | |||||||||||||
Common stock, par value (in dollars per share) | 0.00001 | 0.00001 | |||||||||||
Class C | VFH | |||||||||||||
Common stock, par value (in dollars per share) | 0.00001 | ||||||||||||
Class D | |||||||||||||
Common stock, par value (in dollars per share) | 0.00001 | $ 0.00001 | |||||||||||
Class D | VFH | |||||||||||||
Common stock, par value (in dollars per share) | $ 0.00001 | ||||||||||||
Class A common stock and Class C common stock | |||||||||||||
Number of votes | Vote | 1 | ||||||||||||
Class B common stock and Class D common stock | |||||||||||||
Number of votes | Vote | 10 | ||||||||||||
Temasek Investment | |||||||||||||
Other offering costs | $ | $ 7,800 | ||||||||||||
NIH Investment Agreement | Class A | |||||||||||||
Number of shares of stock issued | shares | 338,124 | ||||||||||||
Aggregate purchase price | $ | $ 5,200 | ||||||||||||
KCG | |||||||||||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||||||||||
KCG | Aranda | Class A | |||||||||||||
Number of shares of stock issued | shares | 6,346,155 | ||||||||||||
Aggregate purchase price | $ | $ 99,000 | ||||||||||||
KCG | Temasek Investment | Class A | |||||||||||||
Number of shares of stock issued | shares | 1,666,666 | ||||||||||||
Aggregate purchase price | $ | $ 26,000 | ||||||||||||
KCG | NIH Investment Agreement | |||||||||||||
Number of shares of stock issued | shares | 39,725,979 | ||||||||||||
Aggregate purchase price | $ | $ 613,500 | ||||||||||||
KCG | NIH Investment Agreement | Class A | |||||||||||||
Number of shares of stock issued | shares | 338,124 | ||||||||||||
Aggregate purchase price | $ | $ 5,200 |
Share-based Compensation (Detai
Share-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 21, 2015 | Apr. 15, 2015 | Jul. 08, 2011 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 |
Share-based Compensation. | |||||||
Expense recognized | $ 6,400 | ||||||
Number of Class A-2 capital interests contributed by Class A-2 members to Virtu East MIP LLC | 2,625,000 | ||||||
Non-voting common interest units outstanding | 12,301,067 | 14,231,535 | 14,231,535 | ||||
Number of non-voting common interest units forfeited or repurchased | 1,930,468 | 1,162,891 | 57,106 | ||||
Weighted Average Remaining Life, outstanding | |||||||
Weighted Average Remaining Life | 9 years 3 months 15 days | ||||||
Weighted average remaining contractual life, granted | 10 years | ||||||
Class A | |||||||
Share-based Compensation. | |||||||
Expense recognized | $ 300 | $ 10,600 | $ 13,200 | ||||
Accrued compensation expense | $ 11,000 | ||||||
Granted (in shares) | 19,719 | 656,019 | 576,693 | ||||
Class B interests | East MIP | |||||||
Share-based Compensation. | |||||||
Vesting period | 4 years | ||||||
Non-voting common interest units (formerly Class B interests) | |||||||
Share-based Compensation. | |||||||
Expense recognized | $ 700 | $ 1,100 | $ 44,900 | ||||
Unrecognized share-based compensation expense | $ 100 | $ 800 | $ 800 | ||||
Weighted average period for compensation expense expected to be recognized | 1 month 6 days | 1 year | |||||
Capitalized software development costs | $ 40 | $ 90 | 9,200 | ||||
Amortization expense related to share based compensation | 700 | 8,500 | |||||
Non-voting common interest units (formerly Class B interests) | East MIP | |||||||
Share-based Compensation. | |||||||
Amortization expense related to share based compensation | 70 | ||||||
Non-voting common interest units (formerly Class A 2 profits interests) | |||||||
Share-based Compensation. | |||||||
Expense recognized | 700 | 1,300 | 1,500 | ||||
Unrecognized share-based compensation expense | $ 100 | $ 800 | 800 | ||||
Weighted average period for compensation expense expected to be recognized | 1 month 6 days | 9 months 18 days | |||||
Non-voting common interest units (formerly Class A 2 profits interests) | Maximum | |||||||
Share-based Compensation. | |||||||
Vesting period | 4 years | ||||||
Non-qualified stock options | 2015 Management Incentive Plan | |||||||
