What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-02-09 compared with 2023-02-24 · 82 added, 96 removed, 814 unchanged (18% of the section changed)

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Risks Relating to Cybersecurity and Intellectual Property

• We could face actual or perceived security vulnerabilities in our systems, networks and infrastructure, breaches of security controls, unauthorized access to confidential or personal information or cyber-attacks.

• We could face actual or perceived security vulnerabilities in the systems, networks and infrastructure that we own or use, breaches of security controls, unauthorized access to confidential or personal information or cyber-attacks.

• We could be subject to systems failures, interruptions, delays in service, catastrophic events and resulting interruptions in the availability of our platforms or solutions.

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• Our actual or perceived failure to comply with privacy, data protection and information security laws, rules, regulations and obligations could harm our business.

• We may face new U.S.

tax legislation as well as unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns.

• We may face new tax legislation and regulation as well as unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns.

• Our compliance and risk management programs might not be effective.

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Risks Relating to our Indebtedness

• The credit agreement that governs the Revolving Credit Facility imposes significant operating and financial restrictions on us and our restricted subsidiaries.

• The credit agreement that governs the 2023 Revolving Credit Facility imposes certain operating and financial restrictions on us and our restricted subsidiaries.

• Any borrowings under the 2023 Revolving Credit Facility will subject us to interest rate risk.

• The phase-out, replacement or unavailability of LIBOR and/or other interest rate benchmarks could adversely affect our indebtedness.

Risks Relating to our Organizational Structure and Governance

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• economic, political and social conditions in the United States, the UK, the EU and/or its member states, China or other major economies around the world, including, among other things, the strength and direction of the U.S.

and global economy and the ongoing effects of COVID-19 and its variants;

and global economy, the war in Ukraine and the Israel Hamas war;

• the impact of foreign exchange fluctuations (see “—Risks Relating to our International Operations — Fluctuations in foreign currency exchange rates may adversely affect our financial results” for further information);

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• broad trends in business and finance, including the number of new issuances and changes in investment patterns and priorities;

• concerns over a potential recession (in the United States or globally), inflation and weakening consumer and investor confidence levels;

• concerns over a potential recession (in the United States or globally), inflation, the banking industry, including as a result of any bank failures and weakening consumer and investor confidence levels;

• the level and volatility of interest rates, including actual and anticipated increases in the federal funds rate by the Federal Reserve;

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• actual or threatened trade war, including between the United States and China, or other governmental action related to tariffs, international trade agreements or trade policies;

• the current or anticipated impact of climate change, extreme weather events, natural disasters and other catastrophic events, actual or threatened acts of war, including Russia’s invasion of Ukraine, terrorism or other armed hostilities or outbreaks of pandemic or contagious diseases.

• the current or anticipated impact of climate change, extreme weather events, natural disasters and other catastrophic events, actual or threatened acts of war, terrorism or other armed hostilities or outbreaks of pandemic or contagious diseases.

These factors also affect the degree of volatility (the magnitude and frequency of fluctuations) in the U.S.

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For example, our trading platforms face existing and potential competition from large exchanges, which have in recent years developed electronic capabilities in-house or through acquisitions.

We also face competition from individual banks that offer their own electronic platforms to their institutional clients.

We also face competition from individual banks that offer their own electronic platforms to their institutional clients and from providers of execution management services and order management services.

In addition, we may face competition from companies with strong market share in specific markets or organizations and businesses that have not traditionally competed with us but that could adapt their products and services or utilize significant financial and information resources, recognized brands, or technological expertise to begin competing with us.

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If, as a result of industry consolidation, our competitors are able to offer lower cost (including fixed cost fees compared to our variable fees for certain offerings) and/or a wider range of trading venues and solutions, obtain more favorable terms from third-party providers or otherwise take actions that could increase their market share, our competitive position and therefore our business, financial condition and results of operations may be materially adversely affected.

Our operations also include the sale of pre- and post-trade services, analytics and market data (including through a distribution agreement with Refinitiv).

Our operations also include the sale of pre- and post-trade services, analytics and market data (including through a distribution agreement with LSEG).

There is a high degree of competition among market data and information vendors in solutions for pre- and post-trade data, analytics and reporting, and such businesses may become more competitive in the future as new competitors emerge.

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• adapt our existing platforms and solutions for new markets, asset classes and products;

• respond to competitive pressures, technological advances, including new or disruptive technology, emerging industry standards and practices and regulatory requirements and changes on a cost-effective and timely basis;

• respond to competitive pressures, technological advances, including new or disruptive technology such as artificial intelligence, emerging industry standards and practices and regulatory requirements and changes on a cost-effective and timely basis;

• attract highly-skilled technology, regulatory, sales and marketing personnel;

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In addition, our dealer clients also provide us with data via feeds and through the transactions they execute on our trading platforms, which is an important input for our data and analytics offerings.

We have historically earned a substantial portion of our revenues from dealer clients that were also stockholders.

Market knowledge and feedback from dealer clients have been important factors in the development of many of our offerings and solutions.

