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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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83 unchanged sentences

Market risk is substantially dependent upon the value of the underlying financial instruments and is affected by market forces, such as volatility and changes in interest and foreign exchange rates.

FINANCIAL STATEMENTS

Index to Consolidated Financial Statements

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

Consolidated Statements of Financial Condition

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Virtu Financial, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying Consolidated Statements of Financial Condition of Virtu Financial, Inc.

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related Consolidated Statements of Comprehensive Income, of Changes in Equity and of Cash Flows for each of the three years in the period ended December 31, 2022, 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, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Trading Income, net (“Trading Income”)

As described in Note 2 to the consolidated financial statements, $1.629 billion of the Company’s Trading Income for the year ended December 31, 2022 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.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s calculation of Trading Income, including controls over the completeness, accuracy, existence, and valuation of trading assets and trading liabilities.

These procedures also included, among others, testing of the inputs used by management in their trading income calculations and independently recalculating trading income.

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 settlement 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

New York, New York

February 17, 2023

We have served as the Company’s auditor since 2018.

Virtu Financial, Inc.

and Subsidiaries

Consolidated Statements of Financial Condition

(in thousands, except share data) December 31,

2022 December 31,

Cash and cash equivalents $ 981,580 $ 1,071,463

Cash restricted or segregated under regulations and other 56,662 49,490

Securities borrowed 1,187,674 1,349,322

Securities purchased under agreements to resell 336,999 119,453

Receivables from broker-dealers and clearing organizations 1,115,185 1,026,807

Trading assets, at fair value:

Financial instruments owned 3,667,481 3,238,995

Financial instruments owned and pledged 963,071 1,017,960

Receivables from customers 80,830 146,476

Property, equipment and capitalized software (net of accumulated depreciation of $ 460,763 and $ 472,155 as of December 31, 2022 and December 31, 2021, respectively)

85,194 89,595

Operating lease right-of-use assets 187,442 225,328

Goodwill 1,148,926 1,148,926

Intangibles (net of accumulated amortization of $ 318,013 and $ 253,161 as of December 31, 2022 and December 31, 2021, respectively)

321,480 386,332

Deferred tax assets 146,801 158,518

Other assets ($ 78,965 and $ 84,378 , at fair value, as of December 31, 2022 and December 31, 2021, respectively)

303,916 291,307

Total assets $ 10,583,241 $ 10,319,971

Liabilities and equity

Short-term borrowings $ 3,944 $ 61,510

Securities loaned 1,060,432 1,142,048

Securities sold under agreements to repurchase 627,549 514,325

Payables to broker-dealers and clearing organizations 273,843 571,526

Payables to customers 46,525 54,999

Trading liabilities, at fair value:

Financial instruments sold, not yet purchased 4,196,974 3,510,779

Tax receivable agreement obligations 238,758 259,282

Deferred tax liabilities 343 65

Accounts payable, accrued expenses and other liabilities 448,292 457,942

Operating lease liabilities 239,202 278,745

Long-term borrowings 1,795,952 1,605,132

Total liabilities 8,931,814 8,456,353

Commitments and Contingencies (Note 15)

Virtu Financial Inc.

Stockholders' equity

Class A common stock (par value $ 0.00001 ), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 133,071,754 and 131,497,645 shares, Outstanding — 98,549,464 and 113,170,782 shares at December 31, 2022 and December 31, 2021, respectively

Class B common stock (par value $ 0.00001 ), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at December 31, 2022 and December 31, 2021, respectively

Class C common stock (par value $ 0.00001 ), Authorized — 90,000,000 and 90,000,000 shares, Issued and Outstanding — 9,030,066 and 9,359,065 shares at December 31, 2022 and December 31, 2021, respectively

Class D common stock (par value $ 0.00001 ), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 60,091,740 and 60,091,740 shares at December 31, 2022 and December 31, 2021, respectively

Treasury stock, at cost, 34,522,290 and 18,326,863 shares at December 31, 2022 and December 31, 2021, respectively

( 954,637 ) ( 494,075 )

Additional paid-in capital 1,292,613 1,223,119

Retained earnings (accumulated deficit) 972,317 830,538

Accumulated other comprehensive income (loss) 31,604 ( 10,196 )

Total Virtu Financial Inc.

stockholders' equity 1,341,899 1,549,388

Virtu Financial, Inc.

and Subsidiaries

Consolidated Statements of Financial Condition

(in thousands, except share data) December 31,

2022 December 31,

Noncontrolling interest 309,528 314,230

Total equity 1,651,427 1,863,618

Total liabilities and equity $ 10,583,241 $ 10,319,971

See accompanying Notes to the Consolidated Financial Statements.

Virtu Financial, Inc.

and Subsidiaries

Consolidated Statements of Comprehensive Income

Years Ended December 31,

(in thousands, except share and per share data) 2022 2021 2020

Trading income, net $ 1,628,898 $ 2,105,194 $ 2,493,248

Interest and dividends income 159,120 75,384 62,119

Commissions, net and technology services 529,845 614,489 600,510

Other, net 46,949 16,418 83,454

Total revenue 2,364,812 2,811,485 3,239,331

Operating Expenses:

Brokerage, exchange, clearance fees and payments for order flow, net 619,168 745,434 758,843

Communication and data processing 219,505 211,988 213,750

Employee compensation and payroll taxes 390,947 376,282 393,536

Interest and dividends expense 231,060 139,704 125,649

Operations and administrative 86,069 88,149 94,558

Depreciation and amortization 66,377 67,816 66,741

Amortization of purchased intangibles and acquired capitalized software 64,837 69,668 74,254

Termination of office leases 6,982 28,138 9,608

Debt issue cost related to debt refinancing, prepayment and commitment fees 29,910 6,590 28,879

Transaction advisory fees and expenses 1,124 843 2,941

Financing interest expense on long-term borrowings 92,035 79,969 87,735

Total operating expenses 1,808,014 1,814,581 1,856,494

Income before income taxes and noncontrolling interest 556,798 996,904 1,382,837

Provision for income taxes 88,466 169,670 261,924

Net income 468,332 827,234 1,120,913

Noncontrolling interest ( 203,306 ) ( 350,356 ) ( 471,716 )

Net income available for common stockholders $ 265,026 $ 476,878 $ 649,197

Earnings per share

Basic $ 2.45 $ 3.95 $ 5.19

Diluted $ 2.44 $ 3.91 $ 5.16

Weighted average common shares outstanding

Basic 103,997,767 117,339,539 121,692,443

Diluted 104,422,443 118,423,928 122,332,190

Net income $ 468,332 $ 827,234 $ 1,120,913

Other comprehensive income

Foreign exchange translation adjustment, net of taxes ( 24,254 ) ( 12,470 ) 15,318

Net change in unrealized cash flow hedges gain (loss), net of taxes 90,865 37,794 ( 59,019 )

Comprehensive income 534,943 852,558 1,077,212

Comprehensive income attributable to noncontrolling interest ( 228,117 ) ( 360,389 ) ( 452,855 )

Comprehensive income attributable to common stockholders $ 306,826 $ 492,169 $ 624,357

See accompanying Notes to the Consolidated Financial Statements.

Virtu Financial, Inc.

and Subsidiaries

Consolidated Statements of Changes in Equity

Years Ended December 31, 2022, 2021, and 2020

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

Stockholders' Equity Noncontrolling Interest Total Equity

(in thousands, except share and interest data)

Shares Amounts Shares Amounts Shares Amounts Shares Amounts Amounts

Balance at December 31, 2019 120,435,912 $ 1 12,887,178 $ — 60,091,740 $ 1 ( 2,178,771 ) $ ( 55,005 ) $ 1,077,398 $ ( 90,374 ) $ ( 647 ) $ 931,374 $ 297,562 $ 1,228,936

Share based compensation 2,489,483 — — — — — — — 56,629 — — 56,629 — 56,629

Treasury stock purchases ( 867,984 ) — — — — — ( 1,436,326 ) ( 33,918 ) — ( 15,946 ) — ( 49,864 ) — ( 49,864 )

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

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

Net Income — — — — — — — — — 649,197 — 649,197 471,716 1,120,913

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

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 — — — — — — — — — — — — —

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 2,660,239 ) — — — — — — — — — — —

Issuance of tax receivable agreements in connection with employee exchange — — — — — — — — ( 1,388 ) — — ( 1,388 ) — ( 1,388 )

Balance at December 31, 2020 125,627,277 $ 1 10,226,939 $ — 60,091,740 $ 1 ( 3,615,097 ) $ ( 88,923 ) $ 1,160,567 $ 422,381 $ ( 25,487 ) $ 1,468,540 $ 386,498 $ 1,855,038

Share based compensation 2,434,251 — — — — — — — $ 55,654 $ — $ — $ 55,654 $ — $ 55,654

Repurchase of Class C common stock — — ( 120,025 ) — — — — — $ ( 3,455 ) $ — $ — $ ( 3,455 ) $ — $ ( 3,455 )

Treasury stock purchases ( 840,229 ) — — — — — ( 14,711,766 ) ( 405,152 ) $ — $ ( 22,301 ) $ — $ ( 427,453 ) $ — $ ( 427,453 )

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

Net Income — — — — — — — — $ — $ 476,878 $ — $ 476,878 $ 350,356 $ 827,234

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 — — — — — — — — $ — $ — $ 22,964 $ 22,964 $ 14,830 $ 37,794

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 — — — — — — — $ — $ — $ — $ — $ — $ —

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

Issuance of tax receivable agreements in connection with employee exchange — — — — — — — — $ 311 $ — $ — $ 311 $ — $ 311

Balance at December 31, 2021 131,497,645 1 9,359,065 — 60,091,740 1 ( 18,326,863 ) ( 494,075 ) $ 1,223,119 $ 830,538 $ ( 10,196 ) $ 1,549,388 $ 314,230 $ 1,863,618

Share based compensation 1,897,030 — — — — — — — $ 71,597 $ — $ — $ 71,597 $ — $ 71,597

Repurchase of Class C common stock — — ( 236,069 ) — — — — — $ ( 8,256 ) $ — $ — $ ( 8,256 ) $ — $ ( 8,256 )

Treasury stock purchases ( 684,730 ) — — — — — ( 16,195,427 ) ( 460,562 ) $ — $ ( 19,982 ) $ — $ ( 480,544 ) $ — $ ( 480,544 )

Stock option exercised 268,879 — — — — — — — $ 5,109 $ — $ — $ 5,109 $ — $ 5,109

Net Income — — — — — — — — $ — $ 265,026 $ — $ 265,026 $ 203,306 $ 468,332

Foreign exchange translation adjustment — — — — — — — — $ — $ — $ ( 13,605 ) $ ( 13,605 ) $ ( 10,649 ) $ ( 24,254 )

Virtu Financial, Inc.

and Subsidiaries

Consolidated Statements of Changes in Equity

Years Ended December 31, 2022, 2021, and 2020

Stockholders' Equity Noncontrolling Interest Total Equity

(in thousands, except share and interest data)

Shares Amounts Shares Amounts Shares Amounts Shares Amounts Amounts

Net change in unrealized cash flow hedges gains — — — — — — — — — — 55,405 55,405 35,460 90,865

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

— — — — — — — — $ — $ ( 103,265 ) $ — $ ( 103,265 ) $ ( 272,019 ) $ ( 375,284 )

Issuance of Common Stock in connection with employee exchanges 92,930 — — — — — — — $ — $ — $ — $ — $ — $ —

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges — — ( 92,930 ) — — — — — $ — $ — $ — $ — $ — $ —

Contributions from noncontrolling interests — — — — — — — — $ — $ — $ — $ — $ 39,200 $ 39,200

Issuance of tax receivable agreements in connection with employee exchange — — — — — — — — $ 1,044 $ — $ — $ 1,044 $ — $ 1,044

Balance at December 31, 2022 133,071,754 1 9,030,066 — 60,091,740 1 ( 34,522,290 ) ( 954,637 ) $ 1,292,613 $ 972,317 $ 31,604 $ 1,341,899 $ 309,528 $ 1,651,427

See accompanying Notes to the Consolidated Financial Statements.

