What changed in this filing

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Item 1. Financial Statements

2021-08-04 compared with 2021-05-07 · 243 added, 182 removed, 1055 unchanged (29% of the section changed)

9 unchanged sentences

Condensed Consolidated Statements of Financial Condition (Unaudited)

(in thousands, except share data) March 31,

(in thousands, except share data) June 30,

2021 December 31,

8 unchanged sentences

Receivables from customers 208,247 214,478

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)

Property, equipment and capitalized software (net of accumulated depreciation of $ 454,875 and $ 455,961 as of June 30, 2021 and December 31, 2020, respectively)

107,955 113,590

1 unchanged sentence

Goodwill 1,148,926 1,148,926

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

Intangibles (net of accumulated amortization of $ 219,648 and $ 183,494 as of June 30, 2021 and December 31, 2020, respectively)

418,345 454,499

Deferred tax assets 180,356 193,070

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

Other assets ($ 81,055 and $ 68,316 , at fair value, as of June 30, 2021 and December 31, 2020, respectively)

280,870 317,747

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 — 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

Class A common stock (par value $ 0.00001 ), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 127,725,595 and 125,627,277 shares, Outstanding — 118,475,086 and 122,012,180 shares at June 30, 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 June 30, 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 — 9,799,036 and 10,226,939 shares at June 30, 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 June 30, 2021 and December 31, 2020, respectively

Treasury stock, at cost, 9,250,509 and 3,615,097 shares at June 30, 2021 and December 31, 2020, respectively

( 253,587 ) ( 88,923 )

7 unchanged sentences

Condensed Consolidated Statements of Financial Condition (Unaudited)

(in thousands, except share data) March 31,

(in thousands, except share data) June 30,

2021 December 31,

6 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

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

39 unchanged sentences

Condensed Consolidated Statements of Changes in Equity (Unaudited)

Three Months Ended March 31, 2021 and 2020

Three and Six Months Ended June 30, 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.

9 unchanged sentences

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

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

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

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

2 unchanged sentences

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

Share based compensation 32,916 — — — — — — — 7,444 — — 7,444 — 7,444

Repurchase of Class C common stock — — ( 45,622 ) — — — — — ( 1,323 ) — — ( 1,323 ) — ( 1,323 )

Treasury stock purchases ( 5,489 ) — — — — — ( 3,358,003 ) ( 101,305 ) — ( 114 ) — ( 101,419 ) — ( 101,419 )

Stock options exercised 253,625 — — — — — — — 4,819 — — 4,819 — 4,819

Net income — — — — — — — — — 62,910 — 62,910 45,997 108,907

Foreign exchange translation adjustment — — — — — — — — — — 43 43 23 66

Net change in unrealized cash flow hedges gains (losses) — — — — — — — — — — ( 4,115 ) ( 4,115 ) ( 3,091 ) ( 7,206 )

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

— — — — — — — — — ( 29,483 ) — ( 29,483 ) ( 103,062 ) ( 132,545 )

Issuance of common stock in connection with employee exchanges 290,524 — — — — — — — — — — — — —

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 290,524 ) — — — — — — — — — — —

Balance at June 30, 2021 127,725,595 $ 1 9,799,036 $ — 60,091,740 $ 1 ( 9,250,509 ) $ ( 253,587 ) $ 1,201,890 $ 648,893 $ ( 19,117 ) $ 1,578,081 $ 344,741 $ 1,922,822

10 unchanged sentences

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

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

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

2 unchanged sentences

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 — — — — — — — — — 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 )

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

— — — — — — — — — ( 30,201 ) — ( 30,201 ) ( 145,211 ) ( 175,412 )

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

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

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2021 2020

25 unchanged sentences

Accounts payable, accrued expenses and other liabilities ( 76,580 ) 203,804

Net cash provided by (used in) operating activities 133,890 ( 218,661 )

Net cash provided by operating activities 355,441 499,277

Cash flows from investing activities

5 unchanged sentences

Dividends to stockholders and distributions from Virtu Financial to non-controlling interest ( 321,931 ) ( 224,179 )

Repurchase of Class C common stock ( 1,323 ) —

Purchase of treasury stock ( 180,837 ) ( 10,161 )

4 unchanged sentences

Debt issuance costs ( 2,658 ) ( 9,301 )

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

Net cash used in financing activities ( 400,843 ) ( 483,897 )

Effect of exchange rate changes on cash and cash equivalents ( 3,610 ) ( 3,952 )

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

Net decrease in cash and cash equivalents ( 91,750 ) ( 25,265 )

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

3 unchanged sentences

Cash paid for taxes 103,083 36,451

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2021 2020

10 unchanged sentences

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

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

As of June 30, 2021, VFI owned approximately 63.6 % 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”).