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Despite testing, our platforms and solutions may contain design defects and errors or fail when first introduced or when major new updates or enhancements are released.

In our development of new platforms, platform features and solutions or updates and enhancements to our existing platforms and solutions, we may make a design error that causes the platform or solution to fail or operate incorrectly or less effectively than planned.

In our development of new platforms, platform features and solutions or updates and enhancements to our existing platforms and solutions, we may make a design error that causes the platform feature or solution to fail or operate incorrectly or less effectively than planned.

Many of our solutions also rely on data and services provided by third-party providers over which we have no or limited control and may be provided to us with defects, errors or failures.

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If design defects, errors or failures are discovered in our current or future platforms or solutions, we may not be able to correct or work around them in a cost-effective or timely manner, or at all.

The existence of design defects, errors, failures or delays that are significant, or are perceived to be significant, could also result in rejection or delay in market acceptance of our platforms or solutions, damage to our reputation, loss of clients and related revenues, diversion of resources, product liability claims, regulatory actions or increases in costs, any of which could materially adversely affect our business, financial condition or results of operations.

The existence of design defects, errors, failures or delays that are significant, or are perceived to be significant, could also result in rejection or delay in market acceptance of our platforms, features or solutions, damage to our reputation, loss of clients and related revenues, diversion of resources, product liability claims, regulatory actions or increases in costs, any of which could materially adversely affect our business, financial condition or results of operations.

We rely on third parties to perform certain key functions, and their failure to perform those functions could result in the interruption of our operations and systems and could result in significant costs and reputational damage to us.

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We depend upon data and information services from external sources, including data received from certain competitors, clients, self-regulatory organizations and other third-party data providers for information used on our platforms and by our solutions, including our data, analytical tools and other pre- and post-trade services.

In particular, we depend on Refinitiv to source certain reference data for products that trade on our platforms.

In particular, we depend on LSEG to source certain reference data for products that trade on our platforms.

Our data sources and information providers, some of which are our competitors, could increase the price for or withdraw their data or information services for a variety of reasons.

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If any of these factors negatively impact our ability to provide these data-based solutions to our clients, our competitive position could be materially harmed, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, pursuant to a market data license agreement, Refinitiv currently distributes a significant portion of our market data.

The cancellation of, or any adverse change to, our arrangement with Refinitiv or the inability of Refinitiv to effectively distribute our data may materially harm our business and competitive position.

In addition, pursuant to a market data license agreement, LSEG currently distributes a significant portion of our market data.

The cancellation of, or any adverse change to, our arrangement with LSEG or the inability of LSEG to effectively distribute our data may materially harm our business and competitive position.

We are dependent upon trading counterparties and clearinghouses to perform their obligations.

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Given the counterparty performance risk that is concentrated in central clearing parties, any failure by a clearinghouse to properly manage a default could lead to a systemic market failure.

For example, historically we have used ICBC Financial Services (“ICBC”), a wholly-owned subsidiary of the Industrial and Commercial Bank of China Limited to clear U.S.

Treasury trades executed by non-FICC members on our wholesale trading platform.

Following the November 2023 ransomware attack on some ICBC operating systems, including those used to clear U.S.

Treasury and repurchase agreement financings, we have and may continue to self-clear these U.S.

Treasury trades.

If trading counterparties do not meet their obligations, including to us, or if any central clearing parties fail to properly manage defaults by market participants, we could suffer a material adverse effect on our business, financial condition, results of operations and cash flows.

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and European operations are heavily concentrated in particular areas and may be adversely affected by events in those areas.

We may incur losses as a result of unforeseen, catastrophic or uncontrollable events, including fire, natural disasters, extreme weather events, global health crises (including COVID-19 and its variants), power loss, telecommunications failure, software or hardware malfunctions, theft, cyber-attacks, acts of war, terrorist attacks or other armed hostilities.

In addition, employee misconduct, fraud or error, such as improperly using confidential information or engaging in improper or unauthorized activities or transactions, could expose us to significant liability, losses, regulatory sanctions and reputational harm.

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If our systems, networks or infrastructure were to fail or be negatively impacted as a result of an unforeseen, catastrophic or uncontrollable event, our business functions could be interrupted, our ability to make our platforms and solutions available to our clients could be impaired and, as a result, we could lose critical data and revenues.

If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after an unforeseen, catastrophic or uncontrollable event, and successfully execute on those plans should such an event occur, our business, financial condition, results of operations and reputation could be materially harmed.

If we are unable to deploy or develop adequate plans to ensure that our business functions continue to operate during and after an unforeseen, catastrophic or uncontrollable event, and successfully execute on those plans should such an event occur, our business, financial condition, results of operations and reputation could be materially harmed.

In addition, our U.S.

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• the amount and timing of expenses, including those related to the maintenance and expansion of our business, operations and infrastructure;

• network or service outages, internet disruptions, the availability of our platforms, security breaches or perceived security breaches;

• network or service outages, internet disruptions, the availability of our platforms, cyber-attacks, security breaches or perceived security breaches;

• general economic, political, social, industry and market conditions;

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These and other factors have led us to scale back our expansion efforts into new markets in the past, and there can be no assurance that we will not experience similar difficulties in the future.

