What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-18 compared with 2021-02-25 · 248 added, 321 removed, 1599 unchanged (26% of the section changed)

1 unchanged sentence

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Statements of Financial Condition

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We have audited the accompanying consolidated statements of financial condition of Virtu Financial, Inc.

and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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As described in Note 2 to the consolidated financial statements, $2.105 billion of the Company’s Trading Income for the year ended December 31, 2021 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 Consolidated Statements of Comprehensive Income.

The principal considerations for our determination that performing procedures relating to Trading Income is a critical audit matter are the significant audit effort in performing procedures and evaluating audit evidence related to the transactions which comprise the trading income.

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The procedures performed over testing of the inputs include (i) confirming a sample of trading assets, trading liabilities and cash (collectively the “equity value”) within each trading portfolio at the balance sheet date with external third parties;

(ii) developing independent prices for a sample of trading assets and liabilities at the balance sheet date and comparing management’s prices to the independently developed prices (iii) testing a sample of purchases and sales throughout the year by agreeing the quantity and price to third-party documentation, and (iv) testing the equity value of a sample of trading portfolios throughout the year by comparing the amounts to third party clearing statements.

(ii) developing independent prices for a sample of trading assets and liabilities at the balance sheet date and comparing management’s prices to the independently developed prices;

(iii) testing a sample of purchases and sales throughout the year by agreeing the quantity and price to third-party documentation, and (iv) testing the equity value of a sample of trading portfolios throughout the year by comparing the amounts to third party clearing statements.

/s/ PricewaterhouseCoopers LLP

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Tax receivable agreement obligations 259,282 271,165

Deferred tax liabilities 65 —

Accounts payable, accrued expenses and other liabilities 457,942 491,818

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Accumulated other comprehensive income (loss) ( 10,196 ) ( 25,487 )

Total Virtu Financial Inc.

stockholders' equity 1,468,540 931,374

Virtu Financial, Inc.

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2021 December 31,

Total Virtu Financial Inc.

stockholders' equity 1,549,388 1,468,540

Noncontrolling interest 314,230 386,498

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Transaction advisory fees and expenses 843 2,941 26,117

Charges related to share based compensation at IPO — — 24

Financing interest expense on long-term borrowings 79,969 87,735 121,859

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Net income (loss) available for common stockholders $ 476,878 $ 649,197 $ ( 58,595 )

Earnings (loss) per share

Earnings per share

Basic $ 3.95 $ 5.19 $ ( 0.53 )

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Diluted 118,423,928 122,332,190 113,918,103

Net income (loss) $ 1,120,913 $ ( 103,705 ) $ 620,192

Other comprehensive income (loss)

Net income $ 827,234 $ 1,120,913 $ ( 103,705 )

Other comprehensive income

Foreign exchange translation adjustment, net of taxes ( 12,470 ) 15,318 ( 1,475 )

Net change in unrealized cash flow hedges gain (loss), net of taxes 37,794 ( 59,019 ) —

Comprehensive income (loss) 1,077,212 ( 105,180 ) 615,065

Comprehensive (income) loss attributable to noncontrolling interest ( 452,855 ) 45,668 ( 328,697 )

Comprehensive income (loss) attributable to common stockholders $ 624,357 $ ( 59,512 ) $ 286,368

Comprehensive income 852,558 1,077,212 ( 105,180 )

Comprehensive income attributable to noncontrolling interest ( 360,389 ) ( 452,855 ) 45,668

Comprehensive income attributable to common stockholders $ 492,169 $ 624,357 $ ( 59,512 )

See accompanying Notes to the Consolidated Financial Statements.

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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.

Stockholders' Equity Non-Controlling Interest Total Equity

Stockholders' Equity Noncontrolling Interest Total Equity

(in thousands, except share and interest data)

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Foreign exchange translation adjustment — — — — — — — — — — ( 565 ) ( 565 ) ( 910 ) ( 1,475 )

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 206,903 ) ( 206,903 )

Dividends — — — — — — — — — ( 100,329 ) — ( 100,329 ) — ( 100,329 )

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

— — — — — — — — — ( 112,414 ) — ( 112,414 ) ( 99,221 ) ( 211,635 )

Issuance of Class A common stock — — — — — — — — — — — — — —

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Stock option exercised 909,627 — — — — — — — 16,440 — — 16,440 — 16,440

Warrants issued — — — — — — — — 11,488 — — 11,488 — 11,488

Net Income (loss) — — — — — — — — — 649,197 — 649,197 471,716 1,120,913

Foreign exchange translation adjustment — — — — — — — — — — 8,604 8,604 6,714 15,318

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 99,221 ) ( 99,221 )

Dividends — — — — — — — — — ( 112,414 ) — ( 112,414 ) — ( 112,414 )

Issuance of Class A common stock — — — — — — — — — — — — — —

Net change in unrealized cash flow hedges gains (losses) — — — — — — — — — — ( 33,444 ) ( 33,444 ) ( 25,575 ) ( 59,019 )

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

— — — — — — — — — ( 120,496 ) — ( 120,496 ) ( 363,919 ) ( 484,415 )

Issuance of common stock in connection with employee exchanges 2,660,239 — — — — — — — — — — — — —

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 — — ( 2,660,239 ) — — — — — — — — — — —

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Stock option exercised 528,497 — — — — — — — $ 10,042 $ — $ — $ 10,042 $ — $ 10,042

Warrants issued — — — — — — — — 11,488 — — 11,488 — 11,488

Net Income (loss) — — — — — — — — $ — $ 476,878 $ — $ 476,878 $ 350,356 $ 827,234

Stockholders' Equity Non-Controlling Interest Total Equity

Stockholders' Equity Noncontrolling Interest Total Equity

(in thousands, except share and interest data)

