INTRODUCTORY NOTE

The financial statements and other disclosures contained in this report include those of Tradeweb Markets Inc., which is the registrant, and those of its consolidating subsidiaries, including Tradeweb Markets LLC, which became the principal operating subsidiary of Tradeweb Markets Inc. on April 4, 2019 in a series of reorganization transactions (the “Reorganization Transactions”) that were completed in connection with Tradeweb Markets Inc.’s initial public offering (the “IPO”), which closed on April 8, 2019. For more information regarding the transactions described above, see Note 1 – Organization to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

The financial statements and other disclosures contained in this Quarterly Report on Form 10-Q relate to periods that ended both prior to and after the completion of the Reorganization Transactions and the IPO. As a result of the Reorganization Transactions completed in connection with the IPO, Tradeweb Markets Inc. became a holding company whose only material assets consist of its equity interest in Tradeweb Markets LLC and related deferred tax assets. As the sole manager of Tradeweb Markets LLC, Tradeweb Markets Inc. operates and controls all of the business and affairs of Tradeweb Markets LLC and, through Tradeweb Markets LLC and its subsidiaries, conducts its business. As a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in Tradeweb Markets LLC, Tradeweb Markets Inc. consolidates the financial results of Tradeweb Markets LLC and its subsidiaries.

The unaudited consolidated financial statements and other financial disclosures included elsewhere in this Quarterly Report on Form 10-Q relating to periods prior to and including March 31, 2019, which we sometimes refer to as the “pre-IPO period,” reflect the results of operations, financial position and cash flows of Tradeweb Markets LLC, the predecessor of Tradeweb Markets Inc. for financial reporting purposes, and its subsidiaries. The unaudited consolidated financial statements and other financial disclosures included elsewhere in this Quarterly Report on Form 10-Q relating to periods beginning on April 1, 2019, and through and including ~~March 31,~~June 30, 2020, which we sometimes refer to as the “post-IPO period,” reflect the results of operations, financial position and cash flows of Tradeweb Markets Inc. and its subsidiaries, including the consolidation of its investment in Tradeweb Markets LLC. As a result, for financial reporting purposes, the pre-IPO period excludes, and the post-IPO period includes, our financial results from April 1, 2019 through April 3, 2019, which are not material. The unaudited consolidated financial statements and other financial disclosures included elsewhere in this Quarterly Report on Form 10-Q do not reflect what the results of operations, financial position or cash flows would have been had the Reorganization Transactions and the IPO taken place at the beginning of the periods presented.

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:



•“We,” “us,” “our,” the “Company,” “Tradeweb” and similar references refer: (i) on or prior to the completion of the Reorganization Transactions to Tradeweb Markets LLC, which we refer to as “TWM LLC,” and, unless otherwise stated or the context otherwise requires, all of its subsidiaries and any predecessor entities, and (ii) following the completion of the Reorganization Transactions to Tradeweb Markets Inc., and, unless otherwise stated or the context otherwise requires, TWM LLC and all of its subsidiaries and any predecessor entities.

“Bank Stockholders” refer collectively to entities affiliated with the following clients: Barclays Capital Inc., BofA Securities Inc. (a subsidiary of Bank of America Corporation), Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBS Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC. Following the IPO and the application of the net proceeds therefrom, entities affiliated with BofA Securities, Inc., RBS Securities Inc. and UBS Securities LLC no longer hold LLC Interests and, except as otherwise indicated, are not considered Bank Stockholders for post-IPO periods.

•“Bank Stockholders” refer collectively to entities affiliated with the following clients: Barclays Capital Inc., BofA Securities Inc. (a subsidiary of Bank of America Corporation), Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBS Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC. Following the IPO and the application of the net proceeds therefrom, entities affiliated with BofA Securities, Inc., RBS Securities Inc. and UBS Securities LLC no longer hold LLC Interests and, except as otherwise indicated, are not considered Bank Stockholders for post-IPO periods.



•“Continuing LLC Owners” refer collectively to (i) those Original LLC Owners, including an indirect subsidiary of Refinitiv (as defined below), certain of the Bank Stockholders and members of management, that continue to own LLC Interests after the completion of the IPO and Reorganization Transactions, that received shares of our Class C common stock, shares of our Class D common stock or a combination of both, as the case may be, in

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connection with the completion of the Reorganization Transactions, and that may redeem or exchange their LLC Interests for shares of our Class A common stock or Class B common stock and (ii) solely with respect to the Tax Receivable Agreement (as defined below), also includes those Original LLC Owners, including certain Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO.



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•“Investor Group” refer to certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.), an affiliate of Canada Pension Plan Investment Board, an affiliate of GIC Special Investments Pte. Ltd. and certain co-investors, which collectively hold indirectly a 55% ownership interest in Refinitiv (as defined below).



•“LLC Interests” refer to the single class of common membership interests of TWM LLC issued in connection with the Reorganization Transactions.



•“LSEG Transaction” refer to the acquisition of the Refinitiv business by London Stock Exchange Group plc in an all share transaction for a total enterprise value of approximately $27 billion.



•“Original LLC Owners” refer to the owners of TWM LLC prior to the Reorganization Transactions.



•“Refinitiv” refer to Refinitiv Holdings Limited, and unless otherwise stated or the context otherwise requires, all of its subsidiaries, which owns substantially all of the former financial and risk business of Thomson Reuters (as defined below), including, prior to and following the completion of the Reorganization Transactions, an indirect majority ownership interest in Tradeweb, and is controlled by the Investor Group.



•“Refinitiv Transaction” refer to the transaction pursuant to which Refinitiv indirectly acquired on October 1, 2018 substantially all of the financial and risk business of Thomson Reuters and Thomson Reuters indirectly acquired a 45% ownership interest in Refinitiv.



•“Thomson Reuters” refer to Thomson Reuters Corporation, which indirectly holds a 45% ownership interest in Refinitiv.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “projection,” “seek,” “should,” “will” or “would,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the markets in which we operate, including our expectations about market trends, our market opportunity and the growth of our various markets, our expansion into new markets, any potential tax savings we may realize as a result of our organizational structure, our dividend policy and our expectations, beliefs, plans, strategies, objectives, prospects or assumptions regarding future events, including the pending LSEG Transaction, our performance or otherwise, contained in this Quarterly Report on Form 10-Q are forward-looking statements. In addition, statements contained in this Quarterly Report on Form 10-Q relating to the COVID-19 pandemic, the potential impacts of which are inherently uncertain, are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements, or could affect our share price.

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Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:



•changes in economic, political, social and market conditions and the impact of these changes on trading volumes;



•our failure to compete successfully;



•our failure to adapt our business effectively to keep pace with industry changes;



•consolidation and concentration in the financial services industry;



•our dependence on dealer clients that are also stockholders;



•our inability to maintain and grow the capacity of our trading platforms, systems and infrastructure;



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•design defects, errors, failures or delays with our platforms or solutions;



•systems failures, interruptions, delays in services, cybersecurity incidents, catastrophic events and any resulting interruptions;



•our dependence on third parties for certain market data and certain key functions;



•our ability to implement our business strategies profitably;



•our ability to successfully integrate any acquisition or to realize benefits from any strategic alliances, partnerships or joint ventures;



•our ability to retain the services of certain members of our management;



•inadequate protection of our intellectual property;



•extensive regulation of our industry;



•limitations on operating our business and incurring additional indebtedness as a result of covenant restrictions under our $500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”) with Citibank, N.A., as administrative agent and collateral agent, and the other lenders party thereto, and certain Refinitiv indebtedness;



•our dependence on distributions from TWM LLC to fund our expected dividend payments and to pay our taxes and expenses, including payments under the tax receivable agreement (the “Tax Receivable Agreement”) entered into in connection with the IPO;



•our ability to realize any benefit from our organizational structure;



•Refinitiv’s control of us and our status as a controlled company; and

other risks and uncertainties, including those listed under “Item 1A. Risk Factors” of our Annual Report on Form 10-K, as amended, for the year ended December 31, 2019 (the “2019 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”), “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q, and in other filings we may make from time to time with the SEC.

•other risks and uncertainties, including those listed under “Item 1A. Risk Factors” of our Annual Report on Form 10-K, as amended, for the year ended December 31, 2019 (the “2019 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”), “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q, and in other filings we may make from time to time with the SEC.

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Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance and our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition or liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods.

Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.

Investors and others should note that we announce material financial and operational information using our investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about Tradeweb, our business and our results of operations may also be announced by posts on Tradeweb’s accounts on the following social media channels: Instagram, LinkedIn and Twitter. The information that we post through these social media channels may be deemed material. As a result, we encourage investors, the media and others interested in Tradeweb to monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website.

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PART I — FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(in thousands, except share and per share ~~data)~~

amounts)

(Unaudited)


	March 31,		December 31,
	2020		2019			June 30, 2020		December 31, 2019
Assets					Assets
Cash and cash equivalents	$	424,357	$	460,711	Cash and cash equivalents	$	559,889	$	460,711
Restricted cash		1,000		1,000	Restricted cash	1,000		1,000
Receivable from brokers and dealers and clearing organizations		95,908		30,641	Receivable from brokers and dealers and clearing organizations	66,821		30,641
Deposits with clearing organizations		11,307		9,724	Deposits with clearing organizations	10,955		9,724
Accounts receivable, net of allowance for credit losses of $150 and $195 at March 31, 2020 and December 31, 2019, respectively		133,468		92,814
Accounts receivable, net of allowance for credit losses of $115 and $195 at June 30, 2020 and December 31, 2019, respectively					Accounts receivable, net of allowance for credit losses of $115 and $195 at June 30, 2020 and December 31, 2019, respectively	101,512		92,814
Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization		37,061		40,405	Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization	35,733		40,405
Right-of-use assets		27,281		24,504	Right-of-use assets	25,012		24,504
Software development costs, net of accumulated amortization		172,100		173,086	Software development costs, net of accumulated amortization	171,155		173,086
Goodwill		2,694,797		2,694,797	Goodwill	2,694,797		2,694,797
Intangible assets, net of accumulated amortization		1,256,589		1,281,441	Intangible assets, net of accumulated amortization	1,231,737		1,281,441
Receivable from affiliates		1,506		2,525	Receivable from affiliates	1,482		2,525
Deferred tax asset		291,920		256,450	Deferred tax asset	525,534		256,450
Other assets		37,422		27,236	Other assets	38,254		27,236
Total assets	$	5,184,716	$	5,095,334	Total assets	$	5,463,881	$	5,095,334

Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Liabilities					Liabilities
Payable to brokers and dealers and clearing organizations	$	55,157	$	30,452	Payable to brokers and dealers and clearing organizations	$	66,697	$	30,452
Accrued compensation		58,016		119,415	Accrued compensation	71,879		119,415
Deferred revenue		26,269		23,990	Deferred revenue	27,428		23,990
Accounts payable, accrued expenses and other liabilities		46,134		32,834	Accounts payable, accrued expenses and other liabilities	39,258		32,834
Employee equity compensation payable		1,037		1,048	Employee equity compensation payable	1,642		1,048
Lease liability		33,366		30,955	Lease liability	30,306		30,955
Payable to affiliates		2,288		1,506	Payable to affiliates	3,164		1,506
Deferred tax liability		21,572		21,572	Deferred tax liability	21,411		21,572
Tax receivable agreement liability		252,029		240,817	Tax receivable agreement liability	372,953		240,817
Total liabilities		495,868		502,589	Total liabilities	634,738		502,589

Commitments and contingencies (Note 14)					Commitments and contingencies (Note 14)

Stockholders' Equity					Stockholders' Equity
Preferred stock, $.00001 par value; 250,000,000 shares authorized; none issued or outstanding		—		—
Class A common stock, $.00001 par value; 1,000,000,000 shares authorized; 70,670,440 shares issued and outstanding as of March 31, 2020		1		1
Class B common stock, $.00001 par value; 450,000,000 shares authorized; 96,933,192 shares issued and outstanding as of March 31, 2020		1		1
Class C common stock, $.00001 par value; 350,000,000 shares authorized; 7,389,983 shares issued and outstanding as of March 31, 2020		—		—
Class D common stock, $.00001 par value; 300,000,000 shares authorized; 49,871,231 shares issued and outstanding as of March 31, 2020		—		1
Preferred stock, $.00001 par value; 250,000,000 shares authorized; NaN issued or outstanding					Preferred stock, $.00001 par value; 250,000,000 shares authorized; NaN issued or outstanding	—		—
Class A common stock, $.00001 par value; 1,000,000,000 shares authorized; 90,642,108 shares issued and outstanding as of June 30, 2020					Class A common stock, $.00001 par value; 1,000,000,000 shares authorized; 90,642,108 shares issued and outstanding as of June 30, 2020	1		1
Class B common stock, $.00001 par value; 450,000,000 shares authorized; 96,933,192 shares issued and outstanding as of June 30, 2020					Class B common stock, $.00001 par value; 450,000,000 shares authorized; 96,933,192 shares issued and outstanding as of June 30, 2020	1		1
Class C common stock, $.00001 par value; 350,000,000 shares authorized; 5,109,991 shares issued and outstanding as of June 30, 2020					Class C common stock, $.00001 par value; 350,000,000 shares authorized; 5,109,991 shares issued and outstanding as of June 30, 2020	—		—
Class D common stock, $.00001 par value; 300,000,000 shares authorized; 34,403,255 shares issued and outstanding as of June 30, 2020					Class D common stock, $.00001 par value; 300,000,000 shares authorized; 34,403,255 shares issued and outstanding as of June 30, 2020	—		1
Additional paid-in capital		3,426,625		3,329,386	Additional paid-in capital	3,922,559		3,329,386
Accumulated other comprehensive income (loss)		(2,179)		1,366	Accumulated other comprehensive income (loss)	(2,693)		1,366
Retained earnings		78,361		47,833	Retained earnings	94,374		47,833
Total stockholders' equity attributable to Tradeweb Markets Inc.		3,502,809		3,378,588	Total stockholders' equity attributable to Tradeweb Markets Inc.	4,014,242		3,378,588
Non-controlling interests		1,186,039		1,214,157	Non-controlling interests	814,901		1,214,157
Total equity		4,688,848		4,592,745	Total equity	4,829,143		4,592,745
Total liabilities and stockholders' equity	$	5,184,716	$	5,095,334	Total liabilities and stockholders' equity	$	5,463,881	$	5,095,334

The accompanying notes are an integral part of these consolidated financial statements.

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Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Income

(in thousands, except share and per share ~~data)~~

~~(Unaudited)~~

Three Months Ended

Three Months Ended

March 31, 2020

March 31, 2019
Revenues

Transaction fees

$
140,824

$
102,640
Subscription fees

34,483

34,445
Commissions

42,493

34,197
Refinitiv market data fees

14,628

13,616
Other

2,178

1,894
Gross revenue

234,606

186,792

Expenses




Employee compensation and benefits

90,520

77,273
Depreciation and amortization

37,176

33,503
Technology and communications

10,318

10,040
General and administrative

8,340

9,089
Professional fees

6,911

6,971
Occupancy

3,726

3,639
Total expenses

156,991

140,515
Operating income

77,615

46,277
Net interest income

699

858
Income before taxes

78,314

47,135
Provision for income taxes

(15,829)

(4,783)
Net income

62,485

$
42,352
Less: Net income attributable to non-controlling interests

18,557

Net income attributable to Tradeweb Markets Inc.

