What changed in this filing

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Item 1. Financial Statements

2021-05-07 compared with 2020-11-06 · 343 added, 830 removed, 894 unchanged (57% of the section changed)

9 unchanged sentences

Condensed Consolidated Statements of Financial Condition (Unaudited)

(in thousands, except share data) September 30,

(in thousands, except share data) March 31,

2021 December 31,

8 unchanged sentences

Receivables from customers 515,519 214,478

Property, equipment and capitalized software (net of accumulated depreciation of $ 443,770 and $ 457,229 as of September 30, 2020 and December 31, 2019, respectively)

Property, equipment and capitalized software (net of accumulated depreciation of $ 463,514 and $ 455,961 as of March 31, 2021 and December 31, 2020, respectively)

109,697 113,590

1 unchanged sentence

Goodwill 1,148,926 1,148,926

Intangibles (net of accumulated amortization of $ 165,417 and $ 219,239 as of September 30, 2020 and December 31, 2019, respectively)

Intangibles (net of accumulated amortization of $ 201,571 and $ 183,494 as of March 31, 2021 and December 31, 2020, respectively)

436,422 454,499

Deferred tax assets 183,035 193,070

Other assets ($ 66,805 and $ 48,966 , at fair value, as of September 30, 2020 and December 31, 2019, respectively)

Other assets ($ 68,750 and $ 68,316 , at fair value, as of March 31, 2021 and December 31, 2020, respectively)

240,579 317,747

16 unchanged sentences

Stockholders' equity

Class A common stock (par value $ 0.00001 ), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 125,059,325 and 120,435,912 shares, Outstanding — 122,880,554 and 118,257,141 shares at September 30, 2020 and December 31, 2019, respectively

Class B common stock (par value $ 0.00001 ), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at September 30, 2020 and December 31, 2019, respectively

Class C common stock (par value $ 0.00001 ), Authorized — 90,000,000 and 90,000,000 shares, Issued and Outstanding — 10,466,939 and 12,887,178 shares at September 30, 2020 and December 31, 2019, respectively

Class D common stock (par value $ 0.00001 ), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 60,091,740 and 60,091,740 shares at September 30, 2020 and December 31, 2019, respectively

Treasury stock, at cost, 2,178,771 and 2,178,771 shares at September 30, 2020 and December 31, 2019, respectively

Class A common stock (par value $ 0.00001 ), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 127,154,019 and 125,627,277 shares, Outstanding — 121,261,513 and 122,012,180 shares at March 31, 2021 and December 31, 2020, respectively

Class B common stock (par value $ 0.00001 ), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at March 31, 2021 and December 31, 2020, respectively

Class C common stock (par value $ 0.00001 ), Authorized — 90,000,000 and 90,000,000 shares, Issued and Outstanding — 10,135,182 and 10,226,939 shares at March 31, 2021 and December 31, 2020, respectively

Class D common stock (par value $ 0.00001 ), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 60,091,740 and 60,091,740 shares at March 31, 2021 and December 31, 2020, respectively

Treasury stock, at cost, 5,892,506 and 3,615,097 shares at March 31, 2021 and December 31, 2020, respectively

( 152,282 ) ( 88,923 )

7 unchanged sentences

Condensed Consolidated Statements of Financial Condition (Unaudited)

(in thousands, except share data) September 30,

(in thousands, except share data) March 31,

2021 December 31,

6 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended

September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands, except share and per share data) 2021 2020

17 unchanged sentences

Total operating expenses 522,785 534,396

Income (loss) before income taxes and noncontrolling interest 252,515 ( 5,828 ) 1,123,272 ( 88,610 )

Provision for (benefit from) income taxes 52,807 ( 644 ) 200,044 ( 14,322 )

Net income (loss) 199,708 ( 5,184 ) 923,228 ( 74,288 )

Income before income taxes and noncontrolling interest 489,787 466,225

Provision for income taxes 80,555 77,987

Net income 409,232 388,238

Noncontrolling interest ( 169,827 ) ( 167,169 )

Net income (loss) available for common stockholders $ 116,709 $ ( 4,312 ) $ 536,917 $ ( 40,876 )

Earnings (loss) per share

Net income available for common stockholders $ 239,405 $ 221,069

Earnings per share

Basic $ 1.91 $ 1.80

3 unchanged sentences

Diluted 123,389,328 119,788,475

Net income (loss) $ 199,708 $ ( 5,184 ) $ 923,228 $ ( 74,288 )

Other comprehensive income (loss)

Net income $ 409,232 $ 388,238

Other comprehensive income

Foreign exchange translation adjustment, net of taxes ( 3,676 ) ( 10,396 )

Net change in unrealized cash flow hedges gain (loss), net of taxes 21,906 ( 55,602 )

Comprehensive income (loss) 207,834 ( 12,381 ) 862,663 ( 84,345 )

Comprehensive income (loss) attributable to noncontrolling interest ( 86,761 ) 3,598 ( 360,302 ) 37,221

Comprehensive income (loss) attributable to common stockholders $ 121,073 $ ( 8,783 ) $ 502,361 $ ( 47,124 )

Comprehensive income 427,462 322,240

Comprehensive income attributable to noncontrolling interest ( 177,616 ) ( 138,523 )

Comprehensive income attributable to common stockholders $ 249,846 $ 183,717

See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

2 unchanged sentences

Condensed Consolidated Statements of Changes in Equity (Unaudited)

Three and Nine Months Ended September 30, 2020 and 2019

Three Months Ended March 31, 2021 and 2020

Class A Common Stock Class C Common Stock Class D Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total Virtu Financial Inc.

6 unchanged sentences

Stock options exercised 154,372 — — — — — — — $ 2,933 $ — $ — $ 2,933 $ — $ 2,933

Warrants issued — — — — — — — — 11,486 — — 11,486 — 11,486

Net income (loss) — — — — — — — — — 221,069 — 221,069 167,169 388,238

Foreign exchange translation adjustment — — — — — — — — — — ( 5,884 ) ( 5,884 ) ( 4,512 ) ( 10,396 )

Net change in unrealized cash flow hedges gains (losses) — — — — — — — — — — ( 31,468 ) ( 31,468 ) ( 24,134 ) ( 55,602 )

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 19,165 ) ( 19,165 )

Dividends — — — — — — — — — ( 29,602 ) — ( 29,602 ) — ( 29,602 )

Issuance of common stock in connection with employee exchanges 724,327 — — — — — — — — — — — — —

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 724,327 ) — — — — — — — — — — —

Balance at March 31, 2020 122,585,460 $ 1 12,162,851 $ — 60,091,740 $ 1 ( 2,178,771 ) $ ( 55,005 ) $ 1,113,447 $ 91,292 $ ( 37,999 ) $ 1,111,737 $ 416,920 $ 1,528,657

Share based compensation 36,771 — — — — — — — 7,839 — — 7,839 — 7,839

Treasury stock purchases ( 8,727 ) — — — — — — — — ( 360 ) — ( 360 ) — ( 360 )

Stock options exercised 404,794 — — — — — — — 7,691 — — 7,691 — 7,691

Net income (loss) — — — — — — — — — 199,142 — 199,142 136,143 335,285

Foreign exchange translation adjustment — — — — — — — — — — 3,674 3,674 2,770 6,444

Net change in unrealized cash flow hedges gains (losses) — — — — — — — — — — ( 5,242 ) ( 5,242 ) ( 3,895 ) ( 9,137 )

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 145,211 ) ( 145,211 )

Dividends — — — — — — — — — ( 30,201 ) — ( 30,201 ) — ( 30,201 )

Issuance of common stock in connection with employee exchanges 1,635,912 — — — — — — — — — — — — —

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 1,635,912 ) — — — — — — — — — — —

Balance at June 30, 2020 124,654,210 $ 1 10,526,939 $ — 60,091,740 $ 1 ( 2,178,771 ) $ ( 55,005 ) $ 1,128,977 $ 259,873 $ ( 39,567 ) $ 1,294,280 $ 406,727 $ 1,701,007

Share based compensation 234,981 — — — — — — — 10,568 — — 10,568 — 10,568

Treasury stock purchases ( 79,570 ) — — — — — — — — ( 2,418 ) — ( 2,418 ) — ( 2,418 )

Stock options exercised 189,704 — — — — — — — 3,604 — — 3,604 — 3,604

Net income — — — — — — — — $ — $ 239,405 $ — $ 239,405 $ 169,827 $ 409,232

1 unchanged sentence

Net change in unrealized cash flow hedges gains (losses) — — — — — — — — $ — $ — $ 12,607 $ 12,607 $ 9,299 $ 21,906

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 83,441 ) ( 83,441 )

Dividends — — — — — — — — — ( 30,347 ) — ( 30,347 ) — ( 30,347 )

Dividends ($ 0.24 per share of Class A common stock and participating Restricted Stock Unit and Restricted Stock Award) and distributions from Virtu Financial to non-controlling interest

— — — — — — — — $ — $ ( 30,147 ) $ — $ ( 30,147 ) $ ( 159,239 ) $ ( 189,386 )

Issuance of common stock in connection with employee exchanges 91,757 — — — — — — — $ — $ — $ — $ — $ — $ —

Stockholders' Equity Non-Controlling Interest Total Equity

(in thousands, except share and interest data)

Shares Amounts Shares Amounts Shares Amounts Shares Amounts Amounts

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 91,757 ) — — — — — $ — $ — $ — $ — $ — $ —

Balance at September 30, 2020 125,059,325 $ 1 10,466,939 $ — 60,091,740 $ 1 ( 2,178,771 ) $ ( 55,005 ) $ 1,143,149 $ 343,817 $ ( 35,203 ) $ 1,396,760 $ 410,047 $ 1,806,807

Balance at March 31, 2021 127,154,019 $ 1 10,135,182 $ — 60,091,740 $ 1 ( 5,892,506 ) $ ( 152,282 ) $ 1,190,950 $ 615,580 $ ( 15,045 ) $ 1,639,205 $ 404,874 $ 2,044,079

6 unchanged sentences

Stock options exercised 213,129 — — — — — — — 3,206 — — 3,206 — 3,206

Net income (loss) — — — — — — — — — ( 6,673 ) — ( 6,673 ) ( 6,946 ) ( 13,619 )

Foreign exchange translation adjustment — — — — — — — — — — ( 2,136 ) ( 2,136 ) ( 1,608 ) ( 3,744 )

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 37,196 ) ( 37,196 )

Dividends — — — — — — — — — ( 26,312 ) — ( 26,312 ) — ( 26,312 )

Issuance of common stock in connection with employee exchanges 240,000 — — — — — — — — — — — — —

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 240,000 ) — — — — — — — — — — —

Balance at March 31, 2019 109,921,498 $ 1 13,509,886 $ — 69,091,740 $ 1 ( 2,178,771 ) $ ( 55,005 ) $ 1,042,091 $ 54,723 $ ( 2,218 ) $ 1,039,593 $ 397,053 $ 1,436,646

Share based compensation 257,750 — — — — — — — 16,443 — — 16,443 — 16,443

Repurchase of Class C common stock — — ( 3,584 ) — — — — — — ( 96 ) — ( 96 ) — ( 96 )

Treasury stock purchases ( 90,852 ) — — — — — — — — ( 2,093 ) — ( 2,093 ) — ( 2,093 )

Stock options exercised 35,120 — — — — — — — 72 — — 72 — 72

Net income (loss) — — — — — — — — — ( 29,891 ) — ( 29,891 ) ( 25,594 ) ( 55,485 )

Foreign exchange translation adjustment — — — — — — — — — — 548 548 336 884

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 14,891 ) ( 14,891 )

Dividends — — — — — — — — — ( 28,592 ) — ( 28,592 ) — ( 28,592 )

Issuance of common stock in connection with employee exchanges 367,900 — — — — — — — — — — — — —

Issuance of common stock in connection with secondary offering, net of offering costs 9,000,000 — — — ( 9,000,000 ) — — — ( 375 ) — — ( 375 ) — ( 375 )

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 367,900 ) — — — — — — — — — — —

Issuance of tax receivable agreements in connection with employee exchange — — — — — — — — ( 644 ) — — ( 644 ) — ( 644 )

Balance at June 30, 2019 119,491,416 $ 1 13,138,402 $ — 60,091,740 $ 1 ( 2,178,771 ) $ ( 55,005 ) $ 1,057,587 $ ( 5,949 ) $ ( 1,670 ) $ 994,965 $ 356,904 $ 1,351,869

Share based compensation 227,579 — — — — — — — 12,536 — — 12,536 — 12,536

Treasury stock purchases ( 57,890 ) — — — — — — — — ( 1,167 ) — ( 1,167 ) — ( 1,167 )

Warrants issued — — — — — — — — 11,486 — — 11,486 — 11,486

Net income — — — — — — — — — 221,069 — 221,069 167,169 388,238

Foreign exchange translation adjustment — — — — — — — — — — ( 5,884 ) ( 5,884 ) ( 4,512 ) ( 10,396 )

Stockholders' Equity Non-Controlling Interest Total Equity

(in thousands, except share and interest data)

Shares Amounts Shares Amounts Shares Amounts Shares Amounts Amounts

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 25,448 ) ( 25,448 )

Dividends — — — — — — — — — ( 28,692 ) — ( 28,692 ) — ( 28,692 )

Net change in unrealized cash flow hedges gains (losses) — — — — — — — — — — ( 31,468 ) ( 31,468 ) ( 24,134 ) ( 55,602 )

Dividends ($ 0.24 per share of Class A common stock and participating Restricted Stock Unit and Restricted Stock Award) and distributions from Virtu Financial to non-controlling interest

— — — — — — — — — ( 29,602 ) — ( 29,602 ) ( 19,165 ) ( 48,767 )

Issuance of common stock in connection with employee exchanges 724,327 — — — — — — — — — — — — —

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 724,327 ) — — — — — — — — — — —

Balance at September 30, 2019 119,894,982 $ 1 12,904,525 $ — 60,091,740 $ 1 ( 2,178,771 ) $ ( 55,005 ) $ 1,070,123 $ ( 40,120 ) $ ( 5,986 ) $ 969,014 $ 327,703 $ 1,296,717

Balance at March 31, 2020 122,585,460 $ 1 12,162,851 $ — 60,091,740 $ 1 ( 2,178,771 ) $ ( 55,005 ) $ 1,113,447 $ 91,292 $ ( 37,999 ) $ 1,111,737 $ 416,920 $ 1,528,657

See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2021 2020

Cash flows from operating activities

Net income (loss) $ 923,228 $ ( 74,288 )

Net income $ 409,232 $ 388,238

Adjustments to reconcile net income to net cash provided by operating activities:

6 unchanged sentences

Deferred taxes 10,035 ( 5,116 )

Gain on sale of MATCHNow ( 58,652 ) —

Other ( 406 ) 4,126

18 unchanged sentences

Acquisition of property and equipment ( 3,488 ) ( 10,750 )

Proceeds from sale of MATCHNow 60,592 —

ITG Acquisition, net of cash acquired, described in Note 3 — ( 835,581 )

Investment in joint ventures ( 2,106 ) ( 1,150 )

Net cash provided by (used in) investing activities 3,444 ( 882,820 )

Net cash used in investing activities ( 25,642 ) ( 20,011 )

Cash flows from financing activities

Distribution from Virtu Financial to non-controlling interest ( 247,816 ) ( 77,535 )

Dividends ( 90,150 ) ( 83,596 )

Repurchase of Class C common stock — ( 96 )

Dividends to stockholders and distributions from Virtu Financial to non-controlling interest ( 189,386 ) ( 48,767 )

Purchase of treasury stock ( 77,093 ) ( 9,801 )

1 unchanged sentence

Short-term borrowings, net 177,920 358,900

Proceeds from long-term borrowings — 1,492,500

Repayment of long term borrowings ( 1,460 ) —

1 unchanged sentence

Debt issuance costs ( 2,658 ) ( 9,263 )

Issuance of common stock in connection with secondary offering, net of offering costs — ( 375 )

Net cash provided by (used in) financing activities ( 89,744 ) 280,989

Effect of exchange rate changes on cash and cash equivalents ( 3,676 ) ( 10,396 )

Net increase (decrease) in cash and cash equivalents ( 107,318 ) ( 341,228 )

Nine Months Ended September 30,

(in thousands) 2020 2019

Net increase in cash and cash equivalents 14,828 31,921

Cash, cash equivalents, and restricted or segregated cash, beginning of period 1,007,005 773,280

3 unchanged sentences

Cash paid for taxes 25,714 2,843

Three Months Ended March 31,

(in thousands) 2021 2020

Non-cash investing activities

Share-based and accrued incentive compensation to developers relating to capitalized software 4,387 3,254

Non-cash financing activities

Tax receivable agreement described in Note 6 — ( 644 )

(1) Net of ITG Acquisition for the three months ended March 31, 2019;

See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

1 unchanged sentence

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except shares and per share amounts, unless otherwise noted)

3 unchanged sentences

VFI is a Delaware corporation whose primary asset is its ownership interest in Virtu Financial LLC (“Virtu Financial”).

As of September 30, 2020, VFI owned approximately 64.2 % of the membership interests of Virtu Financial.

As of March 31, 2021, VFI owned approximately 64.0 % of the membership interests of Virtu Financial.

VFI is the sole managing member of Virtu Financial and operates and controls all of the businesses and affairs of Virtu Financial and its subsidiaries (the “Group”).

2 unchanged sentences

Leveraging its global market structure expertise and scaled, multi-asset infrastructure, the Company provides its clients with a robust product suite including offerings in execution, liquidity sourcing, analytics and broker-neutral, multi-dealer platforms in workflow technology.

The Company’s product offerings allow its clients to trade on hundreds of venues in over 50 countries and across multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income and other commodities.

The Company’s product offerings allow its clients to trade on hundreds of venues in over 50 countries and across multiple asset classes, including global equities, Exchange-Traded Funds ("ETFs"), foreign exchange, futures, fixed income and other commodities.

The Company’s integrated, multi-asset analytics platform provides a range of pre- and post-trade services, data products and compliance tools that its clients rely upon to invest, trade and manage risk across global markets.

The Company has completed two significant acquisitions over the past four years that have expanded and complemented Virtu Financial's original electronic trading and marking making business.

On July 20, 2017 (the “KCG Closing Date”), the Company completed the all-cash acquisition of KCG Holdings, Inc.

2 unchanged sentences

and its subsidiaries (“ITG”) in an all-cash transaction valued at $ 30.30 per ITG share, for a total of approximately $ 1.0 billion (the “ITG Acquisition”).

See Note 3 “ITG Acquisition” for further details.

ITG was a global financial technology company.

ITG's business contributes to the Company's Execution Services segment.

Virtu Financial’s principal U.S.

subsidiary is Virtu Americas LLC (“VAL”), which is a U.S.

Virtu Financial’s principal United States ("U.S.") subsidiary is Virtu Americas LLC (“VAL”), which is a U.S.

broker-dealer.

