What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-02-25 compared with 2020-02-28 · 25 added, 115 removed, 37 unchanged (79% of the section changed)

3 unchanged sentences

There is no established public trading market for Class B Common Stock, Class C Common Stock or Class D Common Stock.

Based on information made available to us by the transfer agent, as of February 28, 2020 , there are forty-three stockholders of record of our Class A Common Stock, one of which was Cede & Co., a nominee for The Depository Trust Company, zero stockholders of record of our Class B Common Stock, eight stockholders of record of our Class C Common Stock and one stockholder of record of our Class D Common Stock.

Based on information made available to us by the transfer agent, as of February 19, 2020, there are thirty-six stockholders of record of our Class A Common Stock, one of which was Cede & Co., a nominee for The Depository Trust Company, zero stockholders of record of our Class B Common Stock, six stockholders of record of our Class C Common Stock and one stockholder of record of our Class D Common Stock.

All of our Class A Common Stock held by brokerage firms, banks and other financial institutions as nominees for beneficial owners is considered to be held of record by Cede & Co., who is considered to be one stockholder of record.

3 unchanged sentences

Our Board of Directors has adopted a policy of returning excess cash to our stockholders.

Subject to the sole discretion of our board of directors and the considerations discussed below, we intend to pay dividends that will annually equal, in the aggregate, at least 70% of our net income.

The Board of Directors declared and we paid quarterly cash dividends of $0.24 during the years ended December 31, 2020, 2019 and 2018.

6 unchanged sentences

Our stock price performance shown in the graph below is not indicative of future stock price performance.

The stock performance graph below compares the performance of an investment in our Class A Common Stock, from April 16, 2015, the date of the IPO, through December 31, 2019 , with the S&P 500 Index and the NYSE ARCA Securities Broker/Dealer Index.

The graph assumes $100 was invested in our Class A Common Stock, the S&P 500 Index and the NYSE Arca Securities Broker/Dealer Index.

The stock performance graph below compares the performance of an investment in our Class A Common Stock, from December 31, 2015 through December 31, 2020, with the S&P 500 Index and the NYSE ARCA Securities Broker/Dealer Index.

The graph assumes $100 was invested in our Class A Common Stock, the S&P 500 Index and the NYSE Arca Securities

Broker/Dealer Index.

It assumes that dividends were reinvested on the date of payment without payment of any commissions or consideration of income taxes.

Index 12/31/2015 6/30/2016 12/30/2016 6/30/2017 12/29/2017 6/29/2018 12/31/2018 6/28/2019 12/31/2019 06/30/2020 12/31/2020

Virtu Financial Inc.

100.00 81.50 74.58 84.93 90.63 133.59 132.28 114.12 86.16 130.17 141.67

S&P 500 100.00 102.69 109.54 118.57 130.81 133.00 122.65 143.93 158.07 151.68 183.77

NYSE Arca Securities Broker/Dealer 100.00 84.46 115.27 126.57 148.94 152.98 133.27 150.02 163.05 152.65 212.02

1 unchanged sentence

Pursuant to the exchange agreement (the “Exchange Agreement”) entered into on April 15, 2015 by and among the Company, Virtu Financial and holders of Virtu Financial Units, Virtu Financial Units (along with the corresponding shares of our Class C Common Stock or Class D Common Stock, as applicable) may be exchanged at any time for shares of our Class A Common Stock or Class B Common Stock, as applicable, on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications.

In February 2018, the Company's board of directors authorized a new share repurchase program of up to $50.0 million in Class A Common Stock and Virtu Financial Units by March 31, 2019.

On July 27, 2018, the Company's board of directors authorized the expansion of the Company's share repurchase program, increasing the total authorized amount by $50.0 million

to $100.0 million and extending the duration of the program through September 30, 2019.

The share repurchase program entitled the Company to repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means.

Repurchases were also permitted to be made under Rule 10b5-1 plans.