4 unchanged sentences

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.

The Company has completed two significant acquisitions over the past five 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.

39 unchanged sentences

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 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 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.

Effective for the quarter ended March 31, 2021, the Company 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 $ 30.2 million of Dividends to stockholders and $ 145.2 million of Distribution from Virtu Financial to non-controlling interest, and $ 59.8 million of Dividends to stockholders and $ 164.4 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 and six months ended June 30, 2020, respectively.

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

Summary of Significant Accounting Policies

6 unchanged sentences

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

Accounting Pronouncements, Not Yet Adopted as of June 30, 2021

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

13 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2021 2020 2021 2020

5 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

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

6 unchanged sentences

Basic earnings (loss) per share $ 0.51 $ 1.59 $ 2.43 $ 3.39

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

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

7 unchanged sentences

Diluted earnings (loss) per share $ 0.50 $ 1.58 $ 2.41 $ 3.38

(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

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.

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.

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.

The Company made its first payment of $ 7.0 million in February 2017, its second payment of $ 12.4 million in September 2018, its third payment of $ 13.3 million in March 2020, and its fourth payment of $ 16.5 million in April 2021.

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.

At June 30, 2021 and December 31, 2020, the Company’s remaining deferred tax assets that relate to the matters described above were approximately $ 189.2 million and $ 199.1 million, respectively, and the Company’s liabilities over the next 15 years pursuant to the tax receivable agreements were approximately $ 254.7 million and $ 271.2 million, respectively.

The amounts recorded as of June 30, 2021 and December 31, 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.

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

4 unchanged sentences

and one non-operating segment:

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:

As of June 30, 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 and six months ended June 30, 2021 and 2020.

The following table presents the details of goodwill by segment as of June 30, 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 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

As of June 30, 2021 and December 31, 2020, the Company's total amount of intangible assets recorded was $ 418.3 million and $ 454.5 million, respectively.

Acquired intangible assets consisted of the following as of June 30, 2021 and December 31, 2020:

As of June 30, 2021

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

17 unchanged sentences

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

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.

Amortization expense relating to finite-lived intangible assets was approximately $ 18.1 million and $ 19.0 million for the three months ended June 30, 2021 and 2020, respectfully, and $ 36.2 million and $ 37.9 million for the six months ended June 30, 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 next five years ended December 31:

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

(in thousands)

1 unchanged sentence

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 March 31, 2021 and December 31, 2020:

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

The following is a summary of receivables from and payables to brokers-dealers and clearing organizations at June 30, 2021 and December 31, 2020:

(in thousands) June 30, 2021 December 31, 2020

Due from prime brokers $ 484,538 $ 697,293

11 unchanged sentences

Total payables to broker-dealers and clearing organizations $ 776,586 $ 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 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.

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 $ 201.8 million and $ 134.7 million as of June 30, 2021 and December 31, 2020, respectively.

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

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

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 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

At June 30, 2021 and December 31, 2020, substantially all of the securities received as collateral have been repledged.

The fair value of the collateralized transactions at June 30, 2021 and December 31, 2020 are summarized as follows:

(in thousands) June 30, 2021 December 31, 2020

Securities received as collateral:

3 unchanged sentences

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 March 31, 2021 and December 31, 2020 consisted of the following:

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

Financial instruments owned and pledged, where the counterparty has the right to repledge, at June 30, 2021 and December 31, 2020 consisted of the following:

(in thousands) June 30, 2021 December 31, 2020

Equities $ 919,440 $ 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.