$
43,928

EPS calculations for post-IPO and pre-IPO periods (1)

Earnings per share



Basic

$
0.26 (a)

$
0.19 (b)
Diluted

$
0.25 (a)

$
0.19 (b)
Weighted average shares outstanding



Basic

166,234,749 (a)

222,222,197 (b)
Diluted

174,517,244 (a)

223,320,457 (b)

~~(1)~~

In April 2019, the Company completed the Reorganization Transactions and the IPO, which, among other things, resulted in Tradeweb Markets Inc. becoming the successor of Tradeweb Markets LLC for financial reporting purposes. As a result, earnings per share information for the pre-IPO period is not comparable to the earnings per share information for the post-IPO period. Therefore, earnings per share information is being presented separately for the pre-IPO and post-IPO periods. See Note 15 – Earnings Per Share for additional information.

amounts)

~~Presents information for Tradeweb Markets Inc. (post-IPO period).~~

(Unaudited)

~~Presents information for Tradeweb Markets LLC (pre-IPO period).~~


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenues
Transaction fees	$	122,146	$	103,952	$	262,970	$	206,592
Subscription fees	35,006		34,566		69,489		69,011
Commissions	38,115		36,413		80,608		70,610
Refinitiv market data fees	14,565		13,385		29,193		27,001
Other	2,275		2,169		4,453		4,063
Gross revenue	212,107		190,485		446,713		377,277

Expenses
Employee compensation and benefits	88,866		95,995		179,386		173,268
Depreciation and amortization	37,919		34,292		75,095		67,795
Technology and communications	12,042		9,519		22,360		19,559
General and administrative	7,523		9,365		15,863		18,454
Professional fees	6,609		6,738		13,520		13,709
Occupancy	3,509		3,621		7,235		7,260
Total expenses	156,468		159,530		313,459		300,045
Operating income	55,639		30,955		133,254		77,232
Net interest income (expense)	(286)		175		413		1,033
Income before taxes	55,353		31,130		133,667		78,265
Provision for income taxes	(12,945)		(6,314)		(28,774)		(11,097)
Net income	42,408		24,816		104,893		67,168
Less: Pre-IPO net income attributable to Tradeweb Markets LLC	—		—		—		42,352
Net income attributable to Tradeweb Markets Inc. and non-controlling interests	42,408		24,816		104,893		24,816
Less: Net income attributable to non-controlling interests	11,912		11,988		30,469		11,988
Net income attributable to Tradeweb Markets Inc.	$	30,496	$	12,828	$	74,424	$	12,828

EPS calculations for post-IPO and pre-IPO periods ⁽¹⁾
Earnings per share
Basic	0.17^(a)		0.09^(a)		0.43^(a)		0.19^(b) / 0.09^(a)
Diluted	0.16^(a)		0.09^(a)		0.41^(a)		0.19^(b) / 0.09^(a)
Weighted average shares outstanding
Basic	177,649,501^(a)		142,933,192^(a)		171,942,125^(a)		222,222,197^(b) / 142,933,192^(a)
Diluted	185,489,824^(a)		150,847,183^(a)		180,008,891^(a)		223,320,457^(b) / 150,847,183^(a)

(1)In April 2019, the Company completed the Reorganization Transactions and the IPO, which, among other things, resulted in Tradeweb Markets Inc. becoming the successor of Tradeweb Markets LLC for financial reporting purposes. As a result, earnings per share information for the pre-IPO period is not comparable to the earnings per share information for the post-IPO period. Therefore, earnings per share information is being presented separately for the pre-IPO and post-IPO periods. See Note 15 – Earnings Per Share for additional information.

a)Presents information for Tradeweb Markets Inc. (post-IPO period).

b)Presents information for Tradeweb Markets LLC (pre-IPO period).

The accompanying notes are an integral part of these consolidated financial statements.

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Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands)

(Unaudited)

Three Months Ended

Three Months Ended

March 31, 2020

March 31, 2019
Comprehensive income - Pre-IPO attributable to Tradeweb Markets LLC

Pre-IPO net income attributable to Tradeweb Markets LLC

$
—

$
42,352
Other comprehensive income:

Foreign currency translation adjustments attributable to Tradeweb Markets LLC

—

988
Pre-IPO comprehensive income attributable to Tradeweb Markets LLC

$
—

$
43,340

Comprehensive income - Tradeweb Markets Inc.

Net income attributable to Tradeweb Markets Inc.

$
43,928

Other comprehensive income:

Foreign currency translation adjustments attributable to Tradeweb Markets Inc.

(3,552)

Comprehensive income attributable to Tradeweb Markets Inc.

$
40,376

Comprehensive income - Non-controlling interests

Net income attributable to non-controlling interests

$
18,557

Other comprehensive income:

Foreign currency translation adjustments attributable to non-controlling interests

(1,232)

Comprehensive income attributable to non-controlling interests

$
17,325


	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Comprehensive income - Tradeweb Markets Inc.
Net income attributable to Tradeweb Markets Inc.	$	30,496	$	12,828	$	74,424	$	12,828
Other comprehensive income:
Foreign currency translation adjustments attributable to Tradeweb Markets Inc.	(265)		(647)		(3,817)		(647)
Comprehensive income attributable to Tradeweb Markets Inc.	$	30,231	$	12,181	$	70,607	$	12,181

Comprehensive income - Non-controlling interests
Net income attributable to non-controlling interests	$	11,912	$	11,988	$	30,469	$	11,988
Other comprehensive income:
Foreign currency translation adjustments attributable to non-controlling interests	(71)		(359)		(1,303)		(359)
Comprehensive income attributable to non-controlling interests	$	11,841	$	11,629	$	29,166	$	11,629

Comprehensive income - Pre-IPO attributable to Tradeweb Markets LLC
Pre-IPO net income attributable to Tradeweb Markets LLC							$	42,352
Other comprehensive income:
Foreign currency translation adjustments attributable to Tradeweb Markets LLC							988
Pre-IPO comprehensive income attributable to Tradeweb Markets LLC							$	43,340

The accompanying notes are an integral part of these consolidated financial statements.

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Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(in thousands, except share ~~and per share~~ amounts)

(Unaudited)


																								Class A Common Stock				Class B Common Stock					Class C Common Stock					Class D Common Stock						Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Non- Controlling Interests	Total Stockholders' Equity
	Class A Common Stock			Class B Common Stock			Class C Common Stock			Class D Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Non-Controlling Interests		Total Stockholders' Equity			Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	Shares		Amount	Shares		Amount	Shares		Amount	Shares		Amount
Balance at December 31, 2019	66,408,328	$	1	96,933,192	$	1	8,328,983	$	—	50,853,172	$	1	$	3,329,386	$	1,366	$	47,833	$	1,214,157	$	4,592,745	Balance at December 31, 2019	66,408,328	$	1	96,933,192	$	1	8,328,983	$	—	50,853,172	$	1	$	3,329,386	$	1,366	$	47,833	$	1,214,157	$	4,592,745
Activities related to exchanges of LLC Interests, net of offering costs and cancellations	1,920,941		—	—		—	(939,000)		—	(981,941)		(1)		(335)		—		—		—		(336)	Activities related to exchanges of LLC Interests, net of offering costs and cancellations	1,920,941	—		—	—		(939,000)	—		(981,941)	(1)		(335)		—		—		—		(336)
Issuance of common stock from equity incentive plans	2,341,171		—	—		—	—		—	—		—		35,422		—		—		—		35,422	Issuance of common stock from equity incentive plans	2,341,171	—		—	—		—	—		—	—		35,422		—		—		—		35,422
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges	—		—	—		—	—		—	—		—		32,736		—		—		—		32,736	Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges	—	—		—	—		—	—		—	—		32,736		—		—		—		32,736
Adjustments to non-controlling interests	—		—	—		—	—		—	—		—		45,436		7		—		(45,443)		—	Adjustments to non-controlling interests	—	—		—	—		—	—		—	—		45,436		7		—		(45,443)		—
Dividends ($0.08 per share)	—		—	—		—	—		—	—		—		—		—		(13,400)		—		(13,400)	Dividends ($0.08 per share)	—	—		—	—		—	—		—	—		—		—		(13,400)		—		(13,400)
Stock-based compensation expense under the PRSU Plan	—		—	—		—	—		—	—		—		5,407		—		—		—		5,407	Stock-based compensation expense under the PRSU Plan	—	—		—	—		—	—		—	—		5,407		—		—		—		5,407
Stock-based compensation expense under the RSU Plan	—		—	—		—	—		—	—		—		315		—		—		—		315	Stock-based compensation expense under the RSU Plan	—	—		—	—		—	—		—	—		315		—		—		—		315
Stock-based compensation expense under the Option Plan	—		—	—		—	—		—	—		—		2,249		—		—		—		2,249	Stock-based compensation expense under the Option Plan	—	—		—	—		—	—		—	—		2,249		—		—		—		2,249
Payroll taxes paid for stock-based compensation exercises	—		—	—		—	—		—	—		—		(23,991)		—		—		—		(23,991)	Payroll taxes paid for stock-based compensation exercises	—	—		—	—		—	—		—	—		(23,991)		—		—		—		(23,991)
Net income	—		—	—		—	—		—			—		—		—		43,928		18,557		62,485	Net income	—	—		—	—		—	—			—		—		—		43,928		18,557		62,485
Foreign currency translation adjustments	—		—	—		—	—		—	—		—		—		(3,552)		—		(1,232)		(4,784)	Foreign currency translation adjustments	—	—		—	—		—	—		—	—		—		(3,552)		—		(1,232)		(4,784)
Balance at March 31, 2020	70,670,440	$	1	96,933,192	$	1	7,389,983	$	—	49,871,231	$	—	$	3,426,625	$	(2,179)	$	78,361	$	1,186,039	$	4,688,848	Balance at March 31, 2020	70,670,440	$	1	96,933,192	$	1	7,389,983	$	—	49,871,231	$	—	$	3,426,625	$	(2,179)	$	78,361	$	1,186,039	$	4,688,848
Activities related to the follow-on offering and other exchanges of LLC Interests, net of offering costs and cancellations																							Activities related to the follow-on offering and other exchanges of LLC Interests, net of offering costs and cancellations	17,747,968	—		—	—		(2,279,992)	—		(15,467,976)	—		(1,406)		—		—		—		(1,406)
Issuance of common stock from equity incentive plans																							Issuance of common stock from equity incentive plans	2,223,700	—		—	—		—	—		—	—		27,197		—		—		—		27,197
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges																							Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges	—	—		—	—		—	—		—	—		127,846		—		—		—		127,846
Adjustments to non-controlling interests																							Adjustments to non-controlling interests	—	—		—	—		—	—		—	—		379,623		(249)		—		(379,374)		—
Distributions to non-controlling interests																							Distributions to non-controlling interests	—	—		—	—		—	—		—	—		—		—		—		(3,605)		(3,605)
Dividends ($0.08 per share)																							Dividends ($0.08 per share)	—	—		—	—		—	—		—	—		—		—		(14,483)		—		(14,483)
Stock-based compensation expense under the PRSU Plan																							Stock-based compensation expense under the PRSU Plan	—	—		—	—		—	—		—	—		7,392		—		—		—		7,392
Stock-based compensation expense under the RSU Plan																							Stock-based compensation expense under the RSU Plan	—	—		—	—		—	—		—	—		1,675		—		—		—		1,675
Stock-based compensation expense under the Option Plan																							Stock-based compensation expense under the Option Plan	—	—		—	—		—	—		—	—		1,279		—		—		—		1,279
Payroll taxes paid for stock-based compensation exercises																							Payroll taxes paid for stock-based compensation exercises	—	—		—	—		—	—		—	—		(47,672)		—		—		—		(47,672)
Net income																							Net income	—	—		—	—		—	—		—	—		—		—		30,496		11,912		42,408
Foreign currency translation adjustments																							Foreign currency translation adjustments	—	—		—	—		—	—		—	—		—		(265)		—		(71)		(336)
Balance at June 30, 2020																							Balance at June 30, 2020	90,642,108	$	1	96,933,192	$	1	5,109,991	$	—	34,403,255	$	—	$	3,922,559	$	(2,693)	$	94,374	$	814,901	$	4,829,143

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Changes in Equity – (Continued)

(in thousands, except share amounts)

(Unaudited)


	Members' Capital		Class A Common Stock				Class B Common Stock					Class C Common Stock					Class D Common Stock						Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Non- Controlling Interests	Total Stockholders' Equity
			Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance at Balance at December 31, 2018	4,573,200		—	$	—	—	$	—	—	$	—	—	$	—	$	—	$	(866)	$	—	$	—	$	4,572,334
Adjustment to Class C Shares and Class P(C) shares in mezzanine capital	(2,369)		—	—		—	—		—	—		—	—		—		—		—		—		(2,369)
Capital distributions	(20,000)		—	—		—	—		—	—		—	—		—		—		—		—		(20,000)
Stock-based compensation	4,674		—	—		—	—		—	—		—	—		—		—		—		—		4,674
Net income	42,352		—	—		—	—		—	—		—	—		—		—		—		—		42,352
Foreign currency translation adjustments	—		—	—		—	—		—	—		—	—		—		988		—		—		988
Balance at March 31, 2019	4,597,857		—	$	—	—	$	—	—	$	—	—	$	—	$	—	$	122	$	—	$	—	$	4,597,979
Capital distributions	(100,000)			—		—	—																(100,000)
Effect of the reorganization transactions	(4,497,857)		—	—		—	—		—	—		—	—		4,521,132		—		—		—		23,275
Issuance of common stock, net of offering costs and cancellations	—		46,000,000	—		96,933,192	1		10,006,269	—		69,282,736	1		(15,856)		—		—		—		(15,854)
Tax receivable agreement liability and deferred taxes arising from the reorganization transactions and IPO	—		—	—		—	—		—	—		—	—		(78,232)		—		—		—		(78,232)
Allocation of equity to non-controlling interests	—		—	—		—	—		—	—		—	—		(1,607,529)		—		—		1,607,529		—
Adjustments to non-controlling interests	—		—	—					—	—		—	—		—		—		—		—		—
Distributions to non-controlling interests	—		—	—		—	—		—	—		—	—		—		—		—		(11,909)		(11,909)
Dividends ($0.08 per share)	—		—	—		—	—		—	—		—	—		—		—		(11,435)		—		(11,435)
Stock-based compensation expense under the PRSU Plan	—		—	—		—	—		—	—		—	—		6,763		—		—		—		6,763
Stock-based compensation expense under the Option Plan	—		—	—		—	—		—	—		—	—		20,403		—		—		—		20,403
Net income	—		—	—		—	—		—	—		—	—		—		—		12,828		11,988		24,816
Foreign currency translation adjustments	—		—	—		—	—		—	—		—	—		—		(647)		—		(359)		(1,006)
Balance at June 30, 2019	$	—	46,000,000	$	—	96,933,192	$	1	10,006,269	$	—	69,282,736	$	1	$	2,846,681	$	(525)	$	1,393	$	1,607,249	$	4,454,800

Table of Contents

Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Accumulated


Other

Total

Members'

Comprehensive

Members'

Capital

Income (Loss)

Capital
Members' capital at December 31, 2018

$
4,573,200

$
(866)

$
4,572,334
Comprehensive income:






Net income

42,352

—

42,352
Foreign currency translation adjustments

—

988

988
Adjustment to Class C Shares and Class P(C) Shares in mezzanine capital

(2,369)

—

(2,369)
Stock-based compensation

4,674

—

4,674
Capital distributions

(20,000)

—

(20,000)
Members' capital at March 31, 2019

$
4,597,857

$
122

$
4,597,979


	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Cash flows from operating activities
Net income	$	104,893	$	67,168
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	75,095		67,795
Stock-based compensation expense	18,317		31,960
Deferred taxes	22,208		(3,596)
(Increase) decrease in operating assets:
Receivable from/payable to brokers and dealers and clearing organizations, net	64		3,290
Deposits with clearing organizations	(1,323)		(1,965)
Accounts receivable	(11,162)		(5,756)
Receivable from/payable to affiliates, net	2,885		1,477
Other assets	(10,591)		(8,825)
Increase (decrease) in operating liabilities:
Accrued compensation	(46,143)		(51,569)
Deferred revenue	3,457		(2,613)
Accounts payable, accrued expenses and other liabilities	6,258		(3,661)
Employee equity compensation payable	595		(16,732)
Net cash provided by operating activities	164,553		76,973
Cash flows from investing activities
Purchase of furniture, equipment, software and leasehold improvements	(4,382)		(3,793)
Capitalized software development costs	(14,798)		(13,914)
Net cash used in investing activities	(19,180)		(17,707)
Cash flows from financing activities
Pre-IPO capital distributions	—		(120,000)
Proceeds from stock-based compensation exercises	62,619		—
Proceeds from issuance of Class A common stock in the IPO and follow-on offerings, net of underwriting discounts	626,267		1,161,270
Purchase of LLC Interests	(626,267)		(1,161,270)
Offering costs from issuance of Class A common stock in the IPO and follow-on offerings	(1,637)		(12,306)
Dividends	(27,883)		(11,435)
Capital distributions to non-controlling interests	(3,605)		(11,909)
Payroll taxes paid for stock-based compensation exercises	(71,663)		—
Net cash used in financing activities	(42,169)		(155,650)
Effect of exchange rate changes on cash and cash equivalents	(4,026)		(138)
Net increase (decrease) in cash and cash equivalents	99,178		(96,522)
Cash and cash equivalents and restricted cash
Beginning of period	461,711		411,304
End of period	$	560,889	$	314,782
Supplemental disclosure of cash flow information