Shares Amounts Shares Amounts Shares Amounts Shares Amounts Amounts

Net Income (loss) — — — — — — — — — 649,197 — 649,197 471,716 1,120,913

Foreign exchange translation adjustment — — — — — — — — $ — $ — $ ( 7,673 ) $ ( 7,673 ) $ ( 4,797 ) $ ( 12,470 )

Warrants exercised 3,000,000 — — — — — — — $ — $ 68,940 $ — $ 68,940 $ — $ 68,940

Net change in unrealized cash flow hedges gains (losses) — — — — — — — — $ — $ — $ 22,964 $ 22,964 $ 14,830 $ 37,794

Distribution from Virtu Financial to non-controlling interest — — — — — — — — — — — — ( 363,919 ) ( 363,919 )

Dividends — — — — — — — — — ( 120,496 ) — ( 120,496 ) — ( 120,496 )

Issuance of Class A common stock — — — — — — — — — — — — — —

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

— — — — — — — — $ — $ ( 115,360 ) $ — $ ( 115,360 ) $ ( 432,657 ) $ ( 548,017 )

Issuance of Common Stock in connection with employee exchanges 747,849 — — — — — — — $ — $ — $ — $ — $ — $ —

Issuance of Common Stock in connection with secondary offering, net of offering costs — — — — — — — — — — — — — —

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 747,849 ) — — — — — $ — $ — $ — $ — $ — $ —

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Deferred taxes 34,617 21,601 ( 18,691 )

Gain on sale of business as described in Notes 4 and 5 ( 58,652 ) — ( 335,211 )

Gain on sale of MATCHNow — ( 58,652 ) —

Other ( 5,556 ) ( 1,926 ) ( 23,446 )

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Acquisition of property and equipment ( 24,562 ) ( 28,888 ) ( 9,320 )

Proceeds from sale of telecommunication assets — — 600

Proceeds from sale of investments — 7,620 —

Proceeds from sale of business as described in Notes 4 and 5 60,592 — 400,192

Proceeds from sale of MATCHNow — 60,592 —

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

Investment in joint ventures ( 10,412 ) ( 6,250 ) ( 23,669 )

Net cash provided by (used in) investing activities ( 2,559 ) ( 899,643 ) 329,174

Other investing activities ( 27,279 ) ( 10,412 ) ( 6,250 )

Net cash used in investing activities ( 87,349 ) ( 2,559 ) ( 899,643 )

Cash flows from financing activities

Distribution from Virtu Financial to non-controlling interest ( 363,919 ) ( 99,221 ) ( 206,903 )

Dividends ( 120,496 ) ( 112,414 ) ( 100,329 )

Dividends to stockholders and distributions from Virtu Financial to noncontrolling interest ( 548,017 ) ( 484,415 ) ( 211,635 )

Repurchase of Class C common stock ( 3,454 ) — ( 196 )

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Debt issuance costs ( 2,658 ) ( 9,779 ) ( 35,702 )

Warrants exercised 68,940 — —

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

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(in thousands) 2021 2020 2019

Net increase (decrease) in cash and cash equivalents 233,725 37,233 203,160

Net increase in cash and cash equivalents 113,948 233,725 37,233

Cash, cash equivalents, and restricted or segregated cash, beginning of period 1,007,005 773,280 736,047

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Tax receivable agreement described in Note 6 311 ( 1,388 ) ( 5,811 )

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

See accompanying Notes to the Consolidated Financial Statements.

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and Subsidiaries

Notes to Consolidated Financial Statements

Notes to the Consolidated Financial Statements

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

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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.

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.

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On March 1, 2019 (the “ITG Closing Date”), the Company completed the acquisition of Investment Technology Group, Inc.

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”).

ITG was a global financial technology company.

and its subsidiaries (“ITG”) in an all-cash transaction (the “ITG Acquisition”).

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

See Note 3 "ITG Acquisition" for further details.

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 and Virtu Financial Capital Markets LLC were consolidated within VAL as of December 31, 2019 and the SEC registrations were withdrawn in March 2020.

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

Other principal U.S.

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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;

Virtu ITG UK Limited, formed in the United Kingdom;

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.

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Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10-K and accounting standards generally accepted in the United States of America (“U.S.

GAAP”) promulgated by the Financial Accounting Standards Board (“FASB”) in the Accounting Standards Codification (“ASC” or the “Codification”), and reflect all adjustments that, in the opinion of management, are normal and recurring, and that are necessary for a fair statement of the

results for the periods presented.

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

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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 June 30, 2020, the Company has changed the presentation of its 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 years ended December 31, 2019 and 2018, the Company reclassified $ 102.1 million and $ 74.6 million, respectively, 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 year ended December 31, 2019, the Company reclassified $ 12.6 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 Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows.

Specifically, the Company combined $ 120.5 million of Dividends to stockholders and $ 363.9 million of Distribution from Virtu Financial to noncontrolling interest, and $ 112.4 million of Dividends to stockholders and $ 99.2 million of Distribution from Virtu Financial to noncontrolling interest into Dividends to stockholders and distribution from Virtu Financial to noncontrolling interest for the years ended December 31, 2020 and December 31, 2019, respectively.

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

Summary of Significant Accounting Policies

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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.

The Company grants restricted stock awards ("RSAs") and restricted stock units (“RSUs”), certain of which entitle recipients to receive non-forfeitable 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.

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

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.

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”), and special reserve accounts for the exclusive benefit of 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

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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.

In accordance with substantially all of its securities 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.

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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.

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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.

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

While certain of the Company's foreign subsidiaries 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.

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.

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 Consolidated Statements of Financial Condition and Other comprehensive income on the Consolidated Statements of Comprehensive Income, to the extent they are effective.

