Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 21, 2021 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38860 | |
Entity Registrant Name | Tradeweb Markets Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-2456358 | |
Entity Address, Address Line One | 1177 Avenue of the Americas | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10036 | |
City Area Code | 646 | |
Local Phone Number | 430-6000 | |
Title of 12(b) Security | Class A common stock, par value $0.00001 | |
Trading Symbol | TW | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001758730 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A Common Stock | ||
Entity Common Stock, Shares Outstanding | 104,759,476 | |
Class B Common Stock | ||
Entity Common Stock, Shares Outstanding | 96,933,192 | |
Class C Common Stock | ||
Entity Common Stock, Shares Outstanding | 1,654,825 | |
Class D Common Stock | ||
Entity Common Stock, Shares Outstanding | 28,877,108 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and cash equivalents | $ 809,938 | $ 791,280 |
Restricted cash | 1,000 | 1,000 |
Receivable from brokers and dealers and clearing organizations | 25,362 | 368 |
Deposits with clearing organizations | 10,783 | 11,671 |
Accounts receivable, net of allowance for credit losses of $177 and $243 at March 31, 2021 and December 31, 2020, respectively | 144,494 | 105,286 |
Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization | 32,733 | 33,814 |
Right-of-use assets | 27,072 | 29,437 |
Software development costs, net of accumulated amortization | 165,587 | 168,030 |
Goodwill | 2,694,797 | 2,694,797 |
Intangible assets, net of accumulated amortization | 1,157,182 | 1,182,034 |
Receivable from affiliates | 2,527 | 111 |
Deferred tax asset | 662,210 | 579,562 |
Other assets | 75,249 | 82,460 |
Total assets | 5,808,934 | 5,679,850 |
Liabilities | ||
Payable to brokers and dealers and clearing organizations | 25,145 | 252 |
Accrued compensation | 70,202 | 129,288 |
Deferred revenue | 27,186 | 23,193 |
Accounts payable, accrued expenses and other liabilities | 44,291 | 42,692 |
Employee equity compensation payable | 0 | 1,900 |
Lease liability | 31,202 | 34,463 |
Payable to affiliates | 1,816 | 5,142 |
Deferred tax liability | 18,804 | 19,425 |
Tax receivable agreement liability | 425,150 | 404,332 |
Total liabilities | 643,796 | 660,687 |
Commitments and contingencies (Note 12) | ||
Equity | ||
Preferred stock, $0.00001 par value; 250,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Additional paid-in capital | 4,307,046 | 4,143,094 |
Accumulated other comprehensive income | 4,102 | 4,314 |
Retained earnings | 207,870 | 156,041 |
Total stockholders' equity attributable to Tradeweb Markets Inc. | 4,519,020 | 4,303,451 |
Non-controlling interests | 646,118 | 715,712 |
Total equity | 5,165,138 | 5,019,163 |
Total liabilities and equity | 5,808,934 | 5,679,850 |
Class A Common Stock | ||
Equity | ||
Common stock | 1 | 1 |
Class B Common Stock | ||
Equity | ||
Common stock | 1 | 1 |
Class C Common Stock | ||
Equity | ||
Common stock | 0 | 0 |
Class D Common Stock | ||
Equity | ||
Common stock | $ 0 | $ 0 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Accounts receivable, allowance for credit losses | $ 177 | $ 243 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class A Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common Stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 104,643,279 | 98,075,465 |
Common stock, shares outstanding (in shares) | 104,643,279 | 98,075,465 |
Class B Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common Stock, shares authorized (in shares) | 450,000,000 | 450,000,000 |
Common stock, shares issued (in shares) | 96,933,192 | 96,933,192 |
Common stock, shares outstanding (in shares) | 96,933,192 | 96,933,192 |
Class C Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common Stock, shares authorized (in shares) | 350,000,000 | 350,000,000 |
Common stock, shares issued (in shares) | 1,654,825 | 3,139,821 |
Common stock, shares outstanding (in shares) | 1,654,825 | 3,139,821 |
Class D Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common Stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 28,877,108 | 30,871,381 |
Common stock, shares outstanding (in shares) | 28,877,108 | 30,871,381 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | ||
Total revenue | $ 273,399 | $ 234,606 |
Expenses | ||
Employee compensation and benefits | 103,622 | 90,520 |
Depreciation and amortization | 40,966 | 37,176 |
Technology and communications | 13,544 | 10,318 |
General and administrative | 3,459 | 8,340 |
Professional fees | 9,728 | 6,911 |
Occupancy | 3,753 | 3,726 |
Total expenses | 175,072 | 156,991 |
Operating income | 98,327 | 77,615 |
Net interest income (expense) | (493) | 699 |
Income before taxes | 97,834 | 78,314 |
Provision for income taxes | (16,269) | (15,829) |
Net income | 81,565 | 62,485 |
Less: Net income attributable to non-controlling interests | 13,706 | 18,557 |
Net income attributable to Tradeweb Markets Inc. | $ 67,859 | $ 43,928 |
EPS calculations for post-IPO and pre-IPO periods | ||
Basic (in dollars per share) | $ 0.34 | $ 0.26 |
Diluted (in dollars per share) | $ 0.33 | $ 0.25 |
Weighted average shares outstanding | ||
Basic (in shares) | 199,064,607 | 166,234,749 |
Diluted (in shares) | 205,028,717 | 174,517,244 |
Transaction fees and commissions | ||
Revenues | ||
Total revenue | $ 217,816 | $ 183,317 |
Subscription fees | ||
Revenues | ||
Total revenue | 37,868 | 34,483 |
Refinitiv market data fees | ||
Revenues | ||
Total revenue | 15,117 | 14,628 |
Other | ||
Revenues | ||
Total revenue | $ 2,598 | $ 2,178 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 81,565 | $ 62,485 |
Foreign currency translation adjustments, with no tax benefit for each of the three months ended March 31, 2021 and 2020 | (343) | (4,784) |
Other comprehensive income (loss), net of tax | (343) | (4,784) |
Comprehensive income | 81,222 | 57,701 |
Less: Net income attributable to non-controlling interests | 13,706 | 18,557 |
Less: Foreign currency translation adjustments attributable to non-controlling interests | (46) | (1,232) |
Comprehensive income attributable to Tradeweb Markets Inc. | 67,562 | 40,376 |
Comprehensive income - Tradeweb Markets Inc. | ||
Net income attributable to Tradeweb Markets Inc. | 67,859 | 43,928 |
Foreign currency translation adjustments attributable to Tradeweb Markets Inc. | (297) | (3,552) |
Comprehensive income - Non-controlling interests | ||
Comprehensive income attributable to non-controlling interests | $ 13,660 | $ 17,325 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Common StockClass A Common Stock | Common StockClass B Common Stock | Common StockClass C Common Stock | Common StockClass D Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non- Controlling Interests | PRSU | PRSUAdditional Paid-In Capital | RSU | RSUAdditional Paid-In Capital | Equity Incentive Plan | Equity Incentive PlanCommon StockClass A Common Stock | Equity Incentive PlanAdditional Paid-In Capital |
Beginning balance ( in shares) at Dec. 31, 2019 | 66,408,328 | 96,933,192 | 8,328,983 | 50,853,172 | ||||||||||||
Beginning balance at Dec. 31, 2019 | $ 4,592,745 | $ 1 | $ 1 | $ 0 | $ 1 | $ 3,329,386 | $ 1,366 | $ 47,833 | $ 1,214,157 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Activities related to exchanges of LLC Interests (in shares) | 1,920,941 | (939,000) | (981,941) | |||||||||||||
Activities related to exchanges of LLC Interests | (336) | $ (1) | (335) | |||||||||||||
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges | 32,736 | 32,736 | ||||||||||||||
Issuance of common stock from equity incentive plans (in shares) | 2,341,171 | |||||||||||||||
Issuance of common stock from equity incentive plans | $ 35,422 | $ 35,422 | ||||||||||||||
Adjustments to non-controlling interests | 0 | 45,436 | 7 | (45,443) | ||||||||||||
Dividends | (13,400) | (13,400) | ||||||||||||||
Stock-based compensation expense | $ 5,407 | $ 5,407 | $ 315 | $ 315 | ||||||||||||
Stock-based compensation expense under the Option Plan | 2,249 | 2,249 | ||||||||||||||
Payroll taxes paid for stock-based compensation exercises | (23,991) | (23,991) | ||||||||||||||
Net income | 62,485 | 43,928 | 18,557 | |||||||||||||
Foreign currency translation adjustments | (4,784) | (3,552) | (1,232) | |||||||||||||
Ending balance (in shares) at Mar. 31, 2020 | 70,670,440 | 96,933,192 | 7,389,983 | 49,871,231 | ||||||||||||
Ending balance at Mar. 31, 2020 | 4,688,848 | $ 1 | $ 1 | $ 0 | $ 0 | 3,426,625 | (2,179) | 78,361 | 1,186,039 | |||||||
Beginning balance ( in shares) at Dec. 31, 2020 | 98,075,465 | 96,933,192 | 3,139,821 | 30,871,381 | ||||||||||||
Beginning balance at Dec. 31, 2020 | 5,019,163 | $ 1 | $ 1 | $ 0 | $ 0 | 4,143,094 | 4,314 | 156,041 | 715,712 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Activities related to exchanges of LLC Interests (in shares) | 3,479,269 | (1,484,996) | (1,994,273) | |||||||||||||
Activities related to exchanges of LLC Interests | 0 | |||||||||||||||
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges | 65,177 | 65,177 | ||||||||||||||
Issuance of common stock from equity incentive plans (in shares) | 3,088,545 | |||||||||||||||
Issuance of common stock from equity incentive plans | 46,397 | 46,397 | ||||||||||||||
Deferred taxes arising from issuance of common stock from equity incentive plans | 6,417 | $ 6,417 | ||||||||||||||
Adjustments to non-controlling interests | 0 | 80,665 | 85 | (80,750) | ||||||||||||
Distributions to non-controlling interests | (2,504) | (2,504) | ||||||||||||||
Dividends | (16,030) | (16,030) | ||||||||||||||
Stock-based compensation expense | $ 5,997 | $ 5,997 | $ 2,523 | $ 2,523 | ||||||||||||
Stock-based compensation expense under the Option Plan | 2,240 | 2,240 | ||||||||||||||
Payroll taxes paid for stock-based compensation exercises | (45,464) | (45,464) | ||||||||||||||
Net income | 81,565 | 67,859 | 13,706 | |||||||||||||
Foreign currency translation adjustments | (343) | (297) | (46) | |||||||||||||
Ending balance (in shares) at Mar. 31, 2021 | 104,643,279 | 96,933,192 | 1,654,825 | 28,877,108 | ||||||||||||
Ending balance at Mar. 31, 2021 | $ 5,165,138 | $ 1 | $ 1 | $ 0 | $ 0 | $ 4,307,046 | $ 4,102 | $ 207,870 | $ 646,118 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Changes in Equity (Parenthetical) | 3 Months Ended |
Mar. 31, 2021$ / shares | |
Limited Liability Company (LLC) Members' Equity [Abstract] | |
Dividends (in dollars per share) | $ 0.08 |
Condensed Consolidated Statem_7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net income | $ 81,565 | $ 62,485 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 40,966 | 37,176 |
Stock-based compensation expense | 10,760 | 7,971 |
Deferred taxes | 15,997 | 7,227 |
(Increase) decrease in operating assets: | ||
Receivable from/payable to brokers and dealers and clearing organizations, net | (101) | (40,563) |
Deposits with clearing organizations | 906 | (1,668) |
Accounts receivable | (38,831) | (43,453) |
Receivable from/payable to affiliates, net | (6,491) | 2,452 |
Other assets | 7,226 | (9,837) |
Increase (decrease) in operating liabilities: | ||
Accrued compensation | (59,275) | (59,910) |
Deferred revenue | 3,995 | 2,306 |
Accounts payable, accrued expenses and other liabilities | 770 | 14,067 |
Employee equity compensation payable | (1,915) | (11) |
Net cash provided by (used in) operating activities | 55,572 | (21,758) |
Cash flows from investing activities | ||
Purchase of furniture, equipment, software and leasehold improvements | (4,359) | (1,298) |
Capitalized software development costs | (8,266) | (7,063) |
Net cash used in investing activities | (12,625) | (8,361) |
Cash flows from financing activities | ||
Proceeds from stock-based compensation exercises | 46,397 | 35,422 |
Offering costs from issuance of Class A common stock in the IPO and follow-on offerings | 0 | (308) |
Dividends | (16,030) | (13,400) |
Capital distributions to non-controlling interests | (2,504) | 0 |
Payroll taxes paid for stock-based compensation | (45,464) | (23,991) |
Payments on tax receivable agreement liability | (6,849) | 0 |
Net cash used in financing activities | (24,450) | (2,277) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 161 | (3,958) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 18,658 | (36,354) |
Cash, cash equivalents and restricted cash | ||
Beginning of period | 792,280 | 461,711 |
End of period | 810,938 | 425,357 |
Supplemental disclosure of cash flow information | ||
Income taxes paid, net of (refunds) | (4,175) | 2,867 |
Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract] | ||
Cash, cash equivalents and restricted cash shown in the statement of cash flows | 792,280 | 425,357 |
Adjusted For Refinitiv Transaction | ||
Non-cash financing activities - Items arising from LLC Interest ownership changes | ||
Establishment of liabilities under tax receivable agreement | 27,666 | 11,212 |