Income taxes paid	$	4,970	$	24,989
Non-cash financing activities
Items arising from LLC Interest ownership changes
Establishment of liabilities under tax receivable agreement	$	132,136	$	171,426
Deferred tax asset	$	292,718	$	93,194

Reconciliation of cash, cash equivalents and restricted cash as shown on the statements of financial condition:
	June 30, 2020		December 31, 2019
Cash and cash equivalents	559,889		460,711
Restricted cash	1,000		1,000
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$	560,889	$	461,711

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

~~Tradeweb Markets Inc. and Subsidiaries~~

~~Consolidated Statements of Cash Flows~~

~~(in thousands)~~

~~(Unaudited)~~

Three Months

Three Months

Ended

Ended

March 31,

March 31,

2020

2019
Cash flows from operating activities




Net income

$
62,485

$
42,352
Adjustments to reconcile net income to net cash used in operating activities:




Depreciation and amortization

37,176

33,503
Stock-based compensation expense

7,971

4,674
Deferred taxes

7,227

(39)
(Increase) decrease in operating assets:

Receivable from/payable to brokers and dealers and clearing organizations, net

(40,563)

(3,831)
Deposits with clearing organizations

(1,668)

2,570
Accounts receivable

(43,453)

(6,406)
Receivable from/payable to affiliates, net

2,452

1,167
Other assets

(9,837)

(7,152)
Increase (decrease) in operating liabilities:

Accrued compensation

(59,910)

(66,447)
Deferred revenue

2,306

602
Accounts payable, accrued expenses and other liabilities

14,067

(4,911)
Employee equity compensation payable

(11)

(17,161)
Net cash used in operating activities

(21,758)

(21,079)
Cash flows from investing activities




Purchase of furniture, equipment, software and leasehold improvements

(1,298)

(1,516)
Capitalized software development costs

(7,063)

(6,767)
Net cash used in investing activities

(8,361)

(8,283)
Cash flows from financing activities




Proceeds from stock-based compensation exercises

35,422

—
Offering costs from follow-on offering

(308)

—
Dividends

(13,400)

—
Capital distributions to non-controlling interests

—

(20,000)
Payroll taxes paid for stock-based compensation exercises

(23,991)

—
Net cash used in financing activities

(2,277)

(20,000)
Effect of exchange rate changes on cash and cash equivalents

(3,958)

866
Net decrease in cash and cash equivalents

(36,354)

(48,496)
Cash and cash equivalents and restricted cash



Beginning of period

461,711

411,304
End of period

$
425,357

$
362,808

Supplemental disclosure of cash flow information

Interest paid

$
—

$
—
Income taxes paid

$
2,867

$
7,301

Non-cash financing activities

Items arising from LLC Interest ownership changes

Establishment of liabilities under tax receivable agreement

$
11,212

$
—
Deferred tax asset

$
43,948

$
—

Reconciliation of cash, cash equivalents and restricted cash as shown on the statements of financial condition:

March 31,

December 31,

2020

2019
Cash and cash equivalents

424,357

460,711
Restricted cash

1,000

1,000
Cash, cash equivalents and restricted cash shown in the statement of cash flows

$
425,357

$
461,711

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Table of Contents~~

Notes to Consolidated Financial Statements

(Unaudited)

Table of Contents

Tradeweb Markets Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization

Tradeweb Markets Inc. (the “Corporation”) was incorporated as a Delaware corporation on November 7, 2018 for the purpose of completing certain reorganization transactions in order to carry on the business of Tradeweb Markets LLC (“TWM LLC”) and conducting an initial public offering (“IPO”) as described below under “—Initial Public Offering” and “—Reorganization Transactions.”

The Corporation is a consolidating subsidiary of BCP York Holdings, (“BCP”) a company owned by certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.) (“Blackstone”), through BCP’s majority ownership interest in Refinitiv Holdings Limited (the “Parent” and, unless otherwise stated or the context otherwise requires, together with all of its subsidiaries, “Refinitiv”). As of ~~March 31,~~June 30, 2020, Refinitiv owns a majority ownership interest in the Company (as defined below).

The Corporation is a holding company whose principal asset is LLC Interests (as defined below) of TWM LLC. As the sole manager of TWM LLC, the Corporation operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts the Corporation’s business. As a result of this control, and because the Corporation has a substantial financial interest in TWM LLC, the Corporation consolidates the financial results of TWM LLC and reports a non-controlling interest in the Corporation’s consolidated financial statements. As of ~~March 31,~~June 30, 2020, Tradeweb Markets Inc. owns ~~74.5%~~82.6% of TWM LLC and the Continuing LLC Owners (defined below) own the remaining ~~25.5%~~17.4% of TWM LLC.

Unless the context otherwise requires, references to the “Company” refer to Tradeweb Markets Inc. and its consolidated subsidiaries, including TWM LLC, following the completion of the Reorganization Transactions (as defined below), and TWM LLC and its consolidated subsidiaries prior to the completion of the Reorganization Transactions.

The Company is a leader in building and operating electronic marketplaces for a global network of clients across the institutional, wholesale and retail client sectors. The Company’s principal subsidiaries include:

Tradeweb LLC (“TWL”), a registered broker-dealer under the Securities Exchange Act of 1934, a member of the Financial Industry Regulatory Authority (“FINRA”), a registered independent introducing broker with the Commodities Future Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”).

Dealerweb Inc. (“DW”) (formerly known as Hilliard Farber & Co., Inc.), a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA. DW is also registered as an introducing broker with the CFTC and NFA.

~~Tradeweb Direct LLC (“TWD”) (formerly known as BondDesk Trading LLC), a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA.~~

Tradeweb Europe Limited (“TEL”), a Multilateral Trading Facility regulated by the Financial Conduct Authority (the “FCA”) in the UK, which maintains branches in Asia which are regulated by certain Asian securities regulators.

~~TW SEF LLC (“TW SEF”), a Swap Execution Facility (“SEF”) regulated by the CFTC.~~

~~DW SEF LLC (“DW SEF”), a SEF regulated by the CFTC.~~

•Tradeweb LLC (“TWL”), a registered broker-dealer under the Securities Exchange Act of 1934, a member of the Financial Industry Regulatory Authority (“FINRA”), a registered independent introducing broker with the Commodities Future Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”).

•Dealerweb Inc. (“DW”) (formerly known as Hilliard Farber & Co., Inc.), a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA. DW is also registered as an introducing broker with the CFTC and NFA.

•Tradeweb Direct LLC (“TWD”) (formerly known as BondDesk Trading LLC), a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA.

•Tradeweb Europe Limited (“TEL”), a Multilateral Trading Facility regulated by the Financial Conduct Authority (the “FCA”) in the UK, which maintains branches in Asia which are regulated by certain Asian securities regulators.

•TW SEF LLC (“TW SEF”), a Swap Execution Facility (“SEF”) regulated by the CFTC.

•DW SEF LLC (“DW SEF”), a SEF regulated by the CFTC.

•Tradeweb Japan K.K. (“TWJ”), a security house regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”).

•Tradeweb EU B.V. (“TWEU”), a Trading Venue and Approved Publication Arrangement regulated by the Netherlands Authority for the Financial Markets (“AFM”).

Table of Contents

~~Tradeweb Japan K.K. (“TWJ”), a security house regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”).~~

~~Tradeweb EU B.V. (“TWEU”), a Trading Venue and Approved Publication Arrangement regulated by the Netherlands Authority for the Financial Markets (“AFM”).~~

Initial Public Offering

On April 8, 2019, the Corporation completed its IPO of 46,000,000 shares of Class A common stock, par value $0.00001 per share, of the Corporation (the “Class A common stock”) at a public offering price of $27.00, which included 6,000,000 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. The Corporation received $1.2 billion in net proceeds, after deducting underwriting discounts and commissions but before deducting offering expenses, which were used to purchase membership interests of TWM LLC from certain existing equity holders of TWM LLC (and the corresponding shares of common stock were cancelled as described below), at a purchase price per interest equal to the public offering price of $27.00, less the underwriting discounts and commissions payable thereon. See Note 8 – Stockholders’ Equity.

Reorganization Transactions

Prior to the closing of the IPO, a series of reorganization transactions (the “Reorganization Transactions”) was completed among the Corporation, TWM LLC and the owners of TWM LLC prior to the Reorganization Transactions (collectively, the “Original LLC Owners”), including the following parties:

~~certain investment and commercial banks (collectively, the “Bank Stockholders”);~~

•certain investment and commercial banks (collectively, the “Bank Stockholders”);

~~members of management;~~

•members of management;

the Refinitiv Direct Owner, (i) prior to June 28, 2019, a direct subsidiary of Refinitiv that owned interests in an entity that held membership interests of TWM LLC prior to the Reorganization Transactions and contributed such entity to the Corporation (the “Refinitiv Contribution”) in exchange for shares of Class B common stock, par value $0.00001 per share, of the Corporation (the “Class B common stock”) in connection with the completion of the Reorganization Transactions and (ii) on and after June 28, 2019, an indirect subsidiary of Refinitiv that owns shares of Class B common stock which shares were contributed by the direct subsidiary of Refinitiv referred to in the foregoing clause (i); and

•the Refinitiv Direct Owner, (i) prior to June 28, 2019, a direct subsidiary of Refinitiv that owned interests in an entity that held membership interests of TWM LLC prior to the Reorganization Transactions and contributed such entity to the Corporation (the “Refinitiv Contribution”) in exchange for shares of Class B common stock, par value $0.00001 per share, of the Corporation (the “Class B common stock”) in connection with the completion of the Reorganization Transactions and (ii) on and after June 28, 2019, an indirect subsidiary of Refinitiv that owns shares of Class B common stock which shares were contributed by the direct subsidiary of Refinitiv referred to in the foregoing clause (i); and

~~an indirect subsidiary (the “Refinitiv LLC Owner” and, together with the Refinitiv Direct Owner, the “Refinitiv Owners”) of Refinitiv.~~

•an indirect subsidiary (the “Refinitiv LLC Owner” and, together with the Refinitiv Direct Owner, the “Refinitiv Owners”) of Refinitiv.

As used herein, references to “Continuing LLC Owners” refer collectively to (i) those Original LLC Owners, including the Refinitiv LLC Owner, certain Bank Stockholders and members of management, that continue to own LLC Interests (as defined below) after the completion of the IPO and Reorganization Transactions, that received shares of Class C common stock, par value $0.00001 per share, of the Corporation (the “Class C common stock”), shares of Class D common stock, par value $0.00001 per share, of the Corporation (the “Class D common stock”) or a combination of both, as the case may be, in connection with the completion of the Reorganization Transactions, and that may redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock and (ii) solely with respect to the Tax Receivable Agreement (as defined below), also includes those Original LLC Owners, including certain Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO.

The following Reorganization Transactions occurred:



•TWM LLC’s limited liability company agreement (the “TWM LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of common membership interests in TWM LLC (“LLC Interests”), (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC. See Note 8 – Stockholders’ Equity.

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•The Corporation’s certificate of incorporation was amended and restated to, among other things, provide for Class A common stock, Class B common stock, Class C common stock and Class D common stock. See Note 8 – Stockholders’ Equity.

•The Corporation issued 20,000,000 shares of Class C common stock and 105,289,005 shares of Class D common stock to the Original LLC Owners that received LLC Interests on a one-to-one basis with the number of LLC Interests they owned immediately following the amendment and restatement of the TWM LLC Agreement for nominal consideration (and the Corporation subsequently cancelled 9,993,731 shares of such Class C common stock and 36,006,269 shares of such Class D common stock in connection with the Corporation’s purchase of LLC Interests from certain of the Bank Stockholders using the net proceeds of the IPO).

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•As a result of the Refinitiv Contribution (described above), the Corporation received 96,933,192 LLC Interests and the Refinitiv Direct Owner received 96,933,192 shares of Class B common stock. See Note 8 – Stockholders’ Equity.

•·

~~The Corporation issued 20,000,000 shares of Class C common stock and 105,289,005 shares of Class D common stock to the~~ ~~Original LLC Owners that received LLC Interests~~ on a one-to-one basis with the number of LLC Interests they owned immediately following the amendment and restatement of the TWM LLC Agreement for nominal consideration (and the Corporation subsequently cancelled 9,993,731 shares of such Class C common stock and 36,006,269 shares of such Class D common stock in connection with the Corporation’s purchase of LLC Interests from certain of the Bank Stockholders using the net proceeds of the IPO).

As a result of the Refinitiv Contribution (described above), the Corporation received 96,933,192 LLC Interests and the Refinitiv Direct Owner received 96,933,192 shares of Class B common stock. See Note 8 ~~– Stockholders’ Equity.~~

The Corporation’s board of directors adopted a new omnibus equity incentive plan, (the “Omnibus Equity Plan”), under which equity awards may be made in respect of shares of the Corporation’s Class A common stock. It also assumed sponsorship of an option plan and PRSU plan formerly sponsored by TWM LLC. See Note 10 – Stock-Based Compensation Plans.



•The Corporation entered into a tax receivable agreement (the “Tax Receivable Agreement”) with TWM LLC and the Continuing LLC Owners. See Note 7 – Tax Receivable Agreement.

LSEG Transaction

On August 1, 2019, London Stock Exchange Group plc announced that it has agreed to definitive terms with a consortium including certain investment funds affiliated with Blackstone as well as TRThomson Reuters Corporation ("TR") to acquire the Refinitiv business in an all share transaction (the “LSEG Transaction”). The LSEG Transaction is subject to customary regulatory approvals and closing conditions, and is expected to close during the second half of 2020. There can be no assurance that the LSEG transaction will be consummated on the expected timing or at all.

2. Significant Accounting Policies

The following is a summary of significant accounting policies:

Basis of Accounting

The consolidated financial statements have been presented in conformity with accounting principles generally accepted in the United States of America. All adjustments, which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented, are normal and recurring in nature. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the consolidated financial statements.

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Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

As discussed in Note 1—Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. As a result, the consolidated financial statements for periods prior to the Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. However, Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. As such, for periods prior to the completion of the Reorganization Transactions, the consolidated financial statements represent the historical financial condition and results of operations of TWM LLC and its subsidiaries. For periods after the completion of the Reorganization Transactions, the consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by the Continuing LLC Owners.

Pushdown Accounting

A majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 (the “Refinitiv Transaction”) from ~~Thomson Reuters Corporation (“TR”).~~TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations, and

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pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting. Under pushdown accounting, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company is recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of our long-lived and indefinite-lived intangible assets, including software development costs.

Cash and Cash Equivalents

Cash and cash equivalents consists of cash and highly liquid investments (such as short-term money market instruments) with original maturities of less than three months.

Allowance for Credit Losses

The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of our counterparties is also performed. ~~Account balances aged greater than 360 days are reserved to the allowance for credit losses.~~ Once determined uncollectable, aged balances are written off as credit loss expense, which is included in general and administrative expenses on the consolidated statements of income. See Note 13 – Credit Risk for additional information.

Receivable from and Payable to Brokers and Dealers and Clearing Organizations

Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities.

At times, transactions executed on the Company’s wholesale platform fail to settle due to the inability of a transaction party to deliver or receive the transacted security. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction.

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Deposits with Clearing Organizations

Deposits with clearing organizations are comprised of cash deposits. Due to the short-term nature of these deposits, the recorded value has been determined to approximate fair value.

Furniture, Equipment, Purchased Software and Leasehold Improvements

Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from three to seven years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the leasehold improvements or the remaining term of the lease for office space.

Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable in accordance with ASC 360, Property, Plant and Equipment.

Software Development Costs

The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed, in accordance with ASC 350, Intangibles – Goodwill and Other. The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Costs capitalized as part of the pushdown accounting allocation are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred.

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Goodwill

Goodwill is the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company under pushdown accounting. Goodwill is also the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date. Goodwill is not amortized, but in accordance with ASC 350, goodwill is tested for impairment annually and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. An impairment loss is recognized if the estimated fair value of a reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value.

