What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-02-16 compared with 2023-02-17 · 87 added, 127 removed, 566 unchanged (27% of the section changed)

4 unchanged sentences

• Our revenues and profitability depend on trading volume, volatility, retail participation and other characteristics in the markets in which we operate and the order flow with which we interact and therefore are subject to factors beyond our control, are prone to significant fluctuations and are difficult to predict.

• We are dependent upon our trading counterparties and clearing houses to perform their obligations to us.

• We are dependent upon our trading counterparties, clients and clearing houses to perform their obligations to us.

• We may incur losses in our market making activities and our execution services businesses due to failures of our customized trading platform, due to market risk or from a lack of perfect information.

20 unchanged sentences

• We are dependent on the continued service of certain key executives, the loss or diminished performance of whom could have a material adverse effect on our business and our success depends, in part, on our ability to identify, recruit and retain skilled management and technical personnel.

• The COVID-19 pandemic could adversely affect our business, results of operations and financial condition.

• We may incur losses as a result of unforeseen or catastrophic events, including the emergence of another pandemic, social unrest, terrorist attacks, extreme weather events or other natural disasters.

• We may be subject to increased risks or business disruption, incur losses or suffer reputational harm in relation to or as a result of climate change.

24 unchanged sentences

• Our stock price and trading volume could decline as a result of inaccurate or unfavorable research, or the cessation of research coverage, about us or our business published by securities or industry analysts.

• Our reported financial results depend on management’s selection of accounting methods and certain assumptions and estimates.

2 unchanged sentences

Our revenues and profitability depend in part on the level of trading activity of securities, derivatives and other financial products on exchanges and in other trading venues in the U.S.

and abroad, which are directly affected by factors beyond our control, including economic and political conditions, regulatory changes, emergencies and pandemics, broad trends in business and finance and changes in the markets in which such transactions occur.

and abroad, which are directly affected by factors

beyond our control, including economic and political conditions, regulatory changes, emergencies and pandemics, broad trends in business and finance and changes in the markets in which such transactions occur.

Weaknesses in the markets in which we operate, including economic slowdowns in recent years, have historically resulted in reduced trading volumes for us.

8 unchanged sentences

As a result, period to period comparisons of our revenues and operating results may not be meaningful, and future revenues and profitability may be subject to significant fluctuations or declines.

We are dependent upon our trading counterparties and clearing houses to perform their obligations to us.

Our business consists of providing consistent two‑sided liquidity to market participants across numerous geographies and asset classes.

We are dependent upon our trading counterparties, clients and clearing houses to perform their obligations to us.

Our business consists of providing consistent two‑sided liquidity to market participants across numerous geographies and asset classes as well as providing trade execution and related services to clients.

In the event of a systemic market event, resulting from large price movements or otherwise, certain market participants may not be able to meet their obligations to their trading counterparties, who, in turn, may not be able to meet their obligations to their other trading counterparties, which could lead to major defaults by one or more market participants.

Further, one or more counterparties may suffer liquidity or solvency challenges as a result of internal or other idiosyncratic events, and this may prevent these counterparties, and potentially their counterparties, from meeting their obligations to us.

Further, one or more counterparties or clients may suffer liquidity or solvency challenges as a result of internal or other idiosyncratic events, and this may prevent these counterparties or clients, and potentially their counterparties or clients, from meeting their obligations to us.

Following the implementation of certain mandates under the Dodd‑Frank Act in the U.S.

35 unchanged sentences

Our competitors range from sole proprietors with very limited resources to highly sophisticated groups, hedge funds, well‑capitalized broker‑dealers and proprietary trading firms or other market makers that have substantially greater financial and other resources than we do.

These larger and better capitalized competitors may be better able to respond to changes in the market making industry, to compete for skilled professionals, to finance acquisitions, to fund internal growth, to manage costs and expenses and to compete for market share

Trading firms that are not registered as broker‑dealers or broker‑dealers not registered as market makers may in some instances have certain advantages over more regulated firms, including our subsidiaries that may allow them to bypass regulatory restrictions and trade more cheaply than more regulated participants on some markets or exchanges.

2 unchanged sentences

The trend toward increased competition in our business is expected to continue, and it is possible that our competitors may acquire increased market share.

Increased competition or consolidation in the marketplace could reduce the bid/ask spreads on which our business and profitability depend, and may also reduce commissions paid by institutional clients for execution services, negatively impacting our financial performance.

our financial performance.

As a result, there can be no assurance that we will be able to compete effectively with current or future competitors, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

10 unchanged sentences

We could lose significant sources of revenues if we lose any of our larger clients or sources of order flow or lose access to an important exchange or other trading venue or if we fail to adapt to proposed new regulations, should they become final rules.

At times, a limited number of clients could account for a significant portion of our order flow, revenues and profitability, and we expect a large portion of the future demand for, and profitability from, our trade execution services to remain concentrated within a limited number of clients.

During a given period, a limited number of clients may account for a significant portion of our order flow, revenues and profitability, and we expect a large portion of the future demand for, and profitability from, our trade execution services to remain concentrated within a limited number of clients.

The loss of one or more larger clients could have an adverse effect on our revenues and profitability in the future.

5 unchanged sentences

The loss, or a significant reduction, of demand for our services from any of these clients could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Similarly, changes in applicable laws, regulations or rules promulgated by exchanges could conceivably prevent us from providing liquidity directly to clients or counterparties or other trading venue where we provide liquidity today.

Similarly, changes in applicable laws, regulations or rules promulgated by regulators or exchanges could conceivably prevent us from providing liquidity directly to clients or counterparties or other trading venue where we provide liquidity today.

Following recent regulatory attention on U.S.