Deferred tax asset | $ 99,260 | $ 43,948 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Tradeweb Markets Inc. (the “Corporation”) was incorporated as a Delaware corporation on November 7, 2018 to carry on the business of Tradeweb Markets LLC (“TWM LLC”) following the completion of a series of reorganization transactions on April 4, 2019 (the “Reorganization Transactions”), in connection with Tradeweb Market Inc.'s initial public offering (the “IPO”), which closed on April 8, 2019. Refinitiv Holdings Limited (the “Parent” and, unless otherwise stated or the context otherwise requires, together with all of its subsidiaries, “Refinitiv”) owns a majority ownership interest in the Company (as defined below). On January 29, 2021, London Stock Exchange Group plc (“LSEG”) completed its acquisition of Refinitiv from a consortium, including certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.) (“Blackstone”) as well as Thomson Reuters Corporation (“TR”), in an all share transaction (the “LSEG Transaction”). In connection with the LSEG Transaction, the Corporation became a consolidating subsidiary of LSEG. Prior to the LSEG Transaction, the Corporation was a consolidating subsidiary of BCP York Holdings, (“BCP”), a company owned by certain investment funds affiliated with Blackstone, through BCP’s previous majority ownership interest in Refinitiv. The Corporation is a holding company whose principal asset is LLC Interests (as defined below) of TWM LLC. As the sole manager of TWM LLC, the Corporation operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts the Corporation’s business. As a result of this control, and because the Corporation has a substantial financial interest in TWM LLC, the Corporation consolidates the financial results of TWM LLC and reports a non-controlling interest in the Corporation’s condensed consolidated financial statements. As of March 31, 2021, Tradeweb Markets Inc. owns 86.8% of TWM LLC and the non-controlling interest holders own the remaining 13.2% of TWM LLC. As of December 31, 2020, Tradeweb Markets Inc. owned 85.1% of TWM LLC and the non-controlling interest holders owned the remaining 14.9% of TWM LLC. Unless the context otherwise requires, references to the “Company” refer to Tradeweb Markets Inc. and its consolidated subsidiaries, including TWM LLC, following the completion of the Reorganization Transactions, and TWM LLC and its consolidated subsidiaries prior to the completion of the Reorganization Transactions. The Company is a leader in building and operating electronic marketplaces for a global network of clients across the institutional, wholesale and retail client sectors. The Company’s principal subsidiaries include: • Tradeweb LLC (“TWL”), a registered broker-dealer under the Securities Exchange Act of 1934, a member of the Financial Industry Regulatory Authority (“FINRA”), a registered independent introducing broker with the Commodities Future Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”). • Dealerweb Inc. (“DW”) (formerly known as Hilliard Farber & Co., Inc.), a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA. DW is also registered as an introducing broker with the CFTC and NFA. • Tradeweb Direct LLC (“TWD”) (formerly known as BondDesk Trading LLC), a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA. • Tradeweb Europe Limited (“TEL”), a Multilateral Trading Facility regulated by the Financial Conduct Authority (the “FCA”) in the UK, which maintains branches in Asia which are regulated by certain Asian securities regulators. • TW SEF LLC (“TW SEF”), a Swap Execution Facility (“SEF”) regulated by the CFTC. • DW SEF LLC (“DW SEF”), a SEF regulated by the CFTC. • Tradeweb Japan K.K. (“TWJ”), a security house regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”). • Tradeweb EU B.V. (“TWEU”), a Trading Venue and Approved Publication Arrangement regulated by the Netherlands Authority for the Financial Markets (“AFM”). • Tradeweb Execution Services Limited (“TESL”), a Banks, Building Societies and Investment Firm (“BIPRU Firm”) regulated by the FCA in the UK. On February 2, 2021, the Company announced that it entered into a definitive agreement to acquire Nasdaq’s U.S. fixed income electronic trading platform. The Nasdaq platform (formerly known as eSpeed) is a fully executable central order limit book (CLOB) for electronic trading in on-the-run (OTR) U.S. Treasuries. Nasdaq’s CLOB will become part of the Company’s wholesale client sector. The $190.0 million, all-cash transaction has not closed as of March 31, 2021 and is expected to close later in 2021, subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals. A majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 (the “Refinitiv Transaction”) from TR. The Refinitiv Transaction resulted in a new basis of accounting for certain of the Company's assets and liabilities beginning on October 1, 2018. See Note 2 – Significant Accounting Policies for a description of pushdown accounting applied as a result of the Refinitiv Transaction. In connection with the Reorganization Transactions, TWM LLC’s limited liability company agreement (the “TWM LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of common membership interests in TWM LLC (the “LLC Interests”), (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC. As used herein, references to “Continuing LLC Owners” refer collectively to (i) those “ Original LLC Owners ” , incl uding an indirect subsidiary of Refinitiv, certain investment and commercial banks (collectively, the “Bank Stockholders”) and members of management, that contin ued to own LLC Interests after the completion of the IPO and Reorganization Transactions, that received shares of Class C common stock, par value $0.00001 per share, of the Corporation (the “Class C common stock”), shares of Class D common stock, par value $0.00001 per share, of the Corporation (the “Class D common stock”) or a combination of both, as the case may be, in connection with the completion of the Reorganization Transactions, and that may redeem or exchange their LLC Interests for shares of Class A common stock, par value $0.00001 per share, of the Corporation (the “Class A common stock”) or Class B common stock, par value $0.00001 per share, of the Corporation (the “Class B common stock”) and (ii) solely with respect to the Tax Receivable Agreement (as defined in Note 6 – Tax Receivable Agreement), also includes those Original LLC Owners, including certain Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO. As of March 31, 2021: • The public investors collectively owned 104,643,279 shares of Class A common stock, representing 7.7% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and indirectly, through Tradeweb Markets Inc., owned 45.1% of the economic interest in TWM LLC; • Refinitiv collectively owned 96,933,192 shares of Class B common stock and 22,988,329 shares of Class D common stock, representing 87.9% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 51.7% of the economic interest in TWM LLC; and • The Bank Stockholders that continue to own LLC Interests collectively owned 1,654,825 shares of Class C common stock and 5,767,435 shares of Class D common stock, representing 4.3% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly own 3.2% of the economic interest in TWM LLC. • Other stockholders that continue to own LLC Interests also collectively owned 121,344 shares of Class D common stock, representing less than 0.1% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly own less than 0.1% of the economic interest in TWM LLC. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies The following is a summary of significant accounting policies: Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As discussed in Note 1 – Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and its subsidiaries and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. The condensed consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by the Continuing LLC Owners. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The consolidated financial information as of December 31, 2020 has been derived from audited financial statements not included herein. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) with respect to interim financial reporting and Form 10-Q. In accordance with such rules and regulations, certain disclosures that are normally included in annual financial statements have been omitted. These unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the condensed consolidated financial statements. Reclassifications Certain reclassifications have been made to prior periods' financial information to conform to the current year presentation. This primarily includes an aggregation of transaction fees and commissions into a single revenue category titled “transaction fees and commissions” for all periods presented in condensed consolidated income statements. These reclassifications had no impact on total consolidated revenue or consolidated net income. Pushdown Accounting In connection with the Refinitiv Transaction, a majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 from TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations, and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting which resulted in a new fair value basis of accounting for certain of the Company's assets and liabilities beginning on October 1, 2018. Under the pushdown accounting applied, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as of October 1, 2018 was recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of the Company's long-lived and indefinite-lived intangible assets, including software development costs. Cash and Cash Equivalents Cash and cash equivalents consists of cash and highly liquid investments (such as short-term money market instruments) with original maturities at the time of purchase of three months or less. Allowance for Credit Losses The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of our counterparties is also performed. Once determined uncollectable, aged balances are written off as credit loss expense, which is included in general and administrative expenses on the condensed consolidated statements of income. See Note 11 – Credit Risk for additional information. Receivable from and Payable to Brokers and Dealers and Clearing Organizations Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions executed on the Company's wholesale platform which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction. Deposits with Clearing Organizations Deposits with clearing organizations are comprised of cash deposits. Furniture, Equipment, Purchased Software and Leasehold Improvements Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from three Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable in accordance with ASC 360, Property, Plant and Equipment ( “ ASC 360 ” ). As of March 31, 2021 and December 31, 2020, accumulated depreciation related to furniture, equipment, purchased software and leasehold improvements totaled $40.8 million and $35.4 million, respectively. Depreciation expense for furniture, equipment, purchased software and leasehold improvements was $5.4 million and $4.3 million for the three months ended March 31, 2021 and 2020, respectively. Software Development Costs The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed, in accordance with ASC 350, Intangibles – Goodwill and Other ( “ ASC 350 ” ) . The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Costs capitalized as part of the pushdown accounting allocation are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred. As of March 31, 2021 and December 31, 2020, accumulated amortization related to software development costs totaled $78.1 million and $67.4 million, respectively. Amortization expense for software development costs was $10.7 million and $8.0 million for the three months ended March 31, 2021 and 2020, respectively. Goodwill Goodwill is the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as previously applied under pushdown accounting in connection with the Refinitiv Transaction. Goodwill also includes the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date. Goodwill is not amortized, but in accordance with ASC 350, goodwill is tested for impairment annually on October 1 st and between annual tests, whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. An impairment loss is recognized if the estimated fair value of a reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. Goodwill was last assessed on October 1, 2020 and no impairment of goodwill was identified. Intangible Assets Intangible assets with a finite life are amortized over the estimated lives, ranging from seven As of March 31, 2021 and December 31, 2020, accumulated amortization related to intangible assets totaled $248.5 million and $223.7 million, respectively. Amortization expense for definite-lived intangible assets was $24.9 million for each of the three months ended March 31, 2021 and 2020. Equity Investments Without Readily Determinable Fair Values Equity Investments without a readily determinable fair value are measured at cost, less impairment, plus or minus observable price changes (in orderly transactions) of an identical or similar investment of the same issuer. If the Company determines that the equity investment is impaired on the basis of a qualitative assessment, the Company will recognize an impairment loss equal to the amount by which the investment’s carrying amount exceeds its fair value. Equity investments are included as a component of other assets on the condensed consolidated statements of financial condition. Leases The Company has operating leases for corporate offices and data centers with initial lease terms ranging from one to 10 years. A right-of-use asset and a lease liability are recognized for all leases with an initial term in excess of twelve months. Significant assumptions and judgements in calculating the right-of-use assets and lease liability include the determination of the applicable borrowing rate for each lease. The Company includes the term covered by an option to extend a lease when the option is reasonably certain to be exercised. The asset reflects the present value of unpaid lease payments coupled with initial direct costs, prepaid lease payments and lease incentives. The amount of the lease liability is calculated as the present value of unpaid lease payments. The Company adopted Accounting Standards Update ("ASU") 2016-2, Leases (Topic 842) on January 1, 2019 using the modified retrospective method of adoption and elected to take the optional package of practical expedients, which allowed for no reassessment of: i. whether any expired or existing contracts are or contain leases, ii. the lease classification for any expired or existing leases, and iii. initial direct costs for any existing leases. Deferred IPO and Follow-On Offering Costs Deferred IPO and follow-on offering costs consist of legal, accounting, and other costs directly related to the Company’s efforts to raise capital. In accordance with ASC 505-10-25, Equity , these costs are recognized as a reduction in additional paid-in capital within the condensed consolidated statements of financial condition when the offering is effective. As of both March 31, 2021 and December 31, 2020, $15.9 million of deferred costs related to the IPO and $5.2 million of deferred costs related to follow-on offerings were included as a component of the additional paid-in capital balance in the condensed consolidated statements of financial condition. No offering costs were incurred during the three months ended March 31, 2021 . Translation of Foreign Currency and Foreign Currency Forward Contracts Revenues and expenses denominated in foreign currencies are translated at the rate of exchange prevailing at the transaction date. Assets and liabilities denominated in foreign currencies are translated at the rate prevailing at the condensed consolidated statements of financial condition date. Foreign currency re-measurement gains or losses on transactions in nonfunctional currencies are recognized in the condensed consolidated statements of income within general and administrative expenses and the realized and unrealized losses totaled $1.9 million during the three months ended March 31, 2021 and realized and unrealized gains totaled $1.5 million during the three months ended March 31, 2020. Gains or losses on translation in the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included as a component of other comprehensive income. The Company enters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus Euro exposure, generally with a duration of less than twelve months. The Company’s foreign currency forward contracts are not designated as hedges for accounting purposes and changes in the fair value of these contracts during the period are recognized in the condensed consolidated statements of income within general and administrative expenses. The Company does not use derivative instruments for trading or speculative purposes. Realized and unrealized gains on foreign currency forward contracts totaled $5.7 million during the three months ended March 31, 2021 and realized and unrealized losses on foreign currency forward contracts totaled $0.5 million during the three months ended March 31, 2020. See Note 10 – Fair Value of Financial Instruments for additional details on the Company's derivative instruments. Income Tax The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The Company evaluates the need for valuation allowances based on the weight of positive and negative evidence. The Company records valuation allowances wherever management believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the future. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the condensed consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition. The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act as a current period expense when incurred. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718” ) . ASC 718 focuses primarily on accounting for a transaction in which an entity obtains employee services in exchange for stock-based payments. Under ASC 718, the stock-based payments received by the employees of the Company are accounted for either as equity awards or as liability awards. As an equity award, the Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital. As a liability award, the cost of employee services received in exchange for an award of equity instruments is generally measured based on the grant-date fair value of the award. The fair value of that award is remeasured subsequently at each reporting date through the settlement. Changes in the equity instrument's fair value during the requisite service period are recognized as compensation cost over that period. For periods following the Reorganization Transactions and the IPO, the fair value of new equity instrument grants is determined based on the price of the Class A common stock on the grant date. Under ASC 718, the grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. The grant-date fair value of stock-based awards that require future service, and are graded-vesting awards, are amortized over the relevant service period on a straight-line basis, with each tranche separately measured. The grant-date fair value of stock-based awards that require both future service and the achievement of Company performance-based conditions, are amortized over the relevant service period for the performance-based condition. If in a reporting period it is determined that the achievement of a performance target for a performance-based tranche is not probable, then no expense is recognized for that tranche and any expenses already recognized relating to that tranche in prior reporting periods are reversed in the current reporting period. Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). In accounting for the options issued under the Option Plan, compensation expense is measured and recognized for all awards based on their estimated fair values measured as of the grant date. Costs related to these options are recognized as an expense in the condensed consolidated statements of income over the requisite service period, with an offsetting increase to additional paid-in capital. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of 2019. Determining the appropriate fair value model and calculating the fair value of the stock-based awards requires the input of highly subjective assumptions, including the expected life of the stock-based awards and the stock price volatility. The Company uses the Black-Scholes pricing model to value some of its stock-based awards. Earnings Per Share Basic earnings per share is computed by dividing the net income attributable to the Company's shares by the weighted-average number of the Company's shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if securities that qualify as participating securities were converted into or exchanged or exercised for TWM LLC’s shares, in the pre-IPO period, and the Class A or Class B common stock, in the post-IPO period, using the treasury stock method, as applicable. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share. Fair Value Measurement The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy under ASC 820, Fair Value Measurement (“ASC 820”) , prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below. Basis of Fair Value Measurement A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. • 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 considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; • Level 3 : Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
Restricted Cash
Restricted Cash | 3 Months Ended |
Mar. 31, 2021 | |
Restricted Cash Equivalents [Abstract] | |
Restricted Cash | Restricted CashCash has been segregated in a special reserve bank account for the benefit of brokers and dealers under SEC Rule 15c3-3. The Company computes the proprietary accounts of other broker-dealers (“PAB”) reserve, which requires the Company to maintain minimum segregated cash in the amount of total credits per the reserve computation. As of both March 31, 2021 and December 31, 2020, cash in the amount of $1.0 million has been segregated in the PAB reserve account exceeding the requirements pursuant to SEC Rule 15c3-3. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Revenue Recognition The Company earns transaction fees from transactions executed on the Company’s trading platforms through various fee plans. Transaction fees are generated both on a variable and fixed price basis and vary by geographic region, product type and trade size. For variable transaction fees, the Company charges clients fees based on the mix of products traded and the volume of transactions executed. Transaction fee revenue is recognized and recorded on a trade-date basis and is generally billed monthly. The Company earns commission revenue from its electronic and voice brokerage services on a riskless principal basis. Riskless principal revenues are derived on matched principal transactions where revenues are earned on the spread between the buy and sell price of the transacted product. Securities transactions and related commission income for brokerage transactions are recognized and recorded on a trade-date basis. Commission revenue is collected by the Company when the trade settles or is billed monthly. The Company earns subscription fees from granting access to institutional investors to the Company's electronic marketplaces. Subscription fees are recognized into income in the period that access is provided on a monthly basis. Also included in subscription fees are viewer fees earned monthly from institutional investors accessing fixed income market data. The frequency of subscription fee billings varies from monthly to annually, depending on contract terms. Fees received by the Company which are not yet earned are included in deferred revenue on the condensed consolidated statements of financial condition until the revenue recognition criteria has been met. The Company earns fees from Refinitiv relating to the sale of market data to Refinitiv, which redistributes that data. Included in these fees, which are billed quarterly, are real-time market data fees which are recognized in the period that the data is provided, generally on a monthly basis, and historical data sets which are recognized when the historical data set is provided to Refinitiv. Significant judgements used in accounting for this contract include: • The provision of real-time market data feeds and annual historical data sets are distinct performance obligations. • The performance obligations under this contract are recognized over time from the initial delivery of the data feeds or each historical data set until the end of the contract term. • Determining the transaction price for the performance obligations by using a market assessment analysis. Inputs in this analysis include a consultant study which determined the overall value of the Company's market data and pricing information for historical data sets provided by other companies. Some revenues earned by the Company have fixed fee components, such as monthly minimums or fixed monthly fees, and variable components, such as transaction based fees. The breakdown of revenues between fixed and variable revenues for the three months ended March 31, 2021 and 2020 is as follows: Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 (in thousands) (in thousands) Variable Fixed Variable Fixed Revenues Transaction fees and commissions $ 179,667 $ 38,149 $ 147,778 $ 35,539 Subscription Fees including Refinitiv market data fees 462 52,523 465 48,646 Other 213 2,385 110 2,068 Total revenue $ 180,342 $ 93,057 $ 148,353 $ 86,253 Deferred Revenue The Company records deferred revenue when cash payments are received or due in advance of services to be performed. The recognized revenue and remaining balance is shown below (in thousands): Amount Deferred revenue balance - December 31, 2020 $ 23,193 New billings 30,762 Revenue recognized (26,769) Deferred revenue balance - March 31, 2021 $ 27,186 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s provision for income taxes includes U.S. federal, state, local and foreign taxes. The Company’s effective tax rate for the three months ended March 31, 2021 and 2020 was approximately 16.6% and 20.2%, respectively. The effective tax rate for the three months ended March 31, 2021 and 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to the effect of non-controlling interests and the tax impact of the issuance of common stock from equity incentive plans, partially offset by state, local and foreign taxes. As a result of the Reorganization Transactions, the Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. The Company’s actual effective tax rate will be impacted by the Corporation’s ownership share of TWM LLC, which will increase over time primarily as the Continuing LLC Owners redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, or the Corporation purchases LLC Interests from the Continuing LLC Owners. The Company's consolidated effective tax rate will vary from period to period depending on redemptions, exchanges or purchases of LLC Interests as described above, changes in the geographic mix of its earnings and changes in tax legislation and tax rates in various jurisdictions. The Company expects to obtain an increase in its share of the tax basis of the assets of TWM LLC when LLC Interests are redeemed or exchanged by the Continuing LLC Owners and in connection with certain other qualifying transactions. This increase in tax basis may have the effect of reducing the amounts that the Corporation would otherwise pay in the future to various tax authorities. Pursuant to the Tax Receivable Agreement, the Corporation is required to make cash payments to the Continuing LLC Owners equal to 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances are deemed to realize) as a result of certain future tax benefits to which we may become entitled. The Corporation expects to benefit from the remaining 50% of tax benefits, if any, that the Corporation may actually realize. See Note 6 – Tax Receivable Agreement. The tax benefit has been recognized in deferred tax assets on the March 31, 2021 condensed consolidated statement of financial condition. As a result of the Refinitiv Contribution, the Company assumed the tax liabilities of the contributed entity. The contributed entity is under audit by the State of New Jersey for the tax years 2012 – 2015 and is appealing a tax assessment from an audit by the State of New Jersey for the tax years 2008 – 2011. As of both March 31, 2021 and December 31, 2020, the tax liability related to the Refinitiv Contribution was $2.7 million and is included within accounts payable, accrued expenses and other liabilities on the condensed consolidated statement of financial condition. The Company is indemnified by Refinitiv for tax liabilities that were assumed by the Company as a result of the Refinitiv Contribution. As of both March 31, 2021 and December 31, 2020, $2.7 million is included in other as |
Tax Receivable Agreement
Tax Receivable Agreement | 3 Months Ended |
Mar. 31, 2021 | |
Tax Receivable Agreement | |
Tax Receivable Agreement | Tax Receivable Agreement In connection with the Reorganization Transactions, the Corporation entered into a tax receivable agreement (the “Tax Receivable Agreement”) with TWM LLC and the Continuing LLC Owners, which provides for the payment by the Corporation to a Continuing LLC Owner of 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO and any subsequent offerings or (b) redemptions or exchanges by such Continuing LLC Owner of LLC Interests for shares of Class A common stock or Class B common stock or for cash, as applicable, and (ii) certain other tax benefits related to the Corporation making payments under the Tax Receivable Agreement. Payments under the Tax Receivable Agreement are made within 150 days after the filing of the tax return based on the actual tax savings realized by the Corporatio n. The first payment of the Tax Receivable Agreement was made in January 2021. Substantially all payments due under the tax receivable agreement are payable over the fifteen years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests. The Corporation accounts for the income tax effects resulting from taxable redemptions or exchanges of LLC Interests by the Continuing LLC Owners for shares of Class A common stock or Class B common stock or cash, as the case may be, and purchases by the Corporation of LLC Interests from the Continuing LLC Owners by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of each redemption, exchange, or purchase, as the case may be. Further, the Corporation evaluates the likelihood that it will realize the benefit represented by the deferred tax asset, and, to the extent that the Corporation estimates that it is more likely than not that it will not realize the benefit, it reduces the carrying amount of the deferred tax asset with a valuation allowance. The impact of any changes in the projected obligations under the Tax Receivable Agreement as a result of changes in the mix of the Company’s earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact the Corporation’s tax savings, are reflected in income before taxes on the condensed consolidated statement of income in the period in which the change occurs. As of March 31, 2021 and December 31, 2020, the Tax Receivable Agreement liability on the condensed consolidated statements of financial condition totaled $425.2 million and $404.3 million, respectively. |
Non-Controlling Interests
Non-Controlling Interests | 3 Months Ended |