Virtu Financial, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31,

(in thousands) 2022 2021 2020

Cash flows from operating activities

Net income $ 468,332 $ 827,234 $ 1,120,913

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

Depreciation and amortization 66,377 67,816 66,741

Amortization of purchased intangibles and acquired capitalized software 64,837 69,668 74,254

Debt issue cost related to debt refinancing and prepayment 24,316 649 7,555

Amortization of debt issuance costs and deferred financing fees 6,919 6,939 26,148

Termination of office leases 4,707 28,138 9,608

Share-based compensation 67,219 55,751 59,838

Deferred taxes ( 3,468 ) 34,617 21,601

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

Other 11,392 ( 5,556 ) ( 1,926 )

Changes in operating assets and liabilities:

Securities borrowed 161,648 75,694 503,747

Securities purchased under agreements to resell ( 217,546 ) ( 96,587 ) 120,166

Receivables from broker-dealers and clearing organizations ( 1,110 ) 657,199 ( 365,422 )

Trading assets, at fair value ( 373,597 ) ( 1,141,224 ) ( 350,041 )

Receivables from customers 65,646 68,002 ( 110,947 )

Operating lease right-of-use assets 28,670 33,930 39,659

Other assets ( 62,799 ) 59,209 ( 48,472 )

Securities loaned ( 81,616 ) 193,792 ( 651,843 )

Securities sold under agreements to repurchase 113,224 53,090 120,493

Payables to broker-dealers and clearing organizations ( 276,646 ) ( 267,126 ) ( 9,323 )

Payables to customers ( 8,474 ) ( 63,827 ) 29,107

Trading liabilities, at fair value 686,195 587,071 425,750

Operating lease liabilities ( 33,322 ) ( 36,595 ) ( 50,024 )

Accounts payable, accrued expenses and other liabilities ( 4,101 ) ( 36,258 ) 81,954

Net cash provided by operating activities 706,803 1,171,626 1,060,884

Cash flows from investing activities

Development of capitalized software ( 37,658 ) ( 35,508 ) ( 31,471 )

Acquisition of property and equipment ( 27,201 ) ( 24,562 ) ( 28,888 )

Proceeds from sale of investments — — 7,620

Proceeds from sale of MATCHNow — — 60,592

Other investing activities 35,329 ( 27,279 ) ( 10,412 )

Net cash used in investing activities ( 29,530 ) ( 87,349 ) ( 2,559 )

Cash flows from financing activities

Dividends to stockholders and distributions from Virtu Financial to noncontrolling interest ( 375,284 ) ( 548,017 ) ( 484,415 )

Repurchase of Class C common stock ( 8,256 ) ( 3,454 ) —

Purchase of treasury stock ( 480,544 ) ( 427,453 ) ( 49,864 )

Stock options exercised 5,109 10,042 16,440

Short-term borrowings, net ( 59,112 ) ( 2,017 ) ( 10,514 )

Proceeds from long-term borrowings 1,800,000 — —

Repayment of long term borrowings ( 1,599,774 ) ( 36,737 ) ( 288,500 )

Tax receivable agreement obligations ( 21,343 ) ( 16,505 ) ( 13,286 )

Debt issuance costs ( 35,741 ) ( 2,658 ) ( 9,779 )

Warrants exercised — 68,940 —

Contributions from noncontrolling interests 39,200 — —

Net cash used in financing activities ( 735,745 ) ( 957,859 ) ( 839,918 )

Effect of exchange rate changes on cash and cash equivalents ( 24,239 ) ( 12,470 ) 15,318

Net decrease in cash and cash equivalents ( 82,711 ) 113,948 233,725

Virtu Financial, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31,

(in thousands) 2022 2021 2020

Cash, cash equivalents, and restricted or segregated cash, beginning of period 1,120,953 1,007,005 773,280

Cash, cash equivalents, and restricted or segregated cash, end of period $ 1,038,242 $ 1,120,953 $ 1,007,005

Supplementary disclosure of cash flow information

Cash paid for interest $ 246,985 $ 159,864 $ 173,645

Cash paid for taxes 103,965 134,878 248,532

Non-cash investing activities

Share-based and accrued incentive compensation to developers relating to capitalized software 17,356 17,239 14,773

Non-cash financing activities

Tax receivable agreement described in Note 5 1,044 311 ( 1,388 )

See accompanying Notes to the Consolidated Financial Statements.

Virtu Financial, Inc.

and Subsidiaries

Notes to the Consolidated Financial Statements

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

Organization and Basis of Presentation

The accompanying Consolidated Financial Statements include the accounts and operations of Virtu Financial, Inc.

(“VFI” or, collectively with its wholly owned or controlled subsidiaries, “Virtu” or the “Company”).

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

As of December 31, 2022, VFI owned approximately 59.7 % of the membership interests of Virtu Financial.

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

The Company is a leading financial firm that leverages cutting edge technology to deliver liquidity to the global markets and innovative, transparent trading solutions to its clients.

The Company provides deep liquidity in over 25,000 financial instruments, on over 235 venues, in 36 countries worldwide to help create more efficient markets.

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, Exchange-Traded Funds ("ETFs"), options, foreign exchange, futures, fixed income, cryptocurrencies, 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 that have expanded and complemented Virtu Financial's original electronic trading and marking making business.

On July 20, 2017, the Company completed the all-cash acquisition of KCG Holdings, Inc.

(“KCG”) (the “Acquisition of KCG”).

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 (the “ITG Acquisition”).

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

broker-dealer.

Other principal U.S.

subsidiaries include Virtu Financial Global Markets LLC, a U.S.

trading entity focused on futures and currencies;

Virtu ITG Analytics LLC, a provider of pre- and post-trade analysis, fair value, and trade optimization services;

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

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 Canada Corp (f/k/a Virtu ITG Canada Corp.), formed in Canada;

Virtu Financial Asia Pty Ltd.

and Virtu ITG Australia Limited, each formed in Australia;

Virtu ITG Hong Kong Limited, formed in Hong Kong;

and Virtu Financial Singapore Pte.

and Virtu ITG Singapore Pte.

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

The Company has two operating segments:

(i) Market Making and (ii) Execution Services;

and one non-operating segment:

See Note 22 "Geographic Information and Business Segments" for a further discussion of the Company’s segments.

Basis of Consolidation and Form of Presentation

These Consolidated Financial Statements are presented in U.S.

dollars, have been prepared pursuant to the rules and regulations of the U.S.

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.

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

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

All intercompany accounts and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the prior periods' Consolidated Financial Statements in order to conform to the current period presentation.

Such reclassifications are immaterial, individually and in the aggregate, to both current and all

previously issued financial statements taken as a whole and have no effect on previously reported consolidated net income available to common stockholders.

Effective for the quarter ended March 31, 2021, the Company 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, into Dividends to stockholders and distribution from Virtu Financial to noncontrolling interest for the year ended December 31, 2020.

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

Use of Estimates

The Company's Consolidated Financial Statements are prepared in conformity with U.S.

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

Accordingly, actual results could differ materially from those estimates.

Earnings Per Share

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

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

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

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

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

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

Cash and Cash Equivalents

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

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

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

Cash restricted or segregated under regulations and other represents (i) special reserve bank accounts for the exclusive benefit of customers (“Special Reserve Bank Account”) maintained by VAL in accordance with Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (“Customer Protection Rule”), 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

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

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

In accordance with substantially all of its 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

The custodian may request additional collateral, if appropriate.

Receivables from/Payables to Broker-dealers and Clearing Organizations

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

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

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

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

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

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

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

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

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

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

Fair Value Measurements

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

Fair value measurements are not adjusted for transaction costs.

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

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

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

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

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

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

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

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

Fair Value Option

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

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

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

Derivative Instruments - Trading

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

The Company does not apply hedge accounting as defined in ASC 815, Derivatives and Hedging, and accordingly gains or losses on these derivative instruments are recognized currently within Trading income, net in the Consolidated Statements of Comprehensive Income.

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

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

The underlying instruments are currencies, which are actively traded.

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

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

Derivative Instruments - Hedging

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

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

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

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

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

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

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

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

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

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 date of acquisition.

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

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

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

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

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

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

Capitalized Software

The Company capitalizes costs of materials, consultants, and payroll and payroll-related costs for employees incurred in developing internal-use software.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In the impairment assessment as of July 1, 2022, the Company assessed qualitative factors as described in ASC 350-20 for each of its reporting units for any indicators that the fair values of the reporting units were less than their carrying values.

No impairment was identified.

Intangible Assets

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

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

Exchange Memberships and Stock

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

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

Trading Income, net

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

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

Commissions, net and Technology Services

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

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

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

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

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

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

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

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

Interest and Dividends Income/Interest and Dividends Expense

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

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

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

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

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

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

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

Rebates are recorded on an accrual basis.

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

equities to the Company.

The Company is subject to U.S.

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

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

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

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

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

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

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

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

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

and are inherently complex.

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

Comprehensive Income

Comprehensive income consists of two components:

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

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

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

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

Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in Accumulated 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 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

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

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

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

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

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

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

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

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

Variable Interest Entities

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

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

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

Accounting Pronouncements, Recently Adopted

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

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

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

The Company adopted this ASU on January 1, 2022 and it did not have a material impact on its Consolidated Financial Statements and related disclosures.

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

The Company adopted this ASU on April 1, 2022 and it did not have a material impact on its Consolidated Financial Statements and related disclosures.

Financial Instruments - Credit Losses - In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326) .

The ASU eliminates the accounting guidance for trouble debt restructurings by creditors in Subtopic 310-40, and enhances the disclosure requirements for modifications of loans to borrowers experiencing financial difficulty.

Additionally, the ASU requires disclosure of gross writeoffs of receivables by year of origination for receivables within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost .

This ASU is effective for periods beginning after December 15, 2022.

The Company adopted this ASU on April 1, 2022 and it did not have a material impact on its Consolidated Financial Statements and related disclosures.

Accounting Pronouncements, Not Yet Adopted as of December 31, 2022

Derivatives and Hedging - In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging - Fair Value Hedging - Portfolio Layer Method (Topic 815).

The ASU expands the scope of permissible hedging, and permits the use of different derivative structures as hedging instruments.

The ASU also clarifies the certain terms for partial-term fair value hedges of interest rate risk.

This ASU is effective for periods beginning after December 15, 2022.

The Company is currently

evaluating the impact of this ASU but does not expect it to have a material impact on its Consolidated Financial Statements and related disclosures.

Fair Value Measurement - In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 326) .

The ASU clarifies the impact of contractual sale restrictions on the fair value of an equity security.

Additionally, this ASU requires disclosure of the nature and remaining duration of the sale restriction.

This ASU is effective for periods beginning after December 15, 2023.

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

Liabilities - Supplier Finance Programs - In September 2022, the FASB issued ASU 2022 -03, Liabilities—Supplier Finance Programs (Subtopic 405-50) .

This ASU requires new quantitative and qualitative disclosure requirements for a buyer who enters into supplier financing programs.

This ASU is effective for periods beginning after December 15, 2023.

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

Sale of MATCHNow

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

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

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

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

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

The Company recognized a gain on sale of $ 58.7 million, which was recorded in Other, net on the Consolidated Statements of Comprehensive Income for the year ended December 31, 2020.

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

(in thousands)

Total sale proceeds received $ 60,592

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

Gain on sale of MATCHNow 58,652

Transaction costs ( 2,453 )

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

Contingent consideration was eligible to be earned based on the future performance of MATCHNow following the MATCHNow Closing Date.

Deferred payments were 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.

For the year ended December 31, 2022, the Company received $ 3.9 million related to the continent consideration, , which is recorded in Other, net on the Consolidated Statements of Comprehensive Income for the year ended December 31, 2022.

No payments were made regarding the contingent consideration in prior years.

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 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.

No impairment was recognized for the year ended December 31, 2020.

Earnings per Share

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

Years Ended December 31,

(in thousands) 2022 2021 2020

Income before income taxes and noncontrolling interest $ 556,798 $ 996,904 $ 1,382,837

Provision for income taxes 88,466 169,670 261,924

Net income 468,332 827,234 1,120,913

Noncontrolling interest ( 203,306 ) ( 350,356 ) ( 471,716 )

Net income available for common stockholders $ 265,026 $ 476,878 $ 649,197

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

Years Ended December 31,

(in thousands, except for share or per share data) 2022 2021 2020

Basic earnings per share:

Net income available for common stockholders $ 265,026 $ 476,878 $ 649,197

Dividends and undistributed earnings allocated to participating securities ( 9,811 ) ( 13,674 ) ( 17,383 )

Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities 255,215 463,204 631,814

Weighted average shares of common stock outstanding:

Class A 103,997,767 117,339,539 121,692,443

Basic earnings per share $ 2.45 $ 3.95 $ 5.19

Years Ended December 31,

(in thousands, except for share or per share data) 2022 2021 2020

Diluted earnings per share:

Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities $ 255,215 $ 463,204 $ 631,814

Weighted average shares of common stock outstanding:

Issued and outstanding 103,997,767 117,339,539 121,692,443

Issuable pursuant to Amended and Restated 2015 Management Incentive Plan, Amended and Restated Investment Technology Group, Inc.