In 2019, the Company changed the annual date on which goodwill is tested for impairment from July 1^stto October 1^st to align with the annual impairment testing date of the Company’s Parent. This change did not accelerate, delay, avoid or cause an impairment charge, nor did this change result in adjustments to any previously issued financial statements. Goodwill was last assessed on October 1, 2019.

Intangible Assets

Intangible assets with a finite life are amortized over the estimated lives, ranging from seven to ~~sixteen~~twelve years, in accordance with ASC 350. Intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances suggest that an asset's or asset group's carrying value may not be fully recoverable in accordance with ASC 360. Intangible assets with an indefinite useful life are tested for impairment at least annually. An impairment loss is recognized if the sum of the estimated discounted cash flows relating to the asset or asset group is less than the corresponding book value.

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Deferred IPO and Follow-On Offering Costs

The Company began incurring costs in connection with the filing of a Registration Statement on Form S-1 for an IPO in 2018 and Registration Statements on Form S-1 for follow-on offerings in 2019 and the first ~~quarter~~half of 2020. IPO and follow-on offering costs consist of legal, accounting, and other costs directly related to the Company’s efforts to raise capital. In accordance with ASC 505-10-25, Equity, these costs are recognized in additional paid-in capital within the consolidated statements of financial condition when the offering is effective. At ~~March 31,~~June 30, 2020, $15.9 million of deferred costs related to the IPO and ~~$3.0~~$4.4 million of deferred costs related to the follow-on offerings were recognized within additional paid-in capital on the consolidated statements of financial condition. See Note 8 – Stockholders’ ~~Equity and Note 18 – Subsequent Events.~~

Equity.

Translation of Foreign Currency

Revenues and expenses denominated in foreign currencies are translated at the rate of exchange prevailing at the transaction date. Assets and liabilities denominated in foreign currencies are translated at the rate prevailing at the consolidated statements of financial condition date. Foreign currency re-measurement gains or losses on transactions in nonfunctional currencies are recognized in the consolidated statements of income. Gains or losses on translation in the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included as a component of comprehensive income.

Income Tax

The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes.

The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. ~~Based~~The Company evaluates the need for valuation allowances based on the weight of ~~the~~ positive and negative ~~evidence considered,~~evidence. The Company records valuation allowances wherever management believes ~~that~~ it is more likely than not that the Company will not be able to realize its deferred tax assets in the ~~future, therefore, no valuation allowance is necessary.~~

future.

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The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition.

The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act as a current period expense when incurred.

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Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. ASC 718 focuses primarily on accounting for a transaction in which an entity obtains employee services in exchange for stock-based payments. Under ASC 718, the stock-based payments received by the employees of the Company are accounted for either as equity awards or as liability awards.

As an equity award, the Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital.

As a liability award, the cost of employee services received in exchange for an award of equity instruments is generally measured based on the grant-date fair value of the award. The fair value of that award is remeasured subsequently at each reporting date through the settlement in accordance with ASC 505. Changes in the equity instrument's fair value during the requisite service period are recognized as compensation cost over that period.

For periods following the Reorganization Transactions and the IPO, the fair value of new equity instrument grants is determined based on the price of the Company’s Class A common stock on the grant date.

Under ASC 718, the grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. The grant-date fair value of stock-based awards that require future service, and are graded-vesting awards, are amortized over the relevant service period on a straight-line basis, with each tranche separately measured. The grant-date fair value of stock-based awards that require both future service and the achievement of Company performance-based conditions, are amortized over the relevant service period for the performance-based condition. If in a reporting period it is determined that the achievement of a performance target for a performance-based tranche is not probable, then no expense is recognized for that tranche and any expenses already recognized relating to that tranche in prior reporting periods are reversed in the current reporting period.

Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). In accounting for the options issued under the Option Plan, compensation expense is measured and recognized for all awards based on their estimated fair values measured as of the grant date. Costs related to these options are recognized as an expense in the consolidated statements of income over the requisite service period, with an offsetting increase to additional paid-in capital. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of ~~2019 and will continue to be expensed over the following three years.~~

2019.

Determining the appropriate fair value model and calculating the fair value of the stock-based awards requires the input of highly subjective assumptions, including the expected life of the stock-based awards and the stock price volatility. The Company uses the Black-Scholes pricing model to value some of its stock-based awards.

Earnings Per Share

Basic earnings per share is computed by dividing the net income attributable to the Company's shares by the weighted-average number of the Company's shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if securities that qualify as participating securities were converted into or exchanged or exercised for TWM LLC’s shares, in the pre-IPO period, and the Corporation’s Class A or Class B common stock, in the post-IPO period, using the treasury stock method, as applicable.

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Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not participating securities for purposes of the computation of earnings per share.

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Fair Value Measurement

The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs.

The fair value hierarchy under ASC 820, Fair Value Measurement, prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:

Basis of Fair Value Measurement

A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

~~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 considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;~~

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

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

•Level 2: Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;

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

Recent Accounting Pronouncements – Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016‑13, Financial Instruments – Credit Losses. The ASU provides new guidance for estimating credit losses on certain types of financial instruments by introducing an approach based on expected losses. ASU 2016-13 was adopted on January 1, 2020 using the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. See to Note 13 – Credit Risk for additional information.

In January 2017, the FASB issued ASU 2017‑~~04,~~ 4, Intangibles – Goodwill and Other. The ASU simplifies the quantitative goodwill impairment test by eliminating the second step of the test. Under this ASU, impairment will be measured by comparing the estimated fair value of the reporting unit with its carrying value. The new guidance does not amend the optional qualitative assessment of goodwill ~~impairment~~.impairment. ASU ~~2017-04~~2017-4 was adopted on January 1, 2020. The adoption of this ASU did not impact the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations and include additional guidance in order to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 was early adopted on January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU ~~2016-02,~~ 2016-2, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and a lease liability for all leases with an initial term in excess of twelve months. The asset reflects the present value of unpaid lease payments coupled with initial direct costs, prepaid lease payments and lease incentives. The

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amount of the lease liability is calculated as the present value of unpaid lease payments. ASU ~~2016-02~~2016-2 was adopted on January 1, 2019 using the modified retrospective method of adoption. Upon adoption, the Company:

~~Recorded right-of-use assets of $31.8 million,~~

~~Recorded a lease liability of $39.6 million,~~

•Recorded right-of-use assets of $31.8 million,

~~Eliminated deferred rent of $4.9 million,~~

•Recorded a lease liability of $39.6 million,

~~Eliminated leasehold interests of $2.9 million, and~~

•Eliminated deferred rent of $4.9 million,

~~Elected to take the optional package of practical expedients, which allows for no reassessment of~~

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~~whether any expired or existing contracts are or contain leases,~~

•Eliminated leasehold interests of $2.9 million, and

~~ii.~~

~~the lease classification for any expired or existing leases, and~~

•Elected to take the optional package of practical expedients, which allows for no reassessment of

~~iii.~~

~~initial direct costs for any existing leases.~~

i.whether any expired or existing contracts are or contain leases,

ii.the lease classification for any expired or existing leases, and

iii.initial direct costs for any existing leases.

3. Restricted Cash

Cash has been segregated in a special reserve bank account for the benefit of brokers and dealers under SEC Rule 15c3-3. The Company computes the proprietary accounts of other broker-dealers (“PAB”) reserve, which requires the Company to maintain minimum segregated cash in the amount of total credits per the reserve computation. As of ~~March 31,~~June 30, 2020 and December 31, 2019, cash in the amount of $1.0 million has been segregated in the PAB reserve account exceeding the requirements pursuant to SEC Rule 15c3-3.

4. Goodwill and Intangible Assets

Goodwill

The carrying amount of goodwill at ~~March 31,~~June 30, 2020 and December 31, 2019 was $2.7 billion.

Intangible Assets

Intangible assets with an indefinite useful life consisted of the following at ~~March 31,~~June 30, 2020 and December 31, 2019 (in thousands):

Amount
Licenses

$
168,800
Tradename

154,300
Total

$
323,100


	Amount
Licenses	$	168,800
Tradename	154,300
Total	$	323,100

Intangible assets that are subject to amortization consisted of the following at ~~March 31,~~June 30, 2020 and December 31, 2019 (in thousands):


		March 31, 2020						December 31, 2019
	Amortization			Accumulated		Net Carrying				Accumulated		Net Carrying				June 30, 2020										December 31, 2019
	Period	Cost		Amortization		Amount		Cost		Amortization		Amount			Amortization Period	Cost		Accumulated Amortization		Net Carrying Amount		Cost		Accumulated Amortization		Net Carrying Amount
Customer relationships	12 Years	$	928,200	$	(116,025)	$	812,175	$	928,200	$	(96,687)	$	831,513	Customer relationships	12 years	$	928,200	$	(135,363)	$	792,837	$	928,200	$	(96,687)	$	831,513
Content and data	7 Years		154,400		(33,086)		121,314		154,400		(27,572)		126,828	Content and data	7 years	154,400		(38,600)		115,800		154,400		(27,572)		126,828
		$	1,082,600	$	(149,111)	$	933,489	$	1,082,600	$	(124,259)	$	958,341			$	1,082,600	$	(173,963)	$	908,637	$	1,082,600	$	(124,259)	$	958,341

Amortization expense for definite-lived intangible assets was $24.9 million for each of the three months ended ~~March 31,~~June 30, 2020 and 2019, respectively, and $49.7 million for each of the six months ended June 30, 2020 and 2019.

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5. Revenue

Revenue Recognition

The Company earns transaction fees from transactions executed on the Company’s trading platforms through various fee plans. Transaction fees are generated both on a variable and fixed price basis and vary by geographic region, product type and trade size. For variable transaction fees, the Company charges clients fees based on the mix of products traded and the volume of transactions executed. Transaction fee revenue is recorded at a point in time when the trade occurs and is generally billed monthly.

The Company earns subscription fees from granting access to institutional investors to the Company's electronic marketplaces. Subscription fees are recognized into income in the period that access is provided on a monthly basis. Also included in subscription fees are viewer fees earned monthly from institutional investors accessing fixed income market data. The frequency of subscription fee billings varies from monthly to annually, depending on contract terms. Fees received by the Company which are not yet earned are included in deferred revenue on the consolidated statements of financial condition until the revenue recognition criteria has been met.

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The Company earns commission revenue from its electronic and voice brokerage services on a riskless principal basis. Riskless principal revenues are derived on matched principal transactions where revenues are earned on the spread between the buy and sell price of the transacted product. Securities transactions and related commission income for brokerage transactions are recognized and recorded on a trade-date basis. Commission revenue is collected by the Company when the trade settles or is billed monthly.

The Company earns fees from Refinitiv relating to the sale of market data to Refinitiv, which redistributes that data. Included in these fees, which are billed quarterly, are real-time market data fees which are recognized in the period that the data is provided, generally on a monthly basis, and historical data sets which are recognized when the historical data set is provided to Refinitiv. Significant judgements used in accounting for this contract include:

~~The provision of real-time market data feeds and annual historical data sets are distinct performance obligations.~~

~~The performance obligations under this contract are recognized over time from the initial delivery of the data feeds or each historical data set until the end of the contract term.~~

•The provision of real-time market data feeds and annual historical data sets are distinct performance obligations.

Determining the transaction price for the performance obligations by using a market assessment analysis. Inputs in this analysis include a consultant study which determined the overall value of the Company's market data and pricing information for historical data sets provided by other companies.

•The performance obligations under this contract are recognized over time from the initial delivery of the data feeds or each historical data set until the end of the contract term.

•Determining the transaction price for the performance obligations by using a market assessment analysis. Inputs in this analysis include a consultant study which determined the overall value of the Company's market data and pricing information for historical data sets provided by other companies.

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Some revenues earned by the Company have fixed fee components, such as monthly minimums or fixed monthly fees, and variable components, such as transaction based fees. The breakdown of revenues between fixed and variable revenues, in thousands, for the three and six months ended ~~March 31,~~June 30, 2020 and 2019 is as follows:


	Three Months Ended				Three Months Ended
	March 31, 2020				March 31, 2019					Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	(in thousands)				(in thousands)					(in thousands)						(in thousands)
	Variable		Fixed		Variable		Fixed			Variable		Fixed		Variable		Fixed
Revenues									Revenues
Transaction fees	$	115,337	$	25,487	$	78,915	$	23,725	Transaction fees	$	96,389	$	25,757	$	79,577	$	24,375
Subscription Fees including Refinitiv market data fees		465		48,646		455		47,606	Subscription Fees including Refinitiv market data fees	415		49,156		435		47,516
Commissions		32,441		10,052		24,310		9,887	Commissions	28,141		9,974		26,635		9,778
Other		110		2,068		303		1,591	Other	237		2,038		302		1,867
Gross revenue	$	148,353	$	86,253	$	103,983	$	82,809	Gross revenue	$	125,182	$	86,925	$	106,949	$	83,536


	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	(in thousands)						(in thousands)
	Variable		Fixed		Variable		Fixed
Revenues
Transaction fees	$	211,726	$	51,244	$	158,492	$	48,100
Subscription Fees including Refinitiv market data fees	880		97,802		890		95,122
Commissions	60,582		20,026		50,945		19,665
Other	347		4,106		605		3,458
Gross revenue	$	273,535	$	173,178	$	210,932	$	166,345

Deferred Revenue

The Company records deferred revenue when cash payments are received or due in advance of services to be performed. The recognized revenue and remaining balance is shown below (in thousands):

Amount
Deferred revenue balance - December 31, 2019

$
23,990
New billings

29,273
Revenue recognized

(26,994)
Deferred revenue balance - March 31, 2020

$
26,269


	Amount
Deferred revenue balance - December 31, 2019	$	23,990
New billings	58,151
Revenue recognized	(54,713)
Deferred revenue balance - June 30, 2020	$	27,428

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6. Income Taxes

The Company’s provision for income taxes includes U.S. federal, state, local and foreign taxes. The Company’s effective tax rate for the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019 was approximately ~~20.2%~~21.5% and ~~10.1%~~14.2%, respectively.

The effective tax rate for the six months ended June 30, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to the effect of state and local taxes, partially offset by the effect of non-controlling interest and other discrete items. The effective tax rate for the six months ended June 30, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to the effect of non-controlling interests and discrete items, partially offset by state and local taxes and other discrete items.

The Company’s effective tax rate for the three months ended June 30, 2020 and 2019 was approximately 23.4% and 20.3%, respectively.

The effective tax rate for the three months ended ~~March 31,~~June 30, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local, and foreign taxes, partially offset by the effect of non-controlling interests. The effective tax rate for the three months ended June 30, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to the effect of non-controlling interests, partially offset by state, local, and foreign taxes. The effective tax rate for the three months ended March 31, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to the fact that, prior to the Reorganization Transactions, income taxes ~~consisted only of business taxes incurred by TWM LLC~~ and certain subsidiaries for business conducted in certain state, local and foreign jurisdictions as well as federal, state and local taxes for certain subsidiaries that are taxed as corporations for U.S. tax purposes.

other discrete items.

As a result of the Reorganization Transactions, the Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. The Company’s actual effective tax rate will be impacted by the Corporation’s ownership share of TWM LLC, which will increase over time as the Continuing LLC Owners redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, or the Corporation purchases LLC Interests from the Continuing LLC Owners.

The Company's consolidated effective tax rate will vary from period to period depending on redemptions, exchanges or purchases of LLC Interests as described above, changes in the geographic mix of its earnings and changes in tax legislation and tax rates.

The Company expects to obtain an increase in its share of the tax basis of the assets of TWM LLC when LLC Interests are redeemed or exchanged by the Continuing LLC Owners and in connection with certain other qualifying transactions. This increase in tax basis may have the effect of reducing the amounts that the Corporation would otherwise pay in the

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future to various tax authorities. Pursuant to the Tax Receivable Agreement, the Corporation is required to make cash payments to the Continuing LLC Owners equal to 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances are deemed to realize) as a result of certain future tax benefits to which we may become entitled. The Corporation expects to benefit from the remaining 50% of tax benefits, if any, that the Corporation may actually realize. See Note 7 – Tax Receivable Agreement. The tax benefit has been recognized in deferred tax ~~asset~~assets on the ~~March 31,~~June 30, 2020 consolidated statement of financial condition.

