Three and Nine Months Ended September 30, ~~2017~~

~~(Unaudited)~~

Additional

Retained

Accumulated

Class A

Class C

Class D

Paid-in

Earnings

Other

Total

Non-

(in thousands, except

Common Stock

Common Stock

Common Stock

Treasury Stock

Capital

(Accumulated

Comprehensive

Stockholders'

Controlling

Total

share and interest data)

Shares

Amounts

Shares

Amounts

Shares

Amounts

Shares

Amounts

Amounts

Deficit)

Income (Loss)

Equity

Interest

Equity

Balance at December 31, 2015

38,379,858

$
—

20,976,598

$
—

79,610,490

$
1

(169,649)

$
(3,819)

$
130,902

$
3,525

$
99

$
130,708

$
427,162

$
557,870

Share based compensation

953,054

—

(58,070)

—

—

—

—

—

24,893

—

—

24,893

—

24,893

Repurchase of Class C common stock

—

—

(4,153)

—

—

—

—

—

(98)

—

—

(98)

—

(98)

Treasury stock purchases

—

—

—

—

—

—

(283,417)

(4,539)

—

—

—

(4,539)

—

(4,539)

Net income

—

—

—

—

—

—

—

—

—

32,980

—

32,980

125,360

158,340

Foreign exchange translation adjustment

—

—

—

—

—

—

—

—

—

—

(351)

(351)

(814)

(1,165)

Distribution from Virtu Financial to non-controlling interest

—

—

—

—

—

—

—

—

—

—

—

—

(162,969)

(162,969)

Dividends

—

—

—

—

—

—

—

—

—

(37,759)

—

(37,759)

—

(37,759)

Issuance of common stock in connection with secondary offering, net of offering costs

1,103,668

—

—

—

—

—

—

—

16,677

—

—

16,677

—

16,677

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering

—

—

(1,103,668)

—

—

—

—

—

(17,383)

—

—

(17,383)

—

(17,383)

Issuance of tax receivable agreements in connection with secondary offering

—

—

—

—

—

—

—

—

545

—

—

545

—

545

Balance at December 31, 2016

40,436,580

$
—

19,810,707

$
—

79,610,490

$
1

(453,066)

$
(8,358)

$
155,536

$
(1,254)

$
(252)

$
145,673

$
388,739

$
534,412

Share based compensation

58,536

—

(34,019)

—

—

—

—

—

12,314

—

—

12,314

—

12,314

Repurchase of Class C common stock

—

—

(286,150)

—

—

—

—

—

(4,592)

—

—

(4,592)

—

(4,592)

Treasury stock purchases

—

—

—

—

—

—

(8,326)

(147)

—

—

—

(147)

—

(147)

Net income (loss)

—

—

—

—

—

—

—

—

—

(8,037)

—

(8,037)

(6,466)

(14,503)

Foreign exchange translation adjustment

—

—

—

—

—

—

—

—

—

—

2,848

2,848

5,452

8,300

Distribution from Virtu Financial to non-controlling interest

—

—

—

—

—

—

—

—

—

—

—

—

(65,573)

(65,573)

Dividends

—

—

—

—

—

—

—

—

—

(42,013)

—

(42,013)

—

(42,013)

Issuance of Class A common stock

48,076,924

1

—

—

—

—

—

—

735,973

—

—

735,974

—

735,974

Issuance of common stock in connection with employee exchanges

1,146,315

—

—

—

—

—

—

—

—

—

—

—

—

—

Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges

—

—

(1,146,315)

—

—

—

—

—

—

—

—

—

—

—

Issuance of tax receivable agreements in connection with employee exchange

—

—

—

—

—

—

—

—

1,355

—

—

1,355

—

1,355

Balance at September 30, 2017

89,718,355

1

18,344,223

—

79,610,490

1

(461,392)

(8,505)

900,586

(51,304)

2,596

843,375

322,152

1,165,527

~~See accompanying notes to the unaudited condensed consolidated financial statements.~~

Table of Contents

Virtu Financial, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

For the Nine Months Ended September 30,

(in thousands)

2017

2016

Cash flows from operating activities







Net Income (loss)

$
(14,503)

$
123,665

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

Depreciation and amortization

29,157

22,685

Amortization of purchased intangibles and acquired capitalized software

6,546

159

Debt issue cost related to debt refinancing

9,351

—

Amortization of debt issuance costs and deferred financing fees

3,470

1,396

Share based compensation

10,924

9,440

Reserve for legal matter

(2,176)

—

Equipment writeoff

1,335

428

Deferred taxes

1,489

9,345

Other

(444)

(1,267)

Changes in operating assets and liabilities:

Securities borrowed

101,046

58,484

Securities purchased under agreements to resell

8,645

14,981

Receivables from broker dealers and clearing organizations

21,241

(36,756)

Trading assets, at fair value

1,020,821

(142,754)

Other Assets

26,248

1,705

Securities loaned

194,523

(42,656)

Securities sold under agreements to repurchase

(220,719)

—

Payables to broker dealers and clearing organizations

(393,564)

(181,348)

Payables to customers

7,967

—

Trading liabilities, at fair value

(569,911)

339,469

Accounts payable and accrued expenses and other liabilities

(25,675)

10,166

Net cash provided by operating activities

215,771

187,142

Cash flows from investing activities

Development of capitalized software

(7,929)

(6,044)

Acquisition of property and equipment

(13,932)

(8,933)

Investment in SBI Japannext

—

(38,754)

Acquisition of KCG Holdings, net of cash acquired, described in Note 3

(799,303)

—

Acquisition of Teza Technologies

(5,594)

—

Proceeds from sale of DMM business

300

—

Net cash used in investing activities

(826,458)

(53,731)

Cash flows from financing activities

Distribution from Virtu Financial to non-controlling interest

(65,573)

(123,867)

Dividends

(42,013)

(28,117)

Purchase of treasury stock

(147)

—

Short-term borrowings, net

(10,000)

(27,400)

Payments on repurchase of non-voting common interest

(6,092)

(1,500)

Proceeds from long-term borrowings

1,115,036

33,078

Repayment of senior secured credit facility

(206,473)

(3,825)

Repayment of KCG Notes

(480,987)

—

Tax receivable agreement obligations

(7,045)

—

Debt issuance costs

(52,528)

(93)

Issuance of common stock, net of offering costs

735,973

16,677

Repurchase of Virtu Financial Units and corresponding number of Class A and C common stock in connection with secondary offering

—

(17,383)

Net cash provided by (used in) financing activities

980,151

(152,430)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

8,300

1,783

Increase (decrease) in cash, cash equivalents, and restricted cash

377,764

(17,236)

Cash, cash equivalents, and Seg cash, beginning of period

181,415

163,235

Cash, cash equivalents, and Seg cash, end of period

$
559,179

$
145,999

Supplementary disclosure of cash flow information

Cash paid for interest

$
59,524

$
43,827

Cash paid for taxes

$
5,744

$
15,008

Non-cash investing activities

Share based compensation to developers relating to capitalized software

$
1,448

$
5,187

See Note 3 for a description of non-cash investing activities relating to the acquisition of KCG

~~See accompanying notes to the unaudited condensed consolidated financial statements.~~


	Nine Months Ended September 30,
(in thousands)	2021		2020
Cash flows from operating activities
Net income	$	641,276	$	923,228

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	49,764		50,728
Amortization of purchased intangibles and acquired capitalized software	53,087		56,177
Debt issue cost related to debt refinancing and prepayment	649		7,555
Amortization of debt issuance costs and deferred financing fees	5,243		24,164
Termination of office leases	5,126		343
Share-based compensation	38,260		37,510




Deferred taxes	16,791		22,204

Gain on sale of MATCHNow	—		(58,652)
Other	(15,093)		(14,750)
Changes in operating assets and liabilities:
Securities borrowed	147,415		602,920
Securities purchased under agreements to resell	(147,328)		125,619
Receivables from broker-dealers and clearing organizations	231,580		(563,297)
Trading assets, at fair value	(862,163)		(51,507)
Receivables from customers	(199,766)		(73,408)
Operating lease right-of-use assets	20,135		27,457
Other assets	43,898		(67,469)
Securities loaned	69,180		(894,310)
Securities sold under agreements to repurchase	122,033		126,253
Payables to broker-dealers and clearing organizations	236,722		(216,143)
Payables to customers	64,113		52,261
Trading liabilities, at fair value	(52,059)		292,177
Operating lease liabilities	(22,373)		(34,738)
Accounts payable, accrued expenses and other liabilities	(71,968)		109,276
Net cash provided by operating activities	374,522		483,598

Cash flows from investing activities
Development of capitalized software	(30,154)		(27,463)
Acquisition of property and equipment	(16,326)		(21,717)



Proceeds from sale of MATCHNow	—		60,592

Other investing activities	(18,960)		(7,968)




Net cash provided by (used in) investing activities	(65,440)		3,444

Cash flows from financing activities

Dividends to stockholders and distributions from Virtu Financial to noncontrolling interest	(430,630)		(337,966)


Repurchase of Class C common stock	(1,693)		—
Purchase of treasury stock	(320,214)		(12,579)
Stock options exercised	8,493		14,502
Short-term borrowings, net	249,622		49,388


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

Tax receivable agreement obligations	(16,505)		(13,286)
Debt issuance costs	(2,658)		(9,779)




Net cash used in financing activities	(550,322)		(598,220)

Effect of exchange rate changes on cash and cash equivalents	(11,452)		3,860

Net decrease in cash and cash equivalents	(252,692)		(107,318)
Cash, cash equivalents, and restricted or segregated cash, beginning of period	1,007,005		773,280
Cash, cash equivalents, and restricted or segregated cash, end of period	$	754,313	$	665,962


Supplementary disclosure of cash flow information

Table of Contents

Nine Months Ended September 30,
(in thousands) 2021 2020
Cash paid for interest $ 115,890 $ 137,750
Cash paid for taxes 130,565 207,387
Non-cash investing activities
Share-based and accrued incentive compensation to developers relating to capitalized software 12,935 9,672

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

Table of Contents

Virtu Financial, Inc. and Subsidiaries

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

1. Organization and Basis of Presentation

Organization

The accompanying condensed 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”) ~~beginning with its initial public offering (“IPO”) in April of 2015, along with the historical accounts and operations of Virtu Financial LLC (“Virtu Financial”) prior to the Company’s IPO.~~. VFI is a Delaware corporation whose primary asset is its ownership interest in Virtu Financial ~~which it acquired pursuant to and subsequent to certain reorganization transactions (the “Reorganization Transactions”~~LLC (“Virtu Financial”) ~~consummated in connection with its IPO.~~. As of September 30, ~~2017,~~2021, VFI owned approximately ~~48.0%~~62.6% of the membership interests of Virtu Financial. ~~The Company~~VFI is the sole managing member of Virtu Financial and operates and controls all of the businesses and affairs of Virtu Financial and ~~through Virtu Financial and~~ its subsidiaries (the “Group”)~~, continues to conduct the business now conducted by such subsidiaries.~~

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 ~~our~~its clients. The Company ~~has broad diversification,~~provides deep liquidity in ~~combination with our proprietary technology platform~~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 ~~low-cost structure, which enables~~scaled, multi-asset infrastructure, the Company ~~to facilitate risk transfer between global capital markets participants by supplying competitive liquidity and execution services while at the same time earning attractive margins and returns.~~

~~Virtu Financial was formed as a Delaware limited liability company on April 8, 2011 in connection~~provides its clients with a ~~corporate reorganization~~robust product suite including offerings in execution, liquidity sourcing, analytics and ~~acquisition~~broker-neutral, multi-dealer platforms in workflow technology. The Company’s product offerings allow its clients to trade on hundreds of ~~the outstanding equity interests of Madison Tyler Holdings, LLC (“MTH”~~venues in over 50 countries and across multiple asset classes, including global equities, Exchange-Traded Funds ("ETFs"), anforeign exchange, futures, fixed income and other commodities. The Company’s integrated, multi-asset analytics platform provides a range of pre- and post-trade services, data products and compliance tools that its clients rely upon to invest, trade and manage risk across global markets.

The Company has completed 2 significant acquisitions over the past five years that have expanded and complemented Virtu Financial's original electronic trading ~~firm~~ and market maker. In connection with the reorganization, the members of Virtu Financial’s predecessor entity, Virtu Financial Operating LLC (“VFO”), a Delaware limited liability company formed on March 19, 2008, exchanged their interests in VFO for interests in Virtu Financial and the members of MTH exchanged their interests in MTH for cash and/or interests in Virtu Financial.

marking making business. On July 20, 2017 (the ~~“Closing~~“KCG Closing Date”), the Company completed the all-cash acquisition ~~(the “Acquisition”)~~ of KCG Holdings, Inc. (“KCG”) (the “Acquisition of KCG”). ~~Pursuant~~On March 1, 2019 (the “ITG Closing Date”), the Company completed the acquisition of Investment Technology Group, Inc. and its subsidiaries (“ITG”) in an all-cash transaction valued at $30.30 per ITG share, for a total of approximately $1.0 billion (the “ITG Acquisition”). ITG's business contributes to the terms of the Agreement and Plan of Merger, dated as of April 20, 2017 (the “Merger Agreement”), by and among the Company, Orchestra Merger Sub, Inc., a Delaware corporation and an indirect wholly-owned subsidiary of the Company (“Merger Sub”), and KCG, Merger Sub merged with and into KCG (the “Merger”), with KCG surviving the Merger as a wholly owned subsidiary of the Company. The transaction will extend Virtu’s scaled operating model to KCG’s wholesale market making businesses and broaden the distribution of Virtu’s technology and execution services to KCG’s extensive institutional client base. The Company expects to migrate trading of the combined company onto a single, proven technology, risk management, and analytics platform. See Note 3 “Merger of Virtu Financial, Inc.and KCG Holdings Inc.” for further details.

Company's Execution Services segment.

Virtu Financial’s principal ~~subsidiaries include Virtu Financial BD LLC (“VFBD”~~United States ("U.S.") ~~and~~subsidiary is Virtu Americas LLC (“VAL”), which ~~are self-clearing U.S. broker-dealers, Virtu Financial Capital Markets LLC (“VFCM”),~~is a U.S. broker-dealer, which self-clears its proprietary transactions and introduces the accounts of its affiliates and non-affiliated broker-dealers on an agency basis to other clearing firms that clear and settle transactions in those accounts;broker-dealer. Other principal U.S. subsidiaries include Virtu Financial Global Markets LLC, ~~(“VFGM”),~~ 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”~~("VFIL") and Virtu ITG Europe Limited ("VIEL"), each formed in Ireland; Virtu ITG UK Limited ("VIUK"), formed in ~~Ireland,~~the United Kingdom; Virtu ITG Canada Corp. and Virtu Financial Canada ULC, each formed in Canada; Virtu Financial Asia Pty ~~Ltd (“VFAP”),~~Ltd. and Virtu ITG Australia Limited, each formed in ~~Australia,~~Australia; Virtu ITG Hong Kong Limited, formed in Hong Kong; and Virtu Financial Singapore Pte. Ltd. ~~(“VFSing”)~~and Virtu ITG Singapore Pte. Ltd., each formed in Singapore, ~~each~~all of which are trading entities focused on asset classes in their respective geographic regions. ~~Following the Acquisition, Virtu Financial’s principal subsidiaries also include VAL.~~

In September 2017, the Company completed the sale of its designated market maker (“DMM”) on the NYSE American. The results of the NYSE American DMM business are included in the Market Making segment, up through the date of its sale. On October 24, 2017, the Company announced it has entered into a definitive agreement to sell its fixed income trading venue, BondPoint, to Intercontinental Exchange. See Note 19 "Subsequent Events" for further details.

~~Table of Contents~~

Prior to the Acquisition, the Company was managed and operated as one business, and, accordingly, operated under one reportable segment. As a result of the acquisition of KCG, beginning in the third quarter of 2017 theThe Company has ~~three~~2 operating segments: (i) Market ~~Making;~~Making and (ii) Execution Services; and ~~(iii)~~1 non-operating segment: Corporate. See Note 1721 "Geographic Information and Business Segments" for a further discussion of the Company’s segments.

~~Market Making~~

The Market Making segment principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities. 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 directly 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 Bulletin Board marketplaces operated by the OTC Markets Group Inc. and the Alternative Investment Market of the London Stock Exchange ("AIM").

~~Execution Services~~

The Execution Services segment comprises agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker dealers as well as technology services revenues. 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. Agency-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 executing program, block and riskless principal trades in global equities and exchange traded funds ("ETFs"); (iii) a fixed income ECN that also offers trading applications; and (iv) an ATS for U.S. equities.Technology licensing fees are earned from third parties for licensing of the Company’s proprietary risk management and trading infrastructure technology and the provision of associated management and hosting services.

~~Corporate~~

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.

Basis of Consolidation and Form of Presentation

These condensed consolidated financial statements are presented in U.S. dollars, ~~and~~ 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-Q and accounting standards generally accepted in the United States of America (“U.S. GAAP”) promulgated inby 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. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in accordance with SEC rules and regulations. The condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The condensed consolidated financial statements of the Company include its equity interests in Virtu Financial and its subsidiaries. ~~The Company operates and controls all business and affairs of Virtu Financial and its operating subsidiaries indirectly through its equity interest in Virtu Financial.~~

The condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements and should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2016 (the “2016 10-K”), as amended, which was filed on March 13, 2017. The accompanying December 31, 2016 unaudited condensed consolidated statements of financial condition data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP for annual financial statement purposes. The accompanying condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The operating results for interim periods are not necessarily

~~Table of Contents~~

~~indicative of the operating results for any future interim or annual period.~~

~~Principles of Consolidation, including Noncontrolling Interests~~

~~The condensed consolidated financial statements include the accounts of the Company and its majority and wholly owned subsidiaries.~~ As sole managing member of Virtu Financial, the Company exerts control over the Group’s operations. The Company

Table of Contents

consolidates Virtu Financial and its subsidiaries’ financial statements and records the interests in Virtu Financial that the Company does not own as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the prior period's condensed consolidated financial statements in order to conform to the current period presentation. Such reclassifications are immaterial, individually and in the aggregate, to both current and all previously issued financial statements taken as a whole and have no effect on previously reported consolidated net income available to common stockholders.

Effective for the quarter ended March 31, 2021, the Company changed the presentation of its Condensed Consolidated Statements of Changes in Equity and Condensed Consolidated Statements of Cash Flows. As ~~discussed in Note 3 “Merger~~a result, the Company combined $30.3 million of Dividends to stockholders and $83.4 million of Distribution from Virtu Financial ~~Inc.and KCG Holdings Inc.”, the Company is accounting for the acquisition~~to noncontrolling interest, and $90.1 million of ~~KCG under the acquisition method~~Dividends to stockholders and $247.8 million of ~~accounting. Under the acquisition method of accounting, the assets~~Distribution from Virtu Financial to noncontrolling interest into one line, Dividends to stockholders and ~~liabilities of KCG, as of July 20, 2017, were recorded at their respective fair values and added~~distribution from Virtu Financial to the carrying value of the Company's existing assets and liabilities. The reported financial condition and results of operations of the Company for the periods following the Acquisition reflect KCG's and the Company's balances and reflect the impact of purchase accounting adjustments. As the Company is the accounting acquirer, the financial resultsnoncontrolling interest for the three and nine months ended September 30, ~~2017 comprise the results of~~2020, respectively. Dividends and distributions from Virtu Financial to noncontrolling interest both represent cash payments by the Company ~~for the entire applicable period and the results of KCG from Closing Date through September 30, 2017. All periods prior~~ to ~~the Closing Date comprise solely the results of the Company.~~

its equity owners which reduce Total equity.

2. Summary of Significant Accounting Policies

~~Use~~

For a detailed discussion of ~~Estimates~~

~~The Company’s condensed~~the Company's significant accounting policies, see Note 2 "Summary of Significant Accounting Policies" in our consolidated financial statements ~~are prepared~~included in ~~conformity with U.S. GAAP, which require management to make estimates and assumptions regarding measurements including the fair value~~Part II, Item 8 of trading assets and liabilities, goodwill and intangibles, compensation accruals, capitalized software, income tax, and other matters that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates.

~~Earnings Per Share~~

~~Earnings per share (“EPS”) is calculated~~our Annual Report 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~~Form 10-K for the period. Diluted EPS is calculated by dividing the net income (loss) 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 under the Company’s share based compensation plans.

The Company grants restricted stock units (“RSUs”), which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. As a result, the unvested 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 carrying amount of such cash equivalents approximates their fair value due to the short-term nature of these instruments. These assets would be categorized as Level 1 in the fair value hierarchy if they were required to be recorded at fair value. The Company maintains cash in bank deposit accounts that, at times, may exceed federally insured limits.

~~Table of Contents~~

~~Cash and securities segregated under federal and other regulations~~

Effective upon the acquisition of KCG, the Company maintains custody of customer funds and is obligated by rules and regulations mandated by the SEC to segregate or set aside cash and/or qualified securities to satisfy these regulations, which have been promulgated to protect customer assets. The amounts recognized as Cash and securities segregated under federal and other regulations approximate fair value. These assets would be categorized as Level 1 in the fair value hierarchy if they were required to be recorded at fair value.

~~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. These transactions are collateralized by cash or securities. In accordance with substantially all of its stock borrow agreements, the Company is permitted to sell or repledge the securities received. Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial cash collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional collateral as appropriate. Receivables and payables with the same counterparty are not offset in the condensed consolidated statements of financial condition. Interest received or paid by the Company for these transactions is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the condensed consolidated statements of comprehensive income (loss).

~~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 takes possession of the underlying collateral securities with a fair value approximately equal to the principal amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the condensed consolidated statements of financial condition. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under agreements to repurchase transactions entered into with the same counterparty. The Company has also 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. Interest received or paid by the Company for these transactions is recorded gross on an accrual basis under interest and dividends income or interest and dividends expense in the condensed consolidated statements of comprehensive income (loss).

~~Receivables from/Payables to Broker-dealers and Clearing Organizations~~

~~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. At September 30, 2017 and~~year ended December 31, 2016, receivables from and payables to broker-dealers and clearing organizations primarily represented 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. The Company presents its balances, including outstanding principal balances on all credit facilities, on a net-by-counterparty basis within receivables from and payable to broker-dealers and clearing organizations when the criteria for offsetting are met.

In the normal course of business, substantially all of the Company’s securities transactions, money balances, and security positions are transacted with several 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 and does not anticipate any losses from these counterparties.

2020.

Accounting Pronouncements, Recently Adopted

~~Table of Contents~~

~~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, including those pledged as collateral, and financial instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded net on a trade-date basis in trading income, net, in the condensed consolidated statements of comprehensive income (loss).

~~Fair Value Measurements~~

Fair value is defines 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; or~~

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

~~Transfers in or out of levels are recognized based on the beginning fair value of the period in which they occurred.~~

~~Fair Value Option~~

The fair value option election allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are recorded in other, net in the condensed consolidated statements of comprehensive income (loss). The decision to elect the fair value option is determined on an instrument by instrument basis must be applied to an entire instrument and is irrevocable once elected.

~~Derivative Instruments~~

Derivative instruments are used for trading purposes, including economic hedges of trading instruments, which are carried at fair value, include futures, forward contracts, and options. Unrealized gains or losses on these derivative instruments are recognized currently within trading income, net in the condensed consolidated statement of comprehensive income (loss). 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 derivatives balances on a net-by-counterparty basis when the criteria for offsetting are met.

~~Table of Contents~~

~~Property, Equipment and Occupancy~~

Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection with the acquisitions of MTH and KCG, which were recorded at fair value on the respective dates of the acquisitions. Depreciation is provided using the straight-line method over estimated useful lives of the underlying assets. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. Furniture, fixtures, and equipment are depreciated over three to seven years. Leasehold improvements are amortized over the lesser of the life of the improvement or the term of the lease.

The Company recognizes rent expense under operating leases with fixed rent escalations, lease incentives and free rent periods on a straight-line basis over the lease term beginning on the date the Company takes possession of or controls the use of the space, including during free rent periods.

~~Lease Loss Accrual~~

The Company’s policy is to identify excess real estate capacity and where applicable, accrue for related future costs, net of projected sub-lease income upon the date the Company ceases to use the excess real estate, which is recorded under operating and administrative in the condensed consolidated statements of comprehensive income (loss). Such accrual is adjusted to the extent the actual terms of sub-leased property differ from the previous assumptions used in the calculation of the accrual.

~~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 condensed consolidated statements of financial condition and are amortized over a period of 1.4 to 3 years, which represents the estimated useful lives of the underlying software.

~~Goodwill~~

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 tested for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment.

The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events or circumstances exist. In the impairment test as of July 1, 2017, the primary valuation method used to estimate the fair value of the Company’s reporting unit was the market capitalization approach based on the market price of its Class A common stock, which the Company’s management believes to be an appropriate indicator of its fair value.

~~Intangible Assets~~

The Company amortizes finite-lived intangible assets over their estimated useful lives. Finite-lived intangible assets are tested for impairment annually or when impairment indicators are present, and if impaired, they are written

~~Table of Contents~~

~~down to fair value.~~

~~Exchange Memberships and Stock~~

Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a value that reflects management’s estimate of fair value. Exchange memberships acquired in connection with the Acquisition were recorded at their fair value on the date of acquisition. Exchange stock includes shares that entitle the Company to certain trading privileges. Exchange Stock is marked to market with the corresponding gain or loss recorded under operating and administrative in the condensed consolidated statements of comprehensive income (loss). The Company’s exchange memberships and stock are included in other assets in the condensed consolidated statements of financial condition.

~~Trading Income, net~~

Trading income is comprised of changes in the fair value of trading assets and liabilities (i.e., unrealized gains and losses) and realized gains and losses on trading assets and liabilities. Trading gains and losses on financial instruments owned and financial instruments sold, not yet purchased are recorded on the trade date and reported on a net basis in the condensed consolidated statements of comprehensive income (loss).

~~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 and technology services in the condensed consolidated statements of comprehensive income (loss).

Technology services revenues consist of technology licensing fees and agency commission fees. Technology licensing fees are earned from third parties for licensing of the Company’s proprietary risk management and trading infrastructure technology and the provision of associated management and hosting services. These fees include both upfront and annual recurring fees. Revenue from technology services is recognized once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized ratably over the contractual service period.

~~Soft Dollar Expense~~

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 and technology services in the condensed consolidated statements of comprehensive income (loss).

~~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 and Clearance Fees, Net~~

Brokerage, exchange and clearance fees, net, comprise the costs of executing and clearing trades and are recorded on a trade date basis. Rebates consist of volume discounts, credits or payments received from exchanges or other market places related to the placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis and included net within brokerage, exchange and clearance fees in the accompanying

~~Table of Contents~~

~~condensed consolidated statements of comprehensive income (loss).~~

~~Payments for Order Flow~~

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. Payments for order flow are recorded on a trade-date basis in the condensed consolidated statements of comprehensive income (loss).

~~Payable to customers~~

Payable to customers arises primarily from securities transactions and includes amounts due on receive versus payment (“RVP”) or deliver versus payment (“DVP”) transactions. Due to their short-term nature, such amounts approximate fair value.

Income Taxes

Subsequent to consummation of the Reorganization Transactions and the IPO, 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. Prior to the consummation of the Reorganization Transactions and the IPO, no provision for United States federal, state and local income tax was required, as Virtu Financial is a limited liability company and is treated as a pass-through entity for United States federal, state, and local income tax purposes.

The provision for income tax is comprised of current tax and deferred tax. Current tax represents the tax on current year tax returns, using tax rates enacted at the balance sheet date. The deferred tax assets are recognized in full and then reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be recognized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authority, including resolution of the appeals or litigation processes, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position are measured based on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Many factors are considered when evaluating and estimating the tax positions and tax benefits. Such estimates involve interpretations of regulations, rulings, case law, etc. and are inherently 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. The Company had $8.0 million of unrecognized tax benefits as of September 30, 2017 from the KCG acquisition. 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, 2016.

As a result of the acquisition of KCG, the Company acquired a deferred tax asset of $31.5 million relating to non-U.S. net operating losses. A full valuation allowance was also recorded against this deferred tax asset at September 30, 2017 as it is more likely than not that this deferred tax asset will not be realized.

No valuation allowance against deferred taxes was recorded at December 31, 2016 because at that point it was estimated to be more likely than not that the deferred tax asset recorded as of that date would be fully realized.

~~Comprehensive Income (Loss) and Foreign Currency Translation~~

Comprehensive income (loss) consists of two components: net income (loss) and other comprehensive income (loss) (“OCI”). OCI is comprised of revenues, expenses, gains and losses that are reported in the comprehensive income (loss) section of the condensed consolidated statements of comprehensive income, but are excluded from reported net income (loss). The Company’s OCI is comprised of foreign currency translation adjustments. Assets and liabilities of

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operations having non-U.S. dollar functional currencies are translated at period-end exchange rates, and revenues and expenses are translated at weighted average exchange rates for the period. Gains and losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

The Company's foreign subsidiaries generally use the U.S. dollar as their functional currency. The Company also has subsidiaries that utilize a functional currency other than the U.S. dollar, primarily comprising its Irish subsidiaries, which utilizes the Euro as the functional currency.

Assets and liabilities of non-U.S. dollar functional currency subsidiaries are translated at exchange rates at the end of a period. Revenues and expenses are translated at average exchange rates during the period. Gains and losses resulting from translating foreign currency financial statements into U.S. dollars are included in Accumulated other comprehensive (loss) income on the condensed consolidated statements of financial condition and cumulative translation adjustment, net of tax on the condensed consolidated statements of comprehensive income (loss).

The Company may seek to reduce the impact of fluctuations in foreign exchange rates on its net investment in certain non-U.S. operations through the use of foreign currency forward contracts. For foreign currency forward contracts designated as hedges, the Company assesses its risk management objectives and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair value of the forward contracts. For qualifying net investment hedges, any gains or losses, to the extent effective, are included in Accumulated other comprehensive (loss) income on the condensed consolidated statements of financial condition and Cumulative translation adjustment, net of tax, on the condensed consolidated statements of comprehensive income (loss). The ineffective portion, if any, is recorded in Investment income and other, net on the condensed consolidated statements of operations.