2007 Omnibus Equity Compensation Plan, and Warrants issued in connection with the Founder Member Loan 424,676 1,084,389 639,747

104,422,443 118,423,928 122,332,190

Diluted earnings per share $ 2.44 $ 3.91 $ 5.16

Tax Receivable Agreements

In connection with the IPO and the Reorganization Transactions, the Company entered into tax receivable agreements ("TRA") 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 $ 238.8 million and $ 259.3 million as of December 31, 2022 and December 31, 2021, respectively.

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

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

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

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

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

The Company made its first payment of $ 7.0 million in February 2017, and subsequent payments of $ 12.4 million in September 2018, $ 13.3 million in March 2020, its $ 16.5 million in April 2021, and $ 21.3 million in March 2022.

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 $ 36.4 thousand to $ 22.0 million per year over the next 15 years.

At December 31, 2022 and December 31, 2021, the Company’s remaining deferred tax assets that relate to the matters described above were approximately $ 162.1 million and $ 180.4 million, respectively, and the Company’s liabilities over the next 15 years pursuant to the tax receivable agreements were approximately $ 238.8 million and $ 259.3 million, respectively.

The amounts recorded as of December 31, 2022 and December 31, 2021 are based on best estimates available at the respective dates and may be subject to change after the filing of the Company's federal and state income tax returns for the years in which tax savings are realized.

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

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

Goodwill and Intangible Assets

The Company has two operating segments:

(i) Market Making;

and (ii) Execution Services;

and one non-operating segment:

As of December 31, 2022 and December 31, 2021, the Company’s total amount of goodwill recorded was $ 1,148.9 million.

No goodwill impairment was recognized during the years ended December 31, 2022 and 2021.

The following table presents the details of goodwill by segment as of December 31, 2022 and December 31, 2021:

(in thousands) Market Making Execution Services Corporate Total

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

As of December 31, 2022 and December 31, 2021, the Company's total amount of intangible assets recorded was $ 321.5 million and $ 386.3 million, respectively.

Acquired intangible assets consisted of the following as of December 31, 2022 and December 31, 2021:

As of December 31, 2022

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

Customer relationships $ 486,600 $ ( 189,986 ) $ 296,614 10 to 12

Technology 136,000 ( 118,119 ) 17,881 1 to 6

Favorable occupancy leases 5,895 ( 4,408 ) 1,487 3 to 15

Exchange memberships 3,998 — 3,998 Indefinite

Trade name 3,600 ( 3,600 ) — 3

ETF issuer relationships 950 ( 950 ) — 9

ETF buyer relationships 950 ( 950 ) — 9

Other $ 1,500 $ — $ 1,500 Indefinite

$ 639,493 $ ( 318,013 ) $ 321,480

As of December 31, 2021

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

Customer relationships $ 486,600 $ ( 142,142 ) $ 344,458 10 to 12

Technology 136,000 ( 102,088 ) 33,912 1 to 6

Favorable occupancy leases 5,895 ( 3,631 ) 2,264 3 to 15

Exchange memberships 3,998 — 3,998 Indefinite

Trade name 3,600 ( 3,400 ) 200 3

ETF issuer relationships 950 ( 950 ) — 9

ETF buyer relationships 950 ( 950 ) — 9

Other $ 1,500 $ — $ 1,500 Indefinite

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

Amortization expense relating to finite-lived intangible assets was approximately $ 64.8 million, $ 69.7 million and $ 74.3 million for the years ended December 31, 2022, 2021, and 2020, respectively.

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 subsequent years:

(in thousands)

Receivables from/Payables to Broker-Dealers and Clearing Organizations

The following is a summary of receivables from and payables to brokers-dealers and clearing organizations at December 31, 2022 and December 31, 2021:

(in thousands) December 31, 2022 December 31, 2021

Due from prime brokers $ 560,111 $ 287,991

Deposits with clearing organizations 146,927 161,928

Net equity with futures commission merchants 137,312 98,302

Unsettled trades with clearing organizations 87,145 164,195

Securities failed to deliver 149,747 290,207

Commissions and fees 33,943 24,184

Total receivables from broker-dealers and clearing organizations $ 1,115,185 $ 1,026,807

Due to prime brokers $ 229,424 $ 497,972

Net equity with futures commission merchants (1) ( 32,381 ) ( 57,226 )

Unsettled trades with clearing organizations 38 828

Securities failed to receive 70,576 128,392

Commissions and fees 6,186 1,560

Total payables to broker-dealers and clearing organizations $ 273,843 $ 571,526

(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 9 "Borrowings") of approximately $ 212.9 million and $ 177.1 million as of December 31, 2022 and December 31, 2021, respectively.

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

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

“Securities failed to deliver” and “Securities failed to receive” include amounts with a clearing organization and other broker-dealers.

Collateralized Transactions

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

At December 31, 2022 and December 31, 2021, substantially all of the securities received as collateral have been repledged.

The fair value of the collateralized transactions at December 31, 2022 and December 31, 2021 are summarized as follows:

(in thousands) December 31, 2022 December 31, 2021

Securities received as collateral:

Securities borrowed $ 1,148,238 $ 1,299,270

Securities purchased under agreements to resell 336,849 119,453

$ 1,485,087 $ 1,418,723

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

Financial instruments owned and pledged, where the counterparty has the right to repledge, at December 31, 2022 and December 31, 2021 consisted of the following:

(in thousands) December 31, 2022 December 31, 2021

Equities $ 957,443 $ 1,012,569

Exchange traded notes 5,628 5,391

$ 963,071 $ 1,017,960

Short-term Borrowings, net

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

December 31, 2022

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

Short-term bank loans 3,944 — 3,944

$ 3,944 $ — $ 3,944

December 31, 2021

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

Broker-dealer credit facilities $ 58,000 $ ( 1,546 ) $ 56,454

Short-term bank loans 5,056 — 5,056

$ 63,056 $ ( 1,546 ) $ 61,510

Broker-Dealer Credit Facilities

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 $ 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 $ 650 million.

The Committed Facility consists of two borrowing bases:

Borrowing Base A Loan is to be used to finance the purchase and settlement of securities;

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 $ 650 million and bear interest at the adjusted SOFR 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 SOFR or base rate plus 2.50 % per annum.

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

On May 25, 2022, Virtu Financial Singapore Pte.

entered into a revolving credit facility with a financial institution (the "Overdraft Facility") to provide a source of short-term financing.

The facility has an aggregate borrowing limit of $ 10 million, and bears interest at the adjusted SOFR or base rate plus 3.5 % per annum.

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

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

The Founder Member Loan Facility Term expired as of September 20, 2020 without VAL having borrowed any Founder Member Loans at any time.

The Founder Member is an affiliate of Mr.

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

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 18 "Capital Structure".

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

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

At December 31, 2022

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

Broker-dealer credit facilities:

Uncommitted facility (1) 5.50 % $ 400,000 $ — $ — $ —

Committed facility 7.67 % 650,000 — — —

Overdraft facility 7.80 % 10,000 — — —

$ 1,060,000 $ — $ — $ —

(1) $0.2 million of deferred debt issuance costs are included within Other assets on the Consolidated Statement of Financial Condition

At December 31, 2021

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

Broker-dealer credit facilities:

Uncommitted facility 1.25 % $ 400,000 $ 58,000 $ ( 1,546 ) $ 56,454

Committed facility 3.78 % 600,000 — — —

$ 1,000,000 $ 58,000 $ ( 1,546 ) $ 56,454

The following summarizes interest expense for the broker-dealer facilities.

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

Years Ended December 31,

(in thousands) 2022 2021 2020

Broker-dealer credit facilities:

Uncommitted facility $ 4,247 $ 2,327 $ 1,337

Committed facility 112 82 447

Demand Loan — — 211

$ 4,359 $ 2,409 $ 1,995

Short-Term Bank Loans

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

At December 31, 2022, there was $ 3.9 million associated with international settlement activities outstanding under these facilities at a weighted average interest rate of approximately 3.8 %.

At December 31, 2021, there was $ 5.1 million associated with international settlement activities outstanding under these facilities at a weighted average interest rate of approximately 4.2 %.

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

Prime Brokerage Credit Facilities

The Company maintains short-term credit facilities with various prime brokers and other financial institutions from which it receives execution or clearing services.

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

At December 31, 2022

(in thousands) Weighted Average

Interest Rate Financing

Available Borrowing

Prime Brokerage Credit Facilities:

Prime brokerage credit facilities (1) 7.42 % $ 591,000 $ 212,912

$ 591,000 $ 212,912

At December 31, 2021

(in thousands) Weighted Average

Interest Rate Financing

Available Borrowing

Prime Brokerage Credit Facilities:

Prime brokerage credit facilities (1) 2.91 % $ 616,000 $ 177,080

$ 616,000 $ 177,080

(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 $ 9.3 million, $ 4.6 million, and $ 4.8 million and for the years ended December 31, 2022, 2021, and 2020, respectively.

Long-Term Borrowings

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

At December 31, 2022

(in thousands) Maturity

Date Interest

Rate Outstanding Principal Discount Deferred Debt Issuance Cost Outstanding Borrowings, net

Long-term borrowings:

First Lien Term Loan Facility January 2029 7.42 % $ 1,800,000 $ ( 3,881 ) $ ( 26,858 ) $ 1,769,261

SBI bonds January 2026 5.00 % 26,693 — ( 2 ) 26,691

$ 1,826,693 $ ( 3,881 ) $ ( 26,860 ) $ 1,795,952

At December 31, 2021

(in thousands) Maturity

Date Interest

Rate Outstanding Principal Discount Deferred Debt Issuance Cost Outstanding Borrowings, net

Long-term borrowings:

First Lien Term Loan Facility March 2026 3.10 % $ 1,599,774 $ ( 3,723 ) $ ( 21,620 ) $ 1,574,431

SBI bonds January 2023 5.00 % 30,722 — ( 21 ) 30,701

$ 1,630,496 $ ( 3,723 ) $ ( 21,641 ) $ 1,605,132

Credit Agreements

In connection with the ITG Acquisition, Virtu Financial, VFH, and Impala Borrower LLC (the "Acquisition Borrower") entered into a 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").

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

the “Acquisition 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, 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, VFH entered into an amendment, which amended the Acquisition 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 “Acquisition Incremental Term Loans”), and amend the related collateral agreement.

On March 2, 2020, VFH entered into a second amendment, which further amended the Acquisition 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.

On January 13, 2022 (the “Credit Agreement Closing Date”), Virtu Financial, VFH Parent LLC, a Delaware limited liability company and a subsidiary of Virtu Financial (“VFH”), entered into the Credit Agreement, with the lenders party thereto, JPMorgan Chase Bank, N.A.

as administrative agent and JPMorgan Chase Bank, N.A., Goldman Sachs Bank USA, RBC Capital Markets, Barclays Bank plc, Jefferies Finance LLC, BMO Capital Markets Corp., and CIBC World Markets Corp., as joint lead arrangers and bookrunners (the “Credit Agreement”).

The Credit Agreement provides (i) a senior secured first lien term loan in an aggregate principal amount of $ 1,800.0 million, drawn in its entirety on the Credit Agreement Closing Date, the proceeds of which were used by VFH to repay all amounts outstanding under the Acquisition Credit Agreement, to pay fees and expenses in connection therewith, 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.

The term loan borrowings and revolver borrowings under the 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 term SOFR rate with an interest period of one month plus 1.00 % and (d)(1) in the case of term loan borrowings, 1.50 % and (2) in the case of revolver borrowings, 1.00 %, plus, (x) in the case of term loan borrowings, 2.00 % and (y) in the case of revolver borrowings, 1.50 %, or (ii) the greater of (a) an adjusted term SOFR rate for the interest period in effect and (b) (1) in the case of term loan borrowings, 0.50 % and (2) in the case of revolver borrowings, 0.00 %, plus, (x) in the case of term loan borrowings, 3.00 % and (y) in the case of revolver borrowings, 2.50 %.