As part of the Company's integration efforts, the Company consolidated the operations of its other historical U.S.

broker-dealer subsidiaries.

Specifically, the broker-dealer activities of Virtu Financial BD LLC ("VFBD") and Virtu Financial Capital Markets LLC ("VFCM") were consolidated within VAL as of December 31, 2019 and the SEC registrations were withdrawn in March 2020.

Subsequently, the Company consolidated the broker-dealer activities of Virtu ITG LLC ("VITG") and Virtu Alternet Securities ("VALT") within VAL as of June 1, 2020 and the SEC registrations were withdrawn in August 2020.

Other principal U.S.

3 unchanged sentences

and Virtu ITG Platforms LLC, a provider of workflow technology solutions and network connectivity services.

Principal foreign subsidiaries include Virtu Financial Ireland Limited and Virtu ITG Europe Limited, each formed in Ireland;

Principal foreign subsidiaries include Virtu Financial Ireland Limited ("VFIL") and Virtu ITG Europe Limited ("VIEL"), each formed in Ireland;

Virtu ITG UK Limited ("VIUK"), formed in the United Kingdom;

Virtu ITG Canada Corp.

6 unchanged sentences

Ltd., each formed in Singapore, all of which are trading entities focused on asset classes in their respective geographic regions.

On August 4, 2020, the Company completed the disposition of the MATCHNow business pursuant to a previously announced agreement with Cboe Global Markets, Inc., resulting in a gain of approximately $ 56.2 million, with contingent consideration of up to approximately $ 23.0 million, conditioned on future performance of MATCHNow.

See Note 4 "Sale of MATCHNow" for further details.

The Company has two operating segments:

11 unchanged sentences

The condensed consolidated financial statements of the Company include its equity interests in Virtu Financial and its subsidiaries.

The Company operates and controls all business and affairs of Virtu Financial and its subsidiaries indirectly through its equity interest in Virtu Financial.

Certain reclassifications have been made to the prior periods’ condensed consolidated financial statements in order to conform to the current period presentation.

As sole managing member of Virtu Financial, the Company exerts control over the Group’s operations.

The Company consolidates Virtu Financial and its subsidiaries’ financial statements and records the interests in Virtu Financial that the

Company does not own as noncontrolling interests.

All intercompany accounts and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the prior period's condensed consolidated financial statements in order to conform to the current period presentation.

Such reclassifications are immaterial, individually and in the aggregate, to both current and all previously issued financial statements taken as a whole and have no effect on previously reported consolidated net income available to common stockholders.

Effective for the quarter ended March 31, 2021, the Company has changed the presentation of its Condensed Consolidated Statements of Changes in Equity and Condensed Consolidated Statements of Cash Flows.

As a result, the Company combined $ 29.6 million of Dividends to stockholders and $ 19.2 million of Distribution from Virtu Financial to non-controlling interest into one line, Dividends to stockholders and distribution from Virtu Financial to non-controlling interest for the three months ended March 31, 2020.

Dividends and distributions from Virtu Financial to non-controlling interest both represent cash payments by the Company it its equity owners which reduce Total equity.

Effective for the quarter ended June 30, 2020, the Company has changed the presentation of its Condensed Consolidated Statements of Comprehensive Income.

As a result, the Company made the following reclassifications to prior period amounts to be consistent with current period presentation.

For the three and nine months ended September 30, 2019, respectively, the Company reclassified $ 24.5 million and $ 71.7 million of Payments for order flow to Brokerage, exchange, clearance fees and payments for order flow, net, previously reported as Brokerage, exchange and clearance fees, net.

For the three months ended March 31, 2020, the Company reclassified $ 62.3 million of Payments for order flow to Brokerage, exchange, clearance fees and payments for order flow, net, previously reported as Payments for order flow and Brokerage, exchange and clearance fees, net, respectively.

Brokerage, exchange and clearance fees, net and payments for order flow both represent costs associated with transacting trades.

For the three and nine months ended September 30, 2019, respectively, the Company reclassified $ 3.0 million and $ 8.9 million of sublease income from Other, net to Operations and administrative to net with other occupancy costs within Operations and administrative.

The condensed consolidated financial statements include the accounts of the Company and its majority and wholly-owned subsidiaries.

As sole managing member of Virtu Financial, the Company exerts control over the Group’s operations.

The Company consolidates Virtu Financial and its subsidiaries’ financial statements and records the interests in Virtu Financial that the Company does not own as noncontrolling interests.

All intercompany accounts and transactions have been eliminated in consolidation.

For the three months ended March 31, 2020, the Company reclassified $ 3.5 million of sublease income from Other, net within Total revenues to net with other occupancy costs recorded in Operations and administrative within Operating Expenses.

Summary of Significant Accounting Policies

Use of Estimates

The Company's condensed consolidated financial statements are prepared in conformity with U.S.

GAAP, which require management to make estimates and assumptions regarding measurements including the fair value of trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, income tax, tax receivable agreements, leases, litigation accruals, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Accordingly, actual results could differ materially from those estimates.

Earnings Per Share

Earnings per share (“EPS”) is calculated on both a basic and diluted basis.

Basic EPS excludes dilution and is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period.

Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period.

Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future.

The Company grants restricted stock awards ("RSAs") and restricted stock units (“RSUs”), certain of which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of

common stock.

As a result, the unvested RSAs and participating unvested RSUs meet the definition of a participating security requiring the application of the two-class method.

Under the two-class method, earnings available to common shareholders, including both distributed and undistributed earnings, are allocated to each class of common stock and participating securities according to dividends declared and participating rights in undistributed earnings, which may cause diluted EPS to be more dilutive than the calculation using the treasury stock method.

Cash and Cash Equivalents

Cash and cash equivalents include money market accounts, which are payable on demand, and short-term investments with an original maturity of less than 90 days.

The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits.

The Company manages this risk by selecting financial institutions deemed highly creditworthy to minimize the risk.

Cash restricted or segregated under regulations and other represents (i) special reserve bank accounts for the exclusive benefit of customers (“Special Reserve Bank Account”) maintained by VAL in accordance with Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (“Customer Protection Rule”), or proprietary accounts of broker-dealers, (ii) funds on deposit for Canadian and European trade clearing and settlement activity, (iii) segregated balances under a collateral account control agreement for the benefit of certain customers in Hong Kong, and (iv) funds relating to the securitization of bank guarantees supporting certain of the Company’s foreign leases.

Securities Borrowed and Securities Loaned

The Company conducts securities borrowing and lending activities with external counterparties.

In connection with these transactions, the Company receives or posts collateral, which comprises cash and/or securities.

In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received.

Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received.

The initial cash collateral advanced or received generally approximates or is greater than 102 % of the fair value of the underlying securities borrowed or loaned.

The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate.

Receivables and payables with the same counterparty are not offset in the Condensed Consolidated Statements of Financial Condition.

Interest received or paid by the Company for these transactions is recorded gross on an accrual basis under Interest and dividends income or Interest and dividends expense in the Condensed Consolidated Statements of Comprehensive Income.

Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at contract value, plus accrued interest, which approximates fair value.

It is the Company's policy that its custodian take possession of the underlying collateral securities with a fair value approximately equal to the principal amount of the repurchase transaction, including accrued interest.

For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the Condensed Consolidated Statements of Financial Condition.

To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions.

The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty.

The Company has entered into bilateral and tri-party term and overnight repurchase and other collateralized financing agreements which bear interest at negotiated rates.

The Company receives cash and makes delivery of financial instruments to a custodian who monitors the market value of these instruments on a daily basis.

The market value of the instruments delivered must be equal to or in excess of the principal amount loaned under the repurchase agreements plus the agreed upon margin requirement.

The custodian may request additional collateral, if appropriate.

Receivables from/Payables to Broker-dealers and Clearing Organizations

Receivables from and payables to broker-dealers and clearing organizations primarily represent amounts due for unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing organizations or exchanges, and balances due from or due to prime brokers in relation to the Company’s trading.

Amounts receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for securities sold, not yet purchased.

The Company presents its balances, including outstanding principal balances on all broker credit facilities, on a net-by-counterparty basis within receivables from and payables to broker-dealers and clearing organizations when the criteria for offsetting are met.

In the normal course of business, a significant portion of the Company’s securities transactions, money balances, and security positions are transacted with several third-party brokers.

The Company is subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf.

The Company monitors the financial condition of such brokers to minimize the risk of any losses from these counterparties.

Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased

Financial instruments owned and Financial instruments sold, not yet purchased relate to market making and trading activities, and include listed and other equity securities, listed equity options and fixed income securities.

The Company records Financial instruments owned, Financial instruments owned and pledged, and Financial instruments sold, not yet purchased at fair value.

Gains and losses arising from financial instrument transactions are recorded net on a trade-date basis in Trading income, net, in the Condensed Consolidated statements of comprehensive income.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date.

Fair value measurements are not adjusted for transaction costs.

The recognition of “block discounts” for large holdings of unrestricted financial instruments where quoted prices are readily and regularly available in an active market is prohibited.

The Company categorizes its financial instruments into a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value.

The hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant to the fair value measurement.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories based on inputs:

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 — Quoted prices in markets that are not active and financial instruments for which all significant inputs are observable, either directly or indirectly;

Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Fair Value Option

The fair value option election allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities.

Unrealized gains and losses on items for which the fair value option has been elected are recorded in other, net in the Condensed Consolidated Statements of Comprehensive Income.

The decision to elect the fair value option is determined on an instrument by instrument basis, which must be applied to an entire instrument and is irrevocable once elected.

Derivative Instruments - Trading

Derivative instruments are used for trading purposes, including economic hedges of trading instruments, are carried at fair value, and include futures, forward contracts, and options.

Gains or losses on these derivative instruments are recognized currently within Trading income, net in the Condensed Consolidated Statement of Comprehensive Income.

Fair values for exchange-traded derivatives, principally futures, are based on quoted market prices.

Fair values for over-the-counter derivative instruments, principally forward contracts, are based on the values of the underlying financial instruments within the contract.

The underlying instruments are currencies, which are actively traded.

The Company presents its trading derivatives balances on a net-by-counterparty basis when the criteria for offsetting are met.

Cash flows associated with such derivative activities are included in cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows.

Derivative Instruments - Hedging

The Company may use derivative instruments for risk management purposes, including cash flow hedges used to manage interest rate risk on long-term borrowings and net investment hedges used to manage foreign exchange risk.

The Company has entered into floating-to-fixed interest rate swap agreements in order to manage interest rate risk associated with its long-term debt obligations.

Additionally, the Company may seek to reduce the impact of fluctuations in foreign exchange rates on its net investment in certain non-U.S.

operations through the use of foreign currency forward contracts.

For interest rate swap agreements and foreign currency forward contracts designated as hedges, the Company assesses its risk management objectives and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively.

The effectiveness of the hedge is assessed based on the overall changes in the fair value of the interest rate swaps or forward contracts.

For instruments that meet the criteria to be considered hedging instruments under ASC 815, any gains or losses, to the extent effective, are included in Accumulated other comprehensive income on the Condensed Consolidated Statements of Financial Condition and Other comprehensive income on the Condensed Consolidated Statements of Comprehensive Income.

The ineffective portion, if any, is recorded in Other, net on the Condensed Consolidated Statements of Comprehensive Income.

The Company presents its hedging derivatives balances on a net-by-counterparty basis when the criteria for offsetting are met.

Balances associated with hedging derivatives are recorded within Receivables from/Payables to broker-dealers and clearing organizations on the Condensed Consolidated Statements of Financial Condition.

Cash flows associated with such derivative activities are included in cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows.

Client Commission Arrangements

Institutional customers are permitted to allocate a portion of their gross commissions to pay for research products and other services provided by third parties and the Company’s subsidiaries.

The amounts allocated for those purposes are commonly referred to as client commission arrangements.

The cost of independent research and directed brokerage arrangements is accounted for on an accrual basis.

Commission revenue is recorded when earned on a trade date basis.

Payments relating to client commission arrangements are netted against the commission revenues.

Research receivable, including prepaid research on behalf of customers and balance transfers due from other broker-dealers, net of an allowance is included in Receivables from customers and Receivables from broker-dealers and clearing organizations, while accrued research payable is included in Accounts payable, accrued expenses, and other liabilities in the Condensed Consolidated Statements of Financial Condition.

Property and Equipment

Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with acquisitions using the purchase accounting method, which were recorded at fair value on the respective date of acquisitions.

Depreciation is provided using the straight-line method over estimated useful lives of the underlying assets.

Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized.

When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.

Furniture, fixtures, and equipment are depreciated over three to seven years .

Leasehold improvements are amortized over the lesser of the life of the improvement or the term of the lease.

Capitalized Software

The Company capitalizes costs of materials, consultants, and payroll and payroll related costs for employees incurred in developing internal-use software and software to be sold, leased, or marketed.

Costs incurred during the preliminary project and post-implementation stages are charged to expense.

Management’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized.

Capitalized software development costs and related accumulated amortization are included in Property, equipment and capitalized software in the accompanying Condensed Consolidated Statements of Financial Condition and are amortized over a period of 1.5 to 3 years, which represents the estimated useful lives of the underlying software.

The Company determines if an arrangement is a lease at the inception of the arrangement.

Operating leases are included in Operating lease right-of-use ("ROU") assets and Operating lease liabilities on the Condensed Consolidated Statements of Financial Condition.

Operating lease ROU assets are assets that represent the lessee’s right to use, or control the use of, a specified asset for the lease term.

Finance leases consist primarily of leases for technology and equipment and are included in Property, equipment, and capitalized software and Accounts payable, accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition.

ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

The Company uses its incremental borrowing rate, based on the information available at the commencement date of the lease, in determining the present value of future payments.

The ROU assets are reduced by lease incentives and initial direct costs incurred.

The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for operating leases and amortization of the finance lease ROU asset is recognized on a straight-line basis over the lease term.

Lease expense related to the leasing of corporate office space is recorded in Operations and Administrative expenses on the Condensed Consolidated Statement of Comprehensive Income.

Lease expense related to the leasing of data centers and other technology is recorded in Communication and Data Processing on the Condensed Consolidated Statement of Comprehensive Income.

Certain of the Company's lease agreements contain fixed lease payments that contain lease and non-lease components;

for such leases, the Company accounts for the lease and non-lease components as a single lease component.

The Company nets its sublease income against corresponding lease expenses within Operations and Administrative expenses on the Condensed Consolidated Statement of Comprehensive Income.

Goodwill represents the excess of the purchase price over the underlying net tangible and intangible assets of the Company’s acquisitions.

Goodwill is not amortized but is assessed for impairment on an annual basis and between annual assessments whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Goodwill is assessed at the reporting unit level, which is defined as an operating segment or one level below the operating segment.

The Company assesses goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events occur or certain circumstances exist.

In the impairment assessment as of July 1, 2020, the Company assessed qualitative factors as described in ASC 350-20 for each of its reporting units for any indicators that the fair values of the reporting units were less than their carrying values.

No impairment was identified.

Intangible Assets

The Company amortizes finite-lived intangible assets over their estimated useful lives.

Finite-lived intangible assets are tested for impairment when impairment indicators are present, and if impaired, they are written down to fair value.

Exchange Memberships and Stock

Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value.

Exchange memberships acquired in connection with the Acquisition of KCG were recorded at their fair values on the dates of acquisition.

Exchange stock includes shares that entitle the Company to certain trading privileges.

Trading Income, net

Trading income, net is composed of changes in the fair value of trading assets and liabilities (i.e., unrealized gains and losses) and realized gains and losses on trading assets and liabilities.

Trading gains and losses on financial instruments owned and financial instruments sold, not yet purchased are recorded on the trade date and reported on a net basis in the Condensed Consolidated Statements of Comprehensive Income.

Commissions, net and Technology Services

Commissions, net, which primarily comprise commissions and commission equivalents earned on institutional client orders, are recorded on a trade date basis.

Under a commission management program, the Company allows institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third parties.

As the Company acts as an agent in these transactions, it records such expenses on a net basis within Commissions, net and technology services in the Condensed Consolidated Statements of Comprehensive Income.

The Company recognizes the related revenue when the third-party research services are rendered and payments are made to the service provider.

The Company provides order management software (“OMS”) and related software products and connectivity services to customers and recognizes license fee revenues and monthly connectivity fees.

License fee revenues, generated for the use of the Company’s OMS and other software products, is fixed and recognized at the point in time at which the customer is able to use and benefit from the license.

Connectivity revenue is variable in nature, based on the number of live connections, and is recognized over time on a monthly basis using a time-based measure of progress.

The Company also provides analytics products and services to customers and recognizes subscription fees, which are fixed for the contract term, based on when the products and services are delivered.

Analytics products and services may be bundled with trade execution services, in which case commissions are allocated to the analytics performance obligations using an allocation methodology.

Interest and Dividends Income/Interest and Dividends Expense

Interest income and interest expense are accrued in accordance with contractual rates.

Interest income consists of interest earned on collateralized financing arrangements and on cash held by brokers.

Interest expense includes interest expense from collateralized transactions, margin and related lines of credit.

Dividends on financial instruments owned including those pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex-dividend date and interest is recognized on an accrual basis.

Brokerage, Exchange, Clearance Fees and Payments for Order Flow, Net

Brokerage, exchange, clearance fees and payments for order flow, net, comprise the costs of executing and clearing trades and are accrued on a trade date basis in the Condensed Consolidated Statements of Comprehensive Income.

These costs are net of rebates, which consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace.

Rebates are recorded on an accrual basis.

Payments for order flow represent payments to broker-dealer clients, in the normal course of business, for directing their order flow in U.S.

equities to the Company.

The Company is subject to U.S.

federal, state and local income taxes on its taxable income.

The Company's subsidiaries are subject to income taxes in the respective jurisdictions (including foreign jurisdictions) in which they operate.

The provision for income tax comprises current tax and deferred tax.

Current tax represents the tax on current year tax returns, using tax rates enacted at the balance sheet date.

The deferred tax assets are recognized in full and then reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be recognized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authority, including resolution of the appeals or litigation processes, based on the technical merits of the position.

The tax benefits recognized in the condensed consolidated financial statements from such a position are measured based on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

Many factors are considered when evaluating and estimating the tax positions and tax benefits.

Such estimates involve interpretations of regulations, rulings, case law, etc.

and are inherently

The Company’s estimates may require periodic adjustments and may not accurately anticipate actual outcomes as resolution of income tax treatments in individual jurisdictions typically would not be known for several years after completion of any fiscal year.

Comprehensive Income

Comprehensive income consists of two components:

net income and other comprehensive income (“OCI”).

The Company’s OCI comprises foreign currency translation adjustments and mark-to-market gains and losses on the Company's derivative instruments designated as hedging instruments under ASC 815.

Assets and liabilities of operations having non-U.S.

dollar functional currencies are translated at period-end exchange rates, and revenues and expenses are translated at weighted average exchange rates for the period.

Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in Accumulated other comprehensive income, a component of stockholders’ equity.

The Company's foreign subsidiaries generally use the U.S.

dollar as their functional currency.

The Company also has subsidiaries that utilize a functional currency other than the U.S.

dollar, primarily comprising its subsidiaries domiciled in Ireland, which utilize the Euro and Pound Sterling as the functional currency, and subsidiaries domiciled in Canada, which utilize the Canadian dollar as the functional currency.

For instruments that meet the criteria to be considered hedging instruments under ASC 815, any gains or losses are included in Accumulated other comprehensive income on the Condensed Consolidated Statements of Financial Condition and Other comprehensive income on the Condensed Consolidated Statements of Comprehensive Income, to the extent they are effective.

Share-Based Compensation

Share-based awards issued for compensation in connection with or subsequent to the Company's initial public offering in April 2015 (the “IPO”) and certain reorganization transactions consummated in connection with the IPO (the “Reorganization Transactions”) pursuant to the Virtu Financial, Inc.

2015 Management Incentive Plan (as amended, the “Amended and Restated 2015 Management Incentive Plan”) and pursuant to the Amended and Restated Investment Technology Group, Inc.

2007 Omnibus Equity Compensation Plan, dated as of June 8, 2017 (the “Amended and Restated ITG 2007 Equity Plan”), are in the form of stock options, Class A common stock, par value $ 0.00001 per share (the “Class A Common Stock”), RSAs and RSUs, as applicable.

The fair values of the Class A Common Stock and RSUs are determined based on the volume weighted average price for the three days preceding the grant.

With respect to the RSUs, forfeitures are accounted for as they occur.

The fair value of RSAs is determined based on the closing price as of the grant date.

The fair value of share-based awards granted to employees is expensed based on the vesting conditions and is recognized on a straight-line basis over the vesting period, or, in the case of RSAs subject to performance conditions, from the date that achievement of the performance target becomes probable through the remainder of the vesting period.

The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the issuance of Class A Common Stock, the vesting of RSUs or the exercise of stock options.

Variable Interest Entities

A variable interest entity (“VIE”) is an entity that lacks one or more of the following characteristics:

(i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity.

The Company will be considered to have a controlling financial interest and will consolidate a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company has interests in two joint ventures (“JV”) that build and maintain microwave communication networks in the U.S., Europe, and Asia.

The Company and its JV partners each pay monthly fees for the use of the microwave communication networks in connection with their respective trading activities, and the JVs may sell excess bandwidth that is not utilized by the JV members to third parties.

As of September 30, 2020, the Company held noncontrolling interests of 10 % and 50 %, respectively, in these JVs.

The Company has an interest in a JV that offers derivatives trading technology and execution services to broker-dealers, professional traders and select hedge funds.

As of September 30, 2020, the Company held approximately a 10 % noncontrolling interest in this JV.

The Company has an interest in a JV that is developing a member-owned equities exchange with the goal of increasing competition and transparency, while reducing fixed costs and simplifying execution of equity trading in the US.

As of September 30, 2020, the Company held approximately a 14.1 % noncontrolling interest in this JV.

The Company's four JVs meet the criteria to be considered VIEs.

In each of the JVs, the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance;

therefore it does not have a controlling financial interest in and does not consolidate the JVs.

The Company records its interest in each JV under the equity method of accounting and records its investment in the JVs within Other assets and its amounts payable for communication services provided by the JV within Accounts payable, accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition.

The Company records its pro-rata share of each JV's earnings or losses within Other, net and fees related to the use of communication services provided by the JVs within Communications and data processing on the Condensed Consolidated Statements of Comprehensive Income.

The Company’s exposure to the obligations of these VIEs is generally limited to its interests in each respective JV, which is the carrying value of the equity investment in each JV.

The following table presents the Company’s nonconsolidated VIEs at September 30, 2020:

Carrying Amount Maximum Exposure to Loss VIEs' assets

(in thousands) Asset Liability

Equity investment $ 31,683 $ — $ 31,683 $ 185,931

The following table presents the Company’s nonconsolidated VIEs at December 31, 2019:

Carrying Amount Maximum Exposure to Loss VIEs' assets

(in thousands) Asset Liability

Equity investment $ 28,579 $ — $ 28,579 $ 119,051

For a detailed discussion of the Company's significant accounting policies, see Note 2 "Summary of Significant Accounting Policies" in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020.

Accounting Pronouncements, Recently Adopted

Fair Value Measurement - In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which modified the disclosure requirements on fair value measurements in ASC Topic 820, Fair Value Measurement.

Disclosure requirements were eliminated for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements.

Disclosure requirements were modified for liquidation of investments in certain entities that calculate net asset value, and for measurement uncertainty disclosures.

Disclosure requirements were added for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

The Company adopted this ASU on January 1, 2020.

The updated disclosures are included in Note 11 “Financial Assets and Liabilities”.

Consolidation - In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810):

Targeted Improvements to Related Party Guidance for Variable Interest Entities , which modified how VIEs are assessed for consolidation purposes under ASC Topic 810, Consolidation.

Under the update, indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.

The Company adopted this ASU on January 1, 2020, and it did not have a material impact on its condensed consolidated financial statements.

Measurement of Credit Losses on Financial Instruments - In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) -Measurement of Credit Losses on Financial Instruments .

This ASU amends several aspects of the measurement of credit losses on financial instruments, including replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses model (“CECL”).

Under CECL, the allowance for losses for financial assets that are measured at amortized cost reflects management’s estimate of credit losses over the remaining expected life of the financial assets.

Expected credit losses for newly recognized financial assets, as well as changes to expected credit

losses during the period, would be recognized in earnings, and adoption of the ASU will generally result in earlier recognition of credit losses.

Expected credit losses will be measured based on historical experience, current conditions and forecasts that affect the collectability of the reported amount, and credit losses will be generally recognized earlier than under previous U.S.

The Company adopted this ASU on January 1, 2020 using the modified retrospective method of adoption.

The ASU impacts only those financial instruments that are carried by the Company at amortized cost such as collateralized financing arrangements (repurchase agreements and securities borrowing/ lending transactions) and receivables from customers, broker-dealers and clearing organizations.

The adoption of this ASU did not have a material impact to the Company's financial condition, results of operations or cash flows.

Accounting Pronouncements, Not Yet Adopted as of September 30, 2020

Income Taxes - In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Income Taxes - In December 2019, the FASB issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

1 unchanged sentence

The ASU also amends other aspects of the guidance relating to the accounting for franchise taxes, enacted changes in tax laws or rates, the accounting for transactions that result in a step-up in the tax basis of goodwill, and other tax-related items.

The ASU is effective for periods beginning after December 15, 2020, including interim periods within that fiscal year;

early adoption is permitted.

Most amendments within the ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The Company is currently evaluating the impact of the new standard on its Condensed Consolidated Financial Statements and related disclosures.

The Company adopted this ASU on January 1, 2021 and it did not have a material impact on its condensed consolidated financial statements.

Accounting Pronouncements, Not Yet Adopted as of March 31, 2021

Reference Rate Reform - In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

4 unchanged sentences

The ASU is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company is evaluating the impact of the ASU, but does not expect it to have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope, which expands the scope of Topic 848 to include derivative instruments that are affected by changes in the interest rates used for margining, discounting or contract price alignment as part of the market transition to new reference rates (the "discounting transition").

The Company is evaluating the impact of these ASUs, but does not expect it to have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

Convertible Instruments - In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40).

The ASU simplifies accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity and updates selected EPS guidance.

The ASU is effective for periods beginning after December 15, 2021.

The Company is currently evaluating the impact of the new standard on its Condensed Consolidated Financial Statements and related disclosures.

ITG Acquisition

On the ITG Closing Date, the Company completed the ITG Acquisition.

In connection with the ITG Acquisition, Virtu Financial, VFH Parent LLC, a Delaware limited liability company and a subsidiary of Virtu Financial (“VFH”) and Impala Borrower LLC (the “Acquisition Borrower”), a subsidiary of the Company, entered into a Credit Agreement dated as of March 1, 2019 (as amended from time to time, the “Credit Agreement”), with the lenders party thereto, Jefferies Finance LLC, as administrative agent and Jefferies Finance LLC and RBC Capital Markets, as joint lead arrangers and joint bookrunners.

The Credit Agreement provided (i) a senior secured first lien term loan in an aggregate principal amount of $ 1,500.0 million, drawn in its entirety on the ITG Closing Date, with approximately $ 404.5 million borrowed by VFH to repay all amounts outstanding under its existing term loan facility and the remaining approximately $ 1,095.0 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.

After the closing of the ITG Acquisition, VFH assumed the obligations of the Acquisition Borrower in respect of the acquisition term loans.

The Credit Agreement was subsequently amended as described further in Note 10 “Borrowings”.

Additionally, on the ITG Closing Date, the Company’s fourth amended and restated credit agreement (as amended on January 2, 2018 and September 19, 2018, the “Fourth Amended and Restated Credit Agreement”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, sole lead arranger and bookrunner, was terminated.

Accounting treatment of the ITG Acquisition

The ITG Acquisition has been accounted for as a business combination pursuant to ASC 805, Business Combinations by the Company using the acquisition method of accounting.

Under the acquisition method, 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 the Company's existing assets and liabilities.

The reported financial condition and results of operations of the Company for the periods following the ITG Closing Date reflect ITG's and the Company's balances and reflect the impact of purchase accounting adjustments.

As the Company is the accounting acquirer, the financial results for the nine months ended September 30, 2019 comprise the results of the Company for the entire applicable period and the results of ITG from the ITG Closing Date through September 30, 2019.

All periods prior to the ITG Closing Date comprise solely the results of the Company.

Certain former ITG management employees were terminated upon the ITG Acquisition, and as a result were paid an aggregate of $ 17.6 million pursuant to their existing employment contracts and arrangements.

This amount has been recognized as an expense by the Company and is included in Employee compensation and payroll taxes in the Condensed Consolidated Statements of Comprehensive Income for the nine months ended September 30, 2019.

Purchase price and goodwill

The aggregate cash purchase price of approximately $ 1.0 billion was determined as the sum of the fair value, at $ 30.30 per share, of ITG shares outstanding held by former ITG stockholders at closing and the fair value of certain ITG employee stock-based awards that were outstanding, and which vested at the ITG Closing Date.

The purchase price was allocated to the assets acquired and liabilities assumed using their fair values at the ITG Closing Date.

The Company engaged third party specialists for the purchase price allocation.

Amounts allocated to intangible assets, the amortization period and goodwill were as follows:

(in thousands) Amount Amortization

Technology $ 76,000 5

Customer relationships 437,600 10

Trade names 3,600 3

Intangible assets 517,200

Goodwill 312,343

Total $ 829,543

The Company estimated the fair value of the intangible assets, which involved the use of significant estimates and assumptions with respect to the timing and amounts of revenue growth rates, customer attrition rates, future tax rates, royalty rates, contributory asset charges, discount rate and the resulting cash flows.

The total Goodwill of $ 312.3 million was assigned to the Execution Services segment.

Such goodwill is attributable to the expansion of product offerings and expected synergies of the combined workforce, products and technologies of the Company and ITG.

Assumption of Equity Compensation Plan

On the ITG Closing Date, the Company assumed the Amended and Restated ITG 2007 Equity Plan and certain stock option awards, restricted stock unit awards, deferred stock unit awards and performance stock unit awards granted under the Amended and Restated ITG 2007 Equity Plan (the “Assumed Awards”).

The Assumed Awards are subject to the same terms and conditions that were applicable to them under the Amended and Restated ITG 2007 Equity Plan, except that (i) the Assumed Awards relate to shares of the Company’s Class A Common Stock, (ii) the number of shares of Class A Common Stock subject to the Assumed Awards was the result of an adjustment based upon an Exchange Ratio (as defined in the Agreement and Plan of Merger by and between the Company, Impala Merger Sub, Inc., a Delaware corporation and an indirect wholly owned subsidiary of the Company, and ITG, dated as of November 6, 2018, the “ITG Merger Agreement”) and (iii) the performance share unit awards were converted into service-based vesting restricted stock unit awards that were no longer subject to any performance-based vesting conditions.

As of the ITG Closing Date, the aggregate number of shares of Class A Common Stock subject to such Assumed Awards was 2,497,028 and the aggregate number of shares of Class A Common Stock that remained issuable pursuant to the Amended and Restated ITG 2007 Equity Plan was 1,230,406 .

The Company filed with the SEC a Registration Statement on Form S-8 on the ITG Closing Date to register such shares of Class A Common Stock.

Tax treatment of the ITG Acquisition

The ITG Acquisition is being treated as a tax-free transaction as described in Section 351 of the Internal Revenue Code.

ITG’s tax basis in its assets and liabilities therefore generally carried over to the Company following the ITG Acquisition.

None of the goodwill is expected to be deductible for tax purposes.

The Company recorded deferred tax assets of $ 17.6 million and deferred tax liabilities of $ 71.1 million with respect to recording ITG’s assets and liabilities under the purchase method of accounting as described above as well as recording the value of other tax attributes acquired as a result of the ITG Acquisition, as described in Note 14 “Income Taxes”.

Sale of MATCHNow

In May 2020, the Company entered into a Securities Purchase Agreement ("SPA") with Cboe Global Markets, Inc.

(“CBOE”) pursuant to which the Company agreed to sell 100 % of the outstanding interests in TriAct Canada Marketplace LP and TCM Corp., which operate an equities alternative trading system (“MATCHNow”) in Canada.

Pursuant to the terms of the SPA, the Company also agreed to enter into a licensing agreement for the licensing of certain software and intellectual property used in support of MATCHNow.

On August 4, 2020 (the "MATCHNow Closing Date"), the Company completed the sale of MATCHNow to CBOE for total gross proceeds of $ 60.6 million in cash, with additional contingent consideration of up to approximately $ 23.0 million.

The Company incurred one-time transaction costs including professional fees related to the sale of $ 2.5 million, which were recorded in Transaction advisory fees and expenses on the Condensed Consolidated Statement of Comprehensive Income.

The Company recognized a gain on sale of $ 56.2 million, which was recorded in Other, net on the Condensed Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2020.

A summary of the carrying value of MATCHNow and gain on sale of MATCHNow is as follows:

(in thousands)

Total sale proceeds received $ 60,592

Total carrying value of MATCHNow as of MATCHNow Closing Date ( 1,940 )

Gain on sale of MATCHNow 58,652

Transaction costs ( 2,453 )

Gain on sale of MATCHNow, net of transaction costs $ 56,199

Contingent consideration will be earned based on the future performance of MATCHNow following the Closing Date.

Deferred payments will be assessed quarterly until December 31, 2022 and recorded in Other, net on the Condensed Consolidated Statement of Comprehensive Income when the contingency is resolved and payments become payable by CBOE.

In addition, the Company entered into a Transition Services Agreement ("TSA") with CBOE, pursuant to which the Company agreed to provide certain telecom and general and administrative services for a defined period.

Income from performing services under the TSA will be recorded in Other, net on the Condensed Consolidated Statement of Comprehensive Income.

With the licensing of certain software and intellectual property associated with MATCHNow, the Company performed an assessment of impairment of long-lived intangible assets acquired in connection with the ITG acquisition, of which MATCHNow technology was a component.

No impairment was recognized for the three and nine months ended September 30, 2020.

Earnings per Share

The below table contains a reconciliation of net income (loss) before noncontrolling interest to net income (loss) available for common stockholders:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2021 2020

Income (loss) before income taxes and noncontrolling interest $ 252,515 $ ( 5,828 ) $ 1,123,272 $ ( 88,610 )

Provision for (benefit from) income taxes 52,807 ( 644 ) 200,044 ( 14,322 )

Net income (loss) 199,708 ( 5,184 ) 923,228 ( 74,288 )

Income before income taxes and noncontrolling interest $ 489,787 $ 466,225

Provision for income taxes 80,555 77,987

Net income 409,232 388,238

Noncontrolling interest ( 169,827 ) ( 167,169 )

Net income (loss) available for common stockholders 116,709 $ ( 4,312 ) $ 536,917 $ ( 40,876 )

Net income available for common stockholders $ 239,405 $ 221,069

The calculation of basic and diluted earnings per share is presented below:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except for share or per share data) 2021 2020

Basic earnings (loss) per share:

Net income (loss) available for common stockholders $ 116,709 $ ( 4,312 ) $ 536,917 $ ( 40,876 )

Net income available for common stockholders $ 239,405 $ 221,069

Dividends and undistributed earnings allocated to participating securities ( 6,312 ) ( 5,287 )

Net income (loss) available for common stockholders, net of dividends and undistributed earnings allocated to participating securities 113,292 ( 4,773 ) 522,707 ( 42,244 )

Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities 233,093 215,782

Weighted average shares of common stock outstanding:

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Basic earnings (loss) per share $ 1.91 $ 1.80

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except for share or per share data) 2021 2020

Diluted earnings (loss) per share:

Net income (loss) available for common stockholders, net of dividends and undistributed earnings allocated to participating securities $ 113,292 $ ( 4,773 ) $ 522,707 $ ( 42,244 )

Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities $ 233,093 $ 215,782

Weighted average shares of common stock outstanding:

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Diluted earnings (loss) per share $ 1.89 $ 1.80

(1) The dilutive impact excludes from the computation of earnings (loss) per share for the three and nine months ended September 30, 2019, respectively, 205,683 and 574,047 unexercised stock options and 221,837 and 264,866 restricted stock units issuable pursuant to the Amended and Restated Investment Technology Group, Inc.

2007 Omnibus Equity Compensation Plan because the inclusion of these instruments would have been anti-dilutive.

(1) The dilutive impact excludes from the computation of earnings (loss) per share 76,817 unexercised stock options issuable pursuant to the Amended and Restated Investment Technology Group, Inc.

2007 Omnibus Equity Compensation Plan, and 3,000,000 unexercised warrants for the three months ended March 31, 2020, because the inclusion of these instruments would have been anti-dilutive.

Tax Receivable Agreements

In connection with the IPO and the Reorganization Transactions, the Company entered into tax receivable agreements to make payments to certain pre-IPO equity holders (“Virtu Members”) that are generally equal to 85 % of the applicable cash tax savings, if any, that the Company actually realizes as a result of favorable tax attributes that were and will continue to be available to the Company as a result of the Reorganization Transactions, exchanges of membership interests for Class A Common Stock or Class B common stock, par value $ 0.00001 per share (the “Class B Common Stock”), (an “Exchange”), and payments made under the tax receivable agreements.

An Exchange during the year will give rise to favorable tax attributes that may generate cash tax savings specific to the Exchange to be realized over a specific period of time (generally 15 years).

each Exchange, management estimates the Company’s cumulative TRA obligations to be reported on the Condensed Consolidated Statement of Financial Condition, which amounted to $ 256.0 million and $ 269.3 million as of September 30, 2020 and December 31, 2019, respectively.