Mar. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interests | Non-Controlling Interests In connection with the Reorganization Transactions, Tradeweb Markets Inc. became the sole manager of TWM LLC and, as a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, consolidates the financial results of TWM LLC into its condensed consolidated financial statements. The non-controlling interests balance reported on the condensed consolidated statements of financial condition represents the economic interests of TWM LLC held by the holders of LLC Interests other than Tradeweb Markets Inc. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by Tradeweb Markets Inc. and the other holders of LLC Interests. The following table summarizes the ownership interest in Tradeweb Markets LLC: March 31, 2021 March 31, 2020 LLC Ownership LLC Ownership Number of LLC Interests held by Tradeweb Markets Inc. 201,576,471 86.8 % 167,603,632 74.5 % Number of LLC Interests held by non-controlling interests 30,531,933 13.2 % 57,261,214 25.5 % Total LLC Interests outstanding 232,108,404 100.0 % 224,864,846 100.0 % LLC Interests held by the Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement at the election of the members for shares of Class A common stock or Class B common stock, on a one-for-one basis or, at the Company's option, a cash payment in accordance with the terms of the TWM LLC Agreement. The following table summarizes the impact on Tradeweb Market Inc.'s equity due to changes in the Corporation’s ownership interest in TWM LLC (in thousands): Net Income Attributable to Tradeweb Markets Inc. and Transfers (to) from the Non-Controlling Interests Three Months Ended March 31, 2021 2020 Net income attributable to Tradeweb Markets Inc. $ 67,859 $ 43,928 Transfers (to) from non-controlling interests: Increase in Tradeweb Markets Inc.'s additional paid-in capital as a result of ownership changes in TWM LLC 80,665 45,436 Net transfers (to) from non-controlling interests 80,665 45,436 Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests $ 148,524 $ 89,364 |
Stockholders' Equity and Stock-
Stockholders' Equity and Stock-Based Compensation Plans | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stockholders' Equity and Stock-Based Compensation Plans | Stockholders' Equity and Stock-Based Compensation Plans The rights and privileges of the Company's stockholders' equity and LLC Interests are described in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and there have been no changes to those rights and privileges during the three months ended March 31, 2021. Under the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan, the Company is authorized to issue up to 8,841,864 new shares of Class A common stock to employees, officers and non-employee directors. Under this plan, the Company may grant awards in respect of shares of Class A common stock, including performance-based restricted stock units (“PRSUs”), stock options, restricted stock units (“RSUs”) and dividend equivalent rights. The awards may have performance-based and/or time-based vesting conditions. Stock options have a maximum contractual term of 10 years. During the three months ended March 31, 2021, the Company granted 319,860 RSUs and 205,655 PRSUs at a weighted-average grant-date fair value of $74.15 and $74.16, respectively. RSUs and PRSUs each represent promises to issue actual shares of Class A common stock at the end of a vesting period. The RSU awards granted to employees will vest one-third each year over a three-year period, and RSU awards granted to non-employee directors will vest after one year. PRSUs vest at the end of a three-year cliff vesting period and the number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the financial performance of the Company in the grant year. The performance modifier can vary between 0% (minimum) and 200% (maximum) of the target (100%) award amount. A summary of the Company's total stock-based compensation expense is presented below (in thousands): Three Months Ended March 31, 2021 2020 Total stock-based compensation expense $ 10,760 $ 7,971 Share Repurchase Program On February 4, 2021, the Company announced that the board of directors authorized a new share repurchase program, primarily to offset annual dilution from stock-based compensation plans (the “Share Repurchase Program”). The Share Repurchase Program authorizes the purchase of up to $150.0 million of the Company's Class A common stock at the Company's discretion through the end of fiscal year 2023. The Share Repurchase Program will be effected primarily through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1). The amounts and timing of the repurchases will be subject to general market conditions and the prevailing price and trading volumes of our Class A common stock. The Share Repurchase Program does not require the Company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. No share repurchases were made pursuant to the Share Repurchase Program during the three months ended March 31, 2021. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company enters into transactions with its affiliates from time to time which are considered to be related party transactions. Prior to the Reorganization Transactions, the Bank Stockholders were collectively considered to be related parties of the Company. As a result of the Reorganization Transactions, they are no longer considered to be related parties. At March 31, 2021 and December 31, 2020, the following balances with such affiliates were included in the condensed consolidated statements of financial condition in the following line items (in thousands): March 31, 2021 December 31, 2020 Accounts receivable $ 4,570 $ 4,009 Receivable from affiliates 2,527 111 Other assets 2,722 2,722 Accounts payable, accrued expenses and other liabilities 7,617 6,140 Deferred revenue 4,500 4,500 Payable to affiliates 1,816 5,142 The following balances with such affiliates were included in the condensed consolidated statements of income in the following line items (in thousands): Three Months Ended March 31, 2021 2020 Revenue: Subscription fees $ 569 $ — Refinitiv market data fees (1) 15,117 14,628 Other fees 161 — Expenses: Shared Services Fees: (2) Technology and communications 740 740 General and administrative 2 24 Occupancy — 46 (1) The Company maintains a market data license agreement with Refinitiv. Under the agreement, the Company delivers to Refinitiv certain market data feeds which Refinitiv redistributes to its customers. The Company earns license fees and royalties for these feeds. (2) The Company maintains a shared services agreement with Refinitiv. Under the terms of the agreement, Refinitiv provides the Company with certain real estate, payroll, benefits administration, insurance, content, financial reporting and tax support. The Company reimburses affiliates of Refinitiv for expenses paid on behalf of the Company for various services including salaries and bonuses, marketing, professional fees, communications, data costs and certain other administrative services. For the three months ended March 31, 2021 and 2020, the Company reimbursed such affiliates approximately $0.2 million and $0.3 million, respectively, for these expenses. The Company en gaged Blackstone Advisory Partners L.P., an affiliate of Blackstone, to provide certain financial consulting services in connection with the IPO, the October 2019 follow-on offering and the April 2020 follow-on offering for fees of $1.0 million, $0.5 million, and $0.5 million, respectively, which fees, with respect to the October 2019 follow-on offering and the April 2020 follow-on offering, were reimbursed by the underwriters. As of both March 31, 2021 and December 31, 2020, $2.0 million related to these offering costs, is included as a component of the additional paid-in capital balance on the condensed consolidated statements of financial condition. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial Instruments Measured at Fair Value The Company's financial instruments measured at fair value on the condensed consolidated statements of financial condition as of March 31, 2021 and December 31, 2020 have been categorized based upon the fair value hierarchy as follows (in thousands) : Quoted Prices in active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As of March 31, 2021 Assets Cash equivalents – Money market funds $ 623,334 $ — $ — $ 623,334 Receivable from affiliates – Foreign currency forward contracts 2,508 2,508 Total assets measured at fair value $ 623,334 $ 2,508 $ — $ 625,842 Liabilities Payable to affiliates – Foreign currency forward contracts $ — $ 21 $ — $ 21 Total liabilities measured at fair value $ — $ 21 $ — $ 21 As of December 31, 2020 Assets Cash equivalents – Money market funds $ 541,790 $ — $ — $ 541,790 Total assets measured at fair value $ 541,790 $ — $ — $ 541,790 Liabilities Payable to affiliates – Foreign currency forward contracts $ — $ 3,409 $ — $ 3,409 Total liabilities measured at fair value $ — $ 3,409 $ — $ 3,409 The Company's money market funds are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The valuation for the Company’s foreign currency forward contracts is primarily based on the difference between the exchange rate associated with the forward contract and the exchange rate at the current period end. Foreign currency forward contracts are categorized as Level 2 in the fair value hierarchy. The Company enters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus Euro exposure, generally with a duration of less than twelve months. As of March 31, 2021 and December 31, 2020 , the counterparty on each of the foreign currency forward contracts was an affiliate of Refinitiv and therefore the corresponding liabilities on such contracts were included in payable to affiliates on the accompanying condensed consolidated statements of financial condition. The following table summarizes the aggregate U.S. dollar equivalent notional amount of the Company's foreign currency forward contracts not designated as hedges for accounting purposes (in thousands): March 31, 2021 December 31, 2020 Foreign currency forward contracts – Gross notional amount $ 122,394 $ 122,458 The Company’s foreign currency forward contracts are not designated as hedges for accounting purposes and changes in the fair value of these contracts during the period are recognized in the condensed consolidated statements of income within general and administrative expenses. The total realized and unrealized gains (losses) on foreign currency forward contracts recorded in the condensed consolidated statements of income are as follows (in thousands): Three Months Ended March 31, 2021 2020 Total realized and unrealized gains (losses) recognized in general and administrative expenses: Foreign currency forward contracts not designated in accounting hedge relationship $ 5,698 $ (547) The Company has no financial instruments measured at fair value that are classified within level 3 of the fair value hierarchy. Financial Instruments Not Measured at Fair Value The Company's financial instruments not measured at fair value on the condensed consolidated statements of financial condition as of March 31, 2021 and December 31, 2020 have been categorized based upon the fair value hierarchy as follows (in thousands) : Carrying Value Quoted Prices in Significant Observable Inputs (Level 2) Significant Total Fair Value As of March 31, 2021 Assets Cash and restricted cash $ 187,604 $ 187,604 $ — $ — $ 187,604 Receivable from brokers and dealers and clearing organizations 25,362 — 25,362 — 25,362 Deposits with clearing organizations 10,783 10,783 — — 10,783 Accounts receivable 144,494 — 144,494 — 144,494 Other assets – Memberships in clearing organizations 1,583 — — 1,583 1,583 Total $ 369,826 $ 198,387 $ 169,856 $ 1,583 $ 369,826 Liabilities Payable to brokers and dealers and clearing organizations $ 25,145 $ — $ 25,145 $ — $ 25,145 Total $ 25,145 $ — $ 25,145 $ — $ 25,145 As of December 31, 2020 Assets Cash and restricted cash $ 250,490 $ 250,490 $ — $ — $ 250,490 Receivable from brokers and dealers and clearing organizations 368 — 368 — 368 Deposits with clearing organizations 11,671 11,671 — — 11,671 Accounts receivable 105,286 — 105,286 — 105,286 Other assets – Memberships in clearing organizations 1,586 — — 1,586 1,586 Total $ 369,401 $ 262,161 $ 105,654 $ 1,586 $ 369,401 Liabilities Payable to brokers and dealers and clearing organizations $ 252 $ — $ 252 $ — $ 252 Total $ 252 $ — $ 252 $ — $ 252 The carrying value of financial instruments not measured at fair value classified within level 1 or level 2 of the fair value hierarchy approximates fair value because of the relatively short term nature of the underlying assets or liabilities. The memberships in clearing organizations, which are included in other assets on the condensed consolidated statements of financial condition, are classified within level 3 of the fair value hierarchy because the valuation requires assumptions that are both significant and unobservable. Financial Instruments Without Readily Determinable Fair Values Included in other assets on the condensed consolidated statements of financial condition are equity investments without readily determinable fair values of $21.1 million at both March 31, 2021 and December 31, 2020, respectively. There were no impairments or adjustments to the carrying value of equity investments without readily determinable fair values during the three months ended March 31, 2021 and 2020 and no adjustments to the original cost basis have been made to the carrying value over the life of the instruments. |
Credit Risk
Credit Risk | 3 Months Ended |
Mar. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Credit Risk | Credit Risk In the normal course of business the Company, as agent, executes transactions with, and on behalf of, other brokers and dealers. If the agency transactions do not settle because of failure to perform by either counterparty, the Company may be obligated to discharge the obligation of the non-performing party and, as a result, may incur a loss if the market value of the security is different from the contract amount of the transaction. A substantial number of the Company's transactions are collateralized and executed with, and on behalf of, a limited number of broker-dealers. The Company's exposure to credit risk associated with the nonperformance of these clients in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets which may impair the clients' ability to satisfy their obligations to the Company. From time to time, the Company enters into agreements to repurchase to facilitate the clearance of securities. Credit exposure related to these agreements to repurchase, including the risk related to a decline in market value of collateral (pledged or received), is managed by entering into agreements to repurchase with overnight or short-term maturity dates and only entering into repurchase transactions with netting members of the Fixed Income Clearing Corporation (“FICC”). The FICC requires dealer netting members to maintain a minimum of $25.0 million in equity capital and $10.0 million in excess net capital (as defined in Rule 15c3-1 under the Securities Exchange Act of 1934). The FICC operates a continuous net settlement system, whereby as trades are submitted and compared the FICC becomes the counterparty. The FICC also marks to market collateral on a daily basis, requiring member firms to pay or receive margin amounts as part of their daily funds settlement. The Company does not expect nonperformance by counterparties in the above situations. However, the Company's policy is to monitor its market exposure and counterparty risk. In addition, the Company has a policy of reviewing, as considered necessary, the credit standing of each counterparty with which it conducts business. Allowance for Credit Losses The Company may be exposed to credit risk regarding its receivables, which are primarily receivables from financial institutions, including investment managers and broker-dealers. At both March 31, 2021 and December 31, 2020, the Company maintained an allowance for credit losses with regard to these receivables of $0.2 million. There was no credit loss expense recognized for each of the three months ended March 31, 2021 and 2020 and recoveries resulted in a reversal of credit loss expense totaling $0.1 million and none for the three months ended March 31, 2021 and 2020, respectively. The Company maintains an allowance for credit losses based upon an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of our counterparties is also performed. The Company has evaluated its loss assumptions as a result of the COVID-19 pandemic and determined the current estimate of expected credit losses remains reasonable due to continued strong collections and no deterioration in the accounts receivable aging. Account balances are pooled based on the following risk characteristics: 1. Geographic location 2. Transaction fee type (billing type) 3. Legal entity Write-Offs Once determined uncollectable, aged balances are written off as credit loss expense. This determination is based on careful analysis of individual receivables and aging schedules, which are disaggregated based on the risk characteristics described above. Based on current policy, this generally occurs when the receivable is 360 days past due. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company enters into user agreements with its dealers which provide the dealers with indemnification from third parties in the event that the electronic marketplaces of the Company infringe upon the intellectual property or other proprietary right of a third party. The Company's exposure under these user agreements is unknown as this would involve estimating future claims against the Company which have not yet occurred. However, based on its experience, the Company expects the risk of a material loss to be remote. The Company has been named as a defendant, along with other financial institutions, in antitrust class actions (consolidated into two actions) relating to trading practices in United States Treasury securities auctions. The Company has filed a motion to dismiss the actions, which was granted on March 31, 2021. The Court has, however, given the Plaintiffs leave to further amend the complaint by no later than May 14, 2021. Based on the prior complaints and the nature of the allegations previously made, the Company believes that it will have meritorious defenses to a further amended complaint and intends to continue to vigorously defend its position. If an amended complaint is filed, further motions to dismiss are scheduled to be fully briefed by the end of July 2021. Additionally, the Company was dismissed from a class action relating to an interest rate swaps matter in 2017, but that matter continues against the remaining defendant financial institutions. The Company records its best estimate of a loss, including estimated defense costs, when the loss is considered probable and the amount of such loss can be reasonably estimated. Based on its experience, the Company believes that the amount of damages claimed in a legal proceeding is not a meaningful indicator of the potential liability. At this time, the Company cannot reasonably predict the timing or outcomes of, or estimate the amount of loss, or range of loss, if any, related to its pending legal proceedings, including the matters described above, and therefore does not have any contingency reserves established for any of these matters. Revolving Credit Facility On April 8, 2019, the Company entered into a five year, $500.0 million senior secured revolving credit facility (“Credit Facility”) with a syndicate of banks. The Credit Facility was subsequently amended on November 7, 2019. The Credit Facility provides additional borrowing capacity to be used to fund ongoing working capital needs, letters of credit and for general corporate purposes, including potential future acquisitions and expansions. Under the terms of the credit agreement that governs the Credit Facility, borrowings under the Credit Facility bear interest at a rate equal to, at the Company’s option, either (a) a base rate equal to the greatest of (i) the administrative agent’s prime rate, (ii) the federal funds effective rate plus ½ of 1.0% and (iii) one month LIBOR plus 1.0%, in each case plus 0.75%, or (b) LIBOR plus 1.75%, subject to a 0.00% floor. The credit agreement also includes a commitment fee of 0.25% for available but unborrowed amounts and other administrative fees that are payable quarterly. The Credit Facility is available until April 2024, provided the Company is in compliance with all covenants. Financial covenant requirements include maintaining minimum ratios related to interest coverage and leverage. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table summarizes the calculations of basic and diluted earnings per share of Class A and Class B common stock for Tradeweb Markets Inc.: Three Months Ended March 31, 2021 2020 (in thousands, except share and per share amounts) Numerator: Net income attributable to Tradeweb Markets Inc. $ 67,859 $ 43,928 Denominator: Weighted average shares of Class A and Class B common stock outstanding - Basic 199,064,607 166,234,749 Dilutive effect of equity-settled PRSUs 1,832,308 2,038,422 Dilutive effect of options 3,851,594 6,221,549 Dilutive effect of RSUs 280,208 22,524 Weighted average shares of Class A and Class B common stock outstanding - Diluted 205,028,717 174,517,244 Earnings per share - Basic $ 0.34 $ 0.26 Earnings per share - Diluted $ 0.33 $ 0.25 For the three months ended March 31, 2021, there were approximately 60,315 weighted-average RSUs and 77,692 PRSUs that were anti-dilutive. As a result, these shares, which are still outstanding, were excluded from the computation of diluted earnings per share. For the three months ended March 31, 2020, there were approximately 378,124 weighted-average shares underlying options that were anti-dilutive and thus excluded from the computation of diluted earnings per share. LLC Interests held by the Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for shares of Class A or Class B common stock of Tradeweb Markets Inc. After evaluating the potential dilutive effect under the if-converted method, for the three months ended March 31, 2021 and 2020, there were 31,214,407 and 57,644,547 weighted-average LLC Interests, respectively, from the assumed exchange of non-controlling interests that were determined to be anti-dilutive and thus were excluded from the computation of diluted earnings per share. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share and are not participating securities for purposes of the computation of diluted earnings per share. |
Regulatory Capital Requirements
Regulatory Capital Requirements | 3 Months Ended |
Mar. 31, 2021 | |
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |
Regulatory Capital Requirements | Regulatory Capital RequirementsTWL, DW and TWD are subject to the Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 1934. TEL and TESL are subject to certain financial resource requirements with the FCA in the UK, TWJ is subject to certain financial resource requirements with the FCA in Japan and TWEU is subject to certain finance resource requirements with the AFM in the Netherlands. At March 31, 2021 and December 31, 2020, the regulatory capital requirements and regulatory capital for TWL, DW, TWD, TEL, TESL, TWJ and TWEU are as follows (in thousands): As of March 31, 2021 TWL DW TWD TEL TWJ TWEU TESL Regulatory Capital $ 37,445 $ 47,796 $ 24,175 $ 63,682 $ 10,455 $ 8,703 $ 756 Regulatory Capital Requirement 1,679 1,459 505 34,164 3,559 2,449 736 Excess Regulatory Capital $ 35,766 $ 46,337 $ 23,670 $ 29,518 $ 6,896 $ 6,254 $ 20 As of December 31, 2020 TWL DW TWD TEL TWJ TWEU Regulatory Capital $ 49,254 $ 58,026 $ 20,577 $ 59,238 $ 11,066 $ 19,102 Regulatory Capital Requirement 2,438 2,147 731 33,742 3,799 2,562 Excess Regulatory Capital $ 46,816 $ 55,879 $ 19,846 $ 25,496 $ 7,267 $ 16,540 As SEFs, TW SEF and DW SEF are required to maintain adequate financial resources and liquid financial assets in accordance with CFTC regulations. The required and maintained financial resources and liquid financial assets at March 31, 2021 and December 31, 2020 are as follows (in thousands): As of March 31, 2021 As of December 31, 2020 TW SEF DW SEF TW SEF DW SEF Financial Resources $ 44,204 $ 16,255 $ 28,476 $ 15,298 Required Financial Resources 13,500 5,991 13,500 6,223 Excess Financial Resources $ 30,704 $ 10,264 $ 14,976 $ 9,075 Liquid Financial Assets $ 27,500 $ 10,520 $ 15,662 $ 8,610 Required Liquid Financial Assets 6,750 2,996 6,750 3,112 Excess Liquid Financial Assets $ 20,750 $ 7,524 $ 8,912 $ 5,498 |
Business Segment and Geographic
Business Segment and Geographic Information | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Business Segment and Geographic Information | Business Segment and Geographic Information The Company operates electronic marketplaces for the trading of products across the rates, credit, equities and money markets asset classes and provides related pre-trade and post-trade services. The Company’s operations constitute a single business segment because of the integrated nature of these marketplaces and services. Information regarding revenue by client sector is as follows (in thousands): Three Months Ended March 31, 2021 2020 Revenues Institutional $ 175,324 $ 145,612 Wholesale 59,390 48,756 Retail 18,713 21,676 Market Data 19,972 18,562 Total revenue 273,399 234,606 Operating expenses 175,072 156,991 Operating income $ 98,327 $ 77,615 The Company operates in the U.S. and internationally, primarily in the Europe and Asia regions. Revenues are attributed to geographic area based on the jurisdiction where the underlying transactions take place. The results by geographic region are not meaningful in understanding the Company's business. Long-lived assets are attributed to the geographic area based on the location of the particular subsidiary. The following table provides revenue by geographic area (in thousands): Three Months Ended March 31, 2021 2020 Revenues U.S. $ 167,736 $ 145,256 International 105,663 89,350 Total revenue $ 273,399 $ 234,606 The following table provides information on the attribution of long-lived assets by geographic area (in thousands): March 31, 2021 December 31, 2020 Long-lived assets U.S. $ 4,060,785 $ 4,091,569 International 16,586 16,544 Total $ 4,077,371 $ 4,108,113 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | . Subsequent Events On April 28, 2021, the board of directors of Tradeweb Markets Inc. declared a cash dividend of $0.08 per share of Class A common stock and Class B common stock for the second quarter of 2021. This dividend will be payable on June 15, 2021 to stockholders of record as of June 1, 2021. On April 27, 2021, Tradeweb Markets Inc., as the sole manager, approved a distribution by TWM LLC to its equityholders, including Tradeweb Markets Inc., in an aggregate amount of $15.0 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of June 1, 2021, payable on June 11, 2021. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As discussed in Note 1 – Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and its subsidiaries and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. The condensed consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by the Continuing LLC Owners. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The consolidated financial information as of December 31, 2020 has been derived from audited financial statements not included herein. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) with respect to interim financial reporting and Form 10-Q. In accordance with such rules and regulations, certain disclosures that are normally included in annual financial statements have been omitted. These unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the condensed consolidated financial statements. |
Reclassifications | ReclassificationsCertain reclassifications have been made to prior periods' financial information to conform to the current year presentation. This primarily includes an aggregation of transaction fees and commissions into a single revenue category titled “transaction fees and commissions” for all periods presented in condensed consolidated income statements. These reclassifications had no impact on total consolidated revenue or consolidated net income. |
Pushdown Accounting | Pushdown Accounting In connection with the Refinitiv Transaction, a majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 from TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations, and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting which resulted in a new fair value basis of accounting for certain of the Company's assets and liabilities beginning on October 1, 2018. Under the pushdown accounting applied, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as of October 1, 2018 was recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of the Company's long-lived and indefinite-lived intangible assets, including software development costs. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consists of cash and highly liquid investments (such as short-term money market instruments) with original maturities at the time of purchase of three months or less. |
Allowance for Credit Losses | Allowance for Credit Losses The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of our counterparties is also performed. Once determined uncollectable, aged balances are written off as credit loss expense, which is included in general and administrative expenses on the condensed consolidated statements of income. See Note 11 – Credit Risk for additional information. |
Receivable from and Payable to Broker and Dealers and Clearing Organizations | Receivable from and Payable to Brokers and Dealers and Clearing Organizations Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions executed on the Company's wholesale platform which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction. |
Deposits with Clearing Organizations | Deposits with Clearing OrganizationsDeposits with clearing organizations are comprised of cash deposits. |
Furniture, Equipment, Purchased Software and Leasehold Improvements | Furniture, Equipment, Purchased Software and Leasehold Improvements Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from three Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable in accordance with ASC 360, Property, Plant and Equipment ( “ ASC 360 ” ). As of March 31, 2021 and December 31, 2020, accumulated depreciation related to furniture, equipment, purchased software and leasehold improvements totaled $40.8 million and $35.4 million, respectively. Depreciation expense for furniture, equipment, purchased software and leasehold improvements was $5.4 million and $4.3 million for the three months ended March 31, 2021 and 2020, respectively. |