2 unchanged sentences

This and other potential legal and regulatory changes are discussed in further detail in “Item 1A.

Risk Factors—Legal and Regulatory Risks.

Though our revenues are diversified across exchanges and other trading venues, asset classes and geographies, the loss of access to or reduction in opportunities to transact with one or more significant clients or counterparties, exchanges or other trading venues for any reason could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Risk Factors—Legal and Regulatory Risks.” Though our revenues are diversified across exchanges and other trading venues, asset classes and geographies, the loss of access to or reduction in opportunities to transact with one or more significant clients or counterparties, exchanges or other trading venues for any reason could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are subject to liquidity risk in our operations.

1 unchanged sentence

Our main sources of liquidity are cash flow from the operations of our subsidiaries, our broker‑dealer revolving credit facilities (described under “Item 7.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations - Liquidity and Capital Resources - Long-Term Borrowings”), margin financing provided by our prime brokers and cash on hand.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Long-Term Borrowings”), margin financing provided by our prime brokers and cash on hand.

Our liquidity could be materially impaired by a number of factors, including increased funding requirements for margin or settlement with central clearinghouses, prime brokers or counterparties, reduced business activity due to a market downturn, adverse regulatory action or a downgrade of our credit rating.

13 unchanged sentences

We have a substantial amount of indebtedness, which could negatively impact our business and financial condition, and may limit our flexibility in operating our business.

As of December 31, 2022, we had an aggregate of $1,826.7 million outstanding indebtedness under our long-term borrowings, which includes to $1.8 billion of debt incurred in connection with a refinancing transaction entered into on January 13, 2022 which is discussed in further detail in Note 9 "Borrowings" of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

As of December 31, 2023, we had an aggregate of $1,751.8 million outstanding indebtedness under our long-term borrowings.

In 2022, we incurred $1.8 billion of term loan under the Credit Agreement (as defined below) in connection with a refinancing transaction entered into on January 13, 2022 which is discussed in further detail in Note 8 “Borrowings” of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets or issue equity to obtain necessary funds.

We do not know whether we will be able to take any of such actions on a timely basis, on terms satisfactory to us or at all.

The Credit Agreement also provides for a revolving credit facility which allows us to borrow on a revolving basis, subject to maximum borrowing limit of $250.0 million, under which we had no borrowing outstanding as of December 31, 2023.

Additionally, we are party to an uncommitted facility (the “Uncommitted Facility”), subject to a maximum borrowing limit of $400.0 million, under which we had no borrowings outstanding as of December 31, 2023.

1 unchanged sentence

Also, certain of our non-guarantor subsidiaries are party to various short-term credit facilities with various prime brokers and other financial institutions in an aggregate amount of $599.2 million under which we had $175.3 million in borrowings outstanding at December 31, 2023.

credit agreement entered into on January 13, 2022 by and among VFH, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”), and any other existing or future indebtedness of ours may contain, a number of covenants that impose significant operating and financial restrictions on us, including restrictions on our and our restricted subsidiaries’ ability to, among other things:

The credit agreement entered into on March 1, 2019 by and among Virtu Financial, VFH Parent LLC, a Delaware limited liability company and a subsidiary of Virtu Financial (“VFH”), Impala Borrower LLC (the “Acquisition Borrower”), a subsidiary of the Company, the lenders party thereto and Jefferies Finance LLC, as administrative agent (as amended on October 9, 2019 and as further amended from time to time, the “Acquisition Credit Agreement”) contained, and the refinancing credit agreement entered into on January 13, 2022 by and among VFH, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”), and any other existing or future indebtedness of ours may contain, a number of covenants that impose significant operating and financial restrictions on us, including restrictions on our and our restricted subsidiaries’ ability to, among other things:

• incur additional debt, guarantee indebtedness or issue certain preferred equity interests;

31 unchanged sentences

Additionally, adoption or development of similar or more advanced technologies by our competitors may require that we devote substantial resources to the development of more advanced technology to remain competitive.

Regulators and exchanges may also introduce risk control and other technological requirements on our business that could result in increased costs of compliance and divert our technological resources away from their primary strategy development and maintenance duties.

Regulators and exchanges may also introduce risk control and other technological requirements on our business that could result in

increased costs of compliance and divert our technological resources away from their primary strategy development and maintenance duties.

The markets in which we compete are characterized by rapidly changing technology, evolving industry standards and changing trading systems, practices and techniques.

15 unchanged sentences

Our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including denial‑of‑service attacks, viruses, malicious software, ransomware, break‑ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain or otherwise result in financial losses or damages to our firm.

Furthermore, we may have little or no oversight with respect to security measures employed by third-party service providers, which may ultimately prove to be ineffective at countering threats and therefore could result in adverse impacts to our business, operations, or confidential information, depending upon our relationship with and exposure to a given services provider and the nature of the services provided.

Furthermore, security measures employed by third-party service providers may ultimately prove to be ineffective at countering threats and therefore could result in adverse impacts to our business, operations, or confidential information, depending upon our relationship with and exposure to a given services provider and the nature of the services provided.

Although we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or may not cover any losses.

8 unchanged sentences

Our business activities are heavily dependent on the integrity and performance of the computer and communications systems supporting them.

weather events, power loss, utility or internet outages, computer viruses, intentional acts of vandalism, war, terrorism and other similar events.

Our systems and operations are vulnerable to damage or interruption from human error, software bugs and errors, electronic and physical security breaches, natural disasters, economic or political developments, pandemics, weather events, power loss, utility or internet outages, computer viruses, intentional acts of vandalism, terrorism, geopolitical and/or global conflict, war and other similar events.

Extraordinary trading volumes or other events could cause our computer systems to operate in ways that we did not intend, at an unacceptably low speed or even fail.