As a result of the Refinitiv Contribution, the Company assumed the tax liabilities of the contributed entity. The contributed entity is under audit by the State of New Jersey for the tax years 2012 – 2015 and is appealing a tax assessment from an audit by the State of New Jersey for the tax years 2008 – 2011. At ~~March 31,~~June 30, 2020, the tax liability related to the Refinitiv Contribution is $2.7 million and is included within accounts payable, accrued expenses and other liabilities on the consolidated statement of financial condition.

The Company is indemnified by Refinitiv for tax liabilities that were assumed by the Company as a result of the Refinitiv Contribution. ~~See Note 11 – Related Party Transactions.~~

At June 30, 2020, $2.7 million is included in other assets on the consolidated statement of financial condition related to this indemnification.

7. Tax Receivable Agreement

In connection with the Reorganization Transactions, the Corporation entered into the Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners, which provides for the payment by the Corporation to a Continuing LLC Owner of 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and April 2020 follow-on ~~offering~~ offerings and any future offering or (b) redemptions or exchanges by such Continuing LLC Owner of LLC Interests for shares of Class A common stock or Class B common stock or for cash, as applicable, and (ii) certain other tax

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benefits related to the Corporation making payments under the Tax Receivable Agreement. Payments under the Tax Receivable Agreement are made annually based on the actual tax savings realized by the Corporation in its previous tax year.

As of December 31, 2019, the liability was $240.8 million, primarily due to the purchase of LLC Interests by the Corporation using the net proceeds of the IPO and the October 2019 follow-on offering, as well as additional exchanges of LLC Interests by Continuing LLC Owners. During the first ~~quarter~~six months of 2020, the liability increased to ~~$252.0~~$373.0 million, primarily due to the April 2020 follow-on offering and additional exchanges of LLC Interests by Continuing LLC Owners. Substantially all payments due under the tax receivable agreement are payable over the fifteen years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests.

The Corporation accounts for the income tax effects resulting from taxable redemptions or exchanges of LLC Interests by the Continuing LLC Owners for shares of Class A common stock or Class B common stock or cash, as the case may be, and purchases by the Corporation of LLC Interests from the Continuing LLC Owners by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of each redemption or exchange, as the case may be. Further, the Corporation evaluates the likelihood that it will realize the benefit represented by the deferred tax asset, and, to the extent that the Corporation estimates that it is more likely than not that it will not realize the benefit, it reduces the carrying amount of the deferred tax asset with a valuation allowance.

The impact of any changes in the projected obligations under the Tax Receivable Agreement as a result of changes in the geographic mix of the Company’s earnings, changes in tax legislation and tax rates or other factors that may impact the Corporation’s tax savings will be reflected in income before taxes on the consolidated statement of income in the period in which the change occurs.

8. Stockholders’ Equity

Initial Public Offering and Reorganization Transactions

As described in Note 1 – Organization, in April 2019, the Corporation completed its IPO of 46,000,000 shares of Class A common stock at a public offering price of $27.00, which included 6,000,000 shares of Class A common stock issued

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pursuant to the underwriters’ option to purchase additional shares of Class A common stock. The Corporation received $1.2 billion in net proceeds, after deducting underwriting discounts and commissions but before deducting offering expenses, which were used to purchase LLC Interests from certain of the Bank Stockholders (and the corresponding shares of common stock were cancelled as described below), at a purchase price per interest equal to the public offering price of $27.00, less the underwriting discounts and commissions payable thereon.

In connection with the IPO, the Reorganization Transactions described below were completed.

Amendment and Restatement of Certificate of Incorporation

On April 3, 2019, the certificate of incorporation of Tradeweb Markets Inc. was amended and restated to, among other things, provide for the authorization of (i) 250,000,000 shares of preferred stock with a par value of $0.00001 per share (ii) 1,000,000,000 shares of Class A common stock with a par value of $0.00001 per share; (iii) 450,000,000 shares of Class B common stock with a par value of $0.00001 per share; (iv) 350,000,000 shares of Class C common stock with a par value of $0.00001 per share; and (v) 300,000,000 shares of Class D common stock with a par value of $0.00001 per share.

Each share of Class A common stock and Class C common stock entitles its holder to one vote on all matters presented to the Corporation’s stockholders generally. Each share of Class B common stock and Class D common stock entitles its holder to ten votes on all matters presented to the Corporation’s stockholders generally. The holders of Class C common stock and Class D common stock have no economic interests in the Corporation (where “economic interests” means the right to receive any dividends or distributions, whether cash or stock, in connection with common stock). These attributes are summarized in the following table:


Class of Common Stock	Par Value		Votes	Economic Rights
Class A common stock	$	0.00001	1	Yes
Class B common stock	$	0.00001	10	Yes
Class C common stock	$	0.00001	1	No
Class D common stock	$	0.00001	10	No

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Holders of outstanding shares of Class A common stock, Class B common stock, Class C common stock and Class D common stock will vote together as a single class on all matters presented to the Corporation’s stockholders for their vote or approval, except as otherwise required by applicable law.

Holders of Class B common stock may from time to time exchange all or a portion of their shares of Class B common stock for newly issued shares of Class A common stock on a ~~one-for-one~~1-for-one basis (in which case their shares of Class B common stock will be cancelled on a ~~one-for-one~~1-for-one basis upon any such issuance). Continuing LLC Owners that hold shares of Class D common stock may from time to time exchange all or a portion of their shares of Class D common stock for newly issued shares of Class C common stock on a ~~one-for-one~~1-for-one basis (in which case their shares of Class D common stock will be cancelled on a ~~one-for-one~~1-for-one basis upon such issuance). In addition, with respect to each Bank Stockholder that holds shares of Class D common stock, immediately prior to the occurrence of any event that would cause the combined voting power held by such Bank Stockholder to exceed 4.9%, the minimum number of shares of Class D common stock of such Bank Stockholder that would need to convert into shares of Class C common stock such that the combined voting power held by such Bank Stockholder would not exceed 4.9% will automatically convert into shares of Class C common stock.

Each share of Class B common stock will automatically convert into ~~one~~1 share of Class A common stock and each share of Class D common stock will automatically convert into ~~one~~1 share of Class C common stock (i) immediately prior to any sale or other transfer of such share by a holder or its permitted transferees to a non-permitted transferee or (ii) once the Refinitiv Owners and their affiliates together no longer beneficially own a number of shares of common stock and LLC Interests that together entitle them to at least 10% of TWM LLC’s economic interest. Holders of LLC Interests that receive shares of Class C common stock upon any such conversion may continue to elect to have their LLC Interests redeemed for newly issued shares of Class A common stock as described below (in which case their shares of Class C common stock will be cancelled on a one-for-one basis upon such issuance).

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In addition, the Corporation’s board of directors adopted the Omnibus Equity Plan, under which equity awards may be made in respect of shares of Class A common stock. It also assumed sponsorship of the Option Plan and a PRSU plan formerly sponsored by TWM LLC. See Note 10 – Stock-Based Compensation Plans.

Recapitalization of Tradeweb Markets LLC

On April 4, 2019, the TWM LLC Agreement was amended and restated to, among other things, (i) provide for the LLC Interests, (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC.

All of the shares of TWM LLC outstanding prior to the Reorganization Transactions were exchanged for 222,222,197 LLC Interests. TWM LLC’s outstanding shares prior to the Reorganization Transactions consisted of the following classes of shares:


			Shares
Class A	146,333	~~146,333~~
Class C	447	~~447~~
Class P (A)	6,887	~~6,887~~
Class P (C)	2	2
Class P-1 (A)	6,094	~~6,094~~
Class P-1 (C)	232	~~232~~

The TWM LLC Agreement requires that TWM LLC at all times maintain (i) a one-to-one ratio between the number of shares of Class A common stock and Class B common stock issued by the Corporation and the number of LLC Interests owned by the Corporation and (ii) a one-to-one ratio between the number of shares of Class C common stock and Class D common stock issued by the Corporation and the number of LLC Interests owned by the holders of such Class C common stock and Class D common stock.

LLC Interests held by Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for newly issued shares of Class A common stock or Class B common stock, as the case may be, on a one-for-one basis (and such holders’ shares of Class C common stock or Class D common stock, as the case may be, will be cancelled on a one-for-one basis upon any such issuance). In the event of such election by a Continuing LLC Owner, the Corporation may, at its option, effect a direct exchange of Class A common stock or Class B common stock for such LLC Interests of such Continuing LLC Owner in lieu of such redemption. In addition, the Corporation’s board of directors may, at its option, instead of the

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foregoing redemptions or exchanges of LLC Interests, cause the Corporation to make a cash payment equal to the volume weighted average market price of one share of Class A common stock for each LLC Interest redeemed or exchanged (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the TWM LLC Agreement.

Issuance and Cancellation of Common Stock

~~As a result of the Refinitiv Contribution, the Corporation received 96,933,192 LLC Interests and the Refinitiv Direct Owner received 96,933,192 shares of Class B common stock.~~

•As a result of the Refinitiv Contribution, the Corporation received 96,933,192 LLC Interests and the Refinitiv Direct Owner received 96,933,192 shares of Class B common stock.

The Corporation issued 20,000,000 shares of Class C common stock and 105,289,005 shares of Class D common stock to the Original LLC Owners that received LLC Interests on a one-to-one basis with the number of LLC Interests they owned immediately following the amendment and restatement of the TWM LLC Agreement for nominal consideration (the Corporation subsequently cancelled 9,993,731 shares of such Class C common stock and 36,006,269 shares of such Class D common stock in connection with the Corporation’s purchase of LLC Interests from certain of the Bank Stockholders using the net proceeds of the IPO).

•The Corporation issued 20,000,000 shares of Class C common stock and 105,289,005 shares of Class D common stock to the Original LLC Owners that received LLC Interests on a one-to-one basis with the number of LLC Interests they owned immediately following the amendment and restatement of the TWM LLC Agreement for nominal consideration (the Corporation subsequently cancelled 9,993,731 shares of such Class C common stock and 36,006,269 shares of such Class D common stock in connection with the Corporation’s purchase of LLC Interests from certain of the Bank Stockholders using the net proceeds of the IPO).

Following the completion of the Reorganization Transactions, including the IPO and the application of the proceeds therefrom as described above, (i) the investors in the IPO collectively owned 46,000,000 shares of Class A common

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stock, representing 2.7% of the combined voting power of all of the Corporation’s common stock and, through the Corporation’s ownership of LLC Interests, 20.7% of the economic interest in TWM LLC; (ii) the Refinitiv Direct Owner owned 96,933,192 shares of Class B common stock, representing 56.4% of the combined voting power of all of the Corporation’s common stock and, through the Corporation’s ownership of LLC Interests, 43.6% of the economic interest in TWM LLC; (iii) the Refinitiv LLC Owner owned 22,988,329 shares of Class D common stock, representing 13.4% of the combined voting power of all of the Corporation’s common stock, and 22,988,329 LLC Interests, representing 10.3% of the economic interest in TWM LLC, (iv) the Continuing LLC Owners (other than the Refinitiv LLC Owner) collectively owned 10,006,269 shares of Class C common stock and 46,294,407 shares of Class D common stock, representing 27.5% of the combined voting power of all of the Corporation’s common stock, and 56,300,676 LLC Interests, representing 25.3% of the economic interest in TWM LLC; and (v) the Corporation owned 142,933,192 LLC Interests, representing 64.3% of the economic interest in TWM LLC.

October 2019 Follow-On Offering

In the fourth quarter of 2019, Tradeweb Markets Inc. completed an underwritten follow-on offering of 19,881,059 shares of Class A Common stock at a public offering price of $42.00 per share, which included 2,593,181 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. Tradeweb Markets Inc. received net proceeds of $810.0 million, after deducting underwriting discounts and commissions but before deducting estimated offering expenses, which were used to purchase (i) 19,835,666 issued and outstanding LLC Interests from certain of the Bank Stockholders and certain of our executive officers (and the corresponding shares of Class C common stock and/or Class D common stock held by such holders were cancelled) and (ii) 45,393 issued and outstanding shares of Class A common stock from certain of our executive officers (which shares of Class A common stock were cancelled), at a purchase price per interest and share equal to the public offering price of $42.00, less the underwriting discounts and commissions payable thereon.

April 2020 Follow-On Offering

In the second quarter of 2020, Tradeweb Markets Inc. completed an underwritten follow-on offering of 12,835,245 shares of Class A Common stock at a public offering price of $50.25 per share, which included 1,674,162 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. Tradeweb Markets Inc. received net proceeds of $626.3 million, after deducting underwriting discounts and commissions but before deducting estimated offering expenses, which were used to purchase (i) 12,238,827 issued and outstanding LLC Interests from certain of the Bank Stockholders and certain of our executive officers (and the corresponding shares of Class C common stock and/or Class D common stock held by such holders were cancelled) and (ii) 596,418 issued and outstanding shares of Class A common stock from certain of our executive officers (which shares of Class A common stock were cancelled), at a purchase price per interest and share equal to the public offering price of $50.25, less the underwriting discounts and commissions payable thereon.

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Redemptions and Exchanges of LLC Interests

In addition to the IPO, ~~and~~ the October 2019 follow-on offering and the April 2020 follow-on offering transactions described above, during the three months ended ~~March 31,~~June 30, 2020, certain Continuing LLC Owners exercised their redemption rights under the TWM LLC Agreement, pursuant to which ~~1,920,941~~5,509,141 LLC Interests were exchanged for ~~1,920,941~~5,509,141 newly-issued shares of Class A common stock. Simultaneously, and in connection with these exchanges, ~~939,000~~2,969,992 shares of Class C common stock and ~~981,941~~2,539,149 shares of Class D common stock were surrendered by ~~these~~the Continuing LLC Owners and cancelled. ~~Additionally, in~~In connection with these exchanges, Tradeweb Markets Inc. received ~~1,920,941~~5,509,141 LLC Interests, increasing its total ownership interest in TWM LLC.

Additionally, 690,000 shares of Class D common stock were surrendered by the Continuing LLC Owners and cancelled in exchange for 690,000 shares of newly-issued Class C common stock.

As a result of the Reorganization Transactions, the IPO, the October 2019 follow-on offering, the April 2020 follow-on offering and other exchanges and equity activity, as of ~~March 31,~~June 30, 2020:

The public investors collectively owned 70,670,440 shares of our Class A common stock, representing 4.6% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and indirectly, through Tradeweb Markets Inc., owned 31.4% of the economic interest in TWM LLC;

Refinitiv collectively owned 96,933,192 shares of our Class B common stock and 22,988,329 shares of our Class D common stock, representing 77.6% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 53.3% of the economic interest in TWM LLC; and

•The public investors collectively owned 90,642,108 shares of the Company's Class A common stock, representing 6.4% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and indirectly, through Tradeweb Markets Inc., owned 39.9% of the economic interest in TWM LLC;

The Bank Stockholders that continue to own LLC Interests collectively owned 7,389,983 shares of our Class C common stock and 26,730,623 shares of our Class D common stock, representing 17.8% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 15.2% of the economic interest in TWM LLC.

•Refinitiv collectively owned 96,933,192 shares of the Company's Class B common stock and 22,988,329 shares of the Company's Class D common stock, representing 85.1% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 52.8% of the economic interest in TWM LLC; and

•The Bank Stockholders that continue to own LLC Interests collectively owned 5,109,991 shares of the Company's Class C common stock and 11,285,182 shares of the Company's Class D common stock, representing 8.4% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 7.2% of the economic interest in TWM LLC.

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9. Non-Controlling Interests

In connection with the Reorganization Transactions, Tradeweb Markets Inc. became the sole manager of TWM LLC and, as a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, consolidates the financial results of TWM LLC into its consolidated financial statements. The non-controlling interests balance reported on the consolidated statements of financial condition represents the economic interests of TWM LLC held by the holders of LLC Interests other than Tradeweb Markets Inc. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by Tradeweb Markets Inc. and the other holders of LLC Interests.