The tax attributes are computed as the difference between the Company's basis in the partnership interest (“outside basis”) as compared to the Company’s share of the adjusted tax basis of partnership property (“inside basis”) at the time of each Exchange.

The computation of inside basis requires management to make judgments in estimating the components included in the inside basis as of the date of the Exchange (i.e., cash received by the Company on hypothetical sale of assets, allocation of gain/loss to the Company at the time of the Exchange taking into account complex partnership tax rules).

In addition, management estimates the period of time that may generate cash tax savings of such tax attributes and the realizability of the tax attributes.

Payments will occur only after the filing of the U.S.

federal and state income tax returns and realization of the cash tax savings from the favorable tax attributes.

For a detailed discussion of the Company's tax receivable agreements, see Note 7 "Tax Receivable Agreements" in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020.

For purposes of the tax receivable agreements, the cash savings realized by the Company are computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been (i) no increase to the tax basis of the assets of Virtu Financial as a result of the purchase or exchange of Virtu

Financial Units, (ii) no tax benefit from the tax basis in the intangible assets of Virtu Financial on the date of the IPO and (iii) no tax benefit as a result of the Net Operating Losses (“NOLs”) and other tax attributes of Virtu Financial.

Subsequent adjustments of the tax receivable agreements obligations due to certain events (e.g., changes to the expected realization of NOLs or changes in tax rates) will be recognized within income before taxes and noncontrolling interests in the Condensed Consolidated Statements of Comprehensive Income.

The Company made its first payment of $ 7.0 million in February 2017, its second payment of $ 12.4 million in September 2018, and its third payment of $ 13.3 million in March 2020.

As a result of (i) the purchase of equity interests in Virtu Financial from certain Virtu Members in connection with the Reorganization Transactions, (ii) the purchase of non-voting common interest units in Virtu Financial (the “Virtu Financial Units”) (along with the corresponding shares of Class C common stock, par value $ 0.00001 per share (the “Class C Common Stock”)) from certain of the Virtu Members in connection with the IPO, (iii) the purchase of Virtu Financial Units (along with the corresponding shares of Class C Common Stock) and the exchange of Virtu Financial Units (along with the corresponding shares of Class C Common Stock) for shares of Class A Common Stock in connection with the secondary offerings completed in November 2015 (the “November 2015 Secondary Offering”) and September 2016 (the “September 2016 Secondary Offering”), and (iv) the purchase of Virtu Financial Units (along with corresponding shares of the Company’s Class D common stock, par value $ 0.00001 per share (the “Class D Common Stock”) in connection with the May 2018 Secondary Offering (defined below) and the May 2019 Secondary Offering (defined below, and, together with the November 2015 Secondary Offering, the September 2016 Secondary Offering, and the May 2018 Secondary Offering, the “Secondary Offerings”), payments to certain Virtu Members in respect of the purchases are expected to range from approximately $ 3.3 million to $ 20.7 million per year over the next 15 years.

In connection with the employee exchanges and May 2018 Secondary Offering between the Company and TJMT Holdings LLC and the other selling stockholders, both as described in Note 18 “Capital Structure”, the Company recorded an additional deferred tax asset of $ 78.7 million and a payment liability pursuant to the tax receivable agreements of $ 79.7 million, with the $ 1.0 million difference recorded as a decrease to additional paid-in capital during the year ended December 31, 2018.

In connection with the employee exchanges and May 2019 Secondary Offering between the Company and TJMT Holdings LLC and the other selling stockholders, both as described in Note 18 “Capital Structure”, the Company recorded an additional deferred tax asset of $ 49.1 million and payment liability pursuant to the tax receivable agreements of $ 54.9 million, with the $ 5.8 million difference recorded as a decrease to additional paid-in capital during the year ended December 31, 2019.

At September 30, 2020 and December 31, 2019, the Company’s remaining deferred tax assets that relate to the matters described above were approximately $ 184.2 million and $ 197.6 million, respectively, and the Company’s liabilities over the next 15 years pursuant to the tax receivable agreements were approximately $ 256.0 million and $ 269.3 million, respectively.

The amounts recorded as of September 30, 2020 are based on best estimates available at the respective dates and may be subject to change after the filing of the Company’s U.S.

Tax receivable payments are expected to range from approximately $ 0.9 million to $ 21.7 million per year over the next 15 years.

At March 31, 2021 and December 31, 2020, the Company’s remaining deferred tax assets that relate to the matters described above were approximately $ 194.2 million and $ 199.1 million, respectively, and the Company’s liabilities over the next 15 years pursuant to the tax receivable agreements were approximately $ 271.2 million and $ 271.2 million, respectively.

The amounts recorded as of March 31, 2021 are based on best estimates available at the respective dates and may be subject to change after the filing of the Company’s U.S.

federal and state income tax returns for the years in which tax savings were realized.

For the tax receivable agreements discussed above, the cash savings realized by the Company are computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been (i) no increase to the tax basis of the assets of Virtu Financial as a result of the purchase or exchange of Virtu Financial Units, (ii) no tax benefit from the tax basis in the intangible assets of Virtu Financial on the date of the IPO and (iii) no tax benefit as a result of the Net Operating Losses (“NOLs”) and other tax attributes of Virtu Financial.

Goodwill and Intangible Assets

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and one non-operating segment:

As of September 30, 2020 and December 31, 2019, the Company’s total amount of goodwill recorded was $ 1,148.9 million.

No goodwill impairment was recognized during the three and nine months ended September 30, 2020 or 2019.

The following table presents the details of goodwill by segment as of September 30, 2020 and December 31, 2019:

As of March 31, 2021 and December 31, 2020, the Company’s total amount of goodwill recorded was $ 1,148.9 million.

No goodwill impairment was recognized during the three months ended March 31, 2021 and 2020.

The following table presents the details of goodwill by segment as of March 31, 2021 and December 31, 2020:

(in thousands) Market Making Execution Services Corporate Total

Balance as of period-end $ 755,292 $ 393,634 $ — $ 1,148,926

As of September 30, 2020 and December 31, 2019, the Company's total amount of intangible assets recorded was $ 473.3 million and $ 529.6 million, respectively.

Acquired intangible assets consisted of the following as of September 30, 2020 and December 31, 2019:

As of September 30, 2020

As of March 31, 2021 and December 31, 2020, the Company's total amount of intangible assets recorded was $ 436.4 million and $ 454.5 million, respectively.

Acquired intangible assets consisted of the following as of March 31, 2021 and December 31, 2020:

As of March 31, 2021

(in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Useful Lives

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Technology 136,000 ( 82,403 ) 53,597 1 to 6

Purchased technology 110,000 ( 110,000 ) — 1.4 to 2.5

Favorable occupancy leases 5,895 ( 2,839 ) 3,056 3 to 15

4 unchanged sentences

$ 637,993 $ ( 183,494 ) $ 454,499

Amortization expense relating to finite-lived intangible assets was approximately $ 18.3 million and $ 18.9 million for the three months ended September 30, 2020 and 2019, respectively, and $ 56.2 million and $ 50.4 million for the nine months ended September 30, 2020 and 2019, respectively.

Amortization expense relating to finite-lived intangible assets was approximately $ 18.1 million and $ 19.0 million for the three months ended March 31, 2021 and 2020, respectively.

This is included in Amortization of purchased intangibles and acquired capitalized software in the accompanying Condensed Consolidated Statements of Comprehensive Income.

The Company expects to record amortization expense as follows over the remaining current year and five subsequent years:

(in thousands) September 30, 2020

The Company expects to record amortization expense as follows over the next five years ended December 31:

(in thousands)

Remainder of 2021 $ 51,600

Receivables from/Payables to Broker-Dealers and Clearing Organizations

The following is a summary of receivables from and payables to brokers-dealers and clearing organizations at September 30, 2020 and December 31, 2019:

(in thousands) September 30, 2020 December 31, 2019

The following is a summary of receivables from and payables to brokers-dealers and clearing organizations at March 31, 2021 and December 31, 2020:

(in thousands) March 31, 2021 December 31, 2020

Due from prime brokers $ 507,570 $ 697,293

11 unchanged sentences

Total payables to broker-dealers and clearing organizations $ 1,079,808 $ 876,446

Included as a deduction from “Due from prime brokers” and “Net equity with futures commission merchants” is the outstanding principal balance on all of the Company’s prime brokerage credit facilities (described in Note 10 “Borrowings”) of approximately $ 163.6 million and $ 134.3 million as of September 30, 2020 and December 31, 2019, respectively.

The loan proceeds from the credit facilities are available only to meet the initial margin requirements associated with the Company’s ordinary course futures and other trading positions, which are held in the Company’s trading accounts with an affiliate of the respective financial institutions.

Included as a deduction from “Due from prime brokers” and “Net equity with futures commission merchants” is the outstanding principal balance on all of the Company’s prime brokerage credit facilities (described in Note 8 "Borrowings") of approximately $ 204.4 million and $ 134.7 million as of March 31, 2021 and December 31, 2020, respectively.

proceeds from the credit facilities are available only to meet the initial margin requirements associated with the Company’s ordinary course futures and other trading positions, which are held in the Company’s trading accounts with an affiliate of the respective financial institutions.

The credit facilities are fully collateralized by the Company’s trading accounts and deposit accounts with these financial institutions.

2 unchanged sentences

The Company is permitted to sell or repledge securities received as collateral and use these securities to secure repurchase agreements, enter into securities lending transactions or deliver these securities to counterparties or clearing organizations to cover short positions.

At September 30, 2020 and December 31, 2019, substantially all of the securities received as collateral have been repledged.

The fair value of the collateralized transactions at September 30, 2020 and December 31, 2019 are summarized as follows:

(in thousands) September 30, 2020 December 31, 2019

At March 31, 2021 and December 31, 2020, substantially all of the securities received as collateral have been repledged.

The fair value of the collateralized transactions at March 31, 2021 and December 31, 2020 are summarized as follows:

(in thousands) March 31, 2021 December 31, 2020

Securities received as collateral:

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In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements.

Financial instruments owned and pledged, where the counterparty has the right to repledge, at September 30, 2020 and December 31, 2019 consisted of the following:

(in thousands) September 30, 2020 December 31, 2019

Financial instruments owned and pledged, where the counterparty has the right to repledge, at March 31, 2021 and December 31, 2020 consisted of the following:

(in thousands) March 31, 2021 December 31, 2020

Equities $ 922,301 $ 734,024

3 unchanged sentences

The following summarizes the Company's short-term borrowing balances outstanding, net of related debt issuance costs, with each described in further detail below.

September 30, 2020

March 31, 2021

(in thousands) Borrowing Outstanding Deferred Debt Issuance Cost Short-term Borrowings, net

9 unchanged sentences

The Company is a party to two secured credit facilities with a financial institution to finance overnight securities positions purchased as part of its ordinary course broker-dealer market making activities.

One of the facilities (the “Uncommitted Facility”) is provided on an uncommitted basis with an aggregate borrowing limit of $ 300 million, which was subsequently increased to $ 400 million in April 2020, and is collateralized by the trading and deposit account of one of the Company’s broker-dealer subsidiaries maintained at the financial institution.

On November 3, 2017, the Company entered into the second credit facility (the “Committed Facility”) with the same financial institution which was subsequently amended and restated March 1, 2019 to increase the borrowing limit to $ 600 million and subsequently amended to adjust sublimits and certain other terms, including most recently on July 29, 2020.

One of the facilities (the “Uncommitted Facility”) is provided on an uncommitted basis with an aggregate borrowing limit of $ 400 million, and is collateralized by VAL's trading and deposit account maintained at the financial institution.

The second credit facility (the “Committed Facility”) with the same financial institution has a borrowing limit of $ 600 million.

The Committed Facility consists of two borrowing bases:

1 unchanged sentence

Borrowing Base B Loan is to be used to fund margin deposit with the National Securities Clearing Corporation.

Borrowing Base A Loans are available up to $ 600 million and bears interest at the adjusted LIBOR or base rate plus 1.25 % per annum.

Following the July 29, 2020 amendment, Borrowing Base B Loans are subject to a sublimit of $ 200 million and bear interest at the adjusted LIBOR or base rate plus 2.50 % per annum.

Borrowing Base A Loans are available up to $ 600 million and bear interest at the adjusted LIBOR or base rate plus 1.25 % per annum.

Borrowing Base B Loans are subject to a sublimit of $ 200 million and bear interest at the adjusted LIBOR or base rate plus 2.50 % per annum.

A commitment fee of 0.50 % per annum on the average daily unused portion of this facility is payable quarterly in arrears.

On March 10, 2020, a broker-dealer subsidiary of the Company entered into a short term loan arrangement with Jefferies Financial Group, Inc., as lender, for a $ 20 million demand loan (the "Demand Loan") repayable no later than ninety ( 90 ) days after the date of borrowing.

On March 10, 2020, VAL entered into a short term loan arrangement with Jefferies Financial Group, Inc., as lender, for a $ 20 million demand loan (the "Demand Loan") repayable no later than ninety ( 90 ) days after the date of borrowing.

The Demand Loan bore interest at a rate of 10 % per annum, increased by 2.0 % with respect to any principal amounts not paid when due and payable.

The Demand Loan was repaid in full as of April 17, 2020.

On March 20, 2020, VAL, a broker-dealer subsidiary of the Company, entered into a Loan Agreement (the “Founder Member Loan Facility”) with TJMT Holdings LLC (the “Founder Member”), as lender and administrative agent, providing for unsecured term loans from time to time (the “Founder Member Loans”) in an aggregate original principal amount not to exceed $ 300 million.

On March 20, 2020, VAL entered into a Loan Agreement (the “Founder Member Loan Facility”) with TJMT Holdings LLC (the “Founder Member”), as lender and administrative agent, providing for unsecured term loans from time to time (the “Founder Member Loans”) in an aggregate original principal amount not to exceed $ 300 million.

The Founder Member Loans were available to be borrowed in one or more borrowings on or after March 20, 2020 and prior to September 20, 2020 (the "Founder Member Loan Term").

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Vincent Viola, the Company’s founder and Chairman Emeritus.

Upon the execution of and in consideration for the Lender’s commitments under the Loan Agreement, the Company delivered to the Founder Member a warrant to purchase shares of the Company’s Class A Common Stock.

Upon the execution of and in consideration for the Lender’s (as defined in the Founder Member Loan Facility) commitments under the Founder Member Loan Facility, the Company delivered to the Founder Member a warrant to purchase shares of the Company’s Class A Common Stock.

Terms of the warrant are set forth in further detail in Note 17 "Capital Structure".

The foregoing description of the Founder Member Loan Facility does not purport to be complete and is qualified in its entirety by reference to the complete text of the Founder Member Loan Facility, which is filed as an exhibit to the Company's 2020 quarterly report on Form 10-Q for the period ended March 31, 2020 filed with Securities and Exchange Commission on May 11, 2020.

The following summarizes the Company’s broker-dealer credit facilities' carrying values, net of unamortized debt issuance costs, where applicable.

These balances are included within Short-term borrowings on the Condensed Consolidated Statement of Financial Condition.

At September 30, 2020

These balances are included within Short-term borrowings on the Condensed Consolidated Statements of Financial Condition.

At March 31, 2021

(in thousands) Interest Rate Financing Available Borrowing Outstanding Deferred Debt Issuance Cost Outstanding Borrowings, net

11 unchanged sentences

Interest expense is included within Interest and dividends expense in the accompanying Condensed Consolidated Statements of Comprehensive Income.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2021 2020

3 unchanged sentences

Demand Loan — 117

$ 315 $ 465 $ 1,651 $ 1,081

Short-Term Bank Loans

The Company’s international securities clearance and settlement activities are funded with operating cash or with short-term bank loans in the form of overdraft facilities.

At September 30, 2020, there was $ 47.0 million associated with international settlement activities outstanding under these facilities at a weighted average interest rate of approximately 2.0 %.

At March 31, 2021, there was $ 65.0 million associated with international settlement activities outstanding under these facilities at a weighted average interest rate of approximately 2.2 %.

At December 31, 2020, there was $ 28.7 million associated with international settlement activities outstanding under these facilities at a weighted average interest rate of approximately 2.4 %.

These short-term bank loan balances are included within Short-term borrowings on the Condensed Consolidated Statement of Financial Condition.

First Lien Revolving Facility

The Company's Amended Credit Agreement (as defined below) provides for a $ 50.0 million senior secured first lien revolving facility.

There were no outstanding borrowings under the facility as of September 30, 2020 or December 31, 2019.

There was minimal interest expense in relation to this facility for the three months ended September 30, 2020 and $ 0.4 million for the nine months ended September 30, 2020.

These short-term bank loan balances are included within Short-term borrowings on the Condensed Consolidated Statements of Financial Condition.

Prime Brokerage Credit Facilities

1 unchanged sentence

The proceeds of these facilities are used to meet margin requirements associated with the products traded by the Company in the ordinary course, and amounts borrowed are collateralized by the Company’s trading accounts with the applicable financial institution.

At September 30, 2020

At March 31, 2021

(in thousands) Weighted Average

12 unchanged sentences

(1) Outstanding borrowings are included with Receivables from/Payables to broker-dealers and clearing organizations within the Condensed Consolidated Statements of Financial Condition.

Interest expense in relation to the facilities was approximately $ 1.2 million and $ 1.6 million for the three months ended September 30, 2020 and 2019, respectively, and $ 3.8 million and $ 5.3 million for the nine months ended September 30, 2020 and 2019, respectively.

Interest expense in relation to the facilities was approximately $ 1.0 million and $ 1.3 million for the three months ended March 31, 2021 and 2020, respectively.

Long-Term Borrowings

The following summarizes the Company’s long-term borrowings, net of unamortized discount and debt issuance costs, where applicable:

At September 30, 2020

At March 31, 2021

(in thousands) Maturity

14 unchanged sentences

Credit Agreement

As described in Note 3 “ITG Acquisition”, in connection with the ITG Acquisition, Virtu Financial, VFH and the Acquisition Borrower entered into the Credit Agreement, with the lenders party thereto, Jefferies Finance LLC, as administrative agent and Jefferies Finance LLC and RBC Capital Markets, as joint lead arrangers and joint bookrunners.

In connection with the ITG Acquisition, Virtu Financial, VFH Parent LLC, a Delaware limited liability company and a subsidiary of Virtu Financial ("VFH") and Impala Borrower LLC, a subsidiary of the Company (the "Acquisition Borrower") entered into a Credit Agreement (the "Credit Agreement"), with the lenders party thereto, Jefferies Finance LLC, as administrative agent and Jefferies Finance LLC and RBC Capital Markets, as joint lead arrangers and joint bookrunners.