5 unchanged sentences

Business disruptions can vary in their scope and significance and can affect one or more of our facilities.

These disruptions may occur as a result of events that affect only our buildings or systems or those of such third parties, or as a result of events with a broader impact globally, regionally or in the cities where those buildings or systems are located, including, but not limited to, natural disasters, economic or political developments, pandemics, weather events, war, terrorism and other similar events.

Further, the severity of the disruption can also vary from minimal to severe.

16 unchanged sentences

Given the nature of open source software, third parties might assert contractual or copyright and other intellectual property‑related claims against us based on our use of such tools and software programs or might seek to compel the disclosure of the source code of our software or other proprietary information.

If any such claims materialize, we could be required to (i) seek licenses from third parties in order to

continue to use such tools and software or to continue to operate certain elements of our technology, (ii) release certain proprietary software code comprising our modifications to such open source software, (iii) make our software available under the terms of an open source license, (iv) re‑engineer all, or a portion of, that software, any of which could materially and adversely affect our business, financial condition, results of operations and cash flows or (v) be required to pay significant damages as a result of substantiated unauthorized use.

While we monitor the use of all open source software in our solutions, processes and technology and try to ensure that no open source software is used (i) in such a way as to require us to disclose the source code to the related solution when we do not wish to do so nor (ii) in connection with critical or fundamental elements of our software or technology, such use may have inadvertently occurred in deploying our proprietary solutions.

If any such claims materialize, we could be required to (i) seek licenses from third parties in order to continue to use such tools and software or to continue to operate certain elements of our technology, (ii) release certain proprietary software code comprising our modifications to such open source software, (iii) make our software available under the terms of an open source license, (iv) re‑engineer all, or a portion of, that software, any of which could materially and adversely affect our business, financial condition, results of operations and cash flows or (v) be required to pay significant damages as a result of substantiated unauthorized use.

our software or technology, such use may have inadvertently occurred in deploying our proprietary solutions.

If a third‑party software provider has incorporated certain types of open source software into software we license from such third party for our products and solutions, we could, under certain circumstances, be required to disclose the source code to our solutions.

29 unchanged sentences

These arrangements typically involve the delivery of securities or cash to a counterparty that is not processed through a central clearing facility in exchange for a simultaneous receipt of cash or securities.

We may operate as either a principal or agent in these transactions.

We may operate as either a principal or

agent in these transactions.

As a result, a default by one of our counterparties prior to the settlement of their obligation could materially impact our liquidity and have a material adverse effect on our financial condition and results of operations.

13 unchanged sentences

For example, FINRA Rule 1017 generally provides that FINRA approval must be obtained in connection with certain change of ownership or control transactions, such as a transaction that results in a single entity or person owning 25% or more our equity.

Similarly, VFIL, VIEL and VIUK, our regulated subsidiaries in Ireland and the U.K., are subject to change in control regulations promulgated by the CBI and/or the FCA, and other registered or regulated foreign subsidiaries may be subject to similar regulations in applicable jurisdictions.

Similarly, VFIL, VETL and VIUK, our regulated subsidiaries in Ireland and the U.K., are subject to change in control regulations promulgated by the CBI and/or the FCA, and other registered or regulated foreign subsidiaries may be subject to similar regulations in applicable jurisdictions.

As a result of these regulations, our future efforts to sell shares of our common stock or raise additional capital may be delayed or prohibited.

1 unchanged sentence

We are dependent on the continued service of certain key executives, the loss or diminished performance of whom could have a material adverse effect on our business, and our success depends in part on our ability to identify, recruit and retain skilled management and technical personnel.

Our performance is substantially dependent on the performance of our senior management, including Douglas Cifu, our Chief Executive Officer, Joseph Molluso, our Co-President and Co-Chief Operating Officer, Brett Fairclough, our Co-President and Co-Chief Operating Officer, Sean Galvin, our Chief Financial Officer and Stephen Cavoli, our Executive Vice President, Markets.

In connection with and subsequent to the IPO, we have entered into employment and other related agreements with certain members of our senior management team that restrict their ability to compete with us should they decide to leave our Company.

Even though we have entered into these agreements, we cannot be sure that any member of our senior management will remain with us or that they will not compete with us in the future.

The loss of any member of our

senior management team could impair our ability to execute our business plan and growth strategy and have a negative impact on our revenues, in addition to potentially causing employee morale problems and/or the loss of key employees.

The loss of any member of our senior management team could impair our ability to execute our business plan and growth strategy and have a negative impact on our revenues, in addition to potentially causing employee morale problems and/or the loss of key employees.

In particular, Mr.

Cifu invests in other businesses and spends time on such matters, which could divert their attention from us.

Cifu invests in other businesses and spends time on such matters, which could divert his attention from us.

Our employment agreement with Mr.

4 unchanged sentences

A loss of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees in the future, could have a material adverse effect on our business.

The COVID-19 pandemic could adversely affect our business, results of operations and financial condition.

The ongoing coronavirus (COVID-19) pandemic has caused significant disruption in the international and United States economies and financial markets, and has caused, among other matters, illness, death, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity, travel, and financial transactions, labor shortages, supply chain interruptions and product shortages and overall economic and financial market instability.

The full impact this virus may have on the global financial markets and the overall economy is not currently known.