In addition, a commitment fee accrues at a rate of 0.50 % per annum on the average daily unused amount of the 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 revolving facility under the Credit Agreement is subject to a springing net first lien leverage ratio test which may spring into effect as of the last day of a fiscal quarter if usage of the aggregate revolving commitments exceeds a specified level as of such date.

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

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

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

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

Under the Credit Agreement, the term loans will mature on January 13, 2029.

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

The revolving commitments will terminate on January 13, 2025.

As of December 31, 2022, $ 1,800 million was outstanding under the term loans, and there were no amounts outstanding under the first lien revolving facility.

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

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

These two interest rate swaps met the criteria to be considered and were designated qualifying cash flow hedges under ASC 815 in the first quarter of 2020, and they effectively fixed interest payment obligations on $ 525.0 million and $ 1,000 million of principal under the Acquisition 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 Acquisition Credit Agreement.

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

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, in order to align the swap agreements with the Credit Agreement, the Company amended each of the swap agreements to align the floating rate term of such swap agreements to SOFR.

The effective fixed interest payment obligations remained at 4.5 %, with respect to the earlier maturing swap arrangement, and 4.6 % with respect to the later maturing swap arrangement.

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

and SBI Insurance Co., Ltd.

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

(as described in Note 10 "Financial Assets and Liabilities").

The SBI Bonds are guaranteed by Virtu Financial.

The SBI Bonds are subject to fluctuations on the Japanese Yen currency rates relative to the Company’s reporting currency (U.S.

Dollar) with the changes reflected in Other, net in the Consolidated Statements of Comprehensive Income.

In December 2022, the maturity of the SBI Bonds was extended to 2026.

The principal balance was ¥ 3.5 billion ($ 26.7 million) as of December 31, 2022 and ¥ 3.5 billion ($ 30.7 million) as of December 31, 2021.

The Company had a gain of $ 4.0 million, a gain of $ 3.2 million, and a loss of $ 1.7 million during the years ended December 31, 2022 2021, and 2020 respectively, due to changes in foreign currency rates.

As of December 31, 2022, aggregate future required minimum principal payments based on the terms of the long-term borrowings were as follows:

(in thousands) December 31, 2022

Thereafter 1,710,000

Total principal of long-term borrowings $ 1,826,693

Financial Assets and Liabilities

Financial Instruments Measured at Fair Value

The fair value of equities, options, on-the-run U.S.

government obligations and exchange traded notes is estimated using recently executed transactions and market price quotations in active markets and are categorized as Level 1 with the exception of inactively traded equities and certain other financial instruments, which are categorized as Level 2.

The Company’s corporate bonds, derivative contracts and other U.S.

government obligations have been categorized as Level 2.

Fair value of the Company’s derivative contracts is based on the indicative prices obtained from a number of banks and broker-dealers, as well as management’s own analyses.

The indicative prices have been independently validated through the Company’s risk management systems, which are designed to check prices with information independently obtained from exchanges and venues where such financial instruments are listed or to compare prices of similar instruments with similar maturities for listed financial futures in foreign exchange.

The Company prices certain financial instruments held for trading at fair value based on theoretical prices, which can differ from quoted market prices.

The theoretical prices reflect price adjustments primarily caused by the fact that the Company continuously prices its financial instruments based on all available information.

This information includes prices for identical and near-identical positions, as well as the prices for securities underlying the Company’s positions, on other exchanges that are open after the exchange on which the financial instruments is traded closes.

The Company validates that all price adjustments can be substantiated with market inputs and checks the theoretical prices independently.

Consequently, such financial instruments are classified as Level 2.

Fair value measurements for those items measured on a recurring basis are summarized below as of December 31, 2022:

December 31, 2022

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

Financial instruments owned, at fair value:

Equity securities $ 461,487 $ 1,545,116 $ — $ — $ 2,006,603

government obligations 251,708 575,946 — — 827,654

Corporate Bonds — 803,880 — — 803,880

Exchange traded notes 51 16,777 — — 16,828

Currency forwards — 500,553 — ( 493,237 ) 7,316

Options 5,200 — — — 5,200

$ 718,446 $ 3,442,272 $ — $ ( 493,237 ) $ 3,667,481

Financial instruments owned, pledged as collateral:

Equity securities $ 552,641 $ 404,802 $ — $ — $ 957,443

Exchange traded notes 6 5,622 — — 5,628

$ 552,647 $ 410,424 $ — $ — $ 963,071

Equity investment $ — $ — $ 76,613 $ — $ 76,613

Exchange stock 2,352 — — — 2,352

$ 2,352 $ — $ 76,613 $ — $ 78,965

Receivables from broker dealers and clearing organizations:

Interest rate swap $ — $ 87,268 $ — $ — $ 87,268

Financial instruments sold, not yet purchased, at fair value:

Equity securities $ 1,146,701 $ 1,016,893 $ — $ — $ 2,163,594

government obligations 147,418 690,480 — — 837,898

Corporate Bonds — 1,183,394 — — 1,183,394

Exchange traded notes — 8,199 — — 8,199

Currency forwards — 497,799 — ( 497,799 ) —

Options 3,889 — — — 3,889

$ 1,298,008 $ 3,396,765 $ — $ ( 497,799 ) $ 4,196,974

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

December 31, 2021

Financial instruments owned, at fair value:

Equity securities $ 572,567 $ 1,700,470 $ — $ — $ 2,273,037

government obligations 337,350 18,519 — — 355,869

Corporate Bonds — 598,944 — — 598,944

Exchange traded notes 10 2,459 — — 2,469

Currency forwards — 206,258 — ( 206,125 ) 133

Options 8,543 — — — 8,543

$ 918,470 $ 2,526,650 $ — $ ( 206,125 ) $ 3,238,995

Financial instruments owned, pledged as collateral:

Equity securities $ 670,277 $ 342,292 $ — $ — $ 1,012,569

Exchange traded notes — 5,391 — — 5,391

$ 670,277 $ 347,683 $ — $ — $ 1,017,960

Equity investment $ — $ — $ 81,358 $ — $ 81,358

Exchange stock 3,020 — — — 3,020

$ 3,020 $ — $ 81,358 $ — $ 84,378

Financial instruments sold, not yet purchased, at fair value:

Equity securities $ 1,482,386 $ 807,631 $ — $ — $ 2,290,017

government obligations 330,765 9,955 — — 340,720

Corporate Bonds — 851,871 — — 851,871

Exchange traded notes — 22,962 — — 22,962

Currency forwards — 208,357 — ( 208,356 ) 1

Options 5,208 — — — 5,208

$ 1,818,359 $ 1,900,776 $ — $ ( 208,356 ) $ 3,510,779

Payables to broker dealers and clearing organizations:

Interest rate swap $ — $ 21,037 $ — $ — $ 21,037

JNX Investment

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

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

In connection with the JNX Investment, the Company issued the SBI Bonds (as described in Note 9 "Borrowings") and used the proceeds to partially finance the transaction.

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

As of December 31, 2022 and December 31, 2021, the fair value of the JNX Investment was determined using a weighted average of valuations using 1) the discounted cash flow method, an income approach;

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

and to a lesser extent 3) a transaction approach based on transaction values of comparable companies.

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

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

December 31, 2022

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

Equity investment $ 76,613 Discounted cash flow Estimated revenue growth ( 5.7 )% - 5.0 %

Discount rate 15.5 % - 15.5 %

Market Future enterprise value/ EBIDTA ratio ( 1.2 )x - 18.1 x

December 31, 2021

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

Equity investment $ 81,358 Discounted cash flow Estimated revenue growth 2.5 % - 32.6 %

Discount rate 14.4 % - 14.4 %

Market Future enterprise value/ EBIDTA ratio 8.7 x - 21.1 x

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

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

Year Ended December 31, 2022

(in thousands) Balance at December 31, 2021 Purchases Total Realized and Unrealized Gains / (Losses) (1) Net Transfers into (out of) Level 3 Settlement Balance at December 31, 2022 Change in Net Unrealized Gains / (Losses) on Investments still held at December 31, 2022

Other assets:

Equity investment $ 81,358 $ — $ ( 4,745 ) $ — $ — $ 76,613 $ ( 4,745 )

Total $ 81,358 $ — $ ( 4,745 ) $ — $ — $ 76,613 $ ( 4,745 )

(1) Total realized and unrealized gains/(losses) includes gains and losses due to fluctuations in currency rates as well as gains and losses recognized on changes in the fair value of the JNX Investment.

Year Ended December 31, 2021

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

Other assets:

Equity investment $ 66,030 $ — $ 15,328 $ — $ — $ 81,358 $ 15,328

Total $ 66,030 $ — $ 15,328 $ — $ — $ 81,358 $ 15,328

Financial Instruments Not Measured at Fair Value

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

The table below excludes non-financial assets and liabilities.

The carrying value of financial instruments not measured at fair value categorized in the fair value hierarchy as Level 1 and Level 2 approximates fair value due to the relatively short-term nature of the underlying assets.

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

The table below summarizes financial assets and liabilities not carried at fair value on a recurring basis as of December 31, 2022:

December 31, 2022

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

(in thousands)

Fair Value (Level 1) (Level 2) (Level 3)

Cash and cash equivalents $ 981,580 $ 981,580 $ 981,580 $ — $ —

Cash restricted or segregated under regulations and other 56,662 56,662 56,662 — —

Securities borrowed 1,187,674 1,187,674 — 1,187,674 —

Securities purchased under agreements to resell 336,999 336,999 — 336,999 —

Receivables from broker-dealers and clearing organizations 1,027,917 1,027,917 — 1,027,917 —

Receivables from customers 80,830 80,830 — 80,830 —

Other assets (1) 30,579 30,579 — 30,579 —

Total Assets $ 3,702,241 $ 3,702,241 $ 1,038,242 $ 2,663,999 $ —

Short-term borrowings $ 3,944 $ 3,944 $ — $ 3,944 $ —

Long-term borrowings 1,795,952 1,783,943 — 1,783,943 —

Securities loaned 1,060,432 1,060,432 — 1,060,432 —

Securities sold under agreements to repurchase 627,549 627,549 — 627,549 —

Payables to broker-dealers and clearing organizations 273,843 273,843 — 273,843 —

Payables to customers 46,525 46,525 — 46,525 —

Other liabilities (2) 23,776 23,776 — 23,776 —

Total Liabilities $ 3,832,021 $ 3,820,012 $ — $ 3,820,012 $ —

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

(2) Includes deposits, interest and dividends payable.

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

December 31, 2021

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

(in thousands)

Fair Value (Level 1) (Level 2) (Level 3)

Cash and cash equivalents $ 1,071,463 $ 1,071,463 $ 1,071,463 $ — $ —

Cash restricted or segregated under regulations and other 49,490 49,490 49,490 — —

Securities borrowed 1,349,322 1,349,322 — 1,349,322 —

Securities purchased under agreements to resell 119,453 119,453 — 119,453 —

Receivables from broker-dealers and clearing organizations 1,026,807 1,026,807 ( 24,037 ) 1,050,844 —

Receivables from customers 146,476 146,476 — 146,476 —

Other assets (1) 20,266 20,266 — 20,266 —

Total Assets $ 3,783,277 $ 3,783,277 $ 1,096,916 $ 2,686,361 $ —

Short-term borrowings 61,510 63,046 — 63,046 —

Long-term borrowings 1,605,132 1,628,497 — 1,628,497 —

Securities loaned 1,142,048 1,142,048 — 1,142,048 —

Securities sold under agreements to repurchase 514,325 514,325 — 514,325 —

Payables to broker dealer and clearing organizations (2) 571,526 571,526 235 571,291 —

Payables to customers 54,999 54,999 — 54,999 —

Other liabilities (3) 9,414 9,414 — 9,414 —

Total Liabilities $ 3,958,954 $ 3,983,855 $ 235 $ 3,983,620 $ —

(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

The Company does not net securities borrowed and securities loaned, or securities purchased under agreements to resell and securities sold under agreements to repurchase.

These financial instruments are presented on a gross basis in the Consolidated Statements of Financial Condition.