For example, although we have since re-entered the Asian market, following the 2008 financial crisis, we did not continue to actively invest in our operations in Asia, following our entry into that market in 2004.

There can be no assurance that we will be able to successfully maintain or grow our operations abroad.

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We have made several acquisitions in the past, including the purchase of the Hilliard Farber & Co.

business in 2008, the Rafferty Capital Markets business in 2011, BondDesk in 2013, CodeStreet in 2016 and Nasdaq’s U.S.

fixed income electronic trading platform in 2021.

business in 2008, the Rafferty Capital Markets business in 2011, BondDesk in 2013, CodeStreet in 2016, Nasdaq’s U.S.

fixed income electronic trading platform in 2021, Yieldbroker in 2023 and r8fin in 2024.

We also may consider potential divestitures of businesses from time to time.

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and (vii) loss of, or damage to our relationships with, any of our key employees, clients, third-party providers or other business partners.

We cannot readily predict the timing or size of any future acquisition or divestiture, and there can be no assurance that we will realize any anticipated benefits from any such acquisition or divestiture.

We cannot readily predict the timing or size of any future acquisition or divestiture, and there can be no assurance that we will realize any anticipated benefits from any recent or any potential future acquisition or divestiture.

If we do not realize any such anticipated benefits, our business, financial condition and results of operations could be materially adversely affected.

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Our business, financial condition and results of operations may be materially adversely affected by risks associated with our international operations.

We have operations in the United States, China, France, Japan, Hong Kong, Singapore, the UK and the Netherlands.

We are a global company serving clients in over 70 countries with offices in North America, Europe, Asia, Australia and the Middle East.

We may further expand our international operations in the future.

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These risks include:

• local economic, political and social conditions, including the possibility of economic slowdowns, hyperinflationary conditions, political instability, social unrest or outbreaks of pandemic or contagious diseases, such as COVID-19 and its variants;

• differing legal and regulatory requirements, and the possibility that any required approvals may impose restrictions on the operation of our business;

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For the year ended December 31, 2023, 36% of our revenues derived from our international operations.

Since we operate in several different countries outside the United States, most notably the UK, the Netherlands, Japan, as well as China, Singapore, Hong Kong and Canada, among others, significant portions of our revenues, expenses, assets and liabilities are denominated in non-U.S.

dollar currencies, most notably the British pound sterling and euros, as well as Japanese Yen, Chinese Yuan Renminbi, Singapore dollars, Hong Kong dollars and Canadian dollars, among others.

Since we operate in several different countries outside the United States, most notably the UK, the Netherlands, Japan, as well as Australia, China, Singapore, Hong Kong and Canada, among others, significant portions of our revenues, expenses, assets and liabilities are denominated in non-U.S.

dollar currencies, most notably the British pound sterling and euros, as well as Japanese Yen, Australian dollars, Chinese Yuan Renminbi, Singapore dollars, Hong Kong dollars and Canadian dollars, among others.

Because our consolidated financial statements are presented in U.S.

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These threats and attacks may come from external sources such as governments, crime organizations, hackers and other third parties or may originate internally from an employee or a third-party service provider, and can include unauthorized attempts to access, disable, interrupt, improperly modify or degrade our information, systems, networks and infrastructure or the introduction of computer viruses, ransomware, malware, and other malicious codes and fraudulent “phishing” emails or other forms of social engineering that seek to misappropriate data and information.

Due to political uncertainty in certain regions, including military actions associated with Russia’s invasion of Ukraine, we, like other financial services companies, may be subject to a heightened risk of such attacks from nation-state and affiliated actors, including attacks that could materially disrupt our systems, operations and platforms.

Due to political uncertainty in certain regions, we, like other financial services companies, may be subject to a heightened risk of such attacks from nation-state and affiliated actors, including attacks that could materially disrupt our systems, operations and platforms.

While we maintain insurance coverage that is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the event we experience a cybersecurity incident, data breach, disruption, unauthorized access, interruption, significant delay, failure or malfunction in our systems, networks, infrastructure and other operations, affecting, in particular, our platforms and solutions, which could result in reputational damage, financial losses, client dissatisfaction, regulatory enforcement actions, fines and penalties and/or private litigation.

While we have dedicated personnel who are responsible for maintaining our cybersecurity program and training our employees on cybersecurity, and while we utilize third-party technology products and services to help identify, protect and remediate our systems, networks and infrastructure, such measures and security controls may not be adequate or effective to prevent, identify or mitigate a cyber-attack, security breach, data breach, disruption, unauthorized access, interruption, significant delay, failure or malfunction.

While we have dedicated personnel who are responsible for maintaining our cybersecurity program and training our employees on cybersecurity, and while we utilize third-party technology products and services to help identify, protect and remediate our systems, networks and infrastructure, such measures and security controls may not be adequate or effective to prevent, detect or mitigate a cyber-attack, security breach, data breach, disruption, unauthorized access, interruption, significant delay, failure or malfunction.