March 31, 2021

June 30, 2021

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

29 unchanged sentences

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

At March 31, 2021

At June 30, 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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

Demand Loan — 94 — 211

$ 625 $ 427 $ 1,307 $ 1,336

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 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 June 30, 2021, there was $ 18.5 million associated with international settlement activities outstanding under these facilities at a weighted average interest rate of approximately 2.3 %.

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 %.

3 unchanged sentences

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 March 31, 2021

At June 30, 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 $ 1.0 million and $ 1.3 million for the three months ended March 31, 2021 and 2020, respectively.

Interest expense in relation to the facilities was approximately $ 1.1 million and $ 1.3 million for the three months ended June 30, 2021 and 2020 , and $ 2.1 million and $ 2.6 million for the six months ended June 30, 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 March 31, 2021

At June 30, 2021

(in thousands) Maturity

32 unchanged sentences

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.

As of June 30, 2021, $ 1,600 million was outstanding under the First Lien Term Loan Facility.

The revolving commitments will terminate on March 1, 2022.

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

There were no outstanding borrowings under the First Lien Revolving Facility as of June 30, 2021 or December 31, 2020.

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

2 unchanged sentences

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.

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 $ 525.0 million and $ 1,000 million of principal under the First Lien Term Loan Facility at rates of 4.3 % and 4.4 % through September 2024 and January 2025, respectively, based on the interest rates set forth in the Amended Credit Agreement.

In April 2021, each of the swap agreements described above was novated to another counterparty and amended in connection with such novation.

The amendments included certain changes to collateral posting obligations, and also had the effect of increasing the effective fixed interest payment obligations to rates of 4.5 %, with respect to the earlier maturing swap arrangement, and 4.6 % with respect to the later maturing swap arrangement.

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.

6 unchanged sentences

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

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

The principal balance was ¥ 3.5 billion ($ 31.5 million) as of June 30, 2021 and ¥ 3.5 billion ($ 33.9 million) as of December 31, 2020.

The Company recorded a gain of $ 0.1 million during both the three months ended June 30, 2021 and 2020, and a gain of $ 2.4 million and a loss of $ 0.2 million during the six months ended June 30, 2021 and 2020, respectively, due to changes in foreign currency rates.

As of June 30, 2021, aggregate future required minimum principal payments based on the terms of the long-term borrowings were as follows:

(in thousands) June 30, 2021

Remainder of 2021 $ —

14 unchanged sentences

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 March 31, 2021:

March 31, 2021

Fair value measurements for those items measured on a recurring basis are summarized below as of June 30, 2021:

June 30, 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

57 unchanged sentences

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;

As of June 30, 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;

2 unchanged sentences

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

March 31, 2021

June 30, 2021

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

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

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

Three Months Ended June 30, 2021

(in thousands) Balance at March 31, 2021 Purchases Total Realized and Unrealized Gains / (Losses) (1) Net Transfers into (out of) Level 3 Settlement Balance at June 30, 2021 Change in Net Unrealized Gains / (Losses) on Investments still held at June 30, 2021

Other assets:

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Total $ 66,192 $ — $ 12,121 $ — $ — $ 78,313 $ 12,121

(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 SBI Investment.

Three Months Ended June 30, 2020

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

Other assets:

Equity investment $ 46,668 $ — $ 4,931 $ — $ — $ 51,599 $ 4,931

Total $ 46,668 $ — $ 4,931 $ — $ — $ 51,599 $ 4,931

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

Six Months Ended June 30, 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 June 30, 2021 Change in Net Unrealized Gains / (Losses) on Investments still held at June 30, 2021

Other assets:

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Six Months Ended June 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 June 30, 2020 Change in Net Unrealized Gains / (Losses) on Investments still held at June 30, 2020

Other assets:

Equity investment $ 46,245 $ — $ 5,354 $ — $ — $ 51,599 $ 5,354

Total $ 46,245 $ — $ 5,354 $ — $ — $ 51,599 $ 5,354

Financial Instruments Not Measured at Fair Value

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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 March 31, 2021:

March 31, 2021

The table below summarizes financial assets and liabilities not carried at fair value on a recurring basis as of June 30, 2021:

June 30, 2021

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

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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 March 31, 2021 and December 31, 2020:

March 31, 2021

The following tables set forth the gross and net presentation of certain financial assets and financial liabilities as of June 30, 2021 and December 31, 2020:

June 30, 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

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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:

March 31, 2021

June 30, 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 March 31, 2021 and December 31, 2020:

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

The fair value of the Company’s derivative instruments on a gross basis consisted of the following at June 30, 2021 and December 31, 2020:

(in thousands) June 30, 2021 December 31, 2020

Derivatives Assets 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 months ended March 31, 2021 and 2020.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) Financial Statements Location 2021 2020 2021 2020

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(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.

These two interest rate swaps met the criteria to be considered qualifying cash flow hedges under ASC 815 in the first quarter of 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 beginning in the first quarter of 2020.

Variable Interest Entities

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

As of June 30, 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 June 30, 2021, 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 U.S.

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

As of June 30, 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 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 Statements of Financial Condition.

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 applicable JVs within Accounts payable, accrued expenses and other liabilities on the 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 March 31, 2021:

The following table presents the Company’s nonconsolidated VIEs at June 30, 2021:

Carrying Amount Maximum Exposure to Loss VIEs' assets

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Disaggregation of Revenues

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

Three Months Ended June 30, 2021

(in thousands) Market Making Execution Services Corporate Total

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Total revenues $ 402,541 $ 138,130 $ 8,294 $ 548,965

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

(in thousands) Market Making Execution Services Corporate Total

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Total revenues $ 759,117 $ 148,076 $ ( 1,290 ) $ 905,903

Six Months Ended June 30, 2021

(in thousands) Market Making Execution Services Corporate Total

Revenues from contracts with customers:

Commissions, net $ 23,217 $ 238,524 $ — $ 261,741

Workflow technology — 52,424 — 52,424

Analytics — 20,599 — 20,599

Total revenue from contracts with customers 23,217 311,547 — 334,764

Other sources of revenue 1,203,048 15,822 7,903 1,226,773

Total revenues $ 1,226,265 $ 327,369 $ 7,903 $ 1,561,537

Timing of revenue recognition:

Services transferred at a point in time $ 1,226,265 $ 290,359 $ 7,903 $ 1,524,527

Services transferred over time — 37,010 — 37,010

Total revenues $ 1,226,265 $ 327,369 $ 7,903 $ 1,561,537

Six Months Ended June 30, 2020

(in thousands) Market Making Execution Services Corporate Total

Revenues from contracts with customers:

Commissions, net $ 136 $ 242,363 $ — $ 242,499

Workflow technology — 55,332 — 55,332

Analytics — 20,650 20,650

Total revenue from contracts with customers 136 318,345 — 318,481

Other sources of revenue 1,589,567 ( 404 ) ( 1,120 ) 1,588,043

Total revenues $ 1,589,703 $ 317,941 $ ( 1,120 ) $ 1,906,524

Timing of revenue recognition:

Services transferred at a point in time $ 1,589,703 $ 280,665 $ ( 1,120 ) $ 1,869,248

Services transferred over time — 37,276 — 37,276

Total revenues $ 1,589,703 $ 317,941 $ ( 1,120 ) $ 1,906,524

Remaining Performance Obligations and Revenue Recognized from Past Performance Obligations

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.

As of June 30, 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.

The Company recognized $ 0.6 million and $ 0.7 million of revenue related to performance obligations satisfied in previous period for the three months ended June 30, 2021 and 2020, respectively.

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 $ 60.4 million and $ 57.3 million as of March 31, 2021 and December 31, 2020, respectively.

Receivables related to revenues from contracts with customers amounted to $ 50.6 million and $ 57.3 million as of June 30, 2021 and December 31, 2020, respectively.

The Company did not identify any contract assets.

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

There were no impairment losses on receivables as of June 30, 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 $ 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.

Deferred revenue related to contracts with customers was $ 12.7 million and $ 9.3 million as of June 30, 2021 and December 31, 2020, respectively.

The Company recognized revenue of $ 7.2 million and $ 7.6 million for the three months ended June 30, 2021 and 2020 respectively, and $ 15.2 million and $ 15.1 million during the six months ended June 30, 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 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.