Impacts to our business could be widespread and global, and material impacts may be possible, including the following:

• Employees, including our senior executives, contracting COVID-19;

• Reductions in our operating effectiveness or efficiency or increases in risk as a result of the implementation of our business continuity plan, and potential disruptions or adverse impacts relating to our return to office policy;

• Unprecedented volatility in global financial markets, which may increase the risk or potential magnitude of operational errors;

• Increases in liquidity needs, including but not limited to margin funding requirements with clearinghouses or prime brokers, for our business and challenges obtaining sufficient liquidity sources to meet such needs or requirements;

• Potential decreases in demand for our products and services, which would negatively impact our liquidity position and our results;

• Adverse impacts on our clients, counterparties, vendors and other business partners on whom we rely for order flow, funding, and critical technological or operational services and the potential increase in risk of counterparty default or insolvency event;

• Closures of our offices or the offices of our clients;

• Travel restrictions limiting our ability to collaborate internally and engage with current and potential clients and counterparties externally.

We continue to monitor COVID-19 and take designed precautions to protect the safety and well-being of our employees, customers and business partners.

However, we cannot be certain that the steps we have taken or will take will be deemed to be adequate or appropriate, nor can we predict the level of disruption which will occur to our employee's ability to perform their functions.

The further spread of the COVID-19 outbreak, including potential new variants, may materially disrupt financial activity generally and in the areas in which we operate.

Any one or more of these developments could have a material adverse effect on our and our consolidated subsidiaries' business, operations, consolidated financial condition, and consolidated results of operations.

We may incur losses as a result of unforeseen or catastrophic events, including the emergence of another pandemic, terrorist attacks, extreme weather events or other natural disasters.

The occurrence of unforeseen or catastrophic events, including the emergence of a pandemic, such as the Ebola or Zika viruses, COVID-19, or other widespread health emergency (or concerns over the possibility of such an emergency), terrorist attacks, extreme terrestrial or solar weather events or other natural disasters, could create economic and financial

disruptions, and could lead to operational difficulties (including travel limitations) that could impair our ability to manage our businesses.

Although we have employed efforts to develop, implement and maintain reasonable disaster recovery and business continuity plans, we cannot guarantee that our systems will fully recover after a significant business disruption in a timely fashion or at all.

Our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which we are located.

This may include a disruption involving electrical, satellite, undersea cable or other communications, internet, transportation or other services facilities used by us, our employees or third parties with which we conduct business.

If we are prevented from using any of our current trading operations, or if our business continuity operations do not work effectively, we may not have complete business continuity, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may be subject to increased risks or business disruption, incur losses or suffer reputational harm in relation to or as a result of climate change.

3 unchanged sentences

New regulations or guidance relating to climate change, as well as the perspectives of shareholders, employees and other stakeholders regarding climate change, may affect whether and on what terms and conditions we engage in certain activities or offer certain products.

Cryptocurrency is an emerging asset class that carries unique risk, including the risk of financial loss.

The value of cryptocurrencies is based in part on market adoption and future expectations, which may or may not be realized.

As a result, the prices of cryptocurrencies are highly speculative.

Due to this highly volatile nature, prices of cryptocurrencies have been subject to dramatic fluctuations which may impact our balance sheet.

Cryptocurrency and other digital assets are an emerging asset class that carries unique risk, including the risk of financial loss.

The value of cryptocurrencies and other digital assets, whether traded in spot, ETP/ETF, or other form, is based in part on market adoption and future expectations, which may or may not be realized.

As a result, the prices of cryptocurrencies and other digital assets are highly speculative.

Due to this highly volatile nature, prices of cryptocurrencies and other digital assets have been subject to dramatic fluctuations which may impact our balance sheet.

For example, if the price of the cryptocurrencies we hold in inventory drops below the price we paid to acquire this inventory, we could incur a loss.

Moreover, if our systems fail at managing our inventory or customer orders, we could be left with excess inventory that increases our exposure to the volatility of the price of cryptocurrencies.

Further, because cryptocurrency is a new and emerging asset class with unique electronic exposure, there is a high degree of fraud, theft, cyberattacks and other forms of risk in the cryptocurrency space, and legal, regulatory and market standards around market conduct, transparency, custody, segregation of client assets, clearing and settlement are all evolving or unsettled, which can increase risks for us and other market participants.

Further, because cryptocurrency, along with other digital assets, is a new and emerging asset class with unique electronic exposure, there is a high degree of fraud, theft, cyberattacks and other forms of risk in the cryptocurrency space, and legal, regulatory and market standards around market conduct, transparency, custody, segregation of client assets, clearing and settlement for these assets, including when traded in spot, ETP/ETF, or other form, are all evolving or unsettled, which can increase risks for us and other market participants.

While the Company employs a variety of controls to mitigate risk of loss and theft in the cryptocurrency positions we maintain, it is possible, for example, for electronic wallet keys to become lost or stolen, for blockchains to experience detrimental changes, such as forks, or for our cryptocurrency exchange and custodian partners to experience cybersecurity incidents.

5 unchanged sentences

Firms in the financial services industry have been subject to an increasingly regulated environment over recent years, and penalties and fines sought by regulatory authorities have increased considerably.

In addition, following recent news congressional, regulatory and news media attention to U.S.

In addition, following recent congressional, regulatory and news media attention to U.S.

equities market structure, the regulatory and enforcement environment has created uncertainty with respect to various types of transactions that historically had been entered into by financial services firms and that were generally believed to be permissible and appropriate.

The retail trading environment in the U.S., relationships between broker-dealers and market making firms, short selling and “high frequency” and other forms of low latency or electronic trading strategies continue to be the focus of extensive regulatory scrutiny by federal, state and foreign regulators and SROs, and such scrutiny is likely to continue.

Our market making and trading activities are characterized by substantial volumes, an emphasis on technology and certain other

characteristics that are also commonly associated with high frequency trading and we engage in direct-to-client market making services across multiple asset classes primarily to sell-side clients including global, national and regional broker-dealers and banks and in the context of our market making and trading activities, we are party to various remuneration and rebate arrangements, including payment for order flow, profit-sharing relationships, and exchange fee and rebate structures.