We are also dependent on security measures, if any, that our third-party service providers and clients take to protect their own systems, networks and infrastructures.

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and foreign regulators.

We have an Enterprise Risk Committee, chaired by the Chief Risk Officer, and comprised of the Chief Information Security Officer and heads of Risk Management, Global Compliance, Human Resources, Internal Audit and various business lines, as well as the General Counsel.

Cybersecurity risk is overseen by our board of directors and audit committee.

The Chief Risk Officer and the Chief Information Security Officer provide regular updates to the Executive Committee, our audit committee and the board of directors.

See Part I, Item 1C.

– “Cybersecurity – Governance” for further detail regarding our cybersecurity risk management, strategy and governance structure.

As regulatory focus increases, we may be required to devote significant additional financial, operational and technical resources to modify and enhance our defensive measures and security controls and to identify and remediate any security vulnerabilities.

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Our disaster recovery and business continuity plans are heavily reliant on the availability of the internet and mobile phone technology, so any disruption of those systems would likely affect our ability to recover promptly from a crisis situation.

In addition, recent supply chain disruptions could affect our ability to procure hardware needed to recover from a crisis situation.

In addition, supply chain disruptions could affect our ability to procure hardware needed to recover from a crisis situation.

If we are unable to execute our disaster recovery and business continuity plans, or if our plans prove insufficient for a particular situation or take longer than expected to implement in a crisis situation, it could have a material adverse effect on our business, financial condition and results of operations, and our business interruption insurance may not adequately compensate us for losses that may occur.

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For example, the SEC’s Regulation Systems Compliance and Integrity and the system safeguards regulations of the CFTC subject portions of our trading platforms and other technological systems related to our SEFs to more extensive regulation and oversight.

In January 2022, the SEC proposed amendments which, among other things, would extend Regulation Systems Compliance and Integrity to systems involving U.S.

government securities trading.

The SEC has proposed amendments which, among other things, would extend Regulation Systems Compliance and Integrity to systems involving U.S.

government securities trading and impose additional cybersecurity-related obligations on covered entities.

Ensuring our compliance with these (and any future proposed) regulations requires significant ongoing costs and there can be no assurance that government regulators will not impose additional costly obligations on us in the future.

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These regulators have broad powers to promulgate and interpret laws, rules and regulations that often serve to restrict or limit our business.

The SEC, the CFTC, FINRA, the National Futures Association (“NFA”) and other authorities extensively regulate the U.S.

The SEC, the CFTC, FINRA, the NFA and other authorities extensively regulate the U.S.

financial services industry, including most of our operations in the United States.

Much of our international operations are subject to similar regulations in their respective jurisdictions, including regulations overseen by the FCA in the UK, De Nederlandsche Bank (“DNB”), the Netherlands Authority for the Financial Markets (“AFM”), the Monetary Authority of Singapore, the Hong Kong Securities and Futures Commission, the Investment Industry Regulatory Organization of Canada and provincial regulators in Canada, the Japanese Financial Services Agency, the Japan Securities Dealers Association and the Australian Securities and Investment Commission.

Much of our international operations are subject to similar regulations in their respective jurisdictions, including regulations overseen by the FCA, the DNB, the AFM, the AMF, the ACPR, the BaFin, the JFSA, the JSDA, the SFC, the MAS, the ASIC, the CBNV, the FINMA, the Investment Industry Regulatory Organization of Canada and provincial regulators in Canada and the DFS.

Most aspects of our business, and in particular our broker-dealer, SEF and introducing broker subsidiaries, are subject to laws, rules and regulations that cover all aspects of our business, including manner of operation, system integrity, anti-money laundering and financial crimes, handling of material non-public information, safeguarding data, capital requirements, reporting, record retention, market access, licensing of employees and the conduct of officers, employees and other associated persons.

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The regulatory framework for privacy, data protection and information security worldwide is uncertain, and is likely to remain uncertain for the foreseeable future, and we expect that there will continue to be new laws, rules regulations and industry standards concerning privacy, data protection and information security proposed and enacted in the various jurisdictions in which we operate.

For example, in the European Economic Area (the “EEA”), the General Data Protection Regulation (“GDPR”) imposes more stringent EU data protection requirements for entities using, processing, and transferring personal data and provides for significant penalties for noncompliance.

The GDPR prohibits the transfer of personal data to countries outside of the European Union/EEA (including the U.S.) that are not considered by the European Commission to provide an adequate level of data protection, except if the data controller meets very specific requirements, including use of standard contractual clauses (“SCCs”), issued by the European Commission.

For example, in the EEA, the General Data Protection Regulation (“GDPR”) imposes more stringent EU data protection requirements for entities using, processing, and transferring personal data and provides for significant penalties for noncompliance.

The GDPR prohibits the transfer of personal data to countries outside of the European Union/EEA (including the U.S.) that are not considered by the European Commission to provide an adequate level of data protection, except if the data controller meets very specific requirements, including, for example, use of standard contractual clauses (“SCCs”), issued by the European Commission, or certification under the new EU-U.S.

Data Privacy Framework administered by the U.S.