Share-based Compensation. | |||||||
Vesting period | 4 years | ||||||
Expiration period | 10 years | ||||||
Expense recognized | $ 5,200 | $ 5,600 | $ 4,700 | ||||
Unrecognized share-based compensation expense | $ 7,500 | $ 14,200 | $ 14,200 | ||||
Weighted average period for compensation expense expected to be recognized | 1 year 3 months 18 days | 2 years 3 months 18 days | |||||
Forfeited or repurchased (in shares) | 496,000 | 760,000 | 234,000 | ||||
Outstanding (in shares) | 8,234,000 | 8,994,000 | |||||
Granted (in shares) | 9,228,000 | ||||||
Forfeited or expired (in shares) | (496,000) | (760,000) | (234,000) | ||||
Outstanding (in shares) | 7,738,000 | 8,234,000 | 8,994,000 | 8,234,000 | |||
Weighted Average Exercise Price Per Share | |||||||
Outstanding (in dollars per share) | $ 19 | $ 19 | |||||
Granted (in dollars per share) | $ 19 | ||||||
Outstanding (in dollars per share) | $ 19 | $ 19 | $ 19 | $ 19 | |||
Weighted Average Remaining Life, outstanding | |||||||
Weighted Average Remaining Life | 7 years 3 months 15 days | 8 years 3 months 15 days | |||||
Options Exercisable, Number of Options (in shares) | 3,869,000 | 2,058,500 | 2,058,500 | ||||
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 19 | $ 19 | $ 19 | ||||
Restricted stock units | |||||||
Share-based Compensation. | |||||||
Unrecognized share-based compensation expense | $ 14,300 | $ 28,500 | $ 28,500 | ||||
Weighted average period for compensation expense expected to be recognized | 1 year 6 months | 2 years 7 months 6 days | |||||
Restricted stock units | Class A | |||||||
Share-based Compensation. | |||||||
Expense recognized | $ 9,900 | $ 6,300 | $ 500 | ||||
Restricted stock units | 2015 Management Incentive Plan | |||||||
Activity | |||||||
Outstanding (in shares) | 1,573,441 | 984,466 | |||||
Granted (in shares) | 64,402 | 1,019,148 | 984,466 | ||||
Forfeited (in shares) | (258,250) | (133,138) | |||||
Vested (in shares) | (526,546) | (297,035) | |||||
Outstanding (in shares) | 853,047 | 1,573,441 | 984,466 | 1,573,441 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||||||
Outstanding (in dollars per share) | $ 18.28 | $ 22.32 | |||||
Granted (in dollars per share) | 18.09 | 16.06 | $ 22.32 | ||||
Forfeited (in dollars per share) | 18.40 | 22.51 | |||||
Vested (in dollars per share) | 18.75 | 16.48 | |||||
Outstanding (in dollars per share) | $ 17.94 | $ 18.28 | $ 22.32 | $ 18.28 | |||
Restricted stock units | 2015 Management Incentive Plan | Maximum | |||||||
Share-based Compensation. | |||||||
Vesting period | 4 years |
Property, Equipment and Capit81
Property, Equipment and Capitalized Software (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | $ 512,674 | $ 142,844 | |
Less: Accumulated depreciation and amortization | (375,656) | (113,184) | |
Total property, equipment and capitalized software, net | 137,018 | 29,660 | |
Depreciation expense | 36,800 | 19,600 | $ 24,000 |
Capitalized software costs | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | 94,915 | 77,591 | |
Leasehold improvements | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | 93,624 | 3,636 | |
Furniture, fixtures and equipment | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | $ 324,135 | 61,540 | |
Land | |||
Property, Equipment and Capitalized Software | |||
Property, equipment and capitalized software, gross | $ 77 |
Regulatory Requirement (Details
Regulatory Requirement (Details) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016USD ($)subsidiaryitem | Dec. 31, 2017subsidiary | Dec. 31, 2017item | Dec. 31, 2017 | Dec. 31, 2017USD ($) | |
Regulatory Requirement | |||||
Number of broker-dealer subsidiaries | 3 | 3 | 3 | ||
Virtu Americas LLC | |||||
Regulatory Requirement | |||||
Regulatory Capital | $ 379,875 | ||||
Regulatory Capital Requirement | 1,000 | ||||
Excess Regulatory Capital | 378,875 | ||||
Virtu Financial BD LLC | |||||
Regulatory Requirement | |||||
Regulatory Capital | $ 74,467 | 40,683 | |||
Regulatory Capital Requirement | 1,000 | 1,000 | |||