~~Share-Based Compensation~~

The fair value of awards issued for compensation prior to the Reorganization Transactions and the IPO was determined by management, with the assistance of an independent third party valuation firm, using a projected annual forfeiture rate, where applicable, on the date of grant.

Share-based awards issued for compensation in connection with or subsequent to the Reorganization Transaction and the IPO pursuant to the VFI 2015 Management Incentive Plan (the “2015 Management Incentive Plan”) were in the form of stock options, Class A common stock and (restricted stock units (“RSUs”). The fair value of the stock option grants is determined through the application of the Black-Scholes-Merton model. The fair value of the Class A common stock and RSUs are determined based on the volume weighted average price for the three days preceding the grant, and with respect to the RSUs, a projected annual forfeiture rate. The fair value of share-based awards granted to employees is expensed based on the vesting conditions and are recognized on a straight-line basis over 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 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.

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In October 2016, the Company invested in a joint venture (“JV”) with nine other parties. One of the parties was KCG. Upon the Merger, KCG was required to relinquish their ownership in the JV. As of September 30, 2017, each of the remaining parties owns approximately 11% of the voting shares and 11% of the equity of this JV, which is building microwave communication networks in the U.S. and Asia, and which is considered to be a VIE. The Company and all of its JV partners each pay monthly fees for the funding of the construction of the microwave communication networks. When completed, this JV may sell excess bandwidth that is not utilized by its joint venture members to third parties.

As a result of the Acquisition, the Company owns 50% of the voting shares and 50% of the equity of a JV which maintains microwave communication networks in the U.S. and Europe, and which is considered to be a VIE. The Company and its JV partner each pay monthly fees for the use of the microwave communication networks in connection with their respective trading activities, and the JV may sell excess bandwidth that is not utilized by the JV members to third parties.

In each of the JVs, the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; therefore it does not have a controlling financial interest in the JV and does not consolidate the JVs. The Company records its interest in each JV under the equity method of accounting and records its investment in the JVs within Other assets and its amounts payable for communication services provided by the JV within Accrued expenses and other liabilities on the condensed consolidated statements of financial condition. The Company records its pro-rata share of the JVs earnings or losses within Other, net and fees related to the use of communication services provided by the JVs within Communications and data processing on the condensed consolidated statements of comprehensive income (loss).

~~The Company’s exposure to the obligations of these VIE 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 VIE at September 30, 2017:~~

Maximum

Carrying Amount

Exposure to

(in thousands)

Asset

Liability

loss

VIE's assets

Equity investment

$
15,925

$
—

$
15,925

$
40,925

~~Recent Accounting Pronouncements~~

~~Revenue~~ - In ~~May 2014,~~December 2019, the FASB issued Accounting ~~Standard~~Standards Update ~~(“ASU”~~("ASU") ~~2014-09,~~ ~~Revenue from Contracts with Customers~~.2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU ~~2014-09 is a comprehensive new revenue~~removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition ~~model that requires a company~~of deferred tax liabilities for outside basis differences. The ASU also amends other aspects of the guidance relating to ~~recognize revenue to depict~~ the ~~transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange~~accounting for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments andfranchise taxes, enacted changes in ~~judgments~~tax laws or rates, the accounting for transactions that result in a step-up in the tax basis of goodwill, and ~~assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date~~. ASU 2015-14 defers the effective date of ASU 2014-09 by one year for public companies. ASU 2015-14 applies to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In December 2016, FASB issued ASU 2016-20 ~~Technical Correction and Improvement (Topic 606): Revenue from Contracts with Customers, which amends the guidance in ASU 2014-09. The effective date and transition requirements for the ASU are the same as ASU 2014-09.~~other tax-related items. The Company ~~is expected to adopt the revenue recognition guidance~~adopted this ASU on January 1, ~~2018 by applying the full retrospective method. Because the guidance does~~2021 and it did not ~~apply to revenue associated with securities trading activities that are accounted for under other GAAP, the Company does not expect the guidance to~~ have a material impact on its condensed consolidated ~~statements of comprehensive income (loss) most closely associated with~~ financial instruments, including Trading revenues, net, Commissions and technology services, and Interest and dividends income. The Company’s implementation efforts include the identification of revenue within the scope of the guidance and the evaluation of certain revenue contracts. The Company’s evaluation of the impact of the new guidance on its condensed consolidated financial statements is ongoing, and it continues to evaluate the timing of recognition for various revenues, including soft

statements.

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dollar related activity, which may be impacted depending on the features of the client arrangements and the presentation of certain contract costs (whether presented gross or offset against revenues). Also, the Company will identify performance obligations under ASC Topic 606 related to its technology licensing agreements. The timing of revenue recognition may be accelerated under the new standard, however the net impact is estimated to be immaterial based on contracts in placeAccounting Pronouncements, Not Yet Adopted as of September 30, ~~2017.~~

~~Financial Assets and Liabilities~~ —2021

Reference Rate Reform - In ~~January 2016,~~March 2020, the FASB issued ASU ~~2016-01,~~ 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial ~~Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~.Reporting, which is designed to ease the potential burden in accounting for the transition away from LIBOR. The ASU ~~intends~~applies to ~~enhance~~contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued and replaced with alternative reference rates as a result of reference rate reform. The ASU provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The ASU is effective for all entities as of March 12, 2020 through December 31, 2022. In January 2021, the ~~reporting model~~FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which expands the scope of Topic 848 to include derivative instruments that are affected by changes in the interest rates used for ~~financial instruments to provide users of financial statements with more decision-useful information and addresses certain aspects~~margining, discounting or contract price alignment as part of the ~~recognition, measurement, presentation, and disclosure of financial instruments. The~~market transition to new ~~ASU affects all entities that hold financial assets or owe financial liabilities and is~~ ~~effective for annual reporting periods (including interim periods) beginning after December 15, 2017. Early adoption of the ASU is not permitted, except for the amendments relating to the presentation of the change in the instrument-specific credit risk relating to a liability that an entity has elected to measure at fair value~~reference rates (the "discounting transition"). The Company is ~~currently~~ evaluating the ~~potential effects~~impact of ~~the adoption of ASU 2016-01 on its condensed consolidated financial statements,~~these ASUs, but does not expect it to have a material impact on its ~~condensed consolidated financial statements, as it does not currently classify any equity securities as available for sale,~~Condensed Consolidated Financial Statements and ~~it does not apply the fair value option to its own debt issuances.~~

~~Leases~~ —related disclosures.

Convertible Instruments - In ~~February 2016,~~August 2020, the FASB issued ASU ~~2016-02,~~ ~~Leases~~ ~~(Topic 842)~~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). Under the new ASU, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. The liability will be equal to the present value of lease payments. The asset, referred to as a “right-of-use asset” will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases will be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. New quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater information regarding the extent of revenue and expense recognized and expected to be recognized from existing contracts. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company anticipates adopting this ASU on January 1, 2019. The Company is not anticipating recognizing lease assets and lease liabilities for leases with a term of twelve months or less. As of September 30, 2017, the Company has not yet identified any significant changes in the timing of operating leases recognition when considering this ASU, but the Company’s implementation efforts are ongoing and such assessments may change prior to the January 1, 2019, anticipated implementation date. Upon adoption of this ASU, the Company expects to report increased assets and liabilities on its condensed consolidated statement of financial condition as a result of recognizing right-of-use assets and lease liabilities related to certain equipment under noncancelable operating lease agreements, which currently are not reflected in its condensed consolidated statement of financial condition.

~~Statement of Cash Flows~~ ~~– In August 2016, FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.~~The ASU ~~intended to reduce diversity~~simplifies accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in ~~practice how certain transactions are classified in the statement of cash flows by mandating classification of certain activities.~~ an entity's own equity and updates selected earnings per share ("EPS") guidance. The ASU is effective for ~~annual~~ periods beginning after December 15, ~~2017, and interim periods within those annual periods. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period.~~2021. The Company is currently evaluating the ~~potential effects of adoption of ASU 2016-15 on the Company’s condensed consolidated financial statements.~~

~~Income Taxes~~ ~~– In October 2016, FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 749): Intra-Entity Transfers of Assets Other Than Inventory. The ASU requires the reporting entity to recognize the tax expense from the sale of an asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects~~impact of the transactions are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The ASU is effective for annual periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the potential effects of adoption of ASU 2016-16 on the Company’s condensed consolidated financial statements.

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~~Restricted cash –~~ ~~In November 2016, FASB issued ASU 2016-18,~~ ~~Statement of Cash Flow (Topic 230): Restricted Cash,~~ which is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalent in the statements. The statement requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. This ASU is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has elected to early adopt this ASU effective as June 30, 2017.

~~Accounting Changes –~~ ~~In January 2017, FASB issued ASU 2017-03,~~ ~~Accounting Changes and Error Correction (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323),~~which amends SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC update). The SEC staff view is that a registrant should evaluate the impact of new accounting standards that have not yet been adopted to determine the appropriate financial disclosures on the potential material effects, especially on new standards on revenue recognition, leases, and financial instruments – credit losses. If a registrant cannot reasonably estimate the impact that adoption of the ASUs, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact. Additional qualitative disclosures should include a description of the effect of the accounting policies expected to be applied compared to current accounting policies. Furthermore, the registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The Company adopted this ASU on January 1, 2017, and appropriate disclosures have been included in this Note for each recently issued accounting standard.

~~Goodwill~~ ~~- In January, 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment~~. To simplify the subsequent measurement of goodwill, this ASU eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This ASU is effective for public entities in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this ASU to have a material impactstandard on its ~~condensed consolidated financial statements.~~

~~Business Combinations~~ - Condensed Consolidated Financial Statements and related disclosures.

3. Sale of MATCHNow

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, to amend the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for reporting periods beginning after December 15, 2017. The impact of this ASU will depend on the nature of the Company’s activities after adoption and the Company does not expect the adoption of this ASU to have a significant impact on its condensed consolidated financial statements. The Company is currently evaluating the potential effects of adoption of ASU 2017-01 on the Company’s condensed consolidated financial statements.

~~3. Merger of Virtu Financial, Inc. and KCG Holdings, Inc.~~

~~Background~~

As of the Closing Date of the Acquisition, each of KCG’s issued and outstanding shares of Class A common stock, par value $0.01 per share were cancelled and extinguished and converted into the right to receive $20.00 in cash, without interest, less any applicable withholding taxes. The acquisition of KCG is being accounted for as a business combination, subject to the provisions of ASC 805, Business Combinations.

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As discussed in further detail in Note 9 “Borrowings”, on June 30, 2017, Virtu Financial and VFH entered into a fourth amended and restated credit agreement (the “Fourth Amended and Restated Credit Agreement”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, sole lead arranger and bookrunner, which amended and restated in its entirety the existing Credit Agreement. The Fourth Amended and Restated Credit Agreement provided for a $540.0 million first lien secured term loan, drawn in its entirety on June 30, 2017, and continued VFH’s existing $100.0 million first lien senior secured revolving credit facility. Also on June 30, 2017, Orchestra Borrower LLC (the “Escrow Issuer”), a wholly owned subsidiary ofMay 2020, the Company entered into ~~an escrow credit agreement (the “Escrow Credit Agreement”~~a Securities Purchase Agreement ("SPA") with Cboe Global Markets, Inc. (“CBOE”) pursuant to which the ~~lenders party thereto~~ Company agreed to sell 100% of the outstanding interests in TriAct Canada Marketplace LP

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and ~~JPMorgan Chase Bank, N.A.~~TCM Corp., ~~as administrative agent, sole lead arranger~~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 ~~bookrunner, which provided for a $610.0 million term loan~~intellectual property used in support of MATCHNow.

On August 4, 2020 (the ~~“Escrow Term Loan”~~"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 ~~deposited into escrow pending~~recorded in Transaction advisory fees and expenses on the ~~closing~~Condensed Consolidated Statements of Comprehensive Income. The Company recognized a gain on sale of $58.7 million, which was recorded in Other, net on the Condensed Consolidated Statements of Comprehensive Income for the year ended September 30, 2020.

A summary of the ~~Acquisition.~~

~~Upon~~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 may be earned based on the ~~closing~~future performance of MATCHNow following the ~~Acquisition,~~MATCHNow Closing Date. Deferred payments will be assessed quarterly until December 31, 2022 and recorded in Other, net on the ~~proceeds~~Condensed Consolidated Statements of Comprehensive Income when the ~~Escrow Term Loan were released to fund in part the Acquisition consideration, the obligations of the Escrow Issuer in respect of the Escrow Term Loan were assumed~~contingency is resolved and payments become payable by VFH Parent and the Escrow Term Loan was deemed to be outstanding under the Fourth Amended and Restated Credit Agreement and the Escrow Credit Agreement and related credit documents automatically terminated and were superseded by the provisions of the Fourth Amended and Restated Credit Agreement. CBOE.

In addition, the ~~revolving credit facility~~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 ~~Fourth Amended and Restated Credit Agreement terminated.~~

On June 16, 2017, the Escrow Issuer and Orchestra Co-Issuer, Inc. (the “Co-Issuer”) completed the offering of $500 million aggregate principal amount of 6.750% Senior Secured Second Lien Notes due 2022 (the “Notes”). The Notes were issued under an Indenture, dated June 16, 2017 (the “Indenture”), among the Escrow Issuer, the Co-Issuer and U.S. Bank National Association, as trustee and collateral agent. The Notes mature on June 15, 2022. InterestTSA are recorded in Other, net on the ~~Notes accrues at 6.750% per annum, payable every six months through maturity on each June 15~~Condensed Consolidated Statements of Comprehensive Income.

With the licensing of certain software and ~~December 15, beginning on December 15, 2017.~~

~~On July 20, 2017, VFH assumed all~~intellectual property associated with MATCHNow, the Company performed an assessment of ~~the obligations~~impairment of the Escrow Issuer under the Indenture and the Notes. The Notes are guaranteed by Virtu Financial and each of Virtu Financial’s wholly-owned domestic restricted subsidiaries that guarantees the Fourth Amended and Restated Credit Agreement, including KCG and certain of its subsidiaries and the Escrow Issuer. We refer to VFH and the Co-Issuer together as, the “Issuers.”

On the Closing Date, the Escrow Credit Agreement and related credit documents automatically ceased to be of force or effect and were superseded by the provisions of the Fourth Amended and Restated Credit Agreement and the first lien senior secured revolving credit facility matured. A total of $1,119.4 million restricted cash in escrow was released to the Company.

~~On the Closing Date, and~~long-lived intangible assets acquired in connection with the ~~financing~~ITG acquisition, of the Acquisition, the Company issued to Aranda Investments Pte. Ltd. (“Aranda”), an affiliate of Temasek Holdings (Private) Limited (“Temasek”), 6,346,155 shares of the Company’s Class A common stock, pursuant to the investment agreement with Aranda (as amended, the “Aranda Investment Agreement”) inwhich MATCHNow technology was a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act for an aggregate purchase price of approximately $99.0 million. On August 10, 2017, the Company issued an additional 1,666,666 shares of its Class A common stock for an aggregate purchase price of $26.0 million (collectively, the “Temasek Investment”).

On the Closing Date, and in connection with the financing of the Acquisition, the Company issued to North Island Holdings I, LP (“NIH”) 39,725,979 shares of the Company’s Class A pursuant to the investment agreement with NIH (as amended, the “NIH Investment Agreement”) in a private placement exempt from the registration requirements of the Securities Act pursuant to Section 4(a) (2) of the Securities Act for an aggregate purchase price of approximately $613.5 million. On August 10, 2017 the Company issued an additional 338,124 shares of its Class A common stock for an aggregate purchase price of $5.2 million (collectively, the “NIH Investment”). In connection with the Temasek Investment and NIH Investment, the Company incurred approximately $7.8 million in fees which were recorded as a reduction to additional paid-in capital.

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On July 21, 2017, the outstanding 6.875% Senior Secured Notes due 2020 issued by KCG were redeemed at a redemption price equal to 103.438% of the principal amount, plus accrued and unpaid interest, pursuant to the indenture, dated as of March 13, 2015 (as amended, restated, supplemented or otherwise modified), by and among KCG, the subsidiary guarantors party thereto and The Bank of New York Mellon, as trustee and collateral agent.

In accordance with the terms of the Fourth Amended and Restated Credit Agreement, VFH made voluntary prepayments of principal under the Term Loan Facility in the amount of $100.0 million each, on August 8, 2017 and September 29, 2017, respectively. The outstanding principal amount under the Term Loan Facilitycomponent. No impairment was ~~$950.0 million as of September 30, 2017.~~

~~Accounting treatment of the Acquisition~~

The Acquisition is accounted for as a purchase of KCG by the Company. Under the acquisition method of accounting, the assets and liabilities of KCG, as of July 20, 2017, were recorded at their respective fair values and added to the carrying value of the Company's existing assets and liabilities. These fair values were determined with the assistance of third party valuation professionals. The reported financial condition and results of operations of the Company for the periods following the Merger reflect KCG's and the Company's balances and reflect the impact of purchase accounting adjustments. As the Company is the accounting acquirer, the financial resultsrecognized for the three and nine months ended September 30, 2017 comprise the results of the Company for the entire applicable period and the results of KCG from Closing Date through September 30, 2017. All periods prior to 2017 comprise solely the results of the Company.

Certain former KCG management employees were terminated upon the Merger, and as a result were paid an aggregate of $6.4 million pursuant to their existing employment contracts. This amount has been recognized as an expense by the Company and is included in Employee compensation and payroll taxes in the condensed consolidated statements of comprehensive income (loss) for the three and nine month periods ending September 30, 2017. The Company also expects to make annual incentive compensation payments to former KCG employees who became employees of the Company following the Merger, and accrued related compensation expense of approximately $23.0 million during the three and nine months ended September 30, 2017, which is included in Employee compensation and payroll taxes in the condensed consolidated statements of comprehensive income (loss).

~~Purchase price and goodwill~~

The aggregate cash purchase price of $1.40 billion was determined as the sum of the fair value, at $20.00 per share, of KCG shares and warrants outstanding to former KCG stockholders at closing and the fair value of KCG employee stock based awards that were outstanding, and which vested at the Closing Date.

The purchase price has been allocated to the assets acquired and liabilities assumed using their estimated fair values at July 20, 2017, the closing date of the Acquisition. The Company has not yet completed all of its analyses to finalize the allocation of the purchase price to the KCG acquired assets and liabilities. The allocation of the purchase price may be modified over the measurement period, as more information is obtained about the fair values of assets acquired and liabilities assumed. The Company has engaged third party specialists for the purchase price allocation.

The amounts in the table below represent the allocation of the purchase price and are subject to revision during the remainder of the measurement period, a period not to exceed twelve months from the Acquisition date. Adjustments to the provisional values during the measurement period will be recorded in the reporting period in which the adjustment amounts are determined. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the Acquisition date:

(in thousands)

Cash and equivalents

$
592,993

Cash and securities segregated under federal regulations

3,000

Securities borrowed

1,406,444

2020.

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Securities purchased under agreements to resell

16,894

Receivables from broker dealers and clearing organizations

553,031

Financial instruments owned, at fair value

2,095,339

Property, equipment and capitalized software (net)

112,204

Intangibles

156,300

Deferred taxes

22,928

Other assets

331,820

Total Assets

$
5,290,953

Securities loaned

$
166,189

Securities sold under agreements to repurchase

841,606

Payables to broker dealers and clearing organizations

536,653

Payables to customers

17,583

Financial instruments sold, not yet purchased, at fair value

1,756,647

Accounts payable and accrued expenses and other liabilities

239,004

Debt

480,987

Total Liabilities

$
4,038,669

Total identified assets acquired, net of assumed liabilities

$
1,252,284

Goodwill

$
143,012

Total Purchase Price

$
1,395,296

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

Amortization

Amount

Years

Technology
$
67,800

1-6 years

Customer relationships

77,100

13 - 17 years

Trade names

5,000

10 years

Exchange memberships

6,400

Indefinite

Intangible assets
$
156,300

Goodwill

143,012

Total
$
299,312

Of the total Goodwill of $143.0 million, $107.2 million has been assigned to the Market Making segment and $35.8 million has been assigned to the Execution Services segment. Such goodwill is attributable to the expansion of products offerings and expected synergies of the combined workforce, products and technologies of the Company and KCG.

~~Tax treatment of the Merger~~

The Company believes that the Acquisition will be treated as a tax-free transaction as described in Section 351 of the Internal Revenue Code, and both KCG and the Company have received tax opinions from external legal counsel to that effect. KCG’s tax basis in its assets and liabilities therefore generally carries over to the Company following the Acquisition. None of the goodwill is expected to be deductible for tax purposes.

The Company recorded net deferred tax assets of $22.9 million with respect to recording KCG’s assets and liabilities under the purchase method of accounting as described above as well as recording the value of other tax attributes acquired as a result of the Acquisition, as described in Note 12.

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~~Pro forma results~~

Included in the Company’s results for the three months ended September 30, 2017 are results from the business acquired as a result of the Acquisition, from the date of Acquisition, July 20, 2017 through September 30, 2017 as follows:

(in thousands)

Revenues

$
149,327

Income (loss) before income taxes

(12,578)

The financial information in the table below summarizes the combined pro forma results of operations of the Company and KCG, based on adding the pre-tax historical results of KCG and the Company, and adjusting primarily for amortization of intangibles created in the Acquisition, debt raised in conjunction with the Acquisition and nonrecurring costs associated with the Acquisition, which comprise advisory and other professional fees incurred by Virtu and KCG of $24.2 and $22.5 million, respectively. The pro forma data assumes all of KCG’s issued and outstanding shares of Class A common stock, par value $0.01 per share were cancelled and extinguished and converted into the right to receive $20.00 in cash, without interest, less any applicable withholding taxes on January 1, 2016 and does not include adjustments to reflect the Company's operating costs or expected differences in the way funds generated by the Company are invested.

This pro forma financial information is based on estimates and assumptions that have been made solely for purposes of developing such pro forma information, including, without limitation, preliminary purchase accounting adjustments. The pro forma financial information does not reflect any synergies or operating cost reductions that may be achieved from the combined operations. The pro forma financial information combines the historical results for the Company and KCG for the three and nine month periods ended September 30, 2017 and 2016 (in millions, except per share amounts):

For the Three Months Ended

For the Nine Months Ended

(in thousands, except per share amounts)

2017

2016

2017

2016

Revenue

$
304,020

$
373,338

$
1,068,164

$
1,401,819

Net income (loss)

(82,520)

1,783

(117,169)

163,146

Net income (loss) attributable to common stockholders

(30,432)

658

(43,210)

60,165

Diluted earnings (loss) per share

$
(0.35)

$
0.01

$
(0.48)

$
0.67

4. Earnings per Share

~~Net income (loss) available for common stockholders is based on the Company’s weighted average interest in Virtu Financial during the periods presented below.~~

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

Three Months Ended  September 30,

Nine Months Ended  September 30,

(in thousands)

2017

2016

2017

2016

Income (loss) before income taxes and noncontrolling interest

$
(46,495)

$
37,874

$
(17,421)

$
140,990

Provision for (benefit from) income taxes

(6,505)

4,851

(2,918)

17,325


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Income before income taxes and noncontrolling interest	$	145,099	$	252,515	$	769,887	$	1,123,272
Provision for income taxes	21,961		52,807		128,611		200,044
Net income	123,138		199,708		641,276		923,228



Noncontrolling interest	(52,631)		(82,999)		(268,454)		(386,311)

Net income available for common stockholders	$	70,507	$	116,709	$	372,822	$	536,917

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Net income (loss)

(39,990)

33,023

(14,503)

123,665

Noncontrolling interest

26,472

(25,997)

6,466

(97,913)

Net income (loss) available for common stockholders

$
(13,518)

$
7,026

$
(8,037)

$
25,752

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

Three Months Ended  September 30,

Nine Months Ended  September 30,

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

2017

2016


2017

2016

Basic earnings per share:

Net income (loss) available for common stockholders

$
(13,518)

$
7,026

$
(8,037)

$
25,752

Less: Dividends and undistributed earnings allocated to participating securities

(314)

(191)

(997)

(612)

Net income (loss) available for common stockholders, net of dividends and undistributed earnings allocated to participating securities

$
(13,832)

6,835

$
(9,034)

25,140

Weighted average shares of common stock outstanding:

Class A

79,199,142

38,351,465

53,520,346

38,264,139

Basic Earnings per share

$
(0.17)

$
0.18

$
(0.17)

$
0.66

Three Months Ended  September 30,

Nine Months Ended  September 30,

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

2017

2016


2017

2016

Diluted earnings per share:

Net income (loss) available for common stockholders, net of dividends and undistributed earnings allocated to participating securities

$
(13,832)

$
6,835

$
(9,034)

$
25,140

Weighted average shares of common stock outstanding:

Class A

Issued and outstanding

79,199,142

38,351,465

53,520,346

38,264,139

Issuable pursuant to 2015 Management Incentive Plan(1)

—

—

—

—

79,199,142

38,351,465

53,520,346

38,264,139

Diluted Earnings per share

$
(0.17)

$
0.18

$
(0.17)

$
0.66


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except for share or per share data)	2021		2020		2021		2020
Basic earnings (loss) per share:
Net income available for common stockholders	$	70,507	$	116,709	$	372,822	$	536,917

Less: Dividends and undistributed earnings allocated to participating securities	(2,222)		(3,417)		(10,335)		(14,210)
Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities	68,285		113,292		362,487		522,707

Weighted average shares of common stock outstanding:
Class A	115,770,457		122,686,931		119,148,571		121,328,895

Basic earnings (loss) per share	$	0.59	$	0.92	$	3.04	$	4.31


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except for share or per share data)	2021		2020		2021		2020
Diluted earnings (loss) per share:
Net income available for common stockholders, net of dividends and undistributed earnings allocated to participating securities	$	68,285	$	113,292	$	362,487	$	522,707

Weighted average shares of common stock outstanding:
Class A
Issued and outstanding	115,770,457		122,686,931		119,148,571		121,328,895
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	852,657		1,085,074		1,224,589		610,944
	116,623,114		123,772,005		120,373,160		121,939,839

Diluted earnings (loss) per share	$	0.59	$	0.92	$	3.01	$	4.29

	~~(1)~~
The dilutive impact of unexercised stock options excludes from the computation of EPS 1,578,617 and 1,151,260 options for the three months ended September 30, 2017 and 2016, respectively, and 1,704,307 and 383,294 options for the nine months ended September 30, 2017 and 2016, respectively, because inclusion of the options would have been anti-dilutive.

5. Tax Receivable Agreements

~~In connection with~~

For a detailed discussion of the ~~IPO and the Reorganization Transactions, the Company entered into~~Company's tax receivable agreements, ~~to make payments to certain Virtu Members, as defined~~see Note 7 "Tax Receivable Agreements" in ~~Note 14, that are generally equal to 85%~~our consolidated financial statements included in Part II, Item 8 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 and payments made under the tax receivable agreements. 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 first payment was due 120 days after the filing of the Company’s tax returnour Annual Report on Form 10-K for the year ended December 31, ~~2015, which was due March 15, 2016, but the due date was extended until September 15, 2016. Future payments under~~2020.

For purposes of the tax receivable agreements, ~~in respect of subsequent exchanges would be in addition~~

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~~to these amounts. The Company made its first payment of $7.0 million in February 2017.~~

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) 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, the Company recorded a deferred tax asset of $218.4 million associated with the increase in tax basis that results from such events. Payments to certain Virtu Members in respect of the purchases are expected to aggregate to approximately $238.6 million, ranging from approximately $0.4 million to $21.4 million per year over the next 15 years. The corresponding deduction to additional paid-in capital was approximately $20.2 million for the difference between the tax receivable agreements liability and the related deferred tax asset. In connection with the February 2017, May 2017, and August 2017 employee exchanges (as described in Note 14), the Company recorded an additional deferred tax asset of $9.5 million and payment liability pursuant to the tax receivable agreements of $8.2 million, with the $1.3 million difference recorded as an increase to additional paid-in capital. The amounts recorded as of September 30, 2017 are based on estimates available at the respective dates and may be subject to change after the filing of the Company’s U.S. federal and state income tax returns for the years in which tax savings were realized. At September 30, 2017 and December 31, 2016, the Company’s remaining deferred tax assets were approximately $191.3 million and $185.6 million, respectively, and the Company’s payment liabilities pursuant to the tax receivable agreements were approximately $232.6 million and $231.4 million, respectively.

~~Approximately $22.1 million of the Company’s deferred tax assets at September 30, 2017 are a result of the Acquisition as described in Note 3. For the tax receivable agreements discussed above,~~ the cash savings realized by the Company are computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been (i) no increase to the tax basis of the assets of Virtu Financial as a result of the purchase or exchange of Virtu Financial Units, (ii) no tax benefit from the tax basis in the intangible assets of Virtu Financial on the date of the IPO and (iii) no tax benefit as a result of the Net Operating Losses (“NOLs”) and other tax attributes of Virtu Financial. 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 ~~operating expenses~~income before taxes and noncontrolling interests in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~comprehensive~~Comprehensive Income.

The Company made its first payment of $7.0 million in February 2017, its second payment of $12.4 million in September 2018, its third payment of $13.3 million in March 2020, and its fourth payment of $16.5 million in April 2021. Tax receivable payments are expected to range from approximately $0.9 million to $21.7 million per year over the next 15 years.

At September 30, 2021 and December 31, 2020, the Company’s remaining deferred tax assets that relate to the matters described above were approximately $184.3 million and $199.1 million, respectively, and the Company’s liabilities over the next 15 years pursuant to the tax receivable agreements were approximately $254.7 million and $271.2 million, respectively. The amounts recorded as of September 30, 2021 and December 31, 2020 are based on best estimates available at the respective dates and may be subject to change after the filing of the Company’s U.S. federal and state income ~~(loss).~~

tax returns for the years in which tax savings were realized.