For instruments that meet the criteria to be considered hedging instruments under ASC 815, any gains or losses are initially included in Accumulated OCI on the Consolidated Statements of Financial Condition and OCI on the Consolidated Statements of Comprehensive Income, as the hedged item affects earnings.

Share-Based Compensation

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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 December 31, 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 December 31, 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 U.S.

As of December 31, 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, 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 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 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 December 31, 2020:

Carrying Amount Maximum Exposure to Loss VIEs' assets

(in thousands) Asset Liability

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

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

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 12 "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 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.

The Company applied the collateral maintenance practical expedient to its collateralized financing arrangements, including Securities borrowed and Securities purchased under agreements to resell, which are subject to collateral maintenance provisions where the borrower is required to continually adjust the amount of collateral securing the financial asset as a result of changes in the fair value of the collateral.

Interest accrued on Securities borrowed is recorded in Other assets on the Consolidated Statements of Financial Condition.

When the fair value of the collateral is less than the amortized cost basis of the financial assets, the Company evaluates whether an allowance for credit losses is necessary for the unsecured amount of the amortized cost basis, limited to the difference between the fair value of the collateral at the reporting date and the amortized cost basis of the financial assets.

Financial assets measured at amortized cost that are not eligible for the collateral maintenance practical expedient consist of commissions and fees receivable due from customers, recorded in Receivables from customers on the Consolidated Statements of Financial Condition, commissions and fees receivable due from broker-dealers and clearing organizations, unsettled trades and securities failed to deliver, recorded in Receivables from broker-dealers and clearing organizations on the Consolidated Statements of Financial Condition, as well as any unsecured amounts for instruments applying the practical expedient.

The Company continually monitors collections and payments from its clients and maintains an allowance for doubtful accounts.

The allowance is based on an estimate of the amount of potential credit losses in existing receivables.

The Company determines this allowance based on a review of aging schedules and past due balances, and considers the short-term nature of credit exposure, counterparty credit quality, historical experience and current customer and economic conditions.

The provision is recorded as bad debt expense within Operations and administrative expenses on the Consolidated Statements of Comprehensive Income.

The allowance was immaterial as of December 31, 2020.

Accounting Pronouncements, Not Yet Adopted as of December 31, 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.

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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 does not expect the new standard to have a material impact on its 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 consolidated financial statements.

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

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

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which is designed to ease the potential burden in accounting for the transition away from LIBOR.

The ASU applies to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued and replaced with alternative reference rates as a result of reference rate reform.

The ASU provides optional expedients and exceptions for applying U.S.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , and in January 2021, the FASB issued ASU 2021-01 —Reference Rate Reform (Topic 848):

Scope, both of which are designed to ease the potential burden in accounting for the transition away from LIBOR.

The ASUs apply to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued and replaced with alternative reference rates as a result of reference rate reform.

The ASUs provide optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

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 Consolidated Financial Statements and related disclosures.

The transition period for adopting these ASUs is March 12, 2020 through December 31, 2022.

The Company is evaluating the impact of the ASUs, but does not expect them to have a material impact on its 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).

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

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

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

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 “Acquisition 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 Acquisition 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 11 "Borrowings".

The Acquisition 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.

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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”).

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.

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 .

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The pro forma financial information does not reflect any synergies or operating cost reductions that may be achieved from the combined operations.

The pro forma financial information combines the historical results for the Company and ITG for the years ended December 31, 2019 and 2018:

Years Ended December 31,

The pro forma financial information combines the historical results for the Company and ITG for the year ended December 31, 2019:

Year Ended December 31, 2019

(in thousands) 2019

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Net income (loss) available for common stockholders ( 53,243 )

Sale of BondPoint

In October 2017, the Company entered into an Asset Purchase Agreement with Intercontinental Exchange (“ICE”) pursuant to which the Company has agreed to sell specified assets and to assign specified liabilities constituting its BondPoint division and fixed income venue (“BondPoint”).

BondPoint is a provider of electronic fixed income trading solutions for the buy-side and sell-side offering access to centralized liquidity and automated trade execution services.

On January 2, 2018, the Company completed the sale of BondPoint to ICE for total gross proceeds of $ 400.2 million in cash.

The Company incurred one-time transaction costs of $ 8.6 million, which included professional fees of $ 7.1 million related to the sale and $ 1.4 million of compensation expense, which is recorded in Transaction advisory fees and expenses and Employee compensation and payroll taxes, respectively, on the Consolidated Statements of Comprehensive Income.

The Company recognized a gain on sale of $ 337.6 million, which is recorded in Other, net on the Consolidated Statements of Comprehensive Income for the year ended December 31, 2018.

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

(in thousands)

Total sale proceeds received $ 400,192

Business assets and liabilities held for sale as of December 31, 2017:

Receivables from broker dealers and clearing organizations 3,383

Intangibles and other assets 51,687

Liabilities ( 728 )

Total carrying value of BondPoint as of December 31, 2017:

Goodwill adjustment allocated to BondPoint 8,300

Gain on sale of BondPoint 337,550

Transaction costs 8,568

Gain on sale of BondPoint, net of transaction costs $ 328,982

Sale of MATCHNow

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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 MATCHNow Closing Date.

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

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

As of December 31, 2021, no payments have been made regarding the contingent consideration.

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 Consolidated Statements of Comprehensive Income.

Income from performing services under the TSA are recorded in Other, net on the Consolidated Statements 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.

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Earnings per Share

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

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

Years Ended December 31,

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Diluted earnings (loss) per share $ 3.91 $ 5.16 $ ( 0.53 )

(1) The dilutive impact excludes from the computation of earnings (loss) per share 377,677 unexercised stock options and 440,335 restricted stock units issuable pursuant to the Amended and Restated Investment Technology Group, Inc.

(1) The dilutive impact excludes from the computation of earnings (loss) per share 377,677 unexercised stock options and 440,335 restricted stock units issuable pursuant to Amended and Restated Investment Technology Group, Inc.

2007 Omnibus Equity Compensation Plan for the year ended December 31, 2019 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).

At each Exchange, management estimates the Company’s cumulative TRA obligations to be reported on the Consolidated Statements of Financial Condition, which amounted to $ 271.2 million and $ 269.3 million as of December 31, 2020 and December 31, 2019, respectively.

At each Exchange, management estimates the Company’s cumulative TRA obligations to be reported on the Consolidated

Statements of Financial Condition, which amounted to $ 259.3 million and $ 271.2 million as of December 31, 2021 and December 31, 2020, 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.

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

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.

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 $ 0.4 million to $ 22.0 million per year over the next 15 years.

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At December 31, 2021 and December 31, 2020, the Company’s remaining deferred tax assets that relate to the matters described above were approximately $ 180.4 million and $ 199.1 million, respectively, and the Company’s liabilities over the next 15 years pursuant to the tax receivable agreements were approximately $ 259.3 million and $ 271.2 million, respectively.

The amounts recorded as of 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.

The amounts recorded as of December 31, 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.

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(in thousands) Market Making Execution Services Corporate Total

Balance as of December 31 $ 755,292 $ 393,634 $ — $ 1,148,926

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

As of December 31, 2021 and December 31, 2020, the Company's total amount of intangible assets recorded was $ 386.3 million and $ 454.5 million, respectively.

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ETF buyer relationships 950 ( 950 ) — 9

Other $ 1,500 $ — $ 1,500 Indefinite

$ 639,493 $ ( 253,161 ) $ 386,332

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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

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ETF buyer relationships 950 ( 876 ) 74 9

Other $ — $ — $ — Indefinite

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

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This is included in Amortization of purchased intangibles and acquired capitalized software in the accompanying 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 next five subsequent years:

(in thousands)

2021 $ 69,676

Receivables from/Payables to Broker-Dealers and Clearing Organizations

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Total payables to broker-dealers and clearing organizations $ 571,526 $ 876,446

(1) 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 .

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 $ 177.1 million and $ 134.7 million as of December 31, 2021 and December 31, 2020, respectively.

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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 VAL's trading and deposit account maintained at the financial institution.

The second credit facility (the “Committed Facility”) with the same financial institution was amended and restated on 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:

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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.

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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 19 "Capital Structure".

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

Interest expense in relation to the facilities was approximately $ 4.8 million, $ 6.6 million and $ 7.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Interest expense in relation to the facilities was $ 4.6 million, $ 4.8 million, and $ 6.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Long-Term Borrowings

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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.

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, of which amount approximately $ 404.5 million was borrowed by VFH to repay all amounts outstanding under the Previous Term Loan Facility (as defined below) 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.

As described in Note 3 "ITG Acquisition", in connection with the ITG Acquisition, Virtu Financial, VFH, and the Acquisition Borrower entered into the Acquisition 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 Acquisition 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, 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 an 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 a second 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.

1 and Amendment No.

2, the “Amended Credit Agreement”) to, among other things, reduce the interest rate spread over adjusted LIBOR or the alternate base rate by 0.50 % per annum and eliminated any stepdown in the spread based on VFH's first lien leverage ratio.

rate and (2) the overnight bank funding rate, in each case plus 0.50 %, (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1.00 % and (d) 1.00 %, plus, in each case, 2.00 %, or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) 0 %, plus, in each case, 3.00 %.

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.

2, the “Amended Credit Agreement”) to, among other things, reduce the interest rate spread over adjusted LIBOR or the alternate base rate by 0.50 % per annum and eliminated any step-down in the spread based on VFH's first lien leverage ratio.

The term loan borrowings and revolver borrowings under the Amended Credit Agreement bear interest at a per annum rate equal to, at the Company's election, either (i) the greatest of (a) the prime rate in effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50 %, (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1.00 % and (d) 1.00 %, plus, in each case, 2.00 %, or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) 0 %, plus, in each case, 3.00 %.

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 step-downs to 0.375 % and 0.25 % per annum based on VFH’s first lien leverage ratio, and is payable quarterly in arrears.

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.

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As of December 31, 2021, $ 1,600 million was outstanding under the First Lien Term Loan Facility.

During the years ended December 31, 2020 and 2019, repayments of $ 288.5 million and $ 100 million, respectively, were made under this facility.

The revolving commitments will terminate on March 1, 2022.

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

Interest expense in relation to this facility was $ 0.5 million for the year ended December 31, 2020.

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

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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 meet 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.

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 “Previous Term Loan Facility”).

The Previous 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.

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.

In January 2022, we entered into a new senior secured first lien term loan for $ 1,800.0 of principal.

The proceeds from this new loan were primarily used to repay the First Lien Term Loan Facility.

Refer to Note 26 "Subsequent Events" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

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 JNX (as described in Note 12 "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 11 "Financial Assets and Liabilities").

The SBI Bonds are guaranteed by Virtu Financial.

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The principal balance was ¥ 3.5 billion ($ 30.7 million) as of December 31, 2021 and ¥ 3.5 billion ($ 33.9 million) as of December 31, 2020.

The Company recorded losses of $ 1.7 million, $ 0.3 million, and $ 0.8 million during the years ended December 31, 2020, 2019 and 2018, respectively, due to changes in foreign currency rates.

The Company had a gain of $ 3.2 million, a loss of $ 1.7 million, and a loss of $ 0.3 million during the years ended December 31, 2021, 2020, and 2019 respectively, due to changes in foreign currency rates.

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

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

Payables to broker dealers and clearing organizations:

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

JNX Investment

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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) Receivables from broker-dealers and clearing organizations include 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.

Offsetting of Financial Assets and Liabilities

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December 31, 2021

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

Amounts Not Offset in the Consolidated Statements of Financial Condition

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

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

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Total $ 1,683,576 $ ( 206,125 ) $ 1,477,451 $ ( 1,418,723 ) $ ( 10,262 ) $ 48,466

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

Amounts Not Offset in the Consolidated Statements of Financial Condition

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

Amounts Not Offset in the Consolidated Statements of Financial Condition

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

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

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

Amounts Not Offset in the Consolidated Statements of Financial Condition

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

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

Derivatives Assets Financial Statements Location Fair Value Notional Fair Value Notional

Derivatives Assets Financial Statement Location Fair Value Notional Fair Value Notional

Derivative instruments not designated as hedging instruments:

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Currency forwards Financial instruments owned 206,258 21,445,374 341,360 30,596,681

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

Derivatives Liabilities Financial Statements Location Fair Value Notional Fair Value Notional

Derivatives Liabilities Financial Statement Location Fair Value Notional Fair Value Notional

Derivative instruments not designated as hedging instruments:

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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 Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018.

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 initially recorded in other comprehensive income in the accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019.

Years Ended December 31,

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Interest rate swaps (1) Other comprehensive income $ 44,541 $ ( 69,462 ) —

Foreign exchange - forward contract Other comprehensive income — — 63

$ 44,541 $ ( 69,462 ) $ —

(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 Consolidated Statements of Comprehensive Income for the year ended December 31, 2020.

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 deferred within Other comprehensive income on the Consolidated Statements of Comprehensive Income beginning in the first quarter of 2020.

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

As of December 31, 2021, the Company held noncontrolling interests of 10.0 % and 50.0 %, 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 December 31, 2021, the Company held approximately a 9.8 % noncontrolling interest in this JV.

As of December 31, 2021, the Company held approximately a 15.1 % 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 applicable JVs within Accounts payable, accrued expenses and other liabilities on the Statements of Financial Condition.

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 December 31, 2021:

Carrying Amount Maximum Exposure to Loss VIEs' assets

(in thousands) Asset Liability

Equity investment $ 38,319 $ — $ 38,319 $ 136,378

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 consolidated financial statements by applying the modified retrospective method.

Commissions, net .

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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”).

The Company participates in commission sharing 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.

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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 years ended December 31, 2020, 2019 and 2018:

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 years ended December 31, 2021, 2020 and 2019:

Year Ended December 31, 2021

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Commissions, net $ 23,526 $ 357,401 $ — $ 380,927

Technology services — 5,320 — 5,320

Workflow technology — 82,610 — 82,610

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Deferred revenue related to contracts with customers was $ 9.2 million and $ 9.3 million as of December 31, 2021 and December 31, 2020, respectively.

The Company recognized revenue of $ 33.1 million and $ 32.6 million during the years ended December 31, 2020 and 2019, respectively that had been initially recorded as deferred revenue.

The Company recognized the full amount of revenue during the years ended December 31, 2021 and 2020, that had been recorded as deferred revenue in the respective prior year.

The Company has not identified any costs to obtain or fulfill its contracts under ASC 606.

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Non-deductible expenses, net 0.1 % 0.1 % ( 1.4 ) %

Excess tax benefit(deficiency) from share based compensation ( 0.2 ) % — % ( 2.3 ) %

Foreign taxes 3.0 % 2.8 % ( 0.1 ) %

Foreign tax credits ( 1.8 ) % ( 0.9 ) % — %

Other, net ( 0.4 ) % — % ( 0.9 ) %

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These balances primarily comprise income tax benefits due to the Company from federal, state and local, and foreign tax jurisdictions based on income before taxes.

Included in Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition at December 31, 2020 and December 31, 2019 are current tax liabilities of $ 37.9 million and $ 11.5 million, respectively.

Included in Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial

Condition at December 31, 2021 and December 31, 2020 are current tax liabilities of $ 16.8 million and $ 37.9 million, respectively.

These balances primarily comprise income taxes owed to federal, state and local, and foreign tax jurisdictions based on income before taxes.

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As a result of the ITG Acquisition, the Company has non-U.S.

net operating losses at December 31, 2020 and December 31, 2019 of $ 75.1 million and $ 86.3 million, respectively, and has recorded a related deferred tax asset of $ 15.2 million and $ 17.9 million, respectively.

A valuation allowance of $ 15.1 million and $ 15.6 million was recorded against this deferred tax asset at December 31, 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 December 31, 2021, 2020 and of $ 67.2 million and $ 75.1 million, respectively, and has recorded a related deferred tax asset of $ 13.4 million and $ 15.2 million, respectively.

A valuation allowance of $ 13.3 million and $ 15.1 million was recorded against this deferred tax asset at December 31, 2021 and 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 has non-U.S.

net operating losses at December 31, 2020 and December 31, 2019 of $ 239.0 million and $ 239.0 million, respectively, and has 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 December 31, 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 December 31, 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 December 31, 2021 and 2020 of $ 239.3 million and $ 239.0 million, respectively, and recorded a related deferred tax asset of $ 44.9 million in both years.

A full valuation allowance was also recorded against this deferred tax asset at December 31, 2021 and 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 December 31, 2021 and 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.

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Balance at December 31, 2018 $ 7,328

Increase from ITG Acquisition 2,713

Decreases based on tax positions related to prior period ( 1,263 )

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Balance at December 31, 2019 8,778

Increase from ITG Acquisition 2,713

Decreases based on tax positions related to prior period ( 311 )

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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 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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The complaint did not specify the amount of alleged damages.

Defendants moved to dismiss the consolidated amended complaint on January 29, 2021.

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.

On August 31, 2021, the Company was named as a defendant in Alers v.

Robinhood Financial, LLC et al No.

The complaint was filed in federal district court in Florida on behalf of a putative class, and asserts claims against the Company and numerous other financial institutions alleging a breach of fiduciary duty by Robinhood and aiding and abetting thereof by the Company and other market making firms.

The complaint did not specify the amount of alleged damages.

On December 31, 2021, plaintiffs filed an amended complaint, after which, on January 21, 2022, Robinhood and the market-maker defendants moved to transfer the case to the Northern District of California, or in the alternative, to dismiss the amended complaint.

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, 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, states attorney generals, and other regulators and governmental authorities.

In addition, there has been an increased regulatory, congressional and media scrutiny of U.S.

equities market structure, the retail trading environment in the U.S., wholesale market making and the relationships between retail broker-dealers and market making firms, including but not limited to payment for order flow arrangements, other remuneration arrangements such as profit-sharing relationships and exchange fee and rebate structures, alternative trading systems and off-exchange trading more generally, high frequency trading, short selling, market fragmentation, colocation, and access to market data feeds.

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 state, 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 December 31, 2020.

Representations and Warranties;

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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 Company adopted ASU 2016-02 Leases (Topic 842) on January 1, 2019, and elected the modified retrospective method of implementation.

The standard requires the recognition of 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.

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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.

During the year ended December 31, 2021, the company ceased use of certain office lease premises as part of efforts to consolidate office space.

For the year ended December 31, 2021, the Company recognized $ 28.1 million in Termination of office leases on the Consolidated Statement of Comprehensive Income, primarily related to the move of our global headquarters, comprising $ 9.6 million impairments of ROU assets, $ 17.6 million of write-off of leasehold improvements and fixed assets, and $ 1 million of dilapidation charges.

Lease assets and liabilities are summarized as follows:

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Finance lease cost:

Amortization of right-of-use assets 11,536 12,565

Amortization of ROU Asset $ 6,587 $ 11,536 $ 12,565

Interest on lease liabilities 230 432 661

Total Finance lease cost $ 6,817 $ 11,968 $ 13,226

The Company recognized $ 9.6 million and $ 66.5 million during the years ended December 31, 2020 and 2019, respectively, in Termination of office leases on the Consolidated Statements of Comprehensive Income related to the abandonment and termination of certain lease premises as part of its ongoing effort to consolidate office space.

Termination of office leases consisted of $ 6.0 million of impairments of ROU assets and lease terminations, $ 3.0 million of write-offs of leasehold improvements and fixed assets and $ 0.6 million of dilapidation charges for the year ended December 31, 2020 and $ 27.1 million of impairments of ROU assets, $ 37.9 million of write-offs of leasehold improvements and fixed assets, and $ 1.4 million of dilapidation charges for the year ended December 31, 2019.

See Note 2 "Summary of Significant Accounting Policies" in Part II Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for details on the classification of these expenses in the Consolidated Statements of Comprehensive Income.

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

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The Founder Member controls approximately 85.4 % 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 62.7 % interest in Virtu Financial at December 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.

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Amended and Restated 2015 Management Incentive Plan

The Company’s Board of Directors and stockholders adopted the 2015 Management Incentive Plan, which became effective upon consummation of the IPO, and was subsequently amended and restated following receipt of approval from the Company’s stockholders on June 30, 2017.

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.

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Continued vesting is subject to the participant entering into a 2 year non-compete.

The amendment was authorized and approved by the Compensation Committee of the Company's Board of Directors.

As a result of the 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.

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

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

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

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

The program expired on September 30, 2019.

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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.

On February 11, 2021, the Company's Board of Directors authorized the expansion of the program by an additional $ 70 million in Class A Common Stock and Virtu Financial Units.

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.

Additionally, on November 3, 2021 the Company's Board of Directors authorized the expansion of the program by an additional $ 750 million to $ 1,220 million and extending the duration of the program through November 3, 2023.

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 December 31, 2021, the Company repurchased approximately 16.1 million shares of Class A Common Stock and Virtu Financial Units for approximately $ 439.1 million.

As of December 31, 2020, the Company has approximately of $ 66.1 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

As of December 31, 2021, the Company has approximately $ 780.9 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

Secondary Offerings

In May 2018, the Company and certain selling stockholders completed a public offering (the “May 2018 Secondary Offering”) of 17,250,000 shares of Class A Common Stock by the Company and certain selling stockholders at a purchase price per share of $ 27.16 (the offering price to the public of $ 28.00 per share minus the underwriters’ discount), which included the exercise in full by the underwriters of their option to purchase additional shares in the May 2018 Secondary Offering.

The Company sold 10,518,750 shares of Class A Common Stock in the offering, the net 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 15, 2018 by and between the Company and TJMT Holdings LLC.

The selling stockholders sold 6,731,250 shares of Class A Common Stock in the May 2018 Secondary Offering, including 2,081,250 shares of Class A Common Stock issued by the Company upon the exercise of vested stock options.

In connection with the May 2018 Secondary Offering, the Company, TJMT Holdings LLC, the North Island Stockholder, Havelock Fund Investments Pte.

(“Havelock”) and Aranda entered into that certain Amendment No.

1 to the Amended and Restated Registration Rights Agreement dated April 20, 2017, by and among the Company, TJMT Holdings LLC, the North Island Stockholder, Havelock, Aranda and certain direct or indirect equityholders of the Company (the “Amended and Restated Registration Rights Agreement”) to add Mr.

Vincent Viola and Mr.

Michael Viola, directors of the Company, and to confirm that certain other persons (including the Company’s CEO) remain parties to the Amended and Restated Registration Rights Agreement.

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.

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During the years ended December 31, 2021, 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 747,849 , 2,660,239 and 840,839 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 64.1 % interest in Virtu Financial at December 31, 2020.

Warrant Issuance

On March 20, 2020, in connection with and in consideration of the Founder Member’s commitments under the Founder Member Loan Facility (as described in Note 10 "Borrowings"), the Company delivered to the Founder Member a warrant (the “Warrant”) to purchase shares of the Company’s Class A Common Stock.

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 .

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 11 "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.

The exercise price per share of the Class A Common Stock issuable pursuant to the Warrant is $ 22.98 , which in accordance with the terms of the Warrant, is equal to the average of the volume weighted average prices of the Class A Common Stock for the ten ( 10 ) trading days following May 7, 2020, the date on which the Company publicly announced its earnings results for the first quarter of 2020.

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 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 Consolidated Statements of Financial Condition and as an increase to Additional paid-in capital on the Consolidated Statements of Changes in Equity.

Pursuant to the Warrant, the Founder Member was entitled to purchase up to 3,000,000 shares of Class A Common Stock on or after May 22, 2020 up to and including January 15, 2022.

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 10 "Borrowings").

The exercise price per share of the Class A Common Stock issuable pursuant to the Warrant was $ 22.98 , which in accordance with the terms of the Warrant, is equal to the average of the volume weighted average prices of the Class A Common Stock for the ten ( 10 ) trading days following May 7, 2020, the date on which the Company publicly announced its earnings results for the first quarter of 2020.

On December 17, 2021, the Founder Member exercised in full the Warrant to purchase 3,000,000 shares of the Company's Class A Common Stock.

The Warrant and Class A Common Stock issued pursuant to the Warrant were offered, 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.

Upon issuance, 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 Consolidated Statements of Financial Condition and as an increase to Additional paid-in capital on the Consolidated Statements 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 Consolidated Statements of Comprehensive Income.

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in AOCI Amounts reclassified from AOCI to income AOCI Ending Balance

Net change in unrealized cash flow hedges gains (losses) $ — $ ( 42,636 ) $ 9,192 $ ( 33,444 )

Foreign exchange translation adjustment ( 647 ) 8,604 — 7,957

Total $ ( 647 ) $ ( 34,032 ) $ 9,192 $ ( 25,487 )

(1) Amounts reclassified from AOCI to income are included within Financing interest expense on long-term borrowings on the Consolidated Statements of Comprehensive Income.

Year Ended December 31, 2019

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in AOCI Amounts reclassified from AOCI to income AOCI Ending Balance

Net change in unrealized cash flow hedges gains (losses) — — — —

Foreign exchange translation adjustment $ ( 82 ) $ ( 565 ) $ — $ ( 647 )

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Treasury zero-coupon issues.

The expected stock price volatility was determined based on historical volatilities of comparable companies.

The expected stock price volatility was

determined based on historical volatilities of comparable companies.

The expected dividend yield was determined based on estimated future dividend payments divided by the IPO stock price.

The Company recognized $ 1.4 million and $ 5.8 million for the years ended December 31, 2019 and 2018, respectively, 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 year ended December 31, 2020.

The Company recognized $ 1.4 million of compensation expense for the year ended December 31, 2019 in relation to the stock options issued and outstanding.

Amended and Restated Investment Technology Group, Inc.

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For the years ended December 31, 2021, 2020, and 2019, respectively, there were 633,938 , 967,526 and 441,920 shares of immediately vested Class A Common Stock granted as part of year-end compensation.

In addition, the Company accrued compensation expense of $ 25.2 million, of which $ 2.1 million was related to accelerated vesting of awards for retirement eligible employees, $ 12.6 million and $ 11.2 million for the years ended December 31, 2020, 2019 and 2018, 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 Consolidated Statements of Comprehensive Income and Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

The following table summarizes activity related to the RSUs (including the Assumed Awards) and RSAs:

In addition, the Company accrued compensation expense of $ 29.4 million, $ 25.2 million and $ 12.6 million for the years ended December 31, 2021, 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 Consolidated Statements of Comprehensive Income and Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

The following table summarizes activity related to RSUs (including the Assumed Awards) and RSAs for the years ended December 31, 2021, 2020, and 2019:

Number of RSUs and RSAs Weighted

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(1) Excluded in the number of RSUs and RSAs are 350,000 participating RSAs where the grant date has not been achieved because the performance conditions have not been met.

The Company recognized $ 37.4 million, of which $ 3.7 million was related to accelerated vesting of awards for retirement eligible employees, $ 66.1 million and $ 17.9 million for the years ended December 31, 2020, 2019 and 2018, respectively, of compensation expense in relation to the RSUs.

As of December 31, 2020 and December 31, 2019, total unrecognized share-based compensation expense related to unvested RSUs was $ 37.1 million and $ 43.4 million, respectively, and this amount is to be recognized over a weighted average period of 1.03 and 2.0 years, respectively.

The Company recognized $ 26.4 million, $ 37.4 million and $ 66.1 million for the years ended December 31, 2021, 2020, and 2019, respectively, of compensation expense in relation to RSUs.

As of December 31, 2021 and December 31, 2020, total unrecognized share-based compensation expense related to unvested RSUs was $ 41.9 million and $ 37.1 million, respectively, and this amount is to be recognized over a weighted average period of 0.9 years and 1.03 , 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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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 December 31, 2020.

Deferrals of cash compensation may also be directed to notional investments in certain of the employee investment opportunities.

The Company recognized $ 5.0 million as compensation cost under the DCP as of December 31, 2021.

Property, Equipment and Capitalized Software

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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 December 31, 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 December 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.

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As of December 31, 2021, VAL had $ 43.0 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 $ 5.8 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 transferred to VAL upon consolidation of the broker dealers.

The balances are included within Cash restricted or segregated under regulations and other on the Consolidated Statements 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:

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 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 December 31, 2021 were as follows:

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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

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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.

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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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 years ended December 31, 2020, 2019 and 2018 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 years ended December 31, 2021 and 2020 and are summarized in the following table:

The Company's Pre-tax earnings by segment for the year ended December 31, 2021, 2020 and 2019 are summarized in the following table:

(in thousands) Market Making Execution Services Corporate Consolidated Total

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The Company made payments of $ 25.3 million, $ 18.7 million and $ 19.9 million to the JVs for the years ended December 31, 2021, 2020 and 2019, respectively.

Additionally, in 2018, the Company sold certain assets to one of its joint ventures, including the intangible assets associated with leases with a net carrying value of $ 1.1 million at the time of sale, for $ 0.6 million.

The Company purchases network connections services from affiliates of Level 3 Communications (“Level 3”).

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Temasek and its affiliates have a significant ownership interest in DBS.

The Company paid $ 0.2 million and $ 0.1 million to DBS for the years ended December 31, 2020 and 2019, respectively.

The Company did not make payments to DBS for the year ended December 31, 2018.

The Company paid $ 0.2 million, $ 0.2 million and $ 0.1 million to DBS for the years ended December 31, 2021, 2020, and 2019 respectively.

The Company incurs consulting fees from American Continental Group, an affiliate of a director.

The Company paid $ 0.1 million to American Continental Group for the years ending December 31, 2021, 2020 and 2019.

The Company has an interest in Members Exchange, a member-owned equities exchange.

The Company pays regulatory and transaction fees and receives rebates from trading activities.

The Company received $ 3.6 million, and $ 0.6 million for the years ended December 31, 2021, and 2020.

There were no transactions with this party for the year ended 2019.

In May 2019, the Company completed 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, the Company’s founding equity holder, pursuant to that certain Member Purchase Agreement, entered into on May 14, 2019 by and between the Company and TJMT Holdings LLC.

On August 12, 2021, the Company entered into a Purchase Agreement with Ordinal Holdings I, LP to repurchase 1.5 million shares of the Company's Class A common stock for $ 39.2 million in accordance with the Company's previously

disclosed share repurchase program.

See Note 19 "Capital Structure" for a further discussion of the Company's share repurchase program.

As described in Note 10 "Borrowings" and Note 19 "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.

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The Founder Member Loan Term expired as of September 20, 2020.

On December 17, 2021, the Founder Member exercised in full its Warrant to purchase 3,000,000 shares of the Company's Class A Common Stock.

Parent Company

VFI is the sole managing member of Virtu Financial, which guarantees the indebtedness of its direct subsidiary under the First Lien Term Loan Facility (see Note 10 "Borrowings").

VFI is limited to its ability to receive distributions (including for purposes of paying corporate and other overhead expenses and dividends) from Virtu Financial under the Credit

VFI is limited to its ability to receive distributions (including for purposes of paying corporate and other overhead expenses and dividends) from Virtu Financial under the Credit Agreement.

The following financial statements (the “Parent Company Only Financial Statements”) should be read in conjunction with the consolidated financial statements of the Company and the foregoing.

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(Parent Company Only)

Condensed Statements of Financial Condition

Statements of Financial Condition

(In thousands except interest data) December 31, 2021 December 31, 2020

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Accounts payable and accrued expenses and other liabilities 50 698

Deferred tax liabilities 2,719 —

Tax receivable agreement obligations 259,282 271,165

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(Parent Company Only)

Condensed Statements of Comprehensive Income

Statements of Comprehensive Income

Years Ended December 31,

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(Parent Company Only)

Condensed Statements of Cash Flows

Statements of Cash Flows

Years Ended December 31,

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Cash flows from financing activities

Distribution from Virtu Financial to non-controlling interest ( 363,919 ) ( 99,221 ) ( 206,903 )

Dividends ( 120,496 ) ( 112,414 ) ( 100,329 )

Dividends to stockholders and distributions from Virtu Financial to noncontrolling interest ( 548,017 ) ( 484,415 ) ( 211,635 )

Repurchase of Class C common stock ( 3,454 ) — ( 196 )

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The Company has evaluated subsequent events for adjustment to or disclosure in its consolidated financial statements through the date of this report, and has not identified any recordable or disclosable events, not otherwise reported in these consolidated financial statements or the notes thereto, except for the following:

On January 13, 2022 ("Credit Agreement Closing Date"), the Company completed issuance of a $ 1.8 billion senior secured first lien term loan due in 2029 (“New Term Loan”).

The Credit Agreement provides (i) a senior secured first lien term loan in an aggregate principal amount of $ 1.8 billion, drawn in its entirety on the Credit Agreement Closing Date, the proceeds of which were used to repay all amounts outstanding under the First Lien Term Loan Facility, and to pay related fees and expenses, with the remainder of the proceeds to be used to fund share repurchases under the Company’s repurchase program and for general corporate purposes, and (ii) a $ 250.0 million senior secured first lien revolving facility to VFH, with a $ 20.0 million letter of credit subfacility and a $ 20.0 million swingline subfacility.

On February 8, 2022, 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 March 15, 2022 to holders of record as of March 1, 2022.

On February 11, 2021, the Company's Board of Directors authorized the expansion of the Company's current share repurchase program, increasing the total authorized amount by $ 70.0 million to $ 170.0 million.

Since inception of the program through February 11, 2021, the Company repurchased approximately 2.1 million shares of Class A Common Stock and Virtu Financial Units for approximately $ 49.9 million.

As of February 11, 2021, the Company has approximately $ 120 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data