Excess Regulatory Capital | 73,467 | 39,683 | |||
VFCM | |||||
Regulatory Requirement | |||||
Regulatory Capital | 10,830 | 8,308 | |||
Regulatory Capital Requirement | 2,886 | 5,114 | |||
Excess Regulatory Capital | 7,944 | 3,194 | |||
Minimum capital required to be maintained in connection with the operation of the Company's DMM business | $ 1,900 | 4,100 | |||
Required amount under exchange rules | $ 1,000 | ||||
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 and Bu83
Geographic Information and Business Segments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Total revenues by geographic area | |||
Revenues | $ 1,027,982 | $ 702,272 | $ 796,213 |
United States | |||
Total revenues by geographic area | |||
Revenues | 791,044 | 455,418 | 537,310 |
Ireland | |||
Total revenues by geographic area | |||
Revenues | 97,637 | 139,642 | 166,739 |
United Kingdom | |||
Total revenues by geographic area | |||
Revenues | 21,143 | ||
Singapore | |||
Total revenues by geographic area | |||
Revenues | 113,891 | 106,813 | 91,816 |
Sweden | |||
Total revenues by geographic area | |||
Revenues | 3,986 | ||
Others | |||
Total revenues by geographic area | |||
Revenues | 281 | $ 399 | 348 |
VFH | |||
Total revenues by geographic area | |||
Revenues | $ 86,599 | $ 445 |
Geographic Information and Bu84
Geographic Information and Business Segments - Segments (Details) $ in Thousands | Oct. 24, 2017segment | Jul. 19, 2017item | Sep. 30, 2017segment | Jun. 30, 2017itemsegment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Segment reporting | |||||||
Number of businesses Company is managed and operated as | item | 1 | 1 | |||||
Number of reportable segments | 1 | 1 | |||||
Number of operating segments | segment | 3 | 3 | |||||
Revenues | $ 1,027,982 | $ 702,272 | $ 796,213 | ||||
Pre-tax earnings | 113,164 | 179,591 | 215,929 | ||||
VFH | |||||||
Segment reporting | |||||||
Revenues | 86,599 | 445 | |||||
Market Making | |||||||
Segment reporting | |||||||
Revenues | 836,707 | 691,884 | 785,591 | ||||
Pre-tax earnings | 74,633 | 176,145 | 211,443 | ||||
Execution Services | |||||||
Segment reporting | |||||||
Revenues | 99,135 | 10,352 | 10,622 | ||||
Pre-tax earnings | (12,519) | 4,403 | $ 4,486 | ||||
Corporate | |||||||
Segment reporting | |||||||
Revenues | 92,140 | 36 | |||||
Pre-tax earnings | $ 51,050 | $ (957) |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 5 Months Ended | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)shares | |
Related Party Transactions | ||||
Payable to affiliates | $ 200 | $ 80 | $ 200 | |
Securities Borrowed | 220,005 | 1,471,172 | 220,005 | |
Securities Loaned | 222,203 | 754,687 | 222,203 | |
Non-qualified stock options | 2015 Management Incentive Plan | ||||
Related Party Transactions | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 9,228,000 | |||
Industrial and Commercial Bank of China (“ICBC”) | ||||
Related Party Transactions | ||||
Securities Borrowed | 23,100 | |||
Securities Loaned | 1,100 | |||
Dell | ||||
Related Party Transactions | ||||
Payments for purchases | 2,500 | 2,700 | $ 3,600 | |
Affiliate Of Founder And Executive Chairman | ||||
Related Party Transactions | ||||
Sublease revenue | $ 60 | 40 | 100 | |
Two microwave communication network JVs | ||||
Related Party Transactions | ||||
Number of microwave communication network JVs the Company makes payments to | item | 2 | |||
Payments to related party | $ 8,300 | 600 | 0 | |
Level 3 | ||||
Related Party Transactions | ||||
Payments for purchases | 2,500 | 2,400 | 4,300 | |
Singtel | ||||
Related Party Transactions | ||||
Payments for purchases | 100 | 200 | 100 | |
Son of Company's Founder and Executive Chairman | ||||
Related Party Transactions | ||||
Total compensation | 0 | $ 800 | ||
Son of Company's Founder and Executive Chairman | Class A | Non-qualified stock options | 2015 Management Incentive Plan | ||||
Related Party Transactions | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 60,000 | |||
Member of Board of Directors | ||||
Related Party Transactions | ||||