The following table summarizes the ownership interest in Tradeweb Markets LLC:


	March 31, 2020
	LLC	Ownership		June 30, 2020				June 30, 2019
	Interests	%		LLC Interests	Ownership %		LLC Interests	Ownership %
Number of LLC Interests held by Tradeweb Markets Inc.	167,603,632	74.5%	Number of LLC Interests held by Tradeweb Markets Inc.	187,575,300	82.6	%	142,933,192	64.3	%
Number of LLC Interests held by non-controlling interests	57,261,214	25.5%	Number of LLC Interests held by non-controlling interests	39,513,246	17.4	%	79,289,005	35.7	%
Total LLC Interests outstanding	224,864,846	100.0%	Total LLC Interests outstanding	227,088,546	100.0	%	222,222,197	100.0	%

LLC Interests held by the Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement at the election of the members for shares of Class A common stock or Class B common stock, on a ~~one-for-one~~1-for-one basis or, at the Company's option, a cash payment in accordance with the terms of the TWM LLC Agreement. See Note 8 – Stockholders’ Equity.

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The following table summarizes the impact on equity due to changes in the Corporation’s ownership interest in Tradeweb Markets LLC (in thousands):


	Three Months Ended
Net Income Attributable to Tradeweb Markets Inc. and Transfers (to) from the Non-Controlling Interests	March 31, 2020		Net Income Attributable to Tradeweb Markets Inc. and Transfers (to) from the Non-Controlling Interests	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Net income attributable to Tradeweb Markets Inc.	$	43,928	Net income attributable to Tradeweb Markets Inc.	$	30,496	$	12,828	$	74,424	$	12,828
Transfers (to) from non-controlling interests:			Transfers (to) from non-controlling interests:
Change in non-controlling interests as a result of ownership changes		45,443	Change in non-controlling interests as a result of ownership changes	379,374		(1,607,529)		424,817		(1,607,529)
Net transfers (to) from non-controlling interests		45,443	Net transfers (to) from non-controlling interests	379,374		(1,607,529)		424,817		(1,607,529)
Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests	$	89,371	Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests	$	409,870	$	(1,594,701)	$	499,241	$	(1,594,701)

Account balances are pooled based on the following risk characteristics:

~~Geographic location~~

~~Transaction fee type (billing type)~~

1.Geographic location

~~Legal entity~~

2.Transaction fee type (billing type)

3.Legal entity

Write-Offs

~~Account balances aged greater than 360 days are reserved to the allowance for credit losses.~~

Once determined uncollectable, aged balances are written off as credit loss expense. This determination is based on careful analysis of individual receivables and aging schedules, which are disaggregated based on the risk characteristics described above. Based on current policy, this generally occurs when the receivable hits 360 days past due.

The following table presents the activity in the allowance for credit losses for accounts receivable for the period ended ~~March 31,~~June 30, 2020 (in thousands):

Amount
Beginning balance, prior to adoption of ASC 326 - December 31, 2019
$
195
Current-period provision for expected credit losses

62
Write-offs charged against the allowance

(33)
Recoveries collected

(74)
Ending balance - March 31, 2020
$
150


	Amount
Beginning balance, prior to adoption of ASC 326 - December 31, 2019	$	195
Current-period provision for expected credit losses	114
Write-offs charged against the allowance	(41)
Recoveries collected	(153)
Ending balance - June 30, 2020	$	115

14. Commitments and Contingencies

In the normal course of business, the Company enters into user agreements with its dealers which provide the dealers with indemnification from third parties in the event that the electronic marketplaces of the Company infringe upon the intellectual property or other proprietary right of a third party. The Company's exposure under these user agreements is unknown as this would involve estimating future claims against the Company which have not yet occurred. However, based on its experience, the Company expects the risk of a material loss to be remote.

The Company has been named as a defendant, along with other financial institutions, in antitrust class actions (consolidated into two actions) relating to trading practices in United States Treasury securities auctions. The Company has filed a motion to dismiss the actions, believes it has substantial defenses to the other plaintiff's claims and intends to defend itself vigorously. Additionally, the Company was dismissed from a class action relating to an interest rate swaps matter in 2017, but that matter continues against the remaining defendant financial institutions.

The Company records its best estimate of a loss, including estimated defense costs, when the loss is considered probable and the amount of such loss can be reasonably estimated. Based on its experience, the Company believes that the amount of damages claimed in a legal proceeding is not a meaningful indicator of the potential liability. At this time, the Company cannot reasonably predict the timing or outcomes of, or estimate the amount of loss, or range of loss, if any, related to its pending legal proceedings, including the matter described above, and therefore does not have any contingency reserves established for any of these matters.

In 2015, IDC Financial Publishing, Inc. (“IDC”) filed a lawsuit in the United States District Court for the Eastern District of Wisconsin captioned IDC Financial Publishing Inc. v. BondDesk Group LLC, et al. Claims were asserted against the Company and against Fidelity Global Brokerage Group, Inc., Fidelity Brokerage Services, LLC, and National Financial Services, LLC (collectively, “Fidelity”) relating to the distribution of IDC’s financial strength ratings over the Company’s trading platform to Fidelity, its registered investment advisors and Fidelity’s correspondent banks. Following extensive pre-trial proceedings that resulted in certain of IDC’s claims being dismissed by the court in 2019, the parties entered into a settlement agreement in early 2020 in which all remaining claims and counterclaims in the lawsuit were settled without any material impact to the Company’s financial condition or results of operations, and the matter has been dismissed with prejudice.

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Revolving Credit Facility

On April 8, 2019, the Company entered into a five year, $500 million senior secured revolving credit facility (“Credit Facility”) with a syndicate of banks. The Credit Facility provides additional borrowing capacity to be used to fund ongoing working capital needs, letters of credit and for general corporate purposes, including potential future acquisitions and expansions.

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On November 7, 2019, TWM LLC entered into an amendment to the Revolving Credit Facility among TWM LLC and the lenders party thereto, which revised the Revolving Credit Facility to permit the pending LSEG Transaction. The amendment did not otherwise impact the terms of the Revolving Credit Facility and did not impact the amount of borrowings available to TWM LLC under the Revolving Credit Facility.

Under the terms of the credit agreement that governs the Credit Facility, borrowings under the Credit Facility bear interest at a rate equal to, at the Company’s option, either (a) a base rate equal to the greatest of (i) the administrative agent’s prime rate, (ii) the federal funds effective rate plus ½ of 1.0% and (iii) one month LIBOR plus 1.0%, in each case plus 0.75%, or (b) LIBOR plus 1.75%, subject to a 0.00% floor. The credit agreement also includes a commitment fee of 0.25% for available but unborrowed amounts and other administrative fees that are payable quarterly. The Credit Facility is available until April 2024, provided the Company is in compliance with all covenants. Financial covenant requirements include maintaining minimum ratios related to interest coverage and leverage.

As of ~~March 31,~~June 30, 2020, there were no0 amounts outstanding under the Credit Facility.

15. Earnings Per Share

In April 2019, the Company completed the Reorganization Transactions and the IPO, which, among other things, resulted in the Corporation becoming the successor of TWM LLC for financial reporting purposes. As a result, earnings per share information for the pre-IPO period is not comparable to earnings per share information for the post-IPO period. Thus, earnings per share information is being presented separately for the pre-IPO and post-IPO periods.

The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets Inc. (post-IPO period):

Three Months Ended
EPS: Net income attributable to Tradeweb Markets Inc.
March 31, 2020
(in thousands, except share and per share amounts)
Numerator:

Net income attributable to Tradeweb Markets Inc.
$
43,928

Denominator:

Weighted average shares of Class A and Class B common stock outstanding - Basic

166,234,749
Dilutive effect of equity-settled PRSUs

2,038,422
Dilutive effect of options

6,221,549
Dilutive effect of RSUs

22,524
Weighted average shares of Class A and Class B common stock outstanding - Diluted

174,517,244

Earnings per share - Basic
$
0.26
Earnings per share - Diluted
$
0.25


	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
EPS: Post-IPO net income attributable to Tradeweb Markets Inc.	(in thousands, except share and per share amounts)
Numerator:
Post-IPO net income attributable to Tradeweb Markets Inc.	$	30,496	$	12,828	$	74,424	$	12,828

Denominator:
Weighted average shares of Class A and Class B common stock outstanding - Basic	177,649,501		142,933,192		171,942,125		142,933,192
Dilutive effect of equity-settled PRSUs	2,492,567		2,214,480		2,265,494		2,214,480
Dilutive effect of options	5,168,379		5,699,511		5,694,964		5,699,511
Dilutive effect of RSUs	179,377		—		106,308		—
Weighted average shares of Class A and Class B common stock outstanding - Diluted	185,489,824		150,847,183		180,008,891		150,847,183

Earnings per share - Basic	$	0.17	$	0.09	$	0.43	$	0.09
Earnings per share - Diluted	$	0.16	$	0.09	$	0.41	$	0.09

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The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets LLC (pre-IPO period):

Three Months Ended
EPS: Net income attributable to Tradeweb Markets LLC(1)
March 31, 2019
(in thousands, except share and per share amounts)
Numerator:

Net income attributable to Tradeweb Markets LLC
$
42,352

Denominator:

Weighted average LLC Interests outstanding - Basic

222,222,197
Dilutive effect of equity-settled PRSUs

1,098,260
Weighted average LLC Interests outstanding - Diluted

223,320,457

Earnings per share - Basic
$
0.19
Earnings per share - Diluted
$
0.19

	~~(1)~~
			Six Months Ended June 30, 2019
EPS: Pre-IPO net income attributable to Tradeweb Markets LLC⁽¹⁾		(in thousands, except share and per share amounts)
Numerator:
Pre-IPO net income attributable to Tradeweb Markets LLC			$	42,352

Denominator:
Weighted average LLC Interests outstanding - Basic			222,222,197
Dilutive effect of equity-settled PRSUs			1,098,260
Weighted average LLC Interests outstanding - Diluted			223,320,457

Earnings per share and weighted average shares outstanding for the pre-IPO period has been computed to give effect to the Reorganization Transactions, including the amendment and restatement of the TWM LLC Agreement to, among other things, (i) provide for LLC Interests and (ii) exchange all of the then existing membership interests in TWM LLC for LLC interests. - Basic			$	0.19
Earnings per share - Diluted			$	0.19

(1)Earnings per share and weighted average shares outstanding for the pre-IPO period has been computed to give effect to the Reorganization Transactions, including the amendment and restatement of the TWM LLC Agreement to, among other things, (i) provide for LLC Interests and (ii) exchange all of the then existing membership interests in TWM LLC for LLC interests.

For the three and six months ended ~~March 31,~~June 30, 2020, there were approximately ~~378,124~~3,500 and 289,563 weighted-average ~~shares underlying~~ options and RSUs, respectively, that were anti-dilutive. As a result, these shares, which are still outstanding, were excluded from the computation of diluted earnings per ~~share~~.

share. For the three and six months ended June 30, 2019, there were approximately 340 weighted-average equity-settled PRSUs that were anti-dilutive and thus excluded from the computation of diluted earnings per share.

LLC Interests held by the Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for shares of Class A or Class B common stock of Tradeweb Markets Inc. After evaluating the potential dilutive effect under the if-converted method, the ~~57,644,547~~48,132,630 and 52,888,588 weighted-average LLC Interests for the assumed exchange of non-controlling interests, for the three and six months ended June 30, 2020, respectively, were determined to be anti-dilutive and thus were excluded from the computation of diluted earnings per share for the post-IPO periods.

Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not participating securities for purposes of the computation of earnings per share.

16. Regulatory Capital Requirements

TWL, DW and TWD are subject to the Uniform Net Capital Rule ~~15c3‑1~~15c3-1 under the Securities Exchange Act of 1934. TEL is subject to certain financial resource requirements with the FCA in the UK, TWJ is subject to certain financial resource requirements with the FCA in Japan and TWEU is subject to certain finance resource requirements with the AFM in the Netherlands.

At ~~March 31,~~June 30, 2020 and December 31, 2019, the regulatory capital requirements and regulatory capital for TWL, DW, TWD, TEL, TWJ and TWEU are as follows (in thousands):

As of March 31, 2020

TWL

DW

TWD

TEL

TWJ

TWEU
Regulatory Capital

$
40,228

$
55,785

$
23,297

$
65,029

$
12,292

$
6,279
Regulatory Capital Requirement

1,549

1,319

428

20,448

8,087

1,675
Excess Regulatory Capital

$
38,679

$
54,466

$
22,869

$
44,581

$
4,205

$
4,604

As of December 31, 2019

TWL

DW

TWD

TEL

TWJ

TWEU
Regulatory Capital

$
42,317

$
52,016

$
33,807

$
49,611

$
11,851

$
6,217
Regulatory Capital Requirement

2,396

2,026

664

21,856

8,565

1,701
Excess Regulatory Capital

$
39,921

$
49,990

$
33,143

$
27,755

$
3,286

$
4,516


As of June 30, 2020	TWL		DW		TWD		TEL		TWJ		TWEU
Regulatory Capital	$	68,860	$	56,374	$	23,037	$	53,331	$	11,401	$	7,044
Regulatory Capital Requirement	1,373		1,506		509		20,331		6,559		1,704
Excess Regulatory Capital	$	67,487	$	54,868	$	22,528	$	33,000	$	4,842	$	5,340

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As of December 31, 2019	TWL		DW		TWD		TEL		TWJ		TWEU
Regulatory Capital	$	42,317	$	52,016	$	33,807	$	49,611	$	11,851	$	6,217
Regulatory Capital Requirement	2,396		2,026		664		21,856		8,565		1,701
Excess Regulatory Capital	$	39,921	$	49,990	$	33,143	$	27,755	$	3,286	$	4,516

As SEFs, TW SEF and DW SEF are required to maintain adequate financial resources and liquid financial assets in accordance with CFTC regulations. The required and maintained financial resources and liquid financial assets at ~~March 31,~~June 30, 2020 and December 31, 2019 are as follows (in thousands):


	As of March 31, 2020				As of December 31, 2019					As of June 30, 2020						As of December 31, 2019
	TW SEF		DW SEF		TW SEF		DW SEF			TW SEF		DW SEF		TW SEF		DW SEF
Financial Resources	$	30,300	$	13,313	$	21,303	$	13,707	Financial Resources	$	28,776	$	14,202	$	21,303	$	13,707
Required Financial Resources		10,500		5,807		10,500		5,505	Required Financial Resources	13,500		5,629		10,500		5,505
Excess Financial Resources	$	19,800	$	7,506	$	10,803	$	8,202	Excess Financial Resources	$	15,276	$	8,573	$	10,803	$	8,202

Liquid Financial Assets	$	13,399	$	7,339	$	18,168	$	7,583	Liquid Financial Assets	$	16,572	$	7,359	$	18,168	$	7,583
Required Liquid Financial Assets		5,250		2,904		5,250		2,753	Required Liquid Financial Assets	6,750		2,815		5,250		2,753
Excess Liquid Financial Assets	$	8,149	$	4,435	$	12,918	$	4,830	Excess Liquid Financial Assets	$	9,822	$	4,544	$	12,918	$	4,830

17. Business Segment and Geographic Information

The Company operates electronic marketplaces for the trading of products across the rates, credit, equities and money markets asset classes and provides related pre-trade and post-trade services. The Company’s operations constitute a single business segment because of the integrated nature of these marketplaces and services. Information regarding revenue by client sector is as follows (in thousands):


	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019			Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months EndedJune 30, 2020		Six Months EndedJune 30, 2019
Gross revenue:					Gross revenue:
Institutional	$	145,612	$	109,252	Institutional	$	129,992	$	111,057	$	275,604	$	220,309
Wholesale		48,756		39,431	Wholesale	43,252		41,945		92,008		81,376
Retail		21,676		21,206	Retail	20,366		19,939		42,042		41,145
Market Data		18,562		16,903	Market Data	18,497		17,544		37,059		34,447
Total revenue		234,606		186,792	Total revenue	212,107		190,485		446,713		377,277
Operating expenses		156,991		140,515	Operating expenses	156,468		159,530		313,459		300,045
Operating income	$	77,615	$	46,277	Operating income	$	55,639	$	30,955	$	133,254	$	77,232

The table below provides a reconciliation of net income attributable to Tradeweb Markets Inc. and net income, as applicable, to Adjusted Net Income and Adjusted Diluted EPS for the three and six months ended ~~March 31,~~June 30, 2020 and 2019:

Three Months Ended

Three Months Ended

March 31, 2020

March 31, 2019

(in thousands except per share amounts)