The Credit Agreement provided (i) a senior secured first lien term loan (together with the Incremental Term Loans, as defined below;

the “First Lien Term Loan Facility”) 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 Existing Term Loan Facility (as defined below) 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 (the “First Lien Revolving Facility”), with a $ 5.0 million letter of credit subfacility and a $ 5.0 million swingline subfacility.

the “First Lien Term Loan Facility”) in an aggregate principal amount of $ 1,500 million, drawn in its entirety on the ITG Closing Date, of which amount approximately $ 404.5 million was borrowed by VFH to repay all amounts outstanding under a previous term loan facility and the remaining approximately $ 1,095 million was 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 (the “First Lien Revolving Facility”), with a $ 5.0 million letter of credit subfacility and a $ 5.0 million swingline subfacility.

After the ITG Closing Date, VFH assumed the obligations of the Acquisition Borrower in respect of the acquisition term loans.

On October 9, 2019 (the “Amendment No.

1 Closing Date”), VFH entered into Amendment No.

1 (“Amendment No.

1”), which amended the Credit Agreement dated as of March 1, 2019 by and among VFH, Virtu Financial, the lenders party thereto, and Jefferies Finance, LLC, as administrative agent and collateral agent, to, among other things, provide for $ 525.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”), and amend the related collateral agreement.

On the Amendment No.

1 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 (together with VFH, the “Issuers”), and paid related fees and expenses.

The terms, conditions and covenants applicable to the Incremental Term Loans are the same as the terms, conditions and covenants applicable to the existing term loans under the Credit Agreement, including a maturity date of March 1, 2026.

On March 2, 2020 (the “Amendment No.

2 Closing Date”), VFH entered into Amendment No.

2 (“Amendment No.

On October 9, 2019, VFH entered into an amendment (“Amendment No.

1”), which amended the Credit Agreement dated as of March 1, 2019 to, among other things, provide for $ 525.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”), and amend the related collateral agreement.

On March 2, 2020, VFH entered into a second amendment (“Amendment No.

2”), which further amended the Credit Agreement (as amended by Amendment No.

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In addition, a commitment fee accrues at a rate of 0.50 % per annum on the average daily unused amount of the First Lien Revolving Facility, with stepdowns to 0.375 % and 0.25 % per annum based on VFH’s first lien leverage ratio, and is payable quarterly in arrears.

On January 29, 2020, the Company entered into a five-year $ 1,000 million floating-to-fixed interest rate swap agreement.

The Company also previously entered into a five-year $ 525 million floating-to-fixed interest rate swap agreement.

As these two interest rate swaps meet the criteria to be considered qualifying cash flow hedges under ASC 815, they effectively fix interest payment obligations on $ 1,000 million and $ 525.0 million of principal under the First Lien Term Loan Facility at rates of 4.4 % and 4.3 % through January 2025 and September 2024, respectively, based on the interest rates set forth in the Amended Credit Agreement.

The First Lien Revolving Facility under the Amended Credit Agreement is subject to a springing net first lien leverage ratio test which may spring into effect as of the last day of a fiscal quarter if usage of the aggregate revolving commitments exceeds a specified level as of such date.

VFH is also subject to contingent principal prepayments based on excess cash flow and certain other triggering events.

Borrowings under the Amended Credit Agreement are guaranteed by Virtu Financial and VFH’s material non-regulated domestic restricted subsidiaries and secured by substantially all of the assets of VFH and the guarantors, in each case, subject to certain exceptions.

Under the Amended Credit Agreement, term loans will mature on March 1, 2026.

Borrowings under the Amended Credit Agreement are guaranteed by Virtu Financial and

VFH’s material non-regulated domestic restricted subsidiaries and secured by substantially all of the assets of VFH and the guarantors, in each case, subject to certain exceptions.

Under the Amended Credit Agreement, the term loans will mature on March 1, 2026.

The term loans amortize in annual installments equal to 1.0 % of the original aggregate principal amount of the term loans.

As of March 31, 2021, $ 1,635 million was outstanding under the First Lien Term Loan Facility.

The revolving commitments will terminate on March 1, 2022.

During the year ended December 31, 2019, $ 100.0 million was repaid under the First Lien Term Loan Facility.

In August of 2020, an additional $ 100 million was repaid under this facility.

As of September 30, 2020, $ 1,637 million was outstanding under the First Lien Term Loan Facility.

There were no outstanding borrowings under the First Lien Revolving Facility as of March 31, 2021 or December 31, 2020.

The Amended Credit Agreement contains certain customary covenants and events of default, including relating to a change of control.

If an event of default occurs and is continuing, the lenders under the Amended Credit Agreement will be entitled to take various actions, including the acceleration of amounts outstanding under the Amended Credit Agreement and all actions permitted to be taken by a secured creditor in respect of the collateral securing the obligations under the Amended Credit Agreement.

To finance the Acquisition of KCG, on June 30, 2017, Virtu Financial and VFH previously entered into the Fourth Amended and Restated Credit Agreement which, upon the closing of the Acquisition of KCG, provided for an aggregate $ 1,150.00 million of first lien secured term loans (the “KCG Acquisition Term Loan Facility”).

The KCG Acquisition Term Loan Facility was fully terminated following its repayment in full with the proceeds of the First Lien Term Loan Facility described above.

Senior Secured Second Lien Notes

To finance the Acquisition of KCG, on June 16, 2017, Orchestra Borrower LLC (the “Escrow Issuer”), a wholly owned subsidiary of Virtu Financial, and Orchestra Co-Issuer, Inc.

(the “Co-Issuer”) completed the offering of $ 500.0 million aggregate principal amount of 6.750 % Senior Secured Second Lien Notes due 2022 (the “Notes”).

The Notes were issued under an Indenture, dated June 16, 2017 (the “Indenture”), among the Escrow Issuer, the Co-Issuer and U.S.

Bank National Association, as trustee and collateral agent.

On July 20, 2017, VFH assumed all of the obligations of the Escrow Issuer under the Indenture and the Notes.

The gross proceeds from the Notes were deposited into a segregated escrow account with an escrow agent.

The proceeds were released from escrow as of the KCG Closing Date and were used to finance, in part, the Acquisition of KCG, and to repay certain indebtedness of the Company and KCG.

As described above, the Credit Agreement was amended on October 9, 2019, on which date VFH borrowed an additional $ 525.0 million of incremental first lien term loans, the proceeds of which were used together with cash on hand to redeem the Notes in full.

The Indenture was fully terminated following such redemption.

In October 2019, the Company entered into a five-year $ 525 million floating-to-fixed interest rate swap agreement.

The Company also entered into a five-year $ 1,000 million floating-to-fixed interest rate swap agreement in January 2020.

As these two interest rate swaps met the criteria to be considered qualifying cash flow hedges under ASC 815 in 2020, they effectively fix interest payment obligations on $ 1,000 million and $ 525.0 million of principal under the First Lien Term Loan Facility at rates of 4.4 % and 4.3 % through January 2025 and September 2024, respectively, based on the interest rates set forth in the Amended Credit Agreement.

On July 25, 2016, VFH issued Japanese Yen Bonds (collectively the “SBI Bonds”) in the aggregate principal amount of ¥ 3.5 billion ($ 33.1 million at issuance date) to SBI Life Insurance Co., Ltd.

and SBI Insurance Co., Ltd.

The proceeds from the SBI Bonds were used to partially fund the investment in SBI (as described in Note 11 “Financial Assets and Liabilities”).

The proceeds from the SBI Bonds were used to partially fund the investment in Japannext Co., Ltd.

(as described in Note 9 "Financial Assets and Liabilities").

The SBI Bonds are guaranteed by Virtu Financial.

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In December 2019, the maturity date of the SBI Bonds was extended to January 2023.

The principal balance was ¥ 3.5 billion ($ 33.2 million) as of September 30, 2020 and ¥ 3.5 billion ($ 32.2 million) as of December 31, 2019.

The Company recorded a loss of $ 0.8 million and a gain of $ 0.1 million during the three months ended September 30, 2020 and 2019, respectively, and a loss of $ 1.0 million and a loss of $ 0.5 million during the nine months ended September 30, 2020 and 2019, respectively, due to changes in foreign currency rates.

As of September 30, 2020, aggregate future required minimum principal payments based on the terms of the long-term borrowings were as follows:

(in thousands) September 30, 2020

The principal balance was ¥ 3.5 billion ($ 31.6 million) as of March 31, 2021 and ¥ 3.5 billion ($ 33.9 million) as of December 31, 2020.

The Company recorded a gain of $ 2.3 million and a loss of $ 0.3 million during the three months ended March 31, 2021 and 2020, respectively, due to changes in foreign currency rates.

As of March 31, 2021, aggregate future required minimum principal payments based on the terms of the long-term borrowings were as follows:

(in thousands) March 31, 2021

Remainder of 2021 $ —

Thereafter 1,635,051

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Consequently, such financial instruments are classified as Level 2.

Fair value measurements for those items measured on a recurring basis are summarized below as of September 30, 2020:

September 30, 2020

Fair value measurements for those items measured on a recurring basis are summarized below as of March 31, 2021:

March 31, 2021

(in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Counterparty and Cash Collateral Netting Total Fair Value

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Equity securities $ 496,943 $ 237,081 $ — $ — $ 734,024

government obligations — — — — —

Exchange traded notes 2 12,513 — — 12,515

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$ 1,399,496 $ 1,817,082 $ — $ ( 292,870 ) $ 2,923,708

SBI Investment

The Company has a minority investment (the “SBI Investment”) in SBI Japannext Co., Ltd.

(“SBI”), a proprietary trading system based in Tokyo.

In connection with the SBI Investment, the Company issued the SBI Bonds (as described in Note 10 “Borrowings”) and used the proceeds to partially finance the transaction.

The SBI Investment is included within Level 3 of the fair value hierarchy.

As of September 30, 2020, the fair value of the SBI Investment was determined using a weighted average of valuations using 1) the discounted cash flow method, an income approach;

Payables to broker dealers and clearing organizations:

Interest rate swap $ — $ 63,513 $ — $ — $ 63,513

JNX Investment

The Company has a minority investment (the “JNX Investment”) in Japannext Co., Ltd.

(“JNX”), formerly known as SBI Japannext Co., Ltd., a proprietary trading system based in Tokyo.

In connection with the JNX Investment, the Company issued the SBI Bonds (as described in Note 8 "Borrowings") and used the proceeds to partially finance the transaction.

The JNX Investment is included within Level 3 of the fair value hierarchy.

As of March 31, 2020 and 2021, the fair value of the JNX Investment was determined using a weighted average of valuations using 1) the discounted cash flow method, an income approach;

2) a market approach based on average enterprise value/EBITDA ratios of comparable companies;

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The fair value measurement is highly sensitive to significant changes in the unobservable inputs, and significant increases (decreases) in discount rate or decreases (increases) in enterprise value/EBITDA multiples would result in a significantly lower (higher) fair value measurement.

The table below presents information on the valuation techniques, significant unobservable inputs and their ranges for the SBI Investment:

September 30, 2020

The table below presents information on the valuation techniques, significant unobservable inputs and their ranges for the JNX Investment:

March 31, 2021

(in thousands) Fair Value Valuation Technique Significant Unobservable Input Range Weighted Average

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Market Future enterprise value/ EBIDTA ratio 11.6 x - 21.5 x

Changes in the fair value of the SBI Investment are included within Other, net in the Condensed Consolidated Statements of Comprehensive Income.

December 31, 2020

(in thousands) Fair Value Valuation Technique Significant Unobservable Input Range Weighted Average

Equity investment $ 66,030 Discounted cash flow Estimated revenue growth ( 9.0 )% - 39.0 %

Discount rate 14.4 % - 14.4 %

Market Future enterprise value/ EBIDTA ratio 12.2 x - 21.9 x

Changes in the fair value of the JNX Investment are included within Other, net in the Condensed Consolidated Statements of Comprehensive Income.

The following presents the changes in the Company's Level 3 financial instruments measured at fair value on a recurring basis:

Three Months Ended September 30, 2020

(in thousands) Balance at June 30, 2020 Purchases Total Realized and Unrealized Gains / (Losses) (1) Net Transfers into (out of) Level 3 Settlement Balance at September 30, 2020 Change in Net Unrealized Gains / (Losses) on Investments still held at September 30, 2020

Other assets:

Equity investment $ 51,599 $ — $ 13,104 $ — $ — $ 64,703 $ 13,104

Total $ 51,599 $ — $ 13,104 $ — $ — $ 64,703 $ 13,104

(1) Total realized and unrealized gains/(losses) includes gains and losses realized on the SBI Bonds (see Note 10 “Borrowings” for more details) due to fluctuations in currency rates as well as gains and losses recognized on changes in the fair value of the SBI Investment.

Three Months Ended September 30, 2019

(in thousands) Balance at June 30, 2019 Purchases Total Realized and Unrealized Gains / (Losses) Net Transfers into (out of) Level 3 Settlement Balance at September 30, 2019 Change in Net Unrealized Gains / (Losses) on Investments still held at September 30, 2019

Other assets:

Equity investment $ 46,351 $ — $ ( 71 ) $ — $ — $ 46,280 $ ( 71 )

Total $ 46,351 $ — $ ( 71 ) $ — $ — $ 46,280 $ ( 71 )

Nine Months Ended September 30, 2020

(in thousands) Balance at December 31, 2019 Purchases Total Realized and Unrealized Gains / (Losses) (1) Net Transfers into (out of) Level 3 Settlement Balance at September 30, 2020 Change in Net Unrealized Gains / (Losses) on Investments still held at September 30, 2020

Three Months Ended March 31, 2021

(in thousands) Balance at December 31, 2020 Purchases Total Realized and Unrealized Gains / (Losses) (1) Net Transfers into (out of) Level 3 Settlement Balance at March 31, 2021 Change in Net Unrealized Gains / (Losses) on Investments still held at March 31, 2021

Other assets:

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Total $ 66,030 $ — $ 162 $ — $ — $ 66,192 $ 162

Nine Months Ended September 30, 2019

(in thousands) Balance at December 31, 2018 Purchases Total Realized and Unrealized Gains / (Losses) Net Transfers into (out of) Level 3 Settlement Balance at September 30, 2019 Change in Net Unrealized Gains / (Losses) on Investments still held at September 30, 2019

(1) Total realized and unrealized gains/(losses) includes gains and losses realized on the SBI Bonds (see Note 8 "Borrowings" for more details) due to fluctuations in currency rates as well as gains and losses recognized on changes in the fair value of the JNX Investment.

Three Months Ended March 31, 2020

(in thousands) Balance at December 31, 2019 Purchases Total Realized and Unrealized Gains / (Losses) (1) Net Transfers into (out of) Level 3 Settlement Balance at March 31, 2020 Change in Net Unrealized Gains / (Losses) on Investments still held at March 31, 2020

Other assets:

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Total $ 46,245 $ — $ 423 $ — $ — $ 46,668 $ 423

Financial Instruments Not Measured at Fair Value

The table below presents the carrying value, fair value and fair value hierarchy category of certain financial instruments that are not measured at fair value on the Condensed Consolidated Statement of Financial Condition.

The table below excludes non-financial assets and liabilities.

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The fair value of the Company’s long-term borrowings is based on quoted prices from the market for similar instruments, and is categorized as Level 2 in the fair value hierarchy.

The table below summarizes financial assets and liabilities not carried at fair value on a recurring basis as of September 30, 2020:

September 30, 2020

The table below summarizes financial assets and liabilities not carried at fair value on a recurring basis as of March 31, 2021:

March 31, 2021

Carrying Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs

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Receivables from customers 515,519 515,519 — 515,519 —

Other assets (1) 24,163 24,163 — 24,163 —

Total Assets $ 4,638,067 $ 4,638,067 $ 1,020,194 $ 3,617,873 $ —

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Payables to customers 347,184 347,184 — 347,184 —

Other liabilities (3) 8,610 8,610 — 8,610 —

Total Liabilities $ 4,914,046 $ 4,943,978 $ 1,366,956 $ 3,577,022 $ —

(1) Payables to broker-dealers and clearing organizations includes interest rate swap carried at fair value.

(1) Includes cash collateral and deposits, and interest and dividends receivables.

(2) Payables to broker-dealers and clearing organizations include interest rate swaps carried at fair value.

(3) Includes deposits, interest and dividends payable.

The table below summarizes financial assets and liabilities not carried at fair value on a recurring basis as of December 31, 2020:

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Receivables from broker-dealers and clearing organizations 1,684,006 1,684,006 173,578 1,510,428 —

Receivables from customers 214,478 214,478 — 214,478 —

Other assets (1) 21,735 21,735 — 21,735 —

Total Assets $ 4,375,106 $ 4,375,106 $ 1,180,583 $ 3,194,523 $ —

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Payables to broker dealer and clearing organizations (2) 876,446 876,446 3,517 872,929 —

Payables to customers 118,826 118,826 — 118,826 —

Other liabilities (3) 9,208 9,208 — 9,208 —

Total Liabilities $ 4,117,937 $ 4,151,500 $ 3,517 $ 4,147,983 $ —

(1) Includes cash collateral and deposits, and interest and dividends receivables.

(2) Payables to broker-dealers and clearing organizations include interest rate swaps carried at fair value.

(3) Includes deposits, interest and dividends payable.

Offsetting of Financial Assets and Liabilities

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In the tables below, the amounts of financial instruments owned that are not offset in the Condensed Consolidated Statements of Financial Condition, but could be netted against financial liabilities with specific counterparties under legally enforceable master netting agreements in the event of default, are presented to provide financial statement readers with the Company’s estimate of its net exposure to counterparties for these financial instruments.