The timing and amount of repurchase transactions were determined by the Company's management based on its evaluation of market conditions, share price, legal requirements and other factors.

The program expired on September 30, 2019.

From the inception of the program in February 2018, the Company repurchased approximately 2.6 million shares of Class A Common Stock and Virtu Financial Units for approximately $65.9 million .

In February 2018, the Company's Board of Directors authorized a share repurchase program of up to $50.0 million in Class A Common Stock and Virtu Financial Units by March 31, 2019.

On July 27, 2018, the Company's Board of Directors authorized the expansion of the Company's share repurchase program, increasing the total authorized amount by $50.0 million to $100.0 million and extending the duration of the program through September 30, 2019.

From the inception of the program in February 2018 to the expiration of the program on September 30, 2019, the Company repurchased approximately 2.6 million shares of Class A Common Stock and Virtu Financial Units for approximately $65.9 million.

On November 6, 2020, the Company's Board of Directors authorized a new share repurchase program of up to $100.0 million in Class A common stock and Virtu Financial Units by December 31, 2021.

The Company may repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means.

Repurchases may also be made under Rule 10b5-1 plans.

The timing and amount of repurchase transactions will be determined by the Company's management based on its evaluation of market conditions, share price, legal requirements and other factors.

The program may be suspended, modified or discontinued at any time without prior notice.

There are no assurances that any further repurchases will actually occur.

From the inception of the program through December 31, 2020, the Company has repurchased approximately 1.4 million shares of Class A Common Stock and Virtu Financial Units for approximately $33.9 million.

The Company has approximately $66.1 million of remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

The following table contains information about the Company’s purchases of its Class A Common Stock and Class C Common Stock during the three months ended December 31, 2020:

Total Number of Shares Purchased (1)

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

October 1, 2020 - October 31, 2020

Class A Common Stock / Virtu Financial Units repurchases

Class A Common Stock / Virtu Financial Units repurchases 22,166 $ 23.04 N/A

November 1, 2020 - November 30, 2020

10 unchanged sentences

The following table provides information about shares of common stock available for future awards under all of the Company’s equity compensation plans as of December 31, 2020:

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)

Equity compensation plans approved by security holders

Amended and Restated 2015 Management Incentive Plan

Equity compensation plans not approved by security holders

Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)

Equity compensation plans approved by security holders Amended and Restated 2015 Management Incentive Plan 2,324,152 $ 19.00 6,539,431

Equity compensation plans not approved by security holders None 3,000,000 22.98 —

Total 5,324,152 $ 21.24 6,539,431

SELECTED FINANCIAL DATA

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected historical consolidated financial data for the periods beginning on and after January 1, 2015.

We were formed on October 16, 2013 and, prior to the consummation of the Reorganization Transactions and the IPO, did not conduct any activities other than those incident to our formation and the IPO.

Our consolidated financial statements reflect, for all the periods prior to April 16, 2015 (the period prior to completion of the Reorganization Transactions), the operations of Virtu Financial and its consolidated subsidiaries, and for all periods on or after April 16, 2015, the operations of the Company and its consolidated subsidiaries (including Virtu Financial).

On July 20, 2017 we acquired KCG, which is accounted for under the acquisition method of accounting.

Under the acquisition method of accounting, the assets and liabilities of KCG as of the KCG Closing Date were recorded at their respective fair values and added to the carrying value of our existing assets and liabilities.

Our reported financial condition, results of operations and cash flows for the periods following the Acquisition of KCG reflect KCG's and our balances and reflect the impact of purchase accounting adjustments.

As we are the accounting acquirer, the financial results for the year ended December 31, 2017 comprise our results for the entire applicable period and the results of KCG from the KCG Closing Date through December 31, 2017.

All periods prior to the KCG Closing Date comprise solely our results.

On March 1, 2019 we acquired ITG, which is accounted for under the acquisition method of accounting.