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6. Goodwill and Intangible Assets

Prior to the Acquisition, the Company was managed and operated as one business, and accordingly, operated under one reportable segment. As a result of the acquisition of KCG, beginning in the third quarter of 2017 the

The Company has ~~three~~2 operating segments: (i) Market Making; (ii) Execution Services; and ~~(iii)~~1 non-operating segment: Corporate. ~~The Company allocated~~As of September 30, 2021 and December 31, 2020, the Company’s total amount of goodwill ~~to the new reporting units using a relative fair value approach. In addition, the Company performed an assessment of potential~~recorded was $1,148.9 million. No goodwill impairment ~~for all reporting units immediately prior to~~was recognized during the ~~reallocation~~three and ~~determined that no impairment was indicated.~~

nine months ended September 30, 2021 and 2020.

The following table presents the details of goodwill by ~~segment:~~

Market

Execution

(in thousands)

Making

Services

Corporate

Total

Balance as of December 31, 2016

$
657,985

$
57,394

$
—

$
715,379

Additions

108,276

35,943

—

144,219

Balance as of September 30, 2017

$
766,261

$
93,337

$
—

$
859,598

On May 3, 2017, the Company completed the acquisition of certain legal entities that owned select strategic telecommunications assets from Teza Technologies. The total purchase price incurred was $5.6 million, of which $1.2 million was recorded as goodwill, and $1.9 million was recorded as intangible assets. This acquisition was accounted for

~~Table of Contents~~

~~as a business combination. The acquisition related disclosures required by ASC 805~~ ~~Business Combinations~~ ~~were finalized~~segment as of September 30, ~~2017, a decrease of $1.9 million in goodwill~~2021 and ~~an increase of $1.9 million in intangible assets were recorded as adjustments to preliminary analysis during the three months ended September 30, 2017.~~

As described in Note 3 “Merger of Virtu Financial, Inc. and KCG Holdings, Inc.”, on July 20, 2017 the Company completed the acquisition of KCG. The aggregate cash purchase price of $1.40 billion has been allocated to the assets acquired and liabilities assumed using their estimated fair values at the Closing Date of the Acquisition. The Company has allocated $143.0 million and $156.3 million to goodwill and identified intangible assets, respectively This Acquisition was accounted for as a business combination.

~~The Company recorded provisional amounts based upon its best estimate of the value as a result of preliminary analysis.~~ December 31, 2020:


(in thousands)	Market Making		Execution Services		Corporate		Total



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

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the ~~Company’s~~Company's total amount of ~~goodwill~~intangible assets recorded was ~~$859.6~~$402.9 million and ~~$715.4~~$454.5 million, respectively. ~~No goodwill impairment was recognized in the three and nine months ended September 30, 2017 and 2016.~~

Acquired intangible assets consisted of the ~~following:~~

following as of September 30, 2021 and December 31, 2020:


	As of September 30, 2017
	Gross
	Carrying		Accumulated		Net Carrying		Useful Lives				As of September 30, 2021
(in thousands)	Amount		Amortization		Amount		(Years)			(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Useful Lives (Years)
Purchased technology	$	110,000	$	110,000	$	—	1.4	to	2.5
Customer relationships										Customer relationships	$	486,600	$	(130,182)	$	356,418	10	to	12
Technology										Technology	136,000		(97,966)		38,034		1	to	6
Favorable occupancy leases										Favorable occupancy leases	5,895		(3,433)		2,462		3	to	15
Exchange memberships										Exchange memberships	3,998		—		3,998		Indefinite
Trade name										Trade name	3,600		(3,100)		500			3
ETF issuer relationships		950		533		417		9		ETF issuer relationships	950		(950)		—			9
ETF buyer relationships		950		533		417		9		ETF buyer relationships	950		(950)		—			9
Leases		1,800		247		1,553		3
FCC licenses		200		12		188		7
Technology		67,800		5,001		62,799	1	to	6
Customer relationships		77,100		1,027		76,073	13	to	17
Trade names		5,000		98		4,902		10
Exchange memberships		6,400		—		6,400		Indefinite
Other										Other	$	1,500	$	—	$	1,500	Indefinite
	$	270,200	$	117,451	$	152,749					$	639,493	$	(236,581)	$	402,912


	As of December 31, 2016
	Gross
	Carrying		Accumulated		Net Carrying		Useful Lives				As of December 31, 2020
(in thousands)	Amount		Amortization		Amount		(Years)			(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Useful Lives (Years)
Purchased technology	$	110,000	$	110,000	$	—	1.4	to	2.5
Customer relationships										Customer relationships	$	486,600	$	(94,299)	$	392,301	10	to	12
Technology										Technology	136,000		(82,403)		53,597		1	to	6
Favorable occupancy leases										Favorable occupancy leases	5,895		(2,839)		3,056		3	to	15
Exchange memberships										Exchange memberships	3,998		—		3,998		Indefinite
Trade name										Trade name	3,600		(2,200)		1,400			3
ETF issuer relationships		950		454		496		9		ETF issuer relationships	950		(877)		73			9
ETF buyer relationships		950		454		496		9		ETF buyer relationships	950		(876)		74			9
Other										Other	$	—	$	—	$	—	Indefinite
	$	111,900	$	110,908	$	992					$	637,993	$	(183,494)	$	454,499

~~The below table contains a reconciliation of the long term borrowings principal amount to the secured credit facility recorded in the condensed consolidated statements of financial condition:~~

To supplement our ~~unaudited~~ condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), we use the following ~~non-GAAP~~non-U.S. GAAP (“Non-GAAP”) financial measures of financial performance:

“Adjusted Net Trading Income”, which is the amount of revenue we generate from our market making activities, or trading income, net, plus commissions, net and technology services, interest and dividends income and expense, net, less direct costs associated with those revenues, including brokerage, exchange and clearance fees, net. Management believes that this measurement is useful for comparing general operating performance from period to period. Although we use Adjusted Net Trading Income as a financial measure to assess the performance of our business, the use of Adjusted Net Trading Income is limited because it does not include certain material costs that are necessary to operate our business. Our presentation of Adjusted Net Trading Income should not be construed as an indication that our future results will be unaffected by revenues or expenses that are not directly associated with our market making activities.

“EBITDA”, which measures our operating performance by adjusting net income to exclude financing interest expense on long-term borrowings, depreciation and amortization, amortization of purchased intangibles and acquired capitalized software and income tax expense, and “Adjusted EBITDA”, which measures our operating performance by further adjusting EBITDA to exclude severance, transaction advisory fees and expenses, termination of office leases, equipment write-off, share based compensation charges related to share based compensation at IPO, the 2015 Management Incentive Plan, and charges related to share based compensation at IPO.

“Normalized Adjusted Net Income”, “Normalized Adjusted Net Income before income taxes”, “Normalized provision for income taxes”, and “Normalized Adjusted EPS”, which we calculate by adjusting Net Income to exclude certain items including IPO-related adjustments and other non-cash items, assuming that all vested and unvested Virtu Financial Units have been exchanged for Class A common stock, and applying a corporate tax rate between 35.5% and 37%.

•“Adjusted Net Trading Income”, which is the amount of revenue we generate from our market making activities, or Trading income, net, plus Commissions, net and technology services, plus Interest and dividends income, less direct costs associated with those revenues, including Brokerage, exchange, clearance fees and payments for order flow, net, and Interest and dividends expense. Management believes that this measurement is useful for comparing general operating performance from period to period. Although we use Adjusted Net Trading Income as a financial measure to assess the performance of our business, the use of Adjusted Net Trading Income is limited because it does not include certain material costs that are necessary to operate our business. Our presentation of Adjusted Net Trading Income should not be construed as an indication that our future results will be unaffected by revenues or expenses that are not directly associated with our market making activities.

~~Total~~

•“EBITDA”, which measures our operating performance by adjusting net income to exclude Financing interest expense on long-term borrowings, Debt issue cost related to debt refinancing, prepayment, and commitment fees, Depreciation and amortization, Amortization of purchased intangibles and acquired capitalized software, and Income tax expense, and “Adjusted EBITDA”, which measures our operating performance by further adjusting EBITDA to exclude severance, transaction advisory fees and expenses, termination of office leases, charges related to share based compensation and other expenses, which includes reserves for legal matters, COVID-19 one-time costs and donations and Other, net.

•“Normalized Adjusted Net Income”, “Normalized Adjusted Net Income before income taxes”, “Normalized provision for income taxes”, and “Normalized Adjusted EPS”, which we calculate by adjusting Net Income to exclude certain items and other non-cash items, assuming that all vested and unvested Virtu Financial Units have been exchanged for Class A Common Stock, and applying an effective tax rate, which was approximately 24%.

•Operating Margins, which are calculated by dividing net income, EBITDA, and Adjusted EBITDA by Adjusted Net Trading Income.

Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, ~~and~~ Normalized Adjusted EPS, and Operating Margins (collectively, the “Company's Non-GAAP Measures”) are non-GAAP financial measures used by management in evaluating operating performance and in making strategic decisions. Additional information provided regarding the breakdown of ~~Total~~total Adjusted Net Trading Income by category is also a non-GAAP financial measure but is not used by the Company in evaluating operating performance and in making strategic decisions. In addition, ~~these non-GAAP financial measures~~the Company's Non-GAAP Measures or similar non-GAAP financial measures are used by research analysts, investment bankers and lenders to assess our operating performance. Management believes that the presentation of ~~Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted~~

~~Table of Contents~~

~~EPS provide~~the Company's Non-GAAP Measures provides useful information to investors regarding our results of operations and cash flows because they assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPSThe Company's Non-GAAP Measures provide indicators of general economic performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period. Furthermore, our ~~senior secured credit facility~~Credit Agreement contains covenants and other tests based on metrics similar to Adjusted EBITDA. Other companies may define Adjusted Net Trading Income, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, ~~and~~ Normalized Adjusted EPS, and Operating Margins differently, and as a result our measures of Adjusted Net Trading Income, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPSthe Company's Non-GAAP Measures may not be directly comparable to those of other companies. Although we use ~~these non-GAAP measures~~the Company's Non-GAAP Measures as financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business.

The Company's Non-GAAP Measures should be considered in addition to, and not as a substitute for, Net Income in accordance with U.S. GAAP as a measure of performance. Our presentation of Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPSthe Company's Non-GAAP Measures should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Adjusted Net Trading Income, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS and our EBITDA-based measuresThe Company's Non-GAAP Measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

~~they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;~~

~~our EBITDA-based measures do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;~~

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and our EBITDA-based measures do not reflect any cash requirement for such replacements or improvements;

•they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;

~~they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;~~

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~~they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and~~

•our EBITDA-based measures do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;

~~they do not reflect limitations on our costs related to transferring earnings from our subsidiaries to us.~~

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and our EBITDA-based measures do not reflect any cash requirement for such replacements or improvements;

•they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;

•they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and

•they do not reflect limitations on our costs related to transferring earnings from our subsidiaries to us.

Because of these limitations, ~~Adjusted Net Trading Income, EBITDA, Adjusted EBITDA and Normalized Adjusted Net Income~~the Company's Non-GAAP Measures are not intended as alternatives to Net Income as indicators of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using ~~Adjusted Net Trading Income, EBITDA, Adjusted EBITDA and Normalized Adjusted Net Income~~the Company's Non-GAAP Measures along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. These U.S. GAAP measurements include operating Net Income, ~~(loss),~~ cash flows from operations and cash flow data. See below a reconciliation of each ~~non-GAAP financial measure~~of the Company's Non-GAAP Measures to the most directly comparable U.S. GAAP measure.

~~Table of Contents~~

The following ~~tables reconcile condensed consolidated statements~~table reconciles the Condensed Consolidated Statements of ~~comprehensive income (loss)~~Comprehensive Income to arrive at ~~EBITDA, Adjusted EBITDA,~~ Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, and ~~selected~~ Operating ~~Margins.~~

For the Three Months Ended

For the Nine Months Ended


September 30,

September 30,

2017

2016


2017

2016

Reconciliation of Trading income, net to Adjusted Net Trading Income

Trading income, net

$
203,907

$
156,706

$
479,644

$
509,542

Interest and dividends income

20,430

5,271

30,933

14,961

Commissions, net and technology services

43,351

2,931

49,237

7,224

Brokerage, exchange and clearance fees, net

(64,584)

(52,118)

(170,253)

(167,416)

Payments for order flow

(12,071)

—

(12,071)

—

Interest and dividends expense

(31,242)

(15,615)

(58,456)

(43,249)

Adjusted Net Trading Income

$
159,791

$
97,175

$
319,034

$
321,062

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Net Income (loss)

$
(39,990)

$
33,023

$
(14,503)

$
123,665

Financing interest expense on long-term borrowings

24,593

7,393

40,141

21,569

Debt issue cost related to debt refinancing

4,869

—

9,351

—

Depreciation and amortization

15,602

7,158

29,157

22,685

Amortization of purchased intangibles and acquired capitalized software

6,440

53

6,546

159

Provision (benefit) for Income Taxes

(6,505)

4,851

(2,918)

17,325

EBITDA

$
5,009

$
52,478

$
67,774

$
185,403

Severance

9,295

77

10,172

270

Reserve for legal matter

—

—

(2,176)

—

Transaction advisory fees and expenses

15,677

521

24,188

676

Termination of office leases

1,811

—

1,811

(319)

Acquisition related retention bonus

23,050

—

23,050

—

Trading related settlement income

—

(2,975)

—

(2,975)

Other, net

(300)

102

(289)

102

Equipment write-off

544

—

544

428

Share based compensation

2,270

4,892

17,102

14,587

Charges related to share based compensation at IPO, 2015 Management Incentive Plan

1,336

1,512

4,134

4,212

Charges related to share based compensation awards at IPO

181

333

545

1,444

Adjusted EBITDA

$
58,873

$
56,940

$
146,855

$
203,828

Selected Operating Margins

Net Income Margin (1)

(25.0)
%

34.0
%

(4.5)
%

38.5
%

EBITDA Margin (2)

3.1
%

54.0
%

21.2
%

57.7
%

Adjusted EBITDA Margin (3)

36.8
%

58.6
%

46.0
%

63.5
%

Margins for the three and nine months ended September 30, 2021 and 2020.

~~(1)~~

~~Calculated by dividing net income by Adjusted Net Trading Income.~~


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020
Reconciliation of Trading income, net to Adjusted Net Trading Income
Trading income, net	$	394,265		$	441,295		$	1,591,840		$	1,987,756
Interest and dividends income	9,704			10,932			26,246			46,788
Commissions, net and technology services	135,923			133,853			470,687			452,333
Brokerage, exchange, clearance fees and payments for order flow, net	(158,862)			(196,448)			(588,885)			(573,769)
Interest and dividends expense	(26,586)			(27,374)			(75,585)			(97,656)
Adjusted Net Trading Income	$	354,444		$	362,258		$	1,424,303		$	1,815,452

Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Net income	$	123,138		$	199,708		$	641,276		$	923,228
Financing interest expense on long-term borrowings	20,179			20,358			59,784			67,764
Debt issue cost related to debt refinancing, prepayment, and commitment fees	1,237			9,916			4,981			27,282
Depreciation and amortization	16,636			16,656			49,764			50,728
Amortization of purchased intangibles and acquired capitalized software	16,933			18,265			53,087			56,177
Provision for income taxes	21,961			52,807			128,611			200,044
EBITDA	$	200,084		$	317,710		$	937,503		$	1,325,223
Severance	1,538			3,030			4,577			7,192

Transaction advisory fees and expenses	167			2,463			150			2,737
Termination of office leases	238			60			5,126			343


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

Other	(4,225)			(11,138)			(12,827)			(10,157)
Share based compensation	12,930			(4,740)			38,260			37,510


Adjusted EBITDA	$	210,732		$	248,733		$	972,789		$	1,304,196

Selected Operating Margins
Net Income Margin (1)	34.7		%	55.1		%	45.0		%	50.9		%
EBITDA Margin (2)	56.5		%	87.7		%	65.8		%	73.0		%
Adjusted EBITDA Margin (3)	59.5		%	68.7		%	68.3		%	71.8		%

~~(2)~~

~~Calculated by dividing EBITDA by Adjusted Net Trading Income.~~

(1)Calculated by dividing net income by Adjusted Net Trading Income.

~~(3)~~

~~Calculated by dividing Adjusted EBITDA by Adjusted Net Trading Income.~~

(2)Calculated by dividing EBITDA by Adjusted Net Trading Income.

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(3)Calculated by dividing Adjusted EBITDA by Adjusted Net Trading Income.

The following ~~tables reconcile~~table reconciles Net Income to arrive at Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted ~~EPS.~~

Three Months Ended September 30,

Nine Months Ended September 30,


2017

2016


2017

2016

(in thousands, except share and per share data)

Reconciliation of Net Income to Normalized Adjusted Net Income

Net income (loss)

$
(39,990)

$
33,023

$
(14,503)

$
123,665

Provision for (benefit from) income taxes

(6,505)

4,851

(2,918)

17,325

Income (loss) before income taxes

(46,495)

37,874

(17,421)

140,990

Amortization of purchased intangibles and acquired capitalized software

6,440

53

6,546

159

Financing interest expense related to KCG transaction

3,010

—

4,626

—

Debt issue cost related to debt refinancing

4,869

—

9,351

—

Severance

9,295

77

10,172

270

Reserve for legal matter

—

—

(2,176)

—

Transaction advisory fees and expenses

15,677

521

24,188

676

Termination of office leases

1,811

—

1,811

(319)

Equipment write-off

1,075

—

2,177

428

Acquisition related retention bonus

23,050

—

23,050

—

Trading related settlement income

—

(2,975)

—

(2,975)

Other, net

(300)

102

(289)

102

Share based compensation

2,270

4,892

17,102

14,587

Charges related to share based compensation at IPO, 2015 Management Incentive Plan

1,336

1,512

4,134

4,212

Charges related to share based compensation awards at IPO

181

333

545

1,444

Normalized Adjusted Net Income before income taxes

22,219

42,389

83,816

159,574

Normalized provision for income taxes (1)

8,221

15,048

31,012

56,649

Normalized Adjusted Net Income

$
13,998

$
27,341

$
52,804

$
102,925

Weighted Average Adjusted shares outstanding (2)

178,490,856

139,687,848

152,812,060

139,685,124

Normalized Adjusted EPS

$
0.08

$
0.20

$
0.35

$
0.74

~~(1)~~

~~Reflects U.S. federal, state, and local income tax rate applicable to corporations of between 35.5% and 37%..~~

~~(2)~~

Assumes that (1) holders of all vested and unvested Virtu Financial Units (together with corresponding shares of Class C common stock), have exercised their right to exchange such Virtu Financial Units for shares of Class A common stock on a one-for-one basis, (2) holders of all Virtu Financial Units (together with corresponding shares of Class D common stock), have exercised their right to exchange such Virtu Financial Units for shares of Class B common stock on a one-for-one basis, and subsequently exercised their right to convert the shares of Class B common stock into shares of Class A common stock on a one-for-one basis. Includes additional shares from dilutive impact of options and restricted stock units outstanding under the 2015 Management Incentive Plan during the three and nine months ended September 30, 2017 and 2016.

The following table shows our Trading Income, Net, average daily Trading Income, Net, Adjusted Net Trading Income, average daily Adjusted Net Trading Income and percentage of Adjusted Net Trading Income by asset classEPS for the three and nine months ended September 30, ~~2017~~2021 and ~~2016.~~

(in thousands, except percentages)

Three Months Ended September 30,

Adjusted Net Trading Income by Category:

2017

2016

% Change

Market Making:

Americas Equities

$
82,588

$
24,737

233.9
%

ROW Equities

16,995

20,790

(18.3)
%

Global FICC, Options and Other

32,204

45,327

(29.0)
%

Unallocated (1)

242

3,390

NM

Total market making

$
132,029

$
94,244

40.1
%

Execution Services

28,229

2,931

863.1
%

Corporate

(467)

-

NM

Adjusted Net Trading Income

$
159,791

$
97,175

64.4
%

2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share and per share data)	2021		2020		2021		2020
Reconciliation of Net Income to Normalized Adjusted Net Income
Net income (loss)	$	123,138	$	199,708	$	641,276	$	923,228
Provision for income taxes	21,961		52,807		128,611		200,044
Income (loss) before income taxes	145,099		252,515		769,887		1,123,272

Amortization of purchased intangibles and acquired capitalized software	16,933		18,265		53,087		56,177

Debt issue cost related to debt refinancing, prepayment, and commitment fees	1,237		9,916		4,981		27,282

Severance	1,538		3,030		4,577		7,192
Transaction advisory fees and expenses	167		2,463		150		2,737
Termination of office leases	238		60		5,126		343


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



Other	(4,225)		(11,138)		(12,827)		(10,157)
Share based compensation	12,930		(4,740)		38,260		37,510


Normalized Adjusted Net Income before income taxes	173,917		211,719		863,241		1,185,704
Normalized provision for income taxes (1)	41,740		50,813		207,178		284,569
Normalized Adjusted Net Income	$	132,177	$	160,906	$	656,063	$	901,135

Weighted Average Adjusted shares outstanding (2)	190,141,600		198,097,715		193,929,595		196,736,969

Normalized Adjusted EPS	$	0.70	$	0.81	$	3.38	$	4.58

(1)Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 24% for 2021 and 2020.

(2)Assumes that (1) holders of all vested and unvested non-vesting Virtu Financial Units (together with corresponding shares of the Company's Class C common stock, par value $0.00001 per share (the “Class C Common Stock”)) have exercised their right to exchange such Virtu Financial Units for shares of Class A Common Stock on a one-for-one basis, (2) holders of all Virtu Financial Units (together with corresponding shares of the Company's Class D common stock, par value $0.00001 per share (the “Class D Common Stock”)) have exercised their right to exchange such Virtu Financial Units for shares of the Company's Class B common stock, par value $0.00001 per share (the “Class B Common Stock”) on a one-for-one basis, and subsequently exercised their right to convert the shares of Class B Common Stock into shares of Class A Common Stock on a one-for-one basis. Includes additional shares from dilutive impact of options, restricted stock units and restricted stock awards outstanding under the Amended and Restated 2015 Management Incentive Plan and the Amended and Restated ITG 2007 Equity Plan during the three and nine months ended September 30, 2021 and 2020 as well as warrants issued in connection with the Founder Member Loan during the three and nine months ended September 30, 2020.

Table of Contents

(in thousands, except percentages)

Three Months Ended September 30,

Average Daily Adjusted Net Trading Income by Category:

2017

2016

% Change

Market Making:

Americas Equities

$
1,311

$
387

239.1
%

ROW Equities

270

325

(17.0)
%

Global FICC, Options and Other

511

708

(27.8)
%

Unallocated (1)

4

53

NM

Total market making

$
2,096

$
1,473

42.3
%

Execution Services

448

46

878.4
%

Corporate

(7)

-

NM

Adjusted Net Trading Income

$
2,536

$
1,518

67.0
%

(in thousands, except percentages)

Nine Months Ended September 30,

Adjusted Net Trading Income by Category:

2017

2016

% Change

Market Making:

Americas Equities

$
134,590

$
92,837

45.0
%

ROW Equities

57,443

73,536

(21.9)
%

Global FICC, Options and Other

97,145

151,319

(35.8)
%

Unallocated (1)

(3,794)

(3,854)

NM

Total market making

$
285,384

$
313,838

(9.1)
%

Execution Services

34,117

7,224

372.3
%

Corporate

(467)

-

NM

Adjusted Net Trading Income

$
319,034

$
321,062

(0.6)
%

(in thousands, except percentages)

Nine Months Ended September 30,

Average Daily Adjusted Net Trading Income by Category:

2017

2016

% Change

Market Making:

Americas Equities

$
716

$
491

45.7
%

ROW Equities

306

389

(21.5)
%

Global FICC, Options and Other

517

801

(35.5)
%

Unallocated (1)

(20)

(20)

NM

Total market making

$
1,518

$
1,661

(8.6)
%

Execution Services

181

38

374.8
%

Corporate

(2)

-

NM

Adjusted Net Trading Income

$
1,697

$
1,699

(0.1)
%

The following tables reconcile Trading income, net to Adjusted Net Trading Income by segment for the three and nine months ended September 30, 2021 and 2020:



	Three Months Ended September 30, 2021
(in thousands)	Market Making		Execution Services		Corporate		Total
Trading income, net	$	389,422	$	4,843	$	—	$	394,265
Commissions, net and technology services	8,894		127,029		—		135,923
Interest and dividends income	9,704		—		—		9,704
Brokerage, exchange, clearance fees and payments for order flow, net	(134,849)		(24,013)		—		(158,862)

Interest and dividends expense	(24,469)		(2,117)		—		(26,586)
Adjusted Net Trading Income	$	248,702	$	105,742	$	—	$	354,444



	Three Months Ended September 30, 2020
(in thousands)	Market Making		Execution Services		Corporate		Total
Trading income, net	$	441,829	$	(534)	$	—	$	441,295
Commissions, net and technology services	9,391		124,462		—		133,853
Interest and dividends income	10,763		169		—		10,932
Brokerage, exchange, clearance fees and payments for order flow, net	(177,758)		(18,690)		—		(196,448)

Interest and dividends expense	(26,990)		(384)		—		(27,374)
Adjusted Net Trading Income	$	257,235	$	105,023	$	—	$	362,258


	Nine Months Ended September 30, 2021
(in thousands)	Market Making		Execution Services		Corporate		Total
Trading income, net	$	1,571,347	$	20,493	$	—	$	1,591,840
Commissions, net and technology services	32,111		438,576		—		470,687
Interest and dividends income	26,174		72		—		26,246
Brokerage, exchange, clearance fees and payments for order flow, net	(502,828)		(86,057)		—		(588,885)
Interest and dividends expense	(70,905)		(4,680)		—		(75,585)
Adjusted Net Trading Income	$	1,055,899	$	368,404	$	—	$	1,424,303


	Nine Months Ended September 30, 2020
(in thousands)	Market Making		Execution Services		Corporate		Total
Trading income, net	$	1,989,176	$	(1,420)	$	—	$	1,987,756
Commissions, net and technology services	9,526		442,807		—		452,333
Interest and dividends income	46,216		572		—		46,788
Brokerage, exchange, clearance fees and payments for order flow, net	(487,234)		(86,535)		—		(573,769)
Interest and dividends expense	(96,062)		(1,594)		—		(97,656)
Adjusted Net Trading Income	$	1,461,622	$	353,830	$	—	$	1,815,452

~~(1)~~

Under our methodology for recording “trading income, net” in our condensed consolidated statements of comprehensive income (loss), we recognize revenues based on the exit price of assets and liabilities in accordance with applicable U.S. GAAP rules, and when we calculate Adjusted Net Trading Income for corresponding reporting periods, we start with trading income, net, so calculated. By contrast, when we calculate Adjusted Net Trading Income by asset class, we do so on a daily basis, and as a result prices used in recognizing revenues may differ. Because we provide liquidity on a global basis, across asset classes and time zones, the timing of any particular Adjusted Net Trading Income calculation can defer or accelerate the amount in a particular asset class from one day to another, and, at the end of a reporting period, from one reporting period to another. The purpose of the Unallocated category is to ensure that ANTI by category sums to total Adjusted Net Trading Income, which can be reconciled to Trading Income, Net, calculated in accordance with GAAP. We do not allocate any resulting differences based on the timing of revenue recognition.

The following table shows our Adjusted Net Trading Income and average daily Adjusted Net Trading Income by segment for the three and nine months ended September 30, 2021 and 2020:

Table of Contents

Three Months Ended September 30,
Adjusted Net Trading Income by Segment (in thousands): 2021 2020 % Change
Market Making $ 248,702 $ 257,235 (3.3)%
Execution Services 105,742 105,023 0.7%
Adjusted Net Trading Income $ 354,444 $ 362,258 (2.2)%
Three Months Ended September 30,
Average Daily Adjusted Net Trading Income by Segment (in thousands): 2021 2020 % Change
Market Making $ 3,886 $ 4,019 (3.3)%
Execution Services 1,652 1,641 0.7%
Average Daily Adjusted Net Trading Income $ 5,538 $ 5,660 (2.2)%



	Nine Months Ended September 30,
Adjusted Net Trading Income by Segment (in thousands):	2021		2020		% Change
Market Making	$	1,055,899	$	1,461,622	(27.8)%





Execution Services	368,404		353,830		4.1%



Adjusted Net Trading Income	$	1,424,303	$	1,815,452	(21.5)%

	Nine Months Ended September 30,
Average Daily Adjusted Net Trading Income by Segment (in thousands):	2021		2020		% Change
Market Making	$	5,616	$	7,733	(27.4)%





Execution Services	1,960		1,872		4.7%



Average Daily Adjusted Net Trading Income	$	7,576	$	9,605	(21.1)%

Three Months Ended September 30, ~~2017~~2021 Compared to Three Months Ended September 30, ~~2016~~

2020

Total Revenues

Our total revenues ~~increased $106.5~~decreased $111.8 million, or ~~64.6%~~17.0%, to ~~$271.3~~$544.3 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$164.8~~$656.1 million for the three months ended September 30, ~~2016. This increase~~2020. The decrease was primarily driven by a decrease of $47.0 million in Trading income, net, which was driven by lower market volatility across global markets and major asset categories during the three months ended September 30, 2021 compared to the same period in 2020, which experienced elevated levels of market volatility and trading volumes largely due to the impacts of the COVID-19 pandemic and the governmental and other responses thereto. Additionally, Other, net declined $65.6 million primarily attributable to the ~~Acquisition~~sale of ~~KCG.~~

MATCHNow on August 4, 2020.

For the three months ended September 30,

(in thousands, except for percentage)

2017

2016

% Change

Market Making

Trading revenues, net

$
206,542

$
156,706

31.8%

Interest and dividends income

20,056

5,271

280.5%

Commissions, net and technology services

1,563

-

NM

Other, net

421

-

NM

Total revenues from Market Making

$
228,582

$
161,977

41.1%

Execution Services

Trading revenues, net

$
(3,342)

$
-

NM

Interest and dividends income

104

-

NM

Commissions, net and technology services

41,788

2,931

1325.7%

Other, net

527

-

NM

Total revenues from Execution Services

$
39,077

$
2,931

1233.2%

Corporate

Trading revenues, net

$
707

$
-

NM

Interest and dividends income

270

-

NM

Commissions, net and technology services

-

-

NM

Other, net

2,650

(102)

NM

Total revenues from Corporate

$
3,627

$
(102)

NM

Table of Contents

The following table shows total revenues by segment for the three months ended September 30, 2021 and 2020.


	Three Months Ended September 30,
(in thousands, except for percentage)	2021		2020		% Change
Market Making
Trading income, net	$	389,422	$	441,829	(11.9)%
Interest and dividends income	9,704		10,763		(9.8)%
Commissions, net and technology services	8,894		9,391		(5.3)%
Other, net	1,270		12,615		(89.9)%
Total revenues from Market Making	$	409,290	$	474,598	(13.8)%

Execution Services
Trading income, net	$	4,843	$	(534)	NM
Interest and dividends income	—		169		(100.0)%
Commissions, net and technology services	127,029		124,462		2.1%
Other, net	677		58,583		(98.8)%
Total revenues from Execution Services	$	132,549	$	182,680	(27.4)%

Corporate



Other, net	$	2,505	$	(1,166)	NM
Total revenues from Corporate	$	2,505	$	(1,166)	NM

Consolidated
Trading income, net	$	394,265	$	441,295	(10.7)%
Interest and dividends income	9,704		10,932		(11.2)%
Commissions, net and technology services	135,923		133,853		1.5%
Other, net	4,452		70,032		(93.6)
Total revenues	$	544,344	$	656,112	(17.0)%

Trading ~~Income, Net.~~ income, net. Trading income, net was primarily ~~related to~~earned by our Market Making segment. Trading income, net ~~increased $47.2~~decreased $47.0 million, or ~~30.1%~~10.7%, to ~~$203.9~~$394.3 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$156.7~~$441.3 million for the three months ended September 30, ~~2016.~~2020. The ~~increase~~decrease was primarily ~~attributable~~driven by the lower market volatility across global markets and major asset categories during the three months ended September 30, 2021 compared to the ~~Acquisition~~same period in 2020, which experienced elevated levels of ~~KCG, offset by~~market volatility largely due to the ~~effect~~impacts of the COVID-19 and the governmental and other responses thereto. Average daily realized volatility of the S&P 500 Index decreased ~~market volume and volatility across major asset categories.~~34.6% during the period as compared to the prior period, while average daily U.S. equity consolidated volumes decreased 1.8%. Rather than analyzing trading income, net, in isolation, we ~~generally~~ evaluate it in the broader context of our Adjusted Net Trading Income, together with ~~interest~~Interest and dividends income, ~~interest~~Interest and dividends expense, Commissions, net and ~~brokerage,~~technology services and Brokerage, exchange, ~~and~~ clearance fees and payments for order flow, net, each of which ~~are~~is described below.

Interest and ~~Dividends Income.~~dividends income. Interest and dividends income ~~which his~~was primarily ~~recorded in~~earned by our Market Making ~~segment, increased $15.1~~segment. Interest and dividends income decreased $1.2 million, or ~~284.9%~~11.2%, to ~~$20.4~~$9.7 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$5.3~~$10.9 million for the three months ended September 30, ~~2016.~~2020. This ~~increase~~decrease was primarily attributable to the ~~Acquisition of KCG and higher~~lower interest income earned on cash collateral posted as part of securities borrowing transactions as well as a reduction in securities borrowing transactions for the ~~securities borrowed transactions.~~period compared to the same period during the prior year. As indicated above, rather than analyzing interest and dividends income in isolation, we ~~generally~~ evaluate it in the broader context of our Adjusted Net Trading Income.

Commissions, net and ~~Technology Services.~~technology services. Commissions, net and technology services revenues ~~are~~were primarily earned by our Execution Services segment. ~~Such revenues include technology licensing fees and agency commission fees,~~ Commissions, net and technology services ~~increased $40.5~~revenues remained fairly consistent, increasing $2.1 million, or ~~1,396.6%~~1.5%, to ~~$43.4~~$135.9 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$2.9~~$133.9 million for the three months ended September 30, ~~2016. The increase was primarily attributable to the Acquisition of KCG, as well as agency fee revenues arising from new customers we onboarded.~~

2020.

Other, net.Other, net ~~revenue is primarily recorded in our Corporate segment. Other, net was $3.6~~decreased $65.6 million, or 93.6%, to $4.5 million for the three months ended September 30, ~~2017 as~~2021, compared to ~~a loss of $0.1~~$70.0 million for the three months ended September 30, ~~2016.~~2020. The ~~increase in revenue recorded in Other, net~~decrease was primarily due to a ~~result~~$56.2 million gain recorded on the sale of MATCHNow in the ~~Acquisition~~third quarter of ~~KCG, which recorded revenue related to our microwave JV. Other, net also include revenue or loss incurred as a result~~2020 (see Note 3 "Sale of MATCHNow" of Part I Item I "Financial Statements" of this Quarterly Report on Form 10-Q for details on the ~~foreign~~

MATCHNow Sale).

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currency revaluations on the Japanese Yen based minority investment and the SBI Bonds, which were $(0.3) million and $0.3 million, respectively, for the three months ended September 30, 2017. There were no such revenue or losses for the three months ended September 30, 2016.

Adjusted Net Trading Income

Adjusted Net Trading Income ~~increased $62.6~~decreased $7.8 million, or 2.2%, to ~~$159.8~~$354.4 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$97.2~~$362.3 million for the three months ended September 30, ~~2016.~~2020. This ~~increased~~decrease was primarily attributable to lower Trading income, net in the Market Making segment driven by lower market volatility across major asset categories during the three months ended September 30, 2021 compared to the same period in 2020. Average daily realized volatility of the S&P 500 Index and average daily CVIX realized volatility decreased 34.6% and 59.1%, respectively, compared to the prior period, ~~reflects increase (decrease) in~~while average daily U.S. equity consolidated volumes decreased 1.8%. Adjusted Net Trading Income ~~in the following categories: $57.9~~per day decreased $0.1 million, ~~from Americas Equities, $(3.8) million from Rest of World (“ROW”) equities~~ or 2.2%, ~~$(13.1) million from Global FICC, Options and Other, and $(3.1) million of unallocated. Adjusted Net Trading Income related~~ to ~~execution services increased $25.3 million to $28.2~~$5.5 million for the three months ended September 30, ~~2017 from $2.9~~2021, compared to $5.7 million for the three months ended September 30, ~~2016.~~

The overall increase in Adjusted Net Trading Income was primarily attributable to the Acquisition of KCG, offset by the effect of less favorable conditions across all asset classes as a result of lower levels of volume and volatility within the equities, currencies, and commodities markets that persisted throughout2020. There were 64 trading days for both the three months ended September 30, ~~2017.~~2021 and 2020. Adjusted Net Trading Income ~~per day increased $1.0~~is a non-GAAP measure. For a full description of Adjusted Net Trading Income and a reconciliation of Adjusted Net Trading Income to trading income, net, see “Non-GAAP Financial Measures and Other Items” in this Item 2. “Management's Discussion and Analysis of Financial Condition and Results of Operations”.

Operating Expenses

Our operating expenses decreased $4.4 million, or 1.1%, to ~~$2.5~~$399.2 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$1.5~~$403.6 million for the three months ended September 30, ~~2016.~~2020. The ~~number of trading days for the three months ended September 30, 2017 and 2016 were each 63.~~

~~Operating Expenses~~

~~Our~~decrease in operating expenses ~~increased $190.9~~is primarily due to a decrease in brokerage, exchange, clearance fees and payments for order flow, net and debt issue cost related to debt refinancing, prepayment and commitment fees, partially offset by an increase in employee compensation and payroll taxes and other operating expenses described in more detail below.

Brokerage, exchange, clearance fees and payments for order flow, net. Brokerage exchange, clearance fees and payments for order flow, net, decreased $37.6 million, or ~~150.4%~~19.1%, to ~~$317.8~~$158.9 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$126.9~~$196.4 million for the three months ended September 30, ~~2016.~~2020. This ~~increase~~decrease was primarily due to an increase in expenses as a result of the Acquisition of KCG. Specifically we recorded increases in employee compensation and payroll taxes of $51.5 million, $12.1 million in payments for order flow, $4.8 million of debt issue cost related to debt refinancing, and $15.7 million of transaction advisory fees and expenses relatedattributable to the Acquisition of KCG. The increase was also attributable to increases in communication and data processing of $28.1 million, in interest and dividend expense of $15.6 million, in operating and administrative expense of $18.7 million, in financing interest expense on long term borrowings of $17.2 million, in brokerage, exchange, and clearance fees of $12.5 million, in depreciation and amortization expense of $8.4 million. these increases were partially offset by decrease in ~~charges related to share based compensation at IPO of $0.1 million. Amortization of purchased intangibles and acquired capitalized software increased to $6.4 million for~~market volatility during the three months ended September 30, ~~2017~~2021 compared to ~~$0.1 million for~~ the ~~three months ended September 30, 2016 as a result of the amortization of intangibles resulting from the Acquisition of KCG.~~

~~Brokerage, Exchange and Clearance Fees, Net.~~ Brokerage exchange and clearance fees, net, increased $12.5 million, or 24.0%, to $64.6 million for the three months ended September 30, 2017, compared to $52.1 million for the three months ended September 30, 2016. This increase was primarily attributable to the increasessame period in market volume and volatility traded in the Americas equities, EMEA equities, APAC equities, Global Commodities, and Global Currencies instruments in which we make markets. As indicated above, rather than analyzing brokerage, exchange and clearance fees, net, in isolation, we generally2020. We evaluate itthis category representing direct costs associated with transacting business, in the broader context of our Adjusted Net Trading Income.

~~Payments for order flow.~~ ~~Payments for order flow were $12.1~~

Communication and data processing. Communication and data processing expense increased $4.0 million, or 7.7%, to $55.6 million for the three months ended September 30, ~~2017 and were primarily attributable~~2021, compared to the Acquisition of KCG. There were no payments for order flow for the three months ended September 30, 2016. Payments for order flow primarily represent payments to broker dealer clients, in the normal course of business, for directing to us their order flow primarily in U.S. equities. Payments for order flow also fluctuate based on U.S. equity share and option volumes, our profitability and the mix of market orders, limit orders, and customer mix.

~~Communication and Data Processing.~~ ~~Communication and data processing expense increased $28.1 million, or 157.0%, to $46.0~~$51.6 million for the three months ended September 30, ~~2017, compared~~2020. This increase was primarily due to ~~$17.9~~increased connectivity spending on colocation, subscriber connections and trading membership fees.

Employee compensation and payroll taxes. Employee compensation and payroll taxes increased $48.8 million, or 136.2%, to $84.6 million for the three months ended September 30, ~~2016. This increase was primarily due~~2021, compared to ~~commencement of new connectivity connections,~~

~~Table of Contents~~

~~as well as increases in market data fees. The increase was partially offset by reductions in discontinued connectivity connections.~~

~~Employee Compensation and Payroll Taxes.~~ ~~Employee compensation and payroll taxes increased $51.5 million, or 247.6%, to $72.3~~$35.8 million for the three months ended September 30, ~~2017, compared to $20.8 million for the three months ended September 30, 2016.~~2020. The increase in compensation levels was primarily attributable to ~~the increased headcount as a result of the Acquisition of KCG. Employee~~an increase in accrued incentive compensation, ~~expense for the interim period~~which is recorded at management’s discretion and is generally accrued in connection with the ~~Adjusted Net Trading Income~~overall level of profitability on a year-to-date basis, as well as the anticipated mix of cash and stock-based awards.

We have capitalized and therefore excluded employee compensation and benefits related to software development of $8.7 million for both the ~~period with certain adjustments made at management’s discretion.~~

three months ended September 30, 2021, and 2020.

Interest and ~~Dividends Expense.~~ dividends expense. Interest and dividends expense ~~increased $15.6~~decreased $0.8 million or ~~100.0%,~~2.9% to ~~$31.2~~$26.6 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$15.6~~$27.4 million for the three months ended September 30, ~~2016.~~2020. This ~~increase~~decrease was primarily attributable to ~~higher~~lower interest expense incurred on cash collateral received as part of securities lending transactions, ~~resulting from~~as well as a reduction in securities lending transactions for the ~~acquisition of KCG.~~period compared to the same period during the prior year. As indicated above, rather than analyzing interest and dividends expense in isolation, we ~~generally~~ evaluate it in the broader context of our Adjusted Net Trading Income.

Operations and ~~Administrative.~~ administrative. Operations and administrative expense ~~increased $18.7~~decreased $6.4 million or ~~340.0%~~25.9%, to ~~$24.2~~$18.2 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$5.5~~$24.6 million for the three months ended September 30, ~~2016. The increase~~2020. This decrease was driven primarily ~~attributable~~by increased subleasing, combined with on-going efforts to consolidate office premises and professional services after the ~~increase in legal and other professional fees resulting from the Acquisition of KCG during the three months ended September 30, 2017.~~

ITG Acquisition.

Depreciation and ~~Amortization.~~ amortization. Depreciation and amortization ~~increased $8.4 million, or 116.7%, to $15.6~~remained consistent at $16.6 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$7.2~~$16.7 million for the three months ended September 30, ~~2016. This increase was primarily attributable to depreciation and amortization~~2020.

Table of ~~additional assets resulting from the Acquisition of KCG and an increase in capital expenditures on telecommunication, networking and other assets.~~

~~Amortization of Purchased Intangibles and Acquired Capitalized Software.~~ Contents

Amortization of purchased intangibles and acquired capitalized ~~increased~~software. Amortization of purchased intangibles and acquired capitalized software decreased $1.3 million, or 7.3%, to ~~$6.4~~$16.9 million for the three months ended September 30, ~~2017,~~2021, compared to $18.3 million for the three months ended September 30, 2020. This decrease was due to certain technology intangible assets acquired in connection with the KCG Acquisition being fully amortized.

Termination of office leases. Termination of office leases remained consistent at $0.2 million for the three months ended September 30, 2021, compared to $0.1 million for the three months ended September 30, ~~2016.This increase was primarily attributable~~2020. These expenses are related to ~~acquired intangibles~~the impairment of leasehold improvements and fixed assets for certain abandoned office space as part of the effort to integrate and consolidate office space in connection with the Acquisition of KCG and the ~~Teza acquisition.~~

ITG Acquisition.

Debt ~~Issue Costs Related~~issue cost related to ~~Debt Refinancing.~~debt refinancing, prepayment and commitment fees. Expense from debt issue costs related to debt refinancing, ~~was $4.9~~prepayment and commitment fees decreased $8.7 million, or 87.5%, to $1.2 million for the three months ended September 30, 2017. These costs reflect $4.9 million acceleration of debt issue costs associated with making a $200 million voluntary prepayment on our senior secured first lien term loan. We had no such expense during the three months ended September 30, 2016.

~~Transaction Advisory Fees and Expenses.~~ ~~Transaction advisory fees and expenses increased $15.7~~2021, compared to $9.9 million for the three months ended September 30, ~~2017, compared to $0.5~~2020. The decrease was primarily driven by the prepayment of $100.0 million ~~for~~made during the ~~three months ended September 30, 2016. The increase reflects nonrecurring professional~~third quarter of 2020.

Transaction advisory fees ~~incurred in connection with the KCG Acquisition.~~

~~Charges related to share based compensation at IPO.~~ ~~Charges related to share based compensation at IPO~~and expenses. Transaction advisory fees and expenses decreased ~~$0.2~~$2.3 million, or ~~46.0%~~93.2%, to $0.2 million for the three months ended September 30, ~~2017,~~2021, compared to ~~$0.3~~$2.5 million during the three months ended September 30, 2020. These expenses were primarily incurred in the prior period related to the sale of MATCHNow, as discussed in Note 3 "Sale of MATCHNow" of Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q.

Financing interest expense on long-term borrowings. Financing interest expense on long-term borrowings remained consistent at $20.2 million for the three months ended September 30, ~~2016. The decrease was primarily attributable~~2021, compared to the fact that certain Class B and East MIP Class B interests became fully vested, and as well as to the difference in forfeitures incurred in 2017 versus 2016. We recognized $0.19 million of charges, net of forfeitures, related to share based compensation at IPO, and approximately $0.17 million in respect of the outstanding time vested Class B and East MIP Class B interests, and approximately $0.02 million amortization of capitalized costs attributable to employees incurred in development of software for internal use.

~~Financing Interest Expense on Long Term Borrowings.~~ ~~Financing interest expense on senior secured credit facility increased $17.2 million, or 232.4%, to $24.6~~$20.4 million for the three months ended September 30, 2017, compared to $7.4 million for the three months ended September 30, 2016. This increase was due to the refinancing to the senior secured first lien term loan and offering of the senior secured second lien notes, as discussed in Note 9 to the notes of the

2020.

~~Table of Contents~~

~~condensed consolidated financial statements. The increase in financing interest expense was primarily attributable to the increase in long-term borrowings outstanding principal.~~

Provision for ~~(Benefit from) Income Taxes~~

~~Following the consummation of the Reorganization Transactions and the IPO, we~~income taxes

We incur corporate tax at the U.S. federal income tax rate on our taxable income, as adjusted for noncontrolling interest in Virtu Financial. Our income tax expense reflects such U.S. federal income tax as well as taxes payable by certain of our non-U.S. subsidiaries. Our provision for income taxes ~~was a benefit of $(6.5)~~and effective tax rates were $22.0 million, 15.1% for the three months ended September 30, ~~2017,~~2021, compared to ~~a provision of $4.9~~$52.8 million, 20.9% for the three months ended September 30, ~~2016. The decrease in provision for income taxes was primarily attributable to the decrease in income before income taxes and noncontrolling interest.~~

2020.

Nine Months Ended September 30, ~~2017~~2021 Compared to Nine Months Ended September 30, ~~2016~~

2020

Total Revenues

Our total revenues ~~increased $31.9~~decreased $456.8 million, or ~~6.0%~~17.8%, to ~~$563.5~~$2,105.9 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$531.6~~$2,562.6 million for the nine months ended September 30, ~~2016.~~2020. This ~~increase~~decrease was primarily attributable to ~~an increase in Commission, net and technology services of $42.0 million and an increase in interest and dividends income of $15.9 million, partially offset by~~ a decrease of $395.9 million in ~~trading income, net, of $29.9 million.~~

For the nine months ended September 30,

(in thousands, except for percentage)

2017

2016

% Change

Market Making

Trading revenues, net

$
482,281

$
509,542

-5.4%

Interest and dividends income

30,558

14,961

104.3%

Commissions, net and technology services

1,563

-

NM

Other, net

421

-

NM

Total revenues from Market Making

$
514,823

$
524,503

-1.8%

Execution Services

Trading revenues, net

$
(3,341)

$
-

NM

Interest and dividends income

104

-

NM

Commissions, net and technology services

47,674

7,224

559.9%

Other, net

527

-

NM

Total revenues from Execution Services

$
44,964

$
7,224

522.4%

Corporate

Trading revenues, net

$
704

$
-

NM

Interest and dividends income

271

-

NM

Commissions, net and technology services

-

-

NM

Other, net

2,699

(102)

NM

Total revenues from Corporate

$
3,674

$
(102)

NM

~~Trading Income, Net.~~ Trading income, net, which was primarily ~~relate~~driven by lower market volatility during the nine months ended September 30, 2021 compared to the prior period. Additionally, Other, net declined $58.7 million primarily attributable to the sale of MATCHNow on August 4, 2020.

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The following table shows the total revenues by segment for the nine months ended September 30, 2021 and 2020.


	Nine Months Ended September 30,
(in thousands, except for percentage)	2021		2020		% Change
Market Making
Trading income, net	$	1,571,347	$	1,989,176	(21.0)%
Interest and dividends income	26,174		46,216		(43.4)%
Commissions, net and technology services	32,111		9,526		237.1%
Other, net	5,923		19,382		(69.4)%
Total revenues from Market Making	$	1,635,555	$	2,064,300	(20.8)%

Execution Services
Trading income, net	$	20,493	$	(1,420)	NM
Interest and dividends income	72		572		(87.4)%
Commissions, net and technology services	438,576		442,807		(1.0)%
Other, net	777		58,662		(99)%
Total revenues from Execution Services	$	459,918	$	500,621	(8.1)%

Corporate



Other, net	$	10,408	$	(2,286)	NM
Total revenues from Corporate	$	10,408	$	(2,286)	NM

Consolidated
Trading income, net	$	1,591,840	$	1,987,756	(19.9)%
Interest and dividends income	26,246		46,788		(43.9)%
Commissions, net and technology services	470,687		452,333		4.1%
Other, net	17,108		75,758		(77.4)%
Total revenues	$	2,105,881	$	2,562,635	(17.8)%

Trading income, net. Trading income, net was primarily earned by our Market Making segment. Trading income, net, decreased ~~$29.9~~$395.9 million, or ~~5.9%~~19.9%, to ~~$479.6~~$1,591.8 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$509.5~~$1,987.8 million for the nine months ended September 30, ~~2016.~~2020. The decrease was primarily ~~attributable~~driven by lower market volatility during the nine months ended September 30, 2021 compared to the ~~decreased~~same period of 2020, which experienced elevated levels of market ~~volume~~volatility and ~~volatility across major asset categories and was offset, in part, by~~trading volumes largely due to the ~~effect~~impacts of the ~~Acquisition~~COVID-19 and the governmental and other responses thereto. Average daily realized volatility of ~~KCG.~~the S&P 500 Index decreased 55.4% compared to the prior period, and the average daily realized volatility of the CVIX decreased 64.4% compared to prior period. Rather than analyzing trading income, net, in isolation, we ~~generally~~ evaluate it in the broader context of our Adjusted Net Trading Income, together with ~~interest~~Interest and dividends income, ~~interest~~Interest and dividends expense, Commissions, net and ~~brokerage,~~technology services and Brokerage, exchange, ~~and~~ clearance fees and payments for order flow, net, each of which are described below.

Interest and ~~Dividends Income.~~dividends income. Interest and dividends income ~~which~~ was primarily ~~recorded in~~earned by our Market Making ~~segment, increased $15.9~~segment. Interest and dividends income decreased $20.5 million, or ~~106.0%~~43.9%, to ~~$30.9~~$26.2 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$15.0~~$46.8 million for the nine months ended September 30, ~~2016.~~2020. This ~~increase~~decrease was primarily attributable to ~~the Acquisition of KCG and higher~~lower interest income earned on cash collateral posted as part of securities borrowed

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~~transactions.~~ transactions driven by lower interest rates as well as a reduction in securities borrowing transactions for the period compared to the same period during the prior year. As indicated above, rather than analyzing interest and dividends income in isolation, we ~~generally~~ evaluate it in the broader context of our Adjusted Net Trading Income.

Commissions, net and ~~Technology Services.~~technology services. Commissions, net and technology services revenues ~~are~~were primarily earned by our Execution Services segment. ~~Such revenues include technology licensing fees and agency commission fees.~~ Commissions, net and technology services revenues increased ~~$42.0~~$18.4 million, or ~~583.3%~~4.1%, to ~~$49.2~~$470.7 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$7.2~~$452.3 million for the nine months ended September 30, ~~2016.~~2020. The increase was primarily attributable to ~~the Acquisition of KCG, as well as agency fee revenues arising from new customers we onboarded.~~

~~Other, net.~~ ~~Other, netrevenue is primarily recorded~~higher trading volumes in ~~our Corporate segment. Other, net, was $3.6 million for the nine months ended September 30, 2017 as~~U.S. equities. Average daily U.S. equities consolidated volumes increased 11.1% compared to a loss of $0.1 million for the nine months ended September 30, 2016. The increase in revenue recorded in Other, net was primarily a result of the Acquisition of KCG, which resulted in recording revenue related to our microwave JV. Other, net also includes revenue earned or loss incurred as a result of the foreign currency revaluations on the Japanese Yen based minority investment and the SBI Bonds, which were $1.2 million and $(1.2) million, respectively, for the nine months ended September 30, 2017, and $1.4 million and $(1.5) million for the nine months ended September 30, 2016..

~~Adjusted Net Trading Income~~

Adjusted Net Trading Income decreased $2.0 million, or 0.6%, to $319.0 million for the nine months ended September 30, 2017, compared to $321.1 million for the nine months ended September 30, 2016. This slight decrease compared to the prior period reflects increases (decreases) in Adjusted Net Trading Income in the following categories: $41.8 million from Americas equities, $(16.1) million from ROW equities, $(54.2) million from Global FICC, Options and Other. Adjusted Net Trading Income related to execution services increased $26.9 million to $34.1 million for the nine months ended September 30, 2017 from $7.2 million for the nine months ended September 30, 2016.

The slight decrease in Adjusted Net Trading Income was primarily attributable to less favorable conditions across all asset classes as a result of lower levels of volume and volatility within the equities, currencies, and commodities markets that persisted throughout the nine months ended September 30, 2017, offset largely by the effect of the Acquisition of KCG. Adjusted Net Trading Income per day was essentially flat; $1.70 million for the nine months ended September 30, 2017 and 2016. The number of trading days were 188 and 189 for the nine months ended September 30, 2017 and 2016, respectively.

~~Operating Expenses~~

Our operating expenses increased $190.3 million, or 48.7%, to $580.9 million for the nine months ended September 30, 2017, compared to $390.6 million for the nine months ended September 30, 2016. This increase was primarily due to increases in brokerage, exchange, and clearance fees of $2.9 million, employee compensation and payroll taxes of $46.9 million, interest and dividend expense of $15.3 million, depreciation and amortization expense of $6.5 million, in communication and data processing of $29.6 million, debt issue cost related to debt of $9.4 million, transaction advisory fees and expenses of $24.0 million, operating and administrative expenses of $21.9 million, and financing interest expense on long term borrowings of $18.5 million. Amortization of purchased intangibles and acquired capitalized software increased to $6.3 million for the nine months ended September 30, 2017 compared to $0.2 million for the nine months ended September 30, 2016 as a result of the amortization of intangible resulting from the Acquisition of KCG. Payments for order flow was $12.1 million for the nine months ended September 30, 2017 as a result from the Acquisition of KCG, we had no such expense for the nine months ended September 30, 2016.

~~Brokerage, Exchange and Clearance Fees, Net.~~ Brokerage exchange and clearance fees, net, increased $2.9 million, or 1.7%, to $170.3 million for the nine months ended September 30, 2017, compared to $167.4 million for the nine months ended September 30, 2016. This increase was primarily attributable to the increase in trading activities as a of the Acquisition of KCG, which was offset by the decreases in market volume and volatility traded across various instruments in which we make markets.period. As indicated above, rather than analyzing ~~brokerage, exchange~~commissions, net and ~~clearance fees, net,~~technology services in isolation, we ~~generally~~ evaluate it in the broader context of our Adjusted Net Trading Income.

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~~Payments for Order Flow.~~ ~~Payments for order flow were $12.1~~Other, net. Other, net decreased $58.7 million, or 77.4%, to $17.1 million for the nine months ended September 30, 2017, and was primarily attributable to the Acquisition of KCG. There were no payments for order flow for the nine months ended September 30, 2016. Payments for order flow primarily represent payments to broker dealer clients, in the normal course of business, for directing to us their order flow primarily in U.S. equities. Payments for order flow also fluctuate based on U.S. equity share and option volumes, our profitability and the mix of market orders, limit orders, and customer mix.

~~Communication and Data Processing.~~ ~~Communication and data processing expense increased $29.6 million, or 55.2%, to $83.2 for the nine months ended September 30, 2017,~~2021, compared to ~~$53.6~~$75.8 million for the nine months ended September 30, ~~2016. This increase~~2020. The decrease was primarily due to ~~new connectivity connections, market data, and software subscriptions as~~ a ~~result~~$56.2 million gain recorded on the sale of MATCHNow in the ~~Acquisition~~third quarter 2020 (see Note 3 "Sale of ~~KCG. The increase was partially offset by reductions in expenses due to cancellation and discontinuance~~MATCHNow" of ~~connectivity connections, market data and software subscriptions.~~

~~Employee Compensation and Payroll Taxes.~~ ~~Employee compensation and payroll taxes increased $46.9~~Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q for details on the MATCHNow sale).

Adjusted Net Trading Income

Adjusted Net Trading Income decreased $391.1 million, or ~~73.1%~~21.5%, to ~~$111.1~~$1,424.3 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$64.2~~$1,815.5 million for the nine months ended September 30, ~~2016. The increase in compensation levels~~2020. This decrease was primarily attributable to lower Trading Income, net (described above), driven by lower market volatility during the ~~increased headcount as a result~~nine months ended September 30, 2021 compared to the prior period, and higher Brokerage, exchange, clearance fees and payments for order flow, net (described below) incurred by Market Making. Average daily realized volatility of the ~~Acquisition of KCG. Employee compensation expense for~~S&P 500 Index and average daily CVIX realized volatility decreased 55.4% and 64.4%, respectively, compared to the ~~interim~~prior period, ~~is accrued in connection with the~~while average daily U.S. equity consolidated volumes increased 11.1%. Adjusted Net Trading Income ~~for the period with certain adjustments made at management’s discretion.~~

~~Interest and Dividends Expense.~~ ~~Interest and dividends expense increased $15.3~~per day decreased $2.0 million, or ~~35.4%~~21.1%, to ~~$58.5~~$7.6 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$43.2~~$9.6 million for the nine months ended September 30, ~~2016.~~2020. The number of trading days was 188 days for the nine months ended September 30, 2021 and 189 days for the nine months ended September 30, 2020. Adjusted Net Trading Income is a non-GAAP measure. For a full description of Adjusted Net Trading Income and a reconciliation of Adjusted Net Trading Income to trading income, net, see “Non-GAAP Financial Measures and Other Items” in this “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations”.

Operating Expenses

Our operating expenses decreased $103.4 million, or 7.2%, to $1,336.0 million for the nine months ended September 30, 2021, compared to $1,439.4 million for the nine months ended September 30, 2020. The decrease in operating expenses was primarily due to lower employee compensation and payroll taxes, interest and dividends expense, and debt issue cost related to debt refinancing, prepayment, and commitment fees, offset by an increase in Brokerage, exchange, clearance fees and payments for order flow, net compared to the same period in the prior year, described in more detail below.

Brokerage, exchange, clearance fees and payments for order flow, net. Brokerage, exchange, clearance fees and payments for order flow, net, increased $15.1 million, or 2.6%, to $588.9 million for the nine months ended September 30, 2021, compared to $573.8 million for the nine months ended September 30, 2020. This increase was primarily attributable to increases in volumes from our broker-dealer clients eligible for payments for order flow, driven by higher participation of retail investors in the market during the quarter compared to the prior year. We evaluate this category, representing direct costs associated with transacting our business, in the broader context of our Adjusted Net Trading Income.

Communication and data processing. Communication and data processing expense decreased $2.5 million, or 1.5%, to $159.8 million for the nine months ended September 30, 2021, compared to $162.3 million for the nine months ended September 30, 2020. This decrease was primarily attributable to reductions in connectivity connections as a result of an on-going effort to consolidate various communication and data processing services and subscriptions.

Employee compensation and payroll taxes. Employee compensation and payroll taxes decreased $53.9 million, or 16.5%, to $273.2 million for the nine months ended September 30, 2021, compared to $327.1 million for the nine months ended September 30, 2020. The decrease in compensation levels was primarily attributable to a reduction in accrued incentive compensation in the current period, relative to the prior period, which is recorded at management’s discretion and is generally accrued in connection with the overall level of profitability, as well as a result of one-time cash bonuses awarded in the first quarter of 2020 to certain employees to mitigate the effects of the COVID-19 pandemic.

We have capitalized and therefore excluded employee compensation and benefits related to software development of $26.7 million and $28.1 million for the nine months ended September 30, 2021 and 2020, respectively.

Interest and dividends expense. Interest and dividends expense decreased $22.1 million, or 22.6%, to $75.6 million for the nine months ended September 30, 2021, compared to $97.7 million for the nine months ended September 30, 2020. This decrease was primarily attributable to lower interest expense incurred on cash collateral received as ~~part of~~well as a reduction in securities lending transactions ~~resulting from~~for the ~~Acquisition of KCG.~~period compared to the same period during the prior year. As indicated above, rather than analyzing interest and dividends expense in isolation, we generally evaluate it in the broader context of our Adjusted Net Trading Income.

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Operations and ~~Administrative.~~ administrative. Operations and administrative expense ~~increased $21.9~~decreased $7.8 million, or ~~135.2%~~10.7%, to ~~$38.1~~$65.6 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$16.2~~$73.5 million for the nine months ended September 30, ~~2016.~~2020. The ~~increase~~decrease was primarily attributable to ~~increase~~decreases in ~~legal~~travel and ~~other~~entertainment due to the on-going effects of the COVID-19 pandemic as well the on-going efforts to consolidate office premises and professional ~~fees resulting from~~services after the ~~Acquisition of KCG.~~

ITG Acquisition.

Depreciation and ~~Amortization.~~ amortization. Depreciation and amortization ~~increased $6.5~~decreased $1.0 million, or ~~28.6%~~1.9%, to ~~$29.2~~$49.8 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$22.7~~$50.7 million for the nine months ended September 30, ~~2016.~~2020. This ~~increase~~decrease was primarily attributable to ~~depreciation and amortization of additional~~certain assets ~~resulting from the Acquisition of KCG and~~being fully depreciated in 2020 partially offset by an increase in capital expenditures on telecommunication, networking, and other assets.

Amortization of ~~Purchased Intangibles~~purchased intangibles and ~~Acquired Capitalized Software.~~ acquired capitalized software. Amortization of purchased intangibles and acquired capitalized software ~~increased $6.3~~decreased $3.1 million, or 5.5%, to $53.1 million for the nine months ended September 30, ~~2017,~~2021, compared to $56.2 million for the nine months ended September 30, 2020. This decrease was primarily attributable to certain intangible assets being fully amortized in 2020.

Termination of office leases. Termination of office leases was $5.1 million for the nine months ended September 30, 2021, compared to $0.3 million for the nine months ended September 30, 2020. Expense from termination of office leases was due to the impairment of operating lease right-of-use assets and leasehold improvements and fixed assets for certain abandoned office space as part of the efforts to integrate and consolidate office space in connection with the Acquisition of KCG and the ITG Acquisition.

Debt issue costs related to debt refinancing, prepayment and commitment fees. Expense from debt issue costs related to debt refinancing, prepayment and commitment fees decreased $22.3 million, or 81.7%, to $5.0 million for the nine months ended September 30, 2021, compared to $27.3 million for the nine months ended September 30, 2020. The amount for the nine months ended September 30, 2020 was primarily driven by the amortization of debt issue costs related to the addition of the Founder Member Loan Facility in March 2020, which expired as of September 20, 2020, costs incurred related to Amendment No. 2 to the Credit Agreement (as defined below), and the prepayment of $288.5 million made during the the nine months ended September 30, 2020. See Note 9 "Borrowings" of Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q for additional details.

Transaction advisory fees and expenses. Transaction advisory fees and expenses decreased $2.6 million, or 94.5%, to $0.2 million for the nine months ended September 30, ~~2016. This increase was primarily attributable~~2021, compared to ~~acquired intangibles in connection with the Acquisition of KCG and the Teza acquisition.~~

~~Debt Issue Costs Related to Debt Refinancing.~~ ~~Expense from debt issue costs related to debt refinancing was $9.4~~$2.7 million for the nine months ended September 30, ~~2017.~~2020. These ~~costs reflect $4.5~~expenses were primarily incurred in prior years related to the ITG Acquisition and Acquisition of KCG, for which we incurred significant transaction advisory fees.

Financing interest expense on long term borrowings. Financing interest expense on long-term borrowings decreased $8.0 million, of expense incurred from refinancing of our senior secured first lien term loan and senior secured second lien notes in June 2017; and $4.9 million acceleration of debt issue costs associated with making a $200 million voluntary prepayment on our senior secured first lien term loan. We had no such expense during the nine months ended September 30, 2016.

~~Transaction Advisory Fees and Expenses.~~ ~~Transaction advisory fees and expenses increased $24.0 million,~~or 11.8%, to ~~$24.2~~$59.8 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$0.2~~$67.8 million for the nine months ended September 30, ~~2016. The increase~~2020. This decrease was primarily ~~reflects nonrecurring professional fees incurred~~attributable to a decrease in ~~connection with the KCG Acquisition.~~

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~~Reserve for Legal Matter.~~ In December 2015, the enforcement committee of the Autorité des marchés financiers (“AMF”) fined our European subsidiary in the amount of €5.0 million (approximately $5.4 million) based on its allegations that the subsidiary of MTH engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules. In accordance with the foregoing, we have accrued an estimated loss in relation to the fine imposed by the AMF. In May 2017, the fine was reduced to €3.0 million (approximately $3.5 million)outstanding principal as a result of ~~an appeal against the AMF. The adjustment related to the reserve for this legal matter was a decrease of €2.0 million (approximately $2.2 million)~~prepayments made during the nine months ended September 30, ~~2017. We had no such adjustment during the nine months ended September 30, 2016.~~

~~Charges related to share based compensation at IPO.~~ Charges related to share based compensation at IPO decreased $0.9 million, to $0.5 million for the nine months end September 30, 2017, compared to the $1.4 million for the nine months ended September 30, 2016. The decrease was primarily attributable to the fully vesting of certain Class B and East MIP Class B interests.

~~Financing Interest Expense on Long Term Borrowings.~~ Financing interest expense on long-term borrowings increased $18.5 million, or 85.6%, to $40.1 million for the nine months ended September 30, 2017, compared to $21.6 million for the nine months ended September 30, 2016. This increase was due to the refinancing of the senior secured first lien term loan and the offering of the senior secured second lien notes,2020, as discussed in Note 9 "Borrowings" of Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q, in addition to ~~the notes to the condensed consolidated financial statements. The increase in financing~~lower interest ~~expense was primarily attributable to the increase in long-term borrowings outstanding principal from $565.0 million as of December 31, 2016 to $1,481.1 million as of September 30, 2017.~~

rates.

Provision for ~~(Benefit from) Income Taxes~~

~~However, following the consummation of the Reorganization Transactions and the IPO, we~~income taxes

We incur corporate tax at the U.S. federal income tax rate on our taxable income, as adjusted for noncontrolling interest in Virtu Financial. Our income tax expense reflects such U.S. federal income tax as well as taxes payable by certain of our non-U.S. subsidiaries. Our provision for income taxes ~~was a benefit of $(2.9)~~and effective tax rates were $128.6 million, 16.7% for the nine months ended September 30, ~~2017,~~2021, compared to a provision for income taxes of ~~$17.3~~$200.0 million, 17.8% for the nine months ended September 30, ~~2016. The decrease in provision for income taxes~~2020.

Table of ~~$20.2 million, or 116.8%, was primarily attributable to the decrease in the income before income taxes and noncontrolling interest.~~

Contents

Liquidity and Capital Resources

General

As of September 30, ~~2017,~~2021, we had ~~$558.0~~$683.8 million in ~~cash~~Cash and cash equivalents. ~~Cash and cash equivalents are~~This balance is maintained primarily to support operating activities ~~and~~ for capital expenditures and for short-term access to liquidity, and for other general corporate purposes. As of September 30, ~~2017,~~2021, we had borrowings under our ~~short-term~~prime brokerage credit facilities of approximately ~~$159.1~~$202.5 million, borrowings under our broker dealer facilities of ~~$15.0~~$178.0 million, short-term bank overdrafts of $136.7 million, and long-term debt ~~borrowing~~ outstanding in an aggregate principal amount of approximately ~~$1481.1~~$1,631.2 million. ~~As of September 30, 2017, our regulatory capital requirements for domestic U.S. subsidiaries were $3.0 million, in aggregate.~~

The majority of our trading assets consist of exchange-listed marketable securities, which are marked-to-market daily, and collateralized receivables from broker-dealers and clearing organizations arising from proprietary securities transactions. Collateralized receivables consist primarily of securities borrowed, receivables from clearing houses for settlement of securities transactions and, to a lesser extent, securities purchased under agreements to resell. We actively manage our liquidity, and we maintain significant borrowing facilities through the securities lending markets and with banks and prime brokers. We have continually received the benefit of uncommitted margin financing from our prime brokers globally. These margin facilities are secured by securities in accounts held at the prime ~~broker.~~brokers. For purposes of providing additional liquidity, we maintain a committed ~~revolving~~credit facility and an uncommitted credit facility for ~~Virtu Financial BD LLC (“VFBD”), one of~~ our ~~wholly owned~~wholly-owned broker-dealer ~~subsidiaries. Effective July 18, 2016, we entered into an amendment to extend the term of the committed broker dealer credit facilities, to July 17, 2017,~~subsidiary, as discussed in Note 9 "Borrowings" of ~~the accompanying condensed consolidated financial statements.~~

Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q.

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Based on our current level of operations, we believe our cash flows from operations, available cash and cash equivalents, and available borrowings under our broker-dealer ~~revolving~~ credit ~~facility~~facilities will be adequate to meet our future liquidity needs for more than the next twelve months. We anticipate that our primary upcoming cash and liquidity needs will be increased margin requirements from increased trading activities in markets where we currently provide liquidity and in new markets into which we plan to expand. We manage and monitor our margin and liquidity needs on a real-time basis and can adjust our requirements both intra-day and inter-day, as required.

We do not believe that the impacts of COVID-19 or the governmental and other responses thereto to date have adversely impacted our long-term financial condition or long-term capital requirements.

We expect our principal sources of future liquidity to come from cash flows provided by operating activities and financing activities. ~~In addition, we have broad discretion as to the application of the net proceeds received from the IPO for working capital and general corporate purposes.~~ Certain of our cash balances are insured by the Federal Deposit Insurance Corporation, generally up to $250,000 per account but without a cap under certain conditions. From time to time these cash balances may exceed insured limits, but we select financial institutions deemed highly ~~creditworthy~~credit worthy to minimize risk. We consider highly liquid investments with original maturities of less than three months, when acquired, to be cash equivalents.

Tax Receivable Agreements

Generally, we are required under the tax receivable agreements entered into in connection with our IPO to make payments to certain direct or indirect ~~equityholders~~equity holders of Virtu Financial that are generally equal to 85% of the applicable cash tax savings, if any, that we ~~actually~~ realize as a result of favorable tax attributes that ~~will be~~are available to us as a result of the Reorganization Transactions, for exchanges of membership interests for Class A ~~common stock~~Common Stock or Class B ~~common stock~~Common Stock and payments made under the tax receivable agreements. We will retain the remaining 15% of ~~these~~any such cash tax savings. We expect that future payments to certain direct or indirect ~~equityholders~~equity holders of Virtu Financial described in Note 135 "Tax Receivable Agreements" to the condensed consolidated financial statements included ~~herein~~in Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q are expected to ~~aggregate to approximately $238.6 million, ranging~~range from approximately ~~$0.4~~$0.9 million to ~~$21.4~~$21.7 million per year over the next 15 years. Such payments will occur only after we have filed our U.S. federal and state income tax returns and realized the cash tax savings from the favorable tax attributes. ~~The~~We made our first payment ~~was originally due after the filing~~ of $7.0 million in February 2017, our ~~tax return for the year ended December 31, 2015, which was due~~second payment of $12.4 million in September 2018, our third payment of $13.3 million in March ~~15, 2016, but which was extended to September 15, 2016.~~2020, and our fourth payment of $16.5 million in April 2021. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these amounts. We currently expect to fund these payments from realized cash ~~flow~~tax savings from ~~operations generated by our subsidiaries as well as from excess~~the favorable tax ~~distributions that we receive from our subsidiaries. We made our first payment of $7.0 million in February 2017.~~

attributes.

Under the tax receivable agreements, as a result of certain types of transactions and other factors, including a transaction resulting in a change of control, we may also be required to make payments to certain direct or indirect ~~equityholders~~equity holders of Virtu Financial in amounts equal to the present value of future payments we are obligated to make under the tax receivable agreements. IfWe would expect any acceleration of these payments to be funded from the realized favorable tax attributes. However, if the payments under the tax receivable agreements are accelerated, we may be required to raise additional debt or equity to fund such payments. To the extent that we are unable to make payments under the tax receivable agreements for any reason (including because our ~~senior secured credit facility agreement~~Amended Credit Agreement restricts the ability of our subsidiaries to make distributions to us) such payments will be deferred and will accrue interest until paid.

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Regulatory Capital Requirements

~~Certain of our~~

Our principal ~~operating subsidiaries are~~U.S. subsidiary, Virtu Americas LLC ("VAL") is subject to separate regulation and capital requirements in the ~~United States~~U.S. and other jurisdictions. ~~VFBD, Virtu Financial Capital Markets LLC (“VFCM”), Virtu Americas LLC, which became an indirect subsidiary of Virtu following the Acquisition, are~~VAL is a registered U.S. ~~broker-dealers,~~broker-dealer, and ~~their~~its primary regulators include the SEC and the ~~Chicago Stock Exchange and FINRA. VFIL is a registered investment firm under the Market in~~ Financial ~~Instruments Directive, and its primary regulator is the Central Bank of Ireland.~~

Industry Regulatory Authority ("FINRA").

The SEC and FINRA impose rules that require notification when regulatory capital falls below certain pre-defined criteria. These rules also dictate the ratio of debt-to-equity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. If a firm fails to maintain the required regulatory capital, it may be subject to suspension or revocation of registration by the applicable

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regulatory agency, and suspension or expulsion by these regulators could ultimately lead to the firm’s liquidation. Additionally, certain applicable rules impose requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to and/or approval from the SEC ~~the Chicago Stock Exchange~~ and FINRA for certain capital withdrawals. ~~VFCM~~VAL is also subject to rules set forth by NYSE ~~MKT (formerly NYSE Amex)~~ and is required to maintain a certain level of capital in connection with the operation of its ~~DMM~~designated market maker business. ~~VFIL is~~

Our Canadian subsidiaries, Virtu ITG Canada Corp. and Virtu Financial Canada ULC, are subject to regulatory capital requirements and periodic requirements to report their regulatory capital and submit other regulatory reports set forth by the the Investment Industry Regulatory Organization of Canada. Our Irish subsidiaries, Virtu Financial Ireland Limited ("VFIL") and Virtu ITG Europe Limited ("VIEL") are regulated by the Central Bank of Ireland as an Investment ~~Firm~~Firms and in accordance with European Union law isare required to maintain a minimum amount of regulatory capital based upon ~~its~~their positions, financial conditions, and other factors. In addition to periodic requirements to report ~~its~~their regulatory capital and submit other regulatory reports, VFIL isand VIEL are required to obtain consent prior to receiving capital contributions or making capital distributions from ~~its~~their regulatory capital. Failure to comply with ~~its~~their regulatory capital requirements could result in regulatory sanction or revocation of ~~its~~their regulatory license.

~~The following table sets forth~~ Virtu ITG UK Limited is regulated by the Financial Conduct Authority in the United Kingdom and is subject to similar prudential capital requirements. Virtu ITG Australia Limited, Virtu ITG Hong Kong Limited, and Virtu ITG Singapore Pte Limited are also subject to local regulatory capital ~~level, requirement~~requirements and ~~excess~~are regulated by the Australian Securities and Investments Commission, the Securities and Futures Commission of Hong Kong, and the Monetary Authority of Singapore, respectively.

See Note 20 "Regulatory Requirement" of Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q for ~~domestic U.S. subsidiaries~~a discussion of regulatory capital requirements of our regulated subsidiaries.

Broker Dealer Credit Facilities, Short-Term Bank Loans, and Prime Brokerage Credit Facilities

We maintain various broker-dealer facilities and short-term credit facilities as part of our daily trading operations. See Note 9 "Borrowings" of Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q for details on our various credit facilities. As of September 30, ~~2017.~~

Regulatory

Regulatory Capital

Excess Regulatory

(in thousands)

Capital

Requirement

Capital

Virtu Americas LLC

$
368,138

$
1,000

$
367,138

Virtu Financial BD LLC

48,308

1,000

47,308

Virtu Financial Capital Markets LLC

11,563

1,000

10,563

~~Broker-Dealer Credit Facilities~~

~~We are a party to two secured credit~~2021, the outstanding principal balance on our broker-dealer facilities ~~with~~was $178.0 million and the same 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 and is available for borrowings by our broker‑dealer subsidiaries up to a maximum amount of $125.0 million. In connection with this credit facility, we entered into demand promissory notes dated February 20, 2013. The loans provided under the Uncommitted Facility are collateralized by our broker‑dealer trading and deposit accounts with the same financial institution and, bear interest at a rate set by the financial institution on a daily basis 2.16% at September 30, 2017 and 1.66% at December 31, 2016). The Uncommitted Facility has a 364‑day term. We are a party to another facility (the “Committed Facility”) with the same financial institution dated July 22, 2013 and subsequently amended on March 26, 2014, July 21, 2014, April 24, 2015, and July 18, 2016, which is provided on a committed basis and is available for borrowings by one of our broker‑dealer subsidiaries up to a maximum of the lesser of $75.0 million or an amount determined based on agreed advance rates for pledged securities. Borrowings under this facility are used to finance the purchase and settlement of securities and bear interest at the adjusted LIBOR rate or base rate, plus a margin of 1.25% per annum. A commitment fee of 0.25% per annum on the average daily unused portion of this facility is payable quarterly in arrears. This facility requires, among other items, maintenance of minimum net worth, minimum excess net capital and a maximum total assets to equity ratio.

~~Short-Term Credit Facilities~~

~~We maintain~~outstanding aggregate short-term credit facilities with various prime brokers and other financial institutions from which ~~we receive~~the Company receives execution or clearing ~~services.~~services was approximately $202.5 million, which was netted within Receivables from broker-dealers and clearing organizations on the Condensed Consolidated Statements of Financial Condition of Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q.

On March 10, 2020, a broker-dealer subsidiary of the Company entered into a short-term loan arrangement with Jefferies Financial Group, Inc., as lender, for a $20 million demand loan (the "Demand Loan") repayable no later than ninety (90) days after the date of borrowing. The proceeds of these facilities are used to meet margin requirements associated with the products traded by us in the ordinary course, and amounts borrowed are collateralized by our trading accounts with the applicable financial institution. The aggregate amount available for borrowing under these facilities was ~~$543.0~~ ~~million and $493.0 million, the outstanding principal was $159.1 million and $309.1 million, and borrowings~~Demand Loan bore interest at a ~~weighted average interest~~ rate of ~~3.56% and 3.12%~~10% per annum, increased by 2.0% with respect to any principal amounts not paid when due and payable. The Demand Loan was repaid in full as of April 17, 2020.

On March 20, 2020, a broker-dealer subsidiary of the Company entered into a loan agreement (the “Founder Member Loan Facility”) with TJMT Holdings LLC (the “Founder Member”), as lender and administrative agent, providing for unsecured term loans from time to time (the “Founder Member Loans”) in an aggregate original principal amount not to exceed $300 million. The Founder Member Loans were available to be borrowed in one or more borrowings on or after March 20, 2020 and prior to September ~~30, 2017,~~20, 2020, though no borrowings were made during such period, which is now expired. The Founder Member is an affiliate of Mr. Vincent Viola, the Company’s founder and ~~December 31, 2016, respectively. Interest expense~~Chairman Emeritus. Upon the execution of and in ~~relation~~consideration for the Lender’s commitments under the Founder Member Loan Facility, the Company delivered to the ~~facilities for~~Founder Member a warrant to purchase shares of the three months ended September 30, 2017 and 2016 was approximately $1.4 million and $1.8 million, respectively, and, for the nine months ended September 30, 2017 and 2016, interest expense was approximately $4.8 million and $5.0 million, respectively.

Company’s Class A Common Stock, as described below.

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~~SBI Bonds~~

~~VFH Parent LLC, Virtu Financial’s wholly owned subsidiary (“VFH”~~On March 20, 2020, in connection with and in consideration of the Founder Member’s commitments under the Founder Member Loan Facility, the Company delivered to the Founder Member a warrant (the “Warrant”) ~~issued Japanese Yen Bonds (collectively~~to purchase shares of the ~~“SBI Bonds”)~~Company’s Class A Common Stock. Pursuant to the Warrant, the Founder Member may purchase up to 3,000,000 shares of Class A Common Stock. If at any time during the term of the Founder Member Loan Facility, the Founder Member Loans equal to or greater than $100 million had remained outstanding for a certain period of time specified in the ~~aggregate principal amount~~Warrant, the number of ~~¥3.5 billion~~shares would have increased to ~~SBI Life Insurance Co., Ltd. and SBI Insurance Co., Ltd., in July 2016.~~10,000,000. The ~~SBI Bonds were issued bearing interest at~~exercise price per share of the ~~rate per annum of 4.0% with the scheduled maturity on January 6, 2020. The rate per annum was increased~~Class A Common Stock issuable pursuant to the ~~terms~~Warrant is $22.98, and ~~conditions~~the Warrant may be exercised to purchase up to 3,000,000 shares of the ~~SBI Bonds~~Company's Class A Common Stock on or after May 22, 2020 up to ~~5.0% as~~and including January 15, 2022. The Warrant and Class A Common Stock issuable pursuant to the Warrant were offered, and will be issued and sold, in reliance on the exemption from the registration requirements of ~~October 27, 2016. The aggregate principal balance was ¥3.5 billion (approximately $31.1 million) as~~the Securities Act, set forth under Section 4(a)(2) of ~~September 30, 2017.~~

the Securities Act relating to sales by an issuer not involving any public offering.

Credit ~~Facilities~~

~~On June 30, 2017,~~Agreement

In connection with the ITG Acquisition, Virtu Financial, VFH and ~~VFH~~the Acquisition Borrower entered into ~~a fourth amended and restated credit agreement (the “Fourth Amended and Restated Credit Agreement”) with~~ the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, sole lead arranger and bookrunner, which amended and restated in its entirety the existing Credit Agreement. The Fourth Amended and Restated Credit Agreement, provided for a $540.0 million first lien secured term loan, drawn in its entirety on June 30, 2017, and continued VFH’s existing $100.0 million first lien senior secured revolving credit facility. Also on June 30, 2017, the Escrow Issuer entered into the Escrow Credit Agreement, with the lenders party thereto, ~~and JPMorgan Chase Bank, N.A.,~~Jefferies Finance LLC, as administrative agent ~~which~~and Jefferies Finance LLC and RBC Capital Markets, as joint lead arrangers and joint bookrunners.

The Credit Agreement provided ~~for~~(i) a ~~$610.0 million~~senior secured first lien term loan (the “First Lien Term Loan Facility”) in an aggregate principal amount of $1,500 million, drawn in its entirety on the ~~proceeds~~ITG Closing Date, of which ~~were deposited into escrow pending~~approximately $404.5 million was borrowed by VFH to repay all amounts outstanding under a previous term loan facility and the ~~closing of the Acquisition.~~

~~Upon the closing of~~remaining approximately $1,095 million was borrowed by the Acquisition Borrower to finance the ~~proceeds~~consideration and fees and expenses paid in connection with the ITG Acquisition, and (ii) a $50.0 million senior secured first lien revolving facility to VFH (the “First Lien Revolving Facility”), with a $5.0 million letter of credit sub-facility and a $5.0 million swing-line sub-facility. After the ~~Escrow Term Loan were released to fund in part the Acquisition consideration,~~ITG Closing Date, VFH assumed the obligations of the ~~Escrow Issuer~~Acquisition Borrower in respect of the ~~Escrow Term Loan were automatically assumed by~~acquisition term loans.

On October 9, 2019, VFH ~~Parent and~~entered into an amendment (“Amendment No. 1”), which amended the ~~Escrow Term Loan was deemed to be outstanding under the Fourth Amended and Restated~~ Credit Agreement ~~and the Escrow Credit Agreement and related credit documents automatically terminated and were superseded by the provisions~~dated as of ~~the Fourth Amended and Restated Credit Agreement, In addition, the first lien senior secured revolving credit facility under the Fourth Amended and Restated Credit Agreement terminated.~~

~~Under the Fourth Amended and Restated Credit Agreement, the $1,150.0~~March 1, 2019, to, among other things, provide for $525.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”), and amend the related collateral agreement.

On March 2, 2020, VFH entered into a second amendment (“Amendment No. 2”), which further amended the Credit Agreement (as amended by Amendment No. 1 and Amendment No. 2, the “Amended Credit Agreement”) to, among other things, reduce the interest rate spread over adjusted LIBOR or the alternate base rate by 0.50% per annum and eliminated any stepdown in the spread based on VFH's first lien ~~senior secured~~leverage ratio. The term ~~loans, including~~loan borrowings and revolver borrowings under the ~~Escrow Term Loan,~~Amended Credit Agreement bear interest at a per annum rate equal to, at the Company's election, either (i) the greatest of (a) the prime rate in effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1.00% and (d) 1.00%, plus, in each case, 2.00%, or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) 0%, plus, in each case, 3.00%. In addition, a commitment fee accrues at a rate of 0.50% per annum on the average daily unused amount of the First Lien Revolving Facility, with stepdowns to 0.375% and 0.25% per annum based on VFH’s first lien leverage ratio, and is payable quarterly in arrears.

Under the Amended Credit Agreement, the term loans will mature on ~~December 30, 2021 and will require scheduled~~March 1, 2026. The term loans amortize in annual ~~amortization payments on each of the first four anniversaries of the closing of the Acquisition in an amount~~installments equal to ~~the sum of 7.5%~~1.0% of the original aggregate principal amount of the term ~~loan issued~~loans. The revolving commitments will terminate on March 1, 2022.

The First Lien Revolving Facility under the ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement ~~and 7.5%~~is subject to a springing net first lien leverage ratio 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 ~~amount of the Escrow Term Loan outstanding~~prepayments based on ~~the Closing Date.~~

~~All obligations~~excess cash flow and certain other triggering events. Borrowings under the ~~Term Loan Facility~~Credit Agreement are ~~unconditionally~~ guaranteed by Virtu Financial and ~~the Company’s existing direct and indirect wholly-owned~~VFH’s material non-regulated domestic restricted subsidiaries ~~(including, KCG~~ and its wholly-owned domestic restricted subsidiaries), subject to certain exceptions, including exceptions for our broker dealer subsidiaries and certain immaterial subsidiaries. The Term Loan Facility and related guarantees are secured by ~~first-priority perfected liens, subject to certain exceptions, on~~ substantially all of ~~VFH’s and~~ the ~~guarantors’ existing and future~~ assets ~~including substantially all material personal property and a pledge of the capital stock of VFH, the guarantors (other than Virtu Financial) and the direct domestic subsidiaries~~ of VFH and the guarantors, ~~and 100% of the non-voting capital stock and up~~in each case, subject to ~~65.0% of the voting capital stock of foreign subsidiaries that are directly owned by VFH or any of the guarantors.~~

~~Amounts outstanding under the Fourth~~certain exceptions.

The Amended ~~and Restated Credit Agreement bear interest as follows:~~

in the case of the term loans, at VFH’s option, at either (a) the greatest of (i) the prime rate in effect, (ii) the NYFRB rate plus 0.50%, (iii) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1.00%, and (iv) 2.00% plus, in each case, 2.75% per annum; or (b) the greater of (i) an adjusted LIBOR rate for the interest period in effect and (ii) 1.00% plus, in each case, 3.75% per annum; and

in the case of revolving loans, at VFH’s option, at either (a) the greatest of (i) the prime rate in effect, (ii) the NYFRB rate plus 0.50%, (iii) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one

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month plus 1.00%, and (iv) 1.00% plus, in each case, 2.00% per annum; or (b) the greater of (i) an adjusted LIBOR rate for the interest period in effect and (ii) zero plus, in each case, 3.00% per annum.

~~Under the Fourth Amended and Restated Credit Agreement, we must comply on a quarterly basis with:~~

a maximum total leverage ratio of 5.00 to 1.0 with a step-down to (i) 4.25 to 1.0 from and after the fiscal quarter ending March 31, 2019, (ii) 3.50 to 1.0 from and after the fiscal quarter ending March 31, 2020 and (iii) 3.25 to 1.0 from the fiscal quarter ending March 31, 2021 and thereafter; and

~~a minimum interest coverage ratio of 2.75 to 1.0, stepping up to 3.00 to 1.0 from and after the fiscal quarter ending March 31, 2019.~~

~~The Fourth Amended and Restated~~ Credit Agreement contains certain customary ~~affirmative covenants. The negative~~ covenants ~~in the Fourth Amended~~ and Restated Credit Agreement include, among other things, limitations on our ability to do the following, subject to certain exceptions: (i) incur additional debt; (ii) create liens on certain assets; (iii) make certain loans or investments (including acquisitions); (iv) pay dividends on or make distributions in respect of our capital stock or make other restricted junior payments; (v) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; (vi) sell or otherwise dispose of assets, including equity interests in our subsidiaries; (vii) enter into certain transactions with our affiliates; (viii) enter into swaps, forwards and similar agreements; (ix) enter into sale-leaseback transactions; (x) restrict liens and subsidiary dividends; (xi) change our fiscal year; and (xii) modify the terms of certain debt agreements.

~~The Fourth Amended and Restated Credit Agreement contains certain customary~~ events of default, including relating to a change of control. If an event of default occurs and is continuing, the lenders under the ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement will be entitled to take various actions, including the acceleration of amounts outstanding under the ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement and all actions permitted to be taken by a secured creditor in respect of the collateral securing the obligations under the ~~Fourth~~ Amended ~~and Restated~~ Credit Agreement.

~~A portion~~

Table of ~~certain financing costs incurred~~Contents

In October 2019, we entered into a five-year $525.0 million floating-to-fixed interest rate swap agreement. In January 2020, we entered into a five-year $1,000.0 million floating-to-fixed interest rate swap agreement. These two interest rate swaps met the criteria to be considered and were designated as qualifying cash flow hedges under ASC 815 in the first quarter of 2020, and they effectively fix interest payment obligations on $525.0 million and $1,000.0 million of principal under the First Lien Term Loan Facility at rates of 4.3% and 4.4% through September 2024 and January 2025, respectively, based on the interest rates set forth in the Amended Credit Agreement. In April 2021, each of the swap agreements described above was novated to another counterparty and amended in connection with such novation. The amendments included certain changes to collateral posting obligations and also had the ~~original credit facility that were scheduled~~effect of increasing the effective fixed interest payment obligations to ~~be amortized over the term~~rates of ~~the loan, including original issue discount and underwriting and legal fees, were accelerated at the closing of the refinancing.~~

~~Senior Secured Second Lien Notes~~

On June 16, 2017, the Escrow Issuer and the Co-Issuer completed the offering of $500 million aggregate principal amount of 6.750% Senior Secured Second Lien Notes due 2022. The Notes were issued under an Indenture, as of June 16, 2017 (the “Indenture”)4.5%, among the Escrow Issuer, the Co-Issuer and U.S. Bank National Association, as the trustee and collateral agent. The Notes mature on June 15, 2022. Interest on the Notes accrues at 6.750% per annum, payable every six months through maturity on each June 15 and December 15, beginning on December 15, 2017.

On July 20, 2017, VFH assumed all of the obligations of the Escrow Issuer under the Indenture and the Notes. The Notes are guaranteed by Virtu Financial and each of Virtu Financial’s wholly-owned domestic restricted subsidiaries that guarantee the Fourth Amended and Restated Credit Agreement, including KCG and certain of its subsidiaries and the Escrow Issuer. We refer to VFH and the Co-Issuer together as, the “Issuers.”

The Notes and the related guarantees are secured by second-priority perfected liens on substantially all of the Issuers’ and guarantors’ existing and future assets, subject to certain exceptions, including all material personal property, a pledge of the capital stock of the Issuers, the guarantors (other than Virtu Financial) and the direct subsidiaries of the Issuers and the guarantors and up to 65.0% of the voting capital stock of any now-owned or later-acquired foreign subsidiaries that are directly owned by the Issuers or any of the guarantors, which assets will also secure obligations under the Fourth Amended and Restated Credit Agreement on a first-priority basis.

The Indenture imposes certain limitations on our ability to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) pay dividends, make certain investments and make repayments on indebtedness that is

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subordinated in right of payment to the Notes and make other “restricted payments”; (iii) create liens on their assets to secure debt; (iv) enter into transactions with affiliates; (v) merge, consolidate or amalgamate with another company; (vi) transfer and sell assets; and (vii) permit restrictions on the payment of dividends by Virtu Financial’s subsidiaries. The Indenture also contains customary events of default, including, among others, payment defaults related to the failure to pay principal or interest on Notes, covenant defaults, final maturity default or cross-acceleration with respect to ~~material indebtedness~~the earlier maturing swap arrangement, and ~~certain bankruptcy events.~~

~~Prior~~4.6% with respect to ~~June 15, 2019, we may redeem some or~~the later maturing swap arrangement.

We were in compliance with all applicable covenants under the Amended Credit Agreement as of the Notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, if any, to (but not including) the date of redemption, plus an applicable “make whole” premium (calculated based upon the yield of certain U.S. treasury securities plus 0.50%).

Prior to June 15, 2019, we may redeem up to 35% of the aggregate principal amount of the Notes at a redemption price equal to 106.750% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of redemption with the net cash proceeds from certain equity offerings.

On or after June 15, 2019, we may redeem some or all of the Notes, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest to (but not including) the date of redemption, if redeemed during the 12-month period beginning on June 15 of the years indicated below:

September 30, 2021.

Period

Percentage

2019

103.375%

2020

101.688%

2021 and thereafter

100.000%

Upon the occurrence of specified change of control events as defined in the indenture governing the Notes, we must offer to repurchase the Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to (but excluding) the purchase date.

Cash Flows

Our main sources of liquidity are cash flow from the operations of our subsidiaries, our ~~broker‑dealer revolving~~broker-dealer credit ~~facility~~facilities (as described above), margin financing provided by our prime brokers and cash on hand.

The table below summarizes our primary sources and uses of cash for the nine months ended September 30, ~~2017~~2021 and ~~2016.~~

2020.

For the Nine Months Ended

(in thousands)

2017

2016

Net cash provided by (used in):

Operating activities

$
215,771

$
187,142

Investing activities

(826,458)

(53,731)

Financing activities

980,151

(152,430)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

8,300

1,783

Net increase in cash, cash equivalents, and restricted cash

$
377,764

$
(17,236)


	Nine Months Ended September 30,
Net cash provided by (used in):	2021		2020
Operating activities	$	374,522	$	483,598
Investing activities	(65,440)		3,444
Financing activities	(550,322)		(598,220)
Effect of exchange rate changes on cash and cash equivalents	(11,452)		3,860
Net decrease in cash and cash equivalents	$	(252,692)	$	(107,318)

Operating Activities

Net cash provided by operating activities was ~~$215.8~~$374.5 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$187.1~~net cash provided by operating activities of $483.6 million for the nine months ended September 30, ~~2016.~~2020. The ~~increase of $28.7 million~~decrease in net cash provided by operating activities was ~~mainly~~primarily attributable to~~operating cash flows resulting from the Acquisition of KCG, offset by the effect of a net loss~~ lower revenues, and an increase in trading assets, at fair value, for the nine months ended September 30, ~~2017 which was attributable~~2021 compared to the ~~factors discussed earlier in this document..~~

prior period.

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Investing Activities

Net cash used in investing activities was ~~$826.5~~$65.4 million for the nine months ended September 30, ~~2017,~~2021, compared to ~~$53.7~~net cash provided by investing activities of $3.4 million for the nine months ended September 30, ~~2016.~~2020. The increase ~~of $772.8 million~~in cash used in investing activities for the nine months ended September 30, 2021 was primarily attributable to an increase in contributions to our strategic investments in the ~~$799.3 million Acquisition~~current period, offset by the sale of ~~KCG and~~MATCHNow in the ~~$5.7 million acquisition of select strategic telecommunications assets from Teza Technologies.~~

prior period.

Financing Activities

Net cash ~~provided~~used in financing activities was ~~$980.2~~$550.3 million for the nine months ended September 30, ~~2017 and~~2021, while net cash used in financing activities was ~~$152.4~~$598.2 million for the nine months ended September 30, ~~2016.~~2020. The ~~increase~~cash used in ~~cash provided by~~ financing activities ~~of $1,132.6 million was primarily attributable to refinancing of our long-term borrowings, which provided an increase in total proceeds of $1,115.0 million during~~for the nine months ended September 30, ~~2017.~~

2021 was primarily attributable to $430.6 million in dividends to stockholders and distributions made to noncontrolling interests and $320.2 million in purchases of treasury stock, partially offset by the proceeds of $249.6 million of short term borrowings. The cash used in financing activities of $598.2 million during the same period of 2020 primarily reflects net dividends to stockholders and distributions to noncontrolling interests and repayment of long term borrowings.

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Share Repurchase Program

On May 4, 2021, the Company's Board of Directors authorized the expansion of the Company's share repurchase program, increasing the total authorized amount by $300 million to $470 million in Class A Common Stock and Virtu Financial Units and extending the duration of the program through May 4, 2022. The share repurchase program authorizes the Company to repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means. 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 September 30, 2021, the Company repurchased approximately 12.5 million shares of Class A Common Stock and Virtu Financial Units for approximately $337.5 million. As of September 30, 2021, the Company has approximately of $132.5 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

Off-Balance Sheet Arrangements

~~We do~~

As of September 30, 2021, we did not ~~invest in~~have any off-balance sheet ~~vehicles~~arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, that ~~provide~~have or are reasonably likely to have current or future effects on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources ~~market or credit risk support, or engage in any activities~~ that ~~expose us~~are material to ~~any liability that is not reflected in our condensed consolidated financial statements.~~

investors.

Inflation

We believe inflation has not had a material effect on our financial condition as of September 30, 2021, and December 31, 2020, or on our results of operations ~~or in~~and cash flows for the three ~~months ended September 30, 2017~~ and ~~2016 and for the~~ nine months ended September 30, ~~2017~~2021 and ~~2016.~~

2020.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the applicable reporting period. Critical accounting policies are those that are the most important portrayal of our financial condition, ~~and~~ results of operations and cash flows, and that require our most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain.

While our significant accounting policies are described in more detail in ~~the notes to~~Note 2 "Summary of Significant Accounting Policies" in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020, our most critical accounting policies are discussed below. In applying such policies, we must use some amounts that are based upon our informed judgments and best estimates. Estimates, by their nature, are based upon judgments and available information. The estimates that we make are based upon historical factors, current circumstances and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

~~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 (loss) 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 under our share based compensation plans, with no adjustments to net income (loss) available for common stockholders for dilutive potential common shares.

We grant restricted stock units (“RSUs”), which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. As a result, the unvested RSUs meet the definition of a participating security requiring the application of the two-class method. Under the two-class

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method, earnings available to common shareholders, including both distributed and undistributed, 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.

~~Principles of Consolidation, including Noncontrolling Interests~~

The condensed consolidated financial statements include the accounts of us and our majority and wholly owned subsidiaries. As sole managing member of Virtu Financial, we exert control over the Group’s operations. In accordance with ASC 810, ~~Consolidation, we consolidate Virtu Financial and its subsidiaries’ consolidated financial statements and record the interests in Virtu Financial that we do not own as noncontrolling interests.~~All intercompany accounts and transactions have been eliminated in consolidation. In July 2016, we made a minority investment in a proprietary trading system. We elected the fair value option to account for an equity investment because we believe that fair value is the most relevant measurement attribute for the investment, as well as to reduce operational and accounting complexity.

Valuation of Financial Instruments

Due to the nature of our operations, substantially all of our financial instrument assets, comprised of financial instruments owned, securities purchased under agreements to resell, and receivables from brokers, dealers and clearing organizations are carried at fair value based on published market prices and are marked to market daily, or are assets which are short-term in nature and are reflected at amounts approximating fair value. Similarly, all of our financial instrument liabilities that arise from financial instruments sold but not yet purchased, securities sold under agreements to repurchase, securities loaned, and payables to brokers, dealers and clearing organizations are short-term in nature and are reported at quoted market prices or at amounts approximating fair value.

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

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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; or

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

The fair values for substantially all of our financial instruments owned and financial instruments sold but not yet purchased are based on observable prices and inputs and are classified in levels 1 and 2 of the fair value hierarchy. Instruments categorized within level 3 of the fair value hierarchy are those which require one or more significant inputs that are not observable. Estimating the fair value of level 3 financial instruments requires judgments to be made. See Note 10 "Financial Assets and Liabilities" of Part I Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q for further information about fair value measurements.

Revenue Recognition

Trading Income, Net

Trading income, net, consists of trading gains and losses that are recorded on a trade date basis and reported on a net basis. Trading income, net, is comprised of changes in fair value of financial instruments owned and financial instruments sold, not yet purchased assets and liabilities (i.e., unrealized gains and losses) and realized gains and losses on equities, fixed income securities, currencies and commodities.

Interest and Dividends Income/Interest and Dividends Expense

Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of income earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense from collateralized transactions, margin and related short-term lending facilities. Dividends are recorded on the ex-dividend date, and interest is recognized on an accrual basis.

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.~~basis, which is the point at which the performance obligation to the customer is satisfied. Under a commission management program, ~~the Company allows~~we allow 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~~we act as an agent in these transactions, ~~it records~~we record such expenses on a net basis within Commissions, net and technology services in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~comprehensive income.~~

~~Technology Services~~

~~Technology services~~Comprehensive Income.

Workflow technology revenues consist of ~~fees~~order and trade execution management and order routing services we provide through our front-end workflow solutions and network capabilities.

We provide trade order routing from our execution management system (“EMS”) to our execution services offerings, with each trade order routed through the EMS representing a separate performance obligation that is satisfied at a point in time. 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 parties~~third-party brokers for ~~licensing~~order routing. The remaining commission is allocated to commissions, net using a residual allocation approach. Commissions earned are fixed and revenue is recognized on the trade date.

We participate in commission share arrangements, where trade orders are routed to third-party brokers from our EMS and our 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.

We also provide OMS and related software products and connectivity services to customers and recognize license fee revenues and monthly connectivity fees. License fee revenues, generated for the use of our ~~proprietary risk management~~OMS and ~~trading infrastructure technology~~other software products, are fixed and ~~provision~~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 ~~associated management~~live connections, and ~~hosting services. These fees include both upfront and annual recurring fees. Income from existing arrangements for technology services~~ is ~~recorded as~~recognized over time on a ~~services contract in accordance with SEC Topic 13 (Staff Accounting Bulletin No. 104), SEC Topic 13.A.3 (f), with revenue being recognized once persuasive evidence~~monthly basis using a time-based measure of ~~an arrangement exists, delivery has occurred, the fee is~~

progress.

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~~fixed or determinable, and collectability is probable. Technology services~~

Analytics revenues ~~also include agency commission fees that~~ are earned from ~~agency trades executed by the Company on behalf of third parties.~~

~~Software Development Costs~~

providing customers with analytics products and services, including trading and portfolio analytics tools. We ~~account~~provide analytics products and services to customers and recognize subscription fees, which are fixed for the ~~costs~~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 ~~computer software developed~~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; and

(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 ~~obtained for internal use~~at a point in accordance with ASC 350-40, Internal-Use Software. We capitalize 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 when various projects enter the stages at which coststime. These allocated commissions may be ~~capitalized, in assessing~~deferred if the ~~ongoing value of~~allocated amount exceeds the capitalized costs and in determining the estimated useful lives over which the costs are amortized. Capitalization of such costs begins when a program or functionality under development has established technological feasibility and ends when the resulting program or functionality is available for release to users. Such criteria are measured through periodic surveys of employees responsible for developing internal-use software.

amount recognizable based on delivery.

Share-Based Compensation

We account for share-based compensation transactions with employees under the provisions of ~~ASC~~the Financial Accounting Standards Board's Accounting Standards Codification (“ASC”) 718, Compensation: Stock Compensation. Share-based compensation transactions with employees are measured based on the fair value of equity instruments issued.

Share-based awards issued for compensation in connection with or subsequent to the Reorganization Transactions and the IPO pursuant to our Amended and Restated 2015 Management Incentive Plan, ~~(the “2015 Management Incentive Plan”)~~and assumed pursuant to the Amended and Restated ITG 2007 Equity Plan, were in the form of stock options, Class A ~~common~~Common Stock, restricted stock awards ("RSAs") and restricted stock ~~units.~~units ("RSUs"). The fair value of the stock option grants is determined through the application of the Black-Scholes-Merton model. The fair value of the Class A ~~common stock~~Common Stock and ~~restricted stock units~~RSUs is determined based on the volume weighted average price for the three days preceding the ~~grant, and with~~grant. With respect to the ~~restricted stock units, a projected annual forfeiture rate.~~RSUs, we account for forfeitures as they occur. The fair value of RSAs is determined based on the closing price as of the date of grant. 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 becomes probable through the remainder of the vesting period. We record as treasury stock shares repurchased from employees for the purpose of settling tax liabilities incurred upon the issuance of common stock, the vesting of ~~restricted stock units~~RSUs or the exercise of stock options.

Income Taxes

We conduct our business globally through a number of separate legal entities. Consequently, our effective tax rate is dependent upon the geographic distribution of our earnings or losses and the tax laws and regulations of each legal jurisdiction in which we operate.

Certain of our wholly owned subsidiaries are subject to income taxes in foreign jurisdictions. The provision for ~~(benefit from)~~ income tax is comprised of current tax and deferred tax. Current tax represents the tax on current year tax returns, using tax rates enacted at the balance sheet date. A deferred tax asset is recognized only to the extent that it is probable that future taxable income will be available against which the asset can be utilized.

We are currently subject to audit in various jurisdictions, and these jurisdictions may assess additional income tax liabilities against us. Developments in an audit, litigation, or the relevant laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods. We recognize the tax benefit from an uncertain tax position in accordance with ASC 740, Income Taxes, only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authority, including resolution of the appeals or litigation processes, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position are measured based on the largest

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benefit for each such position that has a greater than fifty percent likelihood of being realized

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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. Our 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.

Tax Receivable Agreements

We are required under the tax receivable agreements entered into in connection with our IPO to make payments to certain direct or indirect equity holders of Virtu Financial that are generally equal to 85% of the applicable cash tax savings, if any, that we realize as a result of favorable tax attributes that are available to us as a result of the Reorganization Transactions, for exchanges of membership interests for Class A Common Stock or Class B Common Stock and payments made under the tax receivable agreements. An exchange of membership interests by the Virtu Members for Class A Common Stock or Class B Common Stock (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, we estimate the cumulative tax receivable agreement obligations to be reported on the consolidated financial statements. The tax attributes are computed as the difference between our basis in the partnership interest (“outside basis”) as compared to our share of the adjusted tax basis of partnership property (“inside basis”), at the time of each Exchange. The computation of inside basis requires judgments in estimating the components included in the inside basis as of the date of the Exchange (such as, cash received on hypothetical sale of assets, allocation of gain/loss at the time of the Exchange taking into account complex partnership tax rules). In addition, we estimate the period of time that may generate cash tax savings of such tax attributes and the realizability of the tax attributes.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the underlying net tangible and intangible assets of our acquisitions. Goodwill is not amortized but is ~~tested~~assessed for impairment on an annual basis and between annual ~~tests~~assessments whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is ~~tested~~assessed at the reporting unit level, which is defined as an operating segment or one level below the operating segment. Prior to the Acquisition, we managed and operated as one business, and accordingly, operated under one reportable segment. As a result of the acquisition of KCG, beginning in the third quarter of 2017, we have three operating segments: (i) Market Making; (ii) Execution Services; and (iii) Corporate. We allocate goodwill to the new reporting units using a relative fair value approach. In addition, we

When assessing impairment, an entity may perform an initial qualitative assessment, ~~of potential goodwill impairment for all reporting units immediately prior~~under which it assesses qualitative factors to ~~the reallocation and determined~~determine whether it is more likely than not that ~~no impairment was indicated.~~

~~The goodwill impairment test is a two-step process. The first step is used to identify potential impairment and compares~~ the fair value of a reporting unit ~~with~~is less than its carrying amount, including goodwill. IfIn evaluating whether it is more likely than not that the ~~carrying amount~~fair value of a reporting unit ~~exceeds~~is less than its carrying amount, an entity shall assess relevant events and circumstances, including the following:

•general economic conditions;

•limitations on accessing capital;

•fluctuations in foreign exchange rates or other developments in equity and credit markets;

•industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for an entity’s products or services, or a regulatory or political development;

•cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;

•overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;

•other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, contemplation of bankruptcy, or litigation.

If, after assessing the totality of such events or circumstances, an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then no further goodwill impairment testing is necessary.

If further testing is necessary, the fair value of the reporting unit is compared to its carrying value; if the fair value of the reporting unit is less than its carrying value, a goodwill impairment loss is recorded, equal to the excess of the reporting unit’s carrying amount over its fair value (not to exceed the ~~second step of the~~total goodwill impairment test must be performed. The second step is used to measure the amount of impairment loss, if any, and compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss must be recognized in an amount equalallocated to that ~~excess.~~

reporting unit).

We ~~test~~assess goodwill for impairment on an annual basis onas of July 11st and on an interim basis when certain events or circumstances exist. In the impairment ~~test~~assessment as of July 1, ~~2017,~~2021, we performed a qualitative assessment as described above for each reporting unit. No impairment of goodwill was identified.

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Valuation of intangible assets involves the ~~primary valuation method used~~use of significant estimates and assumptions with respect to ~~estimate~~ the ~~fair value~~timing and amounts of revenue growth rates, customer attrition rates, future tax rates, royalty rates, contributory asset charges, discount rate and the ~~reporting unit was the market capitalization approach based on the market price of our Class A common stock, which the management believes~~resulting cash flows.We amortize finite-lived intangible assets over their estimated useful lives. We test finite-lived intangible assets for impairment when impairment indicators are present, and if impaired, they are written down to ~~be an appropriate indicator of its~~ fair value.

Recent Accounting Pronouncements

For a discussion of recently issued accounting developments and their impact or potential impact on our condensed consolidated financial statements, see Note 2 ~~– Summary~~"Summary of Significant Accounting ~~Policies,~~Policies" of ~~the condensed consolidated financial statements included in~~Part I Item 1 “Financial Statements” of this ~~quarterly report~~Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to various market risks in the ordinary course of business. The risks primarily relate to changes in the value of financial instruments due to factors such as market prices, interest rates, and currency rates.

Our on-exchange market making activities are not dependent on the direction of any particular market and are designed to minimize capital at risk at any given time by limiting the notional size of our positions. Our on-exchange market making strategies involve continuously quoting two-sided markets in various financial instruments with the intention of profiting by capturing the spread between the bid and offer price. If another market participant executes against the strategy’s bid or offer by crossing the spread, the strategy will ~~instantaneously~~ attempt to lock in a return by either exiting the position or hedging in one or more different correlated instruments that represent economically equivalent value to the primary instrument. Such primary or hedging instruments include but are not limited to securities and derivatives such as: common shares, exchange traded products, American Depositary Receipts (“ADRs”), options, bonds, futures, spot currencies and commodities. Substantially all of the financial instruments we trade are liquid and can be liquidated within a short time frame at low ~~costs.~~

cost.

Our customer market making activities involve the taking of position risks. The risks at any point in time are limited by the notional size of positions as well as other factors. The overall portfolio risks are quantified using internal risk models and monitored by the Company's Chief Risk Officer, the independent risk group and senior management.

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management system detects a trading strategy generating revenues outside of our preset limits, it will freeze, or “lockdown”, that strategy and alert risk management personnel and management.

For working capital purposes, we invest in money market funds and maintain interest and non-interest bearing balances at banks and in our trading accounts with clearing brokers, which are classified as Cash and cash equivalents and Receivables from broker-dealers and clearing organizations, respectively, on the Condensed Consolidated Statements of Financial Condition. These financial instruments do not have maturity dates; the balances are short-term, which helps to mitigate our market risks. We also invest our working capital in short-term U.S. government securities, which are included in Financial instruments owned on the Condensed Consolidated Statements of Financial Condition. Our cash and cash equivalents held in foreign currencies are subject to the exposure of foreign currency fluctuations. These balances are monitored daily and are hedged or reduced when appropriate and therefore not material to our overall cash position.

In the normal course of business, we maintain inventories of exchange-listed and other equity securities, and to a lesser extent, fixed income securities and listed equity options. The fair value of these financial instruments at September 30, 2021 and December 31, 2020 was $4.0 billion and $3.1 billion, respectively, in long positions and $2.9 billion and $2.9 billion, respectively, in short positions. We also enter into futures contracts, which are recorded on our Condensed Consolidated Statements of Financial Condition within Receivable from brokers, dealers and clearing organizations or Payable to brokers, dealers and clearing organizations as applicable.

We calculate daily the potential losses that might arise from a series of different stress events. These include both single factor and multi factor shocks to asset prices based off both historical events and hypothetical scenarios. The stress calculations include a full recalculation of any option positions, non-linear positions and leverage. Senior management and the independent risk group carefully monitor the highest stress scenarios to help mitigate the risk of exposure to extreme events.

The purchase and sale of futures contracts requires margin deposits with a Futures Commission Merchant (“FCM”). The Commodity Exchange Act requires an FCM to segregate all customer transactions and assets from the FCM’s proprietary activities. A customer’s cash and other equity deposited with an FCM are considered commingled with all other customer funds subject to the FCM’s segregation requirements. In the event of an FCM’s insolvency, recovery may be limited to the Company’s pro rata share of segregated customer funds available. It is possible that the recovery amount could be less than the total cash and other equity deposited.

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Interest Rate Risk, Derivative Instruments

In the normal course of business, we utilize derivative financial instruments in connection with our proprietary trading activities. We ~~do not designate~~carry our ~~derivative financial instruments as hedging instruments under Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (ASC) 815~~ ~~Derivatives and Hedging. Instead, we carry our~~trading derivative instruments at fair value with gains and losses included in ~~trading~~Trading income, net, in the accompanying ~~condensed statements~~Condensed Consolidated Statements of ~~comprehensive income (loss).~~Comprehensive Income. Fair value of derivatives that are freely tradable and listed on a national exchange is determined at their last sale price as of the last business day of the period. Since gains and losses are included in earnings, we have elected not to separately disclose gains and losses on derivative instruments, but instead to disclose gains and losses within trading revenue for both derivative and non-derivative instruments.

We also 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. We have entered into floating-to-fixed interest rate swap agreements in order to manage interest rate risk associated with our long-term debt obligations. Additionally, we may seek to reduce the impact of fluctuations in foreign exchange rates on our net investment in certain non-U.S. operations through the use of foreign currency forward contracts. For interest rate swap agreements and foreign currency forward contracts designated as hedges, we assess our risk management objectives and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair value of the interest rate swaps or forward contracts. For instruments that meet the criteria to be considered hedging instruments under ASC 815, any gains or losses, to the extent effective, are included in Accumulated other comprehensive income on the Condensed Consolidated Statements of Financial Condition and Other comprehensive income on the Condensed Consolidated Statements of Comprehensive Income. The ineffective portion, if any, is recorded in Other, net on the Condensed Consolidated Statements of Comprehensive Income.

Futures ~~Contracts.~~ Contracts. As part of our proprietary market making trading strategies, we use futures contracts to gain exposure to changes in values of various indices, commodities, interest rates or foreign currencies. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date. Upon entering into a futures contract, we are required to pledge to the broker an amount of cash, U.S. government securities or other assets equal to a certain percentage of the contract amount. Subsequent payments, known as variation margin, are made or received by us each day, depending on the daily fluctuations in the fair values of the underlying securities. We recognize a gain or loss equal to the daily variation margin.

Due from ~~Broker Dealers~~Broker-Dealers and Clearing ~~Organizations.~~ Organizations. Management periodically evaluates our counterparty credit exposures to various brokers and clearing organizations with a view to limiting potential losses resulting from counterparty insolvency.

Foreign Currency Risk

As a result of our international market making and execution services activities and accumulated earnings in our foreign subsidiaries, our income and net worth are subject to fluctuation in foreign exchange rates. While we generate revenues in several currencies, athe majority of our operating expenses are denominated in U.S. dollars. Therefore, depreciation in these other currencies against the U.S. dollar would negatively impact revenue upon translation to the U.S. dollar. The impact of any translation of our foreign denominated earnings to the U.S. dollar is mitigated, however, through the impact of daily hedging practices that are employed by the company.

Approximately 20.5% and 26.1% of our revenues for the three months ended September 30, 2021 and 2020, respectively, and approximately 20.3% and 20.2% of our total revenues for the nine months ended September 30, 2021 and 2020, respectively, were denominated in non-U.S. dollar currencies. We estimate that a hypothetical 10% adverse change in the value of the U.S. dollar relative to our foreign denominated earnings would have resulted in decreases in total revenues of $11.1 million and $17.2 million for the three months ended September 30, 2021 and 2020 respectively, and $42.7 million and $51.7 million for the nine months ended September 30, 2021 and 2020, respectively.

Assets and liabilities of subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars at period-end exchange rates. Income, expense and cash flow items are translated at average exchange rates prevailing during the period. The resulting currency translation adjustments are recorded as foreign exchange translation adjustment in our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~comprehensive income (loss)~~Comprehensive Income and ~~changes~~Condensed Consolidated Statements of Changes in ~~equity.~~Equity. Our primary currency translation exposures historically relate to net investments in subsidiaries having functional currencies denominated in the ~~Euro.~~

~~Market Risk~~

~~Our market making activities are not dependent on the direction of any particular market~~Euro, Pound Sterling, and are designed to minimize capital at risk at any given time by limiting the notional size of our positions. Our strategies involve continuously quoting two-sided markets in various financial instruments with the intention of profiting by capturing the spread between the bid and offer price. If another market participant executes against the strategy’s bid or offer by crossing the spread, the strategy will instantaneously attempt to lock in a return by either exiting the position or hedging in one or more different correlated instruments that represent economically equivalent value to the primary instrument. Such primary or hedging instruments include but are not limited to securities and derivatives such as: common shares, exchange traded products, American Depositary Receipts (“ADRs”), options, bonds, futures, spot currencies and

Canadian dollar.

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~~commodities. Substantially all of the financial instruments we trade are liquid and can be liquidated within a short time frame at low costs.~~

For working capital purposes, we invest in money market funds and maintain interest and non-interest bearing balances at banks and in our trading accounts with clearing brokers, which are classified as Cash and cash equivalents and Receivable from brokers, dealers and clearing organizations, respectively, on the condensed consolidated statements of financial condition. These financial instruments do not have maturity dates; the balances are short term, which helps to mitigate our market risks. We also invest our working capital in short-term U.S. government securities, which are included in Financial instruments owned on the condensed consolidated statements of financial condition. Our cash and cash equivalents held in foreign currencies are subject to the exposure of foreign currency fluctuations. These balances are monitored daily and are hedged or reduced when appropriate and therefore not material to our overall cash position.

We use various proprietary risk management tools in managing our market risk on a continuous basis (including intraday). In order to minimize the likelihood of unintended activities by our market making strategies, if our risk management system detects a trading strategy generating revenues outside of our preset limits, it will freeze, or “lockdown”, that strategy and alert risk management personnel and management.

In the normal course of business, we maintain inventories of exchange-listed and other equity securities, and to a lesser extent, fixed income securities and listed equity options. The fair value of these financial instruments at September 30, 2017 and December 31, 2016 was $3.00 billion and $1.83 billion, respectively, in long positions and $2.54 billion and $1.35 billion, respectively, in short positions. We also enter into futures contracts, which are recorded on our condensed consolidated statements of financial condition within Receivable from brokers, dealers and clearing organizations or Payable to brokers, dealers and clearing organizations as applicable.

We calculate daily the potential losses that might arise from a series of different stress events. These include both single factor and multi factor shocks to asset prices based off both historical events and hypothetical scenarios. The stress calculations include a full recalculation of any option positions, non-linear positions and leverage. Senior management and the independent risk function carefully monitor the highest stress scenarios to ensure that the Company is not unduly exposed to any extreme events.

The potential change in fair value is estimated to be a gain of $6.5 million using a hypothetical 10% increase in equity prices as of September 30, 2017, and an estimated loss of $9.5 million using a hypothetical 10% decrease in equity prices at September 30, 2017. These estimates take into account the offsetting effect of such hypothetical price movements on the fair value of short positions against long positions, the effect on the fair value of options, futures, nonlinear positions and leverage as well as assumed correlations with non-equity asset classes, such as fixed income, commodities and foreign exchange. The Company relies on internally developed systems in order to model and calculate stress risks to a variety of different scenarios.

Financial Instruments with Off Balance Sheet Risk

We enter into various transactions involving derivatives and other off-balance sheet financial instruments. These financial instruments include futures, forward contracts, swaps, and exchange-traded options. These derivative financial instruments are used to conduct trading activities and manage market risks and are, therefore, subject to varying degrees of market and credit risk. Derivative transactions are entered into for trading purposes or to economically hedge other positions or transactions.

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Futures and forward contracts provide for delayed delivery of the underlying instrument. In situations where we write listed options, we receive a premium in exchange for giving the buyer the right to buy or sell the security at a future date at a contracted price. The contractual or notional amounts related to these financial instruments reflect the volume and activity and do not necessarily reflect the amounts at risk. Futures contracts are executed on an exchange, and cash settlement is made on a daily basis for market movements, typically with a central clearing house as the counterparty. Accordingly, futures contracts generally do not have credit risk. The credit risk for forward contracts, options, and swaps is limited to the unrealized market valuation gains recorded in the ~~statements~~Condensed Consolidated Statements of ~~financial condition.~~Financial Condition. 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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, ~~2017.~~2021. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, ~~2017,~~2021, our disclosure controls and procedures were effective to ensure information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, with the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of controls.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or because the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Changes to Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the three months ended September 30, ~~2017~~2021 that has or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II ~~- OTHER INFORMATION~~

ITEM 1. LEGAL PROCEEDINGS

The information required by this item is set forth in the ~~“Litigation”~~“Legal Proceedings” section in Note ~~13 “Commitments,~~15 "Commitments, Contingencies and ~~Guarantees”~~Guarantees" to the Company’s ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements included in Part I Item 1 “Financial ~~Information”~~Statements”, which is incorporated by reference herein.

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ITEM 1A. RISK FACTORS

~~We are updating our risk factors~~

There have been no material changes to include the additional risk factors presented below. The additional risk factors presented below and the other information set forth in this quarterly report on Form 10-Q should be read in conjunction with the other risk factors set forth in our Annual Report for the year ended December 31, 2016 on Form 10-K, in each case which should be carefully considered. The risks and uncertainties presented in this quarterly report on Form 10-Q and in our Annual Report for the year ended December 31, 2016 on Form 10-K (collectively, the “Risk Factors”) are not the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also materially and adversely affect our business, financial condition and/or operating results. Please see page 49 of this quarterly report on Form 10-Q for a discussion of the forward-looking statements that are qualified by the Risk Factors. If any of the events or circumstances described in the Risk Factors ~~actually occurs, our business, operating results and financial condition could be materially adversely affected.~~

~~Risks Related to the Business~~

~~KCG’s market making business is concentrated~~described in ~~U.S. equities; accordingly, our operating results may be negatively impacted by changes that affect the U.S. equity markets.~~

Approximately 85% of KCG’s market making revenues for 2016 were derived from its market making in U.S. equities. The level of activity in the U.S. equity markets is directly affected by factors beyond our control, including U.S. economic and political conditions, broad trends in business and finance, legislative and regulatory changes and changes in volume and price levels of U.S. equity transactions. As a result, to the extent these or other factors reduce trading volume or volatility or result in a downturn in the U.S. equity markets, KCG may experience a material adverse effect on its or, after the consummation of the Acquisition, our business, financial condition and operating results.

~~We could lose significant sources of revenues if we lose any of KCG’s larger clients.~~

~~At times, a limited number of clients could account for a significant portion of KCG’s order flow, revenues~~

and profitability, and we expect a large portion of the future demand for, and profitability from, its 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. None of these clients is currently contractually obligated to utilize us for trade execution services and, accordingly, these clients may direct their trade execution activities to other execution providers or market centers at any time. Some of these clients have grown organically or acquired market makers and specialist firms to internalize order flow or will have entered into strategic relationships with competitors. There can be no assurance that we will be able to retain these significant clients or that such clients will maintain or increase their demand for our trade execution services. Further, the continued integration of legacy systems and the development of new systems could result in disruptions to our ongoing businesses and relationships or cause issues with standards, controls, procedures and policies that adversely affect our ability to maintain relationships with customers, or to solicit new customers. 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 and results of operations.

~~We will incur risks in connection with migration of KCG’s data center.~~

~~We are planning to migrate KCG’s Jersey City data center operations to other commercial data centers and~~

colocations by the end of April 2018 and there are a number of risks involved that could have a potential negative impact on our operations. These risks include, but are not limited to, missing project timelines (which could have the potential for disruption of market making or trading services or other operations), risks related to changes to technology, and unexpected costs associated with the migration. The diversion of business, technology and management attention from other business concerns and a multitude of external factors also pose a risk. While we employ a significant amount of internal and external resources to mitigate these and other risks associated with the migration, they could have an adverse impact on our business, financial condition or results of operations.

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~~Certain additional payments to be made to us in connection with the sale of by KCG of KCG Hotspot are uncertain.~~

~~The sale of KCG Hotspot, KCG’s institutional spot foreign exchange electronic communications network, in~~

2015 was structured as a taxable asset sale and BATS Global Markets, Inc. (“Bats”), the purchaser, and KCG have agreed to share certain related tax benefits that potentially accrue to Bats after the closing of the transaction. KCG will share in 70% of the actual tax benefits to Bats for the first three years after the closing and 50% of the actual tax benefits thereafter (the “Annual Tax Benefits”). However, KCG has a one-time option exercisable within 30 days of the third anniversary of the closing of the transaction to terminate the continued tax sharing arrangement in exchange for a one-time payment of $50 million, which Bats has the right to exercise after KCG’s option expires.

On September 26, 2016, Bats entered into an agreement and plan of merger with CBOE Holdings, Inc. (“CBOE”) and certain newly formed subsidiaries thereof, pursuant to which Bats merged into a subsidiary of CBOE, with such subsidiary surviving the merger (the “Bats Merger”). The receipt of the Annual Tax Benefits by KCG is subject to CBOE having sufficient net income to receive the tax benefits. The net income of CBOE could decrease due to numerous factors, which are outside of the control of KCG. In addition, any decrease in the corporate tax rates applicable to CBOE could reduce the size or certainty of the Annual Tax Benefits (but will not have an impact on the $50 million one-time payment described above).

We have substantial amount of indebtedness, which could negatively impact our business and financial condition, and our debt agreements contain restrictions that will limit our flexibility in operating our business.

After the Acquisition of KCG, we are a highly leveraged company. As of September 30, 2017, we have approximately $1,481.1 million principal amount of outstanding long-term indebtedness. Additionally, we are party to the $125.0 Uncommitted Facility under which we had $15.0 million of borrowings outstanding at September30, 2017 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 $543.0 million under which we had $159.1 million in borrowings outstanding at September 30, 2017.

The Fourth Amended and Restated Credit Agreement, the indenture governing the Notes and any other existing or future indebtedness of ours contain a number of covenants that impose significant operating and financial restrictions on us, including restrictions on the Issuers’ and its restricted subsidiaries ability to, among other things:

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

~~pay dividends on or make distributions in respect of, or repurchase or redeem, our equity interests or make other restricted payments;~~

~~prepay, redeem or repurchase certain debt;~~

~~make loans or certain investments;~~

~~sell certain assets;~~

~~create liens on certain assets;~~

~~consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;~~

~~enter into certain transactions with our affiliates;~~

~~enter into agreements restricting our subsidiaries’ ability to pay dividends; and~~

~~designate our subsidiaries as unrestricted subsidiaries.~~

As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to successfully execute our strategy, engage in favorable business activities or finance future operations or capital needs. A failure to comply with the covenants under the Term Credit Agreement or any of our other future indebtedness could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. In the event of any such default, the lenders thereunder, among other things:

~~will not be required to lend any additional amounts to us;~~

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~~could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable and terminate all commitments to extend further credit;~~

~~could require us to apply all of our available cash to repay these borrowings; or~~

~~could effectively prevent us from making debt service payments on the Notes;~~

~~any of which could result in an event of default under the Notes.~~

Such actions by the lenders could cause cross defaults under our other indebtedness. If we were unable to repay those amounts, the lenders under the Term Loan Facility could proceed against the collateral granted to them to secure that indebtedness. We pledge substantially all of our assets as collateral under the Term Loan Facility. If any of our outstanding indebtedness under the Term Loan Facility or our other indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full. We do not have sufficient working capital to satisfy our debt obligations in the event of an acceleration of all or a significant part of our outstanding indebtedness.

~~Despite our substantial indebtedness, we may still be able to incur significantly more debt, which could intensify the risks associated with our substantial indebtedness.~~

We may be unable to remain in compliance with the financial maintenance and other covenants contained in the Term Credit Agreement and our obligation to comply with these covenants may adversely affect our ability to operate our business.

The covenants in the Term Credit Agreement may negatively impact our ability to finance future operations or capital needs or to engage in other business activities. Our Term Credit Agreement requires us to maintain specified financial ratios and tests, including interest coverage and total leverage ratios, which may require us to take action to reduce our debt or to act in a manner contrary to our business objectives. Our Term Credit Agreement also restricts our ability to, among other things, incur additional indebtedness, dispose of assets, guarantee debt obligations, repay other indebtedness, pay dividends, pledge assets, make investments, including in certain of our operating subsidiaries, make acquisitions or consummate mergers or consolidations and engage in certain transactions with subsidiaries and affiliates.

~~A failure to comply with the restrictions contained~~Part I Item 1A. “Risk Factors” in our Term Credit Agreement could lead to an event of default, which could result in an acceleration of our indebtedness. If we default on our indebtedness, our business, financial condition and results of operation could suffer a material adverse effect.

~~Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.~~

Borrowings under the Term Loan Facility, the Uncommitted Facility and the Committed Facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on certain of our variable rate indebtedness will increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. We may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk, may prove disadvantageous or may create additional risks.

~~An increase in market interest rates would increase our interest costs on existing and future debt.~~

If interest rates increase, so could our interest costs for any new debt and our variable rate debt obligations. This increased cost could make future financing by us more costly, as well as lower our current period earnings. Rising interest rates could limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing.

2020 Form 10-K.

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~~Risks Related to the Acquisition of KCG~~

Significant costs and significant indebtedness were incurred in connection with the consummation of the Acquisition of KCG, and the integration of KCG into our business, including legal, accounting, financial advisory and other costs.

~~We expect to incur significant costs in connection with integrating the operations, products and personnel of KCG into our business. These costs may include:~~

~~employee retention, redeployment, relocation or severance;~~

~~integration of information systems;~~

~~combination of corporate and administrative functions; and~~

~~potential or pending litigation or other proceedings related to the KCG Acquisition.~~

The costs related to the Acquisition of KCG could be higher than currently estimated, depending on how difficult it will be to integrate our business with that of KCG, and the expected cost reductions and synergies may not be achieved.

In addition, we expect to incur a number of non-recurring costs associated with combining the operations of KCG with ours, which cannot be estimated accurately at this time. While we expected to and incurred a significant amount of transaction fees and other costs related to the consummation of the Acquisition of KCG, additional unanticipated costs may yet be incurred. Any expected elimination of duplicative costs, as well as the expected realization of other cost reductions, efficiencies and synergies related to the integration of our operations with those of KCG, that may offset incremental transaction and transaction-related costs over time, may not be achieved as projected, or at all.

In addition, we incurred $1,650.0 million of new indebtedness in connection with the Acquisition of KCG, $200.0 million of which we have voluntarily prepaid. The debt we have incurred in connection with the Acquisition of KCG may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our substantial indebtedness. Our substantial indebtedness may have material consequences for our business, prospects, results of operations, financial condition and/or cash flows.

~~Integrating KCG’s business into our business may divert management’s attention away from operations, and we may also encounter significant difficulties in integrating the two businesses.~~

The Acquisition of KCG involves the integration of two companies that have previously operated independently. The success of the Acquisition of KCG and their anticipated financial and operational benefits, including increased revenues, synergies and cost reductions, will depend in part on our ability to successfully combine and integrate KCG’s business into ours, and there can be no assurance regarding when or the extent to which we will be able to realize these increased revenues, synergies, cost reductions or other benefits. These benefits may not be achieved within the anticipated time frame, or at all.

Successful integration of KCG’s operations, products and personnel may place a significant burden on management and other internal resources. The diversion of management’s attention, and any difficulties encountered in the transition and integration process, could harm our business, prospects, results of operations, financial condition and/or cash flows.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, and competitive responses. The difficulties of combining the operations of the companies include, among others:

~~difficulties in achieving anticipated cost reductions, synergies, business opportunities and growth prospects from the combination;~~

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~~difficulties in the integration of operations and systems;~~

~~conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;~~

~~difficulties in the assimilation of employees and the integration of the companies’ different organizational structures;~~

~~difficulties in managing the expanded operations of a larger and more complex company with increased international operations;~~

~~challenges in integrating the business culture of each company;~~

~~challenges in attracting and retaining key personnel; and~~

difficulties in replacing numerous systems, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll, data privacy and security and regulatory compliance, many of which may be dissimilar.

These factors could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact our business, prospects, results of operations, financial condition and/or cash flows.

~~We may not realize the anticipated synergies, net cost reductions and growth opportunities from the Acquisition of KCG.~~

The benefits that we expect to achieve as a result of the Acquisition of KCG will depend, in part, on the ability of the combined company to realize anticipated growth opportunities, net cost reductions and synergies. Our success in realizing these growth opportunities, net cost reductions and synergies, and the timing of this realization, depends on the successful integration of our historical business and operations and the historical business and operations of KCG. Even if we are able to integrate the businesses and operations of the Company and KCG successfully, this integration may not result in the realization of the full benefits of the growth opportunities, net cost reductions and synergies that we currently expect from this integration within the anticipated time frame or at all. For example, we may be unable to eliminate duplicative costs. Moreover, we may incur substantial expenses in connection with the integration of our business and KCG’s business. While we anticipate that certain expenses will be incurred, such expenses are difficult to estimate accurately and may exceed current estimates. Accordingly, the benefits from the Acquisition of KCG may be offset by costs or delays incurred in integrating the businesses. We projected net cost reductions and synergies are based on a number of assumptions relating to our business and KCG’s business. Those assumptions may be inaccurate, and, as a result, our projected net cost reductions and synergies may be inaccurate, and our business, prospects, results of operations, financial condition and/or cash flows could be materially and adversely affected.

~~The Company will be subject to business uncertainties that could materially and adversely affect our business.~~

Uncertainty about the effect of the Acquisition of KCG on employees, customers and suppliers may have both a material and adverse effect on the Company. These uncertainties may impair the Companies’ ability to attract, retain and motivate key personnel, and could cause customers, suppliers and others who deal with the Company to seek to end, suspend or change existing business relationships. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with us, or if customers, suppliers or others seek to end, suspend or change their dealings with us as a result of the Acquisition of KCG, our business could be materially and adversely impacted.

~~In connection with the Acquisition of KCG, we have assumed potential liabilities relating to KCG’s business.~~

In connection with the Acquisition of KCG, we have assumed potential liabilities relating to KCG’s business. For example, KCG is currently the subject of various regulatory reviews and investigations by federal, state and foreign regulators and SROs, including the SEC, the Financial Industry Regulatory Authority, Inc. and the FCA. In some instances, these matters may rise to a disciplinary action and/or a civil or administrative action. To the extent we have not

~~Table of Contents~~

identified such liabilities or miscalculated their potential financial impact, these liabilities could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Pursuant to the exchange agreement (the ~~"Exchange Agreement"~~“Exchange Agreement”) entered into on April 15, 2015 by and among the Company, Virtu Financial and holders of ~~non-voting common interest units in~~ Virtu Financial ~~(the “Virtu Financial Units”),~~Units, Virtu Financial Units (along with the corresponding shares of our Class C ~~common stock~~Common Stock or Class D ~~common stock,~~Common Stock, as applicable) may be exchanged at any time for shares of our Class A ~~common stock~~Common Stock or Class B ~~common stock,~~Common Stock, as applicable, on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications.

~~Pursuant~~

Total share repurchases for the three months ended September 30, 2021 were as follows:


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

























July 1, 2021 - July 31, 2021
Class A Common Stock / Virtu Financial Units repurchases	1,043,846	$	26.61	1,042,900	$243,670,314


August 1, 2021 - August 31, 2021
Class A Common Stock / Virtu Financial Units repurchases	3,391,961	$	25.84	3,383,168	$156,238,886


September 1, 2021 - September 30, 2021
Class A Common Stock / Virtu Financial Units repurchases	984,079	$	24.29	975,864	$132,536,635















Total Common Stock / Virtu Financial Unit repurchases	5,419,886	$	25.71	5,401.932	$132,536,635

(1) Includes the repurchase of 5,489 shares from employees in order to satisfy statutory tax withholding requirements upon the ~~Exchange Agreement, on August 16, 2017, certain current~~net settlement of equity awards for the three months ended September 30, 2021.

On May 4, 2021, the Company's Board of Directors authorized the expansion of the Company's share repurchase program, increasing the total authorized amount by $300 million to $470 million in Class A Common Stock and ~~former employees elected to exchange 155,009~~ Virtu Financial Units ~~(along with~~and extending the ~~corresponding~~duration of the program through May 4, 2022. The share repurchase program authorizes the Company to repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means. 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 September 30, 2021, the Company repurchased approximately 12.5 million shares of ~~our~~ Class ~~C common stock) held on their behalf on a one-for-one basis~~A Common Stock and Virtu Financial Units for approximately $337.5 million. As of September 30, 2021, the Company has approximately of $132.5 million remaining capacity for future purchases of shares of ~~our~~ Class A ~~common stock. The shares of our Class A common stock were issued in reliance on~~Common Stock and Virtu Financial Units under the ~~registration exemption contained in Section 4(a)(2) of the Securities Act, on the basis that the transaction did not involve a public offering. No underwriters were involved in the transaction.~~

program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

~~None.~~

None.

~~Table of Contents~~

ITEM 6. EXHIBITS


~~Exhibit��Number~~						~~Description~~
~~3.1~~ Exhibit Number						Amended and Restated Certificate of Incorporation of Virtu Financial, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q, as amended (File No. 001-37352) filed on May 29, 2015). Description
~~3.2~~						Amended and Restated By-laws of Virtu Financial, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q, as amended (File No. 001-37352), filed on May 29, 2015).
~~4.1~~						Escrow End Date Supplemental Indenture, dated as July 20, 2017, by and among VFH Parent LLC, Orchestra Borrower LLC, Orchestra Co-Issuer, Inc. Virtu Financial LLC, the other parties that are signatories thereto as Guarantors and U.S. Bank National Association (incorporated herein by reference to Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q (File No. 001-37352), filed on August 9, 2017).
~~10.1~~						Stockholders Agreement, dated April 20, 2017, by and among Virtu Financial, Inc., TJMT Holdings LLC, Aranda Investments Pte. Ltd., Havelock Fund Investments Pte Ltd. and North Island Holdings I, LP. (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37352), filed on May 10, 2017).
~~10.2~~						Amended and Restated Registration Rights Agreement, dated April 20, 2017, by and among Virtu Financial, Inc., TJMT Holdings LLC, Aranda Investments Pte. Ltd., Havelock Fund Investments Pte Ltd., North Island Holdings I, LP and the additional holders named therein. (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37352), filed on May 10, 2017).
31.1*						Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*						~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).~~
32.2*						~~Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).~~
~~101.INS~~						~~XBRL Instance Document~~
~~101.SCH~~						~~XBRL Taxonomy Extension Schema~~
~~101.CAL~~						~~XBRL Taxonomy Extension Calculation Linkbase~~
~~101.LAB~~						~~XBRL Taxonomy Extension Label Linkbase~~
~~101.PRE~~						~~XBRL Taxonomy Extension Presentation Linkbase~~
~~101.DEF~~						~~XBRL Taxonomy Extension Definition Document~~

* Filed herewith.

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~~EXHIBIT INDEX~~


~~Exhibit Number~~						~~Description~~
~~3.1~~						Amended and Restated Certificate of Incorporation of Virtu Financial, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q, as amended (File No. 001-37352) filed on May 29, 2015).
~~3.2~~						Amended and Restated By-laws of Virtu Financial, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q, as amended (File No. 001-37352), filed on May 29, 2015).
~~4.1~~						Escrow End Date Supplemental Indenture, dated as July 20, 2017, by and among VFH Parent LLC, Orchestra Borrower LLC, Orchestra Co-Issuer, Inc. Virtu Financial LLC, the other parties that are signatories thereto as Guarantors and U.S. Bank National Association (incorporated herein by reference to Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q (File No. 001-37352), filed on August 9, 2017).
~~10.1~~						Stockholders Agreement, dated April 20, 2017, by and among Virtu Financial, Inc., TJMT Holdings LLC, Aranda Investments Pte. Ltd., Havelock Fund Investments Pte Ltd. and North Island Holdings I, LP. (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37352), filed on May 10, 2017).
~~10.2~~						Amended and Restated Registration Rights Agreement, dated April 20, 2017, by and among Virtu Financial, Inc., TJMT Holdings LLC, Aranda Investments Pte. Ltd., Havelock Fund Investments Pte Ltd., North Island Holdings I, LP and the additional holders named therein. (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37352), filed on May 10, 2017).
31.1*














































































31.1*						Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002 (furnished herewith).~~2002.
32.2*						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002 (furnished herewith).~~2002.
~~101.INS~~ 101.INS*						XBRL Instance Document
~~101.SCH~~ 101.SCH*						XBRL Taxonomy Extension Schema
~~101.CAL~~ 101.CAL*						XBRL Taxonomy Extension Calculation Linkbase
~~101.LAB~~ 101.LAB*						XBRL Taxonomy Extension Label Linkbase
~~101.PRE~~ 101.PRE*						XBRL Taxonomy Extension Presentation Linkbase
~~101.DEF~~ 101.DEF*						XBRL Taxonomy Extension Definition Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

† Management contract or compensatory plan or arrangement.

~~Delaware~~	~~32-0420206~~
Delaware		32-0420206
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 Vesey Street New York, New York 10282	~~10282~~
One Liberty Plaza			10006
165 Broadway
New York,		New York
(Address of principal executive offices)			(Zip Code)


Class of Stock	Shares ~~Outstanding~~ outstanding as of November 9th~~, 2017~~	3, 2021
Class A common stock, par value $0.00001 per share	~~89,256,963~~	112,339,058
Class C common stock, par value $0.00001 per share	~~18,344,223~~	9,763,065
Class D common stock, par value $0.00001 per share	~~79,610,490~~	60,091,740


		PAGE NUMBER



Condensed Consolidated Statements of Financial Condition (Unaudited)	3 2

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) ~~(Loss)~~	5 3

Condensed Consolidated Statements of Changes in Equity (Unaudited)	6 4

Condensed Consolidated Statements of Cash Flows (Unaudited)	9 5

Notes to Condensed Consolidated Financial Statements (Unaudited)	11 6


	As of
	September 30,		December 31,
(in thousands, except share and interest data)	2017		2016

Assets
Cash and cash equivalents	$	557,990	$	181,415
Cash and securities segregated under federal and other regulations		3,000		—
Securities borrowed		1,525,403		220,005
Securities purchased under agreements to resell		8,249		—
Receivables from broker dealers and clearing organizations		980,518		448,728
Trading assets, at fair value:
Financial instruments owned		2,203,248		1,683,999
Financial instruments owned and pledged		699,152		143,883
Property, equipment and capitalized software (net of accumulated depreciation of $118,671 and $113,184 as of September 30, 2017 and December 31, 2016, respectively)		144,686		29,660
Goodwill		859,598		715,379
Intangibles (net of accumulated amortization)		152,748		992
Deferred tax assets		224,804		193,859
Other assets ($98,837 and $36,480, at fair value, as of September 30, 2017 and December 31, 2016, respectively)		379,949		74,470
Total assets	$	7,739,345	$	3,692,390

Liabilities and equity
Liabilities
Short term borrowings	$	15,000	$	25,000
Securities loaned		582,915		222,203
Securities sold under agreements to repurchase		620,887		—
Payables to broker dealers and clearing organizations		839,067		695,978
Payables to customers		25,550		—
Trading liabilities, at fair value:
Financial instruments sold, not yet purchased		2,535,891		1,349,155
Tax receivable agreement obligations		232,552		231,404
Accounts payable and accrued expenses and other liabilities		287,327		69,281
Long-term borrowings		1,434,629		564,957
Total liabilities	$	6,573,818	$	3,157,978

Stockholders' equity
Class A common stock (par value $0.00001), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued — 89,718,355 and 40,436,580 shares, Outstanding — 89,256,963 and 39,983,514 shares at September 30, 2017 and December 31, 2016, respectively		1		—
Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at September 30, 2017 and December 31, 2016, respectively		—		—
Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued — 18,344,223 and 19,810,707 shares, Outstanding — 18,344,223 and 19,810,707, at September 30, 2017 and December 31, 2016, respectively		—		—
Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 79,610,490 and 79,610,490 shares at September 30, 2017 and December 31, 2016, respectively		1		1
Treasury stock, at cost, 461,392 and 453,066 shares at September 30, 2017 and December 31, 2016, respectively		(8,505)		(8,358)
Additional paid-in capital		900,586		155,536
Accumulated deficit		(51,304)		(1,254)
Accumulated other comprehensive income (loss)		2,596		(252)
Total stockholders' equity	$	843,375	$	145,673
Noncontrolling interest		322,152		388,739
Total equity	$	1,165,527	$	534,412

Total liabilities and equity	$	7,739,345	$	3,692,390


(in thousands, except share data)	September 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	683,836	$	889,559
Cash restricted or segregated under regulations and other	70,477		117,446
Securities borrowed	1,277,601		1,425,016
Securities purchased under agreements to resell	170,194		22,866
Receivables from broker-dealers and clearing organizations	1,452,426		1,684,006
Trading assets, at fair value:
Financial instruments owned	3,018,838		2,369,192
Financial instruments owned and pledged	959,056		746,539
Receivables from customers	414,244		214,478
Property, equipment and capitalized software (net of accumulated depreciation of $470,524 and $455,961 as of September 30, 2021 and December 31, 2020, respectively)	103,963		113,590
Operating lease right-of-use assets	247,531		268,864
Goodwill	1,148,926		1,148,926
Intangibles (net of accumulated amortization of $236,581 and $183,494 as of September 30, 2021 and December 31, 2020, respectively)	402,912		454,499
Deferred tax assets	176,279		193,070

Other assets ($87,926 and $68,316, at fair value, as of September 30, 2021 and December 31, 2020, respectively)	303,194		317,747
Total assets	$	10,429,477	$	9,965,798

Liabilities and equity
Liabilities
Short-term borrowings	$	312,814	$	64,686
Securities loaned	1,017,436		948,256
Securities sold under agreements to repurchase	583,268		461,235
Payables to broker-dealers and clearing organizations	1,094,971		876,446
Payables to customers	182,939		118,826
Trading liabilities, at fair value:
Financial instruments sold, not yet purchased	2,871,649		2,923,708
Tax receivable agreement obligations	254,660		271,165

Accounts payable, accrued expenses and other liabilities	413,998		491,818
Operating lease liabilities	292,967		315,340
Long-term borrowings	1,604,062		1,639,280
Total liabilities	8,628,764		8,110,760

Commitments and Contingencies (Note 15)	0		0

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 — 127,872,786 and 125,627,277 shares, Outstanding — 113,220,345 and 122,012,180 shares at September 30, 2021 and December 31, 2020, respectively	1		1
Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 0 and 0 shares at September 30, 2021 and December 31, 2020, respectively	—		—
Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued and Outstanding — 9,763,065 and 10,226,939 shares at September 30, 2021 and December 31, 2020, respectively	—		—
Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and Outstanding — 60,091,740 and 60,091,740 shares at September 30, 2021 and December 31, 2020, respectively	1		1
Treasury stock, at cost, 14,652,441 and 3,615,097 shares at September 30, 2021 and December 31, 2020, respectively	(392,468)		(88,923)
Additional paid-in capital	1,209,064		1,160,567
Retained earnings (accumulated deficit)	690,568		422,381
Accumulated other comprehensive income (loss)	(21,838)		(25,487)
Total Virtu Financial Inc. stockholders' equity	1,485,328		1,468,540


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share and per share data)	2017		2016		2017		2016		(in thousands, except share and per share data)	2021		2020		2021		2020
Revenues:									Revenues:
Trading income, net	$	203,907	$	156,706	$	479,644	$	509,542	Trading income, net	$	394,265	$	441,295	$	1,591,840	$	1,987,756
Interest and dividends income		20,430		5,271		30,933		14,961	Interest and dividends income	9,704		10,932		26,246		46,788
Commissions, net and technology services		43,351		2,931		49,237		7,224	Commissions, net and technology services	135,923		133,853		470,687		452,333
Other, net		3,598		(102)		3,647		(102)	Other, net	4,452		70,032		17,108		75,758
Total revenue		271,286		164,806		563,461		531,625	Total revenue	544,344		656,112		2,105,881		2,562,635

Operating Expenses:									Operating Expenses:
Brokerage, exchange and clearance fees, net		64,584		52,118		170,253		167,416
Brokerage, exchange, clearance fees and payments for order flow, net									Brokerage, exchange, clearance fees and payments for order flow, net	158,862		196,448		588,885		573,769
Communication and data processing		45,998		17,903		83,190		53,578	Communication and data processing	55,627		51,647		159,824		162,336
Employee compensation and payroll taxes		72,341		20,816		111,053		64,182	Employee compensation and payroll taxes	84,552		35,798		273,172		327,091
Payments for order flow		12,071		—		12,071		—

Interest and dividends expense		31,242		15,615		58,456		43,249	Interest and dividends expense	26,586		27,374		75,585		97,656
Operations and administrative		24,183		5,543		38,107		16,198	Operations and administrative	18,228		24,612		65,636		73,480
Depreciation and amortization		15,602		7,158		29,157		22,685	Depreciation and amortization	16,636		16,656		49,764		50,728
Amortization of purchased intangibles and acquired capitalized software		6,440		53		6,546		159	Amortization of purchased intangibles and acquired capitalized software	16,933		18,265		53,087		56,177
Debt issue cost related to debt refinancing		4,869		—		9,351		—
Termination of office leases									Termination of office leases	238		60		5,126		343
Debt issue cost related to debt refinancing, prepayment and commitment fees									Debt issue cost related to debt refinancing, prepayment and commitment fees	1,237		9,916		4,981		27,282
Transaction advisory fees and expenses		15,677		—		24,188		155	Transaction advisory fees and expenses	167		2,463		150		2,737
Reserve for legal matter		—		—		(2,176)		—
Charges related to share based compensation at IPO		181		333		545		1,444

Financing interest expense on long-term borrowings		24,593		7,393		40,141		21,569	Financing interest expense on long-term borrowings	20,179		20,358		59,784		67,764
Total operating expenses		317,781		126,932		580,882		390,635	Total operating expenses	399,245		403,597		1,335,994		1,439,363
Income (loss) before income taxes and noncontrolling interest		(46,495)		37,874		(17,421)		140,990
Provision for (benefit from) income taxes		(6,505)		4,851		(2,918)		17,325
Net income (loss)		(39,990)		33,023		(14,503)		123,665
Income before income taxes and noncontrolling interest									Income before income taxes and noncontrolling interest	145,099		252,515		769,887		1,123,272
Provision for income taxes									Provision for income taxes	21,961		52,807		128,611		200,044
Net income									Net income	123,138		199,708		641,276		923,228
Noncontrolling interest		26,472		(25,997)		6,466		(97,913)	Noncontrolling interest	(52,631)		(82,999)		(268,454)		(386,311)
Net income (loss) available for common stockholders	$	(13,518)	$	7,026	$	(8,037)	$	25,752

Earnings (loss) per share
Net income available for common stockholders									Net income available for common stockholders	$	70,507	$	116,709	$	372,822	$	536,917

Earnings per share									Earnings per share
Basic	$	(0.17)		0.18	$	(0.17)		0.66	Basic	$	0.59	$	0.92	$	3.04	$	4.31
Diluted	$	(0.17)		0.18	$	(0.17)		0.66	Diluted	$	0.59	$	0.92	$	3.01	$	4.29

Weighted average common shares outstanding									Weighted average common shares outstanding
Basic		79,199,142		38,351,465		53,520,346		38,264,139	Basic	115,770,457		122,686,931		119,148,571		121,328,895
Diluted		79,199,142		38,351,465		53,520,346		38,264,139	Diluted	116,623,115		123,772,005		120,373,160		121,939,839

Net income (loss)	$	(39,990)	$	33,023	$	(14,503)	$	123,665
Other comprehensive income (loss)
Net income									Net income	$	123,138	$	199,708	$	641,276	$	923,228
Other comprehensive income									Other comprehensive income
Foreign exchange translation adjustment, net of taxes		2,558		519		8,300		1,783	Foreign exchange translation adjustment, net of taxes	(7,843)		7,812		(11,452)		3,860
Comprehensive income (loss)		(37,432)		33,542		(6,203)		125,448
Less: Comprehensive income (loss) attributable to noncontrolling interest		25,122		(26,370)		1,014		(99,195)
Comprehensive income (loss) attributable to common stockholders	$	(12,310)	$	7,172	$	(5,189)	$	26,253
Net change in unrealized cash flow hedges gain (loss), net of taxes									Net change in unrealized cash flow hedges gain (loss), net of taxes	3,498		314		18,197		(64,425)
Comprehensive income									Comprehensive income	118,793		207,834		648,021		862,663
Less: Comprehensive income attributable to noncontrolling interest									Less: Comprehensive income attributable to noncontrolling interest	(51,007)		(86,761)		(271,552)		(360,302)
Comprehensive income attributable to common stockholders									Comprehensive income attributable to common stockholders	$	67,786	$	121,073	$	376,469	$	502,361


													Additional		Retained		Accumulated
	Class A			Class C			Class D						Paid-in		Earnings		Other		Total		Non-
(in thousands, except	Common Stock			Common Stock			Common Stock			Treasury Stock			Capital		(Accumulated		Comprehensive		Stockholders'		Controlling		Total
share and interest data)	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		Amounts		Deficit)		Income (Loss)		Equity		Interest		Equity
Balance at December 31, 2015	38,379,858	$	—	20,976,598	$	—	79,610,490	$	1	(169,649)	$	(3,819)	$	130,902	$	3,525	$	99	$	130,708	$	427,162	$	557,870
Share based compensation	953,054		—	(58,070)		—	—		—	—		—		24,893		—		—		24,893		—		24,893
Repurchase of Class C common stock	—		—	(4,153)		—	—		—	—		—		(98)		—		—		(98)		—		(98)
Treasury stock purchases	—		—	—		—	—		—	(283,417)		(4,539)		—		—		—		(4,539)		—		(4,539)
Net income	—		—	—		—	—		—	—		—		—		32,980		—		32,980		125,360		158,340
Foreign exchange translation adjustment	—		—	—		—	—		—	—		—		—		—		(351)		(351)		(814)		(1,165)
Distribution from Virtu Financial to non-controlling interest	—		—	—		—	—		—	—		—		—		—		—		—		(162,969)		(162,969)
Dividends	—		—	—		—	—		—	—		—		—		(37,759)		—		(37,759)		—		(37,759)
Issuance of common stock in connection with secondary offering, net of offering costs	1,103,668		—	—		—	—		—	—		—		16,677		—		—		16,677		—		16,677
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with secondary offering	—		—	(1,103,668)		—	—		—	—		—		(17,383)		—		—		(17,383)		—		(17,383)
Issuance of tax receivable agreements in connection with secondary offering	—		—	—		—	—		—	—		—		545		—		—		545		—		545
Balance at December 31, 2016	40,436,580	$	—	19,810,707	$	—	79,610,490	$	1	(453,066)	$	(8,358)	$	155,536	$	(1,254)	$	(252)	$	145,673	$	388,739	$	534,412
Share based compensation	58,536		—	(34,019)		—	—		—	—		—		12,314		—		—		12,314		—		12,314
Repurchase of Class C common stock	—		—	(286,150)		—	—		—	—		—		(4,592)		—		—		(4,592)		—		(4,592)
Treasury stock purchases	—		—	—		—	—		—	(8,326)		(147)		—		—		—		(147)		—		(147)
Net income (loss)	—		—	—		—	—		—	—		—		—		(8,037)		—		(8,037)		(6,466)		(14,503)
Foreign exchange translation adjustment	—		—	—		—	—		—	—		—		—		—		2,848		2,848		5,452		8,300
Distribution from Virtu Financial to non-controlling interest	—		—	—		—	—		—	—		—		—		—		—		—		(65,573)		(65,573)
Dividends	—		—	—		—	—		—	—		—		—		(42,013)		—		(42,013)		—		(42,013)
Issuance of Class A common stock	48,076,924		1	—		—	—		—	—		—		735,973		—		—		735,974		—		735,974
Issuance of common stock in connection with employee exchanges	1,146,315		—	—		—	—		—	—		—		—		—		—		—		—		—
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges	—		—	(1,146,315)		—	—		—	—		—		—		—		—		—		—		—
Issuance of tax receivable agreements in connection with employee exchange	—		—	—		—	—		—	—		—		1,355		—		—		1,355		—		1,355
Balance at September 30, 2017	89,718,355		1	18,344,223		—	79,610,490		1	(461,392)		(8,505)		900,586		(51,304)		2,596		843,375		322,152		1,165,527


	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, 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	1,896,407	—		—	—		—	—		—	—		27,450		—		—		27,450		—		27,450

Treasury stock purchases	(615,794)	—		—	—		—	—		(2,277,409)	(63,359)		—		(16,059)		—		(79,418)		—		(79,418)
Stock options exercised	154,372	—		—	—		—	—		—	—		2,933		—		—		2,933		—		2,933

Net income	—	—		—	—		—	—		—	—		—		239,405		—		239,405		169,827		409,232
Foreign exchange translation adjustment	—	—		—	—		—	—		—	—		—		—		(2,165)		(2,165)		(1,511)		(3,676)
Net change in unrealized cash flow hedges gains (losses)	—	—		—	—		—	—		—	—		—		—		12,607		12,607		9,299		21,906
Dividends ($0.24 per share of Class A common stock and participating Restricted Stock Unit and Restricted Stock Awards) and distributions from Virtu Financial to noncontrolling interest	—	—		—	—		—	—		—	—		—		(30,147)		—		(30,147)		(159,239)		(189,386)

Issuance of common stock in connection with employee exchanges	91,757	—		—	—		—	—		—	—		—		—		—		—		—		—
Repurchase of Virtu Financial Units and corresponding number of Class C common stock in connection with employee exchanges	—	—		(91,757)	—		—	—		—	—		—		—		—		—		—		—
Balance at March 31, 2021	127,154,019	$	1	10,135,182	$	—	60,091,740	$	1	(5,892,506)	$	(152,282)	$	1,190,950	$	615,580	$	(15,045)	$	1,639,205	$	404,874	$	2,044,079
Share based compensation	32,916	—		—	—		—	—		—	—		7,444		—		—		7,444		—		7,444
Repurchase of Class C common stock	—	—		(45,622)	—		—	—		—	—		(1,323)		—		—		(1,323)		—		(1,323)
Treasury stock purchases	(5,489)	—		—	—		—	—		(3,358,003)	(101,305)		—		(114)		—		(101,419)		—		(101,419)
Stock options exercised	253,625	—		—	—��		—	—		—	—		4,819		—		—		4,819		—		4,819
Net income	—	—		—	—		—	—		—	—		—		62,910		—		62,910		45,997		108,907
Foreign exchange translation adjustment	—	—		—	—		—	—		—	—		—		—		43		43		23		66
Net change in unrealized cash flow hedges gains (losses)	—	—		—	—		—	—		—	—		—		—		(4,115)		(4,115)		(3,091)		(7,206)
Dividends ($0.24 per share of Class A and Class B common stock and participating Restricted Stock Unit and Restricted Stock Awards) and distributions from Virtu Financial to noncontrolling interest	—	—		—	—		—	—		—	—		—		(29,483)		—		(29,483)		(103,062)		(132,545)

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

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

Balance at June 30, 2021	127,725,595	$	1	9,799,036	$	—	60,091,740	$	1	(9,250,509)	$	(253,587)	$	1,201,890	$	648,893	$	(19,117)	$	1,578,081	$	344,741	$	1,922,822
Share based compensation	103,154	—		—	—		—	—		—	—		6,803				—		6,803				6,803
Repurchase of Class C common stock		—		(12,980)	—		—	—		—	—		(370)				—		(370)				(370)
Treasury stock purchases	(17,954)	—		—	—		—	—		(5,401,932)	(138,881)				(496)		—		(139,377)				(139,377)
Stock options exercised	39,000	—		—	—		—	—		—	—		741				—		741				741
Net income	—	—		—	—		—	—		—	—		—		70,507		—		70,507		52,631		123,138
Foreign exchange translation adjustment	—	—		—	—		—	—		—	—		—				(4,912)		(4,912)		(2,931)		(7,843)
Net change in unrealized cash flow hedges gains (losses)	—	—		—	—		—	—		—	—		—				2,191		2,191		1,307		3,498
Dividends ($0.24 per share of Class A and Class B common stock and participating Restricted Stock Unit and Restricted Stock Award) and distributions from Virtu Financial to noncontrolling interest	—	—		—	—		—	—		—	—		—		(28,336)		—		(28,336)		(80,363)		(108,699)


	For the Nine Months Ended September 30,
(in thousands)	2017		2016
Cash flows from operating activities
Net Income (loss)	$	(14,503)	$	123,665

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29,157		22,685
Amortization of purchased intangibles and acquired capitalized software		6,546		159
Debt issue cost related to debt refinancing		9,351		—
Amortization of debt issuance costs and deferred financing fees		3,470		1,396
Share based compensation		10,924		9,440
Reserve for legal matter		(2,176)		—
Equipment writeoff		1,335		428
Deferred taxes		1,489		9,345
Other		(444)		(1,267)
Changes in operating assets and liabilities:
Securities borrowed		101,046		58,484
Securities purchased under agreements to resell		8,645		14,981
Receivables from broker dealers and clearing organizations		21,241		(36,756)
Trading assets, at fair value		1,020,821		(142,754)
Other Assets		26,248		1,705
Securities loaned		194,523		(42,656)
Securities sold under agreements to repurchase		(220,719)		—
Payables to broker dealers and clearing organizations		(393,564)		(181,348)
Payables to customers		7,967		—
Trading liabilities, at fair value		(569,911)		339,469
Accounts payable and accrued expenses and other liabilities		(25,675)		10,166
Net cash provided by operating activities		215,771		187,142

Cash flows from investing activities
Development of capitalized software		(7,929)		(6,044)
Acquisition of property and equipment		(13,932)		(8,933)
Investment in SBI Japannext		—		(38,754)
Acquisition of KCG Holdings, net of cash acquired, described in Note 3		(799,303)		—
Acquisition of Teza Technologies		(5,594)		—
Proceeds from sale of DMM business		300		—
Net cash used in investing activities		(826,458)		(53,731)

Cash flows from financing activities
Distribution from Virtu Financial to non-controlling interest		(65,573)		(123,867)
Dividends		(42,013)		(28,117)
Purchase of treasury stock		(147)		—
Short-term borrowings, net		(10,000)		(27,400)
Payments on repurchase of non-voting common interest		(6,092)		(1,500)
Proceeds from long-term borrowings		1,115,036		33,078
Repayment of senior secured credit facility		(206,473)		(3,825)
Repayment of KCG Notes		(480,987)		—
Tax receivable agreement obligations		(7,045)		—
Debt issuance costs		(52,528)		(93)
Issuance of common stock, net of offering costs		735,973		16,677
Repurchase of Virtu Financial Units and corresponding number of Class A and C common stock in connection with secondary offering		—		(17,383)
Net cash provided by (used in) financing activities		980,151		(152,430)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash		8,300		1,783

Increase (decrease) in cash, cash equivalents, and restricted cash		377,764		(17,236)
Cash, cash equivalents, and Seg cash, beginning of period		181,415		163,235
Cash, cash equivalents, and Seg cash, end of period	$	559,179	$	145,999

Supplementary disclosure of cash flow information
Cash paid for interest	$	59,524	$	43,827
Cash paid for taxes	$	5,744	$	15,008

Non-cash investing activities
Share based compensation to developers relating to capitalized software	$	1,448	$	5,187
See Note 3 for a description of non-cash investing activities relating to the acquisition of KCG


						Maximum
	Carrying Amount					Exposure to
(in thousands)	Asset		Liability			loss		VIE's assets
Equity investment	$	15,925	$	—	$	15,925	$	40,925


(in thousands)
Cash and equivalents	$	592,993
Cash and securities segregated under federal regulations		3,000
Securities borrowed		1,406,444

Securities purchased under agreements to resell		16,894
Receivables from broker dealers and clearing organizations		553,031
Financial instruments owned, at fair value		2,095,339
Property, equipment and capitalized software (net)		112,204
Intangibles		156,300
Deferred taxes		22,928
Other assets		331,820
Total Assets	$	5,290,953

Securities loaned	$	166,189
Securities sold under agreements to repurchase		841,606
Payables to broker dealers and clearing organizations		536,653
Payables to customers		17,583
Financial instruments sold, not yet purchased, at fair value		1,756,647
Accounts payable and accrued expenses and other liabilities		239,004
Debt		480,987
Total Liabilities	$	4,038,669

Total identified assets acquired, net of assumed liabilities	$	1,252,284

Goodwill	$	143,012

Total Purchase Price	$	1,395,296


			Amortization
		Amount	Years
Technology	$	67,800	1-6 years
Customer relationships		77,100	13 - 17 years
Trade names		5,000	10 years
Exchange memberships		6,400	Indefinite
Intangible assets	$	156,300
Goodwill		143,012
Total	$	299,312



(in thousands)
Revenues	$	149,327
Income (loss) before income taxes		(12,578)


	For the Three Months Ended				For the Nine Months Ended
(in thousands, except per share amounts)		2017		2016		2017		2016
Revenue	$	304,020	$	373,338	$	1,068,164	$	1,401,819

Net income (loss)		(82,520)		1,783		(117,169)		163,146

Net income (loss) attributable to common stockholders		(30,432)		658		(43,210)		60,165

Diluted earnings (loss) per share	$	(0.35)	$	0.01	$	(0.48)	$	0.67


	Market		Execution
(in thousands)	Making		Services		Corporate		Total
Balance as of December 31, 2016	$	657,985	$	57,394	$	—	$	715,379
Additions		108,276		35,943		—		144,219
Balance as of September 30, 2017	$	766,261	$	93,337	$	—	$	859,598


(in thousands)
Remainder of 2021	$	16,580
2022	64,852
2023	63,960
2024	50,845
2025	47,879
2026	47,879


(in thousands)	September 30, 2021		December 31, 2020
Equities	$	947,661	$	734,024

Exchange traded notes	11,395		12,515
	$	959,056	$	746,539



	At September 30, 2017				At December 31, 2016
		Financing		Borrowing		Financing		Borrowing
(in thousands)		Available		Outstanding		Available		Outstanding
Broker-dealer credit facilities:
Uncommitted facility	$	125,000	$	15,000	$	125,000	$	25,000
Committed facility		—		—		75,000		—
	$	125,000	$	15,000	$	200,000	$	25,000

Short-Term Credit Facilities:
Short-term credit facilities (1)	$	543,000	$	159,128	$	493,000	$	309,086
	$	543,000	$	159,128	$	493,000	$	309,086


	September 30, 2021
(in thousands)	Borrowing Outstanding		Deferred Debt Issuance Cost		Short-term Borrowings, net
Broker-dealer credit facilities	$	178,000	$	(1,881)	$	176,119
Short-term bank loans	136,695		—		136,695

	$	314,695	$	(1,881)	$	312,814



		At September 30, 2017				At December 31, 2016
	Maturity		Unused Available		Borrowing		Unused Available		Borrowing
(in thousands)	Date		Capacity		Outstanding		Capacity		Outstanding
Long-term borrowings:
Senior secured credit facility	December 2021	$	n/a	$	928,089	$	n/a	$	535,104
Senior secured Second Lien Notes	June 2022		n/a		475,485		n/a		n/a
Revolving credit facility	April 2018		—		—		100,000		—
SBI bonds	January 2020		n/a		31,055		n/a		29,853
		$	0	$	1,434,629	$	100,000	$	564,957


	At September 30, 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	$	178,000	$	(1,881)	$	176,119
Committed facility	2.61%	600,000		—		—		—


		$	1,000,000	$	178,000	$	(1,881)	$	176,119


	At December 31, 2020
(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	$	36,400	$	(387)	$	36,013
Committed facility	1.40%	600,000		—		—		—
		$	1,000,000	$	36,400	$	(387)	$	36,013


	At September 30, 2021
(in thousands)	Weighted Average Interest Rate	Financing Available		Borrowing Outstanding
Prime Brokerage Credit Facilities:
Prime brokerage credit facilities (1)	2.78%	$	616,000	$	202,480
		$	616,000	$	202,480


		At September 30, 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	3.08%	$	1,599,774	$	(3,949)	$	(23,187)	$	1,572,638

SBI bonds	January 2023	5.00%	31,450		—		(26)		31,424
			$	1,631,224	$	(3,949)	$	(23,213)	$	1,604,062


Period			Percentage
2019			103.375%
2020			101.688%
2021 and thereafter			100.000%


(in thousands)
2017	$	—
2018		—
2019		—
2020 and thereafter		1,481,108
Total principal of long-term borrowings	$	1,481,108


		At September 30,		At December 31,
(in thousands)	2017		2016
Senior secured first lien term loan outstanding principal	$	950,000	$	540,000
Senior secured second lien notes outstanding principal		500,000		—
SBI Bonds outstanding principal		31,108		29,925
Net deferred financing fees		(45,237)		(4,012)
Net discount on senior secured credit facility		(1,242)		(956)
Long-term borrowings	$	1,434,629	$	564,957


	September 30, 2017
	Quoted Prices		Significant
	in Active		Other		Significant		Counterparty
	Markets for		Observable		Unobservable		and Cash
	Identical Assets		Inputs		Inputs		Collateral		Total Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Netting		Value
Assets
Financial instruments owned, at fair value:
Equity securities	$	591,928	$	1,434,092	$	—	$	—	$	2,026,020
U.S. and Non-U.S. government obligations		2,783		21,002		—		—		23,785
Corporate Bonds		—		83,532		—		—		83,532
Exchange traded notes		4,553		53,081		—		—		57,634
Currency forwards		—		3,459,340		—		(3,458,283)		1,057
Options		11,220		—		—		—		11,220
	$	610,484	$	5,051,047	$	—	$	(3,458,283)	$	2,203,248
Financial instruments owned, pledged as collateral:
Equity securities	$	413,860	$	278,270	$	—	$	—	$	692,130
Exchange traded notes		520		6,502		—		—		7,022
	$	414,380	$	284,772	$	—	$	—	$	699,152
Other Assets
Equity investment	$	—	$	—	$	37,263	$	—	$	37,263
Exchange stock		3,211		—		—		—		3,211
Other(1)		—		55,363		3,000		—		58,363
	$	3,211	$	55,363	$	40,263	$	—	$	98,837
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equity securities	$	895,116	$	1,470,863	$	—	$	—	$	2,365,979
U.S. and Non-U.S. government obligations		10,375		14,975		—		—		25,350
Corporate Bonds		—		83,535				—		83,535
Exchange traded notes		355		50,327		—		—		50,682
Currency forwards		—		3,492,928		—		(3,492,847)		81
Options		10,264		—		—		—		10,264
	$	916,110	$	5,112,628	$	—	$	(3,492,847)	$	2,535,891


	September 30, 2021
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting		Total Fair Value
Assets
Financial instruments owned, at fair value:
Equity securities	$	436,245	$	2,117,572	$	—	$	—	$	2,553,817
U.S. and Non-U.S. government obligations	216,125		19,947		—		—		236,072
Corporate Bonds	—		201,086		—		—		201,086
Exchange traded notes	427		8,285		—		—		8,712
Currency forwards	—		311,230		—		(300,399)		10,831
Options	8,320		—		—		—		8,320
	$	661,117	$	2,658,120	$	—	$	(300,399)	$	3,018,838

Financial instruments owned, pledged as collateral:
Equity securities	$	576,478	$	371,183	$	—	$	—	$	947,661

Exchange traded notes	5,389		6,006		—		—		11,395
	$	581,867	$	377,189	$	—	$	—	$	959,056

Other Assets
Equity investment	$	—	$	—	$	85,317	$	—	$	85,317
Exchange stock	2,609		—		—		—		2,609
	$	2,609	$	—	$	85,317	$	—	$	87,926

Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equity securities	$	1,336,070	$	825,070	$	—	$	—	$	2,161,140
U.S. and Non-U.S. government obligations	285,997		12,747		—		—		298,744
Corporate Bonds	—		349,299		—		—		349,299
Exchange traded notes	835		4,750		—		—		5,585
Currency forwards	—		316,352		—		(308,611)		7,741
Options	49,140		—		—		—		49,140
	$	1,672,042	$	1,508,218	$	—	$	(308,611)	$	2,871,649

Payables to broker dealers and clearing organizations:
Interest rate swap	$	—	$	43,608	$	—	$	—	$	43,608


	December 31, 2016
	Quoted
	Prices in
	Active		Significant
	Markets for		Other		Significant		Counterparty
	Identical		Observable		Unobservable		and Cash
	Assets		Inputs		Inputs		Collateral		Total Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Netting		Value
Assets
Financial instruments owned, at fair value:
Equity securities	$	1,597,049	$	31,988	$	—	$	—	$	1,629,037
Non-U.S. government obligations		—		10,765		—		—		10,765
Exchange traded notes		37,034		—		—		—		37,034
Currency forwards		—		1,147,261		—		(1,140,239)		7,022
Options		—		141		—		—		141
	$	1,634,083	$	1,190,155	$	—	$	(1,140,239)	$	1,683,999
Financial instruments owned, pledged as collateral:
Equity securities	$	128,202	$	—	$	—	$	—	$	128,202
Exchange traded notes		15,681		—		—		—		15,681
	$	143,883	$	—	$	—	$	—	$	143,883
Other Assets
Equity investment	$	—	$	—	$	36,031	$	—	$	36,031
Exchange stock		449		—		—		—		449
	$	449	$	—	$	36,031	$	—	$	36,480
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equity securities	$	1,323,693	$	6,638	$	—	$	—	$	1,330,331
Exchange traded notes		18,744		—		—		—		18,744
Currency forwards		—		1,009,038		—		(1,009,038)		—
Options		—		80		—		—		80
	$	1,342,437	$	1,015,756	$	—	$	(1,009,038)	$	1,349,155


		Nine Months Ended September 30, 2017
											Change in Net
											Unrealized Gains
											/ (Losses) on
											Investments
	Balance at				Total Realized		Net Transfers		Balance at		still held at
	December 31,				and Unrealized		into (out of)		September 30,		September 30,			Three Months Ended September 30, 2021
(in thousands)	2016		Purchases		Gains / (Losses)		Level 3		2017		2017		(in thousands)	Balance at June 30, 2021		Purchases		Total Realized and Unrealized Gains / (Losses) (1)		Net Transfers into (out of) Level 3		Settlement		Balance at September 30, 2021		Change in Net Unrealized Gains / (Losses) on Investments still held at September 30, 2021
Assets													Assets
Other assets:													Other assets:
Equity investment	$	36,031	$	—	$	1,232	$	—	$	37,263	$	1,232	Equity investment	$	78,313	$	—	$	7,004	$	—	$	—	$	85,317	$	7,004
Other		—		3,000		—		—		3,000		—

Total	$	36,031	$	3,000	$	1,232	$	—	$	40,263	$	1,232	Total	$	78,313	$	—	$	7,004	$	—	$	—	$	85,317	$	7,004
(1) Total realized and unrealized gains/(losses) includes gains and losses realized on the SBI Bonds (see Note 9 "Borrowings" for more details) due to fluctuations in currency rates as well as gains and losses recognized on changes in the fair value of the JNX Investment.													(1) Total realized and unrealized gains/(losses) includes gains and losses realized on the SBI Bonds (see Note 9 "Borrowings" for more details) due to fluctuations in currency rates as well as gains and losses recognized on changes in the fair value of the JNX Investment.


	Three Months Ended September 30, 2020
(in thousands)	Balance at June 30, 2020		Purchases		Total Realized and Unrealized Gains / (Losses) (1)		Net Transfers into (out of) Level 3		Settlement		Balance at September 30, 2020		Change in Net Unrealized Gains / (Losses) on Investments still held at September 30, 2020
Assets
Other assets:
Equity investment	$	51,599	$	—	$	13,104	$	—	$	—	$	64,703	$	13,104

Total	$	51,599	$	—	$	13,104	$	—	$	—	$	64,703	$	13,104
(1) Total realized and unrealized gains/(losses) includes gains and losses realized on the SBI Bonds (see Note 9 "Borrowings" for more details) due to fluctuations in currency rates as well as gains and losses recognized on changes in the fair value of the JNX Investment.


	Nine Months Ended September 30, 2020
(in thousands)	Balance at December 31, 2019		Purchases		Total Realized and Unrealized Gains / (Losses) (1)		Net Transfers into (out of) Level 3		Settlement		Balance at September 30, 2020		Change in Net Unrealized Gains / (Losses) on Investments still held at September 30, 2020
Assets
Other assets:
Equity investment	$	46,245	$	—	$	18,458	$	—	$	—	$	64,703	$	18,458

Total	$	46,245	$	—	$	18,458	$	—	$	—	$	64,703	$	18,458
(1) Total realized and unrealized gains/(losses) includes gains and losses realized on the SBI Bonds (see Note 9 "Borrowings" for more details) due to fluctuations in currency rates as well as gains and losses recognized on changes in the fair value of the JNX Investment.