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

The following tables set forth the gross and net presentation of certain financial assets and financial liabilities as of December 31, 2022 and December 31, 2021:

December 31, 2022

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

Offsetting of Financial Assets:

Securities borrowed $ 1,187,674 $ — $ 1,187,674 $ ( 1,148,238 ) $ ( 5,138 ) $ 34,298

Securities purchased under agreements to resell 336,999 — 336,999 ( 336,849 ) — 150

Receivables from broker-dealers and clearing organizations:

Interest rate swaps 87,268 — 87,268 — — 87,268

Trading assets, at fair value:

Currency forwards 500,553 ( 493,237 ) 7,316 — — 7,316

Options 5,200 — 5,200 — ( 3,889 ) 1,311

Total $ 2,117,694 $ ( 493,237 ) $ 1,624,457 $ ( 1,485,087 ) $ ( 9,027 ) $ 130,343

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

Offsetting of Financial Liabilities:

Securities loaned $ 1,060,432 $ — $ 1,060,432 $ ( 1,027,062 ) $ ( 9,100 ) $ 24,270

Securities sold under agreements to repurchase 627,549 — 627,549 ( 627,388 ) — 161

Trading liabilities, at fair value:

Currency forwards 497,799 ( 497,799 ) — — — —

Options 3,889 — 3,889 — ( 3,889 ) —

Total $ 2,189,669 $ ( 497,799 ) $ 1,691,870 $ ( 1,654,450 ) $ ( 12,989 ) $ 24,431

December 31, 2021

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

Offsetting of Financial Assets:

Securities borrowed $ 1,349,322 $ — $ 1,349,322 $ ( 1,299,270 ) $ ( 5,054 ) $ 44,998

Securities purchased under agreements to resell 119,453 — 119,453 ( 119,453 ) — —

Trading assets, at fair value:

Currency forwards 206,258 ( 206,125 ) 133 — — 133

Options 8,543 — 8,543 — ( 5,208 ) 3,335

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

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

Offsetting of Financial Liabilities:

Securities loaned $ 1,142,048 $ — $ 1,142,048 $ ( 1,107,688 ) $ ( 17,272 ) $ 17,088

Securities sold under agreements to repurchase 514,325 — 514,325 ( 514,325 ) — —

Interest rate swaps 21,037 — 21,037 — — 21,037

Trading liabilities, at fair value:

Currency forwards 208,357 ( 208,356 ) 1 — — 1

Options 5,208 — 5,208 — ( 5,208 ) —

Total $ 1,890,975 $ ( 208,356 ) $ 1,682,619 $ ( 1,622,013 ) $ ( 22,480 ) $ 38,126

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

December 31, 2022

Remaining Contractual Maturity

(in thousands) Overnight and Continuous Less than 30 days 30 - 60

Days Greater than 90

Securities sold under agreements to repurchase:

Equity securities $ — $ 250,000 $ 100,000 $ 50,000 $ — $ 400,000

government obligations 227,549 — — — 227,549

Total $ 227,549 $ 250,000 $ 100,000 $ 50,000 $ — $ 627,549

Securities loaned:

Equity securities $ 1,060,432 $ — $ — $ — $ — $ 1,060,432

Total $ 1,060,432 $ — $ — $ — $ — $ 1,060,432

December 31, 2021

Remaining Contractual Maturity

(in thousands) Overnight and Continuous Less than 30 days 30 - 60

Days Greater than 90

Securities sold under agreements to repurchase:

Equity securities $ — $ 140,000 $ 50,000 $ 210,000 $ — $ 400,000

government obligations 114,325 — — — — 114,325

Total $ 114,325 $ 140,000 $ 50,000 $ 210,000 $ — $ 514,325

Securities loaned:

Equity securities 1,142,048 — — — — 1,142,048

Total $ 1,142,048 $ — $ — $ — $ — $ 1,142,048

Derivative Instruments

The fair value of the Company’s derivative instruments on a gross basis consisted of the following at December 31, 2022 and December 31, 2021:

(in thousands) December 31, 2022 December 31, 2021

Derivatives Assets Financial Statement Location Fair Value Notional Fair Value Notional

Derivative instruments not designated as hedging instruments:

Equities futures Receivables from broker-dealers and clearing organizations $ ( 575 ) $ 663,110 $ 1,619 $ 406,420

Commodity futures Receivables from broker-dealers and clearing organizations ( 31,007 ) 7,597,057 ( 24,405 ) 5,285,216

Currency futures Receivables from broker-dealers and clearing organizations ( 24,023 ) 7,460,531 ( 8,205 ) 4,760,173

Fixed income futures Receivables from broker-dealers and clearing organizations ( 360 ) 30,292 147 8,489

Options Financial instruments owned 5,200 691,737 8,543 1,063,686

Currency forwards Financial instruments owned 500,553 30,286,330 206,258 21,445,374

Derivative instruments designated as hedging instruments:

Interest rate swap Receivables from broker-dealers and clearing organizations 87,268 1,525,000 — —

Derivatives Liabilities Financial Statement Location Fair Value Notional Fair Value Notional

Derivative instruments not designated as hedging instruments:

Equities futures Payables to broker-dealers and clearing organizations $ 1,819 $ 3,238,651 $ 791 $ 1,362,684

Commodity futures Payables to broker-dealers and clearing organizations 597 39,046 ( 49 ) 27,224

Currency futures Payables to broker-dealers and clearing organizations 8 6,386 1,671 725,162

Fixed income futures Payables to broker-dealers and clearing organizations ( 264 ) 123,043 ( 161 ) 120,212

Options Financial instruments sold, not yet purchased 3,889 742,531 5,208 1,066,801

Currency forwards Financial instruments sold, not yet purchased 497,799 30,284,952 208,357 21,446,422

Derivative instruments designated as hedging instruments:

Interest rate swaps Payables to broker-dealers and clearing organizations — — 21,037 1,525,000

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 initially recorded in other comprehensive income in the accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020.

Years Ended December 31,

(in thousands) Financial Statements Location 2022 2021 2020

Derivative instruments not designated as hedging instruments:

Futures Trading income, net $ 257,258 $ 283,482 $ ( 6,217 )

Currency forwards Trading income, net 12,492 1,077 249,856

Options Trading income, net 30,339 95,828 84,695

Interest rate swap on term loan Other, net ( 1,879 ) ( 1,871 ) ( 1,890 )

$ 298,210 $ 378,516 $ 326,444

Derivative instruments designated as hedging instruments:

Interest rate swaps (1) Other comprehensive income $ 106,329 $ 44,541 $ ( 69,462 )

$ 106,329 $ 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 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:

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, 2022, the Company held noncontrolling interests of 11.1 % 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, 2022, the Company held approximately a 9.8 % noncontrolling interest in this JV.

The Company has an interest in a JV that operates 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, 2022, the Company held approximately a 14.9 % noncontrolling interest in this JV.

In the second quarter of 2022, the Company invested in a JV that was formed for the purpose of developing and operating a cryptocurrency trading platform with the goal of increasing competition and transparency, while improving trading performance and reducing operational risk.

As of December 31, 2022, the Company held approximately a 9.3 % noncontrolling interest in this JV.

The Company's five JVs noted above 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 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, 2022:

Carrying Amount Maximum Exposure to Loss VIEs' assets

(in thousands) Asset Liability

Equity investment $ 43,589 $ — $ 43,589 $ 239,682

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

During the second quarter of 2022, the Company formed a JV to support the growth and expansion of a multi-asset request-for-quote communication platform.

As of December 31, 2022, the Company held a 51 % controlling interest in this entity.

Based on the standard for control set forth above, this JV meets the criteria to be considered a VIE, and the Company consolidates this entity and records the interest that the Company does not own as noncontrolling interest in the Consolidated Financial Statements.

Revenues from Contracts with Customers

Commissions, net .

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

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

accordingly, commission revenues are recorded on the trade date.

Commission revenues are received on settlement date;

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

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

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

Workflow technology .

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

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

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

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

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

The Company participates in commission 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

Disaggregation of Revenues

The following tables present the Company’s revenue from contracts with customers disaggregated by service, by timing of revenue recognition, reconciled to the Company’s segments, for the years ended December 31, 2022, 2021, and 2020:

Year Ended December 31, 2022

(in thousands) Market Making Execution Services Corporate Total

Revenues from contracts with customers:

Commissions, net $ 42,180 $ 356,090 $ — $ 398,270

Workflow technology — 91,667 — 91,667

Analytics — 39,908 — 39,908

Total revenue from contracts with customers 42,180 487,665 — 529,845

Other sources of revenue 1,770,659 26,576 37,732 1,834,967

Total revenues $ 1,812,839 $ 514,241 $ 37,732 $ 2,364,812

Timing of revenue recognition:

Services transferred at a point in time $ 1,812,839 $ 444,483 $ 37,732 $ 2,295,054

Services transferred over time — 69,758 — 69,758

Total revenues $ 1,812,839 $ 514,241 $ 37,732 $ 2,364,812

Year Ended December 31, 2021

(in thousands) Market Making Execution Services Corporate Total

Revenues from contracts with customers:

Commissions, net $ 40,955 $ 433,755 $ — $ 474,710

Workflow technology — 98,486 — 98,486

Analytics — 41,293 41,293

Total revenue from contracts with customers 40,955 573,534 — 614,489

Other sources of revenue 2,162,091 26,681 8,224 2,196,996

Total revenues $ 2,203,046 $ 600,215 $ 8,224 $ 2,811,485

Timing of revenue recognition:

Services transferred at a point in time $ 2,203,046 $ 525,960 $ 8,224 $ 2,737,230

Services transferred over time — 74,255 — 74,255

Total revenues $ 2,203,046 $ 600,215 $ 8,224 $ 2,811,485

Year Ended December 31, 2020

(in thousands) Market Making Execution Services Corporate Total

Revenues from contracts with customers:

Commissions, net $ 52,453 $ 405,698 $ — $ 458,151

Workflow technology — 101,211 — 101,211

Analytics — 41,148 41,148

Total revenue from contracts with customers 52,453 548,057 — 600,510

Other sources of revenue 2,540,889 102,086 ( 4,154 ) 2,638,821

Total revenues $ 2,593,342 $ 650,143 $ ( 4,154 ) $ 3,239,331

Timing of revenue recognition:

Services transferred at a point in time $ 2,593,342 $ 575,846 $ ( 4,154 ) $ 3,165,034

Services transferred over time — 74,297 — 74,297

Total revenues $ 2,593,342 $ 650,143 $ ( 4,154 ) $ 3,239,331

Remaining Performance Obligations and Revenue Recognized from Past Performance Obligations

As of December 31, 2022 and 2021, the aggregate amount of the transaction price allocated to the performance obligations relating to workflow technology and analytics revenues that are unsatisfied (or partially unsatisfied) was not material.

Contract Assets and Contract Liabilities

The timing of the revenue recognition may differ from the timing of payment from customers.

The Company records a receivable when revenue is recognized prior to payment, and when the Company has an unconditional right to payment.

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

Receivables related to revenues from contracts with customers amounted to $ 56.1 million and $ 51.5 million as of December 31, 2022 and December 31, 2021, respectively.

The Company did not identify any contract assets.

There were no impairment losses on receivables as of December 31, 2022.

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

Deferred revenue related to contracts with customers was $ 9.6 million and

$ 9.2 million as of December 31, 2022 and December 31, 2021, respectively.

The Company recognized the full amount of revenue during the years ended December 31, 2022 and 2021, 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.

Income before income taxes and noncontrolling interest is as follows for the years ended December 31, 2022, 2021, and 2020:

Years Ended December 31,

2022 2021 2020

(in thousands)

operations $ 426,902 $ 804,358 $ 1,214,282

operations 129,896 192,546 168,555

$ 556,798 $ 996,904 $ 1,382,837

The provision for income taxes consists of the following for the years ended December 31, 2022, 2021, and 2020:

Years Ended December 31,

(in thousands) 2022 2021 2020

Current provision (benefit)

Federal $ 40,887 $ 80,203 $ 148,034

State and Local 17,216 24,282 52,040

Foreign 26,974 29,790 37,474

Deferred provision (benefit)

Federal 911 30,519 26,255

State and Local 131 4,984 ( 2,580 )

Foreign 2,347 ( 108 ) 701

Provision for income taxes $ 88,466 $ 169,670 $ 261,924

The reconciliation of the tax provision at the U.S.

federal statutory rate to the provision for income taxes for the

years ended December 31, 2022, 2021, and 2020 is as follows:

Years Ended December 31,

2022 2021 2020

(in thousands, except percentages)

Tax provision at the U.S.

federal statutory rate 21.0 % 21.0 % 21.0 %

rate attributable to noncontrolling interest ( 8.3 ) % ( 7.7 ) % ( 7.5 ) %

State and local taxes, net of federal benefit 2.5 % 3.0 % 3.4 %

Non-deductible expenses, net 0.3 % 0.1 % 0.1 %

Excess tax benefit(deficiency) from share based compensation ( 0.3 ) % ( 0.2 ) % — %

Foreign taxes 5.1 % 3.0 % 2.8 %

Foreign tax credits ( 2.8 ) % ( 1.8 ) % ( 0.9 ) %

Other, net ( 1.6 ) % ( 0.4 ) % — %

Effective tax rate 15.9 % 17.0 % 18.9 %

The components of the deferred tax assets and liabilities as of December 31, 2022, and 2021 are as follows:

(in thousands) 2022 2021

Deferred income tax assets

Tax Receivable Agreement $ 162,098 $ 180,376

Share-based compensation 18,043 15,934

Intangibles — 2,061

Fixed assets and other 10,260 12,989

Tax credits and net operating loss carryforwards 57,797 58,801

Valuation allowance on net operating loss carryforwards and tax credits ( 57,389 ) ( 58,602 )

Total deferred income tax assets $ 190,809 $ 211,559

Deferred income tax liabilities

Intangibles $ 44,008 $ 53,106

Fixed assets $ 343 $ —

Total deferred income tax liabilities $ 44,351 $ 53,106

The Company is subject to U.S.

federal, state and local income tax at the rate applicable to corporations less the rate attributable to the noncontrolling interest in Virtu Financial.