Department of Commerce.

The SCCs impose obligations on companies relating to cross-border personal data transfers, including, for example, depending on a party’s role in the transfer, implementation of additional security measures and to update internal privacy practices.

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and we evaluate what additional mechanisms may be required to establish adequate safeguards for personal information.

As supervisory authorities issue further guidance on personal information export mechanisms, including circumstances where the SCCs cannot be used and/or start taking enforcement action, we could incur substantial costs and/or regulatory investigations or fines.

As supervisory authorities issue further guidance on personal information export mechanisms, including circumstances where the SCCs cannot be used and/or broaden their enforcement activities, we could incur substantial costs and/or regulatory investigations or fines.

We are also subject to the GDPR as incorporated into United Kingdom law (“UK GDPR”).

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Moreover, any changes to these laws may require us to modify our data processing practices and policies and to incur substantial costs and expenses to comply.

We are also subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing.

Recent European court and regulator decisions are driving increased attention to use of cookies and tracking technologies on websites and digital platforms.

If the trend of increasing enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, and subject us to additional liabilities.

In light of the complex and evolving nature of EU, EU Member State and UK privacy laws on cookies and tracking technologies, there can be no assurances that we will be successful in our efforts to comply with such laws.

There has also been increased regulation of data privacy and security in the U.S.

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established a dedicated privacy regulator in California, the California Privacy Protection Agency, to implement and enforce the law;

and granted additional rights to consumers, such as correction of personal information and additional opt-out rights with respect to a new category of “sensitive information.” The CCPA has marked the beginning of a trend toward more stringent state data privacy legislation in the U.S., which may result in significant costs to our business, damage our reputation, require us to amend our business practices, and could adversely affect our business, especially to the extent the specific requirements vary from those and other existing laws.

For example, Virginia, Utah, Connecticut and Colorado have adopted new state data privacy laws that take effect in 2023.

and granted additional rights to consumers, such as correction of personal information and additional opt-out rights with respect to a new category of “sensitive information.” The CCPA marked the beginning of a trend toward more stringent state data privacy legislation in the U.S., which may result in significant costs to our business, damage our reputation, require us to amend our business practices, and could adversely affect our business, especially to the extent the specific requirements vary from those and other existing laws.

For example, comprehensive privacy laws in multiple U.S.

states have gone, or will go, into effect between 2023 and 2026, and a number of other states are considering similar laws related to the protection of consumer personal information.

In addition, many jurisdictions have also enacted or are considering laws requiring companies to notify individuals and/or regulators of data security breaches involving their personal data.These mandatory notifications are costly to implement and often lead to widespread negative publicity, which may cause our clients to lose confidence in the effectiveness of our cybersecurity measures.

Any inability, or perceived inability, by us or third parties on which we rely to comply with applicable laws, regulations, policies, industry standards and guidance, contractual obligations, or other legal obligations requiring notification could result in litigation;

regulatory investigations, fines and penalties;

enforcement actions;increased costs to us and significant legal and financial exposure and/or reputational harm.

Our efforts to comply with privacy, data protection and information security laws, rules and regulations could entail substantial expenses, may divert resources from other initiatives and could impact our ability to provide certain solutions.

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Any failure or perceived failure by us to comply with any of our obligations relating to privacy, data protection or information security may result in governmental investigations or enforcement actions, litigation, claims or negative publicity and could result in significant liability, increased costs or cause our clients to lose trust in us, which could have an adverse effect on our reputation and business.

tax legislation may materially adversely affect our financial condition, results of operations and cash flows.

New tax legislation and regulation may materially adversely affect our financial condition, results of operations and cash flows.

At any time, the U.S.

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Any such law, regulation or interpretation could take effect retroactively, and could adversely affect our business and financial condition, and the impact of any such law, regulation or interpretation on holders of our Class A common stock could be adverse.

For example, the IRA enacted, among other changes, a 15% corporate minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations.

For example, the IRA enacted, among other changes, a 15% corporate alternative minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations.

On October 8, 2021, the Organization for Economic Cooperation and Development announced an accord endorsing and providing an implementation plan focused on global profit allocation, and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as the “Two Pillar Plan.” On December 15, 2022, the European Council formally adopted a European Union directive on the implementation of the plan by January 1, 2024.

We may be subject to the provisions of the Two Pillar Plan, and related tax impacts per local country adoption, as we are a consolidating subsidiary of LSEG.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could materially adversely affect our results of operations and financial condition.

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Risks Relating to our Indebtedness

The credit agreement that governs the Revolving Credit Facility imposes significant operating and financial restrictions on us and our restricted subsidiaries, which may prevent us from capitalizing on business opportunities, and we may incur additional debt in the future that may include similar or additional restrictions.

We are party to a $500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), with a syndicate of banks.

The credit agreement that governs the Revolving Credit Facility imposes significant operating and financial restrictions.

These restrictions, which are subject to a number of qualifications and exceptions, could limit our ability and the ability of our restricted subsidiaries to, among other things:

• incur additional indebtedness and guarantee indebtedness;

• create or incur liens;

• pay dividends and distributions or repurchase capital stock;

• make investments, loans and advances;

• enter into certain transactions with affiliates.