The following tables set forth the gross and net presentation of certain financial assets and financial liabilities as of September 30, 2020 and December 31, 2019:

September 30, 2020

Gross Amounts of Recognized Assets Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition Net Amounts of Assets Presented in the Condensed Consolidated Statement of Financial Condition

Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition

(in thousands) Financial Instruments Counterparty Netting/ Cash Collateral Net Amount

The following tables set forth the gross and net presentation of certain financial assets and financial liabilities as of March 31, 2021 and December 31, 2020:

March 31, 2021

Gross Amounts of Recognized Assets Amounts Offset in the Condensed Consolidated Statement of Financial Condition Net Amounts of Assets Presented in the Condensed Consolidated Statements of Financial Condition Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition

(in thousands) Financial Instrument Collateral Counterparty Netting/ Cash Collateral Net Amount

Offsetting of Financial Assets:

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Total $ 1,725,931 $ ( 271,028 ) $ 1,454,903 $ ( 1,377,500 ) $ ( 14,783 ) $ 62,620

Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Condensed Consolidated Statement of Financial Condition Net Amounts of Liabilities Presented in the Condensed Consolidated Statement of Financial Condition

Gross Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition

Gross Amounts of Recognized Liabilities Amounts Offset in the Condensed Consolidated Statement of Financial Condition Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition

(in thousands) Financial Instruments Counterparty Netting/ Cash Collateral Net Amount

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December 31, 2020

Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Statement of Financial Condition Net Amounts of Assets Presented in the Consolidated Statement of Financial Condition

Gross Amounts Not Offset in the Consolidated Statement of Financial Condition

(in thousands) Financial Instruments Counterparty Netting/ Cash Collateral Net Amount

(in thousands) Financial Instrument Collateral Counterparty Netting/ Cash Collateral Net Amount

Offsetting of Financial Assets:

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Total $ 1,798,322 $ ( 291,964 ) $ 1,506,358 $ ( 1,397,132 ) $ ( 18,766 ) $ 90,460

Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Statement of Financial Condition Net Amounts of Liabilities Presented in the Consolidated Statement of Financial Condition

Gross Amounts Not Offset in the Consolidated Statement of Financial Condition

(in thousands) Financial Instruments Counterparty Netting/ Cash Collateral Net Amount

(in thousands) Financial Instrument Collateral Counterparty Netting/ Cash Collateral Net Amount

Offsetting of Financial Liabilities:

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Securities sold under agreements to repurchase 461,235 — 461,235 ( 461,235 ) — —

Interest rate swaps 63,513 — 63,513 — ( 63,162 ) 351

Trading liabilities, at fair value:

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The following table presents gross obligations for securities sold under agreements to repurchase and for securities lending transactions by remaining contractual maturity and the class of collateral pledged:

September 30, 2020

March 31, 2021

Remaining Contractual Maturity

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Derivative Instruments

The fair value of the Company’s derivative instruments on a gross basis consisted of the following at September 30, 2020 and December 31, 2019:

(in thousands) September 30, 2020 December 31, 2019

The fair value of the Company’s derivative instruments on a gross basis consisted of the following at March 31, 2021 and December 31, 2020:

(in thousands) March 31, 2021 December 31, 2020

Derivatives Assets Financial Statements Location Fair Value Notional Fair Value Notional

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Currency forwards Financial instruments owned 294,965 25,271,660 341,360 30,596,681

Interest rate swap Other assets — — 8,976 525,000

Derivatives Liabilities Financial Statements Location Fair Value Notional Fair Value Notional

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Amounts included in receivables from and payables to broker-dealers and clearing organizations represent net variation margin on long and short futures contracts as well as amounts receivable or payable on interest rate swaps.

The following table summarizes the net gain (loss) from derivative instruments not designated as hedging instruments under ASC 815, which are recorded in total revenues, and from those designated as hedging instruments under ASC 815, which are recorded in other comprehensive income in the accompanying Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) Financial Statements Location 2021 2020

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Interest rate swaps (1) Other comprehensive income $ 25,826 $ ( 55,602 )

(1) On January 29, 2020, the Company entered into a five-year $ 1,000 million floating-to-fixed interest rate swap agreement.

The Company also previously entered into a five-year $ 525 million floating-to-fixed interest rate swap agreement in the fourth quarter of 2019.

These two interest rate swaps met the criteria to be considered qualifying cash flow hedges under ASC 815, and as such, the mark-to-market gains (losses) on the instruments were recorded within Other comprehensive income on the Condensed Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2020.

$ 25,826 $ ( 55,602 )

(1) The Company entered into a five-year $ 1,000 million floating-to-fixed interest rate swap agreement in the first quarter of 2020 and a five-year $ 525 million floating-to-fixed interest rate swap agreement in the fourth quarter of 2019.

These two interest rate swaps met the criteria to be considered qualifying cash flow hedges under ASC 815 in 2020, and as such, the mark-to-market gains (losses) on the instruments were recorded within Other comprehensive income on the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021.

Variable Interest Entities

A variable interest entity (“VIE”) is an entity that lacks one or more of the following characteristics:

The Company has interests in two joint ventures (“JV”) that build and maintain microwave communication networks in the U.S., Europe, and Asia.

As of March 31, 2021, the Company held noncontrolling interests of 10 % and 50 %, respectively, in these JVs.

The Company has an interest in a JV that offers derivatives trading technology and execution services to broker-dealers, professional traders and select hedge funds.

As of March 31, 2021, the Company held approximately a 10 % noncontrolling interest in this JV.

As of March 31, 2021, the Company held approximately a 14.1 % noncontrolling interest in this JV.

The Company's four JVs meet the criteria to be considered VIEs, which it does not consolidate.

The Company’s exposure to the obligations of these VIEs is generally limited to its interests in each respective JV, which is the carrying value of the equity investment in each JV.

The following table presents the Company’s nonconsolidated VIEs at March 31, 2021:

Carrying Amount Maximum Exposure to Loss VIEs' assets

(in thousands) Asset Liability

Equity investment $ 27,379 $ — $ 27,379 $ 172,310

The following table presents the Company’s nonconsolidated VIEs at December 31, 2020:

Carrying Amount Maximum Exposure to Loss VIEs' assets

(in thousands) Asset Liability

Equity investment $ 28,969 $ — $ 28,969 $ 175,547

Revenues from Contracts with Customers

Revenue Recognition

The Company adopted ASC Topic 606, Revenue from Contracts with Customers , as of January 1, 2018 in the condensed consolidated financial statements by applying the modified retrospective method.

The Company’s revenue recognition methods for its contracts with customers prior to the adoption of Topic 606 are consistent with its methods after the adoption of Topic 606.

Commissions, net .

The Company earns commission revenue by acting as an agent on behalf of customers.

The Company’s performance obligations consist of trade execution and clearing services and are satisfied on the trade date;

accordingly, commission revenues are recorded on the trade date.

Commission revenues are paid on settlement date;

therefore, a receivable is recognized as of the trade date.

Under a commission management program, the Company allows institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third parties.

Workflow technology.

Through its front-end workflow solutions and network capabilities, the Company provides order and trade execution management and order routing services.

The Company provides trade order routing from its execution management system (“EMS”) to its execution services offerings, with each trade order routed through the EMS representing a separate performance obligation that is satisfied at a point in time.

Commissions earned are fixed and revenue is recognized on the trade date.

A portion of the commissions earned on the trade is then allocated to workflow technology based on the stand-alone selling price paid by third-party brokers for order routing.

The remaining commission is allocated to commissions, net using a residual allocation approach.

The Company participates in commission share arrangements, where trade orders are routed to third-party brokers from its EMS and its order management system (“OMS”).

Commission share revenues from third-party brokers are generally fixed and revenue is recognized at a point in time on the trade date.

The Company provides OMS and related software products and connectivity services to customers and recognizes license fee revenues and monthly connectivity fees.

Connectivity revenue is variable in nature, based on the number of live connections, and is recognized over time on a monthly basis using a time-based measure of progress.

The Company provides customers with analytics products and services, including trading and portfolio analytics tools.

The Company provides analytics products and services to customers and recognizes subscription fees, which are fixed for the contract term, based on when the products and services are delivered.

Analytics services can be delivered either over time (when customers are provided with distinct ongoing access to analytics data) or at a point in time (when reports are only delivered to the customer on a periodic basis).

Over time performance obligations are recognized using a time-based measure of progress on a monthly basis, since the analytics products and services are continually provided to the client.

Point in time performance obligations are recognized when the analytics reports are delivered to the client.

Analytics products and services can also be paid for through variable bundled arrangements with trade execution services.

Customers agree to pay for analytics products and services with commissions generated from trade execution services, and commissions are allocated to the analytics performance obligation(s) using:

(i) the commission value for each customer for the products and services it receives, which is priced using the value for similar stand-alone subscription arrangements;

(ii) a calculated ratio of the commission value for the products and services relative to the total amount of commissions generated from the customer.

For these bundled commission arrangements, the allocated commissions to each analytics performance obligation are then recognized as revenue when the analytics product is delivered, either over time or at a point in time.

These allocated commissions may be deferred if the allocated amount exceeds the amount recognizable based on delivery.

For more information on revenue recognition and the nature of services provided, see Note 2 "Summary of Significant Accounting Policies" and Note 14 "Revenues from Contracts with Customers" to the Consolidated Financial Statements of the Company's 2020 Annual Report on Form 10-K.

Disaggregation of Revenues

The following tables present the Company’s revenue from contracts with customers disaggregated by the services described above, by timing of revenue recognition, reconciled to the Company’s segments, for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended September 30, 2020

(in thousands) Market Making Execution Services Corporate Total

Revenues from contracts with customers:

Commissions, net $ 9,391 $ 91,460 $ — $ 100,851

Workflow technology — 23,044 — 23,044

Analytics — 9,958 — 9,958

Total revenue from contracts with customers 9,391 124,462 — 133,853

Other sources of revenue 465,207 58,218 ( 1,166 ) 522,259

Total revenues 474,598 182,680 ( 1,166 ) 656,112

Timing of revenue recognition:

Services transferred at a point in time 474,598 164,018 ( 1,166 ) 637,450

Services transferred over time — 18,662 — 18,662

Total revenues $ 474,598 $ 182,680 $ ( 1,166 ) $ 656,112

Three Months Ended September 30, 2019

(in thousands) Market Making Execution Services Corporate Total

Revenues from contracts with customers:

Commissions, net $ 7,252 $ 98,365 $ — $ 105,617

Workflow technology — 24,041 — 24,041

Analytics — 9,969 — 9,969

Total revenue from contracts with customers 7,252 132,375 — 139,627

Other sources of revenue 242,550 1,430 ( 1,267 ) 242,713

Total revenues 249,802 133,805 ( 1,267 ) 382,340

Timing of revenue recognition:

Services transferred at a point in time 249,802 114,300 ( 1,267 ) 362,835

Services transferred over time — 19,505 — 19,505

Total revenues $ 249,802 $ 133,805 $ ( 1,267 ) $ 382,340

Nine Months Ended September 30, 2020

The following tables present the Company’s revenue from contracts with customers disaggregated by service, by timing of revenue recognition, reconciled to the Company’s segments, for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021

(in thousands) Market Making Execution Services Corporate Total

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Total revenues $ 823,724 $ 189,239 $ ( 391 ) $ 1,012,572

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

(in thousands) Market Making Execution Services Corporate Total

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Remaining Performance Obligations and Revenue Recognized from Past Performance Obligations

As of September 30, 2020, the aggregate amount of the transaction price allocated to the performance obligations relating to technology services, workflow technology, and analytics revenues that are unsatisfied (or partially unsatisfied) was not material.

The Company recognized $ 0.6 million and $ 0.3 million of revenue related to performance obligations satisfied in previous period for the three months ended September 30, 2020 and 2019, respectively.

As of March 31, 2021 and 2020, the aggregate amount of the transaction price allocated to the performance obligations relating to workflow technology and analytics revenues that are unsatisfied (or partially unsatisfied) was not material.

Contract Assets and Contract Liabilities

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The Company records a contract liability when payment is received prior to the time at which the satisfaction of the service obligation occurs.

Receivables related to revenues from contracts with customers amounted to $ 54.0 million and $ 53.6 million as of September 30, 2020 and December 31, 2019, respectively.

Receivables related to revenues from contracts with customers amounted to $ 60.4 million and $ 57.3 million as of March 31, 2021 and December 31, 2020, respectively.

The Company did not identify any contract assets.

There were no impairment losses on receivables as of September 30, 2020.

There were no impairment losses on receivables as of March 31, 2021.

Deferred revenue primarily relates to deferred commissions allocated to analytics products and subscription fees billed in advance of satisfying the performance obligations.

Deferred revenue related to contracts with customers was $ 7.6 million and $ 8.6 million as of September 30, 2020 and December 31, 2019, respectively.

The Company recognized revenue of $ 8.6 million and $ 8.1 million for the three months ended September 30, 2020 and 2019, respectively, and $ 23.6 million and $ 23.1 million for the nine months ended September 30, 2020 and 2019, respectively that had been initially recorded as deferred revenue.

Deferred revenue related to contracts with customers was $ 11.6 million and $ 9.3 million as of March 31, 2021 and December 31, 2020, respectively.

The Company recognized revenue of $ 7.9 million and $ 7.5 million during the three months ended March 31, 2021 and 2020, respectively that had been initially recorded as deferred revenue.

The Company has not identified any costs to obtain or fulfill its contracts under ASC 606.

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taxation as partnerships.

Accordingly, for the three and nine months ended September 30, 2020 and 2019, the income attributable to these noncontrolling interests was reported in the Condensed Consolidated Statements of Comprehensive Income, but the related U.S.

Accordingly, for the three months ended March 31, 2021 and 2020, the income attributable to these noncontrolling interests was reported in the Condensed Consolidated Statements of Comprehensive Income, but the related U.S.

income tax expense attributable to these noncontrolling interests was not reported by the Company as it is the obligation of the individual partners.

The Company’s provisions for (benefits from) income taxes and effective tax rates were $ 52.8 million, 20.9 %, and $( 0.6 ) million, and 9.9 % for the three months ended September 30, 2020 and 2019, respectively, and $ 200.0 million, 17.8 %, and $( 14.3 ) million, and 16.0 %, for the nine months ended September 30, 2020 and 2019, respectively.

The Company’s provisions for income taxes and effective tax rates were $ 80.6 million, 16.4 %, and $ 78.0 million, and 16.8 % for the three months ended March 31, 2021 and 2020, respectively.

Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation.

Included in Other assets on the Condensed Consolidated Statements of Financial Condition at September 30, 2020 and December 31, 2019 were current income tax receivables of $ 99.8 million and $ 39.3 million, respectively.

The balances at September 30, 2020 and December 31, 2019 primarily comprised income tax benefits due to the Company from federal, state, local, and foreign tax jurisdictions based on income before taxes.

Included in Accounts payable, accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition at September 30, 2020 and December 31, 2019 were current tax liabilities of $ 33.8 million and $ 11.5 million, respectively.

The balances at September 30, 2020 and December 31, 2019 primarily comprised income taxes owed to federal, state and local, and foreign tax jurisdictions based on income before taxes.

Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the IPO (see Note 6 “Tax Receivable Agreements”), the Acquisition of KCG and the ITG Acquisition (see Note 3 “ITG Acquisition”), differences in the valuation of financial assets and liabilities, and other temporary differences arising from the deductibility of compensation, depreciation, and other expenses in different time periods for book and income tax return purposes.

Included in Other assets on the Condensed Consolidated Statements of Financial Condition at March 31, 2021 and December 31, 2020 were current income tax receivables of $ 0.2 million and $ 83.1 million, respectively.

The balances at March

31, 2021 and December 31, 2020 primarily comprised income tax benefits due to the Company from federal, state, local, and foreign tax jurisdictions based on income before taxes.

Included in Accounts payable, accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition at March 31, 2021 and December 31, 2020 were current tax liabilities of $ 29.9 million and $ 37.9 million, respectively.

The balances at March 31, 2021 and December 31, 2020 primarily comprised income taxes owed to federal, state and local, and foreign tax jurisdictions based on income before taxes.

Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the IPO (see Note 4 "Tax Receivable Agreements"), the Acquisition of KCG and the ITG Acquisition, differences in the valuation of financial assets and liabilities, and other temporary differences arising from the deductibility of compensation, depreciation, and other expenses in different time periods for book and income tax return purposes.

There are no expiration dates on the deferred tax assets.

The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some

portion or all of the deferred tax assets will not be realized.

The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the realization of the deferred tax assets.

At September 30, 2020 and December 31, 2019, the Company had U.S.

federal net operating loss carryforwards of $ 0.0 million and $ 91.3 million, respectively, and has recorded a deferred tax asset related to these federal net operating carryforwards of $ 0.0 million and $ 19.2 million, respectively.

The Company did not record a valuation allowance against this deferred tax asset.

At September 30, 2020, the Company recorded deferred income taxes related to state and local net operating losses of $ 3.7 million.

At March 31, 2021 and December 31, 2020, the Company did not have any U.S.

federal net operating loss carryforwards and therefore the Company did not record a deferred tax asset related to federal net operating loss carryforwards.

At March 31, 2021 and December 31, 2020, the Company recorded deferred income taxes related to state and local net operating losses of $ 0.4 million.

These net operating losses will begin to expire in 2039.

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As a result of the ITG Acquisition, the Company had non-U.S.

net operating losses at September 30, 2020 and December 31, 2019 of $ 75.9 million and $ 86.3 million, respectively, and recorded a related deferred tax asset of $ 15.5 million and $ 17.9 million, respectively.

A valuation allowance of $ 15.2 million and $ 15.6 million was recorded against this deferred tax asset at September 30, 2020 and December 31, 2019, respectively, as it is more likely than not that a portion of this deferred tax asset will not be realized.

net operating losses at March 31, 2021 and December 31, 2020 of $ 73.6 million and $ 75.1 million, respectively, and recorded a related deferred tax asset of $ 15.0 million and $ 15.2 million, respectively.

A valuation allowance of $ 14.9 million and $ 15.1 million was recorded against this deferred tax asset at March 31, 2021 and December 31, 2020, respectively, as it is more likely than not that a portion of this deferred tax asset will not be realized.

As a result of the Acquisition of KCG, the Company had non-U.S.

net operating losses at September 30, 2020 and December 31, 2019 of $ 239.0 million and $ 239.0 million, respectively, and recorded a related deferred tax asset of $ 44.9 million and $ 44.9 million, respectively.

A full valuation allowance was also recorded against this deferred tax asset at September 30, 2020 and December 31, 2019 as it is more likely than not that this deferred tax asset will not be realized.

No valuation allowance against the remaining deferred taxes was recorded as of September 30, 2020 and December 31, 2019 because it is more likely than not that these deferred tax assets will be fully realized.

net operating losses at March 31, 2021 and December 31, 2020 of $ 239.0 million and $ 239.0 million, respectively, and recorded a related deferred tax asset of $ 45.0 million and $ 44.9 million, respectively.

A full valuation allowance was also recorded against this deferred tax asset at March 31, 2021 and December 31, 2020 as it is more likely than not that this deferred tax asset will not be realized.

No valuation allowance against the remaining deferred taxes was recorded as of March 31, 2021 and December 31, 2020 because it is more likely than not that these deferred tax assets will be fully realized.

The Company is subject to taxation in U.S.

federal, state, local and foreign jurisdictions.

As of September 30, 2020, the Company’s tax years for 2013 through 2019 and 2010 through 2019 were subject to examination by U.S.

As of March 31, 2021, the Company’s tax years for 2015 through 2019 and 2017 through 2019 were subject to examination by U.S.

tax authorities, respectively.

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The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income or loss before income taxes and noncontrolling interest.

Penalties, if any, are recorded in Operations and administrative expense and interest received or paid is recorded in Other, net or Operations and administrative expense in the Condensed Consolidated Statement of Comprehensive Income, respectively.

The Company had $ 9.1 million of unrecognized tax benefits as of September 30, 2020, all of which would affect the Company’s effective tax rate if recognized.

The Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of September 30, 2020.

The Company had $ 7.0 million of unrecognized tax benefits as of March 31, 2021, all of which would affect the Company’s effective tax rate if recognized.

The Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of March 31, 2021.

Commitments, Contingencies and Guarantees

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The defendants' response brief was filed August 13, 2020 and the plaintiffs' reply was filed September 17, 2020.