Our market making and

trading activities are characterized by substantial volumes, an emphasis on technology and certain other characteristics that are also commonly associated with high frequency trading and we engage in direct-to-client market making services across multiple asset classes primarily to sell-side clients including global, national and regional broker-dealers and banks and in the context of our market making and trading activities, we are party to various remuneration and rebate arrangements, including payment for order flow, profit-sharing relationships, and exchange fee and rebate structures.

Additionally, the regulatory and legal status and classification of various cryptocurrencies and other digital assets is subject to substantial uncertainty.

For example, a given digital asset could be considered a security, a commodity or currency, or some combination thereof, and therefore may be subject to rules and regulations promulgated by federal regulators, including but not limited to the SEC, the CFTC, the Department of Treasury, in addition to state regulators.

While our participation in this asset class has been limited thus far, changes in this regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government, may significantly affect or change the manner in which we currently conduct some aspects of our business or may significantly impact or limit our ability to increase our participation.

In addition, the financial services industry is heavily regulated in many foreign countries.

2 unchanged sentences

MiFID II requires certain types of firms, including VFIL, to post firm quotes at competitive prices and supplements previous requirements with regard to investment firms’ risk controls related to the safe operation of electronic systems.

MiFID II also imposes additional requirements on market structure, such as the introduction of a harmonized tick size regime, the introduction of new trading venues known as Organized Trading Facilities, and the promulgation of a new bilateral trading arrangement called the Systematic Internaliser regime, new open access provisions, market making requirements and various other pre‑ and post‑trade risk management requirements.

MiFID II also imposed additional requirements on market structure, such as the introduction of a harmonized tick size regime, the introduction of trading venues known as Organized Trading Facilities, and the promulgation of a bilateral trading arrangement called the Systematic Internaliser regime, new open access provisions, market making requirements and various other pre‑ and post‑trade risk management requirements.

The MiFID II regime is currently under review, with European Union authorities proposing to make further changes to the regime.

Various consultation papers have been published on different aspects of the MiFID II regime, on February 4, 2020, an ESMA Consultation Paper entitled “MiFID II/MiFIR Review Report on the Transparency Regime for Equity and Equity-like Instruments, the Double Volume Cap Mechanism and the Trading Obligations for Shares”, on December 18, 2020 an ESMA Consultation Paper entitled "MiFID II/MiFIR Review Report on Algorithmic Trading" and on January 28, 2022 an ESMA Consultation Paper “on ESMA”s Opinion on the trading venue perimeter”.

In its communication on “The European economic and financial system:

2 unchanged sentences

as well as publishing an “I” item note, also dated December 16, 2022, inviting the Council’s Permanent Representatives Committee to agree the text of the mandate for negotiations with European Parliament on the basis of the published general approaches, with a view to reaching agreement at first reading.

The Council of the European Union further published an Information Note with respect to the “Proposal for a Regulation (EU) of the European Parliament and of the Council of amending Regulation (EU) No 600/2014 as regards enhancing data transparency, removing obstacles to the emergence of consolidated tapes, optimizing the trading obligations and prohibiting receiving payments for forwarding client orders” and the “Proposal for the Directive (EU) 2023/ of the European Parliament and of the Council of amending Directive 2014/65/EU on markets in financial instruments”, dated October 18, 2023, which includes the final compromise texts for each proposed regulation.

The Information Note details the draft overall compromise package as agreed by the Permanent Representatives’ Committee, with the Council of the European Union inviting the European Parliament to adopt its position at first reading in accordance with the compromise package, with a view to reaching an agreement and adopting the act at first reading.

Each of these and other proposals may impose technological and compliance costs on us.

4 unchanged sentences

In the E.U., on December 24, 2019, a Regulation on the prudential requirements for Investment Firms (“IFR”) and a Directive on the prudential supervision of Investments Firms (“IFD”) entered into force.

The IFR and IFD introduce new prudential requirements for investment firms, classifying them into different categories depending on the firm’s balance-sheet size and types of activity.

The IFR and IFD introduced new prudential requirements for investment firms, classifying them into different categories depending on the Company’s balance-sheet size and types of activity.

The main provisions of the IFR and IFD were applicable from the end of June 2021.

Certain Level 2 texts are still outstanding which are required to provide clarity on certain provisions in the IFR/IFD.

As these rules are implemented and in certain cases impose more stringent capital and liquidity requirements, certain of our lenders may revise the terms of our borrowing facilities or margin financing arrangements, reduce the amount of financing they provide, or cease providing us financing, each of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

As these rules are implemented and in certain cases impose more stringent capital and liquidity

requirements, certain of our lenders may revise the terms of our borrowing facilities or margin financing arrangements, reduce the amount of financing they provide, or cease providing us financing, each of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Pending, proposed and other potential changes in laws and rules may adversely impact our business.

5 unchanged sentences

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.

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”), (iv) amendments to Rule 605 of Regulation NMS, (v) 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, and (vi) amendments to Regulation SCI which would broaden the scope of covered technology platforms business models.

Additionally, rules to amend the definitions of “dealer” and “government securities dealer” within the Exchange Act were recently adopted and are expected to broaden the scope of these registrant categories.

Regulators may propose other market structure changes, particularly considering the continued regulatory, congressional and media scrutiny of U.S.