Earnings per diluted share(1)

$
0.25
(a)
$
0.19
(b)
Net income attributable to Tradeweb Markets LLC (1)

$
—

$
42,352
(b)
Net income attributable to Tradeweb Markets Inc.(1)

43,928
(a)

—

Net income attributable to non-controlling interests (1)(2)

18,557
(a)

—

Net income

62,485
(a)

42,352
(b)
Provision for income taxes

15,829

4,783

Acquisition and Refinitiv Transaction related D&A(3)

26,273

23,209

Stock-based compensation expense(4)

3,497

—

Unrealized foreign exchange (gains) / losses

1,164

(293)

Loss from revaluation of foreign denominated cash(5)

198

860

Adjusted Net Income before income taxes

109,446

70,911

Adjusted income taxes(6)

(24,078)

(18,721)

Adjusted Net Income

$
85,368

$
52,190

Adjusted Diluted EPS (1)(7)

$
0.37
(a)
$
0.23
(b)

~~(1)~~

~~As a result of the Reorganization Transactions and the IPO completed in April 2019, certain earnings information is being presented separately for Tradeweb Markets LLC and Tradeweb Markets Inc.~~


	Three Months Ended June 30, 2020			Three Months Ended June 30, 2019			Six Months Ended June 30, 2020			Six Months Ended June 30, 2019
	(in thousands except per share amounts)
Earnings per diluted share⁽¹⁾	$	0.16	_(a)	$	0.09	_(a)	$	0.41	_(a)	0.19 / 0.09		_(b)/ _(a)
Pre-IPO net income attributable to Tradeweb Markets LLC ⁽¹⁾	$	—		$	—		$	—		$	42,352	_(b)
Net income attributable to Tradeweb Markets Inc.⁽¹⁾	30,496		_(a)	12,828		_(a)	74,424		_(a)	12,828		_(a)
Net income attributable to non-controlling interests ⁽¹⁾⁽²⁾	11,912		_(a)	11,988		_(a)	30,469		_(a)	11,988		_(a)
Net income⁽¹⁾	42,408		_(a)	24,816		_(a)	104,893		_(a)	67,168		_(b)/ _(a)
Provision for income taxes	12,945			6,314			28,774			11,097
Acquisition and Refinitiv Transaction related D&A⁽³⁾	27,131			24,133			53,404			47,342
Stock-based compensation expense⁽⁴⁾	4,995			20,403			8,492			20,403
Unrealized foreign exchange (gains) / losses	2,793			1,577			3,957			1,284
(Gain) / loss from revaluation of foreign denominated cash⁽⁵⁾	(37)			(302)			161			558
Adjusted Net Income before income taxes	90,235			76,941			199,681			147,852
Adjusted income taxes⁽⁶⁾	(19,852)			(20,312)			(43,930)			(39,033)
Adjusted Net Income	$	70,383		$	56,629		$	155,751		$	108,819
Adjusted Diluted EPS ⁽¹⁾⁽⁷⁾	$	0.30	_(a)	$	0.25	_(a)	$	0.67	_(a)	$ 0.23 / 0.25		_(b)/ _(a)

(1)As a result of the Reorganization Transactions and the IPO completed in April 2019, certain earnings information is being presented separately for Tradeweb Markets LLC and Tradeweb Markets Inc.

(a)Presents information for Tradeweb Markets Inc. (post-IPO period).

(b)Presents information for Tradeweb Markets LLC (pre-IPO period).

See Note 15 — Earnings Per Share to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form ~~10-Q~~.

~~(2)~~

For post-IPO periods, represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock.

10-Q.

~~(3)~~

Represents acquisition-related intangibles amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

(2)For post-IPO periods, represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock.

~~(4)~~

Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period.

(3)Represents acquisition-related intangibles amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

~~(5)~~

~~Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.~~

(4)Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period.

~~(6)~~

Represents corporate income taxes at an assumed effective tax rate of 22.0% and 26.4% applied to Adjusted Net Income before income taxes for the three months ended March 31, 2020 and March 31, 2019, respectively.

(5)Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

~~(7)~~

Due to the Reorganization Transactions and the IPO completed in April 2019, shares outstanding during the three months ended March 31, 2019 represent shares of TWM LLC (pre-IPO period) and shares outstanding during the three months ended March 31, 2020 represent shares of Class A and Class B common stock of Tradeweb Markets, Inc. (post-IPO period). For a summary of the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding” below.

(6)Represents corporate income taxes at an assumed effective tax rate of 22.0% and 26.4% applied to Adjusted Net Income before income taxes for the three and six months ended June 30, 2020 and 2019, respectively. For pre-IPO periods, this adjustment assumes Tradeweb Markets LLC was subject to a corporate tax rate for the periods presented.

(7)Due to the Reorganization Transactions and the IPO completed in April 2019, shares outstanding during the six months ended June 30, 2019 represent shares of TWM LLC (pre-IPO period) and shares of Class A and Class B common stock of Tradeweb Markets, Inc. (post-IPO period). Shares outstanding during the three and six months ended June 30, 2020 represent shares of Class A and Class B common stock of Tradeweb Markets Inc. (post-IPO period). For a summary of the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding” below.

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The following table summarizes the calculation of Adjusted Diluted EPS for the three and six months ended ~~March 31,~~June 30, 2020 and 2019:

Reconciliation of Diluted Weighted Average Shares Outstanding to

Three Months Ended

Three Months Ended
Adjusted Diluted Weighted Average Shares Outstanding

March 31, 2020

March 31, 2019
Diluted weighted average TWM LLC shares outstanding

—

223,320,457
Diluted weighted average shares of Class A and Class B common stock outstanding

174,517,244

—
Assumed exchange of LLC interests for shares of Class A or Class B common stock (1)

57,644,547

—
Adjusted diluted weighted average shares outstanding

232,161,791

223,320,457
Adjusted Net Income (in thousands)

$
85,368

$
52,190
Adjusted Diluted EPS

$
0.37

$
0.23

~~(1)~~

Assumes the exchange of all outstanding LLC Interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests.


							Pre-IPO Period		Post-IPO Period
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019		Six Months Ended June 30, 2019
Diluted weighted average TWM LLC shares outstanding	—		—		—		223,320,457		—
Diluted weighted average shares of Class A and Class B common stock outstanding	185,489,824		150,847,183		180,008,891		—		150,847,183
Assumed exchange of LLC interests for shares of Class A or Class B common stock ⁽¹⁾	48,132,630		79,289,005		52,888,588		—		79,289,005
Adjusted diluted weighted average shares outstanding	233,622,454		230,136,188		232,897,479		223,320,457		230,136,188
Adjusted Net Income (in thousands)	$	70,383	$	56,629	$	155,751	$	52,190	$	56,629
Adjusted Diluted EPS	$	0.30	$	0.25	$	0.67	$	0.23	$	0.25

(1)Assumes the exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests.

Off-Balance Sheet Arrangements

As of ~~March 31,~~June 30, 2020, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP which requires us to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. Management evaluates its accounting policies, estimates and judgments on an on-going basis.

Management evaluated the development and selection of its critical accounting policies and estimates and believes that the following policies are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. More information on all of our significant accounting policies can be found in Note 2 – Significant Accounting Policies to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in our consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Management bases its estimates on historical experience, observance of trends in particular areas, information available from outside sources and various other assumptions that are believed to be reasonable under the circumstances. Information from these sources form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Therefore, actual results could differ materially from those estimates. Such estimates include pushdown accounting, intangible assets, goodwill, software development costs, stock based compensation, and current and deferred income taxes.

Pushdown Accounting

The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv on the date of the Refinitiv Transaction. We, as a consolidating subsidiary

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of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting. Under pushdown accounting, the excess of our fair value above the fair value accounting basis of our net assets and liabilities is recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability.

In determining the fair value of the assets acquired and the liabilities assumed, we considered a report of a third-party valuation expert. Management is responsible for these internal and third-party valuations and appraisals.

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Intangible Assets

We amortize our intangible assets over the estimated useful lives and test for impairment whenever events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. We test our intangible assets with an indefinite useful life for impairment at least annually. An impairment loss is recognized if the sum of the estimated discounted cash flows relating to the asset or asset group is less than the corresponding carrying value. Intangible assets are amortized over their estimated useful lives of seven to twelve years.

Goodwill

Goodwill arises out of pushdown accounting and business combinations and is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. We test our goodwill at least annually for impairment and recognize an impairment loss if the estimated fair value of a reporting unit is less than its net book value. The Company is one reporting unit for goodwill impairment testing purposes. The fair value of a reporting unit is calculated based on the fair market value of the Company’s Class A and B common shares. We calculate such loss as the difference between the estimated fair value of goodwill and its carrying value. If future events or results differ adversely from the estimates and assumptions made at acquisition or as part of subsequent impairment tests, we may record increased amortization or impairment charges in the future.

Software Development Costs

We capitalize certain costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed, including among other items, employee compensation and related benefits and third-party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Costs capitalized as part of the pushdown accounting allocation are amortized over nine years. We review the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Due to rapidly changing technology and the uncertainty of the software development process itself, future results could be affected if management’s current assessment of its software projects differs from actual performance.

Revenue Recognition

We earn fees from Refinitiv relating to the sale of market data to Refinitiv, which redistributes that data. Included in these fees are real-time market data fees which are recognized in the period that the data is provided, generally on a monthly basis, and fees for historical data sets which are recognized when the historical data set is provided to Refinitiv. We are required to make significant judgements for the Refinitiv market data fees. Significant judgements used in accounting for this contract include:

~~The provision of real-time market data feeds and annual historical data sets are distinct performance obligations.~~

~~The performance obligations under this contract are recognized over time from the initial delivery of the data feeds or each historical data set until the end of the contract term.~~

•The provision of real-time market data feeds and annual historical data sets are distinct performance obligations.

•The performance obligations under this contract are recognized over time from the initial delivery of the data feeds or each historical data set until the end of the contract term.

•Determining the transaction price for the performance obligations by using a market assessment analysis. Inputs in this analysis include a consultant study which determined the overall value of our market data and pricing information for historical data sets provided by other companies.

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Determining the transaction price for the performance obligations by using a market assessment analysis. Inputs in this analysis include a consultant study which determined the overall value of our market data and pricing information for historical data sets provided by other companies.

Stock-Based Compensation

The stock-based compensation that our employees receive is accounted for as equity or liability awards. As a stock-based equity award, the Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital.

As a stock-based liability award, the cost of the employee services received in exchange for an award of equity instruments is generally measured based on the grant-date fair value of the award. The fair value of that award is remeasured subsequently at each reporting date through to settlement. Changes in the fair value of the equity instrument are recognized as compensation cost over that period in our consolidated statements of income.

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For grants made during the post-IPO period, the fair value of the equity instruments is determined based on the price of the Company’s Class A common stock on the grant date.

Prior to and following the IPO, we awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan. In accounting for the options issued under this plan, we measure and recognize compensation expense for all awards based on their estimated fair values measured as of the grant date. Costs related to these options are recognized as an expense in our consolidated statements of income over the requisite service period, with an offsetting increase to additional paid-in capital. We started to expense the non-cash stock-based compensation related to the Special Option Award beginning in the second quarter of 2019, with a charge of $20.4 million ($18.9 million of which was charged immediately upon the completion of the IPO), and will continue to expense over the following three years. For more information, please see “Executive Compensation—Narrative Disclosure to Summary Compensation Table—Amended and Restated Tradeweb Markets Inc. 2018 Share Option Plan” in our definitive proxy statement for the ~~October Prospectus.~~

2020 Annual Meeting of Stockholders filed with the SEC on April 9, 2020.

We use the Black-Scholes pricing model to value some of our stock-based awards. Determining the appropriate fair value model and calculating the fair value of the stock-based awards requires the input of highly subjective assumptions, including the expected life of the stock-based awards, the number of expected stock-based awards that will be forfeited prior to the completion of the vesting requirements, and the stock price volatility.

Income Taxes

Tradeweb Markets Inc. is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including to us. TWM LLC records taxes for conducting business in certain state, local and foreign jurisdictions and records U.S. federal taxes for subsidiaries that are taxed as corporations for U.S. tax purposes. We currently record deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and measure the deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. We record valuation allowances when we believe that it is more likely than not that the Company will not be able to realize its deferred tax assets in the ~~future; therefore, no valuation allowance is necessary.~~

future.

We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes in our consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in our consolidated statements of financial condition.

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A U.S. shareholder of a controlled foreign corporation (“CFC”) is required to include in income, as a deemed dividend, the global intangible low-taxed income (“GILTI”) of the CFC. We have elected to treat taxes due on future U.S. inclusions in taxable income of GILTI as a current period expense when incurred.

Tax Receivable Agreement

Tradeweb Markets Inc. entered into a Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners which provides for the payment by Tradeweb Markets Inc. to a Continuing LLC Owner of 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that Tradeweb Markets Inc. actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and April 2020 follow-on ~~offering~~offerings and any future offering or (b) redemptions or exchanges by such Continuing LLCOwner of LLC Interests for shares of Class A common stock or Class B common stock or for cash, as applicable, and (ii) certain other tax benefits related to Tradeweb Markets Inc. making payments under the Tax Receivable Agreement.

We recorded an initial liability of $171.4 million related to our projected obligations under the Tax Receivable Agreement with respect to LLC Interests that were purchased by us using the net proceeds from the IPO. As of December 31, 2019, the liability was $240.8 million, primarily due to the purchase of LLC Interests by the Corporation using the net proceeds of the October 2019 follow-on offering as well as additional exchanges of LLC Interests by Continuing LLC Owners. During the ~~first~~second quarter of 2020, the liability increased to ~~$252.0~~$373.0 million primarily due to the April 2020 follow-on offering and additional exchanges of LLC Interests by Continuing LLC Owners.

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The impact of any changes in the projected obligations under the Tax Receivable Agreement as a result of changes in the geographic mix of the our earnings, changes in tax legislation and tax rates or other factors that may impact our tax savings will be reflected in income before taxes in the period in which the change occurs.

Recent Accounting Pronouncements – Recently Adopted

See Note 2 – Significant Accounting Policies to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements (adopted and not yet adopted).

Effects of Inflation

While inflation may impact our revenues and operating expenses, we believe the effects of inflation, if any, on our results of operations and financial condition have not been significant. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future.

Jumpstart Our Business Startups Act of 2012

The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) permits us, as an “emerging growth company,” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Foreign Currency and Derivative Risk

We have global operations and substantial portions of our revenues, expenses, assets and liabilities are generated and denominated in non-U.S. dollar currencies.

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The following table shows the percentage breakdown of our gross revenue and operating expenses denominated in currencies other than the U.S. dollar for the three and six months ended ~~March 31,~~June 30, 2020 and 2019:

Three

Three

Months

Months

Ended

Ended

March 31,

March 31,

2020

2019

% of revenue denominated in foreign currencies (1)

31
%

30
%
% of operating expenses denominated in foreign currencies (2)

15
%

15
%

~~(1)~~

~~Gross revenue in foreign currencies is primarily denominated in Euros.~~


	Three Months Ended June 30,			Six Months Ended June 30,
	2020	2019	2020	2019
% of revenue denominated in foreign currencies⁽¹⁾	27%	30%	29%	30	%
% of operating expenses denominated in foreign currencies⁽²⁾	16%	14%	15%	14	%

~~(2)~~

~~Operating expenses in foreign currencies are primarily denominated in British pounds.~~

(1)Gross revenue in foreign currencies is primarily denominated in Euros.

(2)Operating expenses in foreign currencies are primarily denominated in British pounds.

Since our consolidated financial statements are presented in U.S. dollars, we must translate revenues and expenses, as well as assets and liabilities, into U.S. dollars. Accordingly, increases or decreases in the value of the U.S. dollar against the other currencies will affect our net operating revenues, operating income and the value of balance sheet items denominated in foreign currencies. Revenues and expenses denominated in currencies other than the U.S. dollar are translated at the rate of exchange prevailing at the transaction date. Assets and liabilities denominated in foreign currencies are translated at the rate prevailing at the end of the reporting period. Any gain or loss resulting from the translation of assets and liabilities is included as a component of comprehensive income.