The credit agreement that governs the 2023 Revolving Credit Facility imposes certain operating and financial restrictions on us and our restricted subsidiaries, which may prevent us from capitalizing on business opportunities, and we may incur debt in the future that may include similar or additional restrictions.

We are party to the 2023 Revolving Credit Facility, a $500.0 million senior unsecured revolving credit facility with a syndicate of banks.

The credit agreement that governs the 2023 Revolving Credit Facility imposes certain operating and financial restrictions.

These restrictions, which are subject to a number of qualifications and exceptions, could, among other things, limit the ability of (i) TWM LLC to merge or consolidate with other entities, (ii) the subsidiaries of TWM LLC to incur or guarantee indebtedness and (iii) TWM LLC and its subsidiaries to create or incur liens.

In addition, the credit agreement that governs our 2023 Revolving Credit Facility requires us to maintain a maximum total net leverage ratio and a minimum cash interest coverage ratio.

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– “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

These covenants could materially adversely affect our ability to finance our future operations or capital needs.

Furthermore, they may restrict our ability to expand and pursue our business strategies and otherwise conduct our business.

These covenants could affect our ability to finance our future operations or capital needs and otherwise conduct our business.

Our ability to comply with these covenants may be affected by circumstances and events beyond our control, such as prevailing economic conditions and changes in regulations, and we cannot assure you that we will be able to comply with such covenants.

These restrictions could also limit our ability to obtain future financings to withstand a future downturn in our business or the economy in general.

In addition, complying with these covenants may also cause us to take actions that make it more difficult for us to successfully execute our business strategies and compete against companies that are not subject to such restrictions.

Our failure to comply with the covenants and other terms of the 2023 Revolving Credit Facility and/or the terms of any future indebtedness could result in an event of default.

If any such event of default occurs and is not waived, the lenders under the Revolving Credit Facility could elect to declare all amounts outstanding and accrued and unpaid interest, if any, under the Revolving Credit Facility to be immediately due and payable, and could foreclose on the assets securing the Revolving Credit Facility.

If any such event of default occurs and is not waived, the lenders under the 2023 Revolving Credit Facility could elect to declare all amounts outstanding and accrued and unpaid interest, if any, under the 2023 Revolving Credit Facility to be immediately due and payable.

The lenders would also have the right in these circumstances to terminate any commitments they have to provide further credit extensions.

If we are forced to refinance any borrowings under the 2023 Revolving Credit Facility on less favorable terms or if we cannot refinance these borrowings, our financial condition and results of operations could be materially adversely affected.

In addition, although the credit agreement that governs the Revolving Credit Facility contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and we and our subsidiaries may be able to incur substantial additional indebtedness in compliance with these restrictions in the future.

In addition, although the credit agreement that governs the 2023 Revolving Credit Facility contains restrictions on the incurrence of certain indebtedness, these restrictions are subject to a number of qualifications and exceptions, and we and our subsidiaries may be able to incur substantial indebtedness in the future.

The terms of any future indebtedness we may incur could include more restrictive covenants.

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Any borrowings under the 2023 Revolving Credit Facility will be at variable rates of interest and expose us to interest rate risk.

If interest rates rise, as they did throughout 2022, our debt service obligations on any borrowings under the Revolving Credit Facility will increase even though the amount borrowed may remain the same, and our net income and cash flows will correspondingly decrease.

If interest rates rise, as they did throughout most of 2023, our debt service obligations on any borrowings under the 2023 Revolving Credit Facility will increase even though the amount borrowed may remain the same, and our net income and cash flows will correspondingly decrease.

Assuming that the $500.0 million 2023 Revolving Credit Facility was fully drawn, each 0.125% change in interest rates would result in an approximate change of $0.6 million in annual interest expense on the borrowings under the 2023 Revolving Credit Facility.

The phase-out, replacement or unavailability of LIBOR and/or other interest rate benchmarks could adversely affect our indebtedness.

The interest rates applicable to the Revolving Credit Facility are based on a fluctuating rate of interest determined by reference to the London Interbank Offered Rate (“LIBOR”).

In July 2017, the UK’s FCA, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021.

On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR tenors, with the support of the Federal Reserve and the FCA, announced plans to consult on ceasing publication of U.S.

dollar LIBOR on December 31, 2021 for the one-week and two-month U.S.

dollar LIBOR, and on June 30, 2023 for all other U.S.

dollar LIBOR tenors.

The Federal Reserve concurrently issued a statement advising banks to stop new U.S.

dollar LIBOR issuances by the end of 2021.

On March 5, 2021, the IBA confirmed its intention to cease publication of (i) one-week and two-month U.S.

dollar LIBOR tenors after December 31, 2021 and (ii) remaining USD U.S.

dollar LIBOR tenors after June 30, 2023.

In response to concerns regarding the future of LIBOR, the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York convened the Alternative Reference Rates Committee (the “ARRC”) to identify alternatives to LIBOR.