Payments to related party | 4 | $ 30 | $ 100 | |
SBI | ||||
Related Party Transactions | ||||
Payments to related party | $ 2,200 | $ 6,000 |
Parent Company - Condensed Stat
Parent Company - Condensed Statements of Financial Condition (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 21, 2015 | Dec. 31, 2014 |
Assets | |||||
Deferred tax asset | $ 125,760 | $ 193,859 | |||
Other assets | 357,352 | 74,470 | |||
Total Assets | 7,320,006 | 3,692,390 | |||
Liabilities | |||||
Accounts payable and accrued expenses and other liabilities | 358,825 | 69,281 | |||
Tax receivable agreement obligations | 147,040 | 231,404 | |||
Total Liabilities | 6,168,428 | 3,157,978 | |||
Stockholders' / Members' equity | |||||
Treasury stock, at cost, 616,923 and 453,066 shares at December 31, 2017 and 2016, respectively | (11,041) | (8,358) | $ (3,819) | ||
Additional paid-in capital | 900,746 | 155,536 | |||
(Accumulated deficit) Retained earnings | (62,129) | (1,254) | |||
Accumulated other comprehensive (loss) income | 2,991 | (252) | |||
Total stockholders' equity | 830,569 | 145,673 | |||
Total liabilities and equity | $ 7,320,006 | $ 3,692,390 | |||
Treasury stock shares | 616,923 | 453,066 | |||
VFH | |||||
Assets | |||||
Cash | $ 60,193 | $ 17,149 | $ 187 | $ 25,939 | |
Deferred tax asset | 124,631 | 192,961 | |||
Receivable from subsidiaries | 10,731 | 1,892 | |||
Investment in subsidiary | 1,549,162 | 165,204 | |||
Total Assets | 1,744,717 | 377,206 | |||
Liabilities | |||||
Payable to affiliates | 767,101 | 129 | |||
Accounts payable and accrued expenses and other liabilities | 7 | ||||
Tax receivable agreement obligations | 147,040 | 231,404 | |||
Total Liabilities | 914,148 | 231,533 | |||
Stockholders' / Members' equity | |||||
Treasury stock, at cost, 616,923 and 453,066 shares at December 31, 2017 and 2016, respectively | (11,041) | (8,358) | |||
Additional paid-in capital | 900,746 | 155,536 | |||
(Accumulated deficit) Retained earnings | (62,129) | (1,254) | |||
Accumulated other comprehensive (loss) income | 2,991 | (252) | |||
Total stockholders' equity | 830,569 | 145,673 | |||
Total liabilities and equity | $ 1,744,717 | $ 377,206 | |||
Treasury stock shares | 616,923 | 453,066 | |||
Class A-1 | VFH | |||||
Stockholders' / Members' equity | |||||
Common stock, authorized | 0 | 0 | |||
Common stock shares issued | 0 | 0 | |||
Common stock, outstanding | 0 | 0 | |||
Class A-2 | VFH | |||||
Stockholders' / Members' equity | |||||
Common stock, authorized | 0 | 0 | |||
Common stock shares issued | 0 | 0 | |||
Common stock, outstanding | 0 | 0 | |||
Class A | |||||
Stockholders' / Members' equity | |||||
Common stock | $ 1 | ||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||
Common stock, authorized | 1,000,000,000 | 1,000,000,000 | |||
Common stock shares issued | 90,415,532 | 40,436,580 | |||
Common stock, outstanding | 89,798,609 | 39,983,514 | |||
Class A | VFH | |||||
Stockholders' / Members' equity | |||||
Common stock | $ 1 | ||||
Common stock, par value (in dollars per share) | $ 0.00001 | ||||
Common stock, authorized | 1,000,000,000 | 1,000,000,000 | |||
Common stock shares issued | 90,415,532 | 40,436,580 | |||
Common stock, outstanding | 89,798,609 | 39,983,514 | |||
Class B | |||||
Stockholders' / Members' equity | |||||
Common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Common stock, authorized | 175,000,000 | 175,000,000 | |||
Common stock shares issued | 0 | 0 | |||
Common stock, outstanding | 0 | 0 | |||
Class B | VFH | |||||
Stockholders' / Members' equity | |||||
Common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | ||||
Common stock, authorized | 175,000,000 | 175,000,000 | |||
Common stock shares issued | 0 | 0 | |||
Common stock, outstanding | 0 | 0 | |||
Class C | |||||
Stockholders' / Members' equity | |||||
Common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Common stock, authorized | 90,000,000 | 90,000,000 | |||
Common stock shares issued | 17,880,239 | 19,810,707 | |||