The following table shows the change in gross revenue and operating income caused by fluctuations in foreign currency rates during the three and six months ended ~~March 31,~~June 30, 2020 and 2019:


	Three		Three			Three Months Ended June 30,						Six Months Ended June 30,
	Months		Months
	Ended		Ended
Impact of Foreign Currency Rate Fluctuations	March 31,		March 31,
(amounts in thousands)	2020		2019
Impact of Foreign Currency Rate Fluctuations (amounts in thousands)					Impact of Foreign Currency Rate Fluctuations (amounts in thousands)	2020		2019		2020		2019
Increase (decrease) in gross revenue	$	(700)	$	(2,300)	Increase (decrease) in gross revenue	$	(500)	$	(2,400)	$	(1,200)	$	(4,700)
Increase (decrease) in operating income	$	100	$	(3,100)	Increase (decrease) in operating income	$	(2,500)	$	(2,100)	$	(2,400)	$	(5,300)

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The following table shows the impact a hypothetical 10% increase or decrease in the U.S. dollar against all other currencies would have on actual gross revenue and operating income for the three and six months ended ~~March 31,~~June 30, 2020 and 2019:

Three

Three Months Ended June 30,

Six Months Ended June 30,

Months

Ended

Hypothetical 10% Change in Value of U.S. Dollar

March 31,

(amounts in thousands)

2020

2019

Hypothetical 10% Change in Value of U.S. Dollar

(amounts in thousands)

Hypothetical 10% Change in Value of U.S. Dollar

(amounts in thousands)

2020

2019

2020

2019

Effect of 10% change on gross revenue

+/-

$ 8,100

+/-

$ 5,700

Effect of 10% change on gross revenue

+/-

$6,400

+/-

$5,800

+/-

$14,500

+/-

$11,500

Effect of 10% change on operating income

+/-

$ 5,500

+/-

$ 3,600

Effect of 10% change on operating income

+/-

$3,900

+/-

$3,600

+/-

$9,400

+/-

$7,300

We have derivative risk relating to our foreign currency forward contracts. We enter into foreign currency forward contracts to mitigate our U.S. dollar and British pound sterling versus Euro exposure, generally with a duration of less than twelve months. We do not use derivative instruments for trading or speculative purposes. As of ~~March 31,~~June 30, 2020 and December 31, 2019, the notional amount of our foreign currency forward contracts was ~~$105.0~~$127.1 million and $83.9 million, respectively.

By using derivative instruments to hedge exposures to foreign currency fluctuations, we are exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, we are not exposed to the counterparty’s credit risk in those circumstances. We attempt to minimize counterparty credit risk in derivative instruments by entering into transactions with high-quality counterparties whose credit rating is at least upper-medium investment grade.

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Credit Risk

We have credit risk relating to our receivables, which are primarily receivables from financial institutions, including investment managers and brokers and dealers.

In the normal course of our business we, as an agent, execute transactions with, and on behalf of, other brokers and dealers. If these transactions do not settle because of failure to perform by either counterparty, we may be obligated to discharge the obligation of the non-performing party and, as a result, may incur a loss if the market value of the instrument is different than the contractual amount. This credit risk exposure can be directly impacted by volatile trading markets, as our clients may be unable to satisfy their contractual obligations during volatile trading markets.

Our policy is to monitor our market exposure and counterparty risk. Counterparties are evaluated for creditworthiness and risk assessment prior to our initiating contract activities. The counterparties’ creditworthiness is then monitored on an ongoing basis, and credit levels are reviewed to ensure that there is not an inappropriate concentration of credit outstanding to any particular counterparty.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as defined in Rule 13(a)‑15(e) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10‑Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10‑Q are effective at a reasonable assurance level in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) 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 or detect all errors and all fraud. While our disclosure controls and procedures are designed to provide reasonable assurance of their effectiveness, 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, within the Company have been ~~detected~~.

detected.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting during the quarter ended ~~March 31,~~June 30, 2020 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Except as set forth ~~below,~~in our Quarterly Report on Form 10-Q filed on May 12, 2020, there have been no material changes from the legal proceedings previously disclosed under the heading “Item 3. Legal Proceedings” in our 2019 Form 10-K. The legal proceeding described below has been disclosed previously in the 2019 Form 10-K. The matter is described in this Quarterly Report on Form 10-Q to include certain developments in the case since we filed the 2019 Form 10-K.

As disclosed most recently in our 2019 Form 10-K, in 2015, IDC Financial Publishing, Inc. (“IDC”) filed a lawsuit in the United States District Court for the Eastern District of Wisconsin captioned IDC Financial Publishing Inc. v. BondDesk Group LLC, et al. Claims were asserted against Tradeweb and against Fidelity Global Brokerage Group, Inc., Fidelity Brokerage Services, LLC, and National Financial Services, LLC (collectively, “Fidelity”) relating to the distribution of IDC’s financial strength ratings over Tradeweb’s trading platform to Fidelity, its registered investment advisors and Fidelity’s correspondent banks. Following extensive pre-trial proceedings that resulted in certain of IDC’s claims being dismissed by the court in 2019, the parties entered into a settlement agreement in early 2020 in which all remaining claims and counterclaims in the lawsuit were settled without any material impact to our financial condition or results of operations, and the matter has been dismissed with prejudice.

ITEM 1A. RISK FACTORS

There have been no material changes to our principal risks that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in “Item 1A. Risk Factors” of our 2019 Form 10-K and the information set forth in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation—Trends and Other Factors Affecting Our Performance—COVID-19” of this Quarterly Report on Form 10-Q.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

~~None.~~

None.

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ITEM 6. EXHIBITS


Exhibit Number		Description of Exhibit

~~10.1~~ 31.1		~~Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan Restricted Stock Unit Award Agreement (Form of RSU Agreement for Messrs. Olesky and Hult)~~

~~10.2~~	~~Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan Restricted Stock Unit Award Agreement (Form of RSU Agreement for other Executive Officers)~~

~~10.3~~	~~Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan PRSU Award Agreement (Form of PRSU Agreement for Messrs. Olesky and Hult)~~

~~10.4~~	~~Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan PRSU Award Agreement (Form of PRSU Agreement for other Executive Officers)~~

~~31.1~~	Certification of Chief Executive Officer pursuant to Rule 13a‑14(a) or 15d‑14(a) of 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 pursuant to Rule 13a‑14(a) or 15d‑14(a) of 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.

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.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover page formatted as Inline XBRL and contained in Exhibit 101.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TRADEWEB MARKETS INC.


~~May 12,~~July 31, 2020	/s/ Lee Olesky
	By:	Lee Olesky
		Chief Executive Officer (Principal Executive Officer)


~~May 12,~~July 31, 2020	/s/ Robert Warshaw
	By:	Robert Warshaw
		Chief Financial Officer (Principal Financial Officer)


Delaware						83-2456358
(State of other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Class of Stock			Shares Outstanding as of ~~May 1,~~July 24, 2020
Class A Common Stock, par value $0.00001 per share	90,762,277	~~83,945,458~~
Class B Common Stock, par value $0.00001 per share	96,933,192	~~96,933,192~~
Class C Common Stock, par value $0.00001 per share	5,109,991	~~8,079,983~~
Class D Common Stock, par value $0.00001 per share	34,403,255	~~36,931,823~~


		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			3 4

PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	6 7

Consolidated Statements of Financial Condition			6 7

Consolidated Statements of Income			7 8

Consolidated Statements of Comprehensive Income			8 9

Consolidated Statements of Changes in Equity			9 10

Consolidated Statements of Cash Flows			11 12

Notes to Consolidated Financial Statements			12 13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36 39

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	65 65

Item 4.	Controls and Procedures	66 67

PART II — OTHER INFORMATION			67 68

Item 1.	Legal Proceedings	67 68

Item 1A.	Risk Factors	67 68

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67 68

Item 3.	Defaults Upon Senior Securities	67 68

Item 4.	Mine Safety Disclosures	67 68

Item 5.	Other Information	67 68

Item 6.	Exhibits	68 69

	Signatures	69 70


			Page
Note 1	Organization	13 14
Note 2	Significant Accounting Policies	15 16
Note 3	Restricted Cash	20 22
Note 4	Goodwill and Intangible Assets	20 22
Note 5	Revenue	20 23
Note 6	Income Taxes	22 24
Note 7	Tax Receivable Agreement	22 25
Note 8	Stockholders’ Equity	23 25
Note 9	Non-Controlling Interests	26 29
Note 10	Stock-Based Compensation Plans	27 29
Note 11	Related Party Transactions	29 31
Note 12	Fair Value of Financial Instruments	30 32
Note 13	Credit Risk	30 33
Note 14	Commitments and Contingencies	31 34
Note 15	Earnings Per Share	32 35
Note 16	Regulatory Capital Requirements	33 36
Note 17	Business Segment and Geographic Information	34 37
Note 18	Subsequent Events	35 38


	Three Months Ended		Three Months Ended
PRSUs (Equity-Settled)	March 31, 2020		March 31, 2019		PRSUs (Equity-Settled)	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
PRSUs (equity-settled) granted		360,609		554	PRSUs (equity-settled) granted	—		6,653		360,609		776,603
Weighted-average grant-date fair value	$	38.87	$	31,563	Weighted-average grant-date fair value	$	—	$	22.19	$	38.87	$	22.19
PRSUs (equity-settled) compensation expense (in thousands)	$	5,407	$	4,674	PRSUs (equity-settled) compensation expense (in thousands)	$	7,392	$	6,894	$	12,799	$	11,671
Income tax expense (benefit) (in thousands)	$	(5,492)	$	(276)
Unrecognized compensation expense (in thousands)	$	53,508	$	N/A
Weighted-average recognition period for unrecognized compensation expense		2.14 years		N/A


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months		Three Months
	Ended		Ended
	March 31,		March 31,
	2020		2019
Cash flows from operating activities
Net income	$	62,485	$	42,352
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		37,176		33,503
Stock-based compensation expense		7,971		4,674
Deferred taxes		7,227		(39)
(Increase) decrease in operating assets:
Receivable from/payable to brokers and dealers and clearing organizations, net		(40,563)		(3,831)
Deposits with clearing organizations		(1,668)		2,570
Accounts receivable		(43,453)		(6,406)
Receivable from/payable to affiliates, net		2,452		1,167
Other assets		(9,837)		(7,152)
Increase (decrease) in operating liabilities:
Accrued compensation		(59,910)		(66,447)
Deferred revenue		2,306		602
Accounts payable, accrued expenses and other liabilities		14,067		(4,911)
Employee equity compensation payable		(11)		(17,161)
Net cash used in operating activities		(21,758)		(21,079)
Cash flows from investing activities
Purchase of furniture, equipment, software and leasehold improvements		(1,298)		(1,516)
Capitalized software development costs		(7,063)		(6,767)
Net cash used in investing activities		(8,361)		(8,283)
Cash flows from financing activities
Proceeds from stock-based compensation exercises		35,422		—
Offering costs from follow-on offering		(308)		—
Dividends		(13,400)		—
Capital distributions to non-controlling interests		—		(20,000)
Payroll taxes paid for stock-based compensation exercises		(23,991)		—
Net cash used in financing activities		(2,277)		(20,000)
Effect of exchange rate changes on cash and cash equivalents		(3,958)		866
Net decrease in cash and cash equivalents		(36,354)		(48,496)
Cash and cash equivalents and restricted cash
Beginning of period		461,711		411,304
End of period	$	425,357	$	362,808

Supplemental disclosure of cash flow information
Interest paid	$	—	$	—
Income taxes paid	$	2,867	$	7,301

Non-cash financing activities
Items arising from LLC Interest ownership changes
Establishment of liabilities under tax receivable agreement	$	11,212	$	—
Deferred tax asset	$	43,948	$	—

Reconciliation of cash, cash equivalents and restricted cash as shown on the statements of financial condition:
	March 31,		December 31,
	2020		2019
Cash and cash equivalents		424,357		460,711
Restricted cash		1,000		1,000
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$	425,357	$	461,711


	Three Months Ended		Three Months Ended
PRSUs (Cash-Settled)	March 31, 2020		March 31, 2019		PRSUs (Cash-Settled)	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
PRSUs (cash-settled) granted		—		—	PRSUs (cash-settled) granted	—		—		—		—
Weighted-average grant-date fair value	$	—	$	—	Weighted-average grant-date fair value	$	—	$	63,497	$	—	$	63,497
PRSUs (cash-settled) compensation expense (in thousands)	$	10	$	100	PRSUs (cash-settled) compensation expense (in thousands)	$	596	$	419	$	606	$	519
Income tax expense (benefit) (in thousands)	$	3	$	(14)
Unrecognized compensation expense (in thousands)	$	228	$	N/A
Weighted-average recognition period for unrecognized compensation expense		0.75 years		N/A


	Three Months Ended		Three Months Ended
Options	March 31, 2020		March 31, 2019		Options	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Options granted		—		130	Options granted	—		—		—		181,115
Weighted-average grant-date fair value	$	—	$	4,132	Weighted-average grant-date fair value	$	—	$	—	$	—	$	1.85
Option compensation expense (in thousands)	$	2,249	$	—	Option compensation expense (in thousands)	$	1,279	$	20,403	$	3,528	$	20,403
Income tax expense (benefit) (in thousands)	$	(10,515)	$	—
Unrecognized compensation expense (in thousands)	$	7,021	$	N/A
Weighted-average recognition period for unrecognized compensation expense		1.97 years		N/A


	Three Months Ended		Three Months Ended
RSUs	March 31, 2020		March 31, 2019		RSUs	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
RSUs granted		465,222		—	RSUs granted	28,656		—		493,878		—
Weighted-average grant-date fair value	$	38.87	$	—	Weighted-average grant-date fair value	$	39.87	$	—	$	39.79	$	—
RSUs compensation expense (in thousands)	$	315	$	—	RSUs compensation expense (in thousands)	$	1,675	$	—	$	1,990	$	—
Income tax expense (benefit) (in thousands)	$	(71)	$	—
Unrecognized compensation expense (in thousands)	$	17,836	$	N/A
Weighted-average recognition period for unrecognized compensation expense		2.96 years		N/A


	Quoted Prices in
	active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Successor	(Level 1)		(Level 2)		(Level 3)		Total		Successor	Quoted Prices in active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of March 31, 2020
As of June 30, 2020									As of June 30, 2020
Assets									Assets
Money market funds	$	255,265	$	—	$	—	$	255,265	Money market funds	$	474,845	$	—	$	—	$	474,845
	$	255,265	$	—	$	—	$	255,265		$	474,845	$	—	$	—	$	474,845
As of December 31, 2019									As of December 31, 2019
Assets									Assets
Money market funds	$	219,158	$	—	$	—	$	219,158	Money market funds	$	219,158	$	—	$	—	$	219,158
	$	219,158	$	—	$	—	$	219,158		$	219,158	$	—	$	—	$	219,158



	Three Months Ended
EPS: Net income attributable to Tradeweb Markets Inc.	March 31, 2020
(in thousands, except share and per share amounts)
Numerator:
Net income attributable to Tradeweb Markets Inc.	$	43,928

Denominator:
Weighted average shares of Class A and Class B common stock outstanding - Basic		166,234,749
Dilutive effect of equity-settled PRSUs		2,038,422
Dilutive effect of options		6,221,549
Dilutive effect of RSUs		22,524
Weighted average shares of Class A and Class B common stock outstanding - Diluted		174,517,244

Earnings per share - Basic	$	0.26
Earnings per share - Diluted	$	0.25


	June 30, 2020		December 31,  2019
	(dollars in thousands)
Cash and cash equivalents	$	559,889	$	460,711
Restricted cash	1,000		1,000
Receivable from brokers and dealers and clearing organizations	66,821		30,641
Deposits with clearing organizations	10,955		9,724
Accounts receivable	101,512		92,814
Receivable from affiliates	1,482		2,525
Current assets	741,659		597,415
Payable to brokers and dealers and clearing organizations	66,697		30,452
Accrued compensation	71,879		119,415
Deferred revenue	27,428		23,990
Accounts payable, accrued expenses and other liabilities	38,675		32,834
Employee equity compensation payable	1,642		1,048
Lease liability	9,742		8,516
Payable to affiliates	3,164		1,506
Tax receivable agreement liability	28,729		6,949
Current liabilities	247,956		224,710
Working capital	$	493,703	$	372,705