Software Development Costs | Software Development Costs The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed, in accordance with ASC 350, Intangibles – Goodwill and Other ( “ ASC 350 ” ) . The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Costs capitalized as part of the pushdown accounting allocation are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred. As of March 31, 2021 and December 31, 2020, accumulated amortization related to software development costs totaled $78.1 million and $67.4 million, respectively. Amortization expense for software development costs was $10.7 million and $8.0 million for the three months ended March 31, 2021 and 2020, respectively. |
Goodwill | Goodwill Goodwill is the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as previously applied under pushdown accounting in connection with the Refinitiv Transaction. Goodwill also includes the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date. Goodwill is not amortized, but in accordance with ASC 350, goodwill is tested for impairment annually on October 1 st and between annual tests, whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. An impairment loss is recognized if the estimated fair value of a reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. Goodwill was last assessed on October 1, 2020 and no impairment of goodwill was identified. |
Intangible Assets | Intangible Assets Intangible assets with a finite life are amortized over the estimated lives, ranging from seven |
Equity Investments Without Readily Determinable Fair Value | Equity Investments Without Readily Determinable Fair ValuesEquity Investments without a readily determinable fair value are measured at cost, less impairment, plus or minus observable price changes (in orderly transactions) of an identical or similar investment of the same issuer. If the Company determines that the equity investment is impaired on the basis of a qualitative assessment, the Company will recognize an impairment loss equal to the amount by which the investment’s carrying amount exceeds its fair value. Equity investments are included as a component of other assets on the condensed consolidated statements of financial condition. |
Leases | Leases The Company has operating leases for corporate offices and data centers with initial lease terms ranging from one to 10 years. A right-of-use asset and a lease liability are recognized for all leases with an initial term in excess of twelve months. Significant assumptions and judgements in calculating the right-of-use assets and lease liability include the determination of the applicable borrowing rate for each lease. The Company includes the term covered by an option to extend a lease when the option is reasonably certain to be exercised. The asset reflects the present value of unpaid lease payments coupled with initial direct costs, prepaid lease payments and lease incentives. The amount of the lease liability is calculated as the present value of unpaid lease payments. The Company adopted Accounting Standards Update ("ASU") 2016-2, Leases (Topic 842) on January 1, 2019 using the modified retrospective method of adoption and elected to take the optional package of practical expedients, which allowed for no reassessment of: i. whether any expired or existing contracts are or contain leases, ii. the lease classification for any expired or existing leases, and iii. initial direct costs for any existing leases. |
Deferred IPO and Follow-On Offering Costs | Deferred IPO and Follow-On Offering Costs Deferred IPO and follow-on offering costs consist of legal, accounting, and other costs directly related to the Company’s efforts to raise capital. In accordance with ASC 505-10-25, Equity , these costs are recognized as a reduction in additional paid-in capital within the condensed consolidated statements of financial condition when the offering is effective. As of both March 31, 2021 and December 31, 2020, $15.9 million of deferred costs related to the IPO and $5.2 million of deferred costs related to follow-on offerings were included as a component of the additional paid-in capital balance in the condensed consolidated statements of financial condition. No offering costs were incurred during the three months ended March 31, 2021 . |
Translation of Foreign Currency and Foreign Currency Forward Contracts | Translation of Foreign Currency and Foreign Currency Forward Contracts Revenues and expenses denominated in foreign currencies are translated at the rate of exchange prevailing at the transaction date. Assets and liabilities denominated in foreign currencies are translated at the rate prevailing at the condensed consolidated statements of financial condition date. Foreign currency re-measurement gains or losses on transactions in nonfunctional currencies are recognized in the condensed consolidated statements of income within general and administrative expenses and the realized and unrealized losses totaled $1.9 million during the three months ended March 31, 2021 and realized and unrealized gains totaled $1.5 million during the three months ended March 31, 2020. Gains or losses on translation in the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included as a component of other comprehensive income. The Company enters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus Euro exposure, generally with a duration of less than twelve months. The Company’s foreign currency forward contracts are not designated as hedges for accounting purposes and changes in the fair value of these contracts during the period are recognized in the condensed consolidated statements of income within general and administrative expenses. The Company does not use derivative instruments for trading or speculative purposes. Realized and unrealized gains on foreign currency forward contracts totaled $5.7 million during the three months ended March 31, 2021 and realized and unrealized losses on foreign currency forward contracts totaled $0.5 million during the three months ended March 31, 2020. See Note 10 – |
Income Tax | Income Tax The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The Company evaluates the need for valuation allowances based on the weight of positive and negative evidence. The Company records valuation allowances wherever management believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the future. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the condensed consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition. The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act as a current period expense when incurred. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718” ) . ASC 718 focuses primarily on accounting for a transaction in which an entity obtains employee services in exchange for stock-based payments. Under ASC 718, the stock-based payments received by the employees of the Company are accounted for either as equity awards or as liability awards. As an equity award, the Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital. As a liability award, the cost of employee services received in exchange for an award of equity instruments is generally measured based on the grant-date fair value of the award. The fair value of that award is remeasured subsequently at each reporting date through the settlement. Changes in the equity instrument's fair value during the requisite service period are recognized as compensation cost over that period. For periods following the Reorganization Transactions and the IPO, the fair value of new equity instrument grants is determined based on the price of the Class A common stock on the grant date. Under ASC 718, the grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. The grant-date fair value of stock-based awards that require future service, and are graded-vesting awards, are amortized over the relevant service period on a straight-line basis, with each tranche separately measured. The grant-date fair value of stock-based awards that require both future service and the achievement of Company performance-based conditions, are amortized over the relevant service period for the performance-based condition. If in a reporting period it is determined that the achievement of a performance target for a performance-based tranche is not probable, then no expense is recognized for that tranche and any expenses already recognized relating to that tranche in prior reporting periods are reversed in the current reporting period. Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). In accounting for the options issued under the Option Plan, compensation expense is measured and recognized for all awards based on their estimated fair values measured as of the grant date. Costs related to these options are recognized as an expense in the condensed consolidated statements of income over the requisite service period, with an offsetting increase to additional paid-in capital. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of 2019. Determining the appropriate fair value model and calculating the fair value of the stock-based awards requires the input of highly subjective assumptions, including the expected life of the stock-based awards and the stock price volatility. The Company uses the Black-Scholes pricing model to value some of its stock-based awards. |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing the net income attributable to the Company's shares by the weighted-average number of the Company's shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if securities that qualify as participating securities were converted into or exchanged or exercised for TWM LLC’s shares, in the pre-IPO period, and the Class A or Class B common stock, in the post-IPO period, using the treasury stock method, as applicable. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share. |
Fair Value Measurement | Fair Value Measurement The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy under ASC 820, Fair Value Measurement (“ASC 820”) , prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below. Basis of Fair Value Measurement A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. • 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 considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; • Level 3 : Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Breakdown of revenues between fixed and variable revenues | The breakdown of revenues between fixed and variable revenues for the three months ended March 31, 2021 and 2020 is as follows: Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 (in thousands) (in thousands) Variable Fixed Variable Fixed Revenues Transaction fees and commissions $ 179,667 $ 38,149 $ 147,778 $ 35,539 Subscription Fees including Refinitiv market data fees 462 52,523 465 48,646 Other 213 2,385 110 2,068 Total revenue $ 180,342 $ 93,057 $ 148,353 $ 86,253 |
Schedule of recognized revenue and remaining deferred revenue balance | The recognized revenue and remaining balance is shown below (in thousands): Amount Deferred revenue balance - December 31, 2020 $ 23,193 New billings 30,762 Revenue recognized (26,769) Deferred revenue balance - March 31, 2021 $ 27,186 |
Non-Controlling Interests (Tabl
Non-Controlling Interests (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
Summary of the ownership interest in noncontrolling interest | The following table summarizes the ownership interest in Tradeweb Markets LLC: March 31, 2021 March 31, 2020 LLC Ownership LLC Ownership Number of LLC Interests held by Tradeweb Markets Inc. 201,576,471 86.8 % 167,603,632 74.5 % Number of LLC Interests held by non-controlling interests 30,531,933 13.2 % 57,261,214 25.5 % Total LLC Interests outstanding 232,108,404 100.0 % 224,864,846 100.0 % |
Summary of the impact on equity due to changes in the Company’s ownership interest in noncontrolling interest | The following table summarizes the impact on Tradeweb Market Inc.'s equity due to changes in the Corporation’s ownership interest in TWM LLC (in thousands): Net Income Attributable to Tradeweb Markets Inc. and Transfers (to) from the Non-Controlling Interests Three Months Ended March 31, 2021 2020 Net income attributable to Tradeweb Markets Inc. $ 67,859 $ 43,928 Transfers (to) from non-controlling interests: Increase in Tradeweb Markets Inc.'s additional paid-in capital as a result of ownership changes in TWM LLC 80,665 45,436 Net transfers (to) from non-controlling interests 80,665 45,436 Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests $ 148,524 $ 89,364 |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock-Based Compensation Plans (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Total Stock-based Compensation Expense | A summary of the Company's total stock-based compensation expense is presented below (in thousands): Three Months Ended March 31, 2021 2020 Total stock-based compensation expense $ 10,760 $ 7,971 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of balances from transactions with affiliates included in the consolidated statements | At March 31, 2021 and December 31, 2020, the following balances with such affiliates were included in the condensed consolidated statements of financial condition in the following line items (in thousands): March 31, 2021 December 31, 2020 Accounts receivable $ 4,570 $ 4,009 Receivable from affiliates 2,527 111 Other assets 2,722 2,722 Accounts payable, accrued expenses and other liabilities 7,617 6,140 Deferred revenue 4,500 4,500 Payable to affiliates 1,816 5,142 |
Schedule of affiliates were included in the consolidated statements of income | The following balances with such affiliates were included in the condensed consolidated statements of income in the following line items (in thousands): Three Months Ended March 31, 2021 2020 Revenue: Subscription fees $ 569 $ — Refinitiv market data fees (1) 15,117 14,628 Other fees 161 — Expenses: Shared Services Fees: (2) Technology and communications 740 740 General and administrative 2 24 Occupancy — 46 (1) The Company maintains a market data license agreement with Refinitiv. Under the agreement, the Company delivers to Refinitiv certain market data feeds which Refinitiv redistributes to its customers. The Company earns license fees and royalties for these feeds. (2) The Company maintains a shared services agreement with Refinitiv. Under the terms of the agreement, Refinitiv provides the Company with certain real estate, payroll, benefits administration, insurance, content, financial reporting and tax support. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measurements | The Company's financial instruments measured at fair value on the condensed consolidated statements of financial condition as of March 31, 2021 and December 31, 2020 have been categorized based upon the fair value hierarchy as follows (in thousands) : Quoted Prices in active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As of March 31, 2021 Assets Cash equivalents – Money market funds $ 623,334 $ — $ — $ 623,334 Receivable from affiliates – Foreign currency forward contracts 2,508 2,508 Total assets measured at fair value $ 623,334 $ 2,508 $ — $ 625,842 Liabilities Payable to affiliates – Foreign currency forward contracts $ — $ 21 $ — $ 21 Total liabilities measured at fair value $ — $ 21 $ — $ 21 As of December 31, 2020 Assets Cash equivalents – Money market funds $ 541,790 $ — $ — $ 541,790 Total assets measured at fair value $ 541,790 $ — $ — $ 541,790 Liabilities Payable to affiliates – Foreign currency forward contracts $ — $ 3,409 $ — $ 3,409 Total liabilities measured at fair value $ — $ 3,409 $ — $ 3,409 |
Summary of Derivative Values | The following table summarizes the aggregate U.S. dollar equivalent notional amount of the Company's foreign currency forward contracts not designated as hedges for accounting purposes (in thousands): March 31, 2021 December 31, 2020 Foreign currency forward contracts – Gross notional amount $ 122,394 $ 122,458 The total realized and unrealized gains (losses) on foreign currency forward contracts recorded in the condensed consolidated statements of income are as follows (in thousands): Three Months Ended March 31, 2021 2020 Total realized and unrealized gains (losses) recognized in general and administrative expenses: Foreign currency forward contracts not designated in accounting hedge relationship $ 5,698 $ (547) |
Summary of Financial Instruments Not Measured at Fair Value | The Company's financial instruments not measured at fair value on the condensed consolidated statements of financial condition as of March 31, 2021 and December 31, 2020 have been categorized based upon the fair value hierarchy as follows (in thousands) : Carrying Value Quoted Prices in Significant Observable Inputs (Level 2) Significant Total Fair Value As of March 31, 2021 Assets Cash and restricted cash $ 187,604 $ 187,604 $ — $ — $ 187,604 Receivable from brokers and dealers and clearing organizations 25,362 — 25,362 — 25,362 Deposits with clearing organizations 10,783 10,783 — — 10,783 Accounts receivable 144,494 — 144,494 — 144,494 Other assets – Memberships in clearing organizations 1,583 — — 1,583 1,583 Total $ 369,826 $ 198,387 $ 169,856 $ 1,583 $ 369,826 Liabilities Payable to brokers and dealers and clearing organizations $ 25,145 $ — $ 25,145 $ — $ 25,145 Total $ 25,145 $ — $ 25,145 $ — $ 25,145 As of December 31, 2020 Assets Cash and restricted cash $ 250,490 $ 250,490 $ — $ — $ 250,490 Receivable from brokers and dealers and clearing organizations 368 — 368 — 368 Deposits with clearing organizations 11,671 11,671 — — 11,671 Accounts receivable 105,286 — 105,286 — 105,286 Other assets – Memberships in clearing organizations 1,586 — — 1,586 1,586 Total $ 369,401 $ 262,161 $ 105,654 $ 1,586 $ 369,401 Liabilities Payable to brokers and dealers and clearing organizations $ 252 $ — $ 252 $ — $ 252 Total $ 252 $ — $ 252 $ — $ 252 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Earnings Per Share | The following table summarizes the calculations of basic and diluted earnings per share of Class A and Class B common stock for Tradeweb Markets Inc.: Three Months Ended March 31, 2021 2020 (in thousands, except share and per share amounts) Numerator: Net income attributable to Tradeweb Markets Inc. $ 67,859 $ 43,928 Denominator: Weighted average shares of Class A and Class B common stock outstanding - Basic 199,064,607 166,234,749 Dilutive effect of equity-settled PRSUs 1,832,308 2,038,422 Dilutive effect of options 3,851,594 6,221,549 Dilutive effect of RSUs 280,208 22,524 Weighted average shares of Class A and Class B common stock outstanding - Diluted 205,028,717 174,517,244 Earnings per share - Basic $ 0.34 $ 0.26 Earnings per share - Diluted $ 0.33 $ 0.25 |
Regulatory Capital Requiremen_2
Regulatory Capital Requirements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |
Schedule of regulatory capital requirements | At March 31, 2021 and December 31, 2020, the regulatory capital requirements and regulatory capital for TWL, DW, TWD, TEL, TESL, TWJ and TWEU are as follows (in thousands): As of March 31, 2021 TWL DW TWD TEL TWJ TWEU TESL Regulatory Capital $ 37,445 $ 47,796 $ 24,175 $ 63,682 $ 10,455 $ 8,703 $ 756 Regulatory Capital Requirement 1,679 1,459 505 34,164 3,559 2,449 736 Excess Regulatory Capital $ 35,766 $ 46,337 $ 23,670 $ 29,518 $ 6,896 $ 6,254 $ 20 As of December 31, 2020 TWL DW TWD TEL TWJ TWEU Regulatory Capital $ 49,254 $ 58,026 $ 20,577 $ 59,238 $ 11,066 $ 19,102 Regulatory Capital Requirement 2,438 2,147 731 33,742 3,799 2,562 Excess Regulatory Capital $ 46,816 $ 55,879 $ 19,846 $ 25,496 $ 7,267 $ 16,540 |
Schedule of financial resources and liquid financial resources | The required and maintained financial resources and liquid financial assets at March 31, 2021 and December 31, 2020 are as follows (in thousands): As of March 31, 2021 As of December 31, 2020 TW SEF DW SEF TW SEF DW SEF Financial Resources $ 44,204 $ 16,255 $ 28,476 $ 15,298 Required Financial Resources 13,500 5,991 13,500 6,223 Excess Financial Resources $ 30,704 $ 10,264 $ 14,976 $ 9,075 Liquid Financial Assets $ 27,500 $ 10,520 $ 15,662 $ 8,610 Required Liquid Financial Assets 6,750 2,996 6,750 3,112 Excess Liquid Financial Assets $ 20,750 $ 7,524 $ 8,912 $ 5,498 |
Business Segment and Geograph_2
Business Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of information regarding revenue by client sector | Information regarding revenue by client sector is as follows (in thousands): Three Months Ended March 31, 2021 2020 Revenues Institutional $ 175,324 $ 145,612 Wholesale 59,390 48,756 Retail 18,713 21,676 Market Data 19,972 18,562 Total revenue 273,399 234,606 Operating expenses 175,072 156,991 Operating income $ 98,327 $ 77,615 |
Schedule of revenue and long-lived assets by geographic location | The following table provides revenue by geographic area (in thousands): Three Months Ended March 31, 2021 2020 Revenues U.S. $ 167,736 $ 145,256 International 105,663 89,350 Total revenue $ 273,399 $ 234,606 The following table provides information on the attribution of long-lived assets by geographic area (in thousands): March 31, 2021 December 31, 2020 Long-lived assets U.S. $ 4,060,785 $ 4,091,569 International 16,586 16,544 Total $ 4,077,371 $ 4,108,113 |
Organization (Details)
Organization (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 02, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Additional dilutive shares (in shares) | 5,964,110 | |||
NASDAQ All Cash Acquisition | ||||
All-cash acquisition | $ 190 | |||
Class D Common Stock | ||||
Common Stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | ||
Class C Common Stock | ||||
Common Stock, par value (in dollars per share) | 0.00001 | 0.00001 | ||
Class A Common Stock | ||||
Common Stock, par value (in dollars per share) | 0.00001 | 0.00001 | ||
Class B Common Stock | ||||
Common Stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | ||
Tradeweb Markets LLC | ||||
Ownership interest | 86.80% | 85.10% | 74.50% | |
Ownership percentage, Continuing LLC Owners | 13.20% | 14.90% | 25.50% | |
Tradeweb Markets LLC | Refinitiv | ||||
Ownership interest | 51.70% | |||
Tradeweb Markets LLC | Public Investors | ||||
Ownership percentage, Continuing LLC Owners | 45.10% | |||
Tradeweb Markets LLC | Class D Common Stock | Other Stockholders | ||||
Ownership percentage, Continuing LLC Owners | 0.10% | |||
Tradeweb Markets LLC | Class C and Class D Common Stock | Bank Stockholders | ||||
Ownership percentage, Continuing LLC Owners | 3.20% | |||
Tradeweb Markets Inc | Refinitiv | ||||
Ownership interest | 87.90% | |||
Tradeweb Markets Inc | Public Investors | ||||
Voting power percentage | 7.70% | |||
Tradeweb Markets Inc | Class D Common Stock | Refinitiv | ||||
Number of share owned (in shares) | 22,988,329 | |||
Tradeweb Markets Inc | Class D Common Stock | Bank Stockholders | ||||
Number of share owned (in shares) | 5,767,435 | |||
Tradeweb Markets Inc | Class D Common Stock | Other Stockholders | ||||
Number of share owned (in shares) | 121,344 | |||
Voting power percentage | 0.10% | |||
Tradeweb Markets Inc | Class C Common Stock | Bank Stockholders | ||||
Number of share owned (in shares) | 1,654,825 | |||
Tradeweb Markets Inc | Class A Common Stock | Public Investors | ||||
Number of share owned (in shares) | 104,643,279 | |||
Tradeweb Markets Inc | Class B Common Stock | Refinitiv | ||||
Number of share owned (in shares) | 96,933,192 | |||
Tradeweb Markets Inc | Class C and Class D Common Stock | Bank Stockholders | ||||
Voting power percentage | 4.30% |
Significant Accounting Polici_3
Significant Accounting Policies - Furniture, Equipment, Purchased Software, Leasehold Improvements and Software Development Cost (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Furniture, Equipment, Purchased Software and Leasehold Improvements | |||
Furniture, Equipment, Purchased Software and Leasehold Improvements | |||
Accumulated depreciation and amortization | $ 40.8 | $ 35.4 | |
Depreciation expense | $ 5.4 | $ 4.3 | |
Furniture, Equipment, Purchased Software and Leasehold Improvements | Minimum | |||
Furniture, Equipment, Purchased Software and Leasehold Improvements | |||
Useful life | 3 years | ||
Furniture, Equipment, Purchased Software and Leasehold Improvements | Maximum | |||
Furniture, Equipment, Purchased Software and Leasehold Improvements | |||
Useful life | 7 years | ||
Software Development Costs | |||
Furniture, Equipment, Purchased Software and Leasehold Improvements | |||
Useful life | 3 years | ||
Accumulated depreciation and amortization | $ 78.1 | $ 67.4 | |
Amortization of pushdown accounting allocation | 9 years | ||
Amortization expense | $ 10.7 | $ 8 |
Significant Accounting Polici_4
Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | |
Intangible Assets | |||
Intangible assets, net of accumulated amortization | $ 248.5 | $ 223.7 | |
Amortization expense for definite-lived intangible assets | $ 24.9 | $ 24.9 | |
Minimum | |||
Intangible Assets | |||
Useful life of intangible assets | 7 years | ||
Maximum | |||
Intangible Assets | |||
Useful life of intangible assets | 12 years |
Significant Accounting Polici_5
Significant Accounting Policies - Deferred IPO Cost Follow-On Offering Costs (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Initial Public Offering | ||
Deferred costs | $ 15.9 | $ 15.9 |
Follow On Offering | ||
Deferred costs | $ 5.2 | $ 5.2 |
Significant Accounting Polici_6
Significant Accounting Policies - Translation of Foreign Currency and Foreign Currency Forward Contracts (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative [Line Items] | ||
Realized and unrealized gains (losses) on translation adjustments | $ 1,900 | $ (1,500) |
Foreign currency forward contracts – Gross notional amount | Selling, General and Administrative Expenses | ||
Derivative [Line Items] | ||
Foreign currency forward contracts not designated in accounting hedge relationship | $ 5,698 | $ (547) |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Restricted Cash Equivalents [Abstract] | ||
Restricted cash | $ 1,000 | $ 1,000 |
Revenue - Breakdown of Revenues
Revenue - Breakdown of Revenues Between Fixed and Variable (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue Recognition | ||
Total revenue | $ 273,399 | $ 234,606 |
Transaction fees and commissions | ||
Revenue Recognition | ||
Total revenue | 217,816 | 183,317 |
Other | ||
Revenue Recognition | ||
Total revenue | 2,598 | 2,178 |
Variable | ||
Revenue Recognition | ||
Total revenue | 180,342 | 148,353 |
Variable | Transaction fees and commissions | ||
Revenue Recognition | ||
Total revenue | 179,667 | 147,778 |
Variable | Subscription Fees including Refinitiv market data fees | ||
Revenue Recognition | ||
Total revenue | 462 | 465 |
Variable | Other | ||
Revenue Recognition | ||
Total revenue | 213 | 110 |
Fixed | ||
Revenue Recognition | ||
Total revenue | 93,057 | 86,253 |
Fixed | Transaction fees and commissions | ||
Revenue Recognition | ||
Total revenue | 38,149 | 35,539 |
Fixed | Subscription Fees including Refinitiv market data fees | ||
Revenue Recognition | ||
Total revenue | 52,523 | 48,646 |
Fixed | Other | ||
Revenue Recognition | ||
Total revenue | $ 2,385 | $ 2,068 |
Revenue - Recognized Revenue an
Revenue - Recognized Revenue and Remaining Balances (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Change In Contract with Customer, Liability [Roll Forward] | |
Deferred revenue balance - beginning of period | $ 23,193 |
New billings | 30,762 |
Revenue recognized | (26,769) |
Deferred revenue balance - end of period | $ 27,186 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized that was previously deferred | $ 13,700 | $ 13,300 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Income Tax Disclosure [Line Items] | |||
Effective tax rate | 16.60% | 20.20% | |
Percentage of amount of U.S. federal, state and local income or franchise tax savings | 50.00% | ||
Remaining percentage of tax benefits | 50.00% | ||
Other assets | $ 75,249 | $ 82,460 | |
Refinitiv | |||
Income Tax Disclosure [Line Items] | |||
Other assets | 2,700 | 2,700 | |
Accounts Payable and Accrued Liabilities | |||
Income Tax Disclosure [Line Items] | |||
Tax liability | $ 2,700 | $ 2,700 | |
State, local and foreign | |||
Income Tax Disclosure [Line Items] | |||
Percentage of amount of U.S. federal, state and local income or franchise tax savings | 21.00% |
Tax Receivable Agreement (Detai
Tax Receivable Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Tax Receivable Agreement | ||
Percentage of amount of U.S. federal, state and local income or franchise tax savings | 50.00% | |
Tax receivable agreement liability | $ 425,150 | $ 404,332 |
Non-Controlling Interests - Sum
Non-Controlling Interests - Summary of Ownership Interest (Details) | 3 Months Ended | ||
Mar. 31, 2021shares | Mar. 31, 2020shares | Dec. 31, 2020 | |
Class A Common Stock | |||
Non-Controlling Interests | |||
Conversion ratio | 1 | ||
Class B Common Stock | |||
Non-Controlling Interests | |||
Conversion ratio | 1 | ||
Tradeweb Markets LLC | |||
Non-Controlling Interests | |||
Number of LLC Interests held by Tradeweb Markets Inc. (in shares) | 201,576,471 | 167,603,632 | |
Number of LLC Interests held by non-controlling interests (in shares) | 30,531,933 | 57,261,214 | |
Total LLC Interests outstanding (in shares) | 232,108,404 | 224,864,846 | |
Number of LLC Interests held by Tradeweb Markets Inc. | 86.80% | 74.50% | 85.10% |
Number of LLC Interests held by Tradeweb Markets Inc. | 13.20% | 25.50% | 14.90% |
Total LLC Interests outstanding | 100.00% | 100.00% |
Non-Controlling Interests - S_2
Non-Controlling Interests - Summary of Equity Changes Due to Changes in Corporation Ownership (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Noncontrolling Interest [Abstract] | ||
Net income attributable to Tradeweb Markets Inc. | $ 67,859 | $ 43,928 |
Increase in Tradeweb Markets Inc.'s additional paid-in capital as a result of ownership changes in TWM LLC | 80,665 | 45,436 |
Net transfers (to) from non-controlling interests | 80,665 | 45,436 |
Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests | $ 148,524 | $ 89,364 |
Stockholders' Equity and Stoc_3
Stockholders' Equity and Stock-Based Compensation Plans - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Feb. 04, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Minimum performance modifier, percent | 0.00% | ||
Maximum performance modifier, percent | 200.00% | ||
Target performance modifier, percent | 100.00% | ||
Common stock repurchased (in shares) | 696,847 | 515,145 | |
Average price per share (in dollars per share) | $ 65.24 | $ 46.57 | |
Aggregate value of share repurchase | $ 45.5 | $ 24 | |
Class A Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share repurchase program, amount authorized | $ 150 | ||
2019 Omnibus Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized (in shares) | 8,841,864 | ||
Vesting period | 10 years | ||
RSU | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Granted (in shares) | 319,860 | ||
Weighted-average grant-date fair value (in dollars per share) | $ 74.15 | ||
Vest per year | 33.00% | ||
RSU | Non-employee director | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 1 year | ||
PRSU | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Granted (in shares) | 205,655 | ||
Weighted-average grant-date fair value (in dollars per share) | $ 74.16 |
Stockholders' Equity and Stoc_4
Stockholders' Equity and Stock-Based Compensation Plans - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
Total stock-based compensation expense | $ 10,760 | $ 7,971 |
Related Party Transactions - Ba
Related Party Transactions - Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Related Party Transactions [Abstract] | ||
Accounts receivable | $ 4,570 | $ 4,009 |
Receivable from affiliates | 2,527 | 111 |
Other assets | 2,722 | 2,722 |
Accounts payable, accrued expenses and other liabilities | 7,617 | 6,140 |
Deferred revenue | 4,500 | 4,500 |
Payable to affiliates | $ 1,816 | $ 5,142 |
Related Party Transactions - Co
Related Party Transactions - Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Expenses: | ||
Technology and communications | $ 13,544 | $ 10,318 |
General and administrative | 3,459 | 8,340 |
Occupancy | 3,753 | 3,726 |
Affiliated Entity | ||
Expenses: | ||
Technology and communications | 740 | 740 |
General and administrative | 2 | 24 |
Occupancy | 0 | 46 |
Subscription fees | Affiliated Entity | ||
Revenue: | ||
Revenue | 569 | 0 |
Refinitiv market data fees | Affiliated Entity | ||
Revenue: | ||
Revenue | 15,117 | 14,628 |
Other fees | Affiliated Entity | ||
Revenue: | ||
Revenue | $ 161 | $ 0 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Apr. 30, 2019 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | |
Related Party Transactions | ||||||
Consulting service fee for IPO | $ 1 | |||||
Consulting service fee for follow on offering | $ 0.5 | $ 0.5 | ||||
Adjustment to additional paid in capital due to consulting service fee | $ 2 | $ 2 | ||||
Refinitiv | Operating Expense Reimbursement | ||||||
Related Party Transactions | ||||||
Related party expense | $ 0.2 | $ 0.3 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Financial Instruments Measured at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value of Financial Instruments | ||
Receivable from affiliates – Foreign currency forward contracts | $ 2,527 | $ 111 |
Total assets measured at fair value | 625,842 | 541,790 |
Payable to affiliates – Foreign currency forward contracts | 1,816 | 5,142 |
Total liabilities measured at fair value | 21 | 3,409 |
Foreign currency forward contracts | ||
Fair Value of Financial Instruments | ||
Receivable from affiliates – Foreign currency forward contracts | 2,508 | |
Payable to affiliates – Foreign currency forward contracts | 21 | 3,409 |
Cash equivalents – Money market funds | ||
Fair Value of Financial Instruments | ||
Cash equivalents – Money market funds | 623,334 | 541,790 |
Quoted Prices in active Markets for Identical Assets (Level 1) | ||
Fair Value of Financial Instruments | ||
Total assets measured at fair value | 623,334 | 541,790 |
Total liabilities measured at fair value | 0 | 0 |
Quoted Prices in active Markets for Identical Assets (Level 1) | Foreign currency forward contracts | ||
Fair Value of Financial Instruments | ||
Receivable from affiliates – Foreign currency forward contracts | ||
Payable to affiliates – Foreign currency forward contracts | 0 | 0 |
Quoted Prices in active Markets for Identical Assets (Level 1) | Cash equivalents – Money market funds | ||
Fair Value of Financial Instruments | ||
Cash equivalents – Money market funds | 623,334 | 541,790 |
Significant Observable Inputs (Level 2) | ||
Fair Value of Financial Instruments | ||
Total assets measured at fair value | 2,508 | 0 |
Total liabilities measured at fair value | 21 | 3,409 |
Significant Observable Inputs (Level 2) | Foreign currency forward contracts | ||
Fair Value of Financial Instruments | ||
Receivable from affiliates – Foreign currency forward contracts | 2,508 | |
Payable to affiliates – Foreign currency forward contracts | 21 | 3,409 |
Significant Observable Inputs (Level 2) | Cash equivalents – Money market funds | ||
Fair Value of Financial Instruments | ||
Cash equivalents – Money market funds | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value of Financial Instruments | ||
Total assets measured at fair value | 0 | 0 |
Total liabilities measured at fair value | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Foreign currency forward contracts | ||
Fair Value of Financial Instruments | ||
Receivable from affiliates – Foreign currency forward contracts | ||
Payable to affiliates – Foreign currency forward contracts | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Cash equivalents – Money market funds | ||
Fair Value of Financial Instruments | ||
Cash equivalents – Money market funds | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Foreign Currency Forward Contracts (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Foreign currency forward contracts – Gross notional amount | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Gross notional amount | $ 122,394 | $ 122,458 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Unrealized Gains(Losses) on Foreign Currency Forwards (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Foreign currency forward contracts – Gross notional amount | Selling, General and Administrative Expenses | ||
Derivative [Line Items] | ||
Foreign currency forward contracts not designated in accounting hedge relationship | $ 5,698 | $ (547) |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Financial Instruments Not Measured at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value of Financial Instruments | ||
Receivable from brokers and dealers and clearing organizations | $ 25,362 | $ 368 |
Deposits with clearing organizations | 10,783 | 11,671 |
Accounts receivable | 144,494 | 105,286 |
Total assets | 5,808,934 | 5,679,850 |
Payable to brokers and dealers and clearing organizations | 25,145 | 252 |
Total liabilities | 643,796 | 660,687 |
Equity investment without readily determinable fair values | 21,100 | 21,100 |
Fair Value, Nonrecurring | ||
Fair Value of Financial Instruments | ||
Cash and restricted cash | 187,604 | 250,490 |
Receivable from brokers and dealers and clearing organizations | 25,362 | 368 |
Deposits with clearing organizations | 10,783 | 11,671 |
Accounts receivable | 144,494 | 105,286 |
Other assets – Memberships in clearing organizations | 1,583 | 1,586 |
Total assets | 369,826 | 369,401 |
Payable to brokers and dealers and clearing organizations | 25,145 | 252 |
Total liabilities | 25,145 | 252 |
Quoted Prices in active Markets for Identical Assets (Level 1) | Fair Value, Nonrecurring | ||
Fair Value of Financial Instruments | ||
Cash and restricted cash | 187,604 | 250,490 |
Receivable from brokers and dealers and clearing organizations | 0 | 0 |
Deposits with clearing organizations | 10,783 | 11,671 |
Accounts receivable | 0 | 0 |
Other assets – Memberships in clearing organizations | 0 | 0 |
Total assets | 198,387 | 262,161 |
Payable to brokers and dealers and clearing organizations | 0 | 0 |
Total liabilities | 0 | 0 |
Significant Observable Inputs (Level 2) | Fair Value, Nonrecurring | ||
Fair Value of Financial Instruments | ||
Cash and restricted cash | 0 | 0 |
Receivable from brokers and dealers and clearing organizations | 25,362 | 368 |
Deposits with clearing organizations | 0 | 0 |
Accounts receivable | 144,494 | 105,286 |
Other assets – Memberships in clearing organizations | 0 | 0 |
Total assets | 169,856 | 105,654 |
Payable to brokers and dealers and clearing organizations | 25,145 | 252 |
Total liabilities | 25,145 | 252 |
Significant Unobservable Inputs (Level 3) | Fair Value, Nonrecurring | ||
Fair Value of Financial Instruments | ||
Cash and restricted cash | 0 | 0 |
Receivable from brokers and dealers and clearing organizations | 0 | 0 |
Deposits with clearing organizations | 0 | 0 |
Accounts receivable | 0 | 0 |
Other assets – Memberships in clearing organizations | 1,583 | 1,586 |
Total assets | 1,583 | 1,586 |
Payable to brokers and dealers and clearing organizations | 0 | 0 |
Total liabilities | 0 | 0 |
Total | Fair Value, Nonrecurring | ||
Fair Value of Financial Instruments | ||
Cash and restricted cash | 187,604 | 250,490 |
Receivable from brokers and dealers and clearing organizations | 25,362 | 368 |
Deposits with clearing organizations | 10,783 | 11,671 |
Accounts receivable | 144,494 | 105,286 |
Other assets – Memberships in clearing organizations | 1,583 | 1,586 |
Total assets | 369,826 | 369,401 |
Payable to brokers and dealers and clearing organizations | 25,145 | 252 |
Total liabilities | $ 25,145 | $ 252 |
Credit Risk (Details)
Credit Risk (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Credit Risk | ||
Total stockholder's equity | $ 4,519,020 | $ 4,303,451 |
Excess net capital | 10,000 | |
Allowance for doubtful accounts | 177 | $ 243 |
Minimum | ||
Credit Risk | ||
Total stockholder's equity | $ 25,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Revolving credit facility - USD ($) | Apr. 08, 2019 | Mar. 31, 2021 |
Commitments and Contingencies | ||
Revolving credit facility, term | 5 years | |
Maximum borrowing capacity | $ 500,000,000 | |
Commitment fee, percentage | 0.25% | |
Letters of credit issued | $ 500,000 | |
One-month LIBOR | ||
Commitments and Contingencies | ||
Spread | 1.00% | |
Base rate | ||
Commitments and Contingencies | ||
Spread | 0.75% | |
LIBOR | ||
Commitments and Contingencies | ||
Spread | 1.75% | |
Floor | 0.00% | |
Fed Funds Effective Rate | ||
Commitments and Contingencies | ||
Spread | 0.50% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||
Net income attributable to Tradeweb Markets Inc. | $ 67,859 | $ 43,928 |
Denominator: | ||
Weighted average shares of Class A and Class B common stock outstanding - Basic (in shares) | 199,064,607 | 166,234,749 |
Dilutive effect (in shares) | 5,964,110 | |
Weighted average shares of Class A and Class B common stock outstanding - Diluted (in shares) | 205,028,717 | 174,517,244 |
Earnings per share - Basic (in dollars per share) | $ 0.34 | $ 0.26 |
Earnings per share - Diluted (in dollars per share) | $ 0.33 | $ 0.25 |
Weighted-average shares (in shares) | 378,124 | |
PRSU | ||
Denominator: | ||
Dilutive effect (in shares) | 1,832,308 | 2,038,422 |
Weighted-average shares (in shares) | 77,692 | |
Options | ||
Denominator: | ||
Dilutive effect (in shares) | 3,851,594 | 6,221,549 |
RSU | ||
Denominator: | ||
Dilutive effect (in shares) | 280,208 | 22,524 |
Weighted-average shares (in shares) | 60,315 | |
Potential Dilutive | ||
Denominator: | ||
Weighted-average shares (in shares) | 31,214,407 | 57,644,547 |
Regulatory Capital Requiremen_3
Regulatory Capital Requirements (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
TWL | ||
Regulatory Capital Requirements | ||
Regulatory Capital | $ 37,445 | $ 49,254 |
Regulatory Capital Requirement | 1,679 | 2,438 |
Excess Regulatory Capital | 35,766 | 46,816 |
DW | ||
Regulatory Capital Requirements | ||
Regulatory Capital | 47,796 | 58,026 |
Regulatory Capital Requirement | 1,459 | 2,147 |
Excess Regulatory Capital | 46,337 | 55,879 |
TWD | ||
Regulatory Capital Requirements | ||
Regulatory Capital | 24,175 | 20,577 |
Regulatory Capital Requirement | 505 | 731 |
Excess Regulatory Capital | 23,670 | 19,846 |
TEL | ||
Regulatory Capital Requirements | ||
Regulatory Capital | 63,682 | 59,238 |
Regulatory Capital Requirement | 34,164 | 33,742 |
Excess Regulatory Capital | 29,518 | 25,496 |
TESL | ||
Regulatory Capital Requirements | ||
Regulatory Capital | 756 | |
Regulatory Capital Requirement | 736 | |
Excess Regulatory Capital | 20 | |
TWJ | ||
Regulatory Capital Requirements | ||
Regulatory Capital | 10,455 | 11,066 |
Regulatory Capital Requirement | 3,559 | 3,799 |
Excess Regulatory Capital | 6,896 | 7,267 |
TWEU | ||
Regulatory Capital Requirements | ||
Regulatory Capital | 8,703 | 19,102 |
Regulatory Capital Requirement | 2,449 | 2,562 |
Excess Regulatory Capital | 6,254 | 16,540 |
TW SEF | ||
Regulatory Capital Requirements | ||
Financial Resources | 44,204 | 28,476 |
Required Financial Resources | 13,500 | 13,500 |
Excess Financial Resources | 30,704 | 14,976 |
Liquid Financial Assets | 27,500 | 15,662 |
Required Liquid Financial Assets | 6,750 | 6,750 |
Excess Liquid Financial Assets | 20,750 | 8,912 |
DW SEF | ||
Regulatory Capital Requirements | ||
Financial Resources | 16,255 | 15,298 |
Required Financial Resources | 5,991 | 6,223 |
Excess Financial Resources | 10,264 | 9,075 |
Liquid Financial Assets | 10,520 | 8,610 |
Required Liquid Financial Assets | 2,996 | 3,112 |
Excess Liquid Financial Assets | $ 7,524 | $ 5,498 |
Business Segment and Geograph_3
Business Segment and Geographic Information - Revenue by Client Sector (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Business Segment and Geographic Information | ||
Total revenue | $ 273,399 | $ 234,606 |
Operating expenses | 175,072 | 156,991 |
Operating income | 98,327 | 77,615 |
Institutional | ||
Business Segment and Geographic Information | ||
Total revenue | 175,324 | 145,612 |
Wholesale | ||
Business Segment and Geographic Information | ||
Total revenue | 59,390 | 48,756 |
Retail | ||
Business Segment and Geographic Information | ||
Total revenue | 18,713 | 21,676 |
Market Data | ||
Business Segment and Geographic Information | ||
Total revenue | $ 19,972 | $ 18,562 |
Business Segment and Geograph_4
Business Segment and Geographic Information - Revenue and Long-lived Assets by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Business Segment and Geographic Information | |||
Total revenue | $ 273,399 | $ 234,606 | |
Long-lived assets | 4,077,371 | $ 4,108,113 | |
U.S. | |||
Business Segment and Geographic Information | |||
Total revenue | 167,736 | 145,256 | |
Long-lived assets | 4,060,785 | 4,091,569 | |
International | |||
Business Segment and Geographic Information | |||
Total revenue | 105,663 | $ 89,350 | |
Long-lived assets | $ 16,586 | $ 16,544 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 28, 2021 | Apr. 27, 2021 | Mar. 31, 2021 |
Subsequent Event [Line Items] | |||
Cash dividend declared (in dollars per share) | $ 0.08 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Capital distributions | $ 15 | ||
Subsequent Event | Class B Common Stock | |||
Subsequent Event [Line Items] | |||
Cash dividend declared (in dollars per share) | $ 0.08 | ||
Subsequent Event | Class A Common Stock | |||
Subsequent Event [Line Items] | |||
Cash dividend declared (in dollars per share) | $ 0.08 |