6 unchanged sentences

Regulatory bodies that exercise or may exercise authority over us include, without limitation, in the U.S., the SEC, FINRA, the Chicago Mercantile Exchange, the Intercontinental Exchange, the CFTC, the NFA Exchanges and the various state securities regulators;

in the European Union, the European Securities and Markets Authority (“ESMA”);

in the European Union, ESMA;

in Ireland, the CBI;

4 unchanged sentences

in Australia, the ASIC;

in Canada, the IIROC and various Canadian provincial securities commissions;

in Singapore, the MAS and the Singapore Exchange;

in Canada, the CIRO and various Canadian provincial securities commissions;

in Singapore, the MAS;

in India, the Securities and Exchange Board of India;

and in Japan, the Financial Services Agency and the Japan Securities Dealers Association.

7 unchanged sentences

We could be subject to disciplinary or other actions in the future due to claimed noncompliance, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have been, are currently, and may in the future be, the

subject of one or more regulatory or SRO enforcement actions, including but not limited to targeted and routine regulatory inquiries and investigations involving Best Execution, Regulation NMS, Regulation SHO, Regulation SCI, market access rules, capital requirements and other domestic and foreign securities rules and regulations.

We have been, are currently, and may in the future be, the subject of one or more regulatory or SRO enforcement actions, including but not limited to targeted and routine regulatory inquiries and investigations involving Best Execution, Regulation NMS, Regulation SHO, Regulation SCI, market access rules, capital requirements and other domestic and foreign securities rules and regulations.

We and other broker-dealers and trading firms have also been the subject of requests for information and documents from the SEC and other regulators.

9 unchanged sentences

Events relating to capital adequacy could give rise to regulatory actions that could limit business expansion or require business reduction.

SEC and SRO net capital rules prohibit payments of dividends, redemptions of stock, prepayments of subordinated indebtedness and the making of any unsecured advances or loans to a stockholder, employee or affiliate, in certain circumstances, including if such payment would reduce the firm’s net capital below required levels.

Similar issues and risks arise in connection with the capital adequacy requirements of foreign regulators.

14 unchanged sentences

The EU Financial Transaction Tax was initially intended to be implemented within those 11 European Union Member States in January 2014.

In 2016, Estonia, one of the original members, withdrew its

support for the proposal.

In 2016, Estonia, one of the original members, withdrew its support for the proposal.

As of December 31, 2023 such tax has not yet been implemented.

On October 15, 2020, the Spanish Government published Law 5/2020 on the Spanish Financial Transaction Tax (“Spanish FTT”).

The Spanish FTT constitutes a new tax to be applied to acquisitions of equity shares in Spanish companies having a market capitalization greater than EUR1bn (as of 1st December the previous year), that are admitted to trading on a Spanish market or a market based in another E.U.

The Spanish FTT constitutes a tax to be applied to acquisitions of equity shares in Spanish companies having a market capitalization greater than EUR1bn (as of 1st December the previous year), that are admitted to trading on a Spanish market or a market based in another E.U.

member state.

6 unchanged sentences

Senators Kirsten Gillibrand and Brian Schatz, have announced proposals or plans that include a financial transaction fee.

President Biden's win in the 2020 U.S.

Presidential election and the Democratic majority in the Senate may lead to additional proposals or plans.

At the state level recently, the state of New Jersey has considered a bill in the state legislature providing for a financial transaction tax on trades processed on any server located in New Jersey, with other states, including New York, discussing similar measures.

Discussions in New York have included a proposed bill which would reestablish a stock transfer tax by repealing a rebate previously implemented and applied to such tax since 1981.

Additional legislation may be proposed at the federal and state levels from time to time.

These proposed transaction taxes would apply to certain aspects of our business and transactions in which we are involved.

13 unchanged sentences

In addition, the varying compliance requirements of these different regulatory jurisdictions and other factors may limit our ability to successfully conduct or expand our business internationally and may increase our costs of investment.

Expansion into international locations involves substantial operational and execution risk.

into international locations involves substantial operational and execution risk.

We may not be able to manage these costs or risks effectively.

Brexit continues to pose a risk of negatively impacting the global economy, financial markets and our business.

In June 2016, UK voters approved a referendum to withdraw the UK's membership from the EU, which is commonly referred to as “Brexit”.

In March 2017, the UK government initiated the exit process under Article 50 of the Treaty of the European Union, commencing a period of up to two years for the UK and the other EU member states to negotiate the terms of the withdrawal, such period ending on March 29, 2019 unless extended.

Following extensions to that period, a Withdrawal

Agreement and Political Declaration were reached between the U.K.

On January 23, 2020, the European Union (Withdrawal Agreement) Act 2020 received Royal Assent in the U.K., and on January 31, 2020 the U.K.

left the E.U.

pursuant to the terms of the Withdrawal Agreement.

then entered into a transition period during which rules on trade, travel, and business for the U.K.

continued to apply.

The transition period came to an end as of January 1, 2021, at which point U.K.

investment firms which had previously used passporting permissions under MiFID II to provide services to clients in the E.U., ceased to subject to the E.U.'s MiFID II regime.

Virtu accesses the E.U.

markets primarily through our Irish regulated subsidiaries via MiFID II passporting permissions and accesses the U.K.

market primarily via a combination of U.K.

based subsidiaries and branch offices.

branch offices of VIEL and VFIL currently utilize the U.K.

FCA’s Temporary Permission Regime and are therefore deemed to be authorized and regulated by the FCA.

The Temporary Permissions Regime is due to come to an end at the end of 2023.

VIEL and VFIL have submitted applications for full third country branch authorization to the FCA to ensure the long-term operational footprint of Virtu’s branches in the U.K.

These authorization processes are ongoing.

subsidiary, VIUK, is an investment firm authorized and regulated by the FCA with permission to operate a U.K.

Following the UK's withdrawal of its membership from the EU in 2020, an event commonly referred to as “Brexit” and the conclusion of a subsequent transition period in 2021, U.K.

investment firms which had previously used passporting permissions under MiFID II to provide services to clients in the E.U., ceased to subject to the E.U.'s MiFID II regime, and E.U.

investment firms could no longer automatically access U.K.

markets on the basis of MiFID passporting rights.

Following Brexit, Virtu services its UK client-base via various means, including a UK authorized third-country branch of VETL, and by its UK investment firm, VIUK, which is authorized and regulated by the FCA with permission to operate an MTF.

Poor future relations between the U.K.

1 unchanged sentence

Disruptions and uncertainty caused by these events may also cause our clients to closely monitor their costs and reduce their spending budget on our services.

Potential regulatory divergence between the U.K.

could cause disruption to our business in EMEA, through incurring implementation costs and/or other operational uplift required to comply with the distinct legal regimes.

Any of these effects of the U.K.’s departure from the E.U., and others we cannot anticipate or that may evolve over time, could adversely affect our business, results of operations and financial condition.

14 unchanged sentences

To the extent that we need funds and Virtu Financial is restricted from making such distributions to us, under applicable law or regulation, as a result of covenants in our Credit Agreement, we may not be able to obtain such funds on terms acceptable to us or at all and as a result could suffer a material adverse effect on our liquidity and financial condition.

equity holders, including the Founder Post‑IPO Member, the trust that holds equity interests in Virtu Financial on behalf of certain employees of ours based outside the United States, which we refer to as the “Employee Trust”, Virtu Employee Holdco and us, in amounts sufficient to cover the taxes on their allocable share of the taxable income of Virtu Financial.

Under the Third Amended and Restated Limited Liability Company Agreement of Virtu Financial (as amended, the “Amended and Restated Virtu Financial LLC Agreement”), Virtu Financial from time to time makes distributions in cash to its equity holders, including the Founder Post‑IPO Member, the trust that holds equity interests in Virtu Financial on behalf of certain employees of ours based outside the United States, which we refer to as the “Employee Trust”, Virtu Employee Holdco and us, in amounts sufficient to cover the taxes on their allocable share of the taxable income of Virtu Financial.

These distributions are treated as advances and may be computed based on Virtu Financial’s estimate of the net taxable income of Virtu Financial allocable to each holder of Virtu Financial Units multiplied by an assumed tax rate equal to the highest effective marginal combined U.S.

17 unchanged sentences

This requirement could limit structural alternatives available to us in any such proposed transaction and could have the effect of discouraging transactions that might benefit you as a holder of shares of our Class A Common Stock.

In addition, the Founder Post-IPO Member’s significant ownership in us and resulting ability to effectively control us may discourage someone from making a significant equity investment in us, or could discourage transactions involving a change in control, including transactions in which you as a holder of shares of our Class A Common Stock might otherwise receive a premium for your shares over the then‑current market price.

transactions in which you as a holder of shares of our Class A Common Stock might otherwise receive a premium for your shares over the then‑current market price.

We have opted out of Section 203 of the General Corporation Law of the State of Delaware (the “Delaware General Corporation Law”), which prohibits a publicly held Delaware corporation from engaging in a business combination transaction with an interested stockholder for a period of three years after the interested stockholder became such unless the transaction fits within an applicable exemption, such as board approval of the business combination or the transaction which resulted in such stockholder becoming an interested stockholder.

1 unchanged sentence

Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the doctrine of “corporate opportunity” does not apply against the Founder Post-IPO Member, Mr.

Viola, Temasek, any of our non‑employee directors or any of their respective affiliates in a manner that would prohibit them from investing in competing businesses or doing business with our clients or customers.

Viola, any of our non‑employee directors or any of their respective affiliates in a manner that would prohibit them from investing in competing businesses or doing business with our clients or customers.

In addition, subject to the restrictions on competitive activities described below, Mr.

5 unchanged sentences

Cifu, may not directly or indirectly engage in certain competitive activities until the third anniversary of the date on which such person ceases to be an officer, director or employee of ours.

Temasek and our non‑employee directors are not subject to any such restriction.

Our non‑employee directors are not subject to any such restriction.

To the extent that the Founder Post-IPO Member, Mr.

Viola, Temasek, our non‑employee directors or any of their respective affiliates invests in other businesses, they may have differing interests than our other stockholders.

Viola, our non‑employee directors or any of their respective affiliates invests in other businesses, they may have differing interests than our other stockholders.

Viola and Cifu also have business relationships outside of our business.

12 unchanged sentences

We are required to pay the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders for certain tax benefits we may claim, and the amounts we may pay could be significant.

In connection with the Reorganization Transactions, we acquired equity interests in Virtu Financial from an affiliate of Silver Lake Partners (which, following a secondary offering completed in November 2015, no longer holds any equity interest

in us) and the Temasek Pre-IPO Member in the Mergers.

In addition, we used a portion of the net proceeds from our IPO and our Secondary Offerings (as defined below) to purchase Virtu Financial Units and corresponding shares of Class C Common Stock from certain Virtu Post-IPO Members, including affiliates of Silver Lake Partners (the “Silver Lake Post-IPO Members”), the Founder Post-IPO Member, and certain employees.

9 unchanged sentences

federal, state and local income tax or franchise tax that we actually realize, could be substantial.

We expect that, as a result of the amount of the increases in the tax basis of the tangible and intangible assets of Virtu Financial, assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize in full the potential tax benefits described above, future payments to the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders in respect of the purchases, the exchanges and the Mergers in connection with the IPO, the purchases and exchanges completed in connection with our subsequent public offerings, the Secondary Offerings, and exchanges by employees and other Virtu Post-IPO Members will range from approximately $36.4 thousand to $22.0 million per year over the next 15 years.