The dismissal was affirmed by the United States Court of Appeals for the Second Circuit in March 2021.

The Company believes that the claims are without merit and is defending itself vigorously.

On November 30, 2020, the Company was named as a defendant in In re United States Oil Fund, LP Securities Litigation , No.

The consolidated amended complaint was filed in federal district court in New York on behalf of a putative class, and asserts claims against the Company and numerous other financial institutions under Section 11 of the Securities Act of 1933 in connection with trading in United States Oil Fund, LP, a crude oil ETF.

The complaint also names the ETF, its sponsor, and related individuals as defendants.

The complaint did not specify the amount of alleged damages.

Defendants moved to dismiss the consolidated amended complaint on January 29, 2021 and plaintiffs subsequently filed its opposition to the motion on March 30, 2021.

The Company believes that the claims are without merit and is defending itself vigorously.

Other Legal and Regulatory Matters

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There has recently been an increased focus by regulators on Anti-Money Laundering and sanctions compliance by broker-dealers and similar entities, as well as an enhanced interest on suspicious activity reporting and transactions involving microcap and low-priced securities.

In addition, there has been an increased focus by Congress, federal and state regulators, SROs and the media on market structure issues, and in particular, high frequency trading, best execution, internalization, alternative trading system (“ATS”) manner of operations, market fragmentation and complexity, colocation, cybersecurity, access to market data feeds and remuneration arrangements, such as payment for order flow and exchange fee structures.

From time to time, the Company is the subject of requests for information and documents from the SEC, the Financial Industry Regulatory Authority and other regulators.

In addition, there has been an increased focus by Congress, federal and state regulators, SROs and the media on market structure issues, and in particular, the retail trading environment in the U.S.

and relationships between retail broker-dealers and market making firms, high frequency trading, best execution, internalization, alternative trading system (“ATS”) manner of operations, market fragmentation and complexity, colocation, cybersecurity, access to market data feeds and remuneration arrangements, such as payment for order flow and other payment and rebate structures and arrangements.

From time to time, the Company is the subject of requests for information and documents from the SEC, the Financial Industry Regulatory Authority ("FINRA"), state attorneys general, and other regulators and governmental authorities.

It is the Company's practice to cooperate and comply with the requests for information and documents.

The Company is currently the subject of various regulatory reviews and investigations by federal and foreign regulators and SROs, including the SEC and the Financial Industry Regulatory Authority.

The Company is currently the subject of various regulatory reviews and investigations by state, federal and foreign regulators and SROs, including the SEC and FINRA.

In some instances, these matters may result in a disciplinary action and/or a civil or administrative action.

For example, in December 2015, the Autorité des Marchés Financiers (“AMF”) fined the Company’s European subsidiary in the amount of € 5.0 million (approximately $ 5.4 million) based on its allegations that the subsidiary of a predecessor entity engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules.

The fine was subsequently reduced in 2017 to € 3.3 million (approximately $ 3.9 million) and in 2018 was further reduced to € 3.0 million (approximately $ 3.4 million).

The Company has fully reserved for the monetary penalty as of September 30, 2020.

Representations and Warranties;

Indemnification Arrangements

In the normal course of its operations, the Company enters into contracts that contain a variety of representations and warranties in addition to indemnification obligations.

In the normal course of its operations, the Company enters into contracts that contain a variety of representations and warranties in addition to indemnification obligations, including indemnification obligations in connection with the Acquisition of KCG and the ITG Acquisition.

The Company's maximum exposure under these arrangements is currently unknown, as any such exposure could relate to claims not yet brought or events which have not yet occurred.

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Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain a variety of representations and warranties and general indemnifications.

The Company has also provided general

indemnifications to its managers, officers, directors, employees, and agents against expenses, legal fees, judgments, fines, settlements, and other amounts actually and reasonably incurred by such persons under certain circumstances as more fully disclosed in its operating agreement.

The Company has also provided general indemnifications to its managers, officers, directors, employees, and agents against expenses, legal fees, judgments, fines, settlements, and other amounts actually and reasonably incurred by such persons under certain circumstances as more fully disclosed in its operating agreement.

The overall maximum amount of the obligations (if any) cannot reasonably be estimated as it will depend on the facts and circumstances that give rise to any future claims.

The Company adopted ASU 2016-02 on January 1, 2019, and elected the modified retrospective method of implementation.

The standard requires the recognition of right-of-use ("ROU") assets and lease liabilities for leases, which are defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

The Company has elected the practical expedient which allows for leases with an initial term of 12 months or less to be excluded from recognition on the Condensed Consolidated Statement of Financial Condition and for which lease expense is recognized on a straight-line basis over the lease term.

Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

These leases are primarily for corporate office space, datacenters, and technology equipment.

The leases have remaining terms of 1 year to 15 years, some of which include options to extend the initial term at the Company's discretion.

The lease terms used in calculating ROU assets and lease liabilities include the options to extend the initial term when the Company is reasonably certain of exercising the options.

The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants.

In addition to the base rental costs, the Company’s lease agreements for corporate office space generally provide for rent escalations resulting from increased assessments for operating expenses, real estate taxes and other charges.

Payments for such reimbursable expenses are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred.

The Company also subleases certain office space and facilities to third parties.

The subleases have remaining terms of 1 to 12 years.

The Company recognizes amounts received from subleases on a straight-line basis over the term of the sublease within Operations and administrative expense on the Condensed Consolidated Statement of Comprehensive Income.

As the implied discount rate for most of the Company's leases is not readily determinable, the Company uses its incremental borrowing rate on its secured borrowings in determining the present value of lease payments.

The Company primarily enters into lessee arrangements for corporate office space, data centers, and technology equipment.

For more information on lease accounting, see Note 2 "Summary of Significant Accounting Policies" and Note 17 "Leases" to the Consolidated Financial Statements of the Company's 2020 Annual Report on Form 10-K.

Lease assets and liabilities are summarized as follows:

(in thousands) Financial Statement Location September 30, 2020 December 31, 2019

(in thousands) Financial Statement Location March 31, 2021 December 31, 2020

Operating leases

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Weighted average remaining lease term and discount rate are as follows:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Weighted average remaining lease term

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Finance leases 2.62 % 3.13 %

The components of lease expense were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

The components of lease expense are as follows:

Three Months Ended March 31,

(in thousands) 2021 2020

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Finance lease cost:

Amortization of right-of-use assets 2,668 3,277 8,838 9,329

Amortization of ROU Asset 2,133 3,187

Interest on lease liabilities 74 129

Total Finance lease cost 2,207 3,316

During the nine months ended September 30, 2019, the Company ceased use of certain office lease premises as part of its ongoing effort to consolidate office space.

For the three months ended September 30, 2019, the Company recognized $ 1.3 million in Termination of office leases on the condensed consolidated statement of comprehensive income related to these premises, comprised entirely of impairment of ROU assets.

For the nine months ended September 30, 2019, the Company recognized $ 66.5 million in Termination of office leases on the Condensed Consolidated Statement of Comprehensive Income related to these premises, comprising $ 27.0 million of impairments of ROU assets, $ 37.9 million of write-offs of leasehold improvements and fixed assets, and $ 1.5 million of dilapidation charges.

There was no impairment of ROU assets during the three and nine months ended September 30, 2020.

Future minimum lease payments under operating and finance leases with non-cancelable lease terms, as of September 30, 2020, are as follows:

(in thousands) Operating Leases Finance Leases

2020 $ 19,414 $ 3,040

2021 74,907 6,774

2022 68,629 4,035

2023 65,048 1,438

2024 34,779 —

2025 and thereafter 141,713 —

Total lease payments $ 404,490 $ 15,287

Less imputed interest ( 73,864 ) ( 862 )

Total lease liability $ 330,626 $ 14,425

Future minimum lease payments under operating and finance leases with non-cancelable lease terms, as of December 31, 2019, are as follows:

Future minimum lease payments under operating and finance leases with non-cancelable lease terms, as of March 31, 2021, are as follows:

(in thousands) Operating Leases Finance Leases

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as reported within the Condensed Consolidated Statements of Financial Condition to the sum of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.

(in thousands) September 30, 2020 December 31, 2019

(in thousands) March 31, 2021 December 31, 2020

Cash and cash equivalents $ 899,041 $ 889,559

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Shares of the Company’s common stock generally vote together as a single class on all matters submitted to a vote of the Company’s stockholders.

The Founder Member controls approximately 82.0 % of the combined voting power of our common stock as a result of its ownership of our Class C and Class D Common Stock.

The Company holds approximately a 64.0 % interest in Virtu Financial at March 31, 2021.

During the period prior to the Reorganization Transactions and IPO, Class A-2 profits interests and Class B interests in Virtu Financial were issued to Employee Holdco (as defined below) on behalf of certain key employees and stakeholders.

In connection with the Reorganization Transactions, all Class A-2 profits interests and Class B interests were reclassified into Virtu Financial Units.

As of September 30, 2020 and December 31, 2019, there were 5,499,713 and 7,919,952 Virtu Financial Units outstanding held by Employee Holdco (as defined below), respectively, and 2,420,239 and 823,456 of such Virtu Financial Units and corresponding Class C Common Stock were exchanged into Class A Common Stock, forfeited or repurchased during the nine months ended September 30, 2020 and 2019, respectively.

As of March 31, 2021 and December 31, 2020, there were 5,167,956 and 5,259,713 Virtu Financial Units outstanding held by Employee Holdco (as defined below), respectively, and 91,757 and 724,327 of such Virtu Financial Units and corresponding Class C Common Stock were exchanged into Class A Common Stock, forfeited or repurchased during the three months ended March 31, 2021 and 2020, respectively.

Amended and Restated 2015 Management Incentive Plan

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The Amended and Restated 2015 Management Incentive Plan provides for the grant of stock options, restricted stock units, and other awards based on an aggregate of 21,000,000 shares of Class A Common Stock, subject to additional sublimits, including limits on the total option grant to any one participant in a single year and the total performance award to any one participant in a single year.

On April 23, 2020, the Company’s board of directors adopted an amendment to the Company’s Amended and Restated 2015 Management Incentive Plan in order to increase the number of shares of the Company’s Class A Common Stock reserved for issuance, and in respect of which awards may be granted under the Amended and Restated 2015 Plan from 16,000,000 shares of Class A Common Stock to an aggregate of 21,000,000 shares of Class A Common Stock, and the amendment was approved by the Company’s shareholders at the Company's annual meeting of stockholders on June 5, 2020.

On November 13, 2020, the Company amended its form award agreement for the issuance of RSUs to provide for the continued vesting of outstanding RSU awards upon the occurrence of a qualified retirement (the "RSU Amendment").

A qualified retirement generally means a voluntary resignation by the participant (i) after five years of service, (ii) the participant attaining the age of 50 and (iii) the sum of the participant's age and service at the time of termination equaling or exceeding 65.

Continued vesting is subject to the participant entering into a 2 year non-compete.

The RSU Amendment was authorized and approved by the Compensation Committee of the Company's Board of Directors.

As a result of the RSU Amendment, currently issued and outstanding RSUs held by the Company's employees, including its executive officers, shall be deemed to be subject to the amended terms of the form award agreement, and any future RSU awards shall also be governed by such amended terms.

Amended and Restated Investment Technology Group, Inc.

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Acquisition of KCG

On the KCG Closing Date, the Company completed the all-cash Acquisition of KCG.

In connection with the Acquisition of KCG, the Company issued 8,012,821 shares of the Company’s Class A Common Stock to Aranda Investments Pte.

(“Aranda”), an affiliate of Temasek Holdings (Private) Limited (“Temasek”), for an aggregate purchase price of approximately $ 125.0 million and 40,064,103 shares of the Company’s Class A Common Stock to North Island Holdings I, LP (the “North Island Stockholder”) for an aggregate purchase price of approximately $ 618.7 million, in each case in accordance with terms of an investment agreement in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act.

The investment agreements were filed as exhibits to the Company’s 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2020.

Secondary Offerings

In May 2019, the Company completed a public offering (the “May 2019 Secondary Offering”) of 9,000,000 shares of Class A Common Stock at a purchase price per share paid by the underwriters of $ 22.00 , the proceeds of which were used to purchase an equivalent number of Virtu Financial Units and corresponding shares of Class D Common Stock from TJMT Holdings LLC pursuant to that certain Member Purchase Agreement, entered into on May 14, 2019 by and between the Company and TJMT Holdings LLC.

Share Repurchase Program

On February 11, 2021, the Company's Board of Directors authorized the expansion of the Company's share repurchase program, increasing the total authorized amount by $ 70.0 million to $ 170.0 million in Class A Common Stock and Virtu Financial Units up to December 31, 2021.

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

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

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

From the inception of the program through March 31, 2021, the Company repurchased approximately 3.7 million shares of Class A Common Stock and Virtu Financial Units for approximately $ 97.3 million.

As of March 31, 2021, the Company has approximately of $ 72.7 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

Employee Exchanges

During the nine months ended September 30, 2020 and 2019, pursuant to the exchange agreement by and among the Company, Virtu Financial and holders of Virtu Financial Units, certain current and former employees elected to exchange 2,420,239 and 823,456 units, respectively in Virtu Financial held directly or on their behalf by Virtu Employee Holdco LLC (“Employee Holdco”) on a one -for-one basis for shares of Class A Common Stock.

The Company holds approximately a 64.2 % interest in Virtu Financial at September 30, 2020.

During the three months ended March 31, 2021 and 2020, pursuant to the exchange agreement by and among the Company, Virtu Financial and holders of Virtu Financial Units, certain current and former employees elected to exchange 91,757 and 724,327 units, respectively in Virtu Financial held directly or on their behalf by Virtu Employee Holdco LLC (“Employee Holdco”) on a one -for-one basis for shares of Class A Common Stock.

Warrant Issuance

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Pursuant to the Warrant, the Founder Member may purchase up to 3,000,000 shares of Class A Common Stock.

If at any time during the term of the Founder Member Facility, the Founder Member Loans equal to or greater than $ 100 million had remained outstanding for a certain period of time specified in the Warrant, the number of shares would have increased to 10,000,000 .

If at any time during the term of the Founder Member Loan Facility, the Founder Member Loans equal to or greater than $ 100 million had remained outstanding for a certain period of time specified in the Warrant, the number of shares would have increased to 10,000,000 .

The Founder Member Loan Facility Term expired on September 20, 2020 without the Company having borrowed any Founder Member Loans thereunder (as described in Note 8 "Borrowings"), and as a result no such increase in the number of shares which may be purchased has occurred or will occur pursuant to the terms of the Warrant.

1 unchanged sentence

The Warrant may be exercised to purchase up to 3,000,000 shares of the Company's Class A Common Stock on any date after May 22, 2020 up to and including January 15, 2022.

The Warrant and Class A Common Stock issuable pursuant to the Warrant were offered, and will be issued and sold, in reliance on the exemption from the registration requirements of the Securities Act, set forth under Section 4(a)(2) of the Securities Act relating to sales by an issuer not involving any public offering.

The foregoing description of the Warrant does not purport to be complete and is qualified in its entirety by reference to the complete text of the Warrant, which was filed as an exhibit to the Company's 2020 quarterly report on Form 10-Q for the period ended March 31, 2020 filed with the Securities and Exchange Commission on May 11, 2020.

The fair value of the Warrant was determined using a Black-Scholes-Merton model, and was recorded as a debt issuance cost within Other Assets on the Condensed Consolidated Statement of Financial Condition and as an increase to Additional paid-in capital on the Condensed Consolidated Statement of Changes in Equity.

The balance was amortized on a straight-line basis from March 20, 2020 through September 20, 2020, the date on which the Founder Member Loan Facility expired, and recorded as expense within Debt issue cost related to debt refinancing, prepayment and commitment fees in the Condensed Consolidated Statement of Comprehensive Income.

The Warrant and Class A Common Stock issuable pursuant to the Warrant were offered, and will be issued and sold, in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), set forth under Section 4(a)(2) of the Securities Act relating to sales by an issuer not involving any public offering.

The fair value of the Warrant was determined using a Black-Scholes-Merton model, and was recorded as a debt issuance cost within Other Assets on the Condensed Consolidated Statements of Financial Condition and as an increase to Additional paid-in capital on the Condensed Consolidated Statements of Changes in Equity.

Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in Other Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended September 30, 2020

(in thousands) AOCI Beginning Balance Amounts

reclassified from

AOCI to income Amounts recorded

in AOCI AOCI Ending Balance

The following table presents the changes in Other Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021

(in thousands) AOCI Beginning Balance Amounts recorded

in AOCI Amounts reclassified from AOCI to income AOCI Ending Balance

Net change in unrealized cash flow hedges gains (losses) (1) $ ( 33,444 ) $ 9,273 $ 3,334 $ ( 20,837 )

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Total $ ( 25,487 ) $ 7,108 $ 3,334 $ ( 15,045 )

(1) Amounts reclassified from AOCI to income are included within Financing interest expense on long-term borrowings on the Condensed Consolidated Statements of Comprehensive Income.

As of September 30, 2020, the Company expects approximately $ 13.2 million to be reclassified from AOCI into earnings over the next 12 months.

(1) Amounts reclassified from AOCI to income are included within Financing interest expense on long-term borrowings on the Consolidated Statements of Comprehensive Income.

As of March 31, 2021, the Company expects approximately $ 13.4 million to be reclassified from AOCI into earnings over the next 12 months.

The timing of the reclassification is based on the interest payment schedule of the long-term borrowings.

Nine Months Ended September 30, 2020

(in thousands) AOCI Beginning Balance Amounts

reclassified from

AOCI to income Amounts recorded

in AOCI AOCI Ending Balance

Three Months Ended March 31, 2020

(in thousands) AOCI Beginning Balance Amounts recorded

in AOCI Amounts reclassified from AOCI to income AOCI Ending Balance

Net change in unrealized cash flow hedges gains (losses) $ — $ ( 31,785 ) $ 317 $ ( 31,468 )

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Total $ ( 647 ) $ ( 37,669 ) $ 317 $ ( 37,999 )

(1) Amounts reclassified from AOCI to income are included within Financing interest expense on long-term borrowings on the Condensed Consolidated Statements of Comprehensive Income.

As of September 30, 2020, the Company expects approximately $ 13.2 million to be reclassified from AOCI into earnings over the next 12 months.

The timing of the reclassification is based on the interest payment schedule of the long-term borrowings.

Three Months Ended September 30, 2019

(in thousands) AOCI Beginning Balance Amounts

reclassified from

AOCI to income Amounts recorded

in AOCI AOCI Ending Balance

Foreign exchange translation adjustment $ ( 1,670 ) $ — $ ( 4,316 ) $ ( 5,986 )

Total $ ( 1,670 ) $ — $ ( 4,316 ) $ ( 5,986 )

Nine Months Ended September 30, 2019

(in thousands) AOCI Beginning Balance Amounts

reclassified from

AOCI to income Amounts recorded

in AOCI AOCI Ending Balance

Foreign exchange translation adjustment $ ( 82 ) $ — $ ( 5,904 ) $ ( 5,986 )

Total $ ( 82 ) $ — $ ( 5,904 ) $ ( 5,986 )

(1) Amounts reclassified from AOCI to income are included within Financing interest expense on long-term borrowings on the Consolidated Statements of Comprehensive Income.