Common stock, outstanding | 17,880,239 | 19,810,707 | |||
Class C | VFH | |||||
Stockholders' / Members' equity | |||||
Common stock | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | ||||
Common stock, authorized | 90,000,000 | 90,000,000 | |||
Common stock shares issued | 17,880,239 | 19,810,707 | |||
Common stock, outstanding | 17,880,239 | 19,810,707 | |||
Class D | |||||
Stockholders' / Members' equity | |||||
Common stock | $ 1 | $ 1 | |||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Common stock, authorized | 175,000,000 | 175,000,000 | |||
Common stock shares issued | 79,610,490 | 79,610,490 | |||
Common stock, outstanding | 79,610,490 | 79,610,490 | |||
Class D | VFH | |||||
Stockholders' / Members' equity | |||||
Common stock | $ 1 | $ 1 | |||
Common stock, par value (in dollars per share) | $ 0.00001 | ||||
Common stock, authorized | 175,000,000 | 175,000,000 | |||
Common stock shares issued | 79,610,490 | 79,610,490 | |||
Common stock, outstanding | 79,610,490 | 79,610,490 |
Parent Company - Condensed St87
Parent Company - Condensed Statements of Comprehensive Income (Details) - USD ($) $ in Thousands | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 15, 2015 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||||
Total revenue | $ 1,027,982 | $ 702,272 | $ 796,213 | ||
Expenses | |||||
Operations and administrative | 65,137 | 23,039 | 25,991 | ||
Net income (loss) | $ 83,147 | $ 114,343 | 18,898 | 158,340 | 197,490 |
Net income attributable to common stockholders | 2,939 | 32,980 | 20,887 | ||
Foreign currency translation adjustment, net of taxes | $ (4,633) | $ 378 | 9,117 | (1,165) | (4,255) |
Comprehensive income (loss) attributable to common stockholders | 6,182 | 32,629 | 20,986 | ||
VFH | |||||
Revenues: | |||||
Service fee revenue | 445 | ||||
Other Income | 86,599 | ||||
Total revenue | 86,599 | 445 | |||
Expenses | |||||
Operations and administrative | 181 | 198 | 447 | ||
Income (loss) before equity in income of subsidiary | 86,418 | (198) | (2) | ||
Equity in income of subsidiary, net of tax | (83,479) | 33,178 | 104,036 | ||
Net income (loss) | 2,939 | 32,980 | 104,034 | ||
Net income attributable to common stockholders | 2,939 | 32,980 | 20,887 | ||
Foreign currency translation adjustment, net of taxes | 3,243 | (351) | (4,534) | ||
Comprehensive income (loss) attributable to common stockholders | $ 6,182 | $ 32,629 | $ 16,353 |
Parent Company - Condensed St88
Parent Company - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 15, 2015 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||||
Net income (loss) | $ 83,147 | $ 114,343 | $ 18,898 | $ 158,340 | $ 197,490 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Tax receivable agreement obligation reduction | (86,599) | ||||
Deferred taxes | 102,973 | 13,313 | 3,985 | ||
Other | (4,577) | (1,070) | 219 | ||
Net cash provided by operating activities | 290,574 | 239,599 | 260,280 | ||
Cash flows from investing activities | |||||
Acquisition of KCG Holdings, net of cash acquired, described in Note 3 | (799,632) | ||||
Cash flows used in investing activities | (838,016) | (59,017) | (24,299) | ||
Cash flows from financing activities | |||||
Distribution to members | (130,000) | ||||
Distribution from Virtu Financial to non-controlling interest | (89,563) | (162,969) | (81,377) | ||
Dividends | (63,814) | (37,759) | (17,362) | ||
Proceeds from issuance | 735,974 | 327,366 | |||
Purchase of treasury stock | (2,683) | (4,539) | (3,819) | ||
Tax receivable agreement obligations | (7,045) | ||||
Repurchase of Virtu Financial Units and corresponding number of Class A and C Common Stock | (277,153) | ||||
Issuance of common stock, net of offering costs | 16,677 | 7,782 | |||
Repurchase of Virtu Financial Units and corresponding number of Class A and C common stock in connection with secondary offering | (17,383) | (8,805) | |||
Net cash provided by (used in) financing activities | 889,797 | (161,237) | (144,355) | ||
Supplementary disclosure of cash flow information | |||||