These noncontrolling interests are subject to U.S.

taxation as partnerships.

Accordingly, for the years ended December 31, 2022, 2021 and 2020, the income attributable to these noncontrolling interests is reported in the Consolidated Statements of Comprehensive Income, but the related U.S.

income tax expense attributable to these noncontrolling interests is not reported by the Company as it is the obligation of the individual partners.

Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation.

Included in Other assets on the Consolidated Statements of Financial Condition at December 31, 2022 and December 31, 2021 are current income tax receivables of $ 54.1 million and $ 37.2 million, respectively.

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, 2022 and December 31, 2021 are current tax liabilities of $ 13.4 million and $ 16.8 million, respectively.

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

Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the IPO (see Note 5 "Tax Receivable Agreements"), the Acquisition of KCG and the ITG Acquisition, differences in the valuation of financial assets and liabilities, and other temporary differences arising from the deductibility of compensation, depreciation, and other expenses in different time periods for book and income tax return purposes.

There are no expiration dates on the deferred tax assets.

The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the realization of the deferred tax assets.

At December 31, 2022, the Company did not have any U.S.

federal net operating loss carryforwards and therefore the Company did not record a deferred tax asset related to any federal net operating loss carryforwards.

At December 31, 2022, the Company recorded deferred income taxes related to state and local net operating losses of $ 0.4 million.

These net operating losses will begin to expire in 2039.

The Company did not record a valuation allowance against this deferred tax asset.

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

net operating losses at December 31, 2022, 2021 and of $ 64.6 million and $ 67.2 million, respectively, and has recorded a related deferred tax asset of $ 12.4 million and $ 13.4 million, respectively.

A valuation allowance of $ 12.4 million and $ 13.3 million was recorded against this deferred tax asset at December 31, 2022 and 2021, 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, 2022 and 2021 of $ 239.3 million and $ 239.3 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, 2022 and 2021 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, 2022 and 2021 because it is more likely than not that these deferred tax assets will be fully realized.

The Company is subject to taxation in U.S.

federal, state, local and foreign jurisdictions.

As a result of the ITG Acquisition and the Acquisition of KCG, the Company has assumed any ITG and KCG tax exposures.

As of December 31, 2022, the Company’s tax years for 2015 through 2021 and 2017 through 2021 are subject to examination by U.S.

tax authorities, respectively.

In addition, the Company is subject to state and local income tax examinations in various jurisdictions for the tax years 2013 through 2021.

The outcome of these examinations is not yet determinable.

However, the Company anticipates that adjustments to the unrecognized tax benefits, if any, will not result in a material change to the financial condition, results of operations and cash flows.

The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income or loss before income taxes and noncontrolling interest.

Penalties, if any, are recorded in Operations and administrative expense and interest received or paid is recorded in Other, net or Operations and administrative expense in the Consolidated Statements of Comprehensive Income.

The Company had $ 6.6 million of unrecognized tax benefits as of December 31, 2022, all of which would affect the Company’s effective tax rate if recognized.

The Company has determined that there are no uncertain tax positions that would have a material impact on the Company’s financial position as of December 31, 2022.

The table below presents the changes in the liability for unrecognized tax benefits.

This liability is included in Accounts payable and accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

(in thousands)

Balance at December 31, 2019 $ 8,778

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

Increase based on tax positions related to current period 110

Balance at December 31, 2020 8,577

Decreases based on tax positions related to prior period ( 2,300 )

Increase based on tax positions related to current period 20

Balance at December 31, 2021 6,297

Decreases based on tax positions related to prior period —

Increase based on tax positions related to current period 317

Balance at December 31, 2022 $ 6,614

Commitments, Contingencies and Guarantees

Legal and Regulatory Proceedings

In the ordinary course of business, the nature of the Company’s business subjects it to claims, lawsuits, regulatory examinations or investigations and other proceedings, any of which could result in the imposition of fines, penalties or other sanctions against the Company.

The Company and its subsidiaries are subject to several of these matters at the present time, including, among others, a matter in which the Company has been responding to requests for information from the U.S.

Securities and Exchange Commission in connection with an investigation of aspects of the Company’s information access barriers.

The Company is cooperating with this civil investigation.

Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, particularly in regulatory examinations or investigations or other proceedings in which substantial or indeterminate judgments, settlements, disgorgements, restitution, penalties, injunctions, damages or fines are sought, or where such matters are in the early stages, the Company cannot estimate losses or ranges of losses for such matters where there is only a reasonable possibility that a loss may be incurred, and utilizes its judgment in accordance with applicable accounting standards in booking any associated estimated liability.

It is not presently possible to determine the ultimate exposure to these matters and it is possible that the resolution of the outstanding matters will significantly exceed any estimated liabilities accrued by the Company.

In addition, there are numerous factors that result in a greater degree of complexity in class-action lawsuits as compared to other types of litigation.

There can be no assurance that these various legal proceedings will not significantly exceed any estimated liability accrued by the Company or have a material adverse effect on the Company’s results of operations in any future period, and a material judgment, fine or sanction could have a material adverse impact on the Company’s financial condition, results of operations and cash flows.

However, it is the opinion of management, after consultation with legal counsel that, based on information currently available, the ultimate outcome of these matters will not have a material adverse impact on the business, financial condition or operating results of the Company, although they might be material to the operating results for any particular reporting period.

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 November 30, 2020, the Company was named as a defendant in In re United States Oil Fund, LP Securities Litigation , No.

The consolidated amended complaint was filed in federal district court in New York on behalf of a putative class, and asserts claims against the Company and numerous other financial institutions under Section 11 of the Securities Act of 1933 in connection with trading in United States Oil Fund, LP, a crude oil ETF.

The complaint also names the ETF, its sponsor, and related individuals as defendants.

The complaint did not specify the amount of alleged damages.

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

the motion is fully briefed and pending before the court.

The Company believes that the claims are without merit and is defending itself vigorously.

On March 7, 2022, the Company was named as a defendant in Iron Workers Local No.

55 Pension Fund v.

Virtu Financial, Inc.

2022-0211-PAF pending in the Court of Chancery of the State of Delaware.

The complaint, filed by a purported stockholder, seeks to compel the inspection of certain Company books and records pursuant to Section 220 of the Delaware General Corporation Law.

The complaint alleges that the stockholder seeks Company information to investigate (a) whether wrongdoing or mismanagement occurred in connection with distributions made to the partners of Virtu Financial pursuant to the Company’s Up-C corporate structure;

(b) the independence and disinterestedness of the Company’s directors and/or officers and whether the directors breached their fiduciary duties;

and (c) potential damages relating thereto.

The Company believes that the claims are without merit and is defending itself vigorously.

On October 17, 2022, the Company’s subsidiary, along with several other parties, was named as a defendant in Mallinckrodt PLC, et al.

(Reorganized Debtors);

Opiod Master Disbursement Trust II v.

Argos Capital Appreciation Master Fund LP et al No.

The complaint alleges that Mallinckrodt PLC engaged in share repurchase program from 2015 through 2018 pursuant to which it repurchased its own shares in various open market transactions, a period during which it was allegedly insolvent.

The plaintiff is seeking to unwind the transactions consummated under the program, alleging such transactions constituted fraudulent transfers by the debtor.

The Company believes that the claims are without merit and is defending itself vigorously.

On December 1, 2022, the Company’s subsidiary, along with several other parties, was named as a defendant in Northwest Biotherapeutics, Inc.

Canaccord Genuity LLC, et al No.

1:22-cv-10185.

The complaint alleges that defendants engaged in market manipulation in the plaintiff’s stock during a period from 2018 to 2022.

The complaint did not specify the amount of alleged damages.

The Company believes that the claims are without merit and is defending itself vigorously.

Other Legal and Regulatory Matters

The Company owns subsidiaries including regulated entities that are subject to extensive oversight under federal, state and applicable international laws as well as self-regulatory organization (“SRO”) rules.

Changes in market structure and the need to remain competitive require constant changes to the Company's systems, order routing and order handling procedures.

The Company makes these changes while continuously endeavoring to comply with many complex laws and rules.

Compliance, surveillance and trading issues common in the securities industry are monitored by, reported to, and/or reviewed in the ordinary course of business by the Company's regulators in the U.S.

As a major order flow execution destination, the Company is named from time to time in, or is asked to respond to a number of regulatory matters brought by U.S.

regulators, foreign regulators, SROs, as well as actions brought by private plaintiffs, which arise from its business activities.

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 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.

Specifically, the SEC has proposed several rule changes focused on equity market structure reform in 2022.

These proposals include, but are not limited to, (i) Proposed Rule 615 of Regulation NMS, which proposes to dramatically change U.S.

equities market structure, the routing, handling and potentially the amount, character and cost of retail order flow, (ii) Regulation Best Execution, which would impose best execution requirements on broker-dealers which would be distinct from, but overlapping with, FINRA’s existing best execution rule (Rule 5310), (iii) proposed rule amendments to minimum pricing increments under Rule 612 or Regulation NMS, access fee caps under Rule 610 of Regulation NMS, acceleration of implementation of certain Market Data Infrastructure Rules, and amendment to the odd-lot information definition adopted under the MDI rules (collectively referred to as the “tick size, access fees and infostructure rule proposals”), and (iv) amendments to Rule 605 of Regulation NMS, along with a series of amendments to the definition of Exchange and Alternative Trading Systems (ATS), which would expand the scope of exchange and ATS registration and compliance requirements.

If adopted, these or other potential rule changes could adversely affect the Company’s business or the Company’s industry.

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.

As indicated above, 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.

Representations and Warranties;

Indemnification Arrangements

In the normal course of its operations, the Company enters into contracts that contain a variety of representations and warranties in addition to indemnification obligations, including indemnification obligations in connection with the Acquisition of KCG and the ITG Acquisition.

The Company's maximum exposure under these arrangements is currently unknown, as any such exposure could relate to claims not yet brought or events which have not yet occurred.

For example, in November 2013, KCG sold Urban Financial of America, LLC (“Urban”), the reverse mortgage origination and securitization business previously owned by Knight Capital Group, Inc., to an investor group now known as Finance of America Reverse, LLC (“FAR”).

Pursuant to the terms of the Stock Purchase Agreement between KCG and FAR, Virtu has certain continuing obligations related to KCG's prior ownership of Urban.

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain a variety of representations and warranties and general indemnifications.

The Company has also provided general indemnifications to its managers, officers, directors, employees, and agents against expenses, legal fees, judgments, fines, settlements, and other amounts actually and reasonably incurred by such persons under certain circumstances as more fully disclosed in its operating agreement.

The 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's leases are primarily for corporate office space, datacenters, and technology equipment.

The leases have remaining terms of 1 to 10 years, some of which include options to extend the initial term at the Company's discretion.

The lease terms used in calculating ROU assets and lease liabilities include the options to extend the initial term when the Company is reasonably certain of exercising the options.

The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants.

In addition to the base rental costs, the Company’s lease agreements for corporate office space generally provide for rent escalations resulting from increased assessments for operating expenses, real estate taxes and other charges.

Payments for such reimbursable expenses are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred.

The Company also subleases certain office space and facilities to third parties.