Share-based Compensation

Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 17 "Capital Structure", and in connection with the IPO, non-qualified stock options to purchase shares of Class A Common Stock were granted, each of which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the date of grant.

The following table summarizes activity related to stock options for the nine months ended September 30, 2020 and 2019:

The following table summarizes activity related to stock options for the three months ended March 31, 2021 and 2020:

Options Outstanding Options Exercisable

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Forfeited or expired — — — — —

At September 30, 2019 3,248,779 $ 18.74 5.49 3,248,779 $ 18.74

At March 31, 2020 3,020,650 $ 19.00 4.99 3,020,650 $ 19.00

At December 31, 2020 2,324,152 $ 19.00 4.24 2,324,152 $ 19.00

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Forfeited or expired — — — — —

At September 30, 2020 2,426,152 $ 19.00 4.49 2,426,152 $ 19.00

The expected life has been determined based on an average of vesting and contractual period.

At March 31, 2021 2,169,780 $ 19.00 3.99 2,169,780 $ 19.00

The expected life was determined based on an average of vesting and contractual period.

The risk-free interest rate was determined based on the yields available on U.S.

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The expected dividend yield was determined based on estimated future dividend payments divided by the IPO stock price.

The Company recognized $ 1.4 million for the nine months ended September 30, 2019 of compensation expense in relation to the stock options issued and outstanding.

The stock options to purchase shares of Class A Common Stock were fully vested in 2019, and as such there was no compensation expense recognized in relation to stock options for the three and nine months ended September 30, 2020.

The stock options to purchase shares of Class A Common Stock were fully vested in 2019.

Amended and Restated Investment Technology Group, Inc.

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Class A Common Stock, Restricted Stock Units and Restricted Stock Awards

Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 18 “Capital Structure”, subsequent to the IPO, shares of immediately vested Class A Common Stock, restricted stock units ("RSUs") and restricted stock awards ("RSAs") were granted, with RSUs and RSAs vesting over a period of up to 4 years.

Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 17 "Capital Structure", subsequent to the IPO, shares of immediately vested Class A Common Stock, RSUs and RSAs were granted, with RSUs and RSAs vesting over a period of up to 4 years.

The fair value of the Class A Common Stock and RSUs was determined based on a volume weighted average price and the expense is recognized on a straight-line basis over the vesting period.

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Performance targets are based on the Company's adjusted EBITDA for certain future periods.

For the nine months ended September 30, 2020 and 2019, respectively, there were 967,526 and 423,393 shares of immediately vested Class A Common Stock granted as part of year-end compensation.

In addition, the Company reduced accrued compensation expense by $ 11.4 million for the three months ended September 30, 2020, increased accrued compensation $ 5.9 million for the three months ended September 30, 2019 and increased accrued compensation expense by $ 14.4 million and $ 8.4 million for the nine months ended September 30, 2020 and 2019, respectively, related to immediately vested Class A Common Stock expected to be awarded as part of year-end incentive compensation, which was included in Employee compensation and payroll taxes on the Condensed Consolidated Statements of Comprehensive Income and Accounts payable, accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition.

For the three months ended March 31, 2021 and 2020, respectively, there were 633,938 and 852,599 shares of immediately vested Class A Common Stock granted as part of year-end compensation.

In addition, the Company accrued compensation expense of $ 5.0 million and $ 17.1 million for the three months ended March 31, 2021 and 2020, respectively, related to immediately vested Class A Common Stock expected to be awarded as part of year-end incentive compensation, which was included in Employee compensation and payroll taxes on the Condensed Consolidated Statements of Comprehensive Income and Accounts payable, accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition.

The following table summarizes activity related to the RSUs (including the Assumed Awards) and RSAs:

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Vested ( 1,854,961 ) 20.45

At September 30, 2019 3,609,712 $ 23.75

At March 31, 2020 4,012,022 $ 20.08

At December 31, 2020 3,393,084 $ 21.35

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Vested ( 1,896,407 ) 23.22

At September 30, 2020 3,778,317 $ 20.77

(1) Excluded in the number of RSUs and RSAs is 400,000 participating RSAs where the grant date has not been achieved because the performance conditions have not been met.

The Company recognized $ 9.0 million and $ 13.0 million for the three months ended September 30, 2020 and 2019 and $ 25.8 million and $ 52.6 million for the nine months ended September 30, 2020 and 2019, respectively, of compensation expense in relation to the RSUs.

As of September 30, 2020 and December 31, 2019, total unrecognized share-based compensation expense related to unvested RSUs was $ 50.6 million and $ 43.4 million, respectively, and this amount is to be recognized over a weighted average period of 1.18 and 2.0 years, respectively.

At March 31, 2021 3,515,007 $ 23.89

(1) Excluded in the number of RSUs and RSAs are 200,000 participating RSAs where the grant date has not been achieved because the performance conditions have not been met.

The Company recognized $ 7.8 million and $ 9.0 million for the three months ended March 31, 2021 and 2020, respectively, of compensation expense in relation to the RSUs.

As of March 31, 2021 and December 31, 2020, total unrecognized share-based compensation expense related to unvested RSUs was $ 65.1 million and $ 37.1 million, respectively, and this amount is to be recognized over a weighted average period of 1.4 and 1.0 year, respectively.

Awards in which the specific performance conditions have not been met are not included in unrecognized share-based compensation expense.

On November 13, 2020, the Company adopted the Virtu Financial, Inc.

Deferred Compensation Plan (the "DCP").

The DCP permits eligible executive officers and other employees to defer cash or equity based compensation beginning in the calendar year ending December 31, 2021, subject to certain limitations and restrictions.

Deferrals may also be directed to notional investments in certain of the employee investment opportunities.

No amounts have been recognized as compensation cost under the DCP as of March 31, 2021.

Regulatory Requirement

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broker-dealer subsidiary, VAL, is subject to the SEC Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital as detailed in the table below.

Pursuant to NYSE rules, VAL was also required to maintain $ 1.0 million of capital in connection with the operation of its designated market maker (“DMM”) business as of September 30, 2020.

Pursuant to New York Stock Exchange ("NYSE") rules, VAL was also required to maintain $ 1.0 million of capital in connection with the operation of its designated market maker (“DMM”) business as of March 31, 2021.

The required amount is determined under the exchange rules as the greater of (i) $ 1 million or (ii) $ 75,000 for every 0.1 % of NYSE transaction dollar volume in each of the securities for which the Company is registered as the DMM.

The regulatory capital and regulatory capital requirements of the Company's U.S broker-dealer subsidiary as of September 30, 2020 was as follows:

VAL's regulatory capital and regulatory capital requirements as of March 31, 2021 was as follows:

(in thousands) Regulatory Capital Regulatory Capital Requirement Excess Regulatory Capital

Virtu Americas LLC $ 676,247 $ 2,843 $ 673,404

As of September 30, 2020, VAL had $ 64.9 million of cash in special reserve bank accounts for the benefit of customers pursuant to SEC Rule 15c3-3, Computation for Determination of Reserve Requirements, and $ 32.6 million of cash in reserve bank accounts for the benefit of proprietary accounts of brokers.

Balances in special reserve bank accounts previously maintained by VITG were moved to VAL upon consolidation of the broker dealers.

The balances are included within Cash restricted or segregated under regulations and other on the Condensed Consolidated Statement of Financial Condition.

The regulatory capital and regulatory capital requirements of the U.S.

broker-dealer subsidiaries as of December 31, 2019 were as follows:

As of March 31, 2021, VAL had $ 108.8 million of cash in special reserve bank accounts for the benefit of customers pursuant to SEC Rule 15c3-3, Computation for Determination of Reserve Requirements, and $ 13.0 million of cash in reserve bank accounts for the benefit of proprietary accounts of brokers.

The balances are included within Cash restricted or segregated under regulations and other on the Condensed Consolidated Statements of Financial Condition.

VAL's regulatory capital and regulatory capital requirements as of December 31, 2020 was as follows:

(in thousands) Regulatory Capital Regulatory Capital Requirement Excess Regulatory Capital

Virtu Americas LLC $ 621,253 $ 2,917 $ 618,336

Virtu Financial BD LLC 30,317 1,000 29,317

Virtu Financial Capital Markets LLC 3,710 1,000 2,710

Virtu ITG LLC 66,069 1,000 65,069

Virtu Alternet Securities LLC 1,931 100 1,831

As of December 31, 2019, VAL and VITG had $ 22.3 million and $ 7.4 million, respectively, of cash in special reserve bank accounts for the benefit of customers pursuant to SEC Rule 15c3-3, Computation for Determination of Reserve Requirements, and $ 4.5 million and $ 5.0 million, respectively, of cash in reserve bank accounts for the benefit of proprietary accounts of brokers.

As of December 31, 2020, VAL had $ 96.2 million of cash in special reserve bank accounts for the benefit of customers pursuant to SEC Rule 15c3-3, Computation for Determination of Reserve Requirements, and $ 20.4 million of cash in reserve bank accounts for the benefit of proprietary accounts of brokers.

Foreign Subsidiaries

The Company’s foreign subsidiaries are subject to regulatory capital requirements set by local regulatory bodies, including the Investment Industry Regulatory Organization of Canada (“IIROC”), the Central Bank of Ireland, the Financial Conduct Authority in the United Kingdom, the Australian Securities Exchange, the Securities and Futures Commission in Hong Kong, and the Monetary Authority of Singapore.

Virtu Financial Canada ULC was admitted to membership in IIROC in March 2019.

The regulatory net capital balances and regulatory capital requirements applicable to the Company's foreign subsidiaries as of September 30, 2020 were as follows:

The Company’s foreign subsidiaries are subject to regulatory capital requirements set by local regulatory bodies, including the Investment Industry Regulatory Organization of Canada (“IIROC”), the Central Bank of Ireland ("CBI"), the Financial Conduct Authority ("FCA") in the United Kingdom, the Australian Securities and Investments Commission ("ASIC"), the Securities and Futures Commission in Hong Kong ("SFC"), and the Monetary Authority of Singapore ("MAS").

The regulatory net capital balances and regulatory capital requirements applicable to the Company's foreign subsidiaries as of March 31, 2021 were as follows:

(in thousands) Regulatory Capital Regulatory Capital Requirement Excess Regulatory Capital

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(1) Preliminary

As of September 30, 2020, Virtu ITG Europe Limited and Virtu ITG Canada Corp had $ 0.2 million and $ 0.4 million, respectively, of segregated funds on deposit for trade clearing and settlement activity, and Virtu ITG Hong Kong Ltd had $ 30 thousand of segregated balances under a collateral account control agreement for the benefit of certain customers.

As of March 31, 2021, Virtu ITG Europe Limited and Virtu ITG Canada Corp had $ 0.3 million and $ 0.4 million, respectively, of segregated funds on deposit for trade clearing and settlement activity, and Virtu ITG Hong Kong Ltd.

had $ 30 thousand of segregated balances under a collateral account control agreement for the benefit of certain customers.

The regulatory net capital balances and regulatory capital requirements applicable to the Company's foreign subsidiaries as of December 31, 2020 were as follows:

1 unchanged sentence

Virtu ITG Canada Corp $ 12,944 $ 196 $ 12,748

TriAct Canada Marketplace LP 2,538 193 2,345

Virtu Financial Canada ULC 2,486 196 2,290

9 unchanged sentences

The Company operates its business in the U.S.

and internationally, primarily in Europe and Asia.

and internationally, primarily in Europe, Asia and Canada.

Significant transactions and balances between geographic regions occur primarily as a result of certain of the Company’s subsidiaries incurring operating expenses such as employee compensation, communications and data processing and other overhead costs, for the purpose of providing execution, clearing and other support services to affiliates.

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The revenues are attributed to countries based on the locations of the subsidiaries.

The following table presents total revenues by geographic area for the three and nine months ended September 30, 2020 and 2019 :

Three Months Ended September 30, Nine Months Ended September 30,

The following table presents total revenues by geographic area for the three months ended March 31, 2021 and 2020 :

Three Months Ended March 31,

(in thousands) 2021 2020

12 unchanged sentences

As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker-dealers, banks and institutions.

The Company engages in principal trading in the Market Making segment direct to clients as well as in a supplemental capacity on exchanges, ECNs and ATSs.

The Company engages in principal trading in the Market Making segment direct to clients as well as in a supplemental capacity on exchanges, Electronic Communications Networks ("ECNs") and ATSs.

The Company is an active participant on all major global equity and futures exchanges and also trades on substantially all domestic electronic options exchanges.

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Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments.

The Company’s total revenues and income before income taxes and noncontrolling interest (“Pre-tax earnings”) by segment for the three months ended September 30, 2020 and 2019 are summarized in the following table:

(in thousands) Market

Making Execution

Services Corporate Consolidated

Total revenue $ 474,598 $ 182,680 $ ( 1,166 ) $ 656,112

Income before income taxes and noncontrolling interest 161,732 102,029 ( 11,246 ) 252,515

The Company’s total revenues and income before income taxes and noncontrolling interest (“Pre-tax earnings”) by segment for the three months ended March 31, 2021 and 2020 and are summarized in the following table:

(in thousands) Market Making Execution Services Corporate Consolidated Total

Total revenue $ 823,724 $ 189,239 $ ( 391 ) $ 1,012,572

Income (loss) before income taxes and noncontrolling interest 453,277 40,351 ( 3,841 ) 489,787

The Company's Pre-tax earnings by segment for the nine months ended September 30, 2020 and 2019 are summarized in the following table:

(in thousands) Market

Making Execution

Services Corporate Consolidated

Total revenue 830,586 169,864 171 1,000,621

Income before income taxes and noncontrolling interest 1,010,871 137,879 ( 25,478 ) 1,123,272

Total revenue 762,076 358,325 ( 2,528 ) 1,117,873

Income (loss) before income taxes and noncontrolling interest 451,546 19,395 ( 4,716 ) 466,225

1 unchanged sentence

The Company incurs expenses and maintains balances with its affiliates in the ordinary course of business.

As of September 30, 2020, and December 31, 2019 the Company had net receivables from its affiliates of $ 2.9 million and $ 1.3 million, respectively.

The Company has held a minority interest in SBI since 2016 (see Note 11 “Financial Assets and Liabilities”).

The Company pays exchange fees to SBI for the trading activities conducted on its proprietary trading system.

The Company paid $ 4.1 million and $ 4.0 million for the three months ended September 30, 2020 and 2019, respectively, and $ 13.8 million and $ 10.2 million for the nine months ended September 30, 2020 and 2019, respectively, to SBI for these trading activities.

The Company makes payments to two JVs (see Note 2 “Summary of Significant Accounting Policies”) to fund the construction of the microwave communication networks, and to purchase microwave communication networks, which are recorded within Communications and data processing on the Condensed Consolidated Statements of Comprehensive Income.

The Company made payments of $ 4.7 million and $ 5.2 million for the three months ended September 30, 2020 and 2019, respectively, and $ 14.0 million and $ 15.6 million to the JVs for the nine months ended September 30, 2020 and 2019, respectively.

As of March 31, 2021, and December 31, 2020 the Company had net receivables from its affiliates of $ 1.8 million and $ 2.3 million, respectively.

The Company has held a minority interest in JNX since 2016 (see Note 9 "Financial Assets and Liabilities").

The Company pays exchange fees to JNX for the trading activities conducted on its proprietary trading system.

The Company paid $ 2.9 million and $ 3.6 million for the three months ended March 31, 2021 and 2020, respectively, to JNX for these trading activities.

The Company makes payments to two JVs (see Note 11 "Variable Interest Entities") to fund the construction of the microwave communication networks, and to purchase microwave communication networks, which are recorded within Communications and data processing on the Condensed Consolidated Statements of Comprehensive Income.

The Company made payments of $ 4.7 million and $ 4.7 million for the three months ended March 31, 2021 and 2020, respectively, to these JVs.

The Company purchases network connections services from affiliates of Level 3 Communications (“Level 3”).

Temasek and its affiliates have a significant ownership interest in Level 3.

The Company paid $ 0.4 million and $ 0.3 million for the three months ended September 30, 2020 and 2019, respectively, and $ 1.2 million and $ 1.1 million for the nine months ended September 30, 2020 and 2019, respectively, to Level 3 for these services.

The Company paid $ 0.5 million and $ 0.4 million for the three months ended March 31, 2021 and 2020, respectively, to Level 3 for these services.

The Company makes commission-sharing arrangement ("CSA") payments to affiliates of DBS Group Holdings ("DBS").

Temasek and its affiliates have a significant ownership interest in DBS.

The Company made payments of $ 13.0 thousand for the three months ended September 30, 2020 and $ 0.2 million for the nine months ended September 30, 2020.

Payments for the three and nine months ended September 30, 2019 were immaterial.

As described in Note 10 “Borrowings” and Note 18 “Capital Structure”, on March 20, 2020 a subsidiary of the Company entered into an agreement with the Founder Member to establish the Founder Member Facility and, upon the execution of the Founder Member Facility and in consideration of the Founder Member’s commitments thereunder, the Company delivered to the Founder Member the Warrant.

The transactions were unanimously approved by the Company’s disinterested Directors.

The Founder Member Loan Term expired as of September 20, 2020.

Payments for the three months ended March 31, 2021 and March 31, 2020 were immaterial.

Subsequent Events

The Company has evaluated subsequent events for adjustment to or disclosure in its condensed consolidated financial statements through the date of this report, and has not identified any recordable or disclosable events, not otherwise reported in these condensed consolidated financial statements or the notes thereto, except for the following:

On November 6, 2020, the Company’s board of directors declared a dividend of $ 0.24 per share of Class A Common Stock and Class B Common Stock and per participating Restricted Stock Unit and Restricted Stock Award that will be paid on December 15, 2020 to holders of record as of December 1, 2020.

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 repurchases will actually occur.

On May 4, 2021, the Company’s Board of Directors declared a dividend of $ 0.24 per share of Class A Common Stock and Class B Common Stock and per participating Restricted Stock Unit and Restricted Stock Award that will be paid on June 15, 2021 to holders of record as of June 1, 2021.

On May 4, 2021, the Company's Board of Directors authorized the expansion of the Company's current share repurchase program, increasing the total authorized amount by $ 300.0 million to $ 470.0 million and extending the duration of the program through May 4, 2022.

Since inception of the program through May 4, 2021, the Company repurchased approximately 5.4 million shares of Class A Common Stock and Virtu Financial Units for approximately $ 151.0 million.

As of May 4, 2021, the Company has approximately $ 319.0 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

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-Q

Item 1. Financial Statements