Tax receivable agreement described in Note 4 | (1,534) | (545) | 21,854 | ||
Discount on issuance of senior secured credit facility | 1,438 | 1,350 | |||
Taxes paid | 5,976 | 16,175 | 12,875 | ||
VFH | |||||
Cash flows from operating activities | |||||
Net income (loss) | 2,939 | 32,980 | 104,034 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Equity in income of subsidiary, net of tax | (513,601) | 157,975 | (18,237) | ||
Tax receivable agreement obligation reduction | (86,599) | ||||
Deferred taxes | 102,973 | 13,197 | 3,392 | ||
Other | (8,500) | ||||
Changes in operating assets and liabilities | (8,832) | (4,012) | 5,900 | ||
Net cash provided by operating activities | (511,620) | 200,140 | 95,089 | ||
Cash flows from investing activities | |||||
Acquisition of KCG Holdings, net of cash acquired, described in Note 3 | (23,908) | ||||
Investment in subsidiaries, equity basis | 16,846 | 24,893 | 64,624 | ||
Cash flows used in investing activities | (7,062) | 24,893 | 64,624 | ||
Cash flows from financing activities | |||||
Distribution to members | (130,000) | ||||
Distribution from Virtu Financial to non-controlling interest | (89,563) | (162,969) | (81,377) | ||
Proceeds from issuance | 735,974 | 327,366 | |||
Purchase of treasury stock | (2,683) | (4,539) | (3,819) | ||
Tax receivable agreement obligations | (7,045) | ||||
Repurchase of Virtu Financial Units and corresponding number of Class A and C Common Stock | (277,153) | ||||
Issuance of common stock, net of offering costs | 16,677 | 7,782 | |||
Repurchase of Virtu Financial Units and corresponding number of Class A and C common stock in connection with secondary offering | (17,383) | (8,805) | |||
Net cash provided by (used in) financing activities | 561,726 | (208,071) | (185,465) | ||
Net increase (decrease) in cash | 43,044 | 16,962 | (25,752) | ||
Cash, beginning of period | $ 25,939 | 17,149 | 187 | 25,939 | |
Cash, end of period | $ 187 | 60,193 | 17,149 | 187 | |
Supplementary disclosure of cash flow information | |||||
Tax receivable agreement described in Note 4 | 1,534 | (21,854) | |||
Discount on issuance of senior secured credit facility | 1,350 | ||||
Taxes paid | 133 | 8,813 | 5,615 | ||
Class A | VFH | |||||
Cash flows from financing activities | |||||
Dividends | (63,814) | (37,759) | (17,362) | ||
Class C | |||||
Cash flows from financing activities | |||||
Purchase of treasury stock | (98) | ||||
Class C | VFH | |||||
Cash flows from financing activities | |||||
Repurchase of Virtu Financial Units and corresponding number of Class A and C Common Stock | (98) | ||||
Class A-2 | VFH | |||||
Cash flows from financing activities | |||||
Repurchase of Class A-2 interests | $ (11,143) | $ (2,000) | $ (2,097) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Jan. 31, 2018 | Jan. 02, 2018 | Mar. 12, 2018 | Feb. 28, 2018 | Dec. 31, 2017 | Feb. 08, 2018 |
Subsequent events | ||||||
Proceeds from sale of business | $ 300 | |||||
Outstanding principal amount | $ 1,431,059 | |||||
LIBOR rate | ||||||
Subsequent events | ||||||
Spread on variable rate basis (as a percent) | 1.25% | |||||
Senior secured term loan | ||||||
Subsequent events | ||||||
Repayments of debt | $ 26,000 | |||||
Outstanding principal amount | $ 624,000 | |||||
Senior secured term loan | LIBOR rate | ||||||
Subsequent events | ||||||
Spread on variable rate basis (as a percent) | 3.25% | |||||
Senior Secured Credit Facility | ||||||
Subsequent events | ||||||
Repayments of debt | $ 250,000 | |||||
Subsequent Events | Class A | ||||||
Subsequent events | ||||||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | 375,000 | 375,000 | ||||
Average Price Paid per Share | $ 29.27 | $ 29.27 | ||||
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | 39,023,750 | 39,023,750 | ||||
New share repurchase program authorized | $ 50,000 | |||||
Dividends declared (in dollars per share) | $ 0.24 | |||||
Subsequent Events | ICE | BondPoint | ||||||
Subsequent events | ||||||
Proceeds from sale of business | $ 400,000 |