The subleases have remaining terms of 1 to 9 years.

The Company recognizes amounts received from subleases on a straight-line basis over the term of the sublease within Operations and administrative expense on the Consolidated Statements of Comprehensive Income.

As the implied discount rate for most of the Company's leases is not readily determinable, the Company uses its incremental borrowing rate on its secured borrowings in determining the present value of lease payments.

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:

(in thousands) Financial Statement Location December 31, 2022 December 31, 2021

Operating leases

Operating lease right-of-use assets Operating lease right-of-use assets $ 187,442 $ 225,328

Operating lease liabilities Operating lease liabilities 239,202 278,745

Finance leases

Property and equipment, at cost Property, equipment, and capitalized software, net 27,908 18,965

Accumulated depreciation Property, equipment, and capitalized software, net ( 12,736 ) ( 12,465 )

Finance lease liabilities Accounts payable, accrued expenses, and other liabilities 15,323 6,612

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

December 31, 2022 December 31, 2021

Weighted average remaining lease term

Operating leases 6.21 years 6.68 years

Finance leases 2.84 years 1.62 years

Weighted average discount rate

Operating leases 5.43 % 5.47 %

Finance leases 3.92 % 2.38 %

The components of lease expense are as follows:

Years Ended December 31,

(in thousands) 2022 2021 2020

Operating lease cost:

Fixed $ 72,749 $ 74,699 $ 73,624

Variable 6,079 6,247 8,532

Impairment of ROU Asset 5,270 9,606 6,003

Total Operating lease cost $ 84,098 $ 90,552 $ 88,159

Sublease income 19,679 17,758 16,437

Finance lease cost:

Amortization of ROU Asset $ 7,685 $ 6,587 $ 11,536

Interest on lease liabilities 366 230 432

Total Finance lease cost $ 8,051 $ 6,817 $ 11,968

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, 2022, are as follows:

(in thousands) Operating Leases Finance Leases

2023 $ 71,193 $ 7,050

2024 43,345 5,440

2025 35,232 1,854

2026 32,174 1,076

2027 25,494 986

2028 and thereafter 76,967 —

Total lease payments $ 284,405 $ 16,406

Less imputed interest ( 45,203 ) ( 1,083 )

Total lease liability $ 239,202 $ 15,323

The following table provides a reconciliation of cash and cash equivalents together with restricted or segregated cash

as reported within the Consolidated Statements of Financial Condition to the sum of the same such amounts shown in the Consolidated Statements of Cash Flows.

(in thousands) December 31, 2022 December 31, 2021

Cash and cash equivalents $ 981,580 $ 1,071,463

Cash restricted or segregated under regulations and other 56,662 49,490

Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 1,038,242 $ 1,120,953

Capital Structure

The Company has four classes of authorized common stock.

The Class A Common Stock and the Class C Common Stock have one vote per share.

The Class B Common Stock and the Class D Common Stock have 10 votes per share.

Shares of the Company’s common stock generally vote together as a single class on all matters submitted to a vote of the Company’s stockholders.

The Founder Member controls approximately 85.2 % of the combined voting power of our common stock as a result of its ownership of our Class A, Class C and Class D Common Stock.

The Company holds approximately a 59.7 % interest in Virtu Financial at December 31, 2022.

During the period prior to the Company's IPO and certain reorganization transactions consummated in connection with the IPO, Class A-2 profits interests and Class B interests in Virtu Financial were issued to Employee Holdco (as defined below) on behalf of certain key employees and stakeholders.

In connection with these reorganization transactions, all Class A-2 profits interests and Class B interests were reclassified into Virtu Financial Units.

As of December 31, 2022 and December 31, 2021, there were 4,462,840 and 4,791,839 Virtu Financial Units outstanding held by Employee Holdco (as defined below), respectively, and 328,999 , 467,874 and 2,660,239 of such Virtu Financial Units and corresponding Class C Common Stock were exchanged into Class A Common Stock, forfeited or repurchased during the years ended December 31, 2022, 2021 and 2020 respectively.

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, June 5, 2020 and June 2, 2022.

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 26,000,000 shares of Class A Common Stock, subject to additional sublimits, including limits on the total option grant to any one participant in a single year and the total performance award to any one participant in a single year.

On November 13, 2020, the Company amended its form award agreement for the issuance of RSUs to provide for the continued vesting of outstanding RSU awards upon the occurrence of a qualified retirement (the "RSU Amendment").

A qualified retirement generally means a voluntary resignation by the participant (i) after five years of service, (ii) the participant attaining the age of 50 and (iii) the sum of the participant's age and service at the time of termination equaling or exceeding 65.

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

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

As a result of the RSU Amendment, currently issued and outstanding RSUs held by the Company's employees, including its executive officers, shall be deemed to be subject to the amended terms of the form award agreement, and any future RSU awards shall also be governed by such amended terms.

Amended and Restated Investment Technology Group, Inc.

2007 Omnibus Equity Compensation Plan

On the ITG Closing Date, the Company assumed the Amended and Restated ITG 2007 Equity Plan and the Assumed Awards.

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 .

Share Repurchase Program

On November 6, 2020, the Company's Board of Directors authorized a 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 an additional $ 300 million in Class A Common Stock and Virtu Financial Units and extending the duration of the program through May 4, 2022.

On November 3, 2021 the Company's Board of Directors authorized another 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, 2022, the Company repurchased approximately 32.3 million shares of Class A Common Stock and Virtu Financial Units for approximately $ 899.6 million.

As of December 31, 2022, the

Company has approximately $ 320.4 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

Employee Exchanges

During the years ended December 31, 2022, 2021 and 2020, pursuant to the exchange agreement by and among the Company, Virtu Financial and holders of Virtu Financial Units, certain current and former employees elected to exchange 92,930 , 747,849 and 2,660,239 units, respectively in Virtu Financial held directly or on their behalf by Virtu Employee Holdco LLC (“Employee Holdco”) on a one -for-one basis for shares of Class A Common Stock.

Warrant Issuance

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 9 "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 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.

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 9 "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.

Accumulated Other Comprehensive Income

The following table presents the changes in Other Comprehensive Income for the years ended December 31, 2022, 2021, and 2020:

Year Ended December 31, 2022

(in thousands) AOCI Beginning Balance Amounts recorded

in AOCI Amounts reclassified from AOCI to income AOCI Ending Balance

Net change in unrealized cash flow hedges gains (losses) (1) $ ( 10,480 ) $ 55,955 $ ( 550 ) $ 44,925

Foreign exchange translation adjustment 284 ( 13,605 ) — ( 13,321 )

Total $ ( 10,196 ) $ 42,350 $ ( 550 ) $ 31,604

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

As of December 31, 2022, the Company expects approximately $ 13.6 million to be reclassified from AOCI into earnings over the next 12 months.

The timing of the reclassification is based on the interest payment schedule of the long-term borrowings.

Year Ended December 31, 2021

(in thousands) AOCI Beginning Balance Amounts recorded

in AOCI Amounts reclassified from AOCI to income AOCI Ending Balance

Net change in unrealized cash flow hedges gains (losses) (1) $ ( 33,444 ) $ 8,374 $ 14,590 $ ( 10,480 )

Foreign exchange translation adjustment 7,957 ( 7,673 ) — 284

Total $ ( 25,487 ) $ 701 $ 14,590 $ ( 10,196 )

(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, 2020

(in thousands) AOCI Beginning Balance Amounts recorded

in AOCI Amounts reclassified from AOCI to income AOCI Ending Balance

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

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

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

Share-based Compensation

Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 18 "Capital Structure", and in connection with the IPO, non-qualified stock options to purchase shares of Class A Common Stock were granted, each of which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the date of grant.

The following table summarizes activity related to stock options for the years ended December 31, 2022, 2021, and 2020:

Options Outstanding Options Exercisable

Number of Options Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life Number of Options Weighted Average Exercise Price

At December 31, 2019 3,233,779 $ 18.74 5.24 3,248,779 $ 18.74

Granted — — — — —

Exercised ( 909,627 ) 18.07 — ( 909,627 ) 18.07

Forfeited or expired — — — — —

At December 31, 2020 2,324,152 $ 19.00 4.24 2,324,152 $ 19.00

Granted — — — — —

Exercised ( 528,497 ) 19.00 — ( 528,497 ) 19.00

Forfeited or expired — — — — —

At December 31, 2021 1,795,655 $ 19.00 3.24 1,795,655 $ 19.00

Granted — — — — —

Exercised ( 268,879 ) 19.00 — ( 268,879 ) 19.00

Forfeited or expired ( 5,000 ) — — ( 5,000 ) —

At December 31, 2022 1,521,776 $ 19.00 2.24 1,521,776 $ 19.00

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

The risk-free interest rate was determined based on the yields available on U.S.

Treasury zero-coupon issues.

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.

Amended and Restated Investment Technology Group, Inc.

2007 Omnibus Equity Compensation Plan

On the ITG Closing Date, the Company assumed the Amended and Restated ITG 2007 Equity Plan and the Assumed Awards.

The Assumed Awards are subject to the same terms and conditions that were applicable to them under the Amended and Restated ITG 2007 Equity Plan, except that (i) the Assumed Awards relate to shares of the Company’s Class A Common Stock, (ii) the number of shares of Class A Common Stock subject to the Assumed Awards was the result of an adjustment based upon an Exchange Ratio (as defined in the 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.

Class A Common Stock, Restricted Stock Units and Restricted Stock Awards

Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 18 "Capital Structure", subsequent to the IPO, shares of immediately vested Class A Common Stock, RSUs and RSAs were granted, with RSUs and RSAs vesting over a period of up to 4 years.

The fair value of the Class A Common Stock and RSUs was determined based on a volume weighted average price and the expense is recognized on a straight-line basis over the vesting period.

The fair value of the RSAs was determined based on the closing price as of the date of grant and the expense is recognized from the date that achievement of the performance target becomes probable through the remainder of the vesting period.

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

For the years ended December 31, 2022, 2021, and 2020 respectively, there were 580,710 , 633,938 and 967,526 shares of immediately vested Class A Common Stock granted as part of year-end compensation.

In addition, the Company accrued compensation expense of $ 31.9 million, $ 29.4 million and $ 25.2 million for the years ended December 31, 2022, 2021, and 2020 respectively, related to immediately vested Class A Common Stock expected to be awarded as part of year-end incentive compensation, which was included in Employee compensation and payroll taxes on the 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, 2022, 2021 and 2020:

Number of RSUs and RSAs Weighted

Average Fair Value

At December 31, 2019 2,993,489 $ 24.10

Granted 3,318,169 17.49

Forfeited ( 430,961 ) 17.45

Vested ( 2,487,613 ) 20.17

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

Granted 2,466,311 27.07

Forfeited ( 200,697 ) 22.95

Vested ( 2,434,251 ) 23.11

At December 31, 2021 3,224,447 $ 24.30

Granted (1) 3,046,623 29.83

Forfeited ( 419,207 ) 26.01

Vested ( 1,897,030 ) 24.80

At December 31, 2022 3,954,833 $ 28.13

(1) Excluded in the number of RSUs and RSAs are 75,000 participating RSAs where the grant date has not been achieved because the performance conditions have not been met.

The Company recognized $ 36.2 million, $ 26.4 million and $ 37.4 million for the years ended December 31, 2022, and 2021, respectively, of compensation expense in relation to RSUs.

As of December 31, 2022 and December 31, 2021, total unrecognized share-based compensation expense related to unvested RSUs was $ 54.6 million and $ 41.9 million, respectively, and this amount is to be recognized over a weighted average period of 0.9 years and 0.9 years, respectively.

Awards in which the specific performance conditions have not been met are not included in unrecognized share-based compensation expense.

On November 13, 2020, the Company adopted the Virtu Financial, Inc.

Deferred Compensation Plan (the "DCP").

The DCP permits eligible executive officers and other employees to defer cash or equity-based compensation beginning in the calendar year ending December 31, 2021, subject to certain limitations and restrictions.

Deferrals of cash compensation may

also be directed to notional investments in certain of the employee investment opportunities.