We expect that, as a result of the amount of the increases in the tax basis of the tangible and intangible assets of Virtu Financial, assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize in full the potential tax benefits described above, future payments to the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders in respect of the purchases, the exchanges and the Mergers in connection with the IPO, the purchases and exchanges completed in connection with our subsequent public offerings, the Secondary Offerings, and exchanges by employees and other Virtu Post-IPO Members will range from approximately $0.1 million to $22.1 million per year over the next 15 years.

Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these amounts.

1 unchanged sentence

In addition, although we are not aware of any issue that would cause the Internal Revenue Service (the “IRS”) to challenge the tax basis increases or other benefits arising under the tax receivable agreements, the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders (or their transferees or other assignees) will not reimburse us for any payments previously made if such tax basis increases or other tax benefits are subsequently disallowed, except that any excess payments made to the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders will be netted against future payments otherwise to be made under the tax receivable agreements, if any, after our determination of such excess.

As a result, in such circumstances we could make payments to the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders under the tax receivable agreements that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact our liquidity.

As a result, in such circumstances we could

make payments to the Virtu Post‑IPO Members and the Investor Post‑IPO Stockholders under the tax receivable agreements that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact our liquidity.

In addition, the tax receivable agreements provide that, upon certain mergers, asset sales or other forms of business combination, or certain other changes of control, our or our successor’s obligations with respect to tax benefits would be based on certain assumptions, including that we or our successor would have sufficient taxable income to fully utilize the increased tax deductions and tax basis and other benefits covered by the tax receivable agreements.

18 unchanged sentences

If we are unable to maintain adequate internal controls over financial reporting, our business and operating results could be harmed.

internal control over financial reporting and our independent registered public accounting firm to issue a report on the effectiveness of internal control over financial reporting with our Annual Report on Form 10-K.

Under applicable SEC rules we must maintain internal controls over financial reporting to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the related rules of the SEC, which require, among other things, our management to assess annually the effectiveness of our internal control over financial reporting and our independent registered public accounting firm to issue a report on the effectiveness of internal control over financial reporting with our Annual Report on Form 10-K.

The internal control assessment required by Section 404 of Sarbanes-Oxley may divert internal resources and we may experience higher operating expenses, higher independent auditor and consulting fees during the implementation of these changes.

25 unchanged sentences

• after the Triggering Event, provisions limiting stockholders' ability to call special meetings of stockholders, to require special meetings of stockholders to be called and to take action by written consent;

required to adopt, amend or repeal our by-laws, or amend or repeal certain provisions of our certificate of incorporation;

• after the Triggering Event, in certain cases, the approval of holders of at least 75% of the shares entitled to vote generally on the making, alteration, amendment or repeal of our certificate of incorporation or by-laws will be required to adopt, amend or repeal our by-laws, or amend or repeal certain provisions of our certificate of incorporation;

• after the Triggering Event, the required approval of holders of at least 75% of the shares entitled to vote at an election of the directors to remove directors, which removal may only be for cause;

3 unchanged sentences

FINRA Rule 1017 generally provides that FINRA approval must be obtained in connection with any transaction resulting in a single person or entity owning, directly or indirectly, 25% or more of a member firm’s equity and would include a change in control of a parent company.

Similarly, VFIL, VIEL and VIUK are subject to change in control regulations promulgated by the CBI and/or the FCA.

Similarly, VFIL, VETL and VIUK are subject to change in control regulations promulgated by the CBI and/or the FCA.

We may also be subject to similar restrictions in other jurisdictions in which we operate.

10 unchanged sentences

Sarbanes-Oxley and related rules of the SEC, together with the listing requirements of Nasdaq, impose significant requirements relating to disclosure controls and procedures and internal control over financial reporting.

We have incurred increased costs as a result of compliance with these public company requirements, which require additional resources and make some activities more time consuming than they have been in the past when we were privately owned.

We may experience higher than anticipated operating expenses as well as higher independent auditor and consulting fees during the implementation of these changes and thereafter and we may need to hire additional qualified personnel in order to continue to satisfy these public company requirements.

We have incurred costs as a result of compliance with these public company requirements, and we may need to hire additional qualified personnel in order to continue to satisfy these public company requirements.

We are required to expend considerable time and resources complying with public company regulations.

In addition, these laws and regulations may make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

In addition, these laws and regulations could make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers and may divert management’s attention.

Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Class A Common Stock, fines, sanctions and other regulatory action.

2 unchanged sentences

If one or more of the analysts who covers us downgrades our Class A Common Stock or publishes inaccurate or unfavorable research about our business, our stock price could decline.

In addition, the analysts’ projections may have little or no relationship to the results we actually achieve and could cause our stock price to

decline if we fail to meet their projections.

In addition, the analysts’ projections may have little or no relationship to the results we actually achieve and could cause our stock price to decline if we fail to meet their projections.

If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our stock price or trading volume could decline.

UNRESOLVED STAFF COMMENTS

Our headquarters are located in leased office space at 1633 Broadway, New York, NY 10019.

We also lease space for our offices in the U.S., Canada, Europe, Asia and Australia.

We believe that our existing facilities are adequate to meet our current requirements.

We may incur losses as a result of unforeseen or catastrophic events, including the emergence of another pandemic, terrorist attacks, geopolitical and/or global conflict, war, extreme weather events or other natural disasters.

The occurrence of unforeseen or catastrophic events, including the emergence of a pandemic, such as COVID-19 or other widespread health emergency (or concerns over the possibility of such an emergency), vandalism, terrorist attacks, geopolitical and/or global conflict, war, extreme terrestrial or solar weather events or other natural disasters, could create economic and financial disruptions, and could lead to operational difficulties (including travel limitations) that could impair our ability to manage our businesses.

Our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which we are located.

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 1A. Risk Factors