Accordingly, for the three and six months ended June 30, 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 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.

The Company’s provisions for income taxes and effective tax rates were $ 26.1 million, 19.3 %, and $ 69.3 million, 17.1 % for the three months ended June 30, 2021 and 2020, respectively, and $ 106.7 million, 17.1 % and $ 147.2 million, 16.9 % for the six months ended June 30, 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 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.

Included in Other assets on the Condensed Consolidated Statements of Financial Condition at June 30, 2021 and December 31, 2020 are current income tax receivables of $ 43.0 million and $ 83.1 million, respectively.

The balances at June 30, 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 June 30, 2021 and December 31, 2020 are current tax liabilities of $ 17.6 million and $ 37.9 million, respectively.

The balances at June 30, 2021 and December 31, 2020 primarily comprise 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.

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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 March 31, 2021 and December 31, 2020, the Company did not have any U.S.

At June 30, 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.

At June 30, 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 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.

net operating losses at June 30, 2021 and December 31, 2020 of $ 74.0 million and $ 75.1 million, respectively, and recorded a related deferred tax asset of $ 14.9 million and $ 15.2 million, respectively.

A valuation allowance of $ 14.8 million and $ 15.1 million was recorded against this deferred tax asset at June 30, 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 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.

net operating losses at June 30, 2021 and December 31, 2020 of $ 239.3 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 June 30, 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 June 30, 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 March 31, 2021, the Company’s tax years for 2015 through 2019 and 2017 through 2019 were subject to examination by U.S.

As of June 30, 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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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 Statements of Comprehensive Income, respectively.

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.

The Company had $ 8.4 million of unrecognized tax benefits as of June 30, 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 June 30, 2021.

Commitments, Contingencies and Guarantees

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The Company carries directors’ and officers’ liability insurance coverage and other insurance coverage for potential claims, including securities actions, against the Company and its respective directors and officers.

On January 29, 2019, the Company was named as a defendant in Ford v.

ProShares Trust II, et al.

The 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 a ProShares inverse-volatility ETF.

Additionally, on February 27, 2019, and March 1, 2019, the Company was named as a defendant in Bittner v.

ProShares Trust II, et al.

19-cv-1840, and Mareno v.

ProShares Trust II, et al ., No.

19-cv-1955, respectively.

The complaints were filed in federal district court in New York on behalf of putative classes, and asserted substantially similar claims against the Company and other financial institutions.

On April 29, 2019, these three actions were consolidated in federal district court in New York as In re ProShares Trust II Securities Litigation , No.

19-cv-886-DLC.

A consolidated amended complaint, which did not specify the amount of alleged damages, was filed in the consolidated action on June 21, 2019.

Defendants moved to dismiss the consolidated amended complaint on August 2, 2019.

In response, plaintiffs filed a consolidated second amended complaint on September 6, 2019, which also did not specify the amount of alleged damages.

Defendants moved to dismiss the consolidated second amended complaint on September 27, 2019.

The defendants’ motion to dismiss was granted on January 3, 2020, and plaintiffs subsequently filed a Notice of Appeal of the district court's ruling on the motion to dismiss on January 31, 2020 and an opening brief on May 14, 2020.

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.

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Lease assets and liabilities are summarized as follows:

(in thousands) Financial Statement Location March 31, 2021 December 31, 2020

(in thousands) Financial Statement Location June 30, 2021 December 31, 2020

Operating leases

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Weighted average remaining lease term and discount rate are as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Weighted average remaining lease term

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The components of lease expense are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2021 2020 2021 2020

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Total Finance lease cost $ 1,490 $ 3,095 $ 3,697 $ 6,411

Future minimum lease payments under operating and finance leases with non-cancelable lease terms, as of March 31, 2021, are as follows:

Future minimum lease payments under operating and finance leases with non-cancelable lease terms, as of June 30, 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) March 31, 2021 December 31, 2020

(in thousands) June 30, 2021 December 31, 2020

Cash and cash equivalents $ 848,111 $ 889,559

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The Founder Member controls approximately 82.4 % 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.

The Company holds approximately a 63.6 % interest in Virtu Financial at June 30, 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 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.

As of June 30, 2021 and December 31, 2020, there were 4,831,810 and 5,259,713 Virtu Financial Units outstanding held by Employee Holdco (as defined below), respectively, and 427,903 and 2,360,239 of such Virtu Financial Units and corresponding Class C Common Stock were exchanged into Class A Common Stock, forfeited or repurchased during the six months ended June 30, 2021 and 2020, respectively.

Amended and Restated 2015 Management Incentive Plan

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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.

On May 4, 2021, the Company's Board of Directors authorized the expansion of the Company's share repurchase program, increasing the total authorized amount by $ 300 million to $ 470 million in Class A Common Stock and Virtu Financial Units and extending the duration of the program through May 4, 2022.

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.

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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.

From the inception of the program through June 30, 2021, the Company repurchased approximately 7.1 million shares of Class A Common Stock and Virtu Financial Units for approximately $ 198.6 million.

As of June 30, 2021, the Company has approximately of $ 271.4 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

Employee Exchanges

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.

During the six months ended June 30, 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 382,281 and 2,360,239 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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Accumulated Other Comprehensive Income (Loss)

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

The following table presents the changes in Other Comprehensive Income (Loss) for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 2021

(in thousands) AOCI Beginning Balance Amounts recorded

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Total $ ( 15,045 ) $ ( 7,829 ) $ 3,757 $ ( 19,117 )

(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 June 30, 2021, the Company expects approximately $ 15.0 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 June 30, 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) $ ( 31,468 ) $ ( 8,823 ) $ 3,581 $ ( 36,710 )

Foreign exchange translation adjustment ( 6,531 ) 3,674 — ( 2,857 )

Total $ ( 37,999 ) $ ( 5,149 ) $ 3,581 $ ( 39,567 )

Six Months Ended June 30, 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 ) $ 1,424 $ 7,068 $ ( 24,952 )

Foreign exchange translation adjustment 7,957 ( 2,122 ) — 5,835

Total $ ( 25,487 ) $ ( 698 ) $ 7,068 $ ( 19,117 )

(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.

As of June 30, 2021, the Company expects approximately $ 15.0 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 March 31, 2020

Six Months Ended June 30, 2020

(in thousands) AOCI Beginning Balance Amounts recorded

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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 three months ended March 31, 2021 and 2020:

The following table summarizes activity related to stock options for the six months ended June 30, 2021 and 2020:

Options Outstanding Options Exercisable

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Forfeited or expired — — — — —

At March 31, 2020 3,020,650 $ 19.00 4.99 3,020,650 $ 19.00

At June 30, 2020 2,615,856 $ 19.00 4.74 2,615,856 $ 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 March 31, 2021 2,169,780 $ 19.00 3.99 2,169,780 $ 19.00

At June 30, 2021 1,916,155 $ 19.00 3.74 1,916,155 $ 19.00

The expected life was determined based on an average of vesting and contractual period.

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Performance targets are based on the Company's adjusted EBITDA for certain future periods.

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:

For the six months ended June 30, 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 $ 6.5 million and $ 8.7 million for the three months ended June 30, 2021 and 2020, respectively, and $ 11.5 million and $ 25.8 million for the six months ended June 30, 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 RSUs (including the Assumed Awards) and RSAs for the six months ended June 30, 2021 and 2020:

Number of RSUs and RSAs Weighted

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Vested ( 1,889,862 ) 20.57

At March 31, 2020 4,012,022 $ 20.08

At June 30, 2020 3,979,091 $ 20.39

At December 31, 2020 3,393,084 $ 21.35

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Vested ( 1,929,323 ) 23.27

At March 31, 2021 3,515,007 $ 23.89

At June 30, 2021 3,458,496 $ 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.

The Company recognized $ 6.1 million and $ 7.8 million for the three months ended June 30, 2021 and 2020 and $ 13.9 million and $ 16.8 million for the six months ended June 30, 2021 and 2020, respectively, of compensation expense in relation to RSUs.

As of June 30, 2021 and December 31, 2020, total unrecognized share-based compensation expense related to unvested RSUs was $ 55.0 million and $ 37.1 million, respectively, and this amount is to be recognized over a weighted average period of 1.2 years 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.

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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.

No amounts have been recognized as compensation cost under the DCP as of June 30, 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 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.

VAL's regulatory capital and regulatory capital requirements as of March 31, 2021 was as follows:

VAL's regulatory capital and regulatory capital requirements as of June 30, 2021 was as follows:

(in thousands) Regulatory Capital Regulatory Capital Requirement Excess Regulatory Capital

Virtu Americas LLC $ 524,404 $ 2,415 $ 521,989

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.

As of June 30, 2021, VAL had $ 57.4 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 $ 8.8 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.

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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:

The regulatory net capital balances and regulatory capital requirements applicable to the Company's foreign subsidiaries as of June 30, 2021 were as follows:

(in thousands) Regulatory Capital Regulatory Capital Requirement Excess Regulatory Capital

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(1) Preliminary

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.

As of June 30, 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.

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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 months ended March 31, 2021 and 2020 :

Three Months Ended March 31,

The following table presents total revenues by geographic area for the three and six months ended June 30, 2021 and 2020 :

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2021 2020 2021 2020

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and one non-operating segment:

The Market Making segment principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities.

The Market Making segment principally consists of market making in the cash, futures and options markets across global equities, fixed income, currencies and commodities.

As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker-dealers, banks and institutions.

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The Execution Services segment also includes revenues derived from providing (a) proprietary risk management and trading infrastructure technology to select third parties for a service fee, (b) workflow technology, the Company’s integrated, broker-neutral trading tools delivered across the globe including trade order and execution management and order management software applications and network connectivity and (c) trading analytics, including (1) tools enabling portfolio managers and traders to improve pre-trade, real-time and post-trade execution performance, (2) portfolio construction and optimization decisions and (3) securities valuation.

The segment also includes the results of the Company's capital markets business, in which the Company act as an agent for issuers in connection with at-the-market offerings and buyback programs.

The Corporate segment contains the Company's investments, principally in strategic trading-related opportunities and maintains corporate overhead expenses and all other income and expenses that are not attributable to the Company's other segments.

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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 March 31, 2021 and 2020 and are summarized in the following table:

The Company’s total revenues and income before income taxes and noncontrolling interest (“Pre-tax earnings”) by segment for the three months ended June 30, 2021 and 2020 and are summarized in the following table:

(in thousands) Market

Making Execution

Services Corporate

(1) Consolidated

Total revenue $ 402,541 $ 138,130 $ 8,294 $ 548,965

Income before income taxes and noncontrolling interest 124,571 4,058 6,373 135,002

Total revenue 759,117 148,076 ( 1,290 ) 905,903

Income (loss) before income taxes and noncontrolling interest 397,596 16,454 ( 9,515 ) 404,535

The Company's Pre-tax earnings by segment for the six months ended June 30, 2021 and 2020 are summarized in the following table:

(in thousands) Market Making Execution Services Corporate Consolidated Total

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The Company incurs expenses and maintains balances with its affiliates in the ordinary course of business.

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.

As of June 30, 2021, and December 31, 2020 the Company had net receivables from its affiliates of $ 2.4 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 paid $ 3.4 million and $ 6.0 million for the three months ended June 30, 2021 and 2020, respectively, and $ 6.3 million and $ 9.7 million for the six months ended June 30, 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 made payments of $ 4.7 million both for the three months ended June 30, 2021 and 2020, and $ 9.3 million and $ 9.4 million for the six months ended June 30, 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 $ 0.5 million and $ 0.4 million for the three months ended March 31, 2021 and 2020, respectively, to Level 3 for these services.

The Company paid $ 0.3 million for both the three months ended June 30, 2021 and 2020, respectively, and $ 0.7 million and $ 0.8 million for the six months ended June 30, 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.

Payments for the three months ended March 31, 2021 and March 31, 2020 were immaterial.

Payments for the three and six months ended June 30, 2021 were immaterial.

The Company made payments of $ 0.2 million for the three and six months ended June 30, 2020.

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 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.

On August 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 September 15, 2021 to holders of record as of September 1, 2021.

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