The ARRC has recommended a benchmark replacement waterfall to assist issuers in continued financial market entry while safeguarding against LIBOR’s discontinuation.

The initial steps in the ARRC’s recommended provision reference variations of the Secured Overnight Financing Rate (“SOFR”), calculated using short-term repurchase agreements backed by Treasury securities.

At this time, it is not possible to predict the extent to which and how quickly SOFR will attain market traction as a LIBOR replacement.

Additionally, it is uncertain whether and to what extent banks will continue to provide LIBOR submissions to the administrator of LIBOR and whether one-month, three-month, six-month, and twelve-month U.S.

dollar LIBOR rates will continue to be published until June 2023, or whether additional reforms to LIBOR may be enacted, or whether alternative reference rates will gain market acceptance as a replacement for LIBOR.

In anticipation of LIBOR’s phase-out, the credit agreement governing the Revolving Credit Facility provides for alternative base rates as well as a transition mechanism for selecting a benchmark replacement rate for LIBOR, with such benchmark replacement rate to be mutually agreed with the administrative agent and subject to the majority lenders not objecting to such benchmark replacement.

There can be no assurance that we will be able to reach any agreement on a replacement benchmark, and there can be no assurance that any agreement we reach will result in effective interest rates at least as favorable to us as our current effective interest rates.

The failure to reach an agreement on a replacement benchmark, or the failure to reach an agreement that results in an effective interest rate at least as favorable to us as our current effective interest rates, could result in a significant increase in our debt service obligations, which could adversely affect our financial condition and results of operations.

In addition, the overall financing market may be disrupted as a result of the phase-out or replacement of LIBOR, which could have an adverse impact on our ability to refinance, reprice or amend the Revolving Credit Facility, or incur additional indebtedness, on favorable terms, or at all.

Borrowings under the 2023 Revolving Credit Facility may bear interest at a rate per annum that, at our election, is based upon SOFR.

Since the initial publication of SOFR, daily changes in the rate have, on occasion, been more volatile than daily changes in comparable benchmark or market rates, and SOFR over time may bear little or no relation to the historical actual or historical indicative data.

The possible volatility of and uncertainty around SOFR as a LIBOR replacement rate could result in higher borrowing costs for us, which could adversely affect our liquidity, financial condition and results of operations.

Risks Relating to our Organizational Structure and Governance

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Following the consummation of the LSEG Transaction, LSEG is the controlling shareholder of Refinitiv and Refinitiv continues to be the controlling shareholder of Tradeweb.

As of December 31, 2022, Refinitiv controls approximately 91.2% of the combined voting power of our common stock as a result of its ownership of our Class B common stock and Class D common stock, each share of which is entitled to 10 votes on all matters submitted to a vote of our stockholders.

As of December 31, 2023, Refinitiv controls approximately 89.9% of the combined voting power of our common stock as a result of its ownership of our Class B common stock and Class D common stock, each share of which is entitled to 10 votes on all matters submitted to a vote of our stockholders and its ownership of our Class C common stock, each share of which is entitled to 1 vote on all matters submitted to a vote of our stockholders.

Moreover, under our amended and restated bylaws and the Stockholders Agreement, for so long as Refinitiv continues to beneficially own at least 10% of the combined voting power of our common stock, we will agree to nominate to our board of directors a certain number of individuals designated by Refinitiv.

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• the requirement that we have a compensation committee that is composed entirely of independent directors.

We intend to continue to rely on all of the exemptions listed above.

If we continue to utilize the exemptions, we will not have a majority of independent directors and our nominating and corporate governance and compensation committees will not consist entirely of independent directors.

We may in the future rely on any or all of the exemptions listed above.

If we utilize the exemptions, we will not have a majority of independent directors and our nominating and corporate governance and compensation committees will not consist entirely of independent directors.

As a result, our board of directors and those committees may have more directors who do not meet Nasdaq independence standards than they would if those standards were to apply.

The independence standards are intended to ensure that directors who meet those standards are free of any conflicting interest that could influence their actions as directors.

Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Accordingly, if we utilize the exemptions, you would not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

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We also incur expenses related to our operations, including payments under the Tax Receivable Agreement, which we expect could be significant.

See Note 10 – Tax Receivable Agreement to our audited consolidated financial statements included in this Annual Report on Form 10-K.

See Note 10 – Tax Receivable Agreement to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We intend, as its sole manager of TWM LLC, to cause TWM LLC to continue to make cash distributions to the owners of LLC Interests, including us, in an amount sufficient to (i) fund all or part of their tax obligations in respect of taxable income allocated to them and (ii) cover our operating expenses, including payments under the Tax Receivable Agreement.

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Under the Tax Receivable Agreement, we are required to make cash payments to a Continuing LLC Owner equal to 50% of the U.S.

federal, state and local income or franchise tax savings, if any, that we actually realize, or in certain circumstances are 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, the October 2019 and the April 2020 follow-on offerings and any future offerings or (b) redemptions or exchanges by such Continuing LLC Owner of LLC Interests for shares of our Class A common stock or Class B Common Stock or for cash, as applicable, and (ii) certain other tax benefits related to our making payments under the Tax Receivable Agreement.

federal, state and local income or franchise tax savings, if any, that we actually realize, or in certain circumstances are 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 a Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and the April 2020 follow-on offerings and any future offerings or (b) redemptions or exchanges by a Continuing LLC Owner of LLC Interests for shares of our Class A common stock or Class B Common Stock or for cash, as applicable, and (ii) certain other tax benefits related to our making payments under the Tax Receivable Agreement.