Under the acquisition method of accounting, the assets and liabilities of ITG as of the ITG Closing Date were recorded at their respective fair values and added to the carrying value of our existing assets and liabilities.

Our reported financial condition, results of operations and cash flows for the periods following the ITG Acquisition reflect ITG's and our balances, and reflect the impact of purchase accounting adjustments.

The financial results for the year ended December 31, 2019 comprise our results for the entire applicable period and the results of ITG from the ITG Closing Date through December 31, 2019.

All periods prior to the ITG Closing Date comprise our results without the results of ITG (and, as discussed above, with the results of KCG for the relevant periods).

The Consolidated Statements of Comprehensive Income data for the years ended December 31, 2019 , 2018 and 2017 and the Consolidated Statements of Financial Condition data as of December 31, 2019 and 2018 have been derived from our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

The following selected historical financial and other data should be read in conjunction with “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our respective consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.

Year Ended December 31,

(In thousands, except share and per share data)

Consolidated Statements of Comprehensive Income Data:

Trading income, net

Interest and dividends income

Commissions, net and technology services(1)

Other, net(2)

Total revenues

Operating Expenses:

Brokerage, exchange and clearance fees, net

Communication and data processing

Employee compensation and payroll taxes

Payments for order flow(3)

Interest and dividends expense

Operations and administrative

Depreciation and amortization

Amortization of purchased intangibles and acquired capitalized software

Termination of office leases

Debt issue cost related to debt refinancing(4)

Transaction advisory fees and expenses(5)

Reserve for legal matters(6)

Charges related to share based compensation at IPO(7)

Financing interest expense on long-term borrowings

Total operating expenses

Income (loss) before income taxes

Provision for (benefit from) income taxes(8)

Net income (loss)

Noncontrolling interest

Net income (loss) available for common stockholders

Year Ended December 31,

Earnings (loss) per share

Weighted average common shares outstanding

Cash dividends declared per share

As of December 31,

Consolidated Statements of Financial Condition Data (in thousands):

Cash and cash equivalents

Senior secured credit facility

Total liabilities

Total Virtu Financial Inc.

stockholders' equity

Noncontrolling interest

In connection with the Acquisition of KCG and ITG Acquisition, we recognized a significant revenue increase in commissions, net and technology services for the years ended December 31, 2017, 2018 and 2019.

Commissions and fees are primarily affected by changes in our equities, fixed income and futures transaction volumes with institutional clients;

changes in commission rates;

client experience on the various platforms;

level of volume based fees from providing liquidity to other trading venues;

and the level of soft dollar and commission recapture activity.

As a result of the 2017 Tax Act (as defined below), we recognized a gain of $86.6 million on the reduction of our tax receivable agreement obligation during the year ended December 31, 2017.

See Note 6, “Tax Receivable Agreements” in Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

In January 2018, we completed the sale of BondPoint to ICE for total gross proceeds of $400.2 million in cash, and recognized a gain on sale net of transaction fees of $329.0 million.

See Note 4 “Sale of BondPoint” in Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Payments for order flow are a result of the Acquisition of KGC since the KCG Closing Date in 2017.

They primarily represent payments to broker dealer clients, in the normal course of business, for directing their order flow to us.

In 2017, in connection with the Acquisition of KCG, Virtu Financial entered into the fourth amended and restated credit agreement, dated as of June 30, 2017 (as amended on January 2, 2018 and September 19, 2018, the “Fourth Amended and Restated Credit Agreement”), which provided for a $1,150.0 million first lien secured term loan facility, and VFH, along with Orchestra Co-Issuer Inc., an indirect subsidiary of the Company, issued senior secured second lien notes in an aggregate principal amount of $500.0 million.

As discussed below in “Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations”, Virtu Financial terminated the Fourth Amended and Restated Credit Agreement in connection with the ITG Acquisition.

During the refinancing and termination of the Fourth Amended and Restated Credit Agreement, a portion of certain financing costs that were scheduled to be amortized over the life of the term loan thereunder, including original issue discount and underwriting and legal fees, were accelerated and recognized at the closing of the ITG Acquisition.

For the years ended December 31, 2018 and 2017, Virtu Financial made principal payments equal to $500.0 million and $250.0 million, respectively, on the term loan facility under the Fourth Amended and Restated Credit Agreement, which resulted in accelerations in the recognition of a portion of certain financing costs that were scheduled to be amortized over the life of the term loan.

On March 1, 2019, in connection with the ITG Acquisition, Virtu Financial entered into the Credit Agreement.

The Credit Agreement provided for (i) a senior secured first lien term loan in an aggregate principal amount of $1,500 million , drawn in its entirety on the ITG Closing Date, with approximately $404.5 million borrowed by VFH to repay all amounts outstanding under the Fourth Amended and Restated Credit Agreement and the remaining approximately $1,095 million borrowed by the Acquisition Borrower to finance the consideration and fees and expenses paid in connection with the ITG Acquisition, and (ii) a $50.0 million senior secured first lien revolving facility to VFH, with a $5.0 million letter of credit subfacility and a $5.0 million swingline subfacility.

On October 9, 2019 (the “Amendment Closing Date”), VFH entered into Amendment No.

1 to the Credit Agreement to, among other things, provide for $525.0 million in aggregate principal amount of incremental term loans, and amend the related collateral agreement.

On the Amendment Closing Date, VFH borrowed the incremental term loans and used the proceeds together with available cash to redeem all of the $500.0 million aggregate principal amount of the outstanding 6.750% Senior Secured Second Lien Notes (as defined below) due 2022 issued by VFH and Orchestra Co Issuer, Inc., a Delaware corporation and indirect subsidiary of the Company, and pay related fees and expenses.

See Note 10 “Borrowings” in Item 8 “Financial Statements and Supplement Data” of this Annual Report on Form 10-K.

Transaction advisory fees reflect professional fees incurred by us in connection with (i) the acquisition in a series of transactions, prior to the Reorganization Transactions, by Temasek, acting through two indirectly wholly owned subsidiaries, of direct or indirect ownership of 10,535,891 Class A-1 redeemable interests and 1,828,755 Class A-2 capital interests in Virtu Financial, which acquisition was consummated on December 31, 2014, (ii) the Acquisition of KCG, which was consummated on July 20, 2017, (iii) the sale of BondPoint, which was consummated on January 2, 2018, and (iv) the ITG Acquisition, which was consummated on March 1, 2019.

In December 2015, the enforcement committee of the AMF fined the Company’s European subsidiary in the amount of €5.0 million (approximately $5.4 million) based on its allegations that the subsidiary of Madison Tyler Holdings, LLC engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules.

In accordance with the foregoing, we accrued an estimated loss in relation to the fine imposed by the AMF.

In May 2017, the fine was reduced to €3.0 million (approximately $3.5 million), subject to an incremental charge of €0.3 million (approximately $0.4 million).

The incremental charge was subsequently annulled in 2019.

Represents non‑cash compensation expenses in respect of the outstanding time vested Class B interests of Virtu Financial (the “Virtu Financial Class B Interests”) and Class B interests of Virtu East MIP LLC (the “East MIP Class B Interests”) recognized at the consummation of the IPO and through the year ended December 31, 2015, net of $9.2 million and $8.5 million in capitalization and amortization, respectively, of the costs attributable to employees incurred in development of software for internal use.

We continued to capitalize and amortize the costs related to development on the software for internal use through the first quarter of 2018.

As a result of the 2017 Tax Act, the U.S.

statutory corporate tax rate has been lowered from 35% to 21% and certain deductions have been eliminated.

See Note 14, “Income Taxes” in Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Not applicable.

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 5. Market for Registrant’s Common Equity