The Company had $ 10.1 million and $ 5.0 million accrued under the DCP as of December 31, 2022 and December 31, 2021, respectively, recorded within Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

Property, Equipment and Capitalized Software

Property, equipment and capitalized software consisted of the following at December 31, 2022 and December 31, 2021:

(in thousands) December 31, 2022 December 31, 2021

Capitalized software costs $ 242,769 $ 210,647

Leasehold improvements 18,370 17,773

Furniture and equipment 284,818 333,330

Total 545,957 561,750

Accumulated depreciation and amortization ( 460,763 ) ( 472,155 )

Total property, equipment and capitalized software, net $ 85,194 $ 89,595

Depreciation expense for property and equipment for the years ended December 31, 2022, 2021, and 2020 was approximately $ 26.1 million, $ 28.4 million, and $ 37.4 million, respectively, and is included within depreciation and amortization expense in the Consolidated Statements of Comprehensive Income.

The Company’s capitalized software development costs were approximately $ 35.5 million, $ 35.8 million, and $ 37.0 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The related amortization expense was approximately $ 40.2 million, $ 39.4 million, and $ 29.3 million for the years ended December 31, 2022, 2021, and 2020, respectively, and is included within Depreciation and amortization in the Consolidated Statements of Comprehensive Income.

Regulatory Requirement

The Company's U.S.

broker-dealer subsidiary, VAL, is subject to the SEC Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital as detailed in the table below.

Pursuant to New York Stock Exchange ("NYSE") rules, VAL was also required to maintain $ 1.0 million of capital in connection with the operation of its designated market maker (“DMM”) business as of December 31, 2022.

The required amount is determined under the exchange rules as the greater of (i) $ 1 million or (ii) $ 75,000 for every 0.1 % of NYSE transaction dollar volume in each of the securities for which the Company is registered as the DMM.

VAL's regulatory capital and regulatory capital requirements as of December 31, 2022 was as follows:

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

Virtu Americas LLC $ 554,550 $ 1,000 $ 553,550

As of December 31, 2022, VAL had $ 50.2 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 $ 5.8 million of cash in reserve bank accounts for the benefit of proprietary accounts of brokers.

The balances are included within Cash restricted or segregated under regulations and other on the Consolidated Statements of Financial Condition.

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

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

Virtu Americas LLC $ 536,647 $ 1,194 $ 535,453

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.

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 ("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, 2022 were as follows:

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

Virtu ITG Canada Corp $ 14,248 $ 184 $ 14,064

Virtu Financial Canada ULC 2,663 184 2,479

Virtu ITG Europe Limited 78,834 28,502 50,332

Virtu Financial Ireland Limited (1) 89,853 39,768 50,085

United Kingdom

Virtu ITG UK Limited 1,405 906 499

Virtu ITG Australia Limited 30,027 3,115 26,912

Virtu ITG Hong Kong Limited 1,683 497 1,186

Virtu ITG Singapore Pte Limited 1,147 91 1,056

Virtu Financial Singapore Pte.

121,166 46,025 75,141

(1) Preliminary

As of December 31, 2022, Virtu ITG Europe Limited and Virtu ITG Canada Corp had $ 0.1 million and $ 0.4 million, respectively, of segregated funds on deposit for trade clearing and settlement activity, and Virtu ITG Hong Kong Ltd.

had $ 30 thousand of segregated balances under a collateral account control agreement for the benefit of certain customers.

The regulatory net capital balances and regulatory capital requirements applicable to the Company's foreign subsidiaries as of December 31, 2021 were as follows:

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

Virtu ITG Canada Corp $ 15,482 $ 198 $ 15,284

Virtu Financial Canada ULC 200 198 2

Virtu ITG Europe Limited 79,087 39,331 39,756

Virtu Financial Ireland Limited 107,293 47,872 59,421

United Kingdom

Virtu ITG UK Limited 1,142 830 312

Virtu ITG Australia Limited 32,186 7,164 25,022

Virtu ITG Hong Kong Limited 4,514 529 3,985

Virtu ITG Singapore Pte Limited 897 74 823

As of December 31, 2021, Virtu ITG Europe Limited and Virtu ITG Canada Corp had $ 0.1 million and $ 0.4 million, respectively, of funds on deposit for trade clearing and settlement activity, and Virtu ITG Hong Kong Ltd had $ 30 thousand of segregated balances under a collateral account control agreement for the benefit of certain customers.

Geographic Information and Business Segments

The Company operates its business in the U.S.

and internationally, primarily in Europe, Asia and Canada.

Significant transactions and balances between geographic regions occur primarily as a result of certain of the Company’s subsidiaries incurring operating expenses such as employee compensation, communications and data processing and other overhead costs, for the purpose of providing execution, clearing and other support services to affiliates.

Charges for transactions between regions are designed to approximate full costs.

Intra-region income and expenses and related balances have been eliminated in the geographic information presented below to accurately reflect the external business conducted in each geographical region.

The revenues are attributed to countries based on the locations of the subsidiaries.

The following table presents total revenues by geographic area for the years ended December 31, 2022, 2021, and 2020 :

Years Ended December 31,

(in thousands) 2022 2021 2020

United States $ 1,914,223 $ 2,260,750 $ 2,569,147

Ireland 222,178 305,509 323,519

Singapore 134,786 135,779 176,665

Canada 60,551 61,378 116,521

Australia 29,489 40,613 44,552

Others 3,585 7,456 8,927

Total revenues $ 2,364,812 $ 2,811,485 $ 3,239,331

The Company has two operating segments:

(i) Market Making and (ii) Execution Services;

and one non-operating segment:

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, Electronic Communications Networks ("ECNs") and alternative trading systems ("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.

As a complement to electronic market making, the cash trading business handles specialized orders and also transacts on the OTC Link ATS operated by OTC Markets Group Inc.

The Execution Services segment comprises client-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker-dealers.

The Company earns commissions and commission equivalents as an agent on behalf of clients as well as between principals to transactions;

in addition, the Company will commit capital on behalf of clients as needed.

Client-based, execution-only trading in the segment is done primarily through a variety of access points including:

(i) algorithmic trading and order routing in global equities and options;

(ii) institutional sales traders who offer portfolio trading and single stock sales trading which provides execution expertise for program, block and riskless principal trades in global equities and ETFs;

and (iii) matching of client conditional orders in POSIT Alert and client orders in the Company's ATSs, including Virtu MatchIt, and POSIT.

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 acts 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.

Management evaluates the performance of its segments on a pre-tax basis.

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, 2022, 2021, and 2020 and are summarized in the following table:

The Company's Pre-tax earnings by segment for the year ended December 31, 2022, and 2021 are summarized in the following table:

(in thousands) Market Making Execution Services Corporate Consolidated Total

Total revenue $ 1,812,839 $ 514,241 $ 37,732 $ 2,364,812

Income before income taxes and noncontrolling interest 480,559 41,342 34,897 556,798

Total revenue 2,203,046 600,215 8,224 2,811,485

Income before income taxes and noncontrolling interest 925,968 70,019 917 996,904

Total revenue 2,593,342 650,143 ( 4,154 ) 3,239,331

Income (loss) before income taxes and noncontrolling interest 1,241,313 174,617 ( 33,093 ) 1,382,837

Related Party Transactions

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

As of December 31, 2022, and December 31, 2021, the Company had a net receivables from its affiliates of $ 0.5 million and a net receivables from its affiliates of $ 2.2 million, respectively.

The Company has held a minority interest in JNX since 2016 (see Note 10 "Financial Assets and Liabilities").

The Company pays exchange fees to JNX for the trading activities conducted on its proprietary trading system.

The Company paid $ 13.8 million, $ 12.5 million and $ 16.7 million for the years ended December 31, 2022, 2021 and 2020, respectively, to JNX for these trading activities.

The Company makes payments to two JVs (see Note 2 "Summary of Significant Accounting Policies") to fund the construction of the microwave communication networks, and to purchase microwave communication networks, which are recorded within Communications and data processing on the Consolidated Statements of Comprehensive Income.

The Company made payments of $ 27.7 million, $ 25.3 million and $ 18.7 million to the JVs for the years ended December 31, 2022, 2021 and 2020, 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, 2022, 2021 and 2020.

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 $ 16.0 million, $ 3.6 million, and $ 0.6 million for the years ended December 31, 2022, 2021 and 2020.

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

As described in Note 9 "Borrowings" and Note 18 "Capital Structure", on March 20, 2020 a subsidiary of the Company entered into an agreement with the Founder Member to establish the Founder Member Facility and, upon the execution of the Founder Member Facility and in consideration of the Founder Member’s commitments thereunder, the Company delivered to the Founder Member the Warrant.

The transactions were unanimously approved by the Company’s disinterested Directors.

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

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 9 "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

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.

Virtu Financial, Inc.

(Parent Company Only)

Statements of Financial Condition

(In thousands except interest data) December 31, 2022 December 31, 2021

Cash $ 6,264 $ 129,229

Deferred tax asset 139,139 149,742

Investment in subsidiary 3,119,418 3,221,605

Other assets 52,153 40,183

Total assets $ 3,316,974 $ 3,540,759

Liabilities, redeemable membership interest and equity

Payable to affiliate $ 1,733,429 $ 1,729,320

Accounts payable and accrued expenses and other liabilities 888 50

Deferred tax liabilities 2,000 2,719

Tax receivable agreement obligations 238,758 259,282

Total liabilities 1,975,075 1,991,371

Virtu Financial Inc.

Stockholders' equity

Class B common stock (par value $ 0.00001 ), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at December 31, 2022 and December 31, 2021, respectively

Treasury stock, at cost, 34,522,290 and 18,326,863 shares at December 31, 2022 and December 31, 2021, respectively

( 954,637 ) ( 494,075 )

Additional paid-in capital 1,292,613 1,223,119

Retained earnings (accumulated deficit) 972,317 830,538

Accumulated other comprehensive income (loss) 31,604 ( 10,196 )

Total Virtu Financial Inc.

stockholders' equity 1,341,899 1,549,388

Total liabilities and stockholders' equity $ 3,316,974 $ 3,540,759

Virtu Financial, Inc.

(Parent Company Only)

Statements of Comprehensive Income

Years Ended December 31,

(in thousands) 2022 2021 2020

Other Income $ — $ — $ —

Operating Expenses:

Operations and administrative 36 734 171

Income (loss) before equity in income of subsidiary ( 36 ) ( 734 ) ( 171 )

Equity in income (loss) of subsidiary, net of tax 468,368 827,968 1,121,084

Net income (loss) $ 468,332 $ 827,234 $ 1,120,913

Net income (loss) attributable to common stockholders $ 468,332 $ 827,234 $ 1,120,913

Other comprehensive income (loss):

Foreign currency translation adjustment, net of taxes ( 13,604 ) ( 7,672 ) 8,604

Net change in unrealized cash flow hedges gains (losses), net of taxes 55,404 22,964 ( 33,444 )

Comprehensive income (loss) $ 510,132 $ 842,526 $ 1,096,073

Virtu Financial, Inc.

(Parent Company Only)

Statements of Cash Flows

Years Ended December 31,

(in thousands) 2022 2021 2020

Cash flows from operating activities

Net income $ 468,332 $ 827,234 $ 1,120,913

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

Equity in income of subsidiary, net of tax 239,807 87,055 ( 543,992 )

Tax receivable agreement obligation reduction 819 4,622 15,169

Deferred taxes 9,884 36,526 14,243

Changes in operating assets and liabilities:

( 11,132 ) 42,086 ( 48,566 )

Net cash provided by operating activities 707,710 997,523 557,767

Cash flows from investing activities

Investments in subsidiaries, equity basis 71,597 55,654 56,629

Net cash provided by investing activities 71,597 55,654 56,629

Cash flows from financing activities

Dividends to stockholders and distributions from Virtu Financial to noncontrolling interest ( 375,284 ) ( 548,017 ) ( 484,415 )

Repurchase of Class C common stock ( 8,256 ) ( 3,454 ) —

Purchase of treasury stock ( 480,544 ) ( 427,454 ) ( 49,864 )

Tax receivable agreement obligations ( 21,343 ) ( 16,505 ) ( 13,286 )

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

Net cash used in financing activities ( 885,427 ) ( 995,430 ) ( 547,565 )

Net increase (decrease) in Cash ( 106,120 ) 57,747 66,831

Cash, beginning of period 129,228 71,481 4,650

Cash, end of period $ 23,108 $ 129,228 $ 71,481

Supplemental disclosure of cash flow information:

Taxes paid $ 64,775 $ 78,844 $ 203,031

Non-cash financing activities

Tax receivable agreement described in Note 6 1,044 311 ( 1,388 )

Subsequent Events

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 26, 2023, 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, 2023 to holders of record as of March 1, 2023.

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 7A. Quantitative and Qualitative Disclosures About Market Risk