We expect that the amount of the cash payments that we will be required to make under the Tax Receivable Agreement will be substantial.

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The actual increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending on a number of factors, including, but not limited to, the timing of any future redemptions, exchanges or purchases of the LLC Interests held by Continuing LLC Owners, the price of our Class A common stock at the time of the redemption, exchange or purchase, the extent to which redemptions or exchanges are taxable, the amount and timing of the taxable income that we generate in the future, the timing and amount of any earlier payments we make under the Tax Receivable Agreement itself, the tax rates then applicable and the portion of our payments under the Tax Receivable Agreement constituting imputed interest.

We expect that, as a result of the increases in the tax basis of the tangible and intangible assets of TWM LLC attributable to the redeemed or exchanged LLC Interests, the payments that we may make to the existing Continuing LLC Owners could be substantial.

For example, as of December 31, 2023, we recorded a liability of $457.5 million related to our projected obligations under the Tax Receivable Agreement with respect to LLC Interests that were purchased by Tradeweb Markets Inc.

using the net proceeds from the IPO and the October 2019 and the April 2020 follow-on offerings and LLC Interests that were exchanged by Continuing LLC Owners during the years ended December 31, 2022, 2021, 2020 and 2019.

using the net proceeds from the IPO and the October 2019 and the April 2020 follow-on offerings and LLC Interests that were subsequently exchanged by Continuing LLC Owners.

Payments under the Tax Receivable Agreement are not conditioned on any Continuing LLC Owner’s continued ownership of LLC Interests or our Class A common stock or Class B common stock.

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Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the Continuing LLC Owners that will not benefit the holders of our Class A common stock or Class B common stock to the same extent as it will benefit the Continuing LLC Owners.

The Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners provides for the payment by us to the Continuing LLC Owners of 50% of the tax benefits, if any, that we actually realize, or in certain circumstances are 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, the October 2019 and April 2020 follow-on offerings and any future offerings or (b) redemptions or exchanges by the Continuing LLC Owners of LLC Interests for shares of our Class A common stock or Class B Common Stock or for cash, as applicable, and (ii) certain other tax benefits related to our making payments under the Tax Receivable Agreement.

The Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners provides for the payment by us to a Continuing LLC Owner of 50% of the tax benefits, if any, that we actually realize, or in certain circumstances are 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 a Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and April 2020 follow-on offerings and any future offerings or (b) redemptions or exchanges by a Continuing LLC Owner of LLC Interests for shares of our Class A common stock or Class B Common Stock or for cash, as applicable, and (ii) certain other tax benefits related to our making payments under the Tax Receivable Agreement.

Although we will retain 50% of the amount of such tax benefits, this and other aspects of our organizational structure may adversely impact the future trading market for the Class A common stock.

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As of February 2, 2024 we have 115,738,944 outstanding shares of Class A common stock and 120,011,165 shares of Class A common stock that are authorized but unissued that would be issuable upon redemption or exchange of LLC Interests or exchange of shares of our Class B common stock.

In addition, shares of Class A common stock issued or issuable upon exercise of options that have currently vested and vesting of the PRSUs and RSUs are eligible for sale.

In addition, shares of Class A common stock issued or issuable upon exercise of options that have currently vested and vesting of outstanding equity awards (as described more fully in Note 13 - Stock-Based Compensation Plains to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K) are eligible for sale.

We have filed registration statements on Form S-8 under the Securities Act covering approximately 32 million shares of Class A common stock issued or issuable under our equity incentive plans.

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If TWM LLC is unable to cause these subsidiaries to make distributions, it may have inadequate funds to distribute to us and we may be unable to fund our dividends.

Our ability to pay dividends may also be restricted by the terms of the Revolving Credit Facility, any future credit agreement or any future debt or preferred equity securities of Tradeweb or its subsidiaries.

Our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of Tradeweb or its subsidiaries.

Our dividend policy entails certain risks and limitations, particularly with respect to our liquidity.

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The manner, timing and amount of any purchase will be based on an evaluation of market conditions, stock price and other factors.

For example, the IRA imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S.

For example, the IRA imposes a 1% excise tax on the repurchase of stock by publicly traded U.S.

corporations.

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We expect these rules and regulations to continue to increase our legal and financial compliance costs and to make some activities more time-consuming and costly.

For example, we expect to incur additional costs in connection with compliance with the SEC’s new climate-related disclosure rules.

For example, we expect to incur additional costs in connection with compliance with any new climate-related disclosure rules.

These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

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Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Class A common stock, fines, sanctions and other regulatory action and potentially civil litigation.

UNRESOLVED STAFF COMMENTS.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors